IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE BGC PARTNERS, INC. 

DERIVATIVE LITIGATION

CONSOLIDATED

C.A. No. 2018-0722-AGB

MEMORANDUM OPINION

Date Submitted: June 6, 2019

Date Decided: September 30, 2019

Nathan A. Cook and Kimberly A. Evans, GRANT & EISENHOFER P.A., 

Wilmington, Delaware; Mark Lebovitch, Jeroen van Kwawegen, Christopher J. 

Orrico, and Andrew E. Blumberg, BERNSTEIN LITOWITZ BERGER & 

GROSSMANN LLP, New York, New York; Attorneys for Plaintiffs Roofers Local 

149 Pension Fund and Northern California Pipe Trades Trust Funds.

C. Barr Flinn and Paul Loughman, YOUNG CONAWAY STARGATT & 

TAYLOR, LLP, Wilmington, Delaware; Eric Leon, Nathan Taylor, and Amanda 

Meinhold, LATHAM & WATKINS LLP, New York, New York; Attorneys for

Defendants Howard Lutnick, CF Group Management, Inc., Cantor Fitzgerald, L.P.,

and Nominal Defendant BGC Partners, Inc.

Raymond J. DiCamillo, Kevin M. Gallagher, and Kevin M. Regan, RICHARDS,

LAYTON & FINGER, P.A., Wilmington, Delaware; Joseph De Simone and

Matthew E. Fenn, MAYER BROWN LLP, New York, New York; Michele L.

Odorizzi, MAYER BROWN LLP, Chicago, Illinois, Attorneysfor Defendants Linda

Bell, Stephen Curwood, William Moran, and John Dalton.

BOUCHARD, C.
1

This case concerns a transaction in which BGC Partners, Inc.—a public 

company controlled by Howard Lutnick—paid $875 million to acquire Berkeley 

Point Financial LLC, a private company also controlled by Lutnick. Plaintiffs are 

two stockholders of BGC. They allege that Lutnick, who stood on both sides of the 

transaction, was highly motivated to—and did—have BGC overpay for Berkeley 

Point because his economic interest in Berkeley Point (60%) far exceeded his 

economic interest in BGC (13.8%), and that the outside directors of BGC acted in 

bad faith in allowing this to happen.

The complaint asserts three derivative claims for breach of fiduciary duty 

against Lutnick as a director, controlling stockholder, and officer of BGC; two 

entities through which Lutnick controls BGC and Berkeley Point; and BGC’s four 

outside directors. Defendants have filed motions to dismiss that raise two issues. 

First, defendants assert that the complaint should be dismissed in its entirety because 

plaintiffs have failed to establish that it would have been futile for them to make a 

demand on BGC’s board to decide whether or not BGC should pursue the claims 

itself. Second, the outside directors assert that the claim brought against them should 

be dismissed for failure to state a claim for relief. 

For the reasons explained below, the court concludes that both of the grounds 

for dismissal that defendants have advanced fail. Accordingly, defendants’ motions

to dismiss will be denied. 
2

I. BACKGROUND

Unless otherwise noted, the facts recited in this opinion are based on the 

allegations of the Verified First Amended Stockholder Derivative Complaint 

(“Complaint”) and documents incorporated therein,

1

including documents produced 

in response to a demand to inspect books and records under 8 Del. C. § 220.2 Any 

additional facts are subject to judicial notice.

A. The Players

On September 8, 2017, BGC Partners, Inc. (“BGC” or the “Company”)

purchased Berkeley Point Financial LLC (“Berkeley Point”) from Cantor 

Commercial Real Estate Company, L.P. (“CCRE”) for $875 million. BGC 

simultaneously invested $100 million for a 27% interest in CCRE’s remaining 

commercial mortgage-backed securities business (the “CMBS Business”). These 

two transactions are referred together in this decision as the “Transaction”. 

Nominal defendant BGC is a Delaware corporation headquartered in New 

York that provides brokerage and financial services. Its predecessor entity, BGC 

Partners, L.P., was formed in 2004 when it was spun off by Cantor Fitzgerald, L.P. 

(“Cantor”). In 2008, BGC Partners, L.P. merged with eSpeed, Inc, another former 

Cantor subsidiary, to form the public company BGC Partners, Inc.

 

1 See Winshall v. Viacom Int’l, Inc., 76 A.3d 808, 818 (Del. 2013) (“[P]laintiff may not 

reference certain documents outside the complaint and at the same time prevent the court 

from considering those documents’ actual terms” in connection with a motion to dismiss).
3

The plaintiffs in this case are Roofers Local 149 Pension Fund and Northern 

California Pipe Trades Trust Funds (together, “Plaintiffs”). They allege they were 

stockholders of BGC at the time of the Transaction and have been stockholders 

continuously since then.3

The defendants in this case consist of Howard Lutnick, the Chairman and 

CEO of BGC; four other individuals on BGC’s board at the time of the Transaction;

and two entities that—along with Lutnick—sit on top of a complicated web of 

affiliated entities and appear on both sides of the Transaction: Cantor and CF Group 

Management, Inc. (“CF Group”).

Cantor is a privately owned financial services and brokerage firm based in 

New York. CF Group is a New York corporation that serves as Cantor’s managing 

general partner. Lutnick is the sole stockholder of CF Group. He also owns 

approximately 60% of Cantor, and has sole voting control of Cantor.

4

 

At all relevant times, Cantor, CF Group, and Lutnick controlled BGC through 

their beneficial ownership of 100% of BGC’s Class B super-voting common stock, 

 

2 As a condition of receiving documents, plaintiff Roofers Local 149 Pension Fund agreed 

that, if it filed a complaint relating to its Section 220 demand, the complaint “shall be 

deemed to incorporate by reference the entirety of the books and records on which 

inspection is permitted.” BGC Defs.’ Opening Br. 18-19 (Dkt. 36). 

3 Compl. ¶¶ 10-11.

4

Id. ¶¶ 13-14. 
4

giving them 60% of the Company’s total voting power.5 In 2017, Cantor and 

Lutnick owned 17.3% and 2.8%, respectively, of BGC’s common stock equivalents.

Before the Transaction, Berkeley Point was a wholly-owned subsidiary of 

CCRE, which, in turn, was an affiliate of Cantor. The Transaction provided that 

Cantor would receive BGC’s $875 million payment to acquire Berkeley Point. 

Lutnick allegedly had “much larger ownership interests” in Cantor (60%) than BGC 

(approximately 13.2%), which “motivated him to cause BGC to overpay for 

Berkeley Point.”6 Thus, according to the Complaint, “Lutnick’s ownership interests

in Cantor and BGC guaranteed that he would personally receive approximately 

46.8% of every dollar that BGC overpaid” in the Transaction.7

Lutnick has been the Chairman of the Board and CEO of BGC and its 

predecessors (including eSpeed) since June 1999.8 Lutnick also serves or has served 

on the boards of multiple other Cantor-affiliated entities, including (i) eSpeed; (ii) 

ELX Futures; (iii) GFI; (iv) Newmark; and (v) Cantor Exchange.9 Lutnick allegedly 

 

5

Id. ¶ 15. 

6

Id. ¶ 3. The 13.2% figure is the rounded sum of (i) Lutnick’s personal interest in BGC 

common stock equivalents (2.8%) and (ii) 60% of Cantor’s interest in BGC common stock 

equivalents (17.3% * 60% = 10.38%). 

7

Id.

8

Id. ¶ 18.

9

Id. ¶ 19.
5

has a “reputation as a Wall Street bruiser” and is “famously sharp-elbowed.”10 

Lutnick also has strong ties to Haverford College, his alma mater. He has served on 

the Haverford Board of Managers for twenty-one years and donated at least $65 

million to the college over the past twenty-five years, including a record-setting $25 

million donation in 2014.11 Lutnick has described the motivation for his generous 

giving as “Love” and the belief that Haverford people “make [his] life special.”12 

The other four individual defendants are Linda Bell, Stephen Curwood, 

William Moran, and John Dalton. At all relevant times, they each were members of 

the BGC board, its Audit Committee, and the Special Committee that evaluated the 

Transaction.

13

 They are referred to hereafter, at times, collectively as the “Special 

Committee Defendants.” In February 2015, Lutnick placed all of the Special 

Committee Defendants on a publicly-filed list of potential appointees to the board 

of GFI, an entity that BGC acquired in 2016.

14

 Other relationships between Lutnick 

and each of the four members of the Special Committee are discussed in detail later 

in Sections III.C-D of this opinion.

 

10 Id. ¶ 2.

11 Id. ¶ 20.

12 Id.

13 Id. ¶ 5.

14 Id. ¶ 31.
6

B. Lutnick and Cantor Set the Stage for the Transaction

On February 11, 2017, Lutnick informed BGC’s Audit Committee (consisting 

of Bell, Curwood, Dalton, and Moran) that BGC’s management was considering 

acquiring Berkeley Point.

15 Berkeley Point is a designated underwriting and 

servicing lender for multi-family homes from government-sponsored entities such 

as the Department of Housing and Urban Development, Freddie Mac, and Fannie 

Mae.

16 BGC and Newmark—a subsidiary of BGC—had been originating business 

for Berkeley Point since late 2011.17 

Lutnick told the Audit Committee on February 11 that a potential purchase 

price for Berkeley Point would be in the “low $700 million range” and that Cantor 

already had reached agreements in principle with outside investors in CCRE—a 

Cantor affiliate that wholly-owned Berkeley Point—to buy their interests, setting the 

stage for a sale of Berkeley Point to BGC.18 Lutnick also informed the Audit 

Committee that BGC management was considering a potential $150 million 

investment by BGC in CCRE that would be “riskier and more volatile than Berkeley 

Point’s business” but would allow BGC to access data about properties that would 

 

15 Id. ¶ 63.

16 Id. ¶ 17.

17 Id. ¶¶ 59, 61.

18 Id. ¶ 63.
7

be beneficial to BGC’s brokerage business.19 These were the first steps in a multistep plan called “Project Referee,” which would culminate in a spin-off and an initial 

public offering of a combined Newmark and Berkeley Point entity by the end of 

2017.20

On March 14, 2017, Bell, Curwood, Dalton, and Moran, were appointed to a 

Special Committee to evaluate the merits of the proposed Transaction.

21

 Debevoise 

& Plimpton acted as the Special Committee’s legal advisor and Sandler O’Neill 

acted as its financial advisor in connection with the Transaction.22 

The Special Committee resolutions recognized that Lutnick had a potential 

conflict of interest and was not disinterested or independent with respect to the

Transaction.23 The Special Committee nevertheless “immediately authorized 

management—i.e., Lutnick—to proceed with negotiating” the Transaction.24 The 

Special Committee resolutions also provided that officers of the Company, including 

Lutnick, had to furnish information to the Special Committee members but that 

obligation did not extend to “any items in the possession of or available to officers 

 

19 Id.

20 Id. ¶ 64.

21 Id. ¶ 66 & n.4.

22 Id. ¶¶ 54, 56.

23 Id. ¶ 66.

24 Id.
8

of [BGC] which is held in their capacity as officers of Cantor or its affiliates” other 

than BGC, which was not otherwise provided to BGC.25 The resolutions “placed no 

corresponding restriction on Lutnick’s ability to share BGC information with 

Cantor.”26 

C. The Negotiation Process

Plaintiffs allege that Lutnick “controlled the negotiations and coopted the 

Special Committee,” citing as evidence the fact that “the Special Committee’s CoChair, Moran, emailed Lutnick on April 6, 2017 and asked whether Lutnick had 

‘changed our timetable for execution???’” of the Transaction.27 Lutnick attended 

multiple BGC board and Special Committee meetings, and directed certain changes 

to the modeling used to determine the valuation of Berkeley Point.28 Neither the 

Special Committee nor BGC considered any alternative transactions.29 

Plaintiffs further allege that the Special Committee’s failure to look out for 

BGC’s interests in negotiating the price of the Transaction can be seen in the upward 

trajectory of the amounts Cantor proposed BGC pay for Berkeley Point, which 

moved from an initial indication in the low $700 million range in February 2017 to 

 

25 Id. ¶ 67.

26 Id. ¶ 68.

27 Id. ¶ 69.

28 Id. ¶¶ 71-72.

29 Id. ¶ 70.
9

$875 million about five months later, in July 2017. The first upward movement 

occurred on March 2, 2017, when Cantor increased the proposed purchase price from 

the low $700 million range that Lutnick floated on February 11, to $750 million for 

a 95% stake in Berkeley Point.30 

The amount increased again on April 21, 2017, when Cantor submitted a term 

sheet to BGC proposing that BGC would invest $1 billion to obtain a limited 

partnership interest in CCRE, which implied a price of $850 million for a 95% 

interest in Berkeley Point and contemplated that the remaining 5% would be retained 

by Cantor and/or its affiliates.

31

 The other $150 million “accounted for the proposed 

investment in CCRE’s remaining Cantor CMBS Business.”32 The term sheet 

contemplated granting a put option to BGC that would allow BGC, no earlier than 

five years after closing, to put to CCRE its interest in all of CCRE in exchange for 

100% of Berkeley Point’s equity and a return of its deemed capital account in the 

Cantor CMBS Business, less $30 million.33 The term sheet indicated that this $30 

million was the “amount . . . attributable to the 5% of [Berkeley Point] owned by 

[Cantor and/or its affiliates].”34 Plaintiffs extrapolate from this valuation of a 5% 

 

30 Id. ¶ 73.

31 Id. ¶ 74.

32 Id.

33 Id. ¶ 75.

34 Id.
10

interest in Berkeley Point that the 95% interest proposed to be sold to BGC “should 

have been valued at approximately $570 million, a far cry from Cantor’s egregiously 

inflated asking price of $850 million.”35 

On May 11, 2017, the Special Committee received a presentation from Cantor 

and Lutnick, indicating that the purchase price of Berkeley Point would be 

approximately $850 million. The minutes do not indicate that the Special 

Committee pushed back on the increase in the purchase price from $750 million 

proposed about two months earlier, on March 2, to approximately $850 million.

36

 

The presentation also acknowledged that BGC had caused its subsidiary, Newmark,

to confer substantial value on Berkeley Point, and thus Cantor, yet the value BGC 

had contributed was not used as leverage in negotiations.37

On May 23, 2017, Cantor provided to the Special Committee a term sheet that 

was substantially similar to the April 21, 2017 term sheet.38 On May 25, 2017, at a 

meeting of the Special Committee, Sandler O’Neill presented its preliminary 

perspective as to a proper valuation of the Transaction. During the meeting, Sandler 

O’Neill acknowledged that it needed to better understand “the economic terms of 

 

35 Id. ¶ 76.

36 Id. ¶ 80.

37 Id. ¶ 81.

38 Id. ¶ 83.
11

CCRE’s initial investment in Berkeley Point in 2014 and the prices at which CCRE’s 

outside investors invested and would exit.”39

D. Sandler O’Neill’s Analysis of the Transaction

On June 4 and 5, 2017, Sandler O’Neill presented the Special Committee with 

an analysis of the proposed Transaction.40 The presentation contained eight reasons 

why Cantor’s $880 million total valuation of Berkeley Point overvalued the 

company.

41

 

One reason was that the multiples implied by Cantor’s valuation were 50-

100% higher in six different metrics than those Cantor paid when it acquired 

Berkeley Point in April 2014 for $259.3 million.

42

 

Several other reasons concerned the only purportedly comparable company

that had been identified for Berkeley Point: Walker & Dunlop. To start, the $880 

million valuation was based on a multiples comparison to Walker & Dunlop, but 

Berkeley Point had not experienced the same consistency or growth as Walker & 

Dunlop.

43 Sandler O’Neill also pointed out that BGC’s ownership of Berkeley Point 

would be illiquid and thus justify a discount relative to Walker & Dunlop, which

 

39 Id. ¶ 84.

40 Id. ¶ 86.

41 Id.

42 Id. ¶ 86(a).

43 Id. ¶ 86(b).
12

was a publicly traded company.

44

 Sandler O’Neill further pointed out that Walker 

& Dunlop’s price had increased significantly between February 2017, when Cantor 

and Lutnick first floated the idea of the acquisition, and the May 2017 term sheet, 

which Cantor allegedly used as leverage to increase the price of Berkeley Point.45 

Finally, after explaining that Berkeley Point’s growth rate would have lagged behind 

Walker & Dunlop’s if originations from Newmark—BGC’s own subsidiary—were 

excluded, Sandler O’Neill presentation stated bluntly that BGC “should not be 

paying for the value it already brings to Berkeley Point.”46 

Sandler O’Neill’s presentation also expressed concern that (i) the Transaction 

structure was designed to maximize Cantor’s tax benefits, but limited BGC’s ability 

to exercise control over Berkeley Point, (ii) BGC was being asked to bear the risk of 

Berkeley Point’s questionable value proposition for Newmark, and (iii) mortgage 

related government sponsored entities may change their procedures and protocols in 

a way that could adversely impact Berkeley Point.47

In light of these concerns, Sandler O’Neill recommended that the valuation 

should be reduced to $720 million, which it contended would be an “appropriate” 

valuation, although it recognized there were reasons why BGC should pay even 

 

44 Id. ¶ 86(d).

45 Id. ¶ 86(f).

46 Id. ¶ 86(c).

47 Id. ¶ 86(e), (g)-(h).
13

less.48 Sandler O’Neill also recommended that BGC seek other concessions, 

including “requiring Cantor to bear losses to the full extent of its investment, a 

change of the preferred return rate to be earned by BGC from 5% to 6%, and an 

increase in BGC’s share of gross returns from 60% to 90%.”

49

E. Terms of the Transaction

At a June 6, 2017 meeting, the Special Committee proposed to Cantor the 

$720 million valuation that Sandler O’Neill had endorsed.50 Cantor offered a 

counter proposal, the terms of which are not disclosed in the Special Committee’s 

meeting minutes, and which the Special Committee discussed for no more than 75 

minutes.

51

 After the negotiations resumed, the parties reached an agreement that 

BGC would acquire 100% of the equity interest in Berkeley Point for $875 million 

and would invest $100 million in the CMBS Business for a period of five years, with 

a preferred return of 5% and a prohibition on distributions until BGC received said 

return.52

 

48 Id. ¶ 87.

49 Id. ¶ 89.

50 Id. ¶ 90.

51 Id. 

52 Id. ¶ 91.
14

BGC did not receive other protections that Sandler O’Neill had urged it to 

seek.

53

 The written agreement granted Cantor 100% voting control over the general 

partner of the Cantor CMBS Business in which BGC had invested, allegedly 

disadvantaging BGC.54 Sandler O’Neill did not issue a fairness opinion with respect 

to BGC’s investment in the CMBS Business, but did issue an opinion that the “terms 

of the investment were ‘reasonable’ to BGC and its investors.”55

On July 13, 2017, the Special Committee approved the Transaction, which 

was not subject to approval by BGC’s stockholders. On September 8, 2017, the 

Transaction closed.

56

F. The Newmark IPO

By October 23, 2017, Berkeley Point had been integrated into Newmark, 

which completed an initial public offering about two months later on December 19, 

2017.57 Based on the IPO price, the value of Newmark, after Berkeley Point had 

been integrated into it, was approximately $1.84 billion. From this, and the fact that 

Newmark allegedly derived 30.6% of its EBITDA from Berkeley Point, Plaintiffs 

contend that the Newmark IPO implied a value for Berkeley Point of only $563 

 

53 Id. ¶ 93.

54 Id. ¶ 94.

55 Id. ¶ 96.

56 Id. ¶ 97.

57 Id. ¶ 98.
15

million (i.e., 30.6% of approximately $1.84 billion), just three months after BGC 

had paid $875 million to acquire Berkeley Point in the Transaction.

58

II. PROCEDURAL HISTORY

In October and November 2018, Plaintiffs each filed derivative actions in this 

court challenging the Transaction. On December 4, 2018, those actions were 

consolidated. On February 12, 2019, Plaintiffs filed their Verified First Amended 

Stockholder Derivative Complaint (as defined above, the “Complaint”).

The Complaint contains three derivative claims. Count I asserts that BGC’s 

directors breached their fiduciary duties by approving a related-party transaction “on 

unfair terms and pursuant to an unfair process.”59 Count II asserts that Lutnick, CF 

Group, and Cantor, as controlling stockholders of BGC, “breached their fiduciary 

duties by using their control over BGC and the Special Committee Defendants to 

cause the Company to enter into the [Transaction] on unfair terms and pursuant to 

an unfair process.”60 Count III asserts that Lutnick breached his fiduciary duties “as 

an officer of BGC by dominating, directing, and otherwise interfering with the 

process through which the Company entered into the [Transaction], including by 

 

58 Id. ¶ 99.

59 Id. ¶ 137.

60 Id. ¶ 141.
16

taking control of the Company’s interactions with rating agencies and financing 

sources.”61

In March 2019, defendants filed two motions to dismiss. In one motion, 

Lutnick, CF Group, and Cantor moved to dismiss the Complaint in its entirety under 

Court of Chancery Rule 23.1 based on Plaintiffs’ failure to make a demand on BGC’s 

board before initiating derivative litigation. In the second motion, the Special 

Committee Defendants also moved to dismiss under Rule 23.1 and separately moved 

to dismiss Count I of the Complaint as to them under Court of Chancery Rule 

12(b)(6) for failure to state a claim for relief. No motion was filed seeking dismissal 

of Counts II and III under Rule 12(b)(6). After the completion of briefing, the court 

heard argument on the motions on June 6, 2019.62 

III. ANALYSIS

Defendants’ motions raise two issues. First, have Plaintiffs pled sufficient 

particularized facts to show that making a demand on the BGC board before filing 

their derivative claims would have been futile? This issue is discussed in Sections 

A-C below. Second, if the answer to the first question is yes, does the Complaint 

state a claim for relief against each of the Special Committee Defendants under the 

 

61 Id. ¶ 146.

62 Dkt. 68; see Tr. (June 6, 2019) (Dkt. 69).
17

test set out in In re Cornerstone Therapeutics Inc., Shareholder Litigation?

63

 This 

issue is discussed in Section D below.

A. Demand Futility Standards

Under Court of Chancery Rule 23.1, a stockholder who wishes to bring a 

derivative claim on behalf of a corporation must “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.”64 This requirement stems from a “basic 

principle of the Delaware General Corporation Law . . . that the directors, and not 

the stockholders, manage the business and affairs of the corporation.”

65

 

“The decision to bring or to refrain from bringing suit on behalf of the 

corporation is the responsibility of the board of directors.”

66

 This allows “a 

corporation, on whose behalf a derivative suit is brought, the opportunity to rectify 

the alleged wrong without suit or to control any litigation brought for its benefit.”67 

Under the heightened pleading requirements of Rule 23.1, “conclusionary

 

63 115 A.3d 1173 (Del. 2015).

64 Ch. Ct. R. 23.1.

65 FLI Deep Marine LLC v. McKim, 2009 WL 1204363, at *2 (Del. Ch. Apr. 21, 2009).

66 Id.

67 Lewis v. Aronson, 466 A.2d 375, 380 (Del. Ch. 1983), rev’d on other grounds, 473 A.2d 

805 (Del. 1984).
18

allegations of fact or law not supported by the allegations of specific fact may not 

be taken as true.”68 

Under Delaware law, courts employ two different tests for determining 

whether demand may be excused: the Aronson test and the Rales test. The court 

applies the test from Aronson v. Lewis69 when “a decision of the board of directors 

is being challenged in the derivative suit.”70 On the other hand, the test from Rales 

v. Blasband71 governs when “the board that would be considering the demand did 

not make a business decision which is being challenged in the derivative suit,” such 

as “where directors are sued derivatively because they have failed to do 

something.”72 The Aronson and Rales tests both ultimately focus on the same 

inquiry, i.e., whether “the derivative plaintiff has shown some reason to doubt that 

the board will exercise its discretion impartially and in good faith.”73

 

68 Grobow v. Perot, 539 A.2d 180, 187 (Del. 1988), overruled on other grounds by Brehm 

v. Eisner, 746 A.2d 244 (Del. 2000).

69 466 A.2d 375.

70 Rales v. Blasband, 634 A.2d 927, 933 (Del. 1993).

71 Id.

72 Id. at 933-34, 934 n.9. The Rales test also applies “where a business decision was made 

by the board of a company, but a majority of the directors making the decision have been 

replaced” and where “the decision being challenged was made by the board of a different 

corporation.” Id. at 934. 

73 In re INFOUSA, Inc. S’holders Litig., 953 A.2d 963, 986 (Del. Ch. 2007).
19

Here, both parties agree that the Aronson test applies because Plaintiffs are 

challenging the Board’s decision to enter into the Transaction.

74

 Under that test, the 

court asks “whether, under the particularized facts alleged, a reasonable doubt is 

created that: (1) the directors are disinterested and independent [or] (2) the 

challenged transaction was otherwise the product of a valid exercise of business 

judgment.”75 Plaintiffs have advanced arguments under both prongs of Aronson.

Those arguments are considered next, in reverse order.

B. Plaintiffs’ Argument Under the Second Prong of Aronson Fails

Focusing on the second prong of Aronson, Plaintiffs argue that “demand is 

excused as a matter of law” simply because the Transaction is subject to entire 

fairness review since “BGC’s controlling stockholder stood on both sides.”

76

 The 

court rejected this same argument four years ago in Teamsters Union 25 Health 

Services & Insurance Plan v. Baiera.

77 There, I explained that “[a]lthough this 

 

74 Id. at 933-34.

75 Aronson, 473 A.2d at 814.

76 Pls.’ Answering Br. 47. Plaintiffs also argue that the demand is excused under second 

prong of Aronson because “the particularized allegations of the Complaint create a reason 

to doubt that the members of the Special Committee acted in good faith.” Id. 39. The court 

does not address this issue because it finds that demand is excused under the first prong of 

Aronson for the reasons stated in Section III.C. 

77 119 A.3d 44 (Del. Ch. 2015).
20

argument has some superficial appeal, it is inconsistent with controlling authority,”78

in particular our Supreme Court’s decisions in Aronson and Beam v. Stewart:

79

As Aronson, Beam, and Rule 23.1 make plain, the demand futility test 

under Delaware law focuses exclusively on whether there is a 

reasonable doubt that the directors could impartially respond to a 

demand. . . . Under these authorities, neither the presence of a 

controlling stockholder nor allegations of self-dealing by a controlling 

stockholder changes the director-based focus of the demand futility 

inquiry.80

In reaching this conclusion, the court did not hold that the presence of a 

controller is irrelevant to the director-based focus of the demand futility inquiry. 

Rather, Teamsters simply holds, based on well-established precedent, that the 

second prong of Aronson is not automatically satisfied when the challenged 

transaction would be subject to entire fairness review because it involves a 

controlling stockholder. 

That said, our law is not blind to the practical realities of serving as a director 

of a corporation with a controlling stockholder. As this court explained in Ezcorp:

Delaware Supreme Court decisions have recognized the risk that 

directors laboring in the shadow of a controlling stockholder face a 

threat of implicit coercion because of the controller’s ability to not 

 

78 Id. at 65.

79 845 A.2d 1040 (Del. 2004).

80 Teamsters, 119 A.3d at 67.
21

support the director’s re-nomination or re-election, or take the more 

aggressive step of removing the directors.81

 

Or, as stated more colorfully by then-Vice Chancellor Strine:

In colloquial terms, the Supreme Court saw the controlling stockholder 

as the 800–pound gorilla whose urgent hunger for the rest of the 

bananas is likely to frighten less powerful primates like putatively 

independent directors who might well have been hand-picked by the 

gorilla (and who at the very least owed their seats on the board to his 

support).

82

Because of the dynamics involved where a controlling stockholder stands on 

both sides of a corporate transaction, there is “an obvious fear that even putatively 

independent directors may owe or feel a more-than-wholesome allegiance to the 

interests of the controller, rather than to the corporation and its public 

stockholders.”83 Put simply, “Delaware is more suspicious when the fiduciary who 

is interested is a controlling stockholder.”84

The implications of taking action in the controlling stockholder context is that 

directors may “preserve their positions and align themselves with the controller by 

not doing something, viz. by not initiating litigation.”85 Given these practical 

 

81 In re Ezcorp Inc. Consulting Agreement Deriv. Litig., 2016 WL 301245, at *20 (Del. Ch. 

Jan. 25, 2016) (citing Kahn v. Lynch Commc’n Sys. Inc., 638 A.2d 1110, 1116-17 (Del. 

1994); and Kahn v. Tremont Corp., 694 A.2d 422, 428 (Del. 1997)). 

82 In re Pure Res., Inc., S'holders Litig., 808 A.2d 421, 436 (Del. Ch. 2002).

83 Leo E. Strine, Jr., The Delaware Way: How We Do Corporate Law and Some of the 

New Challenges We (and Europe) Face, 30 Del. J. Corp. L. 673, 678 (2005). 

84 Id. 

85 In re EzCorp, 2016 WL 301245, at *29 n.24.
22

realities, although application of the entire fairness standard to a transaction 

involving a controller does not automatically satisfy the second prong of Aronson, 

the presence and influence of a controller is an important factor that should be 

considered in the director-based focus of the demand futility inquiry under the first 

prong of Aronson, particularly on the issue of independence.

Former Chancellor Chandler thoughtfully explained the considerations 

implicated in considering the question of independence, including where a 

stockholder has the unilateral power to determine whether a director may continue 

to receive a benefit, as follows:

“Independence” does not involve a question of whether the challenged 

director derives a benefit from the transaction that is not generally 

shared with the other shareholders. Rather, it involves an inquiry into 

whether the director's decision resulted from that director being 

controlled by another. A director can be controlled by another if in fact 

he is dominated by that other party, whether through close personal or 

familial relationship or through force of will. A director can also be 

controlled by another if the challenged director is beholden to the 

allegedly controlling entity. A director may be considered beholden to 

(and thus controlled by) another when the allegedly controlling entity 

has the unilateral power (whether direct or indirect through control over 

other decision makers), to decide whether the challenged director 

continues to receive a benefit, financial or otherwise, upon which the 

challenged director is so dependent or is of such subjective material 

importance to him that the threatened loss of that benefit might create 

a reason to question whether the controlled director is able to consider 

the corporate merits of the challenged transaction objectively.86

 

86 Orman v. Cullman, 794 A.2d 5, 25 n.50 (Del. Ch. 2002).
23

Here, the Complaint specifically alleges that Lutnick, through his control of 

Cantor, had the unilateral power to remove any of BGC’s directors at any time:

Specifically, BGC’s public filings provide that BGC is “controlled by 

Cantor, which has potential conflicts of interest with [BGC] and may 

exercise its control in a way that favors its interests to [BGC’s] 

detriment.” According to the 10-K, this control includes the ability, 

“without the consent of public holders of [BGC’s] Class A common 

stock, to elect all of the members of [BGC’s] board of directors and to 

control [BGC’s] management and affairs.” Pursuant to the Company’s 

bylaws and certificate of incorporation, Cantor could use its control of 

the Company’s voting power to call a special meeting at any time for 

the purpose of “remov[ing], with or without cause, any Director.” 

Accordingly, Lutnick and Cantor had the power to remove any of the 

BGC directors at will.87

With this well-pled fact and the foregoing discussion in mind, the court turns next 

to the director-based analysis required under the first prong of Aronson. 

C. The Complaint’s Factual Allegations Create a Reasonable Doubt 

About the Impartiality of a Majority of the Demand Board

When the Complaint was filed, BGC’s board consisted of five directors: 

Lutnick, three members of the Special Committee that approved the Transaction 

(Bell, Curwood, and Moran), and a new director (David Richards) who did not 

consider the Transaction (collectively, the “Demand Board”).

88

 Therefore, to 

demonstrate that the Demand Board is unable to consider a pre-suit demand

 

87 Compl. ¶ 25.

88 Id. ¶ 113.
24

impartially, the Complaint must plead facts that create a reason to doubt that at least

three of these five individuals are disinterested or independent. 

Defendants concede that Lutnick is interested for purposes of this motion.

89

They could not credibly do otherwise. As previously discussed, Lutnick stood on 

both sides of the Transaction through his control of Cantor and personally stood to 

receive almost 47% of every dollar that BGC allegedly overpaid for Berkeley Point 

because Lutnick’s economic interest in Cantor far exceeded his economic interest in 

BGC. For their part, Plaintiffs do not challenge Richards’ impartiality. 

Thus, whether or not demand would be futile in this case turns on whether

Plaintiffs have plead particularized facts sufficient to create a reasonable doubt that 

two of the three remaining members of the Demand Board are disinterested or 

independent. For the reasons explained below, the court concludes that the 

particularized allegations of the Compliant create a reason to doubt the independence 

of each of these three individuals. Before analyzing those factual allegations, the 

court turns to review the recent teachings of our Supreme Court on the issue of 

director independence in the demand futility context. 

“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 

 

89 BGC Defs.’ Opening Br. 22. 
25

party’s dominion or beholden to that interested party.”

90

 When assessing

independence, “our law cannot ignore the social nature of humans or that they are 

motivated by things other than money, such as love, friendship, and collegiality.”91 

At the pleadings stage, a “plaintiff cannot just assert that a close relationship exists, 

but when the plaintiff pleads specific facts about the relationship—such as the length 

of the relationship or details about the closeness of the relationship—then this Court 

is charged with making all reasonable inferences from those facts in the plaintiff’s 

favor.”92 Relatedly, the court must consider plaintiff’s allegations “in their totality 

and not in isolation from each other.”93 In short, a plaintiff must allege a 

“constellation of facts that, taken together, create a reasonable doubt about [the 

director]’s ability to objectively consider a demand.”94

Applying these principles, our Supreme Court has reversed Court of Chancery 

findings of director independence in the demand futility context on three occasions 

over the past four years under a de novo standard of review. These decisions, which 

reinforce the importance of considering a plaintiff’s factual allegations holistically 

and affording plaintiff all reasonable inferences, are reviewed next.

 

90 Marchand v. Barnhill, 212 A.3d 805, 818 (Del. 2019) (internal quotation marks omitted).

91 Id. (internal quotation marks omitted).

92 Id.

93 Del. Cty. Emps. Ret. Fund v. Sanchez, 124 A.3d 1017, 1019 (Del. 2015).

94 In re Oracle Corp. Deriv. Litig., 2018 WL 1381331, at *18 (Del. Ch. Mar. 19, 2018).
26

In Sanchez, the Supreme Court ruled that the plaintiffs had “pled 

particularized facts, that when considered in the plaintiff-friendly manner required, 

create a reasonable doubt about [the] independence” of a director named Alan 

Jackson.

95

 Jackson had been close friends for more than five decades with the 

patriarch of a family (Chairman Sanchez) that held 16% of the company’s shares, 

donated $12,500 to Chairman Sanchez’s gubernatorial campaign, and his “personal 

wealth [was] largely attributable to business interests over which Chairman Sanchez

[had] substantial influence.”96 The high court commented that while Jackson’s 

personal and professional relationships “may be coincidental,” they were sufficient 

to support “a pleading stage inference that Jackson’s economic positions derive in 

large measure from his 50-year close friendship with Chairman Sanchez, and that he 

is in these positions because Sanchez trusts, cares for, and respects him.”97 

Explaining why it had reached a different conclusion about Jackson’s independence

than the trial court, the Supreme Court stated that “the Court of Chancery’s analysis 

seemed to consider the facts the plaintiffs pled about Jackson’s personal friendship 

with Sanchez and the facts they pled regarding his business relationships as entirely 

separate issues.”98 

 

95 124 A.3d at 1024.

96 Id. at 1020.

97 Id. at 1023.

98 Id. at 1021.
27

In Sandys, the Supreme Court held in a 4-1 decision that one of the directors 

of Zynga, Inc. (Ellen Siminoff) was not independent of its controlling stockholder 

(Mark Pincus) because they co-owned a private airplane together.99 The high court 

reasoned that co-owning a plane “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.”100 The Supreme Court commented that 

pleading demand futility “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.”101 Rather, the coownership of the plane supported a reasonable inference that Siminoff “would not 

be able to act impartially” as the relationship could be inferred to be one that “one 

would expect to heavily influence a human’s ability to exercise impartial 

judgment.”

102

 

Most recently, in Marchand, the Supreme Court found there was reason to 

doubt that a former employee of Blue Bell Creameries USA, Inc. (W.J. Rankin) had 

the capacity to impartially decide whether to sue the company’s CEO, who was a 

 

99 Sandys v. Pincus, 152 A.3d 124, 129-31 (Del. 2016).

100 Id. at 130.

101 Id.

102 Id.
28

member of the Kruse family that had run Blue Bell for generations.103 Rankin started 

as an assistant to the CEO’s father, rose to the position of CFO during his 28 years 

with the company, and was added to the Blue Bell board while he was an employee 

with the support of the Kruse family.

104

 The family had spearheaded efforts that led 

to a $450,000 donation to a local college in Rankin’s name and resulted in the new 

agricultural facility at the college being named after Rankin.

105

 The high court 

reasoned that these facts, “support a reasonable inference that there are very warm 

and thick personal ties of respect, loyalty, and affection,”

106 and that, like in Sanchez 

and Pincus, “the important personal and business relationship that Rankin and the 

Kruse family have shared supports a pleading-stage inference that Rankin cannot act 

independently.”107 Notably, the Supreme Court placed little if any weight on the fact 

that Rankin had voted differently from the CEO in the past, explaining that “the 

decision whether to sue someone is materially different and more important than the 

decision to part company with that person on a vote about corporate governance.”108

 

103 212 A.3d at 818-19.

104 Id. at 808.

105 Id. at 819.

106 Id.

107 Id.

108 Id. 
29

With the foregoing guidance in mind, the court turns to consider the factual 

allegations of the Complaint with respect to the three members of the Special 

Committee who were on the Demand Board.109 

1. William Moran

Moran and Lutnick’s professional relationship spans approximately twenty 

years, during which Moran has served with Lutnick on the boards of four Cantoraffiliated companies: (i) eSpeed, which was BGC’s predecessor, from 1999 to 2005;

(ii) ELX Futures, of which Lutnick was a co-founder and Chairman, from 2009 to 

2013; (iii) GFI, from February 2015 until it was merged with BGC in January 2016; 

and (iv) BGC, since 2013.

110 Defendants downplay the significance of the number 

of boards on which Moran and Lutnick have served together based on the fact that 

most of it occurred sequentially and did not overlap.111 To my mind, however, that 

Moran has served on at least one Cantor-affiliated board for sixteen of the past 

 

109 Demand futility typically is analyzed on a claim-by-claim basis. See Cambridge Ret. 

Sys. v. Bosnjak, 2014 WL 2930869, at *4 (Del. Ch. June 26, 2014) (citing Beam v. Stewart, 

833 A.2d 961, 977 n.48 (Del. Ch. 2003) aff’d, 845 A.2d 1040 (Del. 2004)). In this case, 

the parties did not analyze the three claims in the Complaint separately and the court sees 

no reason to do so because Lutnick is clearly the focal point of each claim. He is named 

as a defendant in his capacity as a BGC director for Count I, as BGC’s controller for Count 

II, and as a BGC officer for Count III. Compl. ¶¶ 136, 140, 145. Thus, insofar as the court 

finds that the alleged facts create a reasonable doubt about a director’s independence from 

Lutnick, that finding would apply to all of the claims in the Complaint. 

110 Compl. ¶ 40.

111 See Tr. 48-49 (June 6, 2019).
30

twenty years suggests that Lutnick “trusts, cares for, and respects him”112 and, 

reciprocally, that it would be important to Moran to maintain a good relationship 

with Lutnick, who has the unilateral ability to terminate the perquisites of Moran’s 

board service to Cantor affiliates, which yielded Moran $931,986 (mostly in cash) 

over the past five years.

113

 

In addition to alleging that Moran has had a lengthy and lucrative professional 

relationship with Lutnick, the Complaint alleges several specific facts from which it 

reasonably can be inferred that they have a close personal relationship, including 

that: (i) Moran and his wife have attended public events with Lutnick, including a 

black-tie gala in 2007 where the three of them were photographed together in a 

staged setting; (ii) Moran’s wife honored Lutnick’s sister at another gala event in 

2014, and (iii) Lutnick offered to help arrange a private tour of the Tate Art Museum 

in London for Moran’s wife and granddaughters, at the time that the Transaction was 

under consideration.

114

 Although the tour did not occur, the alleged fact that Lutnick

would use his influence to set up a private tour at a prominent museum in another 

 

112 Sanchez, 124 A.3d at 1023. 

113 Compl. ¶ 44. See In re Oracle, 2018 WL 1381331, at **17-20 (noting that each of the 

challenged directors stood to lose half a million dollars in director’s fees if they were to 

lose the controller’s support for their directorships, which standing alone would have been 

insufficient to establish a lack of independence on the part of the directors, but when viewed 

holistically, were deemed sufficient to constitute a “constellation of facts” that dictated that 

very conclusion).

114 Compl. ¶¶ 41-43.
31

country as a favor to Moran, and that Moran’s wife chose to honor Lutnick’s sister, 

who co-founded the Cantor Fitzgerald Relief Fund with Lutnick, suggests that the 

relationship between Lutnick and Moran is a close one and not simply a “thin socialcircle friendship.”115

 

Taking into consideration the totality of the Complaint’s allegations 

concerning the 20-year professional and personal relationship between Moran and 

Lutnick, and drawing all reasonable inferences in Plaintiffs’ favor at this stage of the 

case, as the court must, Plaintiffs have adequately pled a “constellation of facts” that 

create a reasonable doubt about Moran’s independence from Lutnick for purposes 

of deciding whether or not to bring a lawsuit against Lutnick.

2. Linda Bell

Bell has served with Lutnick on two Cantor-affiliated boards over the past ten 

years: (i) ELX Futures, from 2009 to July 2013; and (ii) BGC, since July 2013.

116

 

In 2015, Lutnick placed Bell on a publicly-filed list of potential board appointees to 

GFI.117 Although Bell’s board-service relationship with Lutnick has not been as 

lengthy as Moran’s, she appears to be another of Lutnick’s go-to choices for board 

appointments on companies he controls. As such, it is reasonable to infer that 

 

115 Sanchez, 124 A.3d at 1022.

116 Compl. ¶¶ 26, 30.

117 Id. ¶ 31.
32

Lutnick has confidence in Bell and that it would be important to Bell not to 

compromise her good relationship with Lutnick, who has the unilateral power to 

discontinue the benefits Bell has received from serving on Cantor-affiliated boards.

This inference is bolstered by specifically alleged facts suggesting that these 

board appointments have been financially material to Bell.

118

 In particular, after 

conducting an ostensibly thorough search of publicly-available information, 

including Form 990’s that tax-exempt organizations must file annually, Plaintiffs

allege that Bell’s board compensation from BGC (e.g., $266,000 in 2017, with 

$216,000 paid in cash) has represented over 30% of her annual income in recent 

years during which she has served as Provost, Dean of the Faculty, and a Professor 

of Economics at Barnard College, and earned $351,409 and $373,547 in 2015 and 

2016, respectively.

119

 

Apart from their board service together, the Complaint goes on to plead more 

particularized facts about Bell’s relationship with Lutnick. Before joining Barnard, 

Bell had an extensive career at Haverford College, dating back to the 1990’s and 

 

118 Orman, 794 A.2d at 25 n.50 (“A director may be considered beholden to (and thus 

controlled by) another when the allegedly controlling entity has the unilateral power . . . to 

decide whether the challenged director continues to receive a benefit, financial or 

otherwise, upon which the challenged director is so dependent or is of such subjective 

material importance to him that the threatened loss of that benefit might create a reason to 

question whether the controlled director is able to consider the corporate merits of the 

challenged transaction objectively.”).

119Compl. ¶¶ 28-29.
33

including service as its Provost and the John B. Hurford Professor of Economic from 

2007 to 2012.120 While at Haverford, Bell, her husband, and Lutnick were members 

of the “1833 Society,” which honors the most generous annual fund donors.

121

 Over 

the past 25 years, Lutnick donated at least $65 million to Haverford, helping to pay 

for its Gary Lutnick Tennis & Track Center, Douglas B. Gardner ’83 Integrated

Athletic Center, Lutnick Library, Cantor Fitzgerald Art Gallery, and five student 

scholarships.122 It can reasonably be inferred that these donations benefited Bell 

professionally as Provost at Haverford,

123 and deepened her personal relationship 

with Lutnick given his self-professed “Love” for Haverford College and its 

people.

124 In that vein, it is reasonable to infer it was no coincidence that Bell was 

first appointed to a Cantor-affiliated board during her tenure as Haverford’s 

Provost.

125

 Although Bell left Haverford several years ago, “past benefits conferred 

 

120 Compl. ¶ 26.

121 Id. 

122 Id. ¶ 20.

123 See In re Oracle Corp. Deriv. Litig., 824 A.2d 917, 930 (Del. Ch. 2003) (differentiating 

between, for the purposes of an independence analysis, tenured professors from those 

members of the university community such as “the University’s President, deans, and 

development professionals, all of whom, it can be reasonably assumed, are required to 

engage heavily in the pursuit of contributions to the University”); see also Off v. Ross, 2008 

WL 5053448, at *11 (Del. Ch. Nov. 26, 2008) (stating in approving a settlement that 

“Ross’s substantial donation raises considerable doubt as to the independence of Dolan” 

who was the Dean of the University of Michigan School of Business when the donation 

was made).

124 Compl. ¶ 20.

125 Id. ¶¶ 26, 30.
34

. . . may establish an obligation or debt (a sense of ‘owingness’) upon which a 

reasonable doubt as to a director’s loyalty to a corporation may be premised.”

126

All-in-all, the particularized facts alleged paint a picture of a close relationship 

between Lutnick and Bell, both professionally and personally, such that there is a 

reasonable doubt as to Bell’s independence from Lutnick for purposes of deciding 

whether or not to bring a lawsuit against Lutnick.

127

3. Stephen Curwood 

Similar to Bell, Curwood has served with Lutnick on a Cantor-affiliated board 

(BGC) for ten years, since December 2009, and Lutnick placed Curwood on a 

publicly-filed list of potential board appointees to another Cantor-affiliated entity—

GFI.128 The Complaint specifically alleges that Curwood received more than $1.3 

million as a BGC director, including $938,000 over the past five years.129

The Complaint also alleges specific facts from which it reasonably may be 

inferred that Curwood’s compensation as a BGC director, which Lutnick has the 

 

126 In re Ply Gem Indus., Inc. S’holders Litig., 2001 WL 1192206, at *1 (Del. Ch. Oct. 3, 

2001). 

127 In reaching this conclusion, the court does not credit Plaintiffs’ contention that “it is 

inconceivable that Lutnick played no role” in Bell’s son gaining admission midway 

through high school to the Horace Mann School, an “elite private preparatory school” 

where Lutnick was on the board and was a “major donor.” See Compl. ¶¶ 23-24, 27. While 

it is certainly possible this occurred, the Complaint’s allegations concerning this matter are 

too speculative to credit. 

128 Compl. ¶¶ 31-32.

129 Id. ¶ 38.
35

unilateral power to discontinue, would be financially material to him. Those 

allegations include that (i) since 1992, Curwood primarily has been employed as 

President of World Media Foundation, Inc., which, according to its Form 990’s, paid 

total compensation to all of its executives in the amount of $61,939 in 2015, 

$107,104 in 2014, and $215,000 or less from 2011 to 2013; and (ii) since 2005, 

Curwood has been the Senior Managing Director of SENCAP LLC, an investment 

group allegedly run out of his residence in New Hampshire that “lacks any internet 

footprint whatsoever.”

130 The Complaint further alleges, credibly, that Curwood’s 

work as an occasional lecturer at Harvard, teacher of one course every other year at 

the University of Massachusetts, and as environmental journalist, likely generated 

less income than his BGC compensation.

131

Like Bell, Curwood’s ties to Lutnick predate his appointment to the BGC 

board, as he served with Lutnick on the Haverford Board of Managers for many 

years. Indeed, the Complaint alleges that Lutnick has been quoted saying he 

appointed Curwood to the BGC board because he “formerly served on the Board of 

Managers of Haverford with Mr. Curwood.”132 Since 2000, Curwood also has 

 

130 Id. ¶¶ 35-39.

131 Id. ¶ 39.

132 Id. ¶ 33.
36

served on the Haverford College Corporation, which holds “legal title to the College 

assets” and has a working group that encourages financial support to Haverford.133 

As our Supreme Court said in Marchand, “any realistic consideration of the 

question of independence must give weight to . . . important relationships and their 

natural effect on the ability of the parties to act impartially toward each other.”134 

Given Lutnick’s extraordinary generosity to Haverford, and Curwood’s own deep 

ties to Haverford, it stands to reason that Curwood naturally would be reluctant to 

support bringing a lawsuit against Lutnick. When this consideration is combined 

with the possibility that Curwood “could lose his rather lucrative directorship” and

the status of serving on a public company board if he agreed to sue Lutnick, Plaintiffs 

have plead sufficient facts to create a reasonable doubt concerning Curwood’s ability 

to be independent from Lutnick.135

* * * * *

 

133 Id. ¶ 34. Defendants assert that since only some of the members of the Haverford 

College Corporation work to encourage donations, this allegation is insufficient. BGC 

Defs.’ Opening Br. 38-39. But, as our Supreme Court has emphasized, the court must draw 

reasonable inferences from particularized facts in Plaintiffs’ favor. Sanchez, 124 A.3d at 

1022 (“[I]t cannot be ignored that although 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.”). Thus, alleging Curwood’s membership in an 

organization with fundraising as a goal is sufficient at this stage of the case. 

134 Marchand, 212 A.3d at 820.

135 See Oracle, 2018 WL 1381331, at **17-20 (considering plaintiff’s particularized facts, 

holistically).
37

For the reasons explained above, Plaintiffs have plead particularized facts that 

create a reasonable doubt that four of the directors serving on the Demand Board are 

either disinterested (Lutnick) or independent (Bell, Curwood, and Moran). 

Defendants’ motion to dismiss the Complaint under Court of Chancery Rule 23.1 

thus must be denied. 

D. Count I States a Claim Against the Special Committee Defendants

The Special Committee Defendants also seek to dismiss Count I of the 

Complaint against them under Court of Chancery Rule 12(b)(6) for failure to state a 

claim for relief. The standard for deciding a motion to dismiss under Rule 12(b)(6) 

is well-settled:

(i) all well-pleaded factual allegations are accepted as true; (ii) even 

vague allegations are well-pleaded if they give the opposing party 

notice of the claim; (iii) the Court must draw all reasonable inferences 

in favor of the non-moving party; and [(iv)] dismissal is inappropriate 

unless the plaintiff would not be entitled to recover under any 

reasonably conceivable set of circumstances susceptible of proof.136

The Special Committee Defendants are protected by a Section 102(b)(7) 

provision in BGC’s certificate of incorporation.137 “When a director is protected by 

an exculpatory charter provision, a plaintiff can survive a motion to dismiss by that 

director defendant by pleading facts supporting a rational inference that the director 

 

136 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002) (internal quotation marks 

omitted).

137 Regan Aff. Ex. 1 (Dkt. 39).
38

harbored self-interest adverse to the stockholders’ interests, acted to advance the 

self-interest of an interested party from whom they could not be presumed to act 

independently, or acted in bad faith.”138 For the reasons discussed above, Plaintiffs 

have plead facts supporting a rational inference that, by voting to approve the 

Transaction, Bell, Curwood, and Moran acted to advance the self-interest of an 

interested party who stood on both sides of the Transaction (Lutnick) from whom 

they could not be presumed to act independently. Accordingly, the motion to 

dismiss under Rule 12(b)(6) is denied as to these three individuals. 

The remaining member of the Special Committee, who is not on the Demand 

Board, is John Dalton. The Complaint alleges that Dalton’s professional relationship 

with Lutnick has spanned approximately twenty years, during which Dalton served 

on the following Cantor-affiliated boards: (i) Cantor Exchange, an electronic 

exchange for trading U.S. Treasury futures that is a subsidiary of Cantor, since 1999; 

(ii) BGC, from 2002 until he resigned in December 2017 to accept a director position 

at Newmark around the time of its IPO; and (iii) Newmark, from late 2017 until late 

2018.139 Lutnick also placed Dalton on a publicly-filed list of potential board 

appointees to GFI in 2015.140 Dalton allegedly received more than $2 million from 

 

138 In re Cornerstone, 115 A.3d at 1179-80.

139 Compl. ¶¶ 46-47, 51.

140 Id. ¶ 31.
39

his service on Cantor-affiliated boards, and for at least the past five years has derived 

40-50% of his income from Cantor-affiliated entities.

141

 

Under the heightened pleading standards of Rule 23.1, these facts, without 

more, 142 would not overcome the presumption of independence our law accords to 

a director of a Delaware corporation in my opinion.

143

 Under the lower pleading 

standard of Rule 12(b)(6), however, it is reasonably conceivable that, when deciding 

whether or not to approve the Transaction, Dalton would be unwilling to jeopardize 

his longstanding position as one of Lutnick’s go-to choices for Cantor-affiliated 

board appointments by negotiating harder for BGC to pay a lower price for Berkeley

Point, or to reject the proposed Transaction outright, given how lucrative his Cantoraffiliated board positions have been to him and Lutnick’s unilateral power to decide 

who should serve on those boards. In other words, it is reasonably conceivable that 

Dalton would not be presumed to have acted independently of Lutnick in deciding 

whether to approve the Transaction, which advanced Lutnick’s self-interest.

 

141 Id. ¶¶ 50-51.

142 Unlike with the other Special Committee members, Plaintiffs have not plead facts 

suggestive of a meaningful personal relationship between Dalton and Lutnick outside of 

Dalton’s lengthy service on Cantor-affiliated boards. The Complaint alleges Dalton is not 

independent because Dalton is a passionate supporter of Navy athletics and the Cantor 

Fitzgerald Relief Fund has donated to the Naval Academy Foundation. Id. ¶ 48. The 

Complaint, however, pleads no specifics concerning the magnitude of any such donations 

or whether Dalton had any role soliciting them. 

143 Beam, 845 A.2d at 1055.
40

Accordingly, the motion to dismiss Count I under Rule 12(b)(6) also is denied as to 

Dalton.

IV. CONCLUSION

For the reasons explained above, both of defendants’ motions to dismiss are 

denied. 

IT IS SO ORDERED.