Offensive Application of the Business Judgment Rule to Terminate Nonfrivolous Derivative Actions: Should the Courts Guard the Guards?

Analyses the business judgment rule, a doctrine that requires potential plaintiff shareholders to acquire approval from a special litigation committee of disinterested corporate directors before proceeding to suit. Next, the article examines the “hesitancy of the courts to enter the corporate boardroom and substitute their judgment for that of the directors,” which the authors describe as understandable, yet problematic. Offensive reliance on the business judgment rule may leave valid claims unredressed, and the authors provide recommendations to remedy this problem.