Document: London, et al. v. Tyrrell, et al., C.A. No. 3321-CC, Chandler, C. (Del. Ch. June 24, 2008)
The Court denied the defendant board of directors’ motion to dismiss Plaintiffs’ complaint alleging demand futility under Rule 23.1, as analyzed under the two-prong Aronson test. First, the Defendants were interested with regard to the granting of stock options because they stood on both sides of the transaction, as they both granted and received the options. Second, the Court found reasonable doubt that the option plan was an exercise of business judgment because the Defendants backdated the options at a price based on a year-old company valuation that was based on incomplete and deceptive information. Accordingly, Plaintiff adequately pled demand futility with particularity and raised the inferences necessary to state a claim.