Board of Directors Shareholder Litigation

News & Analysis as of

How to Answer When an Activist Calls

The increasing activist stockholder demands upon boards of directors call for careful responses. The recent Delaware Court of Chancery decision In re Ebix Stockholder Litigation, C.A. No. 8526-VCN (Del. Ch. Jan. 15, 2016),...more

Court Of Chancery Explores The Effect Of Federal Settlements On A Delaware Action And Applies Unocal To Bylaw Amendments

First, the Court explores the effect settlement agreements in two federal court actions might have on claims in a Delaware action. The decision holds that the settlements did not release the Delaware plaintiffs’ derivative...more

5 Securities Litigation Issues to Watch in 2016

The coming year promises to be a pivotal one in the world of securities and corporate governance litigation. In particular, there are five developing issues we are watching that have the greatest potential to significantly...more

District Court Explains Caremark Proof Requirements In Pleading

To meet the pleading requirements to state a Caremark claim it is necessary that you show either the board ignored signs of wrongdoing or at least took no steps to prevent such wrongdoing. This decision contains an excellent...more

Business Litigation Alert: "Is Your Board of Directors Providing Sufficient Oversight for Cyber Attacks?"

Last month, we discussed the recent federal court decision that allows whistleblowers to sue board members directly for retaliation. Now, it seems as though board members are assuming a bigger role in managing another...more

Court of Chancery Again Explains Claim Against An Investment Banker

In this unusual factual circumstance, the Court denied a motion to dismiss a claim against an investment banker for aiding and abetting a board’s alleged breach of its duty to act with care. Note that the board itself was...more

Ninth Circuit Rejects Adverse-Interest Exception in Fraud-on-the Market Securities Class Actions

Last week, the Ninth Circuit issued a decision that could affect analyses of corporate scienter in securities class actions. The court reversed the dismissal of In re ChinaCast Education Corporation Securities Litigation and...more

Southern District of Florida Case Challenging Bylaw Requiring Minimum Stake to Sue Dismissed

As we have previously discussed, there has been a growing trend of corporations’ adopting various types of bylaws to define the bounds of shareholder litigation. These include forum-selection bylaws and fee-shifting bylaws...more

Insights: The Delaware Edition - October 2015

We are pleased to share with you the inaugural issue of Insights: The Delaware Edition, a periodic publication addressing significant Delaware deal litigation and corporation law developments. In This Issue: - Q&A...more

Delaware Court of Chancery Cautions Directors: Be Vigilant in Recognizing Advisor’s Conflict of Interests

Shareholders challenged the merger of Zale Corporation with Signet Jewelers Ltd. In a decision dated October 1, 2015, the Delaware Court of Chancery credited allegations that the board of directors of Zale breached its...more

Update from Wilson Elser’s D&O Insurance Digest

Litigation Developments and Mega Settlements - Dole Food, Inc. Derivative Action – Delaware Chancery Court Finds D&Os Engaged in Fraud - Dole Food, Inc. shareholders sued Dole Chairman and CEO David Murdock and Dole...more

Shareholder Suit Challenging Groundbreaking Minimum-Support-To-Sue Bylaw Dismissed

In what is believed to be the first case nationwide seeking to strike down a groundbreaking corporate bylaw aimed at combatting frivolous shareholder class actions, Emergent Capital, Inc., has secured the dismissal with...more

Ninth Circuit Affirms Dismissal of '40 Act Section 36(b) Excessive Fee Action Against Davis

The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of an amended complaint asserted by a shareholder of the Davis New York Venture Fund (the “Fund”) under section 36(b) of the Investment Company...more

Court Of Chancery Explains Investment Banker Conflict Leads To Aiding And Abetting Claim

Here the banker failed to make a timely disclosure to its client that it had previously pitched the buyer to make a bid for the client. The Court found that in the context of a motion to dismiss the Board may have breached...more

M&A Update: Fully Informed Vote of Disinterested Stockholders Results in Business Judgment Rule Protection in Post-Closing Review...

In an October 2, 2015 decision, Corwin, et al. v. KKR Financial Holdings LLC., et al., the Delaware Supreme Court clarified that once a merger closes, as long as it has been approved by a fully informed vote of the...more

Delaware Court Leaves Ousted Executive on His Own for Legal Fees

In a September 11, 2015, decision, the Delaware Chancery Court denied a former officer and director advance reimbursement of legal fees in a dispute with his company, despite his insistence that multiple corporate documents...more

Justice Friedman Allows Breach of Fiduciary Duty Claim to Proceed Against Corporate Directors Under Delaware Law

In AP Services, LLP v. Lobell et. al, No. 651613/2012, 2015 NY Slip Op 31115(U) (N.Y. Sup. Ct. June 19, 2015) (argued Feb. 21, 2014), Justice Friedman, applying Delaware Law, denied a motion to dismiss plaintiff AP Services,...more

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 3

Herbert Chen and Derek Sheeler v. Robert Howard-Anderson, Steven Krausz, Robert Abbott, Robert Bylin, Thomas Pardun, Brian Strom, Albert Moyer, Jeanne Seeley, and Occam Networks, Inc., C.A. No. 5878–VCL, Oral Argument on...more

Minority Shareholder Owed No Fiduciary Duty To Other Shareholders In Merger Transaction

Judge Gale's decision earlier this month in Corwin v. British American Tobacco PLC, 2015 NCBC 74 dismissed all of the claims of the Plaintiff class. If the name Corwin is ringing a bell with you, his case is the shareholder...more

Court Of Chancery Denies Standing After Spin-Off

After a spin–off of a subsidiary, there is a question as to whether the subsidiary’s stockholders have standing to bring a derivative suit on behalf of the subsidiary for past wrongs against the subsidiary committed by the...more

In re General Motors Company Derivative Litig., C.A. No. 9627-VCG (Del. Ch. June 26, 2015) (Glasscock, VC)

In this memorandum opinion, the Court of Chancery dismissed a derivative complaint under Rule 23.1, finding that plaintiffs failed to show that the board of directors (the “Board”) of General Motors Company (“GM”) acted in...more

Reminder to Delaware Corporations of New Statute Effective Aug. 1, 2015 – Time to Amend Your Bylaws to Authorize Delaware as the...

A great deal of attention has been paid over the past few years to efforts made by corporations to control in which courts fiduciary duty and other claims may be brought against directors and officers. Effective August 1,...more

SEC Proposes Broadened Rules on Clawback of Incentive-Based Compensation

Proposed Rules would require increased disclosures on companies’ recovery processes and affect the majority of issuers with listed securities. Background - On July 1, 2015, the Securities and Exchange Commission...more

Delaware General Corporation Law Amendments

On June 24, 2015, Delaware Governor Jack Markell approved several important amendments to the Delaware General Corporation Law (the “DGCL”),[1] with such amendments generally becoming effective on August 1, 2015. These...more

Are “Proxy Puts” Kaput?

“Proxy put” provisions, which have been widely used in credit agreements and indentures since the 1980s, have recently garnered the attention of shareholders and plaintiffs lawyers, calling into question their value and the...more

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