News & Analysis as of

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

Is It Worth It For Plaintiffs' Counsel To Gamble On Merger Class Actions in North Carolina?

I hadn't written anything yet about the multiple shareholder actions challenging the merger of PokerTek -- a developer and distributor of electronic table (gambling) games -- with Multimedia Games -- another developer and...more

Data Breach Plaintiffs Survive Dismissal Against Target

Target’s 2013 data breach has generated over 100 consumer lawsuits, which were consolidated last year before the U.S. District Court for the District of Minnesota. On December 18, 2014, Judge Paul A. Magnuson issued a...more

When a Minority Stockholder May Be Deemed a Controller

In just the past three months, the Delaware Court of Chancery has issued four opinions (In re KKR Financial Holdings LLC Shareholder Litigation, Consol. C.A. No. 9210-CB; In re Crimson Exploration Stockholder Litigation, C.A....more

Delaware Supreme Court Confirms Chancery Court’s Broad Authority to Impose Use Restrictions on Information Obtained From Section...

The Delaware Supreme Court reversed the Chancery Court’s decision that it lacked authority to impose the requested use restriction, noting that Section 220(c) authorizes the Chancery Court in the exercise of discretion to...more

Ninth Circuit Holds that Under Nevada Law, a Prior Stockholder’s Litigation of Demand Futility Precludes Another Stockholder From...

In Arduini v. Hart, 2014 WL 7156764 (9th Cir. Dec. 17, 2014), the United States Court of Appeals for the Ninth Circuit considered whether the doctrine of issue preclusion prevents a stockholder from relitigating a prior...more

California Court of Appeal Applies Delaware Law to Deny Discovery in Shareholder Derivative Action

In Jones v. Martinez, 230 Cal. App. 4th 1248 (2014), the California Court of Appeal, Second Division, held that a plaintiff asserting a shareholder derivative action against directors of a Delaware corporation in a California...more

Lessons For Corporate Directors From The Wyndham Data Breach Derivative Action

On October 20, 2014, Wyndham Worldwide Corporation won dismissal of a shareholder derivative suit seeking damages arising out of three data breaches that occurred between 2008 and 2010. Dennis Palkon, et al. v. Stephen P....more

Investor Claims NetTALK Executives Took Control of Board

On November 5, Telestrata, LLC brought a derivative shareholder action and direct action against NetTALK.com, Inc., a publicly traded telecommunication company, and NetTALK’s directors and officers, alleging that the...more

Federal District Court in New Jersey Dismisses Shareholder Derivative Action against Wyndham Relating to Data Breach

On October 20, 2014, the United States District Court in New Jersey granted a 12(b)(6) motion to dismiss in favor of Wyndham Worldwide Corporation’s directors and officers in a shareholder derivative action arising out of the...more

Cybersecurity Litigation Monthly Newsletter

In August, Paytime, Inc., a payroll services company, moved to dismiss a putative class action filed in the wake of a data breach in which the personal and financial information of more than 230,000 people was compromised. ...more

Wyndham Decision Provides Guidance to Corporate Directors and Officers in Responding to a Data Breach

U.S. District Judge Stanley R. Chesler of the District of New Jersey recently provided much needed guidance to directors and officers on their duties and responsibilities with regard to cybersecurity. In Palkon v. Holmes, et...more

Data Breach Case Update: Shareholder Derivative Suit Dismissed

We recently discussed the increase in data breach litigation which resulted after several high-profile data breaches. You can read those articles here and here. Not surprisingly, several of these suits involve class actions...more

Delaware Court of Chancery Rejects Controlling Stockholder Claims and Applies Business Judgment Rule to Merger Suits

In In re KKR Financial Holdings LLC Shareholder Litigation, C.A. No. 9210 (Del. Ch. Oct. 14, 2014), the Delaware Court of Chancery dismissed a shareholder derivative suit brought by shareholders of KKR Financial Holdings LLC...more

Court Dismisses Shareholder Derivative Action Targeting Directors and Officers for Data Breaches

A federal district court in New Jersey has dismissed with prejudice a shareholder derivative suit, Palkon v. Holmes, No. 14-CV-01234 (SRC) (D.N.J.), that tried to blame the directors and officers at hospitality company...more

Demand Futility in Delaware Derivative Actions

Although they often involve overlapping issues, shareholder derivative lawsuits are fundamentally different from securities class actions. While the object of a securities class action is to hold the company (and, perhaps,...more

Oklahoma Takes a Stand a Stand in the Battle Over Derivative Fee-Shifting

Back in May we discussed ATP Tour, Inc. v. Deutscher Tennis Bund a seminal Delaware Supreme Court case that upheld a non-stock corporation’s “loser pays” fee-shifting bylaw. ATP Tour held that where a Delaware corporation...more

The Root Cause of Skyrocketing Securities Class Action Defense Costs

Why do the costs of defending securities class actions continue to increase? Because of my writing on the subject) I’m asked about the issue a lot. My answer has evolved from blaming biglaw economics – a combination of...more

Delaware Court of Chancery Dismisses Derivative Suit Brought by Expired Trust

The Delaware Court of Chancery recently held that the trustee of an expired trust does not have capacity to pursue a derivative suit unless authorized by state law, or in the trust instrument. In April 2009, shareholders of...more

The Current View On Direct vs. Derivative

When a member or shareholder of a company or corporation sustains a loss, is that member’s loss directly compensable by a direct suit? Or does the member have to bring a derivative suit on behalf of the corporation? ...more

Julie Friedman v. Dara Khosrowshahi, et al., C.A. No. 9161-CB (Del. Ch. Jul. 16, 2014) (Bouchard, C.)

In this memorandum opinion, the Court of Chancery granted the defendants’ motion to dismiss a stockholder’s complaint, challenging the accelerated vesting of the CEO’s restricted stock units based on an alleged violation of...more

Significant Legislation Affecting Business Passed by General Assembly

At the end of last week, the North Carolina General Assembly passed significant legislation affecting the State’s business legal climate. With large bipartisan majorities, the Legislature adopted Senate Bill 853 (SB 853),...more

They are coming for your client’s data. What will you do if they succeed?

Data security breaches—no industry is immune. These hackers can phish, spoof, skim, packet sniff, and key log their way into your system. Once a hacker successfully hacks into a corporation’s server, the breach will go...more

Florida Appeals Court Clarifies Law On Derivative And Direct Shareholder Lawsuits

On July 9, 2014, Florida’s Third District Court of Appeal issued a landmark opinion in the case of Dinuro Investments, LLC vs. Felisberto Figueira Camacho, et al., 3D13-1242 & 3D13-1246, (July 9, 2014). In Dinuro, the Court...more

Editorial: 3rd DCA Clarifies Derivative Lawsuits

The Third District Court of Appeal has issued a landmark opinion setting forth Florida's law to determine the limited circumstances in which a corporate shareholder or limited liability company member has standing to bring a...more

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