The fiduciary duty of loyalty that directors, officers, and employees owe to their corporations includes the duty to refrain from taking advantage of opportunities that are within the company’s line of business without the corporation’s consent. This obligation is known as the “corporate opportunity doctrine”. A corporate opportunity is one that is reasonably incident to the corporation’s present or prospective business and one in which the corporation has the capacity to undertake. The corporate opportunity doctrine requires that fiduciaries of corporations must first disclose and tender corporate opportunities to their corporations and can only personally take advantage of the opportunity with the corporation’s consent.
Corporate opportunity cases typically involve an opportunity that is available to the fiduciary personally or the corporation, but not both. For instance, a common scenario in which the corporate opportunity doctrine is implicated is when a director, officer, or employee personally purchases another business that the corporation was or may have been interested in purchasing. However, in Indeck Energy Services, Inc. v. DePodesta, the Illinois Supreme Court recently addressed the question of whether a fiduciary can be liable for usurpation of a corporate opportunity where the fiduciary’s personal taking of the opportunity did not prevent the corporation from being able to take advantage of the opportunity as well. A divided Supreme Court in a 4-3 decision held that, even where fiduciaries breach their duties by failing to tender, disclose, and obtain the corporation’s consent prior to personally taking advantage of a corporate opportunity, where the taking of the opportunity did not prevent the corporation from also being able to take advantage of the opportunity, the corporation has not suffered the requisite injury to prevail on a usurpation of corporate opportunity claim.
As set forth in the opinion, Indeck Energy Services, Inc. (“Indeck”) is a developer, owner, and operator of independent power generation projects. Defendant Christopher M. Podesta (“Podesta”) was the company’s vice president for development. Defendant Karl G. Dahlstrom (“Dahlstrom”) served as its director of development. Both DePodesta and Dahlstrom’s duties for Indeck included identifying opportunities for the development of power generation projects and developing those projects. Indeck’s president charged both DePodesta and Dahlstrom with researching the viability of natural gas power generation projects in an area known the Electrical Reliability Council of Texas (“ERCOT”).