[Cite as Evans v. Gardner, 2026-Ohio-690.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
BUTLER COUNTY
CATHERINE L. EVANS, RECEIVER, : ON BEHALF OF CERTIFIED STEEL CASE NOS. CA2025-02-020 STUD ASSOCIATION, INC., : CA2025-02-021
Appellant, : OPINION AND vs. : JUDGMENT ENTRY 3/2/2026 WILLIAM A. GARDNER, et al., :
Appellees. :
CIVIL APPEAL FROM BUTLER COUNTY COURT OF COMMON PLEAS Case No. CV 2018 02 0442
Helmer, Martins, Tate & Garrett Co., LPA, and B. Nathaniel Garrett, James A. Tate, and Paul B. Martins; and Millikin & Fitton Law Firm, and Steven A. Tooman, for appellant, Catherine L. Evans, Receiver.
Frost Brown Todd LLP, and Matthew C. Blickensderfer; and Dentons Cohen & Grigsby, P.C., Anthony Cillo, and Fridrikh V. Shrayber, for appellant, ClarkWestern Dietrich Building Systems LLC.
Taft Stettinius & Hollister LLP, and Daniel R. Warncke, Aaron M. Herzig, and Nathan R. Coyne; and Pollock Law, LLC, and Jeffrey M. Pollock, for appellee, William A. Gardner.
Dinsmore & Shohl LLP, and Peter J. Georgiton and Justin M. Burns; and Chamberlain Hrdlicka White Williams & Aughtry, and Scott M. Ratchick and John C. Guin, for appellee, Edward R. Slish. Butler CA2025-02-020 CA2025-02-021
____________ OPINION
BYRNE, J.
{¶ 1} Plaintiff, court-appointed Receiver Catherine L. Evans, and Interested Party,
Clarkwestern Dietrich Building Systems LLC, appeal the decision of the Butler County
Court of Common Pleas, General Division, which denied the Receiver's motion for
summary judgment and granted the motions for summary judgment filed by Defendants
William A. Gardner and Edward R. Slish. For the reasons discussed below, we affirm.
I. Factual and Procedural Background
{¶ 2} This case arises from a dispute between competitors in the steel framing
products industry. The dispute led to litigation and a more than $40 million dollar judgment
against a trade association. This case involves efforts to collect that judgment through a
receivership action.
A. Formation of the Certified Steel Stud Association
{¶ 3} In 2012, three steel framing product manufacturers, Ware Industries, Inc.
("Ware"), California Expanded Metal Products Company ("CEMCO"), and Telling
Industries, LLC ("Telling") formed the Certified Steel Stud Association, Inc. ("CSSA"). The
CSSA was formed under IRS Revenue Code 501(c)(6) as a nonprofit, nonstock mutual
benefit corporation recognized as a tax-exempt business league. The CSSA is a
Delaware corporation. According to its bylaws, the CSSA's "objectives and purposes"
were to, among other things,
provide members with an independent organization of industry members to permit coordinated compliance with building codes applicable to them. The corporation shall establish standards that can be certified by an independent -2- Butler CA2025-02-020 CA2025-02-021
third party certification service such as the International Code Council Evaluation Services ("ICC-ES") to permit members to conform to current and evolving building code standards.
{¶ 4} Pursuant to its bylaws, full voting membership in the CSSA was limited to
those involved in the steel stud manufacturing industry. The CSSA's bylaws further
provided that its governing body would be the Board of Directors, elected by the full
members of the CSSA. Any representative of the full members would be eligible to serve
as a member of the Board of Directors.
{¶ 5} The CSSA's initial directors were high-level employees of each of the three
companies that formed the CSSA, as follows:
Chairman Defendant-appellee William A. Gardner ("Gardner") Vice Chair Tom Porter Secretary/Treasurer Defendant-appellee Edward R. Slish ("Slish")
Gardner was the Chief Executive Officer of Ware. Porter was the Vice President of
CEMCO. Slish was the President of Telling.
B. Background Information on Steel Coatings
{¶ 6} Manufacturers of nonstructural steel framing ("NSSF") products coat these
products with a zinc-based coating called "G40." They apply this coating to comply with
certain building standards set forth in the International Building Code ("IBC") that relate
to ensuring that these products are noncombustible and corrosion-resistant.
{¶ 7} Clarkwestern Dietrich Building Systems LLC, dba ClarkDietrich
("ClarkDietrich"), is also a steel stud manufacturer, and a direct competitor to two of the
companies in the CSSA (Ware and Telling). In 2010, ClarkDietrich developed a new NSSF
product, which it coated with a proprietary coating that it called "EQ" or "G40EQ."
Clarkwestern Dietrich Bldg. Sys., L.L.C. v. Certified Steel Stud Assn., Inc., 2017-Ohio-
1091, ¶ 6 (12th Dist.). ClarkDietrich claimed that the "EQ" coating was an equivalent
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coating to "G40" and provided equal or better corrosion resistance as the standard G40
coating. Id. ClarkDietrich was able to produce its alternative NSSF product at a lower cost
than its steel industry competitors could produce traditional G40-coated NSSF products,
which gave it a competitive advantage. Id. at ¶ 7.
C. The CSSA Article on EQ Coatings
{¶ 8} After its formation, the CSSA released a publication entitled "CSSA
Opinion: EQ Coatings Are Not Recognized by The Code." The article claimed, among
other things, that EQ coatings were not compliant with the IBC because EQ coatings were
not listed in a certain IBC table specifying acceptable coatings. The article also suggested
that the use of EQ-coated products could result in liability for any contractors using those
products. The article further suggested that manufacturers who sold EQ products were in
the business of substituting EQ-coated framing products on projects that called for the
use of G40 coatings, without informing the customer.
{¶ 9} The CSSA's article on EQ coatings was published to a wide audience
involved in the industry. ClarkDietrich claimed that it lost projects and millions of dollars
in revenue after—and as a result of—the article's publication.
D. The Defamation Action and the Antitrust Action
{¶ 10} In 2013, ClarkDietrich filed a defamation action against the CSSA and its
three members companies ("the Defamation Action") in the Butler County Court of
Common Pleas. ClarkDietrich alleged that the EQ coatings article published by the CSSA
defamed it and sought substantial damages.
{¶ 11} ClarkDietrich also filed a parallel suit in the Butler County Court of Common
Pleas against a different trade association (the Steel Stud Manufacturing Association
["SSMA"]), the CSSA, and various manufacturers, including the three member companies
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of the CSSA. This suit alleged antitrust violations of the Ohio Valentine Act ("the Antitrust
Action"). The Antitrust Action involved the creation, by the SSMA, of an IBC compliance
program for NSSF products, the purpose of which was (as alleged by ClarkDietrich) to
force ClarkDietrich to stop producing its EQ products. Clarkwestern, 2017-Ohio-1091, at
¶ 8. ClarkDietrich, which was an SSMA member, resigned from the organization and
asserted the Antitrust Action. Eventually, the Antitrust Action was resolved when the
common pleas court granted summary judgment in favor of the SMMA, finding that
ClarkDietrich had not presented evidence of an actionable claim under the Ohio Valentine
Act. Id. at ¶ 11.
{¶ 12} In 2015, the Defamation Action went to trial. During the course of the trial,
ClarkDietrich settled with each of the CSSA's three member companies, leaving only the
CSSA as a defendant. After approximately 11 weeks of trial, and just before closing
arguments, ClarkDietrich offered to dismiss its claims against the CSSA with prejudice.
That is, ClarkDietrich offered CSSA a walk-away, no-cost settlement offer. The CSSA had
no counterclaims against the ClarkDietrich so this dismissal offer would have ended the
case. But because trial had commenced, ClarkDietrich could not dismiss the case without
the CSSA's agreement or a court order. Civ.R. 41(A)(1) and (2).
{¶ 13} The CSSA Board of Directors—consisting at that time of Gardner, Porter,
Slish and one additional director, Henri Jung—discussed the settlement offer on a
conference call and voted to reject the offer.1 After this refusal, ClarkDietrich moved the
trial court for an order dismissing its case against the CSSA. The CSSA directors also
1. Jung was a representative of Phillips Manufacturing, which joined the CSSA in 2014 or 2015, after the publication of the article and after the filing of the Defamation Action. Phillips Manufacturing was not a co- defendant in the Defamation Action. Jung did not vote on the settlement offer issue; Gardner had Jung's proxy and voted "no" on his behalf. The parties have argued whether this proxy was valid, but that issue is not relevant to deciding this appeal so we need not discuss it further. -5- Butler CA2025-02-020 CA2025-02-021
decided to oppose this motion.
{¶ 14} At a hearing the next morning, counsel for CSSA, John Hust, explained the
CSSA's reasoning for opposing ClarkDietrich's motion to dismiss. Part of that reasoning
was that ClarkDietrich, in offering to dismiss the Defamation Action, would not agree to
also forego an appeal of the Antitrust Action. Hust explained that the CSSA was
concerned that the Antitrust Action could be appealed and remanded for a trial and that
many of the same issues that could be resolved in the Defamation Action would have to
be relitigated in a revived Antitrust Action. Hust stressed the time and effort that had gone
into the Defamation Action trial and that "this is the chance to end it on this issue" and
that "the organization wants a decision."
{¶ 15} The trial court denied ClarkDietrich's motion to dismiss. Thereafter, the trial
proceeded to closing arguments. Afterwards, a unanimous jury found for ClarkDietrich in
the amount of $49.5 million dollars. The CSSA was ultimately responsible for $43 million
of that amount.
{¶ 16} But the CSSA only held sufficient assets to pay its limited operating costs
and could not satisfy this substantial judgment. ClarkDietrich thereafter moved the trial
court to appoint a receiver on the CSSA's behalf to pursue potential breach-of-fiduciary-
duty claims against the CSSA's four individual directors, to obtain funds to satisfy the
judgment against the CSSA. The trial court agreed and appointed John Reister as the
Receiver of the CSSA for the limited purpose of investigating and pursuing breach of
fiduciary duty claims. After Reister retired, the court substituted Catherine Evans as the
Receiver.
E. The Receiver Brings Claims Against the Four Directors
{¶ 17} In 2018, the Receiver initiated the litigation which is the subject of this
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appeal ("the Receivership Action"). The Receiver's complaint stated claims for breach of
fiduciary duty and declaratory judgment against the four CSSA directors: Gardner, Slish,
Porter, and Jung. The Receiver also named ClarkDietrich as an interested party.
{¶ 18} The complaint alleged that in rejecting the settlement offer, the CSSA's four
directors breached their fiduciary duty to the CSSA, resulting in money damages. The
complaint also asked for a declaratory judgment that the directors failed to exercise
appropriate business judgment and their decision to oppose the settlement offer was not
entitled to protection under the business-judgment rule. During the proceedings, Porter
and Jung settled with the Receiver and were dismissed from the case.
{¶ 19} The remaining two director-defendants, Gardner and Slish, moved for
judgment on the pleadings, arguing that their actions in rejecting the settlement offer were
protected by the litigation privilege. The common pleas court agreed that the litigation
privilege applied and granted Gardner's and Slish's motions. On appeal, this court
affirmed. Reister v. Gardner, 2019-Ohio-4720, ¶ 29 (12th Dist.).
{¶ 20} The Receiver and ClarkDietrich then appealed to the Ohio Supreme Court.
The Ohio Supreme Court reversed and held that the litigation privilege was inapplicable
and remanded the case. Reister v. Gardner, 2020-Ohio-5484, ¶ 14, 21. The Ohio
Supreme Court noted that the business-judgment rule may apply to shield the directors'
actions but that it was premature to say whether it would apply. Id. at ¶ 19. The supreme
court also clarified that because the CSSA was a Delaware corporation, the court would
look to Delaware law to define the directors' fiduciary duties and the applicability of the
business-judgment rule. Id. at ¶ 11.
{¶ 21} On remand, Gardner moved to dismiss ClarkDietrich from the Receivership
Action, arguing that ClarkDietrich was not an "interested party" under R.C. 2721.12. The
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common pleas court dismissed ClarkDietrich from the Receivership Action, but on appeal
we reversed that decision and reinstated ClarkDietrich as an interested party. Reister v.
Gardner, 2022-Ohio-4272, ¶ 12-16, 41-42, 47 (12th Dist.).
{¶ 22} Later, in 2024, Gardner and Slish each moved the common pleas court for
summary judgment. In their motions, Gardner and Slish argued that the Receiver had
failed to identify any conflict of interest between Gardner, Slish, and the CSSA and had
therefore not overcome the presumption, under Delaware's business-judgment rule, that
they rejected the settlement offer in good faith.
{¶ 23} The Receiver also moved for summary judgment, arguing that Gardner and
Slish were not acting in the CSSA's best interest in rejecting ClarkDietrich's settlement
offer in the Defamation Action, but were instead serving only the interests of their
respective employers, Ware and Telling. The Receiver argued that because Gardner and
Slish were disloyal to the CSSA, the presumption that the business-judgment rule applied
had been rebutted and the directors' actions should be scrutinized under Delaware's more
onerous "entire fairness" standard. Under this standard, the Receiver argued that
Gardner and Slish could not establish that rejecting the settlement offer was "entirely fair"
to the CSSA.
{¶ 24} The common pleas court issued a written decision granting Gardner's and
Slish's motions for summary judgment and denying the Receiver's motion for summary
judgment. The court determined that the business-judgment rule applied and that the
Receiver had failed to rebut the presumption that Garder and Slish acted in good faith
and with due care. The common pleas court found that the Receiver had provided no
evidence that either director had a conflict of interest or lacked independence in their
decision-making with regard to rejecting the settlement offer.
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{¶ 25} The court noted that Gardner and Slish, in rejecting the offer, had
independent conversations with the CSSA's attorney, who believed that there was a 60%
chance of winning a defense verdict. The common pleas court also found that rejecting
the settlement offer was consistent with the CSSA's objective in the litigation of resolving
the issue of whether ClarkDietrich's EQ products were code-compliant.
{¶ 26} The common pleas court rejected the argument that Gardner and Slish
lacked independence because they served dual roles as both CSSA directors and
employees of CSSA's member companies. The court found that the CSSA was a trade
association and was formed to serve the interests of its members. The court found that
the CSSA and its member companies were aligned as a matter of law and that rejecting
the settlement offer was in furtherance of the CSSA's bylaws, which related to compliance
with building codes and advocating for its members' needs in the judicial system.
{¶ 27} The common pleas court further found that even if the business-judgment
rule did not apply, the decision to reject the settlement offer would have passed muster
under the "entire fairness" standard. The court noted that the CSSA was essentially
formed to force compliance with its interpretation of the IBC and that it was consistent
with this purpose to let the jury decide the issue because of the CSSA's belief that
ClarkDietrich was not in code compliance with its EQ products. The court also noted that
the CSSA was judgment-proof and had nothing to lose by proceeding to a verdict. In
addition, and as stated before, the directors believed that they had a 60 percent chance
of a defense verdict.
{¶ 28} The Receiver and Clark Dietrich appealed, each raising two essentially
identical assignments of error. We address their assignments of error together.
II. Law and Analysis
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{¶ 29} The Receiver's first assignment of error states:
THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT FOR THE CSSA DIRECTORS.
{¶ 30} ClarkDietrich's first assignment of error states:
THE TRIAL COURT ERRED BY GRANTING SUMMARY JUDGMENT FOR DEFENDANTS GARDNER AND SLISH.
{¶ 31} The Receiver and ClarkDietrich argue that the common pleas court erred in
granting summary judgment in favor of Gardner and Slish. The Receiver points to various
facts in the record that she argues support the conclusion that in rejecting the settlement
offer, Gardner and Slish were working to advance their employers' anti-competitive
interests and were not working to advance CSSA's welfare. The Receiver argues this
summary judgment evidence demonstrated that Gardner and Slish violated their duty of
loyalty to the CSSA, and thus, the common pleas court erred in applying the business-
judgment rule to the Receiver's claims against Gardner and Slish. The Receiver further
argues that the correct standard of review for reviewing the directors' actions was not the
business-judgment rule, but rather, the "entire fairness" standard. ClarkDietrich focuses
its argument on Gardner and Slish's alleged lack of independence and the application of
the "entire fairness" standard.
{¶ 32} As described in the previous paragraph, the Receiver and ClarkDietrich in
their respective briefs present many of the same arguments in support of reversing the
trial court's decision. We address the Receiver's and ClarkDietrich's arguments together
in this opinion, but for ease of reading, we will only refer to the Receiver when describing
the Receiver's and ClarkDietrich's collective arguments.2
2. To be clear, we have considered all arguments raised by all parties with respect to all assignments of error. We specifically respond to those arguments here to the extent they require a specific response in the context of our overall analysis, which is dispositive of all arguments made by the parties. - 10 - Butler CA2025-02-020 CA2025-02-021
A. Applicable Law
{¶ 33} Before addressing the parties' arguments, we must address the question of
which state's law applies, the applicable standards of review, and the contours of the
business-judgment rule and the entire-fairness standard.
1. Which State's Law Applies?
{¶ 34} In an earlier appeal in this Receivership Action, the Ohio Supreme Court
explained that because the CSSA is a Delaware corporation, Delaware state law applies
to questions involving the directors' fiduciary duties and the business-judgment rule.
Reister v. Gardner, 2020-Ohio-5484, ¶ 11. We therefore apply Delaware law to those
issues in this appeal.
{¶ 35} In that earlier appeal, the Ohio Supreme Court applied Ohio procedural law.
Id. at ¶ 17. We therefore apply Ohio procedural law regarding summary judgment in our
review of the common pleas court's summary judgment decision.
{¶ 36} The trial court's summary judgment decision noted that the parties agreed
that Delaware would control the "substantive" law and Ohio law applied "elsewhere." That
finding has not been challenged on appeal.
2. Ohio's Summary Judgment Standard of Review
{¶ 37} "Summary judgment is a procedural device used to terminate litigation
when there are no issues in a case requiring a formal trial." Franchas Holdings, L.L.C. v.
Dameron, 2016-Ohio-878, ¶ 16 (12th Dist.), citing Roberts v. RMB Ents. Inc., 2011-Ohio-
6223, ¶ 6 (12th Dist.).
{¶ 38} "Civ.R. 56 sets forth the summary judgment standard." State ex rel.
Becker v. Faris, 2021-Ohio-1127, ¶ 14 (12th Dist.). "Pursuant to that rule, a court may
grant summary judgment only when (1) there is no genuine issue of any material fact, (2)
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the moving party is entitled to judgment as a matter of law, and (3) the evidence submitted
can only lead reasonable minds to a conclusion that is adverse to the nonmoving party."
Spitzer v. Frisch's Restaurants, Inc., 2021-Ohio-1913, ¶ 6 (12th Dist.), citing BAC Home
Loans Servicing, L.P. v. Kolenich, 2011-Ohio-3345, ¶ 17 (12th Dist.). "A material fact is
one which would affect the outcome of the suit under the applicable substantive law."
Hillstreet Fund III, L.P. v. Bloom, 2010-Ohio-2961, ¶ 9 (12th Dist.), citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
{¶ 39} The party moving for summary judgment bears the initial burden of
demonstrating that no genuine issue of material fact exists. Vesper v. Otterbein Lebanon,
2021-Ohio-4545, ¶ 23 (12th Dist.); Touhey v. Ed's Tree & Turf, L.L.C., 2011-Ohio-3432,
¶ 7 (12th Dist.), citing Dresher v. Burt, 75 Ohio St.3d 280, 1996-Ohio-107, ¶ 17. The
moving party "must be able to point to evidentiary materials of the type listed in Civ.R.
56(C) that a court is to consider in rendering summary judgment." Kelley v. Dayton Pub.
Schools Bd. of Edn., 2024-Ohio-979, ¶ 21, (2d Dist.), citing Dresher at ¶ 17. Once the
moving party meets this burden, the nonmoving party has a reciprocal burden requiring it
to present evidence to demonstrate that there is some issue of material fact yet remaining
to be resolved. Smedley v. Discount Drug Mart, Inc., 190 Ohio App.3d 684, 2010-Ohio-
5665, ¶ 11 (12th Dist.). The nonmoving party does this by presenting "'specific facts,'"
demonstrating the existence of a genuine triable issue; the nonmoving party "'may not
rest on the mere allegations or denials in its pleadings.'" Oliphant v. AWP, Inc., 2020-
Ohio-229, ¶ 31 (12th Dist.), quoting Deutsche Bank Natl. Trust Co. v. Sexton, 2010-Ohio-
4802, ¶ 7 (12th Dist.), citing Civ.R. 56(E). "Summary judgment is proper if the nonmoving
party fails to set forth such facts." Taylor v. Atrium, 2019-Ohio-447, ¶ 10 (12th Dist.), citing
Puhl v. U.S. Bank, N.A., 2015-Ohio-2083, ¶ 13 (12th Dist.). "In determining whether a
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genuine issue of material fact exists, the evidence must be construed in favor of the
nonmoving party." Assured Admin., L.L.C. v. Young, 2019-Ohio-3953, ¶ 14 (12th Dist.),
citing Vanderbilt v. Pier 27, L.L.C., 2013-Ohio-5205, ¶ 8, (12th Dist.).
{¶ 40} Under Ohio law, an appellate court reviews a trial court's decision on a
motion for summary judgment de novo, independently, and without deference to the trial
court's decision. Davis v. Royal Paper Stock Co., Inc., 2022-Ohio-4135, ¶ 56 (12th Dist.);
Wulf v. Bravo Brio Restaurant Group, Inc., 2019-Ohio-3434, ¶ 15 (12th Dist.).
B. Delaware's Standards of Review of Director Fiduciary Obligations
{¶ 41} As explained above, the common pleas court granted summary judgment
to Gardner and Slish, and denied summary judgment to the Receiver, based on its
application of Delaware's business-judgment rule to the Receiver's claims against the
directors for breach of fiduciary duty.
{¶ 42} "Delaware has three tiers of review for evaluating director decision-making:
[(1)] the business judgment rule, [(2)] enhanced scrutiny,3 and [(3)] entire fairness." In re
Trados Inc. Shareholder Litigation, 73 A.3d 17, 43 (Del.Ch.2013), quoting Reis v. Hazelett
Strip-Casting Corp., 28 A.3d 442, 457 (Del.Ch. 2011). The business-judgment rule is the
"default standard of review." Id. at 43.
{¶ 43} The business-judgment rule "presumes that 'in making a business decision
the directors of a corporation acted on an informed basis, in good faith and in the honest
belief that the action taken was in the best interests of the company.'" Id., quoting Aronson
v. Lewis, 473 A.2d 805, 812 (Del.1984). This standard "'reflects and promotes the role of
3. Enhanced scrutiny is an intermediate level of review that applies only in certain situations, such as a hostile takeover or the sale of a corporation. In re Trados, 73 A.3d at 43-44. Enhanced scrutiny is not applicable in this case.
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the board of directors as the proper body to manage the business and affairs of the
corporation.'" Id. quoting In re Trados Inc. Shareholder Litigation, 2009 WL 2225958, *6
(Del.Ch. July 24, 2009). Unless an element of the business-judgment rule is rebutted, a
reviewing court "'merely looks to see whether the business decision made was rational in
the sense of being one logical approach to advancing the corporation's objectives.'"
Trados, 73 A.3d at 43, quoting In re Dollar Thrifty Shareholder Litigation, 14 A.3d 573, 598
(Del.Ch.2010). "Only when a decision lacks any rationally conceivable basis will a court
infer bad faith and a breach of duty." Id.
{¶ 44} To rebut the presumptive applicability of the business judgment rule, "a
shareholder plaintiff has the burden of proving that the board of directors, in reaching its
challenged decision, violated any one of its triad of fiduciary duties: due care, loyalty, or
good faith."4 Emerald Partners v. Berlin, 787 A.2d 85, 91 (Del.2001). "If a shareholder
plaintiff fails to meet this evidentiary burden, the business judgment rule operates to
provide substantive protection for the directors and for the decisions that they have
made." Id. "If the presumption of the business judgment rule is rebutted, however, the
burden shifts to the director defendants to prove to the trier of fact that the challenged
transaction was 'entirely fair' to the shareholder plaintiff" under Delaware's entire-fairness
standard of review. (Emphasis in original.) Id.5
{¶ 45} A court's application of the business-judgment rule under Delaware law,
4. Though the Receiver is not a shareholder of the CSSA, the common pleas court appointed the Receiver specifically to pursue breach of fiduciary duty claims that would in other circumstances have been brought by a shareholder of the CSSA.
5. "Entire fairness" is Delaware's most demanding standard of review and applies when a board made decisions under "actual conflicts of interest." Trados, 73 A.3d at 44. To obtain entire-fairness review, a plaintiff must prove that there were not enough "independent and disinterested" individuals among the directors making the challenged decision to comprise a board majority. Id. In reviewing whether the directors were disinterested, a court conducts a director-by-director analysis. Id.
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including the court's consideration of the duty of loyalty and duty of care standards under
the business-judgment rule, involves questions of law, and thus the court's decision is
subject to de novo review on appeal. Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 360
(Del.1993).
C. Analysis: Did the Receiver Present Summary Judgment Evidence Rebutting the Business-Judgment Rule?
{¶ 46} On appeal, the Receiver argues that after Gardner and Slish met their initial
summary judgment burden, she presented summary judgment evidence that Gardner and
Slish violated their duty of loyalty and good faith6 to the CSSA.7 The Receiver argues that
Gardner and Slish violated their duty of loyalty by voting to reject the settlement offer, in
furtherance of their own employers' interests, and subjected the CSSA to the risk of
substantial liability if the jury found for ClarkDietrich.
{¶ 47} The business-judgment rule presumption that a board acted loyally and in
good faith can be rebutted by facts which establish that (1) a majority of the board was
financially interested in the outcome of the transaction or (2) a majority of the board was
dominated or controlled by a materially interested director. Orman v. Cullman, 794 A.2d
5, 22 (Del.Ch.2002).8 This second means of demonstrating disloyalty is shown when a
majority of the board "lacked the independence to consider objectively whether the
transaction was in the best interest of its company and all of its shareholders." Id.
{¶ 48} As to the first means—financial interest—the common pleas court found,
6. "Good faith" is a subsidiary element of the duty of loyalty. Stone ex rel. Amsouth Bancorporation v. Ritter, 911 A.2d 362, 369-370 (Del.2006).
7. The Receiver does not argue that Gardner and Slish violated a duty of care.
8. Typically a majority of the board of directors is the key to this analysis. Delaware courts have recognized situations in which a minority of directors is sufficient, but that scenario is not applicable here and need not be considered. Orman at 22. - 15 - Butler CA2025-02-020 CA2025-02-021
and we agree, that the summary judgment record is devoid of any evidence suggesting
that Gardner or Slish received any personal financial benefit by voting to reject the
settlement offer. The Receiver also does not argue on appeal that Gardner or Slish
received any financial benefit from voting to reject the settlement offer.
{¶ 49} The Receiver's argument instead concerns the second means, i.e., that
Gardner and Slish were disloyal to the CSSA because in voting to reject the settlement
offer they were only considering the best interests of Ware and Telling. That is, the
Receiver is arguing that Gardner and Slish lacked independence and were "dominated
or controlled" by their respective employers, whose interests were not aligned with the
CSSA's interests. Orman, 794 A.2d at 22. See Manti Holdings, L.L.C. v. Carlyle Group,
Inc., 2025 WL 39810, *24 (Del.Ch.2025) (holding that director's decisions are only
reviewed under the entire-fairness standard if the director lacks "independence from a
conflicted controller."). A plaintiff can rebut the presumptive application of the business-
judgment rule where the facts demonstrate that a director was a "dual fiduciary and owed
a competing duty of loyalty to an entity that itself stood on the other side of the transaction
or received a unique benefit not shared with the stockholders." In re McDonald's Corp.
Stockholder Derivative Litigation, 291 A.3d 652, 687 (Del.Ch. 2023).
{¶ 50} Upon review, we conclude that Gardner and Slish did not lack
independence and were not conflicted, as a matter of law, in voting to reject
ClarkDietrich's settlement offer. While Gardner and Slish had dual loyalties with respect
to the CSSA and their respective employers, the summary judgment record supports the
conclusion that the CSSA and its member companies were aligned with respect to the
decision to reject the settlement offer and proceed to a jury verdict.
{¶ 51} The corporate structure and bylaws of the CSSA are critical to this analysis.
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The record reflects that CSSA is a nonprofit, nonstock, tax-exempt business league and
mutual benefit corporation, registered under Section 501(c)(6) of the Internal Revenue
Code. A Section 501(c)(6) business league is an organization created to promote the
common business interests of its members. 26 C.F.R. 1.501(c)(6)-1. A business league's
"activities should be directed to the improvement of business conditions of one or more
lines of business as distinguished from the performance of particular services for
individual persons." Id.
{¶ 52} Consistent with these regulations, the stated purpose of the CSSA, as set
forth in its Delaware Certificate of Incorporation, was to "promote the business interests
of manufacturers of steel studs." The CSSA bylaws further stated that the "objectives" of
the corporation were:
(1) To provide members with an independent organization of industry members to permit coordinated compliance with building codes applicable to them. The corporation shall establish standards that can be certified by an independent third party certification service such as the International Code Council Evaluation Services ("ICC-ES") to permit members to conform to current and evolving building code standards.
(2) To provide members and others with a forum to discuss technical issues involving industry products, with such discussions to be based upon the technical merits of the products;
(3) To articulate and advocate the needs and interests of the members' industry, before legislative, administrative, regulatory and judicial branches of local, state, and national governments;
(4) To promote cooperation among its members and others, both directly and through other corporations in matters involving the business and governmental affairs of the corporation; and
(5) To undertake such other programs or such other activities as may be necessary and proper to enhance and promote the welfare of the Cold-Formed Steel Framing Systems industry
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as determined by the Board of Directors.
{¶ 53} The CSSA bylaws further restricted full membership in the CSSA to
companies that were in the business of manufacturing by roll forming cold-formed steel
studs, and related items, and who sold to the residential and/or commercial construction
markets.
{¶ 54} In sum, the purpose of the CSSA was to coordinate code compliance
between member companies and to "promote" the business interests of its member
companies, including, critically, "advocat[ing] the needs and interests of the members'
industry, before . . . judicial branches of local, state, and national governments."
(Emphasis added.)
{¶ 55} The CSSA's bylaws establish that it operated in the nature of a mutual
benefit corporation and such corporations are "'formed primarily to serve their members.'"
Mary A. Jacobson, Nonprofit Corporations: Conversion to for-Profit Corporate Status and
Nonprofit Corporation Members' Rights -- Farahpour v. Dex, Inc., 20 Del. J. Corp. L. 635,
638 (1995), quoting Thomas H. Boyd, A Call to Reform the Duties of Directors Under
State Not-for-Profit Corporation Statutes, 72 Iowa L. Rev. 725, 730 (1987). Consistent
with the understanding that mutual benefit corporations serve their members, Delaware
law supports the conclusion that "[t]he directors of a non-profit membership corporation
have a duty to act in the best interest of the corporation's members. . . ." (Emphasis
added.) Baring v. Watergate East, Inc., 2004 Del.Ch. LEXIS 17, *6 (Del.Ch.2004).
{¶ 56} Delaware law supports the conclusion that there is no conflict between the
directors' dual loyalties in a case with facts like those here. Delaware courts hold that
there is "'no dilution'" of the duty of loyalty when a director "'holds dual or multiple'"
fiduciary obligations. Trados, 73 A.3d at 46-47, quoting Weinberger v. UOP, Inc., 457 A.2d
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701, 710 (Del.1983). Nevertheless, even in a dual-loyalty situation, no conflict exists if the
interests of the beneficiaries to whom the fiduciary owes duties are aligned. Id.
{¶ 57} Based on the incorporation documents and the bylaws, Gardner's and
Slish's decision to reject the settlement offer and proceed to a jury verdict was consistent
with the purpose of the CSSA, which was to "promote" and serve the business interests
of the CSSA's member companies. While the vote subjected the CSSA to a substantial
risk, even potentially its demise, the CSSA, Ware, and Telling were aligned in their desire
to achieve a favorable outcome in the Defamation Action. That is, the CSSA and its
member companies, rightly or wrongly, took the position that ClarkDietrich's EQ product
was not compliant with the IBC, presented safety concerns, and was negatively affecting
their business interests and the steel stud industry. A defense verdict could help establish
that the claims asserted in the article were substantially true and that ClarkDietrich's EQ
products were not code compliant.
{¶ 58} The evidence is clear that Gardner and Slish understood that they were
risking the viability of the CSSA as an ongoing organization. Gardner said as much and
Hust confirmed that proceeding to a jury verdict was a considerable risk. But given the
CSSA's obligation to serve its members first, the CSSA directors could decide that this
gamble was warranted and authorized under the bylaws. As such, and as a matter of law,
Gardner and Slish in voting to reject the settlement offer were not conflicted, but in fact
aligned with the interests of the CSSA.
{¶ 59} The Receiver claims that Gardner and Slish lacked independence and
points to evidence establishing that the two directors communicated frequently with their
respective companies concerning the vote on the settlement offer. The Receiver argues
that their votes were a product of those conversations. However, the fact that Gardner
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and Slish consulted with their respective employers, which were member companies of
the CSSA, is not surprising and does not demonstrate a lack of independence under the
circumstances presented here. A director only lacks independence if he is controlled by
a conflicted entity. Manti, 2025 WL 39810 at *24 (directors "decisions are only reviewed
under entire fairness if they lack independence from a conflicted controller such that they
themselves have a conflict of interest . . . "); In re Crimson Explorations Inc. Stockholder
Litigation, 2014 WL 5449419, *21 (Del.Ch. Oct. 24, 2014) ("Because Oaktree was not
conflicted, even if it appointed a majority of the Board, that fact is not relevant to
determining the directors' independence or interestedness in this transaction.") As set
forth above, the CSSA and its member companies were aligned and not conflicted.
Because the CSSA existed to serve and promote its members' business interests, it is
wholly reasonable and expected that Garder and Slish would consult with their respective
companies in deciding how to respond to the settlement offer. Because the CSSA and its
member companies were aligned, Gardner and Slish did not lack independence as a
matter of law.
{¶ 60} The outcome of this case could be different if the CSSA was, for example,
a for-profit corporation with shareholders, or a charitable organization with beneficiaries
who were not the four member companies. In such a case, a decision risking the viability
of the organization, to the detriment of shareholders or beneficiaries, and that would have
only inured a benefit to the four member companies, could potentially establish a conflict
of interest meriting entire-fairness review under Delaware law. But here, the CSSA existed
to serve and promote the business interests of its members and the summary judgment
record is clear that the directors' decision was in line with the member companies'
interests.
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{¶ 61} There is no issue of fact as to whether Gardner and Slish were financially
interested in the transaction. They were not. And as a matter of law, Gardner and Slish
were not conflicted in voting to reject the settlement offer because that vote was in line
with the interests of the CSSA's member companies. As such, the Receiver did not meet
her burden of demonstrating a genuine issue of fact for trial as to whether Gardner and
Slish acted disloyally to the CSSA. Construing the evidence most strongly in the
Receiver's favor, reasonable minds could only conclude that Gardner and Slish did not
act disloyally. Spitzer, 2021-Ohio-1913 at ¶ 6; Civ.R. 56(C).
D. Analysis: Whether the Decision to Reject the Settlement offer had a Rational Basis
{¶ 62} Because the Receiver did not meet her burden of demonstrating a genuine
issue of fact for trial as to potential disloyalty by Gardner and Slish, we must apply the
business-judgment rule in reviewing their decision to reject the settlement offer. Our
review is therefore limited to determining "whether the business decision made was
rational in the sense of being one logical approach to advancing the corporation's
objectives." Trados, 73 A.3d at 43. Irrationality is a high bar. "Only when a decision lacks
any rationally conceivable basis will a court infer bad faith and a breach of duty." Id. An
"irrational decision" is "'one that is so blatantly imprudent that it is inexplicable, in the
sense that no well-motivated and minimally informed person could have made it'" Id. at
fn. 18, quoting William T. Allen, Jack B. Jacobs, & Leo E. Stine, Jr., Realigning the
Standard of Review of Director Due Care with Delaware Public Policy: A Critique of Van
Gorkom and its Progeny as a Standard of Review Problem, 96 Nw. U. L. Rev. 449, 452
(2002). So we now turn to the question of rationality.
{¶ 63} Based on the information available to Gardner and Slish at the time, the
decision to reject the settlement offer and proceed to a jury verdict had a rational basis.
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That rational basis is supported by the summary judgment evidence concerning the
discussions between the directors and Hust, and other information supplied to the
directors prior to the vote.
{¶ 64} The record reflects that ClarkDietrich's attorney emailed Hust (the CSSA's
attorney) the settlement offer at approximately 8:00 p.m. on November 15, 2015. This
was a Sunday night, and closing argument was set to begin the next morning. Hust
immediately shared the settlement offer with the CSSA directors. At 10:00 p.m. the same
evening, the directors convened a conference call to discuss the settlement offer. In his
deposition, Hust described this conference call and stated that he did much of the talking.
There was a lot of discussion about how well the trial had gone and CSSA's chances of
winning a defense verdict. Hust told the directors he believed that the CSSA had a 60%
to 66% chance of winning a defense verdict. In an email to Gardner, Hust qualified this
assertion by indicating that juries are unpredictable and that the CSSA was "risking a lot"
by letting a jury decide. But ultimately, Hust characterized the directors' votes as a
"business decision."
{¶ 65} Hust testified that the directors also discussed whether ClarkDietrich's EQ
products were code compliant and the need to have that issue resolved by a verdict. Hust
explained that the directors expressed concerns about the safety of ClarkDietrich's
products. Hust stated that in light of how well the trial had gone, the CSSA directors
thought that the EQ coating question should be answered.
{¶ 66} In an email sent a few hours before receiving the settlement offer, Gardner
told the other directors that he believed that CSSA had a 66 percent chance of winning,
and only a 10 percent chance of losing. Outside of Hust's advice on the merits of the trial,
Gardner had other bases to believe that the jury would find for the CSSA, including that
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the CSSA article had been reviewed and edited before publication by David Musselwhite,
an IBC "code-compliance expert," and by Chris Kinkade, a patent attorney.
{¶ 67} Gardner expressed that winning would be "extremely helpful" with respect
to the possibility of the Antitrust Action being revived in the appellate process. That is, the
CSSA's member companies were named defendants in that Antitrust Action and Gardner
believed a favorable jury verdict in the Defamation Action would have a positive effect on
any remand of the Antitrust Action after appeal. Hust expressed this very reason to the
common pleas court in response to ClarkDietrich's motion to dismiss the case.
{¶ 68} Gardner also believed, and expressed to the other directors, that a defense
verdict would "reinstate" the CSSA's reputation. He stated his belief that ClarkDietrich
was deceiving the market and the "end-users" and that a verdict would "set the record
straight." Gardner acknowledged that losing the Defamation Action would be the "end" of
the CSSA. But he noted that the CSSA was its own corporation and no harm would befall
its member companies.
{¶ 69} In his deposition, Slish explained that he felt that if the CSSA did not see
the trial through to a verdict, "nothing was going to change relative to [ClarkDietrich's EQ
product] that was being put in the marketplace that was not listed in the ASTM 1003 Table
1." Slish explained that this issue was one of the most compelling reasons that the
discussions shifted from questioning the settlement offer to voting against it. Slish also
emphasized that if the CSSA was supposed to be an "advocate" for the steel framing
industry, and, if they just "folded up and went home," then they would no longer advocate
for the industry.
{¶ 70} In all, the summary judgment record reflects that Gardner and Slish had a
"rationally conceivable basis" for rejecting the settlement offer. Trados, 73 A.3d at 43.
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They were informed, based on their trial counsel's advice, that the trial had gone well
enough and had a greater-than-even chance of achieving a defense verdict. The directors
perceived the risk of losing and its ramifications, and concluded that this risk was
outweighed by the potential benefits to the member companies in establishing that the
statements in the CSSA's publication were true. Finally, the directors were concerned that
the settlement offer did not resolve the separate Antitrust Action. This was not a decision
that is "so blatantly imprudent that it is inexplicable." Id. at 43, fn. 18.
{¶ 71} The Receiver argues that the directors could not claim that a defense verdict
would vindicate their views about the EQ code compliance issue because the jurors in
the Defamation Action were never presented with any specific interrogatory regarding
code compliance. However, the jurors were asked in a jury interrogatory,
to determine as a whole whether the Association's publication (1) "contained a false or a misleading statement of fact in a commercial advertisement or promotion about the nature or quality of Plaintiff's nonstructural steel framing products," (2) whether the publication was "false," and (3) whether the Association made a "false and disparaging statement of fact about Plaintiff's products by publishing" the publication.
Clarkwestern Dietrich Bldg. Sys., L.L.C. v. Certified Steel Stud Assn., Inc., 2017-Ohio-
2713, ¶ 35 (12th Dist.) The CSSA could fairly point to a negative answer to these inquiries
as evidence that the jurors concluded that the organization's statements about
ClarkDietrich's products were true, and therefore not defamatory. As such, the directors
could reasonably view a defense verdict as implicitly vindicating the statements in the
CSSA's publication.
{¶ 72} Based on the foregoing analysis, the common pleas court properly
determined, as a matter of law, that the business-judgment rule applied. The court could
also find no genuine issues of any material fact, and that the evidence submitted,
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construed most strongly in favor of the Receiver, could only lead reasonable minds to the
conclusion there was some rationally conceivable basis for rejecting the settlement offer.
Spitzer, 2021-Ohio-1913 at ¶ 6; Civ.R. 56(C). Accordingly, the common pleas court did
not err in granting summary judgment in favor of Gardner and Slish on the Receiver's
breach of fiduciary duty and declaratory judgment claims. Id.
E. "Entire Fairness"
{¶ 73} The Receiver argues that the business-judgment rule does not apply here
and that Gardner's and Slish's vote should have been reviewed under the more onerous
"entire fairness" standard. However, because we have found the directors were not
conflicted as a matter of law and did not lack independence, the Receiver did not meet
her burden of overcoming the business-judgment rule and the entire-fairness standard
need not be considered. See Emerald Partners, 787 A.2d at 91.9
{¶ 74} We overrule the Receiver's and ClarkDietrich's first assignments of error.
{¶ 75} The Receiver's second assignment of error states:
THE TRIAL COURT ERRED BY DENYING SUMMARY JUDGMENT FOR THE RECEIVER.
{¶ 76} ClarkDietrich's second assignment of error states:
THE TRIAL COURT ERRED BY DENYING THE RECEIVER'S MOTION FOR SUMMARY JUDGMENT.
{¶ 77} The Receiver argues that the common pleas court erred by denying her
motion for summary judgment, arguing again that the common pleas court should have
9. ClarkDietrich and the Receiver briefly mention an argument presented to the trial court, asserting that the trial court had previously determined that entire-fairness review applied to the directors' actions and that this ruling was "law of the case." In its summary judgment decision, the trial court rejected this argument, noting that the ruling was for the limited purpose of resolving a discovery dispute and pertained to the scope of allegations in the Receiver's complaint. Neither party presents any argument or assignment of error challenging this specific ruling. As the parties have not assigned error to this issue or articulated how this aspect of the decision was substantively erroneous, we need not address it here. App.R. 12(A)(1)(b). - 25 - Butler CA2025-02-020 CA2025-02-021
reviewed the directors' actions under the "entire fairness" standard. The Receiver argues
that if the court had applied that standard, Gardner and Slish could not demonstrate, as
a matter of law, that the decision to reject the settlement offer was "entirely fair" to the
CSSA. ClarkDietrich sets forth the same argument in its appellate brief.
{¶ 78} These assignments of error are meritless based on our resolution of the first
assignments of error. As the directors were not financially interested or conflicted, the
common pleas court properly reviewed their actions under the business-judgment rule
and review under the entire-fairness standard was not required.
{¶ 79} We overrule the Receiver's and ClarkDietrich's second assignments of
error.
III. Conclusion
{¶ 80} The Receiver did not meet her burden of demonstrating that Gardner or
Slish violated their duty of loyalty to the CSSA. The CSSA existed to promote its members'
business interests and the interests of the CSSA and its member companies in rejecting
the settlement offer and proceeding to a jury verdict were aligned. Gardner and Slish had
a rational basis to reject the settlement offer. The common pleas court did not err when it
granted Gardner's and Slish's motions for summary judgment and denied the Receiver's
motion for summary judgment.
Judgment affirmed.
HENDRICKSON , P.J., and PIPER, J., concur.
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JUDGMENT ENTRY
The assignments of error properly before this court having been ruled upon, it is the order of this court that the judgment or final order appealed from be, and the same hereby is, affirmed.
It is further ordered that a mandate be sent to the Butler County Court of Common Pleas for execution upon this judgment and that a certified copy of this Opinion and Judgment Entry shall constitute the mandate pursuant to App.R. 27.
Costs to be taxed in compliance with App.R. 24.
/s/ Robert A. Hendrickson, Presiding Judge
/s/ Robin N. Piper, Judge
/s/ Matthew R. Byrne, Judge
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