Derivative Suit

News & Analysis as of

Boards Should Put Time and Resources into Cybersecurity Issues – It Is Good for Business and Works as a Defense Strategy

We have previously blogged about Commissioner Aguilar’s recommendations at a NYSE conference, “Cyber Risks and the Boardroom” on what boards of directors should do to ensure that their companies are appropriately considering...more

The NC Business Court Rules On Recovering Attorneys' Fees In A Derivative Action Against An LLC

In this week's opinion in Ekren v. K&E Real Estate Investments, 2014 NCBC 56, Judge Bledsoe outlined how a derivative action plaintiff can recover attorneys' fees....more

Wyndham Decision Provides Guidance to Corporate Directors and Officers in Responding to a Data Breach

U.S. District Judge Stanley R. Chesler of the District of New Jersey recently provided much needed guidance to directors and officers on their duties and responsibilities with regard to cybersecurity. In Palkon v. Holmes, et...more

Data Breach Case Update: Shareholder Derivative Suit Dismissed

We recently discussed the increase in data breach litigation which resulted after several high-profile data breaches. You can read those articles here and here. Not surprisingly, several of these suits involve class actions...more

Wolst v. Monster Beverage Corp., C.A. No. 9154-VCN (Del. Ch. Oct. 3, 2014) (Noble, V.C.)

In this letter opinion, the Court of Chancery entered judgment against a stockholder seeking books and records related to the denial of her demand that Monster Beverage Corporation bring litigation related to alleged insider...more

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

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

The Proper Purpose Of Discovery In Derivative Suits

A plaintiff holding less than 2000 shares files a derivative suit against a corporation’s current or former directors and officers. The trial court finds the complaint to be internally inconsistent and that regulatory...more

Delaware Court of Chancery Rejects Contemporaneous Ownership Requirement For Creditors Asserting Derivative Claims

In Quadrant Structured Products Co. v. Vertin, C.A. No. 6990-VCL, 2014 Del. Ch. LEXIS 193 (Del. Ch. Oct. 1, 2014), the Delaware Court of Chancery held that when creditors of insolvent firms assert derivative claims, they need...more

Consequences of a Data Breach: Lessons from Wyndham Worldwide

On October 20, 2014, Wyndham Worldwide Corporation won dismissal of a shareholder derivative suit seeking damages arising out of three data breaches that occurred between 2008 and 2010. Dennis Palkon, et al. v. Stephen P....more

Court Dismisses Shareholder Derivative Action Targeting Directors and Officers for Data Breaches

Earlier this week a federal district court in New Jersey dismissed with prejudice a shareholder derivative suit, Palkon v. Holmes, No. 14-CV-01234 (SRC) (D.N.J.), that tried to blame the directors and officers at hospitality...more

Delaware Chancery Rejects Books and Records Demand as Time-Barred

The Delaware Court of Chancery recently found that a shareholder’s demand for books and records was time-barred, as the alleged basis for a derivative action occurred nearly seven years ago and thus was well beyond any...more

Court Dismisses Shareholder Derivative Action Targeting Directors and Officers for Data Breaches

A federal district court in New Jersey has dismissed with prejudice a shareholder derivative suit, Palkon v. Holmes, No. 14-CV-01234 (SRC) (D.N.J.), that tried to blame the directors and officers at hospitality company...more

Forum Selection Clauses Were Here Before They Were In Bylaws

Recent rulings by judges in Delaware and other states have given impetus to the adoption of exclusive forum bylaws. To the casual observer, the idea might seem entirely novel. But as Koheleth (the Gatherer) wrote “What has...more

Oklahoma Takes a Stand a Stand in the Battle Over Derivative Fee-Shifting

Back in May we discussed ATP Tour, Inc. v. Deutscher Tennis Bund a seminal Delaware Supreme Court case that upheld a non-stock corporation’s “loser pays” fee-shifting bylaw. ATP Tour held that where a Delaware corporation...more

The Florida Revised Limited Liability Company Act Action may be required by Florida LLCs by December 31, 2014

In 2013, the Florida Legislature adopted the Revised Florida Limited Liability Act. The Revised LLC Act restates the Florida laws governing LLCs in an entirely new Chapter 605, which succeeds the prior LLC Act found in...more

The Root Cause of Skyrocketing Securities Class Action Defense Costs

Why do the costs of defending securities class actions continue to increase? Because of my writing on the subject) I’m asked about the issue a lot. My answer has evolved from blaming biglaw economics – a combination of...more

Delaware Court of Chancery Upholds North Carolina Forum Selection Bylaw for Delaware Corporation

Yesterday, in City of Providence v. First Citizens BancShares, Inc., Chancellor Andre Bouchard of the Delaware Court of Chancery held in a case of first impression that the board of a Delaware corporation may validly adopt a...more

Oregon State Court Refuses to Enforce Forum Selection Bylaw

In Roberts v. TriQuint Semiconductor, Inc., No. 1402-02441 (Cir. Ct. Or. Aug 14, 2014), an Oregon state court, breaking with state courts in California, Illinois, New York and Texas, held that the bylaw of a Delaware...more

Fee-Shifting Bylaw Developments In The Courts

Those expecting that the Delaware court, in a case involving Hemispherx, would soon address the as-applied validity of a fee-shifting bylaw may be disappointed. (As discussed in this post and this Cooley Alert, the Delaware...more

Delaware Court of Chancery Dismisses Derivative Suit Brought by Expired Trust

The Delaware Court of Chancery recently held that the trustee of an expired trust does not have capacity to pursue a derivative suit unless authorized by state law, or in the trust instrument. In April 2009, shareholders of...more

District Court Confirms Caremark Applies to Audit Committee Oversight of Internal Controls

The U.S. District Court for the Northern District of California recently granted a motion to dismiss a derivative action in which the plaintiff alleged that the directors of VeriFone Systems, Inc. breached fiduciary duties...more

Corporate and Financial Weekly Digest - Volume IX, Issue 32

In this issue: - SEC’s Office of Investor Education and Advocacy Releases Alert on Identifying Fraudulent Private Placements - ICE Futures U.S. Issues Amendments to EFRP Rule and FAQs - Consumer Financial...more

Fee Award Nixed After Client Abandons Case

In a neat, short opinion, the Delaware Supreme Court dealt with a situation that the chief justice characterized as "Kafkaesque" at oral argument and "unusual" in the written opinion. In Crothall v. Zimmerman, No. 608, 2013...more

The Current View On Direct vs. Derivative

When a member or shareholder of a company or corporation sustains a loss, is that member’s loss directly compensable by a direct suit? Or does the member have to bring a derivative suit on behalf of the corporation? ...more

Julie Friedman v. Dara Khosrowshahi, et al., C.A. No. 9161-CB (Del. Ch. Jul. 16, 2014) (Bouchard, C.)

In this memorandum opinion, the Court of Chancery granted the defendants’ motion to dismiss a stockholder’s complaint, challenging the accelerated vesting of the CEO’s restricted stock units based on an alleged violation of...more

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