MARA Wins Dismissal of Derivative Action Concerning Non-Employee Director Compensation

Paul, Weiss secured a rare pleading-stage victory for digital energy and infrastructure company MARA Holdings, Inc., and 12 current and former directors when the Eighth Judicial District Court of the State of Nevada granted our motion to dismiss a shareholder derivative lawsuit claiming that MARA’s board of directors improperly approved and received excessive non-employee director compensation between 2021 and 2024.

The shareholder plaintiff brought claims of breach of fiduciary duty, unjust enrichment and waste of corporate assets, alleging that the directors approved and received higher compensation on average than the compensation of directors at allegedly comparable companies during the relevant period.

In moving to dismiss, we argued that the complaint failed to plead demand futility—that a majority of the board members could not impartially assess a demand by the shareholder—or to state a claim under Nevada law. In particular, we argued that the complaint failed to allege facts sufficient to plead conduct that would not be exculpated under Nevada’s strong statutory business judgment standard of review, NRS 78.138(7), namely intentional misconduct, fraud or a knowing violation of law. Judge Susan Johnson agreed, dismissing the action in its entirety without prejudice to being refiled.

The Paul, Weiss team includes litigation partners Joshua Hill and Matthew Stachel, who argued the motion, and counsel Daniel Sinnreich.