Opinion ID: 1996638
Heading Depth: 1
Heading Rank: 7

Heading: Standard of Review Questions Presented

Text: Our standard of review of the trial court's formulation of the legal standard controlling defendants' 23.1 motion to dismiss each of the derivative actions, Grobow II and Levine, is plenary or de novo. See, e.g., Barkan v. Amsted Industries, Inc., Del.Supr., 567 A.2d 1279, 1284 (1989). Assuming no error in the formulation of the appropriate legal standard in each case, our standard of review of the application of the correct legal standard is for abuse of discretion. A decision on a Rule 23.1 motion, whether based on demand excused or demand refused, involves essentially a discretionary ruling on a predominantly factual issue. Grobow I, 539 A.2d at 186. See also Pogostin v. Rice, Del.Supr., 480 A.2d 619, 624 (1984); Aronson, 473 A.2d at 814. In Grobow II, three questions are presented, of which the first two are related. They are: (1) whether the Court of Chancery erred in granting plaintiffs relief under Rule 60(b) and leave to file a second amended complaint; and, if not, (2) whether the court, having granted such relief, erred in then confining its demand futility analysis to plaintiffs' claims based on newly discovered evidence. Assuming no error in those rulings, a further question is raised: (3) whether the trial court erred in dismissing plaintiffs' restated complaint for failure to plead particularized facts sufficient to excuse demand. In Levine, four questions are presented: (1) whether plaintiff was entitled to limited discovery, as in Zapata, in response to defendants' Rule 23.1 motion; (2) whether the trial court applied the proper pleading standard for testing the sufficiency of Levine's Amended Complaint to withstand dismissal under Rule 23.1; (3) whether the trial court applied the correct legal standard for determining the sufficiency of a derivative complaint based on wrongful refusal of demand to withstand a Rule 23.1 motion; and (4) whether the plaintiff complied with Rule 23.1 by pleading particularized facts sufficient to create a reasonable doubt that the GM Board's refusal of Levine's demand was protected by the business judgment rule.