1991) ("A
shareholder derivative suit is a uniquely equitable remedy in which a shareholder asserts on behalf of a corporation a claim belonging not to the shareholder, but to the corporation").
Goodwin Litigators Secure Second Circuit Win for Mutual Fund Trustees in
Shareholder Derivative SuitOnce Wal-Mart's bribery scandal made headlines, the California State Teachers Retirement System (CalSTRS), concerned that Wal-Mart's bribery practices and the corresponding potential for hefty penalties would negatively impact its substantial holdings in Wal-Mart, filed a
shareholder derivative suit against Wal-Mart's board in the Delaware Court of Chancery.
767, 783 (1999) [hereinafter West, Information, Institutions, and Extortion] (commenting that investors only recently began using the
shareholder derivative suit as a result of the 1993 Commercial Code amendment that reduced filing fees).
Baker once represented a Park City resident in a
shareholder derivative suit against a major company.
355, 357 (1994) ("Traditionally, the debate over frivolous shareholder suits has focused to a large extent on the
shareholder derivative suit rather than on direct shareholder actions.
the case of a
shareholder derivative suit, lead plaintiffs may not have
To address the analogous problem in the for-profit context, Delaware courts have required a stringent set of conditions to obtain before a
shareholder derivative suit may survive the board's motion to dismiss.
7) One factor supporting this transformation (8) was the use of the
shareholder derivative suit system to buttress the increased emphasis on an independent and effective board of directors.
While such cases rarely go to trial, the Delaware chancery court permitted a
shareholder derivative suit alleging a breach of fiduciary responsibility against Disney's board to proceed.
One such area may be
shareholder derivative suits brought against directors and officers of companies that experience a data security breach.
Shareholder derivative suits arising out of data breaches have opened a whole new front for suing corporate officers focusing on cybersecurity.
