New York Corporate Litigation when Shareholders Sue

When you, as a New York company, face a lawsuit from your shareholders, you want a law firm with a deep understanding of business law and the court system. And a law firm who is proficient in the complexities of Pennsylvania, New Jersey and New York corporate litigation. Seeger Weiss, New York corporate litigation attorneys have represented a diverse range of companies in these jurisdictions and others across the United States.

In many jurisdictions, such as New York, directors and officers of corporations can be liable to their shareholders for issuing false information, misconduct, divided loyalties and potential conflicts of interests to name a few. Under New York corporate law, directors of corporations have two basic “fiduciary” duties, the duty of care and the duty of loyalty:
  • The duty of care, which is governed by stature in most states, such as New York, usually requires the directors discharge their duties in good faith and with the care that an ordinarily prudent person in a like position would exercise under similar circumstances.
  • The duty of loyalty requires that directors act on behalf of their New York corporation and its shareholders and refrain from self-dealing, usurpation of corporate opportunity and any acts that would permit them to receive an improper personal benefit or injure their constituencies.

When Shareholders Sue

When shareholders rally and sue a corporation—as in the following examples—it requires the experience of a strong corporate litigator who is well-versed in New York corporate litigation.
  • Shareholders of biotech company, Sequenom sued the company in relation to the company’s mishandling of data surrounding its non-invasive test for fetal gene and chromosome abnormalities. The complaint alleged breach of fiduciary duties against a number of current and former officers. One executive plead guilty to issuing false claims. "Elizabeth Dragon knew the truth about Sequenom's Down syndrome test, yet she told the public it was a near-perfect success," Rosalind Tyson, director of the commission's Los Angeles office, said a statement. "Her actions misled investors with exaggerated information about a significant new product that never materialized."
  • Toyota shareholders incensed over drop in automaker’s stock price filed lawsuits recently claiming company executives deliberately misled investors and the public about the depth of accelerator problems in millions of vehicles. Lawsuits content that top Toyota executives have known for nearly a decade that faulty electronic throttle controls caused vehicles to sometimes careen wildly out of control but covered it up to protect company’s reputations for safety.
  • News Corp. shareholders sued CEO Rupert Murdoch and the company over plans to acquire a London-based television production company owned by the senior executive’s daughter.
  • H-P shareholders also recently sued the company seeking more details on the ouster of CEO Mark Hurd and his huge severance, which they claim is “corporate waste arising out of a severance agreement.”

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