Can A Company Sue It's Board of Directors?

To answer that questions, one only needs to look at real-life examples of the business world. Right here in Denver parent company of the Denver Post, MediaNews Group, put its neck out there and voiced its outright opposition to Randstad North America Inc.’s $429 million purchase of Monster Worldwide Inc.

MediaNews’s Senior Vice President Joe Anto wrote a letter to Monster stating that Randstad’s $429 million offer for the company was too low. MediaNews owns approximately 11.6 percent of Monster’s stock. Additionally, Anto claimed Randstad’s “$3.40 per share deal would represent the textbook definition of selling at the bottom.”

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Additional Transaction Details and Allegations of the Monster Acquisition

The following transaction details and allegations of the acquisition of Monster by Randstad were collected from media reports:¹

• MediaNews claimed Monster’s share price could go as high as $8 per share within 18 months following the sale.
• “(Monster’s shares) woefully underperformed versus its peers and the market over any relevant period of time,” Anto stated in a letter to Monster’s board.
• As a result of the undervalued purchase and to reduce expenses, MediaNews reported that Monster could cut anywhere from 1,600 to 3,700 jobs to try and recoup $136 million.
• The letter to the board members also claims that Monster has too many layer of management and support, as well as too large of a sales force.
• Anto alleged that Monster is in too many money-losing international operations

When is it Appropriate to Sue a Board of Directors?

Obviously, board of directors of any company wield quite a bit of authority over the company operations, and they are beholden to shareholders. Shareholders represent partial ownership stake in those companies, and when the board of directors makes poor business decisions the shareholders have every right to display their disdain and possibly even take legal action to correct any infraction.

Here is a list of fiduciary duties that boards of directors are typically subject to:

• Board of directors have a duty of care they must exemplify when managing company or corporate affairs and assets.
• Board of directors have a duty of loyalty to avert undisclosed conflict of interest.
• Individual board members cannot undertake actions for self-profit on behalf of the company.
• Board of directors should also never take advantage of business opportunities as a result of their relationship to the company/corporation.

Contact a Denver Business Attorney at Downey & Associates, PC

Has your board of directors taken an action that either profited its members or unknowingly hurt the bottom line of your company or corporation? If so, you can count on a Denver Business Attorney with Downey & Associates, PC. Since 1983, Thomas Downey and the legal team at Downey & Associates, PC, have been exhibited exceptional legal representation for their clients in all manner of business-related matters, including contract negotiations, workplace accidents, and corporate conflicts.

For a free, no-hassle consultation about our legal services, please call our Denver business attorney today at (303) 647-9399 or by emailing us using the contact form on this page.

From our law offices in Englewood, we serve clients throughout Colorado and the U.S.

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¹“Denver Post parent company vehemently opposes Randstad’s purchase of Monster” published in Denver Business Journal, Sept. 2016.