In several blog posts, I have commented on the right to a jury trial under California law. This may seem like an inapposite subject for a blog devoted to corporate and securities law issues. Nonetheless, I have...more
11/16/2017
/ Appeals ,
Breach of Duty ,
Bylaws ,
Choice-of-Law ,
Class Action ,
Conflicts of Interest ,
Delaware General Corporation Law ,
Forum Selection ,
Jury Trial ,
Mergers ,
Shareholder Litigation
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
UCLA Law School Professor Stephen Bainbridge recently critiqued the Nevada Supreme Court’s decision to follow Auerbach v. Bennett, 419 N.Y.S.2d 920 (1979) rather than Delaware’s Zapata Corp. v. Maldonado, 430 A.2d 779 (Del....more
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
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
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
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
The last few days, I’ve been writing about the legal issues raised by Jon L. Pritchett and Ed Tiryakian in a recent opinion piece published by The Wall Street Journal. To sum up the discussion so far, Professor Stephen...more
Yesterday’s post concerned asked the question whether shareholders can sue CEOs for social activism. The answer is of course, yes. The more interesting question is whether shareholders will win the suit. To answer that...more
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
In March 2011, the three-member compensation committee of EchoStar Corporation awarded options to purchase 1.5 million shares of company stock to its Chairman, Charles W. Ergen. According to EchoStar’s proxy statement for...more
Nevada, like California, has codified the attorney-client privilege...more
In May, I wrote about Judge Peter H. Kirwan’s ruling in Drulias v. 1st Century Bancshares, Inc., (Cal. Super. Ct. Case No. 16-CV-294673, Nov. 18, 2016). As readers may recall, Judge Kirwan declined to approve a disclosure...more
Kevin LaCroix recently tackled the question Is Deal Litigation in Delaware Done? According to Kevin, “deal litigation has been shifting from Delaware Chancery Court to courts in other states and to federal courts”. He...more
Theranos’ anni horribilium began in October 2015 with the publication of a story by investigative reporter John Carreyrou at The Wall Street Journal. Lawsuits and government investigations ensued. Although the Theranos...more
When a shareholder files a derivative suit in state court, the defendants often will try to have the case removed to the federal district court. Federal courts, however, are courts of limited jurisdiction and not every...more
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
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
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
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
Vice Chancellor J. Travis Laster’s ruling in In re Aruba Networks, Inc. Stockholder Litigation, C.A. No. 10765-VCL has received widespread coverage. See, e.g., Kevin LaCroix, Game Over?: Del. Chancery Court Rejects...more
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
In a post published yesterday on The Harvard Law School Forum on Corporate Governance and Financial Regulation, Delaware lawyer A. Thompson Bayliss and Mark Mixon write that no pay provisions “could transform stockholder...more
Yesterday’s post mentioned the recent Delaware Supreme Court decision in United Techs. Corp. v. Treppel, 2014 Del. LEXIS 608 (Del. Dec. 23, 2014). The case involved an inspection demand under Section 220 of the Delaware...more
In George Orwell’s famous satire of Stalin’s Soviet Union, Animal Farm, the animals started out with seven commandments. The seventh commandment was “All Animals Are Equal”. As time passed, three of the original...more