Wrigley was the majority
shareholder in a corporation that owned a baseball team in Chicago and its
associated stadium. Unlike most other teams in the league, Chicago did
not have lights in their stadium to allow for games to be played at night.
Night games often had
significantly higher attendances than day games.
Shelnsky, a minority
shareholder, sued, claiming that Wrigley was in breach of his fiduciary
duty by failing to install lights.
Shelnsky argued that Wrigley
didn't allow lights not because of a legitimate business reason, but
because he had a personal opinion that baseball should only be played
during the daytime.
Shelnsky also argued that
the other directors acquiesced to Wrigley even though they knew the
decision made no business sense.
Wrigley argued that there
was no allegation of fraud, illegality, or conflict of interest, so the
courts should stay out if it because of the Business Judgment Rule.
The Business Judgment
Rule says that the courts should not
second guess business decisions made by directors.
The Trial Court found for
Wrigley. Shelnsky appealed.
The Appellate Court affirmed.
The Appellate Court found
that there must be fraud, or a breach of good faith that with directors
are bound to exercise towards the stockholders in order to justify the
courts entering into the internal affairs of corporations.
The Court found that
Wrigley's decision to not play baseball at night was not fraud or breach
of good faith, so it was covered by the Business Judgment Rule.