Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
Delaware Court of Chancery Dismisses Derivative Lawsuit Against ADT’s Directors
- Client News
- April 28, 2015
Practices
The Delaware Court of Chancery dismissed a derivative lawsuit against the directors of Paul, Weiss client The ADT Corporation, as well as Corvex Management LP, a hedge fund that previously held approximately five percent of ADT's stock, and Keith Meister, Corvex's founder and principal.
The derivative complaint alleged that, in a desire to appease Corvex and maintain their positions on the ADT board, ADT's directors breached their fiduciary duties by appointing Meister to ADT's board, engaging in a stock repurchase program similar to one that Meister had advocated, and repurchasing Corvex's ADT stock. The plaintiff alleged that demand was excused because ADT's directors had been motivated to entrench themselves in office and therefore had a self-interest in the transactions. The Court of Chancery rejected the plaintiff's claim of demand futility, ruling that the plaintiff had not adequately alleged that the directors faced an actual threat of removal by Corvex, or that entrenchment was the directors' sole or primary purpose. The Court of Chancery also ruled that the complaint did not provide a reason to doubt that the challenged transactions were a valid exercise of the ADT board's business judgment.
The Paul, Weiss team included, among others, litigation partner Daniel Kramer and counsel Robert Kravitz.