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Plumbers Local Union 519 Pension Tr. Fund v. Ergen
Citation: Not availableDocket: 81704
Court: Nevada Supreme Court; August 4, 2022; Nevada; State Supreme Court
Original Court Document: View Document
The Supreme Court of Nevada affirmed a district court's dismissal of a shareholder derivative action brought by Plumbers Local Union No. 519 Pension Trust Fund and the City of Sterling Heights Police and Fire Retirement System against certain directors of DISH Network Corporation. The appellants alleged that the directors either condoned or ignored violations of the Telephone Consumer Protection Act and a 2009 Assurance of Voluntary Compliance while acting on behalf of DISH. DISH's board established a Special Litigation Committee (SLC) that investigated the claims, concluded that pursuing the lawsuit was not in DISH's best interests, and recommended its dismissal. After an evidentiary hearing, the district court found the SLC was independent and conducted a thorough investigation, leading to the dismissal of the suit with prejudice. The appellants highlighted a footnote in the dismissal order indicating that the court's finding of SLC qualifications was based on a preponderance of the evidence standard, differing from a more stringent question-of-material-fact standard. They referred to prior case law (In re DISH Network Derivative Litigation) that favored a deferential review standard for SLC qualifications over the Delaware standard. However, the court maintained that the Jacksonville ruling had established a lasting precedent, and the appellants failed to provide adequate justification to overturn it. The court upheld the lower court’s ruling, emphasizing its commitment to stare decisis. The district court properly exercised its discretion by accepting the qualifications and report of the Special Litigation Committee (SLC) based on a preponderance of the evidence standard. The SLC included two disinterested directors who were not personally liable in the underlying lawsuit, and its voting structure required agreement from at least one of these directors, both of whom supported the SLC's recommendations. Their sworn statements indicated minimal connections to the respondent DISH directors and underscored their integrity, which countered any claims of structural bias against the SLC. Additionally, the thoroughness of the SLC's process was evidenced by the extensive documentation reviewed and the broad scope of its charter. As a result, the district court's dismissal of the derivative suit was affirmed.