Royal Park Investments SA/NV v. The Bank of New York Mellon
- Gregory Woods
- 1:14-cv-06502
- U.S. District Court · Southern District of New York
- 2
In Royal Park v. The Bank of New York Mellon, Judge Woods denied the joint dismissal motion because the parties provided too little information for required court approval.
The parties and the investors or shareholders who would receive notice of the proposed dismissal.
What happened
Royal Park Investments SA/NV and The Bank of New York Mellon jointly asked the court to dismiss the action under Federal Rule of Civil Procedure 23.1(c).
That rule requires court approval before a shareholder derivative action can be settled, voluntarily dismissed, or compromised, and it requires notice to shareholders or members in a manner the court orders. The parties’ filings did not explain whether the dismissal involved a settlement, provide settlement terms, or adequately explain the proposed notice.
Judge Gregory H. Woods denied the joint motion to dismiss and directed the parties to provide more information if they renew their request. The Clerk of Court was directed to terminate the pending motion.
The detailed version
- Royal Park Investments SA/NV v. The Bank of New York Mellon · No. 1:14-cv-06502
- Gregory Woods
- Mar. 6, 2020
Background
Royal Park Investments SA/NV, individually and on behalf of others similarly situated, and The Bank of New York Mellon, as trustee, filed a joint motion to dismiss the action under Federal Rule of Civil Procedure 23.1(c). The opinion does not describe the underlying claims or explain whether the proposed dismissal resulted from a settlement.
Rule 23.1 Requirements
Rule 23.1(c) requires court approval before a shareholder derivative action may be settled, voluntarily dismissed, or compromised. It also requires notice to shareholders or members in the manner ordered by the court. The court explained that its role was not merely to approve the parties’ request automatically. If the proposed dismissal reflected a settlement, the court would need information allowing it to evaluate whether the resolution was fair, reasonable, and adequate.
Court’s Analysis
The court found that the motion and supporting declaration provided no substantive information about the proposed resolution. They did not say whether the dismissal represented a settlement or provide settlement terms. The proposed notice merely told investors that the action would be dismissed and did not explain why or how they could raise concerns about the dismissal.
Disposition
Judge Gregory H. Woods denied the parties’ joint motion to dismiss. The court directed that, if the parties renew their request for approval, they submit a comprehensive legal memorandum and supporting affidavits with enough information to evaluate the proposed resolution and the adequacy of the notice. Alternatively, if they believed Rule 23.1 permitted approval without additional information, they were directed to provide substantive briefing supporting that position. The Clerk of Court was directed to terminate the motion at docket number 202.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.