In a decision that has broad implications for shareholders, the U.S. Court of Appeals for the Ninth Circuit sided with the Gap, Inc., potentially making it easier for corporations to eliminate certain kinds of lawsuits. The Court said that a Gap, Inc. corporate bylaw that effectively killed an investor suit by sending it to an impermissible court is valid. The opinion cited the work of Professor Verity Winship (on p. 10), "Shareholder Litigation by Contract," which was originally published in Boston University Law Review.
Winship also spoke to Bloomberg Law about the decision. An excerpt from that piece is below:
There may be cases where shareholder attorneys will think it’s worth the time and effort to bring a direct claim for an individual shareholder who alleges being harmed by the company, said Verity Winship, a professor at the University of Illinois Urbana-Champaign College of Law.
But one shareholder’s claim often isn’t worth it. And with conflicting appeals court rulings, a shareholder attorney probably starts thinking, “I also am looking at other categories of suits, or I’m bringing them in the Seventh Circuit for now,” Winship said.
Read the full article at bloomberglaw.com.
Read the full 9th Circuit opinion.