Robert F. Booth Trust Ex Rel. Sears Holding Corp. v. Crowley, 687 F.3d 314

Background

Sears, Roebuck & Co. merged with Kmart in 2005; the surviving holding company Sears inherited directors from both firms, including Crowley and Reese.
Crowley and Reese also serve on other boards (AutoNation/AutoZone and Jones Apparel Group, respectively).
Two Sears shareholders, Booth Trust and Gross, filed a derivative suit alleging interlocking directorships violate § 8 of the Clayton Act, without making a pre-suit demand on the board.
The district court denied dismissing the suit, allowing it to proceed and later addressing a proposed settlement involving resignation of one director and a fee provision.
Theodore H. Frank, another investor, moved to intervene to oppose the settlement; the district court denied intervention and later rejected the proposed settlement, but the case remained pending.
The Seventh Circuit held that Frank is entitled to intervene to contest settlements in derivative actions and reversed the district court's ruling, remanding to grant intervention and enter judgment for defendants.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Frank may intervene in the derivative settlement	Frank argues he must intervene to obtain appellate review of settlement.	Booth Trust/Gross contend representation is adequate and intervention unnecessary.	Frank is entitled to intervene; district court's denial reversed.
Whether derivative suits can enforce § 8 through interlocking directorships	Plaintiffs rely on Protectoseal to permit private § 8 enforcement via derivatives.	Antitrust-injury doctrine limits who may sue; derivative suits must meet standing and injury requirements.	The court rejects unbridled private enforcement via derivatives and remands on intervention, not on merits.
Whether a demand on directors was required before filing	Investors alleged demand would have been futile; misused to avoid demand.	Derivatives generally require demand unless futile.	The decision focuses on intervention; it does not resolve demand futility as a standalone issue here.
Whether the district court properly approved or could approve the settlement	Settlement prematurely benefits plaintiffs' counsel and may not align with corporate interests.	Settlement could resolve interlocks without continuing costly litigation.	Remanded with instruction to grant intervention and enter judgment for defendants, effectively terminating the settlement process.
Whether Felzen survives Devlin for derivative actions	Felzen provides grounds for appellate review via intervention in derivatives.	Devlin controls whether intervention is required for review in derivative actions.	Court declines to decide Felzen’s fate here, leaving that question unresolved while affirming intervention entitlement.

Key Cases Cited

Protectoseal Co. v. Barancik, 484 F.2d 585 (7th Cir. 1973) (private § 8 enforcement acknowledged but context differs from derivatives)
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1981) (antitrust-injury doctrine; private suits limited to antitrust injury)
Atlantic Richfield Co. v. USA Petroleum Co., 495 U.S. 328 (1990) (antitrust-injury doctrine elaborated)
Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986) (limits private enforcement of antitrust laws)
Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998) (intervention rights in derivative actions; separate from class-action rules)
Devlin v. Scardelletti, 536 U.S. 1 (2002) (class-action appellate review standards; relevance to derivatives)
Crawford v. Equifax Payment Services, Inc., 201 F.3d 877 (7th Cir. 2000) (intervention principles in analogous contexts)
United States v. W.T. Grant Co., 345 U.S. 629 (1953) (mootness and settlement review considerations in litigation)
Kamen v. Kemper Financial Services, Inc., 500 U.S. 90 (1991) (standing in derivative actions; appointment of fiduciaries)
Braddock v. Zimmerman, 906 A.2d 776 (Del. 2006) (demand futility and derivative standing guidance)