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Northern District of California Judge William Alsup rejected a preliminary settlement in a derivative lawsuit against directors and officers at Zoran Corp. on April 7, alerting lawyers that the company’s shareholders deserved more than the cashless promises to behave that the opposing sides had agreed on. On the same day, he also discouraged attorneys from settling a similar case involving CNET without proceeding further and testing some of the claims.

In both the Zoran and CNET orders, Alsup emphasized that derivative suits — filed by shareholders seeking to return value to the company — can be abused by “collusive” settlements in which the interests of shareholders are disregarded.

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