Top Defense Verdict: Saratoga Advantage Trust Technology & Communications Portfolio v. Marvell Technology Group Ltd.

Saratoga Advantage Trust Technology & Communications Portfolio's shareholder derivative action asserted California state law claims based on allegations that Marvell Technology Group Ltd. was responsible for losing about $1 billion in market capitalization and that Marvell and its present or former officers and directors had made false or misleading statements in company press releases and public filings. Those allegedly led to securities class actions that damaged the company, causing shareholder losses.

The case was originally filed in California state court. Harry A. Olivar Jr. of Quinn Emanuel Urquhart & Sullivan LLP, who declined to comment, citing his client's wishes, knew that it would be advantageous to move the case to a federal court, where judges would be more familiar with the foreign laws that were at play in the case, specifically the laws of Bermuda. He employed the so-called "snatch and remove" maneuver, a ploy that required nimble and speedy footwork.

Important to the removal action was the need to file fast, in the two or three days before the defendants were served. Although the plaintiff was a citizen of Arizona, some defendants were citizens of California, which normally would preclude removal because an action otherwise removable may not be removed if any of the parties properly "joined and served" as defendants is a citizen of the state in which the action is brought.

Olivar contended that Congress' inclusion of the "and served" language in the statute permits defendants to remove a state court action after filing but prior to service, even if in-state defendants are included. Although courts have split on this issue, Olivar successfully argued that the court should apply the statute as written and deny Saratoga's motion to send the case back to state court.

Because Marvell is incorporated under Bermuda law, Olivar could then contend that the law does not permit shareholders to assert direct claims where, as in the case at bar, the purported injury was to the company. And Bermuda law permits shareholders to litigate a company's claims derivatively only in rare circumstances, none of which Olivar maintained were present in this case. Marvell's successful motion to dismiss the complaint followed.

— John Roemer