Rivers v. Wachovia Corp.
2011 U.S. App. LEXIS 25552
| 4th Cir. | 2011Background
- Rivers, a Wachovia shareholder, sues Wachovia and four officers asserting multiple fraud-related claims.
- Rivers seeks personal damages for Wachovia’s stock decline during 2007–2008 crisis, not a derivative recovery for the corporation.
- District court dismissed, holding claims were derivative and barred as direct actions under state corporate law.
- Alleged misrepresentations concerned Wachovia’s financial health and its 2006 Golden West acquisition.
- Stock fell from about $56.65 in early 2007 to below $1 by September 2008, affecting all shareholders.
- Rivers did not pursue a derivative action and sought individual recovery instead of corporate relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rivers’ claim is derivative or direct | Rivers argues direct injury to him personally | Defendants contend injury is to the corporation | Claim is derivative; dismissed as improper direct suit. |
| Special duty exception applicability | Rivers alleges a direct fiduciary duty to him individually | Duty runs to the corporation, not Rivers personally | Special duty exception does not apply. |
| Special injury exception applicability | Rivers claims a personal, distinct injury | Injury is common to all shareholders | Special injury exception not satisfied. |
| Lost profit opportunity theory viability | Lost opportunity to sell constitutes personal harm | Injury mirrors stock decline; not separable | Lost profit theory rejected; harms are derivative. |
Key Cases Cited
- Meyer v. Fleming, 327 U.S. 161 (1946) (derivative remedy for corporate injury)
- Barger v. McCoy Hillard & Parks, 488 S.E.2d 215 (1997) (special duty/personal to shareholder)
- Babb v. Rothrock, 401 S.E.2d 418 (1991) (derivative action for corporate injury)
- Allen ex rel. Allen & Brock Constr. Co v. Ferrera, 540 S.E.2d 761 (2000) (standing to sue derivative claims)
- Hite v. Thomas & Howard Co. of Florence, 409 S.E.2d 340 (1991) (injury to corporation; no direct action)
- Energy Investors Fund, L.P. v. Metric Constructors, Inc., 351 N.C. 331 (2000) (fiduciary duty to corporation, not individual)
- Kagan v. Edison Bros. Stores, Inc., 907 F.2d 690 (1990) (injury to investors from corporate decline)
- Arent v. Distribution Scis., Inc., 975 F.2d 1370 (1992) (lost profit opportunity theory)
- Brown v. Stewart, 557 S.E.2d 676 (2001) (derivative injury framework)
- Crocker v. FDIC, 826 F.2d 347 (1987) (difficulties valuing lost profits)
- Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975) (issues of damages and fraud)