United States District Court, W.D. Washington, Seattle
DAVID V. MYERS and SHIVA Y. STEIN, derivatively on behalf of STARBUCKS CORPORATION, Plaintiffs,
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.
Honorable Richard A. Jones United States District Judge.
matter comes before the Court on Nominal Defendant Starbucks
Corporation's (“Starbucks”) Motion to Dismiss
Amended Complaint. Dkt. # 28. For the reasons that follow,
the Court GRANTS Starbucks' Motion.
general facts of the case are familiar to the parties and the
Court will not reiterate them here. See Dkt. # 24
(prior Order outlining the basic facts of the case). At issue
is whether Plaintiffs' Amended Complaint addresses the
deficiencies that led to the prior dismissal.
Amended Complaint does not differ greatly from the original
Complaint. See Dkt. # 29-1 (redline comparing
original Complaint to Amended Complaint). Plaintiffs have now
clarified that Starbucks engaged in wrongdoing. See
generally Dkt. # 26 (Amended Complaint). But Plaintiffs
do so by merely adjusting the language in the Amended
Complaint to include terms such as “illicit, ”
id. at ¶ 7, “illegal, ”
id. at ¶ 11, or “improper, ”
id. at ¶ 12. The facts in the Amended Complaint
are derived from the same sources as the initial Complaint.
See, e.g., Dkt. # 17-2 (Commission Decision on State
Aid). Starbucks moves the Court to dismiss the Amended
Complaint because it argues that Plaintiffs again failed to
rebut the business judgment rule. Dkt. # 28.
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).
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).
Business Judgment Rule
Amended Complaint argues that Starbucks' Board did not
conduct an adequate investigation because it failed to
interview the appropriate witnesses and spent mere minutes
discussing the issues. Dkt. # 30.
did the first time, the Court reviews the Board's
decisions under the business judgment rule. The business
judgment rule is a rebuttable “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.” Aronson v. Lewis, 473 A.2d 805, 812
(Del. 1984) overruled on other grounds by Brehm v.
Eisner, 746 A.2d 244 (Del. 2000) (citations
omitted).“Absent an abuse of discretion, that
judgment will be respected by the courts.”
Id.; see also Zapata Corp. v. Maldonado,
430 A.2d 779, 787 (Del. 1981) (“If a ‘committee,
composed of independent and disinterested directors,
conducted a proper review of the matters before it,
considered a variety of factors and reached, in good faith, a
business judgment that (the) action was not in the best
interest of (the corporation)', the action must be
dismissed.”) (citations omitted); Sinclair Oil
Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971) (“A
board of directors enjoys a presumption of sound business
judgment, and its decisions will not be disturbed if they can
be attributed to any rational business purpose. A court under
such circumstances will not substitute its own notions of
what is or is not sound business judgment.”). The party
challenging the Board's decision has the burden to
establish facts that rebut this presumption.
Aronson, 473 A.2d at 812.
reviewing the Board's decision, the Court inquires
“into the procedures employed by the board in making
its determination.” Barovic v. Ballmer, 72
F.Supp.3d 1210, 1215 (W.D. Wash. 2014) (quoting In re PSE
& G Shareholder Litigation, 173 N.J. 258, 291
(2002)). There is “no prescribed procedure that a board
must follow.” Levine v. Smith, 591 A.2d 194,
214 (Del. 1991) overruled on other grounds by Brehm v.
Eisner, 746 A.2d 244 (Del. 2000). Generally, however,
the Court will analyze whether the Board fulfilled their
“duty to inform themselves of all material information
reasonably available to them.” Barovic, 72
F.Supp.3d at 1215 (citing Mt. Moriah Cemetery on Behalf
of Dun & Bradstreet Corp. v. ...