Thomas SANDYS, Derivatively on Behalf of Zynga Inc., Plaintiff below, Appellant, v. Mark J. PINCUS, Reginald D. Davis, Cadir B. Lee, John Schappert, David M. Wehner, Mark Yranesh, William Gordon, Reid Hoffman, Jeffrey Katzenberg, Stanley J. Meresman, Sunil Paul And Owen Van Natta, Defendants below, Appellees, and Zynga Inc., a Delaware Corporation, Nominal Defendant below, Appellee.

No. 157, 2016

Supreme Court of Delaware.

Submitted: October 13, 2016

Decided: December 5, 2016

*125Norman M. Monhait, Esquire, P. Bradford deLeeuw, Esquire, Rosenthal, Monhait & Goddess, P.A., Wilmington, Delaware; Jeffrey S. Abraham, Esquire, (Argued), Philip T. Taylor, Esquire, Abraham, Fruchter & Twersky, LLP, New York, New York, Attorneys for Plaintiff-Below, Appellant, Thomas Sandys.

Elena C. Norman, Esquire, Nicholas J. Rohrer, Esquire, Paul J. Loughman, Esquire, Young Conaway Stargatt & Taylor LLP, Wilmington, Delaware; Jordan Eth, Esquire, Anna Erickson White, Esquire, (Argued), Morrison & Foerster LLP, San Francisco, California, Attorneys for Defendants-Below, Appellees, Mark J. Pincus, Reginald D. Davis, Cadir B. Lee, John Schappert, David M. Wehner, Mark Vra-nesh, and Owen Van Natta, and Zynga Inc.

Bradley D. Sorrels, Esquire, Jessica A Montellese, Esquire, Wilson Sonsini Goodrich & Rosati, P.C., Wilmington, Delaware; Steven M. Schatz, Esquire, (Argued), Nina (Nicki) Locker, Esquire, Benjamin M. Crosson, Esquire, Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California, Attorneys for Defendants-Below, Appellees, William Gordon, Reid Hoffman, Jeffrey Katzenberg, Stanley J. Meresman, and Sunil Paul.

Before STRINE, Chief Justice; HOLLAND, VALIHURA, VAUGHN, and SEITZ, Justices, constituting the Court en Banc.

*126STRINE, Chief Justice,

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 ....”1 Although the plaintiffs lack of diligence made the determination as to these directors perhaps closer than necessary, in our view, the combination of these facts creates a pleading stage reasonable doubt, as to .the ability of these directors to act independently on a demand adverse to the controller’s interests. When these three directors are considered incapable of impartially considering a demand, a majority of the nine member Zynga board is compromised for Rule 23.1 purposes and demand is excused. Thus, the dismissal of the complaint is reversed.

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, *127and controlling stockholder Mark Pincus— were given an exemption to the company’s standing rule preventing sales by insiders until three days after an earnings announcement. According to the plaintiff, top Zynga insiders sold 20.3 million shares of stock for $236.7 million as part of a secondary offering before Zynga’s April 26, 2012 earnings announcement, an announcement that the plaintiff contends involved information that placed downward pressure on Zynga’s' stock price.2 The plaintiff alleges that these insiders sold their shares at $12.00 per share and that, immediately after the earnings announcement, the market price dropped 9.6% to $8.52. Three months later, following the release of additional negative information, which the plaintiff alleges was known by Zynga management and the board when it granted the exemption, Zynga’s market price declined to $3.18, a decrease of 73.5% from the $12.00 per share offering price. In this suit, the plaintiff alleges that the insiders who participated in the sale breached' their fiduciary duties by misusing confidential information when they sold their shares while in possession of adverse, material non-public information and also asserts a duty of loyalty claim against the directors who approved the sale.

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.3 The Court of Chancery’s decision turned on its evaluation of the pleading stage independence of the Zynga board at the time the complaint was filed,4 which was comprised of the following nine directors: Mark Pincus, Reid Hoffman, Jeffrey Katzenberg, Stanley J. Meresman, William Gordon, John Doerr, Ellen Siminoff, Sunil Paul, and Don Mat-trick. In addressing demand excusal, the Court of Chancery applied the standard set forth in this Court’s decision in Rales v. Blasband5 to determine if at least five of Zynga’s nine directors were independent for - pleading stage purposes. The Court of Chancery first determined that the two directors who participated in the transaction, Pincus and Hoffman, were interested in the transaction, and therefore could not impartially consider a demand.6 The Court of Chancery then examined the independence of directors Katzenberg, *128Meresman, Gordon, Doerr, and Siminoff. The Court of Chancery found that all five of these directors were independent and thus, that demand was not excused. The Court of Chancery did not analyze the independence of directors Paul and Mat-trick. But, the Court of Chancery did include a footnote stating that it “would reach the same conclusion regarding Paul, who did not participate in the Secondary Offering or even vote to approve it.”7 At the time of the complaint, Mattrick had replaced Pincus as CEO. The remaining seven directors were outsiders.

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.8 If the plaintiff convinces us that he did, then we must reverse the Court of Chancery’s dismissal under Rule 23.1. We review this question de novo.9

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.”10 At the pleading stage, a lack of independence turns on “whether the plaintiffs have pled facts from which the director’s ability to act impartially on a matter important to the interested party can be doubted because that director may feel either subject to the interested party’s dominion or beholden to that interested party.”11 “Our law requires that all the pled facts regarding a director’s relationship to the interested party be considered in full context in making the, admittedly imprecise, pleading stage determination of independence.”12 “[Although the plaintiff is bound to plead particularized facts in pleading a derivative complaint, so too is the court bound to draw all inferences from those particularized facts in favor of the plaintiff, not the defendant, when dismissal of a derivative complaint is sought.”13

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.14 This case presents the unusual situation where a plaintiff who *129sought books and records to plead his complaint somehow only asked for records relating to the transaction he sought to redress and did not seek any books and records bearing on the independence of the board.15 Furthermore, although purporting to be a fitting representative for investors in a technology company, the plaintiff appears to have forgotten that one of the most obvious tools at hand is the rich body of information that now can be obtained by conducting an internet search.16 As a result of the plaintiffs failure, he made the task of the Court of Chancery more difficult than was necessary and hazarded an adverse result for those he seeks to represent. Despite that failure, the plaintiff did plead some particularized facts and we are bound to draw all reasonable inferences from those facts in the plaintiffs favor in determining whether dismissal was appropriately granted.17

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 airplane18 with Pincus.19 In his complaint, the plaintiff pled that “Siminoff and her husband have an existing business relationship with defendant Pincus as co-owners of a private airplane,” 20 and in his briefing in the Court of Chancery, the plaintiff characterized Siminoff as a “close family friend” of Pincus,21 which the Court of Chancery took into account as if it was a pled fact.22 Had the plaintiff been more thorough in his research by using all of the “tools at hand,”23 including the tool provided by the *130company whose name has become a verb— or another internet search engine—he likely would have discovered more information about Siminoff s relationship with Pincus. Not only was the plaintiffs research cursory, the plaintiff did not focus on the most likely inference from the co-ownership of the private airplane between Pincus and Siminoff—which is not that the private airplane was a business venture—but that it signaled an extremely close, personal bond between Pincus and Siminoff, and between their families. Thus, the Court of Chancery was stuck with the limited factual allegations made by the plaintiff and, citing our decision in Beam v. Stewart,24 the Court of Chancery determined that these allegations of friendship and shared ownership of an asset were not enough to create a reasonable pleading stage inference that Siminoff could not act impartially in considering a demand implicating Pincus.25

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.26 As we noted recently, although a plaintiff has a pleading stage burden that is elevated in the demand excusal context, that standard does not require a plaintiff to plead a detailed calendar of social interaction to prove that directors have a very substantial personal relationship rendering them unable to act independently of each other.27 A plaintiff is only required to plead facts supporting an inference28—or in the words of Rales, “create a reasonable doubt”29—that a director cannot act impartially. Here, the facts support an inference that Siminoff would not be able to act impartially when deciding whether to move forward with a suit implicating a very close friend with *131whom she and her husband co-own a private plane.

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,30 which controls approximately 9.2% of Zynga’s equity; 31 and, Kleiner Perkins is also invested in One Kings Lane, a company that Pincus’s wife co-founded.32 Not only that, defendant Reid Hoffman—an outside director of Zynga who was one of the directors and officers given an exemption to sell in the secondary offering—and Kleiner Perkins both have investments in Shopkick, Inc., and Hoffman serves on that company’s board along with yet another partner at Kleiner Perkins.33 These relationships, suggest the plaintiff, indicate that Gordon and Doerr have a mutually beneficial network of ongoing business relations with Pincus and Hoffman that they are not likely to risk by causing Zynga to sue them. Amplifying this argument, says the plaintiff, is the voice of Gordon’s and Doerr’s fellow Zynga directors who did not consider them to be independent directors. According to its own public disclosures, the Zynga board determined that Gordon and Doerr do not qualify as independent directors under the NASDAQ Listing Rules.34 Importantly, however, Zynga did not disclose why its board made this determination,35 and the plaintiff failed to request this information in its books and records demand.36

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.”37 In so ruling, the Court of Chancery seemed to place heavy weight on the presumptive independence of directors under our law.38 But, to have a derivative suit dismissed on demand excusal grounds because of the presumptive independence of directors whose own colleagues will not accord them the appellation of independence creates cognitive dissonance that our jurisprudence should not ignore.

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,39 but the criteria NASDAQ has articulated as bearing on independence are relevant under Delaware law and likely influenced by our law.40 The *132NASDAQ rules outline the following list of relationships that automatically preclude a finding of independence:

(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 *133that is also relevant under our law. The bottom line under the NASDAQ rules is 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 in carrying out the responsibilities of a director.”42 The NASDAQ rules’ focus on whether directors can act independently of the company or its managers has important relevance to whether they are independent for purposes of Delaware law. Our law is based on the sensible intuition that deference ought to be given to the business judgment of directors whose interests are aligned with those of the company’s stockholders.43 Precisely because of that deference, if our law is -to have integrity, Delaware must be cautious about according deference to directors unable to act with objectivity. To consider directors independent on a Rule 23.1 motion generates understandable skepticism in a high-salience context where that determination can short-circuit a merits determination of a fiduciary duty claim.

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.”44 And, although we do not know the exact reason the board made this determination,45 we do know this. In the case of a company like Zynga, which has a controlling stockholder, Pincus, who wields 61% of the voting power, if a-director cannot be presumed capable of acting independently because the director derives material benefits from her relationship with the company that could weigh on her mind in considering an issue before the board, she necessarily cannot be presumed capable of acting independently of the company’s controlling stockholder. That a director sits on a controlled company board is not, and cannot of course, be determinative of director independence at the pleading stage, as that would make the question of independence tautological. But, our courts cannot blind themselves to that reality when considering whether a director on a controlled company board has other ties to the controller beyond her relationship at the controlled company.

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 *134Kleiner Perkins partner. Of course, the defendants now argue that the relationships among these directors flowed all in one direction and that it is Pincus who is likely beholden to Gordon, Doerr, and Kleiner Perkins for financing. But, the reality is that firms like Kleiner Perkins compete with others to finance talented entrepreneurs like Pincus, and networks arise of repeat players who cut each other into beneficial roles in various situations. There is, of course, nothing at all wrong with that. In fact, it is crucial to commerce and most human relations. But, precisely because of the importance of a mutually beneficial ongoing business relationship, it is reasonable to expect that sort of relationship might have a material effect on the parties’ ability to act adversely toward each other. Causing a lawsuit to be brought against another person is no small matter, and is the sort of thing that might plausibly endanger a relationship. When, as here, pled facts suggest such a relationship exists and the company’s own board has determined that the directors whose ability to consider a demand impartially is in question cannot be considered independent, a reasonable doubt exists under Ra-les.

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.46

1

. NASDAQ Marketplace Rule 5605(a)(2).

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.

3

. 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. ”).

4

. Rales v. Blasband, 634 A.2d 927, 934 (Del. 1993) (noting that demand futility is assessed at the time the complaint is filed).

5

. Id.

6

.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).

7

. Id., at *14 n.70.

8

. The plaintiff does not dispute the Court of Chancery’s finding that directors Katzenberg and Meresman are independent.

9

. Del. Cty. Emps. Ret. Fund v. Sanchez, 124 A.3d 1017, 1021 (Del. 2015); Beam v. Stewart, 845 A.2d 1040, 1048 (Del. 2004).

10

. Rales, 634 A.2d at 934.

11

. Sanchez, 124 A.3d at 1024 n.25.

12

. Id. at 1022.

13

. Id.

14

. See, e.g., Rales, 634 A.2d at 934 n.10; Brehm v. Eisner, 746 A.2d 244, 266-67 (Del. 2000); Guttman v. Huang, 823 A.2d 492, 504 (Del. Ch. 2003); Ash v. McCall, 2000 WL 1370341, at *15 n.56 (Del. Ch. Sept. 15, 2000).

15

. Verified Complaint Pursuant to 8 Del. C. § 220, Sandys v. Zynga Inc., C.A. No. 8450-ML (Del. Ch.).

16

. 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.

17

. Sanchez, 124 A.3d at 1022.

18

. 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.

19

. 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”).

20

. App. to Appellant’s Opening Br. at A071 (Verified Shareholder Derivative Complaint).

21

. Id. at A145.

22

. Sandys, 2016 WL 769999, at *8.

23

. See, e.g., Rales v. Blasband, 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.

24

. 845 A.2d 1040 (Del. 2004).

25

. Sandys, 2016 WL 769999, at *8.

26

. See In re MFW S’holders Litig., 67 A.3d 496, 509 n.37 (Del. Ch. 2013), aff’d sub nom. Kahn v. M & F Worldwide Corp., 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, 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).

27

. 124 A.3d at 1020-22.

28

. Id. at 1019.

29

. Rales, 634 A.2d at 934.

30

. App. to Appellant's Opening Br. at A071 (Verified Shareholder Derivative Complaint).

31

. Id. atA020.

32

. Id. at A072.

33

. Id.

34

. Id.

35

. Zynga, Inc. Definitive Proxy Statement (Form 14A), at 1 (Apr. 25, 2013).

36

. Verified Complaint Pursuant to 8 Del. C. § 220, Sandys v. Zynga Inc., C.A. No. 8450-ML (Del. CL).

37

. Sandy’s, 2016 WL 769999, at *10.

38

. Id.

39

. Id. at *9.

40

. See In re MFW S’holders Litig., 67 A.3d at 510 (noting that stock exchange rules governing director independence “were influenced by experience in Delaware and other states *132and were the subject of intensive study by expert parties” and ‘‘[t]hey cover many of the key factors that tend to bear on independence ... and they are a useful source for this court to consider when assessing an argument that a director lacks independence”).

41

. NASDAQ Marketplace Rule 5605(a)(2).

42

. Id.

43

. 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.").

44

. NASDAQ Marketplace Rule 5605(a)(2).

45

.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).

46

. 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 (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.

VALIHURA, Justice,

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.1 De*135mand futility required the plaintiff to demonstrate that five of the nine directors were interested or lacked independence. In my view, the Court of Chancery correctly determined that directors Katzenberg, Meresman, Gordon, and Doerr were independent. Plaintiff raises no challenge in this Court as to the independence of directors Katzenberg and Meresman.2 Although the trial court did not separately analyze director Paul, it did state in a footnote that it “would reach the same conclusion regarding Paul, who did not participate in the Secondary Offering or even vote to approve it.”3 Because I would conclude that directors Katzenberg, Meresman, Gordon, Doerr, Siminoff, and Paul were independent, I would affirm the Court of Chancery’s determination that the plaintiff’s complaint failed to create a reasonable doubt that at least five of the nine directors were disinterested or independent for pleading stage purposes.

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.4 As the Court of Chancery recognized, the plaintiff failed to plead any facts about the size, profits, or materiality to Gordon and Doerr of these investments or interests. Absent more, the relationships among these venture capitalists and entrepreneurs, as alleged, are not sufficient to raise a reasonable doubt as to Gordon and Doerr’s independence. Thus, I agree with the Chancellor’s view that their relationships and- overlapping investments do not rise to the level of creating a reasonable doubt as to their independénce.

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.5 The plaintiff candidly acknowledged that he failed to allege why Gordon and Doerr lack independence under NASDAQ rules.6 As the trial court *136observed, “neither the proxy statement nor the plaintiff specifies the reason for this[,]”7 and so it is not clear whether Gordon and Doerr’s “non-independent” designation was due to a relationship with Zynga, Pincus, or another executive. It is not difficult to come up with a scenario where a director might be deemed “not independent” under the NASDAQ rules, or NYSE rules, yet deemed independent for demand futility purposes.8 A request pursuant to 8 Del. C. § 220 should have been targeted to this point, as plaintiff concedes.9

In the demand futility context, directors are presumed independent,10 and it is the plaintiffs burden to plead facts “with particularity” showing that a demand on the board would have been futile.11 Given this burden of proof, the presumption of independence, and the lack of any explanation as to why Gordon and Doerr were identified as “not independent” for NASDAQ purposes, I do not believe that plaintiffs are entitled to an inference that Gordon and Doerr lack independence for purposes of the fact-specific demand futility determination here. This is particularly true given that the allegations concerning Gordon and Doerr’s interlocking business relationships fall short of suggesting that they are of a “bias-producing” nature.

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.12 There are no allegations that demonstrate the materiality or magnitude of the present business relationship, which the plaintiff conceded could have been “[s]omewhere between 10 cents and $10 billion.”13 He also did not dispute the trial court’s statement that the company Paul and Pincus co-founded was sold approximately 15 years ago.14 Thus, based upon my review of the record,15 I would *137conclude that these allegations are insufficient to plead a lack of independence.

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.”16

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.17 In briefing on the defendants’ motion to dismiss or stay, the defendants attached a proxy statement in which Zynga disclosed the “relationship between Ms. •Siminoff and ¡her spouse and Mr. Pincus, who co-own a small private airplane, which was not used for Company travel.”18 The Chancellor also acknowledged an unsupported reference in the plaintiffs brief describing Siminoff as a “close personal friend” of Pincus. At oral argument on the defendants’ motion to dismiss, the Chancellor offered counsel for Sandys an opportunity to expand on the nature of the relationship, but counsel was unable to do so.19

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),20 whether there were other owners, or the nature of the Siminoff/Pincus relationship,21 I am sympathetic to the Chancellor’s view that “Plaintiffs allegations concerning co-ownership of an asset and friendship do not reveal a sufficiently *138deep personal connection to Pincus so as to raise a reasonable doubt about Simi-noff s independence from Pincus.”22 Given the plaintiffs burden, the Chancellor’s decision to err on the dismissal side of this fault line is not unreasonable.

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.”231 respectfully disagree given that the plaintiff has chosen to plead only a business relationship. Nothing more is alleged, let alone facts suggesting that kind of familial loyalty and intimate friendship.

To render a director unable to consider demand, a relationship must be of a “bias-producing nature.” 24 In Beam, this Court reaffirmed that a reasonable inference cannot be made that a particular friendship raises a reasonable doubt “without specific factual allegations to support such a conclusion.”25 In Beam, this Court affirmed dismissal of a complaint that had pled that certain directors were a “longtime personal friend,” a “longstanding friend[,]” and had a “longstanding personal relationship with defendant Stewart.”26 Given this plaintiffs decision to allege the existence of a business relationship only, he is left to argue that co-ownership of a small airplane is simply the kind of fact that, in and of itself, creates a reasonable doubt as to Siminoff s independence from Pincus. This is a close call. Although it may be reasonable to infer some kind of collaborative relationship given the nature of the asset, I do not believe the bare allegation in the Complaint rises to the level of creating a reasonable doubt as to Siminoff s ability to carry out her fiduciary duties, to properly consider a demand, and to put at risk her reputation by disregarding her duties.

Thus, this case stands in contrast to Sanchez,27 for example, where the plaintiff pled that the director had a fifty-year friendship with the interested party, that the director’s primary employment (and that of his brother) was as an executive of a company over which the interested party had substantial influence, and the director made thirty to forty percent of his annual income from his directorship.28 Here, the bare reference to a “close friendship” appears only as an unsupported assertion in a brief.29 This unsupported and unverified reference should not be considered and should not serve as a basis upon which to draw any inferences. For me, this is not a mere technicality. Court of Chancery Rule 3(aa) requires that all complaints “be verified.”30 This means that every pleading *139“shall be under oath or affirmation by the party filing such pleading that the matter contained therein insofar as it concerns the party’s act and deed is true, and so far as relates to the act and deed of any other person, is believed by the party to be true.”31 Unverified and unsupported statements in a brief should not be considered as if they were pleaded facts.

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.”32 We further cautioned that “this approach hazards dismissal with prejudice on the basis of a record the plaintiffs had the fair chance to shape and that omitted facts they could have, but failed to, plead.”33 Here, the plaintiff failed to heed that warning and unnecessarily complicated the task of both courts in exercising their best efforts to reach a just result.34 Even assuming that our law cannot “ignore the social nature of humans[,]”35 there is no equity here in asking the reviewing courts to speculate that the pleaded Siminoff/Pincus business relationship is of such a nature to render her beholden to him or so under his influence that her directorial discretion is sterilized.

Accordingly, because I would affirm the Court of Chancery’s decision, I respectfully dissent.

1

. 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 *135hindsight if I had to do it again we would have sought that.”).

2

. 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.

3

. Sandys v. Pincus, 2016 WL 769999, at *14 n.70 (Del. Ch. Feb, 29, 2016).

4

. 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,

5

. See, e.g., In re MFW S’holders Litig., 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, 941 n.62 (Del. Ch. 2003))), aff'd, 88 A.3d 635 (Del. 2014).

6

.See Oral Argument at 12:13.

7

. Sandys, 2016 WL 769999, at *9.

8

. See, e.g., Teamsters Union 25 Health Servs. & Ins. Plan v. Baiera, 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.

9

. 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.”).

10

. Beam v. Stewart, 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)).

11

. Del. Ch. Ct. R. 23.1; see also Brehm v. Eisner, 746 A.2d 244, 254 (Del. 2000) ("Rule 23.1 is not satisfied by conclusory statements or mere notice pleading.”).

12

. Compl. at A71 ¶ 117(f).

13

. 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.

14

. Id. at A410 (Tr. 49:19-22).

15

. Beam, 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 *137review is plenary.” (italics added) (citations omitted)).

16

. Compl. at A71 ¶ 117(h) (emphasis added).

17

. 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.

18

. Zynga Inc., Definitive Proxy Statement (Form 14A), at 1 (Apr. 25, 2013), excerpt available at B210-21.

19

. Transcript of Oral Argument on Defs.’ Mots, to Dismiss & Stay at A410 (Tr. 49:7-16).

20

. 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.

21

.See Compl. at A71 ¶ 117(h).

22

. Sandys, 2016 WL 769999, at *8.

23

. Majority Op. at 129-30 (emphasis added).

24

. Beam, 845 A.2d at 1050,

25

. Id. (quoting Beam v. Stewart, 833 A.2d 961, 979 (Del. Ch. 2003)) (internal quotation marks omitted).

26

. Id. at 1045-47.

27

. Del. Cnty. Emps. Ret. Fund v. Sanchez, 124 A.3d 1017 (Del. 2015).

28

. Id. at 1020-21.

29

. 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.

30

. Del. Ct. Ch. R. 3(aa).

31

. Id.

32

. Sanchez, 124 A.3d at 1021 n.14.

33

. Id.

34

. 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, 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, 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.”).

35

. Oracle, 824 A.2d at 938.

In re WAYPORT, INC. LITIGATION.

Consol. C.A. No. 4167-VCL.

Court of Chancery of Delaware.

Submitted: Jan. 31, 2013.

Decided: May 1, 2013.

See also 2009 WL 2246793.

*300Bruce E. Jameson, Marcus E. Montejo, Prickett, Jones & Elliott, P.A., Wilmington, Delaware; Attorneys for Plaintiffs.

*301Gregory V. Varallo, John D. Hender-shot, Rudolf Koch, Scott W. Perkins, Richards, Layton & Finger, P.A.; Attorneys for Defendants Wayport, Inc. and Gordon P. Williams, Jr.

M. Duncan Grant, James H.S. Levine, Pepper Hamilton LLP, Wilmington, Delaware; Roger A. Lane, Courtney Worcester, Foley & Lardner LLP, Boston, Massachusetts; Attorneys for Defendants New Enterprise Associates VIII L.P. and New Enterprise Associates 8A L.P.

Michael F. Bonkowski, Cole, Schotz, Meisel, Forman & Leonard, P.A., Wilmington, Delaware; John J. McKetta III, Graves Dougherty Hearon & Moody, P.C., Austin, Texas; Attorneys for Defendant Trellis Partners Opportunity Fund, L.P.

OPINION

LASTER, Vice Chancellor.

The plaintiffs sued for damages arising out of their sales of stock in Wayport, Inc. (“Wayport” or the “Company”). Vice Chancellor Lamb granted the defendants’ motion to dismiss in part, and his rulings represent law of the case. See Latesco, L.P. v. Wayport, Inc., 2009 WL 2246798 (Del.Ch. July 24, 2009) (the “Dismissal Opinion”). The litigation proceeded to trial against the remaining defendants on claims for breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, common law fraud, and equitable fraud. Judgment is entered in favor of plaintiff Brett Stewart and against defendant Trellis Partners Opportunity Fund, L.P. (“Trellis Opportunity Fund”) in the amount of $470,000, subject to an adjustment to be calculated by the parties in accordance with this opinion, plus pre- and post-judgment interest at the legal rate, compounded quarterly. Judgment otherwise is entered against the plaintiffs and in favor of the defendants.

I. FACTUAL BACKGROUND

The case was tried on September 17-20, 2012. The parties introduced over 400 exhibits, submitted deposition testimony from nineteen witnesses, and adduced live testimony from ten fact witnesses and one expert witness. The burden of proof rested on the plaintiffs. Having evaluated live witness testimony, weighed credibility, and considered the evidence as a whole, I make the following factual findings.

A. Wayport’s Early Days

Wayport was a privately held Delaware corporation with its principal place of business in Austin, Texas. Founded in 1996, the Company was a pioneer in designing, developing, and enabling Wi-Fi hotspots, which use a wireless router to offer internet access within the immediate vicinity. Stewart was Wayport’s original CEO, a member of its board of directors (the “Board”), and a named inventor on most of its patents. Plaintiffs Dirk Heinen and Brad Gray were the Company’s vice president of operations and vice president of sales, respectively.

Early on, Heinen introduced Stewart to John Long, who was a partner in a venture capital firm known as Trellis Partners.1 In 1998, Trellis purchased Series A Preferred Stock in Wayport and obtained (i) *302the right to designate a director, (ii) the right to receive financial information, and (iii) a right of first refusal (“ROFR”) on plaintiffs’ shares. Long joined the Board as the Trellis designee. He had primary responsibility for Trellis’s investment in Wayport, but often discussed the Company’s progress with Broeker, one of his partners at Trellis.

In 1999, Wayport sought additional funding. Trellis introduced Wayport to Richard Kramlich, a partner in the venture capital firm New Enterprise Associates (“NEA”).2 NEA purchased Series B Preferred Stock in Wayport and obtained (i) the right to designate a Board observer, (ii) the right to receive financial information, and (iii) a ROFR on plaintiffs’ shares. Kramlich became NEA’s Board observer and had primary responsibility for NEA’s investment.

B. The Bursting Of The Technology Bubble

In 2000, the technology bubble burst, and Wayport’s business prospects soured. Wayport’s struggles led the Board to consider a management transition. According to the defendants, Stewart was forced to step aside. Stewart testified that he did not oppose the change. He considered himself a “technology and analysis” buff, and once fundraising and cash flow issues became all-consuming, Stewart felt he was out of his “comfort zone.” Tr. 90.

In fall 2000, Dave Vucina took over as CEO, and Stewart received the title of President. Stewart soon became disenchanted with his new role, which he felt was “ambiguous,” “uncomfortable,” and “poorly defined.” Tr. 91. In late 2001, Stewart resigned from all positions with the Company. He nominated Heinen to serve as a director in his stead, and Heinen continued as a director until May 2005.

C. Wayport’s Prospects Revive.

Under Vucina’s leadership, Wayport reduced its cash burn and began to turn around its business. Over four years, thanks in part to a rebounding economy and the advent of smart phones, the Company went from operating at a loss on little revenue to generating $90-100 million in sales with positive cash flow and a healthy balance sheet.

In 2005, Wayport began exploring an initial public offering. In preparation, Vu-cina hired defendant Gordon P. Williams, Jr. as Wayport’s new general counsel. In the trial record, Gordon Williams is referred to frequently as Chuck Williams. Another Wayport employee, Greg Williams, plays a smaller part in the case. To distinguish between the two, and because Gordon Williams has the more prominent role, I refer to him as “Williams.” When his colleague enters the frame, I refer to him as “Greg Williams.”

Williams took steps to “prepare [Way-port] for an IPO” by implementing what he believed were “best practices” with respect to sharing financial and other information about the Company. Tr. 874-75. Wayport previously shared information freely with directors and stockholders alike. Williams worried that sharing unaudited financial information posed a risk of misleading investors and could lead to violations of securities laws. He therefore instituted a policy that required any common stockholder who wanted informa*303tion to make a formal books and records demand pursuant to Section 220 of the Delaware General Corporation Law (the “DGCL”), 8 Del. C. § 220, and sign a nondisclosure agreement (collectively, the “Section 220 Policy”). The Section 220 Policy did not affect Trellis or NEA, because they had contractual information rights and representatives in the boardroom.

Also in 2005, Wayport management began to explore whether the Company could better utilize its intellectual property. As an initial step, Wayport hired Craig Yu-dell, a patent attorney with the firm Dillon & Yudell, to clean up the portfolio. Yu-dell’s firm also served as a patent broker, and Wayport anticipated that Yudell might serve in that role. Over the next twelve to eighteen months, Yudell organized a patent inventory, assessed the portfolio’s potential value, and determined which patents required the filing of amendments with the U.S. Patent and Trademark Office (“USPTO”).

D. Stewart Offers His Two Cents On Patents.

In spring 2005, as part of the patent cleanup process, Yudell reached out to Stewart to obtain his signature on certain patent amendments. Stewart “hadn’t really thought about Wayport for several years,” but Yudell’s inquiry sparked his interest. Tr. 98. On May 17, Stewart sent an email to the Board and management containing a lengthy and unsolicited strategic manifesto about how Wayport could monetize its patent portfolio.

I have seen no evidence of any attempt by Wayport to enforce [its] ever increasingly valuable patent assets. Indeed, I would be surprised if the ability to enforce the patents [was] not to some extent already limited by either direct licenses, covenants not to sue, or implicit licenses under the patent exhaustion doctrine as a part of other deals Way-port has done with [carriers].

However, there is more to IP strategy than waiting defensively to be sued, or offensively suing someone. I would like here to propose a set of strategic actions in this regard. Four years ago, [Vucina] asked me to make such a proposal, and I could not think of a good one. But today, many things have changed. So I herewith have two trivial and one significant patent asset management strategies to propose. My credentials for these proposals are threefold: I am a significant shareholder with a desire to see Wayport maximize value of all assets, I am a named inventor on all of Wayport’s system and method patents, and I pretty much only did technology IP strategy and deals globally for AMD during the five years prior to starting Wayport....

I can quickly dispose of the trivial:

1. Abandon any investment, including fees, in [patent A] if you have not already done so....

2. Offer to sell [patent] 6732176 to Cisco.... The cash benefit to Wayport could be relatively immediate and significant. However, I don’t see how Way-port would need to continue to invest in this patent over time — it is about gear, and not about service.... Regarding value of this patent, I would propose you start at 5% of actual or forecasted] sales, and settle for 2% or some NPV equivalent of 2%. This could be many hundreds of thousands of dollars....

3. Far more interesting is the profound component of strategy I would like to propose regarding the remaining system and method patients.

The big change in the environment from 2000/2001 is the presence of municipali*304ties operating wifi networks. Some or all of these will infringe [patent B] and its progeny. But you can enforce patents against a government with a degree of impunity not available when contemplating enforcement against customers, suppliers, or competitors.

As I see it there are three approaches:

— [D]o nothing, wait for more infringement

— [D]o the ‘little fish/big fish’ dance, well known to technology IP strategists. Under this approach Wayport would find a small municipality somewhere (the little fish) operating a municipal wifi network, approach them, say ‘hey you know what? You infringe my patents. But [don’t] worry, I am not trying to shut you down. Why [don’t] you just give me $500 and I’ll give you this license. Then you never have to worry about this again.’

Next, find a slightly bigger fish, and repeat at a slightly higher price, saying ‘municipality A needed a license, and so do you.’ Repeat. Repeat. Repeat....

— The third approach is my personal favorite. If you know who you’d do this with, and [carrier A] or [carrier B] come directly to mind, ... just go to their IP section and lay out the strategy, and use the NPV of the strategy to add to valuation discussions either with private or public markets. The neat thing about this approach is that you can directly get valuation from a carrier who would like to control the patent assets.

The courtesy of a response to these suggestions would be greatly appreciated.

JX 8 (the “Patent Strategy Memo”). As these excerpts indicate, the tone of the Patent Strategy Memo was not entirely complimentary towards Wayport management. But for Stewart’s emails, which tend toward the prickly and condescending, it was relatively subdued. The 6,732,-176 patent referenced in the Patent Strategy Memo was one of the chief patents in a family (the “MSSID Patents”) that Way-port would sell to Cisco Systems, Inc. (“Cisco”) in a transaction that serves as the foundation for much of the plaintiffs’ case.

On the same day he received the Patent Strategy Memo, Wayport’s then-general counsel, Bob Kroll, sent a brief email thanking Stewart “for [his] time and for sharing [his] thoughts.” JX 9. He then referred to a patent monetization strategy and team:

We are aggressively pursuing a patent monetization strategy and will give due consideration to the suggestions you have set forth below. No doubt many ideas for deep consideration are contained in it, but time constraints limit my ability to fully consider them right now. They will be shared with the patent monetization team once it is in place, which should be within the near future. Again, thank you for your continuing interest in Wayport’s success.

Id. Kroll copied Stewart, Vucina, Heinen, other members of the Board, and Yudell.

Wayport’s Chief Technology Officer at the time, Dr. James Keeler, also replied to Stewart, but cautioned that any patent strategy would take time.

Thank you for your thoughts. We view the patent portfolio as being a valuable asset and I have been nurturing this asset in the U.S. and in selected international locations....

The actual strategy of what to do with [the patents] is a complex one that tends to move slowly — when I was involved in licensing the patent portfolio at Pavilion ... it took about 4 to 5 years from start to finish, $5 million of investment, and *305resulted in about $30Million [sic] licensing fees after 2 lawsuits....

Under [Kroll’s] leadership we are engaging several firms regarding our strategy for how to monetize this asset and we expect to have a plan put in place within the next six months or so. However, it will be a multi-year process to actually monetize....

I will say that the value of your patents has not gone unnoticed by me, the board or our lawyers. It is being worked on and strategies are being developed.... There is a lot of work to do to tap into that mine, however, and it takes a lot of time for these things to become monetized.

... [W]e are approaching this in a very structured and professional manner that we expect will optimize the value of the good work that you have done in the past.

JX10.

Long also responded to Stewart:

Thanks for prodding us on this, and for laying out the issue more clearly. It’s clear to all of us that Wayport’s patents have value, but as you know the issue has been how and when to best realize that value. Your idea is interesting and worth examining closely.

JX 15.

To me, these communications appear professional and courteous. To Stewart, they were disingenuous, and he concluded that the Board had no concept of the patent portfolio’s value. In an email to Heinen, Stewart summarized his reaction. “As a person literate in the English language, it is safe to assume there is no patent monetization activity underway, just glib lip service.” JX 15. At trial, Stewart testified to the same effect. He believed that Wayport had brushed aside the Patent Strategy Memo and had no alternative patent strategy. See Tr. 176-77 (Stewart agreeing that “regardless of what the company was telling [him] through several different voices, [he] made a decision personally simply not to give credit to that information”).

Despite what Stewart perceived to be a dismissal of his recommendations, Long and Stewart continued discussing the Company’s patents. In summer 2005, they met for lunch, but the meeting ended badly when Long became “annoyed at what [he] took as [Stewart’s] zings against Way-port and its board_” JX 27. After this difficult encounter, Long reached out to Stewart again in fall 2005. Yudell was nearing the end of his housekeeping efforts and starting to develop a formal marketing plan, and Long hoped to tap Stewart’s expertise. On October 21, Long emailed Stewart:

I would like to follow up with you about your ideas on how Wayport can best exploit its IP portfolio. This has become a higher priority for [Vucina] and the board, and [Vucina] acknowledges that you are uniquely qualified by background and talent to help with these efforts. The company has not been completely idle here, although I know we have not moved as quickly as you would have liked or followed your suggestions around IP strategy. The board is scheduled to hear presentations in a couple of weeks from two outside IP firms to get their assessments of the Wayport portfolio and their thoughts around exploitation strategies.

Id. Long asked whether Stewart would “be willing to look into this matter and help us” and suggested that there appeared to be “a real opportunity to drive meaningful value to Wayport....” Id. He suggested that Stewart and the Company “look past [their] disagreements and frictions.... ” Id.

*306Stewart replied the same day and reiterated his criticisms of Vucina and the Company, including what he described as its failures to honor his requests for information even when he complied with the Section 220 Policy. While acknowledging Wayport’s efforts, Stewart denigrated the strategy of using brokers to market and sell the patents.

Indeed, I view the process you describe, of outside law firms presenting (“pay me fees and I will go ask for licenses in the following way”) as one where I could hardly add value, likely to have the prospect of consuming inordinate amounts of my (uncompensated) time, and unlikely to do anything significant for shareholder value in the time frame of interest. I have seen this movie and I know how it ends.

JX 27. In subsequent emails, Stewart offered more heated assessments of how Wayport had treated him and whether its patent strategy was likely to succeed.

On November 11, 2005, Long again informed Stewart that Wayport was taking his suggestions seriously and would soon act.

While [Vucina] may not have moved as quickly as you would have liked, and may not have the technology background to understand the issues, opportunities and strategies as completely as you would like, I can assure you that he now has a sense of urgency on this topic and is marshalling resources to move quickly.

JX 38. In the same email, Long asked Stewart to be more constructive and suggested that he stop any independent efforts to reach out to industry contacts about Wayport’s patents. Long expressed concern that a dual track sales process, one managed by Wayport and one conducted independently by Stewart, would undermine the Company’s efforts.

I believe that your proposed independent activities with potential partners risk greater potential harm than potential gain. I am confident that the value of Wayport’s IP will get communicated to the appropriate people_In pursuing this course you would also be taking a position that the company could only view as adversarial, an outcome I think would be very unfortunate.

Id. Stewart reserved his right to do whatever he wanted, and the discussions between Stewart and Long stopped.

E. The First Stock Sale

In November 2005, Max Chee, a principal at Millennium Technology Value Partners, L.P. (“Millennium”) contacted Stewart and Gray about their shares of Wayport common stock. Millennium is a venture capital fund that invests in founders’ shares. Chee asked whether Stewart and Gray might be interested in liquidating a portion of their Wayport common stock.

Stewart was initially suspicious. Coming on the heels of his exchanges with Long about the patents, he thought there was “zero chance [Chee] [did] not have Wayport’s hand up his back.” JX 37. But less than a month later, Stewart, Heinen, and Gray signed letters of intent to sell a portion of their Wayport common stock to Millennium at $3.00 per share. Stewart, Heinen, and Gray initially agreed to sell 184,000 shares. In January 2006, plaintiff Paul Koffend, formerly Wayport’s CFO during Stewart’s tenure as CEO, caught wind of the opportunity and asked to sell some of his shares to Millennium on the same terms.

The contemplated sales could not close immediately because of the ROFRs held by Wayport, Trellis, and NEA. When the sellers gave notice of their intent to sell, *307Wayport and NEA declined to exercise their rights, but Trellis sought to buy.

A dispute then ensued between Stewart and Trellis. Stewart’s shares ostensibly were covered by multiple iterations of a stockholder agreement that contained various other ROFRs, but the parties to the iterations were different and Stewart was not a signatory to the later versions, including the version that Trellis believed was operative. To Trellis’s dismay, Stewart began sending ROFR notices to parties under the last version of the stockholder agreement that he signed, including parties that Trellis believed were not entitled to notice. Stewart also objected to the shares being purchased by a Trellis fund that was not a signatory to the agreement he deemed controlling and therefore, in his view, did not have a ROFR.

After much wrangling and considerable delay, Williams came up with a solution. Each version of the ROFR permitted the affected seller, the Company, and a super-majority of the preferred stockholders to waive any provision of the agreement. As long as the necessary votes could be obtained, the ROFRs could be waived, avoiding the need to determine which version of the stockholder agreement was actually controlling. The parties followed this course.

Everything was proceeding towards a closing until March 9, 2006, when Trellis backed out. According to Broeker, Trellis decided to invest in other portfolio companies. Trellis’s decision did not affect the plaintiffs because Millennium stepped in to buy their shares. In late March, Millennium acquired 527,500 shares from the plaintiffs.

F. Wayport Markets The MSSID Patents.

At some point in 2006, Wayport Executive Vice President Greg Williams assumed responsibility for executing Wayport’s patent strategy. In’ the fall, Greg Williams told Vucina that he wanted Wayport to be in good faith negotiations for a license to the MSSID Patents by April 1, 2007.

Consistent with this goal, Wayport began marketing the MSSID Patents in February 2007. Yudell distributed offering materials to approximately sixty potential buyers and asked for initial indications of interest by the end of March. Only two parties submitted indications of interest: Cisco and Intellectual Ventures Management, LLC (“Intellectual Ventures”), an investment firm focused on intellectual property.

G. The Second Stock Sale Begins.

In December 2006, shortly before the auction for the MSSID Patents commenced, Stewart contacted Wayport about selling more stock to Millennium. The transaction was anticipated to close on substantially similar terms, including a $8.00 sale price. Stewart asked if Williams wanted to handle the ROFR issues through the waiver process. On December 13, Stewart followed up with an email in which he informed Williams that the selling stockholders preferred the waiver approach. The same day, Stewart and Williams spoke by phone, and Williams suggested that Trellis and NEA would likely agree to waive their ROFRs if plaintiffs made enough shares available such that Trellis and NEA could participate. Stewart alluded to this conversation in an email to Williams on December 14:

I was thinking over our conversation yesterday, and after a few discussions among the [plaintiffs], I would like to indicate to you the potential flexibility to increase the number of shares available, should one of the [preferred stockholders] have an interest in taking an additional position. I don’t have a number, I *308just want to communicate receptivity to discussing this, should it turn out that one of the issues in getting a waiver ... is, as you anticipated, the desire for one of the [preferred stockholders] to co-buy.

JX 145 (emphasis added). Williams responded: “Thanks [Stewart]. It does help.” Id. Later that week, Williams confirmed that Wayport was willing to proceed by waiver, but he still needed to coordinate with Trellis and NEA.

On December 20, 2006, Long emailed the Board and noted that there were two directors, Katzen and McCormick, who wanted to purchase shares. Long described how Williams planned to satisfy everyone’s desires.

[Williams] has concluded it doesn’t make sense to intervene in the current proposed sale, but rather to see if the [plaintiffs] would sell an additional 200-250k shares directly to [Katzen and McCormick]. [Williams] also learned from Greg Williams that he would be interested in selling 100k of his shares, which would reduce the request to the [plaintiffs].

JX 149. Caught off-guard, Vucina emailed Williams and asked why he made this “formal recommendation.” JX 150. Williams downplayed the idea of a “formal recommendation” but did not dispute that requesting additional shares from the plaintiffs was his idea.

I had originally been thinking of this as a two step (company buys and then sells to directors) approach as well. Different approach of facilitating the sales directly came into the discussion yesterday and has the appeal of keeping the Company out of the transaction.... I was still forming my thinking around that yesterday but it is settling in as a better simpler [sic] approach.

Id. Under Williams’s structure, the plaintiffs and Greg Williams would sell directly to Katzen and McCormick.

Williams conveyed his proposal to Stewart, who agreed. On January 25, 2007, Williams supplied the parties with a draft stock purchase agreement. Around this time, Trellis and NEA decided not to participate in the second stock sale, at least while the going-rate was $3.00 per share.

H. Millennium Lowers Its Bid.

On January 81, 2007, Millennium asked Wayport for financial information to help evaluate the proposed transactions. The record does not contain direct evidence of what Millennium received or learned, but on February 13, Millennium told Stewart that it was dropping its price to $2.50. Stewart vented to Williams: “I learned yesterday evening that ... [Millennium] received new information from Wayport that was unavailable to the [plaintiffs], and that as a consequence of that information and subsequent questioning of management, [Millennium] would decline to perform the stock transfer [at $3.00 per share].” JX 171. Stewart asked Williams to give him the same information to “restore [the] balance of information available.” Id.

Williams forwarded Stewart’s email directly to Millennium, remarking that Stewart’s communication was his “morning surprise.” JX 171. Williams and Millennium spoke by phone twenty minutes later. Williams also gave a heads up to Vucina, who was upset that Millennium had acted without warning the Company. Vucina commented:

One of the things I don’t understand is the need for [Millennium] to share this level of information with [Stewart]. I don’t feel like we should have any more of these conversations with [Millennium] if they are going to turn around and *309communicate back to [Stewart] in this manner.... [T]hey have put us in a tough position.

JX 178.

Williams did not respond to Stewart until after his communications with both Millennium and Vucina. On February 15, 2007, Williams decided that Stewart would get “exactly what [Millennium] got.” JX 174. Wayport sent Stewart the additional information and set up a call between Stewart and Wayport’s CFO, Ken Kieley, which took place on February 27.

Meanwhile, Williams continued acting as an intermediary for the stock sales. On February 16, 2007, Williams facilitated the exchange of draft stock purchase agreements between Stewart and McCormick. On February 21, Stewart asked Williams whether Trellis and NEA were interested in buying stock at the new price, and Williams responded “definitely.” JX 186. On February 28, Stewart confirmed to Williams and Millennium that plaintiffs would still sell at $2.50 per share. To generate the same proceeds, Gray increased the number of shares he would make available by 20,000 shares. On March 1, Williams reported on these developments to the Board.

On March 2, 2007, Greg Williams learned that Millennium had lowered the price from $3.00 to $2.50. He declined to sell at the new price. On March 7, Stewart and Williams worked out a ledger reflecting Greg Williams’s withdrawal.

Because the price had changed, the revised stock sales at $2.50 per share required a new ROFR waiver. On March 8, Wayport waived the Company’s ROFR, but Trellis and NEA now indicated that they wanted to buy.

To keep everyone happy, Williams stepped in. He first determined the preferred stockholders’ investment appetites. Once this figure was known, Williams asked Stewart whether the plaintiffs would make additional shares available to accommodate both the preferred stockholders and Millennium, indicating that it would enable him to procure the ROFR waivers. When Stewart agreed, Williams contacted Trellis and NEA to confirm that if the plaintiffs made additional shares available, the extra shares could go to Millennium. When they agreed, Williams believed he had a transaction in which the ROFRs could be waived, and Trellis, NEA, and Millennium would be able to participate.

I. The Auction Generates Two Bidders.

While Williams and Stewart were putting together the stock sales, the auction results came in for the MSSID Patents. On March 30, 2007, Cisco submitted a “non-binding indication of interest” suggesting a transaction price in a “range” of $1-10 million, subject to “Cisco’s evaluation of relevant market factors,” “due diligence,” and negotiation of a “definitive agreement.” JX 211. Attached to the indication of interest was an extensive list of due diligence requests. Greg Williams understood Cisco to be closer to the $1 million figure.

On April 3, 2007, Intellectual Ventures submitted a “preliminary, non-binding indication of interest” suggesting a transaction price “between $1.5 and $2.25 million.” JX 212. Intellectual Ventures also asked about purchasing an additional patent for $500,000. Id. The Intellectual Ventures indication of interest was subject to “due diligence” including “the review of complete file histories, relevant prior art, [and] pre-existing licenses....” Id.

Yudell tried to negotiate the bidders up. Cisco balked at his initial counteroffer of $12-17 million, so he proposed a “nonexclusive license” requiring an “up-front payment” of $8 million. JX- 234. On May *31017, 2007, Yudell sent Cisco’s counsel a nonbinding term sheet reflecting Wayport’s counteroffer. Cisco went silent, and Greg Williams thought Yudell had overplayed his hand.

Negotiations with Intellectual Ventures progressed more smoothly. By June 8, 2007, Intellectual Ventures had proposed a transaction that included a $5 million upfront payment and future royalties. Way-port countered with a new term: the deal would be conditioned on a license for “a large networking equipment manufacturer,” namely Cisco. JX 252. Greg Williams’s contemporaneous emails suggest he thought the condition might cause Intellectual Ventures to believe it faced competition and increase its bid. But Intellectual Ventures never agreed to the condition and never raised its price.

Meanwhile, Greg Williams reached out to Cisco to restart negotiations. On June 14, 2007, he reported to the Board on his efforts, and the directors formally authorized him to reopen discussions. After the meeting, Greg Williams offered to sell the MSSID Patents to Cisco for $10 million, subject “to Cisco’s sole satisfaction with its due diligence.... ” JX 257.

On June 18, 2007, Greg Williams sent Cisco a proposed sale agreement. Cisco rejected Wayport’s form of the agreement and supplied its own, without specifying a price. On June 20, Wayport began providing Cisco with due diligence. Eight days later, on June 28, Cisco finally named a price: $9 million. Greg Williams countered, and Cisco and Wayport reached agreement at a price of $9.5 million. The agreement was executed on June 29.

The sale of the MSSID Patents was a major achievement for Wayport. After paying Yudell’s success fee, Wayport received $7.6 million in cash. The proceeds increased the Company’s year-end cash position by 22%, and the gain on sale represented 77% of the Company’s year-end operating income. On July 2, 2007, Vucina notified the Board. The directors received detailed materials about the Cisco sale on July 20 and gathered for a Board meeting on July 25 where Greg Williams provided a formal update. No one at Wayport said anything about the sale of the MSSID Patents to the plaintiffs.

J. The Second Stock Sale Closes.

In late March 2007, as bids for the MSSID Patents arrived, Stewart was growing increasingly frustrated with the delays in closing the second stock sale caused by Trellis and NEA deciding how many shares to purchase. On April 9, NEA indicated that it would purchase 200,000 shares. Trellis originally indicated that it would purchase 400,000 shares, but reduced its ask to approximately 300,000 shares as a courtesy to NEA. Katzen and McCormick would purchase 270,000 shares in the aggregate. Millennium would purchase the balance. On April 24, with the transaction structure finalized, Wayport waived its ROFR.

On April 25, 2007, Stewart and Koffend sold shares to Millennium. On May 9, a sufficient number of preferred stockholders executed ROFR waivers to facilitate the remainder of the transactions. The same day, Williams’s paralegal circulated Wayport’s draft stock purchase agreement.

For the sales to the directors, Williams negotiated the terms of the stock purchase agreement with Williams’s paralegal. Stewart asked that certain buyer-friendly language be removed, and Williams agreed. Stewart had more difficulty with Trellis. Trellis’s outside counsel tried to add language to the stock purchase agreement reciting that the parties were operating with equal information, but Stewart *311objected. On June 8, 2007, after Stewart and Trellis’s counsel reached an impasse, Broeker weighed in:

We cannot have a one sided representation. ... I think [Trellis’s counsel] has outlined a number of solutions which are attempting to address comfort so we can have symmetry in the [representations]. He indicated we’d be happy to [represent] a number of items. We are not aware of any bluebirds of happiness in the Wayport world right now and have graciously offered to [represent] that. But what happens if Google walks in in 80 days and says “we’d like to buy [Way-port]”. [sic] The way the [representation] is worded, you would come to us and say foul — you should have told me. I think we can address this but we need to focus on solutions that will meet [Wayport’s] guidance for existing investors and [B]oard members and our counsel.

JX 248 (emphasis added). In response, Stewart emailed Broeker, saying that “[i]f you know of a Google deal in play, perhaps you ought to refrain from this transaction, or arrange for us to be on a level information playing field.” JX 246.

At trial, this “bluebirds” email was hotly disputed. Stewart testified that he understood “bluebirds” to mean any unspecified good news. Broeker testified that it meant an acquisition. Having heard the witnesses and considered the email in context, I agree with Stewart. Broeker’s reference to an acquisition was just one example of a potential bluebird. During his deposition, Greg Williams volunteered an example of another “great big bluebird”— a patent sale in the range of the Cisco sale. Greg Williams Dep. Tr. 64-65.

Later that day on June 8, 2007, Broeker attempted to break the logjam with Stewart by providing him with a copy of a stock purchase agreement that Trellis entered into with Dave Hampton, a former Way-port employee. Broker pointed out that Hampton was “no longer at the company and doesn’t receive financial information,” but he agreed to the “mutual representations” that Trellis wanted. JX 247. Broeker offered: “If you feel you do not have the correct information to make an informed selling decision, we stand by ready to provide whatever we can to help you make an informed decision.” Id. Neither the agreement nor the offer mollified Stewart, who remained concerned about being at an information disadvantage. Ultimately Trellis and Stewart executed a stock purchase agreement that did not contain any representations about information.

On June 13, 2007, Stewart closed his sale of stock with NEA. On June 14, Kat-zen and McCormick backed out of their purchases, leaving Stewart with 270,000 shares that he had planned on liquidating. On June 20, Stewart, Heinen, and Gray closed their sales with Trellis.

K. The Third Stock Sale

On June 26, 2007, Stewart emailed Williams and stated that he was “contemplating asking for [William’s] assistance in mitigating the effect of [Katzen and McCormick] bolting.” JX 272. First, though, he asked for “a copy of the 11-months to date” current fiscal year unaudited financial statements. Id. Williams sent the materials the following day. Recall that at the time, Greg Williams had reengaged with Cisco. On June 28, Cisco offered $9 million for the MSSID Patents, and on June 29, the parties executed a patent sale agreement at a price of $9.5 million. Williams never informed Stewart of these developments.

On July 2, 2007, Stewart confirmed that he wanted to sell additional shares and asked Williams for his “assistance in recov*312ering from the llth-hour departure of [Katzen and McCormick].” JX 281. Williams initially suggested that Stewart reach out to Trellis and NEA directly. Stewart wrote back:

If you would like to change the flow of communication over the last six months, where the company interposed itself between the preferred [stockholders] and the [plaintiffs] until the actual transfer was about to occur, that is OK by me. I am happy to contact Trellis and NEA, but I suspect we will quickly be back to where we are now.

JX 290. Williams then contacted Trellis and NEA and advised them that Stewart wanted to sell additional shares at a price of $2.50 per share. After several weeks of internal discussions, Trellis and NEA decided to purchase 100,000 and 150,000 shares, respectively. The parties agreed to use the same versions of the stock purchase agreement previously used. On September 27 and 28, the transactions closed.

L. Stewart Learns Of The Patent Sale.

On October 1, 2007, just days after the final stock sale, Stewart asked Williams for a copy of Wayport’s audited financials. On October 30, Williams provided them. Buried in the notes was the following three sentence disclosure:

In June 2007, Wayport completed the sale of certain of its patents related to a distributed network communication system which enables multiple network providers to use a common distributed network infrastructure. Cash proceeds of $7.6 million, net of expenses related to the transaction, were received in June 2007. The Company has no ongoing obligations under the patent sale agreement and was granted a royalty-free, nontransferable license to the related patents sold.

JX 316. This was the first time Stewart learned of the patent sale.

At his deposition, Williams testified that he was upset that even this limited disclosure was included in the financial statements. Williams opposed making any disclosure about the sale, citing the need to respect Cisco’s confidentiality. Williams also testified that he ultimately agreed to the disclosure only because Wayport’s auditors told him that they “really didn’t have an alternative....” Williams Dep. Tr. 207-08. If the auditors had not insisted on following GAAP, Stewart might never have learned about the sale.

On November 6, 2007, Stewart asked Williams about the purchase, including “who bought them?” JX 318. Williams refused to divulge anything, citing a confidentiality agreement between Cisco and Wayport. Stewart then pared back his request, agreed to forego the name of the buyer, and asked for only (i) whether one or more patents were sold, (ii) whether any pending patents were sold, (iii) the date of the sale, and (iv) the gross sale proceeds. Williams would not budge, and Wayport provided nothing.

On December 21, 2007, Stewart made formal demand under Section 220. When Wayport failed to respond, he filed a books and records action on January 3, 2008. On March 10, Wayport provided Stewart with a list of its currently held patents, which enabled Stewart to deduce which patents were sold. Wayport did not disclose the gross proceeds, the timing, or the purchaser. Wayport continued to withhold this information even after Cisco filed a patent amendment with the USPTO that publicly identified Cisco as the purchaser of the MSSID Patents.

M. AT & T Purchases Wayport.

On November 6, 2008, Wayport announced that it would be acquired by AT *313& T Inc. and its common stock would be converted into the right to receive $7.20 per share. The plaintiffs were informed of the transaction upon announcement. The discussions with AT & T began just months after Stewart completed his final stock sale: The AT & T transaction closed on December 11, 2008.

N. The Plaintiffs Sue.

On November 17, 2008, Stewart filed this litigation. As amended, his complaint contained seven counts:

• Count I — Breach of the fiduciary duty of disclosure;

• Count II — Breach of the fiduciary duty of loyalty;

• Count III — Common law fraud;

• Count IV — Civil conspiracy;

• Count V — Aiding and abetting a breach of fiduciary duty;

• Count VI — Unjust enrichment;

• Count VII — Breach of the implied covenant of good faith and fair dealing.

In the Dismissal Opinion, Vice Chancellor Lamb dismissed all claims with respect to any stock sales that took place before 2007. He also dismissed Counts I, IV, VI, and VII with respect to the 2007 stock sales. The motion to dismiss Counts II and III was denied as to defendants Way-port, Williams, Trellis, and NEA. The motion to dismiss Count V was denied as to Wayport. Dismissal Op. at *8-10.

After discovery, the plaintiffs moved to amend their complaint to add a claim for equitable fraud. Leave was granted on the grounds that all of the elements of equitable fraud are subsumed within the elements of common law fraud and therefore were already at issue in the case. See Ct. Ch. R. 15(a) (“leave [to amend] shall be freely given when justice so requires”); Ikeda v. Molock, 603 A.2d 785, 788 (Del.1991) (finding reversible error and ordering new trial where trial court failed to permit amendment of the pleadings on the morning of trial); see also Bellanca Corp. v. Bellanca, 169 A.2d 620, 622 (Del.1961) (affirming grant of leave to amend mid-trial under Ct. Ch. R. 15(b) where additional theory of liability did not require “additional evidence” and thereby posed “no possible prejudice”).

II. LEGAL ANALYSIS

The Dismissal Opinion located this case at “an interesting intersection of contract, fiduciary duty, and fraud.” Dismissal Op. at *8. In making this comment, Vice Chancellor Lamb assumed based on the allegations of the' complaint that the ROFRs would play a significant role and that only the Company had waived its ROFR. Id. at *1. Trial simplified matters, because the plaintiffs proved that all of the parties waived all of their ROFRs. By executing the Waivers of Rights of First Refusal and Co-Sale that Williams prepared, Wayport, Trellis, NEA, and the plaintiffs relinquished “all rights of first refusal and co-sale” with respect to the sale transactions. JX 154; see also Pre-trial Order ¶¶ 65-66, 80-81. Default common law principles therefore apply. The plaintiffs have advanced two principal theories of liability: breach of fiduciary duty and fraud.

A. The Claim For Breach Of Fiduciary Duty

The plaintiffs contended at trial that Trellis, NEA, Williams, and Wayport breached their fiduciary duties of loyalty. The plaintiffs did not carry their burden of proof, and judgment is entered in favor of the defendants on the fiduciary duty claim.

1. The Nature Of The Fiduciary Duty Claim

The plaintiffs contended that the defendants owed them fiduciary duties *314that included a duty to disclose material information when they purchased the plaintiffs’ shares. Directors of a Delaware corporation owe two fiduciary duties: care and loyalty. Stone ex rel. AmSouth Bancorporation v. Ritter, 911 A.2d 362, 370 (Del.2006). The “duty of disclosure is not an independent duty, but derives from the duties of care and loyalty.” Pfeffer v. Redstone, 965 A.2d 676, 684 (Del.2009) (internal quotation marks omitted). The duty of disclosure arises because of “the application in a specific context of the board’s fiduciary duties.... ” Malpiede v. Townson, 780 A.2d 1075, 1086 (Del.2001). Its scope and requirements depend on context; the duty “does not exist in a vacuum.” Stroud v. Grace, 606 A.2d 75, 85 (Del.1992). When confronting a disclosure claim, a court therefore must engage in a contextual specific analysis to determine the source of the duty, its requirements, and any remedies for breach. See Lawrence A. Hamermesh, Calling Off the Lynch Mob: The Corporate Director’s Fiduciary Disclosure Duty, 49 Vand. L.Rev. 1087, 1099 (1996). Governing principles have been developed for recurring scenarios, four of which are prominent.

The first recurring scenario is classic common law ratification, in which directors seek approval for a transaction that does not otherwise require a stockholder vote under the DGCL. See Gantler v. Stephens, 965 A.2d 695, 713 (Del.2009) (describing ratification in its classic form); id. at 713 n. 54 (distinguishing “the common law doctrine of shareholder ratification” from “the effect of an approving vote of disinterested shareholders” under 8 Del. C. § 144). If a director or officer has a personal interest in a transaction that conflicts with the interests of the corporation or its stockholders generally, and if the board of directors asks stockholders to ratify the transaction, then the directors have a duty “to disclose all facts that are material to the stockholders’ consideration of the transaction and that are or can reasonably be obtained through their position as directors.” Hamermesh, supra, at 1103. The failure to disclose material information in this context will eliminate any effect that a favorable stockholder vote otherwise might have for the validity of the transaction or for the applicable standard of review. Id.; see Gantler, 965 A.2d at 713 (“With one exception, the ‘cleansing’ effect of such a ratifying shareholder vote is to subject the challenged director action to business judgment review, as opposed to ‘extinguishing’ the claim altogether (i.e., obviating all judicial review of the challenged action).”); id. at 713 n. 54 (“The only species of claim that shareholder ratification can validly extinguish is a claim that the directors lacked the authority to take action that was later ratified. Nothing herein should be read as altering the well-established principle that void acts such as fraud, gift, waste and ultra vires acts cannot be ratified by a less than unanimous shareholder vote.”).

A second and quite different scenario involves a request for stockholder action. When directors submit to the stockholders a transaction that requires stockholder approval (such as a merger, sale of assets, or charter amendment) or which requires a stockholder investment decision (such as tendering shares or making an appraisal election), but which is not otherwise an interested transaction, the directors have a duty to “exercise reasonable care to disclose all facts that are material to the stockholders’ consideration of the transaction or matter and that are or can reasonably be obtained through their position as directors.” Hamermesh, supra, at 1103; see Stroud, 606 A.2d at 84 (“[Djirectors of Delaware corporations [have] a fiduciary duty to disclose fully and *315fairly all material information within the board’s control when it seeks shareholder action.”). A failure to disclose material information in this context may warrant an injunction against, or rescission of, the transaction, but will not provide a basis for damages from defendant directors absent proof of (i) a culpable state of mind or non-exculpated gross negligence, (ii) reliance by the stockholders on the information that was not disclosed, and (iii) damages proximately caused by that failure. See Loudon v. Archer-Daniels-Midland Co., 700 A.2d 135, 146-47 (Del.1997). .

A third scenario involves a corporate fiduciary who speaks outside of the context of soliciting or recommending stockholder action, such as through “public statements made to the market,” “statements informing shareholders about the affairs of the corporation,” or public filings required by the federal securities laws. Malone v. Brincat, 722 A.2d 5, 11 (Del.1998). In that context, directors owe a duty to stockholders not to speak falsely:

Whenever directors communicate publicly or directly with shareholders about the corporation’s affairs, with or without a request for shareholder action, directors have a fiduciary duty to shareholders to exercise due care, good faith and loyalty. It follows a fortiori that when directors communicate publicly or directly with shareholders about corporate matters the sine qua non of directors’ fiduciary duty to shareholders is honesty.

Id. at 10. “[D]irectors who knowingly disseminate false information that results in corporate injury or damage to an individual stockholder violate their fiduciary duty, and may be held accountable in a manner appropriate to the circumstances.” Id. at 9; see id. at 14 (“When the directors are not seeking shareholder action, but are deliberately misinforming shareholders about the business of the corporation, either directly or by a public statement, there is a violation of fiduciary duty.”). Breach “may result in a derivative claim on behalf of the corporation,” “a cause of action for damages,” or “equitable relief. ...” Id.

The fourth scenario arises when a corporate fiduciary buys shares directly from or sells shares directly to an existing outside stockholder. Hamermesh, supra, at 1103. Under the “special facts doctrine” adopted by the Delaware Supreme Court in Lank v. Steiner, 224 A.2d 242 (Del.1966), a director has a fiduciary duty to disclose information in the context of a private stock sale “only when a director is possessed of special knowledge of future plans or secret resources and deliberately misleads a stockholder who is ignorant of them.” Id. at 244. If this standard is met, a duty to speak exists, and the director’s failure to disclose material information is evaluated within the framework of common law fraud. If the standard is not met, then the director does not have a duty to speak and is liable only to the same degree as a non-fiduciary would be. It bears emphasizing that the duties that exist in this context do not apply to purchases or sales in impersonal secondary markets. See Hamermesh, supra, at 1153 & n. 296. Transactions in the public markets are distinctly different. See, e.g., In re Am. Int’l Gp., Inc., 965 A.2d 763, 800 (Del.Ch.2009), aff'd, 11 A.3d 228 (Del.2011) (TABLE); In re Oracle Corp., 867 A.2d 904, 932-33, 953 (Del.Ch.2004), aff'd, 872 A.2d 960 (Del.2005); Guttman v. Huang, 823 A.2d 492, 505 (Del.Ch.2003).

The current case originally raised the second, third, and fourth scenarios, but only the fourth remains. Count I of the complaint was titled “Breach of Fiduciary Duty of Disclosure.” Dkt. 25 at 20. At the motion to dismiss stage, it was under*316stood to invoke the second scenario, viz., the duty of disclosure in the context of a request for stockholder action. Vice Chancellor Lamb dismissed Count I on the grounds that “a call for an individual stockholder to sell his shares does not, without more, qualify as a call for stockholder action.” Dismissal Op. at *6 n. 18.

Count II of the complaint was titled “Breach of Fiduciary Duty of Loyalty.” Dkt. 25 at 21. At the motion to dismiss stage, it was understood to invoke both the third scenario (the duty under Malone not to engage in deliberate falsehoods) and the fourth scenario (the duty to speak that a fiduciary may have in the context of a direct purchase of shares from a stockholder). As to the former, Vice Chancellor Lamb recognized that the “corporation and its officers and directors are, of course, subject to the underlying duty of loyalty not to make false statements or otherwise materially misrepresent the facts in such a way as to defraud the stockholder in any such negotiation [over the purchase of shares].” Dismissal Op. at *6 n. 19 (citing Malone, 722 A.2d at 10). He held, however, that the complaint pled “no facts whatsoever to suggest that the company, or its directors or officers, made any knowingly false statements.... ” Id. He therefore dismissed Count II as to the Company and the director defendants, effectively disposing of the Malone claim. As to the latter, Vice Chancellor Lamb denied the motion to dismiss, holding that Count II implicated the “normal standard of fraud, as applied to transactions between corporate insiders ....” Dismissal Op. at *5 (emphasis added). In a footnote, Vice Chancellor Lamb contrasted this variety of fraud with “the affirmative-misrepresentation or intentional concealment species of fraud (that is, the forms of fraud that do not require a duty to speak)” that applies to non-fiduciaries. Id. at *5 n. 17. This remaining aspect of Count II was litigated and tried.

2. The Duty Of Disclosure In A Direct Purchase By A Fiduciary

The legal principles that govern a direct pin-chase of shares by a corporate fiduciary from an existing stockholder have a venerable pedigree.

As almost anyone who has opened a corporation law casebook or treatise knows, there has been for over a century a conflict of authority as to whether in connection with a purchase of stock a director owes a fiduciary duty to disclose to the selling stockholder material facts which are not known or available to the selling stockholder but are known or available to the director by virtue of his position as a director.

Hamermesh, supra, at 1116. Three rules were developed: a majority rule, a minority rule, and a compromise position known as the “special facts doctrine.” Id. at 1116-17; see also Robert Charles Clark, Corporation Law § 8.8, at 306-09 (1986); Stephen M. Bainbridge, Incorporating State Law Fiduciary Duties into the Federal Insider Trading Prohibition, 52 Wash. & Lee L.Rev. 1189, 1219 (1995).

The “supposedly ‘majority’ rule disavows the existence of any general fiduciary duty in this context, and holds that directors have no special disclosure duties in the purchase and sale of the corporation’s stock, and need only refrain from misrepresentation and intentional concealment of material facts.” Hamermesh, supra, at 1116-17. Under this rule, corporate fiduciaries may

trade like strangers at arm’s length, provided they do not commit a deliberate active fraud for the purpose of procuring the shareholders’ stock. They need not disclose to the shareholders important official information which they *317possess, at least in the absence of inquiry. Not only the element of active misrepresentation is required, but also the reliance of the shareholders thereon as an inducement to part with their shares.

Henry Winthrop Ballantine, Ballantine on Corporations § 80, at 212 (1946); accord Clark, supra, § 8.9, at 311 (“[T]he majority rule appears to have been that corporate directors and officers owe their fiduciary duties to the corporation, ... so that shareholders selling to an officer who purchased on the basis of inside information would ordinarily have no remedy.”); 2 Seymour D. Thompson & Joseph W. Thompson, Commentaries on the Law of Corporations § 1363, at 885 (1927) (describing majority rule under which “a director may purchase the stock of the stockholder without disclosing to him the condition of the corporation, or without giving the stockholder the benefit of any knowledge that such director may possess in relation to the corporate affairs and affecting the value of the stock”); see also 3A William Meade Fletcher, Fletcher Cyc. Corp. § 1168.1, at 321-26 (perm ed., rev. vol.2011 & supp.2013) (collecting cases exemplifying majority rule). The majority rule was “criticized as a rule of unconscionable laxity” and “condemned by almost all text writers and commentators....” Ballantine, supra, § 80, at 213; see, e.g., Adolf A. Berle, Jr. & Gardiner C. Means, The Modem Corporation & Private Property, at 327-29 (1932) (criticizing majority rule). By 1937, the majority rule arguably no longer represented the rule in a majority of jurisdictions. See Bainbridge, supra, at 1120.

“The ostensibly opposing ‘minority’ view broadly requires directors to disclose all material information bearing on the value of the stock when they buy it from or sell it to another stockholder.” Hamermesh, supra, at 1117. Jurisdictions taking this approach hold that a director’s fiduciary duties obligate the director to make the necessary disclosures of material information or abstain from the transaction. See Clark, supra, § 8.9, at 311; Ballantine, supra, § 80, at 213; Berle & Means, supra, at 328; Thompson & Thompson, supra, § 1364, at 888; see also Fletcher, supra, § 1168.2, at 326-29 (collecting cases exemplifying minority rule).

The special facts doctrine attempts to strike a compromise position between “the extreme view that directors and officials are always under a full fiduciary duty to the shareholders to volunteer all their information and a rule that they are always free to take advantage pf their official information.” Ballantine, supra, § 80, at 213. Under this variant, a director has a duty of disclosure only

in special circumstances ... where otherwise there would be a great and unfair inequality of bargaining position by the use of inside information. Such special circumstances or developments have been held to include peculiar knowledge of directors as to important transactions, prospective mergers, probable sales of the entire assets or business, agreements with third parties to buy large blocks of stock at a high price and impending declarations of unusual dividends.

Id.; see id. at 213-14 (collecting cases exemplifying special facts rule). Like the minority rule, the compromise position recognizes a duty of disclosure, but cuts back on its scope by limiting disclosure only to that subcategory of material information that qualifies as special facts or circumstances. Berle and Means criticized the “reasoning underlying [the intermediate rule as] not particularly clear.... ” Berle & Means, supra, at 329.

In Kors v. Carey, 158 A.2d 136 (Del.Ch.1960), the Delaware Court of Chancery *318applied the special facts doctrine. The stockholder plaintiff alleged that the defendant directors had acted inequitably by causing the corporation to purchase the plaintiffs block of stock secretly, without revealing the corporation’s identity, under circumstances where the court agreed the plaintiff would not have sold if the purchaser’s true identity was known. Id. at 143. Then-Vice Chancellor Marvel dismissed the breach of fiduciary duty claim, explaining that

it disregards the principle that directors generally do not occupy a fiduciary position vis á vis individual stockholders in direct personal dealings as opposed to dealings with stockholders as a class, fading to recognize that it is only in special cases where advantage is taken of inside information and the like that the selling stockholder is afforded relief and then on the basis of fraud-

Id. (emphasis added) (citations omitted). In support of this proposition, Vice Chancellor Marvel relied on two leading “special facts” cases: Strong v. Repide, 213 U.S. 419, 29 S.Ct. 521, 53 L.Ed. 853 (1909), and Northern Trust Co. v. Essaness Theatres Corp., 348 Ill.App. 134, 108 N.E.2d 493 (1952). On the facts alleged, he found that

the purchaser[ ] had no fiduciary or other duty in the transaction (there being no showing that the buyer had any special knowledge about the possibilities of appreciation in the market value of the purchased stock which was not basically available to the seller) other than to live up to its contract which it did. In other words, this is a case in which there is neither proof of fraud, nor of actionable willful concealment, but also no proof of a false statement innocently made.

Kors, 158 A.2d at 143 (citations omitted).

Six years later, in Lank, the Delaware Supreme Court identified Kors as “a decision which we expressly approve....” Lank, 224 A.2d at 244. The high court then described Kors as holding that “the special circumstance rule applies only when a director is possessed of special knowledge of future plans or secret resources and deliberately misleads a stockholder who is ignorant of them.” Id. (emphasis added). By making the test conjunctive, the Delaware Supreme Court combined the scienter requirement of the majority rule with a disclosure duty limited to “special facts.”

Lank involved a privately held Delaware corporation in which two stockholder-directors were responsible for its “active management” while another stockholder, the plaintiff, was largely passive. Id. at 243. One of the directors learned that a third party had offered to acquire the company for $600 per share. Id. After learning of the offer, the director purchased an option to buy the minority stockholder’s shares at $270 per share. Id. at 244. After the minority stockholder passed away, his heirs alleged the director breached his fiduciary duty by failing to disclose the offer to the minority stockholder when securing the option. Chancellor Seitz dismissed the complaint, finding that there was no breach of duty. See Lank v. Steiner, 213 A.2d 848, 851 (Del.Ch.1965).

On appeal, the Delaware Supreme Court affirmed, relying on the trial court’s finding that the minority stockholder “knew of the [third party] offer since he, along with all the stockholders, signed a resolution ... authorizing the sale of corporate assets” for a price equal to the offer, prior to agreeing to the option contract. Lank, 224 A.2d at 244. The high court agreed that there was no evidence to “justify the conclusion that [the minority stockholder] was not aware of the difference” between the strike price of the option contract and the offer price, and therefore the director “had breached no duty to [the minority stock*319holder] as a corporate fiduciary.” Id. (emphasis added). The reasoning of Lank suggests that without the finding of knowledge, the defendant’s failure to disclose an offer for the whole company could have supported a claim for breach of fiduciary duty in connection with the option contract, although it appears that the plaintiff still would have had to show that the defendant took action or remained silent to deliberately mislead. See id. (stating Kors applies where a director fails to disclose special knowledge and “deliberately misleads” a stockholder).

Based on Lank and Kors, it appears to me that Delaware follows the special facts doctrine. Professor Hamermesh has argued that in Lynch v. Vickers Energy Corp., 383 A.2d 278 (Del.1977), the Delaware Supreme Court reversed course and adopted the minority rule. See Hamermesh, supra, at 1121 (“Lynch ... aligned Delaware with jurisdictions rejecting the ‘majority rule’ in favor of a rule recognizing a fiduciary duty on the part of directors, officers and controlling stockholders to disclose material facts, learned through their position with the corporation, to outside stockholders when buying stock from them.”). In Lynch, then-Chancellor Marvel, the author of Kors, held that a majority stockholder owed a fiduciary duty of “complete candor” when purchasing shares from the minority, and he equated that obligation with the duty owed by corporate directors:

[I]n situations in which the holder of a majority of the voting shares of a corporation, as here, seeks to impose its will upon minority stockholders, the conduct of such majority must be tested by those same standards of fiduciary duty which directors must observe in their relations with all their stockholders. I take this to mean that in a situation such as the one found in the case at bar that the majority stockholder here, namely Vick-ers, had a duty to exercise complete candor in its approach to the minority stockholders of TransOcean for a tender of their shares, namely a duty to make a full disclosure of all of the facts and circumstances surrounding the offer for tenders, including the consequence of acceptance and that of refusal....

Lynch v. Vickers Energy Corp., 351 A.2d 570, 573 (Del.Ch.1976) (citations omitted), aff'd in pertinent part, 383 A.2d 278 (Del.1977). Applying this standard, Chancellor Marvel held that disclosure violations alleged by the plaintiffs were not material. Id. at 574-75. On appeal, the Delaware Supreme Court reversed on the factual application, but agreed with the legal standard and the existence of a “fiduciary duty ... which required ‘complete candor.’ ” Lynch, 383 A.2d at 279. The high court explained that “[t]he objective, of course, is to prevent insiders from using special knowledge which they may have to their own advantage and to the detriment of the stockholders.” Id. at 281. “Completeness, not adequacy, is both the norm and the mandate....” Id.

Lynch did not expressly overrule either Lank or Kors, nor did it discuss the minority rule. The passage in the Court of Chancery decision that described the duty of disclosure owed by a controlling stockholder equated it with the “same standards of fiduciary duty which directors must observe in their relations with all their stockholders.” 351 A.2d at 573 (emphasis added). It is not immediately apparent that this language refers to the duty that a director would owe when purchasing shares directly from a stockholder in a private transaction. It seems more likely to anticipate the duty of disclosure that directors owe to all stockholders when seeking stockholder action. In Stroud, the Delaware Supreme Court seemingly sought to clarify this very point by stating *320that the “duty of candor” described in Lynch did not import “a unique or special rule of disclosure” but rather represented “nothing more than the well-recognized proposition that directors of Delaware corporations are under a fiduciary duty to disclose fully and fairly all material information within the board’s control when it seeks shareholder action.” Stroud, 606 A.2d at 84. Subsequent Delaware Supreme Court decisions have treated the disclosure obligations of a controlling stockholder when making a tender offer or effecting a short-form merger as examples of the duty of disclosure in the context of stockholder action. See, e.g., Berger v. Pubco Corp., 976 A.2d 132, 145 (Del.2009); Glassman v. Unocal Exploration Corp., 777 A.2d 242, 248 (Del.2001); Shell Petroleum, Inc. v. Smith, 606 A.2d 112, 116 (Del.1992).

Although I agree with the policy rationales that Professor Hamermesh advances for imposing an affirmative duty to disclose material information on a director who purchases shares from or sells shares to a stockholder in a private transaction, see Hamermesh, supra, at 1151-59, it does not appear to me that the Delaware Supreme Court has endorsed this rule. Absent further guidance from the high court, the “special facts” doctrine remains the standard in this context.

3. No “Special Facts”

Under the “special facts” doctrine, Trellis and NEA were free to purchase shares from other Wayport stockholders, without any fiduciary duty to disclose information about the Company or its prospects, unless the information related to an event of sufficient magnitude to constitute a “special fact.” If they knew of a “special fact,” then they had a duty to speak and could be liable if they deliberately misled the plaintiffs by remaining silent.

To satisfy the “special facts” requirement, a plaintiff generally must point to knowledge of a substantial transaction, such as an offer for the whole company. See Jordan v. Duff & Phelps, Inc., 815 F.2d 429, 435 (7th Cir.1987) (“The ‘special facts’ doctrine developed by several courts at the turn of the century is based on the principle that insiders in closely held firms may not buy stock from outsiders in person-to-person transactions without informing them of new events that substantially affect the value of the stock.”); accord Lazenby v. Godwin, 40 N.C.App. 487, 495, 253 S.E.2d 489 (1979) (third party purchase of corporation’s assets at multiple of book value); Weatherby v. Weatherby Lumber Co., 94 Idaho 504, 492 P.2d 43, 45 (1972) (ongoing negotiation over sale of assets “enhancing the value of the stock”); Lank v. Steiner, 213 A.2d 848, 851 (Del.Ch.1965) (third party offer to purchase corporation’s stock at multiple of book value), aff'd, 224 A.2d 242 (Del.1966); Jacobson v. Yaschik, 249 S.C. 577, 155 S.E.2d 601, 605 (1967) (“forthcoming assured sale of corporate assets,” “an offer of purchase of the [corporation’s] stocks,” or a “fact or condition enhancing the value of the [corporation’s] stocks”); Fox v. Cosgriff, 66 Idaho 371, 159 P.2d 224, 229 (1945) (liquidation “enhancing the value of the stock”); Nichol v. Sensenbrenner, 220 Wis. 165, 263 N.W. 650, 657 (1935) (plan of reorganization generating “fair” value above price paid by insider); Buckley v. Buckley, 230 Mich. 504, 202 N.W. 955, 956 (1925) (“assured sale, merger, or other fact or condition enhancing the value of the stock”); see generally Harold R. Smith, Purchase of Shares of a Corporation by a Director From a Shareholder, 19 Mich. L.Rev. 698, 712-17 (1921) (analyzing special facts cases).

Contrary to Lank, the plaintiffs argue that they need only show that the defen*321dants failed to disclose material information. Under Delaware law, “[a]n omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important” such that “under all the circumstances, the omitted fact would have assumed actual significance in the deliberations of the reasonable shareholder.” Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del.1985). The standard “does not require proof of a substantial likelihood that disclosure of the omitted fact would have caused the reasonable investor to change his vote” or (in more generalized terms) act differently. Id. The standard of materiality is thus lower than the standard for a “special fact.”

The plaintiffs have identified three allegedly material omissions. Only one — the Cisco sale — is material. Even this omission does not rise to the level of a “special fact.”

The plaintiffs first argue that the Company’s efforts to monetize Wayport’s patent portfolio constituted material information that the defendants failed to disclose. According to the plaintiffs, the Company’s decision to take concrete steps towards monetizing its portfolio represented a substantial change in corporate direction, and its stockholders should have been told. I need not decide whether this information was material or special, because in either event it was not omitted. Through his communications with Long and other members of Wayport management, Stewart learned as early as 2005 that Wayport was evaluating its patent portfolio and taking steps to monetize it. The Company even asked for his help. Stewart discussed the Company’s plans and expressed his views about them to his fellow plaintiffs. Stewart did not like Wayport’s strategy and did not believe the Company would really execute it, but what matters for present purposes is that he fully understood its plan of action. The plaintiffs cannot maintain a claim for breach of the duty of loyalty in a direct stock sale based on information they actually knew. Lank, 224 A.2d at 244.

The plaintiffs next contend that the existence of the Intellectual Ventures proposal constituted material information that should have been disclosed. For purposes of Delaware law, the existence of preliminary negotiations regarding a transaction generally becomes material once the parties “have agreed on the price and structure of the transaction.” Bershad v. Curtiss-Wright Corp., 535 A.2d 840, 847 (Del.1987); see also Alessi v. Beracha, 849 A.2d 939, 945-49 (Del.Ch.2004). Under these standards, the plaintiffs did not prove that the Intellectual Ventures deal ever became material. After the Board meeting on June 14, 2007, the Intellectual Ventures transaction remained a Wayport counteroffer that was subject to a carve-out for “a large networking equipment manufacturer.” JX 263. Intellectual Ventures never accepted. No agreement on price and structure was reached, and the Intellectual Ventures transaction was not otherwise sufficiently firm to be material. It therefore could not rise to the level of a “special fact.”

By contrast, plaintiffs proved at trial that the Cisco sale was material. Wayport and Cisco agreed on a total price of $9.5 million on June 29, 2007, and the patent sale agreement was signed that day. Wayport’s net sale proceeds of $7.6 million increased the Company’s year-end cash position by 22%, and the gain on sale represented 77% of the Company’s year-end operating income. Wayport’s auditors concluded that the transaction was material to Wayport’s financial statements and insisted that it be included over Williams’s opposition because they “really didn’t have an alternative.... ” Williams Dep. Tr. 207-OS.

*322The Cisco sale was a milestone in the Company’s process of monetizing its patent portfolio, and it was sufficiently large to enter into the decisionmaking of a reasonable stockholder. But the plaintiffs did not prove at trial that the Cisco sale substantially affected the value of their stock to the extent necessary to trigger the special facts doctrine. Stewart admitted that the sale of the MSSID Patents did not necessarily imply anything about the market value of the remaining patents, and he himself believed — before and after learning of the Cisco sale — that the rest of the Company’s patent portfolio was still worth hundreds of millions of dollars. Tr. 182-88, 261-65; Stewart Dep. Tr. 564-68, 576-78.

Because they did not know of any “special facts,” Trellis and NEA did not have a fiduciary duty to speak when purchasing shares from the plaintiffs. Judgment is entered in their favor on the breach of fiduciary duty claim.

4. Williams Had No Greater Duty

Williams was an officer of Wayport, and the “fiduciary duties of officers are the same as those of directors.” Gantler, 965 A.2d at 708-09. Although Williams did not purchase shares from the plaintiffs, I will assume for the sake of argument that Williams could have undertaken a duty to disclose based on his fiduciary status and substantial role in the transaction process. See Arnold v. Soc’y for Sav. Bancorp, Inc., 678 A.2d 533, 541 (Del.1996); Shell Petroleum, 606 A.2d at 116. But even then, it does not seem to me that the scope of Williams’s duty to speak as a transactional facilitator would exceed the duty imposed on the fiduciaries who were actual participants in the transaction. Trellis and NEA only had a duty to speak if they knew of a “special fact.” For the reasons already discussed, although the Cisco sale was material information, it did not rise to the level of a special fact. Consequently, Williams did not have a duty to speak, and judgment is entered in his favor on the breach of fiduciary duty claim.3

5. The Claim Against Wayport

Wayport is not liable for breach of fiduciary duty. As a corporate entity, *323Wayport did not owe fiduciary duties to its stockholders. See A.W. Fin. Servs., S.A. v. Empire Res., Inc., 981 A.2d 1114, 1127 n. 36 (Del.2009); Arnold, 678 A.2d at 539. The plaintiffs asserted a separate claim against Wayport for aiding and abetting Williams's breach of fiduciary duty, but without an underlying breach, the aiding and abetting claim fails. See Malpiede v. Toumson, 780 A.2d 1075, 1096 (Del.2001). Judgment is entered in favor of Wayport.

B. The Common Law Fraud Claim

As an alternative to their breach of fiduciary duty claim, the plaintiffs alleged in Count III of their complaint and contended at trial that Trellis, NEA, and Williams were liable for common law fraud. To establish a claim for fraud, a plaintiff must prove (i) a false representation, (ii) a defendant’s knowledge or belief of its falsity or his reckless indifference to its truth, (iii) a defendant’s intention to induce action, (iv) reasonable reliance, and (v) causally related damages. See Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del.1983). The plaintiffs proved that Trellis committed fraud in connection with the September 27, 2007 stock sale. Otherwise judgment is entered in favor of defendants.

1. A False Representation

The plaintiffs do not ground their fraud claim on affirmative representations but rather on material omissions. “[F]raud does not consist merely of overt misrepresentations. It may also occur through deliberate concealment of material facts, or by silence in the face of a duty to speak.” Stephenson, 462 A.2d at 1074. The plaintiffs rely on the same three omissions that were previously analyzed in the context of the breach of fiduciary duty claim. For the reasons already discussed, only one was a material omission: the Cisco sale.

2. A Duty To Speak

The plaintiffs next contend, as the Dismissal Opinion held, that “the duty of loyalty may give rise to a duty to speak....” Dismissal Op. at *6. But under Lank, a corporate fiduciary has a duty to speak when buying or selling stock from a stockholder in a direct transaction “only when a director is possessed of special knowledge of future plans or secret resources and deliberately misleads a stockholder who is ignorant of them.” 224 A.2d at 244. For the reasons discussed in Part II.A.3, none of the defendants knew about a “special fact” that gave rise to a duty to speak.

A duty to speak also can arise because of statements a party previously made. A “party to a business transaction is under a duty to ... disclose to the other [party] before the transaction is consummated ... subsequently acquired information that [the speaker] knows will make untrue or misleading a previous representation that when made was true .... ” Restatement (Second) of Torts § 551 (1977) (emphasis added) [hereinafter Restatement of Torts]. The fact that a statement was true when made does not enable the speaker to stand silent if the speaker subsequently learns of new information that renders the earlier statement materially misleading.

[H]aving made a representation which when made was true or believed to be so, [one who] remains silent after he has learned that [the representation] is untrue and that the person to whom [the representation was] made is relying upon it in a transaction with him, is ... in the same position as if he knew that his [representation] was false when made.

*324Id. cmt. h. Numerous cases apply this rule to claims of securities fraud.4

NEA never spoke, and hence had no duty to update an earlier statement. Williams never made any representation that subsequently became untrue. He and others at the Company consistently told Stewart to assume that the Company was actively exploring options for its patent portfolio and considering a number of different alternatives, any of which might come to fruition. Williams also informed Stewart that the Company believed the stock was worth more than the price reflected in the sale transactions.

Trellis, by contrast, chose to speak, and its representation later became untrue. On June 8, 2007, Trellis’s managing partner, Broeker, represented in an email to Stewart that Trellis was “not aware of any bluebirds of happiness in the Wayport world right now....” JX 248. Long was included on the email chain and knew that his partner had made the representation. Heinen emailed Long contemporaneously to call his attention to the contentious negotiations between Broeker and Stewart. When the email was sent, the representation was true. But by speaking, Trellis assumed a duty to update its statement to the extent that subsequent events rendered its representation materially misleading. See Restatement of Torts § 551.

Trellis’s statement became materially misleading on July 2, 2007, when Vucina informed the Board via email of the Cisco sale. On July 20, Board materials were distributed which described the Cisco sale in detail. On July 25, Greg Williams gave the Board a presentation about the Cisco sale. Long thus knew about Way-port’s unexpected good news and the falsity of the “bluebirds” email. Broeker did as well, because he often spoke with Long about Wayport developments and had access to Board materials through Trellis’s information rights. Their knowledge is imputed to Trellis. See Teachers’ Ret. Sys. of La. v. Aidinoff, 900 A.2d 654, 671 n. 23 (Del.Ch.2006) (“[I]t is the general rule that knowledge of an officer or director of a corporation will be imputed to the corporation.”); Albert v. Alex. Brown Mgmt. Servs., Inc., 2005 WL 2130607, at *11 (Del.Ch. Aug. 26, 2005) (imputing knowledge of member-employees to limited liability companies); Metro Commc’n Corp. BVI, v. Advanced Mobilecomm Techs. Inc., 854 A.2d 121, 153-55 (Del.Ch.2004) (imputing fraud claims to corporation where it designated a manager of a limited liability company and where the manager made fraudulent statements); Nolan v. E. Co., 241 A.2d 885, 891 (Del.Ch.1968) (“Knowledge of an agent acquired while acting within the scope of his authority is imputable to the principal.”), aff'd, 249 A.2d 45 (Del.1969); see also 3 William Meade Fletcher, Fletcher Cyc. Corp. § 790, at 16-20 (perm *325ed., rev. vol.2011 & supp. 2013) (“[T]he general rule is well established that a corporation is charged with constructive knowledge ... of all material facts of which its officer or agent receives notice or acquires knowledge [of] while acting in the course of employment within the scope of his or her authority, even though the officer or agent does not in fact communicate the knowledge to the corporation.” (footnote omitted)).

Once the Cisco sale occurred and Trellis learned of it, the “no bluebird” representation became materially misleading, and Trellis therefore had a duty to speak. Instead, Trellis remained silent. For purposes of fraud, the decision to remain silent placed Trellis in the same position as if Trellis knowingly made a false representation in the first instance.

3. Inducement, Reliance, And Causation

At this point, only Trellis is potentially liable for fraud and only in connection with the September 27, 2007 purchase. But for liability to exist, Trellis must have made its misrepresentation “with the intent to induce action or inaction by the plaintiff.” Stephenson, 462 A.2d at 1074. “A result is intended if the actor either acts with the desire to cause it or acts believing that there is a substantial certainty that the result will follow from his conduct.” Restatement of Torts § 531, cmt. c. The party that was the recipient of the information “must in fact have acted or not acted in justifiable reliance on the representation.” NACCO Indus., Inc. v. Applied Inc., 997 A.2d 1, 29 (Del.Ch.2009) (internal quotation marks omitted). And the fraudulent misrepresentation must actually cause harm. Id. at 32; Restatement of Torts § 548A. Each of these requirements is met.

Broeker represented that he did not know of “any bluebirds of happiness in the Wayport world,” JX 248, to induce Stewart to complete the sale transactions. At the time, Stewart was complaining about information asymmetry, and Broeker sought to mollify his concerns. Broeker intended for Stewart to rely on the statement, to no longer be suspicious about what Trellis knew, and to sell his shares. For his part, Stewart relied on Trellis’s representation. Stewart was concerned about Trellis’s insider knowledge, and Broeker’s statement spoke directly to that issue. In response, Stewart emailed Broeker, saying that “[i]f you know of a Google deal in play, perhaps you ought to refrain from this transaction, or arrange for us to be on a level information playing field.” JX 246. This email demonstrates that Stewart took Trellis’s representation seriously and expected that if Trellis were aware of any unexpected good news, Trellis would either abstain from the transaction or disclose. After learning of the Cisco sale, Trellis did neither. Under the circumstances, Stewart’s reliance on Trellis was justifiable. He knew that Broeker’s partner, Long, was a member of the Board, and Stewart had spoken and emailed with Long about developments at the Company. Long received a copy of the Patent Strategy Memo and communicated extensively with Stewart about the Company’s patent strategy. Stewart had reason to believe that Trellis would know if any unexpected good news was forthcoming.

Stewart also demonstrated causation. Trellis’s representation and course of dealing caused Stewart to feel comfortable closing the transactions with Trellis. The defendants make much of the fact that, in their view, Stewart wanted liquidity and would have sold his shares to someone else, such as Millennium. I find that if Broeker had not made his representation, *326Stewart would not have sold to Trellis and would have suspected that something was afoot at the Company. Having already sold a significant number of shares, Stewart would not have sold additional shares until after he had requested and received Wayport’s year-end financial statements. At that point, he would have seen the note about the patent sale and demanded additional information. Once he obtained it, he would have considered it thoroughly and used it to recalibrate his sense of the Company’s value.

All this would have taken considerable time. Williams rarely responded quickly to Stewart’s informational requests, except on the one occasion when Stewart asked for information when Williams knew Greg Williams was reengaging with Cisco. Williams was particularly resistant to providing Stewart with any information about the Cisco sale, going so far as to force Stewart to file a books and records action. Assuming one of the defendants provided some form of disclosure to Stewart about the Cisco sale, it would have taken months and potentially a Section 220 lawsuit before Stewart could be satisfied that he had obtained the information he needed. To the extent Stewart decided at some point to explore another sale, the process would take additional months, as demonstrated by the lengthy timeline required for each of the transactions at issue in this case. I find that Stewart still would have been holding his shares approximately one year later when Wayport announced that it would be acquired by AT & T for $7.20 per share. Instead, because of the “no bluebirds” representation and Trellis’s failure to correct it, Stewart sold 100,000 shares to Trellis on September 27, 2007 for $2.50 per share.

4. Scienter

The final hurdle for Stewart’s common law fraud claim is scienter. Under Delaware law, scienter can be proven by establishing that the defendant acted with knowledge of the falsity of a statement or with reckless indifference to its truth. See Metro, 854 A.2d at 143. Stewart proved that Trellis acted with scienter by establishing that Long knew of the Cisco transaction by July 2, 2007 (via Vuci-na’s email) and received detailed information on July 20 (via the distribution of Board materials) and on July 25 (via Board meeting). On June 8, less than a month earlier, Long read Broeker’s “no bluebirds” representation. Yet despite repeated communications from Wayport management about the importance of the Cisco sale, which demonstrated that the “no bluebirds” representation was false, Long remained silent.

It would have been evident to Long that if Trellis disclosed the Cisco sale to Stewart, the stock purchase would not have gone forward as planned. Long knew from personal experience that Stewart was a volatile and combative fellow. He also knew that Stewart was deeply interested in the Company’s patents and its monetization efforts, having been copied on the Patent Strategy Memo which suggested selling the MSSID Patents to Cisco. If Long told Stewart about the Cisco sale, Stewart would have demanded information and wanted to analyze its implications, just as he ultimately did when he saw a reference to a patent sale in Wayport’s financial statements. The process would be unpleasant, and Stewart could be expected to indulge his penchant for eloquent accusations. But if Long and Trellis failed to mention the sale, there was a good chance that Stewart might never find out — or find out too late for it to matter. Wayport and Cisco had agreed to keep the sale confidential, and during approximately the same period, Williams was *327attempting to keep any mention of the sale out of the Company’s financial statements. The evidence is circumstantial but sufficient to find that Long knew disclosure would place the stock sales at risk and therefore decided not to correct Trellis’s earlier representation. Scienter is therefore met.

5. Damages for Fraud

“The recipient of a fraudulent misrepresentation is entitled to recover as damages ... pecuniary loss suffered otherwise as a consequence of the recipient’s reliance upon the misrepresentation.” Restatement of Torts § 549. The best measure of the quantum of Stewart’s damages is approximately $470,000, or $4.70 per share, calculated as the difference between the $7.20 per share Stewart would have received in the AT & T merger and the $2.50 per share that Stewart received from Trellis in the final stock sale. I say “approximately $470,000” because to account for Stewart’s use of the cash he received from Trellis, the parties will add interest to that amount at the legal rate, compounded quarterly, for the period from September 27, 2007 until December 11, 2008. See Lynch v. Vickers Energy Corp., 429 A.2d 497, 506 (Del.1981). Trellis is liable to Stewart for the net amount, plus pre- and post-judgment interest at the legal rate, compounded quarterly, from December 11, 2008, until the date of payment.

C. The Equitable Fraud Claim

In addition to their common law fraud claim, the plaintiffs asserted that the defendants are liable for “equitable” or “constructive” fraud. “Constructive fraud is simply a term applied to a great variety of transactions, having little resemblance either in form or nature, which equity regards as wrongful, to which it attributes the same or similar effects as those which follow from actual fraud....” 3 John Norton Pomeroy, A Treatise on Equity Jurisprudence § 922, at 626 (5th ed.1941).

The principal factor distinguishing constructive fraud from actual fraud is the existence of a special relationship between the plaintiff and the defendant, such as where the defendant is a fiduciary for the plaintiff. See NACCO, 997 A.2d at 33. On the facts of this case, the breach of fiduciary duty count confronts directly the implications of the fiduciary relationship, rendering the constructive fraud count redundant and superfluous. See Parfi Hldg. AB v. Mirror Image Internet, Inc., 794 A.2d 1211, 1236-37 (Del.Ch.2001), rev’d on other grounds, 817 A.2d 149 (Del.2002).

Equitable fraud also has been described as a form of fraud having all of the elements of common law fraud except the requirement of scienter. See Zirn v. VLI Corp., 681 A.2d 1050, 1061 (Del.1996) (explaining that equitable fraud “provides a remedy for negligent or innocent misrepresentations”); Stephenson, 462 A.2d at 1074 (noting that with equitable fraud, a “defendant [does] not have to know or believe that his statement was false or to have proceeded in reckless disregard of the truth”). To the extent this formulation is used, the outcome is no different. The plaintiffs failed on their common law fraud claims against NEA and Williams for reasons other than scienter, and hence their equitable fraud claims would fail as well. The plaintiffs succeeded on their common law fraud claim against Trellis.

III. CONCLUSION

Trellis is liable to Stewart for damages in accordance with this opinion. Otherwise judgment is entered in favor of the defendants and against the plaintiffs. All parties will bear their own costs. The plaintiffs will submit a form of Final Order *328and Judgment after consulting with the defendants as to form.

1

. Trellis Opportunity Fund is the only Trellis-affiliated defendant in the case. Non-party Trellis Partners Opportunity Management, LLC ("Trellis GP") is the general partner of Trellis Opportunity Fund, and non-party Alex Broeker is the managing member of Trellis GP. Non-parties Trellis Partners, L.P. and Trellis Partners II, L.P. were Trellis-affiliated funds also managed by Broeker through Trellis GP. Trellis Partners, L.P. acquired the Series A Preferred Stock. Trellis Partners II, L.P. and Trellis Opportunity Fund held later series of preferred stock. For simplicity, I refer only to "Trellis.”

2

. New Enterprise Associates VIII L.P. and New Enterprise Associates 8A L.P. (jointly, the "NEA Funds”) are the only NEA-affiliated defendants in the case. Non-parties NEA Partners VIII, L.P. and NEA Partners 10, L.P. were the general partners, respectively, of the two NEA Funds. Non-party Charles W. New-hall. III was the general partner of the two NEA Funds’ general partners. For simplicity, I refer only to "NEA.”

3

. By contrast, a non-fiduciary aider and abetter could face different liability exposure than the defendant fiduciaries if, for example, the non-fiduciary misled unwitting directors to achieve a desired result. See In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813, 838 (Del.Ch.2011). ("[U]nless post-closing discovery reveals additional facts, the plaintiffs face a long and steep uphill climb before they could recover money damages from the independent, outside directors on the Board. Admittedly other prospects for recovery are not so remote. By their terms, Sections 102(b)(7) and 141(e) do not protect aiders and abetters, and disgorgement of transaction-related profits may be available as an alternative remedy.”). It is thus possible for a non-fiduciary to be liable for aiding and abetting "even if the Board breached only its duty of care” and is exculpated for that breach. In re Celera Corp. S’holder Litig., 2012 WL 1020471, at *28 (Del.Ch. Mar. 23, 2012), aff'd in part, rev'd in part, 59 A.3d 418 (Del.2012); see Arnold v. Soc’y for Sav. Bancorp, Inc., 1995 WL 376919, at *8 (Del.Ch. June 15, 1995) (holding that plaintiffs could maintain a claim against acquirer for aiding and abetting a breach of the duty of disclosure, notwithstanding that defendant directors were protected by an exculpatory provision), aff'd, 678 A.2d 533, 541-542 (Del.1996) (affirming analysis and remanding for further proceedings on aiding and abetting claim); see also In re Shoe-Town Inc. S’holders Litig., 1990 WL 13475, at *8 (Del.Ch. Feb. 12, 1990) (denying motion to dismiss aiding and abetting claim against financing advisor in going-private transaction where financial advisor "was closely involved with the management group, the special committee and the Shoe-Town board”).

4

. See In re Int'l Bus. Machs. Corporate Sec. Litig., 163 F.3d 102, 110 (2d Cir.1998) ("A duty to update may exist when a statement, reasonable at the time it is made, becomes misleading because of a subsequent event."); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir.1997) ("[T]here may be room to read in an implicit representation by the company that it will update the public with news of any radical change in the company's plans” when it makes public disclosure.); Stransky v. Cummins Engine Co., Inc., 51 F.3d 1329, 1331 (7th Cir.1995) ("The [duty to update] applies when a company makes a historical statement that, at the time made, the company believed to be true, but as revealed by subsequently discovered information actually was not. The company then must correct the prior statement within a reasonable time.”); Backman v. Polaroid Corp., 910 F.2d 10, 16-17 (1st Cir.1990) ("Obviously, if a disclosure is in fact misleading when made, and the speaker thereafter learns of this, there is a duty to correct it.").

LC CAPITAL MASTER FUND, LTD., on behalf of itself and all holders of the Series A Cumulative Mandatory Convertible Preferred Stock of QuadraMed Corporation, Plaintiff, v. Duncan JAMES, James Peebles, Robert Pevenstein, Lawrence English, Robert Miller, William Jurika, QuadraMed Corporation Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Francisco Partners GP II, L.P., Francisco Partners GP II Management, LLC, Francisco Partners Management, LLC, Bavaria Holdings Inc., and Bavaria Merger Sub, Inc., Defendants.

C.A. No. 5214-VCS.

Court of Chancery of Delaware.

Submitted: March 3, 2010.

Decided: March 8, 2010.

*437Bruce L. Silverstein, Esquire, Christian Douglas Wright, Esquire, Richard J. Thomas, Esquire, Young, Conaway, Star-gatt & Taylor, LLP, Wilmington, DE, for Plaintiff.

Daniel A. Dreisbach, Esquire, John D. Hendershot, Esquire, Geoffrey G. Grivner, Esquire, Peter C. Wood, Jr., Esquire, Richards, Layton & Finger, P.A., Wilmington, DE; William J. McSherry, Jr., Esquire, John N. Thomas, Esquire, Crowell & Moring, LLP, New York City, for Defendants Duncan James, James Peebles, Robert Pevenstein, Lawrence English, Robert Miller, William Jurika, and Qua-draMed Corporation.

S. Mark Hurd, Esquire, Shannon E. German, Esquire, Morris, Nichols, Arsht & Tunnell, LLP, Wilmington, DE; Stephen D. Hibbard, Esquire, Shearman & Sterling, LLP, San Francisco, CA, for Defendants Francisco Partners II, L.P., Francisco Partners Parallel Fund II, L.P., Francisco Partners GP II, L.P., Francisco Partners GP II Management, LLC, Francisco Partners Management, LLC, Bavaria Holdings Inc., and Bavaria Merger Sub, Inc.

*438OPINION

STRINE, Vice Chancellor.

I. Introduction

Plaintiff LC Capital Master Fund, Ltd. (“LC Capital”), a preferred stockholder of QuadraMed Corporation (“QuadraMed”), seeks to enjoin the acquisition by defendant Francisco Partners II, L.P. (“Francisco Partners”) of QuadraMed (the “Merger”) because the consideration to be received by the preferred stockholders of QuadraMed does not exceed the “as if converted” value the preferred were contractually entitled to demand in the event of a merger. That “as if converted” value was based on a formula in the certifícate of designation (the “Certifícate”) governing the preferred stock, and gave the preferred the bottom line right to convert into common at a specified ratio (the “Conversion Formula”) and then receive the same consideration as the common in the Merger. The plaintiff purports to have the support of 95% of the preferred stockholders in seeking injunctive relief1 and I therefore refer to the plaintiff as the preferred stockholders.

Based on certain contractual rights that the preferred had in the event that a merger did not take place, the preferred stockholders argue that the QuadraMed board of directors (the “Board”) had a fiduciary duty to allocate more of the merger consideration to the preferred. Notably, the preferred stockholders do not argue that the Board breached any fiduciary duty owed to all stockholders; in particular, they do not claim that the board did not fulfill its fiduciary duty to obtain the highest value reasonably attainable, a duty commonly associated with Revlon.2 Rather, the preferred stockholders contend that the preferred stock has a strong liquidation preference and certain non-mandatory rights to dividends that the Board failed to accord adequate value, and that as a result of these contractual rights, the QuadraMed Board owed the preferred a fiduciary duty to accord it more than it was contractually entitled to receive by right in a merger. The preferred stockholders seek to enjoin the Merger because of this supposed breach of duty.

In this decision, I find that the preferred stockholders have not proven a reasonable probability of success on the merits of their fiduciary duty claim. Under Delaware law, a board of directors may have a gap-filling duty in the event that there is no objective basis to allocate consideration between the common and preferred stockholders in a merger. But, when a certificate of designations does not provide the preferred with any right to vote upon a merger, does not afford the preferred a right to claim a liquidation preference in a merger, but does provide the preferred with a contractual right to certain treatment in a merger, I conclude that a board of directors that allocates consideration in a manner fully consistent with the bottom-line contractual rights of the preferred need not, as an ordinary matter, do more. Consistent with decisions like Equity-Linked Investors, L.P. v. Adams3 and In re Trados Incorporated Shareholder Litigation,4 once the QuadraMed Board honored the special contractual rights of the preferred, it was entitled to favor the interests of the common stockholders. By exercising its discretion to treat the preferred entirely consistently with the Con*439version Formula the preferred bargained for in the Certifícate, the QuadraMed Board acted equitably toward the preferred.

For that reason alone, I would deny the preliminary injunction. But, given that plaintiff LC Capital purports to represent 95% of the preferred stockholders, has an appraisal right, and an appraisal action is therefore easily maintainable, I would be reluctant to enjoin the transaction and thereby deprive the QuadraMed common stockholders, who under any reasonable measure are entitled to the bulk of the Merger consideration, from determining for themselves whether to accept the Merger. The balance of the equities in this unique context would seem to weigh in favor of requiring the preferred stockholders, who I have no doubt are unwilling to post a full injunction bond, to seek relief through appraisal or through an equitable action for damages.

In the pages that follow, I explain these reasons for denying the preliminary injunction motion in more detail.

II. Factual Background

These are the facts as presented in the complaint and in the exhibits provided with the parties’ briefing. The preferred stockholders chose to present this motion as raising a straightforward legal issue. Indeed, the preferred stockholders chose not to depose any witnesses. As a result, the evidence before me constitutes a cold paper record susceptible to parsimonious summary.

Under the terms of the challenged merger agreement (the “Merger Agreement”), Francisco Partners will acquire QuadraMed at a price of $8.50 per share of common stock.5 The preferred stockholders will receive $13.7097 in cash in exchange for each share of preferred stock.6 The price for the preferred stock set forth in the Merger Agreement was pegged to the conversion right the Certificate granted to the preferred stockholders in the event of a merger. That conversion right allowed the preferred stockholders to convert their preferred shares into common shares and then to receive the same consideration as the common stock received in the merger. The conversion was determined by using the Conversion Formula of 1.6129 shares of preferred stock to one share of common stock.7 That is, in order to value the preferred stock, the merging parties agreed to simply cash out the preferred stock at the price the preferred stockholders would receive if they exercise their right to convert to common stock.

The preferred stockholders seek to enjoin the Merger on the grounds that the defendants breached their fiduciary duties of care and loyalty. But, the preferred stockholders do not allege that the defendants breached their Revlon duties as to all shareholders by approving a transaction that does not fully value QuadraMed as an entity. Instead, the preferred stockholders argue that the Merger consideration was unfairly allocated between the common and preferred stock. That is, the preferred stockholders do not challenge the overall adequacy of the Merger consideration. Rather, the preferred stockholders claim that they simply did not receive a big enough slice of the pie because the Board allocated the Merger consideration to the preferred stock on an “as-if converted” basis, which the preferred stockhold*440ers believe understates the value of their shares.

1. The Rights Of The Preferred Stockholders

Requesting a preliminary injunction is the only means the preferred stockholders have to block the transaction because, per the Certificate, the preferred stock does not have the right to vote on a merger.8 The circumstances in which the preferred stock has voting rights are limited to: (1) if the Certificate were to be amended in a way “that materially adversely affects the voting powers, rights or preferences” of the preferred stockholders; (2) if any class of shares with ranking before or in parity with the preferred stock were to be created; and (3) if the company were to incur “any long term, senior indebtedness of the Corporation in an aggregate principal amount exceeding $8,000,000.”9 Relatedly, if four quarterly dividends are in arrears, the preferred stockholders can elect two substitute directors.10

The Certificate includes a number of other rights for the preferred stock that are arguably relevant to the current dispute. As mentioned, the preferred stock has a dividend right. This provides for the payment of a dividend of $1,375 per year, but it is to be paid only “when, as and if authorized and declared” by the Board.11

The Certificate also provides a liquidation preference of $25 (plus accrued dividends) for each share of preferred stock.12 But, the Certificate does not afford the preferred stock a right to force a liquidation. Most relevantly, the Certificate expressly provides that a merger does not trigger the preferred stock’s liquidation preference.13

The preferred stockholders also point out that the Certificate includes a mandatory conversion right that allows Qua-draMed to force the preferred stockholders to convert into common shares.14 The preferred stockholders stress that this provision of the Certificate may only be used by QuadraMed to force conversion when the company’s common stock hits a price of $25 per share, far above the $8.50 per common share Merger value.15 But, like the liquidation preference, the mandatory conversion provision does not have bite in a merger. That is, the Certificate does not provide that, in the event of a merger, the preferred stockholders must be converted at a formula that affords the preferred stockholders an implied common stock value of $25 per share.

To the contrary, in a merger, the preferred stockholders will receive either: 1) the consideration determined by the Board in a merger agreement; or 2) if the preferred choose, the right to convert their shares using the Conversion Formula into common shares and redeem the same consideration as the common stockholders.16 The bottom line right of the preferred stockholders in a merger, therefore, is not tied to its healthy liquidation preference or the company’s mandatory conversion strike price — it is simply the right to convert the shares into common stock at the *441Conversion Formula and then be treated pari passu with the common.

2. The Board’s Decision To Accept Francisco Partners’ Bid For QuadraMed

Over the years, QuadraMed received expressions of interest from a number of potential acquirors.17 From 2008 to date, QuadraMed has been seriously considering a sale. From early on in this strategic process, the preferred stockholders demanded a high price, even $25, for their stock, apparently under the mistaken view that they had a right to their liquidation preference in the event of a merger.18 Initially, some bidders indicated an interest in either meeting the preferred stockholders’ asking price — which would mean paying much more for the preferred stock than the common — or at least allowing the preferred stock to remain outstanding after the consummation of a merger. For example, Francisco Partner’s first bid for QuadraMed, made in October 2008, offered to acquire the company at $11 per share of common stock and to allow the preferred stock to remain outstanding.19 And, a later bid, received August 31, 2009 from a bidder referred to as “Bidder D” in the proxy materials, proposed acquiring Qua-draMed for $10.00 per share of common stock, and $25.00 par value for each share of preferred stock.20 By “par value,” Bidder D seems not to have meant to offer the preferred stockholders $25 per share in current value but a security with the future potential of reaching that value. But this was perhaps not as clearly expressed as it could have been.

As the negotiations continued, moreover, both Francisco Partners and Bidder D revised their offers downward. After several months of negotiating, Francisco Partners submitted a revised offer of $9.50 per share of common stock, with the requirement that the preferred stock be cashed-out. In March 2009, the Board rejected this offer, and negotiations with Francisco Partners were suspended. And, after its initial approach, Bidder D made very plain its earlier position and explained that it “never intended to offer face value” for the preferred stock and was instead interested in paying $10 per share of common stock and reaching agreement with the holders of preferred stock on the terms of a debt instrument with a $25 face value, but a present value equal to $10 per share on an as-if converted basis.21 Therefore, the treatment of the preferred stock and common stock under Bidder D’s initial proposal and under the Merger is not as different as at first appears.

In light of the various bids being made for the company, QuadraMed’s outside counsel, Crowell & Moring, LLP (“Crowell & Moring”), sent the QuadraMed Board a memorandum on September 1, 2009 addressing the legal issues relating to apportioning merger consideration between the common stock and preferred stock (the “September 2009 Memorandum”).22 In *442substance, the September 2009 Memorandum was Crowell & Moring’s distillation of and update to a memorandum that Richards, Layton & Finger, P.A. (“Richards Layton”), QuadraMed’s Delaware counsel, had prepared in June 2006. In 2006, while QuadraMed was in negotiations over a possible acquisition by a private equity firm, referred to as “Bidder B” in QuadraMed’s proxy materials, Richards Layton authored a memorandum, dated June 22, 2006, that provided a general overview of the legal authority relevant to allocating merger consideration between common stock and preferred stock in a merger. The memorandum was addressed to counsel, Crowell & Moring, not the QuadraMed Board.23 Crowell & Moring’s September 2009 Memorandum summarized Richards Layton’s 2006 advice and discussed this court’s April 2009 decision In re Appraisal of Metromedia Int’l Group, Inc.,24 which addressed the allocation of merger consideration between common and preferred stock in the context of an appraisal action.25

The QuadraMed Board formed a special committee of independent directors (the “Special Committee”) to evaluate the various bids. QuadraMed’s Board is comprised of six individuals: Duncan James, William Jurika, Lawrence English, James Peebles, Robert Miller, and Robert Peven-stein (collectively, the “Special Committee members”). The Special Committee was comprised of Jurika, English, Peebles, Miller, and Pevenstein — that is, all of the Special Committee members except James, who was also QuadraMed’s Chief Executive Officer. With the exception of Jurika, who owns over 650,000 shares of QuadraMed common stock, the Special Committee members hold a nominal amount of QuadraMed shares and in the money stock options.26 The preferred stockholders have not presented any evidence that these members’ holdings of QuadraMed shares and options constitute a material portion of their personal wealth.

In early autumn 2009, after Bidder D’s approach in August, QuadraMed’s investment bankers shopped the deal. At this time, Francisco Partners made a second bid, offering $8.50 per share of common stock and requiring the cash-out of the preferred stock on an as-if converted basis, *443which yielded a value of $13.7097 per preferred share. Francisco Partners insisted on cashing out the preferred stock because it did not want to bear the risk of a voluntary conversion of the preferred stock into common stock after the Merger.27 The evidence also indicates that Francisco Partners wanted to increase QuadraMed’s borrowing after the Merger, and therefore wanted to eliminate the preferred stock because the Certificate gives the preferred stock a right to vote on any incurrence of debt in excess of $8,000,000.28

Because the preferred stockholders were demanding more consideration than the common stock, one of the questions before the Special Committee was what fiduciary duties it owed to the common stock and preferred stock when allocating the proposed Merger’s consideration. The evidence indicates that the Special Committee carefully considered the duties it owed to both the preferred and common stockholders, and was concerned about any perception that it was favoring one class over the other. In a series of meetings, the Special Committee reviewed the bids, and at those meetings, QuadraMed’s counsel informed the Special Committee that the Board could adopt a merger agreement that cashed out the preferred stockholders, and that, if the Board respected the bottom line contractual rights of the preferred stockholders in a merger, it did not have to allocate additional value to the preferred stockholders.29 Indeed, Crowell & Moring said that the Board had to be careful about giving the preferred stockholders more unless there were special reasons to do so.30 Crowell & Moring also reported that Francisco Partner’s counsel, Shearman & Sterling, LLP, had also reached the conclusion that a cash out of the preferred stock at closing was permissible under Delaware law, and that Francisco Partners would not insist on an “appraisal out” provision in the Merger Agreement so as to satisfy any concerns the Special Committee might have regarding the treatment of the preferred stock.31

Meanwhile, Bidder D had been attempting to persuade the preferred stockholders to take a new debt security with a current value equal to what the common would receive but with a future upside. But, Bidder D found it “extremely difficult” to convince the holders of preferred stock to exchange their stock for a new debt security, and its bid foundered.32 Once Bidder D withdrew its offer on November 22, 2009, Francisco Partners became the only remaining bidder for QuadraMed. Although the Special Committee resisted cashing out the preferred stock for some time,33 the Committee eventually relented *444once it became clear that Francisco Partners would not do a deal that allowed QuadraMed’s preferred stock to survive the Merger.34

On December 7, 2009, a Special Committee meeting was held to consider approval of the Merger with Francisco Partners. At that meeting, Piper Jaffray, Qua-draMed’s financial advisor, presented an opinion that $8.50 per common share was fair to the common stockholders from a financial point of view. There was no separate opinion addressing the fairness of the Merger to the preferred stockholders. After deliberation, the Special Committee unanimously approved the Merger with Francisco Partners. From the meeting minutes, it appears that the Special Committee was wary of doing a deal that allocated more consideration to the preferred stock than to the common stock for two reasons: (1) shifting additional merger consideration to the preferred stock would cause the holders of common stock, who were the only stockholders who had a right to vote on the Merger, to vote against the transaction;35 and (2) there was no special reason to deviate from the Conversion Formula provided in the Certificate for allocating consideration to the preferred stock.36

In the latter regard, it is fair to say that the Special Committee’s equitable heartstrings were not moved to bestow upon the preferred stockholders anything better than receipt of the same treatment as the common stockholders on an as-if converted basis. Had a particular bidder insisted, after negotiations with the preferred, on doing a deal with differential consideration, the Special Committee would seem to have had an open and receptive mind if the proposal offered a more favorable valuation to all stockholders. But even then, the Special Committee, I infer, would have harbored a concern if the allocation system strayed too far (in either direction) from the Conversion Formula in the Certificate.

III. Legal Analysis

A. Legal Standard

The procedural framework for evaluating a motion for a preliminary injunction is familiar. To carry their burden, the preferred stockholders must show: (1) a reasonable probability of ultimate success on the merits at trial; (2) that they will suffer imminent, irreparable harm if in-junctive relief is denied; and (3) that the harm to the plaintiffs if relief is denied outweighs the harm to defendants if relief is granted.37

*445B. The Preferred Stockholders Have Not Met Their Burden To Justify Enjoining The Merger

1. The Preferred Stockholders Have Not Shown That The QuadraMed Board Likely Breached Its Fiduciary Duties By Allocating To The Preferred Stock The Bottom Line Consideration Contractually Owed To Them

The contending arguments of the parties are starkly divergent. The preferred stockholders, pointing to the decisions of this court in Jedwab v. MGM Grand Hotels, Inc.38 and In re FLS Holdings, Inc. Shareholders Litigation,39 argue that the QuadraMed board had the duty to make a “fair” allocation of the Merger consideration between the common and preferred stockholders. To do this fairly, the preferred stockholders argue that the board had to set up some form of negotiating agent, with the duty and discretion to exert leverage on behalf of the preferred stockholders in the allocation process. This need, the preferred stockholders say, is heightened because of an unsurprising fact: the directors of QuadraMed own common stock and do not own preferred stock. Indeed, the preferred stockholders say, every member of the Special Committee owned common stock and one member, Jurika, owned over five million dollars worth. How, they say, could such directors fairly balance the interests of the preferred against their own interest in having the common get as much as possible? At the very least, the preferred imply, the QuadraMed Board should have charged certain directors with representing the preferred, and enabled them to retain qualified legal and financial advisors to argue for the preferred and to value the preferred based on its unique contractual rights and their economic value.

By contrast, the defendants say that the QuadraMed Board discharged any fiduciary obligation of fairness it had by: 1) fulfilling its Revlon obligations to all equity holders, including the preferred, to seek the highest reasonably available price for the corporation; and 2) allocating to the preferred the percentage of value equal to their bottom line right, in the event of a merger, to convert and receive the same consideration as the common. Given that the preferred stockholders had no contractual right to impede, vote upon, or receive consideration higher than the common stockholders in the Merger, the defendants argue that the Board’s decision to accord them the value that the preferred were entitled to contractually demand in the event of a merger cannot be seen as unfair. That is especially so when the preferred bases its claim for a higher value entirely on contractual provisions that do not guarantee them any share of the company’s cash flows if the company does not liquidate, and that do not even condition a merger on the payment of any accrued, but undeclared dividends. Indeed, because the QuadraMed Board honored all contractual rights belonging to the preferred, the defendants say it was the duty of the Board not to go further and bestow largesse on the preferred stock at the expense of the common stock.

The defendants cite In re Trados Inc. Shareholder Litigation40 and Equity-Linked Investors, L.P. v. Adams41 for the proposition that it was the Board’s duty, once it had ensured treatment of the preferred in accord with their contractual *446rights, to act in the best interests of the common. To have added a dollop of creme fraiche on top of the merger consideration to be offered to the preferred would itself, in these circumstances, have amounted to a breach of fiduciary duty. Finally, the defendants argue that even if there is a case where directors might be found to be “interested” in a transaction simply because they own common stock and no preferred stock, this is not that case. For example, a sizable premium to the preferred of 10% to 20% would cause a reduction in the common stock price of approximately $1.30 to $2.60 per share. Because four of the five Special Committee members own very modest common stock stakes, this would reduce those Special Committee members’ Merger take by, at most, several thousand dollars, an amount the preferred stockholders have done nothing to show is material to these directors.

In my view, the defendants have the better of the arguments. After reviewing the evidence, I perceive no basis to find that the directors sought to advantage the common stockholders at the unfair expense of the preferred stockholders. What the preferred stockholders complain about is that the directors did not perceive themselves as having a duty to allocate more Merger consideration to the preferred than the preferred could demand as an entitlement under the Certificate. Had the Board been advised properly and had the right mindset, the preferred stockholders say, they would have given weight to various contractual rights of the preferred, such as their liquidation preference rights, and determined that on the basis of those rights, they should get a higher share than the Certificate guaranteed they could demand. Ideally, in fact, the Board should have employed a bargaining agent on their behalf to vigorously contend for the proposition that the largest part of the roast should be put on the preferred stockholders’ plate.

In arguing for this, I admit that the preferred stockholders can point to cases in which broad language supporting something like a duty of this kind to preferred stockholders was articulated. In FLS Holdings, for example, Chancellor Allen found that:

FLS was represented in its negotiations ... exclusively by directors who ... owned large amounts of common stock.... No independent adviser or independent directors’ committee was appointed to represent the interests of the preferred stock who were in a conflict of interest situation with the common .... [N]o mechanism employing a truly independent agency on behalf of the preferred was employed before the transaction was formulated. Only the relatively weak procedural protection of an investment banker’s ex post opinion was available to support the position that the final allocation was fair.42

Likewise, in Jedwab, Chancellor Allen said that directors owe preferred stockholders a fiduciary duty to “exercise appropriate care in negotiating [a] proposed merger” in order to ensure that preferred shareholders receive their “ ‘fair’ allocation of the proceeds of [a] merger.”43

A close look at those cases, however, does not buttress the preferred stockholders’ arguments. Notable in both cases was the absence of any contractual provision such as the one that exists in this case. That is, from what one can tell from FLS Holdings and Jedwab, there was no objective contractual basis — such as the *447conversion mechanism here — in either of those cases for the board to allocate the merger consideration between the preferred and the common. In the absence of such a basis, the only protection for the preferred is if the directors, as the backstop fiduciaries managing the corporation that sold them their shares, figure out a fair way to fill the gap left by incomplete contracting. Otherwise, the preferred would be subject to entirely arbitrary treatment in the context of a merger.

The broad language in FLS Holdings and Jedwab must, I think, be read against that factual backdrop. I say so for an important reason. Without this factual context, those opinions are otherwise in sharp tension with the great weight of our law’s precedent in this area. In his recent decision in Trados, Chancellor Chandler summarized the weight of authority very well:

Generally the rights and preferences of preferred stock are contractual in nature. This Court has held that directors owe fiduciary duties to preferred stockholders as well as common stockholders where the right claimed by the preferred “is not to a preference as against the common stock but rather a right shared equally with the common.” Where this is not the case, however, “generally it will be the duty of the board, where discretionary judgment is to be exercised, to prefer the interests of the common stock- — -as the good faith judgment of the board sees them to be — to the interests created by the special rights, preferences, etc., of preferred stock, where there is a conflict.” Thus, in circumstances where the interests of the common stockholders diverge from those of the preferred stockholders, it is possible that a director could breach her duty by improperly favoring the interests of the preferred stockholders over those of the common stockholders.44

Notably, that summary relied heavily on decisions by Chancellor Allen, who authored both Jedwab and Equity-Linked Investors. Does the summary of Trados expose some inconsistency in our law?

No, not when Chancellor Allen’s decision in HB Korenvaes Investments, L.P. v. Marriott Corp. is considered.45 In that case, a board took very aggressive action that was, objectively speaking, adverse to the interest of the preferred stockholders. The Marriott board agreed to a transaction that issued a large special dividend (of certain businesses!) to the common stock and indefinitely suspended dividends on the preferred stock.46 The preferred stockholders then sought to enjoin the payment of the special dividend, arguing that Marriott’s directors breached their fiduciary duties to the preferred stockholders by agreeing to the transaction.47 Chancellor Allen rejected that argument, finding that even on the assumption that the board had acted to advantage the common in the transaction, no breach of duty of loyalty claim was stated.48

In explaining his holding, he first stated: Rights of preferred stock are primarily but not exclusively contractual in nature. The special rights, limitations, etc. of preferred stock are created by the corporate charter or certificate of designa*448tion which acts has an amendment to a certificate of incorporation. Thus, to a very large extent, to ask what are the rights of the preferred stock is to ask what are the rights and obligations created contractually by the certifícate of designation. In most instances, given the nature of the acts alleged and the terms of the certificate, this contractual level of analysis will exhaust the judicial review of corporate action challenged as a wrong to preferred stock.49

Chancellor Allen then noted that “it has been recognized that directors may owe duties of loyalty and care to preferred stock” where a lack of contractual rights renders “the holder of preferred stock [in an] exposed and vulnerable position vis-a-vis the board of directors.”50 In light of preferred stock’s dual contractual and fiduciary protection, Chancellor Allen stated:

In fact, it is often not analytically helpful to ask the global question whether (or to assert that) the board of directors does or does not owe fiduciary duties of loyalty to the holders of preferred stock. The question (or the claim) may be too broad to be meaningful. In some instances (for example, when the question involves adequacy of disclosures to holders of preferred who have a right to vote) such a duty will exist. In others (for example, the declaration of a dividend designed to eliminate the preferred’s right to vote) a duty to act for the good of the preferred does not. Thus, the question whether duties of loyalties are implicated by corporate action affecting preferred stock is a question that demands reference to the particularities of context to fashion a sound reply.51

Having framed the analysis thusly, Chancellor Allen then found that the fact that the certificate of designation considered the possibility of an in-kind dividend and gave the preferred certain rights in that context was dispositive of whether there was any fiduciary duty claim:

Most important ... is the fact that the certificate of designation expressly contemplates the payment of a special dividend of the type here involved and supplies a device to protect the preferred stockholders in the event such a dividend is paid.... [Therefore,] the legal obligation of the corporation to the Series A Preferred Stock upon the declaration and payment of an in-kind dividend of securities has been expressly treated and rights created. It is these contractual rights — chiefly the right to convert into common stock now or to gross-up the conversion ratio for future conversions — that the holders of preferred stock possess as protection against the dilution of their shares’ economic value through a permissible dividend.52

The reasoning of Korenvaes reconciles the doctrine. When, by contract, the rights of the preferred in a particular transactional context are articulated, it is *449those rights that the board must honor. To the extent that the board does so, it need not go further and extend some unspecified fiduciary beneficence on the preferred at the expense of the common. When, however, as in Jedwab and FLS Holdings, there is no objective contractual basis for treatment of the preferred, then the board must act as a gap-filling agency and do its best to fairly reconcile the competing interests of the common and preferred.53

This case is much closer to Korenvaes than it is to Jedwab. Although the preferred stockholders make much of the fact that the Certificate does not mandate that the Board accord the preferred stockholders the same treatment as the common in a merger, the only right that the preferred stockholders extracted for themselves was to receive the same consideration they would have received if they had converted their shares per the Conversion Formula set forth in the Certificate. In a situation where the preferred have no mandatory right to annual dividends, no voting rights on a merger, and where the Certificate plainly provides that a merger is not a liquidation event triggering a right to receipt of accrued dividends and the liquidation preferences before the common is paid, it is difficult to fathom any duty on the part of the QuadraMed Board to go further and allocate additional value to the preferred. To do so would seem inconsistent with Chancellor Allen’s well-reasoned observation in Equity-Linked Investors that

While the board in these circumstances could have made a different business judgment, in my opinion, it violated no duty owed to the preferred in not doing so. The special protections offered to the preferred are contractual in nature. The corporation is, of course, required to respect those legal rights. But ... generally it will be the duty of the board, where discretionary judgment is to be exercised, to prefer the interests of common stock as the good faith judgment of the board sees them to be to the interests created by the special rights, preferences, etc., of preferred stock, where there is a conflict.54

This, of course, is not to say that the QuadraMed Board did not owe the preferred stockholders fiduciary duties in connection with the Merger. The Board certainly did. But those were the duties it also owed to the common. In the context of a sale of a company, those are the duties articulated in Revlon and its progeny;55 namely, to take reasonable efforts to secure the highest price reasonably available for the corporation. Notably, the pre*450ferred stockholders do not argue that the Board fell short of its obligations in this regard.56 They simply want more of the *451proceeds than they are guaranteed by the Certifícate. But I do not believe that the Board acted wrongly in viewing itself as under no obligation to satisfy that desire.

To indulge such a notion would create great uncertainty and inefficiency for corporations seeking to engage in mergers and acquisitions. Having had the chance to extract more and having only obtained the right to demand treatment under the Conversion Formula that operates to allocate any consideration in a merger between the preferred and the common on a basis the preferred assented to in the Certificate, why should the preferred have the right to ask the Board to give them more? 57 The preferred stockholders’ view of what the Board should do if this notion is embraced exemplifies the problem. The preferred stockholders would have the Board consider as relevant to value facts such as the preferred stock’s dividend rights, rights in the event of liquidation, and limited voting rights. These, the preferred shareholders say, should be taken into account. But, of course, if that is so, it is also necessary to take into account the fact that the common get to vote on a merger and the preferred do not, and that the common stockholders get to elect a majority of the Board even if dividends are not paid to the preferred stockholders, and the preferred get to elect two substitute directors. That is, the Board would have to “weigh” these soft contractual possibilities against each other and somehow value them. Realizing that this is not so easy, the preferred stockholders say they have a simple answer: just form two special committees, have each retain their own advis-ors, and go at it. They can cut up the pie, and, while they do it, the acquiror will, in their hypothetical world, wait patiently for the results.

As Chancellor Allen indicated in Koren-vaes, there may be “particularities of context” 58 — such as when there is no objective contractual basis to determine a fair allocation between the preferred and common stock in a merger — that may demand this approach. It is nonetheless difficult to fathom the utility or, more important, the fairness of requiring such an approach in a situation when the preferred have a contractual protection of which they can avail themselves. To accept the preferred stockholders’ view is to, in essence, give them leverage that they did not fairly extract in the contractual bargain, a hold-up value of some kind that acts as a judicially imposed substitute for the voting rights and other contractual protections that they could have, but did not obtain in the context of a merger.

Another counterproductive consequence would result from accepting the preferred stockholders’ arguments. For its entire history, our corporate law has tried to insulate the good faith decisions of disinterested corporate directors from judicial second-guessing for well-known policy reasons.59 The business judgment rule em*452bodies that policy judgment.60 When mergers and acquisitions activity became a more salient and constant feature of corporate life, our law did not cast aside the values of the business judgment rule. Rather, to deal with the different interests manager-directors may have in the context of responding to a hostile acquisition offer or determining which friendly merger partner to seek out, our law has consistently provided an incentive for the formation of boards comprised of a majority of independent directors who could act independently of management and pursue the best interests of the corporation and its stockholders.61 This impetus also recognized that managers’ incentives and the temptations they face, when combined with fallible human nature, make it advisable to have independent directors to monitor the corporation’s approach to law compliance, risk, and executive compensation.62 Consistent with this viewpoint, it has been thought that having directors who actually owned a meaningful, long-term common stock stake was a useful thing, because that would align the interests of the independent directors with the. common stockholders and give them a personal incentive to fulfill their duties effectively.63

To hold that independent directors are disabled from the protections of the business judgment rule when addressing a merger because they own common stock, and not the corporation’s preferred stock, is not, therefore, something that should be done lightly. Corporate law must work in practice to serve the best interests of society and investors in creating wealth. Director compensation is already a difficult enough issue to address without adding on the need to ponder whether the independent directors need to buy or receive as compensation a share of any preferred stock issuance made by the corporation, for fear that, if they do not have an equally-weighted portfolio of some kind,64 they will not be able to impartially balance questions that potentially affect the common and preferred stockholders in different ways. Adhering to the rule of Equity-Linked Investors, Trados, and other similar cases, which hold that it is the duty of directors to pursue the best interests of the corporation and its common stockholders, if that can be done faithfully with the contractual promises owed to the preferred,65 avoids this policy dilemma. Admittedly, it does not solve for certain situations that directors might create themselves by authorizing multiple and sometimes exotic classes of common stock, situations that have led this court to, as a matter of necessity, consider the directors’ *453portfolio balance,66 but it at least does not exacerbate the already complex challenge of compensating independent directors in a sensible way. And, given the unique nature of preferred stock and the often-fraught circumstances that lead to its issuance, our law should be chary to somehow suggest that otherwise independent directors should be receiving shares of this kind at the risk of facing being called “non-independent” or, worse, being deemed by loose reasoning to be “interested” and therefore somehow personally liable under the entire fairness standard for a merger allocation decision.

Here, the plaintiffs have also failed to impugn the Board’s entitlement to the business judgment rule for a more mundane reason. Even if the court must, as I think it does not in this situation, consider whether the otherwise independent directors comprising the Special Committee could, because of their ownership of common stock and no preferred stock, impartially balance the interests at stake, the plaintiffs have not advanced facts that support a reasonable inference that any of the Special Committee members are materially self-interested.67 I say any forthrightly. As to director Juri-ka, who owns a large common stock stake, a shift in the merger consideration of 10% to the preferred would cost him approximately $500,000.68 That amount of money, of course, would be material to most Americans. But most Americans are not corporate directors, and do not have a $5.6 million stake of common stock in any company. And, the plaintiffs have not advanced any reason to believe that the hypothetical 10% shift would be important to Jurika. The man could be as rich as Croesus or Jimmy Buffett. The plaintiffs have a burden here and they have not even tried to meet it. As to the other directors on the Special Committee, they have failed even more obviously. Directors English, Miller, Peebles, and Pevenstein own only $61,284 worth of common stock and in the money options collectively. Even a fairly drastic shift of 20% of the merger consideration from the preferred to the common would only reduce those directors’ collective take by approximately $28,000, and the plaintiffs do not make any attempt to show that this would be material to these directors’ personal economic circumstances.69 Thus, even under the plaintiffs’ theory, the business judgment rule, and not the entire fairness standard, applies to the Special Committee’s decision.

Finally, the preferred stockholders have not established a likelihood of success on their claim that the defendants breached their duty of care. The record reveals that the Board complied with its Revlon duties by actively seeking the best value and considered whether the preferred should get more than the contractual bottom line. Finding no special reason for better treatment, the Board allocated the *454preferred stockholders their share of the Merger proceeds in accord with those bottom line rights. The preferred stockholders may not like that decision, but it was made on a thoughtful basis informed by advice of counsel, and there is no hint of any lapse in care.

2. The Balance Of Equities Cuts Against The Issuance Of An Injunction

Having concluded that the preferred stockholders have not made an adequate merits showing, I could stop because the injunction cannot be issued. But given the omnipresent possibility that any human judge can make an error, I note briefly another ground why I would not grant the preliminary injunction sought. The plaintiff here, LC Capital, purports to speak for 95% of the preferred stockholders. The Merger gives the preferred stockholders appraisal rights. Although the fact that stockholders have the right to seek monetary relief through appraisal or an equitable action does not invariably suffice to alleviate any threat of irreparable injury, the reality that the preferred stockholders have the ability to seek recompense is an important factor in the discretionary calculus whether to grant an injunction.

Here, where a concentrated group of holders can pursue appraisal and an equitable damages case, I would be reluctant to grant injunctive relief that could harm the common stockholders of QuadraMed. These stockholders are set to vote on the Merger tomorrow. If I grant an injunction improvidently, Francisco Partners walks away, and the preferred stockholders were unwilling (as I expect they would be) to fully bond the risk of injury to the common, great harm could result to the common stockholders. Given that even under a 10% shift of consideration to the preferred stockholders, the common stockholders of QuadraMed are entitled to well over a majority of the Merger consideration, the balance of harms analysis, in my view, cuts against the issuance of a preliminary injunction.

IV. Conclusion

For the reasons discussed above, I refuse to enjoin the transaction. The preferred stockholders’ motion is therefore denied. IT IS SO ORDERED.

1

. LC Capital Master Fund, Ltd. v. James, C.A. No. 5214-VCS, at 4 (Del. Ch. Mar. 3, 2010).

2

. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.1986).

3

. 705 A.2d 1040, 1042 (Del.Ch.1997).

4

. 2009 WL 2225958 (Del.Ch. July 24, 2009).

5

. Wood Aff. Ex. 26 (QuadraMed Form 8-K (Dec. 8, 2009)).

6

. Id.

7

. Wood Aff. Ex. 2 at § 7(f) (QuadraMed Certificate of Designations (June 14, 2004)) ("Certificate”).

8

. Certificate § 11 (a)(ii).

9

. Id.

10

. Id.

11

. Id. § 3(a).

12

. Id. § 4(a).

13

. Id.

14

. Id. § 8(a).

15

. Compl. If 21; Pl.'s Op. Br. 8.

16

. Certificate §§ 4(a)(i), 7(a), 7(f).

17

. Wood Aff. Ex. 4 at 23 (QuadraMed Corp. Schedule 14A (Feb. 8, 2010)) (the “Proxy”).

18

. Id. at 32; Wood Aff. Ex. 11 (Special Committee Meeting Minutes (Sept. 10, 2009)).

19

. Wood Aff. Ex. 6 (Letter from Francisco Partners to QuadraMed Board of Directors (Oct. 27, 2008)) at 3.

20

. Proxy at 29.

21

. Wood Aff. Ex. 11 (Special Committee Minutes (Sept. 10, 2009)); Proxy at 30-31.

22

. Wood Aff. Ex 15 (Crowell & Moring Memorandum to QuadraMed Board of Directors (Sept. 1, 2009)) (the "September 2009 Memorandum”).

23

. Wood Aff. Ex. 5 (Richards, Layton & Finger Memorandum (June 22, 2006)). It is unclear in the record whether Richards Layton’s June 2006 memorandum discussing the Delaware law on the apportionment of merger consideration was given to any of the Qua-draMed directors or officers in 2006. In fact, Crowell & Moring's remark in the September 2009 Memorandum that it could provide Qua-draMed with Richards Layton's memoranda suggests that those memoranda were not given to the QuadraMed Board in 2006. See September 2009 Memorandum (“We would be happy to ... furnish the original, underlying Delaware counsel memos at your request.”).

24

. 971 A.2d 893 (Del.Ch.2009).

25

. Language in Crowell & Moring’s memorandum indicates that it had not consulted with Richards Layton before sending the September 2009 Memorandum to QuadraMed's Board, and it is unclear in the record when, if at all, Richards Layton was brought in to advise QuadraMed in the autumn of 2009. See, e.g., September 2009 Memorandum (indicating that Crowell & Moring would be happy to "confer with Delaware counsel" at Qua-draMed’s request).

26

. Specifically, the Director Defendant’s Qua-draMed shareholdings are as follows: English holds $3,360 worth of in the money options; Jurika holds $5,628,678 worth of common stock; Miller holds $32,380 worth of both common stock and in the money options; Peebles owns $5,184 worth of in the money options; Pevenstein owns $20,360 worth of both common stock and in the money options. See Def.’s Ans. Br. 12; Wood Aff. Exs. 31-36 (SEC Form 4 describing individual directors' shareholdings).

27

. Proxy at 27; Wood Aff. Ex. 8 (Special Committee Meeting Minutes (Feb. 5, 2009)).

28

. Wood Aff. Ex. 19 (Special Committee Meeting Minutes (Nov. 10, 2009)) (Crowell & Moring noting that “neither [Bidder D or Francisco Partners] would permit the Preferred Stock to remain outstanding post-closing, especially in light of its debt approval rights”).

29

. Id. Ex. 16 (Special Committee Minutes (Dec. 10, 2008)); id. Ex. 9 (Special Committee Minutes (Feb. 22, 2009)); id. Ex. 13 (Special Committee Minutes (Oct. 28, 2009)); id. Ex. 19 (Special Committee Minutes (Nov. 10, 2009)).

30

. Id. Ex. 16; id. Ex. 17 (email from Kelly Howard to Jim Peebles (Sept. 2, 2009)).

31

. Id. Ex. 8.

32

. Proxy at 32.

33

. See, e.g., Wood Aff. Ex. 10 (email from Robert Pevenstein to Special Committee members and Crowell & Moring (Feb. 5, 2009)).

34

. Wood Aff. Ex. 19 ("[I]t was clear to [Cro-well & Moring] in the instant negotiations that [Francisco Partners] required the Preferred Stockholders to be cashed out at closing, and [would not] permit the Preferred Stock to remain outstanding post-closing.”).

35

. See Wood Aff. Ex. 14 (Special Committee Meeting Minutes (Sept. 2, 2009)) (recording Jurika’s comment that BlueLine Partners, which held 15% of QuadraMed's common stock, would not approve the merger if the preferred stock received $25 per share, while the common stock received $10 per share).

36

. See Wood Aff. Ex. 13 (Crowell & Moring counseling that once consideration for the Preferred Stock "deviated from the consideration of the common on an 'as-converted’ basis, the Committee needed to analyze whether the allocation of enterprise value was appropriate and fair based on the terms of the Preferred Stock and applicable Delaware law”).

37

. Unitrin, Inc. v. Am. Gen. Corp., 651 A.2d 1361, 1371 (Del.1995); In re Cencom Cable Income Partners, L.P. Litig., 1996 WL 74726, at *3 (Del.Ch. Feb 15, 1996).

38

. 509 A.2d 584 (Del.Ch.1986).

39

. 1993 WL 104562 (Del.Ch. Apr. 2, 1993).

40

. 2009 WL 2225958, at *7 (Del.Ch. July 24, 2009).

41

. 705 A.2d 1040, 1042 (Del.Ch.1997).

42

. 1993 WL 104562, at *5.

43

. 509 A.2d at 594.

44

. Trados, 2009 WL 2225958, at *7 (quoting Jedwab, 509 A.2d at 594, and Equity-Linked Investors, L.P. v. Adams, 705 A.2d 1040, 1042 (Del.Ch.1997)).

45

. 1993 WL 205040 (Del.Ch. June 9, 1993).

46

. Id. at *1-2.

47

. Id. at *4-5.

48

. Id. at *3-4.

49

. Id. at *5 (internal citations omitted); see also Metromedia, 971 A.2d at 899-900 ("[R]ights of preferred shareholders are contractual in nature and the 'construction of preferred stock provisions are matter of contract interpretation for the courts.’ ... Unlike common stock, the value of preferred stock is determined solely from the contract rights conferred upon it in the certificate of designation.... In other words, the valuation of preferred stock must be viewed through the defining lens of its certificate of designations, unless the certificate is ambiguous or conflicts with positive law.”).

50

. Korenvaes, 1993 WL 205040, at *5 (citing FLS Holdings, 1993 WL 104562).

51

. Id. at *6.

52

. Id. at *7.

53

. As this court noted in Jedwab:

[Preferences and limitations associated with preferred stock exist only by virtue of an express provision (contractual in nature) creating such rights or limitations. But absent negotiated provisions conferring rights on preferred] stock, it does not follow that no rights exists.... Thus, with respect to matters relating to preferences or limitations that distinguish preferred stock from common, the duty of the corporation and its directors is essentially contractual and the scope of the duty is appropriately defined by reference to the specific words evidencing that contract; where however the right asserted is not to a preference as against the common stock but rather a right shared equally with the common, the existence of such right and the scope of the correlative duty may be measured by equitable as well as legal standards.

509 A.2d at 593.

54

. Equity-Linked Investors, 705 A.2d at 1042 (internal citations omitted).

55

. See, e.g., Paramount Commc’ns Inc. v. QVC Network, Inc., 637 A.2d 34, 44 (Del.1994); Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d 1261, 1288 (Del.1989); Revlon, 506 A.2d at 184 n. 16.

56

. Therefore, in this decision, I need not confront what might be considered a much harder case. Imagine an issuance of preferred stock that had an absolute right to annual dividend payments of a large amount. The corporation's discounted cash flow ("DCF”) valuation indicates that the corporation could pay those dividends. The certificate of designation, like the one here, only gives the preferred the right to convert based on a formula, and does not give the preferred the right to vote on a merger, nor does it treat a merger as an event implicating the preferred’s right to a liquidation preference.

The corporation is valued fairly based on a DCF model in the merger. That is, the total consideration is fair. But, the conversion formula results in the preferred stockholders receiving a price for their shares that is lower than the discounted value of the dividends the preferred stockholders would be guaranteed to receive in the next five years. The board realizes this but chooses not to allocate more consideration to the preferred.

This hypothetical case is harder because the financial analysis undergirding the board’s determination to proceed with the merger suggests that the corporation would have the financial capacity to pay the dividends to the preferred and that the certificate of designations would require that the board do so if the corporation remained as a going concern.

But remember that the preferred would not have bargained for, in the context of a merger, any contractual protection other than the bottom line right to be treated on as converted basis and the board would not have dishonored that protection. Under the reasoning of Chancellor Allen in Korenvaes, the board would not have owed any fiduciary duty of loyalty to somehow adjust upward the preferred stock’s portion of the consideration. In that case, as mentioned, he sanctioned aggressive board action that clearly advantaged the common at the expense of the preferred. Because the preferred had bargained only for a limited right of protection in that context and the board has not deprived them of that protection, Chancellor Allen found that the board had no further duty and could take the action it did.

I need not answer the hard case here because the preferred stockholders have made no argument along these lines and have no right to demand that they actually receive annual dividends. The judicial sanctioning of the notion that the preferred get more merger consideration than they actually bargained for would, though, seem only to have appeal to those who believe that appraisal proceedings are now too predictable and non-burdensome. Indeed, the only thing rendering the future dividend stream in the hard case a non-speculative future source of income would be the judicial holding that preferred stockholders, who did not bargain for the right to block a merger that would result in the end of the corporation and therefore their future dividend stream, have to be compensated for the very stream that they did not procure a contractual right to force to continue. In that regard, the traditional appraisal use of the term "going concern” value cannot be rationally thought to have been intended to express the implicit notion that preferred stock, with no contractual right to block a merger or to receive any special economic treatment in a merger, can claim that the merger did not accord them fair value on the game theory-type speculation that: 1) if the corporation did not engage in a merger, the preferred stockholders would have received a guaranteed share of the company's going concern cash flow; 2) that although the preferred stockholders received the bottom line consideration they were guaranteed by the certificate of designation and although the total price paid for the corporation was fair, the preferred stockholders’ share of the merger consideration was less than fair in light of the contractual share of dividends they would have received even though they did not have the contractual right to block the merger that terminated that stream of future payments.

This example illustrates a tension that permeates the preferred stockholders’ argument. Although they rely on the Board’s supposed failure to comply with the equitable duties owed to them as preferred stockholders, the preferred stockholders continually refer back to their contractual rights as the basis for arguing for special fiduciary consideration. But in the context of a merger, they had no right to demand a special dividend, consideration equal to the liquidation preference formula, or any of the other sorts of things on which they base their argument for higher value. It is only to the extent that a judge implies that rights of this kind, which could *451have been but were not insulated by contractual protections from defeasement by merger, must be compensated for by equity that they have economic value in a merger. Our law has not, to date, embraced the notion that Chancery should create economic value for preferred stockholders that they failed to secure at the negotiating table.

57

. Cf. Metromedia, 971 A.2d at 906 ("If the parties had intended that a transaction, such as the merger, constituted an ‘effective redemption' of the preferred holders, then they should have included language to that effect in the contract. The absence of such language in an otherwise clear and unambiguous contract leads me to the opposite conclusion.”).

58

. Korenvaes, 1993 WL 205040, at *6.

59

. See, e.g., Aronson v. Lewis, 473 A.2d 805, 812-13 (Del.1984); Zapata Corp. v. Maldonado, 430 A.2d 779, 782 (Del.1981); see also In *452re The Walt Disney Co. Deriv. Litig., 731 A.2d 342, 361, 362 (Del.2000).

60

. See, e.g., 1 Stephen A. Radin, The Business Judgment Rule: Fiduciary Duties of Corporate Directors 26-40 (6th ed. 2009).

61

. See Unitrin v. Am. Gen. Corp., 651 A.2d 1361, 1375 (Del.1995); QVC Network, Inc., 637 A.2d at 44; Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 955 (Del.1985).

62

. See In re Caremark Intern. Inc. Deriv. Litig., 698 A.2d 959, 970 (Del.Ch.1996).

63

. See In re IXC Commons, Inc. v. Cincinnati Bell, Inc., 1999 WL 1009174, at *6-7 (Del.Ch. Oct. 27, 1999); In re PNB Holding Co. S’holder Litig., 2006 WL 2403999, at *10 (Del.Ch. Aug. 18, 2006).

64

. Query how one would do this exactly without creating other problems? What if, for example, the preferred stock, even under its wildest dreams, constituted only 10% of the corporation’s equity value. Should the independent directors have half of their equity in preferred stock in order to balance questions like this impartially? If so, wouldn’t they have incentives that were not well aligned, as a whole, with the objectives of the corporation’s larger equity base?

65

. See Equity-Linked Investors, 705 A.2d at 1042; In re Trados, 2009 WL 2225958, at *7.

66

. See In re Staples, Inc. S’holders Litig., 792 A.2d 934, 950-51 (Del.Ch.2001); In re Gen. Motors Class H S’holders Litig., 734 A.2d 611, 617-18 (Del.Ch.1999); Solomon v. Armstrong, 747 A.2d 1098, 1117-18 (Del.Ch.1999).

67

. E.g., In re Gen. Motors Class H S’holders Litig., 734 A.2d at 617-18.

68

. LC Capital, C.A. No. 5214-VCS, at 84 (Del. Ch. Mar. 3, 2010) (TRANSCRIPT).

69

. By my rough calculations, under a 20% shift in consideration from the common stock to the preferred stock, English’s options would be worth $168, Miller’s shares and options would be worth $16,154, Peebles options would be worth $1,992, and Peven-stein's shares and options would be worth $14,508. See Def.'s Ans. Br. 12. In other words, English’s take would fall by $3,192, Miller's by $16,226, Peebles by $3,192, and Pevenstein’s by $5,852.