Sonnenschein Successfully Represents Director in Ninth Circuit Stock Options Backdating Appeal
On January 23, 2009, the U.S. Court of Appeals for the Ninth Circuit upheld the dismissal with prejudice of a shareholder derivative action involving allegations of stock options backdating against current and former officers and directors of Computer Sciences Corporation ("CSC").
In Laborers Int'l Union of North America v. Irving W. Bailey, et al., No. 07-56461, the Ninth Circuit, in one of the first federal appellate decisions to address the issue in the context of stock options backdating allegations, agreed with the District Court that the plaintiffs had failed to plead with sufficient particularity, pursuant to Federal Rule of Civil Procedure 23.1, that it would have been futile to make a demand on CSC's board of directors. Specifically, the Ninth Circuit held that the plaintiffs had failed to plead with sufficient particularity that the option grants were approved by or reasonably attributable to a majority of the CSC board members and that plaintiffs' amended complaint lacked particularized allegations raising a reasonable doubt that, as of the time the original complaint was filed, a majority of CSC's board "could have properly exercised its independent and disinterested business judgment in responding to the demand."
Sonnenschein attorneys Robert Scoular and David Alverson represented former director Thomas McDonnell in the Ninth Circuit appeal, working in cooperation with attorneys for the other officer/director defendants.
