| Zapata Corp v. Maldonado | |
|---|---|
 | |
| Court | Delaware Supreme Court |
| Citation | 430 A 2d 779 (Del Sup 1979) |
| Keywords | |
| Derivative action | |
Zapata Corp v. Maldonado 430 A 2d 779 (Del Sup 1979) is a US corporate law case, concerning the derivative suits in Delaware.
| Zapata Corp v. Maldonado | |
|---|---|
| | |
| Court | Delaware Supreme Court |
| Citation | 430 A 2d 779 (Del Sup 1979) |
| Keywords | |
| Derivative action | |
Zapata Corp v. Maldonado 430 A 2d 779 (Del Sup 1979) is a US corporate law case, concerning the derivative suits in Delaware.
There was suspicion about whether a special litigation committee appointed by the board, which then dismissed the validity of a claim, was independent. The Zapata Corp was founded by George H. W. Bush.
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The Delaware Supreme Court held that a "special litigation committee" would not automatically be regarded as independent. However in this case the board could not be sued for breach of fiduciary duty, and on the facts the committee was competent to reject the demand for a derivative suit, despite being appointed by the board.
Where a derivative suit cannot be brought without prior demand upon the directors followed by refusal, the directors' decision will stand absent a demonstration of self-interest or bad faith; but where such a demand is excused (for reasons of futility, etc.) and a derivative action is properly brought, an independent committee of directors may obtain a dismissal only if the trial court finds both (a) that the committee was independent, acted in good faith and made a reasonable investigation; and (b) that in the court's independent business judgment as to the corporation's best interest, the action should be dismissed.
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A class action, also known as a class action lawsuit, class suit, or representative action, is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member or members of that group. The class action originated in the United States and is still predominantly an American phenomenon, but Canada, as well as several European countries with civil law, have made changes in recent years to allow consumer organizations to bring claims on behalf of consumers.
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A shareholder derivative suit is a lawsuit brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director. Shareholder derivative suits are unique because under traditional corporate law, management is responsible for bringing and defending the corporation against suit. Shareholder derivative suits permit a shareholder to initiate a suit when management has failed to do so. To enable a diversity of management approaches to risks and reinforce the most common forms of corporate rules with a high degree of permissible management power, many jurisdictions have implemented minimum thresholds and grounds to such suits.
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