The same duty that applies in a director or officer's dealings with shareholders applies with equal force with respect to their dealings with the corporation itself. See Rowland v. Kable, 174 Va. 343, 366, 6 S.E.2d 633, 642 (1940) ; see also Byelick v. Vivadelli, 79 F.Supp.2d 610, 623 (E.D.Va.1999) (“It is well settled that a Virginia corporation's directors and officers owe a duty of loyalty both to the corporation and to the corporation's shareholders.” (quoting WLR Foods v. Tyson Foods, Inc., 869 F.Supp. 419, 421 (W.D.Va.1994) (internal quotations and alterations omitted))).

"When confronted with uncertain state law, a federal court, sitting in diversity jurisdiction, must predict what course the highest court in the state would take." Byelick v. Vivadelli, 79 F. Supp.2d 610, 623 (E.D. Va. 1999). The court can base this prediction on "canons of construction . . . recent pronouncements of general rules or policies by the state's highest court, well considered dicta, and the state's trial court decisions."

In their respective briefs in support of, and in opposition to, the defendants' motion to dismiss, the parties discussed the somewhat conflicting decisional law that has emerged out of this district on the issue whether, in Virginia, an individual shareholder of a corporation may sue an officer or director of that corporation for breach of fiduciary duty. Compare American General Ins. Co. v. Equitable General Corp., 493 F. Supp. 721 (E.D.Va. 1980), with Byelick v. Vivadelli, 79 F. Supp.2d 610 (E.D.Va. 1999). It is unnecessary to examine Storey's breach of fiduciary duties claim in perspective of the American General Ins. Co. and Byelick decisions, however, because, since they were decided, the Supreme Court of Virginia authoritatively has decided the precise issue that the parties dispute.

"The district court also `must view the evidence presented through the prism of the substantive evidentiary burden.'" Byelick v. Vivadelli, 79 F. Supp.2d 610, 616 (E.D. Va. 1999) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-52 (1986)) (in the context of motion for summary judgment) B. The Constructive Fraud Verdict

In January 2011, the organization took the further step of incorporating under Virginia law. Since then, it has conducted its activities as a nonprofit corporation under the name National Security Counselors, Inc. Virginia law imposes governance obligations on nonprofit corporations like NSC. Anyone acting as a director to such a corporation owes a duty of loyalty to the interests of the corporation and must guard against conflicts of interest. See Byelick v. Vivadelli, 79 F.Supp.2d 610, 623 (E.D.Va.1999); see also Dodge v. Trs. of Randolph–Macon Woman's Coll., 276 Va. 10, 661 S.E.2d 805, 809 (2008) (applying corporate directors' duties to directors of nonstock charitable corporation). A director must discharge all directorial duties “in accordance with his [or her] good faith business judgment of the best interests of the corporation.”

This interpretation of the limitations standard has metamorphosed into the majority view. See, e.g., Rothman v. Gregor, 220 F.3d 81, 97-98 (2d Cir. 2000); Morton's Mkt. Inc. v. Gustafson's Dairy, Inc., 198 F.3d 823, 836 (11th Cir. 1999); Sterlin, 154 F.3d at 1201; Marks, 122 F.3d at 368; Byelick v. Vivadelli, 79 F.Supp.2d 610, 619 (E.D.Va. 1999); see also Berry v. Valence Tech., Inc., 175 F.3d 699, 704 (9th Cir. 1999) (predicting that the Ninth Circuit, were it to adopt the inquiry notice rule, would subscribe to the Sterlin court's approach). This consensus has become particularly evident since Lampf.

The question whether the fiduciary duty of a director of a close corporation runs to stockholders individually, as well as to stockholders as a class, does not appear to have been decided in Virginia. Compare Byelick v. Vivadelli, 79 F. Supp.2d 610, 624-25 (E.D.Va. 1999) (predicting that the Virginia Supreme Court would recognize a claim against an inside director by a minority shareholder in a close corporation), with American Gen. Ins. Co. v. Equitable Gen. Corp., 478 F. Supp. 721, 740-41 (E.D.Va. 1980) (holding that the fiduciary duty of directors under Virginia common law attaches only to dealings with the shareholders as a class). We need not resolve this question here because we reject Berman's claims on different grounds.

Directors and officers of Virginia corporations owe fiduciary duties to their corporation and to the corporation's shareholders. Byelick v. Vivadelli, 79 F.Supp.2d 610, 623 (E.D. Va. 1999); A.I.M. Percolating Corp. v. Ferrodine Chem. Corp., 124 S.E. 442, 445 (Va. 1924). The law considers directors and officers to have a “quasi trust” relation with the corporation and the stockholders as a class, meaning that they “must act in the utmost good faith, and this good faith forbids placing himself in a position where his individual interest clashes with his duty to his corporation.” Rowland v. Kable, 6 S.E.2d 633, 642-43 (Va. 1940).

DCG & T ex rel. Battaglia/Ira v. Knight actually cuts against the defendants' argument because the court in that case noted that the Virginia statute in question "refers to a corporation's (and not a shareholder's) right to void an interested director transaction." 68 F.Supp.3d 579, 589 (E.D. Va. 2014) (quoting Byelick v. Vivadelli , 79 F.Supp.2d 610, 628 (E.D. Va. 1999) ). As such, the court held that the statute only applied in derivative suits, not shareholder class actions such as the case at hand.

When confronted with uncertain state law, a federal court must predict what course the highest court in the state would take. Byelick v. Vivadelli, 79 F. Supp. 2d 610, 623 (E.D. Va. 1999). The federal court may base its prediction on "canons of construction, restatements of the law, treatises, recent pronouncements of general rules or policies by the state's highest court, well considered dicta, and the state's trial court decisions."