The Appellate Division, First Department of the New York Supreme Court recently adopted a test from the Delaware Supreme Court to determine whether a claim is direct or derivative. Prior to deciding the case Yudell v. Gilbert, New York courts lacked a clear approach for assessing when a claim was direct or derivative in nature, and employed a case-by-case analysis that was not always predictable. The distinction is important because derivative claims require additional action before a party can bring such claims, such as a prior demand requirement, and allow for broader defenses including the business judgment rule.
Click here to download PDF.
This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2012 White & Case LLP