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 GOODR ICH & 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 fo r 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 Jor dan 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 & SULLIV AN, LLP, Los Angeles, California ; Attorneys for Defendant SoftBank Vision Fund (AIV M1) L.P

.

BOUCHARD, Chancello r1

This decision resolves the motions of SoftBank Group Corp. and SoftBank Vision Fund (AIV M1) L.P. to dismiss the c omplaint 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 wil l 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
additio nal 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 an d

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 a s 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 individua l ly, as Mr. Neumann.
Defendant S oftBank Group Corp. (“S BG ”) 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 ma d e 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 control s

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 ot her SBG executives

. 8 Vision Fund is primarily financed through investments fr om 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 form ed a special committee consisting of directors Bruce Dunlevie and Lewis Frankfort (the “Special Committee”) to evaluate the options availab le 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 p roposal 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 determine d 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 Transactio n Agreement ( the “MTA” ). 14
T he 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 Pacifi c Co 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 “ Pacifi c C o 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 Ch inaCo, Vision Fund would receive
WeWork shares. 22 T he ChinaCo Roll

- Up provided that “other equityholders” of ChinaCo “may participate in the JV Roll

- Up.” 23 To complete the ChinaCo Roll

Up, these minority investors had to either participate in the transacti on 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, Visi on 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 (China Co 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 th e 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 T he Stockholders’ Agre ement 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 B oard. 30 Neumann also executed a proxy, pursuant to the S tock holder’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 Ma rch 18, 2020. 32

26 Id. § 1.01.
27 Id

. § 8.12; see Compl. ¶ 54

. 28 MTA § 11.15. 29 See MTA Ex. I (“Stockho lders’ 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. T he 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, S oftBank began pursuing a transaction concerning ChinaCo , th e terms and conditions of which allegedly were inconsistent with the prescribed ChinaCo p urchase a greement

. 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 discuss ions 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 beha lf of various ChinaCo minority stockholders indicat ing that the y 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 t he 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 t o 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 (“Amen dment 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 promi sed 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, i n 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 receiv ing the same number of newly

- issued shares of Series H preferred stock that Vision Fund would have received under the MTA upon com pletion 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
f our 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 termin ated the Tender O ffer, 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 SB G and Vision Fund . This action is sometimes referred to as the “MTA Litigation

. ” The Complaint asserts two claims.
Count I a sserts that SBG and Vision Fund breached Sections 8.03 and 8.12 of the MTA by failing “ to use reasonable best efforts to consumma te the transactions contemplated by the MTA .” 50 Count II a sserts 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 W ithdrawal 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 m oved 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, o n 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 assert s 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 f or two

- month terms and appointed th ose directors t o 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, 202 0, 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, 202 0 . SBG and Vision Fund’s motions to dismiss the Complaint were held in abeyance until the court’s adjudication of th e 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 brea ch of contract claim against it. Id. at *6.13

III. ANALYSIS SBG and Vision F und ’s motions to dismiss raise three issues. The first issue is whether the Company has standing to assert claims under the MTA relat ing 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 state s a claim for relief against Vision Fund

. The third issue is whether Count II of the Complaint for breach of fiduciary duty state s 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 inapp ropriate 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 Compl aint in is entirely for l ack 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 jurisdiction al requirement

. ” 61 “ Unlike the federal courts, where standing may be subject to stated constitutional limits, state courts apply the concept of sta nding 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 Sup reme 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 demonstr ate firs t, 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) (D kt. 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

requir ement, 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 plain tiff 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 C ommittee 70

— 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 Prop s. , L.P. , 2015 WL 55 7995, 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 Spec ial Committee had the authority to act for the Company to assert a claim for breach of the MTA against S BG 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 t he Company filed at the direction of the New C ommittee . 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 tend ering stockholders c an 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 breache s of the MTA and “that the Company was the appropriate party to seek specific performance on behalf of itself and its stockholders. ” 74 More s pecifically, the Company contends it has standing to assert claims stemming from the Tender Offer as a “ guardian of the minorit y 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 C ompany also contended that “the Company has suffered an injury” because SBG had failed to provide $1.1 billion of the D ebt
F inancing required under the MTA, “which is contingent upon consummation of the Tender Offer.” 76 This issue became moot on June 12, 2 020, the same day the

72 Id. at 9. 73 Id. at 8 n.4, 1 6. 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
I n connection with briefing on the Rule 41(a) motion, t he Special Committee submitted a declaration fro m 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 Visio n 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 V ision 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 Chanc ery 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 alle ged 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 def ines 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 H

ldg s . , LLC v. Li & Fund (Trading) L td. , 118 A.3d 1 75, 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
lack ed standing to assert alleged breaches of that contract.
T he MTA enumerates SBG and Vision Fund ’s obligations with respect to the T ender Offer, including their obligation under Sections 8.03 and 8.12 of the
MTA to use their respective “ reasonable best efforts” to satisfy various c losing

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 co mmon - law right (including a right conferred by contract) can constitute an injur y 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 t he 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 bef ore her Plan has standin g, 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 involv ed 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 a nd Harlan signed any document constituting the alleged contract. ”).20

c onditions. Other provisions of the MTA support WeWork’s standing as a party to the MTA to sue for breach of the se “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 impli ed, 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
t he 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 I t thus is of no moment that t he 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 th e total amount at tributable to the Tender Offer. The ability of the Company

— as a Party to the MTA

— to s eek specific performance to enforce SBG and Vision Fund’s obligation s to use their reasonable best efforts to consummate the Tender Offer is critical to ensure that the
C ompany receives all the benefit s 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, t he 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 stockho lders b y materially increas ing SBG’s stake in WeWork , which w ould 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 T he New Committee itself found that closing the Tender Offer could provide a benefit to the Company, a lbeit 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 S ection 11.06 of the MTA, none of the stockholders who tendered shares in to 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 , in cluding 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. ¶¶ 3 5

- 37; see also Lucian A. Bebchuck & K obi 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 comp any provides powerful financial incentives to maximize company value .” (emphasis added)) ; In re E ZCORP 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 ove r 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 econom ic 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 Co mmittee of the Board of Directors of The We Company), at 42

- 43.23

This outcome is untenable “[a]s e quity 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 a rise 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 disa dvantage 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 c onstrained to the terms of the Offer to Purchase is that
tender ing 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 re sults in formation of a contract” between the offeror and offerree).
96 See MTA § 11.10.25

For the reasons explained above, t he court finds that the Company has met its burden of establishing standing. Accordingly, SBG and Vision Fund’s motion to dismiss the Compl aint 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 transa ctions contemplated by the MTA, including the Tender Offer and the roll

- up of ChinaCo. ” 97 SBG d id 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 establis h 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 V ision 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 reasonab le 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 r easonable 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 prom ptly 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 e fforts 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 claus e (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 tra nsaction 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 Fu nd 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 affirmativel y 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 1 04

- 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 72 4 (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 C ommittee proposed to try to consummate the Tender Offer. 109 T he 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 com

pletion 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”
th e 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 V ision 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 obli gations in order to avoid clos ing 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 requ ired 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; a nd rejection of the Special Committee’s proposed a mendment 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

con tract claim against Vision Fund. ” 115 The court disagrees. Although group pleading is generally disfavored, th e Complaint’s use of the term “SoftBank” to capture both SBG and Vision Fund was justified here given the close r elationship between these entities plead in the Complaint. Specifically, t he 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 i d. ¶¶ 66

- 69, 73. 115 Vision Fund Opening Br. 13.30

executives

. 116 Given these close

- knit rel ationships, 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, a s 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 reaso nable 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 n ot 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 Fu nd 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 r epeatedly 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 mai ntaining a contract claim against Vision Fund “based on the pre

December 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 op ening 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 cit ation 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

stockho lder

. ” 120 U nlike the Neumann Complaint , which asserted that SBG and Vision Fund owed fiduciary duties only after entering into the MTA, t he Comp any 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 tim e . 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 powe r 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 busine ss affairs of the corporation.’ ” 124 “ The requisite degree of control can be shown to exist generally or with regard to the particular t ransaction that is being challenged.” 125 T here a re 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 ove r 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 provi de 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 sub ject to the fiduciary duties of a controller,” 127 as follows:

124 Sheldon v. Pinto Tech. Ventures, L.P. , 220 A.3d 24 5, 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 *2 6 (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 owner ship, 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 ind ication of an actual agreement, although it need not be formal or written. 128
With the above principles in mind, the court consider s the Complaint’s breach of fiduciary allegations with respect to the pre

- MTA and post

- MTA periods, in turn , next

.

1. Th e Fiduciary Dut y Claim Pre
- MTA The Company argues that SBG and Vision Fund together “ exerted control over the Company pr ior 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 co unter that the fiduciary duty claim must be dismissed for the pre

- MTA period because they were not controlling stockhold er s 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, na mely 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 o f the Company ” b efore the MTA was execute d. 132 The resolutions recite t hat 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 wou ld 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 dictat e the outcome of board or stockholder action. Also missing from the C omplaint 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 info rmation alleged in the Complaint, SBG submitted (i) a copy of a Stockholders’ Agreement, dated July 15, 2019, by and among the Company and various stockholders 136 and (ii) a declaration from Christopher C. McKinnon, corporate counsel of a wholly

- owned subsid iary of

134 Compl. ¶ 35. 135 See Almond for Almond Family 2001 Tr. v. Glenhill Advisors LL C, 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 2 00 (Del. 2019).
136 See SBG Reply Br. Ex. 1 (July 15, 2019 Stockholders’ Agreement).37

SBG , to which is attache d a capitalization table showing the economic and voting interests of WeWork by major stockholder s as of October 21, 2019, the day before the MTA became effective. 137 The Stockholders’ Agreement reflects that SBG had the righ t 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 (ind ividually 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, w hich 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 co urt takes judicial notice of this information , which come s “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 tha t 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 allegation s 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 wer e 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 SB G 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 “SoftBa nk 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, S BG 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 decision s in Basho Technologies Holdco B, LLC v. Georgetown Basho Investors, LLC 144 and Voigt v. Metca lf

. 145
In Basho , an investor (Georgetown) in Basho Technologies, Inc. held a majority of a certain series of preferred s tock 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 t rial 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 takin g 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 s ignificance 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 tha t 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 suf ficient 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 t he allegation s of the Complaint, SBG

en gaged in hardball negotiating tactics by threatening not to fund the Warrant in
breach of its contractual obligations. 151 T hat 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 s um , the Complaint fails to allege facts sufficient to support a reasonable inference that SBG and Vision Fund had the voting power, level of Board representati on, 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 th is 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 ar rangements through a marketing process led by J.P. Morgan Chase &
Co , ” 154 and “approved the transactions to be effected by the MTA” 155 after
conclud ing that the MTA was “in the best interests of the C ompany and its disinterested minority stockholders.” 156 Cons istent 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
F or 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 a gain contends that SBG and
Vision Fund breached fiduciary duties they owed as the Company’s controlling
stockholders. T h e court addressed th is 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 S ee 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 reach ing 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 t hus exists to maintain the claim for breach of fiduciary duty. ” 160
T he Company’s fiduciary duty claim suffers from the same deficiency

. T he 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 allegation s 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 eff orts” 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 (e xplaining that the “Company and [Special] Committee do not belie ve 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 assert s that “ SoftBank’s
actions not only violated the reasonable best efforts covenants of the MTA, but further demonstr ate 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 , the re 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 motion s 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 inc onsistent 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 Sec tions 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.