IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

DEREK S. JETER, TURN 2 

ENTERPRISES, LLC, and DEREK S. 

JETER 2002 TRUST,

Plaintiff/CounterclaimDefendant,

)

)

)

)

)

)

v.

)

)

)

C.A. No. 11706-VCG

REVOLUTIONWEAR, INC.,

Defendant/

Counterclaimant.

)

)

)

)

MEMORANDUM OPINION

Date Submitted: April 21, 2016

Date Decided: July 19, 2016

David J. Teklits, Kevin M. Coen, and Thomas P. Will, of MORRIS, NICHOLS, 

ARSHT & TUNNELL LLP, Wilmington, DE; OF COUNSEL: Edward H. 

Tillinghast, III, Rena Andoh, and Brian B. Garrett, of SHEPPARD, MULLIN,

RICHTER & HAMPTON LLP, New York, NY, Attorneys for 

Plaintiff/Counterclaim-Defendant.

Marc S. Casarino, of WHITE AND WILLIAMS LLP, Wilmington, DE; OF 

COUNSEL: Joseph Tacopina and Matthew G. DeOreo, of TACOPINA & SEIGEL, 

New York, NY, Attorneys for Defendant/Counterclaimant.

GLASSCOCK, Vice Chancellor
1

This case provides a cautionary tale of the mixing of roles in a corporategovernance setting. The Defendant and Counterclaimant is RevolutionWear, Inc. 

(“RWI” or the “Company”), manufacturer of a high-technology undergarment, 

which it distributes under the FRIGO® brand (“FRIGO”).

1

 The Company wished 

to use the marketing power of the endorsement of a well-known athlete, Derek Jeter,2

to enhance sales of FRIGO. Instead of negotiating with Jeter for the right to use his 

likeness, or hiring his services to promote FRIGO, RWI pursued a different strategy:

it negotiated to bring Jeter into the Company as an owner and member of the board 

of directors, so that it could indirectly point to his involvement in a way that, 

presumably, RWI thought would appear more sincere to the underpants-buying 

public than would a standard paid endorsement. Jeter and RWI entered a director’s 

agreement, which imposed contractual duties on the parties and made Jeter a 

fiduciary for RWI. I understand, in light of the counterclaims, that RWI had little or 

no interest in Jeter’s stewardship of the Company; the arrangement was seen by RWI 

as a marketing ploy. In furtherance of that interest, RWI alleges that it required 

certain representations from Jeter: that he would consent to public promotion of the 

fact that he was a director, investor in, and “founder” of RWI, and that such would 

not conflict with a promotional contract Jeter had with the Nike sportswear 

 

1 Specifically, RWI distributes a product known colloquially as “underpants” or “underdrawers.”

2As the reader is probably aware, Jeter played shortstop for the New York Yankees baseball team.
2

company. Jeter and his agents, according to RWI, made such representations, which 

were material to RWI entering the director’s agreement, and on which 

representations RWI relied in creating and funding a marketing strategy. Jeter also 

made similar representations to investors on behalf of RWI. According to the 

counterclaims, however, Jeter’s representations were false: either he misrepresented 

the Nike contract or for other reasons was unwilling to allow RWI to publicize his 

involvement with the Company. Jeter also attempted to influence Company 

decisions; in other words, he acted like a “real” board member, but for allegedly selfserving reasons. The counterclaims, accordingly, seek to impose damages for fraud 

and breach of contract, as well as breach of fiduciary duty. Jeter has moved to 

dismiss the counterclaims; the results are mixed. My reasoning follows.

I. BACKGROUND3

A. The Parties

Defendant and Counterclaimant RWI is a Delaware corporation 

headquartered in New York, New York.4 Incorporated in 2010,5 RWI is a men’s 

clothing company that develops and markets men’s undergarments under the FRIGO 

brand.

6

 

 

3 The facts are drawn from the Counterclaimant’s Amended Answer to the Verified Amended 

Complaint and Counterclaims (the “Counterclaims” or “Countercls.”) and are presumed true for 

purposes of evaluating the Counterclaim-Defendant’s motion to dismiss. 

4 Countercls. ¶ 26.

5

Id. at ¶ 66.

6

Id. at ¶ 28. 
3

Plaintiff and Counterclaim-Defendant Derek S. Jeter is a former professional 

baseball player and a stockholder, noteholder, and former director of RWI.7 By at 

least March 2011, and at all relevant times thereafter, Jeter owned 15% of the 

Company.8 

B. Jeter Joins RWI and Agrees to Publically Announce His Role

RWI targets consumers using a unique marketing strategy that it refers to by 

the odd misnomer “reverse-endorsement.”9 “Reverse-endorsement” is a concept in 

which celebrities and famous athletes join the Company as “significant owners, 

directors, advisers and founders,” rather than simply endorsing or promoting the 

product.10 RWI believes that “consumers [are] more impressed if a well-respected 

celebrity or famous athlete [is] actually part of the business, [as] a board member, 

[and] co-founder and invest[s] his/her own money, time and effort into the 

company.”11

In 2009, after learning of RWI’s FRIGO undergarment product and its 

reverse-endorsement strategy, David VanEgmond, Jeter’s financial and tax adviser, 

and Casey Close, Jeter’s sports agent, met with a group of RWI representatives, 

 

7

Id. at ¶¶ 27, 29. Although the Plaintiffs’ Amended Complaint, filed November 25, 2011 (the 

“Complaint” or “Compl.”), refers to Turn 2 Enterprises, LLC and Derek S. Jeter 2002 Trust as 

Plaintiffs, neither party is identified in the Counterclaims. Therefore, while I list those parties in 

the caption, I refer to Jeter as the Plaintiff throughout this Memorandum Opinion. 

8

Id. at ¶ 149.

9

Id. at ¶¶ 41–43.

10 Id.

11 Id. at ¶ 42.
4

including Mathias Ingvarsson, a co-founder of the Company and its eventual 

Chairman and CEO, to discuss Jeter’s potential involvement with RWI.12 Later,

after Ingvarsson sent Jeter samples of FRIGO products, Jeter requested a meeting 

with Ingvarsson.13 On February 17, 2010, Ingvarsson and the RWI team met with 

Jeter, VanEgmond, and Close.14 At the meeting, the RWI team made a presentation 

to Jeter which outlined Jeter’s possible involvement with FRIGO.15 Among other 

things, the presentation stressed the value of Jeter’s potential “high profile 

involvement” in the Company and indicated that Jeter would make media 

appearances to discuss FRIGO as a “substantial owner, co-founder and director” of 

RWI.16 

Shortly after the presentation, Jeter’s representatives contacted RWI to 

express Jeter’s interest in joining the Company.17 At that time, Jeter was under 

contract with Nike, a relationship Jeter considered “incredibly important.”

18

 

Accordingly, Jeter’s representatives stated that he would need to obtain permission 

from Nike to become a “publically announced co-founder, substantial owner and 

director” of RWI.19 Recognizing the importance of Jeter’s relationship with Nike, 

 

12 Id. at ¶¶ 45–50.

13 Id. at ¶¶ 51–52.

14 Id. at ¶ 53.

15 Id.

16 Id. at ¶¶ 54–56. 

17 Id. at ¶ 57.

18 Id. at ¶¶ 59–60.

19 Id. at ¶ 59. 
5

RWI requested a copy of the Nike contract and any carve-out related to Jeter serving 

as a “director, co-founder and significant owner” of RWI.20 Jeter’s representatives,21

however, refused to provide Jeter’s Nike contract, stating that the contract was 

confidential.22 Instead, Jeter’s agents represented that Jeter’s impending relationship 

with RWI was “carved-out” in his Nike contract. During a telephone conversation 

on or about February 17, 2011 between VanEgmond, Ingvarsson, and RWI officer 

Kinda Younes, VanEgmond stated that the language in the carve-out “was in 

accordance with what RWI requested and wished to accomplish with Jeter.”

23

 In 

addition, VanEgmond represented that Jeter had received Nike’s written permission 

to be a “publically announced co-founder, substantial owner and director” of RWI.24 

On March 23, 2011, based partly on Jeter’s representations concerning his 

Nike contract, Jeter and RWI executed a Memorandum of Agreement for Service 

upon the Board of Directors (the “Director Agreement”).25 Two provisions in the 

Director Agreement are pertinent to the reverse-endorsement strategy at issues here. 

 

20 Id. at ¶ 63.

21 I generally refer to David VanEgmond, Jeter’s financial and tax adviser, and Casey Close, Jeter’s 

sports agent, as Jeter’s “representatives” or “agents.” 

22 Countercls. ¶ 63.

23 Id.

24 Id. at ¶¶ 66–67. It is unclear from the Counterclaims whether VanEgmond spoke to Ingvarsson 

and Younes individually in separate calls or whether VanEgmond spoke with Ingvarsson and 

Younes together on a single joint call. 

25 The Director Agreement is not attached to the Counterclaims, but is attached to the Plaintiff’s 

Complaint. See Compl., Ex. B (“Director Agreement”). The Counterclaimant refers to the Director 

Agreement in its pleadings. Countercls. ¶ 73. I find that the Director Agreement is integral to the 

Counterclaims and I therefore consider it as part of my analysis of the motion here. See Orman v. 

Cullman, 794 A.2d 5, 15 (Del. Ch. 2002). 
6

First, Section Seven of the Director Agreement provides, in part, that 

“RevolutionWear may disclose the identity, and a brief biographical sketch, of the 

Director in the context of information about [] RevolutionWear’s management or 

otherwise.”26 Second, Exhibit E of the Director Agreement, titled “Specific Services 

to be Provided by Director,” provides that “RevolutionWear may issue a press 

release disclosing [the] Director’s role with RevolutionWear provided that Director 

approves the press release in advance.”27 Therefore, despite RWI’s ability to 

unilaterally disclose Jeter’s identity “in the context of information about [RWI’s] 

management,” the Company’s ability to issue a formal press release is dependent on 

Jeter’s approval in advance.

A third provision is important here: notwithstanding the provisions governing 

the disclosure of Jeter’s role with the Company, the Director Agreement specifically 

excludes the obligation that Jeter endorse the product. Section Six of the Director 

Agreement states, in part, that Jeter’s “services to RevolutionWear under this 

Agreement do not include endorsement or marketing RevolutionWear’s products or 

the use of [Jeter’s] likeness or name in connection with the marketing of 

RevolutionWear’s products.”28 

In return for the obligations imposed on Jeter in the Director Agreement, Jeter 

 

26 Director Agreement § 7.

27 Id., Ex. E (emphasis added). 

28 Id. § 6.
7

received, among other things, non-qualified stock options to purchase shares in the 

Company.29

Months after executing the Director Agreement, Jeter’s agents continued to 

represent that Jeter’s Nike contract did not conflict with the “reverse-endorsement” 

strategy envisioned by RWI. In a September 15, 2011 meeting with Ingvarsson and 

other RWI officials, Close purported to “read”—that is, orally quote verbatim—the 

carve-out from the Nike contract that was, as RWI explains, consistent with 

VanEgmond’s earlier statement on February 17.30 Based on that representation, 

RWI continued to believe that Jeter could publically announce that he was a director, 

co-founder, and significant owner of the Company. 

C. Jeter Refuses to Announce His Role with RWI

Once he became an investor and director of RWI, the Counterclaimant 

contends that Jeter began to influence the direction of the FRIGO product by 

threatening to withhold the pledged public announcement of his role with the 

Company. In or about November 2012, Jeter told RWI that he could not publically 

announce his role with RWI unless it changed the FRIGO product from a “sports 

undergarment” to a “fashion undergarment.”

31

 As RWI explains, Jeter feared that if 

 

29 Id. § 3.

30 Countercls. ¶ 63.

31 Id. at ¶ 77. It is not clear whether such a reformulation required a change in high-tech

underdrawer technology, or simply to the marketing of the product.
8

the product was too “sporty,” it would upset and damage his relationship with Nike.32 

In order to preserve its relationship with Jeter, therefore, RWI “invested substantial 

funds into redesigning the message, packaging and product line, and changed the 

distribution plan, to make the product less ‘sporty/athletic.’”33

Nonetheless, RWI continued to pursue its “reverse-endorsement” strategy

with Jeter. Jeter, however, repeatedly “refused to allow” RWI to publically

announce that he was a “co-founder, substantial owner and director.”34 Although 

RWI had a contractual right to disclose this information without Jeter’s permission 

in accordance with the Director Agreement, it allegedly demurred in the hope of 

maintaining a good relationship with Jeter; it therefore sought his approval.35

Finally, on November 13, 2013, Close informed Ingvarsson via email that,

due to Jeter’s Nike contract, “there will be no mention of Derek’s presence in the 

marketplace.”36 Close’s email, according to RWI, revealed for the first time that 

Jeter’s prior representations relating to his Nike contract were false and misleading.37 

Until Close’s email, RWI alleges that it was unaware and could not discover the 

falsity of those representations because Jeter’s representatives refused to give RWI 

 

32 Id.

33 Id. at ¶ 78.

34 Id. at ¶ 69.

35 Id. at ¶ 79. Presumably, RWI refers to the contractual right provided in Section Seven of the 

Director Agreement that allows RWI to “disclose the identity, and a brief biological sketch, of the 

Director.” Director Agreement § 7. 

36 Countercls. ¶ 69.

37 Id. at ¶ 70.
9

access to the terms of the Nike contract.38 

The Counterclaimant points to later communications that solidified Jeter’s 

refusal to publicly disclose his role with the Company. Following a July 2014 article 

in the New York Post naming Jeter an “owner” of RWI, Close sent an email to

Ingvarsson in which he objected to the publication of Jeter’s role, characterizing any 

mention of Jeter as an owner of RWI as “improper.”

39

 Specifically, Close stated that 

“[w]e don’t speak about it”—referring to Jeter’s role at RWI.40 

Months later, in September 2014, Jeter refused to approve a formal press 

release announcing that he was a co-founder, significant owner, and director of 

RWI.41 Instead, Jeter allowed a statement expressing his “excitement” about the 

product and that he looked forward to seeing its continued progress.42 Notably, in 

an email following the press release, VanEgmond explained that “[i]f Derek wants 

to be a silent investor at this point, let him.”43 Finally, following a December 2014 

report by “Crain’s”

44 that characterized Jeter as an RWI “investor,” Jeter’s 

representatives demanded that RWI halt further press releases discussing Jeter’s 

role.45

 

38 Id. at ¶ 80.

39 Id. at ¶ 130.

40 Id.

41 Id. at ¶¶ 131–32. 

42 Id. at ¶¶ 132–33.

43 Id. at ¶ 134.

44 The Complaint does not define the report, or article, published by Crain’s. 

45 Countercls. ¶¶ 138–39.
10

D. Jeter’s Misrepresentations to Investors 

While the Counterclaims focus mostly on Jeter’s representations to the 

Company, RWI also identifies instances in which Jeter falsely represented to 

investors that he would publicly announce that he was a “co-founder, substantial 

owner and director” of RWI. Specifically, RWI alleges that Jeter made such false 

representations to investors in Sweden in November 2011, as well as to investors in 

Tampa, Florida in January 2012.46 Moreover, in a September 2012 video shot to 

show to RWI investors and retailers, Jeter stated that he was “involved in this 

business as an investor, entrepreneurial co-founder [and] Board Member.”47 Jeter’s 

statements in the video, according to RWI, strengthened investor belief that Jeter 

would publically announce his role with the Company pursuant to its reverseendorsement campaign.48

Following the video, on January 25, 2013, Jeter attended an RWI “marketing 

and investor” meeting in Stockholm.49 At the meeting, Jeter represented to 

Ingvarsson, RWI’s marketing team, and investors that he would publicize his full 

involvement with RWI at an upcoming product launch.50 Shortly before the

November 2013 product launch, however, Jeter declared that he would not permit 

 

46 Id. at ¶¶ 108–09.

47 Id. at ¶ 110.

48 Id.

49 Id. at ¶ 84.

50 Id.
11

RWI to disclose his full involvement with the Company at the event.

51

 Instead, at 

the product launch, Jeter merely stated: “I’m supporting my man, Mathias 

Ingvarsson. He gave me this product and I fell in love with it.”52 Moreover, rather 

than fulfill the Company’s expectations, RWI asserts that Jeter used the product 

launch to promote his new publishing venture.53

The Counterclaimant alleges that investors invested significant funds in RWI 

based upon Jeter’s false representations regarding a public announcement.

54

 Shortly 

after the November 2013 product launch, RWI explains that investors became upset 

with Jeter and the Company because it was clear that Jeter would not state publically 

that he was a co-founder, substantial owner, and director of RWI, thereby inhibiting 

its ability to raise necessary funds.

55

E. Jeter’s Plan to “Take Over” RWI

RWI alleges that Jeter’s ultimate plan was to purposefully reduce the value of 

the Company in hopes of later obtaining control. In the midst of the Company’s 

financial hardship in early 2014—a direct result of Jeter’s “misconduct,” according 

to the Counterclaimant—Jeter and his representatives brought in Mary Gleason as 

an outside consultant to assist RWI in licensing the FRIGO brand.56 As RWI 

 

51 Id. at ¶ 86.

52 Id. at ¶ 87.

53 Id. at ¶ 88.

54 Id. at ¶ 111.

55 Id. at ¶¶ 115–16.

56 Id. at ¶ 118.
12

explains, Jeter and his representatives wanted Gleason to “take over” RWI’s 

management.57 According to RWI, Jeter and his representatives, without the 

authority of the RWI board, instructed Gleason to run the Company and the FRIGO

brand.58 Jeter’s alleged efforts, RWI contends, caused “great confusion” within the 

Company, as well as “significant financial harm.”59 There is no indication in the 

Counterclaims, I note, that Gleason did, in fact, control the Company’s management. 

Finally, RWI alleges that in late 2014, Jeter attempted to become the 

Company’s largest stockholder in an attempt to capitalize on RWI’s financial 

suffering. According to RWI, one of the Company’s co-founders sought to sell 

shares of stock representing approximately 10% of RWI.

60

 Through his 

representatives, Jeter “demanded” the opportunity to purchase the shares, which 

would have made him the Company’s largest stockholder at approximate 25%.61 

RWI, however, “refused” to sell the shares to Jeter.62 Instead, another investor 

ultimately purchased the shares and Jeter remained a 15% owner.63

According to the Counterclaims, Jeter desired full control of the Company 

because his plan had always been to either own his own clothing brand or, upon 

 

57 Id. at ¶ 119.

58 Id. at ¶ 120. 

59 Id. at ¶ 123. 

60 Id. at ¶ 146.

61 Id. at ¶¶ 148–49.

62 Id. at ¶ 150.

63 Id. at ¶¶ 149–50.
13

seizing control of RWI, transferring its patented technology to a sports apparel 

company, such as Nike, to incentivize a long-term endorsement deal.64 Based on the 

pleadings, Jeter’s “plan” failed as he never obtained control of the Company. 

Ultimately, Jeter’s directorship ended on July 22, 2015.65

F. Procedural History

Jeter filed a Verified Complaint on November 13, 2015 and a Verified 

Amended Complaint on November 25, 2015, alleging three counts. In Count I, Jeter 

sought a declaration that he had fully complied with, and performed under, the 

Director Agreement. In Count II, Jeter sought a declaration that he was entitled to 

indemnification and advancement. In Count III, Jeter sought an order compelling 

the inspection of the Company’s books and records. Counts II and III have since 

been resolved by the parties. Count I remains to be litigated and is not at issue in 

this Memorandum Opinion. 

RWI filed its Answer and Counterclaim on December 14, 2015 and its 

Amended Answer and Counterclaim on February 16, 2016. Generally, RWI asserts 

that Jeter initially represented, and continued to represent, that his Nike contract 

 

64 Id. at ¶ 142.

65 The Plaintiff’s (Counterclaim-Defendant’s) Complaint asserts that “by letter dated July 22, 

2015, Jeter resigned as director of the Company, effective immediately.” Compl. ¶ 27. In its 

Answer, however, RWI “denies Plaintiffs’ characterization of [that] document[],” explaining that 

its “terms speak for themselves.” Countercls. 17. Furthermore, RWI contends that it is “without 

knowledge or information sufficient to form a belief as to the truth of Jeter’s reasoning for sending 

the July 22, 2015 letter,” and on that basis denies the Plaintiff’s averments. Id. Nonetheless, it 

appears from the briefs and oral argument that Jeter is no longer a director of the Company. 
14

would allow the Company to publically announce his role as a co-founder, 

substantial owner, and director. Based on Jeter’s actions and later representations, 

however, RWI contends that Jeter’s representations were false. RWI alleges five 

counts in which it asserts that Jeter’s actions support claims of fraud, breach of the 

implied covenant of good faith and fair dealing, and breach of fiduciary duties. In 

relief, RWI seeks, among other things, compensatory damages of no less than $30 

million and rescission of the Director Agreement.

On February 19, 2016, Jeter moved to dismiss RWI’s Counterclaims pursuant 

to Court of Chancery Rule 12(b)(6). Following briefing on the motion, I heard oral 

argument on April 21, 2016. This is my Memorandum Opinion. 

II. ANALYSIS

The Plaintiff and Counterclaim-Defendant move to dismiss the Counterclaims 

under Court of Chancery Rule 12(b)(6) on the ground that the Counterclaims fail to 

state a claim upon which relief may be granted. When considering a motion to 

dismiss under this rule, I must accept all well-pled factual allegations as true and 

draw all reasonable inferences in favor of the non-movant—the Defendant and 

Counterclaimant here.66 The Court need not, however, accept conclusory allegations 

unsupported by specific facts.67 The motion will be denied unless the non-movant 

 

66 Touch of Italy Salumeria & Pasticceria, LLC v. Bascio, 2014 WL 108895, at *3 (Del. Ch. Jan. 

13, 2014) (citations omitted).

67 Id.
15

“could not recover under any reasonably conceivable set of circumstances 

susceptible of proof.”68 

The Counterclaimant has alleged five causes of action, some of which are 

related and are thus analyzed together. I address the motion as to each count below, 

finding that it must be granted in part and denied in part. 

A. Count II: Breach of the Implied Covenant of Good Faith and Fair 

Dealing

In Count II, the Counterclaimant alleges that Jeter breached the implied 

covenant of good faith and fair dealing within the Director Agreement by refusing 

to issue a press release announcing his role as a significant owner, co-founder, and 

director of RWI. In addition, the Counterclaimant alleges that Jeter breached the 

implied covenant by stating at the November 2013 product launch that he was there 

as Ingvarsson’s friend. Based on the following analysis, the Counterclaimant’s latter 

allegation fails to state a claim and must be dismissed. Its former allegation, 

however, survives the motion. 

Assessing the implied covenant of good faith and fair dealing is a “cautious 

enterprise.”69 In Delaware, the implied covenant inheres to every contract.70 To 

 

68 Id.

69 Nemec v. Shrader, 991 A.2d 1120, 1125 (Del. 2010) (citing Dunlap v. State Farm Fire & Cas. 

Co., 878 A.2d 434, 441 (Del. 2005)).

70 Peco Logistics, LLC v. Walnut Inv. Partners, L.P., 2015 WL 9488249, at *11 (Del. Ch. Dec. 30, 

2015) (citing Great–West Investors LP v. Thomas H. Lee Partners, L.P., 2011 WL 284992, at *14 

(Del. Ch. Jan. 14, 2011)). 
16

successfully plead a breach of the implied covenant of good faith and fair dealing, 

“the plaintiff must allege a specific implied contractual obligation, a breach of that 

obligation by the defendant, and resulting damage to the plaintiff.”71 The Court will 

not imply contractual terms, however, when the dispute at issue is expressly 

addressed by the terms of the contract.72 Further, the implied covenant will only 

engage when “the party asserting the implied covenant proves that the other party 

has acted arbitrarily or unreasonably, thereby frustrating the fruits of the bargain that 

the asserting party reasonably expected.”73 Finally, “[w]hen conducting this 

analysis, we must assess the parties' reasonable expectations at the time of 

contracting and not rewrite the contract to appease a party who later wishes to rewrite 

a contract he now believes to have been a bad deal.”

74

1. Jeter’s Refusal to Issue a Press Release

The Counterclaimants’ first allegation is that Jeter breached the implied 

covenant of good faith and fair dealing by refusing to issue a press release 

announcing his role as a significant owner, co-founder, and director of the Company. 

Jeter moves to dismiss RWI’s claim for three reasons: (1) the Director Agreement 

 

71 Id. (citing Fitzgerald v. Cantor, 1998 WL 842316, at *1 (Del. Ch. Nov. 10, 1998)).

72 Sanders v. Devine, 1997 WL 599539, at * 6 (Del. Ch. Sept. 24, 1997) (“[T]he law is settled that 

where the terms of a contract expressly address the terms of a dispute, those express contractual 

terms-not an implied covenant of good faith and fair dealing-govern the parties' relations.”)

(citations omitted). 

73 Nemec, 991 A.2d at 1126 (citing Dunlap, 878 A.2d at 442).

74 Id. (citations omitted). 
17

expressly covers the issuance of a press release, leaving no room for operation of the 

implied covenant; (2) RWI is precluded from relying on the implied covenant, since 

it could have reasonably anticipated the current issues when negotiating the Director 

Agreement and thus could have negotiated for a contractual provision that it now 

seeks to imply; and (3) Jeter’s alleged refusal to issue a press release could not 

frustrate the overall purpose of the Director Agreement, and thus does not implicate 

the implied covenant. I have already explained that this Court regards appeals to the 

implied covenant with a gimlet eye, lest its application frustrate, rather than perfect, 

the parties’ intentions as explicitly stated in the contract. Here, however, Jeter’s 

concession at oral argument alleviates the need for such scrutiny. 

I turn first to the pertinent contractual provision in the Director Agreement. 

Attached to the Director Agreement is Exhibit E, titled “Specific Services to be 

Provided by Director.” Exhibit E provides, in part, that “RevolutionWear may issue 

a press release disclosing [the] Director’s role with RevolutionWear provided that 

Director approves the press release in advance.”75 RWI’s ability to issue a press 

release is, accordingly, conditioned on Jeter’s approval. RWI contends that, implied 

in this condition, is the requirement that Jeter not withhold approval unreasonably. 

I need not decide, and specifically decline to decide, whether under the facts as pled, 

the implied covenant should attach to impose an objective good-faith or 

 

75 Director Agreement, Ex. E. 
18

reasonableness requirement here, because the issue has been conceded by Jeter. At 

oral argument, counsel addressed the intentions of the parties as provided for in this 

section. The parties, including Jeter through his counsel, agreed that a 

“reasonableness” requirement attaches and must be imputed to Jeter’s approval of a 

press release.76 In other words, Jeter concedes that the terms of the Director 

Agreement, including any term implied by the covenant of good faith and fair 

dealing, provide that he may only reject a proposed press release if his rejection is 

reasonable and not arbitrary. Given this concession, I need not further scrutinize 

the contract in light of the implied covenant. As the parties have agreed, Jeter will 

have breached the Director Agreement, and thus deprived RWI of the fruits of its

bargain, if Jeter unreasonably refused to approve the issuance of a press release. The 

remaining issue before me in this regard, therefore, is whether Jeter’s refusal to issue 

a press release was reasonable, as required by the Director Agreement. 

In its Counterclaims, RWI alleges that, after many failed requests that Jeter 

approve a press release, RWI proposed a formal press release in September 2014

(the “Proposed Press Release”).

77

 Although RWI failed to submit the Proposed Press 

Release as part of its pleadings, the Counterclaimant represents that it would have 

announced that Jeter was a co-founder, significant owner, and director of RWI in 

 

76 Oral Arg. Tr. 24:1–30:1, 39:5–41:24, 70:22–72:11.

77 Countercls. ¶ 131.
19

furtherance of the Company’s reverse-endorsement strategy.

78

 Jeter, upon RWI’s 

request for approval of the Proposed Press Release, withheld his approval and 

instead approved the following statement:

FRIGO® is a brand I am excited about because of their innovation and 

patented technology. I was introduced to FRIGO® when it was a 

prototype and believe it fills a void in the marketplace. I am looking 

forward to seeing its continued progress, thanks to the hard work of the 

RevolutionWear team, led by founder and CEO Mathias Ingvarsson.79

That official statement, according to RWI, falls short of a disclosure of Jeter’s full 

role at RWI as contemplated by Exhibit E of the Director Agreement, which was 

bargained for in aid of the reverse-endorsement strategy. Moreover, RWI asserts 

that Jeter’s refusal to disclose his role with the Company was unreasonable and thus 

violated Exhibit E. Jeter’s refusal to approve the Proposed Press Release, RWI 

explains, was either arbitrary or driven by an undisclosed provision of Jeter’s Nike 

contract precluding such disclosure. The latter explanation, if true, would be 

unreasonable, RWI argues, because at the time of contracting, Jeter represented that 

his Nike contract included a carve-out that allows Jeter to issue a press release that 

publically announces his role as a co-founder, significant owner, and director of 

RWI. Otherwise, according to RWI, Jeter had no legitimate reason for refusing the 

Proposed Press Release and such a refusal is, therefore, arbitrary. 

 

78 Id.

79 Id. at ¶ 132.
20

Based on the pleadings, I find that it is reasonably conceivable that Jeter’s 

refusal to approve the Proposed Press Release was not reasonable and thus his refusal 

is a breach of the Directors Agreement. To the extent Jeter refused to approve the 

Proposed Press Release because of its potential conflict with his Nike contract, his 

refusal frustrated the overall purpose of the Director Agreement as determined at the 

time of contract, contradicts his representation concerning a carve-out, and is 

therefore conceivably unreasonable. If Jeter’s decision to withhold approval of the 

Proposed Press Release was not based on the Nike contract, it is reasonably 

conceivable that his refusal was arbitrary and thus unreasonable. The motion to 

dismiss is accordingly denied as to that portion of Count II.

2. Jeter’s Statements at the 2013 Product Launch

The Counterclaimant also alleges that the implied covenant of good faith and 

fair dealing was breached by Jeter’s statements at the November 2013 product 

launch in which he stated that he was at the launch as Mr. Ingvarsson’s friend. 

Specifically, at the November 2013 product launch, Jeter stated: “I’m supporting 

my man, Mathias Ingvarsson. He gave me this product and I fell in love with it.” 

According to RWI, Jeter’s statements are false and are another example of an 

arbitrary and unreasonable refusal by Jeter to announce his full role with the 

Company in violation of the Director Agreement. 

This portion of RWI’s claim fails to state a cause of action. My understanding 
21

of RWI’s claim is that the necessary implication of Jeter’s statements is that he was 

only at the product launch to “support [his] man, Ingvarsson” and was not at the 

event, therefore, as a co-founder, director, and substantial owner. It is not reasonably 

conceivable, however, that Jeter’s statements at the November 2013 product launch 

equate to an unreasonable refusal to issue a press release as contemplated by Exhibit 

E. Jeter’s statements were not categorical as characterized by the Counterclaimant: 

Jeter did not say that his sole purpose for attending the event was to support 

Ingvarsson. Jeter’s statements are silent as to any official role with RWI and do not

create an implication that Jeter has no other role with the Company. Moreover, 

Exhibit E contemplates a press release, and not some other type of an announcement, 

such as an interview at a product launch party. The parties’ agreement makes clear, 

in fact, that Jeter does not have a duty to promote the company or its products, 

beyond not unreasonably interfering with the specified press release addressed 

above.80 Therefore, this portion of Count II is dismissed.

B. Counts I, III, & V: Fraud-Based Claims 

RWI alleges three counts based in fraud: fraudulent inducement (Count I), 

fraudulent concealment (Count V), and fraud (Count III). In order to sufficiently 

plead a fraud claim, the plaintiff must allege:

(1) the defendant falsely represented or omitted facts that the defendant 

had a duty to disclose; (2) the defendant knew or believed that the 

 

80 See Director Agreement § 6.
22

representation was false or made the representation with a reckless 

indifference to the truth; (3) the defendant intended to induce the 

plaintiff to act or refrain from acting; (4) the plaintiff acted in justifiable 

reliance on the representation; and (5) the plaintiff was injured by its 

reliance.

81

In addition, Court of Chancery Rule 9(b) requires that the claimant state with 

particularity the circumstances constituting fraud.82 Specifically, fraud claims must

be pled with particularity concerning: “(1) the time, place, and contents of the false 

representation; (2) the identity of the person making the representation; and (3) what 

the person intended to gain by making the representations.”83

The Counterclaimant’s claims for fraudulent inducement and fraudulent 

concealment are intertwined. I thus analyze those claims together and find that each 

claim survives the motion to dismiss. I then turn to the Counterclaimant’s separate 

count for fraud, finding that it is dismissed because the count fails to state a separate 

claim of fraud. 

1. Fraudulent Inducement and Concealment 

In Count I, the Counterclaimant alleges that RWI was fraudulently induced 

by Jeter into entering the Director Agreement. It asserts that Jeter fraudulently 

induced RWI to enter into the Director Agreement by falsely representing to the 

 

81 Eurofins Panlabs, Inc. v. Ricerca Biosciences, LLC, 2014 WL 2457515, at *7 (Del. Ch. May 

30, 2014) (citing Abry Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032, 1050 (Del. Ch. 

2006)).

82 Ct. Ch. R. 9(b). 

83 Eurofins Panlabs, Inc., 2014 WL 2457515, at *7 (citing Abry Partners V, L.P., 891 A.2d at 

1050). 
23

Company that he had “explicit, written approval from Nike to announce, and allow 

RWI to announce, that Jeter was a co-founder, substantial owner and director of 

RWI.”84 Thereafter, as alleged in Count V, RWI argues that Jeter concealed its 

fraud. According to RWI, Jeter “actively concealed the truth about the Nike contract 

by affirmatively making statements to RWI . . . that he would allow the public 

announcement of his role as director, co-founder and significant owner of RWI,” 

and that such acts “prevented RWI from gaining knowledge of material facts

concerning the truth about the Nike contract and led RWI astray from the truth.”85 

The Counterclaim-Defendants contend that the fraudulent inducement and 

fraudulent concealment claims should be dismissed on two grounds: first, they argue 

that the fraudulent inducement claims are time-barred; second, they contend that 

RWI fails to sufficiently allege the falsity of the statements regarding Jeter’s Nike 

contract. I conclude that the Counterclaimant’s claims for fraudulent inducement 

survive the motion to dismiss. I start with the Counterclaim-Defendant’s assertion 

that the fraudulent inducement claims are untimely.

In Delaware, claims based in fraud are subject to a statute of limitation of three 

years.86 Generally, “the cause of action accrues at the time of the alleged wrongful 

 

84 Countercls. ¶ 152.

85 Id. at ¶ 197.

86 10 Del. C. § 8106.
24

act, even if the plaintiff is ignorant of the cause of action.”87 Here the alleged 

contract-inducing misstatements were made to induce RWI to enter the Director 

Agreement in 2011. The Counterclaims assert that on February 17, 2011, 

VanEgmond spoke with Kinda Younes, an officer of RWI, and represented that Jeter 

had received written permission from Nike to be a publically announced co-founder, 

substantial owner and director of RWI.88 On that same day, VanEgmond also made 

a similar representation to Ingvarsson.89 According to RWI, VanEgmond’s 

representations were false and were knowingly made on behalf of Jeter to induce 

RWI to enter the Director Agreement. Earlier in this litigation, before the 

Counterclaims were amended, Jeter denied that RWI’s pleadings were sufficient to 

allege VanEgmond was acting as his agent in dealing with RWI, but in briefing this 

motion Jeter has dropped that assertion, based upon what he describes as RWI’s 

“more fulsome” pleadings.90 RWI’s original counterclaims were filed on December 

14, 2015, nearly five years after the alleged misstatements by Jeter’s agent. It 

therefore follows, according to the Counterclaim-Defendants, that the fraud-based 

counterclaims should be dismissed as they were filed outside the three-year statute 

 

87 Seiden v. Kaneko, 2015 WL 7289338, at *7 (Del. Ch. Nov. 3, 2015) (citations omitted).

88 Countercls. ¶ 66.

89 Id. at ¶ 67.

90 See Pl’s Opening Br. 30 n.12. I hereby renounce, in defeat, a pedantic pet peeve: I confess that 

in today's United States, 'fulsome' is a sesquipedalian synonym for 'full,' Mr. Webster's dictionary 

be damned. I give up, I give in, I yield to the majority; I will no longer be stuck in fulsome prison.
25

of limitation.

RWI’s claim of fraudulent inducement must be measured in light of its claim 

of fraudulent concealment, however. According to RWI, Jeter’s fraudulent 

concealment tolls the statute of limitation until November 2013, at which time it 

received an email from Close revealing Jeter’s fraudulent inducement. In order to

toll the statute of limitation under the fraudulent concealment exception, “the 

plaintiff must allege some affirmative act by the defendant ‘that either prevented the 

plaintiff from gaining knowledge of material facts or led the plaintiff away from the 

truth.’”91 When the exception is satisfied, the statute will be tolled and will not begin 

to run until the “discovery of facts constituting the basis of the cause of action or the 

existence of facts sufficient to put a person of ordinary intelligence and prudence on 

inquiry which if pursued, would lead to the discovery [of the injury].”92

In Count V, RWI alleges that Jeter concealed the truth concerning the 

fraudulent representations—that Jeter’s Nike contract did not preclude a public 

announcement of his role with the Company—by “affirmatively making statements 

to RWI while he was a director of RWI that he would allow the public announcement 

of his role as director, co-founder and significant owner of RWI.”93 In other words, 

 

91 Smith v. Mattia, 2010 WL 412030, at *5 (Del. Ch. Feb. 1, 2010) (quoting In re Tyson Foods, 

Inc., 919 A.2d 563, 585 (Del. Ch. 2007)). 

92 Id. at *4 (citing Krahmer v. Christie's Inc., 903 A.2d 773, 778–79 (Del. Ch. 2007)).

93 Countercls. ¶ 195.
26

following the fraudulently induced execution of the Director Agreement, Jeter 

allegedly continued to represent to RWI that he could (and would) publically 

announce his role with the Company as co-founder, substantial owner, and director, 

thereby concealing the fact that his Nike contract provided otherwise. For example, 

RWI alleges that in or about November 2012, Jeter stated to RWI that if it changed 

the style of the product from a sports undergarment to a fashion undergarment that 

he would “fully support RWI and publically announce that he was a co-founder, 

substantial owner and director.”94 According to RWI, Jeter’s continued 

representations prevented RWI from gaining knowledge of the falsity of the alleged

fraudulent statements and that, as a result, RWI continued to devote significant 

resources, funds, and time to developing the reverse-endorsement plan around Jeter. 

It was not until Close’s email of November 13, 2013—written over two years after 

Jeter executed the Director Agreement—that RWI discovered the falsity of 

VanEgmond’s representations. According to RWI, Close’s email informed 

Ingvarsson that because of Jeter’s Nike contract, “there will be no mention of 

Derek’s presence in the marketplace.”95 Moreover, RWI explains that it could not 

have discovered the truth concerning the Nike contract because at all times, Jeter’s 

Nike contract was in the sole possession of Jeter and his agents, who have refused 

 

94 Id. at ¶ 77.

95 Id. at ¶ 69.
27

to provide a copy to RWI. 

Jeter, on the other hand, contends that RWI’s fraudulent inducement claim is 

not subject to equitable tolling. According to Jeter, RWI was aware, or should have 

been aware, of facts sufficient to put the Company on inquiry notice that Jeter’s 

representations regarding the Nike contract were false. Jeter’s agents’ repeated 

refusal to provide the Nike contract, Jeter explains, should have deterred RWI from 

moving forward with Jeter and should have provoked further investigation into the 

contents of the Nike contract. Therefore, it would follow, RWI failed to perform 

reasonable diligence to investigate the contents of the Nike contract and should thus 

not benefit from equitable tolling. Jeter’s argument assumes, however, that it was 

unreasonable for RWI to trust Jeter’s agents’ repeated representations that Jeter’s 

Nike contract did not serve as an impediment to the reverse-endorsement strategy. I 

cannot make that fact-based assumption at this stage of the litigation. Jeter’s 

argument cannot, therefore, serve as a basis to dismiss RWI’s claim. 

Jeter asserts a second rationale for barring equitable tolling here. Jeter 

contends that tolling of the statute of limitations is inappropriate because RWI has 

admitted that Close read the relevant provisions of the Nike contract, or the carveout, to RWI on September 15, 2011, at which point RWI must have known the truth 

of the matter. Jeter’s argument, however, borders on tautology: it ignores the fact 

that RWI’s claim contemplates that Jeter’s representatives read something other than 
28

the actual provisions of the Nike contract—that is, that the purported reading was a 

lie to further the fraud. Therefore, at this stage of the litigation, Jeter’s agent’s 

reading of what he purported to be the relevant provisions of the Nike contract do 

not preclude the equitable tolling of RWI’s fraudulent inducement claim. 

Based on its pleadings in Counts I and V, therefore, it is reasonably 

conceivable that RWI’s fraud claims are timely because Jeter fraudulently concealed 

the preclusive contents of his Nike contract, thereby tolling the statute of limitations 

until November 2013. Accordingly, Count I cannot be dismissed on the ground that 

it was untimely. 

The Plaintiffs second argument in support of dismissal of RWI’s fraudulent 

inducement and fraudulent concealment claims is that RWI has failed to sufficiently 

state that the representations regarding the Nike contract were false. According to 

Jeter, RWI never pleads that it “discovered that any of the alleged statements or 

representations were false,” and that RWI instead “assumes that [the] alleged

statements must have been false . . . because Jeter later refused to make a public 

announcement.”96 Moreover, Jeter argues that RWI admits that it was free to 

publicly announce Jeter’s role without Jeter’s permission and, in fact, shot a video 

with Jeter to show to investors in which Jeter stated that he was involved with RWI 

as an investor, co-founder, and board member. While RWI’s fraud claims appear 

 

96 Defs’ Opening Br. 34.
29

weakened by various admissions in its pleadings, RWI nonetheless sufficiently

alleges that Jeter’s representations regarding his Nike contract were false. 

Specifically, RWI points to Close’s representation in his November 2013 email that 

Jeter’s “presence in the marketplace” could not be disclosed due to his Nike contract. 

Therefore, RWI has sufficiently pled falsity in support of its fraudulent inducement 

and concealment claims. 

Based on the foregoing, the motion is denied as to Counts I and V.

2. Fraud

In Count III, RWI alleges a separate claim of fraud that resembles an 

amalgamation of its claims of fraudulent inducement and concealment. In its fraud 

claim, RWI alleges that Jeter made “knowing false statements to RWI that he would 

publically announce that he was a co-founder, substantial owner and director of 

RWI,”97 and that “these statements were false, because, upon information and belief, 

Jeter could not make such announcements due to the Nike contract.”98 RWI explains 

that “Jeter used these fraudulent statements to induce RWI into spending substantial 

money, time and effort into creating the reverse-endorsement plan around Jeter and 

changing its product and marketing to his personal liking to please Nike.”99

I find that RWI has failed to identify statements that contributed to fraud that 

 

97 Countercls. ¶ 173.

98 Id. at ¶ 174.

99 Id. at ¶ 175.
30

RWI relied on to its detriment separate from those statements made to allegedly 

fraudulently induce the Director Agreement and fraudulently conceal their falsity. 

To the extent RWI has alleged statements that I have not identified here that have 

contributed to RWI’s continued reliance on Jeter’s initial fraudulent statements, any 

related claim for fraud is subsumed by the surviving counts for fraudulent 

inducement and concealment. As a result, an additional, distinct claim of fraud is 

not present in the Counterclaims.

100

 The motion to dismiss is accordingly granted 

as to Count III.101

C. Count IV: Breach of Fiduciary Duties

In Count IV, RWI asserts several allegations that Jeter acted in bad faith and 

in violation of the duty of loyalty. It alleges that Jeter breached his fiduciary duties 

in seven ways: (1) making fraudulent statements to RWI and RWI’s investors; (2) 

using the November 2013 product launch to promote a separate business interests; 

(3) causing RWI to alter the FRIGO product and marketing strategy to fit Jeter’s 

personal liking in return for his false promise that he would publically announce his 

role with RWI; (4) demanding that RWI not pursue a certain branding strategy that 

 

100 I note that RWI seeks monetary damages in relief for its fraud claim in Count III. RWI also 

seeks monetary damages, in addition to rescission, in relief for its fraudulent inducement claim in 

Count I. 

101 The Counterclaim-Defendants argue that RWI’s fraud claim must be dismissed because RWI 

improperly “bootstrapped” a contract claim into a fraud claim. Because I’ve found that RWI’s 

fraud claim must be dismissed for failure to state a claim, I need not determine whether RWI’s 

fraud claim is improperly duplicative of a breach of contract claim. 
31

the board had already agreed to pursue; (5) attempting to take over the management 

of RWI; and (6) attempting to capitalize on RWI’s financial suffering by buying 

additional shares of RWI at a depressed price to become the largest stockholder of 

RWI.102

The Company’s Certificate of Incorporation, I note, includes an exculpatory 

clause that absolves a director of liability to the Company for monetary damages 

“[t]o the fullest extent permitted by law.”103 In order to withstand a motion to 

dismiss, therefore, the allegations against Jeter must make it reasonably conceivable 

that Jeter has breached a non-exculpated duty: the fiduciary duty of loyalty.104 This 

Court has held that “the duty of loyalty mandates that the best interest of the 

corporation and its shareholders takes precedence over any interest possessed by a 

director, officer or controlling shareholder and not shared by the stockholders 

generally.”

105

 Accordingly, “Corporate fiduciaries ‘are not permitted to use their 

position of trust and confidence to further their private interests’”

106 in ways inimical 

to the corporation. Encompassed within the duty of loyalty is the requirement that 

 

102 Countercls. ¶ 188.

103 Pls.’ Opening Br., Ex. A, at 17.

104 In re Alloy, Inc., 2011 WL 4863716, at *7 (Del. Ch. Oct. 13, 2011) (explaining that “if the 

corporation’s certificate contains an exculpatory provision pursuant to § 102(b)(7) barring claims 

for monetary liability against directors for breaches of the duty of care, the complaint must state a 

nonexculpated claim, i.e., a claim predicated on a breach of the directors’ duty of loyalty or bad 

faith conduct”)) (citing Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 239–40 (Del. 2009).

105 In re Orchard Enters., Inc. S’holder Litig., 88 A.3d 1, 33 (Del. Ch. 2014) (citing Cede & Co. 

v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993)).

106 Id. (quoting Guth v. Loft, Inc., 5 A.2d 503, 510 (Del. 1939)). 
32

a director act in good faith.107 Although the duty to act in good faith may be invoked 

with regard to a variety of behavior,108 RWI contends that it has pled a breach of the 

duty to act in good faith by showing that Jeter “intentionally act[ed] with a purpose 

other than that of advancing the best interests of the corporation.”109

RWI’s allegations, in my mind, illustrate the difficulties that may arise in the 

fiduciary duty context when a corporation expects its directors to perform acts 

outside of their traditional fiduciary role. Here, for example, the purpose of Jeter’s 

membership on RWI’s board was essentially for marketing purposes: the Company 

hoped that consumers would recognize Jeter’s role on the board, and his substantial 

investment in the Company, and be persuaded thereby to purchase its product. The 

Director Agreement, therefore, contains certain provisions to facilitate RWI and 

Jeter’s “reverse-endorsement” strategy that obligate Jeter beyond his fiduciary 

obligations. Specifically, the Director Agreement contemplates a press release 

announcing Jeter’s role with the Company, as well as a biographical sketch to be 

 

107 See Stone v. Ritter, 911 A.2d 362, 369–70 (Del. 2006) (“The failure to act in good faith may 

result in liability because the requirement to act in good faith ‘is a subsidiary element[,]’ i.e., a 

condition, ‘of the fundamental duty of loyalty.’”) (quoting Guttman v. Huang, 823 A.2d 492, 506 

n.34 (Del. Ch. 2003)).

108 See e.g., In re Walt Disney Co. Deriv. Litig., 906 A.2d 27, 67 (Del. 2006) (describing examples 

of bad-faith acts, such as “where the fiduciary intentionally acts with a purpose other than that of 

advancing the best interests of the corporation, where the fiduciary acts with the intent to violate 

applicable positive law, or where the fiduciary intentionally fails to act in the face of a known duty 

to act, demonstrating a conscious disregard for his duties”) (citations omitted).

109 In re Rural/Metro Corp S’holder Litig., 102 A.3d 205, 253 (Del. Ch. 2014) (citing In re Walt 

Disney Co. Deriv. Litig., 906 A.2d 27, 67 (Del. 2006)). 
33

disclosed in the context of information about RWI’s management.110 While such 

contractual obligations may give rise to breach-of-contract claims, they do not alter 

the fiduciary obligations of the director. Here, it appears that Jeter’s contractual 

obligations have enlarged the Company’s expectations of Jeter beyond his fiduciary 

obligations. For this reason, all but the claim that Jeter made false statements to 

investors must be dismissed for failure to state a claim. I address each of RWI’s 

allegations in turn below. I note at the outset, however, that (with the exception of 

the misrepresentation to investors and actions at the November 2013 product launch, 

addressed directly below) RWI’s claims of breach of duty, ironically, involve Jeter 

acting like a director of the Company, and not like the promoter manqué that RWI 

apparently intended he be.

1. Allegation 1: Misrepresentations to Investors

In RWI’s first allegation, it asserts that Jeter made fraudulent statements to 

RWI and RWI’s investors. RWI explains that on multiple occasions, Jeter 

represented to RWI investors that he would publically announce his role as a cofounder, investor, and director of RWI. It points to statements made in Stockholm, 

Sweden in November 2011, and in Tampa, Florida in January 2012. In reliance on 

those representations, RWI explains, investors made significant investments in the 

Company. Jeter, however, knew he was unable to comply, because he was

 

110 See Director Agreement, Ex. E; id. § 7. 
34

(allegedly) contractually prohibited from doing so under his contract with Nike.

After Jeter inevitably reneged on his obligation to RWI, those investors became 

unhappy with RWI and lost faith in the Company. As a result, RWI asserts, the 

Company was unable to raise the necessary funds to implement its business plans. 

Assuming, as I must at this stage, the truth of RWI’s pleadings, Jeter’s 

statements to investors, made to encourage investment and knowingly false, were 

made in bad faith, and RWI’s allegation, therefore, sufficiently pleads a claim of 

breach of fiduciary duty. Jeter, while acting as a fiduciary to the Company, made 

statements that were knowingly false and caused investors to invest in the Company. 

After discovering the falsity of Jeter’s statements, investors lost faith in the 

Company, thereby limiting the Company’s ability to raise capital. Based on RWI’s 

allegations, Jeter acted with a purpose other than that of advancing the best interests 

of the Company. The motion as to the first allegation, therefore, is denied. 

2. Allegation 2: Promotion of Other Interests

In RWI’s second allegation, it asserts that Jeter breached his duty of loyalty 

and acted in bad faith by using the November 2013 product launch to promote a 

separate business interests. Specifically, RWI points to statements Jeter made at the 

product launch in which he described a recent opportunity to enter the publishing 

business. This allegation fails to state a breach of the fiduciary duty of loyalty and 

does not amount to a bad faith act as pled. 
35

Assuming for the purposes of this analysis that Jeter attended the November 

2013 product launch and promoted a business other than the Company, the fiduciary 

duty of loyalty does not preclude a director from discussing other business ventures 

at a promotional event that he has no fiduciary obligation to facilitate or even attend. 

RWI’s allegation, as I see it, is merely another iteration of its contract and fraud 

claims. RWI expected that at the November 2013 product launch, Jeter would 

publically announce that he was a co-founder, substantial owner, and director of 

RWI. Instead, Jeter stated only that he attended the product launch to support 

Ingvarsson and the product. While Jeter’s discussion of his other business interest 

may have offended RWI’s expectations, such expectations are based in contract and 

cannot state a claim for breach of fiduciary duty. The statements regarding the 

publishing venture, as opposed to Jeter’s failure to disclose his role, are not alleged 

to have harmed the Company. Accordingly, it is not reasonably conceivable that 

RWI will prevail, and the motion is granted as to RWI’s second allegation. 

3. Allegations 3 & 4: Influence on Marketing Strategies 

In RWI’s third allegation, it asserts that Jeter breached the fiduciary duty of 

loyalty and acted in bad faith by causing RWI to change the FRIGO product and 

marketing strategy to his “personal liking” in return for his false promise that he 

would publically announce his role with RWI. Similarly, in its fourth allegation, 

RWI alleges that Jeter “demanded” that RWI halt a branding strategy that had been 
36

approved by the board in favor of his own strategy. Both of RWI’s allegations fail 

to state a claim of breach of the fiduciary duty of loyalty and do not arise to bad faith 

acts.

In the Counterclaims, RWI states that Jeter insisted that the FRIGO product

was “too sporty,” allegedly because, unless the products were redesigned as

“fashion” undergarments, his relationship with Nike could be damaged by the 

similarities between the FRIGO products and Nike products. According to RWI, 

VanEgmond informed Ingvarsson in November 2012 that Jeter would not publically 

support RWI if the FRIGO product remained “sporty.” To save its relationship with 

Jeter, and thus preserve its “reverse-endorsement” strategy, RWI “redesign[ed] the 

message, packaging and product line, and changed the distribution plan, to make the 

product less ‘sporty/athletic’ and more of a fashion product.”111 

Later, in April 2013, RWI’s board of directors approved a marketing 

campaign that featured a social media strategy spearheaded by Curtis James Jackson 

III, also known as the rapper 50 Cent.112 Subsequently, however, Jeter objected to 

the strategy, causing RWI to abandon the effort. According to RWI, Jeter’s 

obstruction caused “the waste of significant funds, time and effort, and caused RWI 

irreparable harm with retailers, customers and investors.”113

 

111 Countercls. ¶ 78.

112 Id. at ¶ 98.

113 Id. at ¶ 104.
37

According to RWI, Jeter’s advocacy of changes to the Company’s marketing 

strategy were not just bad business decisions made by a corporate fiduciary, but were 

acts made in bad faith, in breach of his duty of loyalty. RWI’s Counterclaims, 

however, lack factual allegations sufficient to show that Jeter breached his fiduciary 

duties. Strikingly absent from RWI’s Counterclaims is how Jeter was able to 

unilaterally alter the direction of the Company. RWI, for example, has not alleged 

that Jeter holds a controlling ownership interest in the Company or that he controls 

the board; it has not described how the Company implemented Jeter’s bad-faith 

marketing decisions; and it has failed to allege whether RWI’s officers and other 

directors supported or challenged Jeter’s decisions. In sum, RWI has failed to allege 

how Jeter acted in breach of his fiduciary duty; instead, to the extent these allegations 

relate to any of RWI’s claims, they seem to again converge with its contract and 

fraud allegations. While RWI’s reaction to Jeter’s demands may have relevance to 

the damages formulation with respect to its fraud or contract claims, they do not, as 

pled, implicate Jeter’s fiduciary duties. Accordingly, the motion is granted as to 

RWI’s third and fourth allegations.

4. Allegations 5 & 6: Efforts to Obtain Control

In its fifth allegation, RWI contends that Jeter attempted to take over the 

management of RWI; and in its sixth allegation, RWI asserts that Jeter attempted to 

capitalize on RWI’s financial suffering by purchasing additional shares at a 
38

depressed price pursuant to a plan to take control of the Company. According to 

RWI, Jeter acted in bad faith and in violation of the duty of loyalty that he owed 

RWI. 

In its Counterclaims, RWI alleges that in early 2014, Jeter and his 

representatives hired an outside consultant to assist RWI in licensing the FRIGO 

brand. Jeter did not stop there, however. According to RWI, Jeter attempted to 

install the outside consultant as a “shadow director” and instructed the consultant to 

run the Company.114 Although Jeter’s efforts allegedly caused financial harm and 

great confusion within the Company, there is no indication that Jeter’s plan was 

successful. Finally, in late 2014, after Jeter had “single handedly caused great 

financial harm to RWI, Jeter attempted to capitalize on RWI’s financial suffering by 

buying additional shares of RWI at a reduced price [to] become, by far, the largest 

shareholder.”115 Ultimately, however, Jeter bought no additional shares.

RWI’s allegations again fail to sufficiently describe the actions Jeter took as 

a fiduciary. Based on the Counterclaims, it is unclear how Jeter, a single director, 

was able to hire an outside consultant and give it clear instruction to “run the 

[C]ompany and the brand.”116 Similarly, the ultimate culmination of Jeter’s alleged 

plan—to control the Company by purchasing RWI stock at a depressed price—also 

 

114 Id. at ¶ 122.

115 Id. at ¶ 141.

116 Id. at ¶ 120.
39

simply never occurred. Therefore, RWI’s fifth and sixth allegations do not support 

a claim for breach of fiduciary duty and are dismissed. 

III. CONCLUSION

Based on the foregoing, the motion to dismiss is denied as to the 

Counterclaimant’s counts for fraudulent inducement (Count I) and fraudulent 

concealment (Count V). Likewise, the motion is denied as to the noted portions of 

the counts for breach of the implied covenant of good faith and fair dealing of the 

Director’s Agreement (Count II) and breach of fiduciary duties (Count IV). The 

motion is otherwise granted. The parties should submit a proposed order consistent 

with this Memorandum Opinion.