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Delaware Supreme Court Holds That Plaintiffs Must Specifically Plead Non-Exculpated Claims Against Disinterested Directors in...

In In re Cornerstone Therapeutics Inc. Stockholder Litigation/Leal v. Meeks, the Delaware Supreme Court reversed decisions of the Delaware Chancery Court denying director-defendants’ motions to dismiss breach of fiduciary...more

Seventh Circuit Reverses $2.46 Billion Judgment in Securities-Fraud Class Action

The Court of Appeals for the Seventh Circuit last week reversed a $2.46 billion judgment in a long-running securities-fraud class action against Household International and granted a new trial on limited issues. The opinion...more

Exercising Registration Rights Did Not Violate Fiduciary Duties

Molycorp, Inc. is a publically traded Delaware corporation engaged in a the production and sale of rare earth oxides. Private equity investors held 44% of Molycorp’s stock, appointed certain directors and had demand...more

Northstar v. Schwab: The Ninth Circuit’s End Run Around Derivative Lawsuits in the Mutual Fund Context

It is well recognized that only investors have standing to sue a mutual fund on behalf of a class of investors and that a fiduciary duty claim accusing fund trustees of mismanagement is the property of the fund, and not of...more

Violation of Corporate Charter: Breach of Contract, Fiduciary Duties or Both

When a company takes action through its board in violation of its certificate of incorporation, may a plaintiff stockholder bring suit against the company directly for breach of its certificate—the most important of corporate...more

Delaware Supreme Court Clarifies That Section 102(b)(7) Charter Provisions May Be Basis For Dismissal At The Pleading Stage In...

On May 14, 2015, the Delaware Supreme Court clarified that, even in conflict-of-interest transactions subject to "entire fairness" review, breach of fiduciary duty claims against independent, disinterested directors should be...more

Delaware Supreme Court Confirms Exculpatory Clauses Have Teeth, and Can Be Used By Director Defendants At The Pleading Stage

In a decision with important implications for directors of public companies, the Delaware Supreme Court overturned two Chancery Court opinions and ruled that independent directors facing breach of duty of care claims arising...more

An Exercise of Business Judgment: Chancery Court Dismisses Shareholder Derivative Demand-Refused Case

Last week, Vice Chancellor Glasscock released an important decision dismissing a case under Rule 23.1 that was brought by a DuPont shareholder who alleged that the board improperly refused a demand to sue DuPont’s officers...more

Delaware Supremes Give Independent Directors a Way Out

In an opinion Thursday, the Delaware Supreme Court held that independent directors should be dismissed from shareholder derivative litigation – even over transactions presumptively subject to “entire fairness” review – unless...more

M&A Update: Delaware Supreme Court Issues Important Ruling Protecting Independent Directors

On May 14, 2015, the Delaware Supreme Court ruled that claims against independent directors must be dismissed when a company charter provision shields directors from monetary liability for breach of the duty of care and the...more

Delaware Dismisses Caremark Claim Against DuPont

The Delaware Court of Chancery recently dismissed a derivative action in Ironworkers District Council of Philadelphia & Vicinity Retirement & Pension Plan v. Andreotti et al. One of the many claims alleged was a Caremark...more

Business Litigation Report - May 2015

In This Issue: - Main Article: ..Insider Trading After United States v. Newman, the Second Circuit’s Landmark Decision Limiting Liability of Downstream Recipients of Insider Information - Noted With...more

Court Of Chancery Explains Creditor’s Right To File Fiduciary Duty Claims

While it is generally known that creditors may only file derivative suits when the company is insolvent, there have been many open issues about what exactly that means. This decision answers many of those questions by...more

California Court Upholds Exclusion in Policy Application

In Crown Capital Securities, L.P. v. Endurance American Specialty Ins. Co., 2015 Cal. App. LEXIS 305, the California Court of Appeal had the opportunity to consider a denial of coverage based on an exclusion stated in the...more

Court Of Chancery Explains How To Prove Bad Faith

While not a corporate case, this decision is useful in explaining how to prove a party acted in bad faith so as to be outside the exculpation provisions of a trust or Sec. 102(b)(7). ...more

Tenth Circuit Court of Appeals Dismisses Failed Bank Shareholder Derivative Suit under FIRREA

On April 21, the United States Court of Appeals for the Tenth Circuit upheld the dismissal of a bank shareholders’ suit against a bank holding company – and its officers and directors – for breach of fiduciary duty. Barnes v....more

Georgia Supreme Court: Insured Cannot Sue for Settlement Amount of Bad Faith Absent Insurer’s “Consent to Settle”

On April 20, 2015, the Georgia Supreme Court unanimously held that when an insured fails to seek its insurer’s consent to settle a claim, the insured cannot pursue litigation against its insurer to recover settlement amounts...more

Implications of the U.S. Supreme Court Omnicare Decision

On March 24, 2015, the U.S. Supreme Court issued its decision in Omnicare, Inc., et al. v. Laborers District Council Construction Industry Pension Fund, et al., addressing when an issuer may be held liable for material...more

A Further Harbinger on the Application of SLUSA

On March 30, 2015, the U.S. District Court for the Southern District of New York dismissed claims in a putative class action against New York-based hedge fund manager Philip A. Falcone (“Falcone”), his advisory firm Harbinger...more

Three Top Considerations After Omnicare

In Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 575 U. S. ____ (2015), the Supreme Court clarified issuer liability under §11 of the Securities Act. Section 11 provides that issuers are...more

SEC Files Two Offering Fraud Actions Tied To A Horse Farm

The Commission filed two settled offering fraud actions centered in part around an entity engaged in the purchase and sale of thoroughbred horses called Raintree Racing. A second involved an offering of interests in a real...more

“Friends” Who Trade on Inside Information: How United States v. Newman Changes the Law

In unsuccessfully seeking rehearing in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), reh’g denied, Nos. 13-1837, 13-1917 (2d Cir. Apr. 3, 2015), the government acknowledged that the Second Circuit’s recent decision in...more

BlackRock, CCO Settle SEC Conflict Charges

Conflicts of interest involving market professionals continue to be a focus of SEC enforcement. In many cases the conflict is uncovered by the inspection staff, OCIE. This time, however, the information came from an article...more

Orrick's Financial Industry Week in Review

Steps Towards a Capital Markets Union - The European Commission is consulting on a blueprint for creating a harmonized capital market across the EU, to facilitate capital raising in the EU while maintaining consumer and...more

Second Circuit Denies DOJ’s Request for En Banc Review of Newman; Leaves Landmark Insider Trading Decision in Place

The Second Circuit today denied the request by the U.S. Attorney’s office for the Southern District of New York for panel or en banc rehearing of the landmark U.S. v. Newman decision, which overturned insider-trading...more

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