                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


CLIFFORD TINDALL; BRITT                 No. 17-15185
NEDERHOOD; ENG KWANG TAN;
ERIC FEIGIN,                               D.C. No.
              Plaintiffs-Appellants,    2:12-cv-00769-
                                             DGC
                 v.

FIRST SOLAR INCORPORATED;                 OPINION
MICHAEL J. AHEARN; ROBERT J.
GILLETTE; MARK R. WIDMAR; JENS
MEYERHOFF; JAMES ZHU; BRUCE
SOHN; DAVID EAGLESHAM; CRAIG
KENNEDY; JAMES F. NOLAN;
WILLIAM J. POST; J. THOMAS
PRESBY; PAUL H. STEBBINS;
MICHAEL SWEENEY; JOSE H.
VILLAREAL,
             Defendants-Appellees.



     Appeal from the United States District Court
              for the District of Arizona
     David G. Campbell, District Judge, Presiding

        Argued and Submitted January 12, 2018
              San Francisco, California

                  Filed June 13, 2018
2                TINDALL V. FIRST SOLAR INC.

    Before: J. Clifford Wallace, Johnnie B. Rawlinson,
           and Paul J. Watford, Circuit Judges.

                   Opinion by Judge Wallace


                          SUMMARY *


                        Demand Futility

    The panel affirmed the district court’s dismissal of a
shareholder derivative action under Fed. R. Civ. P. 23.1 for
failure to show demand futility.

     Shareholders of First Solar, Inc., alleged that officers and
directors of the company breached their fiduciary duties by
failing to disclose in financial statements and press releases
the existence of manufacturing and design defects in First
Solar’s solar panels. The shareholders made no demand to
the board before bringing the derivative action.

    Reviewing for an abuse of discretion, and applying
Delaware law, the panel held that the shareholders failed to
show demand futility. The panel held that the Aronson test
for demand futility did not apply because it is limited to
board business decisions. Under the Rales test, demand was
not excused.




    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                TINDALL V. FIRST SOLAR INC.                   3

    The panel also held that the district court did not abuse
its discretion in denying plaintiff’s motion to extend the
deadline for filing their fourth amended complaint.


                         COUNSEL

George C. Aguilar (argued) and Brian J. Robbins, Robbins
Arroyo LLP, San Diego, California; Yury A. Kolesnikov,
Albert Y. Chang, and Francis A. Bottini Jr., Bottini & Bottini
Inc., La Jolla, California; for Plaintiffs-Appellants.

Anna Erickson White (argued), Robert L. Corez Webb, and
Jordan Eth, Morrison & Foerster LLP, San Francisco,
California; Sophia M. Brill and Brian R. Matsui, Morrison
& Foerster LLP, Washington, D.C.; for Defendants-
Appellees.


                          OPINION

WALLACE, Circuit Judge:

    Plaintiffs appeal from the dismissal of their shareholder
derivative action under Federal Rule of Civil Procedure 23.1
for failure to show demand futility. We have jurisdiction
under 28 U.S.C. § 1291, and affirm.

                               I.

    First Solar, Inc. is one of the world’s largest producers of
photovoltaic solar panel modules. Plaintiffs, shareholders of
First Solar, appeal from the dismissal of their fiduciary duty
claims against eight directors and five officers of the
company. Plaintiffs allege that Defendants breached their
4              TINDALL V. FIRST SOLAR INC.

fiduciary duties by failing to disclose in financial statements
and press releases the existence of manufacturing and design
defects in First Solar’s solar panels. This alleged
wrongdoing was also an issue in a separate but related
securities fraud case, Mineworkers’ Pension Scheme v. First
Solar Inc., 881 F.3d 750, 752 (9th Cir. 2018). Plaintiffs did
not make a litigation demand on First Solar’s board of
directors before filing this action.

                              II.

    The parties dispute the applicable standard of review.
While the parties agree that our court applies abuse of
discretion review to Rule 23.1 dismissals, Plaintiffs argue
that such review is inconsistent with the de novo review that
we apply to Rule 12(b)(6) dismissals. This argument has
persuaded other courts. See Espinoza ex rel. JPMorgan
Chase & Co. v. Dimon, 797 F.3d 229, 234–35 (2d Cir. 2015)
(collecting cases). We, however, do not consider its merits
because binding authority compels us, as a three-judge
panel, to apply abuse of discretion review. Potter v. Hughes,
546 F.3d 1051, 1056 (9th Cir. 2008).

                             III.

    A derivative action is an action brought by a shareholder
on behalf of a corporation. See Rosenbloom v. Pyott,
765 F.3d 1137, 1147 (9th Cir. 2014). Before bringing the
action, the shareholder must “demand action from the
corporation’s directors or plead with particularity the
reasons why such demand would have been futile.” La. Mun.
Police Emps.’ Ret. Sys. v. Wynn, 829 F.3d 1048, 1057 (9th
Cir. 2016), quoting Rosenbloom, 765 F.3d at 1148. Where,
as here, the shareholders made no demand to the board
before bringing the derivative action, they must show
demand futility. Wynn, 829 F.3d at 1057. The law of the state
               TINDALL V. FIRST SOLAR INC.                   5

of incorporation governs whether demand is futile. Arduini
v. Hart, 774 F.3d 622, 628 (9th Cir. 2014). First Solar is a
Delaware corporation and Delaware law, therefore, applies
to this action.

    Delaware has two tests for demand futility—the Aronson
test and the Rales test. Wood v. Baum, 953 A.2d 136, 140
(Del. 2008). The parties agree that Plaintiffs’ claims can
survive, if at all, only under the Aronson test. The Aronson
test “requires that the plaintiff allege particularized facts
creating a reason to doubt that ‘(1) the directors are
disinterested and independent or that (2) the challenged
transaction was otherwise the product of a valid exercise of
business judgment.’” Id., quoting Aronson v. Lewis,
473 A.2d 805, 814 (Del. 1984). Aronson’s second
alternative is the lynchpin of Plaintiffs’ appeal. Plaintiffs
argue that if the Aronson test applies, a showing of gross
negligence by the board would excuse demand under the
second alternative. Plaintiffs concede the same is not true for
the Rales test. Accordingly, we must first decide whether the
Aronson or Rales test applies to this action.

    Which test applies depends, in part, on the nature of the
alleged wrongdoing. See Wood, 953 A.2d at 140. Plaintiffs
argue the Aronson test applies to claims involving any
affirmative action by the board. They style the alleged
wrongdoing here as an “approval” of financial statements or
press releases concealing the product defects. Plaintiffs point
to authorities showing, they argue, that a director makes a
“statement” for purposes of the securities laws where, as
here, they sign financial statements filed with the Securities
and Exchange Commission. Defendants counter that
whether the alleged wrongdoing was an affirmative action
does not matter. The Aronson test, they say, applies not to all
affirmative actions, but only to board business decisions.
6               TINDALL V. FIRST SOLAR INC.

    We agree with Defendants. Delaware law appears clear
that the Aronson test does not apply to all actions, but to
board business decisions. In Rales v. Blasband, the Delaware
Supreme Court held that the “essential predicate for the
Aronson test is the fact that a decision of the board of
directors is being challenged in the derivative suit.”
634 A.2d 927, 933 (Del. 1993) (emphasis in original). The
court further explained that the Aronson test does not apply
“where the subject of the derivative suit is not a business
decision of the board.” Id. at 934. More recently, in Wood
v. Baum, the Delaware Supreme Court stated that “[t]he
Aronson test applies to claims involving a contested
transaction i.e., where it is alleged that the directors made a
conscious business decision in breach of their fiduciary
duties.” 953 A.2d at 140 (emphasis added); see also In re
Citigroup Inc. S’holder Derivative Litig., 964 A.2d 106, 120
(Del. Ch. 2009) (holding the Rales test applies “to show
demand futility where the subject of the derivative suit is not
a business decision of the board”); Guttman v. Huang,
823 A.2d 492, 499–500 (Del. Ch. 2003) (holding the Rales
test applied because the allegations “do not attack a specific
business judgment of the board”).

    Limiting the Aronson test to board business decisions
makes sense because only those decisions implicate the
business judgment rule invoked by Aronson’s second
alternative. The business judgment rule is “a presumption
that in making a business decision the directors of a
corporation acted on an informed basis, in good faith and in
the honest belief that the action taken was in the best interests
of the company.” Gantler v. Stephens, 965 A.2d 695, 705–
06 (Del. 2009) (citation omitted) (emphasis added). “[T]he
core rationale of the business judgment rule . . . is that judges
are poorly positioned to evaluate the wisdom of business
decisions . . . .” Corwin v. KKR Fin. Holdings LLC,
                TINDALL V. FIRST SOLAR INC.                    7

125 A.3d 304, 313 (Del. 2015) (emphasis added). Without a
business decision, it is “impossible to perform the essential
inquiry contemplated by Aronson—whether the directors
have acted in conformity with the business judgment rule in
approving the challenged transaction.” Rales, 634 A.2d at
933.

    Even Plaintiffs seem to recognize that Aronson’s
application is limited to business decisions by arguing in
their reply brief that the approval of financial statements and
press releases is, in fact, a business decision. Plaintiffs argue
that we should read “business decision” broadly because
Delaware courts have associated business judgment not only
with transaction decisions, but also with litigation decisions,
delegations to experts, compensation decisions, and stock
buyback decisions. But these types of decisions differ from
those here because they involve judgments by the board as
to whether to enter into a course of conduct, generally one
that creates new rights or obligations on behalf of the
company. By contrast, financial statements and press
releases provide a snapshot of past conduct; they reflect
business judgments already made. Approving financial
statements and press releases generally does not involve
weighing the risks and rewards of future conduct, which is
the type of decision-making process the business judgment
rule is designed to protect.

    We view this case as more analogous to the board
oversight claims to which Delaware courts regularly apply
the Rales test. See, e.g., City of Birmingham Ret. & Relief
Sys. v. Good, 177 A.3d 47, 55 (Del. 2017). Tellingly,
Plaintiffs have cited no Delaware authority applying the
Aronson test to a failure-to-disclose case, such as this one.
Defendants have cited authorities that, while not dispositive,
suggest the Rales test would apply. For example, in Guttman
8              TINDALL V. FIRST SOLAR INC.

v. Huang, plaintiffs brought both failure to disclose claims
and oversight claims. 823 A.2d at 494–97. While the
Delaware Chancery Court in Guttman did not compare the
tests because the parties had agreed Rales applied, the court
explained the reason for the parties’ agreement was that “the
plaintiffs do not challenge any particular business decision
made by the [corporation’s] board as a whole.” Id. at 499.
Likewise, Seminaris v. Landa involved claims that the
“board failed to prevent [the CEO] from misrepresenting the
corporation’s financial condition” and that “board members
signed misleading statements on behalf of the corporation.”
662 A.2d 1350, 1354 (Del. Ch. 1995). The Delaware
Chancery Court held that Rales applied because “plaintiff
[did] not challenge a decision of [the corporation’s] board of
directors” or “any specific board action that approved or
ratified these alleged wrongdoings.” Id.

    In sum, we conclude that the approval of financial
statements and press releases here was not a board business
decision implicating the Aronson test. The Rales test applies
to this action. We need go no further in our analysis because
Plaintiffs concede here that the Rales test does not excuse
demand. We also need not decide whether gross negligence
could excuse demand under Aronson’s second alternative,
since Aronson does not apply. Therefore, the district court
did not abuse its discretion by dismissing Plaintiffs’
derivative action for failure to show demand futility.

                             IV.

    Plaintiffs also appeal from the denial of their motion to
extend the deadline for filing their fourth amended
complaint. Plaintiffs argue the district court abused its
discretion by failing to cite Federal Rule of Civil Procedure
6(b)(1)(A), the rule governing requests for extensions of
time made before the deadline expires. That rule provides
               TINDALL V. FIRST SOLAR INC.                  9

that a district court may extend a deadline “for good cause.”
Fed. R. Civ. P. 6(b)(1)(A).

    We reject Plaintiffs’ argument. Rule 6 provides that the
court may grant the motion for good cause, not that it must
do so. Fed. R. Civ. P. 6(b)(1)(A). While district courts
normally grant these requests in the absence of bad faith or
prejudice to the adverse party, see Ahanchian v. Xenon
Pictures, Inc., 624 F.3d 1253, 1259 (9th Cir. 2010), the
district court properly concluded that Plaintiffs had not
shown good cause. “That the district court did not recite the
text of [the rule] or employ a specific phrase . . . is not
determinative.” United States v. Ogles, 440 F.3d 1095, 1104
(9th Cir. 2006) (en banc). What matters is that the district
court actually considered the proper standard. See id. Here,
the court viewed the deadline extension, which would have
prolonged the time to amend until after the resolution of
Plaintiffs’ motion to intervene in a related action, as an
attempt to circumvent the district court’s prior rulings
denying Plaintiffs discovery. The district court’s
determination that “the Court cannot justify delaying this
case further while Plaintiffs pursue an appeal of their effort
to obtain improper discovery” is another way of saying
Plaintiffs have not shown good cause. Our case of United
States v. Signed Personal Check No. 730, 615 F.3d 1085,
1091–92 (9th Cir. 2010) is not to the contrary. There, the
district court erred not because it failed to recite the legal
standard, but because this failure led it to apply the wrong
standard. Id. Here, the district court applied the right
standard, simply without reciting it.

   AFFIRMED.
