Opinion ID: 2291974
Heading Depth: 2
Heading Rank: 3

Heading: Shareholder Standing to Continue A Post-Merger Derivative Suit

Text: Having found Kramer's claims to be clearly derivative in nature, we turn to the issue of standing. To have standing to maintain a shareholder derivative suit, a plaintiff must be a shareholder at the time of the filing of the suit and must remain a shareholder throughout the litigation. See Lewis v. Anderson, Del.Supr., 477 A.2d 1040 (1984). This Court, in Lewis, set forth two exceptions in the merger context to its holding that only a current shareholder has standing to maintain an action that is derivative in nature: (i) if the merger itself is the subject of a claim of fraud, being perpetrated merely to deprive shareholders of the standing to bring a derivative action; or (ii) if the merger is in reality merely a reorganization which does not affect plaintiff's ownership in the business enterprise. 477 A.2d at 1046 n. 10; see also Bokat v. Getty Oil Co., Del.Supr., 262 A.2d 246, 249 (1970); Schreiber v. Carney, Del.Ch., 447 A.2d 17, 21-22 (1982). Both exceptions set forth in Lewis are clearly inapplicable to this case. Kramer does not contend that the merger was fraudulent, perpetrated merely to deprive Western Pacific of its claim against the defendants; nor does plaintiff assert that Western Pacific has simply been through a reorganization not affecting plaintiff's ownership. Having found the claims asserted by Kramer to be derivative in nature and that Kramer has failed to assert a claim that falls within an exception established in Lewis, plaintiff has lost standing to pursue the post-merger claims against the defendants.