IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE WEWORK LITIGATION

)

)

)

)

Consolidated

C.A. No. 2020-0258-AGB

MEMORANDUM OPINION

Date Submitted: December 14, 2020

Date Decided: December 14, 2020

William M. Lafferty, Kevin M. Coen, Sabrina M. Hendershot, and Sara Toscano,

MORRIS NICHOLS ARSHT & TUNNELL LLP, Wilmington, Delaware; Eric 

Seiler, Philippe Adler, and Mala Ahuja Harker, FRIEDMAN KAPLAN SEILER & 

ADELMAN LLP, New York, New York; William Christopher Carmody, Shawn J. 

Rabin, and Arun Subramanian, SUSMAN GODFREY L.L.P., New York, New 

York; Attorneys for Plaintiffs Adam Neumann and We Holdings LLC. 

William B. Chandler, III, Brad D. Sorrels, Lori W. Will, Lindsay Kwoka 

Faccenda, Leah E. Brenner, and Jeremy W. Gagas, WILSON SONSINI 

GOODRICH & ROSATI, P.C., Wilmington, Delaware; David J. Berger, Steven 

M. Guggenheim, and Dylan G. Savage, WILSON SONSINI GOODRICH & 

ROSATI, P.C., Palo Alto, California; Michael S. Sommer, WILSON SONSINI 

GOODRICH & ROSATI, P.C., New York, New York; Attorneys for the Special 

Committee of the Board of Directors of The We Company.

Robert S. Saunders, Sarah R. Martin, and Arthur R. Bookout, SKADDEN, ARPS, 

SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware; George A. 

Zimmerman, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, New York, 

New York; Attorneys for The We Company.

Elena C. Norman, Rolin P. Bissell, and Nicholas J. Rohrer, YOUNG CONAWAY 

STARGATT & TAYLOR, LLP, Wilmington, Delaware; Erik J. Olson, 

MORRISON & FOERSTER LLP, Palo Alto, California; James Bennett and Jordan 

Eth, MORRISON & FOERSTER LLP, San Francisco, California; Attorneys for 

Defendant SoftBank Group Corp.
Michael A. Barlow and E. Wade Houston, ABRAMS & BAYLISS LLP, 

Wilmington, Delaware; John B. Quinn and Molly Stephens, QUINN EMANUEL 

URQUHART & SULLIVAN, LLP, Los Angeles, California; Attorneys for 

Defendant SoftBank Vision Fund (AIV M1) L.P.

BOUCHARD, Chancellor
1

This decision resolves the motions of SoftBank Group Corp. and SoftBank 

Vision Fund (AIV M1) L.P. to dismiss the complaint of The We Company that 

was filed at the direction of a special committee of its board of directors (the 

“Special Committee”) on April 7, 2020.

1

 For the reasons explained below, the 

motions brought under Rule 12(b)(1) for lack of standing will be denied and the 

motions brought under Rule 12(b)(6) for failure to state a claim for relief will be 

granted in part and denied in part. More specifically, as to the Rule 12(b)(6) 

element of the motions, the claim for breach of contract survives in its entirety but 

the claim for breach of fiduciary duty will be dismissed in its entirety.

I. BACKGROUND

Unless otherwise noted, the facts recited in this opinion come from the 

Verified Complaint (the “Complaint”) and documents incorporated therein. Any 

additional facts are subject to judicial notice.

A. The Parties

Plaintiff The We Company (“WeWork” or the “Company”) is a Delaware 

corporation headquartered in New York City that provides space solutions and 

 

1 As explained below in Part II, these motions were argued on July 21, 2020, but held in 

abeyance pending the court’s adjudication of a separate motion to dismiss the Complaint 

that the Company filed under Court of Chancery Rule 41(a) at the direction of a new 

committee of the board of directors formed on May 29, 2020. The court’s decision on the 

Rule 41(a) motion is being issued simultaneously with this opinion, thus the reason for 

the submission date of this opinion. 
2

related products and services.2 WeWork was co-founded by Adam Neumann, who 

served as its CEO until September 24, 2019.3 We Holdings LLC is a Delaware 

limited liability company of which Adam Neumann is a managing member. For 

simplicity, this decision refers to Adam Neumann and We Holdings together as 

“Neumann” and, when referring to Adam Neumann individually, as Mr. Neumann. 

Defendant SoftBank Group Corp. (“SBG”) is a publicly-traded, 

multinational conglomerate holding corporation incorporated under the laws of 

Japan and headquartered in Tokyo, Japan.4 SBG is led by Masayoshi Son, its 

Chairman and CEO.5 SBG has been heavily invested in WeWork since 2017, 

when it made an initial investment of $3 billion in the Company.6

Defendant Vision Fund (AIV M1) L.P. (“Vision Fund”), a Delaware limited 

partnership, is a $100 billion venture capital fund that was formed in 2017 

following a conversation between Son and Saudi Crown Prince Mohammed bin 

Salman.

7

 Vision Fund is an affiliate of SBG and is led by Son, who controls

 

2 Verified Compl. (“Compl.”) ¶ 23 (Dkt. 1). 

3

Id. ¶¶ 1, 37. 

4

Id. ¶ 25. 

5

Id.

6

Id. ¶ 30. 

7

Id. ¶ 26. 
3

Vision Fund’s day-to-day operations along with other SBG executives.

8

 Vision 

Fund is primarily financed through investments from SBG, SBG executives, and 

Middle Eastern sovereign wealth funds.9 The Complaint at times refers to SBG 

and Vision Fund together as “SoftBank.” 

B. The MTA and the Stockholders’ Agreement

In early October 2019, with the Company facing a liquidity crisis, the 

WeWork board of directors (the “Board”) began to explore strategic options to 

avoid running out of cash.10 On October 12, 2019, the Board formed a special 

committee consisting of directors Bruce Dunlevie and Lewis Frankfort (the 

“Special Committee”) to evaluate the options available to the Company, in 

particular debt financing arrangements that were underway with J.P. Morgan 

Chase & Co. (“J.P. Morgan”) and a proposal from SBG.11 

At the time SBG made its proposal to the Board, SBG and Vision Fund

owned 27.1% of WeWork’s equity on a fully-diluted basis and had designated two 

members to the Board.

12

 In appointing Dunlevie and Frankfort to the Special 

Committee, the Board determined that they were “free of any material conflict of 

 

8

Id.

9

Id.

10 Id. ¶ 36.

11 Id. ¶¶ 38, 39. 

12 Id. ¶ 35. 
4

interest” relating to a potential transaction involving SBG, Vision Fund, or 

Neumann.13

On October 22, 2019, the Company, SBG, Vision Fund, Mr. Neumann, and 

We Holdings LLC entered into a Master Transaction Agreement (the “MTA”).14 

The MTA obligated SBG, subject to certain terms and conditions, to undertake 

three significant transactions: (i) provide the Company with $1.5 billion of equity 

financing (the “Equity Financing”);

15 (ii) purchase up to $3 billion of the 

Company’s stock from Neumann and other stockholders of the Company in a 

tender offer at a per share price no less than $19.19 (the “Tender Offer”);

16 and (iii) 

provide the Company with up to $5.05 billion of debt financing (the “Debt 

Financing”).

17

The Tender Offer was subject to multiple closing conditions.18 One such 

condition was the completion of a “roll up” of two of WeWork’s joint ventures in 

Asia, known as PacificCo and ChinaCo (together, the “JV Roll-Ups”).19 After the 

 

13 Id. ¶ 24. 

14 Id. ¶ 43; see Compl. Ex. A (“MTA”).

15 MTA § 2.01.

16 Id. § 3.01(a).

17 Id. §§ 4.01(a)-(b). 

18 See id. § 3.01(a).

19 Compl. ¶¶ 51, 53. 
5

filing of this action, the condition concerning the “PacificCo Roll-Up” was 

satisfied.20

The “ChinaCo Roll-Up” involved a subsidiary of WeWork acquiring from 

Vision Fund shares in ChinaCo, a company WeWork used to conduct operations in 

China.21 In exchange for these shares of ChinaCo, Vision Fund would receive 

WeWork shares.22 The ChinaCo Roll-Up provided that “other equityholders” of 

ChinaCo “may participate in the JV Roll-Up.”23 To complete the ChinaCo RollUp, these minority investors had to either participate in the transaction or waive 

their first refusal and co-sale rights.24

The MTA contains provisions requiring the parties to use reasonable best 

efforts to complete the ChinaCo Roll-Up and satisfy other closing conditions. 

Section 8.03(a) of the MTA provides that SBG, Vision Fund, Neumann, and 

WeWork “shall . . . use their respective reasonable best efforts . . . to consummate 

and make effective as reasonably promptly as reasonably practicable after the date 

hereof . . . the Transactions.”25 The term “Transactions” includes the JV Roll-Ups

 

20 See Mot. for Expedited Proceedings Hr’g Tr. at 12 (Apr. 17, 2020) (Dkt. 66); Mot. to 

Dismiss Hr’g Tr. at 61 (July 21, 2020) (Dkt. 242). 

21 MTA Ex. O (ChinaCo Share Purchase Agreement Term Sheet), at 1; Compl. ¶¶ 53, 71.

22 MTA Ex. O, at 1; Compl. ¶¶ 53, 71.

23 MTA Ex. O, at 1.

24 Id. at 2; see Compl. ¶ 53. 

25 MTA § 8.03(a).
6

and the Tender Offer.

26

 Section 8.12 of the MTA requires SBG, Vision Fund, and 

WeWork to use their “reasonable best efforts . . . to negotiate and finalize the final 

forms of definitive JV Roll-Up Documents” no later than ten days after the funding 

of the Equity Financing.27 The term “JV Roll-Up Documents” includes a purchase 

agreement for the ChinaCo Roll-Up.

28

The MTA also required the parties to enter into a stockholders’ agreement 

(the “Stockholders’ Agreement”).29 The Stockholders’ Agreement gave SBG and 

Vision Fund the right to designate five of the Company’s ten directors, one of 

whom would be executive chairman of the Board.30 Neumann also executed a 

proxy, pursuant to the Stockholder’s Agreement, giving voting control over his 

super-voting founder shares to the Board, which constitute 14.1% of the 

Company’s equity on a fully-diluted basis.31 As a result of the MTA, SBG and 

Vision Fund owned approximately 43.4% and 8.9%, respectively, of WeWork’s 

stock on a fully-diluted basis as of March 18, 2020.32

 

26 Id. § 1.01. 

27 Id. § 8.12; see Compl. ¶ 54.

28 MTA § 11.15.

29 See MTA Ex. I (“Stockholders’ Agreement”). 

30 Compl. ¶ 44; Stockholders’ Agreement §§ 2.01(b)(ii), 2.01(b)(v).

31 Compl. ¶¶ 44, 60; Stockholders’ Agreement § 5.08.

32 Id.
7

C. The Tender Offer, Trustbridge, and Amendment No. 1 

In November 2019, SBG commenced the Tender Offer pursuant to an Offer 

to Purchase.

33

 By this time, Son allegedly regretted his decision to invest in the 

Company.34

Also in November 2019, SoftBank began pursuing a transaction concerning 

ChinaCo, the terms and conditions of which allegedly were inconsistent with the 

prescribed ChinaCo purchase agreement.

35

 Specifically, SoftBank pursued a 

transaction with Trustbridge Partners (“Trustbridge”) which contemplated that 

Trustbridge, instead of WeWork, would acquire 51% of ChinaCo and assume 

operational control of ChinaCo.36

On or about December 26, 2019, Son and other SoftBank executives met in 

person with representatives of Trustbridge to pursue a proposed transaction with 

Trustbridge.37 At this meeting, Son and other representatives of SoftBank gave 

Trustbridge reason to believe it would be against their interests to waive their 

ChinaCo first refusal and co-sale rights.

38

 SoftBank also had discussions with 

 

33 Id. ¶ 4.

34 Id. ¶ 7.

35 Id. ¶ 66. 

36 Id.

37 Id.

38 Id. ¶ 67. 
8

other ChinaCo minority investors to pressure them not to waive those rights, 

although the time frame of this discussions is not clear.39 As recently as March 4, 

2020, “following instruction from SoftBank,” Trustbridge wrote to the Company 

on behalf of various ChinaCo minority stockholders indicating that they would not 

waive their first refusal or co-sale rights.40

On December 27, 2019, the Company, Vision Fund, and SBG signed an 

amendment to the MTA (“Amendment No. 1”).41 Amendment No. 1 altered the 

sequencing of the transactions in the MTA by permitting the Debt Financing to 

occur either before or after the closing of the Tender Offer.42 Amendment No. 1 

also included an acknowledgement concerning the use of “reasonable best efforts” 

with respect to the JV Roll-Ups.43 Specifically, Section 5(b) of Amendment No. 1 

states, as follows:

 

39 See id.

40 Id. ¶ 69.

41 See Compl. Ex. B (“Amendment No. 1”). 

42 Id. § 3. 

43 Id. § 5(b). 
9

Each Party hereby acknowledges that the Company, SBG and [Vision 

Fund] caused their respective Affiliates to use reasonable best efforts 

to negotiate and finalize the final forms of definitive JV Roll-Up 

Documents, however, the JV Roll-Up Documents were not finalized 

within ten (10) days of the 1.5 Agreement Funding. The Company, 

SBG and [Vision Fund] will continue to cause their respective 

Affiliates to use reasonable best efforts in accordance with this 

Section 5.

44

D. Termination of the Tender Offer

In February 2020, Vision Fund informed the Special Committee that, “at the 

closing of the Tender Offer, it expected to receive the same ownership in the 

Company it was promised in the MTA, including as a result of the ChinaCo share 

exchange,” and “that it was not interested in any other transaction.”

45

 After 

receiving this communication, in an effort to consummate the Tender Offer, the 

Special Committee proposed an amendment to the MTA that, among other things, 

would have allowed Vision Fund to retain its equity interest in ChinaCo while also 

receiving the same number of newly-issued shares of Series H preferred stock that 

Vision Fund would have received under the MTA upon completion of the ChinaCo 

Roll-Up, equivalent to about 8% of WeWork’s stock.46 Although Vision Fund 

 

44 Id. 

45 Compl. ¶ 71.

46 Id. ¶ 72.
10

indicated it “found this proposal acceptable,” the proposal ultimately was 

rejected.47

On March 17, 2020, in an amendment to the Offer to Purchase, SBG listed 

four conditions to the Tender Offer, including the ChinaCo Roll-Up, it claimed had 

not been satisfied and stated it would not be obligated to pay for any tendered 

shares if these conditions were not satisfied by April 1, 2020.

48

 On April 1, 2020, 

SBG terminated the Tender Offer, asserting that certain closing conditions, 

including the ChinaCo Roll-Up, had not been satisfied.49 

II. PROCEDURAL HISTORY 

On April 7, 2020, the Company, acting under the direction of the Special 

Committee, filed this action against SBG and Vision Fund. This action is 

sometimes referred to as the “MTA Litigation.” The Complaint asserts two claims. 

Count I asserts that SBG and Vision Fund breached Sections 8.03 and 8.12 of the 

MTA by failing “to use reasonable best efforts to consummate the transactions 

contemplated by the MTA.”50 Count II asserts that SBG and Vision Fund breached 

 

47 Id. ¶¶ 72-73.

48 Id. ¶¶ 74-75; Compl. Ex. D (Amendment to Offer to Purchase Equity Securities of The 

We Company). 

49 Compl. ¶ 77; Compl. Ex. C (Notice Regarding Termination and Withdrawal of Offer to 

Purchase Equity Securities of The We Company). 

50 Compl. ¶ 92. 
11

fiduciary duties they owe to the Company and its minority stockholders as “the 

Company’s controlling stockholder.”51 

On April 17, 2020 SBG and Vision Fund moved to dismiss the Complaint 

pursuant to Court of Chancery Rules 12(b)(1) and 12(b)(6).52 After briefing, this 

motion was argued on July 21, 2020. 

In the meantime, on May 4, 2020, Neumann filed a complaint against SBG 

and Vision Fund in a separate action (the “Neumann Complaint”).

53

 On May 28, 

2020, the court entered an order consolidating the two actions for discovery and 

trial while maintaining separate pleadings for the different plaintiffs.

54

 As 

amended, the Neumann Complaint asserts claims for breach of contract and breach 

of fiduciary duties similar to those asserted in the Complaint that was filed at the 

direction of the Special Committee.

55

 

On May 29, 2020, the Company’s board of directors, by a 6-2 vote, 

appointed two new directors to the board for two-month terms and appointed those 

directors to a committee (the “New Committee”) to determine “whether the Special 

Committee has or should have . . . the authority to cause the Company to 

 

51 Id. ¶¶ 100-02. 

52 See Dkts. 30, 31. 

53 See C.A. No. 2020-0329-AGB. 

54 See Dkt. 109 ¶¶ 1, 4.

55 See generally Verified Am. Compl. ¶¶ 70-90 (Dkt. 131). 
12

commence and/or continue the MTA Litigation.”56 On July 30, 2020, the 

Company, acting at the direction of the New Committee, filed a motion for leave to 

dismiss the Complaint under Court of Chancery Rule 41(a).57 This motion is 

referred to as the “Rule 41(a) motion.”

The Rule 41(a) motion was argued on October 16, 2020. SBG and Vision 

Fund’s motions to dismiss the Complaint were held in abeyance until the court’s 

adjudication of the Rule 41(a) motion. The court’s opinion deciding the Rule 41(a) 

motion is being issued simultaneously with this opinion. 

On October 30, 2020, the court granted SBG’s partial motion to dismiss the 

fiduciary duty claim in the Neumann Complaint and granted in part and denied in 

part Vision Fund’s motion to dismiss the Neumann Complaint in its entirety. 

Specifically, the court found that the Neumann Complaint stated a claim for breach 

of the MTA against Vision Fund, but did not state a claim for breach of fiduciary 

duty against SBG and Vision Fund because that claim was duplicative of the 

breach of contract claim.58

 

56 Martin Decl. Ex. 14 (May 29, 2020 Board Minutes), Annex Res-2 (May 29, 2020 

Board Resolutions), at Skadden_ NewCommittee 0000016 (Dkt. 372). 

57 Dkt. 204.

58 See In re WeWork Litig., 2020 WL 6375438, at *1 (Del. Ch. Oct. 30, 2020). SBG did 

not seek to dismiss Neumann’s breach of contract claim against it. Id. at *6. 
13

III. ANALYSIS 

SBG and Vision Fund’s motions to dismiss raise three issues. The first issue 

is whether the Company has standing to assert claims under the MTA relating to 

the Tender Offer. The standards relevant to this issue, which is governed by Court 

of Chancery Rule 12(b)(1), are addressed in Part III.A.

The second issue is whether Count I of the Complaint for breach of the 

MTA states a claim for relief against Vision Fund. The third issue is whether 

Count II of the Complaint for breach of fiduciary duty states a claim for relief

against both SBG and Vision Fund. These issues are addressed in Parts III.B and 

III.C, respectively. The standards that apply to a motion under Court of Chancery 

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 

unless the plaintiff would not be entitled to recover under any 

reasonably conceivable set of circumstances susceptible of proof.59

A. Does the Company Have Standing?

SBG and Vision Fund move under Court of Chancery Rule 12(b)(1) to 

dismiss the Complaint in is entirely for lack of jurisdiction over the subject 

 

59 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. 2002) (internal quotation marks 

and citations omitted).
14

matter.60“Standing is a threshold jurisdictional requirement.”

61

 “Unlike the 

federal courts, where standing may be subject to stated constitutional limits, state 

courts apply the concept of standing as a matter of self-restraint to avoid the 

rendering of advisory opinions at the behest of parties who are mere 

intermeddlers.”62

Our Supreme Court has found that “[t]he requirements for Article III 

constitutional standing,” as the United States Supreme Court explained them in 

Lujan v. Defenders of Wildlife,

63

“are generally the same as the standards for 

determining standing to bring a case or controversy within the courts of 

Delaware.”

64

 “To establish standing, a plaintiff or petitioner must demonstrate 

first, that he or she sustained an ‘injury-in-fact’; and second, that the interests he or 

she seeks to be protected are within the zone of interests to be protected.”

65

 

“Injury-in-fact is not Mount Everest.”

66 “The contours of the injury-in-fact 

 

60 See SBG Opening Br. 14 (Dkt. 84); Vision Fund Opening Br. 1 (joining SBG’s 

standing arguments) (Dkt. 83). 

61 Hall v. Coupe, 2016 WL 3094406, at *3 (Del. Ch. May 25, 2016). 

62 Dover Hist. Soc’y v. City of Dover Plan. Comm’n, 838 A.2d 1103, 1111 (Del. 2003)

(internal quotation marks omitted).

63 504 U.S. 555 (1992).

64 Dover Hist. Soc’y, 838 A.2d at 1111.

65 Id. at 1110. 

66 Danvers Motor Co., Inc. v. Ford Motor Co., 432 F.3d 286, 294 (3d Cir. 2005) (Alito, 

J.).
15

requirement, while not precisely defined, are very generous,” requiring only that “a 

plaintiff has alleged some specific, identifiable trifle of injury.”67

The burden of establishing subject matter jurisdiction is on the plaintiff.68

“In deciding whether the plaintiff has met that burden, the Court need not accept 

the plaintiff’s factual allegations as true and is free to consider facts not alleged in 

the complaint.”

69

SBG and Vision Fund contend that the Company—acting in this case at the 

direction of the Special Committee70—does not have standing to sue for alleged 

breaches of the MTA because the Company “was not injured when the Tender 

Offer was terminated.”71 SBG contends that the Tender Offer “only benefits 

 

67 Bowman v. Wilson, 672 F.2d 1145, 1151 (3d Cir. 1982) (internal citations and 

quotation marks omitted).

68 Lewis v. AimCo Props., L.P., 2015 WL 557995, at *2 (Del. Ch. Feb. 10, 2015).

69 Shahin v. City of Dover, 2018 WL 4635730, at *3 (Del. Ch. Sept. 26, 2018) (citing 

Appriva S’holders Litig. Co. v. ev3, Inc., 937 A.2d 1275, 1284 n.14 (Del. 2007)). 

70 This decision does not consider whether the Special Committee had the authority to act 

for the Company to assert a claim for breach of the MTA against SBG and Vision Fund. 

The court addresses that issue in a separate opinion issued simultaneously with this 

opinion in response to the Rule 41(a) motion the Company filed at the direction of the 

New Committee. This decision confines itself to determining whether the Company 

itself has standing to assert a claim for breach of the MTA against SBG and Vision Fund. 

Because the court concludes that the breach of fiduciary duty claim in Count II of the 

Complaint fails to state a claim for relief for the reasons explained in Part III.C, it does 

not address the standing issue with respect to that claim.

71 SBG Reply. Br. 1 (Dkt. 165).
16

tendering stockholders,” not the Company,

72 and that tendering stockholders can

assert their own claims against SBG under the Offer to Purchase for its alleged 

failure to complete the Tender Offer.73

In response, the Company contends it has standing as a party to the MTA to 

sue for the alleged breaches of the MTA and “that the Company was the 

appropriate party to seek specific performance on behalf of itself and its 

stockholders.”

74

 More specifically, the Company contends it has standing to assert 

claims stemming from the Tender Offer as a “guardian of the minority 

stockholders with respect to the MTA” because “Delaware courts have long 

recognized that it is logical for companies to enforce the terms of agreements to 

which the company is a party and not rely on stockholders to do so.”

75

In its answering brief, the Company also contended that “the Company has 

suffered an injury” because SBG had failed to provide $1.1 billion of the Debt 

Financing required under the MTA, “which is contingent upon consummation of 

the Tender Offer.”76 This issue became moot on June 12, 2020, the same day the 

 

72 Id. at 9. 

73 Id. at 8 n.4, 16.

74 WeWork Answering Br. 33 (Dkt. 132). 

75 Id. at 34-35. 

76 Id. at 24, 39. 
17

Company filed its answering brief, when SBG “offered WeWork the [$1.1 billion] 

debt facility on the terms provided in the MTA.”

77

 

In connection with briefing on the Rule 41(a) motion, the Special Committee 

submitted a declaration from Robert M. Daines, the Priztker Professor of Law and 

Business and Associate Dean at Stanford Law School.78 Professor Daines opines 

that the Company and all of its stockholders would benefit from consummation of 

the Tender Offer by increasing SBG and Vision Fund’s combined equity 

ownership from approximately 52.3% to 77.9%.

79

 Using Professor Daines’ 

declaration for support, the Special Committee argues in its brief in opposition to 

the Rule 41(a) motion that this larger equity stake would increase SBG and Vision 

Fund’s “incentive to increase Company value” by reducing agency costs and the 

risk that they “would benefit [themselves] at the expense of WeWork and minority 

stockholders.”80

 

77 SBG Reply. Br. 1.

78 See Decl. of Robert M. Daines in Support of the Special Committee’s Opp’n to The 

We Company’s Mot. for Leave to Dismiss the Compl. Pursuant to Court of Chancery 

Rule 41(a) (“Daines Decl.”) ¶ 5 (Dkt. 388). 

79 Id. ¶ 21. 

80 The Special Committee’s Brief in Opp’n to The We Company’s Mot. for Leave to 

Dismiss the Compl. Pursuant to Court of Chancery Rule 41(a) at 3, 37-38 (Dkt. 385) 

(citing Daines Decl. ¶¶ 35-37). As noted previously, the court may consider facts not 

alleged in the complaint when deciding a motion for lack of subject matter jurisdiction. 

Shahin, 2018 WL 4635730, at *3.
18

In my opinion, the Company has standing to sue SBG and Vision Fund for 

alleged breaches of the MTA related to the Tender Offer for essentially three 

reasons. 

First, the Company is a party to the MTA. The MTA was “entered into by 

and among” the Company, SBG, Vision Fund, Mr. Neumann, and We Holdings 

LLC.

81

 The MTA expressly defines each of these entities and Mr. Neumann as the 

“Parties” to the MTA.82 

As our Supreme Court has stated: “It is a fundamental principle of contract 

law that the parties to a contract are bound by its terms, and have the 

corresponding right to enforce them.”83 Indeed, as numerous federal circuit courts 

have found, “[w]hen one party fails to honor its commitments, the other party to 

the contract suffers a legal injury sufficient to create standing even where that 

 

81 MTA at 1. 

82 Id. 

83 NAF Hldgs., LLC v. Li & Fund (Trading) Ltd., 118 A.3d 175, 180-81 (Del. 2015) 

(Strine, C.J.); see also 17B C.J.S. Contracts § 935 (2020) (“In the absence of a provision 

in a contract specifically stating that it will inure to the benefit of a third person, parties to 

a contract are presumed to have contracted for themselves, or their own benefit, and not 

for the benefit of third parties.”).
19

party seems not to have incurred monetary loss or other concrete harm.”

84 SBG 

and Vision Fund have cited no case where a court found that a party to a contract 

lacked standing to assert alleged breaches of that contract. 

The MTA enumerates SBG and Vision Fund’s obligations with respect to 

the Tender Offer, including their obligation under Sections 8.03 and 8.12 of the 

MTA to use their respective “reasonable best efforts” to satisfy various closing 

 

84 J.P. Morgan Chase Bank, N.A. v. McDonald, 760 F.3d 646, 651 (7th Cir. 2014)

(emphasis added) (citing Hydrite Chem. Co. v. Calumet Lubricants Co., 47 F.3d 887, 891 

(7th Cir.1995) and 3 E. Allan Farnsworth, Farnsworth on Contracts § 12.8, p. 189 

(2004)); see also Carlsen v. GameStop, Inc., 833 F.3d 903, 909 (8th Cir. 2016) (“Our 

court previously has held that a plaintiff who has produced facts indicating it was a party 

to a breached contract has a judicially cognizable interest for standing purposes, 

regardless of the merits of the breach alleged.” (internal quotation marks omitted)); Katz 

v. Pershing, LLC, 672 F.3d 64, 72 (1st Cir. 2012) (Stating that “[t]he invasion of a 

common-law right (including a right conferred by contract) can constitute an injury 

sufficient to create standing” and noting that “when a plaintiff generally alleges the 

existence of a contract, express or implied, and a concomitant breach of that contract, her 

pleading adequately shows an injury to her rights”); ABF Freight Sys., Inc. v. Int’l Bhd. of 

Teamsters, 645 F.3d 954, 960 (8th Cir. 2011) (“None of YRC’s cases denied standing to 

a plaintiff that produced facts indicating it was a party to a breached contract. Here, ABF 

signed an agreement with the Union, which purports to make it a signatory to the NMFA. 

. . . Whatever the merits of these points, ABF has produced sufficient facts, for standing 

purposes, indicating a judicially cognizable interest in the NMFA.”); Cent. States Se. & 

Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229, 

242-43 (2d Cir. 2007) (“We reject the Self–Funded Plans’ claim that Janazzo must 

establish specific financial harm before her Plan has standing, since it conflates a defense 

to the merits of the Plan’s claim against Medco with the requirement to make a threshold 

jurisdictional showing. In our view, the foregoing evidence supports the District Court’s 

determination that Janazzo’s Plan was involved in a contractual relationship with Medco 

so as to give her standing.”); Castle v. United States, 301 F.3d 1328, 1337 (Fed. Cir. 

2002) (“We conclude that only Castle and Harlan have standing to sue for breach of the 

alleged contract because only Castle and Harlan signed any document constituting the 

alleged contract.”). 
20

conditions. Other provisions of the MTA support WeWork’s standing as a party to 

the MTA to sue for breach of these “reasonable best efforts” provisions. Section 

11.06—titled “No Third-Party Beneficiaries”—provides, with certain exceptions 

not relevant here, that the MTA “is for the sole benefit of the Parties . . . and 

nothing herein, express or implied, shall give or be construed to give to any Person 

. . . any legal or equitable rights hereunder.”85 Section 11.10 further provides in 

relevant part that:

The Parties agree that in the event that any of the Transactions are not 

consummated in accordance with the terms of this Agreement or the 

other Transaction Agreements, . . . irreparable damage would occur, 

no adequate remedy at Law would exist and damages would be 

difficult to determine. Accordingly, the Parties acknowledge and 

agree that the Parties shall be entitled to an injunction, specific 

performance or other equitable relief to prevent breaches or threatened 

breaches of this Agreement and the other Transaction Agreements and 

to enforce specifically the terms and provisions of this Agreement and 

the other Transaction Agreements, in addition to any other remedy at 

Law or in equity.86

 

The plain language of these provisions reflect the shared intent of the Parties to the 

MTA that the Company would have the right to seek specific performance under 

the MTA to remedy a breach of SBG and Vision Fund’s obligations with respect to 

the “Transactions,” which expressly includes the Tender Offer.87

 

85 MTA § 11.06 (emphasis added).

86 Id. § 11.10 (emphasis added). 

87 Id. § 1.01.
21

Second, “injury-in-fact” is not limited “to those who could show economic 

harm.”88 It thus is of no moment that the Company will not receive the proceeds of 

the Tender Offer. The bargain struck in the MTA was that SBG, subject to 

specified conditions, would invest a total of approximately $9.5 billion in 

WeWork—not $6.5 billion—with $3 billion of the total amount attributable to the 

Tender Offer. The ability of the Company—as a Party to the MTA—to seek 

specific performance to enforce SBG and Vision Fund’s obligations to use their 

reasonable best efforts to consummate the Tender Offer is critical to ensure that the 

Company receives all the benefits in the MTA to which it is entitled, including the 

benefit of having SBG deeply committed to the success of WeWork in connection 

with the transfer of control of the Company from Neumann to SBG and Vision 

Fund.

To that end, the Special Committee submitted evidence in the form of an 

expert opinion that consummation of the Tender Offer not only would benefit 

minority stockholders who receive payment for some of their shares, but also 

would benefit the Company and all its stockholders by materially increasing SBG’s 

stake in WeWork, which would reduce agency costs and increase SBG’s incentive 

 

88 United States v. SCRAP, 412 U.S. 669, 686 (1973).
22

to enhance the value of the Company.

89

 The New Committee itself found that 

closing the Tender Offer could provide a benefit to the Company, albeit a 

“relatively small” benefit, in the form of improved employee morale and retention 

by providing employees who tendered shares into the Tender Offer liquidity at an 

attractive price.90

Third, given the disclaimer of third-party beneficiary rights in Section 11.06 

of the MTA, none of the stockholders who tendered shares into the Tender Offer 

(other than Mr. Neumann and his affiliated entity who are parties to the MTA)

would have standing to enforce the “reasonable best efforts” provisions of the 

MTA, including the right to seek the equitable remedy of specific performance for 

breach of those provisions based on the stipulation in Section 11.10 of the MTA. 

 

89 Daines Decl. ¶¶ 35-37; see also Lucian A. Bebchuck & Kobi Kastiel, The Perils of 

Small-Minority Controllers, 107 Geo. L.J. 1453, 1465 (2019) (“Conversely, whereas a 

majority owner cannot be replaced and would not be disciplined by the market for 

corporate control, her large equity stake in the controlled company provides powerful 

financial incentives to maximize company value.” (emphasis added)); In re EZCORP Inc. 

Consulting Agreement Deriv. Litig., 2016 WL 301245, at *2 (Del. Ch. Jan. 25, 2016) 

(“The basic insight is a simple one: by virtue of its control over the firm, the controller 

can direct how that firm deploys its capital. As an equity owner, the controller 

participates in the resulting benefits (and losses) in proportion to its equity stake, 

effectively gaining or losing on a pro rata basis with other stockholders. By contrast, in a 

related-party transaction, the controller receives 100% of the benefit while only funding 

the payment to the extent of its equity stake. The balance of the payment is funded by the 

unaffiliated equity holders. The economic incentive to tunnel varies inversely with the 

controller’s equity stake. All else equal, as the controller’s equity stake declines, the 

relative benefit from a direct payment increase.”) (emphasis added).

90 See Martin Decl. Ex. 15 (Report of the New Committee of the Board of Directors of 

The We Company), at 42-43. 
23

This outcome is untenable “[a]s equity will not suffer a wrong without a 

remedy.”

91

 

Noting that “[a] tender offer creates a contract with the tendering party,” 

SBG and Vision Fund argue that “[t]endering stockholders can sue to enforce that 

contract.”92 In advancing this argument, SBG and Vision Fund assert that 

“[w]hether or not tendering stockholders’ rights under the Offer to Purchase are 

identical to terms included in the MTA is irrelevant.”93 The court disagrees. 

SBG and Vision Fund have not cited any principle of law or equity—and the 

court is aware of none—to support the notion that a party to a contract can avoid 

accountability for its contractual obligations based on the availability of an 

alternative theory of liability, particularly one that appears less potent. Putting 

aside the complexity of determining ab initio all the issues that may arise in 

enforcing a claim under the express or implied terms of the Offer to Purchase and 

the differences between such a claim and a direct claim for breach of the MTA, it 

 

91 Fischer v. Fischer, 1999 WL 1032768, at *4 (Del. Ch. Nov. 4, 1999). 

92 SBG Opening Br. 20.

93 SBG Reply. Br. 8.
24

appears that such a claim would have at least two distinct disadvantages.94 One 

disadvantage is that, unlike under the MTA, a tendering stockholder could not sue 

Vision Fund for breach of a “reasonable best efforts” obligation under the Offer to 

Purchase because it was not an offeror in the Tender Offer.95 A second 

disadvantage of being constrained to the terms of the Offer to Purchase is that 

tendering stockholders would not be able to utilize SBG and Vision Fund’s 

stipulation in Section 11.10 of the MTA that the failure to consummate the Tender 

Offer in breach of the MTA would constitute irreparable harm and provide a 

putative entitlement to specific performance.96 

 

94 Further complicating the ability to make such an assessment, SBG has been coy about 

what rights a tendering stockholder would have for breach of the Offer to Purchase. The 

Offer to Purchase does not include the “reasonable best efforts” provisions set forth in the 

MTA. In briefing this motion, SBG did not expressly acknowledge that all tendering 

stockholders could assert a claim under the Offer to Purchase equivalent to a claim under 

the MTA for breach of its reasonable best efforts provisions but stated instead, rather 

elliptically, that “[i]f Neumann proves that SBG failed to use reasonable best efforts, 

tendering stockholders would necessarily benefit in any consolidated trial.” SBG Reply 

Br. 8 n.4. It was not until several months later, on October 13, 2020, that SBG expressly 

stated “its position that, under the [Offer to Purchase], SBG has an implied obligation to 

take reasonable best efforts equal to its obligations under the MTA’s express 

obligations.” Dkt. 398 at 2. 

95 See Gilbert v. El Paso Co., 490 A.2d 1050, 1054 (Del. Ch. 1984) (explaining that “[a] 

tender offer results in formation of a contract” between the offeror and offerree).

96 See MTA § 11.10.
25

For the reasons explained above, the court finds that the Company has met 

its burden of establishing standing. Accordingly, SBG and Vision Fund’s motion 

to dismiss the Complaint under Court of Chancery Rule 12(b)(1) will be denied.

B. The Breach of Contract Claim

Count I of the Complaint asserts that SBG and Vision Fund breached 

Sections 8.03 and 8.12 of the MTA by failing “to use reasonable best efforts to 

consummate the transactions contemplated by the MTA, including the Tender 

Offer and the roll-up of ChinaCo.”

97

 SBG did not move to dismiss Count I for 

failure to state a claim for relief, tacitly conceding the viability of the Company’s 

contract claim against it. 

To establish a claim for a breach of contract under Delaware law, “a plaintiff

must prove: (1) the existence of a valid and enforceable contract; (2) that the

defendants breached the contract; and (3) that the plaintiff was damaged as a result 

of those breaches.”98 Vision Fund only challenges the second element, arguing 

that its alleged breach of the “reasonable best efforts” clauses of the MTA are not 

reasonably conceivable.99

 

97 Compl. ¶ 92. 

98 Ivize of Milwaukee, LLC v. Compex Litig. Support, LLC, 2009 WL 1111179, at *8 

(Del. Ch. Apr. 27, 2009). 

99 See Vision Fund Opening Br. 12; Vision Fund Reply Br. 12 (Dkt. 166). 
26

Sections 8.03(a) and 8.12 of the MTA each required both SBG and Vision 

Fund to use reasonable best efforts to complete the ChinaCo Roll-Up and to satisfy 

other conditions to close the Tender Offer. Specifically, Section 8.03(a) of the 

MTA states, in relevant part:

The Company, SBG, [Vision Fund], [and Neumann] shall . . . use 

their respective reasonable best efforts to take, or cause to be taken, all 

actions, and to do, or cause to be done, and assist and cooperate with 

the other Parties in doing, all things necessary, proper or advisable . . . 

to consummate and make effective as reasonably promptly as 

reasonably practicable after the date hereof . . . the Transactions. . . .100

The MTA defines the term “Transactions” to include the Tender Offer.101

Similarly, Section 8.12 required the Company, SBG, and Vision Fund “to 

use reasonable best efforts to negotiate and finalize the final forms of definitive JV 

Roll-Up Documents by the [Equity Financing] Funding (and in any event no later 

than the tenth (10th) day following the date of the [Equity Financing] Funding).”102

Under Delaware law, reasonable best efforts clauses “impose obligations to 

take all reasonable steps to solve problems and consummate the transaction.”103 

“When evaluating whether a merger partner has used reasonable best efforts, this 

court has looked to whether the party subject to the clause (i) had reasonable 

 

100 MTA § 8.03(a). 

101 Id. § 1.01.

102 Id. § 8.12.

103 Williams Cos. v. Energy Transfer Equity, L.P., 159 A.3d 264, 272 (Del. 2017).
27

grounds to take the action it did and (ii) sought to address problems with its 

counterparty.”104

The Complaint alleges, among things, that “SoftBank”—which is defined to 

include SBG and Vision Fund—“pursue[d] an alternative financing transaction 

with Trustbridge” that was “inconsistent with the roll-up of ChinaCo required by 

the MTA”

105 and that SoftBank “had discussions with other ChinaCo minority 

investors to pressure them not to waive” their first refusal and co-sale rights.106 

Vision Fund contends that the Company’s breach of contract claim should 

be dismissed under Court of Chancery Rule 12(b)(6) for failure to state a claim for 

relief on the theory that the Complaint’s “allegations specific to Vision Fund 

establish that it affirmatively tried to facilitate the closing of the JV Roll-Up 

transactions, which was the only Tender Offer Condition that implicated Vision 

Fund.”107 As to the ChinaCo Roll-Up, which is the only JV Roll-Up at issue,108

Vision Fund relies on a single paragraph in the 104-paragraph Complaint. 

Specifically, Vision Fund points to paragraph 72 of the Complaint, which states

 

104 Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 4719347, at *91 (Del. Ch. Oct. 1, 2018), 

aff’d, 198 A.3d 724 (Del. 2018).

105 Compl. ¶ 66. 

106 Id. ¶ 67. 

107 Vision Fund Opening Br. 14. 

108 See supra Part I.B. 
28

that Vision Fund at one point found “acceptable” an amendment to the MTA that 

the Special Committee proposed to try to consummate the Tender Offer.109 The 

proposed amendment, which ultimately was rejected, would have allowed Vision 

Fund to retain its equity interests in ChinaCo while also receiving the shares of 

WeWork (about 8% percent of the Company’s stock) it would have received under 

the MTA upon completion of the ChinaCo share exchange.110

The fundamental problem with Vision Fund’s argument is that it asks the 

court to ignore “contradictory allegations” in the Complaint and to rely on a single 

allegation that Vision Fund views as “exculpatory” and that it believes “defeats” 

the other allegations.111 This is impermissible. The court may not resolve material 

factual disputes or weigh evidence on a motion dismiss.112

Accepting as true all the well-pleaded factual allegations of the Complaint 

and drawing all reasonable inferences in favor of the Company at this stage of the 

case, as the court must, the narrative of the Complaint is that “SoftBank” (i.e., SBG 

and Vision Fund) schemed to thwart the ChinaCo Roll-Up in breach of their 

 

109 See Vision Fund Opening Br. 8, 12, 14, 15, 23 (citing Compl. ¶ 72). 

110 Compl. ¶ 72.

111 See Vision Fund Reply Br. 9; Vision Fund Opening Br. 15. 

112 Malpiede v. Townson, 780 A.2d 1075, 1082 (Del. 2001) (“Because a motion to 

dismiss under Chancery Rule 12(b)(6) must be decided without the benefit of 

a factual record, the Court of Chancery may not resolve material factual disputes; instead, 

the court is required to assume as true the well-pleaded allegations in the complaint.”). 
29

reasonable best efforts obligations in order to avoid closing the Tender Offer.

113

 

The well-plead allegations to that effect include SoftBank’s pursuit of an 

alternative transaction with Trustbridge, the terms and conditions of which “were 

inconsistent with the roll-up of ChinaCo required by the MTA”; discussions that 

Son and other representatives of SoftBank had with Trustbridge and other ChinaCo 

minority investors to pressure them not to waive their first refusal and co-sale 

rights; and rejection of the Special Committee’s proposed amendment itself.114 

Vision Fund protests that the Complaint wrongfully “lump[s] together” 

Vision Fund and SBG by using the defined term “SoftBank” to refer to both 

entities and contends that this “failure . . . alone requires dismissal of the breach of 

contract claim against Vision Fund.”

115

 The court disagrees. Although group 

pleading is generally disfavored, the Complaint’s use of the term “SoftBank” to 

capture both SBG and Vision Fund was justified here given the close relationship 

between these entities plead in the Complaint. Specifically, the Complaint alleges 

that Vision Fund is an affiliate of SBG and that Son—who leads both SBG and 

Vision Fund—controls Vision Fund’s day-to-day operations along with other SBG 

 

113 See Compl. ¶¶ 63, 66-69, 94.

114 See id. ¶¶ 66-69, 73.

115 Vision Fund Opening Br. 13.
30

executives.

116 Given these close-knit relationships, it understandably would be 

difficult to discern whether Son and other SBG executives were wearing their SBG 

or Vision Fund “hat” or both “hats” at given points in time. On a motion to 

dismiss, the court cannot make such capacity determinations, which must await the 

development of a factual record after discovery.117 

In sum, as this court explained in denying Vision Fund’s motion to dismiss 

the contract claim asserted against it in the Neumann Complaint, “[d]etermining 

whether a party used reasonable best efforts is an inherently factual inquiry that is 

not readily amenable to resolution at the pleadings stage.”118 Here, just because 

Vision Fund is alleged to have been amenable at one point to amending the MTA 

to facilitate the Tender Offer does not rule out that it failed to use its reasonable 

efforts to complete the ChinaCo Roll-Up and to close the Tender Offer in other 

respects. To the contrary, based on the overall narrative alleged in the Complaint, 

it is reasonably conceivable that Vision Fund breached its reasonable best efforts 

 

116 Compl. ¶ 26. 

117 See Voigt v. Metcalf, 2020 WL 614999, at *28 (Del. Ch. Feb. 10, 2020) (declining at 

the pleadings stage to make the “capacity determination” that certain individuals were 

acting solely as representatives of an alleged controller rather than as directors of a 

controlled entity because that “would require drawing inferences in favor of the 

defendants, rather than the plaintiff.”).
31

obligations in Sections 8.03(a) and 8.12 of the MTA.119 Accordingly, Vision 

Fund’s motion to dismiss Count I of the Complaint is denied. 

C. The Fiduciary Duty Claim

Count II of the Complaint asserts that “SoftBank has repeatedly used its 

influence over the Company to limit the Company’s options and force it into 

favorable outcomes for SoftBank, to the detriment of the Company’s minority 

stockholders” in breach of its fiduciary duties as the “Company’s controlling 

 

118 In re WeWork Litig., 2020 WL 6375438, at *9 (Del. Ch. Oct. 30, 2020) (citing 

Cooper Tire & Rubber Co. v. Apollo (Mauritius) Hldgs. Pvt. Ltd., 2013 WL 5787958, at 

*6 (Del. Ch. Oct. 25, 2013), Crum & Crum Enters., Inc. v. NDC of Cal., LP, 2010 WL 

4668456, at *5 (D. Del. Nov. 3, 2010), and Brown v. Buschman Co., 2002 WL 389139, at 

*85 (D. Del. Mar. 12, 2002)).

119 Amendment No. 1 to the MTA “acknowledges that the Company, SBG and [Vision 

Fund] caused their respective Affiliates to use reasonable best efforts to negotiate and 

finalize the final forms of definitive JV Roll-Up Documents.” Amendment No. 1 § 5(b). 

Based on this provision, Vision Fund argues in its reply brief that the Company should be 

foreclosed from maintaining a contract claim against Vision Fund “based on the preDecember 27, 2019 discussions in which Mr. Son is alleged to have participated.” Vision 

Fund Reply Br. 6-7. The court disagrees. First, this argument was not made fairly in 

Vision Fund’s opening brief, which mentions the acknowledgement in Amendment No. 1 

once in a footnote that cannot fairly be read to be a ground for dismissal. See Vision 

Fund Opening Br. 15 n.4; Franklin Balance Sheet Inv. Fund v. Crowley, 2006 WL 

3095952, at *4 (Del. Ch. Oct. 19, 2006) (“Under the briefing rules, a party is obliged in 

its motion and opening brief to set forth all of the grounds, authorities and arguments 

supporting its motion. A movant should not hold matters in reserve for reply briefs.”)

(internal citation omitted); In re Asbestos Litig., 2007 WL 2410879, at *4 (Del. Super.

Aug. 27, 2007) (same). Second, the Complaint pleads that the discussions in question 

took place “on or about December 26, 2019,” thus discovery is necessary to determine 

the actual timing of these events. Compl. ¶ 66. Third, it is unclear who authorized 

Amendment No. 1 on behalf of the Company, whether the Company was fully-informed 

about the relevant discussions at that time, and whether an “acknowledgment” would 

have preclusive effect.
32

stockholder.”

120 Unlike the Neumann Complaint, which asserted that SBG and 

Vision Fund owed fiduciary duties only after entering into the MTA, the Company

asserts that SBG and Vision Fund owed fiduciary duties both before and after 

entering into the MTA. 

SBG and Vision Fund advance essentially three arguments for why Count II 

fails to state a claim for relief. First, they argue the allegations of the Complaint 

are insufficient to establish the existence of a “control group” between SBG and 

Vision Fund at any time.

121

 Second, with respect to the pre-MTA period, they 

contend they did not owe fiduciary duties to WeWork and its stockholders because 

“it is undisputed” that Neumann “controlled the Company” during this period.122 

Third, with respect to the post-MTA period, they assert that the breach of fiduciary 

duty claim in the Complaint simply duplicates the contract claim in the 

Complaint.

123

“[A] stockholder could be found a controller under Delaware law: where 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 

 

120 Compl. ¶¶ 100, 102.

121 See Vision Fund Reply Br. 22-26; SBG Reply Br. 26. 

122 Vision Fund Reply Br. 28; see also SBG Reply Br. 25-26. 

123 See Vision Fund Reply Br. 12-16; SBG Reply Br. 23, 29-31. 
33

control over the business affairs of the corporation.’”

124

 “The requisite degree of 

control can be shown to exist generally or with regard to the particular transaction 

that is being challenged.”125 There are many ways to demonstrate actual control 

over a particular decision:

It is impossible to identify or foresee all of the possible sources of 

influence that could contribute to a finding of actual control over a 

particular decision. Examples include, but are not limited, to: (i) 

relationships with particular directors that compromise their 

disinterestedness or independence, (ii) relationships with key 

managers or advisors who play a critical role in presenting options, 

providing information, and making recommendations, (iii) the 

exercise of contractual rights to channel the corporation into a 

particular outcome by blocking or restricting other paths, and (iv) the 

existence of commercial relationships that provide the defendant with 

leverage over the corporation, such as status as a key customer or 

supplier.126

Our law also “recognizes that multiple stockholders together can constitute a 

control group exercising majority or effective control, with each member subject to 

the fiduciary duties of a controller,”127 as follows:

 

124 Sheldon v. Pinto Tech. Ventures, L.P., 220 A.3d 245, 251 (Del. 2019) (quoting In re 

KKR Fin. Hldgs. LLC S'holder Litig., 101 A.3d 980, 991 (Del. Ch. 2014)) (alteration in 

original).

125 Carsanaro v. Bloodhound Techs., Inc., 65 A.3d 618, 659 (Del. Ch. 2013) (internal 

quotation marks omitted). 

126 Basho Techs. Holdco B, LLC v. Georgetown Basho Invs., LLC, 2018 WL 3326693, at 

*26 (Del. Ch. July 6, 2018) (internal citations omitted).

127 Sheldon, 220 A.3d at 251. 
34

To demonstrate that a group of stockholders exercises control

collectively, the Appellants must establish that they are connected in 

some legally significant way—such as by contract, common 

ownership, agreement, or other arrangement—to work together 

toward a shared goal. To show a legally significant connection, the 

Appellants must allege that there was more than a mere concurrence 

of self-interest among certain stockholders. Rather, there must be

some indication of an actual agreement, although it need not be formal 

or written.128

With the above principles in mind, the court considers the Complaint’s 

breach of fiduciary allegations with respect to the pre-MTA and post-MTA 

periods, in turn, next.

1. The Fiduciary Duty Claim Pre-MTA

The Company argues that SBG and Vision Fund together “exerted control 

over the Company prior to the execution of the MTA” through their “significant 

equity and debt positions and control over the Company’s financing, the many

financial relationships with Mr. Neumann and the Board, and its ability to direct 

the actions of the Company.”

129

 SBG and Vision Fund counter that the fiduciary 

duty claim must be dismissed for the pre-MTA period because they were not 

controlling stockholders and thus did not owe fiduciary duties to WeWork during 

this period.

130

 

 

128 Id. at 251-52 (internal quotation marks and citations omitted). 

129 WeWork Answering Br. 49-50. 

130 See Vision Fund Reply Br. 28-30; SBG Reply Br. 25-26.
35

As an initial matter, the Company’s contention that SBG and Vision Fund 

exerted control over WeWork pre-MTA is inconsistent with documents quoted in 

and submitted with its brief, namely minutes of an October 12, 2019 Board 

meeting and resolutions the Board approved that day to create the Special 

Committee, which negotiated the terms of the MTA.

131

 The Board minutes

acknowledge “the status of Mr. Neumann as the controlling stockholder of the 

Company” before the MTA was executed.132 The resolutions recite that SBG’s 

proposal—which became the transaction documented in the MTA—“would result 

in SoftBank acquiring majority economic ownership and voting control of the 

Company.”133 

With respect to SBG and Vision Fund’s equity position and board 

representation in the Company pre-MTA, the Complaint alleges only that they 

“held approximately 27.1% of the Company’s stock on a fully-diluted basis and 

 

131 See WeWork Answering Br. 13 (“Because SoftBank’s proposal ‘would result in 

SoftBank acquiring majority economic ownership and voting control of the Company,’

and also contemplated that Mr. Neumann would receive benefits from SoftBank not 

offered to other shareholders, the Board formed an independent committee to evaluate the 

strategic alternatives available to the Company.”) (quoting Will Decl. Ex. M (Minutes of 

the Board of Directors of The We Company dated October 12 and 13, 2019 with Board 

Resolutions) (Dkt. 132)). 

132 Will Decl. Ex. M (emphasis added). 

133 Id. (emphasis added); See also The Special Committee’s Brief in Opp’n to The We 

Company’s Mot. for Leave to Dismiss the Compl. Pursuant to Court of Chancery Rule 

41(a) at 1 (“There is no dispute that [SBG and Vision Fund] gained control of The We 

Company . . . through the Master Transaction Agreement.”) (emphasis added).
36

had designated two members of the Board.”

134

 These allegations are insufficient to 

support a reasonable inference that SBG and Vision Fund held a control position in 

the Company, separately or together. Missing from the Complaint are any 

allegations concerning SBG and Vision Fund’s individual or combined voting 

power or the total number of Board members pre-MTA. Without this information, 

the court has no context from which it can reasonably infer that SBG and/or Vision 

Fund could dictate the outcome of board or stockholder action. Also missing from 

the Complaint are any allegations that SBG and/or Vision Fund formed a control 

group pre-MTA with Mr. Neumann, who was recognized as the Company’s 

“controlling stockholder” at that time in the October 12, 2019 Board minutes.135 

In response to the selective information alleged in the Complaint, SBG 

submitted (i) a copy of a Stockholders’ Agreement, dated July 15, 2019, by and 

among the Company and various stockholders136 and (ii) a declaration from 

Christopher C. McKinnon, corporate counsel of a wholly-owned subsidiary of 

 

134 Compl. ¶ 35. 

135 See Almond for Almond Family 2001 Tr. v. Glenhill Advisors LLC, 2018 WL 3954733, 

at *26 (Del. Ch. August 17, 2018) (explaining that “for a preexisting controlling 

stockholder to become part of a ‘control group’ with other stockholders, the preexisting 

controlling stockholder would have to agree to share with other stockholders, or impose 

limitations on, its own control power (such as through a voting agreement) for some 

perceived advantage as part of a legally significant relationship with the other 

stockholders.”), aff’d, 224 A.3d 200 (Del. 2019). 

136 See SBG Reply Br. Ex. 1 (July 15, 2019 Stockholders’ Agreement). 
37

SBG, to which is attached a capitalization table showing the economic and voting 

interests of WeWork by major stockholders as of October 21, 2019, the day before 

the MTA became effective.137 The Stockholders’ Agreement reflects that SBG had 

the right to designate one of nine members of the Board.138 In his declaration, 

McKinnon attests, based on “personal knowledge of and access to records 

reflecting equity ownership in WeWork by SBG and other parties,” that: 

As of October 21, 2019, Adam Neumann (individually and jointly 

through his controlling position in We Holdings LLC) controlled 

approximately 75% of the voting interests in the company on an 

outstanding basis. SBG owned approximately 12% of economic 

interests in WeWork on a fully diluted basis, which yielded 

approximately 3.1% voting interests of WeWork on an outstanding 

basis. Vision Fund owned approximately 15% of economic interests 

on a fully-diluted basis, which yielded approximately 3.9% of voting 

interests on an outstanding basis.139

The court takes judicial notice of this information, which comes “from sources 

whose accuracy cannot reasonably be questioned.”140 

 

137 McKinnon Decl. ¶¶ 1-2 (Dkt. 165).

138 SBG Reply Br. Ex. 1 § 2.01(b)(ii)(C).

139 McKinnon Decl. ¶¶ 2-3.

140 D.R.E. 201(a)(2). Even if the court disregarded this information, it would reach the 

conclusion that the Company failed to allege facts to support a reasonable inference SBG 

and Vision Fund held a control position in the Company, separately or together, based on 

their equity interests and board representation because of the lack of well-plead 

allegations providing context to understand the significance of (i) holding 27.1% of the 

Company’s stock on a fully-diluted basis without knowing the voting power associated 

with those shares and (ii) having two Board designees without knowing how many 

directors were on the Board at the time.
38

Apart from focusing on SBG and Vision Fund’s equity interests in WeWork 

and representation on its Board, the Company argues that SBG and Vision Fund 

used their “negative control position to advantage itself” by “threatening not to 

fund its $1.5 billion Warrant if the Company proceeded with J.P. Morgan’s debt 

financing.”141 The referenced warrant dates back to January 2019, when 

“SoftBank entered into a mandatory warrant agreement with WeWork pursuant to 

which it agreed to provide another $1.5 billion in financing in exchange for 

additional shares in the Company at a price of $110 per share (the ‘Warrant’).”

142

 

According to the Company, SBG and Vision Fund made this threat “to force the 

Company to agree to the MTA.”143 In support of this argument, the Company 

primarily relies on this court’s decisions in Basho Technologies Holdco B, LLC v. 

Georgetown Basho Investors, LLC144 and Voigt v. Metcalf.

145

In Basho, an investor (Georgetown) in Basho Technologies, Inc. held a 

majority of a certain series of preferred stock with rights that “gave it the ability to 

block the Company from raising capital through equity financings.”146 The court 

 

141 WeWork Answering Br. 52.

142 Compl. ¶ 32.

143 WeWork Answering Br. 50.

144 2018 WL 3326693. 

145 2020 WL 614999.

146 Basho, 2018 WL 3326693, at *29.
39

found after trial that “Georgetown exercised effective control over Basho” 

concerning a financing transaction through “use of its contractual rights to channel 

the Company into a position where it had no options other than to accept 

Georgetown’s terms” while also taking actions to “spread misinformation” and 

“manipulate the fundraising process.”147

In Voigt, a private equity firm (CD&R) held 34.8% of the voting power of 

NCI Building Systems, Inc., had four designees on its twelve-person board, 

“relationships of varying significance with another four directors,” and 

“contractual veto rights over a wide range of actions that the Board could 

otherwise take unilaterally.”

148 The court found at the pleadings stage that “[t]hese 

blocking rights weigh in favor of an inference that CD&R exercised control over 

the Company generally by giving CD&R power over the Company beyond what 

the holder of a mathematical majority of the voting power ordinarily could 

wield.”

149

Here, unlike in Basho or Voigt, the Complaint does not plead facts sufficient 

to support a reasonable inference that SBG and/or Vision Fund had any contractual 

veto or blocking rights “to channel [the] corporation into a particular outcome by 

 

147 Id. at *28.

148 Voigt, 2020 WL 614999, at *1.

149 Id. at *19. 
40

blocking other paths.”

150 Accepting as true the allegations of the Complaint, SBG

engaged in hardball negotiating tactics by threatening not to fund the Warrant in 

breach of its contractual obligations.151 That alleged threat, which is the stuff of a 

litigation claim, is insufficient to support a reasonable inference that SBG and/or 

Vision Fund had the power to exercise control over the Company to force it to 

enter into the MTA. In sum, the Complaint fails to allege facts sufficient to 

support a reasonable inference that SBG and Vision Fund had the voting power, 

level of Board representation, contractual rights, or any other source of power to 

impose its will unilaterally and cause the Company to enter into the MTA.

Indeed, the contention that SBG and Vision Fund could force the Company 

to enter into the MTA runs counter to the gravamen of the Complaint, which 

alleges that the Special Committee independently made this decision for the 

Company.152 According to the Complaint, the Special Committee “thoroughly 

assessed the options available to the Company,”153 including “certain debt 

 

150 Id.

151 The allegations that “SoftBank” (i) abandoned a plan with Neumann to buy out other 

stockholders of WeWork in mid-2018 (Compl. ¶ 31) and (ii) contributed to the failure of 

WeWork’s IPO by pressing “the Company to grow at all costs” (Compl. ¶ 34) do not rise 

to the level of supporting a reasonable inference that SBG and/or Vision Fund threatened 

or acted to breach a contractual obligation, much less that they exercised actual control 

over the Company.

152 Compl. ¶¶ 36, 39.

153 Id. ¶ 40.
41

financing arrangements through a marketing process led by J.P. Morgan Chase & 

Co,”

154 and “approved the transactions to be effected by the MTA”155 after 

concluding that the MTA was “in the best interests of the Company and its 

disinterested minority stockholders.”156 Consistent with these allegations, the only 

harm alleged in Count II for breach of fiduciary duty stems from a breach of the 

MTA (i.e., depriving minority stockholders of liquidity by not closing the Tender 

Offer) and not from execution of the MTA itself.157 

For the reasons explained above, the court concludes that Count II of the 

Complaint fails to state a claim for breach of fiduciary duty during the period 

leading up to the MTA.

2. The Fiduciary Duty Claim Post-MTA

Turning to the post-MTA period, the Company again contends that SBG and 

Vision Fund breached fiduciary duties they owed as the Company’s controlling 

stockholders. The court addressed this same issue with respect to the Neumann 

Complaint in an opinion issued on October 30, 2020, and incorporates Part III.B. 

of that opinion herein.

158

 

 

154 Id. ¶ 36. 

155 Id. ¶ 42. 

156 Id. ¶ 40. 

157 See id. ¶ 104.

158 See WeWork, 2020 WL 6375438, at *11-14.
42

In that decision, the court held that, “[e]ven assuming that SBG and Vision 

Fund owed fiduciary duties to the Company’s other stockholders” during this 

period, Neumann’s fiduciary duty claim “must be dismissed because it is 

duplicative of his breach of contract claims.”159 Critical to reaching that 

conclusion, the court found that “Neumann does not identify any additional facts 

relevant to his fiduciary duty claim but not his contract claim” and that “no 

independent basis thus exists to maintain the claim for breach of fiduciary duty.”

160

 

The Company’s fiduciary duty claim suffers from the same deficiency. 

The Company’s primary contention is that SBG and Vision Fund breached 

their fiduciary duties by pursuing an alternative transaction—the Trustbridge 

transaction—to thwart the ChinaCo Roll-Up.

161

 The factual allegations supporting 

this claim are the same as the ones supporting the Company’s claim that SBG and 

Vision Fund breached the MTA by failing to use “reasonable best efforts” to 

 

159 Id. at *11.

160 Id. at *14.

161 See WeWork Answering Br. 55-56, 58-59. As a secondary matter, the Company 

argues that “Softbank wrongfully fabricated a failed closing condition with respect to 

[certain] lease renegotiations.” Id. at 59. Tellingly, this issue is described in the section 

of the Company’s brief entitled “SoftBank Reneges on its Contractual Obligations.” See 

id. at 22. It also appears that this issue may be academic. See Compl. ¶ 76 (explaining 

that the “Company and [Special] Committee do not believe that the Default Condition 

has been triggered” as a result of the lease renegotiations.).
43

complete the ChinaCo Roll-Up.

162

 Indeed, the Company jointly alleges the 

contract and fiduciary claims in the Complaint, which asserts that “SoftBank’s 

actions not only violated the reasonable best efforts covenants of the MTA, but 

further demonstrate that SoftBank has put its own interests ahead of the minority

stockholders to which it owes fiduciary duties.”

163

 

In sum, given the Company’s failure to identify any additional facts relevant 

to its fiduciary duty claim but not its contract claim, there is no independent basis 

for the breach of fiduciary duty claim. Accordingly, the Company’s fiduciary duty 

claim stemming from SBG and Vision Fund’s post-MTA actions will be 

dismissed. 

IV. CONCLUSION

For the reasons explained above, SBG and Vision Fund’s motions to dismiss 

are GRANTED in part, and DENIED in part. 

IT IS SO ORDERED.

 

162 See, e.g., Compl. ¶¶ 66 (“The terms and conditions of the restructuring with 

Trustbridge were inconsistent with the roll-up of ChinaCo required by the MTA.”), 67 

(“On information and belief, SoftBank also had discussions with other ChinaCo minority 

investors to pressure them not to waive those rights. SoftBank did so despite its 

obligations under Sections 8.03 and 8.12 of the MTA to use its reasonable best efforts to 

secure achievement of the ChinaCo roll-up.”), 69 (“On information and belief, 

SoftBank’s discussions with Trustbridge and the other minority investors in ChinaCo 

convinced those investors not to waive their first refusal and co-sale rights, and the JV 

Roll-Up Condition was not satisfied by April 1, 2020.”).

163 Id. ¶ 69.