On October 7, 2008, the United States District Court for the District of Delaware granted the defendants' motion to dismiss in In re Countrywide Financial Corporation Derivative Litigation, a consolidated shareholder derivative action alleging breach of fiduciary duty against certain of Countrywide's directors and officers arising out of Countrywide's involvement in the subprime lending crisis. A copy of the decision can be found here.
In granting the motion to dismiss on standing grounds, the court refused to depart from longstanding Delaware precedent holding that a plaintiff loses standing to pursue a shareholder derivative action following a merger because he can longer satisify the continuous ownership rule. The plaintiffs had been Countrywide shareholders when they filed the lawsuit in July 2007. However, in July 2008, Bank of America acquired Countrywide in a stock-for-stock transaction in which all outstanding Countrywide shares, including those of the plaintiffs, were exchanged for shares of Bank of America. The court reasoned that, since the plaintiffs were no longer Countrywide shareholders as result of its acquisition by Bank of America, they did not have standing to pursue their derivative claims against the defendants.
A motion to dismiss on similar standing grounds is reportedly pending in a shareholder derivative action against Countrywide's directors and officers in a California federal court.