In re Par Pharmaceutical Inc. Derivative Litigation

750 F. Supp. 641 (1990)

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In re Par Pharmaceutical Inc. Derivative Litigation

United States District Court for the Southern District of New York
750 F. Supp. 641 (1990)

SC

Facts

Shareholders (plaintiffs) of Par Pharmaceutical Inc. (Par) (defendant) brought a shareholder derivative action against Par. Par’s board of directors appointed a special litigation committee (SLC) to investigate the claims. The SLC had the authority to make a recommendation to the board of directors on a course of action, subject to the board’s vote. The SLC recommended that the board pursue dismissal of the derivative action. The board voted and approved the recommendation. The shareholders argued that the board’s decision to seek dismissal was not entitled to deference under the business-judgment rule because four of the board members who voted to approve the SLC’s recommendation were defendants in the derivative action.

Rule of Law

Issue

Holding and Reasoning (Patterson, J.)

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