Business Groups Delay Bill Banning “Loser Pays” In Shareholder Suits

Business groups, including the U.S. Chamber of Commerce, that favor the recent Delaware Supreme Court ruling that would allow companies to adopt shareholder lawsuit “loser pays” bylaws, have been successful at delaying a proposed bill in the Delaware legislature that would make such bylaws illegal. Delaware lawmakers will not consider the bill until early 2015, the sponsor of the bill said last week. The proposed bill would ban companies from adopting bylaws that shifted attorney fees onto shareholders who sued them and lost. “I certainly believe that we should not permit companies carte blanche to adopt these kinds of bylaws,” said the bill’s sponsor, Sen. Bryan Townsend. “But we have heard from a broad group of stakeholders and thought it best to take the coming months to continue our examination of the issue.”