COURT OF CHANCERY

OF THE

STATE OF DELAWARE

J OSEPH R. S LIGHTS III

V ICE C HANCELLOR 417 S. State Street

Dover, Delaware 19901

Telephone: (302) 739

- 4397

Facsimile: (302) 739

- 6179

Date Submitted: October 18, 2021

Date Decided: November 8 , 2021

Daniel K. Astin, Esquire

Ciardi Ciardi & Astin

1204 North King Street

Wilmington, DE 19801

Thaddeus J. Weaver, Esquire

Dilworth Paxson LLP

One Customs House

704 King Street, Suite 500

Wilmington, DE 19801

Nathan A. Cook, Esquire

Block & Leviton LLP

3801 Kennett Pike, Suite C

- 305

Wilmington, DE 19807

Kurt M. Heyman, Esquire

Melissa N. Donimirski, Esquire

Aaron M. Nelson, Esquire

Heyman Enerio Gattuso & Hirzel LLP

300 Delaware Avenue, Suite 200

Wilmington, DE 19801

Peter B. Andrews, Esquire

Craig J . Springer, Esquire

David M. Sborz, Esquire

Andrews & Springer, LLC

4001 Kennett Pike, Suite 250

Wilmington, DE 19807 Kevin H. Davenport, Esquire

Samuel L. Closic, Esquire

John G. Day, Esquire

Elizabeth Wang, Esquire

Prickett, Jones & Elliott, P.A.

1310 K ing Street

Wilmington, DE 19801

David E. Ross, Esquire

R. Garrett Rice, Esquire

Ross Aronstam & Moritz LLP

100 S. West Street, Suite 400

Wilmington, DE 19801

Jon E. Abramczyk, Esquire

Alexandra M. Cumings, Esquire

Morris, Nichols, Arsht & Tunnell LLP

1201 North Market Street

Wilmington, DE 19801

Blake A. Bennett, Esquire

Cooch and Taylor, P.A.

1000 West Street, 10 th Floor

Wilmington, DE 19801Robert A. Feuer v. Mark Zuckerberg, et al.

C.A. No. 2019

- 0324

- JRS

In re Facebook, Inc. Derivative Litigation

Consolidated C.A. No. 2018

- 0307

- JRS

November 8

, 2021

Page 2

Re: Robert A. Feuer v. Mark Zuckerberg, et al.

C.A. No. 2019

- 0324

- JRS

In re Facebook, Inc. Derivative Litigation

Consolidated C.A. No. 2018

- 0307

- JRS

Dear Counsel:

Plaintiff

, Robert A. Feuer

, has filed a M otion for R eargument or

R econsideration (the “Motion”) with respect to this Court’s Memor andum Opinion

(the “Opinion”) issued October 5, 2021. 1 The Opinion (1) denied Facebook’s

motion to consolidate Feuer’s “demand made” derivative action with related

consolidated “ demand futility ” action s

, and (2) stayed Feuer’s action pending

resolution of anticipated motion(s) to dismiss the operative demand futility

complaint

. For the reasons stated below, the Motion is denied.

The Court will deny a motion for reargument “unless the Court has

overlooked a decision or principle of l aw that would have a controlling effect or the

Court has misapprehended the law or the facts so that the outcome of the decision

1 Feuer v. Zuckerberg

, 2021 WL 4552160 (Del. Ch. Oct. 5, 2021) (the “Opinion”)

( D .I. 94 ) (C.A. 2019

- 0324

- JRS)

.Robert A. Feuer v. Mark Zuckerberg, et al.

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would be affected.” 2 “Where the motion merely rehashes arguments already made

by the parties and considered by the Court when reaching the decision from which

reargument is sought, the motion must be denied.” 3

Feuer argues the Court erroneously failed to consider the impact of our

Supreme Court’s recent decision in United Food v. Zuckerberg in holding that the

consolidated demand futility action should proceed ahead of his demand made

action

. 4 He contends that United Food adopted a new unified standard for pleading

demand futility that is more difficult to satisfy than the previously prevailing

Aronson / Rales standards, and he also suggests that the Supreme Court has now

2 Stein v. Orloff

, 1985 WL 21136, at *2 (Del. Ch. Sept. 26, 1985).

3 Wong v. USES Hldg. Corp.

, 2016 WL 1436594, at *1 (Del. Ch. Apr. 5, 2016) ( citing

Lewis v. Aronson

, 1985 WL 21141, at *2 (Del. Ch. June 7, 1985)) ; see also Miles, Inc. v.

Cookson Am

. , Inc.

, 677 A.2d 505, 506 (Del. Ch. 1995) (“Where, as here, the motion for

reargument represents a mere rehash of arguments already made at trial and during post

tri al briefing, the motion must be denied.”).

4 United Food and Com. Workers Union & Participating Food Indus. v. Zuckerberg

, —

A.3d

— , 2021 WL 4344361 (Del. 2021). Th e parties refer to this decision as

“ United Food

, ” presumably to avoid confusion with the c laims in this litigation also

asserted against Mark Zuckerberg. I will do the same.Robert A. Feuer v. Mark Zuckerberg, et al.

C.A. No. 2019

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confirmed in United Food that the Facebook board of di rectors (the “Board”) is not

disabled from considering a stockholder demand to assert claims against

Mr. Zuckerberg. 5 Feuer already made both arguments while opposing the motion

to stay his case

. 6 While he is correct that the Opinion did not overtly address the

arguments, t he arguments were

, in fact, considered by the Court and rejected. 7

Because t he Motion simply “rehashes arguments already made” to and rejected by

the Court, it presents no basis for reargument under Chancery Rule 59 (f)

. 8 For the

5 Pl. Robert A. Feuer’s Mot. for Reargument or Recons. (the “Motion”) ¶¶ 2, 6

– 10, 12

– 13, 16, 18 (D.I. 95) (C.A. 2019

- 0324)

.

6 Ltr. to V.C. Slights from Daniel K. Astin, Esq. (D.I. 90) (C.A. 2019

- 0324);

In re Facebook, Inc. Deriv. Litig.

, Consol. C.A. No. 2018

- 0307

- JRS, at 10, 30

(Del. Ch. Sept. 30, 2021) (TRANSCRIPT).

7 Opinion at *5 ( recognizing that the pleading standard con fronting a demand made

plaintiff remains more onerous than the standard confronting a demand futility plaintiff:

“ O f the two potential routes presented by Rule 23.1

— pleading demand excusal with

particularity or making a pre

- suit demand

— the former is a stee p road, but the latter is

steeper yet

. ” (internal quotation marks and citation omitted) )

.

8 USES Hldg. Corp.

, 2016 WL 1436594, at *1.Robert A. Feuer v. Mark Zuckerberg, et al.

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sake of completeness, however, I will address Feuer’s argument under United Food

more directly.

As this court has observed, United Food reframes the inquiry previously

captured by the dual demand futility tests set forth in Aronson and Rales

, bu t the

unified test remains “consistent” with its progeny. 9 The Supreme Court said as

much in United Food itself. 10 And, w hile i t is true

, as Feuer observes, that United

Food now confirms what this court has been holding for years

— that duty of care

claims against a fiduciary who is exculpated under a corporation’s charter

, standing

alone, canno t support a finding of demand futility

— that holding will have

9 See Genworth Fin., Inc. Consol. Deriv. Litig.

, 2021 WL 4452338, at *1 1 (Del. Ch.

Sept. 29, 2021); Patel v. Duncan

, 2021 WL 4482157, at *18 (Del. Ch. Sep t

. 30, 2021).

10 United Food

, 2021 WL 4344361, at *16 (“Blending the Aronson test with the Rales test

is appropriate because both address the same question of whether the board can exercise

its business judgment on the corporation’s behalf in considering demand; and the refined

test does not change the result of demand

- futility analysis .”) (cleaned up) (emphasis

added) ; id. at *16 n.169 (showing how the analysis as applied in one situation is similar

under both Ar onson and the new demand futility framework); id. at *17 (observing that

because the new “three

- part test is consistent with and enhances Aronson

, Rales

, and their

progeny, the Court need not overrule Aronson to adopt this refined test, and cases properly

construing Aronson

, Rales

, and their progeny remain good law”).Robert A. Feuer v. Mark Zuckerberg, et al.

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absolutely no bearing on the outcome of the demand futility analysis in this case. 11

Breach of loyalty claims

— the primary claims asserted in the consolidated demand

futility complaint

— are not subject to exculpation. 12 And, i nasmuch as Count I of

the c omplaint brings duty of care claims against Zuckerberg, Sandberg and

11 Id. at *12 (“[T]his Court affirms the Court of Chancery’s holding that exculpated care

claims do not satisfy Aronson ’s second prong

. . . When Aronson was decided, raising a

reasonable dou bt that directors breached their duty of care exposed them to a substantial

likelihood of liability and protracted litigation, raising doubt as to their ability to

impartially consider demand. The ground has since shifted, and exculpated breach of care

cl aims no longer pose a threat that neutralizes director discretion.”); id. at *10

(“[T]he weight of Delaware authority since the enactment of Section 102(b)(7) supports

holding that exculpated care violations do not excuse demand under Aronson ’s second

pron g.”).

12 See, e.g.

, Malpiede v. Townson

, 780 A.2d 1075, 1094 (Del. 2001) (“A plaintiff must

allege well

- pleaded facts stating a claim on which relief may be granted. Had a plaintiff

alleged such well

- pleaded facts supporting a breach of loyalty or bad faith claim, the

Section 102(b)(7) charter provision would have been unavailing as to such claims

. . . .”) ;

Second Am. and Consol. Verified S’holder Deriv. Compl. (“Compl.”) ¶¶ 6 65

– 76

(D.I. 242) (C.A. 2018

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Papamiltiadis as officers

, those claims, by statute, are also not subject to

exculpation

. 13

Although unclear, it appears F euer would have the Court conclude that the

fin ding in United Food that demand was not excused in that case will somehow be

binding on th is Court as it considers demand futility with respect to the claims

asserted in this case

. 14 T he Opinion did not address that argument because it w as

(and is) patently unper suasive. To be clear, the claims addressed in United Food

have absolutely no relationship to the claims asserted here. And Feuer has offered

no credible reason to conclude, or even suspect, that this Court will be bound by the

demand futility determination made in an entirely separate case, involving different

13 See Compl. ¶¶ 6 65

– 69 ; 8 Del. C. § 102(b) (7); Firefighters’ Pension Sys. of Kan. City,

Mo. Tr. v. Presidio, Inc.

, 251 A.3d 212, 286 (Del. Ch. 2021) (“Section 102(b)(7) only

applies to directors.”)

.

14 Motion ¶ 10 ( “ United Food has particular significance here because, in that opinion, the

Supreme Court analyzed and rejected demand futility as to the Board of Directors of

Facebook. As such

, the decision is highly material with respect to the ability of the

demand

- futile plaintiffs here to overcome a Rule 23.1 motion to dismiss

. ” ).

.Robert A. Feuer v. Mark Zuckerberg, et al.

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claims, different plaintiffs, different defendants and entirely different bases to

argue, on both sides, how the three questions posed in United Food should be

answered. 15

After carefully considering the parties’ arguments on consolidation and

sequencing, t he Court concluded that consolidation of the demand futility case and

Feuer’s demand made case was unwarranted because “demand

- made

- and

- refused

and demand

- futile cases are subject to a different legal analysis,” a proposition and

result with which Feuer agreed

. 16 Then, in determining which case should proc eed

first

, the Court declined to adopt a rule that would always place demand futility

claims ahead of demand made claims when both arise from the same facts,

concluding that a ny such per se rule would “blunt the optionality of Rule 23.1.” 17

15 While there is overlap, there are defendants named in the consolidated complaint

brought here who were not named in United Food

.

16 Opini on at *4 (citing Robert A. Feuer’s Opp’n to the Facebook Defs. ’ Mot. to Consol.

¶ 6 (D.I. 81) (C .A. No. 2019

- 0324 )).

17 Id. at *5.Robert A. Feuer v. Mark Zuckerberg, et al.

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Instead, the Court held that “when a complaint that makes a bona fide attempt to

plead demand futility is presented alongside a complaint that implicitly

acknowledges the independence of the board, it makes sense to allow the demand

futility allegations to be tested before addressing the demand

- refused complaint”

because “[i]f the demand futility allegations survive the challenge, that finding

alone will likely inform the court’s determination of which plaintiff’s team has

made the better strategic decision s.” 18 After carefully assessing Feuer’s bid for

reargument, for the reasons already stated, I remain satisfied that

, as a matter of case

management, the Opinion correctly sequenced the presentation of the claims in th e

Feuer and consolidated demand futility case s

. Thus, I cannot agree that “the Court

has overlooked a decision or principle of law that would have a controlling effect

or [that] the Court has misapprehended the law or the facts so that the outcome of

the decision would be affected.” 19

18 Id. at *6

.

19 Stein

, 1985 WL 21136, at *2.Robert A. Feuer v. Mark Zuckerberg, et al.

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Feuer also contends that the Court erred when it determined no prejudice

would result from a stay of his case. But Feuer did not ( and does not ) articulate

why the stay would prejudice him or Facebook, the company he seeks to repre sent.

A general statement that un identified witnesses may leave, die or have their

memories fade while the other case proceeds

— made for the first time in the

M otion

— does not suffice

. 20 The Opinion set forth the reasons why a stay was not

only justified in this case but good policy for future cases

. 21

Finally, I am not persuaded that the particular circumstances of Facebook’s

alleged rej ection of Feuer’s demand by silence change any of the foregoing

analysis. 22 Feuer’s demand on the Facebook Board “tacitly concede[d] the

20 Motion ¶ 17 ; see inTEAM Assocs., LLC v. Heartland Payment Sys., Inc.

, 2016

WL 6819734, at *2 (Del. Ch. Nov. 18, 2016) (“A party may not present a new argument

for the first time in a motion for reargument.”).

21 Opinion at *5

– 6.

22 Feuer appears to argue that because the Bo ard allegedly ig nored his demand

, his

c omplaint should be viewed differently than a typical demand

- refused c omplaint

. Motion ¶ ¶ 14

– 15; see id. ¶ 14 n.4 (“Mr. Feuer’s Complaint alleges that the Facebook

Board’s failure to respond to the pre

- suit written demands in any way is prima facie and

per se a wrongful refusal.”). But “ [w] he re the board fails to accede to the plaintiff’sRobert A. Feuer v. Mark Zuckerberg, et al.

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disinterest and independence of the board to respond.” 23 For their part, t he demand

futility plaintiffs have endeavored to challenge the disinterestedness or

independe nce of a majority of the Board

, both in connection with their demand

futility allegations and in their allegations that the defendants breached their duty

of loyalty

. 24 I remain convinced that these allegations should be vetted at the

demand to take corrective action or does not respond to such demand

, Rule 23.1 requires

the plaintiff to plead with particularity why that failure to accede or respond is wrongful.”

3 Robert S. Saunders et al., Folk on the Delaware General Corporation Law

, § 327.04[C][1], 13

- 203 (7th ed. 2021) (emphasis added)

. “ [A] board has no obligation to

take any specific type of action to comply with a demand under Rule 23 .1. T he board

may, for example, ignore the demand

. . . if, in the exercise of its good faith judgment

. . . the corporation’s interests would be served thereby .” Schick Inc. v. Amalgamated

Clothing & Textile Workers Union

, 533 A.2d 1235, 1240 (Del. Ch. 1987). Whether the

demand was refused or ignored, Feuer must make “particularized allegations which would

raise a reasonable doubt that the Board’s decision to reject the demand was the product of

a valid business judgment.” Grimes v. Donald

, 673 A.2d 120 7, 1220 (Del. 1996),

overruled in part on other grounds by Brehm v. Eisner

, 746 A.2d 244 (Del. 2000). Thus,

although the fact that the B oard failed to respond to a demand might be relevant in an

argument that the B oard’s decision was not the product of a valid business judgment,

contrary to Feuer’s argument, it is not our law that ignoring a demand is per se a wrongful

refusal.

23 Opinion at *5 (citation omitted).

24 Compl. ¶¶ 562

– 6 6 2.Robert A. Feuer v. Mark Zuckerberg, et al.

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pleading stage befor e determining whether Feuer’s demand made claims should

proceed. 25

Based on the foregoing

, the Motion must be DENIED.

IT IS SO ORDERED.

Very truly yours,

/s/ Joseph R. Slights II

I

25 Id

. at *6.