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by dragonwriter
1696 days ago
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No they don’t, except maybe in Michigan (Dodge v. Ford is a Michigan Supreme Court ruling from 1919, applying Michigan state law; as your own article states: “In the 1950s and 1960s, states rejected Dodge repeatedly”, so assuming that Dodge v. Ford represents anything other than a quirk of Michigan law [and potentially an outdated one even there] is...unfounded on the evidence you have provided.) |
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To summarize the case, Ford was sitting on a huge amount of cash. Some shareholders, in particular the Dodge brothers, wanted it paid out as dividends. Ford said no, and specifically:
"My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes"
Had he said less, or even nothing, that would have been fine. Management is entitled to make whatever business-related decisions they see fit (the "business judgement" rule). If the Dodges disagree with those decisions, they can sell their shares and reinvest the money elsewhere.
Had Ford said more "...and we think doing so will grow the market for our cars", "help us retain our skilled and motivated workforce" or something else vaguely related to success of Ford Motor Company, that also would have been fine.
Unfortunately, what Ford said fell into a gap where it was clear that what he was doing was not a business decision; he was using the shareholders' money for his own personal ends, charitable though they may be. Shlensky v. Wrigley is an interesting comparison. The Cubs refused to have night baseball games due to some...idiosyncratic beliefs about the "true nature" of the sport. This reduced their potential profits, but was nevertheless okay because chasing after the "purists" OR going for mass-market appeal are both reasonable business decisions.
(This is not my argument; it's made in this article: https://digitalcommons.law.yale.edu/fss_papers/1384/)