Guam § 171307 - Special Litigation Committee.

§ 171307. Special Litigation Committee.

(a) If a limited cooperative association is named as or made a party in a derivative proceeding, the

association may appoint a special litigation committee to investigate the claims asserted in the proceeding

and determine whether pursuing the action is in the best interests of the company. If the association appoints

a special litigation committee, on motion by the committee made in the name of the association, except for

good cause shown, the court shall stay discovery for the time reasonably necessary to permit the committee

to make its investigation. This Subsection does not prevent the court from:

(1) enforcing a person’s right to information under § 17505; or

(2) granting extraordinary relief in the form of a temporary restraining order or preliminary

injunction.

(b) A special litigation committee must be composed of one (1) or more disinterested and independent

individuals, who may be members.

(c) A special litigation committee may be appointed:

(1) by a majority of the directors not named as parties in the proceeding; or

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(2) if all directors are named as parties in the proceeding, by a majority of the directors named as

defendants.

(d) After appropriate investigation, a special litigation committee may determine that it is in the best

interests of the limited cooperative association that the proceeding:

(1) continue under the control of the plaintiff;

(2) continue under the control of the committee;

(3) be settled on terms approved by the committee; or

(4) be dismissed.

(e) After making a determination under Subsection (d) of this Section, a special litigation committee

shall file with the court a statement of its determination and its report supporting its determination and shall

serve each party with a copy of the determination and report. The court shall determine whether the

members of the committee were disinterested and independent and whether the committee conducted its

investigation and made its recommendation in good faith, independently, and with reasonable care, with

the committee having the burden of proof. If the court finds that the members of the committee were

disinterested and independent and that the committee acted in good faith, independently, and with

reasonable care, the court shall enforce the determination of the committee. Otherwise, the court shall

dissolve the stay of discovery entered under Subsection (a) of this Section and allow the action to continue

under the control of the plaintiff.

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