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Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.

Second Circuit Affirms Dismissal of Derivative Action Against lululemon Board and Founder

The Second Circuit affirmed the order dismissing a shareholder derivative action brought against the board of directors of lululemon athletica, including Paul, Weiss client Dennis "Chip" Wilson, lululemon founder and former chairman of the board of directors.  

The 2013 lawsuit alleged, among other things, that Mr. Wilson sold a large portion of his lululemon stock on June 7, 2013, the same day that former CEO Christine McCormick Day informed the board of her resignation. The plaintiff alleged that the board could not impartially consider a demand because it had facilitated or failed to prevent Mr. Wilson's purported insider trading by delaying a public announcement of Day's resignation until the following Monday, June 10, 2013. In a summary order issued just one week after oral argument, the Second Circuit found that the plaintiff's allegations "fall short" of Delaware's stringent requirements for alleging demand futility. The Second Circuit rejected the allegation that certain directors faced liability for facilitating Mr. Wilson's stock sales because of their positions on the audit committee, observing that the plaintiff failed to "allege any specific actions or omissions" by those directors that give rise to a "reasonable inference" that they could not impartially consider a demand. It also rejected the plaintiff's allegation that lululemon's board was beholden to Mr. Wilson due to his influence at the company and significant stock ownership. Even assuming Mr. Wilson's "outsize" role at lululemon during his tenure there, the Second Circuit found that mere allegations of his ability to exert influence did "not justify an inference that the Board is incapable of exercising its independent business judgment."

The Paul, Weiss team included litigation partners Michele Hirshman and Audra Soloway.

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