Scott v. Sokolov, 1996 NCBC 2 (N.C. Super. Ct. Dec. 2, 1996)(Tennille)

North Carolina law applied to the procedure for approval of a settlement of a derivative action involving a Delaware corporation.

The Court found that it was required to "balance (1) any legitimate corporate claims as brought forward in the derivative shareholder suit against (2) the corporation’s best interests . . . . Factors to be considered in this . . . process include: costs to the corporation of litigating the suit (including attorneys’ fees, out-of-pocket expenses related to the litigation, time spent by corporate personnel preparing for and participating in litigation, and indemnification) and the benefits to the corporation in continuing the suit."

The Court found that the settlement was reasonable after considering the relevant circumstances, and that notice to the shareholders of the defendant, a publicly traded company, was not required.

Full Opinion

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