Corporations Practice Exams #25.

Dinaco is a manufacturing company whose stock is traded on the New York Stock Exchange. Women on the March (WOM) is a nonprofit corporation organized by women employees of Dinaco. On March I, 1973, Dinaco's board of directors, by an 8 to 1 vote, rejected a request by WOM that Dinaco revise its personnel and promotion policies to comply with a recently enacted federal statute granting equal employment rights to women. X, the dissenting director, told the board that a carefully documented study prepared by WOM demonstrated that Dinaco was not complying with the statute and that the statute grants treble damages to employees who have been the victims of discrimination.

A suit was brought by WOM against Dinaco on behalf of all women employees of Dinaco to recover damages for violations of the equal employment rights statute. In January 1974, a verdict for $2,000,000 was rendered in that suit against Dinaco and in favor of its women employees for violations of the statute after March 1, 1973. The verdict was trebled by the court and judgment entered against Dinaco for $6,000,000. The judgment has been paid by Dinaco.

In February 1974, WOM made its first purchase of shares of Dinaco stock. WOM now consults you and wants to know:

(1) Can it bring an action on behalf of Dinaco against all Dinaco directors in of office on March 1, 1973, and recover from them the damages paid by Dinaco, and

(2) Can it require Dinaco to insert in the proxy statement for the next annual meeting of shareholders the following proposals: 'That the officers and directors of Dinaco be directed (a) to take affirmative action over and above that required by law to redress wrongs resulting from past discriminatory employment practices, and (b) not to pay any bonus to any director, officer or employee who was responsible for the adoption or administration of past discriminatory employment practices'?

What advice would you give WOM? Discuss.

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