Securities Civil Procedure

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Delaware Supreme Court Preserves Benefit of Exculpatory Provisions for Independent Directors at Motion to Dismiss Stage

A recent decision by the Delaware Supreme Court provides independent directors, such as special committee members, with the ability to escape protracted fiduciary duty litigation during its initial stages. The court’s...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 Holds That a Stockholder Plaintiff Must Plead a Non-Exculpated Claim to Avoid Section 102(b)(7)-Based...

In the consolidated appeal In re Cornerstone Therapeutics Inc., Stockholder Litigation and In re Zhongpin Stockholders Litigation, Nos. 564, 2014 and 706, 2014, 2015 Del. LEXIS 231 (Del. May 14, 2015), the Delaware Supreme...more

Important Delaware Supreme Court ruling on use of charter provision to seek preliminary dismissal – 3 key takeaways

In a decision jointly resolving two appeals - In re Cornerstone Therapeutics Inc. Stockholder Litigation and Leal v. Meeks - the Delaware Supreme Court clarified seemingly conflicting Delaware case law. The decision sought to...more

Fee-Shifting Prohibition Clears a Hurdle

Last week, the Delaware Senate, in response to a prior Delaware Supreme Court ruling, voted to approve legislation that would prohibit corporations from adopting charter or bylaw provisions that shift a corporation’s legal...more

Delaware court of chancery issues significant ruling on the ability of creditors to assert fiduciary duty claims against...

In Quadrant Structured Products Co. v. Vertin, 2015 WL 2062115 (Del. Ch. May 4, 2015), the Delaware Court of Chancery (Vice Chancellor J. Travis Laster) announced a bright-line standard governing the threshold inquiry of when...more

CLIENT ALERT: Delaware Supreme Court Establishes Rule Permitting Dismissal of Independent Directors From Entire Fairness Suits

In re Cornerstone Therapeutics Inc. S’holder Litig., No. 564, 2014 (Del. May 14, 2015) & Leal v. Meeks, No. 706, 2014 (Del. May 14, 2015) In these interlocutory appeals, the Delaware Supreme Court resolved a...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

Assembly Committee Seeks To Fix Securities Fraud Statute

Readers of this blog will know be familiar with my criticism of the 2013 amendment of California’s basic securities fraud statute, Corporations Code Section 25401. See California Creates Complete Chaos By Rewriting...more

Supreme Court Clarifies When Independent Directors May Be Dismissed From Case

This important Supreme Court decision clarifies when independent, disinterested directors may be dismissed from litigation, even when an interested transaction is under attack. When the complaint only alleges a breach of the...more

Delaware Supreme Court Clarifies Pleading Standard For Claims Against Independent Directors

Yesterday, in In re Cornerstone Therapeutics, Inc. Stockholder Litigation, the Supreme Court of Delaware held that plaintiffs seeking monetary damages against disinterested, independent directors must plead facts sufficient...more

Southeastern Pennsylvania Transportation Authority, v. AbbVie, Inc., CA No. 10374-VCG and Rizzolo v. AbbVie Inc., CA No. 10408-VCG...

In this memorandum opinion, the Court of Chancery denied two stockholders’ request for the inspection of books and records of a company pursuant to 8 Del. C. § 220, finding that the stockholders failed to show a credible...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

SEC Enforcement Division Issues Guidance on Venue Selection

Respondents in SEC enforcement actions increasingly will litigate a wide array of matters in administrative proceedings, rather than having their day in federal district court. In the wake of significant public...more

Nomura Found Liable in RMBS Trial

On May 11, 2015, Judge Denise Cote of the United States District Court for the Southern District of New York found Nomura Holdings Inc. liable for inaccurately characterizing the mortgage loan collateral backing seven RMBS...more

The First, First Circuit Court to Opine on a Newman Challenge

And the Insider Trading Charges Stick - On May 12, 2015, in United States v. Douglas Parigian, U.S. District Court Judge Denise Casper became the first judge in the First Circuit to opine on a challenge to insider...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

Is the Conflict Minerals Law Helping?

Those toiling away for the second required conflict minerals filings are sure to wonder whether the law is having any positive impact. Politico has an interesting article about a trip to the DRC in an attempt to answer that...more

The Efficient Market Theory—§ 10(b)’s Double-Edged Sword - The Eleventh Circuit in Sappssov Deploys Meyer in Affirming Dismissal...

On May 11, 2015, the Eleventh Circuit, relying on the “efficient market theory” as explained in Meyer v. Greene, 710 F.3d 1189, 1195 (11th Cir. 2013), affirmed the dismissal of a shareholder class action for failing to...more

Corporate & Financial Weekly Digest - Volume X, Issue 19

In This Issue: - FINRA's NAC Strengthens Sanction Guidelines Related to Fraud and Suitability - CFTC Revises Interpretation on Forward Contracts with Embedded Volumetric Optionality - CFTC Requests Public...more

Delaware Senate Upholds Ban on Fee-Shifting Provisions in Corporate Governing Documents

The Delaware Senate has passed a bill that would amend the Delaware General Corporation Law (DGCL) to prohibit Delaware stock-based companies from adopting bylaws or articles of incorporation that shift legal fees to the...more

Safe Harbors and Securitizations: Loan Payments in Connection with a Commercial Mortgage-Backed Securitization Protected from...

Krol v. Key Bank National Association, et al. (In re MCK Millenium Centre Parking, LLC), Adv. No. 14-00392 (N.D. Ill. Apr. 24, 2015) - Case Snapshot In Krol v. Key Bank National Association, et al. (In re MCK Millenium...more

Oklahoma Firefighters Pension & Ret. Sys. v. Citigroup Inc., C.A. No. 9587-ML (VCN) (Del. Apr. 24, 2015) (Noble, V.C.)

In this memorandum opinion, the Court denied the exceptions of defendant Citigroup Inc. (“Citigroup” or the “Company”) to the Master’s Final Report and adopted the recommendations therein related to a demand to inspect the...more

District Court Denies Motion to Dismiss Securities Class Action Against Urban Outfitters

The US District Court for the Eastern District of Pennsylvania recently denied a motion to dismiss filed by Urban Outfitters, Inc. and its senior executives in a securities fraud class action. The court found that the...more

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