Topic: Inadequate Description

Chancery Court Tosses Complaint For Lacking Foundational Facts Available To Plaintiffs-Stockholders Under Delaware General Corporation Law § 220

By Annette Becker and Max E. Kaplan

In Thermopylae Capital Partners, L.P. v. Simbol, Inc. C.A. No. 10619-VGC (Jan. 29, 2016), Vice Chancellor Glasscock granted defendants’ motion to dismiss, with prejudice.  After attempting to unravel the allegations in plaintiffs’ pleadings as to a dilution claim, the Court of Chancery held that the complaint’s omission of pertinent facts tested the limits of “reasonable conceivability” by requiring the Court to speculate as the fundamental facts necessary for plaintiffs to prevail—facts available to plaintiffs under Delaware General Corporation Law § 220.

Plaintiffs—stockholders and former management of defendant Simbol, Inc. (“Simbol”)—claimed that Simbol’s board of directors, executives, and certain defendants-stockholders diluted plaintiffs’ shares in the corporation as part of an elaborate “scheme” to usurp corporate control for the benefit of defendants-stockholders Mohr Davidow Ventures (“MDV”) and Itochu Corporation (“Itochu”).  By so doing, defendants purportedly breached their fiduciary duties to minority stockholders, causing them direct harm.

Read More

Copyright © 2017, K&L Gates LLP. All Rights Reserved.