While not occurring here in Georgia, a recent federal court ruling dismissing a shareholder derivative action in California is a prime example of the extreme importance of the procedural demands placed on the plaintiffs in a derivative claim. As a shareholder plaintiff, satisfying these procedural steps is essential to getting your case to trial. On the flip side, these requirements can be the keys to a successful dismissal motion if you’re the board of directors. Either way, having an experienced Atlanta derivative action lawyer is crucial to success.
To understand the lawsuit from California, one must know the background. In 2021, the State of California took legal action against a well-known Santa Monica-based video game publishing and development company. According to the state, the company fostered a “frat boy culture” that led to rampant sexual harassment, gender discrimination (in the form of unequal pay and promotions,) and retaliation.
According to some shareholders, the 2021 legal action was the culmination of a state investigation that dated back to 2018. Allegedly, despite its knowledge of the state’s investigation, the company’s board of directors failed to take appropriate corrective steps to stop the company’s discriminatory practices.