from a district court order granting a motion to dismiss in a
derivative shareholder action. Eighth Judicial District
Court, Clark County; Elizabeth Goff Gonzalez, Judge.
Hernandez, Landrum & Garofalo, A.P.C., and David S. Lee,
Natasha A. Landrum, and Dirk W. Gaspar, Las Vegas; Lifshitz
& Miller and Edward W. Miller and Joshua M. Lifshitz,
Garden City, New York, for Appellant Michael Kirsch.
Aldrich Law Firm, Ltd., and John P. Aldrich, Las Vegas; The
Weiser Law Firm, P.C., and Robert B. Weiser, Brett D.
Stecker, and James Ficaro, Berwyn, Pennsylvania; The Weiser
Law Firm, P.C., and Kathleen A. Herkenhoff, San Diego,
California, for Appellant Siu Yip.
Kaempfer Crowell and Ryan W. Daniels and Lyssa S. Anderson,
Las Vegas; King & Spalding LLP and Michael R. Smith and
B. Warren Pope, Atlanta, Georgia, for Respondents.
CHERRY, PARRAGUIRRE and STIGLICH, JJ.
the doctrine of issue preclusion, a Nevada court defers to a
foreign court's final judgment resolving an issue between
litigants if those same litigants previously litigated the
same issue before the foreign court. However, the Nevada
court does not defer to the foreign court's final
judgment if it contravenes a final judgment previously
entered by a Nevada court.
question to be resolved in this appeal is whether a Nevada
district court's order denying a motion to dismiss
constituted a final judgment on the issue of demand futility.
To the extent that we have not previously defined "final
judgment" within this context, we take this opportunity
to clarify that Nevada applies the definition set forth
within section 13 of the Restatement (Second) of Judgments.
Applying that definition to the facts of this case, we agree
with the district court that its denial of a motion to
dismiss was not a final judgment on the issue of demand
futility. Therefore, it was proper for the district court to.
accord preclusive effect to a subsequent final judgment from
a foreign court. Accordingly, we affirm.
AND PROCEDURAL HISTORY
Therapeutics, Inc. (Galectin) is a pharmaceutical company
incorporated in Nevada and headquartered in Georgia.
Beginning in October 2013, the directors of Galectin
commenced a "stock promotion scheme" in which they
published glowing reviews of Galectin in third-party
publications. In July 2014, shortly after news of that
promotion scheme became public, Galectin's share price
dropped approximately 50 percent.
August 2014, several Galectin shareholders filed shareholder
derivative actions against Galectin's officers and
directors in the United States District Court for the
District of Nevada. Appellant Siu Yip was a named plaintiff
in one of those federal cases, which were consolidated and
transferred to the Northern District of Georgia.
after the federal cases were filed, appellant Michael Kirsch
filed the instant derivative shareholder suit in Clark County
district court against Galectin's officers and directors
(here, respondents). In his complaint, Kirsch conceded that
he did not make a demand on Galectin's board of directors
prior to filing suit. He alleged that such a demand would
have been futile. Siu Yip later intervened in Kirsch's
moved to dismiss Kirsch's complaint pursuant to NRCP
23.1, which requires a plaintiff in a shareholder derivative
action either to make a demand upon the corporation's
directors prior to filing suit or to plead particularized
facts demonstrating that such a pre-suit demand would have
been futile. At a hearing on the motion, the district court
noted that Kirsch's complaint contained "conclusory
allegations" that a pre-suit demand would have been
futile. Nonetheless, the district court denied the motion to
dismiss, commenting: "The allegations related to the
conflicted directors who may face personal liability are not
the best I've ever seen, but they are not enough to merit
dismissal at this point." The district court granted
Kirsch leave to amend his complaint to add additional
plaintiffs, advising him "to beef up [the] factual
allegations" in the amended complaint. Finally, the
district court sua sponte stayed the case pending a decision
in the parallel shareholder derivative action filed in
United States District Court for the Northern District of
Georgia dismissed the federal action in an order. See In
re Galectin Therapeutics, Inc. Derivative Litig., No.
l:15-CV-208-SCJ, 2015 WL 12806566 (N.D.Ga. Dec. 30, 2015).
That order held that the Nevada district court's denial
of defendants' motion to dismiss was not "a final
ruling on the merits with respect to the issue of demand
futility." Id. at *4. Turning to the merits of
the demand futility issue, the federal court
"conclude[d] that Plaintiffs have not set forth