Sichenzia Ross Ference Kesner LLP Attorneys Harvey Kesner, Michael Ference, Sameer Rastogi, and Mendy Piekarski Prevail in Removing a Shareholder Derivative Lawsuit to Federal Court
Press Release – New York, NY – December 14, 2016 – Sichenzia Ross Ference Kesner LLP today announced that attorneys Harvey Kesner, Michael Ference, Sameer Rastogi and Mendy Piekarski prevailed in removing a shareholder derivative lawsuit to federal court.
Plaintiff derivatively sued officers and directors of a Nevada corporation for breach of fiduciary duty in Nevada State Court. SRFK, on behalf of the defendants, removed the case to federal court, which plaintiff challenged by motion to remand.
In the first such decision in the 9th Circuit, SRFK attorneys prevailed in arguing that a corporation in a shareholder derivative lawsuit—although considered a nominal defendant—can be aligned with, and effectively deemed, a plaintiff for purposes of the “forum defendant rule.” The forum defendant rule prevents a defendant from removing a case to federal court when at least one defendant is a citizen of the original forum state. The Nevada District Court ruled that a district court may realign a corporation in a shareholder derivative lawsuit with the plaintiff, even for purposes of the forum defendant rule, assuming that company management was not antagonistic to the lawsuit. The court concluded that, here, because plaintiff had failed to demonstrate that a majority of the company board was antagonistic to the lawsuit, and because the derivative lawsuit was purportedly brought on behalf of the company, the company was properly deemed a plaintiff for purposes of the forum defendant rule. Therefore, the court denied the motion to remand, and the case remains in federal court.
See Gartner v. Pyatt, No. 2:16-cv-00553-JAD-CWH, 2016 U.S. Dist. LEXIS 164281 (D. Nev. Nov. 29, 2016).
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