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In re Fuqua Industries, Inc. Shareholder Litigation

Delaware Court of Chancery
752 A.2d 126 (Del. Ch. 1999)


Facts

Virginia Abrams (plaintiff) and Alan Freberg (plaintiff) were named plaintiffs in a shareholder derivative action against Fuqua Industries, Inc. (Fuqua) (defendant). Abrams had been a substantial shareholder of Fuqua for over 30 years. Abrams made her investment decisions jointly with her husband, who was a lawyer, including the decision to sue Fuqua. When she and her husband became dissatisfied with Fuqua's management, Mr. Abrams wrote letters to Fuqua's board. The letters were ignored. Abrams was ill, and her memory suffered. In a deposition, although Abrams was able to provide a general understanding of her claim, she was unable to give any details, and she was confused about the basic facts of her lawsuit. The other named plaintiff, Freberg, owned 25 Fuqua shares. Freberg's deposition testimony showed that his knowledge about the case was minimal. Contrary to Fuqua's allegations, Freberg did understand the basic nature of the derivative action and numerous other, unrelated derivative actions brought in his name. Fuqua alleged that Freberg was just a "puppet" for his lawyers. Fuqua moved to disqualify Abrams and Freberg as representative plaintiffs in this action on the ground of inadequacy.

Rule of Law

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Issue

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Holding and Reasoning (Chandler, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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