Shareholder litigation
DEF Trading LLC v. Florida Bancshares Inc.
Date: Sept. 29, 2026
Issue: Whether DEF Trading satisfied the legal requirements for a shareholder derivative lawsuit to survive a motion to dismiss by Florida Bancshares Inc.
Case Summary: A Florida federal court refused to dismiss a lawsuit alleging that bank directors breached their fiduciary duties by changing corporate bylaws to protect their positions and prevent shareholders from removing them.
In October 2025, DEF Trading LLC sued Florida Bancshares, First National Bank of Pasco, and board members Ander Platt Gibbs, John Henson, Paul Midili, Ernest Peeples, Marlene Mann, Steven Carle, and Paula S. O’Neil (collectively, Florida Bancshares), alleging the directors breached their fiduciary duties by placing their personal interests ahead of the bank and its shareholders. DEF Trading claimed the directors allowed the bank to provide payment processing services to cannabis-related businesses without qualified personnel or adequate compliance procedures. In turn, DEF Trading claimed this resulted in an enforcement action by the Office of the Comptroller of the Currency (OCC).
DEF Trading also alleged the directors amended Florida Bancshares’ bylaws to prevent shareholders from voting to remove them. DEF Trading sought: more than $3 million in damages; preliminary and permanent injunctions requiring compliance with OCC regulations; an order replacing the bank’s directors and senior management; and a declaration invalidating the disputed bylaw amendments.
In December 2025, Florida Bancshares moved to dismiss, arguing DEF Trading failed to satisfy the legal requirements for a shareholder derivative lawsuit. Florida Bancshares maintained that DEF Trading failed to demand action from the board before filing suit and did not provide sufficient facts to show why such a demand would be futile. Florida Bancshares also argued that DEF Trading failed to establish a valid breach-of-fiduciary-duty claim or an actual dispute warranting declaratory relief.
However, in May, Judge Steven Merryday of the Middle District of Florida issued a preliminary injunction ruling that DEF Trading showed a substantial likelihood of success in its challenge to Florida Bancshares’ amended bylaws. The court found that the directors likely amended the bylaws to protect their positions and prevent shareholders from replacing them. Judge Merryday also found that the amendments threatened irreparable harm by excluding DEF Trading’s nominees from the board election. The court noted that one amendment violated Florida law by eliminating shareholders’ right to act by written consent. As a result, Judge Merryday barred Florida Bancshares from enforcing the amended bylaws and prohibited it from holding its annual shareholder meeting, electing directors, or taking actions outside the ordinary course of business without court approval for 60 days.
Subsequently, Judge Merryday denied Florida Bancshares’ motion to dismiss, ruling that DEF Trading provided sufficient facts to show that asking the board to act before filing suit would have been futile. The court explained that Florida law requires shareholders to first ask the board to act or explain why such a request would be futile. According to the court, the directors barred shareholders from acting by written consent, raised the ownership threshold for calling special meetings, and imposed new notice requirements. Judge Merryday determined that each director faced a substantial likelihood of liability for allegedly breaching the duty of loyalty by seeking to maintain control of the board. The court also found reason to doubt that the directors could fairly assess a shareholder demand. As a result, Judge Merryday denied Florida Bancshares’ motion to dismiss and allowed the lawsuit to proceed.
Bottom Line: The court allowed a shareholder derivative lawsuit to proceed, ruling that directors who face a substantial likelihood of liability for allegedly breaching their fiduciary duties cannot impartially assess a shareholder demand.
Document: Order
