Case Brief

Topics: Pleading, Appeal, Cause of action Pages: 2 (400 words) Published: February 2, 2013
Bezirdjian v. O'Reilly
Court of Appeal of California, First District,
183 Cal.App.4th 316, 107 Cal.Rptr.3d 384
March 30, 2010, Rendered
Bezirdjian filed a shareholder derivative action against current and former members of the board of directors of Chevron Corporation, alleging breaches of fiduciary duty, gross mismanagement, constructive fraud and waste of corporate assets in connection with illicit payments Chevron allegedly made to Saddam Hussein in exchange for Iraqi oil from 2000 to 2003. The allegations of the complaint were based on an article published in May 2007 in the New York Times. Chevron never defended the alleged payments to Saddam Hussein, essentially asked the Court to assume the truth of those allegations, and yet obtained an order dismissing the case without ever having to provide plaintiff with any documents, information or testimony regarding any of plaintiff's claims. Chevron responded to the complaint by:

* forming a committee of the board composed of three directors who were not on the board when the alleged payments to Saddam Hussein were made, * granting the committee the power to investigate the allegations of the complaint and resolving that the committee's conclusions would be binding on the board without further review, * obtaining a stay of the litigation to permit the committee to perform its investigation, and * moving for judgment in its favor solely on the basis of the committee's recommendation, as reported to plaintiff in a letter from Chevron's attorney. The letter stated that the Committee and its counsel interviewed 34 individuals, reviewed over 150,000 pages of documents, and "determined it not to be in the best interests of Chevron or its stockholders to pursue the claims asserted" in Bezirdjian's complaint. Issue

Does the committee of the board failed to act independently, reasonably and in good faith or not.

No. The court granted Chevron's motion for judgment...
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