Stegall v. Ladner’s Empirical Analysis

Citation profile

4 federal appellate · 4 district · 3 state decisions

Most-quoted passages

The sentences later courts lift from this opinion, ranked by how many decisions quote each — the parts of the opinion doing the work. These counts are smaller than the citation total above because most of the 18 citing decisions cite the case generally; a passage count includes only decisions quoting that exact language verbatim.

1. “[W]hat differentiates a direct from a derivative suit is neither the nature of the damages that result from the defendant’s alleged conduct, nor the identity of the party who sustained the brunt of the damages, but rather the source of the claim of right itself. If the right flows from the breach of a duty owed by the defendants to the corporation, the harm to the investor flows through the corporation, and a suit brought by the shareholder to redress the harm is one “derivative” of the right retained by the corporation. If the right flows from the breach of a duty owed directly to the plaintiff independent of the plaintiffs status as a shareholder, investor, or creditor of the corporation, the suit is “direct.””

   2 later decisions quote this exact passage · from the majority
   e.g. Halebian v. Berv · PARAMETRIC SOUND CORP. VS. DIST. CT. (RAKAUSKAS)

2. “There is no precise parallel to the described arrangement in the corporate world, but the closest analogy still seems to be that of separate subsidiaries (the various mutual funds) that share a common parent (the Massachusetts business trust). What controls over the other factors identified in counsel’s submission is the total separateness of the beneficial interest in the funds, with Williams being a shareholder in only two of them. Williams’ small holdings in those two funds provide no justification for using them as a springboard for him to act on behalf of the umbrella Massachusetts trust-indeed, any allegation of Williams’ ownership interest in that entity is conspicuously absent from the Derivative Complaint. As for the other One Group Funds, any notion of Williams being able to bootstrap upstream to the business trust and thence downstream to the other separate funds clearly has nothing at all to commend it. Accordingly, any purported derivative action ‘on behalf of the One Group Investment Trust and each of the One Group Funds,’ asserted in the Derivative Complaint’s opening paragraph, is rejected. Id. (emphasis in original).”

   1 later decision quote this exact passage · from the majority
   e.g. In Re Mutual Funds Investment Litigation

3. “In short, the pooling of resources, collective assets, expenses, and management to a great extent restrict the duties owed to individual investors. That defendants do not owe a duty directly to plaintiff in this setting is not the same as saying that no duties to individual investors are owed. In the context of the mutual fund, at least so far as decisions affecting all shareholders in the same way are concerned, managers owe a duty to the fund itself. Plaintiff enjoys the benefits of that duty, but does so derivatively. Consequently, he is empowered to enforce that duty, but must do so on behalf of the fund after providing the fund an opportunity to take action on its own behalf. Stegall, 394 F.Supp.2d at 366 (emphasis added).”

   1 later decision quote this exact passage · from the majority
   e.g. Northstar Financial Advisors, Inc. v. Schwab Investments