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July 22 — AbbVie Inc. investors cannot pursue claims that seek to hold Abbott Laboratories directors liable for damages that might result from a whistle-blower lawsuit, according to a July 21 Delaware Chancery Court ruling.
Vice Chancellor Sam Glasscock III refused to set aside a mutual release of liability entered into between Abbott Laboratories and its spin-off, on the grounds that the investors lacked standing to derivatively sue on behalf of AbbVie.
The release prevented the plaintiffs from derivatively suing Abbott directors for bad faith or lack of oversight in connection with the marketing of the drug Tricor, an asset transferred in the spin-off and the subject of the whistle-blower lawsuit.
Because the plaintiffs were not AbbVie shareholders at the time of the alleged wrong—the release's approval—they requested that the court find equitable standing under its ruling in Shaev v. Wyly. They claimed that an exception to Delaware's standing rule—8 Del. C. §327—was warranted to redress a wrong to AbbVie that would otherwise go unremedied if the release was approved.
However, Glasscock held that “an equitable override” of the rule was inapplicable because the plaintiffs failed to plead facts showing that AbbVie was harmed from the alleged wrongdoing.
“Even if the [whistle-blower] Action results in some kind of payout for which AbbVie is responsible because of the transfer of that liability from Abbott, there would remain a daunting leap between AbbVie's monetary liability for Abbott's off-label marketing of TriCor and Abbott directors being personally liable for bad faith or oversight in connection with that marketing,” he wrote.
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The opinion is available at http://www.bloomberglaw.com/public/document/IN_RE_ABBVIE_INC_STOCKHOLDER_DERIVATIVE_LITIGATION_No_9983VCG_201.
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