For the second time this spring, a Fort Worth federal judge has dismissed with prejudice a lawsuit that stemmed from a business deal that fell apart between Arlington-based Six Flags Entertainment Corp. and Riverside Investment Group related to the development of Six Flags parks in China.
In a 16-page ruling issued Wednesday, U.S. District Judge Mark Pittman ruled that a group of shareholders did not present enough evidence in a shareholder derivative action that sought to hold several Six Flags board of directors members liable for the fallout. The plaintiffs had claimed that the board members breached their fiduciary duties after company leaders made alleged misstatements or omissions of fact related to the development of the Six Flags parks and the financial health of Riverside, which defaulted on its payments.
The plaintiffs also claimed the board members improperly traded Six Flags shares on nonpublic information, wasted corporate assets and unjustly enriched themselves.
Judge Pittman dismissed an earlier securities fraud lawsuit against Six Flags, then-CEO James Reid-Anderson and then-CFO Marshall Barber alleging misstatements and omissions that caused Six Flags’ stock price to suffer double-digit percentage declines.
Kirkland & Ellis represented Six Flags in both suits. The lawyers declined to comment.
Lead counsel for the plaintiffs, Dallas attorney Joe Kendall of the Kendall Law Group and San Diego attorney Erik Luedeke of Robbins Geller Rudman Dowd, did not respond to a request for comment.
Judge Pittman based his ruling on Delaware law, which governs Delaware-incorporated corporations regarding derivative shareholder suits. Allegations that board members failed to exercise their oversight duties, known as Caremark claims, are the most “difficult theory” for plaintiffs to prevail on, the opinion says.
Judge Pittman enumerated ways in which the plaintiffs failed to meet the burden of proof under a Caremark claim. “Mere pleasantries” made by one board member about Reid-Anderson when he became CEO did not insinuate that “a decade later, the board member “was beholden” to him, Judge Pittman wrote.
The judge also rejected a “boilerplate” allegation that the board members failed in their duties by not bringing their own lawsuit.
“Indeed, a plaintiff who hurries to file a Caremark claim after the announcement of a corporate trauma behaves contrary to the interests of the corporation,” Judge Pittman wrote.
The case is 4:20-cv-00262 in the Fort Worth division of the U.S. District Court for the Northern District of Texas.
The Kirkland team representing Six Flags includes Dallas partner Jeremy Fielding and New York partners Sandra Goldstein and Stefan Atkinson and associate Daniel Cellucci.