                Not for Publication in West's Federal Reporter

          United States Court of Appeals
                       For the First Circuit
No. 13-1914

                           MARTA BRYCELAND,

                        Plaintiff, Appellant,

                                     v.

     MICHAEL R. MINOGUE, W. GERALD AUSTEN, LOUIS E. LATAIF,
      DOROTHY E. PUHY, MARTIN P. SUTTER, HENRI A. TERMEER,
               PAUL G. THOMAS, and ABIOMED, INC.,

                       Defendants, Appellees.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. F. Dennis Saylor IV, U.S. District Judge]


                               Before
                        Lynch, Chief Judge,
                    Souter,* Associate Justice,
                     and Lipez, Circuit Judge.


     Ex Kano S. Sams II, with whom Lionel Z. Glancy, Michael
Goldberg, Brian Murray, Glancy Binkow & Goldberg LLP, David Pastor,
Pastor Law Office, LLP, Patrick Powers, Powers Taylor, LLP, Willie
C. Briscoe, and The Briscoe Law Firm, PLLC were on brief, for
appellant.
     John D. Donovan, Jr., with whom Daniel V. Ward, Matthew
Mazzotta, Elizabeth D. Johnston, and Ropes & Gray LLP were on
brief, for appellees.

                              June 10, 2014



     *
       Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
            SOUTER, Associate Justice.     Marta Bryceland appeals the

dismissal of her shareholder derivative action brought on behalf of

Abiomed, Inc.    Because Bryceland's complaint fails to plead with

the required particularity that a demand to the directors for

remedial action would have been futile, we affirm.

            On defendants' motion to dismiss under Fed. R. Civ. P.

12(b)(6), the following facts are taken as stated in the complaint.

Abiomed is a Delaware corporation with its principal place of

business in Massachusetts.         It develops products to assist or

replace the pumping of the human heart, and the company's promotion

of one such device, the Impella 2.5, led to this lawsuit.

            In June 2011, a letter to Abiomed from the Food and Drug

Administration   (FDA)   alleged    that   some   advertising   materials

appeared to market the Impella 2.5 for uses that the FDA had not

approved.   Abiomed publicly disclosed its receipt in the company's

later mandatory quarterly filing with the Securities and Exchange

Commission (SEC):

            [W]e received a warning letter from the FDA
            stating that some of our promotional materials
            marketed the Impella 2.5 for uses that had not
            been approved by the FDA. We have cooperated
            with the FDA in addressing its concerns and
            believe that we have resolved the matter
            without any penalties.    Although we believe
            that this issue has been resolved, if similar
            matters come up in the future, we may not be
            able   to   resolve    them   without   facing
            significant consequences. Such matters could
            result in reduced demand for our products and
            would have a material adverse effect on our
            operations and prospects.

                                    -2-
           In April 2012, the FDA wrote to Abiomed again alleging

that some Impella 2.5 promotional materials continued to violate

FDA regulations.   Abiomed's next SEC filing disclosed this letter

as well:

           In June 2011 we received a warning letter from
           the FDA stating that some of our promotional
           materials marketed the Impella 2.5 for uses
           that had not been approved by the FDA.       We
           cooperated with the FDA and made changes to
           our promotional materials in response to the
           warning letter.    However, in April 2012, we
           received a follow up letter from the FDA
           stating that some of our promotional materials
           continued to market the Impella 2.5 in ways
           that are not compliant with FDA regulations.
           We are cooperating with the FDA in addressing
           its concerns.    While we hope to be able to
           resolve   this    matter   without    incurring
           penalties, we may not be able to resolve it,
           or any similar matters that may come up in the
           future     without      facing     significant
           consequences.   Such matters could result in
           reduced demand for our products and would have
           a material adverse effect on our operations
           and prospects.

           In October 2012, Abiomed received a subpoena from the

U.S. Attorney's Office for the District of Columbia, which was

investigating Abiomed's marketing materials.      Abiomed made the

subpoena known in a special press release:

           On October 26, 2012, Abiomed was informed that
           the United States Attorney's Office for the
           District   of   Columbia  is   conducting   an
           investigation that is focused on the Company's
           marketing and labeling of the Impella 2.5. On
           October, 31, 2012, Abiomed accepted service of
           a    Health    Insurance    Portability    and
           Accountability Act administrative subpoena
           related to this investigation. The subpoena
           seeks documents related to the Impella 2.5 and

                                -3-
             we understand the investigation focuses
             primarily on marketing and labeling issues.
             Abiomed is in the process of responding to the
             subpoena and intends to cooperate fully.

A sharp drop in Abiomed's stock price followed.          Some four months

later, and after this lawsuit had been brought, the FDA wrote

Abiomed that the agency had completed its evaluation and that the

company had addressed the problems to the agency's satisfaction.

The current status of the U.S. Attorney's investigation is unknown.

At oral argument, defendants' counsel represented that Abiomed has

heard nothing from the U.S. Attorney's Office since responding to

the subpoena.

             Bryceland,    an   Abiomed   shareholder,     brought    this

derivative action in federal court on behalf of the corporation

against its seven directors, one of whom is also the President and

CEO.   Bryceland's overarching theory, running through the multiple

counts of the complaint, is that the defendants breached their

fiduciary duties to Abiomed because, with them at the helm, the

company both unlawfully marketed the Impella 2.5 and issued public

statements that were overly sunny in the face of the corporation's

potential liability.      Bryceland takes particular exception to the

fact that, in the intervals between the unfavorable disclosures,

the directors approved the issuance of press releases of positive

financials     without    reiterating   cautions   about   the   potential

liability associated with the FDA inquiry.



                                    -4-
          Defendants moved to dismiss the complaint on the grounds

that it failed both to plead with particularity that a demand for

corrective action would have been futile, and to state a claim of

substantive liability.   The district court dismissed for want of a

particularized futility allegation.1

          Among other things, Bryceland says that the district

court failed to accept her allegations as true, to treat them

collectively, and to draw inferences in her favor. But because our

review of the dismissal of a derivative suit for failure to plead

with particularity is de novo, see Union de Empleados de Muelles de

P.R. PRSSA Welfare Plan v. UBS Fin. Servs. Inc. of P.R., 704 F.3d

155, 162-63 (1st Cir.), cert. granted, 133 S. Ct. 2857, and cert.

dismissed, 134 S. Ct. 40 (2013), rather than answer each of

Bryceland's assignments of error, it will suffice to highlight the

deficiencies in her complaint.   We accept as true all well-pleaded

facts and draw all reasonable inferences in her favor.   Mass. Ret.

Sys. v. CVS Caremark Corp., 716 F.3d 229, 237 (1st Cir. 2013).

          A derivative action permits a shareholder to enforce

corporate rights that the corporation itself is unable or unwilling

to enforce on its own.   See Union de Empleados, 704 F.3d at 159.



     1
      The complaint contains no allegation that before filing suit
Bryceland had sought to learn any details of actions by the
directors that might have been disclosed if she had requested
access to corporate records, to which she was entitled under Del.
Code Ann. tit. 8, § 220. The defendants have represented without
contradiction that she made no such pretrial request.

                                 -5-
Before invoking this procedural device a shareholder must demand

that the corporation take action, unless such a demand would be

futile, and the shareholder's complaint must accordingly either

state that her demand was rebuffed (or inadequately honored) or

explain why a demand would have proven pointless.             See id.    In such

a case, despite the relative laxity of pleading requirements

generally, see Fed. R. Civ. P. 8(a)(2), a special rule governing

derivative        actions   requires     the    complaint    to    "state   with

particularity" the shareholder's efforts to make a demand or her

reasons for failing to do so, id. 23.1(b)(3).           Because Bryceland's

complaint does not claim that she made a demand for action by the

defendants, and it is undisputed that she made none, this appeal

turns on the requirement that she plead with particularity the

futility     of    a   demand,   and,   given   Abiomed's    incorporation      in

Delaware, we look to Delaware law to determine the substance of

what   the   complaint      must   particularly    allege.        See   Union   de

Empleados, 704 F.3d at 163.             Delaware law offers two tests for

assessing a demand-futility pleading.

             The first comes from Aronson v. Lewis, where the Delaware

Supreme Court explained that demand will be excused as futile if,

"under the particularized facts alleged, a reasonable doubt is

created that: (1) the directors are disinterested and independent

[or] (2) the challenged transaction was otherwise the product of a

valid exercise of business judgment."              473 A.2d 805, 814 (Del.


                                        -6-
1984), overruled on other grounds by Brehm v. Eisner, 746 A.2d 244

(Del. 2000). While only the second Aronson prong explicitly refers

to a challenged transaction, subsequent cases indicate that the

first   prong's   inquiry   into   disinterest   and   independence   also

focuses on a specific transaction.        See Pogostin v. Rice, 480 A.2d

619, 624 (Del. 1984), overruled on other grounds by Brehm, 746 A.2d

244.    In short, under Aronson, demand will be excused as futile if

the complaint alleges particular facts that call into question

whether the board discharged its duty of loyalty (Aronson's first

prong) or its duty of care (Aronson's second prong) at the time of

a specific transaction.

            This concentration on the time of transaction rendered

Aronson's test inapposite to the facts of the later case of Rales

v. Blasband, where the challenged decision was made not by the

board of the corporation on whose behalf the action was brought,

but rather by the board of a wholly owned subsidiary.           634 A.2d

927, 932-33 (Del. 1993).     The Delaware Supreme Court explained:

            [A] court should not apply the Aronson test
            for demand futility where the board that would
            be considering the demand did not make a
            business decision which is being challenged in
            the derivative suit.     This situation would
            arise in three principal scenarios: (1) where
            a business decision was made by the board of a
            company, but a majority of the directors
            making the decision have been replaced; (2)
            where the subject of the derivative suit is
            not a business decision of the board; and (3)
            where, as here, the decision being challenged
            was made by the board of a different
            corporation.

                                    -7-
Id. at 933-34 (footnotes omitted).   Rales announced a new test to

be used in these cases: demand will be excused as futile if "the

particularized factual allegations of a derivative stockholder

complaint create a reasonable doubt that, as of the time the

complaint is filed, the board of directors could have properly

exercised its independent and disinterested business judgment in

responding to a demand."   Id. at 934.   Importantly to our case,

Rales applies where the subject of a derivative action is not a

board's business decision but rather its failure to oversee.   See

Wood v. Baum, 953 A.2d 136, 140 (Del. 2008).

          After analyzing Bryceland's suit as concerned not with a

specific decision but with a failure in oversight, the district

court applied the Rales test. Bryceland calls instead for the test

under Aronson, contending that her action challenges particular

decisions of the board, both the decision to market the Impella 2.5

unlawfully and the decision to issue public statements that were

misleadingly optimistic in light of Abiomed's potential liability.

We think the trial judge made the better call in following Rales,

though this case is not an easy one to categorize.   In any event,

that choice is not crucial, because Bryceland's complaint fails to

plead particular facts that cast doubt on either the board's

disinterest or independence at any point (precluding success under

Rales or Aronson's first prong), or the board's business judgment




                               -8-
at the time of any specific decision (precluding success under

Aronson's second prong).

          As for disinterest or independence, we will assume,

without deciding, that Bryceland raises a doubt to the requisite

degree about the disinterest of one of the directors, who doubles

as Abiomed's CEO.    Her complaint alleges that this defendant

derives his principal income from his employment as an Abiomed

officer and that he certified a number of the company's SEC

filings, which Bryceland claims were misleading.    And, given the

small size of the company, one might infer that its CEO would have

overseen (or at least have had knowledge of) the creation of the

controversial promotional materials and statements of corporate

prospects, giving him special reason to fear further probing into

the company's marketing decisions and publicity.   Delaware courts

have accordingly suggested that there is reason to doubt the

disinterest of a director who has a substantial financial stake in

maintaining a position as an officer.   See, e.g., Rales, 634 A.2d

at 937.

          But one is not enough. Under either Aronson or Rales the

complaint must cast doubt on the disinterest or independence of a

majority of the board, see Rales, 634 A.2d at 937; Aronson, 473

A.2d at 815 & n.8, and to survive the motion to dismiss in reliance

on interest or lack of independence, Bryceland's allegations must

particularly raise doubt about the capacity of at least three more


                               -9-
members of the seven-member board.             It does not.2        Instead, the

complaint's deficiencies fall into two categories.                      The first

includes failure to state particular facts, in lieu of which the

complaint contains a series of conclusory statements that can

satisfy neither Aronson nor Rales.             See Brehm, 746 A.2d at 254.

The second covers allegations that fail to show futility under

Delaware law, whether based on interest-dependence or the absence

of valid business judgment behind action taken.

            As     a    representative      example    of    merely     conclusory

pleading, the complaint states that "Defendants face a substantial

likelihood of being held liable for breaching their fiduciary

duties."   This allegation apparently attempts to cast doubt on the

board's current ability to respond disinterestedly or independently

to a demand (a claim under Rales) by pleading that the directors

face a substantial likelihood of personal liability for decisions

that breached their duty of care to exercise business judgment

(claims    under       Aronson's   second    prong).        But   the   conclusory

allegation is supported by no particular detail of either.

            The complaint does not plead facts indicating that the

directors were personally involved in creating or disseminating the

relevant marketing materials.            Nor does it allege facts showing

that the directors hid from investors the trouble that this



     2
      Our further references to "defendants" or "directors" do not
include the one assumed to be interested.

                                      -10-
marketing had created; indeed, as the reproduced sections of

Abiomed's SEC filings make clear, the company was not shy in

disclosing           its    exposure     to   liability.        Instead,     Bryceland's

complaint challenges the directors' (presumed) approval of press

releases, issued during the intervals between the SEC filings, that

reported favorable financial facts.                      But she pleads no particular

basis to question the accuracy of these facts.                          At most, her

conclusion seems to assume that it was misleading for Abiomed to

issue these releases without an accompanying reminder about the

ongoing        FDA    investigation       that     had    previously   been   disclosed

publicly through the SEC filings.                        Bryceland directs us to no

authority, and we have found none, supporting the proposition that

after      a     corporation           discloses     negative      information,    that

information must also accompany subsequently released financial

statements.

                In sum, we see in this narrative no particular facts

that, as required under Aronson's second prong, cast doubt on

whether the directors exercised sound business judgment at any

point including the approval of the press releases.                     As previously

noted, the lack of particular facts evidencing a potential breach

of   the       duty        of   care    and   likelihood      of   ensuing    liability

consequently disarms any Rales claim that defendants could not

disinterestedly or independently respond to a demand at the time

suit was filed.


                                              -11-
            Bryceland's complaint, to be sure, lists other supposed

reasons for questioning the directors' disinterest or independence,

and, although they are alleged with greater particularity, their

substance fails to cast the requisite doubt on the capacity or

intention of any director, whether at the moment a demand would

have been made or at the time of an antecedent business decision.

Thus, the complaint contends that, "to bring this suit, all of the

Company's directors would be forced to sue themselves."           But under

Delaware law, a director is not rendered interested simply by being

named a defendant in an action.       See Aronson, 473 A.2d at 818.

Were the law otherwise, every derivative suit would qualify for

futility on this basis alone, leaving the demand requirement a

hollow one.    See id.

            The complaint also reveals in detail that all of the

directors     hold   financial   interests   in   Abiomed   and    receive

compensation from the company.     One defendant's financial interest

derives not only from his current directorship, but also from his

prior employment as a consultant to the company.              But under

Delaware law, compensation is by itself insufficient to render a

director interested.     See Grobow v. Perot, 539 A.2d 180, 188 (Del.

1988), overruled on other grounds by Brehm, 746 A.2d 244.           While a

director may cease to be disinterested and face temptation to act

outside of loyal business judgment if her financial stake becomes

unaligned with the shareholders', see Rales, 634 A.2d at 936, that


                                   -12-
did not occur here, where the directors' financial interests are

said to comprise stock and stock options.

             In addition, the complaint alleges a lack of disinterest

and independence on the part of several directors because they

serve together on the boards of other corporations, none of which

was involved in the events giving rise to this action.                    This

particular fact, however, says nothing about the directors' ability

or intention to discharge their duty of loyalty to Abiomed. Cf. In

re Dow Chem. Co. Derivative Litig., Civil Action No. 4349-CC, 2010

WL 66769, at *9 (Del. Ch. Jan. 11, 2010) ("That directors of one

company are also colleagues at another institution does not mean

that they will not or cannot exercise their own business judgment

with regard to the disputed transaction.").

             As yet another try, though not raised in the complaint,

Bryceland's opposition to the motion to dismiss argues that three

of the directors lack disinterest or independence because of their

service on Abiomed's audit committee.         The insinuation presumably

is that, given their familiarity with Abiomed's finances, these

directors had especial reason to know of a tendency to mislead in

the interim press releases.       But under Delaware law, membership on

an audit committee is not taken, on its own, to imply directors'

knowledge of or participation in corporate wrongdoing.           See Wood,

953 A.2d 142-43.    And in any case, as we said before, Bryceland has

given   us   no   reason   to   question   either   the   accuracy   of    the


                                    -13-
financials as publicized, or their significance in light of the

prior public disclosure of the FDA inquiry.

            Finally, Bryceland takes the position that even if each

of her allegations standing alone may be inadequate to meet Aronson

or Rales, collectively they suffice.        But the series of general

allegations here do not become particular by amalgamation, and the

legally   irrelevant   facts   are   no   more   relevant   when   grouped

together.    To the contrary, to the extent that the complaint

reveals anything about the directors' mental states or conduct, it

portrays a company that disclosed its exposure to liability as it

responded to a charge of unlawful behavior.

            The order of dismissal is AFFIRMED.




                                 -14-
