Business Roundtable Amicus Brief in CalSTRS v. Alvarez | Business Roundtable


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On September 7, 2017, Business Roundtable filed an amicus brief in the Supreme Court of Delaware in the case of California State Teachers Retirement System et al. v. Aida M. Alvarez et al., arguing that the court should reject a decision by a lower state court (Chancery Court) that could potentially expand the number of derivative stockholders suits filed in multiple states.

The brief argued that the Supreme Court should not depart from existing doctrine and should instead reject the Chancery Court's ruling that would deny preclusive effect to non-Delaware decisions on demand futility in derivative litigation.

Business Roundtable contends the current state of the law protects corporations and boards of directors from the need to relitigate successively whether the board is entitled to its usual prerogative of controlling the litigation of corporate causes of action, viz., the essence of the demand futility issue. Download the brief here.
UPDATE: January 25, 2018
On January 25, 2018, the Delaware Supreme Court rejected the Delaware Court of Chancery’s suggestion that judgment in a derivative action not be given preclusive effect unless the stockholder has acquired authority to litigate on behalf of the corporation. Instead, agreeing with Business Roundtable, the Delaware Supreme Court upheld existing doctrine, following three federal circuit courts, and repudiated the notion that affording preclusive effect to the ruling that demand was not futile in the Arkansas federal court would violate due process. See the ruling here.