On January 31, 2019, the First Department issued a decision in NWM Capital, LLC v. Scharfman, 2019 NY Slip Op. 00674, holding that where a derivative action plaintiff had not posted security pursuant to Partnership Law § 121-1003, the plaintiff could not subsequently be required to pay the partnership’s attorneys’ fees, explaining: The court properly... Read more »
Blogs
Posts Categorized: Derivative Actions
Mere Theory as to the Board’s Misconduct Insufficient to Plead Demand Futility With Particularity
On November 15, 2018, Justice Ramos of the New York County Commercial Division issued a decision in Shields v. Murstein, 2018 NY Slip Op. 32964(U), holding that a “mere theory as to the Board’s misconduct is insufficient to meet” the demand particularity requirements for a derivative action under Delaware law, explaining: In a final attempt... Read more »
Plaintiff Asserting Derivative Claims Must be Represented by Counsel
On November 1, 2018, Justice Schecter of the New York County Commercial Division issued a decision in Park v. Song, 2018 NY Slip Op. 28343, holding that a plaintiff asserting derivative claims must be represented by counsel, explaining: Whether a derivative plaintiff can maintain claims without being represented by counsel is a question of first impression under... Read more »
Shareholder Has Standing to Sue Corporation’s Counsel for Malpractice
On September 20, 2018, Justice Sherwood of the New York County Commercial Division issued a decision in Reines v. Raoul Felder & Partners, P.C., 2018 NY Slip Op. 32332(U), holding that a shareholder had standing to sue the corporation’s counsel for malpractice, explaining: It is well settled that a stockholder has no individual cause of action against... Read more »
Court Declines to Dismiss Double-Derivative Action
On September 4, 2018, Justice Scarpulla of the New York County Commercial Division issued a decision in Simon v. French-American Surgery Ctr., Inc., 2018 NY Slip Op. 32184(U), refusing to dismiss a double-derivative action, explaining: Under New York law, double derivative actions may be brought by a minority shareholder of a parent company for harm to... Read more »
Shareholder Need Not Hold Share Certificates to Have Right to Assert Derivative Claims
On September 5, 2018, Justice Bransten of the New York County Commercial Division issued a decision in Lentini v. 219 W. 20th Str. Corp., 2018 NY Slip Op. 32181(U), holding that a plaintiff need not hold share certificates to have the right to assert derivative claims, explaining: The mere fact that the corporation did not issue any... Read more »
Derivative Claims Fail for Failure Adequately to Plead Demand Futility
On July 5, 2018, the First Department issued a decision in Epstein v. Ruane, Cunniff & Goldfarb Inc., 2018 NY Slip Op. 04970, affirming the dismissal of a derivative action for failure adequately to plead demand futility, explaining: Plaintiff failed to allege sufficient facts to establish that a pre-suit demand on the board of the... Read more »
Fraud Claim Dismissed; Claim Was Derivative, Not Direct
On May 30, 2018, Justice Masley of the New York County Commercial Division issued a decision in Khan v. Garg, 2018 NY Slip Op. 31061(U), dismissing a fraud claim because it did not plead a direct claim for fraud, explaining: With respect to Garg, defendants contend that the fraud claim inadequately pleads the elements of... Read more »
Derivative Action Dismissed for Failure to Plead Demand or Demand Futility
On May 9, 2018, Justice Sherwood of the New York County Commercial Division issued a decision in Glaubach v. PricewaterhouseCoopers, LLP, 2018 NY Slip Op. 30875(U), dismissing a derivative action for failure to plead demand or demand futility, explaining: Under Delaware law, and Delaware Chancery Court Rule 23.1, to have standing to pursue a derivative... Read more »
Estate of Deceased LLC Member Lacked Standing to Bring Derivative Claims
On February 22, 2018, Justice Scarpulla of the New York County Commercial Division issued a decision in Pappas v. 38-40 LLC, 2018 NY Slip Op. 30329(U), holding that the estate of a deceased member of an LLC lacked standing to bring a derivative action, explaining: Moving Defendants argue that Plaintiff does not have standing to... Read more »