City of Cold Spring v. Kentucky League of Cities, Inc., et al.
Via a purported class action complaint, the City of Cold Spring, Kentucky filed a shareholder derivative suit against Kentucky League of Cities, Inc. and its affiliates (collectively, "KLC") concerning various alleged transactions identified in an audit report prepared by Kentucky State Auditor, Crit Luallen. In addition to the derivative action, Cold Spring also brought a separate class action alleging direct personal injury against KLC and the 27 individually named KLC board members, who are all current or former mayors of cities throughout Kentucky, and former executives. Cold Spring, seeking to certify a class of nearly 400 cities and municipalities with an interest in KLC, contends that KLC and its directors and officers breached various fiduciary duties to KLC's member cities, misappropriated corporate funds, wasted corporate assets, and made unauthorized loans to directors and officers. On a joint motion to dismiss filed by KLC and the individual defendants, the Fayette Circuit Court construed the law in KLC's favor, dismissing the class action and derivative suit.