Court Opinion

ID: 9427557
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:21:11.25074+00
Date Added: 2024-06-11T17:23:08.027528
License: Public Domain

Mr. Justice Stewart,
with whom Mr. Justice Powell joins, concurring in the judgment.
The Investment Company Act of 1940 and the Investment Advisers Act of 1940 are silent on the question whether the disinterested directors of an investment company may terminate a stockholders’ derivative suit. The inquiry thus must turn to the relevant state law. I cannot agree with the implications in the Court’s opinion, ante, at 480, 481-482, 486, that there is any danger that state law will conflict with federal policy.
The business decisions of a corporation are normally entrusted to its board of directors. A decision whether or not a corporation will sue an alleged wrongdoer is no different from any other corporate decision to be made in the collective discretion of the disinterested directors. E. g., Swanson v. Traer, 354 U. S. 114, 116; United Copper Securities Co. v. Amalgamated Copper Co., 244 U. S. 261, 263; McKee v. Rogers, 18 Del. Ch. 81, 156 A. 191 (1931); Rice v. Wheeling Dollar Savings & Trust Co., 130 N. E. 2d 442 (Ohio Ct. Com. Pleas 1954); Goodwin v. Castleton, 19 Wash. 2d 748, 144 P. 2d 725 (1944).
On remand, the issue will be whether the state law here applicable recognizes this generally accepted principle and thereby empowers the directors to terminate this stockholder suit. Since Congress intended disinterested directors of mutual funds to be “independent watchdogs,” ante, at 484, I can see no possible conflict between this generally accepted principle of state law and the federal statutes in issue.