Commenced in the Supreme Court of British Columbia, the action alleges that the directors and senior officers of Trevali Mining Corporation (TSX: TV) (BVL: TV) (OTCQX: TREVF) (Frankfurt: 4TI) failed to exercise proper and effective oversight with respect to central, mission-critical risk management and compliance affairs of Trevali.
In August 2022, following a series of adverse events materially affecting Trevali’s operations, the company sought protection from its creditors under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”). Following a listing review conducted by the Toronto Stock Exchange, Trevali’s common shares were determined to be delisted from securities exchanges.
Overview of the Caremark Claim
Deriving its name from the seminal Delaware case of In re Caremark Intern. Inc. Derivative Litigation,[1] a Caremark claim alleges that directors of a public company failed to make a good faith effort to oversee the company’s operations, thereby breaching their fiduciary duty of loyalty.[2] A plaintiff making a Caremark claim must establish that the directors failed to implement a reasonable, board-level oversight system and monitor it.[3]
In recent years, the Delaware court saw a surge of cases wherein the plaintiffs successfully advanced Caremark claims. In June 2019, the Delaware Supreme Court released its decision in Marchand v. Barnhill, holding that the plaintiff successfully pled his Caremark claim alleging that one of the largest ice cream manufacturers in the U.S. had “no board-level system of monitoring or reporting on food safety” leading up to the fatal 2015 listeria outbreak.[4] Subsequently, the Delaware Court of Chancery allowed the plaintiffs’ Caremark claims to proceed over the defendants’ motions to dismiss in In re Clovis Oncology, Inc.,[5] Inter-Marketing Grp. U.S. v. Armstrong,[6] Hughes ex rel. Kandi Tech. Grp. v. Xiaoming Hu,[7] Teamsters Local 443 Health Servs. & Ins. Plan v. Chou,[8] and In re The Boeing Co. Derivative Litig.[9]
In re Trevali Mining Corporation Securities Litigation
Trevali is the first known case to advance a Caremark claim before a Canadian Court. On behalf of a proposed class of shareholders of Trevali,[10] the action alleges that Trevali’s senior management and directors failed to exercise care and oversight to ensure that Trevali had or implemented effective policies and procedures to manage core, mission-critical aspects of Trevali’s business.
The action accordingly alleges that Trevali’s core disclosure documents, including several prospectuses, annual information forms and management information circulars, contained a misrepresentation with respect to Trevali’s corporate governance practices.
Specifically, the action alleges that specific statements contained in Trevali’s core disclosure documents constituted a misrepresentation as Trevali’s senior management and directors failed to exercise care and oversight to ensure that Trevali had, maintained or implemented effective policies and procedures to manage core, mission-critical aspects of Trevali’s business concerning:
- Health and safety;
- Corporate governance and risk management; and
- Internal control systems and disclosure controls and procedures.
The action has been brought on behalf of a proposed class defined as follows:
All persons and entities, wherever they may reside or may be domiciled, who purchased or otherwise acquired the common shares of Trevali in the primary market and/or in the secondary market during the Class Period, and held some or all of such common shares as of the close of trading on April 14, 2022 and/or August 15, 2022, except the Excluded Persons.
More Information
KND Complex Litigation is counsel to the shareholder plaintiffs in Trevali. For more information visit https://knd.law/class-actions/trevali-mining-corp/.
Trevali is currently in protection under the CCAA. Information regarding Trevali’s CCAA proceedings is available on the website of the Court-appointed Monitor at http://cfcanada.fticonsulting.com/trevali/.
Contact Shareholders’ Counsel
Sage Nematollahi / Taek Soo Shin
KND Complex Litigation
- [1] In re Caremark Intern. Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. Sept. 25, 1996).
- [2] Marchand v. Barnhill, 212 A.3d 805, (Del. 2019), p. 29 (citing Stone v. Ritter, 911 A.2d 362, 372 (Del. 2006) and In re Caremark Int’l Inc. Derivative Litig., 698 A.2d 959, 967 (Del. Ch. 1996)).
- [3] Id. at pp 30-31.
- [4] Id. at pp 1, 36.
- [5] In re Clovis Oncology, Inc., CONSOLIDATED C.A. No. 2017-0222-JRS, (Del. Ch. Oct. 1, 2019).
- [6] Inter-Marketing Grp. U.S. v. Armstrong, C.A. No. 2017-0030-TMR, (Del. Ch. Jan. 31, 2020).
- [7] Hughes ex rel. Kandi Tech. Grp. v. Xiaoming Hu, C.A. No. 2019-0112-JTL, (Del. Ch. Apr. 27, 2020).
- [8] Teamsters Local 443 Health Servs. & Ins. Plan v. Chou, C.A. No. 2019-0816-SG, (Del. Ch. Aug. 24, 2020).
- [9] In re The Boeing Co. Derivative Litig., C. A. 2019-0907-MTZ, (Del. Ch. Sep. 7, 2021).
- [10] In Trevali, “Class Members” is defined as: “[a]ll persons and entities, wherever they may reside or may be domiciled, who purchased or otherwise acquired the common shares of Trevali in the primary market and/or in the secondary market between October 9, 2020 through to August 15, 2022, inclusive, and held some or all of such common shares as of the close of trading on April 14, 2022 and/or August 15, 2022, except certain excluded persons (as defined).”