On November 27, 2017, the Delaware Supreme Court affirmed a decision by the Delaware Court of Chancery dismissing a stockholder derivative complaint against certain directors and officers of BioScrip, Inc. for failing to allege that a demand on BioScrip’s board of directors to bring the litigation would have been futile.
Park Employees’ and Retirement Bd. Employees’ Annuity and Benefit Fund of Chicago v. Smith, No. 198 (Del. Nov. 27, 2017). As discussed in our
post regarding that decision, the Court of Chancery departed from its usual practice of assessing plaintiff’s allegations of demand futility based on the composition of the board on the date the complaint was filed.
Park Employees’ and Retirement Bd. Employees’ Annuity and Benefit Fund of Chicago v. Smith, C.A. No. 11000-VCG (Del. Ch. May 31, 2016). Instead, the Court of Chancery made an “equitable” exception to that rule and dismissed the complaint for failing to establish demand futility based on the board as it existed four days later based on “unique facts,” including that it was publicly known that those board changes were imminent prior to the filing of the complaint and that the new board was in place by the time defendants had received service of the complaint. In its short order, the Supreme Court affirmed without further elaboration.
