Recently, in the decision of Feuer v. Redstone, (Del. Ch. Apr. 19, 2018), the Delaware Court of Chancery considered a motion to dismiss brought in response to a derivative complaint against certain directors of CBS Corporation for excessive compensation paid to media titan, Sumner Redstone, at a time when plaintiff alleged he could no
Derivative Actions
Demand Not Excused When “Best Practices” Not Followed
By Fox Rothschild LLP on
When a derivative lawsuit is brought on behalf of a company, the derivative plaintiff will often times attempt to argue that demand upon the board would be “futile” in order to excuse the demand requirement under Delaware Court of Chancery Rule 23.1. The reason is that when a demand is in fact made upon the…
Caremark Claims Analyzed by Delaware Court of Chancery
By Fox Rothschild LLP on
In the recent decision of Oklahoma Firefighters Pension & Retirement System v. Corbett, C.A. No. 12151-VCG (Del. Ch. Dec. 18, 2017), the Delaware Court of Chancery provided a scholarly review of Caremark claims. In sum, the decision stands for the proposition that in order to survive a motion to dismiss, a plaintiff must plead…
Supreme Court Upholds Dismissal of Caremark Claim
By Fox Rothschild LLP on
In the recent opinion by the Delaware Supreme Court of Chancery in City of Birmingham Retirement and Relief System v. Good, No. 16, 2017 (Del. Supr. Dec. 15, 2017), the High Court held that stockholder plaintiffs failed to adequately plead demand futility in the connection with Caremark claims asserted against the company’s board of…
Chancery Denies Derivative Action for Failure to Plead Demand Futility
By Fox Rothschild LLP on
Under Delaware law, if a shareholder requests that a company pursue litigation, the decision whether to pursue litigation on behalf of the company generally resides with the board as an exercise of its business judgment. A stockholder lacks standing to bring suit on the company’s behalf unless the stockholder (i) has demanded that the directors…
Derivative Demand Requirements Equally Apply to Actions Asserted by 50/50 Member of an LLC
By Fox Rothschild LLP on
In Delaware, to assert a derivative action against company management, either a presuit demand must be made, or plaintiff must allege that demand would be futile because the board is not disinterested. For derivative actions asserted by shareholder against a corporation or of an unincorporated association, Court of Chancery Rule 23.1 requires that the complaint…
Creditor Lacks Standing to Bring Derivative Suit against LLC
By Fox Rothschild LLP on
The recent decision of Trusa v. Nepo, C.A. No. 12071-VCMR (Del. Ch. April 13, 2017), stands for the proposition that a creditor lacks standing to assert a derivative claim against a limited liability company. In Trusa, the plaintiff creditor Steven B. Trusa brought a derivative action for breach of fiduciary duty and dissolution…
Chancery Rules that Claims against General Partner are Direct, Allows Action to Proceed Despite Partnership’s Bankruptcy
By Fox Rothschild LLP on
Whether a claim against company management is direct or derivative is not infrequently disputed in litigation before the Delaware Court of Chancery. This determination becomes important in many contexts, including whether it was necessary for plaintiff to make a pre-suit demand upon the board, whether derivative claims of a company have been assigned to a…
Mootness Fee Awarded for Helpful Disclosures that Provided Benefit to Stockholders
By Fox Rothschild LLP on
In 2016, beginning with In Re Trulia Inc. Stockholder Litigation, C.A. No. 10020-CB (Del. Ch. Jan. 22, 2016) (see blog post here), the Court of Chancery has issued a wave of decisions analyzing the granting of fees in the context of disclosures. In Trulia, the Court of Chancery set forth the standard that…
Caremark Claims Dismissed by Chancery – Bad Faith Not Adequately Pled
By Fox Rothschild LLP on
In the recent decision of Melbourne Municipal Firefighters’ Pension Trust Fund v. Jacobs, C.A. No. 10872-VCMR (Del. Ch. Aug. 1, 2016), Vice Chancellor Montgomery-Reeves dismissed Caremark claims brought against certain directors (“Directors”) of Qualcomm, Incorporated (“Qualcomm” or “Company”). Plaintiffs alleged that the Directors failed to take action to prevent antitrust violations from occurring, despite…