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In derivative litigation, procedure is extremely important. In order to preserve the central importance of the board in the management of the corporation, courts will require shareholders who wish to sue on behalf the corporation to jump through certain hoops.
This section provides an overview to procedural requirements with respect to “demand” and “demand futility.”EDIT PLAYLIST INFORMATION DELETE PLAYLIST
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|1||Show/Hide More||Aronson v. Lewis|
|2||Show/Hide More||Beam v. Stewart|
|3||Show/Hide More||Spiegel v. Buntrock|
Deriviative litigation requires stockholder plaintiffs to either make a demand on the board unless such a demand would be futile. If a plaintiff makes a demand on the board and that demand is rejected, is that the end of stockholder's litigation?
The following case, Spiegel, illustrates the effect on litigation of making demand on the board and the standard of review a court will use when asked to review a board's decision to refuse a stockholder's demand.
|4||Show/Hide More||Rales v. Blasband|
|5||Show/Hide More||Guttman v. Huang|
|6||Show/Hide More||Shoen v. SAC Holding Corp.|
Shoen is a Nevada case. In Shoen, the Nevada Supreme Court adopts the Delaware standards (Aronson and Rales) for determination of demand futility. The Nevada high court's discussion of both standards provides a clear overview and restatement of both tests and their application to pleadings.
Shoen is also an example of how state courts around the country look to the Delaware courts for guidance as they form their corporate law. Through cases like Shoen you can begin to appreciate Delaware's outsized influence in the corporate law arena.
|7||Show/Hide More||Brehm v. Eisner|
|8||Show/Hide More||In Re The Goldman Sachs Group, Inc. Shareholder Litigation|
January 22, 2014
Brian JM Quinn
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