In enacting the Dodd-Frank Act, Congress made it clear to everyone, other than the plaintiffs' bar, that say-on-pay votes were advisory only, did not create or imply any change in fiduciary duties of directors, or create or imply any additional fiduciary duties of directors. 15 USCS ยง 78n-1. In the eyes of the plaintiffs' bar, failed advisory votes have become the basis of lawsuits. The question then is whether the federal statute mandating say-on-pay votes confers jurisdiction on the federal courts.
In an opinion issued earlier this week, a panel of the Ninth Circuit Court of Appeals held that the argument that Congress did not intend to create additional liability for failed votes did not create a significant federal question conferring jurisdiction. Dennis v. Hart, 2013 U.S. App. LEXIS 15648 (9th Cir. July 31, 2013) As a result, the Court of Appeals instructed the District Court to remand the case to the California Superior Court.
The ruling represents a set-back for the defendants who evidently preferred to have the case tried in federal court.