Breach of Duty

News & Analysis as of

Corporations Don't Independently Owe Fiduciary Duties to Stockholders

On Aug. 7, Vice Chancellor Sam Glasscock III issued a letter opinion in the matter Buttonwood Tree Value Partners LP v. R.L. Polk & Co., C.A. No. 9250-VCL, that is not attention-grabbing because it wrestles with some nuanced...more

7th Circuit Holds Excess Insurer Has No Duty to Indemnify Punitive Damages

In its recent decision in Fox v. Am. Alternative Ins. Corp., 2014 U.S. App. LEXIS 12799 (7th. Cir. July 7, 2014), the United States Court of Appeals for the Seventh Circuit, applying Illinois law, had occasion to consider...more

Court Rules LLC Form Provided No Fiduciary Shield To Personal Jurisdiction

Last Friday’s post concerned whether a plaintiff could establish jurisdiction by tagging a corporate officer attending a conference in California. The question was whether a corporation is present wherever its officers are...more

Law Firms Are Not Body Shops: An Insurer’s Duty to Defend Requires it to Pay Only the Defense Costs the Insured Actually Paid

In the course of discharging their coverage obligations, insurers often benefit from bargains they strike with service providers. Healthcare insurers pay in-network caregivers rates that are dramatically lower than the...more

This Week In Securities Litigation

The Second Circuit upheld SEC Rule 10b-5-2 which defines certain types of relationships as the predicate for insider trading. In reaching its conclusion the Court rejected an argument that an insider trading claim must be...more

Ontario Court Of Appeal Upholds Finding of Breach of Fiduciary Duty Respecting Executive Compensation

The Ontario Court of Appeal recently upheld a trial court decision which concluded that the CEO, who was also a director, breached his fiduciary duty to the corporation when the directors of Unique Broadband Systems, Inc....more

Director Liability for Cybersecurity Risks

If a corporation is the target of a cyberattack resulting in a data breach, its board may be the target of a shareholder derivative action claiming breach of fiduciary duty. A recent example is Palkon v. Holmes, No....more

Divided Fourth Circuit Panel Rules On Burden of Proving Loss Causation in ERISA Fiduciary Breach Case

That was the sentiment expressed in a blistering dissent by Fourth Circuit Judge J. Harvie Wilkinson in the latest ruling in a lawsuit challenging the decision by the fiduicaries of the RJR 401(k) plan to liquidate two stock...more

District Court Confirms Caremark Applies to Audit Committee Oversight of Internal Controls

The U.S. District Court for the Northern District of California recently granted a motion to dismiss a derivative action in which the plaintiff alleged that the directors of VeriFone Systems, Inc. breached fiduciary duties...more

Third Circuit Rejects Claim that Fiduciary Duty Required For Insider Trading

Insider trading cases frequently turn on the nature of the relationship between the trader and the person who is the source of information. The breach of that relationship of trust and confidence can supply the statutory...more

The Reckless Fiduciary: When Are Imprudent U.S. Fiduciaries Liable For Plan Losses?

“A pure heart and an empty head are not enough.” This is a quote from an early case defining the scope of ERISA fiduciary liability. However, ERISA has always made fiduciaries responsible only for losses caused by their...more

Recent Developments in California Bad Faith Law and Related Trends

On July 29, 2014, I spoke on a panel about recent developments in California bad faith law and related trends. My co-presenter was Robert K. Scott of The Law Offices of Robert K. Scott, and we gave the presentation at ACI’s...more

Venture Capital Firm Liable For "Aiding And Abetting" Breach Of Fiduciary Duty

A recent case in the California Court of Appeals underscores the dangers that await venture capital firms brave (or foolish) enough to fund companies in the midst of internal disputes. In American Master Lease LLC v Idanta...more

Delaware Likes Garner/California Not So Much

In 1970, Richard Nixon was president, the 26th Amendment was still not part of the Constitution, and the Fifth Circuit Court of Appeals issued its opinion in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970). In that...more

Doing Business in Canada: Directors' Liabilities

DIRECTORS’ LIABILITIES - In Canada, there is a legal duty for every director and officer of a corporation to act honestly and in good faith with a view to the best interests of the corporation when exercising his/her...more

Hedge Funds and Material Nonpublic Information: The Role of Deception, Duty, Breach, Personal Benefit and Knowledge in Creating...

The last thing hedge funds need is another wake up call about the risks of liability for trading on the basis of material nonpublic information. But if they did, a July 17 article in the Wall Street Journal would provide it....more

They are coming for your client’s data. What will you do if they succeed?

Data security breaches—no industry is immune. These hackers can phish, spoof, skim, packet sniff, and key log their way into your system. Once a hacker successfully hacks into a corporation’s server, the breach will go...more

IR Executive Settles SEC Insider Trading Charges

The SEC filed a settled insider trading case against a partner in an investor relations firm who traded securities based on information he obtained from draft press releases he worked on for firm clients. The settled action...more

U.S. Supreme Court Changes Fiduciary Rules for Retirement Plans with Employer Stock

A recent U.S. Supreme Court decision affects fiduciaries of retirement plans that have investments in employer stock. In the decision, the Supreme Court held that a retirement plan fiduciary is not entitled to a presumption...more

Employee Benefits Update: Unanimous Supreme Court Issues ERISA Fiduciary Duty Opinion

On June 25, the Supreme Court issued a unanimous decision in Fifth Third Bancorp v. Dudenhoeffer, which is likely to change the future of the Employee Retirement Income Security Act (ERISA) stock drop litigation. ...more

Dent v. Ramtron Int’l Corp., C.A. No. 7950-VCP (Del. Ch. June 30, 2014) (Parsons, V.C.)

In this memorandum opinion, the Court of Chancery granted the defendant’s motion to dismiss the plaintiff’s claims that defendants breached their fiduciary duties in connection with the sale of the defendant-corporation to a...more

Rail Corporation New South Wales v King [2014] NSWCA 207

The New South Wales Court of Appeal recently handed down judgment in the matter of Rail Corporation New South Wales v King. The facts of the matter are that at 3:00 am on the morning of Saturday, 2 September 2006, Shane King...more

First Circuit Finds for Life Insurer in ERISA Class Action Challenging Retained Asset Accounts to Pay Life Insurance Benefits

In a unanimous panel decision, the U.S. Court of Appeals for the First Circuit reversed a trial court’s ruling that the defendant, Unum Life Insurance Company of America (Unum), had breached fiduciary duties under the...more

Raul v. Astoria Fin. Corp., C.A. No. 9169-VCG (Del. Ch. June 20, 2014) (Glasscock, V.C.)

In this memorandum opinion, the Court of Chancery granted defendant’s motion to dismiss, finding that plaintiff was not entitled to attorneys’ fees under the corporate benefit doctrine because plaintiff had not presented a...more

Pro Se Defendant Wins Trial On Breach Of Fiduciary Duty Claims In Business Court

When I was a young pup preparing to go to court against the uncommon adversary who was proceeding without a lawyer, I would joke that "I hope I don't lose." Luckily, I never did....more

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