VMWare Shareholders Must See Board First on Backlog, Court Says

VMware Inc. officers and directors beat a shareholder derivative lawsuit alleging they misled investors about the software company’s unfulfilled orders.

The investors didn’t show that it would’ve been futile to demand action from VMware’s board before filing the suit, Judge Edward Davila in US District Court for the Northern District of California said a Tuesday order dismissing the suit.

The lawsuit alleged that VMware was “besieged with litigation” and investigations because the defendants misled investors about the software company’s backlog and failed to implement appropriate controls.

Shareholders must demand the board of directors investigate before bringing a derivative lawsuit, unless ...