however, relate this comparison to the issue of fair exchange,
nor does it make any particularized allegations demonstrating
that the price for PARTNERS was objectively unfair.
Accordingly, plaintiff fails to raise a reasonable doubt as to
substantive due care.
Procedural due care requires Enterprises to have made an
informed business decision, subject to the gross negligence
standard. "Approval of a transaction by a majority of
independent, disinterested directors almost always bolsters a
presumption that the business judgment rule attaches to
transactions approved by a board of directors that are later
attacked on grounds of procedural due care. In such cases, a
heavy burden falls on a plaintiff to avoid presuit demand."
Grobow, supra, 539 A.2d at 190. Plaintiff's allegations include
that: (1) both the negotiations and approval of the deal were
finalized within a few weeks, Amended Complaint ¶ 63; (2)
Enterprises' Executive Committee endorsed the proposal before
engaging an investment bank as financial advisor, id. ¶ 63; and
(3) the investment bank engaged, PaineWebber, Inc., failed to
make all necessary investigations, including a range of values
for PARTNERS and the higher value that might have been realized
by alternate types of transactions, id. ¶¶ 64(a)-(p).
"A cardinal precept of the General Corporation Law of the
State of Delaware is that directors, rather than shareholders,
manage the business and affairs of the corporation."
Aronson, supra, 473 A.2d at 811. Delaware courts have shown a
marked deference to directors in their treatment of procedural
due care. For instance, the law establishes that the duration
of negotiations prior to a disputed transaction is not a
decisive factor. In Grobow, for example, formal negotiations
lasted only three weeks, yet the court found that the board was
Delaware courts also frequently defer to an outside advisor's
discretion in determining what information was necessary to an
informed decision. See In re Fort Howard Corp. Shareholders
Litigation, Civ. No. 9991, 1988 WESTLAW 83147 (Del. Ch. Aug. 8,
1988). In the same spirit, the Court in Levine v. Smith, Civ.
No. 8833, 1989 WESTLAW 150784 (Del. Ch. May 21, 1990) rejected
plaintiff's allegations that directors failed to consider
certain information, pointing out that "[t]he Board may not
have needed further information at that time, because they
possessed the information essential to an informed decision."
In the instant action, the complaint establishes that
Enterprises' board had the Aetna offer considered by a separate
committee, in addition to consulting PaineWebber. Moreover,
plaintiff has failed to allege particularized facts, as
required by Aronson, that support his allegations that the
board lacked essential information, or that the issues that
were not investigated by PaineWebber were crucial to the
board's decision. Thus, the Court concludes that plaintiff has
not raised a reasonable doubt as to the adequacy of the process
surrounding the negotiation of the sale sufficient to excuse a
demand on the board.*fn2
The Court therefore finds that plaintiff has failed to
demonstrate demand futility. Accordingly, plaintiff's pleading
of his derivative claims fails to meet the requirements of Rule
III. Counts III through VIII
The Court will not at this time address the question of
whether Counts III through VIII of the Amended Complaint may be
brought as both derivative and direct claims. However, on
repleading, the Court would advise plaintiff to consider
carefully the teaching of Delaware courts on this issue. "A
derivative claim is a wrong to an incorporated group as a whole
that depletes or destroys corporate assets and, as a
consequence, reduces the value of the corporation's stock."
In re Tri-Star, supra, 1990 Del. Ch. LEXIS 80, 1990 WESTLAW
82734 (citing Cede & Co. v. Technicolor,
Inc., 542 A.2d 1182, 1188 n. 10 (Del. 1988). To maintain
allegations individually as well as derivatively, plaintiff
"`must allege either "an injury separate and distinct from that
suffered by other shareholders," . . . or a wrong involving a
contractual right of a shareholder, such as the right to vote
or to assert majority control, which exists independently of
any right of the corporation.'" Id. (quoting Moran v. Household
Int'l. Inc., 490 A.2d 1059, 1070 (Del. Ch.), aff'd,
500 A.2d 1346 (Del. 1985)) (quoting Fletcher Cyc. Corp. § 5921, at 452
(perm. ed. 1984))).
For the reasons set forth above, plaintiff's derivative
claims are dismissed. Leave to replead is granted. Plaintiff
shall elect whether to pursue his direct or his derivative
claims, and shall serve and file a second amended complaint in
this action on or before July 19, 1991.