Oregon
How Brehm v. Eisner applies in Oregon: state-specific rules, key cases, and bar exam notes for Corporate Law.
Oregon law generally follows the business judgment rule as articulated in Brehm v. Eisner, allowing directors of a corporation broad discretion in their decision-making, provided such decisions are made in good faith and with a rational basis. The courts give deference to the decisions of directors unless there is clear evidence of fraud, bad faith, or illegal conduct.
In Oregon, the business judgment rule is codified in the Oregon Business Corporation Act, which provides that directors are presumed to act in the best interests of the corporation and its shareholders, as long as their actions are informed and undertaken in good faith.
The court found that brokers and directors owed fiduciary duties to shareholders, reinforcing the application of the business judgment rule in evaluating board decisions.
This case affirmed that when assessing directors' actions under the business judgment rule, courts will not substitute their judgment for that of the directors unless a clear breach of fiduciary duty is shown.
The ruling emphasized that director decisions made in good faith and without conflict of interest are protected under the business judgment rule, consistent with Brehm v. Eisner.
Oregon's approach to the business judgment rule mirrors that of federal law, particularly as seen in Delaware's corporate statutes and case law. Both jurisdictions avoid micromanaging board decisions, emphasizing deference unless there’s evidence of wrongdoing or failure to act in the corporation's best interests.
Candidates in the Oregon bar exam should be familiar with the principles of the business judgment rule as established in Brehm v. Eisner, especially how it applies to director duties and corporate governance.