Derivative Suit

News & Analysis as of

"Delaware Supreme Court Addresses Limited Partnership Drop-Down Transactions and Conflicts Committees"

The Delaware Supreme Court recently ruled on two appeals from Court of Chancery decisions involving "conflicts committees" of Delaware limited partnerships. Both decisions arise out of challenges to "drop-down" transactions...more

Delaware Supreme Court Provides Guidance on Director Independence

Seyfarth Synopsis: The Delaware Supreme Court recently reversed the dismissal of a derivative complaint for failure to plead demand excusal because it found that certain directors of Zynga Inc. were not independent due to...more

Top 10 Business Divorce Cases of 2016

I’m pleased to present my 9th annual list of this past year’s ten most significant business divorce cases. The list includes important appellate rulings by the First and Second Departments on dissolution of foreign business...more

Shareholders Derivative Suit Filed against Wendy’s for Data Breach

Continuing the trend of filing a shareholders derivative suit following a data breach, a Wendy’s shareholder recently filed a derivative suit against Wendy’s executives and board members alleging they did not adequately...more

Supreme Court Chips Away at Concept of Direct And Derivative Claims

Just in time for Christmas, on December 20, 2016, the Delaware Supreme Court issued a Christmas present – or lump of coal, depending on your view – in its opinion in El Paso Pipeline GP Company LLC v. Brinckerhoff. In this...more

Home Depot Evades Shareholder’s Derivative Suit for 2014 Data Breach

Public companies that are proactively working to mitigate “cyber” risks and prepare to respond to potential incidents frequently ask whether a “breach” will lead to litigation, loss of customers, stock price decline, and...more

"Delaware Supreme Court Rules on Director Independence"

The Delaware Supreme Court recently issued an important decision on the subject of director independence. In Sandys v. Pincus, No. 157, 2016 (Del. Dec. 5, 2016), the Delaware Supreme Court held that certain directors of...more

Home Depot Data Breach Derivative Suit Sent Home

Judge Thomas W. Thrash Jr. of the U.S. District Court of Georgia permanently shelved a derivative suit brought by shareholders of Home Depot. Home Depot is a multinational home improvement retailer. In September, 2014,...more

CLIENT ALERT: Delaware Supreme Court Relaxes Inquiry into Director Independence in Demand Futility Context

Sandys v. Pincus, No. 157, 2016 (Del. Dec. 5, 2016). In this en banc majority opinion, the Delaware Supreme Court signaled that, at least in the context of a demand futility analysis involving a corporation with a...more

Shareholders’ Derivative Suit Against Home Depot Dismissed

On November 30, 2016, The Home Depot, Inc. (Home Depot) got a victory in the shareholders’ derivative suit filed against it for its alleged failure to institute necessary controls to secure its data relating to its 2014...more

How Does One Know When A Corporation Is Antagonistic?

When a shareholder files a derivative suit in state court, the defendants often will try to have the case removed to the federal district court. Federal courts, however, are courts of limited jurisdiction and not every...more

Delaware Court of Chancery Dismisses Derivative Suits Alleging Directors Wrongfully Refused Litigation Demands

Seyfarth Synopsis: On November 30, 2016, The Delaware Court of Chancery dismissed two derivative suits filed on behalf of the Bank of New York Mellon (“BNYM”). The companion memorandum and letter opinions reaffirm the heavy...more

Officers and Directors Spared Home Depot Data Breach Derivative Lawsuit

Officers and directors may breathe a temporary sigh of relief following the recent dismissal of the Home Depot data breach derivative case. Others will look to the facts for guidance. The complaint alleging the board had...more

“Directors’ Decisions Must Be Reasonable, not Perfect” Home Depot’s Shareholder Derivative Litigation Arising from Data Breach...

On November 30, 2016, a federal district court dismissed a shareholder derivative complaint against various current and former directors of Home Depot arising from the well-publicized data breach the company suffered between...more

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

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 Supreme Court Finds Pre-Suit Demand Was Excused

When a stockholder files a derivative suit she can avoid dismissal under Rule 23.1’s pre-suit demand-on-the-board requirement by showing that a majority of the directors were not independent enough to fairly consider her...more

Court Of Chancery Examines Whether Derivative Demand Was Wrongfully Refused

Even after a board rejects a plaintiff-stockholder’s demand to bring a derivative litigation, the plaintiff may proceed to bring that derivative action if the plaintiff can show the demand was “wrongful.” Having conceded...more

Court Rejects Challenge To Internal Affairs Doctrine

Marvell Technology Group, Ltd. is a publicly traded company that is incorporated in Bermuda. Marvell’s U.S. operating subsidiary is based in California. A year ago, an institutional stockholder filed a derivative suit...more

A Failed Strategy: Another Derivative Action In A Data Breach Case Goes Down To Defeat

Dismissal Of Home Depot Derivative Action Extends Shareholder Losing Streak An attempt to impose liability on corporate officers and directors for data breach-related losses has once again failed. On November 30,...more

Court Dismisses Derivative Claim for Alleged Breach of Oversight Duty

The Delaware courts encourage plaintiffs who bring derivative claims in Delaware without making demand on the board of directors to seek books and records under Section 220 of the Delaware General Corporation Law so as to be...more

Court of Chancery Explains When Corporate Overpayment Claims Require Demand Futility

The issuance of additional stock in exchange for less than fair value typically is a harm falling on the company, and hence gives rise to a derivative claim. But, such a claim might be dual natured – partially direct and...more

Inside the Courts: An Update From Skadden Securities Litigators - September 2016 / Volume 8 / Issue 3

We are pleased to present Inside the Courts (Volume 8, Issue 3), Skadden’s securities litigation newsletter. This quarter’s issue includes summaries and associated court opinions of selected cases principally decided between...more

Baker v Sadiq C.A. No. 9464-VCL (Del. Ch. Aug. 16, 2016) (Laster, V.C.)

In this letter opinion, the Court of Chancery awarded $650,000 in attorney’s fees to counsel for the minority stockholders of NavSeeker, Inc. (“NavSeeker”), resolving a dispute regarding how a fee award should be determined...more

Taming the Bull Rider: Chancery Court Reining in Mootness Fee Awards in Merger Litigation

Last month, the Delaware Chancery Court drastically reduced – from $275,000 to $50,000 – a mootness fee award requested by plaintiffs’ counsel in a lawsuit challenging the merger between PayPal and Xoom Corporation, finding...more

Court Of Chancery Explains When Prior Dismissal Does Not Preclude Another Derivative Case

This is an important decision because it explains when a prior dismissal of a derivative complaint does not preclude a second complaint alleging a wrong close to that alleged in the dismissed case. It distinguishes a...more

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