Delaware County Employees Retirement Fund v. Sanchez
Delaware Supreme Court
124 A.3d 1017 (2015)
Shareholders (plaintiffs) of a company controlled by the Sanchez family sued its directors (defendants) over an interested transaction, arguing pre-suit demand on the board was excused because director Jackson, alleged to be over 50 years a close personal friend of the board chairman and financially dependent on the Sanchez family for his employment and long-term wealth, was not independent; the Court of Chancery evaluated these facts separately and found them individually insufficient, dismissing the complaint for failure to satisfy the demand requirement, and the shareholders appealed.
Whether, to survive a motion to dismiss a shareholder derivative claim in which the plaintiff is asserting that demand is excused due to lack of director independence, the plaintiff must plead particularized facts that create a reasonable doubt about the directors' independence.