Shareholder Litigation

News & Analysis as of

Fraud Vitiated Special-Committee Process in Dole Merger

In a self-interested transaction between a company and its controlling stockholder, the operative standard of judicial review under Delaware law is the most rigorous: entire fairness standard of review. To obtain the least...more

Court Of Chancery Explains Investment Banker Conflict Leads To Aiding And Abetting Claim

Here the banker failed to make a timely disclosure to its client that it had previously pitched the buyer to make a bid for the client. The Court found that in the context of a motion to dismiss the Board may have breached...more

M&A Update: Fully Informed Vote of Disinterested Stockholders Results in Business Judgment Rule Protection in Post-Closing Review...

In an October 2, 2015 decision, Corwin, et al. v. KKR Financial Holdings LLC., et al., the Delaware Supreme Court clarified that once a merger closes, as long as it has been approved by a fully informed vote of the...more

In re Riverbed: The Beginning of the End for Disclosure-Only Settlements in M&A Cases?

The past decade has seen an incredible rise in M&A litigation. According to Cornerstone, in 2014, a whopping 93% of announced mergers valued over $100 million were subject to litigation, up from 44% in 2007. As Delaware...more

Why Is John Prine Involved In A Suit By Shareholder Activists?

In one of the more consequential legal decisions of recent times, Magistrate Judge Kelly Rankin ruled recently that she would not strike part of a complaint filed by shareholder activists against Peabody Energy Corporation,...more

Still a Target: Court Certifies Bank Class Claims Against Retailer Following Data Breach

Although Target has tentatively settled consumer data breach class action claims, the retailer remains in the crosshairs of the plaintiffs’ class action bar. On September 15, a Minnesota federal district court certified a...more

Disclosure-Only Settlements Face Continued Scrutiny In Delaware

On Thursday, September 17, 2015, in In re Riverbed Technology, Inc. Stockholders Litigation, the Delaware Chancery approved a disclosure-only settlement related to the go-private deal for Riverbed Technology, Inc. Although...more

Court Of Chancery Signals Limits On M&A Settlements

This decision has been widely reported as signaling the Court of Chancery’s intention to cut back on the wave of suits filed over almost every merger. First, the Court held that the scope of any release will be affected...more

Delaware Court Leaves Ousted Executive on His Own for Legal Fees

In a September 11, 2015, decision, the Delaware Chancery Court denied a former officer and director advance reimbursement of legal fees in a dispute with his company, despite his insistence that multiple corporate documents...more

A Farewell to Alms? Peppercorn Settlements of M&A Litigation

An apparently frustrated Delaware Vice Chancellor recently approved yet another disclosure-only settlement of yet another challenge to a merger, but seemed intent on signaling that such proposed class-action settlements might...more

Going-Private Transaction Results in $148 Million Fraud Charge for CEO and GC – What to Consider Going Forward

The Delaware Court of Chancery (the "Court") recently found the CEO, David Murdock ("Murdock"), and the General Counsel, C. Michael Carter ("Carter"), of Dole Foods Company (the "Company") personally liable to investors for...more

Florida Appellate Court Adopts Test to Distinguish Direct Shareholder Actions From Derivative Actions

Addressing what it acknowledged was a “murky question” under Florida law, Florida’s Fourth District Court of Appeal recently outlined the test for determining when shareholders may maintain a direct action against a...more

Justice Friedman Allows Breach of Fiduciary Duty Claim to Proceed Against Corporate Directors Under Delaware Law

In AP Services, LLP v. Lobell et. al, No. 651613/2012, 2015 NY Slip Op 31115(U) (N.Y. Sup. Ct. June 19, 2015) (argued Feb. 21, 2014), Justice Friedman, applying Delaware Law, denied a motion to dismiss plaintiff AP Services,...more

In re Dole Food Co., Inc.; A Going-Private Primer

In an August 27, 2015 decision, Vice Chancellor Laster of the Delaware Chancery Court found that the chief executive officer (David H. Murdock) and president and general counsel (C. Michael Carter) of Dole Food Co., Inc....more

Delaware District Court Explains Securities Law Pleading Rules

This decision is an excellent primer for what must be plead to state a claim under various sections of the federal securities laws. The pleadings rules to establish a claim well enough to avoid a motion to dismiss are...more

Top Ten International Anti-Corruption Developments for August 2015

In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important international anti-corruption developments in the past month, with links to primary...more

Looking Back on 2014: The 7 Most Important eDiscovery Cases in Delaware - Part 3

Herbert Chen and Derek Sheeler v. Robert Howard-Anderson, Steven Krausz, Robert Abbott, Robert Bylin, Thomas Pardun, Brian Strom, Albert Moyer, Jeanne Seeley, and Occam Networks, Inc., C.A. No. 5878–VCL, Oral Argument on...more

Failure To Follow Up Demand Dooms Derivative Suit

Shareholders wanting to pursue a derivative suit all come to the same fork in the road.  One fork is to make a demand.  The other is to file a lawsuit and allege that demand would have been futile.  Most plaintiffs choose the...more

Delaware Court’s Finding of $148 Million Fraud by Dole CEO and General Counsel Offers Major Lessons in Take-Private Deals

The Delaware Chancery Court ordered Dole Food Co. Inc. CEO David Murdock and General Counsel Michael Carter to pay Dole shareholders $148 million for fraud in connection with the company’s 2013 take-private deal. The August...more

Court Of Chancery Explains Unfair Dealing Law In Cash-Out Case

Aside from the very large damage award, this decision should be noted for its thorough analysis of the duties of a controlling stockholder and his aides in the way they act to carry out a going private transaction....more

Give & Take: The Case for a Better G&E Compliance Program

Part One: Setting The Foundation - Why Does G&E Matter? Tony Robbins once said, “Every problem is a gift—without problems we would not grow.” In the compliance arena, the reverse also applies, as many gifts can...more

Glossary of Important Securities Regulation Terms and Definitions

This Glossary is designed to provide law students taking Securities Regulation with a tool that will assist them in learning the basic language of securities law and achieve a working knowledge of the fundamental principles...more

Minority Shareholder Owed No Fiduciary Duty To Other Shareholders In Merger Transaction

Judge Gale's decision earlier this month in Corwin v. British American Tobacco PLC, 2015 NCBC 74 dismissed all of the claims of the Plaintiff class. If the name Corwin is ringing a bell with you, his case is the shareholder...more

Court Of Chancery Denies Standing After Spin-Off

After a spin–off of a subsidiary, there is a question as to whether the subsidiary’s stockholders have standing to bring a derivative suit on behalf of the subsidiary for past wrongs against the subsidiary committed by the...more

Significant Headwinds for Securities Class Actions

In April 2015, the Supreme Court of Canada released its decision in Theratechnologies Inc. v 121851 Canada Inc., 2015 SCC 18, in which it emphasized the need for a robust screening mechanism to prevent unmeritorious secondary...more

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