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Court of Chancery Dismisses Derivative Claims Even Though Entire Fairness Arguably Applied

Delaware’s requirements for stockholders to maintain derivative actions reflect the twin principles of director management and control and accountability. Because directors manage the business and affairs of Delaware...more

United States Supreme Court Poised to Address Standard for Insider Trading Following Second Circuit's Decision in United States v....

Today, the Solicitor General filed a petition for a writ of certiorari in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), asking the United States Supreme Court to address the standard for insider trading in a...more

Securities and Corporate Governance Litigation Quarterly

Welcome to the fourth issue of Securities and Corporate Governance Litigation Quarterly, Seyfarth’s quarterly publication of the Securities & Financial Litigation Group focusing on decisions or other items of interest for...more

The Future of Securities Class Action Litigation

Securities litigation has a culture defined by multiple elements: the types of cases filed, the plaintiffs’ lawyers who file them, the defense counsel who defend them, the characteristics of the insurance that covers them,...more

Teamsters Union 25 Health Servs. & Ins. Plan v. Baiera, C.A. No. 9503-CB (Del. Ch. July 13, 2015) (Bouchard, C.)

In this opinion, the Court of Chancery dismissed a purported derivative plaintiff’s complaint for failure to adequately plead demand futility and failure to state a claim upon which relief may be granted. In doing so, the...more

Court of Appeals Warns Against Complacency in the PSLRA’s Safe Harbor

SEC Rule 10b-5 makes it unlawful to misstate a material fact (or omit to say something if the omission would render misleading what you do say) in connection with the purchase or sale of a security. The Private Securities...more

Rebutting the Fraud-on-the-Market Presumption in Securities Class Actions: Halliburton Class Certified Over Price Impact...

On July 25, 2015, Judge Barbara Lynn of the Northern District of Texas issued a formative opinion in the class actions securities arena. The case, The Erica P. John Fund, Inc., et al. v. Halliburton Co., et al., No....more

Delaware Supreme Court Reinforces Importance of Clear and Precise Bylaw Provisions and Specifically Drafted Notices of Annual...

In Hill International, Inc. v. Opportunity Partners L.P., No. 305, 2015, 2015 WL 4035069 (Del. July 2, 2015), the Delaware Supreme Court affirmed the Court of Chancery’s grant of injunctive relief as it recognized the...more

Friedman v. Dolan, C.A. No. 9425-VCN (Del. Ch. June 30, 2015) (Noble, V.C.)

In this letter opinion, the Court of Chancery dismissed claims for breach of fiduciary duty and waste under Chancery Rule 12(b)(6), holding that the business judgment rule, rather than entire fairness review, applied to...more

Solicitor-Client Privilege: The Quebec Securities Regulator Can Summon In-House Counsel to Testify in an Investigation

On July 16, 2015, the Supreme Court of Canada (SCC) denied leave to appeal to an in-house counsel (referred to as Ms. X to protect her identity) in the case of X v. Autorité des marchés financiers. The SCC thus maintained the...more

Court Dismisses in Part a Mutual Fund Excessive Fee Action Against SEI

Introduction - Over the past few years, we’ve seen a resurgence in the number of shareholder suits against mutual fund investment advisers for excessive fees under section 36(b) of the Investment Company Act. Currently,...more

Court Of Chancery Explains That The Existence Of A Controlling Stockholder Does Not Determine Demand Is Excused

Teamsters Union 25 Health Services & Insurance Plan v. Baiera, C.A. No. 9503-CB (July 13, 2015) - A transaction with a controlling stockholder that is the subject of a derivative complaint still requires that a...more

Delaware Corporation Law Now Prohibits “Fee-Shifting,” Allows Limited “Forum Selection”

On June 24, 2015, the Delaware State Legislature enacted various amendments to the General Corporation Law of the State of Delaware (the “DGCL”), which resolved two increasingly controversial issues of corporate governance....more

Delaware Legislature Rejects Fee-Shifting Bylaws for Stock Corporations

On June 24, Delaware’s Governor signed Senate Bill No. 75 into law and closed the door on the tantalizing prospect of fee shifting (“loser pays”) bylaws for Delaware stock corporations. The full text of the bill can be read...more

In re Cornerstone Therapeutics Inc. S’holder Litig., C.A. No. 564, 2014 (Del. May 14, 2015) & Leal v. Meeks, C.A. No. 706, 2014...

In these interlocutory appeals, the Delaware Supreme Court resolved a long-standing split in Delaware authorities by ruling that independent directors (including members of a special committee negotiating a transaction with a...more

Delaware Supreme Court Holds Tooley Direct vs. Derivative Rule Is No Bar to Parent Corporation’s Contract Claim

As previously reported, in NAF Holdings, LLC v. Li & Fung (Trading) Limited, 772 F.3d 740 (2d Cir. 2014), the Second Circuit certified to the Delaware Supreme Court an unusual question regarding whether the direct vs....more

Court Rules Shareholders May Be Sued In De Facto Dissolution

California Corporations Code Section 2011 provides that causes of action against a dissolved corporation, whether arising before or after dissolution, may be enforced against its shareholders if any of the assets of the...more

Delaware Governor Signs Bill Prohibiting Bylaws on Fee-Shifting

Last week, Delaware Governor Jack Markell signed Senate Bill 75, which amends the Delaware General Corporation Law to prohibit Delaware stock corporations from adopting bylaws that force shareholders to pay legal fees if they...more

Professor Bainbridge Takes On S.B. 75 And The Delaware Bar

UCLA Law Professor Stephen Bainbridge recently posted an article calling Delaware’s recently enacted S.B. 75 a “self-inflicted wound”. SB 75, which was signed into law late last month, limits the ability of Delaware stock...more

Executive Compensation Paid to Controlling Shareholders Subject to Business Judgment Review When Approved by an Independent...

Members of the Dolan family hold 73% of the voting power of Cablevision Systems Corporation’s stock. A shareholder commenced a derivative action regarding the executive compensation paid to Dolan family members serving as...more

Theratechnologies Inc. V. 12185 Canada Inc: Supreme Court Of Canada Raises The Bar For Obtaining Leave To Bring Secondary Market...

In Theratechnologies inc. v. 12185 Canada inc., the Supreme Court of Canada has ruled that requirements that plaintiffs demonstrate that their claims have been brought in good faith and have a reasonable chance of succeeding...more

Calma v. Templeton, C.A. No. 9579-CB (Del. Ch. Apr. 30, 2015) (Bouchard, C.)

In this opinion, the Court of Chancery denied a motion to dismiss a claim challenging grants of compensation to non-employee directors pursuant to a compensation plan that had been approved prospectively by stockholders. The...more

"The New Mutual Fund Exception: Ninth Circuit Allows Direct Claims to Redress Derivative Injury"

Courts have sought to simplify their approach to determining whether an action is derivative or direct — a determination that the Delaware Supreme Court has acknowledged “is sometimes difficult.” Tooley v. Donaldson, Lufkin &...more

Delaware Supreme Court Rejects Presumption of Disloyalty for Independent Directors

Public companies incorporated in Delaware frequently adopt a charter provision, pursuant to 8 Del. C. § 102(b)(7), that insulates their directors from monetary damages for breaches of the fiduciary duty of care. Those...more

Blog: Delaware Chancery Court Applies Entire Fairness Standard Of Review To Director Compensation

What is the judicial standard of review applicable to an award of compensation by directors to directors under an equity incentive compensation plan that has been approved by the shareholders? That was the question before...more

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