News & Analysis as of

Derivative Suit Fiduciary Duty

Under Delaware Law, the Occurrence of Alleged Illegal Conduct at a Company Is Not Enough to Plead Demand Futility Sufficient to...

In a shareholder derivative action, to survive a motion to dismiss for failure to plead facts showing demand futility, a derivative plaintiff must plead particularized facts showing either actual involvement by a majority of...more

Delaware Chancery Court Declines To Dismiss Claims Under Corwin, Finding The Complaint Adequately Pleaded That The Shareholder...

by Shearman & Sterling LLP on

On May 31, 2017, Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery declined to dismiss purported derivative and direct stockholder claims for breaches of fiduciary duty against the directors of Charter...more

“Food Fight” Sequel Ends Badly for Ousted Sibling

by Farrell Fritz, P.C. on

A little over three years ago I reported on the first round of a fascinating “food fight” among four siblings, each of whom is a 25% shareholder of a Brooklyn-based, second-generation food distributor known as Jersey Lynne...more

Federal Circuit Rules that Starr International Lacks Standing to Pursue Class Claims Stemming from the U.S. Government’s...

On May 9, 2017, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed in part and reversed in part an earlier decision from the U.S. Court of Federal Claims, which had held that aspects of the...more

“If at First You Don’t Succeed…” - Shareholders Keep Trying to Sue D&Os for Data Security Breaches

by Locke Lord LLP on

Several high-profile lawsuits have been filed in recent years by shareholders seeking to hold corporate officers and directors liable for damage resulting from data security breaches. For example, directors and officers at...more

Delaware Chancery Court Holds That Well-Pled Unocal Claim Does Not Automatically Excuse Pre-Suit Demand

by Shearman & Sterling LLP on

On May 15, 2017, Vice Chancellor Sam Glasscock III of the Delaware Chancery Court dismissed a shareholder derivative action asserting that the directors of The Williams Companies, Inc. (“Williams”) breached their duty of...more

Is There A “Revlon Duty” In California?

by Allen Matkins on

There are certain seminal Delaware corporate law cases that are so well known that corporate lawyers are wont to assume that they have been adopted and followed everywhere. One such case is Revlon, Inc. v. MacAndrews &...more

Creditor Lacks Standing To Bring Derivative Suit against LLC

by Fox Rothschild LLP on

The recent decision of Trusa v. Nepo, C.A. No. 12071-VCMR (Del. Ch. April 13, 2017), stands for the proposition that a creditor lacks standing to assert a derivative claim against a limited liability company. In Trusa, the...more

"Delaware Supreme Court Examines Director Disinterestedness, Independence"

Delaware law provides important tools for directors to maintain control of derivative lawsuits.1 One such tool is the “demand requirement” embodied in Court of Chancery Rule 23.1, which requires that before a stockholder acts...more

Delaware Chancery Court Dismisses Breach Of Fiduciary Duty Claims By Minority Stockholder Of Subsidiary In Relation To Acquisition...

by Shearman & Sterling LLP on

On May 2, 2017, Vice Chancellor Laster of the Delaware Court of Chancery dismissed a purportedly derivative and putative class action brought by a minority stockholder of software company VMware, Inc. (“VMware”), a subsidiary...more

Debt Dialogue: April 2017 - Creditor Barred from Bringing a Derivative Action Against an Insolvent Delaware Limited Liability...

In a recent ruling, Trusa v. Nepo (Del. Ch. April 13, 2017), consistent with prior case law, Vice Chancellor Montgomery-Reeves of the Delaware Chancery Court held that a creditor cannot bring a derivative action against a...more

Appeal in Home Depot Data Breach Derivative Action Results in Settlement of Corporate Governance Claims

Snatching victory of a sort from the jaws of defeat, shareholders who brought a derivative action alleging that the 2014 Home Depot data breach resulted from officers’ and directors’ breaches of fiduciary duties have reached...more

Suing on Behalf of People You’re Suing Can Sink a Derivative Lawsuit — Especially If You Have a Litigious Nature

by Farrell Fritz, P.C. on

The U.S. reportedly has the world’s highest number of lawyers per capita (1 for every 300 people) and the 5th highest number of lawsuits per capita (74.5 for every 1,000 people, topped only by Germany, Sweden, Israel, and...more

Court Of Chancery Explains Limits Of The Dual Claims Rule

by Morris James LLP on

Under the well-known Brinckerhoff decision, a claim may be both a direct claim and a derivative claim. When that occurs the complaint need not comply with Rule 32.1 demand requirements. This decision points out that...more

Want To File A Derivative Suit? You May Soon Be Required To Read Statutes

by Allen Matkins on

I have been writing recently about SB 203, a bill that is now pending in the Nevada legislature. As introduced, the bill would, among other things, require the following...more

Massachusetts Supreme Court Affirms Dismissal Of Shareholder Class Action And Clarifies That Directors Generally Owe Fiduciary...

by Shearman & Sterling LLP on

On March 6, 2017, in a decision authored by Justice Margot Botsford, the Massachusetts Supreme Judicial Court affirmed the dismissal of an action for breach of fiduciary duty brought by former shareholders of EMC Corporation...more

New York Court Reverses Rejection of M&A Disclosure-Only Settlement Signaling Split from Delaware

by Seyfarth Shaw LLP on

Seyfarth Synopsis: On February 2, 2017, the Appellate Division for the First Department in New York entered an order approving a “disclosure-only” settlement. While acknowledging the “increasingly negative view” of...more

Yahoo Data Breach Update: A Third Notification + Shareholders Sue

Last week, Yahoo issued another warning to some of its customers telling them that their personal information may have been compromised in a data breach. This is the third notification to Yahoo users that their information...more

Yahoo! Data Breach Results in Another Lawsuit Against Corporate Directors and Officers

by Snell & Wilmer on

A number of claims have been made against companies’ directors and officers alleging a breach of fiduciary duty for failing to adequately oversee data security programs. To date, the defendants’ oversight of the programs and...more

Yellow Flags Are Not Red Flags: Delaware Court of Chancery Rejects Caremark Claim in Reiter v. Fairbank

by Carlton Fields on

In October 2016, the Delaware Court of Chancery rejected a shareholder derivative lawsuit premised on an alleged lack of oversight by the directors of Capital One Financial Corp., Reiter v. Fairbank, C.A. No. 11693-CB, 2016...more

Court Of Chancery Explains Pleading Rules For A Caremark Claim

by Morris James LLP on

At first look, this decision seems to involve just another unsuccessful failure of oversight Caremark claim against directors. But it is worth reading because it outlines the various theories of a Caremark case and then...more

Delaware Law Updates - 2016 Year in Review

by McCarter & English, LLP on

Our Delaware Corporate and Alternative Entity Law attorneys closely followed the opinions coming from Delaware’s Supreme Court and Court of Chancery. Our 2016 Year in Review is a collection of brief summaries of selected...more

Choice of Entity and Key Contents of Organization Documents

by Jackson Walker on

Five Business Entity Forms: • Corporation • General Partnership • Limited Partnership • Limited Liability Partnership (“LLP”) • Limited Liability Company (“LLC”) Please see full presentation publication...more

"Delaware Supreme Court Addresses Limited Partnership Drop-Down Transactions and Conflicts Committees"

The Delaware Supreme Court recently ruled on two appeals from Court of Chancery decisions involving "conflicts committees" of Delaware limited partnerships. Both decisions arise out of challenges to "drop-down" transactions...more

Delaware Supreme Court Provides Guidance on Director Independence

by Seyfarth Shaw LLP on

Seyfarth Synopsis: The Delaware Supreme Court recently reversed the dismissal of a derivative complaint for failure to plead demand excusal because it found that certain directors of Zynga Inc. were not independent due to...more

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