Tuesday, September 25, 2018

No Need to Be Judgmental: Last Thoughts on the Business Judgmenty Nike Ad

I was going to move on to other topics after two recent posts about Nike's Kaepernick Ad, but I decided I had a little more to say on the topic.  My prior posts, Nike's Kaepernick Ad Is the Most Business Judgmenty Thing Ever and Delegation of Board Authority: Nike's Kaepernick Ad Remains the Most Business Judgmenty Thing Ever explain my view that Nike's decision to run a controversial ad is the essence of the exercise of business judgment.  Some people seem to believe that by merely making a controversial decision, the board should subject to review and required to justify its actions.  I don't agree. I need more.   

First, I came across a case (an unreported Delaware case) that had language that was simply too good for me to pass up in this context:

The plaintiffs have pleaded no facts to undermine the presumption that the outside directors of the board . . . failed to fully inform itself in deciding how best to proceed . . . . Instead, the complaint essentially states that the plaintiffs would have run things differently. The business judgment rule, however, is not rebutted by Monday morning quarterbacking. In the absence of well pleaded allegations of director interest or self-dealing, failure to inform themselves, or lack of good faith, the business decisions of the board are not subject to challenge because in hindsight other choices might have been made instead.

In re Affliated Computer Servs., Inc. Shareholders Litig., No. CIV.A. 2821-VCL, 2009 WL 296078, at *10 (Del. Ch. Feb. 6, 2009) (unreported). 
 
Absolutely, positively, spot on.  (I'll note, again, that Nike's stock is up, not down since the ad. That shouldn't matter as to the inquiry, but it further supports why we have the business judgment rule in the first place.) 
 
Next, the good Professor Bainbridge posted yesterday, I hate to break it to Josh Fershee but "Judgmenty" is not a word. He is, of course, correct. But, I couldn't leave it there. I decided to double down on my use of the admittedly ridiculous "judgmenty."  My claim:
Ever the good sport, the good professor replied: 

So it appears. 

http://lawprofessors.typepad.com/business_law/2018/09/no-need-to-be-judgmental-last-thoughts-on-the-business-judgmenty-nike-ad.html

Corporate Governance, Corporate Personality, Corporations, Delaware, Joshua P. Fershee, Management, Sports | Permalink

Comments

Ah, may I then use properly the expression "Not to be judgmenty, but . . . ." I guess the red line under the term is only temporary, until Microsoft catches up.

Posted by: Craig Sparks | Sep 26, 2018 9:19:06 AM

Well, my suggested usage would have you say, "Not to be judgmental, but . . . ." However, it would be proper to say, "I didn't mean for the letter [a thing] to be judgmenty, but . . . ." Yes, I recognize that I am applying formalistic rules to a made-up word. Still, I am pretty sure that little red line under the word will go away one day.

Posted by: Joshua Fershee | Sep 28, 2018 6:52:59 AM

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