Shareholder Litigation

News & Analysis as of

Delaware Supreme Court Clarifies Standards in Corporate Takeovers

On May 6, 2016, the Delaware Supreme Court upheld a merger between Zale Corporation (“Zales”) and Signet Jewelers Limited (“Signet”) when it affirmed a lower court’s dismissal of a shareholder class action that sought to...more

Court of Chancery Explains Bad Faith Test

This decision deals with when the actions of directors may be considered to be in bad faith, at least when there is no self-interest involved and the directors are properly informed before taking the time to decide what to...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

"Court of Chancery Continues to Clarify Views of Disclosure-Based Deal Litigation Settlements"

As previously discussed in Insights: The Delaware Edition, throughout the second half of 2015, the Delaware Court of Chancery began to question its long-standing practice of approving deal litigation settlements involving...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

Australian Court Manages Concurrent Class Actions By Giving The Class Members A Choice

As securities litigation becomes increasingly globalized, the Mintz Levin Institutional Investor Class Action Recovery practice is constantly monitoring and participating in jurisprudential developments in a number of...more

New York High Court Adopts Delaware Rule in Go-Private Suits

New York’s highest court earlier this month adopted a more lenient standard for reviewing certain types of corporate transactions between companies and controlling shareholders, similar to that adopted two years ago by...more

New York High Court Adopts Business Judgment Rule for Going-Private Transactions When Certain Minority Shareholder Protections Are...

Background of Kenneth Cole Productions Shareholder Litigation - The case involved Kenneth Cole Productions (KCP), a public New York corporation well-known as the designer and marketer of shoes, apparel and accessories....more

How to Win After You Lost: Examing "Trados"

Perhaps the longest-running litigation in recent Delaware Court of Chancery history has been settled, after the plaintiff class lost at trial. The Jan. 20 settlement hearing in In re Trados Shareholder Litigation, Con. C.A....more

Top Courts in Delaware and New York Affirm Business Judgment Rule Protection Where Procedural Safeguards are Followed

In recent decisions, both the Delaware Supreme Court and the New York Court of Appeals affirmed defendant-friendly lower court rulings, holding that, if appropriate procedural safeguards are employed in M&A transactions,...more

Delaware Supreme Court Reaffirms KKR, But Sounds Cautionary Note to Gatekeepers

On May 6, 2016, the Delaware Supreme Court affirmed the Delaware Chancery Court's ruling that Zale Corporation's sale to Signet Jewelers withstood scrutiny under the business judgment rule because the transaction was approved...more

New York High Court Holds Business Judgment Rule May Apply to Going-Private Mergers

On May 5, 2016, the New York Court of Appeals in Matter of Kenneth Cole Productions, Inc., Shareholder Litigation, 2016 WL 2350133 (N.Y. May 5, 2016) (Matter of Kenneth Cole), adopted the approach of the Supreme Court of...more

New York High Court Adopts Delaware's Deferential Business Judgment Review for Controlling Stockholder Buyouts

In re Kenneth Cole Productions, Inc. Shareholder Litigation - We previously reported on the Delaware Supreme Court’s landmark decision in Kahn v. M&F Worldwide Corp. (MFW) applying the deferential, defendant-friendly...more

New York Adopts Delaware Standard for Going-Private Transactions

On May 5, 2016, the New York Court of Appeals affirmed the dismissal of a shareholder class action and formally adopted the standard of review for going-private transactions articulated by the Delaware Supreme Court in Kahn...more

New York Follows Delaware, Applies Business Judgment Rule to Going-Private Mergers

On May 5, 2016, the New York Court of Appeals ruled that courts should apply the business judgment rule in shareholder lawsuits challenging going-private mergers, as long as shareholders were adequately protected—a decision...more

NY Court Of Appeals Rejects No-Opt Out Class Action Settlement In Shareholder Litigation

In Jinnaras v. Alfant, decided on May 5, 2015, the New York Court of Appeals rejected a proposed settlement of a shareholder class action, where the proposed settlement would have deprived out-of-state class members of a...more

N.Y. Court of Appeals Adopts Business Judgment Rule, with Conditions, for Going-Private Mergers

The New York Court of Appeals has followed Delaware in holding that the business-judgment rule applies to going-private mergers as long as certain shareholder-protective measures are met. The court’s May 5, 2016 decision in...more

The Court of Chancery Declines to Disturb Company’s “Waiver” of its Forum Selection Bylaw to Settle Derivative Action in...

Many Delaware companies have adopted forum selection bylaws that prevent their stockholders from bringing internal corporate claims in courts outside of Delaware. These bylaws are a valid and effective tool for limiting...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

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

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