Business Law Journal

The California Court of Appeal recently affirmed a trial court’s decision to award costs to a prevailing defendant in a member derivative action, even though the derivative plaintiff defeated a bond motion under Cal. Corp. Code §17709.02 at the outset of the case. In Barrios v. Chraghchian, No. B341773, 2026 WL 145207, *1 (Cal. Ct. of Appeal, Jan. 20, 2026), the plaintiff, Mr. Barrios, was an investor in the limited liability company and brought derivative claims against the company's managers, including the named defendant, Mr. Chraghchian, alleging that under their direction the company engaged in unauthorized transactions.

On September 30, 2023, California Governor Gavin Newsom signed into law Senate Bill (SB) No. 235, now codified as California Code of Civil Procedure section 2016.090, introducing a significant shift towards encouraging proactive initial disclosures in state court civil litigation. This legislative change amends California’s Civil Discovery Act to include proactive initial disclosure rules that align with those used in Federal Court. Effective for almost all civil cases filed after January 1, 2024, until January 1, 2027, this amendment heralds a new era of discovery rules in California that aim to foster judicial efficiency, transparency, and fairness in civil litigation.