Justia Business Law Opinion Summaries

Articles Posted in Supreme Court of Nevada
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The Supreme Court issued a writ of mandamus directing the district court to vacate its order waiving the obligation of the real party in interest stockholders (RPIs) to provide consents from their stockholders of record until step four of the four-step process outlined in Nev. Rev. Stat. 92A.410-.440 and after petitioner corporation's merger vote was held, holding that the district court erred.At issue was the statutory process by which a stockholder who objects to a proposed merger may seek the fair value of the stockholder's shares from the corporation if the stockholder believes the proposed price for those shares is inadequate. In the event stockholders own their shares indirectly, the beneficial stockholders must obtain the stockholder of record's consent before dissenting from the merger. The Supreme Court held (1) Nev. Rev. Stat. 92A.400(2)(a), when read in conjunction with the four-step process outlined in sections 92A.410-.440, unambiguously requires a beneficial holder to obtain the record holder's consent at step two before the vote on the merger is held; and (2) therefore, the district court here erred in construing the statutes as permitting RPIs to submit their consents after the merger vote was taken and in waiving RPIs statutory obligation to obtain those consents. View "Aerogrow International, Inc. v. District Court" on Justia Law

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The Supreme Court denied the petition filed by NuVeda, LLC for a writ of prohibition and/or mandamus asking the Supreme Court to disqualify Judge Elizabeth Gonzalez from presiding over a contempt hearing and to order the Chief Judge of the Eighth Judicial District Court to randomly reassign that hearing to another judge, holding that NuVeda was not entitled to relief.In this business dispute, NuVeda moved for a change of judge thirty-seven days after the court set a date for a trial on NuVeda's alleged contempt. The district court denied the motion as untimely. NuVeda petitioned for extraordinary writ relief. The Supreme Court denied the relief, holding (1) motions for a change of judge under Nev. Rev. Stat. 22.030(3) must be made with reasonable promptness under the circumstances; and (2) the district court did not erroneously determine that the motion in this case was untimely. View "NuVeda, LLC v. Eighth Judicial District Court" on Justia Law

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In these consolidated appeals concerning whether shareholders had a right to dissent from a corporate merger and seek fair value for their shares the Supreme Court reversed the decision of the district court granting summary judgment in favor of Respondent, holding that Appellants had the right to obtain an appraisal of the fair value of their shares.Appellants held shares of Respondent's stock and sought to exercise dissenters' rights when Respondent commenced a corporate merger offering per-share compensation that Appellants concluded were inadequate. The district court granted summary judgment for Respondent, finding that Respondent was a covered security and thus the market-out exception applied. The Supreme Court reversed, holding that Appellants had a right to dissent from the merger and obtain an appraisal of the fair value of their shares because the Board, in its resolution, approved a right to dissent for dissenting shareholders. View "Pope Investments, LLC v. China Yida Holding, Co." on Justia Law

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The Supreme Court affirmed the judgment of the district court dismissing Appellant's shareholder complaint against Appellees, the individual directors of a corporation and its controlling stockholder, holding that Appellant failed to rebut the business judgment rule and allege particularized facts demonstrating the requisite breach of fiduciary duty.In her complaint, Appellant alleged breach of fiduciary duty and sought damages from a merger. The district court dismissed the complaint for failure to state a claim, determining that the business judgment rule applied. The Supreme Court affirmed, holding (1) Nev. Rev. Stat. 78.138 and Chur v. Eighth Judicial District Court, 458 P.3d 336 (Nev. 2020), foreclose the inherent fairness standard that previously allowed a shareholder to automatically rebut the business judgment rule and shift the burden of proof to the director; and (2) the district court properly dismissed Appellant's complaint. View "Guzman v. Johnson" on Justia Law

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In this derivative action, the Supreme Court held that a corporation, as a nominal defendant, is precluded from challenging the merits of a derivative action but may challenge a shareholder plaintiff's standing in such an action.Plaintiff filed a derivative action on behalf of a Corporation challenging conduct by the Corporation's board of directors. The district court granted partial summary judgment against certain directors and then ratified the remaining challenged board conduct. The Supreme Court reversed the summary judgments and vacated the orders denying Defendants' motions to dismiss, holding (1) this Court adopts the factors set forth in Larson v. Dumke, 900 F.2d 1363 (9th Cir. 1990), for determining whether a shareholder plaintiff in a derivative action fairly and adequately represents the interests of the shareholders under Nev. R. Civ. P. 23.1; (2) a corporate nominal defendant in a derivative action cannot challenge or defend the underlying merits of that action but may challenge a shareholder plaintiff's standing to bring a derivative suit; and (3) Plaintiff in this case lacked standing as an adequate representative of the shareholders. View "Cotter v. Kane" on Justia Law

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The Supreme Court granted the petition for writ of mandamus sought by Petitioners, holding that Petitioners were entitled to judgment as a matter of law on the complaint filed by the State Commissioner of Insurance because Nev. Rev. Stat. 78.138(7) applies to all claims of individual liability against directors and officers, precluding the imposition of liability for grossly negligent breaches of fiduciary duties.Petitioners formerly served as directors of a Nevada risk retention group. After a receivership action was filed, the district court entered a liquidation order appointing the Commissioner as receiver. As receiver, the Commissioner filed a complaint against Petitioners alleging claims of gross negligence and deepening insolvency. Petitioners filed a motion for judgment on the pleadings, arguing that gross negligence cannot support a claim for personal liability against Petitioners pursuant to section 78.138. The district court denied the motion. Petitioners petitioned the Supreme Court for a writ of mandamus. The Supreme Court granted the writ and directed the district court to grant the motion for judgment on the pleadings, holding (1) claims against individual directors and officers cannot proceed based only on allegations of gross negligence; and (2) the gross negligence-based allegations in the complaint failed to state an actionable claim under section 78.138(7). View "Chur v. Eighth Judicial District Court" on Justia Law

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At issue was when it is appropriate for the Supreme Court to exercise its discretion to grant extraordinary relief in the form of advisory mandamus.In this petition for writ of prohibition or mandamus challenging the district court’s denial of Petitioners’ motion to dismiss, Petitioners asked the Supreme Court to direct the district court to vacate and reconsider its motion without applying the doctrine of cross-jurisdictional class-action tolling to their statute of limitations defenses. The Supreme Court declined to grant relief relief because (1) the district court did not consider the statute-based argument Petitioners made to the Supreme Court due to Petitioners’ failure to cite the statute until the hearing on their motion to dismiss; (2) this court’s clarification of the law would not alter the district court’s disposition; and (3) the district court’s decision to defer final decision on Petitioners’ statute of limitations defenses pending further factual and legal development was sound and not the proper basis for extraordinary writ relief. View "Archon Corp. v. Eighth Judicial District Court" on Justia Law

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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

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This case provided the Supreme Court with the opportunity to clarify Cohen v. Mirage Resorts, Inc., 62 P.3d 720 (Nev. 2003), and distinguish between direct and derivative claims by adopting the direct harm test as articulated in Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1033 (Del. 2004), which allows a direct claim when a shareholder injury is independent from corporate injury.At issue in this case was whether shareholders lacked standing to sue a corporation and its directors because the shareholders’ claims were derivative, rather than claims asserting a direct injury. Applying Tooley’s direct harm test to the facts of this case, the Supreme Court held that the shareholders’ complaint alleged derivative dilution claims, not direct claims. The court thus instructed the district court to dismiss the complaint without prejudice to the shareholders’ ability to file an amended complaint. View "Parametric Sound Corp. v. Eighth Judicial District Court" on Justia Law

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Wynn Resorts filed a lawsuit against Kazuo Okada, a former member of the board of directors of Wynn Resorts. As part of the discovery process, Wynn Resorts noticed Okada’s deposition for over the course of ten days in Las Vegas even though Okada resides in Hong Kong and owns businesses in Tokyo, Japan. Okada filed a motion for a protective order, asserting that his deposition should presumptively be conducted in Hong Kong or in Tokyo and that the deposition should not exceed three days. The district court denied his motion. Okada filed this writ petition, contending that the district court ignored a common-law presumption that his deposition should take place where he resides that that the district court erred in departing from Nev. R. Civ. P. 30(d)(1)’s presumption that depositions should be limited to one day. The Supreme Court denied Okada’s request for writ relief, holding that the district court did not abuse its discretion in (1) rejecting Okada’s argument regarding the common-law presumption and in determining that Okada failed to demonstrate good cause for having his deposition moved to a location other than Las Vegas; and (2) departing from Rule 30(d)(1)’s presumptive one-day time frame and adopting Wynn Resorts’ ten-day proposal. View "Okada v. Eighth Judicial Dist. Court" on Justia Law