Hani Atallah v. John C. Malone

• Court: Court of Chancery of Delaware
• Decided: July 19, 2023
• Docket: CA No. 2021-1116-SG
• Status: Published

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

HANI ATALLAH and SHIVA STEIN, ) Derivatively on Behalf of QURATE ) RETAIL, INC., ) ) Plaintiffs, ) ) v. ) ) JOHN C. MALONE, GREGORY B. ) MAFFEI, RICHARD N. BARTON, ) FIONA P. DIAS, M. IAN G. ) C.A. No. 2021-1116-SG GILCHRIST, LARRY E. ROMRELL, ) MARK VADON, DAVID E. RAPLEY, ) and ANDREA L. WONG, ) ) Defendants, ) ) -and- ) ) QURATE RETAIL, INC., a Delaware ) Corporation, ) ) Nominal Defendant. )

MEMORANDUM OPINION

Date Submitted: April 21, 2023 Date Decided: July 19, 2023 F. Troupe Mickler IV and Stephen E. Jenkins, ASHBY & GEDDES, P.A., Wilmington, Delaware; OF COUNSEL: William J. Fields, Christopher J. Kupka, and Samir Shukurov, FIELDS KUPKA & SHUKUROV LLP, New York, NY; Gustavo F. Bruckner, Samuel J. Adams, and Daryoush Behbood, POMERANTZ LLP, New York, NY; Brian Schall, THE SCHALL LAW FIRM, Los Angeles, CA; Attorneys for Plaintiffs Hani Atallah and Shiva Stein.

Kevin R. Shannon, Tyler J. Leavengood, Jaclyn C. Levy, Michael C. Gorski, Jr., and Lucille E. Wiesner, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; OF COUNSEL: Richard B. Harper, Vern Cassin, Thomas E. O’Brien, Alyssa M. Pronley, and Kristina Wenner, BAKER BOTTS LLP, New York, NY, Attorneys for Defendants Richard N. Barton, Fiona P. Dias, M. Ian G. Gilchrist, Larry E. Romrell, Mark Vadon, David E. Rapley, and Andrea L. Wong.

Bradley R. Aronstam, S. Reiko Rogozen, and Roger S. Stronach, ROSS ARONSTAM & MORITZ LLP, Wilmington, Delaware; Attorneys for Defendant Gregory B. Maffei.

Joseph O. Larkin, Matthew P. Majarian, and Rupal K. Joshi, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware; OF COUNSEL: James R. Carroll, SKADDEN, ARPS, MEAGHER & FLOM LLP, Boston, MA; Attorneys for Defendant John C. Malone.

GLASSCOCK, Vice Chancellor This case involves a scenario in the shaded portion of the otherwise sunny

uplands of equity. Here, a team of two stockholders holds control, it is alleged, of

a Delaware corporation, Qurate Retail, Inc. (“Qurate” or the “Company”). These

controllers are also members of the board of Qurate. One, John C. Malone, has

certain contractual rights against, and obligations to, the Company, which provide

the Company with a call right on his high vote stock in Qurate, upon the happening

of certain conditions. The other putative controller, Gregory B. Maffei, also had an

employment contract with the company. That contract provided for significant

benefits upon a change in control, which exercise of the Malone call right would

trigger.

Plaintiffs’ derivative complaint (the “Complaint”) alleges that Maffei made a

sham offer to purchase Malone’s high vote stock, which appeared to trigger the

call right. Malone and Maffei (through exercise of their fiduciary and voting

control of Qurate) encouraged the Company’s board to exercise this contractual

call right, which in turn forced the Company to renegotiate Maffei’s employment

contract to avoid the change-in-control benefits from accruing, much to Maffei’s

benefit. The Plaintiffs seek damages against Defendants Maffei and Malone, and

against other Defendant directors, in connection with this complex series of

transactions.

1 Before me are Defendants’ motions to dismiss. Because I find that a

majority of the board lacks independence from Malone and Maffei, Rule 23.1 is

satisfied and the matter may proceed derivatively, so long as the pleading

requirements of Rule 12(b)(6) are met. Thus, the allusion to the umbra of equity;

Malone argues that this matter is, in essence, only his exercise of a contract right,1

and does not implicate equity, at all.

On examination, the shade proves not so deep. What is alleged is that two

fiduciaries colluded to propose a sham transaction, through which Company wealth

was wrongfully transferred to Maffei. Despite the fact that the scheme alleged

depended on a contract right, the actions of the fiduciaries, in that capacity, are

alleged to have been harmful to the Company, and to have caused the Company to

enter into a series of transactions which provided a non-ratable benefit to Malone

and Maffei, beyond any contract rights held by Malone, triggering entire fairness

review. With respect to the other Director Defendants, however, I find that the

Complaint fails to state a claim cognizable under our Supreme Court’s directives in

Cornerstone,2 and that those directors must be dismissed.

1 In actuality, the call right was a right belonging to Qurate, to which Malone was subject. The Defendants argue that the transactions at issue were purely helpful to Qurate, in that they lessened voting control by Malone and Maffei. Perhaps, and the allegations of the complaint remain only allegations. It is precisely to sort out the fairness of controlled transactions that our Court employs entire fairness, and it is a rare entire fairness case that may be dismissed under 12(b)(6). 2 In re Cornerstone Therapeutics Inc, Stockholder Litig., 115 A.3d 1173 (Del. 2015). 2 The facts of these transactions, barely limned above, are explained in detail

below, followed by my analysis of the motions to dismiss.

I. BACKGROUND3

Nominal Defendant Qurate is a Delaware incorporated media conglomerate

with its principal place of business in Englewood, Colorado. 4 Defendant John

Malone has been a director of Qurate (or its predecessors) since the spin off from

Tele-Communications Incorporated (“TCI”) in 1991.5 Malone also served as the

chairman of Qurate’s board from 1994 to 2018 and as its CEO from August 2005 to

February 2006.6 Defendant Gregory B. Maffei has been a Qurate director since 2005

and succeeded Malone as chairman in March 2018.7 When the Complaint was filed,

the remaining members of the 10-member Qurate board (the “Board”) were Richard

N. Barton,8 Fiona P. Dias,9 Michael A. George,10 M. Ian G. Gilchrist,11 Evan D.

3 Except where otherwise noted, the facts in this section are drawn from the Verified S’holder Derivative Compl. for Breach of Fiduciary Duties (the “Compl.”), Dkt. No. 1, and the documents it incorporates by reference. 4 Compl. ¶ 22. 5 Id. ¶¶ 23, 34. 6 Id. ¶ 23. 7 Id. ¶ 24. 8 Id. ¶ 25. 9 Id. ¶ 26. 10 Id. ¶ 27. George was also President and CEO of the Company from March 2018 through September 2021. Id. He transitioned to the role of Senior Advisor in October 2021 and was expected to resign from the Board effective January 1, 2022. Id. 11 Id. ¶ 28. 3 Malone (“Evan”),12 Larry E. Romrell,13 Mark Vadon,14 and Andrea L. Wong.15 All

members of the Board are named as Defendants in this action.16

A. The Origin of the Call Right

On February 9, 1998, Malone and TCI entered into an agreement giving TCI

the conditional right to purchase high vote Series B common stock (“High Vote

Stock”) from Malone or his affiliates (the “Call Agreement”).17 The Call Agreement

provides, in part, that:

[U]pon Malone’s death, the Company shall have the right (the “Call Right”), exercisable by action of the Independent Committee, to purchase all but not less than all of the shares of High Vote Stock beneficially owned by each Member at the time of Malone’s death and all but not less than all of the shares of High Vote Stock that are then beneficially owned by any Permitted Transferee of any Member and which shares were acquired directly or indirectly from a Member or another Permitted Transferee of Member Shares in any Exempt Transfer or other transaction except a sale to a prospective Purchaser in accordance with Section 2.3(b) hereof (collectively for all Members and Permitted Transferees, the “Subject Shares”).18

12 Id. ¶ 29. This Memorandum Opinion uses Evan’s first name for the sake of distinguishing him from his father, John C. Malone, and intends no disrespect. 13 Id. ¶ 30. 14 Id. ¶ 31. 15 Id. ¶ 32. 16 See id. ¶¶ 23-32. The Board, that is, at the time the Complaint was filed. 17 Id. ¶ 49. 18 Ex. 1 to Def. John C. Malone’s Opening Br. in Supp. of his Mot. to Dismiss the Verified S’Holder Derivative Compl. (the “Call Agreement”) § 2.2, Dkt. No. 17. 4 In addition to Malone’s death, the Call Agreement provides that the Call Right can

also be triggered by an offer to purchase Malone’s High Vote Stock from an outside

investor (the “Acceleration Provision”).19 Specifically:

If any Member or any Permitted Transferee (as applicable, the “Transferor”) receives a bona fide written offer (a “Bona Fide Offer”) from a Person who is not an Affiliate of any Member or any Permitted Transferor (a “Prospective Purchaser”) to purchase all or any of the Member Shares beneficially owned by the Transferor and the Transferor desires to accept the Bona Fide Offer, then prior to the acceptance of the Bona Fide Offer by the Transferor, the Call Right shall accelerate as to the Member Shares that are the subject of the Bona Fide Offer (the “Offered Shares”) and the Company may exercise the Call Right[.]20

Finally, the Call Agreement includes covenants that limited Malone and his affiliates

to a maximum premium of 10% in the event of a sale of the company (the

“Additional Covenants”).21

In short, the Call Agreement, once triggered, gave TCI a short-lived option to

buy out Malone’s control stake in the event of his death or a bona fide offer from an

unaffiliated party.22 In exchange, Malone received $100 million for the grant of the

Call Right, $25 million for the Acceleration Provision, and $25 million for the

19 Call Agreement § 2.3(b)(i). 20 Id.; Compl. ¶ 50. 21 Compl. ¶ 51; Call Agreement § 6.1. 22 See Call Agreement § 2.3(b)(v) (giving the Company only 10 days to elect to exercise the Call Right following a Bona Fide Offer). 5 Additional Covenants.23 The rights under the Call Agreement eventually came to

rest, unmodified,24 with the Company as TCI’s successor-in-interest.25

B. Maffei’s Offer

On May 18, 2021, Maffei delivered to Malone an offer (the “Offer”) to acquire

all of the High Vote Stock beneficially owned by the Malone Group at a price of $14

per share.26 That same day, Malone provided the Company with written notice of

his desire to accept the Offer, subject to Board approval.27 Assuming the Offer met

the appropriate criteria, the Call Agreement then provided the Company with the

right to purchase the shares at the lower of (a) the Offer price of $14 per share or (b)

110% of the average closing price of the Company’s common stock for the preceding

30 days, equal to $13.62.28

Two days later, the Board, including Malone and Maffei, met to discuss the

Offer.29 At that meeting, Malone expressed a preference to settle the Call Right in

23 Compl. ¶ 52. 24 Id. ¶ 54. 25 Id. ¶ 5, 53. 26 Id. ¶ 54. Malone Group is defined in the Call Agreement as “(i) each of Malone and Leslie, (ii) each other Person who is required to become or becomes a party to this Agreement and a member of the Malone Group pursuant to any provision of this Agreement, (iii) each other Person who at any time acquires any High Vote Stock in a transaction or a chain of transactions initiated by another member of the Malone Group, other than Exempt Transfers (except those described in clauses (ii), (vii) or (viii) of the definition of "Exempt Transfer" in Section 1.1 hereof) and (iv) each spouse or other Related Party of any member of the Malone Group, in each case so long as such Person is or is required to be a party to this Agreement or such Person or any of its Related Parties is the direct or indirect Beneficial Owner of any High Vote Stock.” Call Agreement § 1.1. 27 Compl. ¶ 55. 28 Id. ¶ 56. 29 Id. ¶ 57. 6 shares of common stock, rather than cash.30 The Board then formed an independent

committee (the “Independent Committee”) comprised of Defendants Dias, Wong,

Barton, Gilchrist, David E. Rapley,31 Romrell, and Vadon.32 Following the Board

meeting, the Independent Committee met to consider whether the Offer constituted

a Bona Fide Offer under the Call Agreement.33 The Independent Committee then

delegated authority to examine the ramifications of the Call Right’s exercise on

Maffei’s employment and compensation to a compensation committee composed of

Wong, Vadon, and Romrell (the “Compensation Committee”).34

The following day, the Compensation Committee met with financial advisors

and outside counsel to discuss its concerns that the Company, by exercising the Call

Right, would effectively be allowing Maffei to trigger certain change-in-control

provisions in his own contracts, giving rise to substantial severance payments.35

Following multiple rounds of negotiation, the Compensation Committee eventually

authorized a deal with Maffei.36

30 Id. 31 Mr. Rapley resigned from the Company’s board prior to the filing of the Complaint. Id. ¶ 33. 32 Id. ¶ 59. 33 Id. ¶ 61. 34 Id. ¶¶ 64-65. 35 Id. ¶ 65. 36 Id. ¶¶ 65-75. 7 1. The Series of Transactions

On June 2, 2021, the Company notified Malone that it would be exercising

the Call Right, payable in common stock.37 The Company entered into a stock

exchange agreement with the Malone Group, under which the latter transferred the

former 27,655,931 shares of High Vote Stock in exchange for 30,421,522 shares of

common stock, reflecting the 10% maximum premium under the Additional

Covenants.38 This purported exercise of the Call Right constituted a change of

control sufficient for Maffei to resign with “Good Reason[,]” which would have

triggered the accelerated vesting of Maffei’s outstanding and unvested equity

awards, along with other severance and penalties payable by the Company.39

To avert this, the Company, Maffei, and Liberty Media Corporation—another

Malone affiliate where Maffei was also employed—entered into an agreement under

which Maffei waived his right to resign for “Good Reason”40 and gave up two stock

option grants that were allegedly underwater, in exchange receiving refreshed

restricted share awards of High Vote Stock and confirmation that certain future

contemplated equity awards would be issued in High Vote Stock.41

37 Id. ¶ 80. 38 Id. ¶ 81. 39 Id. ¶¶ 82-83. For clarity’s sake, I have simplified the chain of contractual provisions involved. 40 This would have triggered the accelerated vesting of Maffei’s outstanding and unvested equity awards, along other severance and penalties payable by the Company. Id. ¶ 83. 41 Id. ¶¶ 84-88. 8 Maffei and the Company also entered into a stock exchange agreement under

which (i) Maffei exchanged 5,378,308 shares of common stock for an equivalent

award of High Vote Stock; (ii) the Company granted Maffei the right to exchange

subsequent awards of restricted stock units from common to High Vote Stock; (iii)

Maffei agreed that, until December 31, 2024, he and his controlled affiliates would

not exceed 20% of the Company’s voting power.42

C. Procedural History

Plaintiffs filed their Complaint on December 28, 2021.43 Defendants filed

their motions to dismiss on March 15 and 16, 2022.44 Following briefing, I heard

oral argument on those combined motions on April 12, 2023.45 That same day, I

issued a letter opinion granting Evan and George’s motion to dismiss under Rule

12(b)(6).46 This decision resolves the remaining motions.

II. ANALYSIS

Plaintiffs allege that Malone and Maffei colluded to create a phony offer to

trigger the Call Agreement’s Acceleration Provision.47 Malone and Maffei then

42 Id. ¶ 86. 43 See Compl. 44 Def. John. C. Malone’s Mot. to Dismiss the Verified S’holder Derivative Compl., Dkt. No. 17; Independent Committee Directors’ Mot. to Dismiss the Compl., Dkt. No. 18; Def. Gregory B. Maffei’s Mot. to Dismiss Pls.’ Verified S’holder Derivative Compl., Dkt. No. 19; Defs. Michael A. George and Evan D. Malone’s Mot. to Dismiss Pls.’ Verif. S’holder Derivative Compl. and Joinder, Dkt. No. 22. 45 Tr. of 4-12-2023 Oral Arg. on Defs.’ Mot. to Dismiss, Dkt. No. 47. 46 Letter Decision Regarding Defs. Evan D. Malone and Michael A. George’s Mot. to Dismiss, Dkt. No. 45. 47 Compl. ¶¶ 3-7. 9 purportedly used their collective control over the Board to ensure that the Call Right

was exercised, despite the applicability issues raised by Maffei’s affiliation with

Malone.48 The exercise of the Call Right then triggered a Rube Goldbergian system

of transactions and agreements that Plaintiffs claim delivered a non-ratable benefit

to both controllers.49 Accordingly, Plaintiffs bring derivative claims for breach of

fiduciary duty, against all Defendants, and unjust enrichment, against Malone and

Maffei.50

A. Demand Futility

Our state’s corporation law vests default decision-making authority in the

board of directors.51 This authority “extends to decisions about what remedial

actions a corporation should take after being harmed, including whether the

corporation should file a lawsuit against its directors, its officers, its controller, or an

outsider.”52 Therefore, “[i]n order for a stockholder to divest the directors of their

authority to control the litigation asset and bring a derivative action on behalf of the

corporation, the stockholder must (1) make a demand on the company's board of

directors or (2) show that demand would be futile.”53

48 Id. ¶¶ 6-9. 49 Id. ¶¶ 10-16. 50 Id. ¶¶ 128-38. 51 See, e.g., 8 Del. C. § 141(a) (stating that the business affairs of every corporation “shall be managed by or under the direction of a board of directors”). 52 United Food & Commercial Workers Union & Participating Food Indus. Employers Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034, 1047 (Del. Sept. 23, 2021) (citation omitted). 53 Id. (internal quotations and citation omitted). 10 Because both claims in this action are asserted derivatively on behalf of the

Company, and no demand was made on the Board, Plaintiffs must first overcome

the hurdle of showing demand futility before I reach the merits of the case.

1. Standard of Review

Where, as here, the plaintiff in a derivative action did not make a pre-suit

demand, she “must meet heightened pleading requirements, alleging particularized

factual statements that are essential to the claim.”54 “Plaintiffs are entitled to all

reasonable factual inferences that logically flow from the particularized facts

alleged, but conclusory allegations are not considered as expressly pleaded facts or

factual inferences.”55

In practice, a plaintiff must plead with particularity that at least half of the

board could not impartially consider a litigation demand.56 The Court assesses

impartiality on a director-by-director basis by asking:

(i) whether the director received a material personal benefit from the alleged misconduct that is the subject of the litigation demand;

(ii) whether the director faces a substantial likelihood of liability on any of the claims that would be the subject of the litigation demand; and

(iii) whether the director lacks independence from someone who received a material personal benefit from the alleged misconduct that would be the subject of the litigation demand or who would face a

54 In re Carvana Co. Stockholders Litig., 2022 WL 2352457, at *6 (Del. Ch. June 30, 2022) (internal quotations omitted). 55 Id. (quoting Brehm v. Eisner, 746 A.2d 244, 255 (Del. 2000)). 56 Id. at *7. 11 substantial likelihood of liability on any of the claims that are the subject of the litigation demand.57

Accordingly, to overcome demand futility the Plaintiffs must allege facts from which

I can find or reasonably infer that at least five members of the Board were not

independent or disinterested.

2. Malone, Maffei, and Evan

The central premise of the Complaint is that Malone and Maffei engaged in a

self-dealing transaction from which they derived a non-ratable benefit, to the

company’s detriment. For the purposes of the motion to dismiss, Defendants do not

address Malone and Maffei’s interestedness under Rule 23.1.58 Accordingly, I find

that Malone and Maffei were interested in the transaction at issue and could not

impartially assess a litigation demand.59

Defendant Evan Malone is John Malone’s son.60 Defendants also do not

contest Evan’s independence from Malone and Maffei for the limited purposes of

the motion to dismiss.61 I therefore find that he was not independent for the purposes

of assessing a hypothetical demand.

57 Id. (citing Zuckerberg, 262 A.3d at 1059). 58 Independent Committee Directors’ Opening Br. in Supp. of their Mot. to Dismiss the Compl. (the “IC Directors OB”) 21 n.74, Dkt. No. 18. 59 See Cumming v. Edens, 2018 WL 992877, at *12 (Del. Ch. Feb. 20, 2018) (holding that the court will deem a director who stands on both sides of a transaction interested); Calma v. Templeton, 114 A.3d 563, 576 (Del. Ch. 2015); Cambridge Ret. Sys. v. Bosnjak, 2014 WL 2930869, at *4 (Del. Ch. June 26, 2014). 60 Compl. ¶ 41. 61 IC Directors OB at 21 n.76. 12 Having established that these three directors were not disinterested or

independent, Plaintiffs must now show that at least two additional directors were

unable to impartially consider a litigation demand. Plaintiffs do not argue that any

of the remaining seven directors received a material benefit from the contested

transactions, nor do Plaintiffs explicitly argue that they face a substantial likelihood

of liability on the claims at issue here.62 Accordingly, I focus my remaining demand

futility analysis on the question of whether a given director was independent of

Malone and Maffei.

3. Dias, Gilchrist, and Wong

“[D]irectors are entitled to a presumption that they were faithful to their

fiduciary duties[,]” which extends to the independent and disinterested evaluation of

litigation demands.63 Plaintiffs field no particularized allegations challenging the

independence and disinterestedness of Defendants Fiona P. Dias, M. Ian G.

Gilchrist, and Andrea L. Wong. Indeed, outside of their one sentence introductions

in the Complaint’s “Parties” section,64 none of these directors is ever discussed

individually.65 Accordingly, I find that Plaintiffs fail to carry their burden regarding

these three directors.

62 In any event, I determine, infra, that the Complaint fails to state a claim against these Defendant directors. 63 Beam ex rel. Martha Stewart Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1049-50 (Del. 2004) (emphasis omitted). 64 Compl. ¶¶ 26, 28, 32. 65 See, e.g., id. ¶ 59 (including Dias, Gilchrist, and Wong among a list of directors). 13 Of the four remaining directors, Plaintiffs must show that at least two were

not independent of Malone and Maffei.

4. Vadon

Plaintiffs allege that Defendant Mark Vadon is not independent because “he

enjoys generational wealth due in part to Malone.”66 Vadon had co-founded and

been a director of Zulily, Inc., which the Company acquired in 2015, netting Vadon

hundreds of millions of dollars.67 Plaintiffs make no allegations that would support

an inference that this transaction was anything but arms-length. This Court has

consistently rejected the idea that “naked assertion[s] of a previous business

relationship” suffice to impugn a director’s independence for the purposes of Rule

23.1.68 Tellingly, Plaintiffs fail to respond to the arguments in favor of Vadon’s

independence raised in Defendants’ opening brief, waiving the issue.69 I therefore

find that Vadon was independent of Malone and Maffei for the purposes of Rule

23.1.

66 Compl. ¶ 127. 67 Id. 68 Owens on Behalf of Esperion Therapeutics, Inc. v. Mayleben, 2020 WL 748023, at *11 (Del. Ch. Feb. 13, 2020), aff’d sub nom. Owens v. Mayleben, 241 A.3d 218 (Del. 2020); Khanna v. McMinn, 2006 WL 1388744, at *20 (Del. Ch. May 9, 2006); Orman v. Cullman, 794 A.2d 5, 27 (Del. Ch. 2002). 69 See IC Directors OB at 24; Pls.’ Answering Br. in Opp. to Defs.’ Mots. To Dismiss the Verified S’Holder Derivative Compl. (the “PL Combined AB”) 15-30, Dkt. No. 31; Emerald Partners v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived”) (citation omitted). 14 5. Barton

Plaintiffs challenge Defendant Richard N. Barton’s independence on two

grounds: Malone’s role in Barton’s “generational wealth” and Barton’s relationship

with Maffei. Per Plaintiffs, “Malone is a primary reason why Barton enjoys

generational wealth.”70 “Barton is the founder of Expedia and served as its President

and CEO” until it was acquired in 2003 by a Malone-affiliated entity.71 Maffei

served on the board of Expedia at the time of the merger.72 However, Plaintiffs

allege no facts from which I can reasonably infer that this 20-year-old transaction

was anything but arms-length or created in Barton some sense of obligation

sufficient to neutralize his independence. Plaintiffs’ “generational wealth”

argument, as applied to Barton, therefore fails for the same reasons it did for Vadon.

Plaintiffs next argue that Barton is not independent of Maffei because of their

longstanding professional connections. The two served together on the boards of

Expedia and Liberty Ventures Group LLC and Maffei has served on the board of

Zillow, Inc., where Barton is CEO, since 2005.73 As a threshold matter, I find that,

despite Barton and Maffei’s longstanding professional relationship, Plaintiffs have

70 Compl. ¶ 122. 71 Id. 72 Id. 73 Id. ¶ 122-24. Plaintiffs also allege that “Barton and Maffei both have relationships with [Technology Crossover Ventures] and [Jay C.] Hoag[.]” Id. However, the Complaint lacks any explanation of how this allegation fits into a relationship sufficiently meaningful to impugn a director’s presumed independence. I decline to address it further. 15 pled no facts from which I can infer a close personal relationship sufficient to

impugn Barton’s independence. I therefore focus my analysis on whether there is

reason to believe that Barton was controlled or beholden to Maffei because of their

professional relationship.

Plaintiffs argue that because, “across Expedia and Zillow, Maffei has been

charged with overseeing Barton’s work as CEO for over 20 years[,]” Barton could

not “impartially consider a demand in which Maffei is personally interested.”74

However, Plaintiffs again fail to connect fact and conclusion. A longstanding

professional relationship does not, absent more, give rise to an inference that a

corporate fiduciary would willfully breach his duties.75 Plaintiffs do not argue that

serving as Zillow’s CEO is material to Barton for either personal or financial

reasons; more to the point, they fail to allege that Maffei had the power to interfere

with this role by removing Barton or adjusting his compensation.76 Plaintiffs

therefore fail to allege any lack of independence stemming from Barton and Maffei’s

professional relationships at Zillow and Expedia.

Finally, Plaintiffs argue that Barton is not independent because both he and

Maffei are named as defendants in pending federal derivative litigation concerning

74 PL Combined AB at 27 (quoting Compl. ¶¶ 122-23, emphasis omitted). 75 Indeed, the case that Plaintiffs cite for this proposition, In re BGC Partners, Inc., found a reasonable doubt as to a director’s independence based on a combined professional and personal relationship. 2019 WL 4745121, at *11 (Del. Ch. Sept. 30, 2019) (“BGC Partners”). 76 See PL Combined AB at 28 (explicitly disclaiming these arguments). 16 Zillow.77 Plaintiffs allege that “both [Barton and Maffei] face a substantial risk of

liability” in that suit and “[c]ommon sense dictates that co-defendants are unlikely

to rock the boat.”78 Plaintiffs provide no evidence to support their claim of a

“substantial risk of liability[,]” nor do they explain why “common sense dictates”

that that a director should commit additional litigation-inducing breaches of

fiduciary duty, simply to appease a co-defendant in an unrelated suit.

For the foregoing reasons, Plaintiffs have not pled facts from which I can

reasonably infer a relationship between Barton and Maffei sufficient to impugn

Barton’s independence.

6. George

Plaintiffs argue that a demand on Defendant Michael A. George is excused

because, in addition to serving on the Board with Malone and Maffei since

September 2011, George has been employed at the Company or its affiliates since

November 2005.79 Having stepped down as the Company’s CEO in October 2021,80

George agreed to stay on as a Senior Advisor through December 31, 2021.81

Plaintiffs allege that, while working at the Company and its subsidiary from 2011 to

2020, George received total compensation in excess of $100 million.82

77 Id. at 29. 78 Id. at 30. 79 Compl. ¶ 125. 80 Id. 81 PL Combined AB at 25. 82 Compl. ¶ 125. 17 Delaware Courts frequently find a lack of independence where one party has

the unilateral power to take away a benefit another party considers material.83 “As

a general matter, compensation from one’s principal employment is ‘typically of

great consequence’ to the employee.”84 Here, Plaintiffs allege that Malone and

Maffei had sufficient control over the Company to threaten George’s employment,

implying a lack of independence.85 Normally, my analysis could end here.

Nonetheless, Defendants argue that George’s planned retirement just three days

after the filing of the Complaint moots any argument that the position or

compensation was material.86 However, looking at George’s longstanding

professional relationships with Malone and Maffei, in which he frequently reported

directly to one or both men in his capacity as an employee, together with the

substantial compensation he enjoyed during that same period, I find that Plaintiffs

have alleged a sufficient “constellation of facts that, taken together, create a

reasonable doubt about [George’s] ability to objectively consider a demand.”87

83 See, e.g., Telxon Corp. v. Meyerson, 802 A.2d 257, 264 (Del. 2002) (finding that a director may be deemed “controlled” where the controller has the unilateral power to take away a benefit). 84 In re Limited, Inc., 2002 WL 537692, at *5 (Del. Ch. Mar. 27, 2002) 85 PL Combined AB at 23-24. 86 Independent Committee Directors’ Reply Br. in Supp. of their Mot. to Dismiss the Compl. (the “IC Directors RB”) 8-9, Dkt. No. 36. 87 BGC Partners, 2019 WL 4745121, at *9 (Del. Ch. Sept. 30, 2019) (citation and internal quotation omitted). I note that Defendants’ argument that George, on the eve of his retirement, could not be swayed by threats, implied or otherwise, to his employment and compensation ignores that consideration of a post-retirement demand would have fallen to George’s successor, the new CEO. Tr. of 4-12-2023 Oral Arg. on Defs.’ Mots. to Dismiss at 84:18-85:7. That new CEO would presumably be subject to these very threats. 18 7. Romrell

Plaintiffs allege that demand on Defendant Larry E. Romrell should be

excused because of his nearly 50-year business and personal relationship with

Malone.88 “Romrell joined TCI in 1960 and, when Malone became CEO in 1973,

the two started working closely together to help turn around an underperforming

TCI.”89 Romrell has served as a director of various Malone-affiliated companies

since 2004.90 While the professional contacts described here are not necessarily

sufficient to impugn Romrell’s independence on their own, Plaintiffs also allege

specific facts indicative of a close personal relationship between Romrell and

Malone.

The personal interactions alleged include, but are not limited to, those that

follow. On visits to each other’s country homes, the two men have purportedly

engaged in activities together ranging from grilling steaks, to riding all-terrain

vehicles, to castrating calves.91 In 1998, Romrell and two others joined Malone on

a week-long yacht trip where they worked together in shifts to pilot the vessel

88 See PL Combined AB 20-23. 89 Compl. ¶ 107. 90 Id. ¶¶ 108-09. 91 Id. ¶¶ 110-12. The Plaintiffs stress the latter activity without explaining its significance here. Presumably, Romrell and Malone’s neutering of bull calves is a significant male bonding experience, for the subjects of this sentence if not for the objects. 19 through a storm.92 In 2013, Romrell and his wife joined the Malones on a trip to

Greece to celebrate the latter couple’s 50th wedding anniversary.93

Because Plaintiffs’ most recent allegation is from 2017, Defendants

characterize the contacts between Malone and Romrell as “dated[.]”94 However, I

find that the particularized facts Plaintiffs have pled, taken in their totality,95 give

rise to a reasonable doubt of Romrell’s ability to impartially considered a

stockholder’s demand that the corporation pursue litigation against Malone. The

contacts alleged are not indicative of a passing or casual personal relationship.

Repeatedly spending multiple days together on the ocean or in the wilderness,

particularly in a small group, is suggestive, to my mind, of a close friendship. That

suggestion is bolstered when one of those trips is in celebration of something as

closely personal as a golden wedding anniversary. Such personal relationships are

rare in a lifetime; under the facts pled here they create a reasonable doubt as to

Romrell’s ability to bring his business judgment to bear on a demand.

Plaintiffs have therefore successfully pled that a majority of the Board,

comprised of Malone, Maffei, Evan, George, and Romrell, was not disinterested or

92 Id. ¶ 113. 93 Id. ¶¶ 115-17. 94 IC Directors RB at 11. 95 Delaware Cnty. Employees Ret. Fund v. Sanchez, 124 A.3d 1017, 1019 (Del. 2015). 20 independent for the sake of considering a litigation demand. Accordingly, I turn

now to the merits of Plaintiffs’ claims.

B. Defendants’ Motions to Dismiss under Rule 12(b)(6)

The standard of review appropriate at a motion to dismiss under Rule 12(b)(6)

is well-established. Under that rule, a complaint will be dismissed where the

plaintiff could not “recover under any reasonably conceivable set of circumstances

susceptible of proof based on the facts as pled in the complaint.”96 “[T]he court must

accept as true all well-pled allegations in the complaint and draw all reasonable

inferences from those facts in plaintiff's favor.”97 However, the court need not accept

conclusory allegations or inferences that do not “logically flow” from the non-

conclusory facts pled.98

1. Malone & Maffei

Per Plaintiffs, “[t]his matter arises because Malone and Maffei, who

collectively control Qurate, caused the Company to enter into a series of complicated

transactions that benefited them personally but were detrimental to the Company.”99

Having cleared the initial hurdle of demand futility, Plaintiffs must next surmount

the issue of showing control.

96 In re Tesla Motors, Inc. Stockholder Litig., 2018 WL 1560293, at *12 (Del. Ch. Mar. 28, 2018) (internal quotations and citation omitted). 97 Id. 98 In re Gen. Motors (Hughes) S'holder Litig., 897 A.2d 162, 168 (Del. 2006); Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001). 99 Compl. ¶ 3 (footnote omitted). 21 a. Control

Delaware courts “will deem a stockholder a controlling stockholder when the

stockholder: (1) owns more than 50% of the voting power of a corporation or (2)

owns less than 50% of the voting power of the corporation but ‘exercises control

over the business affairs of the corporation.’”100 Plaintiffs allege that, prior to the

transactions at issue here, Malone and Maffei “controlled 47.5% of the voting power

of outstanding Company stock[.]”101 Because collusion between Malone and Maffei

is one of the central allegations in the Complaint, supported by particularized

pleadings about Maffei’s history as Malone’s righthand man,102 I find it reasonable

at the pleadings stage to assess their combined holdings for the purposes of

determining control.103

Because Malone and Maffei together own less than 50% of the Company’s

combined voting power, the operative question is whether they “exercise control

over the business affairs of [Qurate].”104 A plaintiff can plead such an exercise in

two ways: “(1) that the minority blockholder actually dominated and controlled the

corporation, its board or the deciding committee with respect to the challenged

100 Tesla Motors, 2018 WL 1560293, at *12 (quoting Kahn v. Lynch Commc’n Sys., 638 A.2d 1110, 1113-14 (Del. 1994) (emphasis in original)). 101 Compl. ¶ 35. 102 Id. ¶¶ 37-39. 103 See Sheldon v. Pinto Tech. Ventures, L.P., 220 A.3d 245, 251 (Del. 2019) (recognizing that multiple stockholders together can constitute a control group). 104 Kahn v. Lynch, 638 A.2d at 1113-14 (Del. 1994) (emphasis in original). 22 transaction or (2) that the minority blockholder actually dominated and controlled

the majority of the board generally.”105 Plaintiffs argue that “[t]he facts alleged in

Plaintiffs’ Complaint give rise to an inference that it is reasonably conceivable that

Malone controlled Qurate, generally, and the transactions, specifically[.]” Because

I find it reasonable to infer that Malone and Maffei controlled the specific

transactions at issue, I need not reach the question of general control, at least at this

pleadings stage.

As an initial matter, I find that Plaintiffs have successfully pled that Malone

and Maffei were potential controllers. The voting block that these two men

controlled was significant and likely would have been dispositive in a contested

board election.106 Indeed, the very existence of the Call Agreement supports an

inference that the Company itself recognized the potency of Malone’s voting power,

such that it spent $150 million in 1998 on the conditional option to buy those votes

back. Evaluating the facts pled from the appropriate plaintiff-friendly perspective, I

find at the pleading stage that Malone’s voting power, combined with his close

association with the Company and Maffei’s role as its chairman, suggests that

105 Tesla Motors, 2018 WL 1560293, at *13. 106 See id. at *14 (acknowledging the significance of influence over contested elections in the controlling stockholder analysis). 23 Malone’s “insistence on a particular policy or result had the potential to sway the

business judgment of the directors and the executives of [the Company].”107

Having found that Malone and Maffei had the potential to control the

Company, I further find that Plaintiffs have pled sufficient facts to support an

inference that Malone and Maffei exercised that control. Here, the impetus for the

exercise of the Call Right came directly from Malone and Maffei.108 The two men

then failed to wall themselves off from the decision-making process. Plaintiffs

allege that Malone and Maffei attended the initial meeting where the Board

discussed the Offer, at which Malone expressed his desire to accept and his

“preference to settle the Call Right in shares of the [Company’s common stock.]”109

Subsequent negotiations to resolve the downstream impacts of exercising the Call

Right on Maffei’s employment and compensation provided additional opportunities

for the controllers’ preferences to “numb the minds or overcome the business

judgment of the other directors.”110

In sum, Malone and Maffei were potential controllers who stood on both sides

of a challenged series of transactions and failed to sufficiently distance themselves

107 In re Oracle Corp. Derivative Litig., 2023 WL 3408772, at *20 (Del. Ch. May 12, 2023). 108 Compl. ¶¶ 54-57. 109 Id. ¶ 57. 110 Oracle, 2023 WL 3408772, at *23 (citation omitted). 24 from the Board’s decision making. Accordingly, I find it reasonable to conclude, at

least at the pleadings stage, that they controlled the transactions in question.

b. Breach of Fiduciary Duty

It is established law that the stringent standards of entire fairness review apply

to a transaction in which a controller, standing on both sides, breaches his duty of

loyalty by extracting a benefit not shared by the other stockholders.111 Recognizing

this, Malone argues that under Delaware law “[a]n individual who owns a

contractual right, and who exploits that right—even in a way that forces a reaction

by a corporation—is simply exercising his own property rights, not that of others,

and is no fiduciary.”112 However, as Malone acknowledges, this proposition is

limited to the exercise of contractual rights “in the situations specifically

contemplated by those contracts[.]”113 I find that Plaintiffs have raised sufficient

doubts that the Call Agreement was intended to apply to Maffei’s Offer.

Additionally, because the subsequent exercise of the Call Right, and the

ramifications of Maffei’s contracts which resulted, conveyed non-ratable benefits,

Plaintiffs’ fiduciary duty claims against Malone and Maffei must go forward.

111 See, e.g., In re Ezcorp Inc. Consulting Agreement Derivative Litig., 2016 WL 301245, at *15 (Del. Ch. Jan. 25, 2016) (clarifying that entire fairness review applies to transactions involving self-interested controllers outside the squeeze-out merger context). 112 Def. John C. Malone’s Opening Br. in Supp. of his Mot. to Dismiss the Verified S’Holder Derivative Compl. (the “Malone OB”) 8 (quoting Thermopylae Cap. Partners, L.P. v. Simbol, Inc., 2016 WL 368170, at *14 (Del. Ch. Jan. 29, 2016)), Dkt. No. 17. 113 Id. at 8-9 (emphasis added) (quoting Sirius XM S’holder Litig., 2013 WL 5411268, at *9 (Del. Ch. Sept. 27, 2013)). 25 As a threshold matter, I find Malone’s efforts to characterize Plaintiffs’

fiduciary duty claims as a mis-pled breach of contract claim are unpersuasive at this

pleadings stage. Here, Plaintiffs allege that Malone and Maffei, leveraging their

position as controllers, used a contract provision as a pretext to push through a self-

dealing transaction not actually contemplated by that contract.114 As a result, the

claim for breach of fiduciary duty is not duplicative of a hypothetical claim for

breach of contract,115 nor is it focused solely on an exercise of contract rights.

Plaintiffs contend that the Call Right itself was not validly triggered. They

argue “that Maffei was Malone’s Affiliate under the definitions set forth in the Call

Agreement.”116 The Acceleration Provision, under which the Company exercised

the Call Right, cannot be triggered by an offer from someone who is “an Affiliate of

any Member[.]”117 Malone is explicitly defined as a Member.118

I first note that, given the adequate pleading of control and non-ratable benefit,

the issue of whether Maffei was a Malone affiliate, and thus whether the Call Right

was actually or pretextually triggered, is not determinative here. For completeness’

sake, however, I address the issue below. Per the Call Agreement, “‘Affiliate’

114 See Compl. ¶¶ 1-19. 115 For example, the hypothetical claim would presumably not apply to Maffei, who was not a party to the Call Agreement. 116 PL Combined AB at 37. 117 Call Agreement at § 2.3(b)(i). 118 Per the Call Agreement, “‘Member’ means any member of the Malone Group[,]” which is in turn defined to include “each of [John C.] Malone and Leslie [Malone.]” Id. § 1.1. 26 means, when used with reference to a specified Person, any Person that directly or

indirectly through one or more intermediaries Controls, is Controlled by or is under

common Control with, such specified Person.”119 The same section further defines

“Person” broadly to include both natural persons and entities, while “Control”

“means the power to direct or cause the direction of the management and policies of

such Person, whether through the ownership of voting securities, by contract or

otherwise.”120 Therefore, the question of whether Maffei is a Malone Affiliate turns

on whether Malone had the power to direct Maffei’s actions.

I find that Plaintiffs have pled particularized facts supporting a reasonable

inference that Malone is capable of directing Maffei’s actions relating to the Offer.

Maffei has worked with and for Malone as his “right-hand man” across over a dozen

companies.121 This ongoing relationship has netted Maffei total compensation that

is, per Plaintiffs pithy phrase, “roughly equal to the per annum GDP of American

Samoa[.]”122 In 2020, Maffei received more than $74 million in compensation from

just the three Malone-affiliated companies where he serves as both an employee and

a director.123 In addition to these past and ongoing financial ties, Maffei netted a

handsome financial return and voting power increase from the transactions at issue

119 Id. 120 Id. 121 Compl. ¶¶ 1, 37-39. 122 PL Combined AB at 43 (emphasis omitted); Compl. ¶ 62. 123 Compl. ¶¶ 37, 62. Indeed, the Company’s 2021 proxy disclosed that Maffei is not independent. Id. ¶ 102. 27 here, all at a relatively minimal cost.124 Accordingly, weighing Maffei’s close ties

to Malone as well as his specific and general financial interest in effecting the

challenged transactions alongside Malone, I find that a pleadings-stage inference of

Malone’s control of Maffei in the context of the Call Agreement is reasonable, and,

thus, I may infer that Maffei is a contractual Affiliate of Malone. If so, the “trigger”

was never pulled and the need for the company to consider whether to exercise the

call was illusory.

c. Unjust Enrichment

Plaintiffs’ cause of action for unjust enrichment appears largely redundant in

light of my finding that the claim for breach of fiduciary duty against Malone and

Maffei survives. Here, I note that Defendants’ reliance on Malone’s contract rights,

although insufficient to achieve dismissal of the fiduciary duty claims, remain in the

case and may make a claim of unjust enrichment pertinent. Because the elements of

unjust enrichment are met here,125 I decline to dismiss the claim at the pleading stage.

124 Id. ¶¶ 16, 88. I further find that, viewed in light of the benefits delivered to both Malone and Maffei, Plaintiffs have adequately pled that unfair price. 125 A cause of action for unjust enrichment requires an enrichment, an impoverishment, a relation between the enrichment and impoverishment, and the absence of justification. See Garfield on behalf of ODP Corp. v. Allen, 277 A.3d 296, 341 (Del. Ch. 2022). Here, these elements are met by Maffei and Malone’s purported abuse of the call right to extract non-pro rata benefits. 28 2. The Independent Committee

Last, I turn to Plaintiffs’ claims that the members of the Independent

Committee (the “IC Directors”)126 breached their duty of loyalty by approving the

challenged transactions.127 In order to survive a given director defendant’s motion

to dismiss, Plaintiffs must plead facts supporting a rational inference that: “the

director harbored self-interest adverse to the stockholders' interests, acted to advance

the self-interest of an interested party from whom they could not be presumed to act

independently, or acted in bad faith.”128 Plaintiffs take the second path.129 This

requires Plaintiffs to show that each IC Director, individually, was not independent

and actively advanced the interests of Malone and Maffei.130 Failure to fulfill either

of these requirements results in dismissal under the second prong of Cornerstone

with respect to that director.131

a. Barton, Dias, Gilchrist, Rapley, Vadon, and Wong

For the reasons discussed in Section II.A.3, Plaintiffs have not impugned the

independence of Dias, Gilchrist, and Wong. Plaintiffs’ allegations against David E.

126 Comprised of Defendants Barton, Dias, Gilchrist, Romrell, Vadon, Rapley, and Wong. 127 Compl. ¶ 131. 128 Cornerstone, 115 A.3d at 1179-80. 129 Plaintiffs explicitly disclaim arguments based on the IC Director’s self-interest. PL Combined AB at 56. Their arguments of bad faith are purely conclusory, to the extent they are made at all. Id. at 54-55. I therefore need not address them further. 130 BCG Partners, 2021 WL 4271788, at *10. 131 Id. 29 Rapley are similarly sparse.132 While the allegations against Vadon and Barton were

less tenuous, I nonetheless found them insufficient to establish a lack of

independence, even at the pleadings stage.133 Accordingly, I grant these six

directors’ motions to dismiss.

b. Romrell

The only IC Director whose independence Plaintiffs credibly challenged is

Romrell. However, “[e]ven if a director is found to lack independence for purposes

of evaluating a demand to sue an interested party, the court must also consider

whether she acted to advance the self-interest of the same interested party.”134 This

Court has previously recognized that directors are likely to have a harder time

deciding to let a suit on behalf of the corporation proceed against a fellow director

than they would denying that same fellow director approval of a self-interested

transaction.135 It follows that “[a] director's objectivity concerning a hypothetical

demand could be compromised even if her actions in evaluating a transaction were

beyond reproach.”136

132 Rapley was not discussed in Section II.A because he resigned prior to the filing of the Complaint. Compl. ¶ 33. As with Dias, Gilchrist, and Wong, Rapley is never mentioned individually after his introduction in the Complaint’s “Parties” section. 133 See Section II.A.4-5. 134 In re BGC Partners, Inc. Derivative Litig., 2021 WL 4271788 at *10 (Del. Ch. Sept. 20, 2021) BGC Partners, 2021 WL 4271788, at *10 (“BGC Partners II”). 135 Id. at *11. 136 Id. 30 Plaintiffs argue that Romrell worked to advance the interests of Malone and

Maffei by (1) “deem[ing] the Offer a Bona Fide Offer without bothering to consider

whether Maffei was an Affiliate of Malone”137 and (2) that, as part of the

Compensation Committee, Romrell breached his duty of loyalty by adopting a

proposal put forward by management.138

Plaintiffs have pled particularized facts sufficient to support a reasonable

inference that Romrell could not impartially consider a hypothetical litigation

demand concerning Malone.139 However, such a finding does relieve Plaintiffs of

their burden to plead a duty of loyalty claim against Romrell sufficient to rebut the

underlying presumption that “independent directors are presumed to be motivated to

do their duty with fidelity.”140 When it comes to the activities of the Independent

Committee, the body alleged to have opted to exercise the Call Right, Plaintiffs make

no particularized pleadings as to Romrell’s role. “[Romrell] was not the Chair of

the [Independent] Committee, is not alleged to have engaged in separate discussions

with [Malone and Maffei], and did not take a particularly active role in

negotiations.”141 Instead, Plaintiffs attempt to coax out an inference of disloyalty

137 PL Combined AB at 54. 138 Id. at 55. 139 See Section II.A.7. 140 Cornerstone, 115 A.3d at 1183 (citation omitted); see BGC Partners II, 2021 WL 4271788, at *12. 141 BGC Partners II, 2021 WL 4271788, at *12 (dismissing plaintiffs’ claims against a director whose impartiality had been found compromised for demand futility purposes). 31 based on group pleading against the Independent Committee as a whole. 142 This

tactic fails as a matter of law.143

Plaintiffs’ claims that Romrell breached his duty of loyalty as chair of the

Compensation Committee fare no better. However, even assuming that Romrell,

due to his connections to Malone, was not independent of Maffei, Plaintiffs

conclusory allegations fail to state a breach of the duty of loyalty. Once again

engaging in group pleading, Plaintiffs argue that the Compensation Committee

breached its duty of loyalty by “simply accept[ing] the terms dictated by

‘management’, who were presumably all in a reporting relationship with Maffei

and/or Malone.”144 Here, the Compensation Committee, following multiple rounds

of negotiations with Maffei, ultimately adopted a deal structure allegedly proposed

by management.145 Plaintiffs attempt to take Maffei’s ultimate acceptance of this

deal as evidence that a servile Compensation Committee merely rubberstamped an

unreasonably favorable transaction drawn up by Maffei’s management minions.146

Plaintiffs’ inference is unreasonable given the facts. A simpler explanation of the

same facts pled, consistent with Delaware courts’ presumption of independent

142 See PL Combined AB at 53-57 (failing to mention a single director, other than Malone and Maffei, by name). 143 See In re Tangoe, Inc. Stockholders Litig., 2018 WL 6074435, at *12 (Del. Ch. Nov. 20, 2018) (holding that a “plaintiff must well-plead a loyalty breach against each individual director; so- called ‘group pleading’ will not suffice”). 144 PL Combined AB at 55. 145 Compl. ¶¶ 65-75. 146 PL Combined AB at 54-55. 32 directors’ fidelity to their fiduciary duties, is that the Compensation Committee

adopted the deal after reviewing its structure and finding it to be in the Company’s

best interests, given the options that would remain after the Company elected to

exercise the Call Right. Accordingly, Plaintiffs fail to plead a non-exculpated breach

of fiduciary duty against Romrell.

III. CONCLUSION

For the foregoing reasons, the Independent Committee directors’ motions to

dismiss under Rule 12(b)(6) are GRANTED. All other outstanding motions under

Rules 12(b)(6) and 23.1 are DENIED. The parties should submit a form of order

consistent with this decision.