The Seventh Circuit Court of Appeals, in no uncertain terms, spiked a derivative lawsuit filed against the board of Sears Holdings on Wednesday, ruling that it “serves no goal other than to move money from the corporate treasury to the attorneys’ coffers.” The lawsuit claimed that two members of Sears’s board have directorships at other companies that compete with Sears, in violation of antitrust law.
The two investors who filed the lawsuit – Robert F. Booth Trust and Ronald Gross — did so without first demanding that the board fix the situation, presumably by booting the directors. This bit is important. Delaware, where Sears is incorporated, usually allows investors to sue derivatively only after a demand for action. Sears made that argument in federal district court, but it sank.
‘Enforcement 40’ for 2020
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