Shareholder Litigation

News & Analysis as of

Delaware Corporation Law Amendments Address Fee-Shifting and Exclusive Jurisdiction Provisions

Recently enacted amendments to the Delaware General Corporation Law will prohibit the certificates of incorporation and bylaws of Delaware corporations from including "loser pays" litigation provisions with respect to...more

Court Dismisses in Part a Mutual Fund Excessive Fee Action Against SEI

Introduction - Over the past few years, we’ve seen a resurgence in the number of shareholder suits against mutual fund investment advisers for excessive fees under section 36(b) of the Investment Company Act. Currently,...more

Seventh Circuit Holds Under Indiana Law, Company Was Allowed to Vote Its Own Shares

The United States Court of Appeals for the Seventh Circuit recently affirmed a district court decision holding that under Indiana law, an Indiana corporation could vote its own outstanding preferred shares. In 1999, Emmis...more

SEC Proposes Broadened Rules on Clawback of Incentive-Based Compensation

Proposed Rules would require increased disclosures on companies’ recovery processes and affect the majority of issuers with listed securities. Background - On July 1, 2015, the Securities and Exchange Commission...more

Delaware General Corporation Law Amendments

On June 24, 2015, Delaware Governor Jack Markell approved several important amendments to the Delaware General Corporation Law (the “DGCL”),[1] with such amendments generally becoming effective on August 1, 2015. These...more

When You Wish Upon A (Lode)Star: NC Business Court Cuts Fees Requested By Attorneys For Class Plaintiffs

The Business Court last week knocked down a fee request of Plaintiffs' class action counsel to $500,000, from the $660,000 requested, in an Order in Nakatsukasa v. Furiex Pharmaceuticals, Inc., 2015 NCBC 68. The...more

Blog: Third Circuit Renders Opinion In Trinity Wall Street V. Wal-Mart (And Admonishes SEC To Issue New Guidance)

Yesterday, the Third Circuit finally rendered its opinion in Trinity Wall Street v. Wal-Mart Stores Inc, a case involving a shareholder proposal submitted by Trinity Wall Street requesting that Wal-Mart’s board develop a...more

In re Cornerstone Therapeutics Inc. S’holder Litig., C.A. No. 564, 2014 (Del. May 14, 2015) & Leal v. Meeks, C.A. No. 706, 2014...

In these interlocutory appeals, the Delaware Supreme Court resolved a long-standing split in Delaware authorities by ruling that independent directors (including members of a special committee negotiating a transaction with a...more

Third Circuit Issues Decision in Wal-Mart Case

The Third Circuit has issued its decision in the case of Trinity Wall Street v Wal-Mart Stores, Inc. To try and put it simply, Wal-Mart argued Trinity’s shareholder proposal dressed up a matter related to the ordinary...more

Are “Proxy Puts” Kaput?

“Proxy put” provisions, which have been widely used in credit agreements and indentures since the 1980s, have recently garnered the attention of shareholders and plaintiffs lawyers, calling into question their value and the...more

Delaware Bans Corporate Fee-Shifting Bylaws and Authorizes Delaware-Only Forum Requirement for Intra-Corporate Litigation

Delaware recently enacted new legislation to prohibit stock corporations from adopting fee-shifting bylaws and charter provisions, among other amendments to the Delaware General Corporation Law. The fee-shifting ban ends a...more

New Delaware Law Invalidates “Fee-shifting” and Validates "Forum-selection" Provisions

Prohibition on Fee-Shifting Provisions - The legislation signed into law last week responds to the Delaware Supreme Court’s decision in ATP Tour, Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014) in which the Court...more

Merger Price and Process Win the Day Yet Again In Delaware Appraisal Action

On June 30, 2015, the Delaware Court of Chancery issued a post-trial opinion in which it yet again rejected a dissenting shareholder’s attempt to extract consideration for its shares above the merger price through appraisal...more

Delaware Supreme Court Holds Tooley Direct vs. Derivative Rule Is No Bar to Parent Corporation’s Contract Claim

As previously reported, in NAF Holdings, LLC v. Li & Fung (Trading) Limited, 772 F.3d 740 (2d Cir. 2014), the Second Circuit certified to the Delaware Supreme Court an unusual question regarding whether the direct vs....more

Delaware Governor Signs Bill Prohibiting Bylaws on Fee-Shifting

Last week, Delaware Governor Jack Markell signed Senate Bill 75, which amends the Delaware General Corporation Law to prohibit Delaware stock corporations from adopting bylaws that force shareholders to pay legal fees if they...more

Executive Compensation Paid to Controlling Shareholders Subject to Business Judgment Review When Approved by an Independent...

Members of the Dolan family hold 73% of the voting power of Cablevision Systems Corporation’s stock. A shareholder commenced a derivative action regarding the executive compensation paid to Dolan family members serving as...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

Delaware General Corporation Law Amended Regarding Fee-Shifting and Forum Selection Clauses

On June 24, 2015, the governor of Delaware signed into law legislation that amends the Delaware General Corporation Law (Title 8 of the Delaware Code) (“DGCL”) to effectively prohibit fee-shifting bylaw provisions in the...more

"The New Mutual Fund Exception: Ninth Circuit Allows Direct Claims to Redress Derivative Injury"

Courts have sought to simplify their approach to determining whether an action is derivative or direct — a determination that the Delaware Supreme Court has acknowledged “is sometimes difficult.” Tooley v. Donaldson, Lufkin &...more

Delaware Supreme Court Rejects Presumption of Disloyalty for Independent Directors

Public companies incorporated in Delaware frequently adopt a charter provision, pursuant to 8 Del. C. § 102(b)(7), that insulates their directors from monetary damages for breaches of the fiduciary duty of care. Those...more

Blog: Delaware Chancery Court Applies Entire Fairness Standard Of Review To Director Compensation

What is the judicial standard of review applicable to an award of compensation by directors to directors under an equity incentive compensation plan that has been approved by the shareholders? That was the question before...more

Shareholder Disputes: When is Just and Equitable Liquidation Appropriate?

Unfair prejudice claims are commonplace in the British Virgin Islands (BVI) following the introduction of bespoke provisions in the BVI Business Companies Act 2004 and have all but replaced old fashioned just and equitable...more

Closely-Held Shareholder Derivative Actions are Alive and Well in Texas

After 30 years of running his family-owned business, Hillbilly Oil Co., Jed Clampett decided to retire in 2013. The board of directors elects Jethro Bodine as Hillbilly’s President and Elly May as Vice President. Both Jethro...more

Meritas Capability Webinar - Controlling Where to Fight and Who Pays for it?

To address the continued problem of duplicitous stockholder strike suits, corporations have started to experiment with forum selection bylaws (which limit the jurisdictions in which stockholders may bring such suits) and fee...more

Meritas Capability Webinar - Controlling Where to Fight and Who Pays for it? [Video]

To address the continued problem of duplicitous stockholder strike suits, corporations have started to experiment with forum selection bylaws (which limit the jurisdictions in which stockholders may bring such suits) and fee...more

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