IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE TRUECAR, INC. 

STOCKHOLDER DERIVATIVE LITIGATION

)

)

)

)

CONSOL.

C.A. No. 2019-0672-AGB

MEMORANDUM OPINION

Date Submitted: June 11, 2020

Date Decided: September 30, 2020

Thomas A. Uebler and Jeremy J. Riley, MCCOLLOM D’EMILIO SMITH 

UEBLER LLC, Wilmington, Delaware; P. Bradford deLeeuw, DELEEUW LAW 

LLC, Wilmington, Delaware; Melinda A. Nicholson, Nicolas Kravitz, and Eda 

Ayrim Walker, KAHN SWICK & FOTI, LLC, New Orleans, Louisiana; Ashley R. 

Rifkin and Steven R. Wedeking, ROBBINS LLP, San Diego, California; Jeffrey S. 

Abraham and Michael J. Klein, ABRAHAM, FRUCHTER & TWERSKY, LLP, 

New York, New York; Attorneys for Plaintiffs David Bryan, Subash D’Souza, and 

Herbert Silverberg.

Shannon E. German, WILSON SONSINI GOODRICH & ROSATI, P.C., 

Wilmington, Delaware; Jerome F. Birn, Jr. and Catherine Moreno, WILSON 

SONSINI GOODRICH & ROSATI, P.C., Palo Alto, California; Attorneys for 

Defendants Abhishek Agrawal, Robert Buce, Christopher Claus, Steven Dietz, 

Neeraj Gunsagar, Michael Guthrie, John Krafcik, Erin Lantz, John Mendel, Wesley 

Nichols, Victor “Chip” Perry, John Pierantoni, Brian Skutta, Jeff Swart, and Ion 

Yadigaroglu, and Nominal Defendant TrueCar, Inc. 

Gregory P. Williams, Brock E. Czeschin, and Kevin M. Regan, RICHARDS,

LAYTON & FINGER, P.A., Wilmington, Delaware; Attorneys for Defendant

Neeraj Gunsagar.

Albert H. Manwaring, IV and Albert J. Carroll, MORRIS JAMES LLP, Wilmington, 

Delaware; Brian Michael Lutz and Michael J. Kahn, GIBSON, DUNN &

CRUTCHER LLP, San Francisco, California; Attorneys for Defendants United 

Services Automobile Association and USAA Property Holdings, Inc.
Jon E. Abramczyk and Ryan D. Stottmann, MORRIS, NICHOLS, ARSHT & 

TUNNELL LLP, Wilmington, Delaware; Attorneys for Defendants Upfront II, L.P., 

Upfront III, L.P., Upfront II Investors, L.P., Upfront II Partners, L.P., Upfront III 

Investors, L.P., Upfront III Partners, L.P., Capricorn AIP-Private Investment Fund 

I, L.P., HIT Splitter, L.P., Capricorn Investment Group, LLC, and Carthage, L.P. 

Jon E. Abramczyk and Ryan D. Stottmann, MORRIS, NICHOLS, ARSHT & 

TUNNELL LLP, Wilmington, Delaware; Ralph C. Ferrara and Ann M. Ashton, 

PROSKAUER ROSE LLP, Washington, District of Columbia; Julia D. Alonzo, 

PROSKAUER ROSE LLP, New York, New York; Attorneys for Defendant Vulcan 

Capital Growth Equity Management LLC.

BOUCHARD, Chancellor
1

TrueCar, Inc. operates a platform designed to connect consumers looking to 

purchase a car with automobile dealers via the internet. Most of the consumers come 

to TrueCar’s platform from its affinity partners. In November 2017, TrueCar

announced it had sustained a loss in the third quarter and was lowering its guidance. 

During an earnings call the same day, management explained that TrueCar’s most 

important affinity partner, USAA, recently launched a significant website redesign 

and that sales generated by USAA were down 5% from the prior year. TrueCar’s 

stock price fell over 35% the next day. A federal securities action followed. This 

action followed after that.

In this action, stockholders of TrueCar assert derivative claims for breach of 

fiduciary duty, insider trading, unjust enrichment, contribution and indemnification, 

and aiding and abetting a breach of fiduciary duty against fifteen current and former 

officers and/or directors of TrueCar and against a series of entities that sold stock in 

a secondary offering in May 2017. Each of the defendants moved to dismiss the 

complaint.

The threshold issue in this case is whether plaintiffs’ failure to make a demand 

on the TrueCar board to initiate litigation should be excused. Plaintiffs advance a 

host of reasons why they believe making a demand would have been futile on the 

theory that a majority of the directors on the board when this action was filed acted 
2

in bad faith and would face a substantial likelihood of liability with respect to the 

claims in this case.

In this decision, the court concludes that plaintiffs have failed to plead 

particularized facts sufficient to impugn the ability of any of the members of the 

demand board, let alone a majority, to have considered a demand impartially. For 

this and the other reasons discussed herein, the complaint will be dismissed in its 

entirety.

I. BACKGROUND

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

allegations of the Verified Consolidated Stockholder Derivative Complaint

(“Complaint”) and documents incorporated therein.1 Any additional facts are 

subject to judicial notice.

A. The Parties

Nominal Defendant TrueCar, Inc., (“TrueCar” or the “Company”) is a

Delaware corporation that connects customers via the internet with automobile 

dealers. Its principal place of business is in Santa Monica, California.2

 

1 Verified Consolidated S’holder Deriv. Compl. (“Compl.”) (Dkt. 16). 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). 

2 Compl. ¶¶ 25, 75.
3

The plaintiffs in this case are David Bryan, Subash D’Souza, and Herbert 

Silverberg (collectively, “Plaintiffs”). They allege they were stockholders of 

TrueCar at the time of the alleged misconduct and have been stockholders 

continuously since then.3

The defendants in this case include six of TrueCar’s current and former

officers, nine current and former members of TrueCar’s board of directors (the 

“Board”), and four groups of entities that sold shares of TrueCar in a secondary 

offering that closed in early May 2017 (the “Secondary Offering”).

4

The first group of stockholder entities is United Services Automobile 

Association (“USAA”) and its affiliate USAA Property Holdings, Inc. USAA is an 

unincorporated association with its primary offices in San Antonio, Texas.5 USAA 

offers its members “services related to insurance, banking, investing, real estate, 

retirement and IRAs, health insurance, and shopping and discounts.”6 USAA was

TrueCar’s largest stockholder and held approximately 14% of the Company’s 

 

3

Id. ¶¶ 22-24.

4

Id. ¶ 8. The Complaint alleges that TrueCar conducted the Secondary Offering on April 

26, 2017, and that various sales in connection with the Secondary Offering occurred on 

May 2, 2017. Id. ¶¶ 112, 176.

5

Id. ¶ 41.

6

Id.
4

common stock as of January 2017.7 In the Secondary Offering, USAA sold

approximately 26% of its holdings and received over $51 million in proceeds.8

The second group of stockholder entities is comprised of Upfront II, L.P., 

Upfront III, L.P., Upfront II Investors, L.P., Upfront II Partners, L.P., Upfront III 

Investors, L.P., and Upfront III Partners, L.P., (collectively “Upfront”), which sold 

approximately 1.5 million shares in the Secondary Offering.

9

 The third group of 

stockholder entities includes Capricorn AIP-Private Investment Fund I, L.P., HIT 

Splitter, L.P., Capricorn Investment Group, LLC, and Carthage, L.P., (together 

“Capricorn”), which sold approximately 509,000 sharesin the Secondary Offering.

10

 

The fourth group consists of Vulcan Capital Growth Equity Management, LLC 

(“Vulcan”), an affiliate of which sold approximately 1.1 million shares in the 

Secondary Offering.

11

 

Defendants Victor Perry, Michael Guthrie, John Pierantoni, Neeraj Gunsagar, 

Jeff Swart, and Brian Skutta are current and former TrueCar officers. Perry served 

as TrueCar’s President and Chief Executive Officer, and as a member of the Board 

 

7

Id. ¶¶ 1, 79.

8

Id. ¶¶ 8, 165.

9

Id. ¶ 42.

10 Id. ¶¶ 33, 43.

11 Id. ¶ 44. 
5

from December 2015 until July 2019.12 Guthrie served as TrueCar’s Chief Financial 

Officer from January 2012 until January 2018.13 Pierantoni, Gunsagar, Swart, and 

Skutta, served as TrueCar’s Chief Accounting Officer, Chief Marketing Officer, 

General Counsel, and Executive Vice President of Dealer Sales and Services, 

respectively.14

In addition to Perry, Defendants Abhishek Agrawal, Robert Buce, Christopher 

Claus, Steven Dietz, John Krafcik, Erin Lantz, John Mendel, Wesley Nichols, and 

Ion Yadigaroglu are current or former members of TrueCar’s Board. 

Agrawal served on the Board from November 2013 through May 18, 2017, 

and served as Managing Director and Global Head of Growth Equity at Vulcan and 

on the Investment Advisory Board of one of the Capricorn entities.

15 Mendel 

replaced Agrawal on the Board in May 2017.16 

Claus has served on the Board since April 2014 and as Chairman of the Board 

since February 2016.17 Before joining TrueCar’s Board, Claus served in various 

 

12 Id. ¶ 27.

13 Id. ¶ 26.

14 Id. ¶¶ 34-36.

15 Id. ¶ 29.

16 Id. ¶ 40.

17 Id. ¶ 37.
6

senior executive positions at USAA for over 20 years.18 Claus also served since 

January 2009 as a director of USAA Real Estate Company, “the real estate 

investment arm of USAA.”19

Dietz served on the Board from February 2006 until his resignation in October 

2018 and “managed” Upfront.

20 Nichols has served on the Board since November 

2016 and “advised” Upfront.21

Buce, Krafcik, Lantz, and Yadigaroglu have served on the Board since April 

2005, February 2014, November 2016, and August 2007, respectively.22 

Yadigaroglu has been Managing Principal at one of the Capricorn entities since 

2004.23

This opinion refers, at times, to the fifteen current and former directors and 

officers named as defendants, collectively, as the “Individual Defendants”; to 

Guthrie, Pierantoni, Agrawal, Buce, Dietz, Krafcik, Yadigaroglu, Gunsagar, Swart, 

and Skutta as the “Individual Selling Defendants”; to USAA, Upfront, Capricorn, 

 

18 Id.

19 Id.

20 Id. ¶¶ 31, 42.

21 Id. ¶¶ 39, 42.

22 Id. ¶¶ 30, 32, 38.

23 Id. ¶¶ 33, 42.
7

and Vulcan, collectively as the “Entity Defendants”; and to all defendants,

collectively, as “Defendants.”

B. TrueCar’s Partnership with USAA and the February Meeting

TrueCar’s financial success depends on its ability to draw consumers to its 

car-buying platform, which leads to sales of cars, referred to as “units.”24 The 

majority of TrueCar’s unit sales are through its “affinity group marketing 

partners.”25 TrueCar’s most important and longest standing affinity partner is 

USAA.26 

As part of its partnership with USAA, TrueCar hosted a co-branded website 

only accessible to USAA members, which was the “largest source of user traffic and 

unit sales from [TrueCar’s] affinity group marketing partners” in 2016.

27

 More 

specifically, the website generated 32% of TrueCar’s annual unit sales and 45% of 

its total contribution profit in 2016.

28

 TrueCar was responsible for maintaining the 

 

24 Id. ¶ 76.

25 Id. ¶ 77.

26 Id. ¶¶ 78, 81.

27 Id. ¶¶ 92, 94.

28 Id. ¶¶ 81, 94.
8

website but USAA had “broad discretion” to determine how the website was 

“promoted and marketed” to its members.29 

In early 2015, Stuart Parker became USAA’s CEO.30 In this role, Parker

sought to make USAA a more “advice-centric organization” and suggested that 

USAA members might be encouraged to delay purchasing vehicles to improve their 

financial health.

31

 Consistent with this new direction, USAA notified TrueCar in or 

around January 2017 that it was redesigning the co-branded website.32 The redesign 

added several steps before USAA members could access the TrueCar platform, 

including a series of questions concerning personal and financial information and 

warnings about the cost of car ownership.33 These changes would take several 

months to implement and were expected to be fully implemented by June 2017.34

On February 9, 2017, all but two of the fifteen Individual Defendants attended 

a meeting of the Board.

35

 At this meeting, the attendees discussed TrueCar’s 

 

29 Id. ¶¶ 82-84.

30 Id. ¶ 88.

31 Id. ¶ 89.

32 Id. ¶ 91.

33 Id. ¶¶ 91, 92, 122, 141, 156.

34 Id. ¶ 92.

35 Id. ¶ 94.
9

“ongoing efforts [to] enhance the relationship with USAA.”36 A presentation to the 

Board stated that the Company had a goal to “re-energize” the relationship with 

USAA to “continue growth” and included a slide identifying “USAA 

underperformance” among a list of TrueCar’s top risks for 2017.37 The meeting 

materials also included a “2017 Financial Model,” which forecasted year-over-year 

quarterly growth in 2017, and USAA year-over-year unit growth of 15%, 12%, 11%, 

and 10% over the next four quarters.

38

 

On February 16, 2017, TrueCar issued a press release announcing its financial 

results for the fourth quarter and year-end 2016.39 In the press release, Perry stated 

that TrueCar was “re-accelerating [its] top-line growth” and would “continue to 

drive double-digit rates of unit and revenue growth for some time.”40 That same 

day, Perry and Guthrie reiterated their expectations on an earnings call and Guthrie

stated that USAA units were at “an all-time high.”41 

 

36 Id. 

37 Id.

38 Id. ¶ 95; German Aff. Ex. 2 (“February 2017 Board Presentation”), at 58 (Dkt. 31).

39 Compl. ¶ 97.

40 Id. 

41 Id. ¶¶ 98-99.
10

On March 1, 2017, TrueCar filed its 2016 Form 10-K with the SEC.42 All 

members of the Board at the time and officers Guthrie and Pierantoni signed the

2016 Form 10-K.

43

 It included various disclosures concerning USAA and the 

website and its potential to negatively impact TrueCar’s business:

USAA has broad discretion in how the car-buying site we maintain for 

USAA is promoted and marketed on its own website. Changes in this 

promotion and marketing have in the past and may in the future 

adversely affect the volume of user traffic we receive from USAA. 

Changes in our relationship with USAA or its promotion and marketing 

of our platform could adversely affect our business and operating 

results in the future.44

According to the Complaint, the Form 10-K also explained that “a significant 

reduction in the number of cars purchased . . . by members of [TrueCar’s] affinity 

group marketing partners would reduce [the Company’s] revenue and harm 

[TrueCar’s] operating results” and that TrueCar’s relationship with affinity groups 

“might change” in which case its “operating results and prospects may be harmed.”45

 

42 Id. ¶ 104.

43 Id.

44 Id. ¶ 106 (emphasis omitted).

45 Id. ¶¶ 104-05 (alterations in original).
11

C. The Secondary Offering and the Website Redesign

On April 17, 2017, the Board approved a resolution authorizing a secondary 

offering of TrueCar stock, defined above as the “Secondary Offering.”46 As part of 

the Secondary Offering, TrueCar’s officers, directors, and affiliates, agreed to a 90-

day “Lock-Up Period,” which prevented them from selling any TrueCar stock until 

after the Lock-Up expired on July 25, 2017.47 

The Secondary Offering was conducted pursuant to a shelf registration filed 

with the SEC, dated January 19, 2017; a Prospectus filed with the SEC, dated 

January 19, 2017; and a Prospectus Supplement filed with the SEC, dated April 26, 

2017.48 This opinion refers to these documents collectively as the “Secondary 

Offering Documents.”

On April 26, 2017, TrueCar conducted the Secondary Offering of 

10.35 million shares for $16.50 per share.49 The Entity Defendants received

approximately 64% of the proceeds, totaling approximately $110 million.50 From 

and including the Secondary Offering until October 16, 2017, the Entity Defendants 

 

46 Id. ¶ 108.

47 Id. ¶¶ 114-15.

48 Id. ¶ 8 n.2. 

49 Id. ¶ 112.

50 Id. 
12

and the Individual Selling Defendants sold approximately 8 million shares of 

TrueCar stock, generating over $135 million in proceeds.51 

On May 3, 2017, after the Secondary Offering closed, the Audit Committee

consisting of Buce, Claus, Guthrie, Lantz, and Pierantoni met to discuss “changes to 

the Company’s risk factors in its SEC filings. . . . [and] approved filing the Form 10-

Q without updating the risk disclosure regarding USAA.”52 On May 9, 2020, during 

an earnings call with investors, Guthrie highlighted USAA’s “healthy [unit] growth 

of 16% in the first quarter.”

53

 The next day, TrueCar filed its Form 10-Q, which

repeated the same disclosures set forth in the Company’s 2016 Form 10-K regarding 

the relationship with USAA and the website.54

On June 1, 2017, USAA’s website redesign was implemented.

55

 USAA 

members described the newly designed website as “a nightmare to use” and the 

changes “caused [USAA members] to pause, perhaps not continue, perhaps come 

back at a later date.”56

 

51 Id. ¶ 176.

52 Id. ¶ 117 (emphasis omitted).

53 Id. ¶¶ 119-20.

54 Id. ¶ 118.

55 Id. ¶¶ 122, 157.

56 Id. ¶¶ 141, 147, 195.
13

On July 26, 2017—the day after the Lock-Up Period expired—certain officers 

of TrueCar began selling shares of TrueCar stock:

 On July 26, Swart and Pierantoni sold over $690,000 and 

$1.1 million worth of TrueCar stock, respectively;

 On July 26 and July 27, Gunsagar sold over $3 million worth of 

TrueCar stock; and

 Over the week after the Lock-Up Period expired, Guthrie sold 

over $13.9 million worth of TrueCar stock.57

On July 27, 2017, during a Board meeting, Perry explained to the Board that 

“[t]he partner business is driving lots of growth . . . USAA, however, is a fragile 

relationship and needs more attention.”

58

 Included in the Board meeting materials 

was a presentation that explained that USAA had made a minor change to its website

in late 2016, which had resulted in an “11% decrease in total new car search visitors” 

and a loss of USAA new car traffic.

59

 

On August 8, 2017, the Company released its second quarter results.60 During 

an earnings call that same day, Guthrie told investors that TrueCar was currently 

seeing “continued strong growth in units” in the third quarter that was “really 

 

57 Id. ¶¶ 115, 127, 176.

58 Id. ¶ 129 (emphasis omitted).

59 Id. ¶ 130 (emphasis omitted).

60 Id. ¶ 132.
14

fantastic.”

61

 Guthrie also stated that TrueCar expected “Q3 units to be in the range 

of . . . 20% to 22% year-over-year growth.”62

On August 9, 2017, TrueCar filed a Form 10-Q for the second quarter of 2017, 

which was approved by the Audit Committee on August 3.

63

 It continued to warn 

of the “risk” that if USAA were to change the website “in the future,” its business 

would be significantly harmed.64

D. The Website Redesign Negatively Impacts TrueCar

On September 15, 2017, the Board held a special meeting at which it was 

advised that “preliminary August results indicate[d] below guidance performance” 

and “USAA [unit] performance [was] significantly affected in Q3 2017,” resulting 

in $1.8 million in lost USAA revenue for the quarter.65 The same day as the special 

Board meeting, officers Pierantoni and Gunsagar sold more than 20,000 shares of 

their TrueCar stock, generating over $300,000 in proceeds.

66

 

61 Id. ¶ 134.

62 Id.

63 Id. ¶ 132.

64 Id. ¶¶ 132-33.

65 Id. ¶¶ 137-38.

66 Id. ¶ 140.
15

On October 26, 2017, the Board held a meeting where it again was advised

that USAA struggled in the third quarter and the website changes had “significantly 

impacted USAA’s performance.”67

On November 6, 2017, TrueCar issued a press release announcing that the 

Company sustained a $9.5 million net loss for the third quarter and was lowering its

guidance.

68

 On an earnings call that day, Perry and Guthrie disclosed that USAA 

units had declined by 5%.69 Guthrie disclosed that “[t]he year-over-year contraction 

in units at USAA contributed to the deceleration in used car growth versus last 

quarter as our USAA channel has the highest ratio of used car sales.”70 He also told 

investors that TrueCar’s “unique visitors” growth rate had fallen to 1%—the slowest 

growth rate since 2013.71 During the earnings call, Perry stated that “we saw these 

[changes] coming. It wasn’t like we were blind to them,” and Guthrie assured 

investors that TrueCar “work[s] with [USAA] on a daily basis and we’re wellconnected.”72

 

67 Id. ¶ 141.

68 Id. ¶¶ 143-44.

69 Id. ¶¶ 144.

70 Id. ¶¶ 145.

71 Id.

72 Id. ¶¶ 149, 152.
16

On November 7, 2017, TrueCar’s stock fell over 35%.

73

 On January 28, 2018, 

Guthrie resigned as CFO.74 On February 15, 2018, TrueCar announced its fourth 

quarter and full year results for 2017.75 TrueCar’s affinity partnership with USAA 

produced 58,975 units, down 14% from the prior year.76 

E. The Securities Class Action

On March 30, 2018, a securities class action was filed in the United States 

District Court for the Central District of California against TrueCar and eleven of 

the fifteen Individual Defendants in this action: Guthrie, Perry, Pierantoni, Agrawal, 

Buce, Claus, Dietz, Krafcik, Lantz, Nichols, and Yadigaroglu (the “Securities Class 

Action”).77 The complaint in that action asserted various claims under the Securities 

Act and the Exchange Act based on TrueCar’s public disclosures concerning USAA 

and its prospects for 2017. This opinion refers to the defendants in the Securities 

Class Action as the “Securities Class Action Defendants.”

 

73 Id. ¶ 154.

74 Id. ¶¶ 26, 158.

75 Id. ¶ 159.

76 Id.

77 Id. ¶¶ 26-33, 37-39, 178-79.
17

On February 5, 2019, the district court in the Securities Class Action denied 

the defendants’ motion to dismiss the complaint in a two-paragraph order.

78

 On

August 2, 2019, the parties in the Securities Class Action executed a Stipulation and 

Agreement of Settlement (the “Settlement Agreement”) to fully and finally resolve 

the case.

79

 The district court preliminarily approved the settlement on October 15, 

2019, and granted final approval on January 27, 2020.80 

II. PROCEDURAL HISTORY

Beginning on August 22, 2019, Plaintiffs filed three separate actions in this 

court against the Defendants after seeking books and records under 8 Del. C. § 220.81 

Those actions were consolidated on October 9, 2019, and Plaintiffs filed a 

consolidated complaint (as defined above, the “Complaint”) on November 7, 2019.82

The Complaint asserts four counts derivatively on behalf of TrueCar. Count 

I asserts essentially two distinct claims for breach of fiduciary duty against different 

sets of defendants. 

 

78 Id. ¶ 179.

79 Id. ¶ 181; German Decl. Ex. 11 (“Preliminary Approval Order”), at 2 (Dkt. 31).

80 Preliminary Approval Order; Uebler Aff. Ex. A (“Final Approval Order”) (Dkt. 48); 

German Decl. Ex. 25 (“Settlement Agreement”) (Dkt. 58). 

81 See Dkt. 5; Compl. ¶ 15.

82 Dkt. 5; Dkt. 16.
18

The first claim within Count I is asserted against the Individual Defendants 

for:

(i) failing to disclose the truth about the impending material changes to 

the USAA co-branded website and its expected negative impact on the 

Company’s financial performance; (ii) making or failing to correct 

false and misleading statements and omissions regarding the same; 

(iii) allowing the [Individual Selling Defendants and USAA] to engage 

in the sale of stock based on insider information; and/or (iv) failing to 

provide adequate oversight of the Company to prevent any of the 

above.83

 

This claim is referred to herein as the “Disclosure Claim” and the fourth part of the 

claim is referred to as the “Caremark” claim.

The second claim within Count I is asserted against the Individual Selling 

Defendants and USAA under Brophy v. Cities Service Company84 for possessing 

“material, adverse, nonpublic information regarding the impending material changes 

to the USAA site and the expected significant negative impact, and ma[king] stock 

sales . . . on the basis of that information while the price of the Company’s shares 

was artificially inflated.”85 Plaintiffs seek restitution and disgorgement of profits for 

 

83 Compl. ¶ 205. Although this part of Count I also is asserted against USAA, Plaintiffs 

did not address the alleged Disclosure Claim or the Caremark claim against USAA in their 

brief and thus waived these issues. See USAA Reply Br. 5 n.2. Emerald P’rs v. Berlin,

726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”).

84 70 A.2d 5 (Del. Ch. 1949).

85 Compl. ¶¶ 206.
19

this claim.86 This claim overlaps with Count II, which asserts a claim for unjust 

enrichment against the Individual Selling Defendants and USAA for selling 

“TrueCar stock while in possession of material, nonpublic information that 

artificially inflated the price of TrueCar stock.”87 

Count III seeks contribution and indemnification on behalf of the Company 

from the Securities Class Action Defendants for “expos[ing] the Company to 

significant liability under various federal and state laws.”

88

 

Count IV asserts an aiding and abetting claim against the Entity Defendants

for “knowingly participat[ing]” in breaches of fiduciary duty by Agrawal, Claus, 

Dietz, Nichols and Yadigaroglu for “selling shares motivated in whole or in part by 

material adverse inside information” the fiduciaries shared with them.

89

 Count IV 

is asserted against USAA in the alternative to Count I, to the extent USAA does not 

owe fiduciary obligations to TrueCar.90

 

86 Id. ¶ 211.

87 Id. ¶¶ 215-16.

88 Id. ¶¶ 219-22.

89 Id. ¶¶ 223-32.

90 Id. at 112 n.15.
20

On December 19, 2019, each of the Defendants moved to dismiss the 

Complaint.91 After briefing, the court heard oral argument on June 11, 2020.92

III. ANALYSIS

The Individual Defendants and USAA have moved to dismiss the Complaint 

under Court of Chancery Rule 23.1 for failure to plead demand futility and all 

Defendants have moved under Rule 12(b)(6) to dismiss the Complaint for failure to 

state a claim for relief against each of them. 

Although it would be typical to analyze first whether Plaintiffs’ failure to 

make a demand should be excused, Defendants’ motions raise a host of subsidiary 

issues that impact the Rule 23.1 analysis. In order to streamline that analysis, the 

court will consider first two of those subsidiary issues, namely (i) whether USAA 

owed fiduciary duties to TrueCar and (ii) whether the sales of stock by certain Entity 

Defendants (Capricorn, Upfront, and USAA) should be attributed to certain directors 

on the Demand Board who allegedly were affiliated with those entities. These issues 

are addressed in Sections A and B below. The court then will consider whether 

Plaintiffs have plead particularized facts sufficient to show that making a demand 

on the TrueCar Board before filing their primary derivative claims would have been 

 

91 Dkt. 27 (USAA Mot.); Dkt. 28 (Entity Defs.’ Mot.); Dkt. 31 (Individual Defs.’ Mot.).

92 Dkt. 71.
21

futile. This issue is discussed in Sections C-E below. Finally, the court will consider 

whether Count III states a claim for relief in Section F below.

A. Whether USAA Owed Fiduciary Duties

Plaintiffs assert a Brophy claim against USAA and, in the alternative, an 

aiding and abetting claim against USAA “solely to the extent USAA is found not to 

have owed fiduciary obligations to TrueCar.”93 To state a claim under Brophy, a 

plaintiff must allege that, “1) the corporate fiduciary possessed material, nonpublic 

company information; and 2) the corporate fiduciary used that information 

improperly by making trades because she was motivated, in whole or in part, by the 

substance of that information.”

94

USAA has moved to dismiss the Brophy claim for failure to state a claim for 

relief on the ground that USAA is not a fiduciary of TrueCar.95 The standards 

governing a motion to dismiss under Rule 12(b)(6) for failure to state a claim for 

relief are 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 

 

93 Compl. at 112 n.15.

94 In re Oracle Corp. Deriv. Litig., 867 A.2d 904, 934 (Del. Ch. 2004).

95 USAA Opening Br. at 13 (Dkt. 27).
22

unless the plaintiff would not be entitled to recover under any 

reasonably conceivable set of circumstances susceptible of proof.96

Plaintiffs allege USAA owed fiduciary obligations to TrueCar because of its 

“significant TrueCar stockholdings which they have maintained since TrueCar’s 

inception, representation on TrueCar’s Board via its designee (Defendant Claus) as 

Board Chairman and attendant observation rights, and control over TrueCar via the 

contractual Services Agreement and its substantial contribution to TrueCar’s 

revenues and profits as TrueCar’s most significant affinity partner.”97 

Citing this court’s 1973 decision in Cheese Shop International, Inc. v. Steele,

98

Plaintiffs assert that USAA “occupied a special position of trust and confidence 

analogous to that of a fiduciary.”

99 Although a venerable decision for its articulation 

of the attributes that generally define a fiduciary relationship, Cheese Shop does not 

address the specific circumstances under which our law imposes fiduciary duties on 

a stockholder of a corporation. A long line of Delaware precedent addresses that 

 

96 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002) (internal quotations and 

citations omitted).

97 Compl. ¶ 204.

98 303 A.2d 689, 690 (Del. Ch. 1973) (finding that a licensee under a license agreement did 

not owe fiduciary duties to the licensor), rev’d on other grounds, 311 A.2d 870 (Del. 1973). 

99 Pls.’ Answering Br. at 73-75 (Dkt. 47).
23

precise issue. That precedent, which Plaintiffs relegate to a conclusory footnote in 

their brief, provides the operative standards to apply here.100

It is well-settled under Delaware law that a stockholder owes fiduciary duties 

when “the stockholder (1) owns more than 50% of the voting power of a corporation 

or (2) owns less than 50% of the voting power of the corporation but ‘exercises 

control over the business affairs of the corporation.’”101 As of January 2017, USAA 

held 14% of TrueCar’s outstanding stock.102 The test for minority stockholders to 

be deemed a controller “is not easy to satisfy, and can only be met where 

stockholders who, although lacking a clear majority, have such formidable voting 

and managerial power that they, as a practical matter, are no differently situated than 

if they had majority voting control.”

103

Here, the Complaint does not allege sufficient facts to show that USAA 

exercised control over the business affairs of the corporation or that any director was 

controlled by or beholden to USAA. USAA contends that Claus served as USAA’s 

 

100 See id. at 76 n.26.

101 In re KKR Fin. Hldgs. LLC S’holder Litig., 101 A.3d 980, 991 (Del. Ch. 2014) (citing 

Kahn v. Lynch Commc’n Sys., Inc., 638 A.2d 1110, 1113-14 (Del. 1994) (quoting Ivanhoe 

P’rs v. Newmont Mining Corp., 535 A.2d 1334, 1344 (Del. 1987)), aff’d sub nom. Corwin 

v. KKR Fin. Hldgs. LLC, 125 A.3d 304 (Del. 2015).

102 Compl. ¶ 41.

103 In re KKR, 101 A.3d at 992 (internal quotation marks and citations omitted).
24

“representative” on the Board, but the court finds for the reasons explained in 

Part III.E below that the Complaint does not plead facts sufficient to create a 

reasonable doubt about Claus’s independence from USAA. 

Although USAA has been TrueCar’s largest stockholder and most important 

affinity partner since the Company’s inception,104 USAA maintained a commercial 

relationship with TrueCar, documented in a Services Agreement that delineated the 

companies’ respective rights and obligations, similar to that of TrueCar’s other 

affinity partners.

105 Absent from the Complaint are any allegations that the Services 

Agreement granted USAA the power to restrict TrueCar’s Board or provided USAA 

such formidable managerial power so as to control TrueCar’s business affairs. In

short, the Complaint does not allege any facts to suggest that USAA had anything 

other than a significant commercial relationship with TrueCar during the period 

relevant to this action. This does not give rise to fiduciary duty obligations.

106

Because it is not reasonably conceivable from the allegations in the Complaint 

that USAA owes fiduciary obligations to TrueCar, the Brophy claim against USAA 

 

104 See Compl. ¶¶ 79-82. 

105 See id. ¶¶ 83-84; Mot. to Dismiss Hr’g Tr. (“Tr.”) at 80-81 (June 11, 2020) (Dkt. 72).

106 In re Delta & Pine Land Co. S’holders Litig., 2000 WL 875421, at *7 (Del. Ch. June 

21, 2000) (“To assert that contractual relationships necessarily cause one contracting party 

to control the other is an unsupported exaggeration. If this were so, customers and suppliers 

would control every existing company.”).
25

will be dismissed. The court will address Plaintiffs’ alternative aiding and abetting 

claim against USAA in the next section. 

B. Whether the Stock Sales of USAA, Upfront, and Capricorn are

Attributable to Members of the Demand Board

When Plaintiffs filed their initial complaint, the Board consisted of eight 

members: Buce, Claus, Krafcik, Lantz, Nichols, Yadigaroglu, Mendel, and nonparty McKoy (collectively, the “Demand Board”).107 The Complaint alleges that 

five of these individuals (Buce, Claus, Krafcik, Nichols, and Yadigaroglu) engaged 

in insider selling in breach of their fiduciary duties.

108

 The Complaint does not allege 

that Claus, Nichols, or Yadigaroglu sold any shares of TrueCar stock they held 

personally at any time relevant to this action.109 Plaintiffs argue nevertheless that 

stock sales made by USAA, Upfront, and Capricorn should be attributed to Claus, 

Nichols, and Yadigaroglu, respectively,110 under this court’s decision in In re Fitbit, 

Inc. Stockholder Derivative Litigation.

111

 

107 Compl. ¶ 192.

108 Id. ¶¶ 206-10, 225.

109 See id. ¶¶ 33, 37, 39, 169, 176, 226. 

110 Pls.’ Answering Br. at 51-52, 88.

111 2018 WL 6587159 (Del. Ch. Dec. 14, 2018). 
26

In Fitbit, the court considered “whether a fiduciary may be held liable on a 

Brophy claim for trades that an entity or fund associated with that fiduciary executed 

in its name.”112 In finding that a fiduciary could be liable in these circumstances, 

Vice Chancellor Slights explained as follows: 

Here, the Selling Defendants seek a ruling that would permit a director

to trade on inside material information without consequence just 

because the director did not trade personally but rather passed the 

information to an entity with which he is affiliated (and over which he 

exercised control) to do the trading. That is not and cannot be our law. 

Indeed, to allow these directors, through their controlled funds, to profit 

from inside information without recourse would be inconsistent with 

the policy of extinguishing all possibility of profit flowing from a 

breach of the confidence imposed by the fiduciary relation that 

undergirds Delaware’s insider trading law.113

Applying this principle, the court found that plaintiffs had pled particularized facts 

concerning two directors who “share voting and dispositive power over the Fitbit 

stock owned by their respective funds” to allow a reasonable inference at the 

pleadings stage that they “personally and materially profited from the challenged 

stock sales through their ownership and control of their affiliated funds.”114 Here, 

the Complaint fails to plead any facts to warrant attributing the stock sales of USAA 

 

112 Id. at *13.

113 Id. at *13-14 (internal quotation marks and citations omitted) (emphasis added).

114 Id. at *14.
27

and Upfront to Claus and Nichols, respectively, but does allege sufficient facts to 

attribute Capricorn’s stock sales to Yadigaroglu at the pleadings stage. 

Starting with Claus, the Complaint is devoid of any facts connecting him to 

the USAA entities that sold stock in the Secondary Offering when those sales 

occurred. In fact, Claus left his employment at USAA in 2014, over three years 

before USAA sold shares in the Secondary Offering, and although Claus sat on the 

board of a related USAA entity, that entity is not alleged to have sold any stock at 

any time relevant to this action.

115

 Because USAA’s sales cannot be attributed to 

Claus, Plaintiffs cannot state a claim for breach of the fiduciary duty of loyalty for 

insider trading against him.116 Thus, the aiding and abetting claim against USAA, 

which is predicated on a claim for insider trading against Claus, will be dismissed 

for failure to state a claim for an underlying breach.

With respect to Nichols, the Complaint similarly does not allege any facts 

regarding the advisory role Nichols played at Upfront or allege that Nichols 

 

115 Compl. ¶¶ 37, 41, 80.

116 Count I of the Complaint, which asserts a Brophy claim against the “Individual Selling 

Defendants,” does not apply to Claus by its terms because he was not included in the 

definition of the term “Individual Selling Defendants.” See id. ¶¶ 45, 209. The aiding and 

abetting claim in Count IV of the Complaint nevertheless asserts that Claus breached his 

fiduciary duty of loyalty by engaging in insider trading. Id. ¶ 225.
28

exercised any control over Upfront’s investment in TrueCar.117 Consistent with this, 

the Complaint notably does not contain any demand futility allegations regarding 

Upfront’s sales being attributable to Nichols.118 

In contrast to USAA and Upfront, the Complaint specifically alleges that

“[v]oting and dispositive decisions on behalf of Capricorn were made by an 

investment committee consisting of four individuals, including Yadigaroglu.”119 

This allegation is sufficient at the pleadings stage to attribute Capricorn’s sales to 

Yadigaroglu under Brophy based on the reasoning in Fitbit, where the court 

attributed stock sales to two directors who shared “voting and dispositive power 

over the Fitbit stock owned by their respective funds.”

120

C. The Demand Requirement

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 

 

117 See id. ¶¶ 39, 42, 164-76.

118 See id. ¶ 197. Although the court does not need to address the issue given its conclusions 

on the issue of demand futility, plaintiffs assert a Brophy claim against another director 

(Dietz), who is not a member of the Demand Board, on the theory that Upfront’s sales may 

be attributed to him. See id. ¶¶ 206-09, 226.

119 Id. ¶¶ 227; id. ¶ 169 n.13; German Aff. Ex. 18 (Prospectus Supplement on Form 424B5, 

filed with the SEC on April 27, 2017), at S-48.

120 Fitbit, 2018 WL 6587159, at *14.
29

directors or comparable authority and the reasons for the plaintiff’s failure to obtain 

the action or for not making the effort.”121 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.”122 

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

corporation is the responsibility of the board of directors.”123 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.”124 

Under the heightened pleading requirements of Rule 23.1, “conclusionary 

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

be taken as true.”125 

 

121 Ch. Ct. R. 23.1.

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

123 Id.

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

805 (Del. 1984).

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

v. Eisner, 746 A.2d 244 (Del. 2000).
30

This court employs two different tests for determining whether demand may 

be excused under Delaware law: the Aronson test and the Rales test.126 The court 

applies the test from Aronson v. Lewis127 when “a decision of the board of directors 

is being challenged in the derivative suit.”128 On the other hand, Rales v. Blasband129

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.”130 Under 

either test, a plaintiff “must impugn the ability of at least half the directors in office 

when [plaintiff] initiated [its] action . . . to have considered a demand impartially.”131 

 

126 Both tests 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.” In re INFOUSA, Inc. S’holders Litig., 953 A.2d 963, 986 (Del. Ch. 2007).

127 473 A.2d at 810 (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.”).

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

129 Id. at 934 (“a court must determine whether or not the particularized factual allegations 

of a derivative stockholder complaint create a reasonable doubt that, as of the time the 

complaint is filed, the board of directors could have properly exercised its independent and 

disinterested business judgment in responding to a demand.”).

130 Id. at 933-34, 934 n.9. Rales 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. 

131 Teamsters Union 25 Health Servs. & Ins. Plan v. Baiera, 119 A.3d 44, 57 (Del. Ch. 

2015) (citation omitted). 
31

To do so, 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.”132

As discussed above, the Demand Board consisted of eight members: Buce, 

Claus, Krafcik, Lantz, Nichols, Yadigaroglu, Mendel, and non-party McKoy.

133

Plaintiffs do not challenge McKoy’s impartiality.134 Thus, the question before the 

court is whether Plaintiffs have plead with particularity sufficient facts to create a 

reasonable doubt about the disinterestedness or independence of four of the other 

seven members of the Demand Board so as to impugn the ability of a majority of the 

Demand Board to consider a demand impartially as to each claim. 

Plaintiffs primarily argue that demand is excused because at least four 

directors on the Demand Board face a substantial likelihood of liability with respect 

to the claims asserted in the Complaint. To establish a substantial likelihood of 

liability at the pleading stage, a plaintiff must “make a threshold showing, through 

the allegation of particularized facts, that their claims have some merit.”135 

 

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

133 Compl. ¶ 192.

134 Rales, 634 A.2d at 930.

135 Rales, 634 A.2d at 934.
32

TrueCar’s certificate of incorporation contains a provision exculpating its 

directors for breaches of the duty of care, as permitted under Section 102(b)(7) of 

the Delaware General Corporation Law.

136

 Thus, to demonstrate that directors on 

the Demand Board face a substantial likelihood of liability with respect to the claims 

asserted against them, Plaintiffs must allege with particularity facts demonstrating 

there is some merit to a claim for breach of the duty of loyalty. As discussed next, 

Plaintiffs’ lead argument is that six of the eight directors on the Demand Board acted 

in bad faith, i.e., that they “intentionally fail[ed] to act in the face of a known duty 

to act, demonstrating a conscious disregard for [their] duties.”137 

D. Whether Demand is Excused as to the Disclosure Claim

The Complaint challenges the accuracy of certain statements that TrueCar 

officers made in press releases and during earnings calls at various times in 2017. 

By contrast, the only disclosures Plaintiffs challenge in which directors on the 

Demand Board are alleged to have “directly participated” consists of three 

statements in the “risk factors” section of TrueCar’s 2016 Form 10-K (the 

 

136 German Aff., Ex. 12 (TrueCar’s Certificate of Incorporation) § 8.1; Lyondell Chem. Co. 

v. Ryan, 970 A.2d 235, 239 (Del. 2009).

137 Lyondell, 970 A.2d at 243 (citation and internal quotations omitted). 
33

“Challenged Statements”), which were repeated in the Secondary Offering

Documents. As stated in Plaintiffs’ brief:

The Demand Defendants themselves directly participated in the 

subterfuge by signing TrueCar 2016 Form 10-K, which misleadingly 

represented [i] that TrueCar’s “relationship with affinity groups might 

change,” [ii] that those partners “might de-emphasize the automobile 

buying programs within their offerings,” and [iii] that changes in 

USAA’s promotion and marketing on its own website “may in the 

future adversely affect the volume of user traffic” received from 

USAA, when the Demand Board already knew those risks were certain 

to come to pass.

138

The risk factors section in Item 1A of TrueCar’s 2016 Form 10-K is approximately 

twenty pages long.139 The first two statements quoted above come from the part of 

the risk factors section discussing TrueCar’s affinity group marketing partners 

generally.140 The third statement comes from the part discussing TrueCar’s 

relationship with USAA specifically.141

Plaintiffs advance essentially three arguments why a majority of the Demand 

Board faces a substantial likelihood of liability with respect to the Challenged 

 

138 Pls.’ Answering Br. 34 (emphasis in original). See also Compl. ¶¶ 104-07.

139 TrueCar Form 10-K filed with the SEC on March 1, 2017, at 9-30. See In re General 

Motors (Hughes) S’holder Litig., 897 A.2d 162, 170 (Del. 2006) (permitting the court to 

take judicial notice of “hearsay in SEC filings” that is not subject to reasonable dispute) 

(internal quotation marks, alterations, and citations omitted).

140 German Aff. Ex. 1 (Excerpts of TrueCar’s 2016 Form 10-K), at 14-15.

141 Id. at 15.
34

Statements, i.e., (i) they failed to correct these statements even though they allegedly 

knew about changes USAA was planning to make to its website several months 

before the changes were implemented in June 2017; (ii) in the alternative, they 

breached their oversight duties under In re Caremark Int’l Inc. Derivative 

Litigation;

142 and (iii) they were conflicted due to the Securities Class Action. The 

court discusses each of these arguments, in turn, below.

1. The Demand Board’s State of Knowledge About the USAA

Website Redesign

 

“Whenever directors communicate publicly or directly with shareholders 

about the corporation’s affairs, with or without a request for shareholder action, 

directors have a fiduciary duty to shareholders to exercise due care, good faith and 

loyalty.”143 To plead a disclosure claim when there is no request for stockholder 

action, as is the case here, a plaintiff must allege that the directors “deliberately 

misinform[ed] shareholders about the business of the corporation, either directly or 

by a public statement.”144 “[D]irectors who knowingly disseminate false 

information that results in corporate injury . . . violate their fiduciary duty . . . .”145 

 

142 698 A.2d 959 (Del. Ch. 1996).

143 Malone v. Brincat, 722 A.2d 5, 10 (Del. 1998).

144 Id. at 14.

145 Id. at 9; see also In re INFOUSA, Inc. S’holders Litig., 953 A.2d 963, 990 (Del. Ch. 

2007) (“When a Delaware corporation communicates with its shareholders, even in the 
35

“A determination of whether the alleged misleading statements or omissions 

were made with knowledge or in bad faith requires an analysis of the state of mind 

of the individual director defendants.”146 Thus, to adequately allege that a director 

faces a substantial likelihood of liability for disclosure violations, the plaintiff must 

plead specific factual allegations showing “that the director defendants had 

knowledge that any disclosures or omissions were false or misleading.”147

With respect to disclosures that appear in “annual reports and other publicly 

filed financial reports,” our Supreme Court has held that the “Board’s execution of 

[the company’s] financial reports, without more, is insufficient to create an inference 

that the directors had actual or constructive notice of any illegality.”148 This is 

 

absence of a request for shareholder action, shareholders are entitled to honest 

communication from directors, given with complete candor and in good faith. 

Communications that depart from this expectation, particularly where it can be shown that 

the directors involved issued their communication with the knowledge that it was deceptive 

or incomplete, violate the fiduciary duties that protect shareholders. Such violations are 

sufficient to subject directors to liability in a derivative claim.”).

146 In re Citigroup Inc. S’holder Deriv. Litig., 964 A.2d 106, 134 (Del. Ch. 2009).

147 Id.

148 Wood v. Baum, 953 A.2d 136, 142 (Del. 2008) (citing Guttman v. Huang, 823 A.2d 492, 

498 (Del. Ch. 2003) (Strine, V.C.) (dismissing complaint that was “devoid of any pleading 

regarding the full board’s involvement in the preparation and approval of the company’s 

financial statements” and of “particularized allegations of fact demonstrating that the 

outside directors had actual or constructive notice of the accounting improprieties.”); see 

id. (“We conclude that the Court of Chancery correctly applied Delaware law in declining 

to infer from the Board’s approval either that (i) each member of the Board knew that the 

alleged transactions were improper or that (ii) the Board consciously and in bad faith failed 

to discharge fiduciary or contractual responsibilities with respect to those transactions.”).
36

because, without “particularized facts to connect the board” to the challenged 

statements, “there is reason to doubt that the board knew that the statements were 

false or misleading or acted in bad faith by not adequately informing themselves 

about the statements.”149 Thus, in determining whether scienter has been sufficiently 

plead, the court looks for allegations demonstrating “sufficient board involvement

in the preparation of the disclosures” or that the director defendants “were otherwise 

responsible for” the disclosures.150

The Complaint alleges that by “early 2017, USAA informed TrueCar that it

would significantly redesign the co-branded car-buying site, and that the changes 

 

149 In re Dow Chem. Co. Deriv. Litig., 2010 WL 66769, at *11 (Del. Ch. Jan. 11, 2010).

See also Steinberg on behalf of Hortonworks, Inc. v. Bearden, 2018 WL 2434558, at *10 

(Del. Ch. May 30, 2018) (holding that although a director who signed a SOX certification 

for a Form 10–Q was differently situated from the other directors who were not alleged to 

have played any specific role concerning the inclusion of disclosures in the Form 10–Q, 

none faced a substantial likelihood of liability because plaintiffs had failed to allege 

scienter); Ellis v. Gonzalez, 2018 WL 3360816, at *10 (Del. Ch. July 10, 2018) (plaintiffs 

failed to establish a substantial likelihood of liability for the disclosures because “[t]he 

Complaint fails to plead any particularized facts supporting a reasonable inference that the 

Director Defendants knew about the September 29 letters—much less that they signed off 

on them”) (emphasis added); In re China Auto. Sys. Inc. Deriv. Litig., 2013 WL 4672059, 

at *8 (Del. Ch. Aug. 30, 2013) (plaintiffs alleged that “all five directors attested to the 

misleading financial statements by signing one of the SEC filings at issue,” but did “not 

allege with particularity any direct or personal involvement . . . in the Company’s 

preparation of its financial statements, in the Board’s or Audit Committee’s review of 

SLF’s auditing of the financial statements, or in any other capacity by which the Court 

could reasonably infer that a majority of the Defendants had any knowledge that their 

actions or inactions were harmful to the corporation or a breach of their fiduciary duties”) 

(emphasis added).

150 Citigroup, 964 A.2d 106 at 133 n.91, 134.
37

would require USAA members to answer a multitude of additional questions about 

their personal finances, and to review information related to [the] total cost of new 

car ownership, before being able to access the TrueCar car buying site.”

151 This 

initiative reflected USAA’s shift to a more “advice-centric organization” that would 

focus on its members’ financial health and de-emphasize new car purchases.152

According to Plaintiffs, six of the Demand Board directors learned about the 

USAA website redesign at the Board’s February 9, 2017 meeting and were obligated

to cause the Company to correct the Challenged Statements thereafter because the 

redesign was expected to have a material adverse impact on TrueCar’s financial 

performance, but they failed to do so. Plaintiffs further contend that these six 

directors subsequently “continued to conceal the truth and affirmatively mislead 

investors.”153 

As discussed below, the court finds that Plaintiffs have failed to plead with 

particularity facts demonstrating that any of the directors on the Demand Board

knew about the USAA website redesign before they were briefed on the issue at a 

Board meeting in September 2017, and thus Plaintiffs have failed to sufficiently 

 

151 Compl. ¶ 92.

152 Id. ¶ 89.

153 Pls.’ Answering Br. at 36.
38

plead facts demonstrating scienter concerning the alleged inaccuracy of the

Challenged Statements up to that time. To examine the state of the directors’

knowledge, the court considers Plaintiffs’ allegations chronologically for three time 

periods: (i) up to the Secondary Offering, which closed by early May 2017; (ii) after 

the close of the Secondary Offering and before the September 2017 meeting where 

the Board was briefed on the USAA website redesign; and (ii) from the September 

2017 Board meeting until November 6, 2017, when TrueCar released its results for 

its third quarter ending September 30, 2017 and publicly disclosed the USAA 

website redesign and the impact it had on TrueCar’s business in the third quarter. 

a. The Demand Directors’ Knowledge up to the 

Secondary Offering

As discussed above, USAA directs customers to TrueCar through a website it 

co-branded with TrueCar and that TrueCar “hosted, managed and operated.”

154 “In 

or around January 2017,” USAA decided to redesign the website “to deemphasize 

car purchasing.”155 According to the Complaint, although the changes to the website 

did not become effective until June 1, 2017, USAA informed TrueCar about the 

website redesign by “early 2017.”

156

 It is logical that members of TrueCar’s 

 

154 Compl. ¶ 82.

155 Id. ¶ 91.

156 Id. ¶¶ 91-92.
39

management would have become aware of the website redesign at some point in 

advance of its implementation—although it is not clear precisely what they knew 

about the redesign and when they knew it—given that “any changes USAA made to 

the car buying site required TrueCar’s implementation.”157 Indeed, during the 

November 6, 2017 earnings call, TrueCar’s CEO at the time acknowledged that the 

Company saw the “changes coming.”158 The critical question before the court, 

however, is not when TrueCar’s management learned about the website redesign, 

but when the members of the Demand Board were informed about the redesign and 

understood its significance to TrueCar’s financial performance. 

Plaintiffs contend that six of the eight members of the Demand Board (Buce, 

Krafcik, Yadigaroglu, Claus, Lantz, and Nichols) learned about the USAA website 

redesign during a regularly scheduled Board meeting held on February 9, 2017. For 

support, Plaintiffs point to two statements and a chart in the Board materials for the 

meeting. The first statement is that one of the Company’s goals for 2017 was to “reenergize” its relationship with USAA.159

 The second statement appears on a page 

identifying nine risks for the Company in 2017, one of which was “USAA 

 

157 Id. ¶ 82.

158 Id. ¶ 149.

159 Compl. ¶ 94; see also February 2017 Board Presentation at 40.
40

underperformance.”160 The chart, as described by Plaintiffs, showed that “USAA’s 

year-over-year unit growth had peaked at 16% in the fourth quarter of 2016, and was 

expected to fall sequentially to 15%, 12%, 11%, and 10% over the next four 

quarters.”

161

 In my opinion, these references are insufficient to demonstrate with 

particularity that the directors present at the February 2017 Board meeting were told 

about the USAA website redesign at that meeting, much less that they knew the

redesign would negatively impact TrueCar’s financial performance in a materially 

adverse manner. 

To start, the Board materials never mention the co-branded website or that 

USAA planned to redesign its website. Nor is there any such reference in the minutes 

of the meeting.162 Second, the chart Plaintiffs rely on does not show that the 

Company’s sales attributable to USAA were expected to suffer later in 2017, when 

the website redesign was to be implemented. To the contrary, the chart shows that 

TrueCar’s overall outlook, and its outlook for sales generated by USAA in particular, 

was positive for 2017. 

 

160 Compl. ¶ 94; see also February 2017 Board Presentation at 67. The other nine factors 

covered a range of items, including a litigation risk, “monetization,” “data costs,” and 

“macroeconomics.” February 2017 Board Presentation at 67. 

161 Compl. ¶ 95.

162 See German Aff. Ex. 13 (February 9, 2017 Board meeting minutes).
41

With respect to USAA specifically, the chart projected (i) increasing unit sales 

for 2017, growing from 64.2 million in the first quarter to 75.5 million by the fourth 

quarter of 2017; (ii) overall growth of approximately 12% from fiscal year 2016 to 

fiscal year 2017, i.e., from approximately 255 units in 2016 to 285 units in 2017; 

(iii) year-over-year quarterly growth for all the quarters in 2017; (iv) and growth for 

the second half of 2017, after the website changes were to be implemented.

163

 This 

forecast is flatly inconsistent with the suggestion that the Board was informed at its 

February 2017 meeting that USAA’s plan to change its website would negatively 

impact TrueCar’s financial performance. Plaintiffs’ counsel acknowledged as much 

at oral argument, conceding it was a “reasonable inference” that “the upcoming 

change to the USAA website, . . . , was not taken into account in the forecast.”164

At bottom, Plaintiffs’ contention that six of the Demand Board directors knew 

in February 2017 that the Challenged Statements were false depends on two 

references in the Board materials about risk of “USAA underperformance” and the 

desire to “re-energize” the Company’s relationship with USAA.165 Given the 

 

163 See February 2017 Board Presentation at 58.

164 Tr. at 54 (emphasis added).

165 It is no surprise that “USAA underperformance” would be listed as one of the 

Company’s nine risks for 2017 given, as Plaintiffs allege, USAA accounted for 32% of the 

units TrueCar sold and 45% of its total contribution profit for 2016. Compl. ¶ 94. To that 

end, TrueCar’s Board presentations in 2017 regularly separated out the data for USAA 

from TrueCar’s other affinity partners. See February 2017 Board Presentation; German 
42

vagueness of these phrases, which are susceptible to multiple interpretations; the 

absence of any direct reference to the USAA website or its redesign in the Board 

package or the minutes of the meeting; and that the forecast in the Board package 

provided no indication that TrueCar expected its sales from USAA to be adversely 

impacted in 2017 and, to the contrary, projected that those sales would increase;

Plaintiffs have failed to allege with particularity facts sufficient to support a 

reasonable inference of scienter, i.e., that the directors in attendance at the meeting 

knew before they signed or approved the Company’s 2016 Form 10-K that

TrueCar’s business, and specifically its USAA channel, would suffer in the second 

half of 2017.

166

On April 17, 2017, the Board held a special meeting during which it 

authorized the Secondary Offering.167 The Complaint alleges that the same six 

directors on the Demand Board signed off on the same risk disclosures in the 

Secondary Offering Documents.

168

 The Complaint does not allege, however, any 

 

Aff. Exs. 5 (May 2017 Board Presentation), 6 (July 2017 Board Presentation), 8

(September 2017 Board Presentation).

166 According to the Complaint, six members of the Demand Board (Buce, Krafcik, 

Yadigaroglu, Claus, Lantz, and Nichols) signed the 2016 Form 10-K and three of them 

(Buce, Claus, and Lantz) served on the Audit Committee that “reviewed and approved” the 

Form 10-K for filing with the SEC. Compl. ¶¶ 103-04. 

167 Id. ¶ 108.

168 Id. ¶¶ 114, 116. 
43

facts indicating that the Board learned any information about the website redesign 

between the February Board meeting and when the Secondary Offering Documents 

were completed on April 26, 2017. Without more, there is no basis to infer that any 

of the Demand Board directors knew that the Challenged Statements were inaccurate 

when the final documents for the Secondary Offering were approved. 

Plaintiffs’ allegations regarding TrueCar stock sales also do not support an 

inference of scienter on behalf of any of the Demand Board directors. To begin, 

none of the Demand Board directors are alleged to have sold shares of TrueCar 

personally before or in connection with the Secondary Offering.169 Plaintiffs 

contend that entities affiliated with Claus (USAA), Nichols (Upfront), and 

Yadigaroglu (Capricorn) sold a substantial number of shares in the Secondary 

Offering.

170

 As discussed in Part III.B above, however, the shares sold by USAA 

and Upfront cannot be attributed to Claus and Nichols. Although Capricorn’s sales 

may be attributed to Yadigaroglu at this stage of the case, the circumstances of 

Capricorn’s stock sales, by themselves, do not support a reasonable inference of 

scienter with respect to Yadigaroglu for the reasons discussed in Part III.E below.

 

169 See Compl. ¶ 176.

170 Id. ¶¶ 33, 113, 176.
44

Finally, Plaintiffs contend the court may infer scienter because “Directors are 

presumed to have knowledge of the corporation’s core operations that drive the 

Company’s bottom line, as is the case here with respect to the significant website 

changes implemented by TrueCar’s single-greatest contributor to its revenues and 

profits.”171 Plaintiffs again cite Fitbit for support, but this case does not aid them.

172

In Fitbit, Vice Chancellor Slights specifically stated that the core operations 

“doctrine is not sufficient on its own in the context of generally pled allegations to 

establish scienter.”173 In addition to pleading “that the products featuring 

the . . . technology [at issue] accounted for 80% of Fitbit’s revenue,” the Plaintiffs 

in Fitbit also plead:

that Fitbit experienced serious problems with the technology early on, 

that Fitbit attempted to design fixes to the problems and those fixes 

were not working, that management was keeping the Board apprised of 

the problems and the efforts to address them, and that, all the while, 

Fitbit was touting the promise and success of [the technology] to the 

market.174

The Fitbit court thus concluded that “[t]he totality of the facts Plaintiffs have pled 

with particularity allow a reasonable pleading stage inference that, because the 

 

171 Pls.’ Answering Br. at 32 (internal quotation marks and emphasis omitted).

172 2018 WL 6587159, at *15 & n.179 (Del. Ch. Dec. 14, 2018).

173 Id. (emphasis added).

174 Id. at *15 (emphasis added).
45

problems with [the technology] were profound and . . . drove the Company’s bottom 

line, . . . the Board knew of the alleged material, nonpublic information.”

175

Here, unlike in Fitbit, Plaintiffs do not allege particularized facts to allow a 

reasonable inference that TrueCar management provided reports to or otherwise 

informed the Board about any expected changes to the USAA website at any time 

before the Secondary Offering closed.

176

 Given the absence of such allegations, the 

core operations doctrine “on its own” does not allow the court to infer scienter based 

on the general allegation that USAA was the single-greatest contributor to TrueCar’s 

revenues and profits.

177

 

 

175 Id.

176

 See id. at *5, *7, *12 (alleging that directors received reports detailing the company’s 

inability to remedy problems, that there were internal management reports detailing the 

inability to fix the problems, and that management sought to conceal this information by 

instructing employees to destroy sensitive presentation slides). 

177 2018 WL 6587159, at *15 & n.179.
46

b. The Demand Directors’ Knowledge Between the 

Secondary Offering and the September Board Meeting

This section considers Plaintiffs’ allegations of scienter for the period after

the close of the Secondary Offering in early May 2017 and before the September 15, 

2017 Board meeting.

On May 3, 2017, Demand Board directors Buce, Claus, and Lantz participated 

in a meeting of the Audit Committee that “discussed changes to the Company’s risk 

factors in its SEC filings. . . . [and] approved filing the Form 10-Q without updating

the risk disclosure regarding USAA, despite the fact that . . . the roll-out of the 

redesigned USAA co-branded car buying website . . . was mere weeks away.”178 

The Complaint does not allege any particularized facts concerning this meeting that 

would allow the court to infer that these individuals had learned of any information 

concerning USAA’s website redesign. Absent such allegations, the court cannot 

reasonably infer that Buce, Claus, and Lantz had the requisite scienter to face a 

substantial likelihood of liability for failing to change the risk disclosures in the 

Company’s Form 10-Q for the first quarter of 2017, which was issued in May. 

The Complaint next alleges that, after TrueCar implemented the website 

changes on June 1, 2017, “[t]he Individual Defendants were immediately aware of 

 

178 Compl. ¶ 117 (emphasis omitted).
47

USAA’s sales declines because they had real-time access to the Company’s 

transactions.”

179 This allegation, however, is unsupported by any particularized facts 

concerning the knowledge of any of the Demand Board directors. Accepting as true 

that members of TrueCar management overseeing the USAA relationship had realtime access to sales transactions generated by USAA, and that they “were 

immediately aware” of declines or, as Guthrie, TrueCar’s CFO at the time, told 

investors during an earnings call, at least “started to see [the shortfall] in August and 

September[,]” the Complaint pleads no facts suggesting that this subject was brought 

to the attention of the Board at any time until its September 15 meeting.180 

At its July 27, 2017 meeting, the Board discussed “a minor change that USAA 

had previously implemented to its website” that was unrelated to the website 

redesign implemented in June 2017.181 Notably, the Complaint cites this event as 

 

179 Id. ¶ 124 (alleging that, at an investor conference in May 2017, Guthrie discussed the 

Company’s access to “dealer management software,” which “showed all car sales at the 

dealership in real time, including for the Company’s affinity partner sites such as 

USAA’s: ‘What that allows us to do is see every transaction that flows through the 

dealership. We know every transaction that comes through either our branded business or 

through our affinity business.’”) (emphasis omitted).

180 Id. ¶ 151; German Aff. Ex. 10 (November 6, 2017 earnings call transcript), at 12.

181 Compl. ¶ 130 (“A slide in the presentation materials distributed to the Board noted an 

‘11% decrease in total new car search visitors’ from the first quarter of 2016 to the second 

quarter of 2017, and explained that ‘USAA loss of new car traffic [was] due to removal of 

site link.’”); see also German Aff. Ex. 6, at 6.
48

evidence that the Board was “closely monitoring USAA’s co-branded website.”182 

Yet, the only other allegations concerning the July Board meeting relevant to USAA 

are vague references in the Board materials for the CEO’s update that the 

relationship with USAA was “fragile” and “needs more attention.”183

The only other facts alleged for the period from early May until the Board’s 

September meeting involving the Demand Board directors relate to an Audit 

Committee meeting held on August 3, 2017, which Buce, Claus, and Lantz attended,

and several stock sales by Buce, Krafcik, and Yadigaroglu in August.

184

 Here too

the Complaint does not allege that the Audit Committee discussed the USAA 

website redesign or any expected negative results from its implementation to support

a reasonable inference of scienter when the Company’s second quarter Form 10-Q 

was approved for filing at that meeting.

185

 

Finally, the Complaint alleges that Buce, Krafcik and Yadigaroglu (through 

Capricorn) sold shares in the latter part of August.

186 As discussed below in 

 

182 Compl. ¶ 130.

183 Id. ¶ 129.

184 Id. ¶¶ 132, 176. 

185 Id. ¶ 132.

186 Id. ¶ 176.
49

Part III.E, the circumstances of these sales, by themselves, do not raise suspicion to 

warrant an inference of scienter. 

c. The September Board Meeting and Later Events

This section considers Plaintiff’s allegations for the period from September 

15, 2017, when the Board was informed about the USAA website redesign, to the 

Company’s earnings release on November 6, 2017.

According to the Complaint, the Board held a special meeting on September 

15, 2017 where a presentation was made concerning USAA’s website redesign. 

Specifically, the presentation included a slide titled “Old vs. New USAA Consumer 

Experience” that illustrated the redesign with screenshots comparing USAA’s “Old 

Experience Landing Page,” which was devoted almost entirely to searching and 

shopping for cars, to its “New Experience Landing Page,” which shows only one 

box titled “Find My Next Car” among several other boxes concerning financing, 

insurance, and budgeting.

187

 The presentation also explained that “preliminary 

August results indicate below guidance performance,” that “USAA [unit] 

performance significantly affected . . . Q3 2017,” and that TrueCar was projecting 

 

187 Id. ¶ 139; German Aff. Ex. 8, at 12.
50

approximately 12,000 lost USAA sales for the third quarter, equating to 

approximately $1.8 million in lost USAA revenue for the quarter.188 

The Complaint next discusses the Board’s regular meeting on October 26, 

2017, where the Company’s Chief Product Officer gave a presentation regarding the 

new user experience on the USAA site.189 The presentation showed that the “USAA 

[channel] struggled in Q3” and “USAA’s new experience introduces more barriers 

to entry into the car buying service,” which “significantly impacted USAA’s [unit] 

performance.”190 A few days later, during a regular meeting of the Disclosure 

Committee held on October 30, the Company’s Deputy General Counsel “discussed 

updates to the Risk Factors included in the Form 10-Q” and the “Committee 

discussed certain disclosures related to the Company’s relationship with USAA and 

the effect of recent changes to the user experience on USAA’s car buying service on 

the Company.”191

On November 6, 2017, TrueCar released its results for the third quarter ended 

September 30, 2017 and reported a net loss of $9.5 million.192 During an earnings 

 

188 German Aff. Ex. 8, at 4, 11; Compl. ¶ 138.

189 Compl. ¶ 141; German Aff. Ex. 9 (October 2017 Board Presentation), at 71.

190 Compl. ¶ 141; German Aff. Ex. 9, at 70-71.

191 Compl. ¶ 142. 

192 Id. ¶ 143.
51

call held that day, management discussed the changes to USAA’s website and its 

impact on TrueCar’s business, including a 5% decline in units generated by USAA 

in the third quarter.193 Guthrie, TrueCar’s CFO at the time, explained during the call 

that USAA’s performance was “pretty good” in July and that the Company “started 

to see” the shortfall caused by the USAA website redesign in August.194 

The Complaint does not allege that any of the Demand Board directors sold 

sales shares of TrueCar from September 15, 2017 to the earnings release on 

November 6, 2017, either personally or, in the case of Yadigaroglu, through 

Capricorn.195

* * * * *

To summarize the above discussion, the Complaint fails to allege with 

particularity facts to support a reasonable inference that any of the members of the 

Demand Board knew about the USAA website redesign that was implemented in 

June 2017 or its potential impact on TrueCar’s financial performance until they were 

briefed on the issue at the September 15, 2017 Board meeting. Given Plaintiffs’ 

failure to sufficiently allege scienter, Plaintiffs have failed to show that any of the 

 

193 Id. ¶ 144.

194 Id. ¶ 151.

195 Id. ¶ 176.
52

Demand Board directors acted in bad faith so as to face a substantial likelihood of 

liability for failing to correct the three Challenged Statements during this period.

The Board’s actions after learning about the USAA website redesign at the 

September 15 Board meeting are discussed in the next section in response to 

Plaintiffs’ contention that directors on the Demand Board ignored red flags and thus 

face a substantial likelihood liability under a Caremark theory. 

2. The Caremark Claim

Plaintiffs argue that even if “the Demand Board did not have actual knowledge 

of the USAA/TrueCar Website changes and their inevitable negative effects, they 

still face a substantial risk of liability under a classic Caremark theory for failing to 

apprise themselves of such information.”196 

To plead a substantial likelihood of liability under Caremark, a stockholder 

must allege particularized facts to show that either (i) “the directors utterly failed to 

implement any reporting or information system or controls” or that (ii) “having 

implemented such a system or controls, [the directors] consciously failed to monitor 

or oversee its operations thus disabling themselves from being informed of risks or 

problems requiring their attention.”197 Plaintiffs make no effort to plead a Caremark

 

196 Pls.’ Answering Br. at 46.

197 Reiter v. Fairbank, 2016 WL 6081823, at *7 (Del. Ch. Oct. 18, 2016).
53

claim under the first theory, nor could they do so. The Complaint acknowledges that 

TrueCar had systems in place to review and approve its public filings, including an 

Audit Committee and a Disclosure Committee charged with handling the 

Company’s public filings with the SEC.

198 

Plaintiffs instead argue that, “assuming TrueCar had a Board-level monitoring 

system in place, the Demand Board failed to utilize that system in the face of 

significant red flags,” for which they point to the following: 

the prior USAA website change to the location and prominence of links 

to TrueCar’s platform that led to a substantial loss of traffic from 

USAA, and numerous Board presentations identifying the USAA 

relationship as ‘fragile,’ that ‘USAA underperformance’ was a top risk, 

and projecting a declining USAA growth rate for all of 2017.

199

These allegations are woefully insufficient to support a reasonable inference that the 

“directors were conscious of the fact that they were not doing their jobs, and that 

they ignored red flags indicating misconduct.”

200

 

As discussed above, the vague references to a “fragile” relationship and 

“USAA underperformance” in Board presentations fail to demonstrate with 

 

198 See Compl. ¶¶ 58 (Audit Committee responsible for, among other things, reviewing the 

Company’s annual and quarterly reports on Form 10-K and 10-Q), 60 (Disclosure 

Committee responsible for, among other things, adopting and implementing procedures 

and policies concerning the preparation of SEC reports).

199 Pls.’ Answering Br. at 46-47 (citing Compl. ¶¶ 94-95, 129) (emphasis omitted).

200 In re LendingClub, 2019 WL 5678578, at *11 (citation omitted).
54

particularity that the directors were made aware of USAA’s website redesign, much 

less that they knew that the redesign would have a material adverse impact on 

TrueCar’s financial performance.

201

 Indeed, the forecast provided to the Board in 

February 2017 presented a positive outlook for sales generated by USAA.

202

 

Additionally, the fact that the Board was made aware in July 2017 of a “prior USAA 

website change” and told in September 2017 about the website redesign that USAA 

implemented in June 2017, demonstrates that the Company’s monitoring systems 

kept the Board apprised of important developments concerning its relationship with 

USAA.203

Finally, the Complaint’s allegations belie Plaintiffs’ suggestion that the Board 

failed to do anything to correct the Challenged Statements after learning about the 

website redesign. To the contrary, the allegations of the Complaint depict a 

reasonable progression of events over the course of about seven weeks: (i) calling a 

special meeting on September 15 to brief the Board about the website redesign after 

preliminary results for August raised a concern that the USAA channel was 

performing below guidance,

204 (ii) discussing the Company’s third quarter results at 

 

201 See supra Parts III.D.1.a-b.

202 See supra Part III.D.1.a.

203 See supra Parts III.D.1.b-c.

204 Compl. ¶¶ 137-39.
55

a regular Board meeting on October 26,205 and (iii) then releasing the Company’s 

results ten days later with an explanation concerning USAA’s website redesign and 

its impact on TrueCar.

206

 

In short, this is not a case where the Board “had notice of serious misconduct 

and simply failed to investigate.”207 Based on the allegations in the Complaint, none 

of the members of the Demand Board face a substantial likelihood of liability for a 

Caremark claim.

3. The Securities Class Action

Plaintiffs assert for their final demand futility argument as to the Disclosure 

Claim that “not a single member of the Demand Board could have considered a 

demand impartially because doing so would have undercut or even compromised the 

defense of the then-pending Securities Class Action.”208 In making this argument, 

Plaintiffs quote part of a sentence from a two-paragraph order the district court in 

the Securities Class Action entered in denying defendants’ motion to dismiss, as 

follows: “[T]he court had found that the plaintiff adequately alleged ‘a strong 

inference of scienter by alleging that Defendants knew about USAA’s website 

 

205 Id. ¶¶ 141; German Aff. Ex. 8.

206 Compl. ¶¶ 143-49, 151-53.

207 South v. Baker, 62 A.3d 1, 15 (Del. Ch. 2012).

208 Pls.’ Answering Br. at 55-58.
56

redesign and its impact as of January 2017.’”209 The district court’s entire analysis, 

including the quoted statement, is provided below:

The Court has reviewed Plaintiff’s Amended Class Action Complaint

and Defendants’ motion to dismiss. For purposes of the motion-todismiss stage, Plaintiff has adequately alleged—under both the 

plausibility and heightened pleading standards—that Defendants made 

materially false and misleading statements by making risk statements 

regarding TrueCar’s reliance on USAA’s website without alerting the 

public that the risk had already come to fruition and by falsely 

representing that USAA would be a key driver of unit and revenue 

growth in 2017. Furthermore, Plaintiff has adequately alleged a strong 

inference of scienter by alleging that Defendants knew about USAA’s 

website redesign and its impact as of January 2017 and that Guthrie and 

Pierantoni sold TrueCar stock in sales that were suspicious in their 

timing, size, and amount, especially in light of Guthrie’s and 

Pierantoni’s prior sales. Assuming, as it must, the allegations to be true, 

the Court DENIES Defendants’ motion to dismiss.210

Plaintiffs’ argument fails for two reasons in my view.

First, as plead in the Complaint, although the Securities Class Action asserted 

scienter-based claims against certain TrueCar officers, including Perry, Guthrie, and 

Pierantoni,211 it only asserted “strict liability and negligence claims” against the non-

 

209 Pls.’ Answering Br. at 56.

210 Milbeck, 2019 WL 476004, at *1 (citations omitted).

211 Compl. ¶¶ 26-28 (alleging that claims under Section 10(b) of the Exchange Act, Rule 

10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act were asserted 

against Guthrie (CFO), Perry (President and CEO), and Pierantoni (CAO)).
57

officer directors of TrueCar, which include six members of the Demand Board.

212

 

Given TrueCar’s exculpatory charter provision and the absence of scienter-based 

claims against the Demand Board directors named in the Securities Class Action, 

those directors would not face a substantial likelihood of personal liability in that 

action so as to compromise their ability to impartially consider a demand with 

respect to the Disclosure Claim here.

Vice Chancellor McCormick reached a similar conclusion in In re 

LendingClub Corp. Derivative Litigation.

213

 There, plaintiffs contended that a 

related federal securities action asserting strict liability and negligence claims 

against members of a demand board compromised those directors’ ability to 

impartially consider a demand concerning the subject matter in that action.

214

 The 

LendingClub court cogently explained that:

 

212 Id. ¶¶ 29-33, 37-39 (alleging “strict liability and negligence claims . . . under Sections 

11, 12(a)(2), and 15 of the Securities Act” against current and former TrueCar directors).

213 2019 WL 5678578 (Del. Ch. Oct. 31, 2019).

214 Id. at *15-16.
58

To hold the Director Defendants liable in this action, Plaintiffs must 

prove that the directors acted in bad faith—that is, there must be some 

factual support speaking to the Director Defendants’ state of mind at 

the time the challenged conduct occurred. By contrast, the Section 11 

claims sustained against the Director Defendants in the Securities Class 

Action did not require a showing of scienter. The only claims that 

required a showing of scienter in the Securities Class Action were the 

Section 10(b) and Rule 10b-5 claims asserted exclusively against [nonDemand Board members]. Liability under Section 11 would not, in and 

of itself, have gotten to the heart of whether the directors acted in bad 

faith concerning wrongdoing at issue in both actions. There is thus no 

basis for this Court to conclude that the Demand Board members would 

have viewed the Securities Class Action as posing a substantial 

likelihood of liability concerning the Caremark claims in this case.215

Although the companion federal securities action in LendingClub did not survive a 

motion to dismiss until after the complaint was filed in the Court of Chancery, Vice 

Chancellor McCormick went on to explain that “the federal court’s [eventual] 

decision to sustain the Section 11 claims in the Securities Class Action does not alter 

the analysis, because the Section 11 claims do not speak to the main ground in this 

case—the Director Defendants’ good faith.”

216

Second, the parties in the Securities Class Action executed a Settlement 

Agreement that was filed with the district court on August 2, 2019, before the first 

complaint in this action was filed on August 22, 2019.

217 As is typical, the 

 

215 Id.

216 Id. at *16.

217 See Dkt. 5.
59

Settlement Agreement denies all wrongdoing and releases all claims in the case.

218

Although the district court did not finally approve the settlement until January 27, 

2020,219 after this action commenced, execution of the Settlement Agreement 

eliminated as a practical matter any reason to doubt that the Securities Class Action 

would compromise the ability of the Demand Board directors to impartially consider 

a demand with respect to the Disclosure Claim out of concern that those directors 

were exposed to personal liability in the Securities Class Action.

Once again citing Fitbit, Plaintiffs argue that “the Defendants could not 

consider a demand to prosecute this action without compromising their factual 

defenses in the Securities Class Action” because they “are premised on the same 

underlying factual conduct.”220 After determining that the plaintiffs had alleged

sufficient “well-pled facts . . . [to] adequately support a reasonable inference that the 

Selling Defendants sought to make trades based on nonpublic information,” the 

Fitbit court considered the findings in a companion federal case.

221 In particular, the 

 

218 See Settlement Agreement, at 8 (Part III “Defendants’ Denial of Wrongdoing and 

Liability”), 29 (§ 5 “Release of Claims”). The court may take judicial notice of these terms 

because they are not subject to reasonable dispute between the parties. In re Rural Metro 

Corp. S’holder Litig., 2013 WL 6634009, at *9 (Del. Ch. Dec. 17, 2013) (taking judicial 

notice of a federal court filing).

219 Final Approval Order. 

220 Pls.’ Answering Br. at 58.

221 2018 WL 6587159, at *15-16.
60

Court of Chancery noted that the district court had found “that a holistic review of 

the allegations suffices to establish scienter[,]” which bolstered the Court of 

Chancery’s conclusion that knowledge had been sufficiently pled against four of 

seven Fitbit demand board members.

222

 The Court of Chancery thus reasoned that 

a majority of the demand board was incapable of considering a demand impartially 

because those directors faced a substantial likelihood of liability in the companion 

federal case.223 

Here, it is unclear from the paragraph quoted above containing the district 

court’s analysis in the Securities Class Action whether its comments concerning 

scienter were intended to apply to all defendants in that action or—as would be 

logical—only to those who were the subject of scienter-based claims, such as 

Guthrie and Pierantoni, two officers whom the district court found had engaged in 

suspicious stock sales. The term “Defendants” is not defined in the district court’s 

order, nor does the district court discuss the allegations on which it relied or the 

rationale for its conclusions, other than relating to Guthrie and Pierantoni. 

 

222 Id. at *16-17.

223 Id. at *11, *16.
61

As for Plaintiffs’ argument, it also is unclear what “factual defenses” a 

director would fear having compromised in a case that only asserts claims for strict 

liability and negligence against him, for which the director would be exculpated 

from personal liability.224 In any event, here, unlike in Fitbit, (i) the allegations in 

the Complaint do not support a reasonable inference of scienter, i.e., that the 

directors on the Demand Board knew of the website redesign or its impact at the 

time of the alleged misconduct and (ii) even if they did, there was an executed 

Settlement Agreement in place before this action was filed that, for all intents and 

purposes, eliminated any reason to doubt the ability of the Demand Board directors 

to impartially consider a demand with respect to the Disclosure Claim.

225

 

 

224 The issue of personal liability is typically the core inquiry for assessing a director’s 

impartiality with respect to companion actions concerning the same or similar alleged 

misconduct. See, e.g., In re GoPro, Inc., 2020 WL 2036602, at *15 & n.181 (Del. Ch. Apr. 

28, 2020) (demand not excused because plaintiffs failed to plead that “a majority of the 

Demand Board faces a substantial likelihood of personal liability, either with respect to the 

related securities litigation or the Brophy claim pending here” and “only a substantial 

likelihood of liability would make it ‘improbable that the director could not perform her 

fiduciary duties to the shareholders’”); Rojas on behalf of J.C. Penney Co., Inc. v. Ellison, 

2019 WL 3408812, at *14 (Del. Ch. July 29, 2019) (demand not excused because plaintiffs 

failed to allege that a majority of the demand board faced a substantial likelihood of liability 

for consciously failing to monitor and none had “any personal exposure in [the related 

federal securities] action”); Pfeiffer v. Toll, 989 A.2d 683 (Del. Ch. 2010) (demand was 

futile because a majority of the demand board faced a substantial likelihood of liability for 

claims in a pending parallel securities class action), abrogated on other grounds by Kahn 

v. Kolberg Kravis Roberts & Co. L.P., 23 A.3d 831 (Del. 2011).

225 Fitbit, 2018 WL 6587159, at *9, *17 (companion federal case settled nearly a year after 

the Court of Chancery action was initiated). 
62

For the reasons explained above, Plaintiffs have failed to plead with 

particularity facts sufficient to impugn the impartiality of any of the members of the 

Demand Board to consider a demand with respect to the Disclosure Claim based on 

the pendency of the Securities Class Action when this action was filed. 

* * * * *

More broadly, for all the reasons explained in Parts III.D.1-3, Plaintiffs have 

failed to plead with particularity facts sufficient to impugn the impartiality of any of 

the members of the Demand Board to consider a demand with respect to the 

Disclosure Claim based on any of the theories they have advanced, i.e., (i) for failing 

to correct the Challenged Statements, (ii) based on a Caremark theory, or (iii) based 

on the pendency of the Securities Class Action.

E. Whether Demand is Excused as to the Brophy and Unjust 

Enrichment Claims

Plaintiffs appear to assert essentially four arguments why a majority of the 

Demand Board could not impartially consider the Brophy and unjust enrichment

claims, which will be referred to hereafter, together, as the Brophy claim.

226

 The 

first three grounds overlap with arguments the court already has addressed and the 

 

226 The parties analyzed the Brophy and unjust enrichment claims together, as will the court. 

This is sensible because “the public policy underlying a Brophy claim is to prevent unjust 

enrichment based on the misuse of confidential corporate information.” In re Fitbit, Inc. 

S’holder Deriv. Litig., 2019 WL 190933, at *4 n.26 (Del. Ch. Jan. 14, 2019).
63

fourth ground concerns the Demand Board directors who are targets of the Brophy 

claim. The court addresses each of these arguments in turn.

First, Plaintiffs assert that seven of the eight members of the Demand Board 

(all but non-party McKoy) are conflicted “because the Brophy claim is premised on 

the same facts (and knowledge/scienter) as the false and misleading statements claim

for which all of the Demand Defendants face a substantial likelihood of liability.”

227

 

As explained in Parts III.D.1-2, none of the Demand Board directors face a 

substantial likelihood of liability with respect to the Disclosure Claim and thus there 

is no reason to doubt their impartiality to consider a demand as to that claim.

Second, Plaintiffs contend that a majority of the Demand Board is conflicted 

due to the Securities Class Action. As discussed in Part III.D.3, none of the six 

Demand Board directors named in that case face a substantial likelihood of liability 

in the Securities Class Action because they would be exculpated for all the claims 

asserted against them (for strict liability and negligence) and because an executed 

Settlement Agreement was in place in that action before this case was filed. Thus,

 

227 Pls.’ Answering Br. at 51. 
64

there is no reason to doubt their impartiality to consider a demand at to the Brophy 

claim, which requires proof of scienter. 

Third, Plaintiffs assert that Claus is “conflicted with respect to this claim due 

to his significant affiliation with USAA.”228 There are two basic problems with this 

contention. The first is that Claus’ independence is an academic question because 

the Brophy claim fails to state a claim for relief against USAA because USAA does 

not owe a fiduciary duty to TrueCar or its stockholders for the reasons explained in 

Part III.A. The second problem is that Plaintiffs have failed to plead facts sufficient 

to create a reasonable doubt about Claus’s independence from USAA. 

The Complaint alleges that Claus was last employed by USAA in March 2014, 

serves on the board of a USAA affiliate (USAA Real Estate Company), and serves 

on the TrueCar Board as USAA’s “representative.”229 Apart from the fact that 

Claus’s employment with USAA ended about three and a half years before this 

action was filed, the Complaint fails to allege any additional facts about his former 

employment with USAA—such as any significant relationships with USAA’s 

current leadership—to overcome the presumption of independence directors are 

 

228 Pls.’ Answering Br. at 51.

229 Compl. ¶¶ 37, 80.
65

accorded under Delaware law.230 Nor does the Complaint allege that Claus received 

material compensation for his service on USAA Real Estate’s board or that USAA 

has the unilateral power to remove Claus from that board or the TrueCar Board, such

that his “discretion would be sterilized.”

231

 Without more, it is not reasonable to 

doubt Claus’s independence from USAA for purposes of considering a demand.

Fourth, and finally, Plaintiffs contend that—at most232—Buce, Claus, Krafcik, 

Nichols, and Yadigaroglu could not impartially consider a demand with respect to 

the Brophy claim because each is a target of the claim and faces a substantial 

likelihood of liability for breaching his fiduciary duty of loyalty for insider 

trading.

233

 For the reasons explained in Part III.B, the Complaint fails to state a

Brophy claim against Claus or Nichols because neither is alleged to have sold 

 

230 Odyssey P’rs, L.P. v. Fleming Cos., 735 A.2d 386, 408 (Del. Ch. 1999) (past 

employment with an interested party is not enough to rebut independence); Baiera, 119 

A.3d at 60.

231 See Rales, 634 A.2d at 934-36; MCG Capital Corp. v. Maginn, 2010 WL 1782271, at 

*20 (Del. Ch. May 5, 2010) (plaintiff failed to allege that $100,000 in director 

compensation was material to two directors, and thus failed to allege that their “judgment 

would be impaired by the threat of losing” that compensation).

232 It is unclear whether Plaintiffs intended to assert a Brophy claim against Claus and 

Nichols as neither is included in the definition of “Individual Selling Defendants” as to 

which the Brophy claim is asserted. See Compl. ¶¶ 45, 209, 215. Also, Plaintiffs’ brief 

does not identify Claus as a target of the Brophy claim. See Pls.’ Answering Br. at 47-53. 

233 Pls.’ Answering Br. at 49. 
66

TrueCar shares personally and because the stock sales of USAA and Upfront are not 

attributable to Claus and Nichols, respectively.

Given the points addressed above, Plaintiffs have failed to impugn the 

impartiality of a majority of the eight-person Demand Board, i.e., Claus, Lantz, 

Mendel, Nichols, and non-party McKoy. For the sake of completeness, the court 

will address Plaintiffs’ arguments concerning the Brophy claim with respect to the 

remaining three directors—Buce, Krafcik, and Yadigaroglu.

To repeat, to state a claim under Brophy, a plaintiff must allege that, “1) the 

corporate fiduciary possessed material, nonpublic company information; and 2) the 

corporate fiduciary used that information improperly by making trades because she 

was motivated, in whole or in part, by the substance of that information.”

234 As to 

the first element, this court explained some of the circumstances to consider when 

determining whether a reasonable inference of scienter has been made concerning 

an insider’s trade of stock, as follows:

At the pleading stage, by necessity, a Brophy claim usually rests on 

circumstantial facts and a successful claim typically includes 

allegations of unusually large, suspiciously timed trades that allow a 

reasonable inference of scienter. While the fact a fiduciary sells stock 

near the time he learns of material, nonpublic information might be 

evidence of the seller’s motive, temporal proximity alone generally is 

insufficient to support an inference of scienter that will survive a motion 

to dismiss. The other important piece of circumstantial evidence that,

 

234 In re Oracle, 867 A.2d at 934.
67

along with timing, might support an inference of scienter is the size of 

the trade relative to the defendant’s overall stock holdings. If a 

defendant sells only a small portion of her holdings and retains a “huge 

stake in the company,” then it is difficult reasonably to infer she was 

“fleeing disaster or seeking to make an unfair buck.”235

The Complaint alleges that Buce sold 32,999 shares on August 18, 2017,

yielding proceeds of approximately $545,000; and that Krafcik sold a total of 20,000 

shares on August 15 and 31, 2017, yielding proceeds of $334,500.

236

 These sales do 

not raise suspicion to warrant an inference of scienter given that the amount of shares 

traded were small relative to each of their overall holdings—only about 3% for 

Krafcik and 7% for Buce—and given that the trades were made several weeks after

the Lock-Up for the Secondary Offering had expired, on July 25, 2017.

237

 Nor do 

Plaintiffs allege that these sales were inconsistent with Buce and Krafcik’s past 

trading practices.

238

 

235 In re Clovis Oncology, Inc. Derivative Litigation, 2019 WL 4850188, at *15 (Del. Ch. 

Oct. 1, 2019) (quoting Oracle, 867 A.2d at 954) (alterations omitted).

236 Compl. ¶ 176.

237 Id. ¶¶ 115, 127, 176. German Aff. Exs. 14-15, 17 at 18 (Buce sold 7% of his holdings 

and Krafcik sold 3% of his holdings). See Oracle, 867 A.2d at 954 (sales of 7% and 2% 

of holdings, despite generating nearly a billion dollars, did not indicate scienter).

238 Clovis, 2019 WL 4850188, at *16 (“Noticeably absent from the Complaint are any wellpled facts that the trades at issue represented a deviation from the sellers’ past trading 

practices.”).
68

Plaintiffs make a perfunctory argument that the larger sales of other insiders 

raise suspicion about Buce and Krafcik’s sales.239 This argument fails. As this court 

explained in Guttman v. Huang, a plaintiff must allege scienter for “each sale by 

each individual defendant.”240 Plaintiffs fail to plead facts sufficient to support a 

reasonable inference of scienter as to Buce and Krafcik not only because the 

circumstances of their stock sales are not inherently suspicious, but because, after 

obtaining books and records and investigating the matter, Plaintiffs failed to plead 

facts supporting a reasonable inference that Buce or Krafcik knew about the USAA 

website redesign or its potential impact on TrueCar until September 2017, after they 

made their sales.

241

As to Yadigaroglu, to whom Capricorn’s sales are attributed, the Complaint 

alleges that Capricorn entities sold approximately 509,000 shares of TrueCar stock 

in the Secondary Offering on May 2, 2017, and an approximately 175,000 shares in 

late August 2017, for total proceeds of approximately $11.28 million.

242

 The 

 

239 Pls.’ Answering Br. at 50 n.17.

240 823 A.2d at 505 (citation omitted) (“[T]he doctrine is not designed to punish 

inadvertence, but to police intentional misconduct[,]” thus, “it must be shown that each 

sale by each individual defendant was entered into and completed on the basis of, and 

because of, adverse material non-public information.”).

241 See Parts III.D.1.a-b.

242 Compl. ¶¶ 169, 176.
69

Complaint alleges that these sales “are suspicious given that they occurred when 

TrueCar’s stock traded at or near all-time highs and represented more than 31% of 

[Yadigaroglu’s] holdings.”243

Although a closer call, the sheer size of Capricorn’s sales are not sufficient to 

support a reasonable inference of scienter in my view. In Guttman, when addressing 

larger insider trades—100% and 50% of the shares held by two insiders—then-Vice 

Chancellor Strine found that the size of the trades alone did not support an inference 

of scienter so as to expose those directors to a “real threat of liability”: 

In the absence of any fact pleading that supports a rational inference 

that any of these directors had some basis to believe that [the]

statements were materially misleading in a manner that inflated the 

company’s stock price, the mere fact that two of the directors sold large 

portions of their stock does not, in my view, support the conclusion that 

these directors face a real threat of liability.

244

The court was even less receptive to the claim against other directors who sold 

“much smaller stakes” of 32%, 20%, and 10% of their shares.245

 

243 Id. ¶ 169.

244 Guttman, 823 A.2d at 504; see also Silverberg ex rel. Dendreon Corp. v. Gold, 2013 

WL 6859282, at *11-13, *15 (Del. Ch. Dec. 31, 2013) (board materials showed discussions 

and awareness, for over a year, of problems and directors sold 77% and 58% of their 

holdings).

245 Guttman, 823 A.2d at 504.
70

Here, as with Buce and Krafcik, the Complaint is devoid of any well-pled 

facts that Capricorn’s trades represented a deviation from its past trading practices.

Most importantly, to repeat, despite investigating the matter, Plaintiffs were unable 

to plead facts supporting a reasonable inference that Yadigaroglu knew about the 

USAA website redesign or its potential impact on TrueCar until September 2017, 

after each of Capricorn’s stock sales.

In sum, as to Buce, Krafcik, and Yadigaroglu, Plaintiffs have failed to allege 

particularized facts that support a reasonable inference that any of them possessed 

material nonpublic information when they traded, much less that they consciously 

acted to exploit such information. Accordingly, Plaintiffs have failed to show that 

Buce, Krafcik, or Yadigaroglu would face a substantial likelihood of liability for the 

Brophy claim so as to impugn their impartiality to consider a demand.

* * * * *

For the reasons explained above, the Complaint fails to plead with 

particularity facts sufficient to impugn the impartiality of any of the members of the 

Demand Board to consider a demand with respect to the Brophy and unjust 

enrichment claims. Accordingly, those claims will be dismissed for failure to plead 

demand futility under Court of Chancery Rule 23.1. 
71

The aiding and abetting claim in Count IV asserted against the Entity 

Defendants (Capricorn, Upfront, USAA, and Vulcan) also will be dismissed because 

“[t]he dismissal of the underlying insider selling and fiduciary duty claims logically 

compels the dismissal of the aiding and abetting claims.”246

F. The Contribution and Indemnification Claims

Count IV of the Complaint seeks contribution and indemnification on behalf 

of the Company from the Securities Class Action Defendants for “exposing the 

Company to significant liability under various federal and state laws by their disloyal 

acts.”247 The Individual Defendants moved to dismiss Count IV under Court of 

Chancery Rules 12(b)(6) and 23.1 contending, in part, that the claim “is unripe and 

will likely never ripen.”248 Plaintiffs responded that the district court in the 

Securities Class Action “obviate[ed] any ripeness arguments” by granting final 

approval of the settlement in that action on January 27, 2020.249 For simplicity, the 

court addresses this claim under Rule 12(b)(6).

 

246 Park Empls.’ & Ret. Bd. Empls.’ Annuity & Benefit Fund of Chicago v. Smith, 2017 WL 

1382597, at *10 & n.105 (Del. Ch. Apr. 18, 2017). Even if this did not logically follow, 

Plaintiffs have failed to plead demand futility as to this claim because only three of the 

eight Demand Board members (Claus, Nichols, and Yadigaroglu) are implicated in the 

aiding and abetting claims. 

247 Compl. ¶ 219.

248 Individual Defs.’ Opening Br. at 40; see also id. at 55.

249 Pls.’ Answering Br. at 53.
72

The court takes judicial notice of the Settlement Agreement and the district 

court’s final approval of the settlement in the Securities Class Action, the terms of 

which are not subject to reasonable dispute between the parties.

250 The Settlement 

Agreement, which the parties entered into to fully and finally resolve the Securities 

Class Action, provides for a payment in the amount of $28.5 million for the benefit 

of a class of TrueCar stockholders to be paid by the “Parties and Defendants’ 

directors’ and officers’ liability insurance carriers” (as defined in the Settlement 

Agreement, the “D&O Insurers”).251 The Settlement Agreement further provides 

that the payments from the D&O Insurers “are the only payments to be made on 

behalf of any and all of the Defendant Releasees in connection with the 

Settlement.”252 Given the express terms of the Settlement Agreement, which the 

district court has approved, Plaintiffs cannot state a reasonably conceivable claim 

for contribution or indemnification from the Securities Class Action Defendants

because they face no personal exposure with respect to that litigation. 

 

250 Del. R. Evid. 201-02; In re Rural Metro, 2013 WL 6634009, at *7-9 (discussing Del. 

R. Evid. 201-02 and taking judicial notice of a federal court filing). Plaintiffs submitted a 

copy of the Final Approval Order with their brief. 

251 Settlement Agreement § 2.1.

252 Id. at § 2.2. The term “Defendant Releasees” includes the Demand Board directors 

named as defendants in the Securities Class Action, i.e., Buce, Claus, Krafcik, Lantz, 

Nichols, and Yadigaroglu. See id. §§ 1.12, 1.21. 
73

Plaintiffs’ fallback position is that, “even if the settlement is, in fact, paid by 

insurance,” TrueCar’s “future policies will cost more as a result of the settlement.”253 

This is sheer speculation that does not state a ripe, reasonably conceivable claim for 

relief.254 For the reasons explained above, Count III will be dismissed for failure to 

state a claim for relief. 

IV. CONCLUSION

For all the reasons explained above, Defendants’ motions to dismiss the 

Complaint are GRANTED. The Complaint is hereby dismissed with prejudice in its 

entirety.

IT IS SO ORDERED.

 

253 Pls.’ Answering Br. at 55.

254 See Baiera, 119 A.3d 44 (“A simple allegation of potential directorial liability is 

insufficient to excuse demand, . . . .”) (quoting In re Goldman Sachs Gp., Inc. S’holder 

Litig., 2011 WL 4826104, at *18 (Del. Ch. Oct. 12, 2011)).