Question

Several retirement funds that own shares in News Corp., Inc., have filed suit against Rupert Murdoch, the chairman of the board and CEO of News Corp., alleging that Mr. Murdoch had the board approve the purchase of his daughter’s company for $675 million. Part of the purchase deal included putting Murdoch’s daughter on the News Corp. board. Which would be the best theory for recovery by the retirement funds? a. Violation of the corporate opportunity doctrine b. Insider trading c. Breach of fiduciary duty d. Violation of the business judgment rule

Answer 1

D. Violation of the business judgment rule

Explanation: Business Judgement rule is a case law which tends to exonorate directors employed by corporations from unwarranted legal actions due to certain activities which they are obliged by their job to undertake. This law ensures that directors are not distracted by unnecessary legal tussles.

THE ACTIVITIES OF MR MURDOCH IS A VIOLATION OF THE BUSINESS JUDGEMENT RULE.

The retirement funds can be recovered through legal actions and other approved means.