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).  ...

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...

The Board and #MeToo

The following fact pattern should be familiar.  A high-profile news story runs detailing years of sexual harassment by the CEO of a company.  Four women sued, claiming that the CEO repeatedly propositioned or groped female employees, and rewarded or...

Plaintiffs File Amended Complaint Against Yahoo! But Is Something Missing?

Last spring, a derivative suit was filed in California Superior Court against certain of current and former directors and officers of Yahoo!, Inc. alleging breach of fiduciary duty in connection with the company's widely reported data breach.  The...

Delaware Supreme Court Defines "Collusion"

A couple of years ago, I taught Administrative Law at the University of California, Irvine School of Law.  One of the many theories that we covered was the idea of "regulatory capture".  This is a "term coined by public choice economists to indicate...

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:

Does California Side With Delaware Or New York On Special Litigation Committee Reviews?

As discussed in the two preceding posts, Nevada's Supreme Court last week decided to adopt New York's standard of review of special litigation committee recommendations to dismiss stockholder derivative suits.  In re Dish Network Derivative...

Court Of Appeal Holds LLC's Former Counsel May Represent Insider Defendants In Derivative Suit

Derivative actions can be somewhat confusing.  Although the entity is essentially the plaintiff, it is named as a defendant.  Initially, one might question why must the corporation be named as a party?  I can think of at least two reasons.  First,...

Federal Judge Rules Out Private Cause Of Action Under California Control Person Statute

Some persons may be deemed to violate the Corporate Securities Law of 1968 even though they did not directly violate the law.  Corporations Code Section 25403(a) provides that a person who with knowledge directly or indirectly controls and induces...

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