In Burks et al. v. Lasker et al., the U.S Supreme Court ruled that federal courts must defer to state law in determining whether directors of an investment company could be held liable for a breach of fiduciary duty, reversing the decision made by lower courts. The case arose when shareholders sued fund managers and directors, alleging they had breached their fiduciary duties by allowing excessive fees to be paid out from fund assets. Lower courts dismissed the claims against independent directors based on provisions in the Investment Company Act which seemed to shield them from liability unless they had personally profited or engaged in willful misfeasance or gross negligence amounting to active malfeasance. However, upon review, the Supreme Court found that these provisions did not preclude suits under state law where there might be different standards for director liability.

In the dissenting opinion for Burks et al. v. Lasker et al., Justice Rehnquist disagreed with the majority's interpretation of federal law and its impact on state laws governing corporate directors' fiduciary duties. He argued that Congress, in passing relevant legislation, did not intend to override or interfere with existing state laws regulating corporations but rather sought to supplement them where necessary. Therefore, he believed that Maryland's business judgment rule should apply in this case as it would protect directors from liability unless they were proven guilty of gross negligence or bad faith actions - a standard which was not met here according to him. Furthermore, he expressed concern about the potential negative implications of allowing federal courts to disregard well-established state laws regarding internal affairs of corporations based solely on their interpretations of federal statutes.