Fiduciary Duty Shareholders

News & Analysis as of

I’m Guessing That The DOL Didn’t Have in Mind Negative Weighing OF ESG Factors

In this post, I noted a recent study by Professor Tracie Woidtke at the University of Tennessee concluding that social-issue shareholder-proposal activism appears to be negatively related to firm value. I therefore raised...more

Inside M&A - October 2015

Overview of SPACs and Latest Trends - A number of recent successful business combination transactions involving special-purpose acquisition companies (SPACs) led by prominent sponsors have driven a resurgence in the SPAC...more

Delaware Court of Chancery Cautions Directors: Be Vigilant in Recognizing Advisor’s Conflict of Interests

Shareholders challenged the merger of Zale Corporation with Signet Jewelers Ltd. In a decision dated October 1, 2015, the Delaware Court of Chancery credited allegations that the board of directors of Zale breached its...more

Ninth Circuit Affirms Dismissal of '40 Act Section 36(b) Excessive Fee Action Against Davis

The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of an amended complaint asserted by a shareholder of the Davis New York Venture Fund (the “Fund”) under section 36(b) of the Investment Company...more

Delaware Supreme Court Addresses Novel Controlling-Stockholder Claim and Clarifies Effect of a Fully Informed, Uncoerced...

The Delaware Supreme Court recently issued an opinion, captioned Corwin v. KKR Financial Holdings LLC, that sheds further light on when a stockholder owning less than 50% of the voting power of a company may be deemed a...more

Financial Services Quarterly Report - Third Quarter 2015: Recent Developments in U.S. “Excessive Fee” Litigation

The U.S. mutual fund industry is poised to see significant developments in the ongoing wave of Section 36(b) “excessive fee” litigation. Days apart in August, the Seventh Circuit Court of Appeals affirmed the grant of summary...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

In re Riverbed: The Beginning of the End for Disclosure-Only Settlements in M&A Cases?

The past decade has seen an incredible rise in M&A litigation. According to Cornerstone, in 2014, a whopping 93% of announced mergers valued over $100 million were subject to litigation, up from 44% in 2007. As Delaware...more

Delaware Court’s Finding of $148 Million Fraud by Dole CEO and General Counsel Offers Major Lessons in Take-Private Deals

The Delaware Chancery Court ordered Dole Food Co. Inc. CEO David Murdock and General Counsel Michael Carter to pay Dole shareholders $148 million for fraud in connection with the company’s 2013 take-private deal. The August...more

Good News for Compensation Committees

With executive compensation under fire from seemingly all directions these days, it’s nice to get some good news occasionally. In this case, that news comes via the Delaware Chancery Court’s recent decision in Friedman v....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

Seventh Circuit Affirms District Court on Remand in Jones v. Harris Associates

In Jones v. Harris Associates L.P., the Supreme Court adopted the Gartenberg standard for cases brought under Section 36(b) of the Investment Company Act of 1940: “[T]o face liability... an investment adviser must charge a...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

Minority Shareholder Owed No Fiduciary Duty To Other Shareholders In Merger Transaction

Judge Gale's decision earlier this month in Corwin v. British American Tobacco PLC, 2015 NCBC 74 dismissed all of the claims of the Plaintiff class. If the name Corwin is ringing a bell with you, his case is the shareholder...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

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

Securities and Corporate Governance Litigation Quarterly

Welcome to the fourth issue of Securities and Corporate Governance Litigation Quarterly, Seyfarth’s quarterly publication of the Securities & Financial Litigation Group focusing on decisions or other items of interest for...more

Second Circuit: Facebook Shareholders Lack Standing for Derivative Suits Challenging Pre-IPO Statements

Earlier this week, a U.S. Court of Appeals for the Second Circuit opinion reinforced that federal courts take standing in derivative actions quite seriously, particular when the alleged director misconduct predated the IPO....more

Eleventh Circuit Affirms Summary Judgment for Insurer Based on "Other Capacity" Exclusion

On June 22, the Eleventh Circuit affirmed the grant of summary judgment in favor of National Union Insurance Company of Pittsburgh, Pa., in an action where the insured sought $10 million in coverage under a D&O policy. The...more

“Dead Hand Proxy Puts” Garner Increased Stockholder Scrutiny In Delaware

A ruling last fall by the Delaware Chancery Court has prompted a wave of 8 Del. C. § 220 books and records inspection demands on (and threatened litigation against) Delaware corporations that have entered into credit...more

Dead Hand Proxy Puts Face Continued Scrutiny

"Dead hand proxy puts’’ have emerged as the target du jour for entrepreneurial plaintiffs counsel litigating corporate governance claims. Since last fall, at least seven separate actions have been filed in the Delaware Court...more

Director Compensation After Calma v. Templeton: Proactive Steps to Consider

Delaware case exposes director compensation to heightened “entire fairness” standard absent adequate stockholder ratification - The Delaware Court of Chancery recently decided a case that makes it easier for plaintiffs...more

Northstar v. Schwab: The Ninth Circuit’s End Run Around Derivative Lawsuits in the Mutual Fund Context

It is well recognized that only investors have standing to sue a mutual fund on behalf of a class of investors and that a fiduciary duty claim accusing fund trustees of mismanagement is the property of the fund, and not of...more

Violation of Corporate Charter: Breach of Contract, Fiduciary Duties or Both

When a company takes action through its board in violation of its certificate of incorporation, may a plaintiff stockholder bring suit against the company directly for breach of its certificate—the most important of corporate...more

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