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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
Morris James Blogs
Court Of Chancery Explains When Prior Dismissal Does Not Preclude Another Derivative Case
This is an important decision because it explains when a prior dismissal of a derivative complaint does not preclude a second complaint alleging a wrong close to that alleged in the dismissed case.
It distinguishes a series of prior Court of Chancery decisions that did dismiss the second suit on collateral estoppel grounds. The key for the second action to survive dismissal depends on the state law where the first action was dismissed, but generally speaking issues that were not already presented and decided will survive. Where the issues are the same as those already decided, however, simply having a better pleading will not sustain the second case. Here, because the Court did not find the issues to be identical, it allowed the second case to proceed.
The decision is also very good in harmonizing the often confused distinction between the Rales and Aronson standards for determining when demand on the board is excused.