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SJC-12137

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL NO. 129 

BENEFIT FUND1 vs. JOSEPH M. TUCCI & others2 (and eight 

consolidated cases3).

Suffolk. November 7, 2016. - March 6, 2017.

Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & 

Budd, JJ.

Corporation, Stockholder's derivative suit, Merger, Sale of 

assets, Valuation of stock, Board of directors. Practice, 

Civil, Class action, Dismissal.

 

1 Individually and on behalf of all others similarly 

situated.

2 Joseph M. Tucci, Jose E. Almeida, Michael W. Brown, Donald 

J. Carty, Randolph L. Cowen, James S. Distasio, John R. Egan, 

William D. Green, Edmund F. Kelly, Jami Miscik, Paul Sagan, 

Laura J. Sen, EMC Corporation, Denali Holding Inc., Dell Inc., 

and Universal Acquisition Co.

3 Breffni Barrett vs. Joseph M. Tucci & others; City of 

Miami Police Relief and Pension Fund vs. Joseph M. Tucci & 

others; Karl Graulich IRA & others vs. Joseph M. Tucci & others; 

Lawrence Frank Vassallo vs. EMC Corporation & others; Howard 

Lasker vs. EMC Corporation & others; Local Union No. 373 U.A. 

Pension Plan vs. EMC Corporation & others; City of Lakeland 

Employees' Pension and Retirement Fund vs. Joseph M. Tucci & 

others; Su Ma vs. Joseph M. Tucci & others.
2

Civil actions commenced in the Superior Court Department on 

October 15, October 16, October 19, October 20, October 23, 

October 28, and October 29, 2015.

After consolidation, a motion to dismiss was heard by 

Edward P. Leibensperger, J.

The Supreme Judicial Court granted an application for 

direct appellate review.

Jason M. Leviton (Michael G. Capeci, of New York, & Joel A. 

Fleming also present) for International Brotherhood of 

Electrical Workers Local No. 129 Benefit Fund & others.

Thomas J. Dougherty (Kurt Wm. Hemr also present) for Joseph 

M. Tucci & others.

John Pagliaro & Martin J. Newhouse, for New England Legal 

Foundation, amicus curiae, submitted a brief.

Ian D. Roffman & Matthew J. Connolly, for Associated 

Industries of Massachusetts, amicus curiae, submitted a brief.

BOTSFORD, J. In these consolidated cases, shareholders of 

a publicly traded corporation claim that a merger transaction 

proposed by the board of directors will result in the effective 

sale of the corporation for an inadequate price. The question 

we consider is whether they may bring that claim directly 

against the board members, or must bring it as a derivative 

claim on behalf of the corporation. We answer that the claim 

must be brought derivatively.4

 

4 We acknowledge the amicus briefs submitted by Associated 

Industries of Massachusetts and New England Legal Foundation.
3

Background. The plaintiffs appeal from the dismissal of 

their first amended class action complaint (complaint)5 alleging 

breaches of fiduciary duty by the board of directors of EMC 

Corporation (EMC) arising from a merger between EMC and Denali 

Holding Inc. and Dell Inc. (collectively, Dell). At the time 

that they commenced these actions, the plaintiffs were 

shareholders of EMC; the proposed merger would result in the 

shareholders receiving a cash payment in exchange for their EMC 

stock. The plaintiffs' complaint alleges that they bring the 

actions on behalf of a class consisting of "all other 

shareholders of EMC . . . who are or will be deprived of the 

opportunity to maximize the value of their shares of EMC as a 

result of the [directors'] breaches of fiduciary duty and other 

misconduct." The plaintiffs assert that the members of EMC's 

board of directors violated their fiduciary duties, allegedly 

owed to both EMC and the shareholders, by "(i) failing to take 

steps to maximize the value of EMC stock; and (ii) agreeing to 

unreasonably preclusive deal protection provisions, thereby 

hindering any potential bid that may have been superior" to the 

sale of EMC to Dell.

 

5 The first amended class action complaint (complaint) was 

filed by the International Brotherhood of Electrical Workers 

Local No. 129 Benefit Fund (IBEW). The actions brought by the 

other plaintiffs were consolidated with IBEW's action prior to 

the dismissal of the complaint.
4

We recite the pertinent facts alleged in the complaint, 

taking as true its factual allegations and drawing all 

reasonable inferences in the plaintiffs' favor. Blank v. 

Chelmsford Ob/Gyn, P.C., 420 Mass. 404, 407 (1995). EMC is a 

Massachusetts corporation providing information technology 

products and services in a global market, with its principal 

place of business in Hopkinton. Its stock is traded on the 

NASDAQ stock exchange.

EMC has a federation structure; that is, it acts as parent 

company to numerous related but independently functioning 

businesses. The defendant Joseph M. Tucci, the long-time chief 

executive officer of EMC and the architect of this federated 

structure, wanted to keep the federation of companies together. 

This caused EMC's shares to trade at a "conglomerate discount" 

because investors valued the large company less than they would 

its individual components. In the fall of 2014, an investor in 

EMC, Elliott Management (Elliott), began advocating for EMC to 

sell off the most valuable subsidiaries of the federation to 

provide maximum value to EMC's shareholders; the individual 

sales of some or all of EMC's subsidiaries would yield higher 

value per share for EMC shareholders than would sale of the 

company as a whole. Elliott argued for an alternative to the 

conglomerate discount in which VMware, one of EMC's most 

valuable subsidiaries, would be sold separately and EMC would 
5

inquire into acquisition for the remaining components. Tucci, 

fearing that Elliott would prevail in breaking up the EMC 

federation, reached an agreement with Elliott in January, 2015, 

by which Elliott was permitted to participate in the appointment 

of new directors but agreed to a limit on stock it could buy for 

a period of time. Tucci and EMC used this period to strategize 

the sale of the company to Dell. Tucci had scheduled his 

retirement several times, but continually extended the date. He

negotiated the sale of EMC and all its subsidiaries to Dell via 

his long-time friend and business associate, Michael Dell, in 

order to keep the company's federated structure intact. Tucci 

is to receive approximately $27 million in "change-in-control" 

benefits as a result of selling the entire company, a sum that 

Tucci would not have received if he had retired as planned. The 

proposed transaction also permits Dell to shelter significant 

tax liability and to retain the value locked in the subsidiaries 

through a potential break-up of the EMC federation in the 

future.

In October, 2015, Tucci announced that Dell agreed to 

acquire all of EMC for approximately $67 billion.6 Tucci used 

his influence over the other board members to convince them to 

approve the merger. The transaction was unanimously approved by 

 

6 There appears to be a discrepancy in the complaint as to 

the exact value of the transaction. Both $67 billion and $64

billion are figures used to describe its value.
6

the board and announced on October 12, 2015. In approving the 

proposed merger, the board also agreed to termination fees that 

further dissuaded competing companies from placing a higher bid 

on EMC than Dell: the merger agreement between EMC and Dell 

included a $2 billion termination fee that any higher bidder 

would have to pay before it could top the Dell bid.

Under the proposed transaction's terms, EMC shareholders 

are to receive $24.05 in cash per share and an estimated 0.111 

shares of "tracking stock" of VMware; the tracking stock does 

not provide the same rights that shares in VMware common stock 

provide. According to Elliott, selling EMC's interest in VMware 

separately would have yielded a total value for EMC's 

shareholders of over forty dollars per share. In addition, just 

before the transaction was announced, VMware announced a new 

business venture with an expected revenue of several hundreds of 

millions of dollars in 2016. This value would have been 

realized by EMC shareholders, but as a result of the transaction 

will be realized by Dell.

The plaintiff International Brotherhood of Electrical 

Workers Local No. 129 Benefit Fund (IBEW) filed a complaint on 

October 15, 2015, as a direct action against members of EMC's 

board of directors in their individual capacities. The 

defendants moved to dismiss the complaint for failure to state a 

claim pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 
7

(1974), after which eight other actions were consolidated with 

IBEW's action. After a hearing, the judge allowed the motion, 

ruling that the board owed no fiduciary duty directly to the 

shareholders in this case and that the action was necessarily 

derivative because any alleged harm to shareholders was not 

distinct from harm to the corporation. He reasoned that there 

were no allegations that any EMC shareholder would receive more 

per share in this proposed transaction than any other 

shareholder, nor were there allegations that any one shareholder 

or group of shareholders controlled the company to assure a 

positive vote on the transaction. A judgment of dismissal 

entered on December 24, 2015. The plaintiffs timely filed an 

appeal, and we subsequently granted the plaintiffs' application 

for direct appellate review.7

Discussion. The parties agree that EMC is a large,

publicly traded Massachusetts corporation, and that the 

corporate statute under which it operates is the Massachusetts 

Business Corporation Act, G. L. c. 156D (act). They also agree 

that the plaintiffs' legal claim is one for breach of fiduciary 

 

7 The defendants inform us in their brief that at a special 

shareholder meeting held on July 19, 2016, ninety-eight per cent 

of voting EMC shareholders voted to approve the merger 

transaction. See Form 8-K submitted by EMC Corporation to 

United States Securities and Exchange Commission (Sept. 9, 

2016), available at https://www.sec.gov/Archives/edgar/data/

790070/000119312516706576/d258881d8k.htm [https://perma.cc/8KTLXAGW].
8

duty by the members of EMC's board of directors and particularly 

by Tucci for failing to take steps to maximize the value of the 

shareholders' EMC stock in arranging for the merger transaction. 

As indicated at the outset, the principal question raised is 

whether the plaintiffs, as shareholders who challenge the 

fairness or validity of a proposed merger on the ground that it 

will effectively result in the sale of EMC and for them a loss 

of personal property -- their EMC stock holdings -- for an 

inadequate price, must bring their claim against the directors

as a derivative action on behalf of the corporation, or may 

bring it directly on their own behalf. We review the judge's 

allowance of the motion to dismiss de novo. Curtis v. Herb 

Chambers I-95, Inc., 458 Mass. 674, 676 (2011).

1. Derivative actions and claims. "The derivative form of 

action permits an individual shareholder to bring 'suit to 

enforce a corporate cause of action against officers, directors, 

and third parties.' . . . Devised as a suit in equity, the 

purpose of the derivative action was to place in the hands of 

the individual shareholder a means to protect the interests of 

the corporation from the misfeasance and malfeasance of 

'faithless directors and managers'" (emphasis in original; 

citations omitted). Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 

90, 95 (1991).

"The derivative action seeks, after management has failed 
9

or refused to act, to redress a wrong to a corporation or 

association (usually by a few of its shareholders or 

members) . . . . [T]he wrong underlying a derivative 

action is indirect, at least as to the shareholders. It 

adversely affects them merely as they are the owners of the 

corporate stock; only the corporation itself suffers the 

direct wrong . . . . [A] complaint alleging mismanagement 

or wrongdoing on the part of corporate officers or 

directors normally states a claim of wrong to the 

corporation: the action, therefore, is properly 

derivative" (emphasis in original; citation omitted).

Jackson v. Stuhlfire, 28 Mass. App. Ct. 924, 925 (1990). See 

Bessette v. Bessette, 385 Mass. 806, 809-810 (1982) (plaintiff 

minority stockholders' claim that majority stockholder and 

director was paid excessive salary qualifies as wrong to 

corporation that plaintiffs were required to pursue as 

derivative claim; plaintiffs' direct action against majority 

stockholder properly dismissed). To determine whether a claim 

belongs to the corporation, and is therefore derivative, "a 

court must inquire whether the shareholders' injury is distinct 

from the injury suffered generally by the shareholders as owners 

of corporate stock" (citation omitted). Stegall v. Ladner, 394 

F. Supp. 2d 358, 364 (D. Mass. 2005) (applying Massachusetts 

law).

2. Direct versus derivative. As the plaintiffs recognize, 

whether a claim asserted by stockholders of a Massachusetts 

corporation is one that may be pursued directly by them against 

the corporation's directors or must be pursued derivatively 

depends on whether the harm they claim to have suffered resulted 
10

from a breach of duty owed directly to them, or whether the harm 

claimed was derivative of a breach of duty owed to the 

corporation. See Bessette, 385 Mass. at 809. See also Stegall, 

394 F. Supp. 2d at 364, quoting Branch vs. Ernst & Young U.S., 

U.S. Dist. Ct., No. Civ. A. 93-10024-RGS (D. Mass. Dec. 22, 

1995). The plaintiffs also recognize that the act's provisions 

defining the standards of conduct applicable to corporate 

directors governs, or at least has a direct bearing on, the 

determination whether corporate directors owe a fiduciary duty 

directly to the corporation's shareholders. We turn to the act.

3. The act. Section 8.30 of the act defines the standards 

of conduct a director of a Massachusetts corporation is required 

to follow. The section provides in relevant part:

"(a) A director shall discharge his duties as a 

director, including his duties as a member of a committee:

"(1) in good faith;

"(2) with the care that a person in a like position 

would reasonably believe appropriate under similar 

circumstances; and

"(3) in a manner the director reasonably believes to 

be in the best interests of the corporation. In 

determining what the director reasonably believes to be in 

the best interests of the corporation, a director may 

consider the interests of the corporation's employees, 

suppliers, creditors and customers, the economy of the 

state, the region and the nation, community and societal 

considerations, and the long-term and short-term interests 

of the corporation and its shareholders, including the 

possibility that these interests may be best served by the 

continued independence of the corporation.
11

". . .

"(c) A director is not liable for any action taken as 

a director, or any failure to take any action, if he 

performed the duties of his office in compliance with this 

section."

G. L. c. 156D, § 8.30.

The plaintiffs argue that the provisions of § 8.30 (a) 

demonstrate that corporate directors owe a fiduciary duty to 

shareholders, but the logic and thread of their argument are 

difficult to follow. They claim that the standards set out in

§ 8.30 (a) (1)-(3) are "conjunctive," and directors are required 

to "satisfy all three prongs," but then assert that in fact the 

three "prongs" are separate. They reason that although § 8.30 

(a) (3) speaks directly about a duty owed by a director to the 

corporation, § 8.30 (a) (1) as well as § 8.30 (a) (2) --

presumably by not explicitly referencing a duty owed to the 

corporation -- "delineate duties owed to both the corporation 

and its shareholders" (emphasis in original).

The plain words of the statute contradict the plaintiffs'

interpretation. By its terms, § 8.30 (a) sets forth the three 

components of a unitary standard that is to govern a corporate 

director in performing all the duties and actions he or she 

performs as a director.8 That is, the plaintiffs' statement that 

 

8 The comment to G. L. c. 156D, § 8.30, supports our 

reading. The comment states in relevant part: "[Section 8.30]

sets forth the standard by focusing on the manner in which the 
12

§ 8.30 (a) (1) through (a) (3) are to be read conjunctively is 

correct: every duty and action by a director as director is to 

be undertaken (1) in good faith, (2) with an appropriate level 

of care, and (3) "in a manner the director reasonably believes 

to be in the best interests of the corporation." Moreover, 

although § 8.30 (a) (3) makes clear that a director may 

consider, among other interests, "the long-term and short-term 

interests of the corporation and its shareholders" (emphasis 

added), it first specifies that the director may do so only in 

the context of "determining what the director reasonably 

believes to be in the best interests of the corporation." 

Particularly in light of this specification, the plaintiffs'

proposed interpretation of § 8.30 (a) as implicitly imposing or 

recognizing a fiduciary duty owed by a corporate director 

directly to the shareholders must fail. Rather, both the 

language and structure of § 8.30 (a) persuade us that if the 

Legislature had wished to impose or recognize such a duty owed 

 

director performs his duties, not the correctness of his 

decisions, and by emphasizing the decision-making process, not 

the decision itself. Section 8.30 (a) thus requires a director 

to perform his duties in good faith, with the care that a person 

in a like position would reasonably believe appropriate under 

similar circumstances and in a manner he believes to be in the 

best interests of the corporation." "The comments to [c. 156D] 

were prepared by the attorneys who drafted the [a]ct and were 

intended to be a valuable tool in interpreting the [a]ct." 

Halebian v. Berv, 457 Mass. 620, 625 (2010).
13

to shareholders, it would have inserted into the statute an 

explicit provision to that effect.9

The plaintiffs argue that our interpretation of the statute 

is flawed, or in any event not dispositive of their claim,

because in Chokel v. Genzyme Corp., 449 Mass. 272, 278 (2007), 

we stated that "[d]irectors owe a fiduciary duty to their 

shareholders." Chokel, however, was a very different case --

even though it involved a corporation that, like EMC, was 

publicly traded. The plaintiff in Chokel owned shares of the 

company's biosurgery division tracking stock (biosurgery stock) 

and challenged a decision of the board of directors to exchange 

the biosurgery stock for the company's general division stock as 

provided for in the company's articles of organization. See id. 

at 273. The plaintiff claimed that the directors' decision 

constituted a breach of the covenant of good faith and fair

dealing implied in those articles, and also of the fiduciary 

duty owed by the directors to the shareholders. Id. In 

affirming a Superior Court judge's decision allowing the 

defendant directors' motion to dismiss, we concluded that,

accepting as true the allegations in the plaintiff's complaint, 

 

9 It goes without saying that our interpretation of G. L. 

c. 156D, § 8.30 (a) (1)-(3), as not imposing or reflecting a 

duty owed by a corporate director to the company's shareholders 

does not mean that the section authorizes a corporate director 

to act in bad faith or with a lack of care that a person in a 

like position would reasonably believe appropriate with respect 

to the corporation's shareholders.
14

no provable set of facts presented a viable claim of breach of 

the contractual implied covenant. Id. at 278. And although, as 

the plaintiffs here point out, we stated that directors owe 

their shareholders a fiduciary duty, we concluded that "[w]hen a 

director's contested action falls entirely within the scope of a 

contract between the director and the shareholders, it is not 

subject to question under fiduciary duty principles." Id. But 

more to the point is that, in Chokel itself, the only cases we 

cited in support of the statement that corporate directors owe 

their stockholders a fiduciary duty were cases that involved 

close corporations. See id., citing Demoulas v. Demoulas Super 

Mkts., Inc., 424 Mass. 501, 528-529 (1997), and Blank, 420 Mass. 

at 408. As next discussed, although directors of close 

corporations owe a fiduciary duty to the shareholders of such 

corporations, that is not the rule in Massachusetts for 

corporations generally. The statement in Chokel, 449 Mass. at 

278, that "[d]irectors owe a fiduciary duty to their 

shareholders" was not necessary to the resolution of that case, 

and we think it was too broad. The statement does not apply 

here.

4. Massachusetts corporate law principles. As reflected 

in § 8.30 (a), its antecedent statute, G. L. c. 156B, § 65,10 and 

 

10 General Laws c. 156B, § 65, provides in pertinent part:
15

decisions reflecting our common-law principles,11 the general 

rule of Massachusetts corporate law is that a director of a 

Massachusetts corporation owes a fiduciary duty to the 

corporation itself, and not its shareholders -- although, as

indicated in the previous paragraph and as the motion judge 

recognized, there are at least two exceptions. First, there is

a special rule for close corporations: "[i]n the case of a 

close corporation, which resembles a partnership, duties of 

loyalty extend to shareholders, who owe one another 

substantially the same duty of utmost good faith and loyalty in 

 

"A director, officer or incorporator of a corporation 

shall perform his duties as such, including, in the case of 

a director, his duties as a member of a committee of the 

board upon which he may serve, in good faith and in a 

manner he reasonably believes to be in the best interests 

of the corporation, and with such care as an ordinarily 

prudent person in a like position would use under similar 

circumstances. . . . The fact that a director, officer or 

incorporator so performed his duties shall be a complete 

defense to any claim asserted against him . . . ." 

(Emphasis added.) 

11 See, e.g., Leventhal v. Atlantic Fin. Corp., 316 Mass. 

194, 199 (1944) ("a stockholder does not stand in any fiduciary 

relation with the other stockholders or with the directors of 

the company"); Spiegel v. Beacon Participations, Inc., 297 Mass. 

398, 410 (1937) ("The directors of an ordinary business 

corporation often have been called trustees and their relation 

to the corporation is at least fiduciary. They are bound to act 

with absolute fidelity and must place their duties to the 

corporation above every other financial or business 

obligation"); Jernberg v. Mann, 358 F.3d 131, 137 (1st Cir. 

2004) ("the same duty of trust and strict good faith owed by 

directors and officers to the corporation itself did not extend 

from them to the individual stockholders," discussing Goodwin v. 

Agassiz, 283 Mass. 358, 360-361 [1933]).
16

the operation of the enterprise that partners owe to one 

another, a duty that is even stricter than that required of 

directors and shareholders in corporations generally" (footnote 

omitted). Demoulas, 424 Mass. at 528-529. See Donahue v. Rodd 

Electrotype Co. of New England, 367 Mass. 578, 593-594 (1975)

("stockholders in the close corporation owe one another 

substantially the same fiduciary duty in the operation of the 

enterprise that partners owe to one another" and direct cause of 

action against directors could be maintained in this context). 

Second, where a controlling shareholder who also is a director 

proposes and implements a self-interested transaction that is to 

the detriment of minority shareholders, a direct action by the 

adversely affected shareholders may proceed. Coggins v. New 

England Patriots Football Club, Inc., 397 Mass. 525, 532-533

(1986), S.C., 406 Mass. 666 (1990). Neither of these 

exceptions, however, applies in this case.12 EMC is a very 

 

12 We also consider and reject the plaintiffs' claim that 

G. L. c. 156D, § 2.02 (b) (4), assumes a fiduciary duty between 

directors and shareholders always exists. Section 2.02 (b) (4) 

provides that a corporation may include a provision in its 

bylaws limiting the liability of a director, but if it chooses

to include such a provision, it may not limit the liability of a 

director for a breach of fiduciary duties owed to the 

corporation or its shareholders. Id. Although this section 

recognizes that a fiduciary duty may be owed by corporate 

directors to the corporation's shareholders and, if so, it may 

not be eliminated or limited through adoption of an exculpatory 

bylaw, we interpret the section to mean that if a director owes 

a fiduciary duty to the corporation's shareholders -- which we 

recognize to be the case in at least the two circumstances 
17

large, publicly traded corporation with over 1.9 billion shares 

of stock outstanding, and there is no differential between any 

class of stock or group of shareholders. This is also not a 

transaction proposed by a director-majority shareholder that 

affects minority shareholders adversely as compared to the 

majority shareholders. As the motion judge noted, the wrong 

alleged by the plaintiffs, undervaluing EMC to secure the merger 

and sale of the federation of companies, qualifies as a direct 

injury to the corporation, the entity to which the directors 

clearly owed a fiduciary duty of good faith and loyalty. 

Flowing from that alleged injury is a claimed derivative injury 

to each shareholder, whose individual shares, as a consequence 

of the asserted undervaluing of EMC itself, are consequently

undervalued as well. We agree with the motion judge that the 

injury posited by the plaintiffs, and the alleged wrong causing 

it, fit squarely within the framework of a derivative action. 

Because the plaintiffs did not bring their claim as a derivative 

action, their complaint was properly dismissed.13

 

described here in the text -- liability for a breach of that 

duty may not be eliminated through the vehicle of a bylaw.

13 Derivative proceedings brought on behalf of a 

Massachusetts corporation are governed by the act. Halebian, 

457 Mass. at 623. See G. L. c. 156D, §§ 7.40–7.47. There is no 

dispute that the plaintiffs did not follow the pertinent 

requirements of the act, including the requirement of making "a

written demand . . . upon [EMC] to take suitable action." G. L. 

c. 156D, § 7.42 (1).
18

5. Delaware law. In reaching this result, we necessarily 

have rejected the plaintiffs' argument that shareholders 

claiming the loss of their stock at an unfair price on account 

of allegedly improper actions by the board of directors is a 

direct rather than a derivative claim. The plaintiffs have a 

response, however, which is that we should change our approach 

and follow those corporate law jurisdictions, including in 

particular Delaware, that treat the plaintiffs' type of claim --

a challenge to the fairness of a merger transaction on the 

ground that the consideration is inadequate -- as a direct 

rather than a derivative claim. See Parnes v. Bally 

Entertainment Corp., 722 A.2d 1243, 1245 (Del. 1999) ("A

stockholder who directly attacks the fairness or validity of a 

merger alleges an injury to the stockholders, not the 

corporation . . ."). See also Tooley v. Donaldson, Lufkin, &

Jenrette, Inc., 845 A.2d 1031, 1033, 1037-1039 (Del. 2004).14 We 

 

14 As a general matter, the plaintiffs urge us to adopt the 

approach of the Delaware Supreme Court to the determination 

whether a particular shareholder claim is direct or derivative. 

The Delaware court has concluded that the determination in each 

case must "turn solely on the following questions: (1) who 

suffered the alleged harm (the corporation or the suing 

stockholders, individually); and (2) who would receive the 

benefit of any recovery or other remedy (the corporation or the 

stockholders, individually)?" Tooley v. Donaldson, Lufkin, & 

Jenrette, Inc., 845 A.2d 1031, 1033 (Del. 2004). The court in 

Tooley rejected the concept that a suit must be maintained 

derivatively if, as here, the claimed injury is one suffered 

equally by all shareholders, concluding that the concept was 

confusing and inaccurate. Id. at 1037. As we indicate in the 
19

decline to do so. Delaware's General Corporation Law, Del. 

Code. Ann. tit. 8, c. 1, differs from the act, and has no 

equivalent of § 8.30. Delaware also has a history of asserting 

that directors stand in a fiduciary relation to stockholders of 

the company, in contrast to our own precedent. See In re MONY 

Group, Inc. Shareholder Litig., 853 A.2d 661, 676 (Del. Ch. 

2004) (board of directors "owes its fiduciary duties to 

corporation and its stockholders"); Crescent/Mach I Partners, 

L.P. v. Turner, 846 A.2d 963, 979 (Del. Ch. 2000) ("Directors 

have an unyielding fiduciary duty to protect the interests of 

the corporation and the stockholders alike").

6. Equitable relief. The plaintiffs claim that the result 

we reach is unjust because even if they had sought to follow the 

statutory procedures governing derivative claims, see G. L. 

c. 156D, §§ 7.40–7.47, it was likely that the defendants would 

have taken steps to assure that the merger occurred before any 

derivative suit could be concluded, and, under our law, once the

plaintiffs were no longer shareholders, they could not have 

continued to seek derivative relief because their ownership 

rights in EMC would have been extinguished. We agree that if a 

 

text, Delaware corporate law principles and those of 

Massachusetts are not always congruent. We continue to adhere 

to the view that whether a claim is direct or derivative is 

governed by whether the harm alleged derives from the breach of 

a duty owed by the alleged wrongdoer -- here the directors -- to 

the shareholders or the corporation. See Bessette v. Bessette, 

385 Mass. 806, 809 (1982).
20

shareholder no longer owns shares in a corporation, as a general 

rule, the shareholder would no longer have standing to pursue a 

derivative claim on behalf of the corporation. See Billings v. 

GTFM, LLC, 449 Mass. 281, 296 (2007). But we disagree that this 

means it is unfair or inequitable to require the plaintiffs and 

similarly situated shareholders to pursue derivative relief in a 

case such as this one.

The act clearly illustrates the procedures to follow to 

bring a derivative claim. A shareholder must make a demand 

pursuant to G. L. c. 156D, § 7.42. The corporation then must 

determine whether it would be in the best interests of the 

corporation to take over the shareholder's claim, and the 

statute specifies alternative ways that the corporation may

undertake to make this determination. G. L. c. 156D,

§ 7.44 (b). If the demand is rejected, the shareholder may 

commence suit, in accordance with the time requirements in

§ 7.42 (2). In this case, at any time between the time the 

proposed merger transaction was announced on October 12, 2015, 

and the date the merger transaction was completed, September 7, 

2016, the plaintiffs could have made a derivative demand on EMC. 

They did not do so.15 We find nothing in the statutory 

 

15 Moreover, if the plaintiffs had filed suit after having 

made such a demand that was rejected, and it appeared that the 

proposed merger might likely be completed while the suit was 
21

provisions governing derivative proceedings to indicate or 

suggest that it offered the plaintiffs here, and other 

shareholders in the plaintiffs' position, a hollow or inadequate 

form of relief.16

Conclusion. For the foregoing reasons, the Superior 

Court's order dismissing the plaintiffs' complaint is affirmed.

So ordered.

 

pending, the plaintiffs could have sought preliminary injunctive 

relief.

16 In that regard, it is important to keep in mind that a 

stockholder's derivative action is equitable in nature, and 

"[e]quitable considerations are relevant." Martin v. F.S. Payne 

Co., 409 Mass. 753, 760 (1991). See Samia v. Central Oil Co. of 

Worcester, 339 Mass. 101, 123-124 (1959). See also Marquis 

Theatre Corp. v. Condado Mini Cinema, 846 F.2d 86, 92 n.5 (1st 

Cir. 1988) ("Generally speaking, any recovery in a stockholder's 

derivative action suit belongs to the corporation. . . . Under 

some circumstances, however, the courts have allowed the direct 

compensation of minority shareholders on a pro rata basis . . ." 

[emphasis in original; citation omitted]).