Elliot v. Ward (In re Sandridge Energy, Inc. Shareholder Derivative Litigation)

Case Type:
Business
Case Status:
Affirmed
Citation:
16-6014 (10th Circuit, Nov 17,2017) Published
Tag(s):
Ruling:
The plaintiff in a state-court shareholder derivative suit was not entitled to additional discovery because his claims, other than for attorney's fees, had been mooted by confirmation of a Chapter 11 plan for the subject corporation that included the corporate debtor's release of claims, including derivative claims, against former directors and officers. Further, the plaintiff was not entitled to attorney's fees because his actions did not contribute to the negotiation of a settlement and he conferred no substantial benefit to the corporate debtor or its shareholders [sic].
Procedural context:
The appellant appealed a federal district court's order denying appellant's motion for additional discovery relating to whether he had substantially contributed to a settlement reached in federal court shareholder derivative litigation (the appellant was the plaintiff in parallel state court shareholder derivative litigation). Following the appeal, the subject corporation filed bankruptcy. A Chapter 11 plan that released claims -- including derivative claims -- against former officers and directors was confirmed. The debtor corporation filed a motion with the Court of Appeals to dismiss the appeal as moot, and the appellant objected.
Facts:
The appellant was plaintiff in state-court shareholder derivative litigation. The state court litigation was stayed to allow a prior federal court shareholder derivative suit to proceed. The federal District Court granted preliminary approval of a partial settlement of the federal action. The appellant objected, and filed a contingent motion for attorney's fees and a request for additional settlement-related discovery. The District Court denied the appellant's motion and denied the appellant's request for attorney's fees. The appellant then appealed to the Court of Appeals. The subject corporation then filed a Chapter 11 bankruptcy case. In the case, the bankruptcy court confirmed a plan that included the release of the corporation's former officers and directors from claims, including derivative claims. The subject corporation then filed a motion with the Court of Appeals to dismiss the appellant's appeal as moot.
Judge(s):
KELLY, MURPHY, MORITZ

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