Connecticut
How In re The Home Depot, Inc. Derivative Litigation applies in Connecticut: state-specific rules, key cases, and bar exam notes for Corporate Law.
In Connecticut, derivative actions are guided by principles set forth in both statutes and case law similar to Delaware but may apply the demand requirement more stringently. Shareholders must first make a demand on the board, or demonstrate futility, before pursuing litigation.
Under Connecticut General Statutes § 33-721, a shareholder may not commence a derivative proceeding until a demand has been made upon the corporation's board of directors, unless such demand would be futile.
The court reinforced the demand requirement and outlined the proper procedure for establishing futility in derivative suits.
The case highlighted the necessity of showing adequate standing to sue derivatively, emphasizing the plaintiff's shareholding status at the time of the alleged wrongdoing.
This ruling explored the concept of board independence when assessing the futility of demand, confirming that an independent board could effectively adjudicate claims against past management.
Connecticut aligns closely with the principles outlined in the Business Judgment Rule under federal law, particularly regarding the demand requirement. However, Connecticut courts may impose stricter scrutiny on the sufficiency of the demand for derivative actions compared to some federal interpretations.
Be prepared to apply the demand requirement in derivative actions and analyze cases concerning shareholder standing on the Connecticut bar exam.