corporation's exceptions to a
derivative suit, however, on the
Gingerich seems skeptical of the likelihood of success of a
derivative suit, considering the importance of the business judgment rule.
This is because the Delaware Chancery Court has taken a rather generous view of when a plaintiff meets the requirement in question: The court will only dismiss the
derivative suit on this ground if the defendant can show that "a serious conflict of interest exists." (256)
DERIVATIVE SUITS: A lawsuit, usually by a shareholder of a corporation, brought under state law on behalf of the corporation, to enforce or defend a legal right or claim of the corporation.
[I]n the United States, high attorneys' fees charged on a contingency basis encourage attorneys to seek out potential
derivative suit plaintiffs.
(38.) More pragmatically, if it is less expensive for a corporation to indemnify its directors against the damage amounts claimed in a shareholder
derivative suit than to bear the costs of inquiry required to seek judicial dismissal of the suit, more "meritless derivative proceedings" might be filed "in order to generate small but immediately payable attorneys' fees." MODEL BUS.
The plaintiff in a parallel
derivative suit can then take this same allegation and assert that the officers and directors breached their fiduciary duty to the corporation by causing the corporation to make false statements or by causing the underlying financial problems resulting from the misstatements.
The shareholder
derivative suit, filed by shareholder John G.
"Aflac Incorporated is pleased that the
derivative suit filed against the company late last year by three current or former independent agents has been dismissed in its entirety.
So a corporation in a
derivative suit, although technically a defendant, is generally aligned with the plaintiff.
In Investors Bancorp, a
derivative suit was filed against the company's board for a breach of the directors' duty of loyalty, alleging that the directors awarded themselves excessive stock-based compensation.
23.1, essentially irrelevant: henceforth, whether a
derivative suit
