527 S.W.3d 511
Tex. App.2017Background
- Weatherford, a global oilfield services company, re-domesticated from Bermuda to Switzerland in February 2009; Weatherford Switzerland became parent of Weatherford Bermuda. Directors at issue served before and after re-domestication.
- Shareholders Neff and Iron Workers Mid‑South sued derivatively (on behalf of Weatherford) alleging directors authorized/bribed foreign officials, violated FCPA and U.S. sanctions, and failed to maintain accounting controls, causing large DOJ/SEC enforcement costs and fines.
- Appellees (directors, Weatherford, and former GC Burt Martin) moved: pleas to the jurisdiction arguing foreign‑law standing limits (Bermuda/Swiss law) barred pre‑2009 claims as double‑derivative; and special exceptions arguing inadequate pleading for post‑2009 claims and that shareholder releases/dechage bar those claims. Martin separately argued pleadings lacked facts specific to him.
- The trial court granted pleas to the jurisdiction as to pre‑2009 claims, sustained special exceptions as to some claims, granted Martin’s special exceptions, and dismissed claims against him; special appearances by several directors were not ruled on.
- On appeal the court: affirmed dismissal of pre‑2009 claims for lack of standing (double‑derivative not shown), reversed the grant of special exceptions as to post‑2009 claims (insufficient to treat shareholder release as properly raised by special exception), affirmed dismissal of claims against Martin, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing for pre‑2009 acts (double‑derivative) | Appellants: Swiss law (art. 756) or UK Companies Act confers derivative standing so plaintiffs can pursue claims despite re‑domestication. | Appellees: Claims pre‑dating re‑domestication concern Weatherford Bermuda; plaintiffs own only parent shares so double‑derivative claims are not permitted under Bermuda or Swiss law. | Held: Plaintiffs lack standing for pre‑Feb‑2009 claims; dismissal affirmed (double‑derivative not established). |
| Pleading adequacy for post‑2009 director misconduct | Appellants: Petition sufficiently alleges breaches, fault, causation, and damages for 2009–2011 period; fair notice satisfied. | Appellees: Petition fails to plead particularized facts required under Swiss law for post‑2009 officer/director liability. | Held: Allegations adequate as to directors for 2009–2011; special exceptions on pleading grounds improperly sustained and reversed in part. |
| Release (dechage) and statute‑of‑limitations as special exceptions | Appellants: Shareholder releases and time‑bar defenses are affirmative defenses not proper for special exceptions; claims not effectively released. | Appellees: Swiss annual general meetings discharged directors for the relevant years; claims lapsed under Swiss law. | Held: Improper to decide release/time‑bar via special exception; court erred in sustaining special exceptions on that basis (reversed as to release). |
| Personal jurisdiction (special appearances) | Appellants: Directors (Brady, Butters, Macaulay, Millard, Rayne) are subject to jurisdiction in Texas. | Directors: Special appearances filed; contest personal jurisdiction. | Held: Trial court did not rule on special appearances; issue not preserved for appeal and presents nothing for review. |
Key Cases Cited
- Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standard for resolving jurisdictional pleas and when courts may consider evidence)
- Heckman v. Williamson Cty., 369 S.W.3d 137 (Tex. 2012) (standing requires claim‑by‑claim analysis; courts assess plaintiff by plaintiff)
- Ben Bolt‑Palito Blanco Consol. Indep. Sch. Dist. v. Tex. Pol. Subdivisions Prop./Cas. Joint Self‑Ins. Fund, 212 S.W.3d 320 (Tex. 2006) (standard of review for jurisdictional rulings)
- Webre v. Sneed, 358 S.W.3d 322 (Tex. App.—Houston [1st Dist.] 2011) (discussing derivative suits and double‑derivative concepts)
- State Farm Mut. Auto. Ins. Co. v. Lopez, 156 S.W.3d 550 (Tex. 2004) (internal affairs doctrine and choice‑of‑law principles)
- In re Bear Stearns Cos., Inc. Sec., Derivative, & ERISA Litig., 763 F. Supp. 2d 423 (S.D.N.Y. 2011) (describing double‑derivative suits and the injury‑to‑subsidiary/parent requirement)
- Perry v. Cohen, 285 S.W.3d 137 (Tex. App.—Austin 2009) (shareholders generally lack independent claim for injury to corporation)