In the Text Case Auerbach V

question 36

Multiple Choice

In the text case Auerbach v. Bennett a shareholder brought a derivative action after an internal audit of the GTE Corporation suggested that the corporation's management had paid significant amounts in bribes and kickbacks over a period of several years. Which of the following was the result on appeal?

• A) The court ruled that the business judgment rule exempted the directors from liability.
• B) The court ruled that the business judgment rule exempted the directors from liability only so long as the directors could establish that the shareholders did not lose money on account of their actions.
• C) The court ruled that the business judgment rule exempted the directors from liability unless the shareholder could establish that the shareholders lost money on account of their actions.
• D) The court ruled that the business judgment rule did not apply because illegality was involved and that the corporation was, therefore, liable.
• E) The court ruled that the business judgment rule shielded the lawsuit insofar as foreign wrongdoing was alleged, but not for wrongdoing committed in the U.S.

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Definitions:

Foreign Nationals

Individuals from countries other than the one in which they currently reside or are present, typically referring to non-citizens.

Re-Election

The process of being elected again to a political position, indicating the continuation of an individual's tenure in a specific office.

Interest Groups

Organizations or collectives that aim to influence public policy or decision-making, typically focused around specific issues or causes.

Whip

A party leader in a legislative body whose role is to ensure party discipline and secure votes for party-supported legislation.