Dodge v. Ford Motor Co., 204 Mich 459; 170 NW 668 (1919), is a case in which the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a manner for the benefit of his employees or customers. It is often taught as affirming the principle of "shareholder primacy" in corporate America, although that teaching has received some criticism.
As of 2022, in Delaware, the jurisdiction where over half of all U.S. public companies are domiciled, shareholder primacy is still upheld.
There are some intepretation of the case also affirmed the business judgment rule that directors may exercise is expansive, leaving Ford and other business a wide latitude about how to run the company, if management decisions can point to any rational link to benefiting the corporation as a whole.
Facts
By 1916, the Ford Motor Company had accumulated a surplus of $60 million. The price of the Model T, Ford's mainstay product, had been successively cut over the years while the wages of the workers had dramatically, and quite publicly,...
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