September 09, 2008
Business Associations Limerick of the Week: Shlensky v. Wrigley
Last week's Limerick addressed the famous dictum of Dodge v. Ford Motor Corp., in which the court reminded Henry Ford that his primary goal ought to be shareholder wealth maximization. In discussing that case, we cautioned that there is more to business associations than shareholders. Rather, as Lynn Stout properly emphasizes, boards of directors owe duties to multiple stakeholders. One case that illustrates this principle is the Barlow case, discussed on this blog here. An even better illustration is Shlensky v. Wrigley.
Shlensky tried to get Wrigley, the owner of the Cubs, to install lights at Wrigley field (pictured) so that the Cubs could play before larger crowds at night games. Shlensky faced a problem. How could he possibly prove that the Cubs could attract more spectators to night games than they could to day games? After all, that would require some comparable sports team that plays in a similar city, and how was he supposed to find another major league baseball team that played in a city like Chicago?
What? White Sox? Oh, yeah. Turns out, Shlensky proferred evidence that people were more inclined to go to Sox games at night than they were to go to Cubs games during the day when the two teams played on the same day. Wrigley responded not with a challenge to Shlensky's economic analysis but with concerns about the effect of night baseball on the Wrigleyville neighborhood and with a lovely little bit of arcane ideology: "Baseball is a daytime sport." As Neo (Keanu Reeves) might say, "Woh!"
That's pretty far from an exercise of reasonable business judgment. By the way, on the clip shown above, Neo's "Woh!" is presented as if it were a response to Trinity's (Carrie-Ann Moss) fleetness (which in our context represents how quickly your head would spin if you tried to construe Wrigley's argument as an exercise of reasoned business judgment). In fact, of course, it was a response to Morpheus's (Laurence Fishburne) leaping abilities (which in our context would represent the leap of faith it would take to get from Wrigley's non-exercise of business judgment to a dismissal of the suit based on the business judgment rule).
The court accommodated Wrigley by hypothesizing what a decent basis for refusing to install lights at Wrigley Field might look like, and on that basis, Shlensky's complaint was dismissed.
Shlensky v. Wrigley
As Wrigley explained to the court,
Pro ball is a daytime sport.
Night ball you can see
Down at Comiskey
Where the teams out for profit cavort.
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