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CNO shareholder loses appeal

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A Marion County court didn’t err when it granted insurance holding company CNO board of directors members’ motion to dismiss a shareholder’s lawsuit for failure to make pre-suit demand, the Indiana Court of Appeals concluded.

In 2010, William Carter filed a purported shareholder derivative action against the defendants, who are current and former CNO directors and officers. He did not make a demand on the board of directors before filing the complaint. Carter alleged that these members breached their fiduciary and good faith duties and other claims because they were aware or should have been aware of problems with CNO’s long-term care business segment.

Both the trial court and Court of Appeals looked to Delaware law to decide whether to grant the defendants’ motion to dismiss because CNO is a Delaware corporation. The trial court granted the motion, finding Carter didn’t allege claims showing that pre-suit demand on the board of directors was futile, as required by Delaware Chancery Court Rule 23.1. The Court of Appeals agreed.

“We conclude that Carter has not alleged particularized facts to show that the Director Defendants face a substantial likelihood of liability for the conduct described in the Amended Complaint, nor has he alleged particularized facts to show that the Director Defendants breached their duties of good faith and loyalty,” Judge Edward Najam wrote in William T. Carter, derivatively on behalf of CNO Financial Group, Inc. v. R. Glenn Hilliard, et al., 49A02-1106-PL-582. “Therefore, Carter has not shown under Delaware law that pre-suit demand on the Board would have been futile.”

 

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  1. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  2. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  3. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  4. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

  5. During a visit where an informant with police wears audio and video, does the video necessary have to show hand to hand transaction of money and narcotics?

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