Derivative Suit Fiduciary Duty

News & Analysis as of

U.S. Court for District of Minnesota Dismisses Target Data Breach Shareholder Derivative Suits

On July 7, 2016, the United States District Court for the District of Minnesota granted Target’s unopposed motion to dismiss the derivative actions filed by a number of shareholders against the company relating to the...more

Court Of Chancery Dismisses Previously Dismissed Case

What happens when a derivative claim is filed outside of Delaware and then is dismissed by that other court? Well even if the other complaint might have stood up in Delaware, the subsequently filed Delaware case will also be...more

Tenth Circuit Upholds Nevada Law By Denying Stockholders Standing to Bring Claims on Behalf of Nevada Corporation

In In re Zagg Inc. Shareholder Derivative Action, No. 15-4001, 2016 U.S. App. LEXIS 11095 (10th Cir. June 20, 2016), the United States Court of Appeals for the Tenth Circuit held that stockholders of a Utah-based, Nevada...more

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

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

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

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

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

Derivative Settlement With Benefit Personal to Plaintiff Rejected

In 1850, Abraham Lincoln prepared notes for a law lecture. He emphasized the importance of compromise because after litigation, "the nominal winner is often a real loser—in fees, expenses, and waste of time." Delaware law...more

Court Explains Rigorous 'Caremark' Pleading Requirements

A recent opinion containing the report and recommendation of the magistrate judge in the U.S. District Court for the District of Delaware, In re Chemed Shareholder Derivative Litigation, C.A. No. 13-1854-LPS-CJB (D.Del. Dec....more

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

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

Espinoza v. Zuckerberg, No. 9745-CB (Del. Ch. Oct. 28, 2015) (Bouchard, C.)

In a decision reinforcing the importance of observing corporate formalities, Chancellor Bouchard found that a controlling stockholder cannot ratify a board’s self-dealing with something as informal as an affidavit, a...more

Caspian Select Credit Master Fund Ltd. v. Gohl, C.A. No. 10244-VCN (Del. Ch. Sept. 28, 2015) (Noble, V.C.)

In this memorandum opinion, the Court of Chancery granted in part and denied in part a motion to dismiss direct and derivative claims against the company’s board and controlling stockholders for breaches of fiduciary duty...more

EXPECT FOCUS: Onboard Technology, NAIC Cybersecurity, DOL, ACA Litigation, SEC Regulation (Vol. III, Summer 2015)

In This Issue: IN THE SPOTLIGHT - - Your Data Breach Collided With My Personal Injury Coverage LIFE INSURANCE - - Phantom Injury Dooms “Shadow Insurance” Case - Latest NAIC Cybersecurity News...more

Navigating Derivative Lawsuits Against Mutual Funds After Northstar

The Ninth Circuit Court of Appeals this spring held that mutual fund shareholders could maintain direct claims against the fund’s trustees for breach of their common law fiduciary duties. Before Northstar v. Schwab, such...more

Appellate Court Notes

Supreme Court Advance Release Opinions: SC19359 - Persels & Associates, LLC v. Banking Commissioner - Noting that it has generally been the policy of the Courts to defer to the Legislature, especially as to the...more

Delaware Chancery Court Rejects Allegations Assailing Independence Of VC Directors In Dismissing Derivative Suit

A recent Delaware Chancery Court decision dismissing derivative fiduciary duty claims has significance for public companies with board members who are associated with venture capital firms. ...more

Court Of Chancery Outlines Discovery In Books and Records Case

First, the discovery cannot be of the very records the plaintiff seeks to obtain, for that will give him the relief he seeks before he proves his case. Second, it is often the case that the records are being sought for use in...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

A Firewall for the Boardroom: Best Practices to Insulate Directors and Officers From Derivative Lawsuits and Related Regulatory...

Shortly after the massive 2013 Target data breach, shareholders filed four derivative lawsuits against the company’s directors and some of its officers (13 CARE 624, 3/20/15). The shareholders alleged that the defendants had...more

Checking in on Target’s Derivative Litigation: 18 Months Later, Directors Remain Stuck in the Checkout Line

Everyone remembers the Target Corporation data breach, one of the worst in history. In late 2013, hackers forced their way into Target’s computer system, accessing the information of approximately 70 million customers,...more

Know Your Limits! Section 162(m) and Excess Equity Grants

In the past few years there has been an uptick in stockholder derivative litigation related to equity compensation granted to named executive officers that exceed the plan share limits. The claims against the companies...more

Court of Chancery Dismisses Derivative Claims Even Though Entire Fairness Arguably Applied

Delaware’s requirements for stockholders to maintain derivative actions reflect the twin principles of director management and control and accountability. Because directors manage the business and affairs of Delaware...more

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