Case Summaries

Corporation & Enterprise Law

[10/23] Leyte-Vidal v. Semel

Judgment dismissing plaintiff’s shareholder derivative action against officers and directors of Yahoo! Inc., is affirmed, where plaintiff failed to plead particularized facts manifesting a reasonable doubt that the board could not have exercised its independent and disinterested judgment in responding to his demand, had he made one at the time he brought the action.

[10/10] Morrical v. Rogers

The trial court’s order setting aside the election of new directors and invalidating several of the underlying corporate transactions, in a suit brought by plaintiff sister challenging actions taken by her brothers with respect to a group of family corporations in which all three are co-equal shareholders, is reversed and remanded, where: 1) Corporations Code section 709 permits a corporate electoral challenge on the grounds of an alleged breach of fiduciary duty, which governs corporate transactions with companies in which one or more corporate directors have a material financial interest; but 2) the trial court erred in failing to require that the brothers be joined in this action as indispensable parties.

[10/09] US v. Peters

Following defendant’s convictions related to a scheme to defraud a bank, the district court’s order of forfeiture is affirmed, where: 1) 18 U.S.C. section 982(a)(2) requires forfeiture of the gross receipts of the criminal violation, not only the profits; and 2) in light of his almost total control over the companies involved in the violation and their assets, the defendant “indirectly” obtained the proceeds of the fraud through the companies and can therefore be held accountable for criminal forfeiture of those proceeds pursuant to section 982.

[09/17] Charter Township of Clinton Police and Fire Retirement System v. Martin

Dismissal of plaintiffs’ shareholder derivative complaint alleging that the defendant-Board members violated fiduciary duties by adopting a compensation plan in the face of poor performance by the company, misrepresenting compliance with the plan and company performance in a proxy statement, and failure to alter the plan in response to its rejection by a majority of the company’s shareholders in a nonbinding vote, is affirmed, where plaintiffs have failed to allege facts excusing pre-suit demand on the defendant-Board with allegations of particularized facts showing wrongdoing by a majority of directors on a director-by-director basis.

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