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Business divorce cases are most often litigated in state courts, and that can create difficulty for all those involved. Based on anecdotal evidence (me talking with members of the judiciary at various lawyer events), many Pennsylvania judges see only a few business-flavored cases a year and it could be several years between when they see a significant business divorce. Dockets are crowded and the businesses at the hearts of these cases tend to suffer as time passes. Many county courts use case management systems that result in different judges hearing different parts of the case, which creates a mess in a complex owner dispute.

For those reasons, we always take a hard look at whether we can get a case into federal court. Here are some things that have worked over the years and some that haven’t.

Continue Reading Getting a Business Divorce Case into Federal Court: Federal Question Strategies That Actually Work

When shareholders of a company believe the leaders of the company have breached their fiduciary duties to it, they can bring a lawsuit against those leaders in one of two ways. Shareholders can bring the suit in their own names (a direct suit), or they can bring it on behalf of the company if the company failed to bring claims against the leaders on its own (a derivative suit). If the injuries the shareholders are alleging were only suffered by the company, they cannot move forward with any direct claims.

When bringing a derivative claim in federal court, the plaintiffs must comply with Federal Rule of Civil Procedure 23.1. The rule, besides explaining what a derivative complaint must include, prevents a plaintiff from bringing a derivative lawsuit if the plaintiff “does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association.”

Continue Reading PENNSYLVANIA’S ALTERNATIVE PATH FOR MINORITY SHAREHOLDERS WHO CAN’T PASS FEDERAL RULE OF CIVIL PROCEDURE 23.1’S “ADEQUATE REPRESENTATION” TEST FOR DERIVATIVE CLAIMS

When legal disputes between owners of closely held companies turn the corner past “Let’s resolve this issue without litigation” and head toward “See you in court,” the owners and their lawyers typically begin jockeying for the upper hand in a potential lawsuit. The most effective way to grab the upper hand is to be the…