Delaware's Zuckerberg test asks, director by director, whether a majority received a material benefit, faces substantial liability, or lacks independence from someone who does. Particularized factual pleading is required.
Failure to plead futility results in dismissal.
Alternative Names:
Futility of Demand|Demand Excused
Why it Matters?
The director-by-director analysis under the refined test requires pleading specific facts about each board member rather than generalized allegations about the board, which is where most derivative complaints fail. Substantial likelihood of liability requires more than naming a director as a defendant, since exculpatory charter provisions eliminate duty of care exposure. Books and records demands before filing are what produce the particularized facts the standard requires.
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Frequently asked questions
What does the test require?
What produces the required facts?
