IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

TEAMSTERS UNION 25 HEALTH SERVICES 

& INSURANCE PLAN, on behalf of itself and all 

other similarly situated stockholders of ORBITZ 

WORLDWIDE, INC., and derivatively on behalf 

of nominal defendant ORBITZ WORLDWIDE, 

INC., 

Plaintiff,

v.

GAVIN BAIERA, MARTIN J. BRAND, MARK 

S. BRITTON, JEFF CLARKE, KENNETH S. 

ESTEROW, SCOTT FORBES, ROBERT L. 

FRIEDMAN, BRADLEY T. GERSTNER, 

BARNEY HARFORD, KRISTINA M. LESLIE, 

TRAVELPORT LIMITED, TRAVELPORT LP, 

TRAVELPORT GLOBAL DISTRIBUTION 

SYSTEM, B.V., TDS INVESTOR 

(LUXEMBOURG) S.A.R.L., WALTONVILLE 

LIMITED, TRAVELPORT HOLDINGS 

LIMITED, and THE BLACKSTONE GROUP LP,

Defendants,

and

ORBITZ WORLDWIDE, INC., a Delaware 

corporation, 

Nominal Defendant.

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C.A. No. 9503-CB

OPINION

Date Submitted: April 15, 2015

Date Decided: July 13, 2015

Christine S. Azar and Ned Weinberger of LABATON SUCHAROW LLP, Wilmington, 

Delaware; Christopher J. Keller, Eric J. Belfi and Michael W. Stocker of LABATON 
SUCHAROW LLP, New York, New York; Jeremy Friedman and Spencer Oster of 

FRIEDMAN OSTER PLLC, New York, New York; Attorneys for Plaintiff.

Anne C. Foster and Christopher H. Lyons of RICHARDS, LAYTON & FINGER P.A., 

Wilmington, Delaware; Elizabeth Herrington of MCDERMOTT WILL & EMERY LLP, 

Chicago, Illinois; John A. Sten of MCDERMOTT WILL & EMERY LLP, Boston, 

Massachusetts; Attorneys for Orbitz Worldwide Inc., and Gavin Baiera, Martin J. Brand, 

Mark S. Britton, Jeff Clarke, Kenneth S. Esterow, Scott Forbes, Robert L. Friedman, 

Bradley T. Gerstner, Barney Harford and Kristina M. Leslie.

Martin S. Lessner, Elena C. Norman and Paul J. Loughman of YOUNG CONAWAY 

STARGATT & TAYLOR, LLP, Wilmington, Delaware; Joseph Serino, Jr., P.C. and 

Matthew Solum of KIRKLAND & ELLIS, New York, New York; Attorneys for the 

Travelport Defendants and The Blackstone Group LP.

 

BOUCHARD, C.
I. INTRODUCTION

In this action, a stockholder of Orbitz Worldwide, Inc. (“Orbitz” or the 

“Company”) challenges the fairness of the terms of a five-year services agreement (the 

“New Agreement”) the Company entered into in February 2014 with a group of entities 

affiliated with Travelport Limited (as defined below, “Travelport”). Plaintiff alleges that 

Travelport owned approximately 48% of Orbitz and thus controlled the Company when it 

negotiated and signed the New Agreement. 

Plaintiff has asserted four derivative claims challenging the New Agreement. Its 

two primary claims are that Travelport breached its fiduciary duty as a controlling 

stockholder by causing the Company to enter into the New Agreement on unfair terms, 

and that Orbitz’s directors breached their fiduciary duties by approving the New 

Agreement. Plaintiff also asserts two related derivative claims for unjust enrichment and 

aiding and abetting. Separately, plaintiff asserts a putative class claim for breach of 

fiduciary duty against Orbitz’s directors for allegedly violating the rules of the New York 

Stock Exchange. Defendants moved to dismiss plaintiff’s claims under Court of 

Chancery Rule 23.1 for failure to make a demand or to adequately plead demand is 

excused and under Court of Chancery Rule 12(b)(6) for failure to state a claim upon 

which relief may be granted. 

In this opinion, I conclude that demand is not excused as to any of plaintiff’s 

derivative claims because plaintiff has failed to raise a reasonable doubt that at least half 

of the directors on Orbitz’s board when this action was filed could have exercised 

impartial business judgment in responding to a demand. In analyzing this issue, I apply 

1
the Rales test for the reasons explained below, but I would reach the same conclusion 

under the Aronson test. Significant to the analysis, I reject plaintiff’s assertion that 

demand should be excused simply because an alleged controlling stockholder stood on 

both sides of the New Agreement. As explained below, this theory is inconsistent with 

Delaware Supreme Court authority that focuses the test for demand futility exclusively on 

the ability of a corporation’s board of directors to impartially consider a demand to 

institute litigation on behalf of the corporation—including litigation implicating the 

interests of a controlling stockholder. For these reasons, and the others explained below, 

I grant defendants’ motions to dismiss.

II. BACKGROUND1

A. The Parties

Nominal Defendant Orbitz Worldwide, Inc., a Delaware corporation based in 

Chicago, Illinois, is an online, travel company. It operates the websites known as 

Orbitz.com, ebookers, HotelClub, and CheapTickets. 

Defendants Travelport Limited, Travelport LP, Travelport Global Distribution 

System, B.V., TDS Investor (Luxembourg) S.a.r.l., Waltonville Limited, and Travelport 

1 Unless noted otherwise, the facts recited in this opinion are based on the well-pled 

allegations of the Verified Second Amended Stockholder Class Action and Derivative 

Complaint (the “Complaint”). At times, I rely upon certain extraneous documents that 

are properly before the Court because they are integral to Plaintiff’s claims and 

incorporated by reference into the Complaint. See In re Santa Fe Pac. Corp. S’holder 

Litig., 669 A.2d 59, 69-70 (Del. 1995). Those documents were attached as exhibits to 

two affidavits submitted by counsel for Orbitz and its directors (collectively, the “Orbitz 

Defendants”). I refer to the affidavit dated December 4, 2014, as “Lyons Aff. I” and to 

the affidavit dated March 9, 2015 as “Lyons Aff. II.”

2

 
Holdings Limited (collectively, “Travelport” or the “Travelport Defendants”) provide 

transaction processing services to travel companies, including Orbitz. Each of the 

Travelport Defendants “is a beneficial owner of Orbitz common stock or a party to” the 

New Agreement.2

Defendant The Blackstone Group LP (“Blackstone”) is an investment and 

advisory firm. Until an April 2013 refinancing, Blackstone held a majority interest in 

Travelport. As of February 4, 2014, the date of the New Agreement, Blackstone owned 

approximately 13% of Travelport. As of November 18, 2014, the date of the Complaint, 

Blackstone owned approximately 7% of Travelport.3

Defendants Martin J. Brand, Mark S. Britton, Jeff Clarke, Kenneth S. Esterow, 

Scott Forbes, Robert L. Friedman, Bradley T. Gerstner, Barney Harford, and Kristina 

Leslie and non-party Jaynie Studenmund were the ten members of Orbitz’s board of 

directors when the Company entered into the New Agreement on February 4, 2014

(collectively, the “Agreement Board”). At the time, Britton, Leslie, and Studenmund 

were the three members of Orbitz’s Audit Committee. On February 7, 2014, 

Studenmund resigned from the Orbitz board. Her former board seat remained vacant

when the Complaint was filed. 

Brand, Britton, Clarke, Esterow, Forbes, Friedman, Gerstner, Harford, and Leslie 

were the nine members of Orbitz’s board of directors when Plaintiff initiated this action 

2 Compl. ¶ 30.

3 Id. ¶ 47.

3

 
on April 3, 2014 (the “Demand Board”). On April 10, 2014, Clarke resigned as an Orbitz 

director, and the board appointed Defendant Gavin Baiera to fill the vacancy created by 

that resignation.

Baiera, Brand, Britton, Esterow, Forbes, Friedman, Gerstner, Harford, and Leslie

are currently the nine members of Orbitz’s board of directors (collectively, the “Current 

Board”). The table below reflects the composition of the Orbitz board at the relevant 

times.

Composition of the Orbitz Board of Directors

Agreement Board Demand Board Current Board

Baiera

Brand Brand Brand

Britton Britton Britton

Clarke Clarke

Esterow Esterow Esterow

Forbes Forbes Forbes

Friedman Friedman Friedman

Gerstner Gerstner Gerstner

Harford Harford Harford

Leslie Leslie Leslie

Studenmund

Plaintiff alleges that at least five of the nine members of the Demand Board—

Brand, Clarke, Esterow, Friedman, and Harford—lack independence from Travelport and 

Blackstone and/or are interested in the New Agreement for the following reasons:

• Brand, who became an Orbitz director in March 2010, is a Managing 

Director in the Private Equity Group of Blackstone and was formerly a 

director of Travelport Limited;

4
• Clarke, who became an Orbitz director in June 2007, was formerly 

Chairman of the board of Travelport Limited from February 2012 to April 

2013, Executive Chairman of Travelport Limited from June 2011 to 

February 2012, and President and CEO of Travelport Limited from May 

2006 to May 2011; 

• Esterow, who became an Orbitz director in August 2011, was formerly the 

President and CEO of Travelport Limited’s Gullivers Travel Associates 

business from January 2007 to May 2011, and he was an employee of 

Travelport and its former parent, Cendant Corporation, for sixteen years; 

• Friedman, who became an Orbitz director in March 2011, is a Senior 

Advisor in the Private Equity Group of Blackstone and was formerly 

Blackstone’s Chief Legal Officer from January 2003 to August 2010; and 

• Harford, who became an Orbitz director in 2009, assumed his position as 

Orbitz’s Chief Executive Officer in 2009 when Travelport owned a 

majority of Orbitz. He has received approximately $12 million in 

compensation as CEO over the past three fiscal years (2011-2013).4

For simplicity, I refer to the Travelport Defendants, Blackstone, and the Orbitz directors 

named as defendants (who comprise the Demand Board and the Current Board) 

collectively as “Defendants.”

Plaintiff Teamsters Union 25 Health Services & Insurance Plan (“Plaintiff”) has 

been an Orbitz stockholder at all relevant times.

B. The Formation and Early History of Orbitz

In 2000, several United States airlines established the predecessor to Orbitz, which 

launched Orbitz.com in June 2001. In December 2003, Orbitz’s predecessor completed 

an initial public offering (IPO), and, in September 2004, it was acquired by Cendant 

Corporation (“Cendant”). In August 2006, Blackstone and Technology Crossover 

4 Id. ¶¶ 20, 22-23, 25, 27, 125, 125 n.6.

5

 
Ventures acquired Travelport, Cendant’s travel distribution services business, which

owned the Orbitz.com travel website. 

In June 2007, Travelport separated its Orbitz.com and related businesses into the 

Company, which was incorporated in Delaware as Orbitz Worldwide, Inc. In July 2007, 

Orbitz completed an IPO, after which Travelport continued to own a majority of the 

outstanding common stock of the Company.

5

 Orbitz’s common stock trades on the New 

York Stock Exchange (NYSE).

When Orbitz went public in 2007, its Amended and Restated Certificate of 

Incorporation, dated July 18, 2007 (the “Orbitz Charter”), contained several provisions 

requiring Travelport’s consent for the Company to take certain actions. Those actions 

include effectuating a consolidation or merger transaction, declaring dividends on any 

class of Orbitz capital stock, amending the amount of authorized capital stock or creating 

any class or series of capital stock, changing the number of directors on the Orbitz board, 

establishing any committee of the Orbitz board, determining the members of the Orbitz 

board or of any committee of the Orbitz board, and filling any newly created 

directorships or vacancies on the Orbitz board or on any committee of the Orbitz board.6

5 Id. ¶ 36.

6 Id. ¶ 53; see also Lyons Aff. I, Ex. H (Orbitz Charter) at Art. Tenth.

6

 
These provisions remain in effect until Travelport ceases to beneficially own shares 

entitled to vote at least 33 1/3% of the votes entitled to be cast by Orbitz’s thenoutstanding common stock.7

C. The Old Agreement Between Orbitz and Travelport

In connection with its July 2007 IPO, Orbitz entered into a multi-year services 

agreement with Travelport (the “Old Agreement”) under which Travelport would provide

global distribution system services (called “GDS” in the industry) to Orbitz.8

 The Old 

Agreement was to expire on December 31, 2014.

Under the Old Agreement, Orbitz earned incentive revenue for processing air, car, 

and hotel reservations (called “segments”) through Travelport, and Travelport earned 

transaction processing revenue from Orbitz. Orbitz was obligated to process a minimum 

number of segments for its domestic brands through Travelport. Specifically, if the 

Company did not process at least 95% of its segments through Travelport, then it was 

required to pay to Travelport a shortfall fee of $1.25 per segment below the required 

minimum.

9

7 Lyons Aff. I, Ex. H (Orbitz Charter) at Art. Seventh §§ G(iii), H.

8 Compl. ¶ 37. According to Plaintiff, Orbitz and Travelport are also parties to “a 

corporate travel management services agreement, master license agreement, and various 

letter agreements and financial services agreements.” Id. ¶ 42. The terms of those other 

agreements are not implicated in this action. 

9 Id. ¶¶ 37-38. The Old Agreement also required Orbitz’s website ebookers to use 

Travelport exclusively to process segments in certain European countries. If the 

Company did not process at least 95% of those segments through Travelport, then it was 

required to pay a shortfall fee of $1.25 per segment for each segment processed through 

an alternative GDS provider. Id. ¶ 39.

7

 
For the year ended December 31, 2013, Orbitz recognized $88.6 million in 

incentive revenue for segments processed through Travelport, which represented more 

than 10% of the Company’s total net revenue. For the same period, Travelport generated 

$152 million in transaction processing revenue from Orbitz, which represented

approximately 8% of Travelport’s transaction processing revenue.

D. Travelport Completes a Refinancing

In early 2013, Blackstone had majority control of Travelport, and Travelport 

owned approximately 53% of Orbitz’s stock. Under NYSE Rule 303A.00, Orbitz was a 

“controlled company” because Blackstone held more than 50% of the voting power for 

the election of Orbitz directors.

10

In April 2013, Travelport completed a capital refinancing that resulted in 

Blackstone no longer owning a majority equity interest in Travelport.

11 Around this time, 

Travelport reduced its interest in Orbitz from 53% to 48%.12 On April 18, 2013, Orbitz 

announced that, as of April 15, 2013, it was no longer a “controlled company” as defined 

10 Id. ¶ 44; see also N.Y. Stock Exchange, Listed Company Manual § 303A.00 (2015), 

http://nyse.com/lcm (hereinafter NYSE Rules).

11 Compl. ¶¶ 45, 47. The record does not reflect Blackstone’s precise ownership stake in 

Travelport immediately before or after the refinancing.

12 Id. ¶ 51. Counsel for the Orbitz Defendants stated at oral argument that Travelport’s 

ownership interest at the time of the New Agreement was closer to 44.8%. Tr. of Oral 

Arg. 7. Plaintiff acknowledged that its allegations were likely based on “slightly stale 

numbers” from Travelport’s S-1 SEC filing and that, according to Orbitz’s 10-K that was 

filed “two or three weeks” before this action was filed, “Travelport’s holdings were 

approximately 45 percent.” Id. 92. 

8

 
in NYSE Rule 303A.00 because no company or group of companies held more than 50% 

of the voting power for the election of Orbitz directors.13 

After the refinancing, Blackstone remained a “significant stockholder” of 

Travelport. According to Plaintiff, Blackstone’s “significant” ownership interest in 

Travelport, coupled with Travelport’s own 48% ownership interest in Orbitz, meant that

“Travelport and Blackstone’s interests in Orbitz [were] squarely aligned.”14

On December 5, 2013, Travelport filed a Shelf Registration Statement with the 

Securities and Exchange Commission (SEC) under which Travelport would be able to

sell all of its Orbitz stock. Plaintiff alleges that this SEC filing “signal[ed] Travelport’s 

intention to further reduce its equity stake in the Company.”15

E. Orbitz and Travelport Negotiate the New Agreement

Before Travelport sold any additional Orbitz stock, it allegedly sought to extend 

the Old Agreement on “favorable” terms.16 Early renewal of the Old Agreement was 

important to Travelport because, by early 2014, it allegedly had begun planning its own 

IPO to occur later in 2014. According to Plaintiff, “[s]ecuring a long-term and lucrative 

13 Compl. ¶ 45.

14 Id. ¶¶ 47-48.

15 Id. ¶ 58.

16 Id. ¶ 59.

9

 
contract with Orbitz in advance of the IPO would help increase Travelport’s valuation 

and the proceeds generated in the offering.”17

In early 2014, Orbitz and Travelport negotiated the Subscriber Services

Agreement (as defined above, the “New Agreement”). The New Agreement was subject 

to review and approval by Orbitz’s Audit Committee because, under its charter, the Audit 

Committee is responsible for “reviewing and approving” any “Related Party 

Transactions” between the Company and a “Related Party.”18 The New Agreement 

qualified as such because it was an agreement involving more than $120,000 per year in 

which Orbitz was a participant and in which Travelport, which was a Related Party, had a 

material interest.19 

On January 29, 2014, Orbitz’s Audit Committee (directors Britton, Leslie, and 

Studenmund) approved the New Agreement.20 On February 3, 2014, Studenmund 

notified Orbitz of her intent to resign as a director, effective February 7, 2014.21 

17 Id.

18 Id. ¶¶ 71-74. The Audit Committee charter defines “Related Party Transactions” to 

include those transactions “(i) in which the Company . . . is a participant, (ii) in which the 

amount involved will (or may reasonably be expected to) exceed $120,000 in any 

calendar year and (iii) in which a Related Party has or will have a direct or indirect 

material interest.” Id. ¶ 72. The definition of a “Related Party” includes a person or 

entity known to be “the beneficial owner of 5% or more of the outstanding equity 

securities of Company.” Id. ¶ 73; see also Lyons Aff. II Ex. B (Charter of the Audit 

Committee of the Board of Directors of Orbitz Worldwide, Inc., at § 4(t) (Revised Feb. 

20, 2013)). 

19 Compl. ¶ 74.

20 Id. ¶ 75.

21 Id. ¶¶ 76-77.

10

 
F. The Terms of the New Agreement

On February 4, 2014, Orbitz and Travelport entered into the New Agreement, 

which terminated and replaced the Old Agreement. Under the New Agreement, which 

expires on December 31, 2018, Orbitz was obligated for the remainder of 2014 to use 

Travelport exclusively “for all air and car segments booked on its domestic agencies” as 

well as for certain “segments booked in Europe and other markets.”22 

Starting January 1, 2015, Orbitz would no longer be subject to an exclusivity 

obligation, meaning that it could contract with Travelport’s competitors (such as 

Amadeus and Sabre, Inc.) for a portion of the Company’s bookings, but Orbitz would be 

required to provide minimum volume levels to Travelport (the “Minimum Volume 

Guarantee”). In certain cases, if Orbitz fails to meet the Minimum Volume Guarantee, it 

must pay a shortfall fee to Travelport.23 The financial terms of the New Agreement are 

not publicly available and were not alleged in the Complaint.

G. Orbitz’s Public Disclosures About Studenmund’s Resignation

and the New Agreement

On February 7, 2014, Orbitz filed a Form 8-K with the SEC disclosing 

Studenmund’s resignation. The full text of that Form 8-K is as follows:

22 Id. ¶ 60. 

23 Id. ¶¶ 60-61. 

11

 
On February 3, 2014, Jaynie Studenmund notified us of her intent to 

resign as a member of the Orbitz Worldwide, Inc. Board of Directors 

effective February 7, 2014.24

Plaintiff alleges that the “[n]oticeably absent” lack of explanation for Studenmund’s

resignation is a departure from precedent because Orbitz “has historically provided 

stockholders an explanation for director departures.”25 When the Complaint was filed on 

November 18, 2014, the Orbitz board had not filled the vacancy created by 

Studenmund’s resignation.

On February 10, 2014, Orbitz filed a Form 8-K with the SEC announcing the New

Agreement, but that Form 8-K did not disclose that the Audit Committee had approved

the New Agreement.26 On March 6, 2014, Orbitz filed a Form 10-K with the SEC that

referenced the Audit Committee’s approval of the New Agreement.27 On May 5, 2014, 

after Plaintiff initiated this action, Orbitz filed with the SEC a Form 10-Q for the quarter 

ended March 31, 2014, which specifically disclosed that the Audit Committee had 

approved the New Agreement on January 29, 2014, pursuant to a delegation by the 

24 Lyons Aff. I Ex. C (Orbitz Worldwide, Inc., Current Report (Form 8-K), at Item 5.02 

(Feb. 7, 2014)). 

25 Compl. ¶ 78.

26 Id. ¶¶ 60, 75.

27 Lyons Aff. I Ex. B (Orbitz Worldwide, Inc., Annual Report (Form 10-K), at 15 (Mar. 

6, 2014)) (“[O]ur Audit Committee . . . takes an active role in reviewing and approving 

any agreement involving more than $120,000 of payments or receipts in which 

Travelport (or any other related party) has an interest, including the New Travelport GDS 

Service Agreement entered into on February 4, 2014.”).

12

 
Company’s board of directors.

28 Orbitz attached a redacted version of the New

Agreement as an exhibit to that Form 10-Q. 

H. Changes in the Composition of Orbitz’s Board of Directors

On April 10, 2014, the Orbitz board appointed Forbes to the Audit Committee to 

fill the committee vacancy created by Studenmund’s resignation. Thereafter, directors 

Britton, Forbes, and Leslie were the three members of the Audit Committee.29 

Also on April 10, Clarke notified the Company of his resignation as an Orbitz 

director, effective immediately, due to his appointment as the CEO of Eastman Kodak

Co. The Orbitz board appointed Baiera to fill the vacancy created by Clarke’s 

resignation.

30 Baiera is a Travelport director and a Managing Director at Angelo, Gordon 

& Co., L.P., a privately-held investment advisor that held an approximately 17% stake in 

Travelport at the time of Baiera’s appointment.

31

28 Compl. ¶ 75; see also Lyons Aff. I Ex. G (Orbitz Worldwide, Inc., Quarterly Report 

(Form 10-Q), at 19-20 (May 5, 2014)) (“On January 29, 2014, the Audit Committee of 

the Board of Directors had approved the New Travelport Service Agreement and 

authorized the execution of such agreement, pursuant to a delegation by the Company’s 

Board of Directors on August 13, 2013.”).

29 Compl. ¶ 83; Lyons Aff. I Ex. F (Orbitz Worldwide, Inc., Proxy Statement (Form 

14A), at 9 (Apr. 25, 2014)).

30 Compl. ¶ 85; Orbitz Worldwide, Inc., Current Report (Form 8-K), at Ex. 99.1 (Apr. 14, 

2014) (explaining that Clarke “resigned from the board after seven years as chairman 

following his recent appointment as chief executive officer of Eastman Kodak 

Company”).

31 Compl. ¶ 19.

13

 
On April 14, 2014, the Company filed a Form 8-K with the SEC disclosing these 

developments.

32 Plaintiff contrasts the public explanation of Clarke’s resignation and 

quick appointment of Baiera to the resulting vacancy with Studenmund’s unexplained 

resignation and the ongoing vacancy created by her resignation.

33

I. Travelport Liquidates Substantially All of its Orbitz Stock

and Completes its Own IPO

On May 23, 2014, the Company filed a prospectus supplement with the SEC to 

facilitate an underwritten offering of 7.5 million shares of Orbitz stock held by 

Travelport. The underwriters also had a 30-day option to buy an additional 1.125 million 

shares of Orbitz stock from Travelport. After consummating the offering, Travelport 

owned approximately 37% of Orbitz’s stock.34 Around the time of the offering, a 

Travelport spokesperson stated that “[Travelport’s] Orbitz equity stake is no longer a 

strategic investment for [Travelport].”35

On June 4, 2014, Travelport filed an IPO prospectus to offer up to $100 million in 

stock. In its prospectus, Travelport noted that it had “addressed legacy contracts” by, 

among other actions, “entering into a new long-term contract [i.e., the New Agreement]

32 Id. ¶ 85. According to Orbitz’s 2014 proxy statement, which was filed with the SEC 

on April 25, 2014, Travelport had previously recommended Clarke to be an Orbitz 

director, and “Travelport recommended Gavin Baiera to fill the vacancy created by 

[Clarke’s] resignation.” Id.

33 Id. ¶¶ 86-87.

34 Id. ¶¶ 88, 90.

35 Id. ¶ 89.

14

 
in February 2014 with Orbitz Worldwide.”36 Travelport disclosed that Orbitz “currently 

is the largest travel agency on [its] Travel Commerce Platform, accounting for 7% of [its] 

net revenue in the year ended December 31, 2013.”37 Travelport further disclosed that 

“[i]n the event Orbitz Worldwide . . . terminates its relationship with [Travelport], . . . 

[Travelport’s] business and results of operations would be adversely affected.”38

On July 16, 2014, the Company announced an underwritten public offering by 

Travelport of 20 million shares of Orbitz stock, with a 30-day option for the underwriters 

to buy an additional 3 million shares. At the time, Travelport beneficially owned 

39,782,697 shares of Orbitz stock, or approximately 36.1% of the Company. On July 17, 

2014, the Company announced that the size of the offering would be increased to 34 

million shares, with the 30-day option for the underwriters increasing to an additional 5 

million shares.39 On July 22, 2014, Travelport completed an underwritten offering of 39 

million shares of Orbitz stock. After the offering, Travelport owned 782,697 shares of 

Orbitz, or less than 1% of the Company.

40

36 Id. ¶ 91.

37 Id. ¶ 92.

38 Id.

39 Id. ¶¶ 95-97.

40 Id. ¶¶ 98-99.

15

 
J. Orbitz’s Compliance with the NYSE Rules

Plaintiff alleges that the Orbitz board has failed to comply with the NYSE Rules

and the Company’s Corporate Governance Guidelines (the “Guidelines”).

41 Under both 

the NYSE Rules and the Guidelines, the Orbitz board was required to have a majority of 

“independent” directors by April 14, 2014, which was one year after Orbitz was no 

longer a “controlled company” under NYSE Rule 303A.00.42 NYSE Rule 303A.02 sets 

forth certain standards to be deemed an “independent” director.

In its proxy statement for its 2013 annual meeting, filed with the SEC on April 26, 

2013, Orbitz disclosed that its board had determined that four directors (Britton, Gerstner, 

Leslie, and Studenmund) were independent under the NYSE Rules and that six directors 

(Brand, Esterow, Forbes, Friedman, Jill Greenthal,

43 and Harford) were not 

independent.44 In its 2014 proxy statement, filed on April 25, 2014, Orbitz disclosed that 

its board had determined that seven directors (Brand, Britton, Esterow, Forbes, Friedman, 

Gerstner, and Leslie) were independent under the NYSE Rules and that two directors 

(Baiera and Harford) were not independent.45 Thus, by April 2014, the Orbitz board had 

41 Id. ¶¶ 101-16.

42 Id. ¶¶ 105-06.

43 Greenthal, a Senior Advisor in the Private Equity Group of Blackstone, resigned from 

the Orbitz board in May 2013. Id. ¶ 49.

44 Id. ¶ 107.

45 Id. ¶ 110.

16

 
determined that a majority of its members were “independent” as required by NYSE Rule 

303A.01.

K. Procedural History

On April 3, 2014, Plaintiff filed its initial complaint. On November 18, 2014, 

Plaintiff filed the Verified Second Amended Stockholder Class Action and Derivative 

Complaint (as defined above, the “Complaint”), asserting five causes of action. 

On December 4, 2014, the Orbitz Defendants moved to dismiss the Complaint 

under Court of Chancery Rule 23.1 for failure to make a pre-suit demand or to plead facts 

excusing such a demand, and under Court of Chancery Rule 12(b)(6) for failure to state a 

claim. Also on December 4, Travelport and Blackstone moved to dismiss the Complaint 

under Court of Chancery Rules 23.1 and 12(b)(6). On April 15, 2015, I heard oral 

argument on these motions.

III. LEGAL ANALYSIS

A. Demand is Not Excused as to Counts I-IV

1. Counts I-IV are Derivative

In Count I of the Complaint, Plaintiff alleges that Travelport breached its fiduciary 

duties as Orbitz’s controlling stockholder by causing “the Company to enter the unfair 

[New Agreement] to suit Travelport’s unique needs to the detriment of the Company.”46 

In Count II, Plaintiff alleges that the Agreement Board (excluding Studenmund) breached 

their fiduciary duties by participating “in the planning and execution of the unfair and 

46 Compl. ¶ 129.

17

 
improper [New Agreement]” and by failing “to take the necessary actions to extract fair 

terms in this related-party transaction.”47 In Count III, Plaintiff alleges that Travelport 

was unjustly enriched by the New Agreement.48 In Count IV, Plaintiff alleges that 

Travelport and Blackstone aided and abetted the board’s breaches of fiduciary duty by 

“knowingly solicit[ing], encourag[ing] and/or participat[ing] in the unlawful [New 

Agreement].”49

Plaintiff asserts Counts I-IV derivatively. Defendants agree that these claims are 

derivative. I agree as well because Counts I-IV all center on whether or not the New 

Agreement is fair to the Company. Thus, under Tooley v. Donaldson, Lufkin & Jenrette, 

Inc.,

50 Counts I-IV are straightforward examples of derivative claims because Orbitz 

suffered the alleged harm as a party to the New Agreement, and Orbitz would receive the 

benefit of any recovery from Defendants. 

2. Demand Futility is Governed by Rales v. Blasband

“Because the shareholders’ ability to institute an action on behalf of the 

corporation inherently impinges upon the directors’ power to manage the affairs of the 

47 Id. ¶ 135. Count II also alleges that the members of the Agreement Board (excluding 

Studenmund) breached their fiduciary duties by failing “to reconstitute the Board to 

consist of a majority of independent directors as required under the NYSE Rules and the 

. . . Guidelines.” Id. ¶ 135. I address this allegation in the context of the identical 

allegations made against the Current Board under Count V.

48 Id. ¶¶ 142-43. 

49 Id. ¶ 146.

50 845 A.2d 1031 (Del. 2004).

18

 
corporation the law imposes certain prerequisites on a stockholder’s right to sue 

derivatively.”51 Under Court of Chancery Rule 23.1, because Plaintiff did not make a 

demand on the Company’s board before initiating this action,52 it must allege with 

particularity that its failure to make such a demand should be excused. In this analysis, I 

accept as true Plaintiff’s particularized allegations of fact and draw all reasonable 

inferences that logically flow from those allegations in Plaintiff’s favor.53

Under Delaware law, there are two tests for demand futility: (i) the test articulated 

in Aronson v. Lewis,

54 which applies when a plaintiff challenges “a decision of the board 

upon which plaintiff must seek demand”;55 and (ii) the test set forth in Rales v. 

Blasband,

56 which applies when a plaintiff does not challenge “a decision of the board in 

place at the time the complaint is filed.”57 A decision approved by at least half of the 

corporation’s directors who would consider a demand, even when acting by committee, 

can be imputed to the entire board and thus triggers the Aronson test “for purposes of 

51 Kaplan v. Peat, Marwick, Mitchell & Co., 540 A.2d 726, 730 (Del. 1988).

52 Compl. ¶ 120.

53 See White v. Panic, 783 A.2d 543, 549 (Del. 2001).

54 473 A.2d 805 (Del. 1984).

55 Ryan v. Gifford, 918 A.2d 341, 353 (Del. Ch. 2007).

56 634 A.2d 927 (Del. 1993).

57 Ryan, 918 A.2d at 352.

19

 
proving demand futility.”58 By contrast, the Rales test applies where a derivative plaintiff 

challenges a decision approved by a board committee consisting of less than half of the 

directors who would have considered a demand, had one been made.59 To establish 

demand futility under Aronson or Rales for Counts I-IV, Plaintiff must impugn the ability 

of at least half of the directors in office when it initiated this action (i.e., the Demand 

Board) to have considered a demand impartially.60 

Citing to the Company’s public filings, the Complaint alleges that the Audit 

Committee, consisting of three members, approved the New Agreement.

61 In fact, the 

Complaint alleges that such approval not only occurred, but was required under the Audit 

Committee’s charter because the New Agreement was a “Related Party Transaction.”62 

As the Audit Committee’s charter states: “The audit committee will . . . be responsible 

58 Id. at 353 (applying Aronson because the challenged decisions were approved 

unanimously by a three-member committee of a six-member board).

59 See Calma v. Templeton, 114 A.3d 563, 575 (Del. Ch. 2015) (“[B]ecause the decisions 

to grant the [non-employee director compensation awards] were made by less than half of 

the Citrix directors in office when Plaintiff filed the Complaint, the Rales test applies.”); 

see also Conrad v. Blank, 940 A.2d 28, 37 (Del. Ch. 2007) (“Since the challenged 

transaction was not made by the board, or even half of its members, the test articulated in 

Rales is the proper standard.”).

60 See Beneville v. York, 769 A.2d 80, 82 (Del. Ch. 2000). 

61 Compl. ¶ 9 (citing the Company’s proxy statement dated April 25, 2014); id. ¶ 75

(citing the Company’s Form 10-Q dated May 5, 2014); see also id. ¶¶ 70, 74, 81.

62 Id. ¶ 74 (“Thus, the Company could not enter into [the New Agreement] without the 

review and approval of the Audit Committee.”); see also id. ¶ 8.

20

 
for the review, approval or ratification of Related Party Transactions.”63 Despite these 

well-pled allegations, Plaintiff argues that Aronson should apply because there is “a 

reasonable inference that the full Board would have been involved in the [New 

Agreement’s] approval” (1) “[g]iven the significance of the [New Agreement] to 

Orbitz—including that it constitutes 10% of Orbitz’s annual revenue and is central to 

Orbitz’s online travel-booking business” and (2) given that the Audit Committee charter, 

which required committee review and approval of the New Agreement, does not use the 

word “negotiate.”64 I disagree. 

The inference of full board approval Plaintiff asks me to draw amounts to little 

more than speculation. This is contrary to a well-recognized purpose of the demand 

futility requirement of Rule 23.1, which is to “not permit a stockholder to cause the 

corporation to expend money and resources in discovery and trial in the stockholder’s 

quixotic pursuit of a purported corporate claim based solely on conclusions, opinions or 

speculation.”65 Given that the Company’s organic documents placed the responsibility 

for review and approval of the New Agreement, as a Related Party Transaction, in the 

63 Lyons Aff. II Ex. B (Charter of the Audit Committee at § 4(t)). Consistent with this 

policy, Orbitz disclosed in its 2014 proxy statement that the Orbitz board “delegated to 

the Audit Committee the responsibility, power and authority to, on behalf of the Board, 

consider, evaluate and approve all agreements for the provision of global distribution 

systems services, including the agreement entered into with Travelport in February 

2014.” Lyons Aff. I Ex. F (Orbitz Worldwide, Inc., Proxy Statement (Form 14A), at 9

(Apr. 25, 2014)).

64 Pl.’s Ans. Br. 9, 16-17.

65 Brehm v. Eisner, 746 A.2d 244, 255 (Del. 2000).

21

 
hands of the Audit Committee, and the absence of any well-pled facts suggesting that the 

Company deviated from this policy, I decline to draw the inference that the full board 

approved the New Agreement. I also view Plaintiff’s construction of the Audit 

Committee’s charter to be hyper-technical and unreasonable.

66 It is an unsupported leap 

of logic to infer from the lack of the word “negotiate” in that charter that the full board 

approved the New Agreement.

Drawing an inference of full board approval would be particularly inappropriate 

here given Plaintiff’s decision not to use 8 Del. C. § 220 to obtain documents relating to 

the review and approval of the New Agreement,67 despite repeated admonitions Delaware 

courts have made for representative plaintiffs to do so before launching derivative claims. 

Documents from such an inspection undoubtedly would have confirmed whether any 

factual basis exists for the assertion of full board approval that Plaintiff asks the Court to 

infer. There is no equity in asking the Court to speculate over a factual matter that was 

well within Plaintiff’s control to determine through basic due diligence. 

In sum, from my reading of the Complaint, the reasonable inference to be drawn 

from its well-pled allegations is that only the Audit Committee approved the New 

66 See In re Walt Disney Co. Deriv. Litig., 907 A.2d 693, 764 (Del. Ch. 2005) (rejecting 

the argument that a compensation committee lacked the authority to negotiate the 

President’s salary where its charter expressly provided that it was responsible for 

establishing and approving the President’s salary, because “there is no language in the 

charter that would indicate that the committee does not have this power” to negotiate), 

aff’d, 906 A.2d 27 (Del. 2006). 

67 Tr. of Oral Arg. 103 (“We made a determination not to make a 220 demand.”).

22

 
Agreement.

68 Because the Audit Committee consisted of just three members when it 

approved the New Agreement, only two of whom remained on the Orbitz board when 

Plaintiff initiated this action, the Rales test applies because more than half of the nine 

members of the Demand Board did not approve the New Agreement.

3. Demand is Not Excused for Counts I-IV under Rales

Under Rales, Plaintiff’s claims should be dismissed under Rule 23.1 unless the 

particularized allegations of the 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.”69 When 

Plaintiff initiated this action, the Demand Board had nine members. Thus, under Rales, 

the Complaint “must plead facts specific to each director, demonstrating that at least half 

of them could not have exercised disinterested business judgment in responding to a 

demand.”70 Plaintiff advances three arguments for why its failure to make a demand 

should be excused as futile.71 I address each argument in turn. 

68 In contrast to its factually supported allegations of Audit Committee approval of the 

New Agreement, the Complaint alleges in other places in conclusory fashion that the 

“New GDS Agreement Director Defendants”—defined as the nine individuals on the 

Demand Board (Compl. ¶ 29)—approved the New Agreement. See id. ¶¶ 122, 135, 145,

147. Presumably recognizing the lack of factual support for this allegation, Plaintiff did 

not rely on it to argue for the application of the Aronson test. 

69 Rales, 634 A.2d at 934.

70 Desimone v. Barrows, 924 A.2d 908, 943 (Del. Ch. 2007).

71 Plaintiff frames its demand futility arguments collectively as to all of Counts I-IV even 

though, under Delaware law, the demand futility analysis “is conducted on a claim-by23

 
a. Plaintiff Has Not Raised a Reasonable Doubt as to the

Impartiality of a Majority of the Demand Board

Plaintiff first argues that a majority of the nine members of the Demand Board 

either were interested in the New Agreement or were not independent from Travelport 

and/or Blackstone, such that there is a reasonable doubt that a majority of the Demand 

Board could have properly exercised their business judgment in responding to a 

demand.72 Because Plaintiff concedes that four members of the Demand Board (Britton, 

Forbes, Gerstner, and Leslie) were independent and did not have a financial interest in the 

New Agreement,

73 it must raise a reasonable doubt that each of the five other directors on 

the Demand Board (Brand, Clarke, Esterow, Friedman, and Harford) could have 

impartially considered a demand for all of Counts I-IV. To resolve that issue, I need only 

consider the allegations concerning one of these five directors. I focus on Esterow.

Plaintiff does not argue that Esterow had any financial interest in the New 

Agreement but rather contends that he is not independent from Travelport because of his 

“long-term and high-level employment with Travelport.”74 As alleged, Esterow was an 

executive of Travelport or Cendant (Travelport’s former parent) for sixteen years, ending 

claim basis.” Cambridge Ret. Sys. v. Bosnjak, 2014 WL 2930869, at *4 (Del. Ch. June 

26, 2014). 

72 Pl.’s Ans. Br. 18.

73 One could interpret Plaintiff’s second demand futility argument (i.e., that the directors 

who approved the New Agreement did so in bad faith so as to expose them to a 

substantial likelihood of personal liability) as a challenge to the disinterestedness of 

Britton and Leslie, but this argument is without merit for the reasons discussed below.

74 Id. 28-30. 

24

 
in May 2011. For the last four of those years, from January 2007 to May 2011, Esterow 

was President and CEO of Travelport Limited’s Gullivers Travel Associates business. In 

August 2011, three months after Esterow left his position at Travelport, he was appointed 

to the Orbitz board.

75 In my opinion, these allegations do not raise a reasonable doubt as 

to Esterow’s independence in considering a demand for any of Counts I-IV.

In the demand futility context, directors are “presumed to be independent.”76 

Under Delaware law, “[i]ndependence means that a director’s decision is based on the 

corporate merits of the subject before the board rather than extraneous considerations or 

influences.”77 “[A] lack of independence can be shown by pleading facts that support a 

reasonable inference that the director is beholden to a controlling person or ‘so under 

their influence that their discretion would be sterilized.’ ”78 Thus, a non-interested

director is not independent if particularized allegations support the inference that he or 

she “would be more willing to risk his or her reputation than risk the relationship with the 

interested [person].” 79

75 Compl. ¶¶ 23, 125.

76 Beam v. Stewart, 845 A.2d 1040, 1055 (Del. 2004).

77 Aronson, 473 A.2d at 816.

78 In re Trados Inc. S’holder Litig., 2009 WL 2225958, at *6 (Del. Ch. July 24, 2009) 

(quoting Rales, 634 A.2d at 936).

79 Beam, 845 A.2d at 1052.

25

 
With these general principles in mind, the case of In re Western National Corp. 

Shareholders Litigation80 provides a useful lens with which to evaluate Plaintiff’s 

challenge to Esterow’s presumed independence. In Western National, the plaintiffs 

asserted that the chairman and CEO (Poulos) of Western National was not independent of 

its 46% stockholder (American General) when Poulos and the other members of the 

Western National board approved a merger with American General. In opposing the 

defendants’ motion for summary judgment, the plaintiffs put forward evidence showing 

that, before Poulos was hired at Western National, he had been an employee of American 

General for over two decades, including as a senior officer. Chancellor Chandler rejected 

the plaintiffs’ argument that this past employment was a sufficient basis to overcome the 

presumption that Poulos was an independent director: 

Plaintiffs . . . argue that Poulos’s former employment by American 

General coupled with his personal friendships with American General 

executives caused him to improperly favor that company in the merger. It 

may indeed be true that Poulos enjoys fond recollections of his twentythree year career at American General (prior to joining Western National) 

and it is undoubtedly true that he maintained close social and professional 

ties with his colleagues there. Nevertheless, such facts do not warrant the 

inference that Poulos favored the fortunes of American General over those 

of a company in which he holds substantial equity and has served as 

executive chairman for its entire existence as a publicly-held entity.81

80 2000 WL 710192 (Del. Ch. May 22, 2000).

81 Id. at *12. The Court ultimately concluded, based on a peculiar provision in a 

shareholders’ agreement between Western National and American General, that there 

was an issue of material fact as to whether “Poulos was entirely independent of American 

General.” Id. at *14.

26

 
Plaintiff’s allegations about Esterow’s supposed lack of independence from

Travelport are similar in my view to those the Court rejected in Western National. As 

with Poulos in Western National, it is unreasonable in my view to question Esterow’s 

presumptive independence based solely on an employment relationship that ended in 

May 2011, almost three years before this action was filed in April 2014. Even if I infer 

from the three-month window between Esterow’s departure from Travelport and his 

appointment to the Orbitz board that his directorship was a “loyalty appointment” by 

Travelport,82 the mere fact that Travelport, an alleged controlling stockholder, “played 

some role in the nomination process should not, without additional evidence, 

automatically foreclose a director’s potential independence.”83 Thus, the inference that 

Esterow “was nominated by or elected at the behest of” Travelport, which had the ability 

to “control[] the outcome of a corporate election” by virtue of its majority interest when 

Esterow joined the Orbitz board, does not overcome his presumed independence.

84

The only additional fact Plaintiff has alleged to challenge Esterow’s independence 

is that, at the time of the Company’s April 2013 proxy statement, which was filed 

82 Pl.’s Ans. Br. 28.

83 W. Nat’l, 2000 WL 710192, at *15 (citing Aronson, 473 A.2d at 815); see also Beam, 

845 A.2d at 1051 (“Allegations that [the controller] and the other directors . . . developed 

business relationships before joining the board . . . are insufficient, without more, to rebut 

the presumption of independence.”); In re KKR Fin. Hldgs. LLC S’holder Litig., 101 

A.3d 980, 996 (Del. Ch. 2014) (“It is well-settled Delaware law that a director’s 

independence is not compromised simply by virtue of being nominated to a board by an 

interested stockholder.”), appeal docketed No. 629,2014 (Del. Nov. 13, 2014).

84 See Aronson, 473 A.2d at 816. 

27

 
approximately two years after Esterow had left Travelport, Orbitz did not consider him to 

be an “independent” director under the NYSE Rules.85 As then-Chancellor Strine 

observed in In re MFW Shareholders Litigation,

86 the NYSE Rules may be “a useful 

source for this court to consider when assessing an argument that a director lacks 

independence” because they “were influenced by experience in Delaware and other states 

and were the subject of intensive study by expert parties.”87 That said, a board’s 

determination of director independence under the NYSE Rules is qualitatively different

from, and thus does not operate as a surrogate for, this Court’s analysis of independence 

under Delaware law for demand futility purposes.

For example, NYSE Rule 303A.02(b)(i) establishes a bright-line rule of 

disqualification for independence if a director has been an employee of the “listed 

company” within the last three years. The NYSE Rules define “listed company” to 

include a parent entity that owns over 50% of the company.88 Thus, because Travelport 

85 Compl. ¶ 107.

86 67 A.3d 496 (Del. Ch. 2013), aff’d sub nom., Kahn v. M & F Worldwide Corp., 88 

A.3d 635 (Del. 2014).

87 Id. at 510. In MFW, the plaintiffs challenged that three directors, all of whom had been 

deemed “independent” under the NYSE Rules, were not independent of the company’s 

controlling stockholder when they approved a merger between the two. In concluding on 

the defendants’ summary judgment motion that those directors were independent, thenChancellor Strine relied, in part, on the fact that the plaintiffs’ evidence of conflicts did 

not rise to the level to disqualify those directors’ independence under the NYSE Rules.

See id. at 512-13.

88 More precisely, the references to “listed company” in the bright-line disqualification 

provisions of NYSE Rule 303A.02 include any parent or subsidiary in a consolidated 

group with the listed company. The NYSE defines “consolidated group” to mean “a 

28

 
held over 50% of the stock of Orbitz before April 2013, it fell within the definition of 

“listed company” as of that date, meaning that Esterow could not be deemed independent 

under the NYSE Rules until the earlier of (i) three years from May 2011, when he left 

Travelport, or (ii) when Travelport ceased to own a majority of Orbitz’s stock. Notably, 

after Travelport had reduced its position in Orbitz below 50%, the Company disclosed in 

its April 2014 proxy statement that the Orbitz board had determined that Esterow was

independent within the meaning of the NYSE Rules.89

Unlike the NYSE Rules, Delaware law does not contain bright-line tests for 

determining independence but instead engages in a case-by-case fact specific inquiry 

based on well-pled factual allegations.

90 The relevant inquiry here is whether, based on 

the factual allegations of the Complaint, Esterow should be deemed independent when 

this action was filed in April 2014—almost three years after he had severed his ties with 

Travelport, and after he had been named President, CEO, and a director of Bankrate, Inc., 

company, its parent or parents, and/or its subsidiaries that would be required under U.S. 

generally accepted accounting principles to prepare financial statements on a 

consolidated basis.” See Section 303A Corporate Governance Standards, Frequently 

Asked Questions, NYSE Regulation, 7 (Jan. 4, 2010), https://www.nyse.com/publicdocs/

nyse/regulation/nyse/final_faq_nyse_listed_company_manual_section_303a_updated_1_

4_10.pdf.

89 Compl. ¶ 110 (“The Board has determined that Mark [Britton], Brad [Gerstner], Kris 

[Leslie], Martin [Brand], Ken [Esterow], Bob [Friedman] and Scott [Forbes] are 

independent within the meaning of NYSE corporate governance rules and have no other 

material relationships with us that could interfere with their ability to exercise 

independent judgment.”).

90 See Orman v. Cullman, 794 A.2d 5, 23 (Del. Ch. 2002) (“[Delaware courts] reach 

conclusions as to the sufficiency of allegations regarding interest and independence only 

after considering all the facts alleged on a case-by-case basis.”).

29

 
a company unaffiliated with Travelport.

91 Given the peculiarities of the NYSE Rules, the 

fact that Esterow was not designated as “independent” under the NYSE Rules in Orbitz’s 

April 2013 proxy statement carries little weight. Rather, for the reasons explained above, 

the factual allegations concerning Esterow’s former relationship with Travelport are 

insufficient in my view to cast reasonable doubt on his presumed independence under 

Delaware law. 

Because Plaintiff has not raised a reasonable doubt as to Esterow’s independence 

from Travelport, I conclude that demand is not excused as to any of Counts I-IV because 

a majority of the Demand Board (Britton, Esterow, Forbes, Gerstner, and Leslie) could 

have impartially exercised their business judgment in responding to such a demand. 

Based on this conclusion, I need not consider Plaintiff’s challenges to the 

disinterestedness or independence of the remaining four members of the Demand Board 

(Brand, Clark, Forbes and Friedman).

b. Plaintiff Has Not Raised a Reasonable Doubt that the 

New Agreement was Approved in Bad Faith

Plaintiff’s second demand futility argument is that the New Agreement was not a 

valid exercise of business judgment. Although Plaintiff did not frame it as such, the crux 

of the argument is that the Orbitz directors who approved the New Agreement did so in 

bad faith such that they cannot impartially consider a demand as to Counts I-IV.92 Put in 

91 Lyons Aff. I Ex. J (Orbitz Worldwide, Inc., Proxy Statement (Form 14A), at 6 (Apr. 

25, 2014)).

92 Pl.’s Ans. Br. 44.

30

 
demand futility terms, Plaintiff contends that Britton and Leslie (as the only members of 

the Demand Board who approved the New Agreement) are not disinterested because they 

face a substantial likelihood of personal liability for not approving the New Agreement in 

good faith.93 In my view, Plaintiff has not made such a showing.

“[I]f the directors face a ‘substantial likelihood’ of personal liability, their ability

to consider a demand impartially is compromised under Rales, excusing demand.”94 “A 

simple allegation of potential directorial liability is insufficient to excuse demand, else 

the demand requirement itself would be rendered toothless, and directorial control over 

corporate litigation would be lost.”95 Where, as here, the corporation’s charter includes 

an exculpatory provision pursuant to 8 Del. C. § 102(b)(7),96 a substantial likelihood of 

liability “may only be found to exist if the plaintiff pleads a non-exculpated claim against 

the directors based on particularized facts.”97 The theory here is a lack of good faith.

93 Even if Plaintiff adequately pled a lack of good faith by Britton and Leslie, Rales

would still require Plaintiff to raise a reasonable doubt as to a majority of the Demand 

Board. I need not perform this analysis because Plaintiff has failed to plead a lack of 

good faith by either Britton or Leslie for the reasons explained above. 

94 Guttman v. Huang, 823 A.2d 492, 501 (Del. Ch. 2003).

95 In re Goldman Sachs Gp., Inc. S’holder Litig., 2011 WL 4826104, at *18 (Del. Ch. 

Oct. 12, 2011).

96 Lyons Aff. I, Ex. H (Orbitz Charter) at Art. Sixth (“No director shall be personally 

liable to the Corporation or any of its stockholders for monetary damages for breach of 

fiduciary duty as a director, except to the extent such exemption from liability or 

limitation thereof is not permitted under the [DGCL] as the same exists or may hereafter 

be amended.”).

97 See Wood v. Baum, 953 A.2d 136, 141 (Del. 2008) (citation omitted).

31

 
Because “the duty of loyalty mandates that the best interest of the corporation and 

its shareholders takes precedence over any interest possessed by a director, officer or 

controlling shareholder and not shared by the stockholders generally,”98 a plaintiff can 

show a lack of good faith by establishing that a director “failed to pursue the best 

interests of the corporation and its stockholders.”99 Additionally, as Chancellor Allen 

recognized in In re J.P. Stevens & Co., Inc. Shareholders Litigation,

100 a plaintiff may 

show a lack of good faith by establishing that a director’s decision was “so far beyond the 

bounds of reasonable judgment that it seems essentially inexplicable on any ground other 

than bad faith.”101 This is a high pleading standard, as Delaware courts typically frame a 

lack of good faith in terms of “intentional” misconduct.102

The New Agreement was approved by the three members of the Audit Committee: 

Britton, Leslie, and Studenmund. The Complaint does not allege that any of these 

98 Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993).

99 In re Orchard Enters., Inc. S’holder Litig., 88 A.3d 1, 33 (Del. Ch. 2014).

100 542 A.2d 770 (Del. Ch. 1988).

101 Id. at 780-81; see also Parnes v. Balley Entm’t Corp., 722 A.2d 1243, 1246 (Del. 

1999) (citing J.P. Stevens, 542 A.2d at 780-81). Elsewhere, Chancellor Allen described 

this demand futility theory as akin to the test for waste. See Kahn v. Tremont Corp., 1994 

WL 162613, at *6 (Del. Ch. Apr. 21, 1994) (“The second prong of Aronson is, I suppose, 

directed to extreme cases in which despite the appearance of independence and disinterest 

a decision is so extreme or curious as to itself raise a legitimate ground to justify further 

inquiry and judicial review. The test for [establishing demand futility on this ground] is 

thus necessarily high, similar to the legal test for waste.”).

102 See, e.g., Walt Disney, 906 A.2d at 67 (“A failure to act in good faith may be shown, 

for instance, where the fiduciary intentionally acts with a purpose other than that of 

advancing the best interests of the corporation[.]”).

32

 
individuals had a personal financial interest in the New Agreement or were not 

independent.

103 Rather, Plaintiff contends they acted in bad faith because the “material 

terms” of the New Agreement “deviate from market standards and are patently unfair to 

Orbitz yet highly beneficial to Travelport.”104 The provisions of the New Agreement that 

Plaintiff challenges as “patently unfair” include “(a) continued exclusivity; (b) the 

Minimum Volume [Guarantee]; (c) shortfall penalties; and (d) a five-year term.”105 

In response, Defendants submit that the terms of the New Agreement “represent a 

value-for-value contract.”106 They argue, under the reasoning of In re Sanchez Energy 

Derivative Litigation,

107 that “Plaintiff’s failure to allege or point to any specific financial 

information (negative or otherwise) concerning the [New Agreement], especially in light 

of its positive economic aspects, . . . requires dismissal of the Complaint.”108 I agree.

In Sanchez Energy, plaintiffs argued that demand was excused because an 

agreement between a company and its alleged controlling stockholder was “so facially 

unfair that it could not possibly have been the product of a valid business judgment.”109 

103 See Compl. ¶¶ 120-126.

104 Pl.’s Ans. Br. 46.

105 Id. 44-45.

106 Orbitz Defs.’ Reply Br. 32.

107 2014 WL 6673895 (Del. Ch. Nov. 25, 2014), appeal docketed No. 702,2014 (Del. 

Dec. 19, 2014).

108 Orbitz Defs.’ Reply Br. 34.

109 Sanchez Energy, 2014 WL 6673895, at *10.

33

 
Specifically, they alleged that the price of the transaction at issue (the sale of a one-half 

interest in 80,000 acres of potential oil reserves at roughly $2,500 per acre) was grossly 

unfair because it was approximately 17 times higher than the price paid in an ostensibly

comparable, arms-length transaction (the sale of a working interest in 172,000 acres of 

potential oil reserves reportedly at $144 per acre). The Court rejected this argument, 

concluding that the derivative complaint did not support an inference of bad faith on 

behalf of the directors because it was devoid of “information about the nature, quality and 

duration of the . . . working interests [in the 172,000 acres] to allow a meaningful 

comparison to those acquired by [the company].”110 In other words, the Court was 

unable to conclude that the challenged transaction was so unfair as to support an 

inference of bad faith because the plaintiffs failed to allege material terms of the 

supposedly comparable transaction.

Here, as in Sanchez Energy, Plaintiff has failed to allege with particularity facts 

from which I could reasonably infer that the New Agreement was so facially unfair as to 

constitute a lack of good faith by Britton and Leslie, the members of the Audit 

Committee who were part of the Demand Board. While in Sanchez Energy the problem 

was the lack of information about the allegedly comparable transaction, here the pleading 

deficiency is more basic: Plaintiff has not alleged any of the financial terms of the New 

110 Id. at *12. For similar reasons, the Court also rejected the plaintiffs’ comparisons to 

another transaction.

34

 
Agreement.111 Instead, Plaintiff asks that I look at the publicly available terms—such as 

the Minimum Volume Guarantee and the five-year duration—without regard for the 

financial terms that formed the basis of Orbitz’s and Travelport’s mutual exchange of

consideration. It would be imprudent for me to do so because there is no well-pled 

baseline from which I can make a “meaningful comparison” between the New Agreement 

and other GDS services contracts in the travel industry, the financial terms of which 

Plaintiff also failed to allege in the Complaint.

112 Thus, I have no informational basis 

from which I could conclude that the New Agreement was “so far beyond the bounds of 

reasonable judgment” as to constitute bad faith or to demonstrate that the members of the 

Audit Committee put the interests of Travelport and/or Blackstone ahead of the best 

interests of the Company.

113 Accordingly, Plaintiff failed to establish that demand should 

be excused as to any of Counts I-IV on this ground.

111 Admittedly, the publicly available version of the New Agreement is redacted to 

conceal these financial terms. Once again, however, Plaintiff failed to use Section 220 to 

attempt to fill this informational void. Had Plaintiff done so, it presumably would have 

obtained this information, subject to entering an appropriate confidentiality agreement.

See Tr. of Oral Arg. 63-64.

112 For example, the Complaint includes quotations from an October 4, 2011, letter from, 

among others, the Interactive Travel Services Association and a purported industry 

expert’s statements on May 5, 2011, and July 24, 2013, about the typical terms of a GDS 

services agreement. Compl. ¶¶ 64-65, 67. The Complaint does not allege the financial 

terms of such “typical” agreements.

113 See J.P. Stevens, 542 A.2d at 780-81.

35

 
Plaintiff’s refrain that “the members of the Board should have exercised the 

Company’s leverage to secure a substantially more favorable GDS agreement”114 is 

precisely the type of “Monday morning quarterbacking” that this Court routinely rejects 

as insufficient to establish demand futility.115 “In the absence of well pleaded allegations 

of director interest or self-dealing, failure to inform themselves, or lack of good faith, the 

business decisions of the board are not subject to challenge because in hindsight other 

choices might have been made instead.”116

c. Demand Should Not Be Excused Simply Because the 

Challenged Transaction Involved an Alleged Controlling 

Stockholder 

Plaintiff’s third demand futility argument is that demand should be excused for 

Counts I-IV as a matter of law because the New Agreement was a conflicted transaction 

subject to entire fairness review.117 Plaintiff advances two theories for the application of 

entire fairness, neither of which provides a basis for excusing demand in my view. 

First, Plaintiff contends that entire fairness should apply because a majority of the 

ten directors on the Agreement Board were financially interested in the New Agreement 

or otherwise not independent from Travelport and/or Blackstone.

118 Accepting for the 

114 Pl.’s Ans. Br. 44.

115 See In re Affiliated Computer Servs., Inc. S’holders Litig., 2009 WL 296078, at *10 

(Del. Ch. Feb. 6, 2009).

116 Id.

117 Pl.’s Ans. Br. 31.

118 Id. 40.

36

 
sake of argument that the full board provides the appropriate frame of reference for 

determining the standard of review for the breach of fiduciary duty claim against the 

Agreement Board (Count II),

119 the Complaint fails to allege facts legitimately calling 

into question the independence or disinterestedness of at least six of the ten members of 

the Agreement Board (Britton, Esterow, Forbes, Gerstner, Leslie and Studenmund) for 

the reasons explained above.

Second, Plaintiff contends that demand should be excused under the second prong 

of Aronson because the New Agreement was a conflicted transaction in which Orbitz’s 

controlling stockholder, Travelport, stood on both sides.

120 The logical extension of this 

argument is that demand would be excused as a matter of law whenever a transaction 

between a corporation and its putative controlling stockholder implicates the entire 

119 As discussed above, the reasonable inference from the Complaint is that the full board 

did not approve the New Agreement and that only the Audit Committee did so. Thus, the 

relevant focus for determining the standard of review for the breach of fiduciary duty 

claim asserted against the Orbitz directors in Count II is on the members of the Audit 

Committee, whose presumed independence, disinterestedness, and good faith Plaintiff 

failed to call into question for the reasons explained above. Thus, the business judgment 

standard would presumably govern Count II. See In re Tyson Foods, Inc. Consol. 

S’holder Litig., 919 A.2d 563, 589 (Del. Ch. 2007) (observing that, where a majority of 

the compensation committee did not have disabling conflicts but where at least half of the 

full board did, the business judgment standard would govern if only the committee 

approved the compensation awarded to the managing general partner of the company’s 

controlling stockholder).

120 Pl.’s Ans. Br. 32.

37

 
fairness standard. Although this argument has some superficial appeal, it is inconsistent 

with controlling authority in my opinion.

121

Under 8 Del. C. § 141(a), “[t]he business and affairs of every corporation . . . shall 

be managed by or under the direction of a board of directors.” In Zapata Corp. v. 

Maldonado,

122 the Delaware Supreme Court observed that the “managerial decision 

making power” granted to directors by 8 Del. C. § 141(a) “encompasses decisions 

whether to initiate, or refrain from entering, litigation.”123 As noted above, because a

derivative action infringes upon the board’s managerial authority, Court of Chancery 

Rule 23.1 requires a derivative plaintiff to allege with particularity “the efforts, if any, 

made by the plaintiff to obtain the action the plaintiff desires from the directors . . . and 

the reasons for the plaintiff's failure to obtain the action or for not making the effort.”124

Building on this core tenet of Delaware corporate law, the Supreme Court 

articulated in Aronson the now-familiar demand futility standard for a derivative claim 

challenging a decision of the board. In that case, the plaintiff challenged certain 

121 Given that the second prong of Aronson asks simply whether “the challenged 

transaction was otherwise the product of a valid exercise of business judgment,” Aronson, 

473 A.2d at 814, it is understandable how one might find that test to be satisfied 

whenever entire fairness review might be triggered, irrespective of the circumstances 

triggering such review or the nature of the claims to which such review might apply. The 

sole authority on which Plaintiff relies consists of a transcript ruling that appears to 

endorse this approach. I decline to follow this ruling because it is inconsistent in my 

opinion with controlling Supreme Court precedent for the reasons explained above. 

122 430 A.2d 779 (Del. 1981).

123 Id. at 782.

124 Ct. Ch. R. 23.1.

38

 
agreements entered into between the company (Meyers) and a director (Fink), who also 

owned 47% of Meyers’s common stock. The plaintiff alleged that Fink “dominated and 

controlled” each of the company’s other nine directors, such that demand should be 

excused, because Fink “personally selected each director.”125 Analyzing the plaintiff’s 

allegations, the Supreme Court appeared to assume that Fink, with his 47% ownership 

interest, was Meyers’s controlling stockholder. The Aronson Court nevertheless squarely 

rejected the notion that a controlling interest in a corporation is itself sufficient to 

overcome the directors’ presumption of independence:

[I]n the demand context even proof of majority ownership of a company 

does not strip the directors of the presumptions of independence, and that 

their acts have been taken in good faith and in the best interests of the 

corporation. There must be coupled with the allegation of control such 

facts as would demonstrate that through personal or other relationships the 

directors are beholden to the controlling person.126

After rejecting the plaintiff’s allegations of Fink’s control over the nine directors,

127 the 

Supreme Court found that the plaintiff’s complaint failed to plead demand futility under 

Rule 23.1.

125 Aronson, 473 A.2d at 808, 810.

126 Id. at 815. 

127 See id. (“Here, plaintiff has not alleged any facts sufficient to support a claim of 

control. The personal-selection-of-directors allegation stands alone, unsupported. At 

best it is a conclusion devoid of factual support. The causal link between Fink’s control 

and approval of the employment agreement is alluded to, but nowhere specified. The 

director’s approval, alone, does not establish control, even in the face of Fink’s 47% 

stock ownership.”).

39

 
Twenty years later, in Beam v. Stewart,

128 the Delaware Supreme Court again 

addressed the effect of a controlling stockholder on a demand futility analysis, albeit 

outside the context of a self-dealing transaction. The Beam case involved a derivative 

claim for breach of fiduciary duty against the company’s (MSO’s) founder, chairman, 

and CEO (Martha Stewart) for allegedly jeopardizing MSO’s financial future by illegally 

selling stock in another public corporation (ImClone) and mishandling the media 

attention that followed. The plaintiffs alleged that three other directors were not 

independent from Stewart for demand futility purposes because of alleged social and 

business relationships, and the fact that Stewart owned 94% of MSO’s voting shares. 

Citing to Aronson, the Beam Court’s analysis began with the presumption that 

directors act independently and faithfully to their fiduciary duties.129 The Supreme Court 

concluded that the alleged social and business relationships did not raise a reasonable 

doubt as to the independence of the three directors. Then, citing to the part of Aronson

discussed above, the Beam Court firmly rejected the notion that Stewart’s majority voting 

control in MSO alone overcame the other directors’ presumed independence:

Beam attempts to bolster her allegations regarding the relationships 

between Stewart and Seligman and Moore by emphasizing Stewart’s 

overwhelming voting control of MSO. That attempt also fails to create a 

reasonable doubt of independence. A stockholder’s control of a 

corporation does not excuse presuit demand on the board without 

particularized allegations of relationships between the directors and the 

controlling stockholder demonstrating that the directors are beholden to the 

stockholder. As noted earlier, the relationships alleged by Beam do not 

128 845 A.2d 1040 (Del. 2004).

129 Id. at 1048 (citing Aronson, 473 A.2d at 812).

40

 
lead to the inference that the directors were beholden to Stewart and, thus, 

unable independently to consider demand. Coupling those relationships 

with Stewart’s overwhelming voting control of MSO does not close that 

gap.130

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

Delaware law focuses exclusively on whether there is a reasonable doubt that the 

directors could impartially respond to a demand. The fact that Rales, rather than 

Aronson, governs here is of no moment, because—regardless of the applicable test—the 

demand futility analysis focuses on whether there is a reason to doubt the impartially of 

the directors, who hold the authority under 8 Del. C. § 141(a) to decide “whether to

initiate, or refrain from entering, litigation.”131 Under these authorities, neither the 

presence of a controlling stockholder nor allegations of self-dealing by a controlling 

stockholder changes the director-based focus of the demand futility inquiry. 

For the reasons explained above, the fact that Travelport arguably held a 

controlling interest in Orbitz when it entered into the New Agreement does not affect the 

demand futility analysis for Counts I-IV. Stated differently, the potential that the entire 

fairness standard may govern Plaintiff’s breach of fiduciary duty claim against Travelport 

130 Id. at 1054 (citing Aronson, 473 A.2d at 815).

131 Zapata, 430 A.2d at 782. Indeed, in Guttman, then-Vice Chancellor Strine explained 

that, although the “Rales test looks somewhat different from Aronson, in that [it] involves 

a singular inquiry[,] . . . that singular inquiry makes germane all of the concerns relevant 

to both the first and second prongs of Aronson.” Guttman, 823 A.2d at 501; see also 

David B. Shaev Profit Sharing Account v. Armstrong, 2006 WL 391931, at *4 (Del. Ch. 

Feb. 13, 2006) (“[T]he Rales test, in reality, folds the two-pronged Aronson test into one 

broader examination.”), aff’d, 911 A.2d 802 (Del. 2006) (TABLE). Given this reality, our 

jurisprudence would benefit in my view from the adoption of a singular test to address 

the question of demand futility. 

41

 
as an alleged controlling stockholder (Count I) does not remove that claim, or any of the 

other derivative claims (Counts II-IV), from the purview of the Demand Board to decide

for themselves under 8 Del. C. § 141(a) whether to exercise the Company’s right to bring 

such a claim. The focus instead, as explained in Aronson and repeated in Beam, is on 

whether Plaintiff’s allegations raise a reasonable doubt as to the impartially of a majority 

of the Demand Board to have considered such a demand. For the reasons set forth above,

Plaintiff has not done so in my view for any of Counts I-IV.

* * *

In sum, after accepting as true Plaintiff’s particularized allegations of fact and 

drawing all reasonable inferences from those allegations in Plaintiff’s favor, I conclude 

that Plaintiff has failed to raise a reasonable doubt under Rales as to the ability of a 

majority of the Demand Board to have impartially considered a demand as to all of 

Counts I-IV.132

132 Even if I were to analyze Plaintiff’s claims under the two prongs of the Aronson test 

(i.e., if the New Agreement had been approved by the entire Agreement Board), my 

conclusions would be no different. To plead demand futility under Aronson, Plaintiff 

must allege particularized facts that raise a reasonable doubt that “(1) the directors are 

disinterested and independent [or] (2) the challenged transaction was otherwise the 

product of a valid exercise of business judgment.” Aronson, 473 A.2d at 814. For the 

reasons explained above, Plaintiff failed to satisfy the first prong of Aronson because it 

failed to raise a reasonable doubt as to the independence or disinterestedness of a 

majority of Orbitz’s directors when this action was filed (Britton, Esterow, Forbes, 

Gerstner and Leslie) and Plaintiff failed to satisfy the second prong because it failed to 

raise a reasonable doubt that the New Agreement was approved in bad faith. 

42

 
B. Count V Fails to State a Claim for Relief

In Count V of the Complaint, Plaintiff asserts that the members of the Current 

Board breached their fiduciary duties by determining that Brand, Esterow, and Friedman 

were “independent” under the NYSE Rules.133 Plaintiff contends that this claim is both 

direct and derivative. As to the former, Plaintiff submits it has alleged direct injury from 

material misstatements in the Company’s 2014 proxy statement, “which solicited 

stockholder votes in connection with the election of directors,” because that proxy 

“falsely claimed that three incumbent directors—Brand, Esterow, and Friedman—were 

independent when, in reality, they were not.”134 As to the latter, Plaintiff argues that it 

has alleged derivative injury from violations of the NYSE Rules, under the theory that 

“directors act in bad faith, and breach their fiduciary duty of loyalty, when they violate 

regulations applicable to their company.”135 I need not resolve whether Plaintiff’s claim 

133 Compl. ¶ 157. Count V also alleges that the members of the Current Board breached

their fiduciary duties by failing to replace the director vacancy created by Studenmund’s 

resignation from the board and by failing to comply with the Company’s Guidelines in 

certain respects. Id. Plaintiff did not advance any argument in its brief concerning either 

of these issues; thus, those aspects of Count V are waived. See Emerald P’rs v. Berlin, 

726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”). There is no 

affirmative duty under Delaware law, moreover, for a board to fill a director vacancy.

See In re Aquila Inc. S’holders Litig., 805 A.2d 184, 191 (Del. Ch. 2002) (holding that 

directors “had no identifiable duty to appoint anyone to the board of directors” even 

though the company failed to “form an audit committee comprised of at least two 

independent directors within three months of listing” as required by the NYSE Rules). 

134 Pl.’s Ans. Br. 61.

135 Id. 63.

43

 
is direct or derivative (or both) because the claim must be dismissed under Court of 

Chancery Rule 12(b)(6) for failure to state a claim for relief.136

Significantly, Plaintiff does not assert that the 2014 proxy statement failed to 

accurately disclose all material facts relevant to assessing the independence of any of 

Orbitz’s directors under Delaware law,137 such as facts concerning the nature of their 

relationships, if any, with Travelport or Blackstone. Thus, Plaintiff’s challenge to the 

propriety of an independence determination under the NYSE Rules does not undermine 

the sufficiency of the disclosures in the 2014 proxy statement. For this reason, the 

authorities on which Plaintiff relies, which involved allegations that directors omitted or 

misstated material information when soliciting stockholder action, are plainly 

distinguishable.

138 

136 Defendants’ motion to dismiss Count V under Court of Chancery Rule 12(b)(6) must 

be denied unless, accepting as true all well-pled allegations of the Complaint and drawing 

all reasonable inferences from those allegations in Plaintiff’s favor, there is no 

“reasonably conceivable set of circumstances susceptible of proof” in which Plaintiff 

could recover. See Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs. LLC, 27 

A.3d 531, 536 (Del. 2011).

137 See, e.g., Stroud v. Grace, 606 A.2d 75, 85 (Del. 1992) (“Delaware law imposes upon 

a board of directors the fiduciary duty to disclose fully and fairly all material facts within 

its control that would have a significant effect upon a stockholder vote.”).

138 See In re Ebix, Inc. S’holder Litig., 2014 WL 3696655, at *16 (Del. Ch. July 24, 2014)

(denying the defendants’ motion to dismiss a claim that stockholder approval of an 

incentive compensation plan, which was required under the NYSE Rules, was invalid due 

to material misstatements about the CEO’s bonus agreement in the relevant proxy 

statement); Millenco L.P. v. meVC Draper Fisher Jurvetson Fund I, Inc., 824 A.2d 11, 18 

(Del. Ch. 2002) (granting summary judgment to plaintiff because the proxy statements 

for two annual meetings omitted material information about an extraneous relationship 

between two directors, one deemed “interested,” and the other deemed “independent,” 

under the Investment Company Act of 1940).

44

 
The actual harm alleged in Count V is that the Orbitz board improperly 

determined that Brand, Esterow, and Friedman were “independent” under NYSE Rule 

303A.02 such that, because Baiera and Harford were determined to not be “independent,” 

the Orbitz board does not have a majority of “independent” directors as required by 

NYSE Rule 303A.01. In essence, Plaintiff challenges the substance of the board’s 

determination of independence for Brand, Esterow, and Friedman under the NYSE Rules. 

Thus, if this case were to proceed, Plaintiff would need to establish that the Current 

Board violated the NYSE Rules. 

“The NYSE is registered with the Securities and Exchange Commission . . . as a 

national securities exchange pursuant to [S]ection 6 of the Exchange Act. As a registered 

exchange, the NYSE is deemed by the Exchange Act a self-regulatory organization.”139 

In effect, this means that the NYSE is responsible for maintaining the compliance of 

listed companies with the NYSE Rules. For example, under NYSE Rule 303A.13, the 

NYSE may issue a public reprimand letter to a listed company that violates NYSE Rule 

303A.01. Here, Plaintiff has not alleged that the NYSE has, by public reprimand letter or 

otherwise, informed Orbitz that it is in violation of the NYSE Rules. In other words, the 

Complaint fails to allege any indication from the NYSE that Orbitz has done anything 

wrong under the NYSE Rules. Nor has Plaintiff alleged a contract-based claim with 

respect to the board’s independence determinations, such as a violation of the Orbitz 

139 In re NYSE Specialists Sec. Litig., 503 F.3d 89, 91 (2d Cir. 2007) (citing 15 U.S.C. §§ 

78f, 76c(a)(26)).

45

 
Charter or the Company’s bylaws.140 Thus, to prove its breach of fiduciary duty claim, 

Plaintiff would be prosecuting the functional equivalent of a claim to enforce the NYSE 

Rules. In my view, Plaintiff has no standing to do so.

Plaintiff cites no authority from Delaware or any other jurisdiction that supports 

the proposition that a violation of the NYSE Rules in the circumstances alleged here 

could sustain a claim for breach of fiduciary duty. In the only case Defendants have 

identified in which this Court considered a related issue, In re Aquila Inc. Shareholders 

Litigation,

141 the plaintiffs conceded they had “no standing directly to bring an action to 

enforce the NYSE rules or to seek sanctions for any alleged violation thereof.”142 

Defendants also point to federal case law, which has observed that “courts in [the Third 

Circuit] have ‘unanimously refused to recognize any private right of action for violation 

of a stock exchange rule.’ ”143 I find this federal authority to be persuasive, and I

140 See DiRienzo v. Lichtenstein, 2013 WL 5503034, at *23 n.97 (Del. Ch. Sept. 30, 

2013) (noting that, where a limited partnership agreement incorporated the definition of 

“independent” under the NYSE Rules, and where that agreement required the general 

partner’s board to have a majority of independent directors, the failure to satisfy this 

charter obligation would be a breach of contract).

141 805 A.2d 184 (Del. Ch. 2002).

142 Id. at 192 n.11 (addressing a contract-based claim for the board’s failure to appoint 

two directors who would qualify as “independent” under the NYSE Rules where the 

corporation’s charter required the majority stockholder’s right to nominate a majority of 

directors under the charter to be exercised “in a manner to ensure compliance by the 

Corporation with . . . the requirements of any securities exchange to which the 

Corporation is then subject”).

143 Mill Bridge V, Inc. v. Benton, 2009 WL 4639641, *11 (E.D. Pa. Dec. 3, 2009) 

(quoting In re Farmers Gp. Stock Options Litig., 1989 WL 73245, at *3 (E.D. Pa. July 5, 

1989)); see also Witt v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 602 F. Supp. 867, 

46

 
likewise conclude that Plaintiff has no standing to prosecute a violation of the NYSE 

Rules. 

It is true that, under Delaware law, “one cannot act loyally as a corporate director 

by causing the corporation to violate the positive laws it is obliged to obey.”144 But, as 

noted above, the Complaint does not allege that the NYSE, as a self-regulatory 

organization, has indicated that Orbitz violated the NYSE Rules and Plaintiff has no 

standing to assert or prove that Orbitz violated the NYSE Rules. Thus, I conclude that it 

is not reasonably conceivable that Plaintiff could establish that the Current Board caused 

the Company to violate the NYSE Rules. A fortiori, I conclude that Count V fails to 

allege a reasonably conceivable claim for breach of fiduciary duty by the Current Board 

with respect to the NYSE Rules. 

IV. CONCLUSION

For the foregoing reasons, the Orbitz Defendants’ motion to dismiss Count II of 

the Complaint under Rule 23.1 is GRANTED, and their motion to dismiss Count V of the 

Complaint under Rule 12(b)(6) is GRANTED. The Travelport and Blackstone 

Defendants’ motion to dismiss Counts I, III, and IV of the Complaint under Rule 23.1 

also is GRANTED.

IT IS SO ORDERED.

869 (W.D. Pa. 1985) (“[T]here is no private right of action against defendants, either 

express or implied, under the New York Stock Exchange . . . Rules [for alleged violations 

of NYSE Rules 405 and 435].”).

144 Guttman, 823 A.2d at 506 n.34.

47