California Corporations Code Section 800 governs derivative suits brought by both domestic and foreign corporations.  The statute provides a modicum of protection to defendants by establishing a procedure by which either the corporation or an individual defendant may move the court to require the plaintiff, as a condition to maintaining the action, to supply a bond to secure reasonable expenses incurred by the defendant, including attorneys' fees, in the event the defendant ultimately prevails.  The bond is for the benefit of the corporation and also any individual defendants who succeed in the motion.  Of course, there is a significant "but" and that is that the court may not require a bond in excess of $50,000 and that applies to in the aggregate.

The $50,000 limit was fixed in 1977 when the General Corporation Law was enacted and Marquette beat North Carolina in the NCAA Men's Division I Basketball Tournament.  This was a doubling of the prior $25,000 limit in former Corporations Code Section 834.  It has been nearly forty years, however, and the legislature has not adjusted the limit. According to the U.S. Department of Labor's inflation calculator, $50,000 in 1977 now has the same buying power as $195,475.25.  It would seem, therefore, that the bond limit is long overdue for a change. 

For more on the bond requirement in Section 800, see Here’s One Way To Recover Attorneys’ Fees Without Adopting A Fee Shifting Bylaw.

March Madness - A Time to Doff The Toga and Don the Brackets

Yesterday, the NCAA announced its March Madness Tournament brackets.  I'm certain that virtually no one will be thinking of pants or even something more intimate when they complete their brackets, but there is a connection.  The word "bracket" is derived from the Middle French word braguette meaning codpiece armor.  The French word has its origin in the Latin adjective bracatus, meaning wearing breeches or trousers.  The ancient Romans, of course, did not wear pants.  Hence, Virgil's famous line from Book I of the Aeneid: "Romanos, rerum dominos, gentemque togatam ([Juno will favor] the Romans, the masters of everything, and the toga clad people)".  To the Romans, only barbarians, such as the natives of Gaul and Britain, wore pants.  In fact, according to the fifth century C.E. compilation of Roman law, it was against the law to wear pants within the Eternal City.  Imperatori Theodosiani Codex 14.10.3 ("Intra urbem Romam nemo vel Bracis vel Tzangis utatur (Let no one use pants or boots within the City of Rome.")