Minnesota
How In re The Home Depot, Inc. Derivative Litigation applies in Minnesota: state-specific rules, key cases, and bar exam notes for Corporate Law.
Minnesota law similarly permits derivative actions but emphasizes the requirement for demand on the board unless excused. Directors owe a duty of care and loyalty, aligning closely with the principles laid out in the Home Depot case regarding oversight and board decisions.
Under Minnesota Statutes § 302A.241, a shareholder may not commence a derivative proceeding until they have made a demand on the board of directors unless the demand would be futile.
The court found that directors could be held liable for failing to act on issues that endangered corporate compliance with laws.
This case clarified that a demand is futile if a majority of directors are under a conflict of interest.
The court reinforced that board decisions are to be evaluated under the Business Judgment Rule unless there is clear evidence of bad faith.
Minnesota's approach mirrors the federal standards under Rule 23.1 regarding demand futility and business judgment, but emphasizes state statutory provisions like the demand requirement more rigorously. The state courts often scrutinize board decisions under the duty of good faith more stringently.
The principles from In re The Home Depot case are relevant for the Minnesota bar exam, particularly in questions regarding derivative actions and board responsibilities.