Shareholder Derivative Litigation
Robbins Arroyo LLP’s shareholder derivative litigation practice has a proven track record of protecting and enhancing shareholder rights and value, holding directors and officers accountable, and improving corporate governance at companies across the country. We represent investors who demand integrity and accountability in corporate boardrooms, and who want to be part of the solution when corporate fraud or misconduct occurs.
As a Shareholder, You Can Make a Difference through Derivative Actions
In a shareholder derivative action, an individual or institutional shareholder, serving as a representative plaintiff, takes legal action on behalf of the corporation. The shareholder derivative action is typically brought against insiders of the company, such as the executive officers, directors, and/or board members, who are suspected of misconduct or other acts that cause harm to the corporation. A shareholder derivative action allows shareholders to redress harm to the corporation caused by management where it is unlikely that management will redress the harm itself. By filing a shareholder derivative action, a single shareholder may be able to compel changes that otherwise might not happen at the company, such as pro-investor corporate governance reform, removal of officers or directors whose misconduct injured the corporation, and monetary payments in the form of damages and/or disgorgement (recovery) of ill-gotten gains.
A Shareholder Lawsuit for Victims of Corporate Misconduct
Corporate misconduct harms not only shareholders, but also the financial markets by driving down stock prices, decreasing shareholder value, and creating mistrust among investors. Past revelations of corporate fraud, including Enron, WorldCom, Tyco, the options backdating scandals, and the recent misconduct that precipitated the U.S. economic crisis, have increased the need to enforce the legal duties of loyalty and good faith that corporate directors and officers owe to their shareholders. Shareholder derivative actions provide greater accountability for shareholders, inspire investor confidence in the financial markets, and protect companies and shareholders from further harm.
Corporate Misconduct that Can Be Addressed by Shareholder Derivative Litigation
- Breaches of fiduciary duty
- Fraud or other unlawful activity
- Self-dealing or greed by insiders
- Conflict of interest
- Waste of corporate assets
- Insider trading
- Options backdating
- Accounting scandals
- Inflated, false, or misleading financial statements
- Improprieties related to executive compensation
- Conduct leading to Department of Justice or SEC investigations
- Management or board decisions that expose the company to harm or risk (e.g., violations of consumer protection laws, environmental violations)
Results through Shareholder Derivative Actions: Robbins Arroyo LLP
Clients turn to Robbins Arroyo LLP for representation in shareholder derivative actions due to the firm’s leadership and breadth of experience in this practice area. The law firm, named a “serious player” in the field by the National Law Journal, has litigated shareholder derivative actions in almost every state in the country on behalf of institutional and individual investors, including officers and directors of publicly traded corporations. Publicly traded companies have also hired Robbins Arroyo LLP to represent them against the individuals and entities who have harmed them. The firm has been instrumental in securing several of the largest monetary recoveries in the history of shareholder derivative litigation. Robbins Arroyo LLP has also been on the forefront of corporate governance reform, having worked with shareholders to improve board oversight, legal compliance, transparency, and responsiveness at more than 125 Fortune 1000 companies, and has forced the removal of company leaders who have engaged in misconduct or fraudulent behavior.
Robbins Arroyo LLP has represented shareholder clients in derivative litigation involving Tenet Healthcare Corporation, KB Home, Nicor Inc., Brocade Communications Systems, Inc., Hewlett-Packard Company, Panera Bread Company, Juniper Networks, Inc., and OM Group, Inc., among many others. In a case involving American International Group, Inc. (“AIG”), the firm helped secure a $90 million payment to AIG, one of the largest monetary recoveries in the history of shareholder derivative actions. In shareholder derivative litigation involving Cardinal Health, Inc., our attorneys secured $70 million for the company on behalf of shareholders and negotiated the implementation of significant corporate governance and internal accounting controls to improve the oversight and accountability of the company’s senior management. In another case involving the vitamin and supplement retailer Vitacost.com, Inc., Robbins Arroyo LLP helped save the company from bankruptcy and to preserve the equity interests of its shareholders. See our Noteworthy Cases page for additional information on select cases.
Shareholders: Contact Us
For more information about Robbins Arroyo LLP’s shareholder derivative litigation practice and how we can help you, please contact Robbins Arroyo LLP attorneys. If you believe you have been subject to corporate fraud or misconduct at a company in which you invest, you can call us for a free evaluation of your potential case at (619) 525-3990. You may also be interested in Stock Watch, our investment portfolio monitoring service for individual and institutional investors.