Solved: 1 Are the reasons given by the board for not

1. Are the reasons given by the board for not installing lights legitimate? Was there any fraud or
conflict of interest? Do the directors have any ethical responsibility to the surrounding
neighborhood as secondary stakeholders?
2. Does the business judgment rule require the board’s decision to be legitimate? Is that the
same as “rational”? Why or why not?
3. This case was decided before the landmark Smith v. Van Gorkom case in chapter. How
would you apply the holding in that case to these facts? Who would prevail?
4. When deciding not to install lights has the board and the majority shareholder put their own
interests ahead of the corporation’s interest? Is that a breach of their fiduciary duty? Why or
why not?
5. Is it possible that installing the lights would not increase the profitability of the team? If so,
how does that impact your analysis?

Defendants are the famous William Wrigley, who owns 80% of the stock, and directors of the
Chicago National League Ball Club, which is the company that owns the Chicago Cubs. Every
other major league team had installed lights, Defendant did not install them for the Cubs
because he was concerned that night baseball would be detrimental to the surrounding
neighborhood and that, in Wrigley’s opinion, baseball was a daytime sport. Plaintiff argued that
the team was losing money, and that other teams had higher attendance during the weekdays
because they played at night. Shareholder plaintiffs argued that the Cubs would draw more
people with weekday night games. Plaintiff asserts that Defendant’s first concern should be
with the shareholders rather than the neighborhood.

ANSWER
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