KeyCorp obtains dismissal of shareholder derivative complaint
On November 29, 2011, the U.S. District Court for the Northern District of Ohio dismissed a shareholder derivative action against certain current and former officers and directors of KeyCorp, relating to liabilities the company incurred as a result of litigation with the IRS regarding cross-border leveraged-lease transactions. (Monday et al. v. Meyer et al., No. 1:10-cv-01838-DCN (N.D. Ohio).) The complaint alleged that the defendants violated their fiduciary duties by failing to disclose or account for tax liabilities relating to those transactions, and by granting excessive compensation packages for KeyCorp's executives. It also alleged that the defendants violated fiduciary duties and the federal securities laws by authorizing a buyback of the company's stock at a supposedly "artificially inflated" price.
The defendants moved to dismiss the complaint on the ground that the plaintiffs had not made a pre-suit demand on the company's board of directors, and had failed to show that a demand would have been futile. The defendants also argued that several of the plaintiffs' claims were barred by the applicable statute of limitations. The court agreed, granting the motion and dismissing the complaint.
Monday, et al. v. Meyer, et al., No. 1:10-cv-01838-DCN, 2011 U.S. Dist. LEXIS 136858 (N.D. Ohio)