Seybold v. Groenink

ABN Amro Holdings, N.V. (ABN) was a Netherlands-based bank. ABN had a branch in New York, through which it conducted banking services and sold financial products. ABN was governed by a managing board and a supervisory board. The managing board was responsible for ABN’s management and business operations. The supervisory board advised and oversaw the management board. Under Dutch law, the members of ABN’s management board owed fiduciary duties to ABN but not to ABN’s shareholders. As a general matter, Dutch law did not permit shareholders to pursue derivative litigation on the company’s behalf against members of management or supervisory boards. However, Dutch law recognized special circumstances under which a shareholder was allowed to sue a company on the company’s behalf: (1) if a majority of the shareholders voted at a general meeting to give a shareholder authority to bring a derivative suit, (2) if the managing board delegated authority to a shareholder to sue on the company’s behalf, or (3) if the company’s articles of association permitted a shareholder derivative action. Beginning in 2003, federal and state regulators in the United States investigated the adequacy of ABN’s internal controls regarding compliance with federal banking and anti-money-laundering laws and whether ABN’s Dubai branch violated United States sanctions laws. Marlene Seybold (plaintiff), who owned ABN American depository receipts that were traded on an American stock exchange, brought a putative shareholder derivative suit on behalf of ABN against 18 current or former ABN directors or officers, including Rijkman Groenink (the chairman of ABN’s management board) (collectively, directors and officers) (collectively, defendants). Seybold brought her suit in federal court in New York pursuant to the court’s diversity jurisdiction. Per Seybold, the directors and officers breached their fiduciary duties or aided and abetted breaches of fiduciary duties in connection with the conduct that federal and state regulators had investigated. Seybold did not allege that any of the special circumstances under which Dutch law allowed shareholders to sue on a company’s behalf applied to her case. The directors and officers moved to dismiss Seybold’s complaint on the ground that Seybold did not have standing to pursue a derivative case on ABN’s behalf against them.