Derivative Suit

News & Analysis as of

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

Significant Legislation Affecting Business Passed by General Assembly

At the end of last week, the North Carolina General Assembly passed significant legislation affecting the State’s business legal climate. With large bipartisan majorities, the Legislature adopted Senate Bill 853 (SB 853),...more

They are coming for your client’s data. What will you do if they succeed?

Data security breaches—no industry is immune. These hackers can phish, spoof, skim, packet sniff, and key log their way into your system. Once a hacker successfully hacks into a corporation’s server, the breach will go...more

Florida Appeals Court Clarifies Law On Derivative And Direct Shareholder Lawsuits

On July 9, 2014, Florida’s Third District Court of Appeal issued a landmark opinion in the case of Dinuro Investments, LLC vs. Felisberto Figueira Camacho, et al., 3D13-1242 & 3D13-1246, (July 9, 2014). In Dinuro, the Court...more

Editorial: 3rd DCA Clarifies Derivative Lawsuits

The Third District Court of Appeal has issued a landmark opinion setting forth Florida's law to determine the limited circumstances in which a corporate shareholder or limited liability company member has standing to bring a...more

In re El Paso Pipeline Partners, L.P. Derivative Litig., C.A. No. 7141-VCL (Del. Ch. Jun. 12, 2014) (Laster, V.C.)

In this memorandum opinion resolving cross-motions for summary judgment, the Court of Chancery dismissed in part claims challenging a drop-down sale governed by a limited partnership agreement that supplanted fiduciary duties...more

Federal Court Rejects Court Of Chancery’s Privity Analysis

Two years ago, I wrote about La. Mun. Police Emples. Ret. Sys. v. Pyott, 46 A.3d 313 (Del. Ch. 2012) in which Vice Chancellor J. Travis Laster refused to give preclusive effect to federal district court’s dismissal of a...more

Crothall v. Zimmerman, C.A. No. 608, 2013 (Del. June 9, 2014)

In this unusual appeal, the Delaware Supreme Court reversed the Court of Chancery’s decision awarding a fee to the former counsel of a derivative plaintiff who had abandoned his claim before final judgment was entered,...more

Cybersecurity Securities Class Actions are Coming: Predictions, Analysis, and Practical Guidance

Last fall, I wrote about board oversight of cybersecurity and derivative litigation in the wake of cybersecurity breaches. I plan to update my thoughts later this year, after we see developments in the recently filed Target...more

Shareholder derivative action against Wyndham Worldwide directors for data breaches

Hot on the heels of our recently released publication, ‘Cyber risks and the impact on company directors’, it has been revealed that a shareholder has commenced a derivative action in the district of New Jersey (USA) against...more

Cyber Risks for the Boardroom Part 2: Why Corporate Directors Should be Concerned About Data Security Breaches

All this week, we are featuring a series “Cyber Risks – Director Liability and Potential Gaps in D&O Coverage” Part 2 of 5: Why Directors Should Be Concerned...more

Houseman v. Sagerman, C.A. No. 8897-VCG (Del. Ch. Apr. 16, 2014) (Glasscock, V.C.)

In this opinion, the Court of Chancery held that the plaintiffs failed to adequately plead that the board failed to satisfy its Revlon duties in good faith and to negotiate consideration for alleged derivative claims that...more

Business Court Dismisses Derivative Action Against Duke Energy

You might remember the derivative action filed against the board of directors of Duke Energy Corporation stemming from its 2012 merger with Progress Energy. It received a lot of publicity. The merger was concluded long ago,...more

California’s RULLCA Impossible Pleading Requirement For Derivative Suits

California’s Revised Uniform Limited Liability Company Act requires a member of a domestic or foreign LLC to include two specific allegations in any complaint brought in the right of the company. Failure to include these two...more

New York Federal Court Dismisses Derivative Suit Against Sons of Norway Executives

On February 6, the US Court for the Eastern District of New York dismissed a derivative suit against the CEO, general counsel and former international president of Sons of Norway, a fraternal organization. Former members of a...more

Second Circuit Reinforces High Pleading Burden for Director Duty of Oversight Claims

In Welch v. Havenstein, No. 13-2648-cv, 2014 WL 322055 (2d Cir. Jan. 30, 2014) (summary order), aff’g In re SAIC Inc. Derivative Litigation, 948 F. Supp. 2d 366 (S.D.N.Y. 2013), the United States Court of Appeals for the...more

Corporate and Financial Weekly Digest - Volume IX, Issue 7

In this issue: - CFTC Exempts MTFs from US Registration Requirements - CFTC Guidance Relating to Trading on SEFs and DCMs - NFA Issues Notice to Members Regarding Member Obligations Under NFA Bylaw 1101...more

Derivative Suit Filed Against JPMorgan Alleges Culture of Risk

Adding to JPMorgan Chase’s widely publicized recent legal woes, shareholder Bradley P. Miller filed a derivative suit against the bank and its directors in California federal court on January 23, 2014, as a result of the $20...more

Shareholder Derivative Suit Dismissed for Failure to Show Demand Futility

The Supreme Court of the State of New York, County of New York recently dismissed a shareholder derivative suit on behalf of Travelzoo, Inc. because plaintiff shareholder failed to plead that demand on the board to sue would...more

Derivative Litigation Representation: Strategic and Ethical Issues

Shareholder litigation comes in waves. There is a widespread belief that the next big wave will be shareholder derivative litigation – a shareholder’s assertion of a claim belonging to the corporation, typically brought...more

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