A Recent Reminder That Omitting This Averment May Doom A Derivative Claim

Section 800 of the California Corporations Code applies to actions brought in the name of any domestic or foreign corporation, aka derivative actions. It is similar, but not the same as, Delaware Court of Chancery Rule 23.1 and Federal Rule of Civil...

Nevada Supreme Court Affirms Contemporaneous Ownership Requirement In LLC Derivative Action

I a short order of affirmance issued last week, the Nevada Supreme Court affirmed a basic requirement of derivative litigation. J. McDonald Co. v. Tropical & Losee, LLC, 2022 WL 6833521 (Nev. Oct. 11, 2022).  The case involved an attempt by J....

Nevada Supreme Court Affirms Choice Of New York Over Delaware

Five years ago, I noted that the Nevada Supreme Court had adopted New York's more deferential approach for assessing special litigation qualifications in Auerbach v. Bennett,393 N.E.2d 994 (N.Y. 1979) over that of the Delaware Supreme Court in ...

A First Sighting Of Zuckerberg Decision In California

Last year, the Delaware Supreme Court adopted a tripartite test for assessing demand futility allegations in derivative actions.  United Food & Commercial Workers Union vZuckerberg262A.3d1034 (Del.2021).  Under this test, courts are to...

Why A River Runs Through Every Derivative Action

I was perplexed by Judge Cindee F. Mayfield's repeated references to "derivate claims" in a recent unpublished opinion - JBB Investment Partners v. Fair, Cal. Ct. of Appeal Case No. No. A160098 (June 9, 2022). Was this a typographical error or was...

California Court Of Appeal Finds Caremark To Be Too Steep A Hill For Plaintiff To Climb

In January 2018, the media began reporting on two security vulnerabilities affecting Intel Corporation's microprocessors - dubbed "Spectre" and "Meltdown". Following these disclosures, Intel's stock price fell and its market capitalization declined...

Federal Court Applies Demand Excused Test When Demand Was Allegedly Made

I must confess that I confess that I am nonplused by a recent ruling by U.S. District Court Judge James A. Teilborg in SinglePoint Direct Solar LLC v. Curiel, 2022 U.S. Dist. LEXIS 19880. The case involved, among other things, a derivative claim...

Unsuccessful Derivative Plaintiff Found Personally Liable For Defendant's Attorneys' Fees

I expect that most plaintiffs in derivative actions do not expect to pay a defendant's attorneys' fees if they lose because under the "American Rule" each side pays their own attorneys' fees, regardless of who wins. A contract may, of course,...

Shareholder Derivative Suit Or Derivative Action?

I have long puzzled over the question of which is correct - "derivative suit" or "derivative action"? Historically, the term "suit" was used for proceedings in equity. California courts have generally regarded shareholder derivative claims as...

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