Raleigh, NC – The North Carolina Business Court has granted Hatteras Investment Partners’ motion to dismiss a derivative complaint brought against it by several shareholder plaintiffs. The ruling closes the door on a second lawsuit the investment firm faced in North Carolina, and it marks the Business Court's second-ever application of a key test in shareholder derivative litigation.
Commonly known as the Zuckerberg test, it reaffirms that shareholder-plaintiffs must clear a high bar to pursue derivative claims on behalf of businesses based in Delaware — the legal home for many businesses operating in North Carolina and nationwide. In a related case, Hatteras Investment Partners also secured the first Business Court ruling applying the test, which is named after a Delaware Supreme Court ruling from 2021.
In this case, Judge Julianna Theall Earp ruled the plaintiffs failed to allege with specificity that serving a demand on the investment firm's leadership would have been futile under any prong of the Zuckerberg test. As a result of that "demand futility" analysis, the court determined that the plaintiffs lacked derivative standing. The ruling reinforces that a prospective plaintiff seeking to bring a derivative suit against a Delaware business in North Carolina must satisfy the Zuckerberg test before the litigation can proceed.
The Parker Poe team representing Hatteras Investment Partners was led by Raleigh partner Melanie Dubis, head of the firm’s Business Litigation Group, and Raleigh associate Corri Hopkins.
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