Mooney v. E. I. du Pont de Nemours and Company
N17C-01-374 AML
Del. Super. Ct.Nov 28, 2017Background
- In 2015 DuPont spun off its Performance Chemicals division into Chemours; DuPont officers made optimistic, forward-looking statements about the spinoff and Chemours’ prospects prior to and at the time of the separation.
- Plaintiff Matthew Mooney, a law‑trained investor, purchased and traded DuPont (and Chemours) securities in reliance on those statements and sold at a loss after disclosures and adverse events in July 2015.
- Post‑spinoff disclosures included a $3.923 billion dividend from Chemours to DuPont (the “midnight dividend”), Chemours’ leveraged capital structure, later dividend cuts, and a judicial ruling easing plaintiffs’ burdens in PFOA litigation.
- Mooney alleges DuPont’s public statements misrepresented the purpose and expected benefits of the spinoff (i.e., that it was for strategic value/growth) and concealed an intent to shift PFOA litigation risk to Chemours and leave Chemours undercapitalized.
- DuPont moved to dismiss for failure to state a fraud claim, arguing the challenged statements were forward‑looking opinions/caveated statements and that Mooney pleads only hindsight facts occurring after the statements.
- The Court dismissed with prejudice, holding the statements were nonactionable forward‑looking opinions and Mooney failed to plead contemporaneous facts showing the statements were known false or made in bad faith.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether challenged statements were actionable facts or forward‑looking opinions | Mooney: statements about spinoff purpose and Chemours’ prospects were factual misrepresentations inducing investment | DuPont: statements were expectations/opinions, couched with cautionary language, thus nonactionable | Court: Statements were forward‑looking opinions and not actionable as facts |
| Whether forward‑looking statements were knowingly false or made in bad faith | Mooney: later events (PFOA ruling, dividend cut, covenant issues) show statements were false when made | DuPont: later events are hindsight; no contemporaneous facts alleged to show knowledge or bad faith | Court: Plaintiff pleaded only after‑the‑fact events; no contemporaneous facts; fraud‑by‑hindsight insufficient |
| Whether plaintiff adequately pleaded reliance and causation | Mooney: he traded in reliance on DuPont’s representations and suffered losses | DuPont: Mooney failed to plead specific reliance, link statements to trades, or damages for many trades | Court: Did not reach in detail; noted these deficiencies could likely be cured but dismissal based on dispositive failure to plead actionable misrepresentation |
| Whether leave to amend should be granted | Mooney requested leave to amend if complaint dismissed | DuPont: dismissal should be with prejudice given plaintiff’s sophistication and full briefing | Court: Denied leave; amendment would be futile given absence of contemporaneous facts and plaintiff’s failure to identify any new allegations despite extensive briefing |
Key Cases Cited
- Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 135 S. Ct. 1318 (U.S. 2015) (distinguishes statements of fact from statements of opinion/expectation)
- Trenwick Am. Litig. Trust v. Ernst & Young, LLP, 906 A.2d 168 (Del. Ch. 2006) (management expectations about future performance are generally nonactionable and require particularized allegations to show contemporaneous falsity)
- Hubbard v. Hibbard Brown & Co., 633 A.2d 345 (Del. 1993) (forward‑looking statements are actionable only if made without good‑faith belief)
- Metro Commc’ns Corp. BVI v. Advanced Mobilecomm Tech., Inc., 854 A.2d 121 (Del. Ch. 2004) (contemporaneous illegal or specific facts can support inference defendants knew statements were false)
- Holmes v. D’Elia, 129 A.3d 881 (Del. 2015) (motion to dismiss standard: plaintiff survives only if recovery is conceivable under pleaded facts)