Law Commons^™

Investing In Corporate Procedure, Jessica M. Erickson

Law Faculty Publications

Corporate litigation is in crisis. At the state level, shareholder lawsuits challenging mergers and other corporate decisions are ubiquitous but rarely end with meaningful relief for shareholders. At the federal level, securities class actions are rife with ethical challenges and low-value settlements. Over the last several decades, multiple groups — including judges, legislatures, and corporate boards — have tried to solve this problem, but all have come up short. This Article argues that the solution lies in rewriting the procedural rules that govern corporate lawsuits. New standing requirements would lead to better screening of these claims. Discovery limits and heightened …

The Gatekeepers Of Shareholder Litigation, Jessica Erickson

Law Faculty Publications

Concerns over agency costs dominate corporate law. The central challenge is ensuring that directors act in the corporation's best interests, rather than their own best interests. Shareholder litigation is a key tool in controlling these agency costs. If directors cross the line, the law provides an array of litigation options that shareholders can use to hold directors accountable. Shareholders can file securities class actions if directors lie to them. They can file shareholder derivative suits if directors engage in egregious misconduct. And they can file lawsuits under both state and federal law if directors try to sell the company at …

Piling On? An Empirical Study Of Parallel Derivative Suits, Jessica Erickson

Law Faculty Publications

Using a sample of all companies named as defendants in securities class actions between July 1, 2005 and December 31, 2008, we study parallel suits relying on state corporate law arising out of the same allegations as the securities class actions. We test several ways that parallel suits may add value to a securities class action. Most parallel suits target cases involving obvious indicia of wrongdoing. Moreover, we find that although a modest percentage of parallel suits are filed first, over 80 percent are filed after a securities class action (termed “follow-on” parallel suits). We find that parallel suits and, …

Securities Class Actions As Pragmatic Ex Post Regulation, Elizabeth Chamblee Burch

Scholarly Works

Securities class actions are on the chopping block-again. Traditional commentators continue to view class actions with suspicion; they see class suits as nonmeritorious byproducts of self-interest and the attorneys who bring them as rent-seekers. Their conventional approach has popularized securities class actions' negative effects. High-profile commissions capitalizing on this rhetoric, such as the Committee on Capital Markets Regulation, have recently recommended eliminating or severely curtailing securities class actions. But this approach misses the point: in the ongoing push and pull of securities regulation, corporations are winning the battle.

Thus, understanding the full picture and texture of securities class actions necessitates …

Corporate Misconduct And The Perfect Storm Of Shareholder Litigation, Jessica M. Erickson

Law Faculty Publications

When it comes to combating corporate misconduct, is more litigation necessarily better? The conventional wisdom is that we should deploy every weapon in the law's arsenal to combat corporate misconduct. This wisdom, however, reflects legal scholarship that is confined to analyzing securities class actions and derivative suits in isolation, with little inquiry into the interplay between them. By Jailing to take a broader view of shareholder litigation, legal scholars have missed an opportunity to provide courts with the conceptual tools necessary to meet the complex challenges of complex corporate litigation. In courtrooms and boardrooms across the country, a debate is …

Shareholder Litigation: The Accidental Elegance Of Aronson V. Lewis, David A. Skeel Jr.

All Faculty Scholarship

Unlike many key corporate law decisions, the 1984 Delaware Supreme Court decision in Aronson v. Lewis was not heralded by stories in the Wall Street Journal and New York Times, nor in any other newspaper of note. Even now, few people other than corporate law experts are likely to recognize the name. Yet Aronson plays a pivotal role in many corporate law decisions that do get a lot more attention. Aronson established the parameters for filing derivative litigation against the directors of a corporation (or a third party, but derivative suits against third parties are now rare). A shareholder …