Munger, Tolles & Olson Secures Victory in Delaware Supreme Court in Skechers Stockholder Lawsuit

Munger, Tolles & Olson secured an appellate victory when the Delaware Supreme Court upheld the dismissal of a shareholder derivative lawsuit filed against officers and directors of Skechers USA Inc.

The lawsuit, filed by shareholder Michael Conte, alleged that Skechers’ corporate aircraft were being used for excessive personal travel, resulting in expenses amounting to millions of dollars. The MTO team successfully obtained the dismissal of the lawsuit in the Delaware Court of Chancery but Conte appealed the ruling to the Delaware Supreme Court.

On appeal, MTO partner John Gildersleeve argued that the lawsuit was properly dismissed because the shareholder failed to demonstrate that Skechers’ board of directors could not evaluate any claims of misconduct. Agreeing with MTO’s argument, a five-justice panel of the Delaware Supreme Court unanimously upheld the Court of Chancery’s earlier decision to dismiss the case.

The Supreme Court’s ruling affirmed the Court of Chancery’s detailed rejection of claims that Skechers’ directors faced potential liability for violations of oversight and disclosure duties. The dismissal and affirmance secured by MTO underscore the authority of boards of directors under Delaware law to control litigation brought on behalf of a corporation.

The MTO team included partners Brad Brian and John Gildersleeve and associate Abraham Dyk.

The case garnered significant media coverage in publications such as Bloomberg Law, Law360, New York Post and others.