Wis. Stat. § 180.0744
Dismissal
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180.0744(1)(1) The court shall dismiss a derivative proceeding on motion by the corporation if the court finds, subject to the burden of proof assigned under sub. (5) or (6), that one of the groups specified in sub. (2) or (6) has determined, acting in good faith after conducting a reasonable inquiry upon which its conclusions are based, that maintenance of the derivative proceeding is not in the best interests of the corporation.
180.0744(2)(2) Unless a panel is appointed under sub. (6), the determination in sub. (1) shall be made by any of the following:
180.0744(2)(a)(a) A majority vote of independent directors present at a meeting of the board of directors if the independent directors constitute a quorum.
180.0744(2)(b)(b) A majority vote of a committee consisting of 2 or more independent directors appointed by majority vote of independent directors present at a meeting of the board of directors, whether or not the voting, independent directors constitute a quorum.
180.0744(3)(3) Whether a director is independent for purposes of this section may not be determined solely on the basis of any one or more of the following factors:
180.0744(3)(a)(a) The nomination or election of the director by persons who are defendants in the derivative proceeding or against whom action is demanded.
180.0744(3)(b)(b) The naming of the director as a defendant in the derivative proceeding or as a person against whom action is demanded.
180.0744(3)(c)(c) The approval by the director of the act being challenged in the derivative proceeding or demand if the act resulted in no personal benefit to the director.
180.0744(4)(4) If a derivative proceeding is commenced after a determination was made rejecting a demand by a shareholder or beneficial owner, the complaint shall allege with particularity facts establishing any of the following:
180.0744(4)(a)(a) That a majority of the board of directors did not consist of independent directors at the time that the determination was made.
180.0744(5)(5) If a majority of the board of directors did not consist of independent directors at the time that the determination rejecting a demand was made, the corporation shall have the burden of proving that the requirements of sub. (1) have been met. If a majority of the board of directors consisted of independent directors at the time that the determination was made, the shareholder or beneficial owner shall have the burden of proving that the requirements of sub. (1) have not been met.
180.0744(6)(6) Upon motion by the corporation, the court may appoint a panel of one or more independent persons to determine whether maintenance of the derivative proceeding is in the best interests of the corporation. If a panel is appointed under this subsection, the shareholder or beneficial owner shall have the burden of proving that the requirements of sub. (1) have not been met.
180.0744 AnnotationA special litigation committee formed under sub. (2) (b) shall be examined carefully by a circuit court to determine whether its members are independent. The test is whether a committee member has a relationship with a defendant or the corporation that would be reasonably expected to affect the member’s judgment with respect to litigation in issue. Einhorn v. Culea, 2000 WI 65, 235 Wis. 2d 646, 612 N.W.2d 78, 97-3592.
Notes of Decisions
Cited in 12
cases, 1999–2016 · leading case: Einhorn v. Culea
Einhorn v. Culea (2000)
“2 The circuit court concluded that the threshold for determining whether a member of the special litigation committee is independent within the meaning of Wis. Stat. § 180.0744 (1997-98) is "extremely low" and found that the special litigation committee was independent.”
Einhorn v. Culea (1999)
“Following Einhorn's amended complaint stating a derivative action, Northern Labs' board of directors was notified that, pursuant to § 180.0744, Stats., it would be voting on whether the maintenance of a derivative action was in the best interests of the corporation.”
Park Bank v. Roger E. Westburg (2013)
“0741 through Wis. Stat. § 180.0744 set out requirements that must be met in order to bring a derivative claim.”
Notz v. Everett Smith Group, Ltd. (2009)
“[6] ¶ 47 In response to Notz's demands, pursuant to Wis. Stat. § 180.0744 (2)(b), ATS convened a Special Litigation Committee to evaluate Notz's claims.”
Albert Trostel & Sons Co. v. Notz (2008)
“0744 , the corporation may create a special litigation committee consisting of two or more independent directors appointed by a majority vote of independent directors present at a meeting of the board of directors. The independent special litigation committee determines whether…”
Desaigoudar v. Meyercord (2003)
“4 ; Wis. Stat. Ann. §§ 180.0744 , 181.0744.) Our Supreme Court has not yet considered any aspect of the special litigation committee defense.”
Notz v. Everett Smith Group, Ltd. (2008)
“§ 180.0744, Trostel responded to Notz's allegations by electing three independent directors to its board.”
Finley v. Superior Court (2000)
“4; Wis. Stat. Ann. §§ 180.0744 , 181.0744.) 9 Of these, all but the Alaska and Minnesota statutes are based on section 7.”
Burgess Ex Rel. BancorpSouth, Inc. v. Patterson (2016)
“See Wis. Stat. § 180.0744 (2015). 8 . As Burgess recognizes, Mississippi Code Section 79-4-7.”
Park Bank v. Roger E. Westburg (2013)
“0741 through Wis. Stat. § 180.0744 set out requirements that must be met in order to bring a derivative claim.”
Young v. Bush (2012)
“458 (West 2011); Wis. Stat. Ann. 180.0744 (West 2011); Wyo.”
Kelleher v. Squires (2016)
“4(E); Wis.Stat. §180.0744(6). Squires made the decision to have the Corporation seek appointment of an independent panel.”
— Wis. Stat. § 180.0744(1) — 2 cases
Einhorn v. Culea (2000)
“2 The circuit court concluded that the threshold for determining whether a member of the special litigation committee is independent within the meaning of Wis. Stat. § 180.0744 (1997-98) is "extremely low" and found that the special litigation committee was independent.”
Einhorn v. Culea (1999)
“Following Einhorn's amended complaint stating a derivative action, Northern Labs' board of directors was notified that, pursuant to § 180.0744, Stats., it would be voting on whether the maintenance of a derivative action was in the best interests of the corporation.”
— Wis. Stat. § 180.0744(2)(b) — 1 case
Einhorn v. Culea (1999)
“Following Einhorn's amended complaint stating a derivative action, Northern Labs' board of directors was notified that, pursuant to § 180.0744, Stats., it would be voting on whether the maintenance of a derivative action was in the best interests of the corporation.”
— Wis. Stat. § 180.0744(3) — 2 cases
Einhorn v. Culea (2000)
“2 The circuit court concluded that the threshold for determining whether a member of the special litigation committee is independent within the meaning of Wis. Stat. § 180.0744 (1997-98) is "extremely low" and found that the special litigation committee was independent.”
Einhorn v. Culea (1999)
“Following Einhorn's amended complaint stating a derivative action, Northern Labs' board of directors was notified that, pursuant to § 180.0744, Stats., it would be voting on whether the maintenance of a derivative action was in the best interests of the corporation.”
— Wis. Stat. § 180.0744(3)(b) — 1 case
Einhorn v. Culea (2000)
“2 The circuit court concluded that the threshold for determining whether a member of the special litigation committee is independent within the meaning of Wis. Stat. § 180.0744 (1997-98) is "extremely low" and found that the special litigation committee was independent.”
— Wis. Stat. § 180.0744(4) — 1 case
Albert Trostel & Sons Co. v. Notz (2008)
“0744 , the corporation may create a special litigation committee consisting of two or more independent directors appointed by a majority vote of independent directors present at a meeting of the board of directors. The independent special litigation committee determines whether…”
— Wis. Stat. § 180.0744(6) — 2 cases
Einhorn v. Culea (1999)
“Following Einhorn's amended complaint stating a derivative action, Northern Labs' board of directors was notified that, pursuant to § 180.0744, Stats., it would be voting on whether the maintenance of a derivative action was in the best interests of the corporation.”
Kelleher v. Squires (2016)
“4(E); Wis.Stat. §180.0744(6). Squires made the decision to have the Corporation seek appointment of an independent panel.”
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