United States Court of Appeals For the Seventh Circuit
Corporations — breach of fiduciary duty
The board of directors of a corporation did not breach their fiduciary duty by agreeing to a merger.
“Dixon does not contend that Ladish’s directors violated their duty of loyalty. They sold their own shares as part of the merger, receiving the same price as outside investors. Their interests thus were aligned with those of all other shareholders. Two of the seven directors had golden-parachute arrangements, potentially entitling them to compensation should they be fired by Allegheny after the merger closed, but five did not—and the board approved the merger unanimously, showing that this potential conflict was unimportant. The potential conflict of interest also was disclosed, which means that the two directors did not engage in ‘[a] willful failure to deal fairly with the corporation or its shareholders’ in connection with the conflict (§180.0828(1)(a)). None of the other paragraphs in §180.0828(1) is even arguably applicable. It follows that Wisconsin law does not allow an award of damages to Ladish’s shareholders.”
Appeal from the United States District Court for the Eastern District of Wisconsin, Stadtmueller, J., Easterbrook, J.