Corporate Governance

Stay of Proceedings in Chiquita Derivative Actions

By Sean Harrell

This post updates the Derivative Actions against Chiquita Brands International, Inc. (“Chiquita”).  In sum, the Derivative Actions remain stayed until February 28, 2009, when Chiquita is required to report to the Court on its investigation of the claims filed in the Verified Consolidated Shareholder Derivative Complaint (“Complaint”).

On October 21, 2008, the Special Litigation Committee (“SLC”) for Chiquita filed an Agreed Motion for a Stay of Proceedings (“Motion 1”).  Motion 1 stated that lead counsel for the parties agreed that the Derivative Actions should be stayed until December 31, 2008, in order to permit Chiquita time to investigate the claims before responding to the Complaint.  At the conclusion of the stay, the SLC proposed to: (1) issue a report detailing its investigations and conclusions regarding the claims and allegations asserted in the Complaint; and (2) present a plan outlining the SLC’s proposed next steps in the Derivative Actions.  Judge Marra granted Motion 1 on October 21, 2008, with leave to request a further stay if necessary. 

Two days before the expiration of the initial stay, Chiquita’s SLC filed an Agreed Motion for a Further Stay of Proceedings (“Motion 2”) on December 29, 2008.  Motion 2 requested an extension of the stay until February 28, 2009, with leave to request a further stay if necessary.  While Motion 2 did not specifically address why Chiquita was unable to complete its investigation within the initial stay period, it said that the SLC has reviewed approximately 740,000 pages of documents and conducted fifty-seven interviews of forty-seven individuals believed to possess knowledge regarding the events underlying the allegations asserted in the Complaint.  Motion 2 also reiterated that the SLC will issue a report detailing its investigations and conclusions, and present to the Court a plan outlining the SLC’s proposed next steps.  Judge Marra granted Motion 2 on December 30, 2008.

The primary materials for this post are available on the DU Corporate Governance Website.

Full post as published by The Race to the Bottom on January 21, 2009 (boomark / email).