Reference no: EM131621170

Klinicki and Lundgren incorporated to form an air taxi service known as Berlinair , Inc. Each of them owned one-third interest in the corporation. The final third was owned by Lelco , Inc., a company owned by Lundgren. In his capacity as pres i dent of Berlinair , Lundgren learned that the Berlinair Flug Ring (BFR), a business association of Berlin's travel agents, was looking for an air charter service.

Lundgren incorporated a new corporate entity called Air Berlin Charter (ABC). ABC then negotiated an air charter contract with BFR. Klinicki brought suit, demanding that Lundgren reimburse Berlinair for any profits made by ABC on the BFR contract. Was this a direct or derivative suit? Explain.

Should the business judgment rule or the fairness rule be used by the court to measure Lundgren's pe r formance? Explain. Who should have won the suit?