California federal court dismisses shareholder derivative action brought against Bermuda company

On 16 August 2016, the United States District Court for the Northern District of California dismissed a purported shareholder derivative lawsuit brought by Saratoga Advantage Trust Technology & Communications against a Bermuda company, Marvell Technology Group, Ltd., and certain current and former Marvell directors and officers.

In his judgment, however, District Judge Ronald Whyte gave the Plaintiff leave to amend its current pleading, should it apply to do so (within 30 days).

In dismissing the Plaintiff’s complaint, the Judge applied Bermuda law to the shareholder derivative complaint being¬†asserted by the Plaintiff, pursuant to the ‘internal affairs’ doctrine. The Judge applied the rule in Foss v Harbottle, and he concluded that none of the exceptions to the rule applied in the circumstances of the case, based on the facts pleaded in the current version of the Complaint.

He noted, however, that “Because “plaintiff could conceivably allege additional facts plausibly establishing that their derivative claims satisfy one of the exceptions to the rule in Foss,” the court permits plaintiff leave to amend“.

 

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