In Dennis v. Hart, 2013 U.S. App. LEXIS 15648 (9th Cir. July 31, 2013), the United States Court of Appeals for the Ninth Circuit held that plaintiffs’ “say-on-pay” shareholder derivative suits alleging breach of fiduciary duty were improperly removed to federal court, vacated the district court’s decisions and dismissed the parties’ cross-appeals for lack of jurisdiction. The Ninth Circuit held that the federal court did not have jurisdiction to hear the action because defendants had held an advisory vote in compliance with the federal Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), 15 U.S.C. § 78n-1, and plaintiffs had only alleged state law causes of action. This holding indicates that challenges to board actions in response to “say-on-pay” votes are not enough to confer federal jurisdiction without additional, specific violations of federal law.
Continue Reading Ninth Circuit Vacates Dismissal and Remands Shareholder Derivative “Say-on-Pay” Suits to California State Court