Inspection Rights

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The Court partially granted an LLC member’s motion for an accounting, ordering the LLC to provide the member with periodic "(1) information regarding the status of the business and the financial condition of [the LLC] including a summary of all funds disbursed and spent and all revenue generated from 1 January 2009 to the present, and (2) a copy of [the LLC’s] federal, State, and local income tax returns as filed for each year the company has been in business."

Full OpinionContinue Reading Donovan v. Huffman, July 6, 2009 (Diaz)(unpublished)

The Court denied the Motion to Intervene by a shareholder of the defendant, a Delaware corporation, by which the proposed intervenor sought to compel an inspection of books and records and to compel an annual meeting. The Court held that "appropriate and efficient remedies" were available under Delaware law.

Full OpinionContinue Reading Voyager Pharmaceutical Corp. v. Bowen, February 13, 2007 (Jolly)(unpublished)

The Court considered yet another derivative action plaintiff who had failed to make the demand required under Delaware law. The Court held that the plaintiff had failed to establish demand futility based on his claim that the outside directors were insufficiently disinterested to have properly considered a demand.

Plaintiff’s claim that one of the outside directors had engaged in insider trading did not establish that the director faced a "substantial likelihood" of liability. Membership on the company’s audit committee did not impair the ability of other directors to consider a…

Continue Reading Egelhof v. Szulik, 2006 NCBC 4 (N.C. Super. Ct. Mar. 13, 2006)(Tennille)

The Court dismissed a series of shareholder derivative actions due to plaintiffs’ failure to make the required demand under Delaware law. Since the shareholders did not attack a specific action of the board, the Court undertook to determine "whether any of the directors were rendered ‘interested’ by any of the conduct alleged and, if so, whether the disinterested directors were nonetheless capable of acting independently from those interested directors." (If a specific action of the board had been under attack, the Court would have analyzed whether there was a "a…

Continue Reading In re Pozen Shareholders Litigation, 2005 NCBC 7 (N.C. Super. Ct. Nov. 10, 2005)(Tennille)

This action sought to enjoin a merger involving a publicly traded company. The Court addressed whether the action was derivative or direct under Delaware law. If it was derivative, the Court held that the complaint suffered from three flaws: it was not verified, the corporation had not been joined as a party, and there were no allegations with respect to demand futility as required by North Carolina law.

The Court held, under Delaware precedent, that a shareholder claiming that the merger price is the product of a breach of the…

Continue Reading Marcoux v. Prim, 2004 NCBC 5 (N.C. Super. Ct. Apr. 16, 2004)(Tennille)

This opinion on attorneys’ fees was issued in tandem with the opinion in In re Wachovia Shareholders Litigation. Lawsuits had filed over a tender offer for the company, which led the Board of Directors to conduct an auction process which led to a higher price per share. Thereafter, class counsel and the defendant had agreed to permit the Court to set the fee, not to exceed $450,000, and the defendant had agreed not to object.

The Court considered, as it would have if there had been an objection: (1)…

Continue Reading In re Quintiles Transnational Corp. Shareholders Litigation, 2003 NCBC 11 (N.C. Super. Ct. Dec. 19, 2003)(Tennille)

A shareholder qualified under N.C.G.S. § 55-16-02 to inspect the shareholder records of a corporation may share the information with another contestant in a proxy fight who is not a qualified shareholder.

Thus, the corporate defendant was obligated to provide its shareholder list to a shareholder even though that shareholder intended to provided to an entity which would not have been entitled to obtain the list, in order to use it in a proxy fight.

Full OpinionContinue Reading Hoepner v. Wachovia Corp., 2001 NCBC 6 (N.C. Super. Ct. June 14, 2001)(Tennille)