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L-R: Jennifer H. Rearden, Jefferson E. Bell, and Michael Marron of Gibson Dunn & Crutcher.

In Steinberg v. Bearden, C.A. No. 2017-0286-AGB (Del. Ch. May 30, 2018), the Delaware Chancery Court considered whether the Aronson or Rales test for demand futility should apply to a derivative claim for breach of fiduciary duty against directors who allegedly made false and misleading statements. After concluding that the plaintiff had failed to plead that a majority of the board had acted improperly, Chancellor Andre G. Bouchard applied Rales and granted defendants’ motion to dismiss under Rule 23.1 for failure to make a demand on the board.

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