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Miller v. American Telephone & Telegraph Co.

United States Court of Appeals for the Third Circuit
507 F.2d 759 (3d Cir. 1974)



Shareholders (plaintiffs) of American Telephone & Telegraph Co. (AT&T) brought a derivative action against the corporation and most of its directors. The complaint alleged that AT&T failed to collect a $1.5 million debt owed by the Democratic National Committee (DNC) for services provided at the 1968 Democratic convention. The shareholders claimed that, in addition to wasting corporate assets, the failure to diligently pursue collection violated federal communications and campaign finance laws; specifically, ignoring the debt allegedly constituted an illegal contribution to the DNC. The trial court dismissed the complaint, finding that collections practices are protected by the business judgment rule absent allegation that the conduct was “plainly illegal, unreasonable, or in breach of fiduciary duty.” The shareholders appealed.

Rule of Law


Holding and Reasoning (Seitz, C.J.)

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