Category: Choice of Law
A shareholder bringing a contested derivative claim in the Cayman Islands must seek leave from the court before proceeding. This litigation prerequisite -- imposed by Rule 12A of the Rules of the Grand Court of the Cayman Islands (“Rule 12A”) -- requires a prima facie factual showing, with the aim of protecting corporations from “vexatious or unfounded litigation.” But when a Cayman Islands-related derivative claim is brought in New York’s Commercial Division, does the same rule apply? The New York Court of Appeals recently answered “No,” holding in Davis v. Scottish Re Group Ltd. that Rule 12A is a procedural rule that does not apply to matters litigated in New York courts.
Commercial Division Analyzes Choice-of-Law on an Element-by-Element Basis in Upholding Claim for Aiding and Abetting Breach of Fiduciary Duty
In Wantickets RDM, LLC v. Eventbrite, Inc., No. 654277/2016, 2017 BL 261099 (Sup. Ct. Jul. 21, 2017), New York Commercial Division Justice Shirley Werner Kornreich denied defendant Eventbrite’s motion to dismiss plaintiff Wantickets’ claims for aiding and abetting breach of fiduciary duty, among other claims. In doing so, she applied Delaware law to assess plaintiff’s allegations of an underlying breach of fiduciary duty and New York law to the remaining elements.
In Casey Capital, LLC v. Levy, the Commercial Division provides a cautionary tale for derivative shareholder plaintiffs alleging demand futility
Activist investors are an increasing presence on the stock ledgers and in the boardrooms of public companies. Since 2010, one in seven companies on the S&P 500 has faced an activist shareholder challenge. But activists can encounter pitfalls when they seek to challenge incumbents through derivative litigation, as illustrated by the recent Commercial Division decision in Casey Capital, LLC v. Levy, C.A. No. 652805/15, 2016 N.Y. Misc. LEXIS 3107 (N.Y. Sup. Ct. Aug. 19, 2016) (Scarpulla, J.).