Thursday, March 24, 2011

Court Reviews Whether Plaintiff Sufficiently Alleged the Futility of Demanding a Board of Directors to Initiate a Lawsuit

IN RE HEALTHWAYS, INC. DERIVATIVE LITIGATION (Tenn. Ct. App. March 15, 2011)

Plaintiff in shareholder derivative action appeals the dismissal of his suit alleging breaches of fiduciary duty and other misconduct, including insider trading, by current and former officers and directors of corporation. Plaintiff filed suit without first making demand on the board of directors of the corporation that the directors initiate the lawsuit. Defendants moved to dismiss the suit on the ground that plaintiff failed to allege with requisite particularity that such demand would have been futile. We affirm the dismissal of the action.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/healthways_COR_032411.pdf