The Yosaki Trust v. Teresa S. Weber

• Court: Supreme Court of Delaware
• Decided: December 15, 2025
• Docket: 157, 2025
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

THE YOSAKI TRUST, Russell J. § Miller and Mary Miller as co-trustees, § and THE MIOKO TRUST, Russell J. § Miller and Mary Miller as co-trustees, § § No. 157, 2025 Plaintiffs Below, § Appellants, § Court Below: Court of Chancery § of the State of Delaware v. § § C.A. No. 2024-0738 TERESA S. WEBER, MARC D. § BEER, MARY ELIZABETH § CONLON, HAYMAKER SPONSOR § III LLC, a Delaware Entity, STEVEN § J. HEYER, and COOLEY LLP, a § California entity, § § Defendants Below, § Appellees. §

Submitted: October 8, 2025 Decided: December 15, 2025

Before SEITZ, Chief Justice; VALIHURA, TRAYNOR, LEGROW, and GRIFFITHS, Justices, constituting the Court en Banc.

ORDER

The Court, having considered the briefs and the record below, and after oral

argument, rules as follows:

(1) This appeal arises out of a dispute involving a de-SPAC transaction

(“Transaction”). In a Court of Chancery complaint, the Yosaki Trust and The Mioko

Trust (collectively, the “Trusts”), who held equity interests in BioTE Holdings, LLC (“Holdings”), alleged that conflicted fiduciaries at Holdings breached their fiduciary

duties by closing a recapitalization transaction that unfairly redistributed equity and

conferred control on insiders. The Trusts alleged that they were harmed by diluting

their equity interests and diverting Transaction consideration to insiders. The Court

of Chancery dismissed their complaint on several grounds, one of which was lack of

standing because the Trusts sold their equity interests and therefore no longer had

standing to pursue their claims.

(2) On appeal, the Trusts argue that their claims were direct, not derivative,

and their direct claims involving their converted stock were not extinguished by

selling the converted stock post-Transaction. As explained below, however, even if

their claims were direct, once the Trusts sold their equity interests, they lost standing

to pursue their claims. We affirm the Court of Chancery’s judgment.

(3) Dr. Gary S. Donovitz, M.D., an obstetrician-gynecologist, founded

BioTE in 2012 to train medical professionals to administer pellet-based hormone

therapy.1 BioTE Medical, LLC (“Medical”) is BioTE’s main operating company

and is wholly owned by Holdings.2

1 App. to Opening Br. at A18–19 [hereinafter A__] (Pls.’ Am. Verified Compl. ¶ 9 [hereinafter Compl.]). 2 A20 (Compl. ¶¶ 14–15).

2 (4) Defendant Teresa Weber (“Weber”) was the Chief Executive Officer of

Medical during the relevant times, and Marc Beer (“Beer”) was Medical’s Executive

Chairman of the Board of Managers.3 Defendant Mary Conlon (“Conlon,” and

together with Weber and Beer, the “Insider Defendants”) was the Vice President of

Business Development and General Counsel of Medical and Holdings. 4

(5) Beginning in June, 2021, the Trusts alleged that the Insider Defendants

and BioTE’s outside counsel, Cooley LLP (“Cooley”), negotiated a Business

Combination Agreement (“BCA”) with defendant Haymaker Sponsor III LLC

(“Haymaker Sponsor”) and its CEO, Defendant Steven J. Heyer (“Heyer,” and

together with Haymaker Sponsor, “Haymaker Defendants”). As the Court of

Chancery correctly observed, despite the complaint characterizing the Transaction

as a “[m]erger,”5 it did not involve an exchange of consideration to qualify as a

merger.6 Instead, prior to closing, Holdings redomiciled from Nevada to Delaware7

and recapitalized its existing equity classes (Class A Units, Class AA Units, Class

AAA Units, and Class AAAA Units) into a single class of equity designated as Class

3 A20–21 (Compl. ¶¶ 16–17). 4 A22 (Compl. ¶ 18). 5 See, e.g., A16 (Compl. ¶ 2). 6 See A252–57 (Oral Args. and Rulings of the Ct. on Defs.’ Mots. to Dismiss at 38:12–43:20). 7 A20 (Compl. ¶ 14).

3 A Common Units. 8 Thereafter, Haymaker Acquisition Corp. III (“Haymaker

SPAC”) and Holdings cross-issued equity resulting in “an umbrella partnership C-

corporation, or ‘Up-C’ structure,” with the Haymaker SPAC serving as the publicly

traded entity and Holdings as the flow-through entity indirectly holding substantially

all of the assets.9

(6) Specifically, Holdings issued some of its new Class A Common Units

to the Haymaker SPAC, and in turn, the Haymaker SPAC issued to Holdings the

cash remaining at closing as well as newly created Class V stock. 10 The Class V

stock held voting rights but no equity interest. 11 Holdings thereafter distributed the

Class V stock to holders of the pre-transaction Class A Common Units, which

included the Trusts. 12 The holders of the pre-transaction Class A Common Units had

the right to convert one Class A Common Unit and one Class V share into a single

publicly traded share of the Haymaker SPAC. 13 Haymaker SPAC became the sole

8 App. to Answering Br. at B414 [hereinafter B__] (Business Combination Agreement, Annex A to Schedule 14A, Definitive Proxy Statement, Haymaker Acquisition Corp. III (May 5, 2022) [hereinafter BCA]). 9 B45 (Schedule 14A, Definitive Proxy Statement, Haymaker Acquisition Corp. III (May 5, 2022)). 10 See B434–35 (BCA §§ 2.1, 2.2). 11 See B45 (Schedule 14A, Definitive Proxy Statement, Haymaker Acquisition Corp. III (May 5, 2022)). 12 B434 (BCA § 2.1(d)). 13 B549–50 (Second Am. & Restated Operating Agreement of BioTE Holdings, LLC, Annex I to Schedule 14A, Definitive Proxy Statement, Haymaker Acquisition Corp. III (May 5, 2022)).

4 managing member of Holdings and renamed itself biote Corp (“PubCo”). 14

(7) Before the Transaction, the Trusts each owned 2.8% of Holdings.15

Immediately following closing, through their ownership of Holdings’ Class A

Common Units and the new Class V shares, the Trusts each owned about 2% of the

resulting public company’s equity and voting rights. 16 The Trusts voluntarily

converted their Holdings’ Class A Common Units and Class V Haymaker SPAC

shares into biote Corp. Class A common stock (“PubCo stock”). The Trusts then

voluntarily sold their PubCo stock. 17

(8) In their complaint, the Trusts alleged that, although Holdings expected

to receive over $317.5 million in SPAC funding, primarily because 98% of the

Haymaker SPAC investors redeemed their shares, Holdings received only about $12

million. 18 The Court of Chancery summarized the “principal effect” of the

Transaction as “dilut[ing] the ownership interest . . . [of the] pre-transaction

members of Holdings . . . in return for whatever minimal cash the [Haymaker] SPAC

14 A23–24 (Compl. ¶ 21). 15 A19 (Compl. ¶ 11). 16 See id. 17 A153 (Pls.’ Consol. Answering Br. in Opp’n to Defs.’ Mots. to Dismiss at 42). 18 A16–17 (Compl. ¶ 4).

5 brought to the table.” 19

(9) In July 2024, the Trusts filed a complaint in the Court of Chancery

asserting breach of fiduciary duty claims against the Insider Defendants, aiding and

abetting breaches of fiduciary duty against the Haymaker Defendants and Cooley,

and unjust enrichment against all defendants. In response, the defendants filed

motions to dismiss under Ch. Ct. R. 23.1 and Ch. Ct. R. 12(b)(6).

(10) The Court of Chancery granted the motions. First, the court held that,

because the Trusts’ claims arose out of a cash and equity transaction that diluted their

interests, their claims were derivative under Brookfield Asset Mgmt., Inc. v. Rosson.20

Thus, the Trusts failed to “allege facts supporting a reasonable inference that the

plaintiff has standing to sue derivatively[,]” as required by Ch. Ct. R. 23.1(a)(2).21

(11) Second, the court dismissed the amended complaint under the

“continuous ownership rule” in Lewis v. Anderson. 22 The rule requires “that a

derivative shareholder must not only be a stockholder at the time of the alleged

wrong and at time of commencement of suit but that he must also maintain

19 A266–67 (Oral Args. and Rulings of the Ct. on Defs.’ Mots. to Dismiss at 52:14–53:8). 20 261 A.3d 1251, 1260 (Del. 2021) (“[D]ilution claims are classically derivative[.]”). 21 A269–70 (Oral Args. and Rulings of the Ct. on Defs.’ Mots. to Dismiss at 55:21–56:6). 22 477 A.2d 1040 (Del. 1984); A273–74 (Oral Args. and Rulings of the Ct. on Defs.’ Mots. to Dismiss at 59:23–60:8).

6 shareholder status throughout the litigation.” 23 As noted above, it is undisputed that

the Trusts no longer owned an equity interest in any of the involved entities. 24

(12) Finally, even if the Trust’s claims were direct, as opposed to derivative,

the court held that, under Urdan v. WR Capital Partners, LLC,25 dilution claims were

not personal to the holder of the stock and therefore “travel” with the sale of the

stock. 26 Thus, the Trusts lost standing to pursue their claims when they converted

their Holdings’ Class A Common Units and Class V Haymaker SPAC shares into

PubCo stock and sold that stock.

(13) The Trusts raise two main arguments on appeal. First, they contend that

the Court of Chancery erred in finding that the Trusts’ claims were derivative.27

According to the Trusts, Brookfield did not overrule this Court’s decision in Parnes

v. Bally Ent. Corp.28 which, according to them, stands for the “settled principle that

when fiduciaries extract side payments or self-dealing benefits from a transaction at

23 477 A.2d at 1046. 24 A153 (Pls.’ Consol. Answering Br. in Opp’n to Defs.’ Mots. to Dismiss at 42). 25 244 A.3d 668 (Del. 2020); A274–75 (Oral Args. and Rulings of the Ct. on Defs.’ Mots. to Dismiss at 60:21–61:4). 26 244 A.3d at 678. 27 Opening Br. at 5. 28 722 A.2d 1243 (Del. 1999).

7 the expense of legacy owners, the resulting harm is personal and redressable by

direct claims.” 29

(14) Second, the Trusts contend that Urdan is inapposite because their

claims “arose well before the closing of the [T]ransaction, when they held entirely

different securities: Class AAA Units in Holdings—a Nevada LLC[.]” 30 Thus, they

say, because Urdan “presumes voluntary sales of the same securities[,]” the Trusts

still have standing to pursue their claims.31 The standing issue raises questions of

law which we review de novo. 32

(15) As we see it, the appeal can be decided based on our Urdan decision.

In Urdan, we observed that “a purchaser of a . . . security acquires all rights in the

security that the transferor had or had power to transfer.” 33 We noted that the words

“all rights in the security” distinguishes between rights that “inhere in the security

itself” and personal rights which do not travel with the sale of a security.34 Claims

29 Opening Br. at 6. 30 Id. 31 Id. at 7 (emphasis added). 32 Empls. Ins. Co. of Wausau v. First State Orthopaedics, P.A., 312 A.3d 597, 606 (Del. 2024) (“We also review questions of justiciability, including standing, de novo.”). 33 244 A.3d at 677 (citing 6 Del. C. § 8-302(a)). 34 244 A.3d at 677 (citing In re Sunstates Corp. S’holder Litig., 2001 WL 432447, at *3 (Del. Ch. Apr. 18, 2001)).

8 that arise from “the relationship among stockholder, stock and the company” inhere

in the security itself.35 Personal claims arise when the underlying “property happens

to be shares, but the cause of action is not a property right carried by the shares.”36

Examples of the former category include a claim alleging a corporate charter

violation, the fairness of a proposed transaction, or a challenge to executive

compensation.37 “[E]xamples of personal claims would include a contract claim for

breach of an agreement to purchase or sell shares or a tort claim for fraud in

connection with the purchase or sale of shares.”38

(16) After Urdan, dilution claims, “[w]hether described as direct,

derivative, or both,” are “not personal to the plaintiffs and travel[ ] with the sale of

their [ ] stock.”39 The same is true of diversion claims – they involve the relationship

between the stockholder and the company, not a claim arising out of a share sale. It

is undisputed that, following closing, the Trusts converted their Holdings’ Class A

35 244 A.3d at 677 (citing I.A.T.S.E. Local No. One Pension Fund v. Gen. Elec. Co., 2016 WL 7100493, at *5 (Del. Ch. Dec. 6, 2016)). 36 244 A.3d at 677 (citing In re Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025, 1056 (Del. Ch. 2016)). 37 See 244 A.3d at 677. 38 Id. (citing 124 A.3d at 1056). 39 244 A.3d at 678 (emphasis added).

9 Common Units and Class V shares into PubCo stock and then sold that stock.40

Under Urdan, the Trusts’ dilution and diversion claims traveled with the Class A

Common Units and Class V shares. The Trusts lost standing after exchanging the

equity and selling the PubCo shares.

(17) The Trusts try to distinguish Urdan by arguing that “[t]he logic

undergirding Urdan (which did not involve a merger) breaks down when, as here,

the securities to which any claims attached were forcibly converted or exchanged as

a precondition to the transaction a plaintiff challenges.”41 In other words, (a) their

claims arose at the time the Trusts held Class AAA Units in Holdings as a Nevada

LLC; (b) their Class AAA units were involuntarily exchanged or converted into

Class A Common Units; and therefore (c) an involuntary conversion occurred which

allows them to pursue their claims post-Transaction.

(18) As an initial matter, the Trusts did not raise this argument below.

Instead, in the Court of Chancery, the Trusts attempted to distinguish Urdan because

the transaction in Urdan did not involve the involuntary surrender of equity through

a merger transaction.42 But as the Trusts eventually agreed, the transaction here did

40 A153 (Pls.’ Consol. Answering Br. in Opp’n to Defs.’ Mots. to Dismiss at 42). 41 Opening Br. at 31. 42 See A154–55 (Pls.’ Consol. Answering Br. in Opp’n to Defs.’ Mots. to Dismiss at 43–44).

10 not involve a merger.43 Thus, the Trusts cannot present a new argument for the first

time on appeal.44

(19) Even if the Trusts did not waive their new argument, we find it

unpersuasive. The Holdings’ conversion from Nevada to Delaware, and

recapitalization of the existing equity classes (Class A Units, Class AA Units, Class

AAA Units, and Class AAAA Units) into a single class of equity designated as Class

A Common Units, was only preparatory to the Transaction. It was the exchange of

Class A Holdings Units and Class V shares where the dilution and diversion is

alleged to have occurred. The Trusts retained their equity interest in Holdings after

the recapitalization. They could have held those units and preserved standing.

Instead, they voluntarily exchanged their Holdings’ equity for PubCo shares. With

the exchange and sale of the PubCo shares went the standing to pursue dilution and

conversion claims.

NOW, THEREFORE, IT IS HEREBY ORDERED that the judgment of the

Court of Chancery is AFFIRMED.

BY THE COURT:

/s/ Collins J. Seitz, Jr. Chief Justice

43 Opening Br. at 21 (“Although the transaction was not technically a merger, it functionally operated as one.”) (emphasis added). 44 Supr. Ct. R. 8.