The shareholder derivative lawsuit can sometimes be a successful tool for angry investors who want to bring an action in the name of the corporation against parties, such as officers or directors, who allegedly have harmed the corporation and the shareholders. However, a new appellate decision handed down by the U.S. Court of Appeals for the Third Circuit shows the limits of using this type of litigation strategy.
The Third Circuit recently dealt with an appeal involving a group of former limited partners, collectively called the “Oklahoma plaintiffs,” connected with the Oklahoma-based oil and gas company SemCrude. When in operation, SemCrude provided transportation, storage, distribution, and other oil and gas services to crude oil producers and refiners across North America’s energy corridor. By 2006, SemCrude became one of the largest privately held companies in the United States, with assets worth almost $14 billion.
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