Eli Mizock
Volume 77, Issue 2, 429-458
Fire disasters have become an inevitability for California residents. After a fire disaster, the public is primarily concerned with compensating the victims. However, securities fraud class actions brought by shareholders of the responsible utilities companies also accompany fire disasters. This Note argues that, instead of securities class actions, derivative claims under the Caremark jurisprudence may better serve corporate litigants following fire disasters. Historically, surviving the initial motion to dismiss under the Caremark standard has been a challenging hurdle for plaintiffs. However, under Marchand v. Barnhill and In re Clovis Oncology Derivative Litigation, “mission critical” risks of life and limb, or the presence of red flag warnings of the risk, are more likely to survive the initial motion to dismiss. Corporate claims following fire disasters are better suited as Caremark claims because fire disaster risk is a risk of life and limb in a highly regulated industry; derivative claims create the possibility that distribution of damages will prevent future harms; and the procedural hurdles of the demand requirement under United Food v. Zuckerberg are unlikely to pose an issue for plaintiffs bringing Caremark claims.