Category Archives: Courts and ADR

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New York Court of Appeals Rules that Civil Securities Fraud Claims Brought Under Martin Act are Subject to Three-Year Statute of Limitations

Sarah AbergKate RossBy Sarah Aberg and Kate Ross on Posted in Courts and ADR
In People v. Credit Suisse Securities (USA) LLC, No. 40, 2018 WL 2899299 (N.Y. June 12, 2018), the Court of Appeals for the State of New York ruled that the three-year statute of limitations of Section 214(2) of the New York Civil Practice Law & Rules (“CPLR”) applies to civil enforcement actions brought under the … Continue Reading

Contracts with Foreign Companies May Require a Rewrite

Hwan KimNeil PopovicBy Hwan Kim and Neil Popovic on Posted in Courts and ADR
A recent California case may force companies doing business with foreign entities to reconsider—and maybe rewrite—their contracts. In Rockefeller Tech. Invs. (Asia) VII v. Changzhou Sinotype Tech. Co., No. B272170, 2018 WL 2455092 (Cal. App. June 1, 2018), the California Court of Appeal held that parties may not contract around the formal service requirements of … Continue Reading

California Court of Appeal Enforces Delaware Forum Selection Clause Contained in Certificate of Incorporation

John StigiBy John Stigi on Posted in Courts and ADR
In Bushansky v. Soon-Shiong, 2018 Cal. App. LEXIS 493 (Cal. App. May 25, 2018), the California Court of Appeal, Fourth Appellate District, affirmed the dismissal of a shareholder derivative action brought in the Superior Court of California, San Diego County, on forum non conveniens grounds based upon an exclusive Delaware forum selection clause in the … Continue Reading

Delaware Court of Chancery Holds that Cancellation of Shares Through Merger Deprives Stockholder of Standing in Section 220 Action

John StigiRyan D. SchiedermayerBy John Stigi and Ryan D. Schiedermayer on Posted in Courts and ADR, Mergers & Acquisitions
In Weingarten v. Monster Worldwide, Inc., C.A. No. 12931-VCG, 2017 WL 752179 (Del. Ch. Feb. 27, 2017), the Delaware Court of Chancery (Glasscock, V.C.) clarified when a plaintiff has standing to vitiate inspection rights under Delaware General Corporation Law Section 220, 8  Del. C. § 220.  In a case of first impression, the Court decided that … Continue Reading

New York Appellate Division Revives Non-Monetary Class Action Settlement in M&A Class Action with Revised Standard of Review

John StigiChristopher BoschBy John Stigi and Christopher Bosch on Posted in Courts and ADR, Mergers & Acquisitions
In Gordon v. Verizon Communications, Inc., No. 653084/13, 2017 WL 442871 (N.Y. App. Div. Feb. 2, 2017), the Appellate Division of the Supreme Court of the State of New York, First Judicial Department (the “First Department”), reversed an order denying plaintiffs’ motion for final approval of a proposed non-monetary settlement in a shareholder class action … Continue Reading

Delaware Court of Chancery Dismisses Post-Closing Disclosure Claims for Damages, Cautioning That Such Claims Are Best Pursued Pre-Closing

John StigiJohn LandryRobin AchenBy John Stigi, John Landry and Robin Achen on Posted in Courts and ADR, Mergers & Acquisitions
In Nguyen v. Barrett, C.A. No. 11511-VCG, 2016 WL 5404095 (Del. Ch. Sept. 28, 2016) (Glasscock, V.C.), the Delaware Court of Chancery dismissed an amended complaint seeking damages for alleged disclosure violations in connection with a tender offer that had already closed.  The Chancery Court’s opinion demonstrates the challenges plaintiffs face when they pursue non-exculpated … Continue Reading

Eleventh Circuit Holds That a Corporation Is Not Distinct From Its Agents For Purposes of a RICO Enterprise, Following Sister Circuits

Jeff KernSarah AbergBy Jeff Kern and Sarah Aberg on Posted in Courts and ADR
In Ray v. Spirit Airlines, Inc., No. 15-13792, 2016 WL 4578347 (11th Cir. Sept. 2, 2016), the United States Court of Appeals for the Eleventh Circuit held that a defendant corporation is not distinct from its own officers and employees for purposes of forming an “enterprise” under the Racketeer Influenced and Corrupt Organizations Act, 18 … Continue Reading

Delaware Court of Chancery Addresses the “Cleansing Effect” of Stockholder Approval In Post-Closing M&A Damages Actions

John StigiJohn LandryRobin AchenBy John Stigi, John Landry and Robin Achen on Posted in Courts and ADR, Mergers & Acquisitions
In two recent decisions, City of Miami General Employees’ & Sanitation Employees’ Retirement Trust v. Comstock, C.A. No. 9980-CB, 2016 Del. Ch. LEXIS 133 (Del. Ch. Aug. 24, 2016) (Bouchard, C.) (“Comstock”), and Larkin v. Shah, C.A. No. 10918-VCS, 2016 Del. Ch. LEXIS 134 (Del. Ch. Aug. 25, 2016) (Slights, V.C.), the Delaware Court of … Continue Reading

Seventh Circuit Criticizes Disclosure-Only M&A Litigation Settlements, Holding That Supplemental Proxy Disclosures Must Address and Correct a Plainly Material Misrepresentation or Omission

Kenneth E. RechtorisJohn StigiBy Kenneth E. Rechtoris and John Stigi on Posted in Courts and ADR, Mergers & Acquisitions
In In re Walgreen Co. Stockholder Litigation, No. 14 C 9786, 2016 WL 4207962 (7th Cir. Aug. 10, 2016) (Posner, J.), the United States Court of Appeals for the Seventh Circuit issued a highly charged opinion critical of an unopposed settlement of a stockholder class action “strike suit” which provided “nonexistent” benefits to class members … Continue Reading

Tenth Circuit Upholds Nevada Law By Denying Stockholders Standing to Bring Claims on Behalf of Nevada Corporation

John StigiJohn LandryBy John Stigi and John Landry on Posted in Courts and ADR
In In re Zagg Inc. Shareholder Derivative Action, No. 15-4001, 2016 U.S. App. LEXIS 11095 (10th Cir. June 20, 2016), the United States Court of Appeals for the Tenth Circuit held that stockholders of a Utah-based, Nevada corporation, who failed to make pre-suit demand that the corporation’s board of directors cause the corporation to file … Continue Reading

Delaware Supreme Court Holds That a Stockholder Plaintiff Must Plead a Non-Exculpated Claim to Avoid Section 102(b)(7)-Based Dismissal When Seeking Damages From Independent and Disinterested Directors

John StigiJohn LandryRobin AchenBy John Stigi, John Landry and Robin Achen on Posted in Courts and ADR, Mergers & Acquisitions
In the consolidated appeal In re Cornerstone Therapeutics Inc., Stockholder Litigation and In re Zhongpin Stockholders Litigation, Nos. 564, 2014 and 706, 2014, 2015 Del. LEXIS 231 (Del. May 14, 2015), the Delaware Supreme Court considered for the first time the pleading burden a stockholder plaintiff must meet when seeking to recover monetary damages from … Continue Reading

California and Delaware Courts Agree: Amendments to Corporate Bylaws Do Not Apply Retroactively to Impair Pursuit of Previously Accrued Claims

John StigiMadalyn MacarrBy John Stigi and Madalyn Macarr on Posted in Corporate Governance, Courts and ADR
Two recent decisions, one from the Delaware Court of Chancery and one from the California Court of Appeal, Fourth Appellate District, refused to apply bylaws that impaired a shareholder/member plaintiff’s ability to pursue his or her claims against the corporation where the the relevant bylaw was adopted after the plaintiff’s claims accrued.… Continue Reading

Delaware Court of Chancery Rejects Share-Tracing Standing Requirement for Appraisal Petitioners

John StigiAlex KuljisBy John Stigi and Alex Kuljis on Posted in Courts and ADR, Mergers & Acquisitions
The Delaware Court of Chancery issued companion opinions clarifying Delaware’s standing requirements for appraisal petitions under 8 Del. C. § 262.  In In re Appraisal of Ancestry.com, Inc., C.A. No. 8173-VGC, 2015 WL 66825 (Del. Ch. Jan. 5, 2015), and Merion Capital LP v. BMC Software, Inc., C.A. No. 8900-VCG, 2015 WL 67586 (Del. Ch. Jan. … Continue Reading

Delaware Supreme Court Confirms Chancery Court’s Broad Authority to Impose Use Restrictions on Information Obtained From Section 220 Books and Records Inspections

John StigiJohn LandryBy John Stigi and John Landry on Posted in Corporate Governance, Courts and ADR
In United Technologies Corp. v. Treppel, No. 127, 2014, 2014 Del. LEXIS (Del. Dec. 23, 2014), the Delaware Supreme Court held that the Delaware Court of Chancery is authorized regulate how stockholders use information obtained through books and records inspections under Section 220 of the Delaware General Corporation Law (“Section 220”).  The defendant corporation, in … Continue Reading

Ninth Circuit Holds that Under Nevada Law, a Prior Stockholder’s Litigation of Demand Futility Precludes Another Stockholder From Litigating Demand Futility In a Subsequent Derivative Action

John StigiAlejandro MorenoBy John Stigi and Alejandro Moreno on Posted in Corporate Governance, Courts and ADR
In Arduini v. Hart, 2014 WL 7156764 (9th Cir. Dec. 17, 2014), the United States Court of Appeals for the Ninth Circuit considered whether the doctrine of issue preclusion prevents a stockholder from relitigating a prior adverse determination concerning demand futility in derivative action brought by a different stockholder.  Applying Nevada law, the Court held … Continue Reading

FINRA Issues Guidance Notice on Confidentiality Provisions in Settlement Agreements and the Arbitration Discovery Process

Jeff KernBy Jeff Kern on Posted in Courts and ADR, Investigations and Enforcement
In Regulatory Notice 14-40, FINRA reminds members that it is a violation of FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) to incorporate into a settlement agreement a confidentiality provision restricting or prohibiting a customer or other person from communicating with the Securities and Exchange Commission (SEC), FINRA, or any federal or … Continue Reading

Second Circuit Holds Forum Selection Clause Supersedes FINRA’s Mandatory Arbitration Rule

Robert FriedmanBy Robert Friedman on Posted in Courts and ADR
In Goldman, Sachs & Co. v. Golden Empire Schools Financing Authority, No. 13-797-cv, 2014 WL 4099289 (2d Cir. Aug. 21, 2014), the United States Court of Appeals for the Second Circuit held that a forum selection clause in a broker-dealer agreement superseded FINRA’s mandatory arbitration rule.  FINRA Rule 12200 compels members to arbitrate disputes if … Continue Reading

Second Circuit Defines “Customer” for Mandatory FINRA Arbitration

Jeff KernBy Jeff Kern on Posted in Courts and ADR
In a case of first impression, the United States Court of Appeals for the Second Circuit in Citigroup Global Markets, Inc. v. Abbar, No. 13-2172, 2014 WL 3765867 (2d Cir. Aug. 1, 2014), established a bright-line definition of “customer” under FINRA’s mandatory arbitration provision.  Absent a written agreement to arbitrate, FINRA Rule 12200 compels FINRA … Continue Reading

Second Circuit Overturns District Court’s Rejection of SEC-Citigroup Fraud Settlement

Jeff KernBy Jeff Kern on Posted in Courts and ADR
In a closely-watched decision involving judicial review of agency settlements, the Unites States Court of Appeals for the Second Circuit vacated United States District Court Judge Jed Rakoff’s 2011 order rejecting a proposed $285 million settlement between the Securities and Exchange Commission (“SEC”) and Citigroup Global Markets Inc., finding that the judge applied an incorrect … Continue Reading

First Circuit Affirms District Court’s Exclusion of Event Study as Unreliable Under Daubert

John StigiJohn LandryBy John Stigi and John Landry on Posted in Courts and ADR
In Bricklayers & Trowel Trades Int’l Pension Fund v. Credit Suisse Sec. (USA) LLC, No. 12-1750, 2014 U.S. App. LEXIS 8994 (1st Cir. May 14, 2014), the United States Court of Appeals for the First Circuit affirmed a district court’s exclusion of an event study as unreliable under Daubert v. Merrell Dow Pharm., Inc., 509 … Continue Reading

Second Circuit Applies Morrison v. National Australia Bank to Allow Certain Extraterritorial Application of RICO

Jeff KernThomas MonahanBy Jeff Kern and Thomas Monahan on Posted in Courts and ADR
In European Community v. RJR Nabisco, Inc., Case No. 11-CV-2475 (2d Cir. Apr. 23, 2014), the United States Court of Appeals for the Second Circuit held that the Racketeer Influenced and Corrupt Organizations (“RICO”) statute, 18 U.S.C. § 1961, et seq., could apply to conduct outside the territory of the United States.  In doing so, the … Continue Reading

Appellate Court Issues Opinion on SEC’s Conflict Minerals Rule

Curtis DombekBy Curtis Dombek on Posted in Compliance, Courts and ADR, Securities Litigation
Yesterday, the Court of Appeals for the D.C. Circuit issued its opinion in the challenge to the SEC’s Conflict Minerals Rule.  We have reviewed the D.C. Court of Appeals decision and find that it leaves much of the SEC’s rule intact.  It is specifically the requirement that companies describe products as not “DRC conflict free” … Continue Reading

United States Supreme Court Holds That Section 806 of the Sarbanes-Oxley Act Extends to Employees of Private Companies Who Are Contractors or Subcontractors for Covered Public Companies

John StigiSean KirbyBy John Stigi and Sean Kirby on Posted in Courts and ADR
In Lawson v. FMR, LLC, No. 12-3, 2014 WL 813701 (U.S. Mar. 4, 2014), the Supreme Court of the United States, in a 6-3 decision reversing the United States Court of Appeals for the First Circuit, held that the whistleblower protection provision in Section 806 of Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”), protects … Continue Reading
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