Shareholder Litigation

News & Analysis as of

New Case Addresses LLC Member Expulsion in New Jersey

The New Jersey Supreme Court has decided a new case addressing what it takes to expel a member from an LLC in New Jersey. The applicable statute in New Jersey (42:2C-46(e)) has three subsections dealing with expelling a...more

Your daily dose of financial news - The Brief – 9.8.16

In a move anticipated over the past year or so, Caliber Home Loans—with PE Lone Star Funds’ backing—is making more loans to “borrowers with spotty credit histories.” A euphemism for subprime, by the way. That targeting has...more

Seventh Circuit Strikes Again – Rejects Settlement In Shareholder Deal Litigation

In yet another strongly-worded opinion, the Seventh Circuit rejected the proposed settlement of a Walgreens’ shareholder strike suit in which the class obtained “worthless” supplemental disclosures but class counsel received...more

Shareholder Derivative Action Or Shareholder Derivative Suit?

A legal proceeding brought in a representative capacity is sometimes referred to as a “shareholder’s derivative action” and sometimes as a “shareholder’s derivative suit”. Which is correct?...more

What To Do If Filing Shareholder Dispute Litigation Might Potentially Harm The Company

To negotiate – or to sue? That is the question when the decision to sue might potentially hurt the company. A minority shareholder (or LLC member) in New Jersey is often faced with a difficult choice. Confronted with...more

Court Rejects Excessive Fee Claims Following Trial on Mutual Fund “Manager of Managers” Theory

On August 25, a federal court in the District of New Jersey issued a much-anticipated decision, finding after a lengthy trial that shareholder plaintiffs failed to prove claims that AXA entities had charged excessive mutual...more

Strike Suit Struck Down

It seems that the announcement of any corporate transaction triggers a race to the courthouse by plaintiffs’ firms. These firms specialize in filing class action lawsuits demanding additional disclosures for the benefit of...more

The Decline of the Disclosure-Only Settlement: Will We Regret What We Wished For?

In combination with the Delaware Court of Chancery’s decision in In re Trulia, Inc. Stockholder Litigation, 129 A.3d 884 (Del. Ch. 2016), Judge Posner’s blistering opinion In re Walgreen Company Stockholder Litigation, 2016...more

In re Volcano Corporation Stockholder Litigation, C.A. No. 10485-VCMR (Del. Ch. June 30, 2016) (Montgomery-Reeves, V.C.).

In this memorandum opinion, the Court of Chancery dismissed claims for breach of fiduciary duty under Chancery Rule 12(b)(6), holding that an irrebuttable business judgment rule standard applies to a merger effected under...more

Seventh Circuit Adopts Trulia Standard for Disclosure-Only Settlements

Last week, in an opinion authored by Judge Richard Posner, the U.S. Court of Appeals for the Seventh Circuit rejected a proposed class-action settlement arising from Walgreen Co.’s acquisition of the Swiss-based pharmacy...more

Seventh Circuit Brands Disclosure-Only Settlement a “Racket” and Endorses Delaware Court of Chancery’s Stricter Standard for...

In a 2-1 decision, the Seventh Circuit has joined the Delaware Court of Chancery’s call for enhanced scrutiny of “disclosure-only” M&A settlements that involve no monetary benefits to shareholders. As previously discussed,...more

Delaware Law Updates – Court of Chancery Puts Boards of Directors on Notice that Contracting Away Derivative Claims in a Merger...

Vice Chancellor Glasscock has held that a merger designed to eliminate derivative claims against a majority of directors justified the application of the entire fairness standard of review in a direct challenge to the merger....more

Court of Appeal Lifts Stay in Cross Border Class Action

In Kaynes v. BP [1] (referred to herein as “Kaynes”) the Court of Appeal for Ontario (“ONCA”) recently lifted a stay of a class proceeding in which the Plaintiff is seeking damages for alleged misrepresentations made to...more

Seventh Circuit Criticizes Disclosure-Only M&A Litigation Settlements, Holding That Supplemental Proxy Disclosures Must Address...

In In re Walgreen Co. Stockholder Litigation, No. 14 C 9786, 2016 WL 4207962 (7th Cir. Aug. 10, 2016) (Posner, J.), the United States Court of Appeals for the Seventh Circuit issued a highly charged opinion critical of an...more

Court of Chancery Awards Mootness Fee for “Helpful” Supplemental Disclosures

The Court of Chancery’s highly-publicized decision in In re Trulia, Inc. Stockholders Litigation, 129 A.3d 884 (Del. Ch. 2016) (Bouchard, C.) (discussed here) took aim at the problem of disclosure-only settlements and...more

Overview of Cornerstone Research Report on Shareholder Litigation

A recent Cornerstone Research report reviewed ‘Shareholder Litigation Involving Acquisitions of Public Companies’ during 2015 and the first half of 2016. As the report indicates. the percentage of M&A deals valued over $100...more

It’s Not Easy Being Green: LeapFrog Execs Dodge Class-Action Over Sales Projections

On August 2, 2016, U.S. District Judge Edward Chen dismissed a shareholder lawsuit brought against children’s educational toymaker LeapFrog Enterprises, Inc. (“LeapFrog”) for failure to adequately plead statements were false...more

To Hell with Hadden: The Adoption of the Tooley Standard in Tennessee

The Tennessee Supreme Court recently adopted a new standard for determining whether a shareholder claim is direct or derivative. Specifically, in Keller v. Estate of Edward Stephen McRedmond, the Court “set aside the...more

Court Of Chancery Reviews Corporate Opportunity Doctrine Where Derivative Claim Eliminated By Merger

This is an excellent explanation of the corporate opportunity doctrine’s four elements, under which directors may be liable for taking a business opportunity that: (1) the corporation is financially able to take for itself;...more

Is This A Derivative or a Direct Shareholder Claim? New Tennessee Standard Makes it Easier to Tell

In Tennessee, shareholders may file a lawsuit for injuries suffered by the company or by the shareholders individually.  A shareholder files a derivative action when the company is entitled to some legal relief; and files a...more

Shareholders Will Get to Trial in Petrobras Corruption Scandal Action

Yesterday I wrote about what may well be the next great bribery and corruption scandal across the globe involving the Venezuelan state oil company Petroleos de Venezuela SA (PDVSA). However, the current largest corruption...more

Steps a Company Can Take to Inoculate Itself Against Shareholder Dispute Litigation

As discussed many times on this blog, shareholder dispute litigation can be extremely costly and terribly disruptive to company operations. From the company’s point of view, it should be avoided if at all possible. Once an...more

U.S. Court for District of Minnesota Dismisses Target Data Breach Shareholder Derivative Suits

On July 7, 2016, the United States District Court for the District of Minnesota granted Target’s unopposed motion to dismiss the derivative actions filed by a number of shareholders against the company relating to the...more

Delaware Chancery Court Confirms: Two Step Merger Initiated As A Tender Offer Enjoys Business Judgment Rule Protection

The Delaware Court of Chancery recently held that where a majority of a corporation’s fully informed, disinterested, and un-coerced stockholders tender their shares as part of a two-step merger, that has the same “cleansing”...more

Shareholder Derivative Suit Following Data Breach Misses Target

On July 7, 2016, Judge Paul A. Magnuson of the United States District Court for the District of Minnesota granted Defendants’ Motions to Dismiss a shareholder class action that had been initiated following a 2013 holiday...more

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