The D&O Diary

The D&O Diary

A PERIODIC JOURNAL CONTAINING ITEMS OF INTEREST FROM THE WORLD OF DIRECTORS & OFFICERS LIABILITY, WITH OCCASIONAL COMMENTARY

Category Archives: Shareholders Derivative Litigation

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More Shareholder Litigation Involving Corporate Inversion Transactions

Posted in Shareholders Derivative Litigation
One of the more distinctive business trends in recent months has been the surge of so-called corporate inversion transactions, in which a domestic U.S. company merges with a non-U.S. company, with the the successor company to be based in the foreign country in order to take advantage of a more favorable corporate tax regime. These … Continue Reading

Texas Appellate Court Affirms Transocean Deepwater Horizon Derivative Suit Dismissal: An Interesting Angle on Corporate Inversion Transactions?

Posted in Shareholders Derivative Litigation
In a July 24, 2014 opinion (here), an intermediate Texas appellate court, applying Texas law, affirmed the trial court’s dismissal on forum non conveniens grounds of the Deepwater Horizon disaster-related shareholder derivative suit filed against Switzerland-domiciled Transocean Limited. The court’s ruling is interesting in and of itself, but it may be even more interesting in … Continue Reading

Despite Forum Selection Clause, Del. Chancery Court Declines to Enjoin Louisiana Action

Posted in Shareholders Derivative Litigation
Earlier this year, when Chancellor Leo Strine issued an opinion in the Chevron case upholding the validity under Delaware law of a forum selection clause in the company’s corporate by-laws, a number of questions remained unanswered, including in particular what would happen if, notwithstanding the forum selection provision, a shareholder nevertheless filed an action in … Continue Reading

Delaware Chancery Court: Forum Selection Bylaw Valid

Posted in Shareholders Derivative Litigation
On June 25, 2013, in a judicial development that may help ease the curse of multi-jurisdiction litigation, ChancellorLeo E. Strine, Jr. of the Delaware Court of Chancery held that forum selection bylaws adopted by Chevron and Federal Express are statutorily and contractually valid. The company’s by-laws designated Delaware as the sole forum for derivative lawsuits, … Continue Reading

D&O Insurance to Fund Entire “Largest Ever” $139 Million News Corp. Derivative Suit Settlement

Posted in Shareholders Derivative Litigation
In what the plaintiffs’ lawyers claim to be the largest derivative lawsuit settlement ever, the parties to the News Corp. shareholder derivative litigation have agreed to settle the consolidated cases for $139 million. The company also agreed to tighten oversight of the company’s operations and to establish a whistleblower hotline, as well as other corporate … Continue Reading

Delaware Supreme Court Blasts Chancery Court’s Controversial Refusal to Recognize California Court Judgment

Posted in Shareholders Derivative Litigation
One of the more vexing litigation problems to emerge recently has been the proliferation of multi-jurisdiction litigation, where corporate defendants are forced to litigate essentially the same claim in multiple courts at the same time. This problem is a particular issue in the context of M&A litigation, although not contained to those kinds of lawsuits. … Continue Reading

Delaware Chancery Court: A Sweeping Vision of Outside Directors’ Foreign Operations Oversight Responsibilities?

Posted in Shareholders Derivative Litigation
In the current global economy, many companies have operations and assets in far-flung corners of the world. These geographically dispersed arrangements have a number of implications for the concerned companies. According to a recent decision from the Delaware Court of Chancery, the arrangements may also have important implications of these companies’ outside directors, at least … Continue Reading

Fifth Circuit Affirms Dismissal of BP Deepwater Horizon Derivative Suit

Posted in Shareholders Derivative Litigation
The Deepwater Horizon platform explosion and oil spill took place in the Gulf of Mexico, about 250 miles southeast of Houston. The environmental damage took place in the Gulf and along the Gulf shore in the Southeastern United States. When BP’s shareholders tried to sue the board of directors of BP — a corporation organized under … Continue Reading

Tough Week for Fee-Seeking and “Fast Filer” Plaintiffs’ Lawyers

Posted in Shareholders Derivative Litigation
Our legal system is one of our society’s crowning achievements. But for all of its grandeur, our legal system is not without its flaws. Among other things, our system encourages litigiousness that all too often involves frivolous suits and lawyers’-fee driven litigation, including the recent phenomenon of multi-jurisdiction derivative litigation driven by plaintiffs’ lawyers competing … Continue Reading

Cornerstone Research Releases Updated Study of M&A Litigation

Posted in Shareholders Derivative Litigation
On April 25, 2012, Cornerstone Research released a report written by Stanford Business School Professor Robert Daines and Cornerstone Research Principal Olga Koumrian entitled “Recent Developments in Shareholder Litigation Involving Mergers and Acquisitions – March 2012 Update” (here). This memorandum is the latest in a series of recent papers documenting the growth in merger related … Continue Reading

Taking a Look at the Limits of Indemnification

Posted in Shareholders Derivative Litigation
Indemnification is the first and most important line of defense for the protection of directors and officers. But corporate officials are not always entitled to indemnification. For example, under Delaware law, they cannot claim mandatory indemnification if their defense is not successful. And they cannot seek permissive indemnification is they did not act in good … Continue Reading

Takeover Litigation in 2011

Posted in Shareholders Derivative Litigation
In their paper “A Great Game: The Dynamics of State Competition and Litigation” (here), Ohio State Law Professor Steven Davidoff and Notre Dame Finance Professor Matthew Cain analyzed the M&A related litigation during the period 2005 to 2010. I discussed this article in a prior post, here. In a newly released February 2, 2012 paper … Continue Reading

All the M&A-Related Litigation Reference Material in One Convenient Location

Posted in Shareholders Derivative Litigation
During last week’s PLUS D&O Symposium, several of the panels discussed the problems surrounding the current onslaught of M&A-related litigation – and appropriately so, as the surging levels of M&A litigation is one of the most distinct and troubling current litigation trends. During the course of the discussion at the conference, several of the speakers … Continue Reading

A Small Step Toward Curbing the Follow-On Derivative Suit Curse

Posted in Shareholders Derivative Litigation
One feature of the recent changing mix of corporate and securities litigation has been the rise in the filing of follow-on derivative lawsuits in the wake of securities class action lawsuit filings. As Wilson Sonsini partner Boris Feldman recently noted, “like a moth drawn to a candle,” the derivative bar watches class action filings and … Continue Reading

Delaware Chancery Court Enters $1.263 Billion Shareholders’ Derivative Suit Award

Posted in Shareholders Derivative Litigation
In an interesting October 14, 2011 post-trial opinion, Delaware Chancellor Leo Strine entered a $1.263 billion award in the Southern Peru Copper Corporation Shareholder Derivative Litigation. The lawsuit relates to Southern Peru’s April 2005 acquisition of Minerva México, a Mexican mining company, from Groupo México, Southern Peru’s controlling shareholder. Chancellor Strine concluded that as a result … Continue Reading

OFAC Violations: A New Potential Source of D&O Liability Exposure?

Posted in Shareholders Derivative Litigation
In a lawsuit suggesting a new area of potential liability for corporate directors and officers, a shareholder of J.P. Morgan Chase has filed a sderivative lawsuit against the company, as nominal defendant, and certain of its directors and officers alleging breaches of fiduciary duty in connection with the company’s recent $88.3 settlement with the U.S. … Continue Reading

BP Deepwater Horizon Derivative Suit Dismissed in Favor of English Forum

Posted in Shareholders Derivative Litigation
A wave of litigation followed in the wake of the April 2010 Deepwater Horizon oil spill. Among this litigation were several shareholder derivative suits filed against certain directors and officers of BP and of its U.S. subsidiary. At the time these cases first arose, I asked whether or not these suits involving (and ultimately for the … Continue Reading

In a Must-Read Opinion, Delaware Court Rejects Bid to Block Massey Merger

Posted in Shareholders Derivative Litigation
According to news reports, on June 1, 2011, Alpha Natural Resources completed its $7.1 billion acquisition of Massey Energy Company. The deal went forward despite last minute efforts by groups of Massey shareholders proceeding in West Virginia and Delaware courts to try to enjoin the transaction on the grounds that the merger did not properly … Continue Reading

Yet Another Lawsuit Following “No” Vote on “Say on Pay”

Posted in Shareholders Derivative Litigation
On May 25, 2011, In the latest example of shareholders suing a company’s board following a negative “say on pay” vote, two union pension funds filed a shareholders’ derivative action claiming that Umpqua Holdings Corporation’s board violated its duties to investor by approving the2010 compensation plan despite the negative shareholder vote.. The lawsuit follows the … Continue Reading

Thoughts About Sokol’s Lubrizol Trades and the Berkshire Derivative Suit

Posted in Shareholders Derivative Litigation, Warren Buffett
Berkshire Hathaway Chairman Warren Buffett was not exaggerating when he stated at the opening of the company’s March 30, 2011 press release (here) that the release “will be unusual.” Not only did Buffett disclose the resignation of David Sokol as Chairman and CEO of several subsidiaries, but the release also revealed that Sokol had acquired … Continue Reading

Pfizer’s D&O Insurers Fund Unusual $75 Million Derivative Settlement

Posted in Shareholders Derivative Litigation
In the wake of Pfizer’s record-setting September 2009 $2.3 billion settlement of charges that it had engaged in off-label marketing of Bextra and other drugs, Pfizer investors filed shareholders derivative lawsuits against the company, as nominal defendant, and 19 of the company’s directors and officer, alleging that the defendants breached their fiduciary duties by failing to detect … Continue Reading

Of Oil Slicks and D&O Claims

Posted in Shareholders Derivative Litigation
One side-effect from the oil slick spreading across the Gulf of Mexico following the blowout of the Deepwater Horizon oil rig, and a direct result of the massive economic and environmental damage it has caused, is the efflorescence of lawsuits from persons whose property or livelihood have been threatened or damaged by the spill. Given … Continue Reading