IN THE SUPREME COURT OF THE STATE OF DELAWARE

FITBIT, INC.,

Nominal Defendant Below, Appellant,

v.
BRIGHT AGYAPONG, ANNE BER N STEIN, and MICHAEL HACKETT
,
Plaintiffs Below, Appellee s

. § § § No. 22, 2019 § § Court Below

— Court of Chance r y § of the State of Delaware § § Consol. C.A. No. 2017

- 0402 § § § § § §

Submitted: January 14, 2019 Decided: January 30 , 2019

Before STRINE
, Chief Justice; VALIHURA and VAUGHN
, Justices.

OR DER
After considering the notice of appeal from an interlocutory order under
Supreme Court Rule 42
, it appears to the Court that :
(1) This interlocutory appeal arises from a Court of Chancery opinion,

dated December 14, 2018, denying Fitbit, Inc.’s motion to dismiss a consolidated

derivative action

. 1 In the derivative action, Fitbit stockholders alleged that members

of the Fitbit board of directors and the chief financial officer breached their fiduciary
duties by using inside r knowledge of faults in a key product to sell Fitbit shares in

1 In re Fitbit, Inc. S ’ holder Derivative Litig. , 2018 WL 6587159 (Del. Ch. Dec. 14, 2018)

.2

initial and secondary public offerings and that other directors breached their
fiduciary duties by allowing the sales to occur

. The Court of Chancery held that the
complaint adequately pled d emand futility and stated viable claims.

(2) On December 24, 2018, Fitbit filed an application for certification of
an interlocutory appeal. Fit bit argued that the opinion decided a substantial issue of
material importance, the opinion conflicted with other trial court decisions on
whether the core operations inference of scienter applies in the context of Court of
Chancery Rule 23.1 , the opinion involved a question of law

— whether outside
directors who did not sell shares personally could be held liable unde r Brophy for
sales by funds they were affiliated with

— resolved for the first time in Delaware, and
review could terminate the litigation and serve the considerations of justice. The
appellees opposed the application

. (3) On January 14, 2019 , the Court of Chancery refused to certify the
application for certification

. 2 Applying the Rule 42 criteria, the Court of Chancery
concluded that the opinion did not decide a substantial issue of material importance
that merited appella te review before final judgment. The Court of Chancery found
that the opinion did not conflict with existing decisions because the core operations
doctrine was not, contrary to Fitbit’s contention , the sole basis for the inference of
scienter. Other facts supporting the reasonable infe rence of scienter included the

2 In re Fitbit Inc. S’holder Derivative Litig.
, 2019 WL 190933 (Del. Jan. 14, 2019)

.3

nature, timing, and size of the offerings, the board’s selective waiver of lock

- up

agreements, and the board’s decision to lower Fi t bit’s allocation in the offering s , which led to more of the defendants’ shares being sold. T he Court of Chancery also
found that the opinion did not address a novel question of law because it was not

novel or controversial under Delaware law to conclude that a fiduciary can not avoid
Brophy liability by sharing inside information with a fund that he controls so that the

fund can trade on the inside information. Under these circumstances, the Court of
Chancery concluded that the likely benefits of interlocutory review would not
outweigh the probable costs , such that interlocutory review would be in the interests
of justice

. (4) Applications for interlocutory review are addressed to the sound

discretion of the Court. 3 We agree with the Court of Chancery’s thoughtful analysis
of the application for certification and conclude that the application does not meet

the strict standards for certification under Rule 42.

NOW, THEREFORE, IT IS HEREBY ORDERED that the interlocutory
appeal is REFUSED

.
BY THE COURT: /s/ Leo E. Strine, Jr.
Chief Justice

3 Supr. Ct. R. 42(d)(v).