Can You File a Lawsuit Against Corporation's Board of Directors In Another State ?
In Young v. Colgate-Palmolive Company, 790 F.2d 567 (7th Cir. 1986), the plaintiff shareholder, an Illinois resident, filed a derivative action against the defendant, a Delaware corporation, and its board of directors, none of whom were residents of Illinois.
The plaintiff alleged the directors breached their fiduciary duty to the corporation by adopting a "poison pill" or anti-takeover plan.
The directors filed a motion to dismiss for lack of personal jurisdiction, which the district court granted.
The court of appeals affirmed, finding that the plaintiff had failed to establish a prima facie case that the defendants had committed a tort in Illinois.
The court explained that because the anti-takeover plan had been adopted in New York, that is where the situs of the tort occurred, not in Illinois where the injured plaintiff shareholder resided.
The court stated, "although shareholders may have been injured by some effect on their interest in the corporation does not mean that the tort was committed wherever they reside." Young, 790 F.2d at 570.
The court also clarified that an "injurious consequence" in Illinois was not the same as a tortious act in Illinois.