Scrushy v. Tucker
Decision Date | 04 February 2011 |
Docket Number | 1081424 |
Parties | Richard Scrushy v. Wade C. Tucker and the Wendell J. Cook, Sr., Testamentary Trust, John P. Cook, trustee, derivatively, for and on behalf of HealthSouth Corporation |
Court | Alabama Supreme Court |
Appeal from Jefferson Circuit Court
In this shareholder-derivative action, Richard Scrushy, a former director and former chief executive officer ("CEO") of HealthSouth Corporation ("HealthSouth"), a Delawarecorporation, appeals from a judgment against him for $2,876, 103, 000.This action was commenced on August 28, 2002, on behalf of nominal defendant HealthSouth by Wade C. Tucker, a shareholder of HealthSouth since August 18, 1998.We affirm.
Certain aspects of this case have already come before us during this long and intricate litigation.SeeScrushy v. Tucker, 955 So. 2d 988(Ala.2006)( );andErnst & Young, LLP v. Tucker, 940 So. 2d 269(Ala.2006)("Tucker").It was the first of a number of derivative actions to be commenced by various HealthSouth shareholders against Scrushy and other former HealthSouth officials and related parties in various forums including (1) the Jefferson Circuit Court, (2) the United States District Court for the Northern District of Alabama("the Federal derivative actions"), and (3) the New Castle Chancery Court in Delaware, Biondi v. Scrushy, 820 A.2d 1148(Del. Ch.2003), restyled and resolved, In re HealthSouth Shareholders Litig., 845 A.2d 1096(Del. Ch.2003), aff'd, 847 A.2d 1121(Del.2004)(table)("the Delaware derivative actions").
The derivative actions appear to have been sparked by the "'public scrutiny of HealthSouth's financial integrity, '" which "'first became intense in the summer of 2002.'"Tucker, 940 So. 2d at 273( ).
Id.Throughout the litigation of this case, the accounting scheme has been referred to as "the fraud," which practice will generally be followed throughout this opinion.
Criminal charges were filed against various alleged conspiratorial HealthSouth officers as early as April 2003 in the United States District Court for the Northern District of Alabama.Eventually, at least 15 ""Scrushy, 955 So. 2d at 993( ).
Meanwhile, complaints in the pending derivative actions were amended to assert claims reflecting the latest revelations of fraud and mismanagement.In that connection, on August 8, 2003, Tucker filed a third amended complaint and a fourth amended complaint, asserting claims alleging, among other things, (1) improper "interested transactions," waste and "misappropriation of corporate assets"; (2) unjust enrichment; (3) breach of contract; (4) conspiracy; (5)"intentional, reckless, and innocent misrepresentation and suppression"; (6) breach of fiduciary duty of loyalty, related to fraud, false accounting, and "insider trading"; and (7) seeking to impose a constructive trust.
The pertinent allegations of the complaint included the following:
For all the alleged wrongful conduct, the complaint sought "money damages."Additionally, the complaint specifically requested "[d]isgorgement of amounts received as the result of breaches of fiduciary duty, waste of corporate assets, conflicted and prohibited transactions, misappropriation of corporate opportunities and assets, [and] unjust enrichment," as well as "[d]isgorgement of all compensation including but not limited to salary... as the result of the wrongful acts and breaches of fiduciary duty, breaches of contract, and breaches of duty of good faith."(Emphasis added.)It also sought "all such other relief at law and equity to which the corporation may be entitled."
Additionally, the third amended complaint averred that no pre-suit demand had been made "on the Board of Directors to take action to press the claims asserted [there]in because such a demand would have been futile."Approximately 10 pages of that complaint were devoted to an explication of the assertions of the futility of such a demand.
All HealthSouth derivative actions pending in the Jefferson Circuit Court were consolidated with Tucker'scase no. CV-02-5212 or abated in its favor.Coordination orderswere entered in the various derivative actions pending elsewhere:
"'In orders entered [in case no. CV-02-5212], [in the Federal derivative actions], and [in the Delaware derivative actions], the following...
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting

Start Your 3-day Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
