Master Classic business judgment rule case upholding directors’ refusal to install lights for night baseball at Wrigley Field absent fraud, illegality, or self-dealing. with this comprehensive case brief.
Shlensky v. Wrigley is a staple in corporate law courses because it crystallizes the modern business judgment rule: courts will not second-guess the substantive merits of boardroom decisions if directors act in good faith, on an informed basis, without conflicts of interest, and within the corporation’s powers. The case involved a high-profile disagreement about whether the Chicago Cubs should install lights at Wrigley Field to permit night games—an operational decision with clear profit implications and community externalities.
The court’s deference to the board’s decision, even in the face of allegations that night baseball would likely be more profitable, underscores two enduring themes. First, shareholders cannot use courts to micromanage ordinary business judgments absent fraud, illegality, or self-dealing. Second, directors may consider long-term and reputational interests—including community impact—without breaching their duty simply because a different choice might maximize short-term profits. Shlensky thus serves as a counterpoint to shareholder-primacy narratives and a foundational articulation of judicial restraint in corporate governance.
Shlensky v. Wrigley, 95 Ill. App. 2d 173, 237 N.E.2d 776 (Appellate Court of Illinois, First Dist., First Div. 1968)
Shlensky, a minority shareholder of the Chicago National League Ball Club, Inc. (owner of the Chicago Cubs), brought a derivative suit against Philip K. Wrigley and other directors. He alleged that the board’s deliberate refusal to install lights at Wrigley Field to allow night baseball constituted mismanagement and negligence that harmed the corporation’s profits and attendance, particularly since many other Major League teams hosted lucrative night games. The complaint asserted that defendants were motivated by Wrigley’s belief that baseball is a daytime sport and concerns that night games would harm the surrounding neighborhood. Shlensky sought damages and injunctive relief to compel the installation of lights and scheduling of night games. The trial court dismissed the complaint for failure to state a claim, and Shlensky appealed.
Whether a court may override directors’ decision not to install lights for night baseball—allegedly reducing profits—when there are no well-pleaded allegations of fraud, illegality, or self-dealing by the directors.
Under the business judgment rule, courts will not interfere with or second-guess the internal management decisions of corporate directors made in good faith, on an informed basis, within the corporation’s authority, and absent fraud, illegality, or conflict of interest. Directors are not strictly required to maximize short-term shareholder profits and may consider long-term corporate interests, including goodwill and community impact, so long as their decisions can be rationally related to the corporation’s best interests.
Affirmed. The complaint failed to state a cause of action because it did not allege fraud, illegality, or self-dealing; the decision not to install lights fell within the directors’ protected business judgment.
The court emphasized that corporate management is entrusted to directors, and judicial intervention is limited. Shlensky’s complaint did not allege any fraud, illegality, or conflict of interest. The defendants’ stated reasons—belief that baseball is a daytime sport and concerns for neighborhood effects such as congestion and potential reduction in property values—were not inherently improper and could plausibly relate to the corporation’s long-term interests, including goodwill and the stadium’s surrounding environment. Even assuming arguendo that night games could increase short-term profits, the court declined to substitute its judgment for that of the directors on complex, predictive business matters involving trade-offs, costs, and potential risks. The court also noted the speculative nature of Shlensky’s profit assertions: while other teams may have benefited from night games, it did not follow that the Cubs necessarily would, especially given unique local considerations. Moreover, the relief sought would require the court to direct operational policy—a task courts are ill-equipped to perform. Because no facts suggested dishonesty, self-dealing, or ultra vires conduct, and because the decision was at least rationally related to perceived corporate welfare, the business judgment rule required dismissal.
Shlensky is a canonical articulation of the business judgment rule, teaching that directors have wide latitude to make policy choices, even those arguably disfavoring short-term profits, so long as they act in good faith and without conflicts. It illustrates judicial restraint and validates directors’ consideration of long-term and reputational interests, including community impact. For students, Shlensky serves as a foil to cases like Dodge v. Ford and a foundation for understanding when courts will—and will not—second-guess board decisions.
The business judgment rule presumes directors act on an informed basis, in good faith, and in the corporation’s best interests. Courts will not second-guess the substance of their decisions absent fraud, illegality, or self-dealing. In Shlensky, the court found no such misconduct and treated the decision not to install lights as a protected business judgment.
No. Directors must act in the corporation’s best interests, which often includes profitability. Shlensky holds only that directors may consider long-term and reputational interests, including community impact, and are not compelled to choose a course merely because it may increase short-term profits.
Dodge v. Ford is sometimes read as emphasizing shareholder profit maximization, ordering dividends when a controlling shareholder refused for arguably non-corporate reasons. Shlensky, by contrast, defers to directors’ good-faith judgment about operations—here, declining night baseball—absent fraud, illegality, or self-dealing. Together, they frame the limits of judicial review: courts may intervene for abuse or oppression but otherwise defer to board discretion.
Specific, well-pleaded facts showing fraud, illegality, self-dealing, bad faith, or waste—for example, that Wrigley had a personal financial interest adverse to the corporation, concealed material facts, or acted with an intent to harm the company—could have displaced the presumption and permitted judicial scrutiny of the decision’s merits.
No. The court required only that the decision be made in good faith and be rationally related to the corporation’s interests; it did not demand proof of actual benefit. Predictive business choices are inherently uncertain, and the rule shields such judgments absent disqualifying misconduct.
Potentially, but only if the plaintiff plausibly alleged and proved fraud, illegality, self-dealing, or egregious waste, or if the board violated a clear statutory or charter mandate. Short of that, courts generally will not order specific operational policies like scheduling night games.
Shlensky v. Wrigley stands for robust judicial deference to directors’ good-faith operational decisions. By refusing to compel the installation of lights at Wrigley Field despite the plaintiff’s profit-based arguments, the court underscored that judges do not run businesses; directors do, so long as they act loyally, lawfully, and rationally.
For law students, the case is a principal exemplar of the business judgment rule in action and a reminder that corporate law tolerates managerial consideration of long-term and stakeholder-related interests. It offers a durable framework for analyzing when courts will refrain from interfering and what plaintiffs must plead to overcome deference.