RCM Securities Fund, Inc. v. Stanton

WINTER, Circuit Judge:

This appeal arises from a shareholder derivative action brought to challenge two integrated transactions that allegedly disposed of assets amounting to one-third of a Delaware corporation’s net worth and that transferred control of the corporation to an employee stock ownership plan, control of which is concentrated in high-level management. The district court dismissed the complaint on the ground that plaintiffs had failed to explain adequately their failure to make a demand upon the corporation’s board of directors under Fed.R.Civ.P. 23.1. We conclude that state law,…