Todd Maclaughlan V Ilana Einheiber

Key Facts

Transaction Type

Issues

• Count V tortious interference claim was dismissed as the court lacked personal jurisdiction over Morris and Parent for this claim.
• Counts I and III alleging breach of fiduciary duty by directors were dismissed as the Complaint failed to state claims under the business judgment rule and did not trigger entire fairness review.
• Count II seeking declaration that MacLaughlan retains 30% profit rights under the Oral Profits Agreement was deemed ripe and remains active after repleading to name the Company as a merits defendant.
• The court dismissed Parent's Rule 12(b)(2) motion by finding no substantial Delaware-directed act or effect in furtherance of the alleged conspiracy, failing to meet the Istituto Bancario test for conspiracy jurisdiction.
• Morris' non-director claims (controlling stockholder, conspirator, tortious interferer) were dismissed as the court could not exercise ancillary jurisdiction due to lack of viable director claims.
• Count IV conspiracy claim was dismissed as it failed to establish a primary fiduciary breach required for conspiracy liability.

Holdings

• Count II (declaratory judgment regarding the Oral Profits Agreement) survives dismissal and can proceed against the Company as a merits defendant, as it states a claim ripe for adjudication.
• Morris's motion to dismiss under Rule 12(b)(2) was granted for claims against him in non-director capacities (controlling stockholder, conspirator, tortious interferer) because no viable claim exists against him as a director.
• Counts I, III, and V (breach of fiduciary duty, derivative claims, and conspiracy) were dismissed with prejudice against Orleski, Einheiber, and Morris in his director capacity, as the Complaint fails to state claims on which relief can be granted.
• The court granted Parent's motion to dismiss under Rule 12(b)(2), determining it lacks personal jurisdiction over Parent due to the absence of a Delaware-directed act or sufficient minimum contacts.

Remedies

• Counts I, III, and V are dismissed without prejudice to the extent they assert claims against Parent or Morris in his capacities as a controlling stockholder, conspirator, or tortious interferer. They are dismissed with prejudice to the extent they assert claims against Orleski, Einheiber, or Morris in his capacity as a director. Count IV is dismissed without prejudice.
• Count II seeking a declaratory judgment that MacLaughlan possesses a right to 30% of the profits from the Orphan Drug can proceed. The court orders MacLaughlan to file a second amended complaint within thirty days that names the Company as a merits defendant.

Legal Principles

Precedent Name

• RJR Nabisco, Inc. S'holders Litig.
• Crescent/Mach I P'rs, L.P. v. Turner
• Weinberger v. UOP, Inc.
• Disney II (Disney I's affirmance)
• Nemec v. Shrader
• Aronson v. Lewis
• McRitchie v. Zuckerberg
• Disney I (In re Walt Disney Co. Deriv. Litig.)
• In re Columbia Pipeline Gp., Inc. Merger Litig.
• Brehm v. Eisner

Key Disputed Contract Clauses

Cited Statute

• Director Consent Statute
• Delaware General Corporation Law
• Delaware Long-Arm Statute

Judge Name

Passage Text

• The allegations against Morris and the two current directors fail to state claims on which relief can be granted. Either MacLaughlan cannot state a claim under the applicable standard of conduct, or his theories fail under the applicable standard of review.
• The court lacks personal jurisdiction over Parent, because it has not engaged in any Delaware-directed act that could support jurisdiction under Delaware's long-arm statute.
• One claim, however, survives. MacLaughlan seeks a declaratory judgment that he did not improperly divert a corporate asset. The Company is both the lone remaining defendant and the proper defendant on this claim.

Damages / Relief Type