Joy v. North,

692 F.2d 880 (2d Cir. 1982)

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Nature of the Case

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Facts

The gist of the action is that Ds violated their duty of care in allowing Citytrust to make a series of loans to Katz Corporation for the construction of an office building. Citytrust was dominated by CEO, North. After the derivative action was brought the board appointed a special litigation committee to make a recommendation whether the action should be dismissed. The committee recommended that the suit be dismissed as to the outside defendants and that settlement be sought for the inside defendants. Summary judgment was granted, and the suit as to outside defendants was dismissed. The judge applied the standard limiting judicial review of the recommendation of a special committee to its good faith, independence and thoroughness.