Mass. High Court Clears Derivative Dismissal Rule

Law360, New York (August 24, 2010, 5:11 PM EDT) -- Massachusetts' highest court has ruled that under state law, the business judgment rule can be applied to a derivative complaint that is filed in a timely manner but is filed before a corporation's rejection of the demand that serves as the basis for the suit.

In response to a certified question from a federal appeals court, a full panel of the Supreme Judicial Court of Massachusetts ruled Monday that a derivative action must be dismissed following a corporation's independent “business judgment” determination that maintenance of the...
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