Levine v. Smith

312 Citing cases

  1. Barovic v. Ballmer

    72 F. Supp. 3d 1210 (W.D. Wash. 2014)   Cited 14 times
    In Barovic v. Ballmer, 72 F.Supp.3d 1210 (W.D. Wash. 2014), the court held that the plaintiff had adequately alleged that the board's investigation was so "restricted in scope, shallow in execution, pro forma, and half-hearted" to be grossly negligent, 72 F.Supp.3d at 1217 (citation and internal quotation marks omitted), but the court also noted that "there is no universal ‘prescribed procedure that a board must follow’ in assessing shareholder demands," id. at 1215 (citing Levine, 591 A.2d at 214).

    Halpert Enterprises, Inc. v. Harrison, 2007 WL 486561 at *5 (S.D.N.Y., Feb. 14, 2007) aff'd. 2008 WL 4585466 (2d Cir., Oct. 15, 2008) ; Levine v. Smith, 591 A.2d 194, 213 (Del.1991) (overruled on other grounds). Thus, when a board refuses a demand, courts will examine the “good faith and reasonableness of its investigation.”

  2. Brehm v. Eisner

    26 Del. 3 (Del. 2000)   Cited 1,166 times   18 Legal Analyses
    In Brehm v. Eisner, 746 A.2d 244, 253-54 (Del. 2000), the Delaware Supreme Court overruled seven precedents, including Levine, to the extent that they reviewed a Rule 23.1 decision by the Court of Chancery under an abuse of discretion standard or otherwise suggested deferential appellate review.

    Aronson v. Lewis, Del. Supr., 473 A.2d 805, 814 (1984) (emphasis added). This language in Aronson was followed, sequentially, by: Pogostin v. Rice, Del. Supr., 480 A.2d 619, 624-25 (1984); Grobow v. Perot, Del. Supr., 539 A.2d 180, 186 (1988); Levine v. Smith, Del. Supr., 591 A.2d 194, 207 (1991); Heineman v. Datapoint Corp., Del. Supr., 611 A.2d 950, 952 (1992); Grimes v. Donald, Del. Supr., 673 A.2d 1207, 1217 n. 15 (1996); and Scattered Corp. v. Chicago Stock Exch., Del. Supr., 701 A.2d 70, 72-73 (1997). By implication, therefore, these dicta would suggest that our review is deferential, limited to a determination of whether the Court of Chancery abused its discretion.

  3. Blasband v. Rales

    971 F.2d 1034 (3d Cir. 1992)   Cited 136 times   3 Legal Analyses
    Noting only that demand futility "depends upon the facts of each case"

    However, we are guided by the recognition of the Delaware courts that "[a] shareholder derivative suit is a uniquely equitable remedy. . . ." Levine v. Smith, 591 A.2d 194, 200 (Del. 1991). Thus, the Delaware courts have consistently refused to apply its corporate law rigidly where to do so would be inequitable.

  4. Morefield ex rel. Nominal v. Bailey

    959 F. Supp. 2d 887 (E.D. Va. 2013)   Cited 20 times
    Holding business judgment rule protects board's decision to refuse litigation demand because, among other things, the board considered the "potential impact on a pending securities fraud action"

    This may be satisfied by allegations demonstrating that either plaintiff is excused from making a demand that would be futile or that she made demand and the board wrongfully refused her demand to take action. See, e.g., Levine v. Smith, 591 A.2d 194, 212 (Del.1991), overruled on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del.2000). “A shareholder's failure to sufficiently plead compliance with the demand requirement deprives the shareholder of standing and justifies dismissal of the complaint.”

  5. Rales v. Blasband

    634 A.2d 927 (Del. 1993)   Cited 908 times   37 Legal Analyses
    Holding that three of eight directors were interested parties and that the amended complaint raised a reasonable doubt as to the independence of two remaining directors, making demand futile

    In such a suit, a stockholder asserts a cause of action belonging to the corporation. Aronson, 473 A.2d at 811; Levine v. Smith, Del.Supr., 591 A.2d 194, 200 (1991). In a double derivative suit, such as the present case, a stockholder of a parent corporation seeks recovery for a cause of action belonging to a subsidiary corporation.

  6. Stepak v. Addison

    20 F.3d 398 (11th Cir. 1994)   Cited 78 times   1 Legal Analyses
    Holding that issue not addressed on appeal is waived

    Alternatively, a shareholder may plead that demand is excused because futile. See Levine v. Smith, 591 A.2d 194, 200 (Del. 1991). The demand requirement "insure[s] that a stockholder exhausts his intracorporate remedies, and . . . provide[s] a safeguard against strike suits."

  7. Copeland v. Lane

    Case No.: 5:11-cv-01058 EJD (N.D. Cal. Oct. 10, 2012)   Cited 6 times
    Applying Delaware law in a case concerning breach of fiduciary duty claim and others based on the internal affairs doctrine

    If a demand is made and rejected, the board rejecting the demand is entitled to the presumption of the business judgment rule unless the stockholder can allege facts with particularity creating a reasonable doubt that the board is not entitled to the benefit of the presumption. See Grimes, 673 A.2d at 1220; see also Levine v. Smith, 591 A.2d 194, 212 (Del. 1991), overruled on other grounds by Brehm, 746 A.2d 244, (the board's refusal of the demand to pursue the action is subject to judicial review according to the traditional business judgment rule).

  8. Lerner v. Prince

    119 A.D.3d 122 (N.Y. App. Div. 2014)   Cited 47 times   4 Legal Analyses
    Stating that "[u]nder New York choice-of-law rules, matters of procedure are governed by the law of the forum"

    Under Delaware law, different pleading requirements apply depending on whether a shareholder (1) makes a demand on a corporation before bringing suit and the corporation refuses the demand (“demand refused” cases) or (2) does not make a demand before bringing suit, claiming that the demand would be futile (“demand excused” or “demand futile” cases) ( see Levine v. Smith, 591 A.2d 194, 197, 212 (Del.1991), revd. in part on other grounds by Brehm v. Eisner, 746 A.2d 244, 253 [Del.Supr.2000] ). With respect to the merits, the court found that the amended complaint failed to allege particularized facts creating a reasonable doubt about the Board's reasonableness and good faith in investigating plaintiff's demand.

  9. Waber v. Lewis (In re Bank of Am. Corp. Sec., Derivative, & Emp. Retirement Income Security Act (Erisa) Litig.)

    Master File No. 09 MD 2058 (PKC) (S.D.N.Y. Apr. 25, 2013)   Cited 1 times

    "A shareholder derivative suit is a uniquely equitable remedy in which a shareholder asserts on behalf of a corporation a claim belonging not to the shareholder, but to the corporation." Levine v. Smith, 591 A.2d 194, 200 (Del. 1991), overruled in part on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000). "Derivative suits have been used most frequently as a means of redressing harm to a corporation allegedly resulting from misconduct by its directors."

  10. Halpert Enterprises, Inc. v. Harrison

    06 Civ. 2331 (HB) (S.D.N.Y. Feb. 14, 2007)   Cited 5 times
    Denying leave to amend where it was "unlikely new facts will come to light regarding [the Company's] directors' actions that might help Plaintiff meet the pleading bar for derivative actions"

    Sterling v. Mulholland, 1998 U.S. Dist. LEXIS 19550, *4 (S.D.N.Y. 1998), citing Kaplan v. Peat, Marwick, Mitchell Co., 540 A.2d 726, 727-8 (Del. 1988). If demand is refused, the derivative suit can only be brought if the shareholder shows that the board's refusal was "wrongful." Levine v. Smith, 591 A.2d 194, 211 (Del. 1991). The board's refusal of a demand is reviewed under the business judgment rule, which creates a "presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."