News
21 Feb 2008
DLA Piper successfully represents JNI
Milestone California Supreme Court Decision Holds Continuous Ownership for Stockholders; Unanimously Affirms Judgment of Dismissal
Press Release
(San Diego) – DLA Piper successfully represented JNI Corporation, a San Diego-based company (now a wholly-owned subsidiary of Applied Micro Circuits Corporation), in a shareholder derivative case in the Supreme Court of California. The court held that Sik-Lin Huang, a former stockholder in JNI Corporation, lost standing to pursue a shareholder derivative action against the corporation when a corporate merger forced him to sell his stock.
Huang had intervened as a plaintiff in a pending shareholder derivative action against Eric Wenaas and other directors and officers of JNI. Soon after the trial court granted a motion to dismiss the derivative complaint, JNI merged with another corporation. As part of the merger, Huang was required to sell his JNI stock to a corporation that became the new sole stockholder of JNI.
While Huang appealed the motion to dismiss, Wenaas argued the appeal was not valid because under Delaware law, where JNI was incorporated, Huang lacked standing to pursue a shareholder derivative action because he was no longer a stockholder. However, Huang countered that, under California law, he had standing because he owned stock at the time of the defendants’ alleged wrongdoing.
The court of appeal dismissed Huang’s appeal, claiming that Huang lacked standing. The Supreme Court of California unanimously affirmed the judgment of dismissal, holding that Huang did not have any standing to prosecute the appeal regardless of California or Delaware law.
“The decision by the California Supreme Court is an important milestone for JNI, as well as all other corporations facing shareholder derivative lawsuits, as it affirms that a shareholder must hold stock throughout the duration of a derivative suit. Otherwise, the party in question would have no interest in the outcome of the litigation,” said Robert Brownlie, co-chair of DLA Piper’s Securities Litigation group and leader of the firm’s team that represented JNI. “The DLA Piper team worked diligently to obtain a favorable verdict and we are proud to have represented JNI through the duration of this complex case.”
In addition to Brownlie, the trial team representing JNI included Paul A. Reynolds and Stanley Panikowski, partners in the firm’s San Diego office.
DLA Piper's litigation platform includes approximately 1,400 litigators working from 64 offices in 25 countries. The firm’s trial and dispute resolution experience covers patent, class action, securities, antitrust, product liability, taxation, government, real estate, and other areas of litigation.
About DLA PiperDLA Piper has 3,600 lawyers in 25 countries and 64 offices throughout the US, UK, Continental Europe, Middle East and Asia. It has leading practices in corporate, finance, human resources, litigation, real estate, regulatory and legislative, tax, and technology, media and communications. Former Senate Majority Leader George J. Mitchell is chairman of DLA Piper. In certain jurisdictions, this information may be considered attorney advertising.
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CONTACTS:
Robert Brownlie, Co-chair, Securities Litigation practice, DLA Piper, 619.699.2665
Eva Van Brunt, Media Relations, DLA Piper, 213.330.7730
Kristen Griffin, Media Relations, Greentarget, 312.252.4107