Citation(s) 692 F 2d 880 (1982) | Location Delaware, United States | |
Court Delaware Court of Chancery Similar Zapata Corp v Maldonado, In re Caremark Internatio, Dodge v Ford Motor Co | ||
Joy v North, 692 F2d 880 (1982) is a US corporate law case, concerning the rules for bringing a derivative suit in Delaware law.
Contents
Facts
Doris Joy was a minority shareholder in Citytrust, Inc and Nelson North was the CEO. Doris complained that Nelson had given a loan to Katz Corp, without considering the merits of the deal, because Katz Corp employed Nelson’s son. Citytrust, Inc established a ‘Special Litigation Committee’ of two independent directors, which concluded that the litigation should be discontinued in respect of most of the board members.
Judgment
Justice Winter held that the litigation was warranted. If the case appears to be worth a substantial amount in relation to equity, the case should continue. If not it must consider further business factors.
Justice Jackson said derivative suits are a ‘remedy born of stockholder helplessness,’ such helplessness resulting from the fact that stockholders were ‘numerous and scattered’ and held but ‘small interests’.
Justice Caramone, dissenting, disapproved of the method. He said future attorney fees and litigation expenses, corporate goodwill and corporate morale cannot be determined.