Stevens v. McGuireWoods L.L.P.

In 2005, plaintiffs, former Beeland minority shareholders, hired the McGuireWoods law firm to sue Beeland’s managers and majority shareholder, alleging misappropriation of Beeland’s intellectual property. Plaintiffs brought these claims in their individual capacities and derivatively on behalf of Beeland. In 2008, the court dismissed several claims without prejudice all claims. Plaintiffs’ new counsel obtained leave to amend and added counts against Beeland’s corporate counsel, Sidley Austin. The court dismissed all claims against Sidley as untimely and dismissed all individual claims against Sidley on the grounds plaintiffs lacked standing in their individual capacities. In 2011, plaintiffs settled with Rogers; relinquished their ownership interests in Beeland, and, in their individual capacities, sued McGuireWoods for breach of fiduciary duty for failing to timely assert obvious claims against Sidley. The court granted McGuireWoods summary judgment. The appellate court noted that in the underlying action the court never ruled on the merits of derivative claims against Sidley and remanded for a determination as to whether plaintiffs would have been successful in a derivative but for failure to add Sidley in a timely manner. The Illinois Supreme Court held that plaintiffs are bound by the trial court’s determination in the underlying case that they had no standing to bring individual claims against Sidley; even assuming they were successful, plaintiffs could not have collected personally on any judgment against Sidley on the derivative claims. McGuireWoods’s failure to assert claims against Sidley in a timely manner caused no injury to plaintiffs in their individual capacities, which is the only capacity in which they are proceeding. View "Stevens v. McGuireWoods L.L.P." on Justia Law