How do Massachusetts Courts apply the strict Donahue fiduciary standard to corporate opportunities?
When the greedy uncle Demoulas ran his supermarket chain so as to obtain most of the benefits of the businesss growth for himself, his deceased brothers family as shareholders sued. In 1997 in Demoulas v. Demoulas Super Mkts. the SJC sternly applied the Donahue standard, stating that “the directors of a corporation stand in a fiduciary relationship to the corporation. Durfee v. Durfee & Canning, Inc., 323 Mass. 187, 196. They owe to the corporation both a duty of care and, more significantly for this case, a paramount duty of loyalty. “They are bound to act with absolute fidelity and must place their duties to the corporation above every other financial or business obligation. . . . They cannot be permitted to serve two masters whose interests are antagonistic.” Spiegel v. Beacon Participations, Inc., 297 Mass. 398, 410-411 (1937). In the case of a close corporation, which resembles a partnership, duties of loyalty extend to shareholders, who owe one another substantially the same duty
