Lewis v. Shaffer Stores Co.
United States District Court for the Southern District of New York
218 F. Supp. 238 (1963)
- Written by Douglas Halasz, JD
Facts
Harry Lewis (plaintiff) filed a shareholder derivative suit against officers, directors, and a majority shareholder (collectively, corporate management) (defendants) of R.C. Williams & Company, Inc. (Williams) (defendant), which Lewis named as a nominal defendant. The lawsuit alleged, among other things, that corporate management engaged in impermissible short-swing trading. The law firm of Breed, Abbott & Morgan (the law firm), which had served as general counsel for Williams for many years, appeared as counsel for both Williams and corporate management. Accordingly, the law firm filed a joint answer on behalf of Williams and corporate management, which denied Lewis’s allegations and requested dismissal of the lawsuit. Lewis moved to strike the joint answer and asked that the district court require Williams to obtain independent counsel for the purpose of filing a separate answer that invited Lewis to prove his case and that requested Williams receive any benefits to which it was entitled. The law firm indicated that it felt an obligation to defend corporate management considering it had previously advised corporate management.
Rule of Law
Issue
Holding and Reasoning (McLean, J.)
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