Iowa Supreme Court Decisions Favors ABI Amicus Position

In May of 2019 Employers Mutual Company (EMC) reorganized, accepting an offer to “go private”. A minority shareholder filed suit against individual directors of the board for failing to uphold their fiduciary duty to shareholders. Those directors asked the Iowa Business Specialty Court, which was developed by the District Court in 5C, to dismiss the case as the individual directors claimed they were shielded by such lawsuits by Iowa law. That Court instead allowed the case to move forward. The directors then asked the Iowa Supreme Court to intervene. Concurrently, ABI and the Iowa Business Council filed an amicus curiae brief supporting the director’s filing before the Supreme Court as this was a first instance in which the Court was asked to interpret the director shield of a model business act adopted by Iowa. Arguments were heard March 23 of this year. On May 27th the Court issued a ruling supporting the directors.

This was an important first test at the Iowa Supreme Court interpreting a director’s shield provision of a recently adopted model business act in Iowa and was closely watched by the greater business community. The Supreme Court ruling is here.