Derivative Suit

News & Analysis as of

Maryland Court of Special Appeals Reaffirms Heightened Standard for Recovering Punitive Damages

On June 1, 2016, the Court of Special Appeals of Maryland issued an opinion in 1st Team Fitness, LLC, et al. v. Francesco Illiano, No. 0136, Sept. Term 2015 (Md. Ct. Spec. App. Jun. 1, 2016) reaffirming Maryland’s heightened...more

A Fun New Fact Pattern for Demand Futility

The concept of demand futility, rooted in the fundamental elements of Delaware corporate law, has been present for decades. The demand futility rules developed, as most doctrines of Delaware corporate law do, through judicial...more

Business Litigation Reporter - June 2016

Goodwin Procter’s Business Litigation Reporter provides timely summaries of key cases and other developments within dedicated Business Litigation sessions and related courts throughout the country – courts within which...more

Corporate Investigations and White Collar Defense - June 2016

Eye on the Supreme Court—Corruption and Fraud Edition - Why it matters: This session, the Supreme Court has undertaken the review of numerous cases that raise thorny issues arising in the white collar context. In our...more

Inside the Courts: An Update From Skadden Securities Litigators - May 2016 / Volume 8 / Issue 2

We are pleased to present Inside the Courts (Volume 8, Issue 2), Skadden’s securities litigation newsletter. This quarter’s issue includes summaries and associated court opinions of selected cases principally decided between...more

Court Of Chancery Lets New Board Review Complaint

Normally it is the board in place at the time the derivative suit is filed that is evaluated to determine if demand is excused....more

Directors Owe Fiduciary Duties to Creditors of Insolvent Companies

Creditors of a corporation in bankruptcy recently received some good news from a bankruptcy court in California. In re ATWR Liquidation, Inc. clarified that corporate officers and directors owe creditors the same fiduciary...more

Insights: The Delaware Edition - May 2016

This issue focuses on important, developing areas of Delaware corporation law and deal litigation, including the Court of Chancery’s clarification of its evolving views about disclosure-based deal litigation settlements;...more

"Recent Delaware Cases Clarify Existing Limits and Adopt Novel Condition in Books-and-Records Demands"

Recent Delaware cases have helped clarify the limits of what the Court of Chancery will consider in a books-and-records demand under 8 Del. C. § 220, and one case has adopted a novel condition that defendants may seek to...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

Court Of Chancery Closes The Door Left Open By Pyott And Applies Preclusion To Derivative Suit

Delaware does hold that the dismissal of a derivative suit in another jurisdiction may preclude the prosecution of a similar derivative suit in Delaware. ...more

Delaware Law Updates - Demand Refused Rule 23.1 Explained by the Delaware Court of Chancery

In a recent decision out of the Delaware Court of Chancery – Friedman v. Maffei et al., C.A. No. 111105-VCMR – the court’s second-newest member, Vice Chancellor Montgomery-Reeves, dismissed a proposed derivative complaint on...more

Class Action Settlements, Cases Paralleled by SEC Up in 2015

Cornerstone Research released a report on Securities Class Action Settlements, “Securities Class Action Settlements, 2015 Review and Analysis”. It records an increased number of settled securities class actions last year....more

Court Finds Plaintiffs Are Not Privies

Yesterday’s post noted that the plaintiff in a derivative suit is bringing claims on behalf of the corporation. Thus, when a derivative suit is dismissed, does that dismissal have any effect on other pending or subsequently...more

Compromising and Settling of Derivative Suits In California

When a shareholder sues derivatively, the shareholder is seeking relief not for itself, but for the corporation. Therefore, it should be expected that the shareholder is not free to compromise or dismiss the suit absent...more

Court of Appeal Says Same Counsel Can’t Represent Corporation And Individual Defendants in Derivative Suit

Derivative suits put the corporation in the odd position of simultaneously occupying the position of a defendant and plaintiff. When the suit is initiated, the corporation is named as a nominal defendant. If, however, the...more

Why Is California’s Derivative Suit Statute Stuck In 1977?

California Corporations Code Section 800 governs derivative suits brought by both domestic and foreign corporations. The statute provides a modicum of protection to defendants by establishing a procedure by which either the...more

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

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

Court Of Chancery Explains When A Minority Stockholder May Have Actual Control Over A Deal

This is another in a series of decisions dealing with the allegation that a minority stockholder controlled a deal through its control of a majority of the board of directors....more

Court Of Chancery Applies Demand Analysis To Changed Board

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

Court Of Chancery Applies Demand Rules To Amended Complaint

In general, an amended derivative complaint does not need to show that demand is excused if it was excused for the filing of the initial complaint....more

Employer Anti-Poaching Agreements. A Tale of Disney Legal Troubles

Once upon a time, the Plaintiff in a shareholder derivative suit pending against Disney and its former and current board members claimed that commencing in the mid-1980s, companies in the animation business—including Pixar...more

Two Recent Delaware Decisions Further Illustrate The Scope Of Section 220 Discovery

Two recent Delaware Court of Chancery decisions demonstrate that narrow statutory standards continue to govern access to corporate books and records pursuant to Section 220 of the Delaware General Corporation Law. In the...more

Refusal of Stockholder Demand Entitled to Presumption of Business Judgment Rule

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

DELAWARE CORPORATE LAW AND LITIGATION: WHAT HAPPENED IN 2015 AND WHAT IT MEANS FOR YOU IN 2016

Delaware has long been known as the corporate capital of the world, and it is now the state of incorporation for 66 percent of the Fortune 500 and more than half of all companies whose securities trade on the NYSE, Nasdaq...more

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