In the past, shareholder derivative lawsuits tended to settle for the defendants’ agreement to adopt corporate therapeutics and the payment of plaintiffs’ attorneys’ fees. There typically was not a cash component to the settlement, and rarely a substantial cash component. In more recent years, settlement patterns have changed, and, increasingly, derivative suit settlements have entailed large amounts of cash. The latest example of these new derivative suit settlement patterns is the $167.5 settlement of the derivative lawsuit brought by CBS shareholders in Delaware Chancery Court in connection with CBS’s $30 billion 2019 acquisition of Viacom. (The combined company was known as ViacomCBS, which changed its named to Paramount Global in February 2022.) Paramount Global disclosed the settlement of the CBS shareholder derivative lawsuit it its April 21, 2023 filing on Form 8-K, here.Continue Reading CBS Shareholder Derivative Suit Relating to Viacom Merger Settles for $167.5 Million
In the latest development in the long-running FirstEnergy bribery-related derivative lawsuit settlement saga, a federal judge has granted final approval to the proposed settlement in the consolidated action pending in the Southern District of Ohio, albeit while reducing the amount of the plaintiffs’ fee award. The parties will now, with the benefit of the final settlement approval, turn to the Northern District of Ohio, where an unconsolidated parallel action remains pending, and where the presiding judge has recently appointed new counsel to prosecute the separate action. In a rational and orderly world, the separate proceeding in the Northern District of Ohio would be dismissed. However, under the actual conditions, anything could happen.
As I have previously noted (
As I detailed in blog posts at the time, the parties to two separate shareholder derivative lawsuits in recent months announced what were among the largest derivative suit settlements – the massive $300 settlement in the Renren derivative lawsuit and the $180 million settlement in the FirstEnergy derivative lawsuit. Though the settlements in each of these two cases were announced to great fanfare, both settlements, for separate reasons, ran into procedural roadblocks. There have now been further developments in each of these cases – the Renren settlement appears to be back on track, while the federal district judge presiding over one of the unconsolidated FirstEnergy derivative suits continues to throw up roadblocks, as discussed below.
In a series of opinions beginning with the Delaware Supreme Court’s 2019 decision in Marchand v. Barnhill, Delaware courts have sustained a number of so-called “Caremark” claims based on the defendant board members’ breach of their duty of oversight. The courts have denied motions to dismiss in cases where the boards failed to act despite “red flags” alerting them to problems. But what happens if the “red flag” that alerts the board to a problem is a litigation demand letter submitted by a prospective claimant seeking to have the board take up litigation because of problems identified in the letter? In an interesting and troubling May 24, 2022 decision, Vice Chancellor Travis Laster sustained a claim based on these kinds of allegations, accepting what he called a “novel theory” with “admitted trepidation.” Though Laster sought in his opinion to contain some the more “disquieting” implications of this ruling, there is now at least a theoretical basis on which future prospective claimants could argue that a board’s rejection of a litigation demand letter could itself give rise to a separate breach of fiduciary duty claim.
In what is one of the largest ever shareholder derivative settlements, the parties to the Cardinal Health opioid-related shareholder derivative litigation have agreed to settle the suit for $124 million. The Cardinal Health settlement, which is subject to court approval, is the latest massive settlement of opioid-related derivative litigation. It also represents another example of a massive settlement of a breach of the duty of oversight claim. The settlement is to be funded entirely by Cardinal Health’s D&O insurers. A copy of the plaintiffs’ May 25, 2022 unopposed motion for preliminary approval of the settlement can be found 
Last month, when I 
As readers of this blog know, the various board diversity lawsuits that the plaintiffs’ lawyers filed in late 2020 and early 2021 have uniformly fared poorly in the courts. In the latest dismissal motion ruling in one of these suits, the court in the board diversity suit filed against the directors of Cisco Systems has granted the defendants’ motion to dismiss, albeit without prejudice. The court’s ruling in the Cisco Systems board diversity suit is noteworthy because the court addressed the merits of the plaintiff’s Section 14(a) claims. A copy of the court’s March 1, 2022 dismissal order can be found