Corporate Governance

Kirby McInerney is committed to protecting shareholder rights and investments through shareholder derivative litigation.

When management fails to take the steps necessary to protect the interests of the company and its shareholders through mismanagement, wasting of corporate assets, or self-dealing, shareholders have a right to hold officers and directors liable. In these cases, shareholders often do not seek monetary damages, but rather seek to protect their long term investment in the company by imposing corporate governance and management reforms which ensure that corporate structures, internal controls, and policies are consistent with the law and best practice. The goal of such litigation is to preserve corporate assets, improve transparency, and restore accountability.

The firm has a long history of activity in the corporate governance arena. In 1988, KM was responsible for a substantial recovery for shareholders in connection with the Kohlberg Kravis Roberts & Co. takeover of RJR Nabisco that inspired “Barbarians at the Gate.” In that case, KM established that investment bankers advising target boards have duties running directly to shareholders of those companies. KM continues routinely working with clients to advance corporate governance agendas during settlement processes.

Additional examples of KM’s experience in shareholder derivative litigation include:
 

• Mason-Mahon v. Flint, No. 602052/14 (N.Y. App. Div.).  Representation of an English shareholder in a shareholder derivative litigation alleging that the directors and officers of HSBC, an English corporation, breached their duties to the bank and shareholders by failing to halt, or even facilitating, several money-laundering schemes, which resulted in the bank paying $1.92 billion in fines and entering into a deferred prosecution agreement.  In a landmark decision by a New York state appellate court, KM established the right for English shareholders to bring derivative claims against English companies in New York state courts.  The litigation remains ongoing.

 

• In re Bio-Rad Laboratories, Inc. Stockholder Litigation, No. 11387 (Del. Ch. Ct.).  Representation of plaintiff Wayne County Employees’ Retirement System as co-lead counsel in this 2015 shareholder derivative action brought against the members of the Board of Directors of Bio-Rad Laboratories, Inc. relating to certain violations of the Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §78dd-1, et seq. (“FCPA”).  The case recently settled together with a parallel action in California state court.  As a result of this settlement, Bio-Rad will adopt industry leading, state-of-the-art corporate governance and compliance measures that directly address plaintiffs’ allegations and provide for greater effectiveness of the Board of Directors in responding to potential violations of the FCPA, and similar anti-corruption laws.

 

• In re Pfizer Inc. Shareholder Derivative Litigation, No. 09-cv-07822 (S.D.N.Y.).  Representation of Skandia Life Insurance in this shareholder derivative lawsuit brought against members of the Board of Directors and senior executives of Pfizer, Inc. related to the Company’s unlawful promotion of drugs even after receiving numerous “red flags” that the improper drug marketing was systemic.  Pfizer agreed to pay a proposed settlement of $75 million to fund groundbreaking changes to the Board’s oversight of regulatory matters.

 

• Hollinger International Inc. v. Black, No. 183-N (Del. Ch. Ct.).  Representation of institutional investor in shareholder derivative action seeking to stop illegal company fund withdrawals being made by Hollinger’s then CEO.  This litigation ultimately resulted in the CEO’s removal, which resulted in the significant appreciation of Hollinger shares.