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California Court of Appeal recognizes that wide discretion granted to a board of directors under the buisness judgment rule may be tempered by a corporation's private contractual obligations to its shareholdersmembers

Sheppard Mullin Richter & Hampton LLP
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USA
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February 14 2013

In Scheenstra v. California Dairies, Inc., No. F062768, ___ Cal. Rptr. 3d ___, 2013 WL 363148 (Cal. App. 5th Dist. Jan. 30, 2013), the California

New York appellate court adopts Delaware Supreme Court's Tooley test for determining whether a stockholder's claim is direct or derivative

Sheppard Mullin Richter & Hampton LLP
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USA
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August 23 2012

In Yudell v. Gilbert, 2012 WL 3166788 (N.Y. App. Div. 1st Dep’t Aug. 7, 2012), the Appellate Division of the New York Supreme Court, First Department, abandoned its prior ad hoc approach to determining whether a stockholder’s claim is “direct” (i.e., on behalf of the stockholder personally) or “derivative” (i.e., on behalf of the corporation as a whole), and held that the test applied by the Delaware Supreme Court in Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004), provides the appropriate analysis for resolving this inquiry

Delaware Chancery Court clarifies when corporate officers and directors are entitled to mandatory indemnification under DGCL 145

Sheppard Mullin Richter & Hampton LLP
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USA
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March 19 2012

In Hermelin v. K-V Pharmaceutical Co., C.A. No. 6936-VCG, 2012 WL 395826 (Del. Ch. Feb. 7, 2012), the Delaware Court of Chancery considered whether the former chief executive officer (“CEO”) of a pharmaceutical company, against whom several regulatory and criminal actions had been brought, had been successful “on the merits or otherwise” such that he was entitled to mandatory indemnification under Section 145 of the Delaware General Corporation Law (“DGCL”) andor under his indemnification agreement with the corporation

Foreign corporation's mere awareness that its products may ultimately end up in a forum state is not sufficient contact to support personal jurisdiction

Sheppard Mullin Richter & Hampton LLP
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USA
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January 12 2012

In Dow Chemical Canada ULC v. Superior Court, 2011 WL 6382110 (Cal. App. 2d Dist. Dec. 21, 2011), the California Court of Appeal, Second District, held that “placing products into the stream of commerce in a foreign country (or another state), aware that some may or will be swept into the forum state,” is not, by itself, sufficient to support the forum state’s exercise of personal jurisdiction over the manufacturer of the products

California Court of Appeal refuses to permit an action for rescission of a strategic transaction, holding that a board has no duty under California law to include a "fiduciary out"

Sheppard Mullin Richter & Hampton LLP
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USA
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August 22 2011

In Monty v. Leis, 193 Cal. App. 4th 1367, 123 Cal. Rptr. 3d 641 (2011), the California Court of Appeal, Second District, affirmed the order of the California Superior Court, Santa Barbara County, denying a motion by shareholders of Pacific Capital Bancorp (“PCB”), a California corporation, for a preliminary injunction to enjoin or rescind a transaction by which Ford Financial Fund, L.P. (“Ford”) would acquire between 80 and 91 percent of PCB’s stock

California Court of Appeal holds that state courts have jurisdiction over Securities Act class actions unless the action is a "covered class action" and involves a "covered security" under SLUSA

Sheppard Mullin Richter & Hampton LLP
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USA
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May 31 2011

In Luther v. Countrywide Financial Corp., No. B222889, 2011 WL 1879242 (Cal. App. 2d Dist. May 18, 2011), the California Court of Appeal for the Second District reversed the dismissal of a class action asserting a claim under Section 11 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. 77k

Sixth Circuit reverses dismissal of a shareholder derivative action based upon the lack of independence of the special litigation committee

Sheppard Mullin Richter & Hampton LLP
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USA
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April 14 2011

In Booth Family Trust v. Jefferies, No. 09-3443, 2011 WL 1237583 (6th Cir. Apr. 5, 2011), the United States Court of Appeals for the Sixth Circuit reversed the district court dismissal of a shareholder derivative action, holding that the special litigation committee (“SLC”) of the board of directors, which recommended the dismissal, was not sufficiently independent of management