double derivative claim in Delaware

2026In Lambrecht, the Delaware Supreme Court reasoned that when a claim belongs to a wholly owned subsidiary, the first-tier corporation exercises control over the second-tier corporation and can compel the second-tier corporation to sue.31 In that setting, the justices held that the double-derivative claim “[n]ormally . . . is one that only the parent corporation, acting through its board of directors, is empowered to enforce.” 32 Therefore, the first-tier stockholder need only establish demand futility at the first- 29 6 Del. C. § 17-1001. 30 Id. 31 Lambrecht v. O’Neal, 3 A.3d 277 , 282-83 (Del.

2026In Lambrecht, the Delaware Supreme Court reasoned that when a claim belongs to a wholly owned subsidiary, the first-tier corporation exercises control over the second-tier corporation and can compel the second-tier corporation to sue.31 In that setting, the justices held that the double-derivative claim “[n]ormally . . . is one that only the parent corporation, acting through its board of directors, is empowered to enforce.” 32 Therefore, the first-tier stockholder need only establish demand futility at the first- 29 6 Del. C. § 17-1001. 30 Id. 31 Lambrecht v. O’Neal, 3 A.3d 277 , 282-83 (Del.

2026If the YWCA can meet the Double-Futility Test, then the YWCA can assert Merits Claims on the Master Fund’s behalf. 48 See Taylor v. Sturgell, 553 U.S. 880 , 893-95 (2008); Richards v. Jefferson Cty., 517 U.S. 793, 798 (1996). 49 The defendants allude to differences in tax treatment, but those differences are built into the master-feeder structure and apply at the Feeder Fund or investor level.

2014Belendiuk argues that “[i]t is questionable whether Verizon Wireless is even a necessary party to this litigation,” asserting that “it was Verizon that was the principal actor in these events.”58 But the distinction between a derivative action and a direct action, and the attendant determination of who “owns” the claim at issue, rests not on a determination of who principally was involved in the underlying conduct, but rather solely on a determination of “[w]ho suffered the alleged harm – the corporation or the suing stockholder individually – and who would receive the benefit of the recovery

2014Co. S’holders Litig., 1993 WL 179335 , at *8 (Del.Ch.1993)); Brandin v. Deason, 941 A.2d 1020 (Del.Ch.2007) ("First, Delaware law controls the entirety of Brandin’s lawsuit....

2014See, e.g., Sternberg v. O’Neil, 550 A.2d 1105 , 1124— 25 (Del.1988) ("Delaware has a legitimate interest in providing a forum for hearing and applying Delaware law to a double derivative claim related to the internal operation of a wholly owned Delaware subsidiary.”); Ryan v. Gifford, 918 A.2d 341, 349-50 (Del.Ch. 2007) ("Delaware courts have a 'significant and substantial interest in overseeing the conduct of those owing fiduciary duties to shareholders of Delaware corporations.’ This interest increases greatly in actions addressing novel issues.’’) (quoting In re Chambers Dev.

2014See, e.g., Sternberg v. O’Neil, 550 A.2d 1105 , 1124— 25 (Del.1988) ("Delaware has a legitimate interest in providing a forum for hearing and applying Delaware law to a double derivative claim related to the internal operation of a wholly owned Delaware subsidiary.”); Ryan v. Gifford, 918 A.2d 341, 349-50 (Del.Ch. 2007) ("Delaware courts have a 'significant and substantial interest in overseeing the conduct of those owing fiduciary duties to shareholders of Delaware corporations.’ This interest increases greatly in actions addressing novel issues.’’) (quoting In re Chambers Dev.

2010See Rogers v. Guaranty Trust Co., 288 U.S. 123, 130 , 53 S.Ct. 295 , 77 L.Ed. 652 (1933) ("[I]n respect of its internal affairs, [a] company [is] to be governed by the laws of the state in which it was organized.”); Draper v. Paul N. Gardner Defined Plan Trust, 625 A.2d 859, 867 (Del.1993) (same). 16 .

2010See Rogers v. Guaranty Trust Co., 288 U.S. 123, 130 , 53 S.Ct. 295 , 77 L.Ed. 652 (1933) ("[I]n respect of its internal affairs, [a] company [is] to be governed by the laws of the state in which it was organized.”); Draper v. Paul N. Gardner Defined Plan Trust, 625 A.2d 859, 867 (Del.1993) (same). 16 .

2010See Rogers v. Guaranty Trust Co., 288 U.S. 123, 130 , 53 S.Ct. 295 , 77 L.Ed. 652 (1933) ("[I]n respect of its internal affairs, [a] company [is] to be governed by the laws of the state in which it was organized.”); Draper v. Paul N. Gardner Defined Plan Trust, 625 A.2d 859, 867 (Del.1993) (same). 16 .

1988See id.; McDermott, Inc. v. Lewis, Del.Supr., 531 A.2d 206 (1987); Armstrong v. Pomerance, Del.Supr., 423 A.2d 174, 178 (1980).