Delaware County Employees Retirement Fund v. Sanchez, 124 A.3d 1017

Sanchez Energy Corporation (public) relied on a privately held Sanchez family company for management; the family is the largest shareholder block (~16%).
The challenged transaction required the public company to pay $78 million to the private Sanchez company to (a) help buy out a private equity partner, (b) acquire property interests, (c) facilitate joint production, and (d) fund a $14.4 million cash payment; plaintiffs allege gross overpayment and undisclosed, onerous royalty obligations favoring the private company.
Two directors (Chairman A.R. Sanchez, Jr. and his son Antonio R. Sanchez III) conceded disinterest/conflict; plaintiffs alleged a third director, Alan Jackson, was not independent, which would excuse pre-suit demand under Aronson.
Plaintiffs pleaded Jackson had a 50+ year close friendship with Chairman Sanchez and derived substantial income from IBC Insurance, a wholly owned subsidiary of International Bancshares Corporation (IBC), where Chairman Sanchez was the largest shareholder and a non-independent director; Jackson and his brother worked at IBC Insurance and serviced Sanchez-related accounts.
The Court of Chancery dismissed the derivative complaint for failure to plead demand futility under Aronson; the Delaware Supreme Court reversed, holding the pleaded facts—viewed together and in plaintiff’s favor—create a reasonable doubt about Jackson’s independence.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs pled particularized facts creating reasonable doubt about a director’s independence for demand excusal under Aronson	Jackson was not independent because of a 50+ year close friendship with Chairman Sanchez plus economic dependence (primary employment at an IBC subsidiary influenced by Sanchez)	Allegations are insufficient: social ties and indirect economic ties do not rebut independence; plaintiffs should have used §220 to gather more facts	Reversed: considering friendship and economic ties together and drawing inferences for the plaintiff, the facts create a reasonable doubt about Jackson’s independence and excuse demand

Aronson v. Lewis, 473 A.2d 805 (Del. 1984) (setting the two-prong test for demand futility in derivative suits)
Beam v. Stewart, 845 A.2d 1040 (Del. 2004) (social or casual friendships alone generally insufficient to rebut director independence)
Wood v. Baum, 953 A.2d 136 (Del. 2008) (pleading-stage inferences must be drawn in plaintiff’s favor on demand futility)
White v. Panic, 783 A.2d 543 (Del. 2001) (limits of pre-suit investigation do not permit courts to constrict reasonable inferences from well-pleaded facts)
Harbor Fin. Partners v. Huizenga, 751 A.2d 879 (Del. Ch. 1999) (familial and business ties taken together can support an inference of lack of independence)