On August 6, 2024, Justice Ruchelsman of the Kings County Commercial Division issued a decision in Kordonsky v. Brudoley, 2024 NY Slip Op. 32768(U), holding that demand futility allegations in a derivative action were sufficiently specific based on the totality of the allegations, explaining:
The defendants argue the plaintiff failed to comply with that provision and that consequently the plaintiff has no standing to pursue the claims. The plaintiff counters that specific evidence such notice would have been futile was presented and that therefore such demand futility has been presented.
To succeed upon an assertion that notice would have been futile and hence not required, specific facts must be presented that the individual at issue was self-interested in the transactions. Thus, the plaintiff must establish that if a demand would have been filed with the Board of Directors or with the defendants they could not have exercised independent and disinterested business judgement. Thus, the individual defendants will be considered incapable of being disinterested if facts support a personal benefit to them regarding the transactions being challenged. In that instance the business judgement. rule is inapplicable and demand futility is established
The defendants argue the standard for demand futility has not been met since the futility has not been presented with sufficient particularity. However, particularity governs the totality of the futility and as long as such futility can be discerned by the court then the particularity will naturally suffice. Thus, where the directors are accused of self-dealing then obviously futility has been presented. The nature·of·the claims against the defendants reveal that such demand would have been futile. Thus, demand futility has been established.
(Internal quotations and citations omitted).