Biondi v. Scrushy
Delaware Court of Chancery
820 A.2d 1148 (2003)
- Written by Sean Carroll, JD
Facts
Shareholders (plaintiffs) of Health South brought a shareholder derivative action against the board of directors of Health South, including Richard Scrushy (defendants). Health South formed a special litigation committee (SLC) to investigate the conduct alleged and to determine whether it should terminate the shareholder derivative suit. While the investigation was pending, Health South hired Fulbright & Jaworski to conduct a separate investigation. This investigation was overseen by the Health South board of directors. Fulbright & Jaworski issued its report while the SLC’s investigation was still pending. Upon release of the report, the chairman of the SLC publicly announced that the Fulbright & Jaworski report exonerated Scrushy. The SLC filed a motion to stay the shareholder derivate suit pending the results of the SLC investigation.
Rule of Law
Issue
Holding and Reasoning (Strine, J.)
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