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CCAF Seventh Circuit briefing on derivative shareholder suit standards

As I've previously said, "Judges should consider whether [derivative shareholder settlements] actually create value for shareholders or amount to a rearranging of the deck chairs to create the illusion of value to justify attorneys' fees." Monday, I filed an appellate brief in the Seventh Circuit arguing both for the right of shareholders to appeal settlement approvals without jumping through the procedural hoop of intervention, and for courts to give teeth to Rule 23.1(a)'s requirement that a plaintiff in a derivative action adequately represent the shareholders—which, in my mind, means that a suit is brought for the benefit of shareholders, rather than plaintiffs' attorneys. (This settlement: $0 for the shareholders, up to $850,000 for the attorneys.) The case is No. 10-3285, Robert F. Booth Trust v. Crowley (7th Cir.). Earlier; more.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.