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Keywords

lawsuitjurisdictionprecedentappealclass action

lawsuitsettlementjurisdictionappealmotionwillappellant

Related Cases

Felzen v. Andreas, 134 F.3d 873, 39 Fed.R.Serv.3d 852, Pens. Plan Guide (CCH) P 23947U

Facts

The case involved nonparty shareholders who sought to appeal a judgment from the United States District Court for the Central District of Illinois regarding a derivative action against Archer Daniels Midland Co. The shareholders did not intervene in the case as parties and relied on previous rulings that permitted nonparties to appeal. However, the court found that the legal landscape had changed, and the shareholders' failure to become parties precluded their appeal.

The two shareholder-appellants in this case believe that the modest settlement, half of which will be paid to counsel, exemplifies this problem. Their failure to become parties prevents us from considering this contention, for the possibility that a district court's judgment is erroneous does not dispense with the need for an appeal by a party.

Issue

Whether nonparty shareholders have the right to appeal a judgment in a shareholders' derivative action.

Rule

Only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment. Nonparties must seek intervention to appeal.

The rule that only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment, is well settled.

Analysis

The court applied the rule by emphasizing that the legal precedent established in Marino v. Ortiz and subsequent cases required nonparties to intervene in order to have the right to appeal. The court noted that allowing nonparties to appeal would fragment the control of the class action and undermine the role of the class representative. The court concluded that the shareholders, as nonparties, could not appeal the judgment.

We think the better practice is for such a nonparty to seek intervention for purposes of appeal; denials of such motions are, of course, appealable.

Conclusion

The appeal was dismissed for lack of jurisdiction, as the court held that nonparty shareholders do not have the right to appeal in derivative actions.

The appeal is dismissed for want of jurisdiction.

Who won?

Archer Daniels Midland Co. prevailed in the case because the court ruled that nonparty shareholders lacked the jurisdiction to appeal the judgment.

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Keywords

Related Cases

Reid v. United States, 142 S.Ct. 2857 (Mem), 213 L.Ed.2d 1083, 22 Cal. Daily Op. Serv. 6381

Lathrop v. Donohue, 367 U.S. 820, 81 S.Ct. 1826, 6 L.Ed.2d 1191

Nix v. Whiteside, 475 U.S. 157, 106 S.Ct. 988, 89 L.Ed.2d 123, 54 USLW 4194

Post v. Bregman, 349 Md. 142, 707 A.2d 806

McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 42 Tex. Sup. Ct. J. 597