Conrad v. Blank, 2007 WL 2593540 (Del.Ch., Sept. 7, 2007), read opinion here. This Chancery Court decision allowed a stock option backdating claim to proceed and denied a Motion to Dismiss that alleged failure to make a pre-suit demand. The opinion included a complete overview of the analysis applicable when pre-suit demand must be made as a prerequisite for a shareholder to bring a derivative suit, and when pre-suit demand is excused as futile pursuant to the seminal Aronson and Rales cases.
The court referred to two prior stock option decisions by the Chancery Court, and followed the reasoning in the recent decision in Ryan, summarized here, but distinguished the recent decision in DeSimone, summarized here. Despite no "continuous wrong" exception being applicable here to the "contemporaneous ownership rule", the court was concerned that the stock ownership requirement of DGCL Section 327 might inadvertently allow a decade-long potential scheme to escape scrutiny. Thus, the court only conditionally dismissed those claims that pre-dated the plaintiff’s stock ownership, subject to a hearing to determine if there were any other shareholders available to pursue such claims during the earlier period of alleged wrongdoing.