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LALONDRIZ v. USA NETWORKS
June 30, 1999
PAULINE LALONDRIZ, ON BEHALF OF HERSELF AND ALL OTHER OTHERS SIMILARLY, SITUATED, PLAINTIFF,
USA NETWORKS, INC., ET AL., DEFENDANT.
The opinion of the court was delivered by: Owen, District Judge.
The plaintiff's class action complaint, initially filed in New
York State Court, and thereafter removed here, alleges that
defendant USA Network, Inc., (hereafter "USA" or "USAi") and its
directors are liable to her and the class of current and
prospective stockholders in breach of fiduciary duty in that they
were advised that USA was getting into TV merchandising in Italy,
but not told of the many problems involved which USA knew
rendered such a venture highly unlikely.*fn1 Paragraph 5 of the
This action is brought as a class action against the
directors of USAi on behalf of all persons, as more
particularly defined below, who own USAi common stock
common [sic] for breach of fiduciary duty, against
SBS as an aider and abettor, and against USAi for
Defendants move before me to dismiss on the ground that the
action may not be maintained under new securities law provisions
entitled the Securities Litigation Uniform Standards Act of 1998,
PL 105-353, 112 Stat. 3227 (1998) (SLUSA). Plaintiff by
cross-motion seeks a remand to State Court.
[D]irectors of Delaware corporations are under a
fiduciary duty to disclose fully and fairly all
material information within the board's control when
it seeks shareholder action. . . . In addition . . .
directors are under a fiduciary obligation to avoid
misleading partial disclosures.
Id. at 1056. In further support, Malone v. Brincat,
722 A.2d 5 (Del. 1998), the court stated in confirmatory language
The historic roles played by state and federal law in
regulating corporate disclosures have been not only
compatible but complementary. That symbiotic
relationship has been perpetuated by the recently
enacted federal Securities Litigation Uniform
Standards Act of 1998. Although that statute by its
terms does not apply to this case, the new statute
will require securities class actions involving the
purchase or sale of nationally traded securities,
based upon false or misleading statements, to be
brought exclusively in federal court under federal
law. The 1998 Act, however, contains two important
exceptions: . . . the second preserves the
availability of state court class actions, where
state law already provides that corporate directors
have fiduciary disclosure obligations to
shareholders. These exceptions have become known as
the "Delaware carveouts." (Footnotes omitted.)
Id. at 13. Accordingly, this case being based under Delaware
common law may be maintained in the New York State courts by a
private party under § 78bb(f)(3)(A)(i), and this court is
required to and does hereby remand it to the State Court pursuant
to (§ 78bb(f)(3)(D)).
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