Schuster

This action for breach of fiduciary duty is one of numerous shareholder actions arising from alleged management improprieties of officers and directors of Peregrine System, Inc. (Peregrine), and the attendant decline in its stock value. Plaintiff George Schuster appeals a judgment of dismissal entered after the court sustained without leave to amend the demurrers of defendants Stephen P. Gardner, Christopher A. Cole, Rod Dammeyer, John J. Moores, Charles E. Noell, HI, William D. Savoy and Thomas G. Watrous, on the ground this is a derivative action Schuster lacks standing to pursue. Schuster contends the trial court erred by finding the action is governed by Delaware law. He asserts that under California law, this is a direct action rather than a derivative action, and in any event, the same is true under Delaware law. We conclude this is a derivative action under both Delaware and California law, and accordingly, affirm the judgment without reaching the choice of law issue.

FACTUAL AND PROCEDURAL BACKGROUND

Because we are reviewing mlings made at the pleading stage, we take the factual background from allegations of the complaint, assuming their truth. (Howard Jarvis…