In re Fuqua Indus. - 752 A.2d 126 (Del. Ch. 1999)

Rule:

The eight factors to be considered in evaluating the adequacy of a representative plaintiff are: (1) economic antagonisms between the representative and the class; (2) the remedy sought by plaintiff in the derivative litigation; (3) indications that the named plaintiff was not the driving force behind the litigation; (4) plaintiff's unfamiliarity with the litigation; (5) other litigation pending between plaintiff and defendants; (6) the relative magnitude of plaintiff's personal interests as compared to her interest in the derivative action itself; (7) plaintiff's vindictiveness toward defendants; and (8) the degree of support plaintiff was receiving from the shareholders she purported to represent.

Facts:

In a consolidated derivative and class action lawsuit, the defendants deposed the two derivative plaintiffs in whose names the litigation was prosecuted. In the course of the depositions, defendants determined that the derivative plaintiffs were unfamiliar with many of the facts and allegations involved in the lawsuit. Defendants now moved to dismiss the derivative plaintiffs as unable to adequately and fairly protect the interests of the corporation and its shareholders as mandated by Del. Chancery Ct. R. 23.1 due to their alleged unfamiliarity with the cases.

Issue:

Under the circumstances, should the court grant the defendants’ motion to dismiss the derivative plaintiffs? 

Answer:

No.

Conclusion:

The court denied the motion because each plaintiff, although not fully familiar with the action, were aware of the basic facts or nature of his or her claims and defendants adduced no evidence that either plaintiff had interests antagonistic to the interests he or she purported to represent, or that class counsel was incompetent or inexperienced to meet the minimum adequacy requirements. However, the court found that counsel for one plaintiff acted in bad faith during the course of litigation and abused the judicial process when he obstructed plaintiff's deposition, and the court assessed the costs of the deposition against him.