Cleary Gottlieb defeated a shareholder action brought against Citigroup’s board of directors alleging that the board had breached its fiduciary duties and violated federal securities law in Citibank’s transactions with Enron, Dynegy, Adelphia and WorldCom, and the equity research reports issued by Salomon Smith Barney’s Jack Grubman. Judge Laura Taylor Swain of the Southern District of New York granted defendants’ motion to dismiss and denied the plaintiff’s motion to file a new complaint.
Cleary Gottlieb’s motion to dismiss, made on behalf of 18 current and former directors, argued that the shareholder had failed to make a demand on the Board before filing suit as required under Delaware law and that the plaintiff failed to state a claim under the securities laws.