XTO Energy Prevails in Derivative Action Appeal

Skadden represented XTO Energy, the settlor of a publicly traded royalty trust, in a derivative action where the unitholder claimed the ability to sue XTO despite the refusal of the trustee to initiate litigation against XTO. The trial court allowed the unitholder to proceed, but the Dallas Court of Appeals held that the unitholder could not circumvent the trustee's authority to control the litigation brought on behalf of the trust. This is the first decision involving a publicly traded royalty trust in Texas, where most of such trusts are organized.