The opinion of the court was delivered by: The Honorable David O. Carter, Judge
Julie Barrera Not Present Courtroom Clerk Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:
NONE PRESENT NONE PRESENT
PROCEEDING (IN CHAMBERS): ORDER GRANTING MOTION TO DISMISS
Before the Court is Nominal Defendant Allergan, Inc.'s("Allergan") Motion to Dismiss Plaintiffs' Consolidated Complaint ("Nominal Defendant's Motion to Dismiss") (Docket 99) and the Directors' ("Director Defendants") Motion to Dismiss Plaintiff's Consolidated Complaint ("Directors' Motion to Dismiss") (Docket 126) (collectively, the "Motions to Dismiss"). The Court finds this matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; Local Rule 7-15. After considering the moving, opposing, and replying papers, the Court GRANTS both Motions to Dismiss.
The Court and the parties are familiar with the factual background of the case from the first Motion to Dismiss, which the Court granted on April 12, 2011 (Docket 70). For a more detailed recitation of the facts, refer to the Court's previous Order granting the first round of motions to dismiss (Docket 70) ("First MTD Order"). Generally, this is a shareholder derivative suit. Shareholder Plaintiffs ("Plaintiffs") bring this action on behalf of Allergan against the Director Defendants. First Amended Verified Consolidated Complaint ("FAC"), ¶ 1 (Docket 83). Plaintiffs assert violations of §§ 14(a) and 29(b) of the Securities Exchange Act of 1934, breach of fiduciary duty, corporate waste, unjust enrichment, and insider trading. Id. Generally, Plaintiffs seek damages and other relief based on the Director Defendants' alleged illegal promotion of Botox for off-label uses not approved by the FDA.
The primary issue presented, as in the first round of motions to dismiss, is demand futility.
A. Motion to Dismiss under Fed. R. Civ. P. 12(b)(6)
Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b). Once it has adequately stated a claim, a plaintiff may support the allegations in its complaint with any set of facts consistent with those allegations. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1969 (2007) (abrogating Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99 (1957)). Dismissal for failure to state a claim does not require the appearance, beyond a doubt, that the plaintiff can prove "no set of facts" in support of its claim that would entitle it to relief. Id. at 1968. In order for a complaint to survive a 12(b)(6) motion, it must state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009). A claim for relief is facially plausible when the plaintiff pleads enough facts, taken as true, to allow a court to draw a reasonable inference that the defendant is liable for the alleged conduct. Id. at 1949. If the facts only allow a court to draw a reasonable inference that the defendant is possibly liable, then the complaint must be dismissed. Id. Mere legal conclusions are not to be accepted as true and do not establish a plausible claim for relief. Id. at 1950.Determining whether a complaint states a plausible claim for relief will be a context-specific task requiring the court to draw on its judicial experience and common sense. Id. Moreover, under a 12(b)(6) motion analysis, the Court must accept as true all factual allegations in the complaint and must draw all reasonable inferences from those allegations, construing the complaint in the light most favorable to the plaintiff. Guerrero v. Gates, 442 F.3d 697, 703 (9th Cir. 2006); Balistreri, 901 F.2d at 699.
B. Demand Futility Under Delaware Law
Under Fed. R. Civ. P. 23.1, a plaintiff seeking to initiate a derivative action is required to "plead with particularity either the efforts made to spur directors to take the action sought, and why these efforts were unsuccessful, or the reasons why no effort was made to demand action from the Kanter v. Barella, 489 F.3d 180, 176 (3d Cir. 2007). The pleading "must comply with stringent requirements of factual particularity that differ substantially from the permissive notice pleadings governed solely by [Fed. R. Civ. P. 8]." Brehm v. Eisner,746 A.2d 244, 254 (Del. 2000). "Rule 23.1 is not satisfied by conclusory statements or mere notice pleading. On the other hand, the pleader is not required to plead evidence. What the pleader must set forth ...