Opinion ID: 781551
Heading Depth: 4
Heading Rank: 1

Heading: First prong — disinterest or independence

Text: 48 A disinterested director can neither appear on both sides of a transaction nor expect to derive any personal financial benefit from [the challenged transaction] in the sense of self-dealing, as opposed to a benefit which devolves upon the corporation or all stockholders generally. Aronson, 473 A.2d at 812. Plaintiffs have not offered any specific facts to indicate that any of the directors had divided loyalties. There were no allegations of improper motives or conflicts of interest. Nor, with the exception of White's sale of stock prior to the FDA's legal action, have plaintiffs presented allegations that any of the other directors profited in any way by their actions, or lack thereof. See In re Gen. Instr. Corp. Sec. Litig., 23 F.Supp.2d 867, 874 (N.D.Ill.1998) (using Aronson test in finding eight directors [out of thirteen] who sold their company stock at inflated price for over $500 million while concealing adverse financial information about company raised reasonable doubt as to directors' disinterest). 49 In addition, plaintiffs have not pleaded sufficient facts to raise reasonable doubt as to the directors' independence. Independence exists when a director's decision is based on the corporate merits of the subject before the board rather than extraneous considerations or influences. Aronson, 473 A.2d at 816. Although plaintiffs have raised the allegation that perhaps one of the reasons behind the board's refusal to act was to conceal the extent of Abbott's problems while a buyout of Alza was pending, there are no specific allegations indicating that individual directors were influenced by outside sources or considerations in making decisions, or that Burnham or White dominated or controlled the board. See id. at 815. 50 We find the plaintiffs have not pleaded specific allegations to create a reasonable doubt as to the majority of the directors' disinterestedness or independence. 51