Gagliardi v. TriFoods International, Inc.
Delaware Court of Chancery
683 A.2d 1049 (Del. Ch. 1996)
Eugene Gagliardi (plaintiff), founder and 13-percent shareholder of TriFoods International after his 1993 termination, sued the company's board (defendants) for negligent mismanagement, pointing to a series of business decisions he considered poor -- a debt-financed plant purchase, a supposedly duplicative research facility, an allegedly overpriced acquisition of Steak-umms production rights, a new sales-commission structure, unpaid suppliers, damaged customer relationships from inferior products, and $125,000 spent rebranding the company. The board moved to dismiss the negligent-mismanagement claim.
Whether an independent and disinterested corporate director may be held liable for a corporate loss resulting from a business decision made in good faith.