News & Analysis as of

Derivative Suit

Can the Bare Naked Assignee Demand Access to LLC Records?

by Farrell Fritz, P.C. on

I wish I could take credit for it, but I can’t. The phrase “bare naked assignee” was coined by the preeminent scholar and LLC maven Professor Daniel Kleinberger whose massive oeuvre (not to mention his guest posts on this...more

Court Of Chancery Rejects Attorney-Driven Books And Records Demand

by Morris James LLP on

Wilkinson v. A. Schulman, Inc., C.A. No. 2017-0138-VCL (Nov. 13, 2017) - This decision has potential far-reaching consequences for shareholder-plaintiff litigation. As is well known, some entrepreneurial plaintiff-side...more

Judge Rules Internal Affairs Doctrine Governs California Insider Trading Statute

by Allen Matkins on

As I have mentioned on numerous occasions, California has its own insider trading statute – California Corporations Code Section 25402. The statute is included in the California Corporate Securities Law of 1968. In general,...more

Delaware Court Of Chancery Dismisses Derivative Action, Finding Demand Unexcused Because Plaintiff Did Not Plead Non-Exculpated...

by Shearman & Sterling LLP on

On November 7, 2017, Vice Chancellor Tamika Montgomery-Reeves of the Delaware Court of Chancery granted a motion to dismiss a derivative and putative class action brought by a minority stockholder of Erin Energy Corporation...more

To Demand or Not Demand, “Futility” is the Question

by Farrell Fritz, P.C. on

Under Delaware law, the decision to commence litigation on behalf of a corporation is, of course, a fundamental exercise of business judgment, which decision rests with the Board of Directors. A shareholder, therefore,...more

Court Of Chancery Issues A Definitive Opinion on Aronson

by Morris James LLP on

Lenois v. Lawal, C.A. No. 11963-VCMR (Nov. 7, 2017) - This case illustrates the power of well-functioning special committee to diffuse the potentially corruptive influence of a self-interested controller on a transaction....more

Your Daily Dose of Financial News

by Robins Kaplan LLP on

The moral of this story is as follows: if Maysayoshi Son says the merger’s off, it’s probably off (regardless of what the rest of the board says). We discussed the will they/won’t they status of the T-Mobile/Sprint deal last...more

Chancery Approves Incorporation of Reference Condition in Section 220 Litigation

by Morris James LLP on

Books and records actions are heralded as the “tools at hand” for litigators pursuing shareholder claims against a corporation. In fact, the Delaware Court of Chancery has been critical of litigants who failed to take...more

Delaware Court Of Chancery Finds Demand Futility As To Fiduciary Duty Breach Claims Arising From Costly Loan Approved By...

by Shearman & Sterling LLP on

On September 29, 2017, Vice Chancellor Sam Glasscock III of the Delaware Court of Chancery granted in part and denied in part a motion to dismiss derivative claims for breach of fiduciary duty against the board of foreign...more

Court Of Chancery Explains Demand Excusal Based On Knowing Violations Of Law

by Morris James LLP on

Kandell v. NIV, C.A. No. 11812-VCG (Sept. 29, 2017) - Derivative plaintiffs alleging that directors allowed the corporation they serve to violate the law typically face dismissal for failure to make pre-suit demand on the...more

LLC’s Purpose Being Achieved? Business Doing Fine? Good Luck Getting Judicial Dissolution

by Farrell Fritz, P.C. on

New York’s LLC judicial dissolution statute, Section 702 of the Limited Liability Company Law, provides far more limited grounds to dissolve a business than the Business Corporation Law – a harsh reality for allegedly...more

Nevada Supreme Court Adopts Delaware’s Direct Harm Test For Derivative Claims

by Allen Matkins on

On the same day that the Nevada Supreme Court rejected Delaware’s approach to reviewing special litigation committee determinations, it adopted Delaware’s test for determining whether a shareholder suit is derivative or...more

Cyberattacks Are the New Norm - How to respond and get insurance recovery for government investigations.

Takeaways - Companies that suffer cyberattacks can expect not sympathy but scrutiny from legal authorities. - D&O insurance can cover not only litigation but also investigation costs. - Strategic negotiation of...more

Nevada Supreme Court Adopts Delaware’s Tooley Test to Determine Whether Shareholder Claims are Direct or Derivative

In Parametric Sound Corp. v. The Eighth Judicial District Court of the State of Nevada, ___ P.3d ___, 2017 WL 4078845 (Nev. Sept. 14, 2017), the Nevada Supreme Court addressed the circumstances under which breach of fiduciary...more

Does California Side With Delaware Or New York On Special Litigation Committee Reviews?

by Allen Matkins on

As discussed in the two preceding posts, Nevada’s Supreme Court last week decided to adopt New York’s standard of review of special litigation committee recommendations to dismiss stockholder derivative suits. In re Dish...more

Review Of Special Litigation Committee Recommendations

by Allen Matkins on

Yesterday’s post limned the Nevada Supreme Court’s adoption of New York’s Auerbach standard of review for special litigation committee recommendations. In re Dish Network Derivative Litigation, 133 Nev. Adv. Op. 61 (2017). ...more

Nevada Favors New York Over Delaware Precedent For SLC Review

by Allen Matkins on

Nevada law endows a board of directors “full control over the affairs of the corporation”. NRS 78.120(1). This control is subject only to such limitations as may be provided by NRS chapter 7, or the articles of...more

When Can an Outside Attorney Serve as a Special Litigation Committee in an LLC Derivative Suit? When the Parties’ Contract Says...

In a decision handed down on August 15, 2017 by the New York Appellate Division First Department, the court endorsed the practice of the appointment of a Special Litigation Committee (SLC) by a limited liability company (LLC)...more

Demand Futility Isn't Dead For Derivative Actions Against Non-Profit Corporations

by Brooks Pierce on

You probably thought that you would never again have to argue that a demand on a corporation's board of directors before filing a derivative action should be excused because it would have been futile. That's because the...more

Delaware Law Updates: 2017 Year To Date Review

by McCarter & English, LLP on

Our Delaware Corporate and Alternative Entity Law attorneys closely follow the opinions coming from Delaware’s Supreme Court and Court of Chancery. Our 2017 Year to Date Review is a collection of brief summaries of selected...more

Summer Shorts: Three Must-Read Decisions

by Farrell Fritz, P.C. on

Regular readers of this blog know it’s been anything but summer doldrums in the world of business divorce, what with case law developments such as the Appellate Division’s potentially far-reaching ruling on the purposeless...more

Shareholder Derivative Suit Or Derivative Action?

by Allen Matkins on

I have long puzzled over the question of which is correct – “derivative suit” or “derivative action”? Historically, the term “suit” was used for proceedings in equity. California courts have generally regarded shareholder...more

Chancery Declines Applying 'Garner' Exception to Privileged Documents in Books-and-Records Action

by Morris James LLP on

In the recent decision in Salberg v. Genworth Financial,the Delaware Court of Chancery declined to compel the production of attorney-client privileged documents in a books-and-records action. In Salberg, Vice Chancellor...more

Can Shareholders Sue CEOs For Corporate Social Activism?

by Allen Matkins on

In an August 17, 2017 opinion piece published in The Wall Street Journal, Jon L. Pritchett and Ed Tiryakian had the following message for shareholders...more

Your Daily Dose of Financial News

by Robins Kaplan LLP on

A nearly $5 billion deal between French energy company Total and the oil and gas arm of Danish shipping giant Maersk is making waves this morning. Total will also assume a few tankers-full of Maersk Oil’s debt....more

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