FDIC v. Loudermilk, et al.—Georgia’s Business Judgment Rule (and Its Limitations)

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On July 11, 2014, the Georgia Supreme Court issued its highly anticipated decision in FDIC v. Loudermilk, addressing squarely the extent to which Georgia’s business judgment rule shields bank directors and officers from ordinary negligence claims. Although there is a lot to unravel in Justice Blackwell’s 34-page opinion, a few things are clear:

• First, the business judgment rule is alive and well in Georgia for bank and non-bank directors and officers, although the scope of the rule’s protection is not as robust as some prior Georgia Court of Appeals cases had suggested.

• Second, it is now more important than ever for Georgia directors and officers to carefully consider and document the process by which business decisions are reached.

• Third, Georgia’s business judgment rule appears to be less protective than the comparable rule in Delaware.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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