Aronson test in New York

2013Morgan Chase & Co. Shareholder Litig., 906 A2d 808 [Del Ch Ct 2005] [allegations that acquiring corporation paid unnecessary premium for an acquired corporation, where majority of directors had interests in corporation that did business with the acquired corporation or were involved with charitable corporations that received contributions from the corporation, without more, insufficient to meet either prong of the Aronson test to excuse demand]; see also Brehm v Eisner, 746 A2d 244 [2000] [board of directors approved large severance package for former president and Delaware Supreme Court found

2013Morgan Chase & Co. Shareholder Litig., 906 A2d 808 [Del Ch Ct 2005] [allegations that acquiring corporation paid unnecessary premium for an acquired corporation, where majority of directors had interests in corporation that did business with the acquired corporation or were involved with charitable corporations that received contributions from the corporation, without more, insufficient to meet either prong of the Aronson test to excuse demand]; see also Brehm v Eisner, 746 A2d 244 [2000] [board of directors approved large severance package for former president and Delaware Supreme Court found

2016The Aronson test is “whether, under the particularized facts alleged, a reasonable doubt is created that: (1) the directors are disinterested and independent [or] (2) the challenged transaction was otherwise the product of a valid exercise of business judgment” (Aronson v Lewis, 473 A2d at 814 ).

2016The Aronson test is “whether, under the particularized facts alleged, a reasonable doubt is created that: (1) the directors are disinterested and independent [or] (2) the challenged transaction was otherwise the product of a valid exercise of business judgment” (Aronson v Lewis, 473 A2d at 814 ).

2010(See Aronson at 814 [affirmative decision]; Rales v Blasband, 634 A2d 927, 934 [Del 1993] [failure to act].) Where the complaint challenges a board’s affirmative de cisión, the trial court, using “its discretion,” must determine whether the complaint alleges “particularized facts” which create a “reasonable doubt” that “(1) the directors are disinterested and independent and (2) the challenged transaction was otherwise the product of a valid exercise of business judgment.” CAronson at 814.) “The prongs of the Aronson test are in the disjunctive; therefore, if plaintiff creates a reasonable dou

1996The two branches of the Aronson test are disjunctive (see, Levine v Smith, 591 A2d 194, 205 ).

2013Instead, courts routinely apply the second prong of Aronson to assess demand futility in cases involving related-party transactions, determining whether the shareholder plaintiff sufficiently pleads reasonable doubt that the transactions were “otherwise the product of a valid exercise of business judgment.” (See Wood v Baum, 953 A2d 136, 139-140, 142 [Del 2008] [applying second Aronson prong to assess demand futility where plaintiff alleged board approval of “a series of ‘related party transactions’ ”]; In re Tyson Foods, Inc., 919 A2d 563, 594-595 [Del Ch 2007] [applying “standard Aronson ana

2013Instead, courts routinely apply the second prong of Aronson to assess demand futility in cases involving related-party transactions, determining whether the shareholder plaintiff sufficiently pleads reasonable doubt that the transactions were “otherwise the product of a valid exercise of business judgment.” (See Wood v Baum, 953 A2d 136, 139-140, 142 [Del 2008] [applying second Aronson prong to assess demand futility where plaintiff alleged board approval of “a series of ‘related party transactions’ ”]; In re Tyson Foods, Inc., 919 A2d 563, 594-595 [Del Ch 2007] [applying “standard Aronson ana

2013White v Panic, 783 A2d 543, 551 [Del 2001]; Brehm v Eisner, 746 A2d 244, 253 [Del 2000], citing Aronson, 473 A2d at 814 .) Specifically, to demonstrate demand futility under the second prong,of this test — known as the Aronson test — plaintiff must allege “particularized facts sufficient to raise (1) a reason to doubt that the action was taken honestly and in good faith or (2) a reason to doubt that the board was adequately informed in making the decision.” (See e.g.

2013White v Panic, 783 A2d 543, 551 [Del 2001]; Brehm v Eisner, 746 A2d 244, 253 [Del 2000], citing Aronson, 473 A2d at 814 .) Specifically, to demonstrate demand futility under the second prong,of this test — known as the Aronson test — plaintiff must allege “particularized facts sufficient to raise (1) a reason to doubt that the action was taken honestly and in good faith or (2) a reason to doubt that the board was adequately informed in making the decision.” (See e.g.

2013Instead, courts routinely apply the second prong of Aronson to assess demand futility in cases involving related-party transactions, determining whether the shareholder plaintiff sufficiently pleads reasonable doubt that the transactions were “otherwise the product of a valid exercise of business judgment.” (See Wood v Baum, 953 A2d 136, 139-140, 142 [Del 2008] [applying second Aronson prong to assess demand futility where plaintiff alleged board approval of “a series of ‘related party transactions’ ”]; In re Tyson Foods, Inc., 919 A2d 563, 594-595 [Del Ch 2007] [applying “standard Aronson ana

2013Instead, courts routinely apply the second prong of Aronson to assess demand futility in cases involving related-party transactions, determining whether the shareholder plaintiff sufficiently pleads reasonable doubt that the transactions were “otherwise the product of a valid exercise of business judgment.” (See Wood v Baum, 953 A2d 136, 139-140, 142 [Del 2008] [applying second Aronson prong to assess demand futility where plaintiff alleged board approval of “a series of ‘related party transactions’ ”]; In re Tyson Foods, Inc., 919 A2d 563, 594-595 [Del Ch 2007] [applying “standard Aronson ana

2013Instead, courts routinely apply the second prong of Aronson to assess demand futility in cases involving related-party transactions, determining whether the shareholder plaintiff sufficiently pleads reasonable doubt that the transactions were “otherwise the product of a valid exercise of business judgment.” (See Wood v Baum, 953 A2d 136, 139-140, 142 [Del 2008] [applying second Aronson prong to assess demand futility where plaintiff alleged board approval of “a series of ‘related party transactions’ ”]; In re Tyson Foods, Inc., 919 A2d 563, 594-595 [Del Ch 2007] [applying “standard Aronson ana

2013Instead, courts routinely apply the second prong of Aronson to assess demand futility in cases involving related-party transactions, determining whether the shareholder plaintiff sufficiently pleads reasonable doubt that the transactions were “otherwise the product of a valid exercise of business judgment.” (See Wood v Baum, 953 A2d 136, 139-140, 142 [Del 2008] [applying second Aronson prong to assess demand futility where plaintiff alleged board approval of “a series of ‘related party transactions’ ”]; In re Tyson Foods, Inc., 919 A2d 563, 594-595 [Del Ch 2007] [applying “standard Aronson ana

2011Such benefit must be alleged to be material to that director.” (Orman v Cullman, 794 A2d 5, 23 [Del Ch 2002].) In this context, materiality means that the benefit was so substantial, “in the context of the director’s economic circumstances, as to have made it improbable that the director could perform her fiduciary duties to the . . . shareholders without being influenced by her overriding personal interest.” (Id., quoting In re General Motors Class H Shareholders Litig., 734 A2d 611, 617 [Del Ch 1999] [emphasis added by the Orman court].) Similarly, independence “means that a director’s decis

2011Such benefit must be alleged to be material to that director.” (Orman v Cullman, 794 A2d 5, 23 [Del Ch 2002].) In this context, materiality means that the benefit was so substantial, “in the context of the director’s economic circumstances, as to have made it improbable that the director could perform her fiduciary duties to the . . . shareholders without being influenced by her overriding personal interest.” (Id., quoting In re General Motors Class H Shareholders Litig., 734 A2d 611, 617 [Del Ch 1999] [emphasis added by the Orman court].) Similarly, independence “means that a director’s decis

2011Such benefit must be alleged to be material to that director.” (Orman v Cullman, 794 A2d 5, 23 [Del Ch 2002].) In this context, materiality means that the benefit was so substantial, “in the context of the director’s economic circumstances, as to have made it improbable that the director could perform her fiduciary duties to the . . . shareholders without being influenced by her overriding personal interest.” (Id., quoting In re General Motors Class H Shareholders Litig., 734 A2d 611, 617 [Del Ch 1999] [emphasis added by the Orman court].) Similarly, independence “means that a director’s decis

2011Such benefit must be alleged to be material to that director.” (Orman v Cullman, 794 A2d 5, 23 [Del Ch 2002].) In this context, materiality means that the benefit was so substantial, “in the context of the director’s economic circumstances, as to have made it improbable that the director could perform her fiduciary duties to the . . . shareholders without being influenced by her overriding personal interest.” (Id., quoting In re General Motors Class H Shareholders Litig., 734 A2d 611, 617 [Del Ch 1999] [emphasis added by the Orman court].) Similarly, independence “means that a director’s decis

2010(See Aronson at 814 [affirmative decision]; Rales v Blasband, 634 A2d 927, 934 [Del 1993] [failure to act].) Where the complaint challenges a board’s affirmative de cisión, the trial court, using “its discretion,” must determine whether the complaint alleges “particularized facts” which create a “reasonable doubt” that “(1) the directors are disinterested and independent and (2) the challenged transaction was otherwise the product of a valid exercise of business judgment.” CAronson at 814.) “The prongs of the Aronson test are in the disjunctive; therefore, if plaintiff creates a reasonable dou

2010(See In re National Auto Credit, Inc. Shareholders Litig., 2003 WL 139768 , *8-9, 2003 Del Ch LEXIS 5, *29-30.) The pleading burden for demand futility “is ‘more onerous’ than the burden a plaintiff must satisfy when confronted with a motion to dismiss.” (Khanna v McMinn, 2006 WL 1388744 , *11, 2006 Del Ch LEXIS 86, *40 [May 9, 2006], citing Levine at 207 ; see also Brehm 1 at 254 [“(demand futility) pleadings must comply with stringent requirements of factual particularity that differ substantially from the permissive notice pleadings”].) Even though “[plaintiffs are entitled to all reasonabl