eBay v Newmark hinges very much on the specifics of the contract, and how it was structured to create this sort of duty on Craigslist's part to eBay, rather than being some general bit of case law that codifies the tired — and wrong — "'fiduciary duty' == 'maximizing shareholder profits'" trope.
We can have a great, and factually-based discussion on whether Newmark, et al violated their contractual duty, under the terms of that specific contract; extrapolating from that to "but fiduciary duuuuty!" (for these narrowly-construed notions of "fiduciary duty") is unsupported by the facts, or the case law.
Dodge v Ford is also, afaik, generally considered a weak precedent for the notion — which was specifically articulated by the state supreme court, and therefore doesn't bind peer state courts, or any Federal courts. ("Persuasive precedent" != "binding precedent".)
Several states' courts have also rejected the same argument in later cases. "The general legal position today is that the business judgment that directors may exercise is expansive. Management decisions will not be challenged where one can point to any rational link to benefiting the corporation as a whole." [1]
In eBay v Newmark, the full quote you're looking for:
"[Newmark and Buckmaster] did prove that they personally believe craigslist should not be about the business of stockholder wealth maximization, now or in the future. As an abstract matter, there is nothing inappropriate about an organization seeking to aid local, national, and global communities by providing a website for online classifieds that is largely devoid of monetized elements. Indeed, I personally appreciate and admire [Newmark's and Buckmaster's] desire to be of service to communities. The corporate form in which craigslist operates, however, is not an appropriate vehicle for purely philanthropic ends, at least not when there are other stockholders interested in realizing a return on their investment. Jim and Craig opted to form craigslist, Inc. as a for-profit Delaware corporation and voluntarily accepted millions of dollars from eBay as part of a transaction whereby eBay became a stockholder. Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders."
I think the money quote in eBay v Newmark is more like:
"Throughout this dispute, I have repeatedly read and listened to what look and sound like breach of contract arguments, which eBay uses not to prove Jim and Craig breached a contract, but rather to prove Jim and Craig breached their fiduciary duties. This has been an odd exercise, and I admit I am puzzled by eBay’s decision not to bring a breach of contract claim or, more promising perhaps, a claim for breach of the implied covenant, considering eBay expended significant effort arguing that the 2008 Board Actions violated both the technical provisions and the spirit of the SPA and the Shareholders’ Agreement. The fact remains, however, that eBay asserted neither a breach of contract claim nor a claim for breach of the implied covenant."
The presiding judge in this very case — whom an article I read on it described as, "one of the most influential corporate jurists in the country" — doesn't think eBay's theory of the case is the right one. It's the only one they brought (to the exclusion of the arguments he thought more apt), though, so he can't rule on them.
That is: eBay structured their minority shareholder agreement with Newmark, et al, and then their case over breach of that agreement, to make it look like a fiduciary duty claim, without offering the court a more accurate alternative.
It's, IMO, a bit specious to take something that was structured specifically so as to be construed in a way that is at odds with the reality of the situation — as specifically cited by the most relevant authority possible, in context — as evidence of the conclusion they (eBay) want you to reach.
EDIT: Though not entirely apt, it's a bit like a prosecutor bringing only a murder charge against a defendant, and not offering the jury the choice to convict instead on a "lesser included offense" like manslaughter, or negligent homicide, or something. Yes, there's clearly a tort in play here, but eBay's insistence that it's this specific tort doesn't make it so.
The court wasn't backed into a corner. If it wasn't a breach of fiduciary duty the case would have been won by the Newmark -- they can't just say, "They did something wrong so we have to punish them somehow, and you only gave us one option." That isn't how the law works.
The section you quoted makes clear that whether or not it was a breach of contract, it certainly was a breach of fiduciary duty because those duties were the sole basis of the complaint.
Precisely because eBay, knowing they were buying into a frugal-first operation like Craigslist, specifically structured the deal such that it was owed this duty. That Craig and Jim took the money under those terms is on them, as is their failure to honor the terms of the contractual duty they owed eBay for its minority stake, specifically including all the ways they tried to weasel out of the deal — for which eBay did have a legitimate cause.
From what I've read, if eBay had not bought that stake under those specific terms, there wouldn't have been a case here. (Or at least not this case.)
Again, IANAL, but I think that makes it more of a contractual duty case. A dog wearing a bill and wings, with a collar that quacks, is apparently a duck — if your lawyer is good enough…
So "Those standards include acting to promote the value of the corporation for the benefit of its stockholders" doesn't read the same to me as must maximize shareholder value at all legal cost.
There's a lot of space between incorporating as a for-profit corporation and then not seriously pursuing profits and the trope that if some action is not maximizing profits right now, you're not allowed to do it. For example, corporations do routinely make charitable contributions.
It's not a black and white issue. Companies, including Salesforce, do things like give money to charities. This isn't any kind of violation because on their investor relations page, they talk about the values of the company which includes giving to charities and upholding high ethical standards.
If Benioff starts talking about the importance of privacy and can make an argument that it aligns well with the ethical standards of the company, then he's probably safe.
He doesn't have to always do the thing that's most profitable as long as he isn't straying outside of the guidelines that have been set for investors.
Giving money to charities is still a profit-based activity, in that it requires generating profit to be able to give some away [0].
The issue that seems to be at stake with eBay vs. Newmark is that a company seems to be prevented from leaving a significant amount of possible profit on the table in order to provide direct amorphous distributed good - in craigslist's case the common person not having to be subject to (graphical) psychological manipulation when viewing classified ads.
A contrasting example is of Bill Gates's modern philanthropy efforts. It's certainly great that he's using that Microsoft lucre to make the world a better place. But IMHO it would have made the world an even better place if Microsoft had relaxed their business practices and not put us all through hell in the 90s.
The first approach leaves wealth and self-determination at the edges, while the latter suffers from the standard problems of top-down redistribution.
Practically, the root of the problem in the craigslist case is that they incorporated as for-profit and simply had an informal goal to begin with. A single stakeholder then sold their share to a purely profit-interested entity, which used that minority share to push craigslist down their own desired path (in addition to siphoning trade secrets). It seems like the only thing craigslist could have done is to formalize their philosophy-of-value when eBay wished to buy the shares, or ideally prior.
[0] Which allows the charity to be quantified. Presumably a shareholder would have a fiduciary duty claim if the board decided to give away 100% of profits.
The previous poster wrote about a duty to "optimize for maximum benefit for the shareholders ". What does this even mean? Dividends? Stock price? Longevity of company? It's way too vague to be meaningful.
