McCall v. Scott

The full case caption appears at the end of this opinion.

RALPH B. GUY, JR., Circuit Judge. These appeals involve a consolidated stockholder derivative action brought on behalf of the nominal defendant, Columbia/HCA Healthcare Corporation (Columbia), against certain of its current and former directors and/or officers. The claims arise out of investigations into allegedly wide-spread and systematic health care fraud by Columbia’s hospitals, home health agencies, and other facilities. Plaintiffs are investors, institutional and otherwise, that own shares of Columbia/HCA and owned such shares during the time of the alleged wrongdoing. Plaintiffs’ three-count amended and consolidated complaint alleged intentional and negligent breach of the fiduciary duty of care, and intentional breach of the fiduciary duty of loyalty by illegal insider trading.[FOOTNOTE 1] The district court, adopting the findings and conclusions of the magistrate judge, dismissed the consolidated action under Fed. R. Civ. P. 12(b)(6), finding that plaintiffs had failed to sufficiently allege demand futility under Delaware law to excuse the failure to make a pre-suit demand on the Board of Directors. Plaintiffs argue that the district court failed to properly view the allegations in the light most favorable to them and made errors in the interpretation and application of the law.[FOOTNOTE 2]