Representation of Corporate Officers and Directors Leads to Precedent Setting
Represented several corporate officers and directors, and partnership managing partners, in a case that combined two shareholder derivative actions and several partnership rights actions. Minority shareholders and partners sought more than $200 million in damages for alleged mismanagement and abuse of corporate offices and partnership positions. Separate claims involving transactions over a 30-year period were advanced by the plaintiffs. The plaintiffs’ claims related to companies incorporated in two different states and several partnerships in a third jurisdiction, so that the law of several jurisdictions was applicable to the various claims. Several motions, hearings and trial court rulings resulted in the plaintiffs abandoning their partnership claims and waiving their position that shareholder demand upon the two corporate boards of directors should be excused as futile. The plaintiffs then made demand upon the two boards to file suit against several officers and directors. We counseled our clients to form disinterested director “demand committees” to undertake, on behalf of the corporations, independent evaluations of the shareholder demands. The demand committee’s report, which found no mismanagement or abuse, was accepted by the trial court; the attempted shareholders derivative action was summarily dismissed; and the result was affirmed on appeal in a precedent setting and now frequently cited decision in the State of Maryland. See Bender v. Schwartz, 917 A.2d 142, 172 Md.App. 648 (Md. Ct. Spec. App. 2007).