Freeman v. Decio

After years of reported growth, Skyline Corporation suddenly disclosed a major earnings loss, and its stock fell nearly 30%. Shareholder Freeman (plaintiff) sued Skyline officials (defendants), alleging they sold or gave away $14 million in Skyline stock based on inside knowledge of misleading prior earnings statements and the impending decline, and sought to force the officials to disgorge those trading profits to the corporation in a derivative suit. The district court found no cause of action existed under Indiana law allowing such a derivative recovery and granted summary judgment for the defendants.