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Failure to Allege “Demand Futility” as Required Under Delaware Law Required Dismissal of the Derivative Causes of Action

The First Department determined the derivative claims in the complaint against a Delaware corporation were properly dismissed for failure to allege demand futility, as required under Delaware law:

Under Delaware law, where, as here, no demand has been made on corporate directors to bring a lawsuit, a derivative action may be brought on the corporation’s behalf only where the complaint alleged particularized facts that such a demand would have been futile … . To allege demand futility, the complaint must set forth particularized facts sufficient to raise a reasonable doubt that either (1) the directors are disinterested and independent, or (2) the challenged transaction was the result of a protected business judgment … . Whitecap (US) Fund I, LP v Siemens First Capital Commercial Fin LLC, 2014 NY Slip Op 07297, 1st Dept 10-28-14

 

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