California Court of Appeal

Wannabe Derivative Plaintiffs of Delaware Corporations Cannot Skirt Delaware Law By Filing Suit in California

It is well-established that a shareholder-plaintiff may not assert derivative claims against a corporation’s officers or directors unless he or she makes a pre-suit demand on the corporation’s board of directors and alleges particularized facts showing that the demand was wrongfully refused, or alleges particularized facts showing that a demand on the board would have been futile.  One question that frequently arises is whether the shareholder-plaintiff may obtain discovery from the corporation and its officers and directors in order to assist his or her compliance with this threshold pleading obligation.

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