directors’ judgment. The court ostensibly rejected defendants’ position, citing the Oklahoma Supreme Court’s subsequent use of as precedent. The court went on Hargrave to review plaintiffs’ additional allegations of bias against the directors. Then the court surprisingly held that demand would not be excused. The trial court’s holding is somewhat difficult to reconcile with the Hargrave holding, which seems to say that board approval is itself sufficient to excuse demand. The trial court clearly wanted more indication of director self-interest or bias to excuse demand. The analysis is not thorough and it relies heavily on two cases, Hargrave Lewis and that squarely stand for the position that more than mere v. Curtis Lewis v. Graves, approval must be shown. If the court believes intended to follow these cases Hargrave but perhaps failed in its application of the law the trial court’s ruling is more – – consistent. On appeal, citing the of Appeals wrote that the trial court’s Hargrave, determination of whether demand is futile within the discretion of the trial court.” “lies The Court noted that it reviewed the record, includes extensive citation to the “which Delaware law from which Oklahoma derived its General Corporation Act.” It then held that the trial court did not err or abuse its discretion” in requiring that “manifestly plaintiffs make demand. Without further analysis of the applicable standard for determining demand futility, the Court of Appeals decision leaves the matter unresolved. Proponents on either side of the issue can find support in Oklahoma. As plaintiffs in tried their In Re Chesapeake Shareholders Derivative Litigation demand excused strategy, the plaintiff in waited on the outcome. Egleston v. McClendon He had made demand on the Chesapeake board. The board responded that numerous similar lawsuits were pending, as were investigations by the SEC, Department of Justice and the Michigan Attorney General. An internal investigation by the board was also pending. The board chose to defer action on plaintiff’s demand pending the outcomes of these proceedings and investigations. Plaintiff then filed suit derivatively alleging various fiduciary breaches by McClendon and the board and claiming that the board’s decision to defer action was a breach of its business judgment.
directors’ judgment. The court ostensibly rejected defendants’ position, citing the Oklahoma Supreme Court’s subsequent use of Hargrave as precedent. The court went on to review plaintiffs’ additional allegations of bias against the directors. Then the court surprisingly held that demand would not be excused. The trial court’s holding is somewhat difficult to reconcile with the Hargrave holding, which seems to say that board approval is itself sufficient to excuse demand. The trial court clearly wanted more indication of director self-interest or bias to excuse demand. The Hargrave analysis is not thorough and it relies heavily on two cases, Lewis v. Curtis and Lewis v. Graves, that squarely stand for the position that more than mere approval must be shown. If the court believes Hargrave intended to follow these cases – but perhaps failed in its application of the law – the trial court’s ruling is more consistent. On appeal, citing Hargrave, the of Appeals wrote that the trial court’s determination of whether demand is futile “lies within the discretion of the trial court.” The Court noted that it reviewed the record, “which includes extensive citation to the Delaware law from which Oklahoma derived its General Corporation Act.” It then held that the trial court did not “manifestly err or abuse its discretion” in requiring that plaintiffs make demand. Without further analysis of the applicable standard for determining demand futility, the Court of Appeals decision leaves the matter unresolved. Proponents on either side of the issue can find support in Oklahoma. As plaintiffs in In Re Chesapeake Shareholders Derivative Litigation tried their demand excused strategy, the plaintiff in Egleston v. McClendon waited on the outcome. He had made demand on the Chesapeake board. The board responded that numerous similar lawsuits were pending, as were investigations by the SEC, Department of Justice and the Michigan Attorney General. An internal investigation by the board was also pending. The board chose to defer action on plaintiff’s demand pending the outcomes of these proceedings and investigations. Plaintiff then filed suit derivatively alleging various fiduciary breaches by McClendon and the board and claiming that the board’s decision to defer action was a breach of its business judgment.
Seminar-paper-recent-developments-2014.docx