In Rosenbloom, v. Pyott., 765 F.3d 1137 (9th Cir. 2014) (No. 12-55516), shareholders brought a derivative action against directors of Allergan, Inc., alleging breach of fiduciary duties and other violations in connection with alleged off-label marketing by Allergan of its product Botox.  The allegations arose out of a 2007 qui tam allegation and a 2010 criminal information, to which Allergan pled guilty.  The defendants moved to dismiss the derivative complaint for failure to demand that the board of directors bring a derivative action and failure to sufficiently allege that demand was excused.  The court noted that demand is excused if particularized allegations create a reasonable doubt as to whether a majority of the board faces a substantial likelihood of personal liability for breaching the duty of loyalty.  Here, plaintiffs alleged with particularity facts showing that the Board closely and regularly monitored off-label Botox sales; it took a specific interest in certain off-label sales programs; it determined that off-label sales were critical to achieving desired profit margins; it received data directly linking sales programs to fluctuations in off-label sales; it received FDA warnings about illegal promotion of Botox; it was informed that an employee resigned after filing an ethics complaint charging the sales division with improper off-label promotions; and the illegal conduct was widespread and enduring.  Taking all of these “red flags” together, the court found they created a reasonable inference of conscious inaction by the Board, and determined that demand should be excused.  Accordingly, it found the district court abused its discretion in dismissing the complaint.