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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...

derivative action, derivative suit

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...

derivative action, derivative suit

Does California Law Apply To A Derivative Action Brought By Members Of A Foreign LLC?

In a ruling handed down this week, U.S. District Judge Lawrence J. O'Neill addressed whether California law applied to derivative claims apparently brought on behalf of an Oregon entity.  I found Judge O'Neill's ruling confusing at best.  First, he...

revised uniform limited liability, derivative action

Is Something Missing From This Complaint Against The We Company?

Earlier this week, Kevin M. LaCroix wrote about a lawsuit filed recently against The We Companies, commonly referred to as WeWork.  The company attracted a lot of press attention when in September it withdrew the registration statement for its...

derivative action

Conflict Waiver Does Not A Shareholder Make

Section 800(b)(1) of the California Corporations Code imposes the following standing requirement for derivative lawsuits:

"The plaintiff alleges in the complaint that plaintiff was a shareholder, of record or beneficially, or the holder of voting...

derivative action

Court Finds Corporation To Be "Antagonistic" To Its Shareholders

A derivative claim is one brought by a shareholder on behalf of the corporation to recover for harm done to the corporation.  Cohen v. Mirage Resorts, Inc., 62 P.3d 720, 732 (Nev. 2003).  However, when a derivative action is initiated, the...

derivative action

NY Courts Disagree On California Demand Requirement

Unlike the federal courts and Delaware's Court of Chancery, California has a statutory demand requirement.  Section 800(b)(2) of the Corporations Code provides:

"The plaintiff alleges in the complaint with particularity plaintiff’s efforts to secure...

derivative action

What Is So Beneficial About Beneficial Ownership?

Shareholders are the persons who enjoy the most rights under the California General Corporation Law.  A "shareholder" is not just anyone with rights in the shares, Corporations Code Section 185 defines a "shareholder" as "a holder of record of...

derivative action

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:

To...

Nevada Corporations, Derivative Suits, Auerbach v. Bennett, Delaware, derivative action, derivative suit, SLC, Stephen Bainbridge, Zapata

Review Of Special Litigation Committee Recommendations

Yesterday's post limned the Nevada Supreme Court's adoption of New York's Auerbach standard of review for special litigation committee recommendations.  In re Dish Network Derivative Litigation, 133 Nev. Adv. Op. 61 (2017).  The Supreme Court...

Nevada Corporations, derivative action, evidentiary hearing, In re Dish Network, Justice Kristina Pickering, SLC, Special Litigation Committee

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