Rales v. Blasband Case Brief Summary | Law Case Explained скачать в хорошем качестве

Rales v. Blasband Case Brief Summary | Law Case Explained

Get more case briefs explained with Quimbee. Quimbee has over 16,300 case briefs (and counting) keyed to 223 casebooks ► https://www.quimbee.com/case-briefs-o... Rales v. Blasband | 634 A.2d 927 (1993) In Delaware, a shareholder must first demand that a corporation’s board take corrective action before bringing a derivative suit, unless demand would be futile.1 In the 1993 case Rales versus Blasband, the Delaware Supreme Court considered whether a shareholder had to first demand that a parent corporation’s board take action before bringing a double derivative suit, which is a suit by a shareholder of a parent corporation on behalf of a wholly owned subsidiary. Easco Hand Tools was a Delaware corporation that manufactured hand tools. Danaher Corporation is a Delaware corporation that manufactures parts for automobiles.2 Brothers Steven and Mitchell Rales were directors of Easco and together owned approximately 52 percent of Easco’s common stock. In addition, the Rales brothers were directors of Danaher and together owned approximately 43 percent of Danaher’s common stock. In 1988, Easco offered to sell one hundred million dollars’ worth of senior subordinated notes to the public. In the prospectus for the offering, Easco stated that the sale proceeds would be used to, among other things, repay outstanding debts and fund business expansion. The prospectus also stated that the proceeds would be invested in government and other marketable securities. Following the sale, thirty million dollars of the proceeds was used to repay existing bank loans, and the remainder was invested in marketable securities and cash equivalents, including sixty-one point nine million dollars in high-yield corporate debt securities or junk bonds.3 Two years later, Easco and Danaher merged, and Easco became a wholly owned subsidiary of Danaher. Subsequently, Alfred Blasband, a Danaher shareholder who owned Easco stock prior to the merger, brought a double derivative suit against the Rales brothers in federal district court. Blasband argued that the junk bond purchase served no corporate purpose and was made by Easco to help an investment bank with which the Rales brothers had a relationship. However, before bringing suit, Blasband didn’t demand that Easco’s or Danaher’s board take action. The Rales brothers then moved to dismiss the suit for failure to make demand, which the district court granted. Blasband appealed to the Third Circuit, which vacated the district court’s order and permitted Blasband to amend his complaint to allege that demand would be futile. Once the complaint was amended, the Rales brothers again moved to dismiss. The district court certified the question of whether demand was futile to the Delaware Supreme Court. Want more details on this case? Get the rule of law, issues, holding and reasonings, and more case facts here: https://www.quimbee.com/cases/rales-v... The Quimbee App features over 16,300 case briefs keyed to 223 casebooks. Try it free for 7 days! ► https://www.quimbee.com/case-briefs-o... Have Questions about this Case? Submit your questions and get answers from a real attorney here: https://www.quimbee.com/cases/rales-v... Did we just become best friends? Stay connected to Quimbee here: Subscribe to our YouTube Channel ► https://www.youtube.com/subscription_... Quimbee Case Brief App ► https://www.quimbee.com/case-briefs-o... Facebook ►   / quimbeedotcom   Twitter ►   / quimbeedotcom   #casebriefs #lawcases #casesummaries