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A Most Adequate Response To Excessive Shareholder Litigation, Lawrence A. Hamermesh

Hofstra Law Review

Although Delaware statutes as recently amended prohibit charter and bylaw provisions that would shift fees to stockholders in litigation involving the corporation’s internal affairs, those statutes leave open the possibility that charter and bylaw provisions may regulate other aspects of such stockholder litigation, in addition to choice of forum. This article suggests that the enforceability of such provisions should depend on their tendency to deter or eliminate meritless litigation while not unduly deterring meritorious litigation. The article examines a bylaw under which a stockholder claim would be dismissed if a committee chosen by the largest stockholders affirmatively supported such dismissal. …