Miller v. American Telephone & Telegraph Co.
United States Court of Appeals for the Third Circuit
507 F.2d 759 (1974)
Shareholders (plaintiffs) of AT&T (defendant) sued derivatively, alleging AT&T's directors improperly failed to collect a $1.5 million debt owed by the Democratic National Committee for services at the 1968 convention, and that this failure to pursue collection amounted to an illegal, undisclosed campaign contribution violating federal communications and campaign finance statutes. The trial court dismissed the complaint, reasoning that collections decisions are ordinarily protected business judgment absent allegations the conduct was plainly illegal, unreasonable, or a breach of fiduciary duty; the shareholders appealed.
Whether a business decision that results in illegal activity is protected by the business judgment rule.