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eBook details

• Title: Bernard Pogostin v. W. Thomas Rice
• Author : Supreme Court of Delaware
• Release Date : January 21, 1984
• Genre: Law,Books,Professional & Technical,
• Pages : * pages
• Size : 65 KB

Description

This stockholder derivative suit, brought on behalf of City Investing Company (City), was dismissed by the Court of Chancery for plaintiffs' failure either to make a demand upon City's board of directors for appropriate corrective action, or to allege with particularity that demand was futile, pursuant to Del. Ch. Ct. R. 23.1. 1 The defendants are City and its board of directors, consisting of four company officers and ten outsiders. Plaintiffs charge that City's board wrongfully rejected a tender offer for its shares, resulting in the alleged loss by its stockholders of a substantial premium over market. It also is contended that the increase in the market price for City's shares, created by the tender offer, resulted in excessive payments to the four officer-directors under a pre-existing compensation plan keyed to the market price. Upon the defendants' motion to dismiss, the Vice Chancellor found plaintiffs' allegations to be conclusory and lacking the particularity mandated by Chancery Rule 23.1. We agree with that result based on the principles stated by us in Aronson v. Lewis, Del. Supr., 473 A.2d 805 (1984). Under the Aronson test we are satisfied that the allegations in the complaint fail to create a reasonable doubt that the outside directors of City were entitled to the protections of the business judgment rule. We therefore affirm.

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