Breach of Duty

News & Analysis as of

Second Circuit: Facebook Shareholders Lack Standing for Derivative Suits Challenging Pre-IPO Statements

Earlier this week, a U.S. Court of Appeals for the Second Circuit opinion reinforced that federal courts take standing in derivative actions quite seriously, particular when the alleged director misconduct predated the IPO....more

Claiming Tipper Received No Benefit, Defendant Invokes Newman in Seeking to Dismiss Insider Trading Allegations

A defendant in an insider trading case who allegedly profited from his inside knowledge recently filed a motion to dismiss in the US District Court for the District of Rhode Island to drop him from a Securities and Exchange...more

Potential Erosion of the Distinction Between Benefits Denials and Breach of Fiduciary Duty under ERISA in the Tenth Circuit

A recent decision from a federal district court in the Tenth Circuit provides an example of the potential erosion of the distinction between claims for wrongful denial of benefits and breach of fiduciary duty under the...more

Tenth Circuit Addresses ERISA Limitations Provision in Class Action Decision

In Fulghum v. Embarq. Corp., 785 F.3d 395 (10th Cir. 2015), the Tenth Circuit Court of Appeals considered the claims of a class of telephone company retirees whose life and health insurance benefits were reduced or eliminated...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

Maryland District Court Grants Insurer’s Motion to Dismiss Payee’s Counterclaims and Awards Attorney Fees in Interpleader

On July 1, 2015, the United States District Court for the District of Maryland issued an opinion granting Connecticut General Life Insurance Company’s (“CGLIC”) motion to dismiss a payee’s claims for breach of contract and...more

CMS Investment Holdings, LLC v. Castle et al., C.A. No. 9468–VCP (Del. Ch. June 23, 2015) (Parsons, VC)

In this decision, the Delaware Court of Chancery largely declined to dismiss claims for breach of a limited liability company agreement, breach of the implied covenant of good faith and fair dealing, unjust enrichment, breach...more

Focus on Private Equity - July 2015

What Private Equity Funds Should Know About ERISA: Basics of ERISA Coverage - The Employee Retirement Income Security Act of 1974, as amended (ERISA) imposes numerous duties on fiduciaries holding employee benefit...more

Don’t touch that remote (tippee)? Salman reflects Ninth Circuit’s view on Newman

In United States v. Salman, the Ninth Circuit recently held that a remote tippee could be liable for insider trading in the absence of any “personal benefit” to the insider/tipper where the insider had a close personal...more

Third Circuit Rules That Actual Harm Needed for Monetary Equitable Remedy

The Third Circuit recently held that a plaintiff was not entitled to a monetary, equitable remedy under ERISA § 502(a)(3) where he failed to prove actual harm. Perelman v. Perelman, Nos. 14–1663, 14–2742, 2015 WL 4174537 (3d...more

Dodd-Frank 180-Day “Deadline” For SEC to Take Action Not Really a Deadline After All

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit recently ruled that Section 4E of the Securities Exchange Act of 1934, 15 U.S.C. § 78d-5(a)(1) – which provides that “[n]ot later than 180 days after the...more

Employee Benefits Developments - June 2015

Supreme Court: Plan Fiduciaries Have a Continuing Duty to Monitor Plan Investments. In 2007, participants and beneficiaries under a 401(k) plan sued the plan fiduciaries and the plan sponsor to recover damages for alleged...more

United State Supreme Court Confirms ERISA Fiduciary’s Continuing Duty To Monitor Investments

In its Tibble v. Edison International decision the United State Supreme Court confirmed that the scope of an ERISA fiduciary’s duty of prudence continues after initial investments are made and imposes an ongoing duty to...more

Unfinished Negotiations Might Generate Treble Damages

The North Carolina Business Court has recognized a new type of claim: a claim for failing to negotiate in good faith. Raising the stakes further, the court has held that failing to negotiate in good faith could lead to treble...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

Dead Hand Proxy Puts Create Litigation Risk for Lenders

Why it matters - In a noteworthy decision, the Delaware Court of Chancery ruled that a lender could be held liable for aiding and abetting a breach of fiduciary duty by directors of a public company borrower by including...more

Louisiana Supreme Court Holds That Statute May Confer Broad Duties On Insurers

In Kelly v. State Farm Fire & Casualty Co., the Supreme Court of Louisiana recently held that an insurer can be liable for bad faith failure to settle a claim even if it has not received a firm offer to settle the claim. The...more

Health Alert (Australia) - July 6, 2015

In This Issue: - Judgments; Legislation; and Reports. - Excerpt from Judgments: Victoria. 26 June 2015 - Northern Health v Kuipers [2015] VSCA 172 - The Victorian Supreme Court has allowed an appeal...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

Ninth Circuit Disagrees with Second Circuit on Personal-Benefit Requirement for Insider Trading

The U.S. Court of Appeals for the Ninth Circuit appears to have rebuffed aspects of the Second Circuit's recent effort to narrow liability for insider trading. The Ninth Circuit's decision today in United States v. Salman...more

Delaware Bans Corporate Fee-Shifting Bylaws and Authorizes Delaware-Only Forum Requirement for Intra-Corporate Litigation

Delaware recently enacted new legislation to prohibit stock corporations from adopting fee-shifting bylaws and charter provisions, among other amendments to the Delaware General Corporation Law. The fee-shifting ban ends a...more

Can The Illegality Defence Bar A Claim Against A Dishonest Director?

In Jetivia SA & anr v Bilta (UK) Ltd (in liquidation) & ors [2015] UKSC 23, 22 April 2015, the Supreme Court ruled on the law of corporate attribution and the "illegality defence", which holds that a party cannot pursue a...more

Can The Illegality Defence Bar A Claim Against A Dishonest Director?

In Jetivia SA & anr v Bilta (UK) Ltd (in liquidation) & ors [2015] UKSC 23, 22 April 2015, the Supreme Court ruled on the law of corporate attribution and the "illegality defence", which holds that a party cannot pursue a...more

One Step Forward and One Step Back: Southern District of New York Denies Motion to Enjoin SEC’s Administrative Proceedings,...

Last week, the SEC scored a victory in its battle to defend the use of administrative proceedings in enforcement actions seeking penalties against unregulated entities or persons. On June 30, 2015, Southern District of New...more

New Delaware Law Invalidates “Fee-shifting” and Validates "Forum-selection" Provisions

Prohibition on Fee-Shifting Provisions - The legislation signed into law last week responds to the Delaware Supreme Court’s decision in ATP Tour, Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014) in which the Court...more

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