Shareholder Litigation

News & Analysis as of

The Most Overlooked Exception to Attorney-Client Privilege

In-house counsel often communicate with corporate management under the assumption that these communications are protected by the attorney-client privilege— absent some type of unusual and extraordinary circumstance, such as...more

Chancery Applies 'Rales' in Dismissing Derivative Claim

In Sandys v. Pincus, C.A. No. 9512-CB, (Del. Ch. Feb. 29, 2016), the Delaware Court of Chancery considered the uncommon scenario of analyzing whether a demand made upon Zynga Inc.'s board of directors pursuant to Rule 23.1...more

2016 M&A Report

Our 2016 M&A Report offers a detailed review of, and outlook for, the global M&A market. Other highlights include a comparison of deal terms in public and private acquisitions; updates on takeover defenses and public company...more

Court Finds Plaintiffs Are Not Privies

Yesterday’s post noted that the plaintiff in a derivative suit is bringing claims on behalf of the corporation. Thus, when a derivative suit is dismissed, does that dismissal have any effect on other pending or subsequently...more

Compromising and Settling of Derivative Suits In California

When a shareholder sues derivatively, the shareholder is seeking relief not for itself, but for the corporation. Therefore, it should be expected that the shareholder is not free to compromise or dismiss the suit absent...more

Court of Appeal Says Same Counsel Can’t Represent Corporation And Individual Defendants in Derivative Suit

Derivative suits put the corporation in the odd position of simultaneously occupying the position of a defendant and plaintiff. When the suit is initiated, the corporation is named as a nominal defendant. If, however, the...more

The Netherlands Returns as a Collective-Settlement Forum

Ageas (the former Fortis) and several organizations representing Fortis shareholders announced yesterday a EUR 1.204 billion settlement of shareholder claims under the Dutch Act on Collective Settlement of Mass Claims (the...more

Storm Warning for Safe Harbor

On February 29, 2016, the Supreme Court denied certification in Harman International Industries Inc. et al. v. Arkansas Public Employees Retirement System et al., thereby leaving unanswered a number of questions related to...more

Seventh Circuit Applies Strong Business Judgment Rule to Reject Assertion of Demand Futility

In a recent decision in a diversity case, the Seventh Circuit deferred to a state legislature’s “strongly pro-management version of the business judgment rule,” rejecting a derivative claim filed by shareholders in an Indiana...more

Delaware Court of Chancery Clamps Down on Disclosure-Only Settlements

In recent years, lawsuits challenging mergers and acquisitions have become almost ubiquitous. Virtually all of these cases settled for disclosure-only settlements in which the target’s stockholders received no money. Of...more

Simply Because a Provision is in the Charter or Bylaws Does Not Necessarily Mean it is Enforceable

The recent Delaware case of In re Vaalco Energy, Inc. Stockholder Litigation (December 21, 2015) is a reminder to practitioners that provisions in the certificate of incorporation (or charter) and bylaws of a Delaware...more

Delaware Court of Chancery Increases Scrutiny on Disclosure-Only M&A Class Action Settlements

As recently as 2014, nearly 95% of all mergers of public companies valued at $100 million or more triggered stockholder class action litigation. Historically, a large number of merger-related stockholder litigation settled...more

"Giving" And "Getting": The NC Business Court On Disclosure Only Class Action Settlements

Disclosure only settlements are in deep trouble in Delaware based on the Court of Chancery's recent decision in In re Trulia Inc. Stockholder Litigation. That decision is said to have sounded a "death knell" in Delaware for...more

RBC Capital Markets, LLC v. Jervis, No. 140, 2015 (Del. Nov. 30, 2015) (Valihura, J.)

In this en banc decision, the Delaware Supreme Court affirmed the principal legal holdings and final judgment of the Court of Chancery finding, among other things, that RBC Capital Markets, LLC (“RBC”) aided and abetted...more

Court Of Chancery Explains When A Minority Stockholder May Have Actual Control Over A Deal

This is another in a series of decisions dealing with the allegation that a minority stockholder controlled a deal through its control of a majority of the board of directors....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

After In re Trulia: Increased Scrutiny for the Give and the Get in Disclosure Settlements

It used to be that boards of public companies being acquired would routinely face one or (likely) more lawsuits alleging the directors breached their fiduciary duties because they had agreed to sell too cheaply or engaged in...more

Chancery Analyzes Limits of 'Reasonable Conceivability'

In 2011, the Delaware Supreme Court in Central Mortgage v. Morgan Stanley Mortgage Capital Holdings, 27 A.3d 531, 537 (Del. 2011), unequivocally stated that the "pleading standard in Delaware to survive a motion to dismiss is...more

Delaware Court of Chancery to Increase Scrutiny of Disclosure Settlements

The Delaware Court of Chancery has made its strongest statement yet in the ongoing conversation about shareholder “disclosure settlements,” i.e., settlements in which the sole or primary consideration received by shareholders...more

Employer Anti-Poaching Agreements. A Tale of Disney Legal Troubles

Once upon a time, the Plaintiff in a shareholder derivative suit pending against Disney and its former and current board members claimed that commencing in the mid-1980s, companies in the animation business—including Pixar...more

Court of Chancery Approves Disclosure Settlement Post-Trulia and Finds Management Projections Plainly Material

As detailed in a prior post (available here), the ruling in In re Trulia, Inc. Stockholders Litigation, 2016 WL 270821 (Del. Ch. Jan. 22, 2016) changed the legal landscape for so-called disclosure settlements. Among other...more

DELAWARE CORPORATE LAW AND LITIGATION: WHAT HAPPENED IN 2015 AND WHAT IT MEANS FOR YOU IN 2016

Delaware has long been known as the corporate capital of the world, and it is now the state of incorporation for 66 percent of the Fortune 500 and more than half of all companies whose securities trade on the NYSE, Nasdaq...more

Strictly business: Could a Commerce Court make Pennsylvania a corporate magnet?

Nearly two-thirds of Fortune 500 businesses are incorporated in Delaware. More than 1 million businesses and half of all publicly traded U.S. companies are registered in Delaware....more

Maryland Appellate Court Clarifies Applicability of Business Judgment Rule for Board Responding to Shareholder Demand

The Maryland Court of Special Appeals recently ruled in Oliveira v. Sugarman, -- A.3d --, 2016 WL 361055 (2016), that a Maryland board's rejection of a shareholder demand is subject to the presumption of the business judgment...more

Chancery Court Continues to Close the Door on Disclosure-Only Settlements and Fees (But Opens a Window for “Mootness Dismissals”)

As previously discussed here, in 2015, the Delaware Court of Chancery issued a number of decisions calling for enhanced scrutiny of “disclosure-only” M&A settlements that involve no monetary benefits to a shareholder class. ...more

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