Connection lost
Server error
SMITH v. VAN GORKOM Case Brief
Why Top Law Students (And Those Aspiring to Be) Use LSD+ Briefs
Let's be real, law school is a marathon. Our exclusive Flash-to-Full case system is designed by Harvard Law School and MIT grads to match your pace: Quick summaries when you're slammed, detailed analysis when you need to go deep. Only LSD+ offers this kind of flexibility to genuinely fit your study flow.
Adaptive Case Views
Toggle between Flash, Standard, and Expanded. Get what you need, when you need it.
Exam-Ready IRAC Format
We deliver the precise structure professors look for in exam answers.
Complex Cases, Clarified
We break down dense legal reasoning into something digestible, helping you grasp core concepts.
Case Brief Summary & Legal Analysis
tl;dr: A corporate board approved a cash-out merger after a two-hour meeting, relying on the CEO’s proposed price without an independent valuation. The court found the directors grossly negligent, breaching their duty of care, as their decision was not reasonably informed, and held them personally liable.
Legal Significance: This landmark case established that the protections of the business judgment rule are contingent upon directors making a reasonably informed decision. It defined the standard for a breach of the duty of care as gross negligence, emphasizing the importance of procedural diligence in board decision-making.
SMITH v. VAN GORKOM Law School Study Guide
Use this case brief structure for your own legal analysis. Focus on the IRAC methodology to excel in law school exams and cold calls.
Case Facts & Court Holding
Key Facts & Case Background
Jerome Van Gorkom, the Chairman and CEO of Trans Union Corporation, sought to arrange a sale of the company to address issues with unusable investment tax credits. Approaching retirement, Van Gorkom unilaterally determined a sale price of $55 per share, not based on a valuation of the company’s intrinsic worth, but on a calculation of what would be feasible for a leveraged buyout (LBO). He secretly negotiated a cash-out merger proposal with acquirer Jay Pritzker. Van Gorkom then called a special board meeting on short notice, without disclosing its purpose beforehand. During the two-hour meeting, the board heard a 20-minute oral presentation from Van Gorkom. No valuation study was presented, nor was a fairness opinion from an investment banker obtained. The company’s CFO stated the $55 price was “at the beginning of the range” of a fair price, but the board did not probe this statement. The directors, a majority of whom were sophisticated outsiders, approved the merger based almost entirely on Van Gorkom’s presentation and the significant premium over the market stock price. The directors did not read the merger agreement before Van Gorkom executed it. Subsequent amendments and a ‘market test’ period were found to be restrictive and ineffective. Shareholder approval was later obtained via proxy statements the court found to be materially deficient.
Court Holding & Legal Precedent
Issue: Did the board of directors breach its fiduciary duty of care by approving a cash-out merger based on a hastily called meeting and without adequate information regarding the company’s intrinsic value, thereby forfeiting the protection of the business judgment rule?
Yes. The board of directors breached its fiduciary duty of care. The Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariat
IRAC Legal Analysis
Complete IRAC Analysis for Higher Grades
IRAC (Issue, Rule, Analysis, Conclusion) is the exact format professors want to see in your exam answers. Our exclusive Flash-to-Full briefs combine holding, analysis, and rule statements formatted to match what A+ students produce in exams. These structured briefs help reinforce the essential legal reasoning patterns expected in law school.
Legal Issue
Did the board of directors breach its fiduciary duty of care by approving a cash-out merger based on a hastily called meeting and without adequate information regarding the company’s intrinsic value, thereby forfeiting the protection of the business judgment rule?
Conclusion
Smith v. Van Gorkom established that director liability can arise from a Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur
Legal Rule
The business judgment rule is a presumption that directors acted on an Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deseru
Legal Analysis
The Delaware Supreme Court determined that the board's conduct did not meet Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute
Flash-to-Full Case Opinions
Flash Summary
- The Trans Union board breached its fiduciary duty of care by