Also known as: internal affair · IA · IA division · internal investigations
Written by attorneys — see sources below.
2 senses
A doctrine holding that courts lack authority to regulate private conduct occurring within a family unit. The principle recognizes a protected sphere of domestic privacy that shields routine household matters from judicial oversight or governmental intrusion.
A doctrine holding that courts lack authority to regulate private conduct occurring within a family unit. The principle recognizes a protected sphere of domestic privacy that shields routine household matters from judicial oversight or governmental intrusion.
A choice-of-law rule providing that the law of the state of incorporation governs relations among a corporation, its shareholders, directors, and officers. Matters such as stock validity, bylaws, voting rights, dividend declarations, and management structure fall within this category and are typically left to the incorporating state's courts.
Shareholders of Interlink Communications, a Delaware corporation, challenged the validity of a bylaw that staggered the board. Although suit was filed in California, the court applied Delaware law to resolve the dispute. The outcome turned on whether the bylaw complied with Delaware's corporate code.
A choice-of-law rule providing that the law of the state of incorporation governs relations among a corporation, its shareholders, directors, and officers. Matters such as stock validity, bylaws, voting rights, dividend declarations, and management structure fall within this category and are typically left to the incorporating state's courts.
Each sense below has its own examples, sources, and questions.
Ibrahim Iqbal sought a court order requiring his adult son to attend weekly family dinners. The court refused to issue any directive. It held that the scheduling of meals and other household routines constituted internal family affairs beyond judicial reach.
1 common questions
Yes. Courts generally will not regulate private conduct inside a family home or interfere with routine domestic decisions. This preserves the family's expectation of privacy in its internal affairs.
Supporting sources
Joseph Hurtado was charged by an information filed in the Superior Court of Sacramento County with the murder of Jose Antonio Estuardo. The information was in the usual form and charged the crime with technical precision and in due legal language. It was filed after the defendant had been examined and committed by a magistrate, as required by the statute. The Constitution of California, adopted in 1879, provides that offenses heretofore required to be prosecuted by indictment shall be prosecuted by information, after examination and commitment by a magistrate, or by indictment. The Penal Code of the State, adopted in 1872 and in force at the time, contained provisions authorizing every person to be proceeded against criminally by indictment or by information, and specifying that an information is an accusation in writing presented by the district attorney after preliminary examination or waiver. Hurtado moved to set aside the information on the ground that it was not found or presented by a grand jury. The motion was overruled. He was arraigned, pleaded not guilty, and was put upon his trial. The jury returned a verdict of guilty of murder in the first degree, and judgment was pronounced sentencing him to be hanged. From this judgment Hurtado appealed to the Supreme Court of the State of California, which affirmed it. He then sued out a writ of error to the Supreme Court of the United States.
View caseIsaiah Ishikawa, a shareholder of Icarus Aviation, brought a derivative suit in federal court alleging mismanagement by directors. The court looked to the law of Delaware, the state of incorporation, to decide whether demand on the board was excused. Application of that state's demand-futility standard determined whether the claim could proceed.
Petitioner brought this suit to enforce § 20(a) of the Act, 15 U. S. C. § 80a-20(a), which prohibits materially misleading proxy statements. The complaint was styled as a shareholder derivative action brought on behalf of respondent Cash Equivalent Fund, Inc. (Fund), a registered investment company, against Kemper Financial Services, Inc. (KFS), the Fund’s investment adviser. Petitioner alleged that KFS obtained shareholder approval of the investment-adviser contract by causing the Fund to issue a proxy statement that materially misrepresented the character of KFS’ fees. Petitioner also averred that she made no precomplaint demand on the Fund’s board of directors because doing so would have been futile. In support of this allegation, the complaint stated that all of the directors were under the control of KFS, that the board had voted unanimously to approve the offending proxy statement, and that the board had subsequently evidenced its hostility to petitioner’s claim by moving to dismiss. The District Court granted KFS’ motion to dismiss on the ground that petitioner had failed to plead the facts excusing demand with sufficient particularity for purposes of Federal Rule of Civil Procedure 23.1. The Court of Appeals affirmed the dismissal of petitioner’s § 20(a) claim. Drawing heavily on the American Law Institute’s Principles of Corporate Governance, the Court of Appeals adopted as a rule of federal common law the ALI’s so-called “universal demand” rule, under which the futility exception is abolished. The court noted that the Fund is incorporated in Maryland. It held that petitioner’s challenge to the court’s power to adopt the ALI’s universal-demand rule came too late to be considered. We granted certiorari, 498 U. S. 997 (1990), and now reverse.
View caseImran Iyer attempted to acquire Infinity Bank, a Delaware corporation with headquarters in Illinois. Illinois invoked its takeover statute to block the bid. The court held that the statute improperly reached internal affairs of a foreign corporation and struck it down.
MITE Corp. and its wholly owned subsidiary MITE Holdings, Inc., both Delaware corporations with principal executive offices in Connecticut, initiated a cash tender offer for all outstanding shares of Chicago Rivet & Machine Co., a publicly held Illinois corporation, on January 19, 1979, by filing a Schedule 14D-1 with the Securities and Exchange Commission. MITE offered $28 per share, approximately $4 above the prevailing market price, but did not register the offer under the Illinois Business Take-Over Act. On the same day MITE filed suit in the United States District Court for the Northern District of Illinois against Illinois Secretary of State James Edgar, seeking a declaratory judgment that the Illinois Act was preempted by the Williams Act and violated the Commerce Clause, together with temporary, preliminary, and permanent injunctive relief. Chicago Rivet responded three days later by suing in Pennsylvania to enjoin the offer under that state's takeover disclosure law, but its efforts there proved unsuccessful. On February 1, 1979, the Illinois Secretary of State notified MITE of his intent to issue a cease-and-desist order. The following day Chicago Rivet informed MITE it would file suit in Illinois state court, and the district court issued a preliminary injunction prohibiting the Secretary from enforcing the Illinois Act against MITE's tender offer. MITE published its nationwide tender offer in the February 5, 1979, edition of the Wall Street Journal. Chicago Rivet simultaneously offered to purchase approximately 40 percent of its own shares at $30 per share. On February 9 the district court entered final judgment declaring the Illinois Act preempted by the Williams Act and violative of the Commerce Clause, and permanently enjoined its enforcement. The parties then entered an agreement withdrawing both offers and granting MITE thirty days to examine Chicago Rivet's books and records. On March 2, 1979, MITE announced it would not proceed with any tender offer. The United States Court of Appeals for the Seventh Circuit affirmed the district court's judgment. The Supreme Court noted probable jurisdiction.
View caseIsabella Ingram sued under a federal civil-rights law after a corporate board allegedly discriminated against her as a shareholder. The court concluded that the statute did not extend to internal corporate management decisions. Those matters remained governed by state incorporation law.
In September 1994 Christy Brzonkala enrolled as a student at Virginia Polytechnic Institute and State University. Within thirty minutes of meeting fellow students Antonio Morrison and James Crawford, both members of the varsity football team, Brzonkala alleges that the two men assaulted and repeatedly raped her. Morrison allegedly told Brzonkala after the attack that she had better not have any diseases. He later announced in a dormitory dining room that he liked to get girls drunk and made other vulgar remarks about women. Brzonkala became severely emotionally disturbed and depressed after the incident. She sought assistance from a university psychiatrist who prescribed antidepressant medication. She stopped attending classes and withdrew from the university. In early 1995 she filed a complaint against Morrison and Crawford under the university's Sexual Assault Policy. Virginia Tech conducted a hearing under its Sexual Assault Policy and a second hearing under its Abusive Conduct Policy. The first found Morrison guilty of sexual assault and suspended him for two semesters. The second hearing again found him guilty but changed the offense description to using abusive language. University officials later set aside the punishment. In December 1995 Brzonkala sued Morrison, Crawford, and Virginia Tech in the United States District Court for the Western District of Virginia. Her complaint alleged that the attack violated 42 U.S.C. §13981, the civil remedy provision of the Violence Against Women Act of 1994, which creates a federal cause of action for compensatory and punitive damages against persons who commit crimes of violence motivated by gender. She also asserted Title IX claims against the university. The district court dismissed the Title IX claims for failure to state a claim. It also dismissed the §13981 claim on the ground that Congress lacked authority to enact the provision under either the Commerce Clause or Section 5 of the Fourteenth Amendment. A divided panel of the Fourth Circuit reversed in part, but the en banc Fourth Circuit affirmed the district court's conclusion that Congress lacked constitutional authority to enact §13981. The Supreme Court granted certiorari to determine the constitutionality of the civil remedy provision.
View caseIke Ingram filed suit in Delaware against directors of Inertia Dynamics, incorporated in Nevada, alleging improper dividend payments. The court dismissed the action, reasoning that Nevada courts should decide questions concerning the internal affairs of a Nevada corporation. The dismissal preserved uniformity of corporate governance standards.
On May 22, 1974, appellee Heitner, a nonresident of Delaware who owned one share of stock in the Greyhound Corporation, filed a shareholder's derivative suit in the Court of Chancery for New Castle County, Delaware. The complaint named as defendants Greyhound Corporation, its wholly owned subsidiary Greyhound Lines, Inc., and twenty-eight present or former officers and directors of one or both corporations. Heitner alleged that the individual defendants had violated their fiduciary duties by causing the corporations to engage in activities that resulted in a private antitrust judgment of over thirteen million dollars and a criminal contempt fine of six hundred thousand dollars, both arising from events in Oregon. The individual defendants resided primarily in Arizona and conducted their business there. Simultaneously with the complaint, Heitner filed a motion for sequestration of the Delaware property of the individual defendants pursuant to Del. Code Ann., Tit. 10, § 366. The Court of Chancery granted the motion the same day and appointed a sequestrator who seized approximately eighty-two thousand shares of Greyhound common stock belonging to nineteen defendants, along with options belonging to two others and certain debentures, warrants, and stock unit credits. The stock certificates were not physically present in Delaware, but Del. Code Ann., Tit. 8, § 169 deemed the situs of ownership of all stock in Delaware corporations to be in the state, allowing the sequestrator to place stop-transfer orders on the corporation's books. The value of the sequestered stock was approximately one point two million dollars. All twenty-eight defendants received notice of the suit by certified mail to their last known addresses and by publication in a New Castle County newspaper. The twenty-one defendants whose property had been seized entered special appearances and moved to quash service of process and vacate the sequestration order. They argued that the ex parte sequestration procedure violated due process and that they lacked sufficient contacts with Delaware to sustain jurisdiction. The Court of Chancery rejected these arguments in a letter opinion, and the Delaware Supreme Court affirmed the judgment in Greyhound Corp. v. Heitner, 361 A. 2d 225 (1976). The United States Supreme Court noted probable jurisdiction and heard argument on February 22, 1977. The individual defendants whose property was seized became the appellants before the Court. Greyhound Corporation and its subsidiary appeared in the action and moved to dismiss on the ground that the sequestration statute was unconstitutional. The sequestration order remained in effect pending resolution of the constitutional questions presented.
View case3 common questions
The law of the state of incorporation governs. This rule ensures uniform treatment of shareholders, directors, and officers regardless of where disputes arise.
Generally no. A state other than the incorporating state ordinarily declines to regulate matters such as voting rights or dividend policy. Doing so would undermine the need for a single, predictable standard.
Matters such as the validity of stock issuances, bylaws, voting rights, selection of directors, and declaration of dividends are included. External dealings with third parties, by contrast, are not.
…1977). The rationale for the general rule appears to be based more on the need for a uniform and certain standard to govern the internal affairs of a corporation than on the perceived interest of the State of incorporation. Cf. Koster v. Lumbermens Mutual Casualty Co. , 330 U. S. 518, 527-528 (1947). : Mr. Justice…