Shareholder Litigation

News & Analysis as of

Appellate Court Notes

- AC34886 - State v. Bush - AC35418 - State v. LaFleur - AC36275 - North Star Contracting Corp. v. Albright This case dealt with who is the proper party to bring a shareholder derivative action. A...more

Court Decision Helps REITs Strategize for Successful Acquisitions in the Face of Shareholder Litigation

Decision of note for REITs contemplating asset acquisitions involving stock consideration that requires stockholder approval, even if the transaction does not effect a change-in-control. Background – Following...more

Spin-Offs and Successorship Clauses

In 2006, the media conglomerate News Corporation, referred to as Old News Corp, entered into a Settlement Agreement to settle stockholder litigation filed in Delaware in 2005. Subject to certain exceptions, the Settlement...more

Impact of Delaware Fee-Shifting Provisions on Derivative Actions in California

A recent decision in the Delaware Supreme Court, in conjunction with the broad California exceptions to the internal affairs doctrine, may dictate the legal landscape of shareholder litigation in California in the near...more

Blog: Is There A Gaping Hole In The Proposed Delaware Legislation On Fee-Shifting Bylaws?

Leave it to a distinguished law professor to actually read the text of proposed legislation and locate the gaping hole in it. In this post, “Delaware Throws a Curveball,” Professor John Coffee analyzes the proposed Delaware...more

Courts Continue to Dismiss Shareholder Suits Based on FCPA Violations

On March 16, 2015, Judge Paul G. Gardephe of the Southern District of New York dismissed a shareholder derivative suit filed by Sylvia Pritika against the CEO and others of Avon Products Inc. ("Avon") alleging breach of...more

California and Delaware Courts Agree: Amendments to Corporate Bylaws Do Not Apply Retroactively to Impair Pursuit Previously...

Two recent decisions, one from the Delaware Court of Chancery and one from the California Court of Appeal, Fourth Appellate District, refused to apply bylaws that impaired a shareholder/member plaintiff’s ability to pursue...more

Wannabe Derivative Plaintiffs of Delaware Corporations Cannot Skirt Delaware Law By Filing Suit in California

It is well-established that a shareholder-plaintiff may not assert derivative claims against a corporation’s officers or directors unless he or she makes a pre-suit demand on the corporation’s board of directors and alleges...more

Grant-Taylor v Babcock & Brown – causation and proof of loss in shareholder actions

The Federal Court has weighed into the debate about causation and proof of loss in shareholder actions in its decision of Grant-Taylor v Babcock & Brown Limited (in liquidation) [2015] FCA 149 (4 March 2015). Significantly,...more

CorpCast Episode 2: Advancement 101 [Video]

We’re back with the second episode of CorpCast, Morris James LLP’s podcast discussing Delaware corporate and commercial law and practice. In “Advancement 101,” we discuss the fundamentals of advancement actions in Delaware’s...more

Court Of Chancery Explains Notice Required For Moot Claims

This decision explains what notice is required when a representative litigation is to be dismissed as moot and a fee paid to the plaintiff’s attorneys. Notice should be given to the class or the other stockholders in the way...more

Court of Chancery Addresses Application of Fee-Shifting Bylaw

The Rites of Spring are upon us: budding flowers, warmer temperatures, and a Delaware court issuing an important decision just before the annual Tulane Corporate Law Institute begins. ...more

Blog: Delaware Chancery Court Addresses Application Of Fee-Shifting Bylaw To Former Stockholder

In a case just decided, Strougo v. Hollander, C.A. No. 9770-CB (Del. Ch. Mar. 16, 2015), the Delaware Chancery Court addressed the issue of whether the timing of adoption affects the enforceability of a unilaterally adopted...more

California court Refuses To Enforce Bylaw Amendment Compelling Arbitration By the Members Of The Corporation

There have been several recent Delaware court decisions and much commentary regarding the enforceability of bylaw provisions that establish rules governing stockholder litigation, including fee-shifting provisions and forum...more

This Week In Securities Litigation

The SEC continued Operation Shell-Expel this week, suspending trading in the shares of 128 OTC issuers bringing its total for the program to about 8% of the shares traded in that market. The Commission also announced another...more

M&A Deals Continue To Be Challenged In Shareholder Litigation

The percentage of M&A deals challenged by shareholder suits remained largely constant last year while the number of suits filed against each deal declined slightly, according to a recent report by Cornerstone Research (here)....more

It's Not Just A Delaware Thing: Other Courts Are Also Questioning Disclosure-Only Settlements In M&A Litigation

In an age when overburdened courts with reduced budgets often approve class action settlements without significant oversight, Delaware courts have frequently bucked that trend in the merger litigation context: rejecting...more

Delaware Independent Director Liability in Control Buyout Cases

The Delaware Supreme Court will address the standard for pleading that an independent director has breached fiduciary duties in connection with a controlling shareholder buyout. The issue was certified for interlocutory...more

"Fee-Shifting, Financial Advisor Liability Among Likely Delaware Law Issues for 2015"

The Delaware courts weighed in on familiar issues of importance last year, including multiforum deal litigation and the emphasis on an independent board process, while also delving into relatively new territory such as...more

Shareholder’s Challenge to Smith & Wesson SLC’s Independence Misfires in the First Circuit

On February 4, 2015, the First Circuit affirmed the summary dismissal of a shareholder derivative suit, which brought Nevada state claims for breach of fiduciary duty, waste of corporate assets, unjust enrichment, and...more

Trinity Wall Street Responds in Appeal of Exclusion of Shareholder Proposal

Currently before the Third Circuit is Trinity Wall Street v. Wal-Mart Stores, Inc. The case involves whether Wal-Mart can exclude a shareholder proposal under the “ordinary business exception” to Rule 14a-8. Trinity...more

BakerHostetler 2014 Year-End Review of Class Actions (and what to expect in 2015)

We are pleased to share with you the BakerHostetler 2014 Year-End Review of Class Actions, which offers a summary of some of the key developments in class action litigation during the past year. Class action litigation...more

“Frivolous” Merger Litigation Settlement Rejected by the Court

In an opinion that could help remedy the problem of baseless merger litigation, a court applying North Carolina law recently refused to approve a class action settlement because the underlying lawsuit was without merit. ...more

Court Of Chancery Explains New Statutory Authority To Correct Corporate Mistakes

This is an important decision because it explains the effect of the new Sections 204-205 to the DGCL. Those provisions permit the correction of corporate actions that failed to comply with the requirements of the DGCL, such...more

Appointment Of Independent Directors On The Eve Of Bankruptcy: Why The Growing Trend?

In recent years, companies in financial distress have found “independent” directors to be useful to achieve protections for their board members. An independent director is a director – usually with no prior affiliation to the...more

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