Data Key Partners v. Permira Advisers, LLC

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After Defendant-directors decided to sell their interest in Renaissance Learning, Inc. to Permira Advisers, LLC, Plaintiffs brought this lawsuit, contending that Defendants breached their fiduciary duty to the minority shareholders by selling Renaissance because Defendants “put their personal interest in monetizing their holdings in the Company…ahead of…the Company’s minority shareholders.” The circuit court dismissed the complaint for failure to state a claim, concluding that the business judgment rule protected the directors’ actions and that Defendants violated no legal duty when they chose to sell Renaissance to Permira. The court of appeals reversed in part, concluding that the business judgment rule should not be used to dismiss a complaint. The Supreme Court reversed, holding (1) the business judgment rule, which is a substantive law, unequivocally sets forth the terms on which directors may be held liable for their decisions, and as such, a party challenging the decision of a director must plead facts sufficient to plausibly show that he or she is entitled to relief; and (2) Plaintiffs’ complaint did not plead facts sufficient to plausibly show that Defendants’ actions came within the terms of potential liability or that the directors received an improper material benefit at the expense of the minority shareholders. View "Data Key Partners v. Permira Advisers, LLC" on Justia Law