Sutherland v. Sutherland

The Sutherland family wholly owns Dardanelle Timber Company, which in turn wholly owns Sutherland Lumber-Southwest, Inc. (Southwest); Perry and Todd Sutherland (defendants) were controlling shareholders, directors, and officers of both companies, while Mark Sutherland (defendant) served as the third director without equity, and Martha Sutherland (plaintiff), a Dardanelle minority shareholder, had been a Southwest director until her 2004 ouster. Both companies' certificates of incorporation contained a provision purporting to let self-interested directors approve their own transactions after disclosure, including voting on those transactions themselves. Martha filed a derivative complaint alleging Perry and Todd, with Mark's acquiescence, caused the companies to fund their personal flights, tax and accounting services, and excessive compensation; the defendants moved to dismiss, relying on the exculpatory provision.