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Myers v. Alstead

United States District Court, W.D. Washington, Seattle

September 5, 2017

DAVID V. MYERS and SHIVA Y. STEIN, derivatively on behalf of STARBUCKS CORPORATION, Plaintiffs,
v.
TROY ALSTEAD, MARY N. DILLON, ROBERT M. GATES, MELLODY HOBSON, KEVIN R. JOHNSON, SCOTT MAW, JOSHUA COOPER RAMO, HOWARD SCHULTZ, JAMES G. SHENNAN, JR., CLARA SHIH, JAVIER G. TERUEL, MYRON E. ULLMAN, III, CRAIG E. WEATHERUP, Defendants, and STARBUCKS CORPORATION, Nominal Defendant.

          ORDER

          Honorable Richard A. Jones United States District Judge.

         I. INTRODUCTION

         This matter comes before the Court on Nominal Defendant Starbucks Corporation's (“Starbucks”) and the Individual Defendants' Motion to Dismiss Complaint for Breach of Fiduciary Duties and Unjust Enrichment. Dkt. ## 15, 16. The Court is also in receipt of Defendants' unopposed Request for Judicial Notice. Dkt. # 18. Having reviewed the briefs submitted by the parties[1] and the relevant portions of the record, the Court finds oral argument unnecessary. For the reasons that follow, the Court GRANTS Starbucks' Motion and the Request for Judicial Notice, and terminates the Individual Defendants' motion as MOOT.

         II. BACKGROUND

         Plaintiffs are shareholders of Starbucks. Based on media reports, Plaintiffs allege that Starbucks underpaid its taxes in the European Union (EU) between 1998 and 2012. Dkt. 4-3 (Complaint) at ¶ 52. The United Kingdom's Parliament inquired into Starbucks' EU tax structure “to understand why [Starbucks doesn't] pay the corporate tax that it appears, on the facts, is due.” Id. at ¶ 54. On December 6, 2012, Starbucks announced to the London Chamber of Commerce that it would resolve the issue by paying ten million pounds each year for 2013 and 2014. Id. at ¶ 60.

         Separately, Starbucks had entered into an advanced pricing agreement (“APA”) with the Netherlands. Id. at ¶ 62. The APA established how Starbucks was to calculate its taxes due to the Netherlands over the course of ten years. In July 2013, the European Commission (“Commission”) began an investigation into the APA on suspicion that the agreement was in violation of anti-competition prohibitions. Id. at ¶ 62. The investigation became public on June 11, 2014 when the Commission confirmed that “it had opened a formal, in-depth investigation into the corporate structure of Starbucks in the Netherlands[.]” Id. at ¶ 63.

         On October 21, 2015, the Commission “issued a decision finding that Starbucks' APA with the Dutch tax authorities artificially lowered tax[es] paid by its subsidiary . . . .” Id. at ¶ 66. The Commission considered the APA to be in violation of Article 107(1) of the Treaty of Functioning of the European Union, which prevents member states, such as the Netherlands, from giving corporations unfair competitive advantages. Id. As a result, the Commission ordered the Netherlands to collect thirty (30) million euros from Starbucks. Id. at ¶ 67. The Netherlands appealed the decision. Id. at ¶ 68.

         Based on the tax schemes that led to Starbucks' payouts to the EU and the Netherlands, Plaintiffs issued demand letters (the “Demands”) to the Starbucks' Board of Directors (“Board”) “to investigate and commence an action against certain current and/or former directors and executive officers of the Company.” Id. at ¶ 79. The Board considered the letters and relevant documents, and discussed the Demands at two Board meetings and an executive session. Id. at ¶ 80, Ex. C. On May 24, 2016, the Board refused the Demands. Id.

         Plaintiffs were unsatisfied with the Board's investigation and subsequent refusal and brought this action on behalf of Starbucks, alleging that the Board breached their fiduciary duties and were unjustly enriched as a result. Id. at ¶¶ 88-104. Defendants now move the Court to dismiss the lawsuit.

         III. LEGAL STANDARD

         Fed. R. Civ. P. 12(b)(6) permits a court to dismiss a complaint for failure to state a claim. The rule requires the court to assume the truth of the complaint's factual allegations and credit all reasonable inferences arising from those allegations. Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). A court “need not accept as true conclusory allegations that are contradicted by documents referred to in the complaint.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The plaintiff must point to factual allegations that “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007). If the plaintiff succeeds, the complaint avoids dismissal if there is “any set of facts consistent with the allegations in the complaint” that would entitle the plaintiff to relief. Id. at 563; Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

         A court typically cannot consider evidence beyond the four corners of the complaint, although it may rely on a document to which the complaint refers if the document is central to the party's claims and its authenticity is not in question. Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). A court may also consider evidence subject to judicial notice. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

         IV. DISCUSSION

         A. Standing Under Federal Rule of ...


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