Texas Business Court Decision – October 2, 2026

No. 26-BC01A-0052    Gary Guillaume, etc. v. Brian Armstrong, et al. (First Division, Judge Bouressa) 2026 Tex. Bus. 70     26-bc01a-0052-guillaume-v-armstrong-2026-tex-bus-70.pdf

Derivative Shareholder Actions.

Background. Coinbase is a Texas corporation, having reincorporated in Texas from Delaware in 2025. Plaintiff commenced this action in the 68th Judicial District Court, Dallas County, in April, 2026, alleging wrongdoing by Armstrong and other defendants between April 2021 and June 2023, when Coinbase was a Delaware corporation. Plaintiff made no pre-suit demand on the board and instead pleaded futility under Delaware law. After the case was transferred to the Business Court, defendants filed a Rule 91 Special Exception, arguing Texas law applied and required dismissal because plaintiff had failed to satisfy his pre-suit demand obligation before filing this shareholder derivative action – see Tex. Bus. Orgs. Cde Sec. 21-553; failure to make a demand is never excused, and the defendant’s remedy for plaintiff’s failure to make the demand is dismissal.  By contrast, Delaware law requires a shareholder to either make a pre-suit demand or plead futility.

Issues:

1. Whether Texas or Delaware law governs a shareholder’s standing and authority to bring a derivative action against a Texas corporation when the claims arose while it was a Delaware corporation;
2. Whether Coinbase’s regulatory statements about the reincorporation preserved Delaware law or plaintiff’s ability to plead demand futility; and
3. What relief follows if Texas law governs.

Discussion.

1. Governing law. The court assumes, without deciding, that Delaware law will apply to the merits of plaintiff’s claims. However, defendants’ special exceptions do not raise a choice-of-law question concerning the merits of the pleaded claims but, instead, present a choice-of-law question concerning plaintiff’s standing to assert those claims for Coinbase. Standing warrants independent inquiry and the court will apply the “internal affairs” doctrine to resolve that issue. Under the doctrine, a shareholder’s authority to assert derivative claims is governed by the law of the state of incorporation as of the date the shareholder purports to exercise that authority. As result, the court holds that a shareholder’s standing and ability to bring a derivative suit on behalf of a Texas corporation is governed by Texas law, even if the asserted claims arise under – and are subject to – the laws of another state.
2. Coinbase’s representations. Plaintiff relied on a statement in Coinbase’s 14C Information Statement that the reincorporation would not extinguish or adversely affect the standing or ability of any person or entity to initiate a derivative action on behalf of the Delaware corporation for acts occurring before the conversion date. However, the court finds this argument unavailing for three reasons: (a) the statement does not say Delaware law will govern standing, and the exhibits expressly provide that Texas law will govern Coinbase’s affairs after reincorporation; (b) plaintiff showed no adverse effect from losing the option to plead demand futility; and (c) plaintiff offered no authority or evidence that the Texas pre-suit demand requirement can be contracted around, and the bylaws contain no carve-out.
3. Remedy. Because it is undisputed that plaintiff failed to make the pre-suit demand required by Texas law,  the court sustains the special exceptions and dismisses the action without prejudice.