Business Law Assignment
Chapter 20
Case 20.1: eBay Domestic Holdings, Inc. v. Newmark
• What was the result?
“eBay sued, asserting that the other two stockholders had breached the fiduciary
duties they owed eBay as a minority stockholder.” Fiduciary duties include two duties: the duty
of care and the duty of loyalty. The duty of care requires fiduciaries to make informed and
reasonable decisions and to exercise reasonable supervision of the business. The duty of loyalty
mandates that fiduciaries act in good faith and in what they believe to be the best interest of
the corporation, subordinating their personal interests to the welfare of the corporation.
Because it may not be clear to someone not knowing what eBay did before suing, I believe that
the business judgement rule would not apply because an outsider may think that the directors
were interested in the transaction. One might say, because the two shareholders will each
increase their number of shares, that they will derive personal financial benefit from the
transaction. However, once given the information about eBay starting another online classifieds
business, kijiji, designed to compete with Craigslist, the court may understand why the other
two stockholders took action in that manner. The two stockholders seemed to have acted in
good faith and subordinated their personal interests to those of the corporation and its
shareholders, especially because of the staggered board implementation.
Case 20.3: Snyder v. Epstein
