Does A Plaintiff In A Derivative Action Have A Protectable Interest?

When allegations of corporate misfeasance surface at public companies, derivative actions are sure to follow.  Often, actions will be filed in both state and federal court.  This is what happened when "sexual misconduct" claims were made made public...

Dismissal Of State Court Derivative Action Yields Dismissal Of Parallel Federal Action

I first wrote about the preclusive effect, if any, of a dismissal of a parallel derivative action some nine years ago when I wrote about Vice Chancellor J. Travis Laster's ruling in La. Mun. Police Emples. Ret. Sys. v. Pyott, 46 A.3d 313, (2012).  ...

Does Requiring Shareholder Demand Increase Firm Value?

California, like many other states, imposes a demand requirement on shareholders who want to maintain a derivative action.  Thus, Corporations Code Section 800(b)(2) requires that a plaintiff allege in its complaint with particularity "plaintiff’s...

Nevada's Director Liability Standard Defeats Another Derivative Suit

NRS 78.138(3) imposes a statutory presumption that other than in cases of a change in control of the corporation, directors and officers, in deciding upon matters of business, act in good faith, on an informed basis and with a view to the interests...

Lack Of Knowledge Defeats Breach Of Fiduciary Duty Claim

Yesterday's post discussed Judge Mary Kay Vyskocil's ruling in Barenbaum v. Palleschi, 2020 U.S. Dist. LEXIS 180624 that the plaintiff's derivative claims were not "validly in litigation".  The case involved allegations that several executives and...

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.

LLC's Failure To File Cross-Complaint Dooms Double Derivative Action

Although the members of a limited liability may file a derivative action, the right of action belongs to the LLC and not to the members themselves.  This fundamental principle had real consequences for the plaintiffs in Heshejin v. Rostami, 2020...

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...

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