This is the case which is often cited to establish that the corporation's primary duty is to its shareholders, and that this duty overrides all others.
EDIT: never mind, this is already discussed in the article. Sorry.
Fans of shareholder primacy almost always cite the nearly century old case of Dodge v. Ford as their primary legal support for the idea of shareholder primacy. But Dodge v. Ford was really a shareholder-versus-shareholder dispute in a close corporation.
Similarly, the second case typically cited—Revlon v. Mac- Andrews & Forbes Holdings, Inc., is also legally irrelevent. In Revlon, the Delaware Supreme Court held that an end-game situation where the directors of a publicly traded firm had decided to sell the company with a controlling shareholder—in effect, terminating the corporation’s existence as a public firm—the board had a duty to maximize shareholder wealth.
But subsequent Delaware cases have made it clear that if the directors of the firm decide not to sell at all, or prefer to do a stock-for-stock exchange with another public company, the infamous Revlon doctrine no longer applies.
For example, in Paramount Communications, Inc. v. Time, Inc., the Delaware Supreme Court upheld directors’ right to “just say no” to a hostile offer, even though the offer was at a premium over the market price for the company’s stock.
California just created a whole new class of corporation for people who wanted a different standard of behavior, which could include social and environmental concerns.
I think it was unnecessary; California should have just made a statutory affirmation that any corporation may choose whatever goals its owners decide.
There's a reasonable argument to be made that's already the case, and the opposing idea – that 'maximizing profits' or 'maximizing shareholder value' is a legal requirement – is just a persistent misunderstanding.
I think such a misunderstanding is fed by some on both the right and left. On the right, some want to celebrate a singular, elegant rule for moving all decisions into an economic model. On the left, some want to smear the very idea of corporations as amoral at the core.
Neither view respects the idea of a corporation as a voluntarist coordination mechanism. A corporation is its shareholders' property, and just like any other property, may be deployed in any legal manner the owners see fit.
The article mentions that case, saying that while it hasn't been explicitly overruled, the decision is now generally ignored by courts and not cited as precedent. (It was also only a Michigan decision, binding only on Michigan courts.)
http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company
This is the case which is often cited to establish that the corporation's primary duty is to its shareholders, and that this duty overrides all others.
EDIT: never mind, this is already discussed in the article. Sorry.