Delaware Business Litigation Report

Court Of Chancery Closes The Door Left Open By Pyott And Applies Preclusion To Derivative Suit

In re Wal-Mart Stores Inc. Delaware Derivative Litigation, C.A. 7455-CB (May 13, 2016)

Delaware does hold that the dismissal of a derivative suit in another jurisdiction may preclude the prosecution of a similar derivative suit in Delaware. However, the Pyott decision left open the question of whether the failure of the plaintiff in the dismissed suit to have first sought production of the company’s records to strengthen the complaint might be deemed so “grossly deficient” as to warrant denying preclusion of the second suit that did seek those records. This decision answers that question by holding that the failure to seek corporate records alone is not so bad that preclusion should be denied. An appeal is sure to follow.

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