News & Analysis as of

Business Judgment Rule Derivative Suit

Delaware Chancery Court Declines To Dismiss Challenges To Director Option Grants And Outside Investor Voting Agreement

by Shearman & Sterling LLP on

On June 28, 2017, Vice Chancellor Tamika Montgomery-Reeves of the Delaware Court of Chancery declined to dismiss purported derivative and direct stockholder claims for breaches of fiduciary duty against the directors of...more

M&A Watch: Court Questions Accelerated Vesting of Equity Compensation

by Shearman & Sterling LLP on

As we have previously reported, the Delaware Chancery Court recently dismissed the stockholder class action suit In re Columbia Pipeline Group, Inc. Stockholder Litigation, C.A. No. 12152-VCL (Del. Ch. Mar. 7, 2017),...more

Delaware Chancery Court Applies Corwin To Dismiss Post-Merger Fiduciary Duty Claim After Finding A Royalty Agreement Did Not...

by Shearman & Sterling LLP on

On April 13, 2017, Chancellor Andre G. Bouchard of the Delaware Court of Chancery dismissed a shareholder derivative suit alleging a breach of fiduciary duty against the directors of Paramount Gold and Silver Corp....more

Choice of Entity and Key Contents of Organization Documents

by Jackson Walker on

Five Business Entity Forms: • Corporation • General Partnership • Limited Partnership • Limited Liability Partnership (“LLP”) • Limited Liability Company (“LLC”) Please see full presentation publication...more

Home Depot Cyber Derivative Action Shuttered: Another Data-Breach Derivative Suit Fails to Clear Fundamental Corporate Law Hurdles

by Carlton Fields on

The recent dismissal of a Home Depot derivative action ends a string of high-profile derivative suits stemming from large-scale corporate data breaches. On November 30, the Northern District of Georgia dismissed a shareholder...more

Delaware Chancery Court Finds that Director Defendants Can Not “Merge Their Way Out of” Breach of Fiduciary Claims

On July 28, 2016, the Delaware Chancery Court allowed claims of unfair dealing against the Board of property management company Riverstone National Inc. to survive where the directors facilitated a merger that forestalled a...more

"Court of Chancery Addresses Fundamental Issues of Derivative Litigation"

The Delaware Court of Chancery recently issued a trio of notable opinions involving stockholder derivative actions. The opinions addressed fundamental issues of law such as whether particular kinds of stockholder claims are...more

Seventh Circuit Applies Strong Business Judgment Rule to Reject Assertion of Demand Futility

by Foley & Lardner LLP on

In a recent decision in a diversity case, the Seventh Circuit deferred to a state legislature’s “strongly pro-management version of the business judgment rule,” rejecting a derivative claim filed by shareholders in an Indiana...more

Refusal of Stockholder Demand Entitled to Presumption of Business Judgment Rule

by Miles & Stockbridge P.C. on

In Oliveira v. Sugarman, No. 1980 September Term 2014 (Jan. 28, 2016), the Maryland Court of Special Appeals held that the decision of a board of directors of a Maryland corporation to refuse a stockholder demand is entitled...more

Problems To Avoid When Making A Meiselman Claim And/Or Filing A Derivative Action

by Brooks Pierce on

The Business Court's Opinion last week in Coleman v. Coleman, 2015 NCBC 110, provides useful guidance on how to properly plead a Meiselman claim, and proper procedure to follow before making a derivative claim. Plaintiff...more

The Most Important Principles of Delaware Corporate Law Can’t Be Found In the DGCL

by Allen Matkins on

I have often observed that you can read every section of the Delaware General Corporation Law and learn almost nothing about Delaware corporate law.  Here are three of the most fundamental principles of Delaware corporate law...more

California, Nevada and 38 Other States Have These, But Delaware Doesn’t

by Allen Matkins on

According to the National Center for State Courts, forty states, including California and Nevada, have established intermediate courts of appeal.  California’s Court of Appeal was established by a constitutional amendment...more

Mergers & Acquisitions Glossary

This Glossary contains many of the important terms and definitions used in the M&A world. The Glossary is not exhaustive, however. Like most areas of the law, M&A is a highly complex subject that involves several legal and...more

No Calm In Delaware After Calma v. Templeton

by Allen Matkins on

In derivative suits, cases are essentially lost and won at the motion to dismiss stage.  Unless the defendants succeed in winning dismissal, they must confront an unhappy choice between continued litigation with all of its...more

Closely-Held Shareholder Derivative Actions are Alive and Well in Texas

by Gray Reed & McGraw on

After 30 years of running his family-owned business, Hillbilly Oil Co., Jed Clampett decided to retire in 2013. The board of directors elects Jethro Bodine as Hillbilly’s President and Elly May as Vice President. Both Jethro...more

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

by DLA Piper on

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

Court Of Chancery Explains Creditor’s Right To File Fiduciary Duty Claims

by Morris James LLP on

While it is generally known that creditors may only file derivative suits when the company is insolvent, there have been many open issues about what exactly that means. This decision answers many of those questions by...more

Delaware Court of Chancery Rejects Controlling Stockholder Claims and Applies Business Judgment Rule to Merger Suits

by Katten Muchin Rosenman LLP on

In In re KKR Financial Holdings LLC Shareholder Litigation, C.A. No. 9210 (Del. Ch. Oct. 14, 2014), the Delaware Court of Chancery dismissed a shareholder derivative suit brought by shareholders of KKR Financial Holdings LLC...more

Navigating Fiduciary Duties In Private Company Mergers And Acquisitions

by Jackson Walker on

I. Introduction. The conduct of corporate directors and officers is subject to particular scrutiny in the context of business combinations (whether friendly or hostile), executive compensation and other affiliated...more

Seventh Circuit Increasingly Problematic for Directors and Officers Defending Shareholder Derivative Suits

by Dechert LLP on

With its recent decision in Westmoreland County Employee Retirement System v. Parkinson, et al., the United States Court of Appeals for the Seventh Circuit has confirmed that the courts of the Seventh Circuit can be a...more

Using Pennsylvania Law to Defend the Heinz Merger with Berkshire Hathaway and 3G Capital

by Reed Smith on

Over the past several years, shareholder litigation challenging mergers and acquisitions has become a virtual certainty in any sizeable deal. A recent decision from a state court in Pittsburgh illustrates how Pennsylvania law...more

Appellate Notes: Week of March 25

by Pullman & Comley, LLC on

In This Issue: - SC18915- Misiti, LLC v. Travelers Property Casualty Co. of America - SC18840- New England Road, Inc. v. Planning & Zoning Commission - SC18804- Cordero v. University of Connecticut...more

Defending Section 162(m) Executive Compensation Derivative Suits in the United States

by Dechert LLP on

Decisions regarding executive compensation fall squarely within the discretion of a public company’s board of directors. Recently, however, plaintiffs’ firms have been trying to invade the board’s purview by bringing...more

Delaware Law Update — Delaware Court Applies Heightened Scrutiny to Director Compensation

by Snell & Wilmer on

In an era of intense investor scrutiny and SEC rulemaking regarding executive compensation, a recent decision by the Delaware Court of Chancery raises questions as to the protections afforded to directors when granting...more

Federal Court Applies Delaware Law to Dismiss Shareholder Derivative Claims

by Holland & Knight LLP on

On August 21, 2012, Judge Richard G. Andrews of the United States District Court for the District of Delaware dismissed without prejudice a shareholder derivative action alleging that a corporation's 2010 proxy statement...more

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