News & Analysis as of

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

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

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

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

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

North Carolina Supreme Court Addresses Duties of Corporate Directors

On November 8, 2013, the North Carolina Supreme Court issued a rare opinion addressing the duties of corporate directors and reaffirming that those duties are generally owed only to the corporation itself rather than the...more

In re Trados: Directors Dodge a Bullet

Vice Chancellor J. Travis Laster’s August 16 post-trial opinion in In re Trados Inc. Shareholder Litigation1 (hereinafter, “In re Trados”) has attracted a significant amount of attention. Much as both the Chancery and the...more

Inside The Courts - December 2013 | Volume 5 | Issue 4

In This Issue: *U.S. SUPREME COURT: - Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317 (U.S. Nov. 15, 2013) Lawson v. FMR LLC, No. 12-3 (U.S. Nov. 12, 2013) - Chadbourne & Parke LLP v. Troice, No....more

TVI Corp. v. Gallagher, C.A. No., 7798-VCP (Del. Ch. Oct. 28, 2013) (Parsons, V.C.)

In this memorandum opinion, the Court of Chancery denied defendants’ motion to dismiss a derivative action in part and granted it in part, holding, among other things, that plaintiffs had satisfactorily alleged demand...more

Delaware Chancery Court Permits Shareholder to Bring Fiduciary Claim for Board’s Violation of a Stock Incentive Plan

On November 8, the Delaware Chancery Court denied a motion to dismiss a derivative action brought by a shareholder of Healthways, Inc. against the company’s president, Ben Leedle, Jr., and the board of directors for approving...more

North Carolina Business Court Holds that Shareholders Cannot Directly Sue Officers and Directors in Merger Challenge

A recent decision by the North Carolina Business Court potentially makes it more difficult for shareholders to challenge mergers and acquisitions in North Carolina. The Court held that an action against a company’s officers...more

Second Circuit Rules for Mutual Fund Trustees in Suit Alleging Breach of Fiduciary Duty in Approving Successor Advisory Contracts...

The U.S. Court of Appeals for the Second Circuit affirmed the dismissal on a motion for summary judgment of a derivative suit against the independent trustees of a mutual fund group in which the plaintiff shareholder alleged...more

The Ropes Recap: Mergers & Acquisitions Law News

In this issue: - News from the Courts - Delaware Legislative Update - Notable Deals - News from the SEC - London Update - Asia Update - Deal Stat Snapshot -...more

DiRienzo v. Lichtenstein, et al., C.A. No. 7094-VCP (Del. Ch. Sept. 30, 2013) (Parsons, V.C.)

In this lengthy memorandum opinion, the Court of Chancery dismissed claims relating to a series of complex transactions in which a hedge fund, previously organized as a private limited partnership, was converted by its...more

Navigating Fiduciary Duties In Private Company Mergers And Acquisitions

I. Introduction. The conduct of corporate directors and officers is subject to particular scrutiny in the context of business combinations (whether friendly or hostile), executive compensation and other affiliated...more

Don't Sue A North Carolina Board Of Directors Over A Merger Without Reading This Case

Last week's Order in Gusinsky v. Flanders Corp., 2013 NCBC 46, should be required reading for lawyers thinking of suing the directors of a corporation in North Carolina over a merger transaction. It provides guidance on the...more

Email Users Beware: Companies and Corporate Officers Should Evaluate Email Practices in Light of Delaware Chancery Court Decision

On September 5, 2013, the Delaware Chancery Court ruled that the attorney-client privilege does not protect from disclosure emails sent by corporate officers to their personal attorneys using the company’s email account. In...more

Shareholder Options for Curbing Business Mismanagement

Shareholders exercise very limited managerial rights over a corporation. Nevertheless, shareholders represent the true owners of the business and the powers that directors and officers wield ultimately flow from them. For...more

Friction in the Family Business: When Fiduciary Duties Become Compromised

Many people ask, "What duties are owed to a family member who has an interest in the business?" Before getting into this important topic, it is critical to understand the legal nuances of a particular jurisdiction. A wide...more

50% Shareholder Didn't Owe Fiduciary Duty To His 50% Co-Shareholder

This week's decision from the Business Court in Maurer v. Maurer, 2013 NCBC 44 is a continuation of the litigation between Jill Maurer and the company owned by her and her husband, which was the subject of three Business...more

Ninth Circuit Vacates Dismissal and Remands Shareholder Derivative "Say-on-Pay" Suits to California State Court

In Dennis v. Hart, 2013 U.S. App. LEXIS 15648 (9th Cir. July 31, 2013), the United States Court of Appeals for the Ninth Circuit held that plaintiffs’ “say-on-pay” shareholder derivative suits alleging breach of fiduciary...more

Ninth Circuit Rules that Say-On-Pay Suit Belongs in State Court

In a recent ruling, the United States Court of Appeals for the Ninth Circuit concluded that certain related shareholder derivative suits arising out of a say-on-pay decision involving Pico Holdings, Inc. (the “Company”) were...more

Using Pennsylvania Law to Defend the Heinz Merger with Berkshire Hathaway and 3G Capital

Over the past several years, shareholder litigation challenging mergers and acquisitions has become a virtual certainty in any sizeable deal. A recent decision from a state court in Pittsburgh illustrates how Pennsylvania law...more

Rich v. Chong, C.A. No. 7616-VCG (Del. Ch. Apr. 25, 2013) (Glasscock, V.C.)

In this opinion, the Court of Chancery denied a motion to dismiss a derivative action brought by a stockholder of Fuqi International, Inc. because the plaintiff pled facts that raised a reasonable doubt that the Fuqi board...more

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