In re Guidant Shareholders Derivative Litigation
Indiana Supreme Court
841 N.E.2d 571 (2006)
- Written by Jenny Perry, JD
Facts
Guidant Corporation (Guidant) pleaded guilty to felony charges of making false statements to a federal agency and shipping misbranded medical devices in interstate commerce. Kelbourne Ritter (plaintiff) and other Guidant shareholders filed shareholder derivative actions against Guidant’s board of directors alleging, among other things, breaches of fiduciary duty and waste of corporate assets by Guidant’s directors. The directors moved to dismiss the lawsuits on the grounds that no demand had been made on the board of directors. The United States District Court for the Southern District of Indiana certified a question to the Indiana Supreme Court as to whether a shareholder commencing a derivative suit was required to make a written demand on the corporation unless doing so would cause irreparable injury to the corporation or whether demand was excused if it was futile.
Rule of Law
Issue
Holding and Reasoning (Shepard, C.J.)
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