157, 2016 | Del. | Dec 5, 2016
Lead Opinion
for the Majority:
I.
This appeal in a derivative suit brought by a stockholder of Zynga, Inc. turns on whether the Court of Chancery correctly found that a majority of the Zynga board could impartially consider a demand and thus corr.ectly dismissed the complaint for failure, to plead demand excusal under Court of Chancery Rule 23.1. This case again highlights the wisdom of the representative plaintiff bar heeding the repeated admonitions of this Court and the Court of Chancery to make a diligent pre-suit investigation into the board’s independence so that a complaint can be filed satisfying the burden to plead particularized facts supporting demand excusal. Here, the derivative plaintiffs lack of diligence compounded the already difficult task that the Court of Chancery faces when making close calls about pleading stage independence. Fortunately for the derivative plaintiff, however, he was able to plead particularized facts regarding three directors that create a reasonable doubt that these directors can impartially consider a demand. First, the plaintiff pled a powerful and unusual fact about one director’s relationship to Zynga’s former CEO and controlling stockholder which creates a reasonable doubt that she can impartially consider a' demand adverse to his interests. That fact is that the controlling stockholder and the director and her husband co-own an unusual asset, an airplane, which is suggestive of an extremely intimate personal friendship between their families. Second, the plaintiff pled that two other directors are partners at a prominent venture capital firm and that they and their firm not only control 9.2% of Zynga’s equity as a result of being early-stage investors, but have other interlocking relationships with the controller and another selling stockholder outside of Zyn-ga. Although it is true that entrepreneurs like the controller need access to venture capital, it is also true that venture capitalists compete to fund the best entrepreneurs and that these relationships can generate ongoing economic opportunities. There is nothing wrong with that, as that is how commerce often proceeds, but these relationships can give rise to human motivations compromising the participants’ ability to act impartially toward each other on a matter of material importance. Perhaps for that reason, the Zynga board itself determined that these two directors did not qualify as independent under the NASDAQ rules, which have a bottom line standard that a director is not independent if she has “a relationship which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment ....”
II.
The plaintiff alleges two derivative claims, each centering on allegations that certain top managers and directors at Zyn-ga—including its former CEO, Chairman,
The defendants moved to dismiss this action under Court of Chaheery Rule 23.1 for plaintiffs failure to make a pre-suit demand on the board.
The Court of Chancery properly determined that directors Pincus and Hoffman were interested in the transaction. Furthermore, Mattrick is Zynga’s CEO. Zyn-ga’s controlling stockholder, Pincus, is interested in the transaction under attack, and therefore, Mattrick cannot be considered independent. Thus, the question for us is whether the plaintiff pled particularized facts that create a reasonable doubt about the independence of two of the remaining six Zynga directors.
On appeal, neither party contests the applicability of the Rales standard employed by the Court of Chancery. Therefore, we use it in our analysis to determine whether the Court of Chancery erred in finding that a majority of the board was independent for pleading stage purposes. To plead demand excusal under Rales, the plaintiff must plead particularized factual allegations that “create a reasonable doubt that, as of the time the complaint [was] filed, the board of directors could have properly exercised its independent and disinterested business judgment in responding to a demand.”
For many years, this Court and the Court of Chancery have advised derivative plaintiffs to take seriously their obligations to plead particularized facts justifying demand excusal.
A.
In conducting this analysis, we first focus on director Ellen Siminoff. The Court of Chancery found that Siminoff was independent even though she and her husband co-own a private airplane
Although we acknowledge the difficult position that the Court of Chancery was placed in, we reach a different conclusion. The Siminoff and Pincus families own an airplane together. Although the plaintiff made some strained arguments below, it made one argument in relation to this unusual fact that does create a pleading stage inference that Siminoff cannot act independently of Pincus. That argument is that owning an airplane together is not a common thing, and suggests that the Pincus and Siminoff families are extremely close to each other and are among each other’s most important and intimate friends. Co-ownership of a private plane involves a partnership in a personal asset that is not only very expensive, but that also requires close cooperation in use, which is suggestive of detailed planning indicative of a continuing, close personal friendship. In fact, it is suggestive of the type of very close personal relationship that, like family ties, one would expect to heavily influence a human’s ability to exercise impartial judgment.
B.
We next turn to the plaintiffs argument that he created a reasonable doubt that two other directors—William Gordon and John Doerr—are not independent for pleading stage purposes. In his complaint, the plaintiff included the following facts pertaining to Gordon and Doerr: both are partners at Kleiner Perkins Caufield & Byers,
Despite these factual allegations, the Court of Chancery found that Gordon and Doerr were independent for pleading stage purposes because the plaintiff failed to specifically allege why Gordon and Doerr lack independence under the NASDAQ rules, and the other circumstances pled by the plaintiff were “insufficient to question their independence • under Delaware law.”
We agree with the Court of Chancery that the Delaware independence standard is context specific and does not perfectly many with the standards of the stock exchange in all cases,
(A) a director who is, or at any time during the past three years was, employed by the Company;
(B) a director who accepted or who has a Family Member who accepted any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:
(i) compensation for board or board committee service;
(ii) compensation paid to a Family Member who is an employee (other than an Executive Officer) of the Company; or
(iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation.
Provided, however, that in addition to the requirements contained in this paragraph (B), audit committee members are also subject to additional, more stringent requirements under Rule 5605(c)(2).
(C) a director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company as an Executive Officer;
(D) a director who is, or has a Family Member who is, a partner in, or a controlling Shareholder or an Executive Officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
(i) payments arising solely from investments in the Company’s securities; or
(ii) payments under non-discretionary charitable contribution matching programs.
(E) a director of the Company who is, or has a Family Member who is, employed as an Executive Officer of another entity where at any time during the past three years any of the Executive Officers of the Company serve on the compensation committee of such other entity; or
(F) a director who is, or has a Family Member who is, a current partner of the Company’s outside auditor, or was a partner or employee of the Company’s outside auditor who worked on the Company’s audit at any time during any of the past three years.
(G) in the case of an investment company, in lieu of paragraphs (A)-(F), a director who is an “interested person” of the Company as defined in Section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee.41
Most importantly, under the NASDAQ rules there is a fundamental determination that a board must make to classify a director as independent, a determination
We presume that the Zynga board did not lightly classify Gordon and Doerr as having a “relationship which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.”
As to this reality, we consider it likely that the other facts pled by the plaintiff were taken into account by the Zynga board in determining that Gordon and Doerr were not independent directors. These facts include that: Gordon and Doerr are partners at Kleiner Perkins, which controls 9.2% of Zynga’s equity; Kleiner Perkins is also invested in One Kings Lane, a company co-founded by Pincus’s wife; and, Hoffman and Kleiner Perkins are both invested in Shopkick, and Hoffman serves on its board with another
Finally, consistent with our prior admonition, why the Zynga board determined that Gordon and Doerr are non-independent is precisely the sort of issue for which the use of a targeted request for books and records would have been helpful to the plaintiff, and thereby to both the Court of Chancery and us. The plaintiffs lack of diligence put the Court of Chancery in a compromised and unfair position to make an important determination regarding these directors’ pleading stage independence. That is regrettable, and the plaintiff is fortunate that his failure to do a pre-suit investigation has not resulted in dismissal.
III.
Because we have determined that the plaintiff has met his pleading stage burden to create a reasonable doubt that a majority of the Zynga board could act impartially in considering a demand impheating Zyn-ga’s CEO and controlling stockholder, we reverse the Court of Chancery’s dismissal under Rule 23.1 and remand the matter for further proceedings consistent with this opinion.
. NASDAQ Marketplace Rule 5605(a)(2).
. These shares were sold as part of a secondary public offering that increased Zynga’s public float, which at that time consisted of fewer than 150 million shares, compared to approximately 688 million shares held by Zynga directors, officers, employees, former employees, and other pre-IPO investors. Ap-pellee’s Answering Br. at 7.
. See Ct. Ch. R. 23.1 ("The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and the reasons for the plaintiff’s failure to obtain the action or for not making the effort. ”).
. Rales v. Blasband, 634 A.2d 927" court="Del." date_filed="1993-12-23" href="https://app.midpage.ai/document/rales-v-blasband-ex-rel-easco-hand-tools-inc-2308645?utm_source=webapp" opinion_id="2308645">634 A.2d 927, 934 (Del. 1993) (noting that demand futility is assessed at the time the complaint is filed).
. Id.
.Although the defendants assert that the Court of Chancery did not reach this conclusion, we disagree. The Court of Chancery conducted a simple analysis finding Pincus and Hoffman interested in the transaction when it stated:
Because Hoffman and Pincus are the only members of the Demand Board who sold shares in the Secondary Offering and received a benefit from the alleged wrongdoing, they are the only members of the Demand Board who face potential liability-under Brophy. Consequently, the other seven directors on the Demand Board are not interested in Count I for purposes of the Rales test, and I need only to determine whether plaintiff has created a reasonable doubt about their independence.
Sandys v. Pincus, 2016 WL 769999, at *7 (Del. Ch. Feb. 29, 2016).
. Id., at *14 n.70.
. The plaintiff does not dispute the Court of Chancery’s finding that directors Katzenberg and Meresman are independent.
. Del. Cty. Emps. Ret. Fund v. Sanchez, 124 A.3d 1017" court="Del." date_filed="2015-10-02" href="https://app.midpage.ai/document/delaware-county-employees-retirement-fund-v-sanchez-3006871?utm_source=webapp" opinion_id="3006871">124 A.3d 1017, 1021 (Del. 2015); Beam v. Stewart, 845 A.2d 1040" court="Del." date_filed="2004-03-31" href="https://app.midpage.ai/document/beam-ex-rel-m-stewart-living-v-stewart-1890645?utm_source=webapp" opinion_id="1890645">845 A.2d 1040, 1048 (Del. 2004).
. Rales, 634 A.2d 927" court="Del." date_filed="1993-12-23" href="https://app.midpage.ai/document/rales-v-blasband-ex-rel-easco-hand-tools-inc-2308645?utm_source=webapp" opinion_id="2308645">634 A.2d at 934.
. Sanchez, 124 A.3d 1017" court="Del." date_filed="2015-10-02" href="https://app.midpage.ai/document/delaware-county-employees-retirement-fund-v-sanchez-3006871?utm_source=webapp" opinion_id="3006871">124 A.3d at 1024 n.25.
. Id. at 1022.
. Id.
. See, e.g., Rales, 634 A.2d 927" court="Del." date_filed="1993-12-23" href="https://app.midpage.ai/document/rales-v-blasband-ex-rel-easco-hand-tools-inc-2308645?utm_source=webapp" opinion_id="2308645">634 A.2d at 934 n.10; Brehm v. Eisner, 746 A.2d 244" court="Del." date_filed="2000-02-09" href="https://app.midpage.ai/document/brehm-v-eisner-2206496?utm_source=webapp" opinion_id="2206496">746 A.2d 244, 266-67 (Del. 2000); Guttman v. Huang, 823 A.2d 492" court="Del. Ch." date_filed="2003-05-05" href="https://app.midpage.ai/document/guttman-v-huang-2391836?utm_source=webapp" opinion_id="2391836">823 A.2d 492, 504 (Del. Ch. 2003); Ash v. McCall, 2000 WL 1370341, at *15 n.56 (Del. Ch. Sept. 15, 2000).
. Verified Complaint Pursuant to 8 Del. C. § 220, Sandys v. Zynga Inc., C.A. No. 8450-ML (Del. Ch.).
. Of course, as with any source of information, including a traditional library, the internet should be used with care. Ultimately, any fact pleading has to be based on a source that provides a good faith basis for asserting a fact. Thus, as with any search, an internet search will only have utility if it generates information of a reliable nature. But with that key caveat in mind, we can take judicial notice that internet searches can generate articles in reputable newspapers and journals, postings on official company websites, and information on university websites that can be the source of reliable information.
. Sanchez, 124 A.3d 1017" court="Del." date_filed="2015-10-02" href="https://app.midpage.ai/document/delaware-county-employees-retirement-fund-v-sanchez-3006871?utm_source=webapp" opinion_id="3006871">124 A.3d at 1022.
. During oral arguments, there was a question raised by the Court over whether this was an airplane or a jet. The plaintiff's lawyer proceeded to characterize it as a jet during his rebuttal. But, Zynga’s Proxy Statement and the plaintiff's complaint both state "private airplane,” and therefore we call it an airplane. Regardless of whether it is an airplane or a jet, we reach the same conclusion.
. Zynga, Inc. Definitive Proxy Statement (Form 14A), at 1 (Apr, 25, 2013) (noting that Ms. Siminoff, her spouse, and Mr. Pincus "co-own a small private aiiplane, which was not used for Company travel”).
. App. to Appellant’s Opening Br. at A071 (Verified Shareholder Derivative Complaint).
. Id. at A145.
. Sandys, 2016 WL 769999, at *8.
. See, e.g., Rales v. Blasband, 634 A.2d 927" court="Del." date_filed="1993-12-23" href="https://app.midpage.ai/document/rales-v-blasband-ex-rel-easco-hand-tools-inc-2308645?utm_source=webapp" opinion_id="2308645">634 A.2d 927, 935 n.10 (1993). This Court noted that although derivative plaintiffs may believe it is difficult to meet the particularization requirement in their pleadings:
[They] have many avenues available to obtain information bearing on the subject of their claims. For example, there is a variety of public sources from which the details of a corporate act may be discovered, including the media and governmental agencies such as the Securities and Exchange Commission. In addition, a stockholder who has met the procedural requirements and has shown á specific proper purpose may use the summary procedure embodied in 8 Del. C. § 220 to investigate the possibility of corporate wrongdoing.
Id.
. 845 A.2d 1040" court="Del." date_filed="2004-03-31" href="https://app.midpage.ai/document/beam-ex-rel-m-stewart-living-v-stewart-1890645?utm_source=webapp" opinion_id="1890645">845 A.2d 1040 (Del. 2004).
. Sandys, 2016 WL 769999, at *8.
. See In re MFW S’holders Litig., 67 A.3d 496" court="Del. Ch." date_filed="2013-05-29" href="https://app.midpage.ai/document/in-re-mfw-shareholders-litigation-4967257?utm_source=webapp" opinion_id="4967257">67 A.3d 496, 509 n.37 (Del. Ch. 2013), aff’d sub nom. Kahn v. M & F Worldwide Corp., 88 A.3d 635" court="Del." date_filed="2014-03-14" href="https://app.midpage.ai/document/kahn-v-m--f-worldwide-corp-4968674?utm_source=webapp" opinion_id="4968674">88 A.3d 635 (Del. 2014) (noting that if a friendship "was one where the parties had served as each other’s maids of honor, had been each other’s college roommates, shared a beach house with their families each summer for a decade, and are as thick as blood relations, that context would be different from parties who occasionally had dinner over the years, go to some of the same parties and gatherings annually, and call themselves 'friends’ ”); Del. Cty. Emps. Ret. Fund v. Sanchez, 124 A.3d 1017" court="Del." date_filed="2015-10-02" href="https://app.midpage.ai/document/delaware-county-employees-retirement-fund-v-sanchez-3006871?utm_source=webapp" opinion_id="3006871">124 A.3d 1017, 1022 (Del. 2015) (finding that a director was not independent for pleading stage purposes because the director had a friendship of over 50 years with an interested party and the director's primary employment was as an executive of a company over which the interested party had substantial influence).
. 124 A.3d 1017" court="Del." date_filed="2015-10-02" href="https://app.midpage.ai/document/delaware-county-employees-retirement-fund-v-sanchez-3006871?utm_source=webapp" opinion_id="3006871">124 A.3d at 1020-22.
. Id. at 1019.
. Rales, 634 A.2d 927" court="Del." date_filed="1993-12-23" href="https://app.midpage.ai/document/rales-v-blasband-ex-rel-easco-hand-tools-inc-2308645?utm_source=webapp" opinion_id="2308645">634 A.2d at 934.
. App. to Appellant's Opening Br. at A071 (Verified Shareholder Derivative Complaint).
. Id. atA020.
. Id. at A072.
. Id.
. Id.
. Zynga, Inc. Definitive Proxy Statement (Form 14A), at 1 (Apr. 25, 2013).
. Verified Complaint Pursuant to 8 Del. C. § 220, Sandys v. Zynga Inc., C.A. No. 8450-ML (Del. CL).
. Sandy’s, 2016 WL 769999, at *10.
. Id.
. Id. at *9.
. See In re MFW S’holders Litig., 67 A.3d 496" court="Del. Ch." date_filed="2013-05-29" href="https://app.midpage.ai/document/in-re-mfw-shareholders-litigation-4967257?utm_source=webapp" opinion_id="4967257">67 A.3d at 510 (noting that stock exchange rules governing director independence “were influenced by experience in Delaware and other states
. NASDAQ Marketplace Rule 5605(a)(2).
. Id.
. See Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984) ("The business judgment rule is an acknowledgment of the managerial prerogatives of Delaware directors under Section 141(a). It is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.").
. NASDAQ Marketplace Rule 5605(a)(2).
.The Proxy Statement states that "the Board has affirmatively determined that Messrs. Hoffman, Katzenberg, Meresman and Paul and Ms. Siminoff do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is 'independent,'" without further explanation as to why the excluded directors were found to be non-independent. Zynga, Inc. Definitive Proxy Statement (Form 14A), at 1 (Apr. 25, 2013).
. As indicated, on appeal, the parties raised numerous other issues, including an argument to dismiss the claims against certain defendants under Court of Chancery Rule 12(b)(6) based on this Court's decision in In re Cornerstone Therapeutics Inc., Stockholder Litig., 115 A.3d 1173" court="Del." date_filed="2015-05-14" href="https://app.midpage.ai/document/leal-v-meeks-4969680?utm_source=webapp" opinion_id="4969680">115 A.3d 1173 (Del. 2015). Although the defendants ask us to reach these questions now, we consider that imprudent and believe that it is important for our Court of Chancery, which is the expert in these cases, to consider these issues in the first instance.
Dissenting Opinion
dissenting:
In a thoughtful forty-two page opinion, the Chancellor determined that the plaintiff had failed to demonstrate that demand would have been futile with respect to the claims in the Complaint. For the reasons set forth herein, I would affirm his well-reasoned decision.
This is a close case, and the plaintiff did not aid his cause in failing to direct a books and records request to the issues bearing on the board’s independence.
The plaintiffs arguments as to Gordon and Doerr’s alleged lack of independence arise from their positions as partners at Kleiner Perkins Caufield & Byers (“Klein-er Perkins”). The plaintiff alleged that Kleiner Perkins has (i) invested alongside Hoffman in a company co-founded by Pincus’s wife; (ii) invested in. a company of which Hoffman is a director; and (iii) completed two financings with Hoffman’s venture capital firm.
As to Gordon’s and Doerr’s designation as “not independent” under the NASDAQ rules, the Court of Chancery correctly observed that independence under the NASDAQ rules is relevant to our analysis here but not dispositive.
In the demand futility context, directors are presumed independent,
As to director Paul, the plaintiff argues that Paul lacked independence from Pincus because they co-founded a company over twenty years ago and Pincus serves in an advisory role and is an investor in Paul’s company, SideCar.
Although I would not need to reach issues concerning Siminoffs independence had my view prevailed, I believe that a few points are worth making. The sum total of the allegations as to Siminoffs alleged lack of independence appear in paragraph 117(h) of the Complaint, which states that “Siminoff and her husband have an existing business relationship with defendant Pincus as co-owners of a private airplane and, therefore, Siminoff would not initiate litigation against her business partner defendant Pincus as it would substantially and irreparably harm, their ongoing business relationship.”
Before the trial court, both parties referred to statements in Zynga’s public filings with the Securities and Exchange Commission, although the Complaint did not expressly incorporate these statements by reference.
Given the plaintiffs failure to allege any specific facts as to the materiality of the co-owned asset (apparently a small plane, not a jet),
The Majority states that “the most likely inference” to draw from co-ownership of the small plane is “not that the private airplane was a business venture” but that there was “an extremely close, personal bond between Pincus and Siminoff’ and that “the Pincus and Siminoff families are extremely close to each other and are among each other’s most important and intimate friends.”
To render a director unable to consider demand, a relationship must be of a “bias-producing nature.”
Thus, this case stands in contrast to Sanchez,
In Sanchez, we warned that, “[i]t is not fair to the defendants, to the Court of Chancery, or to this Court, nor is it proper under the rules of either court, for the plaintiffs to put facts outside the complaint before us.”
Accordingly, because I would affirm the Court of Chancery’s decision, I respectfully dissent.
. To his credit, his counsel was candid about this at oral argument before this Court. See Oral Argument at 5:23, Sandys v. Pincus, No. 157, 2016 (Del. Oct. 19, 2016) [hereinafter "Oral Argument”], https://livestream.com/ DelawareSupremeCourt/events/6511893/ videos/139287026 ("Your Honor, at the time we started the process, a majority of the board had been sellers in the Secondary Offering, so it didn’t seem quite as critical at that point in time. I guess with the benefit of
. The Verified Shareholder Derivative Complaint (the "Complaint”) contains no allegations regarding Katzenberg’s relationship with Hoffman or Pincus. The Complaint’s only allegation regarding Meresman's independence is that both he and Hoffman serve on Linkedln's board, Verified S'holder Derivative Compl. at A71 II 117(i), Sandys v. Pincus (Del. Ch. Apr. 4, 2014) [hereinafter "Compl. at A_”], available at A12-78. Directors Simi-noff and Doerr joined the Board after the events at issue in this action and are not named as defendants; and directors Gordon, Katzenberg, Meresman, and Paul are outside directors who were on the Board during the events at issue, but did not sell any stock in the Secondary Offering.
. Sandys v. Pincus, 2016 WL 769999, at *14 n.70 (Del. Ch. Feb, 29, 2016).
. Compl. at A20 ¶¶ 17-18, A68 ¶¶ 114(c), (f), A71 ¶ 117(g), A72 ¶¶ 117(j-k). The Chancellor appropriately declined to consider other information regarding certain officers' investments in Kleiner Perkins funds. The plaintiff had raised this information in briefing and in an affidavit containing an excerpt from a public filing that was not incorporated by reference into or attached to the Complaint,
. See, e.g., In re MFW S’holders Litig., 67 A.3d 496" court="Del. Ch." date_filed="2013-05-29" href="https://app.midpage.ai/document/in-re-mfw-shareholders-litigation-4967257?utm_source=webapp" opinion_id="4967257">67 A.3d 496, 510 (Del. Ch. 2013) ("[T]he fact that directors qualify as independent under the NYSE rules does not mean that they are necessarily independent under our law in particular circumstances.” (citing In re Oracle Corp. Derivative Litig., 824 A.2d 917" court="Del. Ch." date_filed="2003-06-17" href="https://app.midpage.ai/document/in-re-oracle-corp-derivative-litigation-1893301?utm_source=webapp" opinion_id="1893301">824 A.2d 917, 941 n.62 (Del. Ch. 2003))), aff'd, 88 A.3d 635" court="Del." date_filed="2014-03-14" href="https://app.midpage.ai/document/kahn-v-m--f-worldwide-corp-4968674?utm_source=webapp" opinion_id="4968674">88 A.3d 635 (Del. 2014).
.See Oral Argument at 12:13.
. Sandys, 2016 WL 769999, at *9.
. See, e.g., Teamsters Union 25 Health Servs. & Ins. Plan v. Baiera, 119 A.3d 44" court="Del. Ch." date_filed="2015-07-13" href="https://app.midpage.ai/document/teamsters-union-25-health-services--insurance-plan-v-gavin-baiera-2816577?utm_source=webapp" opinion_id="2816577">119 A.3d 44, 61 (Del. Ch. 2015) (comparing the bright-line test for independence set forth in the NYSE rules with the "case-by-case fact specific inquiry based on well-pled factual allegations” required by Delaware law). In Baiera, the Court of Chancery concluded that, "[g]iven the peculiarities of the NYSE Rules, the fact that [the director] was not designated as 'independent' under the NYSE Rules in Orbitz’s April 2013 proxy statement carries little weight.” Id. at 62. The court then found that "the factual allegations concerning [that director's] former relationship with Travelport [were] insufficient in [its] view to cast reasonable doubt on his presumed independence under Delaware law.” Id.
. See Oral Argument at 14:00 ("We alleged certain business relationships. It's true we didn't go through the 220 for that one and that was a deficiency in our process. And I guess I fall on my sword for that one.”).
. Beam v. Stewart, 845 A.2d 1040" court="Del." date_filed="2004-03-31" href="https://app.midpage.ai/document/beam-ex-rel-m-stewart-living-v-stewart-1890645?utm_source=webapp" opinion_id="1890645">845 A.2d 1040, 1048-49 (Del. 2004) ("The key principle upon which this area of our jurisprudence is based is that the directors are entitled to a presumption that they were faithful to their fiduciary duties. In the context of presuit demand, the burden is upon the plaintiff in a derivative action to overcome that presumption.” (emphasis in original) (citations omitted)).
. Del. Ch. Ct. R. 23.1; see also Brehm v. Eisner, 746 A.2d 244" court="Del." date_filed="2000-02-09" href="https://app.midpage.ai/document/brehm-v-eisner-2206496?utm_source=webapp" opinion_id="2206496">746 A.2d 244, 254 (Del. 2000) ("Rule 23.1 is not satisfied by conclusory statements or mere notice pleading.”).
. Compl. at A71 ¶ 117(f).
. Transcript of Oral Argument on Defs.’ Mots. to Dismiss & Stay at A410-411 (Tr. 49:23-50:6), Sandys v. Pincus, No. 9512-CB (Del. Ch. Nov. 17, 2015), available at A3 62-435.
. Id. at A410 (Tr. 49:19-22).
. Beam, 845 A.2d 1040" court="Del." date_filed="2004-03-31" href="https://app.midpage.ai/document/beam-ex-rel-m-stewart-living-v-stewart-1890645?utm_source=webapp" opinion_id="1890645">845 A.2d at 1048 (“This Court reviews de novo a decision of the Court of Chancery to dismiss a derivative suit under Rule 23.1 [,]'' and "[t]he scope of this Court’s
. Compl. at A71 ¶ 117(h) (emphasis added).
. E.g., Zynga Inc., Definitive Proxy Statement (Form 14A) (Apr. 25, 2013), excerpt available at B210-21; Zynga Inc., Prospectus (Mar. 29, 2012), excerpt available at B125-60.
. Zynga Inc., Definitive Proxy Statement (Form 14A), at 1 (Apr. 25, 2013), excerpt available at B210-21.
. Transcript of Oral Argument on Defs.’ Mots, to Dismiss & Stay at A410 (Tr. 49:7-16).
. Zynga Inc., Definitive Proxy Statement (Form 14A), at 1 (Apr. 25, 2013), excerpt available at B210-21. Plaintiff's counsel referred to the plane as a "jet” during argument before this Court. See Oral Argument at 42:35 (“Your Honor I know you faulted Plaintiff for not doing a more complete books and records, but in the context of this case Defendants placed into the record many of the facts in the form of a proxy statement and a registration statement. And in the argument down below I did invite the Chancellor to look at all the facts in the registration statement and the proxy and both sides cited to those facts. So— that it’s a plane or a jet, the fact that it is a jet is properly before the Court just based upon the Defendants putting that document before the Court, to the extent there is a difference between a plane and a jet.”). The proxy statement does not refer to the plane as a "jet,” as the Majority acknowledges. See Majority Op. at 129 n.18. At oral argument, when asked whether the plane is a $40,000 Piper Cub or a $40 million Gulfstream jet, counsel for plaintiff merely responded that he never considered that the plane could be a smaller plane "given the positions of these individuals” and that he thought "it’s reasonable to infer that a private plane is a relatively weighty purchase and a weighty investment.” Oral Argument at 10:00.
.See Compl. at A71 ¶ 117(h).
. Sandys, 2016 WL 769999, at *8.
. Majority Op. at 129-30 (emphasis added).
. Beam, 845 A.2d 1040" court="Del." date_filed="2004-03-31" href="https://app.midpage.ai/document/beam-ex-rel-m-stewart-living-v-stewart-1890645?utm_source=webapp" opinion_id="1890645">845 A.2d at 1050,
. Id. (quoting Beam v. Stewart, 833 A.2d 961" court="Del. Ch." date_filed="2003-09-30" href="https://app.midpage.ai/document/beam-ex-rel-martha-stewart-living-omnimedia-inc-v-stewart-1444024?utm_source=webapp" opinion_id="1444024">833 A.2d 961, 979 (Del. Ch. 2003)) (internal quotation marks omitted).
. Id. at 1045-47.
. Del. Cnty. Emps. Ret. Fund v. Sanchez, 124 A.3d 1017" court="Del." date_filed="2015-10-02" href="https://app.midpage.ai/document/delaware-county-employees-retirement-fund-v-sanchez-3006871?utm_source=webapp" opinion_id="3006871">124 A.3d 1017 (Del. 2015).
. Id. at 1020-21.
. Brief of PI. in Opp’n to Defs.' Mots, to Stay or Dismiss at A145, Sandys v. Pincus, No. 9512-CB (Del. Ch. Apr. 17, 2015), available at A82-150.
. Del. Ct. Ch. R. 3(aa).
. Id.
. Sanchez, 124 A.3d 1017" court="Del." date_filed="2015-10-02" href="https://app.midpage.ai/document/delaware-county-employees-retirement-fund-v-sanchez-3006871?utm_source=webapp" opinion_id="3006871">124 A.3d at 1021 n.14.
. Id.
. Finally, regarding the Majority’s repeated suggestions (both in its Opinion and at oral argument) that plaintiffs should search the internet for facts in fashioning a complaint, see, e.g., Oral Argument at 6:05, 14:00, 21:10, although perhaps useful on some level, internet searches likely are not, in most cases, an adequate substitute for demands made pursuant to 8 Del. C. § 220—particularly in terms of the reliability and trustworthiness of information discovered. Of course, a court cannot engage in independent fact-finding, on the internet or otherwise, and the Majority is correct that the Court of Chancery was stuck with the limited factual allegations made by the plaintiff—and so is this Court. The Majority suggests that, had the plaintiff undertaken an internet search, "he likely would have discovered more information about Siminoff’s relationship with Pincus," Majority Op. at 130; see also Oral Argument at 21:30. But the Majority never identifies what information likely would have been discovered. Whatever it may be, it can have no bearing on our disposition since the record on appeal before us consists of "the original papers and exhibits” only. Del, Sup. Ct. R. 9(a); see Tribbitt v. Tribbitt, 963 A.2d 1128" court="Del." date_filed="2008-12-23" href="https://app.midpage.ai/document/tribbitt-v-tribbitt-2113836?utm_source=webapp" opinion_id="2113836">963 A.2d 1128, 1131 (Del. 2008) (observing that, "while a judge may take judicial notice of a fact outside the record, that fact must not be subject to reasonable dispute and the parties must be given prior notice and an opportunity to challenge judicial notice of that fact” (citations omitted)); Barks v. Herzberg, 206 A.2d 507" court="Del." date_filed="1965-01-05" href="https://app.midpage.ai/document/barks-v-herzberg-1512666?utm_source=webapp" opinion_id="1512666">206 A.2d 507, 509 (Del. 1965); Del. R. Evid. 201(e) ("A party is entitled upon timely request to an opportunity to be heard as to the propriety of taking judicial notice and the tenor of the matter noticed. In the absence of prior notification, the request may be made after judicial notice has been taken.”).
. Oracle, 824 A.2d 917" court="Del. Ch." date_filed="2003-06-17" href="https://app.midpage.ai/document/in-re-oracle-corp-derivative-litigation-1893301?utm_source=webapp" opinion_id="1893301">824 A.2d at 938.