June 09, 2015 Articles

Fee-Shifting after ATP Tour

Formerly a mere challenge, shareholder derivative litigation is now tantamount to climbing Everest

By George C. Aguilar and Michael J. Nicoud

In ATP Tour, Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014), the Delaware Supreme Court upheld a fee-shifting provision in a Delaware non-stock corporation's bylaws. The provision provided that plaintiffs pursuing intracorporate litigation could be held liable for the opposing party's legal fees if the litigation did not substantially achieve the desired results. Following the ATP decision, a number of publicly traded companies sought to limit shareholder derivative litigation by adopting a fee-shifting provision in their bylaws or corporate charters.

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