News & Analysis as of

Breach of Duty Derivatives

Proskauer - Employee Benefits & Executive...

In Split Ruling Second Circuit Declines to Compel Arbitration of ERISA Plan Claims

They say that April showers bring May flowers, but there were no flowers for ERISA plan sponsors and fiduciaries on May 1 when the Second Circuit held, in a ruling that provoked a vigorous dissenting opinion, that an ERISA...more

Proskauer Rose LLP

Conflict Between Delaware LLC Act and Bankruptcy Code Affects Creditor Toolbox

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As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of...more

Mintz - Bankruptcy & Restructuring Viewpoints

Delaware Bankruptcy Court Grants Derivative Standing to Creditors’ Committee to Sue Members and Officers of Delaware LLC

In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three...more

Walkers

Shades of grey? Unfair prejudice and derivative actions in Jersey following Ntzegkoutanis v Kimionis

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Matters of law will certainly not always be black and white, however, the Courts have adopted a traditional approach when assessing matters of mismanagement or misconduct by directors in relation to company – if there is...more

Allen Matkins

A Recent Reminder That Omitting This Averment May Doom A Derivative Claim

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Section 800 of the California Corporations Code applies to actions brought in the name of any domestic or foreign corporation, aka derivative actions.  It is similar, but not the same as, Delaware Court of Chancery Rule 23.1...more

Morris James LLP

Chancery Upholds Claims Post-Merger

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Harris v. Harris, C.A. No. 2019-0736-JTL (Del. Ch. Jan. 6, 2023) - Delaware law allows for two exceptions to the continuous stock ownership rule for stockholders to bring and maintain standing to assert derivative claims...more

Dechert LLP

Securities and Derivative Litigation: Quarter 3 2022 Update

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In this edition of Dechert’s Securities & Derivative Litigation Quarterly Update, we examine: (1) the Delaware Court of Chancery’s latest post-trial decision showing how the special committee process is critical in the...more

Allen Matkins

A First Sighting Of Zuckerberg Decision In California

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Last year, the Delaware Supreme Court adopted a tripartite test for assessing demand futility allegations in derivative actions. United Food & Commercial Workers Union v. Zuckerberg 262 A.3d 1034 (Del. 2021). Under this...more

A&O Shearman

Delaware Court Of Chancery Applies Contemporaneous Ownership Requirement And Declines To Extend Equitable Derivative Standing

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On May 13, 2022, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery dismissed certain stockholder derivative claims for breaches of fiduciary duty brought against the founder-CEO and other directors of...more

A&O Shearman

Finding That Allegedly Conflicted Acquisition Satisfied Entire Fairness Review, Delaware Court Of Chancery Rejects Breach Of...

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On April 27, 2022, Vice Chancellor Joseph R. Slights III of the Delaware Court of Chancery entered judgment in favor of defendant, the CEO/Founder and then-Chairman (the “Chairman”) of Tesla Motors, Inc. (the “Company”),...more

Allen Matkins

California Court Of Appeal Finds Caremark To Be Too Steep A Hill For Plaintiff To Climb

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In January 2018, the media began reporting on  two security vulnerabilities affecting Intel Corporation's microprocessors - dubbed "Spectre" and "Meltdown".  Following these disclosures, Intel's stock price fell and its...more

Jackson Lewis P.C.

Court Rules Separation Agreement’s Covenant Not to Sue Bars ERISA Breach of Fiduciary Duty Claim on Behalf of Plan

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In an order issued on October 15, 2021, United States District Judge Thomas W. Thrash from the Northern District of Georgia granted an employer’s Motion for Summary Judgment and ruled that plaintiff’s separation agreement...more

Morris James LLP

Chancery Grants Special Litigation Committee’s Zapata Motion, Finds Committee Was Sufficiently Independent and Reasonable

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Diep v. Sather, C.A. No. 12760-CM (Del. Ch. July 30, 2021) - Under Zapata, when analyzing a motion to dismiss by a special litigation committee, the court evaluates whether the committee was independent, acted in good...more

Kramer Levin Naftalis & Frankel LLP

California Federal Court Enforces Delaware Forum Bylaw and Dismisses Derivative Shareholder Suit Including Exchange Act Proxy...

We have discussed in previous alerts a spate of shareholder lawsuits alleging corporate fiduciary breaches and securities law violations tied to the defendant company’s alleged failure to fulfill diversity aspirations. ...more

Morris James LLP

Chancery Dismisses Complaint Challenging Dilution for Lack of Standing and Failure to State a Claim

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Hindlin v Gottwald, C.A. No. 2019-0586-JRS (Del. Ch. July 22, 2020) - The plaintiff, a minority investor (“Plaintiff”) in a Delaware limited liability company, Core Nutrition, LLC (the “Company”), brought an action for...more

Skadden, Arps, Slate, Meagher & Flom LLP

Investment Management Update - September 2019

In this issue, we summarize regulatory, litigation and industry developments from May to September 2019 impacting the investment management sector, including SEC action on standards of conduct for broker-dealers and...more

Kramer Levin Naftalis & Frankel LLP

Delaware Supreme Court Allows Caremark Breach of Loyalty Claim To Go Forward

On June 18, in Marchand v. Barnhill, the Delaware Supreme Court reversed a ruling by the Delaware Court of Chancery in a shareholder derivative suit alleging a breach of the duty of loyalty. While the standard for a...more

Stinson - Corporate & Securities Law Blog

Court Declines to Approve Settlement in Director Pay Suit

In Stein v. Blankfein et al the Delaware Court of Chancery considered a proposed settlement of litigation against directors of Goldman Sachs....more

Carlton Fields

Dismissal of Individual Claims Cap Insurer’s Winning Streak in Action Challenging FIA Product Features

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In May, the Southern District of California handed ING a win in a case involving allegations that the company targeted seniors with annuities that hid an embedded derivative structure that made them worth less than promised....more

Skadden, Arps, Slate, Meagher & Flom LLP

"Key Takeaways: Recent Investment Management Litigation and Regulatory Developments"

On February 28, 2017, Skadden hosted a webinar titled “Recent Investment Management Litigation and Regulatory Developments.” The Skadden panelists were litigation partners Eben Colby and Seth Schwartz, securities enforcement...more

Morris James LLP

Court: Derivative Claims Allowed to Be Asserted as Part of Merger Attack

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It is well-settled under Delaware law that in a merger a stockholder loses standing to assert a purely derivative claim. That claim passes instead to the acquiring company. As an asset of a Delaware company, derivative claims...more

Patterson Belknap Webb & Tyler LLP

After Favorable LIBOR Ruling from the Second Circuit, Investors Now Allege Anticompetitive SIBOR Manipulation

On July 5, 2016, investors filed a federal class action in the Southern District of New York alleging defendant banks had manipulated the Singapore Interbank Offered Rate (SIBOR) “and/or” Singapore Swap Offer Rate (SOR)...more

Morris James LLP

Court Of Chancery Denies Second Chance To New Derivative Plaintiff

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This decision illustrates the importance of putting your best foot forward in derivative litigation. Here, a different plaintiff had his complaint dismissed for failure to satisfy the demand excused rules. When this plaintiff...more

Morris James LLP

Court Of Chancery Applies Demand Analysis To Changed Board

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This is an interesting decision because it applies the demand rules in a derivative case to an odd situation — when some but not all of the board members have changed between when the challenged conduct occurred and when the...more

Carlton Fields

Checking in on Target’s Derivative Litigation: 18 Months Later, Directors Remain Stuck in the Checkout Line

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Everyone remembers the Target Corporation data breach, one of the worst in history. In late 2013, hackers forced their way into Target’s computer system, accessing the information of approximately 70 million customers,...more

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