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Question
Ted is the president of Soprano Corporation (SC). Ted decided to have SC manufacture large, gas-guzzling SUV automobiles just before gasoline prices rose dramatically. As a result, SC lost billions of dollars. The shareholders of SC want to sue Ted for this bad decision that cost them billions. However, Ted had made a reasonable investigation before making this decision, he had a rational basis for it, and he had no conflicts of interest regarding this decision. What would be the probable outcome if the shareholders file a suit?
A. Ted is liable under the vicarious liability rule.
B. Ted is liable under the ultra vires rule.
C. Ted is not liable under the business judgment rule.
D. Ted is not liable under the corporate protection rule.
Answer
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