Nevada Supreme Court Affirms Contemporaneous Ownership Requirement In LLC Derivative Action

I a short order of affirmance issued last week, the Nevada Supreme Court affirmed a basic requirement of derivative litigation. J. McDonald Co. v. Tropical & Losee, LLC, 2022 WL 6833521 (Nev. Oct. 11, 2022).  The case involved an attempt by J....

Nevada Supreme Court Affirms Choice Of New York Over Delaware

Five years ago, I noted that the Nevada Supreme Court had adopted New York's more deferential approach for assessing special litigation qualifications in Auerbach v. Bennett,393 N.E.2d 994 (N.Y. 1979) over that of the Delaware Supreme Court in ...

Court Finds Derivative Claims Involving Nevada Corporation Were Not "Validly In Litigation"

A shareholder bringing a derivative claim, faces a choice. The shareholder can either make a demand on the board of directors and then challenge the board's decision not to proceed or file a complaint alleging that the demand would be futile. NRCP...

Nevada Supreme Court Finds California Precedent "Persuasive" In Appeal Of Derivative Action

What, if any, is the standing of a corporation in a derivative action?  Until this month, that question was yet to be addressed by the Nevada Supreme Court.  We now have an answer.

If You Plan To Claim Demand Futility, You Had Best Not Make A Demand

Rule 23.1 of the Nevada Rules of Civil Procedure specifies the pleading and standing requirements for shareholder derivative actions.  Among other things, Rule 23.1 requires that a complaint "allege with particularity the efforts, if any, made by the...

Can a breach of fiduciary duty suit be brought directly?

In a recent posting, Professor Stephen Bainbridge breaks down the question of whether breach of fiduciary duty claims by a shareholder may be brought as direct, rather than, derivative claims. The focus of his discussion is on breach of fiduciary...

Nevada Supreme Court Accords Preclusive Effect To Subsequent Federal Court Order

When bad things happen to corporations, derivative suits are sure to follow. So it was for Galectin Therapeutics, Inc., a Nevada corporation. Following publication of allegations of a "stock promotion scheme", stockholders filed derivative suits in...

Delaware Special Litigation Committee Review "Could Stand A Good Tweaking"

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. 1981).  He concludes:

Nevada Favors New York Over Delaware Precedent For SLC Review

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 incorporation of the corporation.  Id.  ...

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