proposal because Allegis's board did not consider the proposal serious enough to subject to a vote. Plaintiff's allegation is actually a claim that the Allegis board committed waste.
A review of Delaware statutes does not reveal any law requiring that Allegis's board allow shareholders to vote on the Air Line Pilot Association's offer. Plaintiff also does not allege that any provision of Allegis's charter requires the board to allow shareholders a vote. Therefore, plaintiff cannot actually be restricted from voting where he did not have a right to vote. Because plaintiff does not adequately plead deprivation of a contractual right in Count III, no individual claim has been plead. Thus, all of plaintiff's claims are derivative in nature.
Federal Rule of Civil Procedure 23.1 provides for procedural requirements that a shareholder must meet before he can sue derivatively. In order to acquire standing to sue derivatively, a shareholder must first demonstrate that he has exhausted all means within his reach to obtain the relief desired. Hawes v. Oakland, 104 U.S. 450, 460-61, 26 L. Ed. 827, 4 A.F.T.R. (P-H) 4591 (1881). Because a derivative suit challenges the assumption a board of directors is managing a company in good faith, a shareholder may proceed derivately only after demonstrating that a "demand" upon the corporation would be futile, Aronson v. Lewis, 473 A.2d 805, 811-812 (Del. Super. Ct. 1984), or that he made a "demand" upon the corporation and the board refused to follow it. Good v. Getty Oil Co., 514 A.2d 1104, 1106 (Del. Ch. 1986). An adequate demand upon the corporation provides notice of a situation and allows the corporate directors an opportunity to exercise their business judgment in taking any corrective action. Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 533, 104 S. Ct. 831, 836, 78 L. Ed. 2d 645 (1984). To be adequate, a demand must be made upon the corporation with "particularity." Fed. R. Civ. P. 23.1
In their respective briefs, all parties concede that the Rule 23.1 demand must include certain information, namely: the identity of the alleged wrongdoers; the factual basis for the allegations; the harm caused to the corporation; and the remedial relief requested.
The motion of Allegis and the individual defendants challenges the sufficiency of plaintiff's complaint, which alleges demands made and refused. Second amended complaint, paras. 15-16.
Plaintiff contends that four letters incorporated into his second amended complaint are sufficient demand to satisfy the requirements of Rule 23.1 and, thus, he has standing to sue derivatively.
The court, however, adopts the reasoning in Allegis's memorandum in support of its motion to dismiss, and finds that the referred-to letters do not satisfy the demand requirement which is an integral part of Delaware corporate law and Rule 23.1
Since plaintiff's claims are derivative, under Fed. R. Civ. P. 23.1, the lack of a valid pre-suit demand is fatal and plaintiff's complaint must be dismissed.
Certain defendants, all present or former directors, have also moved to dismiss based on lack of personal jurisdiction and have argued that the action may not proceed in the absence of all directors. This motion is rendered moot.
DATED: January 9, 1989
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