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District Court Considers Status Of Disclosure Claims

In re Caterpillar Inc. Derivative Litigation, No. 12-1076-LPS-CJB (June 10, 2014)

This comprehensive decision is particularly interesting because it considers whether a disclosure claim is subject to the normal Rule 23.1 demand rules.  Normally, disclosure claims are thought of as direct claims based on the violation of the stockholder's right to cast an informed vote.  But when, as here, the plaintiff chooses to assert a derivative claim for an alleged disclosure claim, he must also meet the normal demand rules.  The plaintiff argued that there was no business judgment involved in making the disclosures at issue and, hence, the demand rules should not apply.  The federal court rejected that argument, relying largely on non-Delaware cases.

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