From our private database of 35,600+ case briefs...
Patrick v. Alacer Corp.
California Court of Appeal
84 Cal. Rptr. 3d 642, 167 Cal. App. 4th 995 (2008)
Ymelda T. Patrick (plaintiff), a stockholder of Alacer Corporation (defendant) (Alacer), filed a shareholder derivative action in superior court against Ronald J. Patrick, James Turner, and Thaddeus Smith (collectively, the directors) (defendants), who were directors of Alacer, for breach of fiduciary duty and mismanagement. Alacer filed a demurrer to dismiss Patrick’s complaint on the ground that the derivative claim was meritless. The directors filed a demurrer to Patrick’s complaint on the same ground. The superior court entered a judgment of dismissal in favor of Alacer. Patrick appealed, arguing that a corporation such as Alacer cannot defend itself in a derivative action. On appeal to the court of appeals, Alacer relied on caselaw raising the exception that corporations may defend against derivative actions if the suit threatens the corporation. However, Alacer did not assert a basis for invoking this exception. Alacer argued a hypothetical concern about requiring a corporation to sit idly by while a shareholder pursues a meritless derivative claim. However, Alacer could not demonstrate the harm that would incur from the hypothetical concern. If Alacer opposed the derivative action, the disinterested directors could assert the special litigation committee defense, and if the defense were not asserted, Alacer could sit idly by with no substantial harm to Alacer and await an outcome in the derivative action.
Rule of Law
Holding and Reasoning (Ikola, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 618,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 618,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 35,600 briefs, keyed to 984 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.