This opinion is subject to revision before final

publication in the Pacific Reporter

2013 UT 20

299 P.3d 1139

IN THE

SUPREME COURT OF THE STATE OF UTAH

SAMUEL R. MCLAUGHLIN and JOHN DOES 1-10,

Plaintiffs and Appellant,

v.

GREG SCHENK; Estate of BOYD SCHENK; ANNA SCHENK;

COOKIETREE, INC.; JOHN DOES 1-10,

Defendants and Appellees.

No. 20111109

Filed April 5, 2013

Third District, Salt Lake

The Honorable Anthony B. Quinn

No. 040924997

Attorneys:

Lincoln W. Hobbs, Margaret H. Olson, Salt Lake City, 

for appellant

Matthew M. Durham, Justin B. Palmer, Salt Lake City, for

appellees Cookietree, Inc. and Greg Schenk

Richard D. Flint, Salt Lake City, for appellees Anna Schenk and

Estate of Boyd Schenk

JUSTICE PARRISH authored the opinion of the Court, in which

CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING,

JUSTICE DURHAM, and JUSTICE LEE joined.

JUSTICE PARRISH, opinion of the Court:

INTRODUCTION

¶1 This case involves an appeal from an entry of summary

judgment in a case that we remanded in 2009. In 1999, Greg Schenk

purchased shares in Cookietree, Inc. (Cookietree), in violation of a

1991 Shareholder Agreement. In 2005, Cookietree’s Board of

Directors (Board), including Schenk, voted to waive the provisions

of the 1991 Shareholder Agreement that precluded the stock

purchase. Around that same time, shareholders representing nearly

90 percent of Cookietree’s shares, again including Schenk, signed

consent and waiver forms ratifying the 1991 stock purchase (collec-
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Opinion of the Court

2

tively, the 2005 Waivers). Samuel McLaughlin, a minority shareholder, brought suit challenging the stock purchase, and the district

court granted Cookietree and Schenk’s motion for summary

judgment. On appeal, we held that the 2005 Waivers were tainted

by Schenk’s participation in the votes and remanded for a determination of whether the 2005 Waivers were fair. McLaughlin v. Schenk,

2009 UT 64, 220 P.3d 146 (McLaughlin I).

¶2 Following our remand, Cookietree took several corporate

actions that it intended to have “the same purpose and effect of a

fairness hearing: to resolve the nontransaction conflict of interest that

tainted the 2005 Waivers” (2009 Ratifications). Specifically, in 2009,

the Board voted to waive the stock transfer provisions in the 1991

Shareholder Agreement and to ratify the 2005 Waivers. And in 2010,

the shareholders similarly voted to waive the stock transfer provisions and to ratify the 2005 Waivers.

¶3 The district court thereafter held that McLaughlin was still

entitled to a fairness hearing, notwithstanding Cookietree’s attempts

to resolve the conflict of interest. But when the case was reassigned

to another district court judge, the replacement judge disagreed with

the determination that a fairness hearing was necessary. He ruled

that the post-remand corporate actions resolved any issue concerning the conflict of interest that had tainted the 2005 Waivers and

entered summary judgment in favor of Cookietree and Schenk.

McLaughlin appeals to this court, raising several issues for our

consideration.

¶4 The first issue is whether the district court violated the law

of the case doctrine when it ruled that it could consider options other

than a fairness hearing to resolve the nontransaction conflict of

interest situation. The second issue is whether the holding of

McLaughlin I that shareholders in closely held corporations owe each

other fiduciary duties has been superseded by statute and whether

the statute is dispositive in this case. The third issue is whether the

district court violated our mandate in McLaughlin I by declining to

hold a fairness hearing. The final issue is whether the post-remand

corporate action mooted the need for a fairness hearing, thereby

mandating summary judgment in favor of Schenk and Cookietree.

BACKGROUND

¶5 Cookietree is a Utah corporation that was established in

1981. McLaughlin v. Schenk, 2009 UT 64, ¶ 3, 220 P.3d 146. Schenk is

the majority shareholder and President of the Board. Id. ¶¶ 3, 6.
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Opinion of the Court

3

McLaughlin is a minority shareholder and former executive

employee. Id. ¶¶ 3, 9.

¶6 In 1999, the Estate of Boyd Schenk sold 545,200 shares of

Cookietree common stock to Greg Schenk. “This transfer was not

recorded in Cookietree’s minutes or written records, and a right of

first refusal was not provided to the corporation or the other

shareholders,” in violation of the 1991 Shareholder Agreement. Id.

¶7 In 2004, McLaughlin filed suit against Schenk and

Cookietree, alleging that the stock transfer violated the 1991

Shareholder Agreement. In 2005, Cookietree’s Board and shareholders, including Schenk, who acted in both capacities, passed the 2005

Waivers, which purported to waive the provisions of the 1991

Shareholder Agreement that precluded the stock transfer.

Cookietree and Schenk then successfully moved to dispose of

McLaughlin’s claims on summary judgment. Id.

¶8 McLaughlin appealed to this court. Id. Although we held

that the 2005 Waivers did not violate Cookietree’s corporate

governance documents, we held that the 2005 Waivers “suffer[ed]

from . . . [a] lack of probity and fair dealing.” Id. ¶ 36. We reasoned

that shareholders in closely held corporations owed fiduciary duties

to other shareholders and extended the conflict of interest provisions

of section 851 of the Utah Revised Business Corporation Act

(Corporation Act), UTAH CODE §§ 16-10a-101 et seq., to

“nontransaction related conflicts” of interest such as those at issue

in this case. Id. ¶ 37. After concluding that Schenk’s participation in

both the Board waiver and the shareholder waiver was tainted by a

conflict of interest, we reversed the summary judgment that had

been based on these waivers. “We therefore remand[ed] for a

determination of whether the [2005] [W]aivers were fair within the

meaning of Utah Code section 16-10a-851, which is a fact-intensive

inquiry focusing on whether the waivers were beneficial to the

corporation and the shareholders and whether they satisfied the

standard of fair dealing.” Id. ¶ 38.

¶9 Following our remand, on December 18, 2009, all three of

Cookietree’s Board members met. They included Schenk, Harold

Rosemann, and David Rudd. Schenk and Rosemann disqualified

themselves from voting due to a conflict of interest. The one

remaining Board member, Rudd, voted to ratify the 2005 Waivers

and “presently waived the stock transfer provisions in the Shareholders Agreement.” All three Board members then voted to ratify

the actions of Rudd.
MCLAUGHLIN v. SCHENK

Opinion of the Court

4

¶10 Rudd then authorized two proposals to be submitted to the

shareholders for vote at the upcoming annual meeting on January 6,

2010. Proposal One was a present waiver of the stock transfer

provisions. Proposal Two was ratification of the 2005 Waivers and

Proposal One.

¶11 The 1991 Shareholder Agreement required that two-thirds

of the shares, excluding those shares owned by the controlling

shareholder, vote to waive the Shareholder’s Agreement’s restriction

on share transfers. Therefore, Schenk voted on Proposal One

because his vote was necessary for waiver under the Shareholder

Agreement. However, because of Schenk’s conflict of interest, the

vote on Proposal One was tallied in two different ways: one tally

including Schenk’s shares other than the shares at issue in the 1999

Stock Sale; the other tally excluding all of his shares. When Schenk’s

shares were included in the tally, 3,168,200 shares were voted in

favor of Proposal One and 400,000 shares (owned by McLaughlin

and his wife) were voted against Proposal One. When Schenk’s

shares were excluded from the tally, 987,000 shares were voted in

favor of Proposal One and 400,000 shares were voted against.

¶12 Proposal Two to ratify the 2005 Shareholders Waiver was

voted for by a majority of the shareholders, not including Schenk.

Specifically, 987,000 shares were voted in favor of Proposal Two and

400,000 shares were voted against.

¶13 On January 15, 2010, McLaughlin filed a Motion for Partial

Summary Judgment and/or Declaratory Judgment Declaring the

Invalidity of Corporate Actions. He argued “that the corporate

actions taken on December 18, 2009 and January 6, 2010 were

improperly undertaken for the specific purpose of circumventing the

remand directive.” In response, Cookietree and Schenk argued that

our remand instruction had only “remanded for further action to

resolve the conflict of interest,” and asked the district court to

recognize that the December 18, 2009 and January 6, 2010 corporate

actions effectively ratified the 2005 Waivers. The district court

disagreed with this reasoning and granted McLaughlin’s motion. It

held that McLaughlin was “entitled to the fairness hearing identified

by the Supreme Court.” Schenk and Cookietree then petitioned this

court for interlocutory appeal, which was denied.

¶14 At a rule 16 conference set for the purpose of scheduling a

trial and obtaining clarification on the procedure for the fairness

hearing, the district court judge originally assigned to the case

announced to the parties that he was retiring and that the case
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Opinion of the Court

5

would be reassigned. Following the reassignment, the replacement

judge convened a status conference where he stated that he

“certainly [was] not going to take the same position [on the fairness

hearing] that [the retired judge] did” because he thought “that the

corporation can try [to] fix [the 2005 Waiver issues].” He thereafter

invited the parties to file motions for summary judgment.

¶15 Cookietree and Schenk filed such a motion, arguing that

the December 18, 2009 and January 6, 2010 corporate actions “cured”

any defect in the 2005 Waivers. McLaughlin opposed the motion,

arguing that “‘fairness’ by its nature is a fact-intensive inquiry,”

making summary judgment improper. He also argued that the

retired judge’s denial of Cookietree and Schenk’s Cross Motion for

Summary Judgment was the law of the case and that, under the

mandate rule, the district court and the parties were bound by this

court’s remand directive.

¶16 The replacement judge ruled that the post-remand

corporate action “completely resolve[d] any issue concerning the

conflict of interest that was found to have tainted the [2005

W]aivers.” He therefore granted summary judgment in favor of

Cookietree and Schenk. McLaughlin appealed. 

¶17 On May 11, 2010, the Legislature amended section 16-10a622 of the Utah Code in response to our opinion in McLaughlin I.

That section now states that “[a] shareholder of a corporation, when

acting solely in the capacity of a shareholder, has no fiduciary duty

or other similar duty to any other shareholder of the corporation,

including not having a duty of care, loyalty, or utmost good faith.

This Subsection . . . applies to . . . a closely-held corporation.” UTAH

CODE § 16-10a-622(3). Legislative history indicates that the purpose

of this amendment was to reverse a portion of our decision in

McLaughlin I. Specifically, in advocating for passage of the bill, its

sponsor described McLaughlin I as a “troubling decision” holding

that “shareholders of a closely-held corporation have a fiduciary

duty to the other shareholders of the corporation.” Senate Business

& Labor Committee Hearing, S.B. 197, 58th Leg., Gen. Sess. (Feb. 16,

2010) (statement of Sen. Liljenquist).

¶18 We have jurisdiction pursuant to Utah Code section 78A-3-

102(3)(j).

STANDARD OF REVIEW

¶19 “The application of the law of the case doctrine is ordinarily reviewed under an abuse of discretion standard.” M.F.K. v.
MCLAUGHLIN v. SCHENK

Opinion of the Court

6

S.V. (In re Adoption of A.F.K.), 2009 UT App 198, ¶ 15, 216 P.3d 980

(alternations omitted) (internal quotation marks omitted). “However, when a legal question is presented to an appellate court in lawof-the-case packaging, the abuse of discretion standard must yield

to the correctness standard of review.” Id. (alteration omitted)

(citation omitted) (internal quotation marks omitted). Although

McLaughlin argues that the standard of review in this case is

correctness, we see no legal question presented in law of the case

packaging. The issue is simply whether the replacement judge

violated the law of the case doctrine when he ruled differently than

the retired judge on an issue previously decided. Therefore, we

apply the abuse of discretion standard to this issue.

¶20 Whether a district court complied with the mandate of an

appellate court is a question of law, which we review for correctness.

See Amax Magnesium Corp. v. State Tax Comm’n, 874 P.2d 840, 842

(Utah 1994); Slattery v. Covey & Co., 909 P.2d 925, 927 (Utah Ct. App.

1995). Similarly, we review a district court’s grant of summary

judgment for correctness, with “the facts and all reasonable inferences [reviewed] in the light most favorable to the nonmoving

party.” McLaughlin I, 2009 UT 64, ¶ 14 (internal quotation marks

omitted). 

ANALYSIS

I. THE REPLACEMENT JUDGE’S RECONSIDERATION

OF THE RETIRED JUDGE’S RULING WAS PROPER

BECAUSE THE RETIRED JUDGE’S RULING WAS

NOT THE LAW OF THE CASE

¶21 McLaughlin argues that the retired judge’s order of a

fairness hearing was the law of the case and that the replacement

judge should not have reconsidered the issue. Cookietree and

Schenk argue that the replacement judge was not bound to follow

the prior order. We hold that the retiring judge’s ruling, in which he

ordered a fairness hearing, did not fall within the law of the case

doctrine. The replacement judge therefore was free to reconsider the

issue.

¶22 Under the law of the case doctrine, “a court [may] decline

to revisit issues within the same case once the court has ruled on

them.” IHC Health Servs., Inc. v. D & K Mgmt., 2008 UT 73, ¶ 26, 196

P.3d 588. However, this doctrine is generally discretionary, with

three exceptions for extraordinary circumstances in which reconsideration is mandatory.
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Opinion of the Court

7

Law of the case does not prohibit a district court judge

from revisiting a previously decided issue during the

course of a case, regardless of whether the judge has

changed or remained the same throughout the proceedings. Rather, the doctrine allows a court to decline

to revisit issues within the same case once the court

has ruled on them.

Mid-Am. Pipeline Co. v. Four-Four, Inc., 2009 UT 43, ¶ 11, 216 P.3d 352

(internal quotation marks omitted). “While a case remains pending

before the district court prior to any appeal, the parties are bound by

the court’s prior decision, but the court remains free to reconsider

that decision. It may do so sua sponte or at the suggestion of one of

the parties.” IHC Health Servs., 2008 UT 73, ¶ 27 (footnote omitted).

¶23 This rule correctly tracks rule 54(b) of the Utah Rules of

Civil Procedure, which states that “any order or other form of

decision, however designated, that adjudicates fewer than all the

claims . . . is subject to revision at any time before the entry of

judgment adjudicating all the claims and the rights and liabilities of

all the parties.” Therefore, in this case, the replacement judge was

free to reconsider the fairness hearing issue that had been previously

ruled upon by the retired judge.

¶24 McLaughlin correctly points out that there are exceptions

to the law of the case. In these situations, a judge is required to

reassess a prior ruling. These situations are “(1) when there has been

an intervening change of authority; (2) when new evidence has

become available; or (3) when the court is convinced that its prior

decision was clearly erroneous and would work a manifest injustice.” Mid-Am. Pipeline, 2009 UT 43, ¶ 14 (internal quotation marks

omitted). “While there are exceptions to the doctrine of law of the

case, these exceptions function only to dictate when the district court

has no discretion but rather must reconsider a previously decided,

unappealed issue.” Id. The exceptions do not operate to bar a

replacement judge from reconsidering an issue previously ruled on

by a prior judge in the same case. We therefore hold that the

replacement judge did not abuse his discretion when he decided to

re-visit the retired judge’s decision ordering a fairness hearing.
MCLAUGHLIN v. SCHENK

Opinion of the Court

8

II. ALTHOUGH THE HOLDING OF McLAUGHLIN I

THAT SHAREHOLDERS IN CLOSELY HELD

CORPORATIONS OWE EACH OTHER FIDUCIARY

DUTIES HAS BEEN SUPERSEDED BY STATUTE, THE

STATUTE IS NOT DISPOSITIVE IN THIS CASE BECAUSE

IT IS NOT RETROACTIVE

¶25 McLaughlin I concluded that shareholders in closely-held

corporations owe each other a heightened duty of “utmost good

faith and loyalty.” McLaughlin v. Schenk, 2009 UT 64, ¶¶ 18, 20, 220

P.3d 146. In response to McLaughlin I, the Legislature amended

section 16-10a-622 to state that “[a] shareholder of a corporation,

when acting solely in the capacity of a shareholder, has no fiduciary

duty or other similar duty to any other shareholder of the corporation, including not having a duty of care, loyalty, or utmost good

faith. This Subsection . . . applies to . . . a closely-held corporation.”

UTAH CODE § 16-10a-622(3).

¶26 The bill’s sponsor described McLaughlin I as a “troubling

decision” holding that “shareholders of a closely-held corporation

have a fiduciary duty to the other shareholders of the corporation.”

Senate Business & Labor Committee Hearing, S.B. 197, 58th Leg.,

Gen. Sess. (Feb. 16, 2010) (statement of Sen. Liljenquist). He

explained that 

this bill just basically clarifies that a shareholder of a

corporation, when acting solely in the capacity of a

shareholder, has no fiduciary duty. When they’re just

a shareholder, they do not have a fiduciary duty to

other shareholders, and this clarifies that the fiduciary

duties are basically held with the directors of the

company. So this, hopefully, will correct that issue in

the McLaughlin v. Schenck [sic.] case.

Id.

¶27 The plain language and legislative history of section 622(3)

are clear: shareholders, whether in a public corporation or a closelyheld corporation, do not owe each other any fiduciary duties. As

Cookietree and Schenk correctly note, “[s]ection 622(3) supersedes

the McLaughlin I court’s holding that shareholders in closely-held

corporations owe their co-shareholders fiduciary obligations.” It is

clear that the McLaughlin I holding regarding shareholder fiduciary

duties is superseded by statute. But, section 622(3) does not apply

to the facts at issue here since they transpired prior to its passage. 
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Opinion of the Court

9

¶28 As a general rule, statutes are not retroactive without clear

evidence to the contrary. Warne v. Warne, 2012 UT 13, ¶ 25, 275 P.3d

238; see also UTAH CODE § 68-3-3 (“A provision of the Utah Code is

not retroactive, unless the provision is expressly declared to be

retroactive.”). Because section 622(3) is silent as to retroactivity, it

does not apply retroactively. And because the stock purchase, the

2005 Waivers, and the 2009 Ratifications all occurred prior to the

passage of the amendment, section 622(3) does not apply and is not

dispositive here.

III. THE DISTRICT COURT DID NOT VIOLATE OUR

MANDATE IN McLAUGHLIN I BY DECLINING TO

HOLD A FAIRNESS HEARING BECAUSE NOTHING

IN OUR OPINION PRECLUDED THE CORPORATION

FROM TAKING POST-REMAND ACTION

¶29 The replacement judge granted summary judgment in

favor of Schenk and Cookietree after concluding that the postremand corporate action resolved any issue concerning the conflict

of interest that had tainted the 2005 Waivers. McLaughlin argues

that decision was erroneous under the mandate rule. He specifically

argues that the district court was in error when it considered actions

taken by the corporation after remand instead of holding a fairness

hearing. Cookietree and Schenk argue that our remand instruction

in McLaughlin I did not preclude the district court from taking a

course of action other than a fairness hearing and in fact “specifically

authorized . . . disinterested directors’ or shareholders’ action as a

means of resolving the conflict of interest that tainted the 2005

Waivers.” We agree with Cookietree and Schenk.

¶30 There was nothing in our McLaughlin I opinion forbidding

Cookietree from attempting to remedy the defects in the 2005

Waivers using procedures available under then-applicable law and

its corporate governance documents. The disinterested Board and

the disinterested shareholders were therefore free to act, and if they

were successful in ratifying the 2005 Waivers, then our order for a

fairness hearing would necessarily be moot. Thus, the district court

did not violate our remand order when it considered the validity of

other avenues for resolving the nontransaction conflict of interest

created by the 2005 Waivers. We therefore address the post-remand

corporate action below.
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Opinion of the Court

1

 In McLaughlin I, we held that, as a matter of law, the provisions

in the Corporation Act addressing conflicting interest transactions

also extend to nontransaction conflicts of interest, like the one at

issue here. McLaughlin v. Schenk, 2009 UT 64, ¶ 37, 220 P.3d 146.

10

IV. SUMMARY JUDGMENT WAS PROPER BECAUSE

THE 2009 RATIFICATION BY THE BOARD MOOTED 

THE NEED FOR A FAIRNESS HEARING

¶31 McLaughlin argues that summary judgment was improper.

Specifically, he argues that the post-remand actions by the Board

and shareholders could not be effective as a matter of law because

there remained disputed issues of fact as to the adequacy and

fairness of the information provided to the disinterested director.

We agree with Cookietree and hold that the 2009 Ratification by the

Board of Directors resolved any conflict of interest problem,

rendering summary judgment appropriate.

¶32 Following our remand in 2009, Cookietree’s three directors,

Greg Schenk, Harold Rosemann, and David Rudd, met to attempt to

ratify the 2005 Waivers. “Prior to the meeting, David Rudd analyzed

and reviewed documentation containing all of the material facts

concerning the [s]tock [s]ale and the 2005 Waivers, including, but not

limited to, the 2005 Waivers themselves, the 1991 Shareholders’

Agreement, Cookietree’s financial statements and other financial

information, and the McLaughlin decision.” Schenk and Rosemann

abstained from voting due to conflicts of interest. Rudd alone then

voted to ratify the 2005 Waivers and to presently waive the stock

transfer provision of the 1991 Shareholder Agreement.

¶33 Cookietree and Schenk are correct that such a vote is

allowable under sections 850–853 of the Corporation Act, which

specifies the requirement for quorums and directors’ actions. These

sections of the Corporation Act expressly contemplate that there

may be situations where corporate directors have conflicts of interest

and specifies mechanisms for handling such circumstances.1

¶34 Under section 851, “[a] director’s conflicting interest

transaction may not be enjoined, be set aside, or give rise to an

award of damages or other sanctions . . . solely because the

director . . . has an interest in the transaction, if: directors’ action

respecting the transaction was at any time taken in compliance with

[s]ection 16-10a-852.” UTAH CODE § 16-10a-851(2)(a). Under section

852, “a quorum for purposes of action that complies with this

section” is a “majority of the qualified directors on the board of
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Opinion of the Court

11

directors,” and directors’ action is taken if there is the affirmative

vote of the majority of those qualified directors. Id. § 16-10a-852(1)-

(3). Section 850 defines a “qualified director” as 

any director who does not have either a conflicting

interest respecting the transaction, or a familial,

financial, professional, or employment relationship

with a second director who does have a conflicting

interest respecting the transaction, which relationship

would, in the circumstances, reasonably be expected

to exert an influence on the first director’s judgment

when voting on the transaction.

Id. § 16-10a-850(3). 

¶35 In this case, the parties agree that the only qualified

director on Cookietree’s Board was Rudd. Thus, Schenk and

Cookietree assert that Rudd’s vote to waive the stock transfer

provisions was sufficient.

¶36 In response, McLaughlin argues that since three board

members were present at the meeting and two were disqualified, it

was impossible to have a majority because “[o]ne of three is not a

majority.” While McLaughlin is certainly correct that one of three is

not a majority, the Corporation Act does not require a majority vote

of all directors present. It requires only a quorum, which it specifically defines as a majority vote of all “qualified directors.” Id. § 16-

10a-852(3).

¶37 McLaughlin makes much of the fact that Cookietree’s

Bylaws state that “the act of the majority of the directors present . . .

shall . . . be the act of the Board.” He argues that because only Rudd

voted to ratify the 2005 Waiver when there were three directors

present, there was no majority. But this provision of the Bylaws

simply restates the more general provision of the Corporation Act

relating to quorums and voting. See Id. § 16-10a-824(3) (stating that

“the affirmative vote of a majority of directors present is the act of

the board of directors”). Thus, it is not this section, but rather

section 852, which provides the more specific requirements related

to conflicted situations. Thus, when dealing with conflicts of

interest, it is section 852 that fills in any potential gaps in a corporation’s articles and bylaws.

¶38 Under the circumstances presented here, the only qualified

director was Rudd. As the sole disinterested director, Rudd’s vote

in favor of the 2009 Ratification constituted a majority of the
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Opinion of the Court

12

“qualified” directors entitled to vote. In fact, section 852 clearly

provides that “[d]irectors’ action that otherwise complies with this

section is not affected by the presence or vote of a director who is not

a qualified director.” Id. § 16-10a-852(3). Here, the only qualified

board member ratified the transfers. And under section 851(2) of the

Utah Code, once director action is taken to ratify a conflicted

transaction or “nontransaction,” it “may not be enjoined, be set

aside, or give rise to an award of damages or other sanctions” as a

matter of law.

¶39 McLaughlin makes much of the “adequacy of the disclosures made to” Rudd. He argues that

Mr. Rudd did not know and still does not know

material pieces of information which would allow him

to evaluate the circumstances and fairness of the

disputed stock transfer. For example, he does not

know what consideration was paid for the disputed

shares in 1999 or whether the provisions of the Shareholders Agreement setting forth how shares were to be

valued were followed in 1999. He does not know how

many shares Sam and Kim McLaughlin . . . would

have been able to acquire in 1999, had they been given

the opportunity or the value of those shares in 2010

compared to 1999. . . . He has never talked to Anna

Schenk, the seller of 545,200 shares. He has never

talked to Sam McLaughlin, the shareholder who

challenged the transaction. He has never talked to

Greg Schenk, the buyer, about the transaction. . . .

There was no counter-opinion contained in the Disclosure Statement [provided to shareholders]. The

document was drafted by litigation counsel and

therefore subject to a reasonable inference that it was

advocacy, not information. The Disclosure Statement

was single spaced, rambling[,] and confusing to read.

¶40 McLaughlin’s alleged factual disputes about Rudd’s

knowledge regarding the stock transfers are legally irrelevant. There

is nothing in the Corporation Act or the Bylaws requiring that

qualified directors have a perfect knowledge as to all matters on

which they cast a vote. The only requirement is that they be

disinterested and that the conflicted director disclose “the existence

and nature of the conflicting interest . . . and all facts known to the

director respecting the subject matter of the transaction that an

ordinarily prudent person would reasonably believe to be material
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Opinion of the Court

13

to a judgment about whether or not to proceed with the transaction.”

Id. §§ 16-10a-850(4), 16-10a-852(3). And McLaughlin does not even

attempt to argue that Rudd was conflicted.

¶41 The 2009 Ratification resolved any conflict of interest

problem with the transfer of shares to Schenk. Summary judgment

was therefore proper.

V. BECAUSE THE 2009 RATIFICATION BY THE BOARD

DISPOSES OF THE CASE, WE DECLINE TO ADDRESS

THE 2010 SHAREHOLDER VOTE

¶42 Because the 2009 Ratification by the Board mooted the

need for a fairness hearing and completely resolved any conflict of

interest problem, questions regarding the validity of the 2010

shareholder vote are moot. We therefore decline to address them. 

CONCLUSION

¶43 We hold that the district court did not violate the law of the

case doctrine. Under that doctrine, it remained free to reconsider an

issue it had previously decided. We additionally hold that the

district court did not violate our mandate in McLaughlin I. There

was nothing in McLaughlin I to prohibit the corporation from taking

post-remand action. Although the holding in McLaughlin I relating

to shareholder fiduciary duties has been superseded by statute,

because the statute is not retroactive, it is not dispositive in this case.

The 2009 Ratification by the Board of Directors mooted the need for

a fairness hearing by completely resolving any conflict of interest

problem. We therefore affirm the summary judgment entered by the

district court.