Rales v. Blasband

As directors and majority shareholders of Easco, the Rales brothers (defendants) allegedly diverted bond-offering proceeds meant for government securities into junk bonds benefiting an affiliated investment bank; after Easco became a wholly owned subsidiary of Danaher, shareholder Blasband (plaintiff) -- now a Danaher shareholder -- sued derivatively over the Easco board's conduct without first making demand on either Easco's or Danaher's board, given that the Raleses held 44% of Danaher and sat on its board too. The Third Circuit found the complaint raised reasonable doubt about the Easco board's independent business judgment and certified the demand-requirement question to the Delaware Supreme Court.