Court Opinion

ID: 5702082
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:42:02.839056+00
Date Added: 2024-06-11T08:40:21.206816
License: Public Domain

Malone, J., dissents in a memorandum as follows:
Since I believe that plaintiff has made the bare requisite demonstration showing that the determination of defendants’ compensation committee was made in bad faith (Gitelson v Du Pont, 17 NY2d 46, 49 [1966]), I dissent and would vote to deny the motion to dismiss, pursuant to CPLR 3211 (a) (7).
In considering defendants’ report to the committee and the committee’s minutes, both of which were first made available to plaintiff when they were attached in support of the motion, the motion court should have accorded similar consideration to the allegations in plaintiff’s opposing affidavit, reading them together with his complaint (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002]; Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409, 414 [2001]). In failing to do so, the motion court did not “accord [plaintiff] the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory,” as it must on a motion to dismiss under CPLR 3211 (a) (7) (Leon v Martinez, 84 NY2d 83, 87-88 [1994]). Dismissal was unwarranted since defendants’ supporting “documentary evidence,” which claimed that plaintiff’s new employer competes with defendants, merely set forth their arguments and did not establish a defense as a matter of law.
While the motion court and the majority find the selection and removal of individual committee members by the two controlling shareholders insufficient bases to rebut Delaware’s presumption of the committee’s independence, I am troubled by the additional fact that the law firm defendants appointed to advise the handpicked compensation committee on this restricted stock unit matter also served as defendants’ special counsel, tending to support plaintiff’s claim that defendants improperly directed the compensation committee to “rubber stamp” their recommendations. Complicating this claim is the fact that plaintiffs restricted stock units were valued at approximately $6 million at the time this action was commenced. The issue of whether the committee’s determination was motivated by bad faith is a subjective one that should not have been determined by the motion court (see American Intl. Group, Inc. v London Am. Intl. Corp. Ltd., 664 F2d 348, 353 [2d Cir 1981]).