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...

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...

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...

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...

Conflict Waiver Does Not A Shareholder Make

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

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...

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:

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