United States District Court, C.D. California
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH LEAVE TO AMEND 
OTIS D. WRIGHT, II, District Judge.
Plaintiff Natalie Gordon is a shareholder of Edison International ("EIX")-a holding company comprised of several wholly owned subsidiaries. She contends that EIX caused Energy Mission Energy ("EME"), one such subsidiary, to pay $924 million in dividends and $183 million under a tax-sharing payment while insolvent-thus throttling EME into bankruptcy.
But this current Motion to Dismiss does not concern the merits of those decisions. Rather, to take the reins away from EIX's board via this derivative suit, Gordon bears the burden of establishing on a director-by-director basis that a majority of the board was either interested or not independent or that the challenged transactions were not the product of a valid exercise of business judgment. After considering Gordon's allegations and the parties' arguments, the Court concludes that Gordon has failed to satisfy this standard. She has not sufficiently alleged that EME was insolvent at the time of the dividends and tax-sharing payment sufficient to subject the Individual Defendants to a substantial likelihood of personal liability or to show that the payments constituted fraudulent transfers. The Court thus GRANTS Defendants' Motion to Dismiss WITH LEAVE TO AMEND. (ECF No. 12.)
II. FACTUAL BACKGROUND
Gordon challenges EIX's board's decisions with respect to two transactions: (1) issuing $924 million in dividends, and (2) making a $183 million tax-sharing payment.
EIX is a California corporation, holding company, and 100-percent owner of Southern California Edison Company ("SCE") and Energy Mission Group ("EMG"). (Compl. ¶¶ 2, 45.) EMG in turn owns 100 percent of Mission Energy Holding Company ("MEHC"), which owns 100 percent of EME. ( Id. ¶¶ 44-45.) EME is itself a holding company that is engaged in the business of developing, acquiring, owning or leasing, operating, and selling energy capacity from independent production facilities. ( Id. ¶ 43.) EME is therefore an indirect, wholly owned subsidiary of EIX. ( Id. ¶ 2.) Gordon is a New York citizen. ( Id. ¶ 19.) She is an EIX shareholder and was an EIX shareholder at times relevant to this action. ( Id. )
Defendants Jagjeet S. Bindra, France A. Córdvoa, Bradford M. Freeman, Ronald L. Olson, Thomas C. Sutton, Peter J. Taylor, Vanessa C. L. Chang, Luis G. Nogales, Richard T. Schlosberg, and Brett White are directors of both EIX and SCE. ( Id. ¶¶ 21-27, 29-31.) Defendant Theodore F. Craver is EIX's Chief Executive Officer, President, and Chairman of the Board. ( Id. ¶¶ 5, 28.) He is also an SCE director and has served as an EMG director and EIX officer. ( Id. ¶ 28.)
Defendant Robert L. Adler is currently an Executive Vice President and General Counsel for EIX and previously was an EME director. ( Id. ¶ 32.) Defendant Mark Clarke is an EIX Vice President and Controller who formerly worked for both EMG and EME. ( Id. ¶ 33.) Defendant William J. Scilacci is EIX's Vice President, Chief Financial Officer, and Treasurer. ( Id. ¶ 34.) Finally, Defendant Bertrand A. Valdman serves as EIX's Senior Vice President of Strategic Planning. ( Id. ¶ 35.)
2. EIX's relationship with EME
Until 2012, the EME board consisted of three directors: EME's President and EIX's CFO and General Counsel. ( Id. ¶ 47.) The EIX board approves executive compensation for EME officers, and EME represents itself as an EIX subsidiary. ( Id. ¶¶ 49, 51.) EIX and its subsidiaries and affiliated companies (the "Consolidated Group") have also consolidated their financial statements for annual reporting purposes. ( Id. ¶ 51.)
3. EME pays a $924 million dividend to MEHC
Gordon alleges that by the end of 2006, EME was in need of cash. ( Id. ¶ 53.) EME reported on its 2006 Form 10-K that it had $7.25 billion in reported assets and $4.6 billion in reported liabilities but was also responsible for about $2.9 billion in additional expenditures for Midwest Generation, LLC-an EME subsidiary. ( Id. ) In its 2007 Form 10-K, EME reported $7.3 billion in assets and $5.3 billion in liabilities, though it still was liable for the $2.9 billion in Midwest Generation expenditures. ( Id. ¶ 55.)
In July 2001, MEHC issued $800 million of 13.50-percent, senior secured notes that were due in 2008. ( Id. ¶ 56.) EME was not an obligor on these notes. ( Id. ) As the notes became due, Gordon alleges that EIX caused EME to pay MEHC dividends totaling $924 million: $25 million in January 2007 and $899 million in May 2007. ( Id. ¶¶ 57-59.) To pay this sum, EME completed a private offering of $2.7 billion in senior notes with staggered due dates. ( Id. ¶ 60.)
At the time, EIX's board consisted of Cordova, Freeman, Olson, Sutton, Nogales, Schlosberg, and Craver. ( Id. ¶ 63.) Gordon contends that EIX was able to carry out the transaction because EME's board consisted of all EIX insiders: Craver, EIX's CEO; Thomas R. McDaniel, then EIX's CFO; and J.A. Bouknight, Jr., then EIX's General Counsel. ( Id. ¶ 62.) She further asserts that the dividends were unfair to EME because it received no consideration from MECH in exchange, and EME had no obligation to pay MEHC's debts. ( Id. ¶ 63.)
4. EME pays EIX a $183 million tax-sharing payment
As part of its integrated financial reporting, the Consolidated Group filed a single federal income tax return as provided in their tax-sharing agreements. ( Id. ¶ 74.) Under these agreements, the Consolidated Group would use one subsidiary's losses to offset another's gain, thus reducing the latter's tax liability. ( Id. ) In exchange for the tax offset, the subsidiary with the gain would make a payment to the subsidiary with the loss as a fee for the offset. ( Id. )
By 2009, EME was producing net losses which the Consolidated Group used to offset gains by other EIX subsidiaries such as SCE. ( Id. ¶ 78.) On September 27, 2012-despite EME's losses-EIX caused EME to pay EIX approximately $183 million as a tax-sharing payment. ( Id. ¶ 79.) EIX then paid the money to SCE. ( Id. )
Gordon alleges that there was no valid reason for EME to make this payment to EIX. ( Id. ¶¶ 80, 84.) Rather, she contends that EIX used the guise of a tax-sharing payment to drain EME of its assets before EME filed for bankruptcy. ( Id. ¶ 80.) Since EME had over $120 million in senior notes set to mature at the end of 2012, it needed this money to pay those obligations. ( Id. ¶ 84.) Gordon asserts that EIX's board was well aware of EME's financial situation at the time of the payment because it repeatedly discussed EME's financial plans and forecasts throughout the years leading up to the tax-sharing payment. ( Id. ¶¶ 85-88.)
Subsequent to the tax-sharing payment, EIX's board sent EME a notice stating that it was terminating the tax-sharing agreements vis-à-vis EME as of December 31, 2012. ( Id. ¶ 89.)
5. EME files for bankruptcy
EIX could not make a $97.5 million interest payment due on November 15, 2012. ( Id. ¶ 94.) After the 30-day grace period elapsed and EME was supposed to pay another $38.1 million interest payment, the company filed for bankruptcy on December 17, 2012. ( Id. )
On January 31, 2013 the bankruptcy court empowered EME's Creditors' Committee to examine EIX and related parties under Federal Rule of Bankruptcy Procedure 2004. Six months later, the Creditors' Committee moved before the bankruptcy court for the right to sue EIX, claiming ...