1

Appeal from the Fourth Judicial District of the State of Idaho, Ada County. Hon. 

Darla Williamson, District Judge.

The decision of the district court is affirmed.

Rossman Law Group, Boise, and Robins Umeda, San Diego, California, for 

appellant. Mark Umeda argued.

Greener, Burke & Shoemaker, Boise, Douglas W. Greene, Seattle, Washington, 

and Davie Lansky, Palo Alto, California, for respondents. Barry Kaplan argued.

____________________________________

W. JONES, Justice

This case stems from a shareholder derivative action filed by Scott Orrock (Orrock) on 

behalf of Micron Technology, Inc. (Micron) against the officers and directors of Micron. The 

complaint alleged that some of the officers and directors violated state law, breached their 

fiduciary duties, abused their control, engaged in gross mismanagement, wasted corporate assets 

and were unjustly enriched thereby causing substantial loss and damages to Micron. The district 

court dismissed the action pursuant to I.R.C.P. 12(b)(6) for failure to state a claim upon which 

relief may be granted. Orrock appeals to this Court.

IN THE SUPREME COURT OF THE STATE OF IDAHO

Docket No. 35064

SCOTT ORROCK, derivatively on behalf of 

MICRON TECHNOLOGY, INC.

 Plaintiff/Appellant, 

v. 

 

STEVEN R. APPLETON, WILBUR G. 

STOVER, JR., MICHAEL W. SADLER, 

JAMES W. BAGLEY, ROBERT A. 

LOTHROP, GORDON C. SMITH, 

WILLIAM P. WEBER, THOMAS T. 

NICHOLSON and DON J. SIMPLOT,

 

 Defendants/Respondents. 

 

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Boise, June 2009 Term of Court

2009 Opinion No. 100

Filed: July 16, 2009

Stephen W. Kenyon
2

FACTUAL AND PROCEDURAL BACKGROUND

The complaint generally alleges that members of the Micron board and Micron officers 

were engaged in a scheme to manipulate the price of Dynamic Random Access Memory 

(DRAM) products. Orrock brought this derivative action for injuries suffered as a result of 

breaches of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and 

unjust enrichment, and aiding and abetting thereof. Orrock names Steven R. Appleton 

(Appleton), Wilbur G. Stover, Jr. (Stover), Michael W. Sadler (Sadler), James W. Bagley 

(Bagley), Robert A. Lothrop (Lothrop), Gordon C. Smith (Smith), William P. Weber (Weber), 

Thomas T. Nicholson (Nicholson), and Don J. Simplot (Simplot) as defendants in this action. 

Prior to filing a shareholder derivative action the plaintiff must demand that the board of the 

corporation take action. A derivative action may not be maintained unless the plaintiff can show 

that demand would be futile. The district court found that Orrock had failed to sufficiently plead 

facts showing that demand on the board would have been futile. Therefore, the district court 

dismissed this action pursuant to I.R.C.P. 12(b)(6) for failure to state a claim upon which relief 

may be granted.

The third amended complaint alleged the following facts1in relation to whether demand

on the board would be futile:

Micron is a manufacturer of memory technology and produces DRAM products. DRAM 

constitutes 95% of Micron‟s revenue. Appleton, Bagley, Lothrop, Smith and Weber served on 

the Board during the relevant period.2 These five members constitute a majority of the Board.

A Micron representative, in a 2001 email, stated that Micron would “be increasing prices 

to all of the [Original Equipment Manufacturer] customers.”

The Department of Justice (DOJ) issued a federal grand jury subpoena to Micron 

demanding documents relating to the pricing and sales of DRAM chips. In response to the 

DOJ‟s subpoena Appleton, Bagley, Lothrop, Smith and Weber allowed Micron to alter 

handwritten notes and other documents relating to the pricing and sales of DRAM products. In 

November of 2004 Appleton responded to the allegations and investigation by publicly stating 

that it was “not possible to control prices in [the DRAM] industry” and that the DOJ‟s 

 

1 Any conclusory statements are not listed in order to evaluate whether sufficient facts were pled to support the 

allegation that demand on the board would have been futile.

2 The “Relevant Period” is defined as February 2001 to the present.
3

investigation was merely “theoretical.” Micron would be subject to billions of dollars in liability 

for any violations of applicable securities and antitrust laws.

Sadler met with CEO‟s of DRAM manufacturing companies and discussed cutting 

DRAM production. In October 2001, Sadler traveled to Munich, Tokyo, Taiwan and Seoul. 

Appleton had knowledge of Sadler‟s actions. Appleton scheduled a visit to Munich to meet with 

the CEO‟s of Infineon and Samsung regarding cut backs in DRAM production.3 In June 2002, 

Appleton, Bagley, Lothrop, Smith and Weber were aware that Micron was likely involved in the 

DRAM price-fixing conspiracy based on the DOJ‟s announcement and investigation into 

Micron‟s role and numerous news articles in the Idaho Statesman, the New York Times, and the 

Wall Street Journal. The Articles collectively contain the following information: (1) the CEO of 

Dell Computers blamed the skyrocketing prices of memory chips on “cartel-like behavior by a 

couple of DRAM suppliers;” (2) industry experts believed the DOJ investigation to be focused 

on “companies artificially pushing prices up;” (3) Micron was being investigated by a grand jury 

for anticompetitive practices which implied that criminal charges may follow; (4) Micron cut 

DRAM supply by 20% between September 2001 and March 2002, which is one of the most

dramatic cuts made by a DRAM manufacturer; (5) DRAM prices were on average $1.97 each in 

the fourth quarter of “last year” and $4.50 each in the first quarter of 2002; (6) the vice president 

of Mosel-Vitelic “confirmed that his company had reached an agreement with Hynix and 

Samsung Electronics to push up DRAM prices to $3 a chip by stopping dumping of the chip;” 

and (7) twenty-six class action lawsuits had been filed naming Micron as a defendant with 

allegations of secrecy and conspiracy to fix memory prices. Micron‟s Board took no 

investigatory action in response to these allegations by the news sources. Specifically, Appleton, 

Bagley, Lothrop, Smith and Weber conducted no investigation as to whether any of Micron‟s 

employees were involved in the alleged conspiracy or whether Micron would be subjected to 

liability if such a conspiracy existed.

Forbes magazine called Appleton the “worst performing boss in America.” Forbes listed 

Appleton‟s annual compensation based on a six-year average at $7.8 million despite an overall 

decrease in Micron‟s stock.

Micron has an on-going business relationship with Lam Research Corporation (Lam) for 

semiconductor manufacturing equipment and related services. Over a five-year period Micron 

 

3 The wording in the complaint indicates that this trip never occurred.
4

paid Lam $326.5 million for semiconductor manufacturing equipment and related services. 

Bagley is the current Executive chairman and former CEO of Lam. Mercedes Johnson 

(Johnson)4served as Senior Vice President of Finance for Lam.

Lothrop, Smith and Simplot were business associates at the J.R. Simplot Company which 

is an agribusiness company. Lothrop served as Senior Vice President from 1986-1991. Smith 

served in various management positions from 1980-1994, including three years as President and 

CEO and seven years as CFO. Simplot served as President of Simplot Financial Corporation 

from 1985-1992, which is a wholly owned subsidiary of the J.R. Simplot Company. Simplot has 

also worked for the J.R. Simplot Company since 1955 in various capacities, including director.

Smith had access to internal corporate documents, conversations and other non-public 

information. While in possession of this information Smith sold 10,000 shares of Micron stock 

for proceeds of $352,400.5 On July 20, 2007, Smith made certain accusatory statements to the 

Idaho Statesman, such as: (1) Micron is in need of new management and potentially a new 

Board; (2) this “change at the top” should have been made a long time ago; (3) the Board was 

not prepared to make any necessary changes; (4) the Board is “very passive” and not “wellinformed;” (5) if the Board had been more “aggressive” and “inquiring” any damage caused to 

Micron due to faulty management could have been avoided; (6) Smith was equally at fault for his 

failure to timely speak out against Appleton and other members of the Board; and (7) the 

business relationship between Bagley and Lam is so strong that Bagley would not speak out 

against Appleton. On July 25, 2007 Smith resigned from the Micron Board.

The Governance and Compensation Committee at Micron reviews and approves the 

CEO‟s compensation. This Committee is responsible for: (1) evaluating director and Board 

committee member compensation, (2) recommending the appropriate level of director 

compensation, (3) reviewing and approving corporate goals and objectives relevant to the CEO‟s 

compensation, (4) evaluating the CEO‟s performance in light of the goals and objectives, (5) 

determining the CEO‟s compensation level, (6) reviewing performance of the individual 

directors, (7) determining whether a director should be nominated for an additional term, and (8) 

oversight of the Board‟s evaluation of it‟s performance and the performance of management. 

Lothrop and Weber consist of two-thirds of the Governance and Compensation Committee.

 

4

Johnson was a board member at the time this complaint was filed, but not a named defendant in the action.

5

Smith is one of the named directors accused by Orrock of engaging in illegal insider selling for proceeds obtained 

from the sale of Micron stock.
5

The Audit Committee is responsible for, (1) conducting a quarterly review of the 

Company‟s system of internal controls, and (2) periodically reviewing, along with Micron‟s 

General Counsel, Micron‟s compliance with legal and regulatory requirements. Lothrop, Smith 

and Weber were all members of the Audit Committee at some point during the relevant period.6

Smith and Weber have received an additional $10,000 in compensation for holding 

positions as chairmen of the Audit Committee and Governance and Compensation Committee. 

Bagley, Lothrop, Smith and Weber each receive an annual retainer of $50,000.7

Appleton is primarily employed by Micron. Over a five-year period Micron paid 

Appleton $1,268,128 in bonus compensation, $2,696,114 in salary, $851,900 in restricted stock 

awards and granted Appleton options to purchase 2,350,000 shares of stock. Compensation for 

Appleton is determined by the Governance and Compensation Committee.

Orrock further alleged that demand on the individual shareholders of Micron would be 

futile because, (1) Micron is a publicly held company with over 618 million shares outstanding, 

(2) such demand would be impossible because Orrock has no means to discover names, 

addresses or phone numbers of the shareholders, and (3) regardless if the shareholders could be 

discovered, demand would cause Orrock a huge expense.

Orrock then alleges the following conclusions follow from the above stated facts:

Demand on Appleton, Bagley, Lothrop, Smith and Weber would be futile because they 

each face a substantial likelihood of liability for their breaches of fiduciary duties to Micron as a 

result of their involvement and conduct relating to the price-fixing conspiracy. Each of the 

above directors knew or consciously ignored Micron‟s role in the DRAM price-fixing conspiracy 

and took no action to prevent liability on behalf of Micron, thereby subjecting the named 

directors to personal liability. As information developed as to the existence of a DRAM pricefixing scheme the above named directors failed to investigate if employees were involved and 

failed to mitigate any damages on behalf of Micron.

Demand on Lothrop, Smith and Weber would be futile because they would be subjected 

to liability pursuant to their roles on the Audit Committee. The members of the Audit 

Committee may be subject to liability for breach of fiduciary duties of due care, loyalty and good 

 

6 Orrock cites Micron‟s Proxy Statement as filed with the SEC as the source of this information.

7 The pleadings do not indicate the purpose of this retainer.
6

faith because the Audit Committee failed to take action or prevent directors, officers or 

employees from engaging in DRAM price-fixing.

Demand on Appleton, Bagley and Smith would be futile because they lack independence 

from Lothrop and Weber; as members of the Governance and Compensation Committee Lothrop 

and Weber determine each director‟s salary. Appleton, Bagley and Smith lack independence 

because it would jeopardize their personal financial compensation.8 Demand on Bagley, 

Lothrop, Smith and Weber would be futile because they lack independence because of their 

interest in maintaining their positions on the Board and to preserve their substantial 

compensation.

Demand on Bagley would be futile because he lacks independence in evaluating 

Appleton‟s behavior because of Bagley‟s business involvement with Lam and Lam‟s business 

relationship with Micron.

Demand on a majority of the Board, that is Appleton, Bagley, Lothrop, Smith and Weber, 

would be futile because they have not exercised independent objective judgment in deciding 

whether to bring this action or whether to vigorously prosecute this action because its members 

are interested personally in the outcome because their actions have subjected Micron to liability, 

thereby subjecting themselves to personal liability. The above individuals, due to their interrelated business, professional and personal relationships, have conflicts of interest that prevent 

the Board from taking action on behalf of Micron.

ISSUE ON APPEAL

Whether the district court erred in granting defendant‟s motion to dismiss pursuant to 

I.R.C.P. 12(b)(6).

STANDARD OF REVIEW

Both parties state that Delaware law applies in this case because Delaware is the state of 

incorporation for Micron. See Kamen v. Kemper Fin. Services, Inc., 500 U.S. 90, 101 (1991) 

(holding that the law of the state of incorporation generally governs the internal matters and 

governance of a corporation and that whether demand is required relates directly to the internal 

governance of the corporation); See also Sword v. Sweet, 140 Idaho 242, 246, 92 P.3d 492, 496 

(2004) (one of the factors used to determine the proper choice of law for contracting parties 

 

8

In the complaint, Orrock lists the names of all the members of the Board who served at any point during the 

Relevant Period. To prevent confusion, this opinion only discusses the members of the board named as defendants.
7

would be the state of incorporation). However, the parties go a step further and state that 

Delaware employs a de novo review, and that is the appropriate standard of review for this case.9 

This Court declines to apply a foreign jurisdiction‟s procedural law regardless if we are applying 

that jurisdiction‟s substantive law. See Sword, 140 Idaho at 247, 92 P.3d at 497 (where this 

Court applied Idaho‟s standard of review to the procedural aspect of the claim and Indiana‟s law 

for the substantive portions of the claim). Therefore, Idaho law will dictate the procedural 

aspects of this case and Delaware law applies to the substantive claims.

“[T]he following defenses shall be made by motion: . . . (6) to dismiss for failure of the 

pleading to state a claim upon which relief can be granted[.]” I.R.C.P. 12(b)(6). “In reviewing a 

ruling on a motion to dismiss for failure to state a claim upon which relief may be granted, the 

question is whether the non-movant has alleged sufficient facts in support of his claim, which if 

true, would entitle him to relief.” Rincover v. Dep’t of Fin., 128 Idaho 653, 656, 917 P.2d 1293, 

1296 (1996). This Court makes “every reasonable intendment” in order to “sustain a complaint 

against a motion to dismiss for failure to state a claim.” Idaho Comm’n on Human Rights v. 

Campbell, 95 Idaho 215, 217, 506 P.2d 112, 114 (1973). In a derivative action “[t]he complaint 

shall . . . allege with particularity the efforts, if any, made by the plaintiff to obtain the action 

which plaintiff desires from the directors . . . and the reasons for the plaintiff‟s failure to obtain 

the action or for not making the effort.” I.R.C.P. 23(f) (emphasis added).

ANALYSIS

The district court did not err in granting defendant’s motion to dismiss pursuant to 

I.R.C.P. 12(b)(6).

A stockholder‟s derivative action is an action brought by one or more 

stockholders of a corporation to enforce a corporate right or remedy a wrong to 

the corporation in cases where the corporation, because it is controlled by the 

wrongdoers or for other reasons fails and refuses to take appropriate action for its 

own protection.

McCann v. McCann, 138 Idaho 228, 233, 61 P.3d 585, 590 (2002) (quoting 19 Am. Jur. 2d 

Corporations § 2250, 151-52 (1986)). “To prevent abuse of [a shareholder derivative suit] . . . 

equity courts established as a precondition „for the suit‟ that the shareholder demonstrate „that 

the corporation itself had refused to proceed after suitable demand, unless excused by 

 

9 Delaware does review the sufficiency of the pleadings in a stockholder derivative action de novo. Brehm v. Eisner, 

746 A.2d 244, 253 (Del. 2000).
8

extraordinary conditions.‟” Kamen, 500 U.S. at 95-96 (quoting Ross v. Bernhard, 396 U.S. 531, 

534, 1970)). The demand requirement “affords the directors an opportunity to exercise their 

reasonable business judgment[.]” Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 533 (1984). 

“[T]he function of the demand doctrine in delimiting the respective powers of the individual 

shareholder and of the directors to control corporate litigation clearly is a matter of „substance,‟ 

not „procedure.‟” Kamen, 500 U.S. at 96-97.

Any factual allegations will be accepted as true, unless they are purely conclusory. Rales 

v. Blasband, 634 A.2d 927, 931 (Del. 1993). The test in a shareholder derivative action is 

whether the plaintiff alleged “particularized facts to creating a reasonable doubt that a majority 

of the Board would be disinterested or independent in making a decision on a demand.” Id. at 

930. To determine whether demand is futile the court must decide “whether, under the 

particularized facts alleged, a reasonable doubt is created that: (1) the directors are disinterested 

and independent [or] (2) the challenged transaction was otherwise the product of a valid exercise 

of business judgment.” Brehm v. Eisner, 746 A.2d at 253-54 (citing Aronson v. Lewis, 473 A.2d 

805, 814 (Del. 1984) (overruled on other grounds)).

Accepting all the facts alleged as true, Orrock insufficiently pled that demand on a 

majority of the Board at Micron would be futile. The facts generally show that Appleton has a 

significant financial interest at stake in the matter and may be subjected to personal liability for 

his failure to act in light of allegations of Micron‟s involvement in price-fixing. However, there 

are insufficient facts which tend to show that a majority of the other board members had 

knowledge of any DRAM price-fixing among DRAM manufacturers as reported in the news

sources, that any of the board members consciously disregarded any of the “red flags,”

10 or that 

the Board members failed to investigate or take remedial action.

11

Orrock did not request access to the books and records of Micron to investigate whether 

information existed within the company records which may tend to support his allegations. A 

simple request for access to the company records might have indicated whether an investigation 

was in fact conducted by Micron‟s board or information was ignored by Micron‟s board, or 

whether Micron‟s board refuses access to the company records. The complaint was insufficient 

 

10 Orrock repeatedly referred to the “red flags” that should have warranted an investigation by the board as to 

whether Micron was engaged in any DRAM price-fixing scheme. Those “red flags” consist of the newspaper 

articles, the DOJ investigation, and various other statements made to the public.

11 Orrock alleges that the Board failed to investigate or take remedial action but does not state what, if any, action he 

took to discover what the Board may or may not have done in either regard.
9

to withstand an I.R.C.P. 12(b)(6) motion for failure to state a claim upon which relief may be 

granted. Shareholder derivative actions require the plaintiff to plead with particularity; Orrock‟s 

third amended complaint insufficiently pled that demand on the Board would be futile.

CONCLUSION

For the foregoing reasons, this Court affirms the decision of the district court. Costs to 

Respondent.

Chief Justice EISMANN, Justices BURDICK and HORTON, CONCUR.

J. JONES, J., specially concurring.

I concur in the Court‟s opinion because, even after four tries, the plaintiff was unable to 

adequately plead that he was excused from the requirement of making demand upon the board of 

directors to take remedial action. Several aspects of the plaintiff‟s case, particularly the timing 

aspects, present concerns that deserve mention. 

It must first be acknowledged that shareholder derivative actions provide a useful tool for 

redress where corporate management wastes corporate assets or otherwise harms the interests of 

the corporation. However, the remedy is designed for sparing use and various mechanisms have 

been put in place to winnow out cases where shareholder complaints lack substance. In order to 

pursue a case, the shareholder must allege particularized facts that management engaged in 

conduct detrimental to the corporation, that the shareholder owned stock in the corporation at the 

time of such conduct, that the shareholder made demand upon the directors to take remedial 

action, and that no such action was taken. While Orrock pointed to conduct by certain 

management personnel that was clearly detrimental to Micron – the price-fixing which resulted 

in a number of civil damage actions being filed against Micron – he failed to state any facts that 

would (1) indicate the defendant directors had sufficient contemporaneous knowledge of the 

price-fixing activity to do anything about it before it ended, or (2) indicate the directors took no 

investigative or remedial action thereafter. None of the four versions of the complaint say what, 

if any, action Orrock took between June of 2002, when it became generally known the 

Department of Justice (DOJ) was investigating allegations that Micron had participated in a 

price-fixing conspiracy, and March of 2006, when Orrock filed his initial complaint.

According to Orrock‟s third amended complaint, when it became known in June of 2002 

that the DOJ was investigating Micron‟s possible involvement in fixing the price of DRAM 

chips, there was “no doubt” the defendant directors were aware that Micron was likely involved 
10

in the DRAM price-fixing conspiracy. He alleges that, notwithstanding such awareness, the 

directors did nothing to investigate or pursue remedial action. It would seem that the price-fixing 

was over and done with by the time the directors should have become aware of it, based on 

Orrock‟s allegations, but at that point the directors could do nothing to put a stop to it. The horse 

had escaped the barn. The only course of action available to the directors at that time was to 

look into the facts, find out what management personnel may have done, and, if in the best 

interest of the company at that point, pursue remedial action against them. The directors had a 

responsibility to investigate once the DOJ inquiry became known but Orrock provides nothing, 

other than speculation, to show that they did not do so. He does not allege in any of the four

versions of his complaint that he sought to obtain information from the corporation, to examine 

corporate records, or to otherwise determine what, if anything, the corporation was doing or had 

done. One might expect that a concerned shareholder, reading the news articles generated by the 

DOJ investigation, would have taken some action or demanded that the board of directors

investigate and attempt to rectify the wrongdoing sometime earlier than almost four years later, 

when Orrock filed his initial complaint. If Orrock was, indeed, a concerned shareholder between 

June 2002 and March 2006, it would not have taken a great deal of effort to write up a summary 

of the news accounts and send it to the board of directors to demand remedial action.

Making a demand pursuant to I.R.C.P. 23(f) is not an extremely onerous undertaking. As 

we have explained:

The demand on the directors need not assume a particular form nor need it be 

made in any special language. However, the stockholder must make an earnest 

and sincere, and not a feigned or simulated, effort to induce the directors to take 

remedial action in the corporate name. Statements should be presented to the 

directors showing the wrong complained of, accompanied by sufficient 

responsible data which will enable the directors to determine whether litigation 

could be engaged in with some hope of success. The shareholder must state facts, 

not mere general charge and conclusions.

The demand should give the directors a fair opportunity to initiate the action 

which the shareholder wants to undertake, and name the potential defendants, as 

well as the shareholder making the demand. 

McCann v. McCann, 138 Idaho 228, 235, 61 P.3d 585, 592 (2002) (quoting 19 Am. Jur. 2d 

Corporations § 2278, 173-74 (1986)). 

The Delaware Supreme Court explains the purpose of making such a demand:
11

The demand requirement serves a salutary purpose. First, by requiring exhaustion 

of intracorporate remedies, the demand requirement invokes a species of 

alternative dispute resolution procedure which might avoid litigation altogether. 

Second, if litigation is beneficial, the corporation can control the proceedings. 

Third, if demand is excused or wrongfully refused, the stockholder will normally 

control the proceedings.

The jurisprudence of Aronson [v. Lewis, 473 A.2d 805 (Del. 1984)] and its 

progeny is designed to create a balanced environment which will: (1) on the one 

hand, deter costly, baseless suits by creating a screening mechanism to eliminate 

claims where there is only a suspicion expressed solely in conclusory terms; and 

(2) on the other hand, permit suit by a stockholder who is able to articulate 

particularized facts showing that there is a reasonable doubt either that (a) a 

majority of the board is independent for purposes of responding to the demand, or 

(b) the underlying transaction is protected by the business judgment rule.

Brehm v. Eisner, 746 A.2d 244, 255 (Del. 2000) (quoting Grimes v. Donald, 673 A.2d 1207, 

1216-17 (Del. 1996)). 

So, the demand is necessary in order to give the board of directors the opportunity to do 

the right thing. There is no indication as to what kept Orrock from making a demand, even at the 

late date he decided to take action against Micron‟s management. In order to survive a motion to 

dismiss, it was Orrock‟s obligation to particularly allege the efforts he made to obtain the action 

which he desired from the directors and the reasons for his failure to obtain the action. I.R.C.P. 

23(f). While he cited articles that appeared in the media and speculated about what the board 

may or may not have done, he did not allege he took any action whatsoever to find out what the 

facts were or to get the directors to do something about it.

The question also arises as to what action the directors might have taken when it became 

known that corporate management personnel had been involved in the DRAM price-fixing 

conspiracy. Investigation by the directors was obviously required; their fiduciary obligations 

would have dictated that they search out the facts. The complaint contains no fact-based 

allegation showing they failed to do so. Orrock‟s complaint indicates that Micron suffered 

substantial damage because of the dozens of civil anti-trust lawsuits brought against it. No doubt 

that is so. Orrock‟s complaint assumes that the only remedial action the directors could have 

taken was to file suit against corporate management personnel who took part in the price-fixing 

conspiracy. However, the directors may have concluded that taking action against the responsible 

management personnel would have aggravated the situation, providing additional fodder to those 
12

seeking anti-trust damages against the company. In other words, the best strategy to protect 

Micron‟s interests, after the misconduct became known, may have been to hunker down until the 

litigation storm blew over. Because Orrock apparently made no effort to find out what the 

directors may or may not have done to protect the company‟s interests and since we are provided 

with no particularized facts indicating that the directors did absolutely nothing, we can only 

speculate. With no factual allegations indicating to the contrary, the business judgment rule 

presumes the directors‟ actions were in Micron‟s interest. 

Another difficulty with the complaint relates to the requirement that a shareholder 

derivative plaintiff allege he was a shareholder “at the time of the transaction of which the 

plaintiff complains.” I.R.C.P. 23(f). In his four versions of the complaint, Orrock merely alleges 

that he “is, and was at times relevant hereto, an owner and holder of Micron common stock.” 

The complaints define a “Relevant Period” as being February 2001 to the “present”, but do not 

allege Orrock was a shareholder during that defined period. The actual period in which Orrock 

appears to allege the defendant directors failed to take action to investigate and remediate the 

price-fixing was June 2002 to March 2006. It would have been easy enough to allege that this 

was the time period during which Orrock owned Micron stock. Since a derivative action is only 

available to a person who was a shareholder at the time of the transaction that is complained of in 

the complaint, it is not asking too much that the shareholder wishing to pursue a derivative action 

assert, affirmatively, that he held the stock during that period of time. 

Orrock‟s failure to affirmatively allege his ownership of Micron stock during the 

“Relevant Period”, combined with the almost four years that elapsed between disclosure of the 

DOJ investigation and the filing of the initial complaint, gives the appearance of a Johnny-comelately lawsuit where the decision to sue was made only after most of the facts relating to the 

price-fixing conspiracy had become known and the time to make an effective demand for redress 

had long passed. Again, without the necessary factual allegations, one can only speculate. 

The derivative action provides shareholders a useful and necessary avenue of redress 

where corporate management acts contrary to the interests of the corporation. However, a 

shareholder pursuing this course must observe the limitations designed to prevent misuse of the 

derivative action. Among other things, the shareholder must first give management the 

opportunity to correct the misconduct, unless excused for some lawful reason. Here, Orrock 

simply has not made the necessary fact-based allegations, even after three amended versions of 
13

the initial complaint, to show that he should be excused from making a demand. Thus, the 

district court acted properly in dismissing the case.