News & Analysis as of

Derivative Suit Board of Directors Shareholders

Frost Brown Todd

Legislature Takes Steps to Ensure Texas Remains the Most Business-Friendly State in the Union

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On February 27, 2025, Senator Bryan Hughes (R-Tyler) filed Senate Bill 29 (S.B. 29), proposing several corporate reforms designed to ensure that Texas remains the premier business-friendly jurisdiction in the nation. If...more

Dechert LLP

Delaware Supreme Court Reaffirms High Bar for Proving Control by a Minority Stockholder

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Delaware Supreme Court reaffirms that “the test for actual control by a minority stockholder is not an easy one to satisfy.” Supreme Court makes clear that control by a minority stockholder is “not presumed.” Supreme Court’s...more

Balch & Bingham LLP

In ‘Case’ You Missed It: Alabama Supreme Court issues opinion clarifying the rules controlling nonprofit corporation governance

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If you have ever been to the Flora-Bama, chances are you have passed by the Caribe Resort in Orange Beach, AL. The Caribe, like many beach resorts, is a condominium building containing individually owned residential units...more

Allen Matkins

Can Delaware Exercise Jurisdiction Over Rupert Murdoch?

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In an opinion issued just after Christmas, Vice Chancellor J. Travis Laster ruled that a derivative lawsuit may proceed against the directors and officers of Fox Corporation.  The plaintiffs are claiming that the directors...more

Morris James LLP

Chancery Finds that Would-Be Caremark Plaintiffs Failed to Plead Demand Futility

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Bricklayers Pension Fund of W. Pa. v. Brinkley, C.A. No. 2022-1118-MTZ (Del. Ch. July 12, 2024) - In derivative cases where a stockholder-plaintiff has not made a pre-suit demand on the board of directors, demand futility...more

Morris James LLP

Chancery Holds That Demand Was Not Wrongfully Refused When Considered by Working Group

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In re Kraft Heinz Demand Refused Derivative Stockholder Litig., Consol. C.A. No. 2022-0398-LWW (Del. Ch. July 19, 2024) - By making a demand, a stockholder-plaintiff tacitly concedes that the board can impartially consider...more

A&O Shearman

Delaware Court Of Chancery Holds Stockholder Vote Following Post-Trial Decision Cannot Retroactively Ratify A Transaction That...

A&O Shearman on

As we previously reported, in January 2024, the Court held in a stockholder derivative suit against the CEO and directors of a sustainable energy and electric vehicle company (the “Company”) that a record-setting $55.8...more

Allen Matkins

Court Rules That When Profits Are Hypothetical There Can Be No Civil Theft

Allen Matkins on

Under California Penal Code Section 496(a) a person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or...more

Allen Matkins

When Dismissing A Case Violates Due Process

Allen Matkins on

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

Morris James LLP

Court of Chancery Rejects ‘Caremark’ Liability for Imperfect Compliance With Legal Obligations

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Delaware corporations are not permitted to pursue profits by violating the law. Under Caremark and its progeny, directors’ fiduciary duties include the good faith obligation to oversee and monitor the corporation’s compliance...more

Allen Matkins

Just What Are The Duties Of A Controlling Shareholder And How Should Claims Of Breach Be Brought?

Allen Matkins on

In a recent post, Professor Stephen Bainbridge discusses the question of when a controlling shareholder owes fiduciary duties to minority shareholders.  Knowing when controlling shareholder owes fiduciary duties is one thing,...more

Kramer Levin Naftalis & Frankel LLP

A Delayed Look at the Delaware Supreme Court Decision in 'In re Match Derivative Litigation': Director Independence

The Delaware Supreme Court’s recent decision in In re Match Group, Inc. Derivative Litigation (April 4, 2024) addressed two issues of significance to transactions of Delaware corporations involving their controlling...more

Woodruff Sawyer

Large Derivative Suit Settlements and Your Side A D&O Insurance

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Traditionally, this has been the main type of derivative suit that has resulted in large settlements. Merger and acquisition cases are common here. Examples of these types of suits include Paramount Global (CBS-Viacom merger)...more

Hogan Lovells

In re Cognizant Technology: Third Circuit adopts de novo review for failure to plead demand futility

Hogan Lovells on

In re Cognizant Technology Solutions Corporation Derivative Litigation, the United States Court of Appeals for the Third Circuit, sitting en banc, overruled its prior decision in Blasband v. Rales that applied an...more

Allen Matkins

Is Your Directors And Officers Liability Coverage Illusory?

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Many corporations pay significant amounts for directors and officers liability policies.  Commonly referred to as D&O policies, these policies usually involve three sides.  Directors and officers are likely to have the most...more

Allen Matkins

After More Than A Year, Questions Remain Regarding Caremark and Officers

Allen Matkins on

Last year, Vice Chancellor J. Travis Laster famously held that officers could be subject to liability under the Caremark doctrine.  In re McDonald’s Corp., 289 A.3d 343 (Del. Ch. Jan. 26, 2023).    The Caremark doctrine...more

Morris James LLP

Chancery Holds Plaintiff Fails to Meet Rule 23.1 Pleading Standard, Dismisses Action Arising From T-Mobile Data Hack

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Harper v. Sievert, C.A. No. 2022-0819-SG (Del. Ch. May 31, 2024). A stockholder plaintiff brought derivative claims alleging that current and former directors of T-Mobile US, Inc. were liable for aggregating customers’...more

Morris James LLP

Delaware Supreme Court Reverses MFW Dismissal Due to Inadequate Disclosures Regarding Special Committee’s Advisors’ Material...

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City of Sarasota Firefighters’ Pension Fund v. Inovalon Holdings Inc., No. 305, 2023 (Del. May 1, 2024). The Delaware Supreme Court’s decision in Khan v. M & F Worldwide Corp. (“MFW”) established a cleansing process for a...more

Woodruff Sawyer

Corporate Barbarians at the Gates: The Attack on Delaware

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All empires eventually decline. For decades, Delaware has held the crown as the premier state of incorporation for domestic companies (and many foreign companies seeking a foothold in the United States capital markets). But...more

Morris James LLP

Court of Chancery Grants Special Litigation Committee’s Dismissal of 'Carvana' Derivative Action

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Boards of Delaware corporations control the company’s assets, which includes by default derivative claims for breach of fiduciary duty against the company’s directors and officers. When derivative claims survive dismissal...more

Morris James LLP

Chancery Dismisses Derivative Action Based on Plaintiff’s Failure to Allege Particularized Facts Demonstrating Demand Futility

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The power to bring a claim for breach of duty causing injury to a Delaware corporation resides with the board of directors. It is part of their duty under Section 141(a) of the Delaware General Corporation Law to manage the...more

Morris James LLP

Chancery Dismisses Caremark Action Based on Insufficient Allegations of Bad Faith

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Clem v. Skinner, et al., C.A. 2021-0240-LWW (Del. Ch. Feb. 19, 2024) - This Caremark decision involved the retail pharmacy company, Walgreens, and concerned billing practices for a particular insulin pen product that gave...more

Morris James LLP

Chancery Denies Attorneys’ Fees for Appointment of New Directors Following Assertion of Derivative Claims

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In re Oracle Corp. Deriv. Litig., Consol. C.A. No. 2017-0337-SG (Del. Ch. Feb. 7, 2024) - Under the mootness rule, a stockholder plaintiff can be awarded attorneys’ fees when the plaintiff’s litigation efforts result in...more

Morris James LLP

Chancery Invalidates Elon Musk’s $55.8 Billion Pay Package

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Tornetta v. Musk, et al., C.A. 2018-0408-KSJM (Del. Ch. Jan. 30, 2024) - Stockholders of Tesla, Inc. brought a derivative action against Elon Musk and six individual Tesla directors, alleging that the directors breached...more

Morris James LLP

Chancery Upholds Challenge to TripAdvisor’s Conversion from a Delaware Corporation into a Nevada Entity

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Palkon v. Maffei, C.A. 2023-0449-JTL (Del. Ch. Feb. 20, 2024) - This decision arose out of TripAdivor’s conversion from a Delaware corporation into a Nevada corporation. The company’s CEO and Chair had voting control and...more

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