Title: In re Parametric Sound Corp.
Citation: 140 Nev. Adv. Op. No. 36
Docket Number: 
State: Nevada
Issuer: Nevada Supreme Court
Date: June 6, 2024

In re Parametric Sound Corp. Annotate this Case Justia Opinion Summary This case involves a dispute over a merger between Parametric Sound Corporation and VITB Holdings, Inc. (VITBH). A group of shareholders, who later formed PAMTP, LLC, opted out of a class action settlement related to the merger and filed a separate lawsuit. They alleged that the merger diluted their equity interests and that Kenneth Potashner, a member of Parametric's board, had breached his fiduciary duties by misleading shareholders about the financial outlook of the merger. The district court granted judgment to the defendants, finding that PAMTP had failed to plead a direct claim. The district court's decision was based on the Nevada Supreme Court's ruling in a previous related case, Parametric I, which held that the shareholders' claims should be dismissed for failure to plead a direct claim. However, the court granted the shareholders leave to replead certain claims that may have been direct under a Delaware case, Gentile v. Rossette. PAMTP's complaint in the present case was based on this guidance. The Nevada Supreme Court affirmed the district court's decision, finding that PAMTP had indeed failed to plead a direct claim. The court noted that the Delaware Supreme Court had since overruled Gentile, holding that most equity expropriation claims are exclusively derivative. The court also found that PAMTP had not satisfied the "direct harm test" adopted in Parametric I. The court also addressed the district court's award of costs and attorney fees to the defendants. It affirmed the award of costs but reversed the award of pre-complaint costs, finding that the district court had abused its discretion. The court also reversed the district court's denial of attorney fees to the defendants, finding that they were entitled to fees under Nevada Rule of Civil Procedure 68. The case was remanded for the district court to determine the amount of fees to which the defendants were entitled. Read more Want to stay in the know about new opinions from the Supreme Court of Nevada? Sign up for free summaries delivered directly to your inbox. Learn More › You already receive new opinion summaries from Supreme Court of Nevada. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here . Download PDF