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.
JPMorgan Directors and Officers Win Dismissal of Shareholder Derivative Lawsuit
- Client News
- January 12, 2024
Practices
Paul, Weiss, alongside WilmerHale, secured the dismissal of a shareholder derivative lawsuit against our clients, directors and officers of JPMorgan Chase & Co., in connection with the bank’s prior relationship with former client Jeffrey Epstein.
The U.S. District Court for the Southern District of New York granted with prejudice our motion to dismiss the plaintiffs’ claims alleging that our clients and the other defendants had breached their fiduciary duties. The bank’s relationship with Epstein previously led to JPMorgan’s settlement of two cases—one with a class of Epstein victims and another with the U.S. Virgin Islands—in which JPMorgan agreed to pay a total of $365 million.
Paul, Weiss moved to dismiss the case in July 2023, asserting that the plaintiffs’ amended complaint failed to state a claim and that the plaintiffs failed to allege they were excused from making a pre-suit demand on JPMorgan’s board of directors. In August, U.S. District Judge Jed Rakoff issued a brief order granting the motion to dismiss, because the plaintiffs failed to adequately allege that a pre-suit demand on the board would have been futile, while noting that the court did not reach the issue of whether the plaintiffs adequately stated a claim.
On January 12, the judge issued a full opinion and order, explaining that pre-suit demand was not excused because the plaintiffs failed to allege that eight of the 12 directors on whom demand would have been served were conflicted. The plaintiffs conceded that certain of the current directors were disinterested, but focused on directors who had served on JPMorgan’s board in the years immediately following Epstein’s account closures, while government investigations that included suspicious activity reporting policies were conducted; and other directors who purportedly lacked independence from allegedly conflicted directors. The court rejected these allegations as insufficient, finding that the plaintiffs had failed to plead that these board members had become aware of red flags of wrongful conduct or otherwise faced disabling conflicts from business relationships with other board members.
The Paul, Weiss team includes litigation partners Audra Soloway and Jessica Carey, and counsel Jacobus Schutte.