Defending a Co-op Against Derivative Claims: A Look Back to 'Auerbach'
"Dismissing the derivative claims from the lawsuit can significantly change the posture of the litigation and substantially narrow the issues in the case," writes Michael A. Pensabene of Rosenberg & Estis.
August 09, 2024 at 02:00 PM
10 minute read
Shareholder litigation commenced against boards of cooperative corporations is often brought both individually and derivatively on behalf of the corporation for good reason. The Business Corporation Law (BCL) broadly provides that a shareholder who is successful, in whole or in part, or who receives anything as a result of a judgment or settlement, in a derivative action, may be awarded reasonable expenses, including reasonable attorneys' fees. BCL Section 626(e). In contrast, the attorneys' fees provisions commonly found in proprietary leases (if any) are much narrower and limit recovery. Dismissing the derivative claims from the lawsuit can significantly change the posture of the litigation and substantially narrow the issues in the case, which can strengthen the board's position and mitigate expenses. This article discusses a basis for seeking dismissal of derivative claims, which may be overlooked by practitioners.
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllAs Second Trump Administration Approaches, Businesses Brace for Sweeping Changes to Immigration Policy
Seyfarth Shaw Corporate Lawyer Authors Book on Military Transition to Civilian Life
Sullivan & Cromwell Urges Top Court to Resist Making NY the 'Shangri-La' for Derivative Shareholder Suits
Purchaser Representative in Truth Social Deal Seeks Trump Media Records
3 minute readTrending Stories
- 1With Florida’s Lateral Hiring Remaining Steady in 2024, Here’s the Top Hires Throughout the State
- 2Capital Markets Partner Rejoins O’Melveny Ahead of Expected Uptick in Demand
- 3Pharma Company Faces Breach-of-Contract Claim Over $1.3 Million in Unpaid Invoices
- 4KPMG Law Seeks Alternative Business License, Shaking Up Legal Status Quo
- 5Pittsburgh's Reed Smith, K&L Gates Join Fight to Save Nippon Steel-U.S. Steel Merger
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250