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By Michael Greene
April 16 — Stockholders accusing Wal-Mart Stores Inc. executives of breaching their fiduciary duties by misleading investors and covering up possible FCPA violations at its subsidiary in Mexico are appealing the dismissal of their derivative lawsuit to the U.S. Court of Appeals for the Eight Circuit.
Last month, a federal judge dismissed the plaintiff stockholder claims on the ground that they had not established that a pre-suit demand on Wal-Mart's directors to take action would be futile.
Applying Delaware law, U.S. District Court for the Western District of Arkansas Judge Susan O. Hickey found that plaintiffs failed to plead with specificity that a majority of Wal-Mart's boards of directors faced “a substantial likelihood of personal liability so that their ability to consider a demand impartially would be compromised.”
While the Arkansas derivative litigation has been ongoing, the plaintiff in the fiercely contested Delaware General Corporation Law §220 books and records action in the chancery court has filed a contempt motion against Wal-Mart for allegedly failing to comply with a production order requiring the retailer to turn over internal documents related to what directors may have known about the bribery claims.
The plaintiff had earlier raised concerns over whether the Arkansas action can render a judgment that would be binding on an underlying derivative lawsuit in Delaware.
Recently, Wal-Mart sent a letter to the chancery court asserting that it has provided the plaintiff with all the responsive documents that were inadvertently omitted from its earlier production. Chancellor Andre G. Bouchard has scheduled oral argument about the contempt motion for May 7.
The notice of appeal is available at http://www.bloomberglaw.com/public/document/Cottrell_v_Duke_et_al_Docket_No_412cv04041_WD_Ark_Apr_25_2012_Cou/2.
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