TreatiseTreatise

Securities Litigation: A Practitioner's Guide (2nd Edition)

 by Gibson, Dunn & Crutcher LLP
 
 Copyright: 2016-2017
 Last Updated: October 2017

 Product Details >> 

Product Details

  • ISBN Number: 9781402427343
  • Page Count: 1262
  • Number of Volumes: 1
  •  

Securities Litigation: A Practitioner’s Guide provides you with the guidance you need to help your clients get the competitive edge in securities class actions. This reference helps you master relevant federal procedural rules for securities class actions • effective defenses against such actions • appellate standards of review, and • the steps involved in achieving favorable settlements.

Securities Litigation also makes sure you’re ready to go to trial if it’s necessary, by showing you how to develop persuasive trial themes • strengthen your trial presentation • use facts and arguments that resonate with jurors • maximize the impact of expert witnesses • get valuable deposition testimony admitted at trial, and • strengthen other litigation skills.

Securities Litigation: A Practitioner’s Guide is an invaluable resource for securities practitioners, as well as executives and managers in securities firms, compliance officers, general practitioners engaged in securities litigation, investors, and federal and state regulators.
  Introduction
  Table of Contents
Chapter 1: Basic Claims Under the Federal Securities Laws
  • § 1:1 : Securities Act of 19331-4
    • § 1:1.1 : Section 111-4
      • [A] : Standing1-5
      • [B] : Who May Be Sued1-7
      • [C] : Elements1-7
      • [D] : Damages1-9
      • [E] : Defenses—Purchaser’s Knowledge of Untruth or Omission1-10
      • [F] : Defenses—Due Diligence1-10
      • [G] : Defenses—Resignation and Notice1-10
      • [H] : Defenses—Negative Causation1-11
      • [I] : Statute of Limitations and Statute of Repose1-11
    • § 1:1.2 : Section 12(a)(1)1-12
      • [A] : Who May Be Sued1-13
      • [B] : Elements1-13
      • [C] : Remedies1-14
      • [D] : Defenses1-14
      • [E] : Statute of Limitations and Statute of Repose1-15
    • § 1:1.3 : Section 12(a)(2)1-15
      • [A] : Standing1-15
      • [B] : Who May Be Sued1-16
      • [C] : Elements1-16
      • [D] : Remedies1-17
      • [E] : Defenses—Seller’s Due Diligence1-17
      • [F] : Defenses—Loss Causation1-17
      • [G] : Statute of Limitations and Statute of Repose1-18
    • § 1:1.4 : Section 151-18
      • [A] : Private Right of Action Against Control Persons1-18
      • [B] : Elements1-19
        • [B][1] : Primary Violation by Controlled Person1-19
        • [B][2] : Control Over Controlled Person1-20
        • [B][3] : Culpable Participation of Control Person1-21
      • [C] : Defenses—Good Faith1-21
      • [D] : Statute of Limitations and Statute of Repose1-22
  • § 1:2 : Securities Exchange Act of 19341-22
    • § 1:2.1 : Express Causes of Action1-22
      • [A] : Section 9(e)1-22
        • [A][1] : Standing1-23
        • [A][2] : Elements1-23
          • [A][2][a] : Section 9(a)1-24
          • [A][2][b] : Sections 9(b) and 9(c)1-24
        • [A][3] : Statute of Limitations and Statute of Repose1-25
      • [B] : Section 16(b)1-25
        • [B][1] : Elements1-26
          • [B][1][a] : Insiders Subject to Liability1-26
          • [B][1][b] : Purchase or Sale of Non-Exempt Security1-28
          • [B][1][c] : Short-Swing Period1-29
          • [B][1][d] : Profit1-29
        • [B][2] : Strict Liability1-30
        • [B][3] : Limitations Period1-30
      • [C] : Section 18(a)1-31
        • [C][1] : Standing1-31
        • [C][2] : Elements1-32
          • [C][2][a] : False or Misleading Statement1-32
          • [C][2][b] : “Filed” Document1-32
          • [C][2][c] : Reliance1-33
          • [C][2][d] : Causation1-33
        • [C][3] : Pleading Standards1-33
          • [C][3][a] : Rule 9(b)1-33
          • [C][3][b] : PSLRA1-34
        • [C][4] : Good-Faith Defense1-34
        • [C][5] : Statute of Limitations and Statute of Repose1-34
      • [D] : Section 20(a)1-35
        • [D][1] : Elements1-35
          • [D][1][a] : Primary Violation by Controlled Person1-36
          • [D][1][b] : Control Over Controlled Person1-36
          • [D][1][c] : Culpable Participation of Control Person1-37
        • [D][2] : Defenses—Good Faith1-38
        • [D][3] : Statute of Limitations and Statute of Repose1-38
    • § 1:2.2 : Implied Causes of Action1-39
      • [A] : Section 10(b)/Rule 10b-51-39
        • [A][1] : Misstatement or Omission Claim Under Rule 10b-5(b)1-40
          • [A][1][a] : Misstatement or Omission of Material Fact1-41
          • [A][1][b] : In Connection with Purchase or Sale of Security1-45
          • [A][1][c] : Scienter1-45
          • [A][1][d] : Reliance1-47
          • [A][1][e] : Loss Causation1-49
        • [A][2] : Market Manipulation Claim Under Rule 10b-5(a) or (c)1-51
        • [A][3] : No Private Right of Action for Aiding and Abetting a Section 10(b) Violation1-52
        • [A][4] : Damages1-55
        • [A][5] : Statute of Limitations and Statute of Repose1-57
        • [A][6] : No Extraterritorial Application1-58
      • [B] : Section 13(d)1-59
        • [B][1] : Standing1-60
        • [B][2] : Elements1-61
        • [B][3] : Remedies1-62
        • [B][4] : Defenses—Mootness1-62
      • [C] : Section 14(a)/Rule 14a-91-63
        • [C][1] : Standing1-65
        • [C][2] : Elements1-67
          • [C][2][a] : Falsity1-67
          • [C][2][b] : Materiality1-68
          • [C][2][c] : State of Mind1-70
          • [C][2][d] : Causation1-71
        • [C][3] : Damages1-71
        • [C][4] : Statute of Limitations and Statute of Repose1-72
      • [D] : Section 14(e)1-72
        • [D][1] : Purpose1-72
        • [D][2] : Scope of Implied Cause of Action1-74
        • [D][3] : Elements1-75
          • [D][3][a] : Materiality1-75
          • [D][3][b] : State of Mind1-75
          • [D][3][c] : Detrimental Reliance1-76
        • [D][4] : Statute of Limitations and Statute of Repose1-77
      • [E] : Section 29(b)1-78
        • [E][1] : Elements1-79
          • [E][1][a] : Contract Involved “Prohibited Transaction”1-80
          • [E][1][b] : Contractual Privity1-80
          • [E][1][c] : Protected Class1-80
        • [E][2] : Defenses1-80
        • [E][3] : Statute of Limitations and Statute of Repose1-81
  • § 1:3 : The Investment Company Act of 19401-81
    • § 1:3.1 : Express Causes of Action1-81
      • [A] : Section 36(b)1-81
    • § 1:3.2 : Implied Causes of Action1-83
      • [A] : Section 71-85
      • [B] : Section 12(d)(1)(A)1-87
      • [C] : Section 15(a)1-89
      • [D] : Section 17(a)1-91
      • [E] : Section 20(a)1-92
      • [F] : Section 22(b)1-94
      • [G] : Section 35(d)1-94
      • [H] : Section 371-95
      • [I] : Section 481-97
  • § 1:4 : Sarbanes-Oxley Act1-98
    • § 1:4.1 : Express Causes of Action1-99
      • [A] : Section 3061-99
      • [B] : Section 806(a)1-100
    • § 1:4.2 : Possible Implied Causes of Action1-103
      • [A] : Section 3041-103
      • [B] : Section 8071-104
    • § 1:4.3 : Limitations on Defenses in Securities Actions1-104
      • [A] : Section 8041-105
      • [B] : Section 8031-106
  • § 1:5 : Federal Jurisdiction and Pendent State Law Claims1-107
    • § 1:5.1 : Federal Jurisdiction1-107
    • § 1:5.2 : Supplemental Jurisdiction Under 28 U.S.C. § 13671-108
    • § 1:5.3 : Preemption Under Securities Litigation Uniform Standards Act1-109
Chapter 2: Pleading Standards
  • § 2:1 : Pleading Standards Applicable to Claims Under the Securities Act of 1933 and the Securities Exchange Act of 19342-3
    • § 2:1.1 : “Notice Pleading” Under Rule 8 of the Federal Rules of Civil Procedure2-3
    • § 2:1.2 : Pleading Fraud Under Rule 9(b) of the Federal Rules of Civil Procedure2-5
    • § 2:1.3 : Pleading Fraud Under the PSLRA2-8
    • § 2:1.4 : Reliance on Facts Outside the Complaint2-8
  • § 2:2 : Pleading Falsity2-9
    • § 2:2.1 : Statutory Requirement2-9
    • § 2:2.2 : Fraud-by-Hindsight Allegations2-10
    • § 2:2.3 : “Known Trends or Uncertainties”2-12
    • § 2:2.4 : “Temporal Proximity”2-15
    • § 2:2.5 : The “Contemporaneous Inconsistent Facts” Standard2-17
    • § 2:2.6 : Statements of Opinion2-19
  • § 2:3 : Pleading Scienter Generally2-22
    • § 2:3.1 : The PSLRA’s “Strong Inference” Pleading Standard Under Tellabs2-22
    • § 2:3.2 : Pleading Recklessness Under Tellabs2-24
    • § 2:3.3 : “Access to Information” Allegations2-26
    • § 2:3.4 : Pleading Scienter Through “Motive and Opportunity” Allegations2-27
      • [A] : Insider Trading Allegations2-28
      • [B] : Performance-Based Incentives2-30
      • [C] : Professional Fees Allegations2-32
      • [D] : Mergers and Acquisitions Allegations2-33
    • § 2:3.5 : Pleading Scienter in Accounting Fraud and Restatement Cases2-34
      • [A] : Pleading Scienter Based upon Failure to Comply with GAAP, GAAS, and Internal Company Policies2-35
      • [B] : Ignoring “Red Flags” or Failing to Monitor2-38
      • [C] : Inferring Knowledge Based upon a Person’s Position in the Company2-40
      • [D] : Knowledge of or Access to Contradictory Information2-43
    • § 2:3.6 : Pleading Scienter Based on Government and Internal Investigations2-43
    • § 2:3.7 : The “Magnitude of the Fraud” Theory2-45
    • § 2:3.8 : “Channel Stuffing” Allegations2-47
  • § 2:4 : Proper Defendants, Theories of Group Pleading, and Aiding and Abetting2-48
    • § 2:4.1 : Central Bank, Stoneridge, and Janus Capital Group2-48
    • § 2:4.2 : Group Pleading After Janus Capital Group2-54
    • § 2:4.3 : Pleading Primary Liability Under Rule 10b-52-58
      • [A] : Primary Liability for Making False Representations Under Rule 10b-5: The Supreme Court’s Janus Decision2-58
      • [B] : Applying Janus2-60
      • [C] : Scheme Liability2-63
      • [D] : The Stoneridge Decision2-67
      • [E] : Post-Stoneridge Decisions2-69
  • § 2:5 : Pleading Fraud on “Information and Belief”2-72
    • § 2:5.1 : Statutory Requirement2-72
    • § 2:5.2 : What Is Information-and-Belief Pleading?2-72
    • § 2:5.3 : Pleading Information and Belief Allegations—Confidential Witnesses and Other Sources2-73
  • § 2:6 : The Safe Harbor for Forward-Looking Statements2-79
  • § 2:7 : Pleading Materiality2-80
    • § 2:7.1 : Pleading Materiality Generally2-80
    • § 2:7.2 : Vague Statements and Puffery2-83
    • § 2:7.3 : The “Bespeaks Caution” Doctrine2-87
    • § 2:7.4 : Merger Negotiations2-88
  • § 2:8 : Pleading Loss Causation2-89
  • § 2:9 : Pleading Issues Under Sections 11 and 12(a)(2) of the Securities Act of 19332-91
    • § 2:9.1 : Causes of Action2-91
    • § 2:9.2 : Section 11 Claims2-93
      • [A] : Tracing2-94
      • [B] : Rule 144A and Private Offering Exemptions2-96
    • § 2:9.3 : Section 12(a)(2) Claims2-97
      • [A] : What Is a Prospectus?2-97
      • [B] : “Seller” Status Under Section 12(a)(2)2-98
      • [C] : Public Versus Private Offerings2-99
  • § 2:10 : Section 20A of the Exchange Act of 19342-100
  • § 2:11 : Pleading “Control Person” Claims2-102
  • § 2:12 : The Morrison Decision and Pleading Application of U.S. Law2-105
  • § 2:13 : Statute of Limitations Defenses2-110
    • § 2:13.1 : Generally2-110
    • § 2:13.2 : Merck & Co. v. Reynolds2-111
    • § 2:13.3 : Open Questions After Merck2-113
    • § 2:13.4 : CalPERS v. ANZ Securities, Inc. and Statutes of Limitations for Opt-Out Cases2-115
Chapter 3: Automatic Stay of Discovery Under the PSLRA
  • § 3:1 : Introduction3-2
  • § 3:2 : Applicability of Stay3-3
    • § 3:2.1 : Before Motion to Dismiss Filed3-4
    • § 3:2.2 : Motions to Dismiss Amended Complaints3-6
    • § 3:2.3 : Motions for Reconsideration of Rulings on Motions to Dismiss3-7
    • § 3:2.4 : After Court Grants a Motion to Dismiss with Leave to Amend Complaint3-8
    • § 3:2.5 : After Court Has Sustained Complaint As to Some Defendants3-9
    • § 3:2.6 : Motions for Judgment on the Pleadings3-11
    • § 3:2.7 : Motions for Summary Judgment Based on PSLRA Safe Harbor3-12
    • § 3:2.8 : Individual Claims Versus Class Claims3-13
    • § 3:2.9 : Shareholder Derivative Actions3-13
    • § 3:2.10 : Non-Federal Securities Fraud Claims3-14
    • § 3:2.11 : Actions by Governmental Agencies3-16
    • § 3:2.12 : Third-Party Discovery3-16
    • § 3:2.13 : Initial Disclosures3-17
    • § 3:2.14 : Corporate Books and Records Demands3-18
    • § 3:2.15 : Other Proceedings3-19
    • § 3:2.16 : Actions in State Court3-20
  • § 3:3 : Exceptions to Automatic Stay3-23
    • § 3:3.1 : Particularized Discovery Requirement3-24
    • § 3:3.2 : Preservation of Evidence Exception3-27
      • [A] : Parties3-28
      • [B] : Non-Parties3-29
    • § 3:3.3 : Undue Prejudice Exception3-30
  • § 3:4 : Parties’ Statutory Duty to Preserve3-35
Chapter 4: Lead Plaintiffs Under the PSLRA
  • § 4:1 : Introduction4-1
  • § 4:2 : Procedure for the Appointment of a Lead Plaintiff4-5
    • § 4:2.1 : Certification Requirement4-6
    • § 4:2.2 : Notice to Class Members4-7
    • § 4:2.3 : Motion for Appointment of Lead Plaintiff4-8
  • § 4:3 : Determining the “Most Adequate” Plaintiff4-10
    • § 4:3.1 : Presumptive Lead Plaintiff4-10
    • § 4:3.2 : Appointment of a Shareholder Group As Lead Plaintiff4-17
    • § 4:3.3 : Professional Plaintiffs4-21
  • § 4:4 : Challenging the Adequacy of Lead Plaintiff Applicants4-22
    • § 4:4.1 : Standing to Be Heard4-23
    • § 4:4.2 : Challenges to Standing of Lead Plaintiffs4-25
  • § 4:5 : Lead Plaintiff’s Recovery4-27
  • § 4:6 : Appointment of Lead Plaintiff’s Counsel4-27
  • § 4:7 : The Court’s Duty to Monitor Lead Plaintiffs and Their Counsel4-31
Chapter 5: The Safe Harbor Provision of the PSLRA for Forward-Looking Statements
  • § 5:1 : Overview and Statutory Framework5-2
  • § 5:2 : Determining Whether a Statement Is Forward-Looking5-5
    • § 5:2.1 : Identifying Forward-Looking Statements Under the PSLRA5-5
    • § 5:2.2 : Handling Mixed Statements of Historical Facts and Future Predictions5-9
      • [A] : Protection Where Truth or Falsity Cannot Be Determined Until After Statement Is Made5-11
      • [B] : Mere Reference to Future Not Necessarily Determinative5-12
      • [C] : Holistic Evaluation5-14
      • [D] : Severing Forward-Looking Component from Present-Fact Component5-17
      • [E] : The Effect of Context and Presentation5-20
  • § 5:3 : Distinguishing Between the Two Prongs of the Safe Harbor5-23
    • § 5:3.1 : The Second Prong: A Forward-Looking Statement Requires Actual Knowledge of Falsity to Be Actionable5-23
    • § 5:3.2 : First Prong Protection: Role of Issuer’s State of Mind5-26
      • [A] : Majority View: The Prongs Are Independent5-27
      • [B] : Minority View: The Prongs Are Not Independent5-33
  • § 5:4 : Deciding Whether the Statement Is Accompanied by Meaningful Cautionary Language5-36
    • § 5:4.1 : Level of Specificity Required5-37
      • [A] : Overview5-37
      • [B] : Identifying the Precise Risk5-45
      • [C] : Disclosing Known Facts Regarding Risk5-50
    • § 5:4.2 : What Does “Accompany” Mean?5-52
      • [A] : Specific References to Cautionary Language in Readily Available Written Materials5-53
      • [B] : Cautionary Language Appearing in Readily Available Written Materials, Even If Not Specifically Referenced5-54
      • [C] : Cautionary Language Appearing in the Same Document or Occurring on the Same Occasion As the Forward-Looking Statement5-57
  • § 5:5 : Protection of Oral Forward-Looking Statements Accompanied by Meaningful Cautionary Language5-59
  • § 5:6 : Protection of Statements of Opinion Accompanied by Meaningful Cautionary Language5-62
  • § 5:7 : Evaluation of Cautionary Statements at the Pleading Stage5-63
  • § 5:8 : When Is a Statement Immaterial?5-68
Chapter 6: Class Certification in Securities Cases
  • § 6:1 : Rule 23 Requirements6-2
    • § 6:1.1 : Burden of Proof6-2
    • § 6:1.2 : Rule 23(a) Requirements6-7
      • [A] : Numerosity6-7
      • [B] : Commonality6-8
      • [C] : Typicality6-8
      • [D] : Adequacy of Representation6-11
      • [E] : Private Securities Litigation Reform Act of 19956-13
    • § 6:1.3 : Rule 23(b)6-14
  • § 6:2 : Application of Rule 23 Requirements to Actions Arising Under Sections 11, 12, and 15 of the 1933 Securities Act6-18
    • § 6:2.1 : General Favorability of Class Certification6-18
    • § 6:2.2 : Shelf Registrations6-20
  • § 6:3 : Application of Rule 23 to Actions Arising Under the Anti-Fraud Provisions of the 1934 Securities Exchange Act6-21
    • § 6:3.1 : Proving Reliance on a Class-Wide Basis: The Fraud-on-the-Market Presumption6-22
      • [A] : Individual Reliance6-22
      • [B] : “Efficient Market” Hypothesis6-23
      • [C] : Judicial Limits on the Presumption of Reliance6-25
    • § 6:3.2 : Rethinking the Fraud-on-the-Market Presumption6-27
    • § 6:3.3 : Rebutting the Presumption of Reliance6-29
    • § 6:3.4 : The Fraud-on-the-Market Presumption in Non-Stock Markets6-33
      • [A] : Debt Versus Equity Securities6-33
      • [B] : Private Offerings; Initial Public Offerings6-35
  • § 6:4 : Settlement Classes6-36
    • § 6:4.1 : Certification Generally6-36
    • § 6:4.2 : Requirements Under Rule 236-37
      • [A] : Fairness Hearing6-38
      • [B] : Class Member Objections6-39
      • [C] : Notice Requirements6-40
  • § 6:5 : Tolling of Statutes of Limitations and Statutes of Repose6-42
    • § 6:5.1 : Statutes of Limitations6-42
    • § 6:5.2 : Statutes of Repose6-43
  • § 6:6 : Appeals of Class Certification Orders6-45
  • § 6:7 : The Class Action Fairness Act of 20056-48
    • § 6:7.1 : CAFA’s Federal Court Original Jurisdiction Requirements and Removal Rules6-48
    • § 6:7.2 : Removal Bar Under the Securities Act of 19336-50
Chapter 7: Loss Causation and Damages
  • § 7:1 : Introduction7-2
  • § 7:2 : Securities Act Section 11—False Registration Statements7-2
    • § 7:2.1 : Overview7-2
    • § 7:2.2 : Statutory Damages Formula—Section 11(e)7-5
    • § 7:2.3 : “Negative Causation” Defense7-9
    • § 7:2.4 : Other Limitations on Damages7-12
    • § 7:2.5 : Awarding Costs7-12
  • § 7:3 : Securities Act Section 12—Sale of Unregistered Securities & Misleading Prospectus7-13
    • § 7:3.1 : Overview7-13
    • § 7:3.2 : Measure of Damages7-14
  • § 7:4 : Exchange Act Section 10(b)7-18
    • § 7:4.1 : Overview7-18
      • [A] : Out-of-Pocket Measure7-19
      • [B] : Measuring Inflation7-19
      • [C] : Preliminary Estimates of Shares Purchased in the Class Period, and Sold or Held After the End of the Class Period7-20
      • [D] : Limitations on Recoverable Damages7-21
      • [E] : Loss Causation7-22
    • § 7:4.2 : The Supreme Court’s Opinion in Dura7-22
    • § 7:4.3 : Pleading and Proving Loss Causation Following Dura7-25
      • [A] : Necessary Characteristics of a Corrective Disclosure7-27
        • [A][1] : Corrective Disclosure Must Reveal a Prior False or Misleading Statement7-28
        • [A][2] : Multiple Disclosures and “Leakage” Theories of Loss Causation7-41
        • [A][3] : Plaintiffs Must Disentangle Multiple Factors Causing Stock Declines and Identify Which Portion Was Due to Dissipation of Fraud Induced Inflation7-45
          • [A][3][a] : In-and-Out Traders7-49
      • [B] : “Materialization of Risk” Approach7-52
      • [C] : Corrective Disclosures by the Government or Third Parties7-64
      • [D] : Using Expert Testimony to Prove Loss Causation7-68
    • § 7:4.4 : Loss Causation at Class Certification Is Not Considered7-70
    • § 7:4.5 : The PSLRA’s Loss Causation Requirement May Necessitate Proof of Loss Causation on a Statement-by-Statement Basis7-71
    • § 7:4.6 : Measure of Damages Under Section 10(b)7-73
      • [A] : Out-of-Pocket Measure7-76
      • [B] : Benefit-of-the-Bargain Method7-79
      • [C] : Rescission7-81
      • [D] : Limitations on Damages7-83
    • § 7:4.7 : Proving Damages7-84
      • [A] : Establishing the Number of Affected Shares7-85
      • [B] : Defining the Class Period7-86
      • [C] : Methods of Estimating the Number of Affected Shares7-87
      • [D] : Criticisms of and Refinements to the Proportional Trading Model7-89
      • [E] : Admissibility of Aggregate Damages Testimony7-92
      • [F] : Conclusions Regarding the Aggregate Computation of the Number of Affected Shares7-96
      • [G] : Establishing Damages per Share7-97
      • [H] : Loss Causation and Event Studies7-100
Chapter 8: Summary Judgment
  • § 8:1 : Courts’ Application of Rule 56 Summary Judgment Standard in the Securities Context8-2
    • § 8:1.1 : What Constitutes an Undisputed Material Fact8-3
    • § 8:1.2 : Summary Judgment and Class Certification8-3
    • § 8:1.3 : Summary Judgment and Extraterritoriality8-4
  • § 8:2 : Summary Judgment Based on Failure of Proof That Allegedly False or Misleading Statements Were Made8-5
  • § 8:3 : Summary Judgment Based on Scienter8-7
    • § 8:3.1 : Inference of Scienter Based on Position in Company8-7
    • § 8:3.2 : Collective Scienter8-8
    • § 8:3.3 : Evidence Sufficient to Negate Issue of Fact As to Scienter8-11
    • § 8:3.4 : Evidence Insufficient to Negate Issue of Fact As to Scienter8-18
  • § 8:4 : Summary Judgment Based on Materiality8-22
    • § 8:4.1 : Evidence Sufficient to Negate Issue of Fact As to Materiality8-23
    • § 8:4.2 : Evidence Insufficient to Negate Issue of Fact As to Materiality8-27
  • § 8:5 : Summary Judgment Based on the “Truth-on-the-Market” Defense8-30
    • § 8:5.1 : Overview of Case Law8-32
    • § 8:5.2 : Selected Evidentiary Issues for Establishing Truth-on-the-Market Defense8-34
      • [A] : Judicial Notice8-34
      • [B] : Hearsay and Exceptions8-35
      • [C] : Use of Experts8-37
    • § 8:5.3 : Use of Rule 56(d) to Obtain Discovery Related to Truth-on-the-Market Defense8-39
  • § 8:6 : Summary Judgment Based on Loss Causation8-40
    • § 8:6.1 : “Fraud-on-the-Market” Cases8-41
      • [A] : Content of the Corrective Disclosure8-41
      • [B] : Apportioning the Loss Among Multiple Potential Causes8-49
    • § 8:6.2 : “Materialization of Risk”8-53
    • § 8:6.3 : “Lost Opportunity” Cases8-57
  • § 8:7 : Summary Judgment Establishing Lack of Duty8-59
  • § 8:8 : The “Due Diligence” Defense8-60
    • § 8:8.1 : The Relevant Standards8-60
    • § 8:8.2 : Escott v. BarChris Construction Corp.8-61
    • § 8:8.3 : Subsequent Case Law8-63
    • § 8:8.4 : Recent Case Law on Due Diligence Defense8-66
Chapter 9: Defending Claims Under the Securities Act of 1933
  • § 9:1 : Introduction9-2
  • § 9:2 : Defending Claims Under Section 119-3
    • § 9:2.1 : Standing9-3
      • [A] : Tracing9-3
      • [B] : Class Standing9-6
    • § 9:2.2 : Who May Be Sued9-8
    • § 9:2.3 : Elements and Pleadings9-9
      • [A] : Limited to Registration Statements9-9
      • [B] : Misstatements or Omissions9-11
      • [C] : Materiality9-14
      • [D] : Reliance9-18
      • [E] : No Economic Loss on the Face of the Pleadings9-18
      • [F] : Heightened Pleading Requirements9-19
        • [F][1] : Allegations of Fraud9-19
        • [F][2] : Statements of Opinion9-20
      • [G] : Timeliness9-23
    • § 9:2.4 : Affirmative Defenses to Section 11 Claims9-23
      • [A] : Plaintiff’s Knowledge of Misstatement or Omission at Time of Acquisition9-23
      • [B] : Due Diligence9-24
        • [B][1] : Experts Versus Non-Experts9-25
        • [B][2] : Reasonableness Standard Across Different Types of Defendants9-26
          • [B][2][a] : Issuer9-26
          • [B][2][b] : Company Management and Inside Directors9-26
          • [B][2][c] : Outside Directors9-27
          • [B][2][d] : Underwriters9-29
      • [C] : Resignation and Notice9-32
      • [D] : Negative Causation9-32
    • § 9:2.5 : Timeliness—Statute of Limitations and Statute of Repose9-34
  • § 9:3 : Defending Claims Under Section 129-37
    • § 9:3.1 : Section 12(a)(1)9-37
      • [A] : Who May Be Sued9-38
      • [B] : Elements and Pleadings9-39
      • [C] : Affirmative Defenses9-40
        • [C][1] : Security Was Exempt from Registration9-40
        • [C][2] : In Pari Delicto9-42
        • [C][3] : Estoppel and Contract Defenses9-43
      • [D] : Timeliness—Statute of Limitations and Statute of Repose9-44
    • § 9:3.2 : Section 12(a)(2)9-44
      • [A] : Standing9-45
      • [B] : Who May Be Sued9-46
      • [C] : Elements and Pleading9-49
      • [D] : Affirmative Defenses9-51
        • [D][1] : Due Diligence—Seller’s Reasonable Care/Lack of Negligence9-51
        • [D][2] : Negative Causation9-52
      • [E] : Timeliness—Statute of Limitations and Statute of Repose9-53
  • § 9:4 : Defending Claims Under Section 159-53
    • § 9:4.1 : Defenses—Elements9-53
      • [A] : Secondary Liability Requires an Underlying Primary Violation9-53
      • [B] : Plaintiffs Must Prove Control over the Primary Violator9-54
      • [C] : Mixed Views on Whether Culpable Participation Is Required9-56
    • § 9:4.2 : Affirmative Defenses9-58
      • [A] : Statutory “Good Faith” Defense Available to Control Persons9-58
    • § 9:4.3 : Timeliness—Statute of Limitations and Statute of Repose9-60
Chapter 10: Trial of a Securities Class Action
  • § 10:1 : Overview10-2
  • § 10:2 : Trial Themes10-7
    • § 10:2.1 : Plaintiff Themes10-9
    • § 10:2.2 : Defense Themes10-10
    • § 10:2.3 : Effective Delivery of Trial Messages10-12
    • § 10:2.4 : Mock Trials and Jury Research10-13
  • § 10:3 : The Role of Expert Testimony10-14
    • § 10:3.1 : Range of Expert Testimony10-14
    • § 10:3.2 : Expert Testimony on Damages10-14
      • [A] : Calculating Per-Share Damages10-15
      • [B] : Calculating Aggregate Damages10-17
    • § 10:3.3 : Procedural Issues10-18
      • [A] : Discovery of Documents Prepared by a Consulting Expert Later Designated to Testify10-18
      • [B] : Recalling Introductory Expert Witnesses at Trial10-19
  • § 10:4 : Fact Witnesses10-20
    • § 10:4.1 : Witnesses in a Securities Class Action10-20
      • [A] : Named Plaintiffs10-20
      • [B] : Defense Witnesses10-20
      • [C] : Use of Non-Class Proof in a Class Action10-21
    • § 10:4.2 : Use and Admission of Witness Testimony for Trial10-23
      • [A] : Live Testimony10-23
      • [B] : Deposition Testimony10-24
      • [C] : Videotaped Depositions at Trial10-26
    • § 10:4.3 : Drawing Adverse Inferences from Witness Assertions of the Fifth Amendment Privilege Against Self-Incrimination10-28
  • § 10:5 : Admission and Presentation of Documentary Evidence10-31
    • § 10:5.1 : Admissibility of Factual Findings in SEC, NYSE, and NASD Consent Decrees10-31
    • § 10:5.2 : Restatement As Admission10-34
    • § 10:5.3 : Motions in Limine10-38
      • [A] : Expert Testimony on Damages and Causation10-39
      • [B] : References to Unrelated Corporate Wrongdoing10-42
      • [C] : Evidence or Argument on Class Issues10-43
      • [D] : Stock Sales or Allegedly Similar Transactions10-44
    • § 10:5.4 : Roles of Judge and Jury: Preliminary Factual Questions Surrounding Market Efficiency at Trial10-45
    • § 10:5.5 : Bifurcation, Proof of Claims, and Other Proceedings10-48
  • § 10:6 : Jury Issues10-52
    • § 10:6.1 : Juror Questionnaires10-52
    • § 10:6.2 : Juror Education10-54
      • [A] : Complex Theories and Concepts10-54
      • [B] : Pre-Instructing the Jury10-54
    • § 10:6.3 : Jury Instructions and Verdict Forms10-54
      • [A] : Jury Instructions10-54
      • [B] : Verdict Forms10-56
  • § 10:7 : PSLRA Proportionate Fault Issues Relevant to Trial of a Securities Fraud Class Action10-56
    • § 10:7.1 : Joint and Several and Proportionate Liability Rules Applicable to Exchange Act Defendants and Outside Directors in Section 11 Suits10-57
      • [A] : Overview10-57
      • [B] : Supplemental Liability of Proportionately Liable Defendants10-58
      • [C] : Separate Representation Issues10-59
    • § 10:7.2 : Joint and Several Liability Carve-Out for Outside Directors Under Section 1110-60
    • § 10:7.3 : What Must the Defendant Prove to Obtain a Proportionate Fault Allocation?10-63
    • § 10:7.4 : Non-Parties Who May Be Included in the Apportionment10-65
    • § 10:7.5 : Fault Allocation Between a Corporation and Its Officers10-67
Chapter 11: Appeals
  • § 11:1 : Appealing an Adverse Decision of a United States District Court11-2
    • § 11:1.1 : Final Judgment Rule11-2
    • § 11:1.2 : Perfecting an Appeal from a Final Judgment Under 28 U.S.C. § 1291(a)11-2
    • § 11:1.3 : Interlocutory Appeals11-5
      • [A] : Certification Under Federal Rule of Civil Procedure 54(b)11-5
      • [B] : District Court Certification Under 28 U.S.C. § 1292(b)11-6
      • [C] : Appeal of Order Granting or Denying Class Action Certification Under Federal Rule of Civil Procedure 23(f)11-8
      • [D] : Collateral Order Doctrine11-10
    • § 11:1.4 : Writs of Mandamus and Prohibition11-13
    • § 11:1.5 : Supreme Court Review11-15
      • [A] : Writ of Certiorari11-15
      • [B] : Certify Questions of Law11-16
  • § 11:2 : General Standards of Review in Securities Cases11-16
    • § 11:2.1 : Fact Issues in Securities Litigation Governed by the Clearly Erroneous Standard of Review11-17
    • § 11:2.2 : Legal Issues in Securities Litigation Governed by a De Novo Standard of Review11-18
    • § 11:2.3 : Mixed Questions of Fact and Law Governed by a De Novo Standard of Review11-21
    • § 11:2.4 : Abuse of Discretion11-22
    • § 11:2.5 : Harmless Error11-24
    • § 11:2.6 : Unreviewable Issues11-25
  • § 11:3 : Preserving Points of Error in an Appeal11-26
  • § 11:4 : Challenging Evidentiary Rulings on Appeal11-28
  • § 11:5 : Challenging Jury Instructions11-31
  • § 11:6 : Challenging a Plaintiff’s Damages Claim11-33
  • § 11:7 : Challenging Class Certification Issues on Appeal11-35
  • § 11:8 : Appeals from Award of Attorney Fees or Costs11-37
Chapter 12: Settlement
  • § 12:1 : Typical Settlement Structures12-2
    • § 12:1.1 : Stipulation of Settlement12-2
    • § 12:1.2 : Rule 23(b)(3) Opt-Out Considerations12-3
    • § 12:1.3 : Settlement Fund12-5
    • § 12:1.4 : Plan of Allocation12-6
    • § 12:1.5 : Claim Administration Process12-8
    • § 12:1.6 : PSLRA Disclosure Requirements12-10
    • § 12:1.7 : Settlement Class Notice12-10
    • § 12:1.8 : Settlement Notice Under the Class Action Fairness Act12-14
  • § 12:2 : Settlement Approval Process12-15
    • § 12:2.1 : Objections to Fairness of Settlement12-15
      • [A] : Court Scrutiny of the Proposed Settlement Class12-17
      • [B] : Consideration of the Strength of Plaintiff’s Case12-17
      • [C] : Lack of Information Supporting Fairness Determination12-20
      • [D] : Scope of Release Provisions12-21
      • [E] : Adequacy of Class Notice12-23
      • [F] : Settlement Amount Compared to Ability to Pay12-24
    • § 12:2.2 : Award of Attorney Fees12-25
      • [A] : Recent Trends12-26
      • [B] : Efforts to Reduce Fee Percentage12-29
    • § 12:2.3 : Timeliness of Objections; Collateral Attacks on Settlements12-35
  • § 12:3 : Partial Settlements12-36
    • § 12:3.1 : PSLRA Standards for Partial Settlements12-36
    • § 12:3.2 : Good-Faith Settlement “Bar Orders” and Judgment Reduction Issues12-37
  • § 12:4 : Role of D&O Insurers12-42
  • § 12:5 : Corporate Governance Reforms As Settlement Consideration12-43
  • § 12:6 : Settlements of Parallel Proceedings12-45
    • § 12:6.1 : Settlements with SEC12-45
    • § 12:6.2 : Settlements of Parallel Derivative Lawsuits12-47
    • § 12:6.3 : Settlements of Parallel “Opt-Out” Litigation12-48
  • § 12:7 : PSLRA Requirements Regarding Compliance with Rule 1112-49
    • § 12:7.1 : District Court’s Obligation to Make Findings12-49
    • § 12:7.2 : Procedures Utilized by District Court12-53
    • § 12:7.3 : Examples of Sanctions Granted12-56
    • § 12:7.4 : Examples of Sanctions Denied12-64
Chapter 13: Indemnification and D&O Insurance
  • § 13:1 : Indemnification13-2
    • § 13:1.1 : Generally13-2
      • [A] : Basic Indemnification Statutes13-2
      • [B] : Definition of “Proceeding”13-3
      • [C] : Mandatory Versus Permissive Indemnification13-4
      • [D] : Multiple Sources of Indemnification13-6
      • [E] : Public Policy Limitations on Indemnification13-10
    • § 13:1.2 : Limited Liability Provisions13-12
    • § 13:1.3 : Advancement of Defense Costs13-17
      • [A] : Enforcement of Provisions As Written13-19
      • [B] : Acting in One’s Official Capacity13-24
        • [B][1] : Capacity Issues13-25
        • [B][2] : Officer Status13-29
      • [C] : Reasonableness of Fees and Costs13-32
    • § 13:1.4 : Proceedings to Enforce Advancement and Indemnification13-34
      • [A] : Summary Proceedings Under Delaware Law13-34
      • [B] : “Fees on Fees”13-37
      • [C] : Requirement of a Final Adjudication13-39
    • § 13:1.5 : Statute of Limitations for Indemnification Claims13-41
  • § 13:2 : Director and Officer Liability Insurance13-42
    • § 13:2.1 : Overview and Key Aspects of Policies13-42
    • § 13:2.2 : Definition of “Claim”13-44
      • [A] : Regulatory Proceedings and Investigations13-46
      • [B] : Internal Investigations As “Claims”13-47
      • [C] : Securities Claims13-48
    • § 13:2.3 : Definition of “Wrongful Act”13-49
      • [A] : Official Capacity13-50
      • [B] : Employees As Insured Persons13-51
      • [C] : Interrelated Wrongful Acts13-52
    • § 13:2.4 : Definition of “Loss”13-55
      • [A] : Coverage for Claims Under the Securities Act of 193313-56
      • [B] : Coverage for Sarbanes-Oxley “Clawback” Claims13-56
      • [C] : State Law Public Policy Limits on D&O Coverage13-57
    • § 13:2.5 : Key Coverage Exclusions13-59
      • [A] : “Conduct” Exclusions13-60
      • [B] : Insured-Versus-Insured13-63
        • [B][1] : Derivative Claims13-66
        • [B][2] : Whistleblower Claims13-66
        • [B][3] : Insured and Non-Insured Plaintiffs13-67
      • [C] : Improper Personal Benefit13-68
      • [D] : ERISA Claims13-69
    • § 13:2.6 : Severability Clauses13-70
      • [A] : Generally13-70
      • [B] : Severability of the Application13-71
      • [C] : Severability in Relation to Conduct Exclusions13-71
    • § 13:2.7 : Other D&O Policy Issues13-72
      • [A] : Allocation Required for Noncovered Claims13-72
      • [B] : Corporate Insolvency and “Priority of Payments” Provisions13-72
      • [C] : Exhaustion of Underlying Limits13-77
    • § 13:2.8 : Claims Handling Practices13-79
      • [A] : Interim Funding Agreements13-80
      • [B] : Timely Reporting of Claims13-80
      • [C] : Consent of Carriers to Settlement13-84
      • [D] : Duty to Advise on Insurance Coverage Issues13-86
    • § 13:2.9 : “Dedicated Side A” Coverage and Other Customized D&O Products13-87
Chapter 14: SEC Investigations and Enforcement Actions
  • § 14:1 : Introduction14-2
  • § 14:2 : SEC Investigations14-4
    • § 14:2.1 : Investigation Participants14-4
    • § 14:2.2 : Triggering Events14-4
      • [A] : Generally14-4
      • [B] : Whistleblowers14-5
    • § 14:2.3 : Phases of SEC Investigations14-9
      • [A] : Informal Inquiry14-9
      • [B] : Formal Investigation14-10
      • [C] : “Wells” Notices and the Process to Authorize the Filing of an Enforcement Action14-12
      • [D] : Resolving Enforcement Actions14-15
      • [E] : Closing Investigations14-18
  • § 14:3 : SEC Enforcement Actions14-18
    • § 14:3.1 : SEC Enforcement Trends14-18
    • § 14:3.2 : Civil Remedies14-21
      • [A] : Civil Injunctions14-21
      • [B] : Monetary Sanctions14-22
        • [B][1] : Disgorgement14-22
        • [B][2] : Civil Penalties14-23
        • [B][3] : Clawback of Executive Compensation14-24
      • [C] : Ancillary Relief14-26
        • [C][1] : Officer and Director Bar14-26
        • [C][2] : Corporate Governance Changes14-27
    • § 14:3.3 : Administrative Remedies14-27
      • [A] : Cease-and-Desist Proceedings14-27
      • [B] : Professional Discipline14-30
    • § 14:3.4 : The Role of Cooperation14-31
      • [A] : The Seaboard Report14-31
      • [B] : Privilege Waivers As an Element of Cooperation14-35
    • § 14:3.5 : Parallel Criminal Cases14-36
      • [A] : Common Grounds for Prosecution14-37
      • [B] : Cooperation Between SEC and DOJ14-38
  • § 14:4 : Insider Trading Cases14-40
    • § 14:4.1 : “Classical Theory” of Insider Trading14-41
    • § 14:4.2 : “Misappropriation Theory” of Insider Trading14-42
    • § 14:4.3 : “Use” Versus “Possession”14-44
    • § 14:4.4 : Tipper/Tippee Liability14-44
  • § 14:5 : Role of Directors14-45
    • § 14:5.1 : Corporate Codes of Conduct and Compliance Policies14-45
    • § 14:5.2 : Internal Controls14-46
    • § 14:5.3 : Dealing with Potential Illegal Acts14-46
    • § 14:5.4 : Supervising Internal Investigations and the Corporation’s Response to the SEC14-47
    • § 14:5.5 : Audit Committee Oversight14-48
  • § 14:6 : Role of Counsel14-50
  • § 14:7 : Role of Auditors14-52
  • § 14:8 : The Janus Decision14-55
Chapter 15: ERISA Litigation
  • § 15:1 : Introduction15-2
  • § 15:2 : Parties15-5
    • § 15:2.1 : Defendants: Who Is a Fiduciary?15-5
    • § 15:2.2 : Plaintiffs15-9
      • [A] : Former Participants15-11
      • [B] : Suit on Behalf of Plan15-13
      • [C] : Standing15-14
  • § 15:3 : Procedural Issues15-15
    • § 15:3.1 : Automatic Stay15-15
    • § 15:3.2 : Demand Requirement15-16
    • § 15:3.3 : Class Certification Questions15-19
  • § 15:4 : Fiduciary Claims and Defenses15-22
    • § 15:4.1 : Statute of Limitations15-23
    • § 15:4.2 : Misrepresentation15-25
      • [A] : Pleading with Particularity15-25
      • [B] : Reliance15-27
      • [C] : Intersection with Securities Laws15-29
    • § 15:4.3 : Prudence15-32
      • [A] : Presumption for Employer Stock15-33
        • [A][1] : “Public Information” Prudence Claims15-37
        • [A][2] : “Insider Information” Prudence Claims15-41
      • [B] : 404(c) Defense15-43
    • § 15:4.4 : Other Claims15-47
      • [A] : Conflict of Interest15-47
      • [B] : Duty to Monitor15-48
    • § 15:4.5 : The Special Case of Directed Trustees15-50
  • § 15:7 : Relief and Damages15-54
    • § 15:5.1 : Equitable Relief15-54
    • § 15:5.2 : Holder Claims15-58
    • § 15:5.3 : Measure of Damages15-59
    • § 15:5.4 : Distribution of Damages15-61
Chapter 16: Developments Under the Securities Litigation Uniform Standards Act
  • § 16:1 : Background16-2
  • § 16:2 : Removal and Preemption of State Court Class Actions16-3
    • § 16:2.1 : Requirements for Removal16-3
      • [A] : Covered Class Action16-5
      • [B] : State Court Action Exclusively Based on Federal Law16-14
      • [C] : Covered Securities16-17
      • [D] : Misrepresentation, Omission, or Use of a Deceptive Device16-20
      • [E] : “In Connection with” the Purchase or Sale of a Covered Security16-26
        • [E][1] : The Zandford Decision16-26
        • [E][2] : The Dabit Decision16-27
        • [E][3] : Post-Dabit Cases16-29
        • [A][6] : The Troice Decision16-35
      • [G] : “Delaware Carve-Out” Cases16-39
    • § 16:2.2 : Preemption of State-Law Claims16-43
  • § 16:3 : SLUSA and the Class Action Fairness Act16-49
  • § 16:4 : Stays of Discovery and Proceedings in Parallel Securities-Related Actions16-53
    • § 16:4.1 : Stay of Discovery in Related State Court Actions16-53
    • § 16:4.2 : Stay of Discovery in Arbitration Proceedings Under SLUSA or the All Writs Act16-58
    • § 16:4.3 : Other Forms of Stays of Concurrent Securities-Related Litigation16-59
  • § 16:5 : Extraterritorial Reach of SLUSA16-60
Chapter 17: Mergers & Acquisitions Litigation
  • § 17:1 : Introduction17-2
  • § 17:2 : Stockholder Class Actions17-3
    • § 17:2.1 : Overview of Stockholder Class Actions17-4
      • [A] : Filing of Initial Complaint17-4
      • [B] : Multijurisdictional Litigation and Motions to Stay17-5
      • [C] : Forum Selection Bylaws17-6
      • [D] : Consolidation of Multiple Cases17-7
      • [E] : Appointment of Lead Plaintiff and Lead Counsel17-8
      • [F] : Amended Complaint17-10
      • [G] : Expedited Proceedings and Discovery17-11
      • [H] : Motion for Preliminary Injunction17-12
      • [I] : Post-Closing Litigation17-14
    • § 17:2.2 : Common Claims in Stockholder Class Actions17-16
      • [A] : General Overview of Fiduciary Duties17-16
      • [B] : Breach-of-Fiduciary-Duty Claims17-17
      • [C] : Aiding-and-Abetting Claims17-18
    • § 17:2.3 : Legal Framework for Evaluating Breach-of-Fiduciary-Duty Claims17-20
      • [A] : Business Judgment Rule17-20
      • [B] : Entire Fairness17-21
      • [C] : Revlon17-23
      • [D] : Unocal17-25
      • [E] : Blasius17-27
    • § 17:2.4 : Claims Against Financial Advisers17-28
      • [A] : Background17-29
        • [A][1] : Del Monte17-29
        • [A][2] : El Paso17-29
      • [B] : Rural/Metro17-30
      • [C] : TIBCO17-30
    • § 17:2.5 : Disclosure Claims and Settlements17-31
      • [A] : Background on Duty-of-Disclosure Claims17-31
        • [A][1] : Background of the Merger17-32
        • [A][2] : Management Projections17-32
        • [A][3] : Financial Adviser Fairness Opinion17-33
      • [B] : Disclosure Settlements17-33
      • [C] : Delaware’s Restriction of Disclosure-Only Settlements17-34
  • § 17:3 : Appraisal Litigation17-37
    • § 17:3.1 : Perfecting Appraisal Rights17-37
    • § 17:3.2 : Appraisal Proceedings: An Overview17-39
    • § 17:3.3 : Determining Fair Value in an Appraisal Proceeding17-40
    • § 17:3.4 : Statutory Interest17-41
    • § 17:3.5 : Recent Trends17-43
      • [A] : Increased Use of Appraisal Statute by Arbitrageurs17-43
      • [B] : Increased Deference to Transaction Price in Arm’s-Length Transactions17-43
Chapter 18: Derivative Litigation and Pre-Suit Demands
  • § 18:1 : Introduction18-3
  • § 18:2 : Derivative Claims by Shareholders: An Overview18-3
    • § 18:2.1 : Deference to Directors Versus Avoiding Conflicts18-3
    • § 18:2.2 : Limitations on Derivative Claims18-4
    • § 18:2.3 : The Business Judgment Rule18-5
  • § 18:3 : Prerequisites to Asserting Derivative Claims18-6
    • § 18:3.1 : Pre-Suit Demand Requirement18-6
    • § 18:3.2 : Contemporaneous Ownership Test18-6
  • § 18:4 : Distinguishing Between Direct Claims and Derivative Claims18-7
    • § 18:4.1 : Generally18-7
    • § 18:4.2 : “Dual-Natured” Claims18-8
  • § 18:5 : Common Derivative Claims18-8
    • § 18:5.1 : Generally18-8
    • § 18:5.2 : Breach of Fiduciary Duty of Care18-9
    • § 18:5.3 : Breach of the Duty of Loyalty and Good Faith18-10
      • [A] : Self-Dealing or Other Improper Personal Benefit18-10
      • [B] : Failure to Monitor or Oversee18-11
    • § 18:5.4 : Corporate Waste18-13
    • § 18:5.5 : Unjust Enrichment18-14
  • § 18:6 : Pleading Demand Futility18-14
    • § 18:6.1 : Generally18-14
    • § 18:6.2 : Demand Futility Under Aronson18-16
      • [A] : “Disinterested and Independent”18-17
        • [A][1] : Disinterestedness18-17
        • [A][2] : Independence18-18
      • [B] : “Valid Exercise of Business Judgment”18-20
    • § 18:6.3 : Demand Futility Under Rales18-22
  • § 18:7 : Board Review When Demand Is Required18-24
    • § 18:7.1 : Generally18-24
    • § 18:7.2 : The Demand Review Process18-25
      • [A] : Creation of a Committee18-25
      • [B] : Retention of Counsel18-26
      • [C] : Review Procedures18-26
      • [D] : Timing Requirements18-26
      • [E] : The Board’s Response18-27
    • § 18:7.3 : Creation of an Empowered Committee As Potential Concession of Demand Futility18-27
    • § 18:7.4 : Wrongful Refusal Under Delaware Law18-29
  • § 18:8 : Board Review When Demand Is Excused: Special Litigation Committees18-30
    • § 18:8.1 : The SLC Review Process18-31
      • [A] : Creation of a Fully Empowered Committee18-31
      • [B] : Selection of SLC Members18-32
      • [C] : Retention of Outside Counsel18-33
      • [D] : Motion to Stay18-33
      • [E] : Document Review; Interviews18-33
      • [F] : SLC’s Conclusions18-34
    • § 18:8.2 : Review of the SLC’s Decision18-35
      • [A] : Delaware Approach18-35
      • [B] : Other Approaches18-35
  • § 18:9 : Protective Charter and Bylaw Provisions18-36
    • § 18:9.1 : Exculpatory Charter Provisions: Section 102(b)(7)18-36
    • § 18:9.2 : Exclusive-Forum Provisions18-36
  • § 18:10 : Inspection of Corporate Books and Records18-38
    • § 18:10.1 : Requirements for Stockholder Demand for Inspection18-38
    • § 18:10.2 : Responding to Demand for Inspection18-39
    • § 18:10.3 : Scope of Inspection18-39
  • § 18:11 : Procedural and Strategic Issues18-40
    • § 18:11.1 : Claim Preclusion18-40
    • § 18:11.2 : Representation by Outside Counsel18-40
    • § 18:11.3 : Privilege18-41
    • § 18:11.4 : Parallel Litigation and Pre-Suit Demand18-42
      • [A] : Generally18-42
      • [B] : Staying Derivative Suits Pending Parallel Litigation18-43
      • [C] : Pre-Suit Demand Letters18-44
  • § 18:12 : Settlement18-44
    • § 18:12.1 : Generally18-44
    • § 18:12.2 : Corporate Governance Reforms18-45
    • § 18:12.3 : Multiparty Settlement Structures18-45
  • § 18:13 : Attorney Fees18-46
    • § 18:13.1 : The “Corporate Benefit” Doctrine18-46
    • § 18:13.2 : Mootness Fees18-47
    • § 18:13.3 : Determining Fee Amounts: The Sugarland Factors18-47
    • § 18:13.4 : Separating Terms of Fees from Settlement Approval18-47
  Index

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