Intercept Pharmaceuticals Wins Dismissal of Derivative Litigation

Skadden secured the dismissal of derivative litigation against Intercept Pharmaceuticals' board of directors. Prior to filing the derivative lawsuit, the plaintiff sent a letter to the Intercept board demanding that it take action to address Intercept’s allegedly excessive compensation policies pertaining to nonemployee directors. Skadden assisted the board in conducting an investigation into the substance of the demand, and the board ultimately decided to reject the demand. On March 23, Judge Charles Ramos of the Supreme Court of the State of New York issued a ruling dismissing the action for failure to adequately plead that demand had been wrongfully refused. The court rejected the plaintiffs’ attempt to argue demand futility and agreed with Skadden’s argument that the plaintiff’s letter to the Intercept board demanding that it take action was in fact a demand for purposes of Court of Chancery Rule 23.1 and further found that the plaintiff failed to plead that demand was wrongfully refused, and that the plaintiff failed to rebut the business judgment rule.