In CASE 20

question 66

Multiple Choice

In CASE 20.3 In re Abbott Laboratories Derivative Shareholders Litigation (2003) ,the shareholder-plaintiffs alleged the corporate directors breached their duty of good faith through their failure to follow up on repeated notices of regulatory noncompliance.How did the court rule?

• A) The court ruled the directors were not liable and did not breach any duty of good faith because they were unaware of the issues,and accepted corporate governance procedures did not require the disclosure of the noncompliance notices to them.
• B) The court ruled the directors could not be held liable because the corporation's certificate of incorporation exempted directors from liability for breach of the duty of care.
• C) The court ruled the business judgment rule applied and that the plaintiffs' allegations could not withstand the protection of that rule.
• D) The court ruled the plaintiffs sufficiently pleaded allegations that,if true,constituted a breach of the duty of good faith leading to the directors' actions falling outside the protection of the business judgment rule.

---

Definitions:

Indifference Curve

An indifference curve represents a series of combinations of two goods or services that give an individual equal satisfaction and utility, illustrating consumer preferences.

Satisfaction Levels

Refers to the degree of contentment or fulfillment that individuals or consumers get from the consumption of goods or services.

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, meaning all combinations yield the exact level of utility to the consumer.

Satisfaction Levels

Measures of how goods, services, or experiences meet or exceed expectations, often used in assessing customer or employee contentment.