Justia Corporate Compliance Opinion Summaries

This matter was before the court on defendant's Motion to Stay. After Perfumania announced an agreement to acquire defendant, Shirley Anderson, purportedly a stockholder of defendant, filed an action challenging the acquisition in a Florida state court (Florida Action). Arthur Weill filed a Motion to Intervene in the Florida Action; after that motion was denied, Weill filed a stockholder class action complaint similar to Anderson's and moved to consolidate his case with the Florida Action. Plaintiff filed the instant action. All three actions sought to enjoin the takeover of defendant, on behalf of a stockholder class, based upon similar allegations of inadequate disclosure and breach of fiduciary duty. Defendant sought a stay in favor of the Florida Action under the doctrine explained in McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co. Discounting, as the court found appropriate, the first-filed nature of the Florida Action, the court found nothing that indicated that this matter should be stayed in deference to the Florida Action. To the contrary, the interest of the the state in the behavior of fiduciaries for its corporate citizens convinced the court that the Motion to Stay must be denied. View "Dias v. Purches, et al." on Justia Law

CIRI filed suit against defendants, shareholders of CIRI, alleging that they had violated the Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C. 1601-1629(h), and Alaska law. On appeal, defendants challenged the district court's holding that it had subject matter jurisdiction over the ANCSA claims. The court held that there was federal jurisdiction under the general federal question jurisdiction statute, 28 U.S.C. 1331, over plaintiff's ANCSA claims because federal law created the cause of action in the claims and because the claims were not frivolous. Accordingly, the court affirmed the judgment of the district court. View "Cook Inlet Region, Inc. v. Rude, et al." on Justia Law

Petitioners sought appraisal of their shares in CKx, under Section 262 of the Delaware General Corporation Law. CKx was acquired by an affiliate of Apollo through a 2011 merger. Fox Broadcasting is not a party to the litigation and was not involved in the merger, but has an agreement with a subsidiary of CKx, 19TV, for the right to broadcast the American Idol television program, which provided substantial revenues to CKx before the merger. Petitioners moved for an order compelling Fox to produce deposition testimony as well as several categories of documents relating to American Idol, Fox’s contracts and contract negotiations with 19TV and FremantleMedia . The chancellor denied the motion except as to the categories of documents and deposition testimony that Fox has agreed to produce. With respect to a request that would require Fox to produce documents relating to Fox’s internal valuation and financial information regarding its negotiations with CKx in connection with an agreement to broadcast American Idol, the court stated that the marginal relevance of the information is outweighed by the potential harm the disclosure of that information would cause Fox and the presence of non-confidential, more probative information already in the record. View "Huff Fund Inv. P'ship v. CKx Inc." on Justia Law

Plaintiff sued the State to challenge a demand for payment made by the State under Delaware's escheat law, 12 Del. C. 1101, et seq. The State countersued, seeking a declaration that the sums demanded from plaintiff were proper and authorized under the Statute. Both parties moved for partial judgment on the pleadings. The court found that the rebates at issue fit comfortably within two of the "specifically enumerated" items of property listed in section 1198(11) and therefore granted the State's motion for partial judgment on the pleadings and denied plaintiff's cross-motion. Although the pleadings did not paint a clear picture of the form in which the rebates were issued by plaintiff to its customers, plaintiff's counsel conceded at oral argument that the rebates were issued as either negotiable "checks" or "credits." As such, the rebates consisted of specifically enumerated items of property under section 1198(11), and the State's claims could not be barred by any statute of limitations.View "Staples, Inc. v. Cook, et al." on Justia Law

A group of minority investors sued the manager of an LLC for damages, arguing that the manager breached his contractual and fiduciary duties. The court concluded that the manager's course of conduct beached both his contractual and fiduciary duties. Using his control over the LLC, the manager took steps to deliver the LLC to himself and his family on unfair terms. Therefore, the court entered a remedy, taking into account the distribution received by plaintiffs at the auction, and adding interest, compounding monthly at the legal rate, from that time period. Because the manager had made this litigation far more cumbersome and inefficient than it should have been by advancing certain frivolous arguments, the court awarded plaintiffs one-half of their reasonable attorneys' fees and costs under the bad faith exception to the American Rule.View "Auriga Capital Corp., et al. v. Gatz Properties, LLC, et al." on Justia Law

In a shareholder derivative action brought in the name of Sunpower, plaintiff claimed that the directors and certain officers of SunPower breached their fiduciary duties by failing to implement or to monitor an effective internal control system, which caused the company to misstate, and then to restate, its financial statements for 2008 and 2009. That restatement also led to related actions in federal court accusing the company and its directors and senior management of violating federal securities laws (Securities Class Action). Plaintiffs sought indemnification for whatever losses the company ultimately incurred from the Securities Class Action and recovery of other damages directly caused by the restatement itself. Defendants moved to stay the derivative action pending resolution of the Securities Class Action. The court found that practical considerations made simultaneous prosecution of both cases unduly complicated, inefficient, and unnecessary. Therefore, the court granted defendant's motion to stay the derivative action.View "Brenner v. Albrecht, et al." on Justia Law

This matter involved a request for books and records under Section 220 of the Delaware General Corporation Law. Plaintiff owned stocked in the defendant corporation and was also a plaintiff in a California state plenary state derivative action, in which it alleged that the defendant directors were liable to the corporation for a breach of their fiduciary duties. Because of the unusual procedural posture of this case, which included statements by the California Court appearing to endorse this action, the court ordered certain records produced. Defendants made production and plaintiffs subsequently filed a motion to compel, arguing that the production was insufficient. The court found that the issue was moot because plaintiff failed to file a third amended complaint before defendants filed and the parties briefed, a demurrer to the second amended complaint in the California action, and because, to the extent plaintiff needed expedited action on this motion to compel in order to file a third amended complaint, it failed to seek it. Defendant's demurrer had been submitted to the California court, which had stated that there would be no amendments to the now-completed briefing and that the second amended complaint would stand or fall with prejudice. Therefore, plaintiff no longer had a proper purpose.View "Amalgamated Bank v. NetApp, Inc." on Justia Law

Plaintiff, a former corporate officer, sued defendant, his former employer, for advancement and indemnification in connection with several proceedings that arose out of regulatory and criminal investigations at the defendant corporation following defendant's distribution of oversized morphine sulfate tablets into the market. The dispute centered around whether plaintiff succeeded on the merits of any of the proceedings at issue, thus entitling him to indemnification as a matter of law, or whether additional discovery was required to determine whether plaintiff acted in good faith, in which case he would be entitled to indemnification under the Indemnification Agreement. The court found that plaintiff was not entitled to advancement for the Jail Records Matter; was not entitled to mandatory indemnification for the Criminal Matter or the HHS Exclusion Matter; was entitled to mandatory indemnification for the FDA Consent Decree Matter; and that the evidence relevant to plaintiff's claims for permissive identification was limited to plaintiff's conduct, and the facts related to that conduct, underlying the proceedings for which indemnification was sought.View "Hermelin v. K-V Pharmaceutical Co." on Justia Law

This action involved claims by plaintiffs (Paron and, together with McConnon and Lyons) against defendant. McConnon, Lyons, and defendant co-founded Paron to manage client accounts using a software-based futures trading strategy defendant had developed. Plaintiffs accused defendant of fabricating records and making other false statements concerning the trade software, fraudulently inducing McConnon and Lyons to form Paron, and breaching fiduciary duties to Paron. This memorandum opinion addressed several outstanding procedural issues raised after trial concerning the post-trial briefing and the exhibits to be considered as part of the record. The court overruled in part and sustained in part Crombie's various objections to a number of plaintiffs' trial exhibits; denied Crombie's motion to reopen the record and admit additional evidence; denied Crombie's request that the court disregard plaintiffs' post-trial brief and award sanctions against them; denied Crombie's recent motion for involuntary dismissal; and considered the matter fully submitted and ripe for a final determination on the merits.View "Paron Capital Mgmt, LLC, et al. v. Crombie" on Justia Law

SES is a company that makes and supplies outer components or "skins" for grocery store refrigeration units. SES was formed in 2009 when its immediate predecessor, SER, was foreclosed by its bank. SES subsequently sued appellants, employees of SER, for injunctive relief under the Georgia Trade Secrets Act (GTSA), OCGA 10-1-760 et seq. Appellants then appealed, contending that the trial court erred when it found SES had standing to sue and when it granted equitable relief after finding that the preemption clause of the GTSA was inapplicable. The court held that, based upon the unique facts of the case, the trial court did not err when it declined to deny SES's action for lack of standing. The court found, however, that the trial court manifestly abused its discretion when it granted equitable relief to SES because the trial court's reliance on Owens v. Ink Wizard Tattoos was erroneous and the GTSA superseded all conflicting laws providing restitution or civil remedies for the misappropriation of trade secrets. Accordingly, the trial court's award of equitable relief pursuant to OCGA 9-5-1 was a manifest abuse of discretion and must be reversed.View "Robins, et al. v. Supermarket Equipment Sales, LLC; Smith v. Supermarket Equipment Sales" on Justia Law