Seidman v. Clifton Savings Bank, S.L.A., 205 N.J. 150 (2011). Under the business judgment rule, there is a rebuttable presumption that good faith decisions of a corporate board of directors are valid and not subject to attack by shareholders, absent fraud, self-dealing or unconscionable conduct. This case involved a challenge to the application of the business judgment rule, as well as an assertion that the defendant bank had engaged in corporate waste. In an opinion by Justice Rivera-Soto, the Supreme Court rejected the claim of corporate waste and reaffirmed the business judgment rule.
The decision is most notable for its encyclopedic discussion of the business judgment rule, its origins, and its rationale. That is perhaps not surprising, given Justice Rivera-Soto’s background in corporate law, including as general counsel of the entity that operated one of Atlantic City’s casinos. Among other things, the Court reiterated that Delaware law has been and continues to be helpful to New Jersey courts in analyzing corporate law issues of many types. Indeed, Delaware caselaw provided the underpinning for New Jersey’ business judgment rule.
One seeming oddity in the Court’s opinion is its consistent use of the term “Chancery Court” to describe the court in which the trial in this case occurred. Prior to the 1947 Constitution, the court of chancery was known as the Chancery Court. Since that time, however, it has been called the Chancery Division of the Superior Court. It is not clear why the Court used the term “Chancery Court” here.