Eccles v. Shamrock Capital Advisors, LLC

FanDuel Ltd. was a Scottish corporation that facilitated fantasy-sports betting. Its articles identified the UK Companies Act as its governing law. After FanDuel expanded into the American market, it established its headquarters in New York. However, FanDuel maintained offices in Scotland. Also, only 10 to 15 percent of FanDuel’s revenue came from New York residents. FanDuel eventually merged with Paddy Power Betfair plc (Paddy). The way FanDuel’s directors (defendants) valued FanDuel’s assets, the proceeds from the merger provided a return only to FanDuel’s preferred shareholders. FanDuel’s common shareholders received nothing. One hundred of the common shareholders and the founding members of FanDuel (collectively, the common shareholders) (plaintiffs), some of whom lived in Scotland, sued FanDuel’s directors in New York state court. They argued that the directors were liable under New York law because they breached fiduciary duties owed to shareholders. The directors moved to dismiss the suit, arguing, among other things, that under the internal-affairs doctrine, Scots law, the law of the place of FanDuel’s incorporation, governed the dispute. The directors claimed that the common shareholders did not have a viable claim under Scots law. The trial court held that New York law governed. The state appeals court reversed, holding that Scots law governed and that the common shareholders had not asserted a viable cause of action under Scots law. The common shareholders appealed to the New York Court of Appeals, the state’s highest court.