Delaware
How Fisher v. Becton Dickinson and Co. applies in Delaware: state-specific rules, key cases, and bar exam notes for Corporate Law.
Delaware courts adhere to the principles established in Fisher, emphasizing the importance of demand futility and the business judgment rule as key factors in evaluating shareholder derivative actions. The state prioritizes the interests of the corporation and its shareholders, ensuring that directors' decision-making is upheld unless demonstrated otherwise.
In Delaware, to establish demand futility under the derivative action rule, a plaintiff must show that a majority of the board had institutionalized self-interest in the transaction or that the board members lacked independence.
The court held that demand was futile because a majority of the board was allegedly involved in wrongful conduct.
This case established a two-pronged test for determining demand futility based on the board's independence and the merits of the underlying claim.
The court clarified when a shareholder may be excused from making a demand on the board, reinforcing principles from Fisher.
Delaware's approach is more permissive regarding demand futility compared to federal procedural standards, highlighting firm adherence to state statutory requirements. While both jurisdictions permit exceptions to the demand requirement, Delaware places heavier emphasis on board dynamics than federal courts do.
Understanding the principles articulated in Fisher is critical for the Delaware bar exam, particularly as they relate to corporation law and the nuances of derivative actions.