In re Citigroup Inc. Shareholder Derivative Litigation

In re Citigroup Inc Shareholder Derivative Litigation, 964 A 2d 106 is a US corporate law case, concerning the standard under Delaware law for the duty of loyalty among directors' duties.

Facts

Citigroup had losses from subprime lending due to the subprime mortgage crisis and the 2008 financial crisis. Former CEO Chuck Prince had said "as long as the music is still playing you have to get up and dance". Shareholders of Citigroup claimed that the directors had breached their duty of care by failing to monitor the bank's risk profile and failing to control risk taking by the bank. They alleged there were "red flags" from public statements like Paul Krugman in the NY Times saying there were "feverish stages of a speculative bubble" and Ameriquest Mortgage closing 229 offices and dismissing 3800 employees.

Chancellor Chandler held that there was no liability without bad faith. He repeated the In re Caremark International Inc. Derivative Litigation standard of 'utter failure' establishing a lack of good faith, which was approved further in Stone v. Ritter. As he said, the business judgment rule,