A Recent Reminder That Omitting This Averment May Doom A Derivative Claim

Section 800 of the California Corporations Code applies to actions brought in the name of any domestic or foreign corporation, aka derivative actions. It is similar, but not the same as, Delaware Court of Chancery Rule 23.1 and Federal Rule of Civil Procedure Rule 23.1.

A key, yet subtle, difference can be found in Section 800(b)(2) which requires that a plaintiff allege with particularity its efforts to secure action from the board of directors or the reasons why it did not make the effort. For those familiar with Delaware Court of Chancery Rule 23.1 or Federal Rule of Civil Procedure Rule 23.1, this is known as the requirement to plead either that a demand was made or demand futility. California adds something more, however. I've copied Section 800(b)(2) and highlighted the additional California requirement below: