The
shareholder derivative suit, filed by shareholder John G.
(5.) See, e.g., John Matheson, Restoring the Promise of the
Shareholder Derivative Suit, 50 GA.
The appointment of the committee --again a common defense strategy in
shareholder derivative suit cases--resulted in a lengthy "stay" of the litigation, which remains pending as of this writing.
Once 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.
Garth et al., Empirical Research and the
Shareholder Derivative Suit: Toward a Better Informed Debate, 48 LAW & CONTEMP.
Similarly, in Wittenborn v Pauly, the Northern District stated as follows: "[W]here the court faced a disqualification motion in the context of a
shareholder derivative suit, the potential for conflict was enough to justify requiring the corporate defendant to retain independent counsel." (15)
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.
This
shareholder derivative suit claimed that certain officers and directors of the corporation violated their fiduciary duties by participating in insider trading.
