Keller v. Estate of Edward Stephen McRedmond

At issue in this case was the standard for determining whether a shareholder’s claim is a direct claim or a derivative claim. This case arose from a dispute among siblings who were shareholders in a closely-held family corporation. The conflict resulted in dissolution of the original family corporation, the formation of two new corporations, and a lawsuit. In the suit, one group of shareholder siblings asserted claims against the other group of shareholder siblings. The trial court awarded damages to the plaintiff shareholder siblings. The court of appeals reversed, concluding that the plaintiff shareholder siblings did not have standing because their claims were derivative in nature and belonged to their new corporation. The Supreme Court affirmed in part and reversed in part, holding (1) the traditional approach for determining whether a shareholder claim is direct or derivative described in Hadden v. City of Gatlinburg is hereby set aside; (2) the framework set forth by the Delaware Supreme Court in Tooley v. Donaldson, Lufkin & Jenrette, Inc. is hereby adopted; and (3) under the Tooley framework, the plaintiffs lacked standing to assert some claims but had standing as to other claims. View "Keller v. Estate of Edward Stephen McRedmond" on Justia Law