A quarterly summary and brief analysis of significant decisions issued by the Massachusetts Superior Court Business Litigation Session. A service of O’Connor, Carnathan and Mack LLC.		  

November
2004

Volume 1
Number 2
Page 4
 

Summarizing opinions from July 1, 2004 through
Sept. 30, 2004


Purported Amendment to the Big East Conference Constitution was Invalid
 

 
 


 


 


 

 

 

 


 
     

O  T  H  E  R      D  E  C  I  S  I  O  N  S  :

Trustees of Boston College v. Big East Conference, 2004 Mass. Super. LEXIS 298
(August 18, 2004, 03-4818 BLS) (Van Gestel, J.).
     

On October 12, 2003, Boston College announced that it was withdrawing its football team from the Big East Conference to join the Atlantic Coast Conference. Just six days earlier, the members of the Big East had purported to amend the Big East Conference Constitution to increase the penalty for withdrawal from $1 million to $5 million, and increase the required advance notice from 12 months to 27 months. Boston College had previously indicated that it supported this amendment to the Constitution, but when the Conference Chair called for a vote by facsimile, Boston College (and Notre Dame) abstained.

 
 


 

 


 



 

 
Boston College sought a declaratory judgment that the purported amendment was invalid for failure to follow the procedure required by the Constitution. The Court interpreted the Constitution following fundamental principles of contract interpretation and agreed with Boston College. Because Article VIII of the Constitution expressly provided that the Constitution could be amended at a meeting, the vote-by-facsimile procedure employed was invalid, even though a separate provision of the Constitution permitted the members to conduct business by a mail, fax or telephone vote at the request of the Chair. “If two provisions of a contract are in conflict, the specific provision controls over the more general provision.” Id. at *22.

 


 


 



 

 


 

 


 
 
     
     
 


Pre-Suit Shareholder Demand Was Not Excused As Futile
 

 

 

 

 

 

 

 

 



 

Demoulas v. Demoulas Super Markets, Inc., 2004 Mass. Super. LEXIS 286
(August 2, 2004, 03-3741 BLS) (Van Gestel, J.).
     

In yet another chapter of the on-going Demoulas litigation saga, the Court rejected Plaintiff Arthur S. Demoulas’s contention that the Company’s board of directors was subject to Defendant Arthur T. Demoulas’s controlling interest, such that a pre-suit demand before bringing a derivative action would have been futile.

Arthur T. asked that the corporation waive its right of first offer so that he could transfer his shares to his wife and ultimately into an irrevocable voting trust. His purpose was to free himself of fiduciary duties that would prevent him from pursuing other business interests. The Company’s board initially rejected the request. Then after a subsequent meeting, presentation by Arthur T., and



 

 

 

 

 

 

 

negotiation of an agreement imposing some restrictions on Arthur T., the Board granted the request. Arthur S. brought a derivative action against Arthur T. and the Board.

Following Houle v. Low, 407 Mass. 810 (1990), the Court held an evidentiary hearing and concluded that the Company directors had proven that they were not interested, biased or under Arthur T.’s controlling interest. Quoting a recent Delaware Chancery Court decision, the Court formulated the standard to be applied as “whether a director is, for any reason, incapable of making a decision with the best interests of the corporation in mind.” Id. at *47 (quoting In re Oracle Corp. Derivative Lit., 824 A.2d 917, 938 (Del. Ch. 2003).

 

 


 

 

 

 

 

 


 
 
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