In re Dish Network Derivative Litigation

In these consolidated appeals, the Supreme Court addressed the appropriate legal standard for a district court’s consideration of a special litigation committee’s (SLC) recommendation that derivative claims should be dismissed because pursuing those claims would not be in the company’s best interest. In this case, the district court deferred to the SLC’s decision, dismissed the suit brought derivatively on behalf of DISH Network Corporation, and awarded costs to the SLC. The Supreme Court affirmed the district court’s order granting the SLC’s motion to defer and vacated the portion of the district court’s order awarding costs for teleconferences because it lacked justifying documentation, holding (1) courts should defer to the business judgment of an SLC that is empowered to determine whether pursuing a derivative suit is in the best interest of a company where the SLC is independent and conducts a good-faith, thorough investigation, see Auerbach v. Bennett 393 N.E.2d at 996 (N.Y. 1979); and (2) the district court did not abuse its discretion in determining that the SLC was independent and that the SLC conducted a good-faith and thorough investigation. View "In re Dish Network Derivative Litigation" on Justia Law