Chevron Corporation obtains dismissal in shareholder derivative action, and successfully defends dismissal of appeal
Clients Chevron Corporation
Jones Day represented nominal defendant Chevron Corporation in a shareholder derivative action. The plaintiff sued current and former members of Chevron's Board of Directors for breach of fiduciary duty and corporate waste, contending that the Board had failed to exercise oversight of a subsidiary company's alleged payment of illegal surcharges to Saddam Hussein as part of the United Nations Oil For Food program, and had wasted corporate assets by allowing governmental agency investigations into these allegations to be settled. Although initially alleging that demand on the Board would be a futile act, plaintiff stipulated to treat its suit as a demand upon the Board. In response, the Board established a special committee to investigate the allegations, which investigated the claims and ultimately decided it was not in the company's best interest to pursue them. The court granted Chevron's motion for judgment on the pleadings, denying plaintiff discovery, and determining under Delaware law that the plaintiff had failed to show that the special committee failed to act independently, reasonably and in good faith. Plaintiff appealed, and the Court of Appeal unanimously affirmed the decision of the Superior Court.
Lawrence Bezirdjian, IRA v. O'Reilly, No. C07-01144 (Contra Costa County Superior Court), aff'd, No. A124859 (Cal. Ct. App. Mar. 20, 2010)