Shareholder Litigation Derivative Suit

News & Analysis as of

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

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

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

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

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

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

Court Of Chancery Dismisses Previously Dismissed Case

What happens when a derivative claim is filed outside of Delaware and then is dismissed by that other court? Well even if the other complaint might have stood up in Delaware, the subsequently filed Delaware case will also be...more

Banking Notes: New Mississippi Law Allows Venue Selection for Shareholder Claims

The Mississippi legislature has created a new mechanism for Mississippi corporations to require that derivative and other shareholder claims be brought in the county of the corporation’s principal office instead of some other...more

Tenth Circuit Upholds Nevada Law By Denying Stockholders Standing to Bring Claims on Behalf of Nevada Corporation

In In re Zagg Inc. Shareholder Derivative Action, No. 15-4001, 2016 U.S. App. LEXIS 11095 (10th Cir. June 20, 2016), the United States Court of Appeals for the Tenth Circuit held that stockholders of a Utah-based, Nevada...more

Corporate Investigations and White Collar Defense - June 2016

Eye on the Supreme Court—Corruption and Fraud Edition - Why it matters: This session, the Supreme Court has undertaken the review of numerous cases that raise thorny issues arising in the white collar context. In our...more

Insights: The Delaware Edition - May 2016

This issue focuses on important, developing areas of Delaware corporation law and deal litigation, including the Court of Chancery’s clarification of its evolving views about disclosure-based deal litigation settlements;...more

"Recent Delaware Cases Clarify Existing Limits and Adopt Novel Condition in Books-and-Records Demands"

Recent Delaware cases have helped clarify the limits of what the Court of Chancery will consider in a books-and-records demand under 8 Del. C. § 220, and one case has adopted a novel condition that defendants may seek to...more

"Court of Chancery Addresses Fundamental Issues of Derivative Litigation"

The Delaware Court of Chancery recently issued a trio of notable opinions involving stockholder derivative actions. The opinions addressed fundamental issues of law such as whether particular kinds of stockholder claims are...more

Delaware Law Updates - Demand Refused Rule 23.1 Explained by the Delaware Court of Chancery

In a recent decision out of the Delaware Court of Chancery – Friedman v. Maffei et al., C.A. No. 111105-VCMR – the court’s second-newest member, Vice Chancellor Montgomery-Reeves, dismissed a proposed derivative complaint on...more

Court Finds Plaintiffs Are Not Privies

Yesterday’s post noted that the plaintiff in a derivative suit is bringing claims on behalf of the corporation. Thus, when a derivative suit is dismissed, does that dismissal have any effect on other pending or subsequently...more

Compromising and Settling of Derivative Suits In California

When a shareholder sues derivatively, the shareholder is seeking relief not for itself, but for the corporation. Therefore, it should be expected that the shareholder is not free to compromise or dismiss the suit absent...more

Court of Appeal Says Same Counsel Can’t Represent Corporation And Individual Defendants in Derivative Suit

Derivative suits put the corporation in the odd position of simultaneously occupying the position of a defendant and plaintiff. When the suit is initiated, the corporation is named as a nominal defendant. If, however, the...more

Seventh Circuit Applies Strong Business Judgment Rule to Reject Assertion of Demand Futility

In a recent decision in a diversity case, the Seventh Circuit deferred to a state legislature’s “strongly pro-management version of the business judgment rule,” rejecting a derivative claim filed by shareholders in an Indiana...more

Court Of Chancery Explains When A Minority Stockholder May Have Actual Control Over A Deal

This is another in a series of decisions dealing with the allegation that a minority stockholder controlled a deal through its control of a majority of the board of directors....more

Court Of Chancery Applies Demand Rules To Amended Complaint

In general, an amended derivative complaint does not need to show that demand is excused if it was excused for the filing of the initial complaint....more

Employer Anti-Poaching Agreements. A Tale of Disney Legal Troubles

Once upon a time, the Plaintiff in a shareholder derivative suit pending against Disney and its former and current board members claimed that commencing in the mid-1980s, companies in the animation business—including Pixar...more

DELAWARE CORPORATE LAW AND LITIGATION: WHAT HAPPENED IN 2015 AND WHAT IT MEANS FOR YOU IN 2016

Delaware has long been known as the corporate capital of the world, and it is now the state of incorporation for 66 percent of the Fortune 500 and more than half of all companies whose securities trade on the NYSE, Nasdaq...more

Court Of Chancery Requires Dismissal With Prejudice Of Withdrawn Derivative Suit

When, after full briefing, the plaintiff decides that he cannot meet the heightened pleading rules of the recent Cornerstone case, may he just walk away without prejudice to his right to sue again later or must the suit be...more

5 Securities Litigation Issues to Watch in 2016

The coming year promises to be a pivotal one in the world of securities and corporate governance litigation. In particular, there are five developing issues we are watching that have the greatest potential to significantly...more

District Court Explains Caremark Proof Requirements In Pleading

To meet the pleading requirements to state a Caremark claim it is necessary that you show either the board ignored signs of wrongdoing or at least took no steps to prevent such wrongdoing. This decision contains an excellent...more

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