Follow POL on Twitter Under Rule 23.1(a), a derivative action may only be maintained if the plaintiff adequately represents the shareholders. But many shareholder derivative actions hurt shareholders; they're brought solely to vindicate the ability of plaintiff's counsel to collect dramatic fees. Robert F. Booth Trust v. Crowley, in the Northern District of Illinois, was such a case; its only value was the threat of harassment of Sears Holding Company and its directors with expensive discovery. I have long argued that this abuse of the legal system is not a loophole; it reflects the failure of judges to enforce the "adequacy" requirements of Rule 23 and Rule 23.1. As a Sears shareholder, I had the opportunity to move to intervene to dismiss Robert F. Booth Trust when it settled; the district court judge disagreed, and I appealed. Yesterday was oral argument in the Seventh Circuit—in front of a dream panel of Chief Judge Frank Easterbrook and Judges William Bauer and Richard Posner.
Robert F. Booth Trust v. Crowley oral argument
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| Isaac Gorodetski Project Manager, Center for Legal Policy at the Manhattan Institute igorodetski@manhattan-institute.org |
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| Laura Eyi Press Officer, Manhattan Institute leyi@manhattan-institute.org |
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