Hi kids, the bunker has decided to grace us this week with a fairly scholarly opinion on shareholder derivative/individual suits, in addition to the usual mix of PCAs and obscure reversals in part that require you to piece together several opinions to understand what actually happened:
Popkin v. Scharlin:
Q: How many trial judges does it take to issue a costs order?
A: A bunch (see footnotes 3 and 5).
Dinuro v. Camacho:
This is the scholarly opinion looking at when shareholders can sue individually in the closely-held context:
Florida law, as it currently stands, embraces none of these tests individually, but utilizes all three to determine whether an action can be brought directly. As the Florida Supreme Court has not established a rule on this issue, a determination of the current standard requires the synthesis of nearly fifty years of case law developed in the Florida Courts of Appeal.Here is where Judge Rothenberg winds up:
In short, the current Florida doctrine explaining which actions should be maintained directly and which must be brought derivatively is incredibly opaque, the application often varying from case to case depending on the facts. In our view, the only way to reconcile nearly fifty years of apparently divergent case law on this point is by holding that an action may be brought directly only if (1) there is a direct harm to the shareholder or member such that the alleged injury does not flow subsequently from an initial harm to the company and (2) there is a special injury to the shareholder or member that is separate and distinct from those sustained by the other shareholders or members.Perhaps a tad restrictive, but a nuanced and well-reasoned opinion.