If a “fast filer” plaintiff races to the courthouse in one jurisdiction to file a derivative suit without prior due diligence, should a dismissal of the lawsuit for failure to plead demand futility preclude a separate derivative lawsuit brought be a different , more diligent plaintiff who files in a second forum? On the one hand, considerations of judicial efficiency and conservation of public resources argues in favor of precluding the second claim. On the other hand, policies in favor of greater pre-suit care prior to filing a lawsuit would militate in allowing the more diligent plaintiff’s claim to go forward.
In an interesting July 25, 2017 opinion (here) in which he reviewed these questions of the prior derivate suit dismissal’s claim preclusive effects on subsequent non-party claimant derivative claims, Chancellor Andre Bouchard concluded, in a break with the Court’s prior practices, the prior derivative suit dismissal on grounds of failure to plead demand futility does not preclude the claims of a subsequent claimant. This new approach to the issue of non-party preclusion in derivative litigation has important practical implications, as discussed below. Continue Reading