Brophy v. Cities Service Co.

5 Citing briefs

  1. Martinez v. Toll et al

    MOTION to Dismiss the Consolidated Verified Shareholder Derivative Complaint

    Filed December 14, 2009

    III. THE OUTSIDE DIRECTORS DO NOT FACE A SUBSTANTIAL LIKELIHOOD OF LIABILITY ON PLAINTIFFS’ CLAIM FOR INSIDER TRADING UNDER COUNT II Plaintiffs have failed to plead particularized facts demonstrating that demand is excused on their claims for insider trading (Count II). Delaware courts have permitted state law claims for disgorgement of profits for insider trading under Brophy v. Cities Serv. Co., 70 A.2d 5 (Del. Ch. 1949). To recover under Brophy, Case 2:09-cv-00937-CDJ Document 29 Filed 12/14/2009 Page 25 of 45 17 plaintiffs ultimately must show that “1) the corporate fiduciary possessed material, nonpublic company information; and 2) the corporate fiduciary used that information improperly by making trades because she was motivated, in whole or in part, by the substance of that information.”

  2. Louisiana Sheriffs' Pension and Relief Fund, et al. v. Merrill Lynch & Co.

    MEMORANDUM OF LAW in Support re:

    Filed July 21, 2008

    B. The Complaint Does Not State A Claim For Breach Of Fiduciary Duty Based On Alleged Misappropriation Of Information And Insider Stock Sales To properly plead a breach of fiduciary duty claim based on allegations of insider trading, a complaint must allege facts demonstrating that a defendant traded company stock when he or she possessed material, non-public information. See Brophy v. Cities Serv. Co., 70 A.2d 5, 8 (Del. Ch. 1949) (“When, therefore, a person ‘in a confidential or fiduciary position, in breach of his duty, uses his knowledge to make a profit for himself, he is accountable for such profit’”) (citation omitted); In re Oracle Corp. Deriv. Litig., 867 A.2d 904, 934 (Del. Ch. 2004) Case 1:07-cv-09633-LBS-DFE Document 73 Filed 07/21/2008 Page 53 of 63 43 (a plaintiff seeking to prevail on a Brophy claim ultimately must show that the corporate fiduciary possessed material, nonpublic company information and used that information improperly by making trades in company stock), aff’d, 872 A.2d 960 (Del. 2005).

  3. Arthur v. O'Neal et al

    MEMORANDUM OF LAW in Support re:

    Filed July 21, 2008

    B. The Complaint Does Not State A Claim For Breach Of Fiduciary Duty Based On Alleged Misappropriation Of Information And Insider Stock Sales To properly plead a breach of fiduciary duty claim based on allegations of insider trading, a complaint must allege facts demonstrating that a defendant traded company stock when he or she possessed material, non-public information. See Brophy v. Cities Serv. Co., 70 A.2d 5, 8 (Del. Ch. 1949) (“When, therefore, a person ‘in a confidential or fiduciary position, in breach of his duty, uses his knowledge to make a profit for himself, he is accountable for such profit’”) (citation omitted); In re Oracle Corp. Deriv. Litig., 867 A.2d 904, 934 (Del. Ch. 2004) Case 1:07-cv-09696-LBS-DFE Document 25 Filed 07/21/2008 Page 53 of 63 43 (a plaintiff seeking to prevail on a Brophy claim ultimately must show that the corporate fiduciary possessed material, nonpublic company information and used that information improperly by making trades in company stock), aff’d, 872 A.2d 960 (Del. 2005).

  4. Louisiana Sheriffs' Pension and Relief Fund, et al. v. Merrill Lynch & Co.

    MEMORANDUM OF LAW in Support re:

    Filed September 21, 2009

    First, as demonstrated in the next section below, the Complaint does not contain any well pled facts sufficient to meet Plaintiff’s minimum pleading burden under Bell Atlantic v. Twombly, 550 U.S. 544 (2007). Second, Article XIII of Merrill’s Restated Certificate of Incorporation, enacted pursuant to Section 102(b)(7) of the Delaware General Corporation Law, fully exculpated Mr. O’Neal as a 14 In 1949, in Brophy v. Cities Service Co., 70 A.2d 5 (Del. Ch. 1949), the Delaware Court of Chancery recognized a common law cause of action for insider trading, even in the absence of damage to the corporation. In the years since, most states have rejected a common law corporate cause of action against directors and officers for insider trading.

  5. Louisiana Municipal Police Employees Retirement System v. Mack et al

    MEMORANDUM OF LAW in Opposition re:

    Filed April 20, 2009

    Under Delaware law, “directors who misuse company information to profit at the expense of innocent buyers of their stock should disgorge their profits.” Guttman v. Jen-Hsun Huang, 823 A.2d 492, 505 (Del. Ch. 2003) (citing Brophy v. Cities Serv., Inc., 70 A.2d 5, 8 (Del. Ch. 1949)). A breach of fiduciary duty claim premised on insider trading, also known as a Brophy claim, arises where “1) the corporate fiduciary possessed material, nonpublic company information; and 2) the corporate fiduciary used that information improperly by making trades because she was motivated, in whole or in part, by the substance of that information.”