Travelzoo Wins Dismissal of Derivative Action

Skadden secured a dismissal with prejudice of all claims against Travelzoo Inc. and certain of its directors challenging its 2009 sale of its Asia Pacific division to a company owned by Travelzoo's founder, majority shareholder and then-board chairman. In the dismissal, dated January 21, New York Supreme Court Justice Barbara R. Kapnick applied the business judgment rule — as opposed to the entire fairness standard — even though the controlling shareholder “stood on both sides of the transaction.” The court concluded that the plaintiff did not “come close to rebutting the presumption of the business judgment rule.” This follows the dismissal of a related securities case and derivative action in federal court.