Nevada Supreme Court Affirms Choice Of New York Over Delaware

• Published date: 19 September 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Allen Matkins Leck Gamble Mallory & Natsis LLP
• Author: Mr Keith P. Bishop

Five years ago, I noted that the Nevada Supreme Court had adopted New York's more deferential approach for assessing special litigation qualifications in Auerbach v. Bennett, 393 N.E.2d 994 (N.Y. 1979) over that of the Delaware Supreme Court in Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981). In re DISH Network Derivative Litigation, 133 Nev. 438, 442-43, 401 P.3d 1081, 1087-88 (2017). Under Auerbach, a shareholder is not be permitted to proceed with derivative litigation after an special litigation committee requests dismissal, unless and until the district court determines at an evidentiary hearing that the committee lacked independence or failed to conduct a thorough investigation in good faith.

In an unpublished order of affirmance issued this summer, the Nevada Supreme Court addressed the evidentiary standard to be applied to the trial court's determination. Plumbers Loc. Union No. 519 Pension Tr. Fund v. Ergen, 514 P.3d 440 (Table), 2022 WL 3150988. The Court found that the trial court had correctly applied a...