Does the Business Judgment Rule protect a director who violates governing documents?

Parth contends that the business judgment rule protects a director who violates governing documents, as long as the director believes that the actions are in the best interests of the corporation. She relies on Biren v. Equality Emergency Medical Group, Inc. (2002) 102 Cal.App.4th 125, 125 Cal.Rptr.2d 325 (Biren ). Biren, which involved a dispute between a company and a former director, held that the business judgment rule may protect a director who acts in a mistaken but good faith belief on behalf of the corporation without obtaining the requisite shareholder approval. The Biren court determined that the director in question was protected by the rule, even though she violated the shareholder agreement. (Id. at pp. 131132, 125 Cal.Rptr.2d 325.) However, the court did not suggest that such conduct would always be protected. Rather, the court concluded that the violation did not by itself make the business judgment rule inapplicable, explaining that the company failed to prove that the director had intentionally usurped her authority or that her actions were anything more than an honest mistake. (Id. at p. 137, 125 Cal.Rptr.2d 325.) The court also noted the trial court's finding that [the director] reasonably relied on information she believed to be correct, observing that this was tantamount to a finding she acted in good faith. (Id. at p. 136, 125 Cal.Rptr.2d 325.) In other words, Biren held that the director's violation of the governing documents did not render the business judgment rule inapplicable under the circumstances ; namely, where the remainder of the business judgment rule requirements were satisfied.