Opinion ID: 2633558
Heading Depth: 1
Heading Rank: 11

Heading: Making a demand on AMERCO's board of directors

Text: Appellants essentially allege that the AMERCO board members knew or should have known of the challenged acts, at times through their participation therein, but nonetheless failed to prevent or remedy the wrongs. Appellants also assert that a majority of the board intentionally signed false and misleading public disclosure statements designed to conceal the substance of the transactions from the AMERCO shareholders. Since, for the most part, appellants have alleged a failure to properly supervise or a willful disregard of duties, they do not challenge any board-considered business decision. Therefore, the Rales test applies. [63] The Rales test inquires whether the complaint's particularized facts show that the board is incapable of impartially considering a demand  i.e., that a majority of the board members are interested in the decision to act on the demand or dependent on someone who is interested in that decision. Consistent with that test, appellants contend that the proposed consolidated complaint raises a reasonable doubt that the current board of directors would be able to exercise its independent and disinterested business judgment in responding to a demand. But as the district court, which has not had the benefit of this analysis in considering these arguments, [64] is a more appropriate forum in which to resolve shareholder demand disputes in the first instance, we decline to address appellants' assertions with regard to the Rales test at this time. Instead, we remand to the district court so that it may address whether appellants have alleged particularized facts that satisfactorily demonstrate demand futility. [65] We now move to appellants' alternative argument  that the demand requirement is excused simply because they have alleged that the AMERCO-SAC entities transactions are ultra vires acts, and thus void and not amenable to ratification.