Grosset v. Wenaas, et al.

Case Updates

The California Supreme Court made clear that plaintiffs who file shareholder derivative actions must remain shareholders during the pendency of the litigation, a doctrine known as the continuous shareholder doctrine.

Encouraging the California Supreme Court to reaffirm the internal affairs doctrine, NCLC filed a brief explaining that multistate corporations require clarity as to which law will govern the relationships between the corporate entity and its officers and directors. Relying on California law, a former shareholder filed a derivative action against officers and directors of a Delaware corporation. In itsbrief, NCLC underscored that the internal affairs doctrine (which looks to the state of incorporation for the substantive law governing a dispute) gives effect to the choices made by both the corporation in its choice of location for incorporation and the state of incorporation in its decisions about the content of its law.