Tripath SJ Order

Entered on Docket
May 13, 2011

GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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The following constitutes
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the order of the court. Signed May 12, 2011
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4 ________________________________________
Charles Novack
5 ________________________________________
U.S. Bankruptcy Judge
6
7 UNITED STATES BANKRUPTCY COURT
8 NORTHERN DISTRICT OF CALIFORNIA
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In re: Case No. 07-50358 CN
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TRIPATH TECHNOLOGY, INC., Chapter 11
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Debtors.
UNITED STATES BANKRUPTCY COURT
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For The Northern District Of California
13 RICHARD C. HERMERDING, as Adversary No. 09-5004

Disbursing Agent of the Post-Effective Date
14 Estate of Tripath Technology, Inc., ORDER ON DEFENDANTS’ MOTION
FOR SUMMARY JUDGMENT
15 Plaintiff,
16 vs.
17
ADYA S. TRIPATHI, aka ACHARYA, Y.S.
18 FU, AKIFUMI GOTO AND ANDY
JASUJA,
19
Defendants.
20
21
22 On November 5, 2010, this court conducted a hearing on the duly noticed motion for
23 summary judgment by defendants Adaya S Tripathi, A.K. Acharya, Y.S. Fu, Akifumi Goto, and
24 Andy Jasuja (collectively, the “Defendants”). All appearances were noted on the record. The
25 following constitutes the court’s findings of fact and conclusions of law under F.R.B.P. 7052.
26
27 The parties do not dispute a substantial portion of the relevant facts at issue in Defendants’
28
1
ORDER ON MOTION FOR SUMMARY JUDGMENT
Case: 09-05004 Doc# 77 Filed: 05/12/11 Entered: 05/13/11 18:15:39 Page 1 of 14
1 motion for summary judgment.1 Instead, the main thrusts of the parties’ legal jousts are the
2 reasonable inferences that the court must make under F.R.B.P. 7056, and the Delaware law that it
3 must apply. In February 2007, Tripath Technology, Inc. (“Tripath”), a Delaware corporation, filed a
4 Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of California.
5 Its bankruptcy filing was substantially caused by Tripath’s several cash shortage that began, for
6 purposes of this motion, in 2005, and its subsequent inability to consummate a sale of its assets or
7 obtain a sufficient cash infusion through borrowing or capital investment. At all relevant times,
8 Defendants were the sole members of Tripath’s board of directors. Acharya, Fu, Goto, and Jasuja
9 were outside, independent board members (the “Outside Board Members”), and Tripathi, who
10 founded the company, served as Tripath’s president and chief executive officer. Plaintiff Richard
11 C. Hermerding is the disbursing agent appointed under the Chapter 11 Debtor’s confirmed Chapter
12 11 plan. In his complaint, Hermerding asserts that the Defendants breached their fiduciary duties of
13 due care, loyalty and good faith by failing to respond to Tripath’s financial crisis and preserve
14 Tripath’s net value for its shareholders and creditors.
15
16 The parties do not dispute that Tripath was in significant financial trouble from (at least) mid
17 2005 to its bankruptcy filing. During 2005, Tripath resorted to expensive, private financing
18 (including a $4.5 million round of private investment in public equity financing (“PIPE”) in March
19 2005, a $6 million line of credit obtained in August 2005, and a second, $5 million PIPE infusion in
20 November 2005) and was forced to secure the November 2005 PIPE borrowing with its intellectual
21 property and other personal property assets. When Tripath held its November 2, 2005 board of
22 directors and audit committee meetings, the Defendants knew or shortly thereafter learned that,
23 among other things, a) the Nasdaq stock exchange intended to delist Tripath; b) Tripath was
24 jeopardizing its supplier and distributor relationships by not timely paying its account payables; c)
25
26 1
While the Defendants filed objections to some of Hermerding’s evidence, all but one of those
27 objections were overruled at the November 5, 2010 hearing. To the extent that the court sustained
the Defendants’ objection no. 10 relating to certain deposition testimony of Rahul Shinkre, those
28 facts are not included herein.
2
1 Tripath’s outside auditor intended to issue a “going concern” qualification to its audit opinion which
2 would question Tripath’s ability to continue as a going concern for another year; and d) Tripath
3 would run out of cash by March/April 2006. During his deposition, Tripathi conceded that the
4 November 2005 PIPE borrowing began the company’s financial “death spiral.”
5
6 Tripath’s financial woes escalated in 2006. By early August 2006, Defendants knew that the
7 company was out of operating capital, that its projected September cash balance would be
8 approximately $7,000.00, that its account payables were substantially increasing both in amount and
9 days outstanding, and that the company was allowing one of its largest customers to pre-pay
10 receivables (to generate cash flow) at a substantial loss. Despite Tripath’s ongoing financial crisis,
11 Defendants convened only three regularly scheduled board meetings in 2006: January 31, 2006, May
12 2, 2006, and August 8, 2006.2 Rather than actively participating in the efforts to rescue the
13 company, the Outside Board Members instead allowed Tripathi to assume this task. As discussed in
14 greater detail below, the evidence suggests that Tripathi’s interests did not necessarily align with
15 those of his company.
16
17 Tripathi’s efforts during 2006 resulted in several potential sale and financing opportunities
18 that possibly could have preserved Tripath’s value and generated a greater return to its creditors than
19 its Chapter 11 bankruptcy. None of these deals came to fruition, and Hermerding asserts that the
20 failed negotiations are damning evidence of the Defendants’ fiduciary lapses. In contrast, the
21 Defendants assert that the evidence presented to this court demonstrates that they met their fiduciary
22 obligations. For example, in January 2006, Tripath and Cirrus Logic executed a non-disclosure
23 agreement and began due diligence regarding Cirrus Logic’s interest in purchasing some of
24 Tripath’s intellectual property. In April 2006, Cirrus offered to purchase these assets for $30
25 million, with half of the funds payable immediately. Cirrus informed Tripathi that it wanted to move
26
2
27 In September 2006, Tripath’s outside corporate counsel strongly advised the Defendants that
they jeopardized violating their fiduciary duties if they did not meet more frequently regarding
28 Tripath’s financial crisis. The Defendants either ignored or rejected this advice.
3
1 quickly and to have a “seamless transition” of the products, employees, and customer support that
2 would be part of the transaction. Without consulting with the Outside Board Members, Tripathi
3 tentatively accepted the $30 million offer but asked that more be paid up front. None of the Outside
4 Board Members recalls meeting or discussing the Cirrus Logic offer, and the May 2, 2006 board
5 minutes do not disclose that it was discussed.3 The Outside Board Members also were not aware
6 that Cirrus had conducted due diligence. The parties did not consummate any deal, and the evidence
7 presented to this court does not clearly establish the reasons why the parties terminated their sale
8 discussions.
9
10 In August 2006, Enable Capital Management (which had previously provided bridge
11 financing to Tripath) offered to make an additional $2.5 million bridge loan to the company. The
12 loan, in the form of 10% senior secured convertible notes (payable a year from closing), had several
13 conditions, including: 1) Tripath’s retention of an investment banker to “seek strategic alternatives

14 and partnerships,” such as joint ventures and the company’s sale; 2) obtaining an additional $8 - 13
15 million in financing within 90 days; and 3) Tripathi’s resignation as president and CEO. The
16 evidence suggests that Tripathi rejected Enable’s offer by email dated August 16, 2006 without
17 submitting it to the Outside Board Members. Enable responded to Tripathi’s August 16th email by
18 directly emailing the Outside Board Members on August 17, 2006 to inquire whether they had
19 considered Enable’s offer. At or about the same time, Tripath’s CFO sent his own email to the
20 Outside Board Members to inform them that he was available to meet with them to discuss Enable’s
21 offer. Tripath’s controller also emailed the Outside Board Members and informed them that she
22 believed that the company’s investors would timely invest another $8 - 13 million.
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3
Because the Outside Board Members resided outside the United States and had international
25 business interests, it may have been difficult for the Board to meet. Regardless, the Defendants
apparently did not even discuss the Cirrus Logic offer by other means. Moreover, the Defendants
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never retained an investment banker or any other professional to advise them on the Cirrus Logic
27 offer (or any other offer during 2006). Hermerding contends that the Defendants’ failure to retain an
investment banker prevented them from effectively and properly marketing Tripath at a time when
28 they desperately needed professional, unbiased advice.
4
1
2 Tripathi responded to this flurry of emails with his own email to the Outside Board
3 Members. In an email dated August 17, 2006, Tripathi briefly informed the Outside Board Members
4 of the Enable offer. Tripathi’s email stated that he was entertaining “multiple offers,4” and that the
5 Enable bridge loan was the “worst one” and an “absolute last resort.” He asked for additional time
6 to bring a “definitive deal to the table.” Rather than requesting a more detailed explanation of the
7 Enable offer and a comprehensive status report on the other offers that Tripathi was pursuing, the
8 Outside Board Members acquiesced and simply endorsed Tripathi’s rejection of the Enable bridge
9 loan. Most of the emails from the Outside Board Members simply reiterated their support for
10 “current management.”5 Defendant Goto was the only Outside Board Member to express any
11 concern regarding the status of these other options. His August 17th email response to Tripathi,
12 which was copied to all directors, stated that “ I support [Tripathi’s] direction on this matter
13 however suggest to have our meeting soon to review all possibilities. . . . [Tripathi] informed us that
14 most of our accounting personnel is leaving. That is also my worry because that is very important
15 division right now.” Despite these comments, the Defendants did not convene a special meeting to
16 discuss the status of the company’s financial affairs or Tripathi’s multiple, other options.
17
18 In the fall of 2006, Tripath received competing purchase offers from NanoAmp Solutions,
19 Inc. (“NanoAmp”) and Wolfson Microelectronics (“Wolfson”) that represented Tripath’s last gasp,
20 pre-petition opportunities to obtain value for its assets. Neither deal closed, and Hermerding alleges
21 that Defendants’ responses to these offers further demonstrate their breach of their fiduciary duties.
22
23
4
24 Tripathi describes these other offers as ones that “he had briefed in the last board meeting.”
The last board meeting was held on August 8, 2006. There is no evidence before the court that the
25 Defendants discussed any of these offers in any detail during the August 8th board meeting.
26 5
This endorsement of current management seemingly was in response to the emails that the
27 Outside Board Members received directly from Tripath’s corporate controller and CFO. Tripath
was upset that the controller and CFO directly contacted his fellow board members, and he
28 terminated their employment soon thereafter.
5
1 NanoAmp conveyed its offer on October 30, 2006. As revised, NanoAmp sought to acquire
2 virtually all of Tripath’s equity with a $15 million investment into the company. NanoAmp’s
3 proposal contemplated that Tripath would become its subsidiary and that certain key employees
4 could participate in the equity of the surviving corporation. NanoAmp contemplated a deal that
5 would close in approximately 30 days. The non-binding offer did not mention which key employees
6 would participate in equity, and its offer would substantially dilute the value of Tripath’s present
7 shares. Moreover, the deal required that Tripathi resign as the company’s CEO (but possibly remain
8 as the company’s CTO). Wolfson alternatively proposed an $11 million acquisition through a pre-
9 packaged Chapter 11 bankruptcy, along with a commitment for $1.5 million in bridge/debtor-in-
10 possession financing. The Chapter 11 bankruptcy would generate little, if any return to the
11 company’s shareholders.
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13 Tripathi waited until November 7, 2006 to convey these offers to the Outside Board
14 Members; even then, his email only summarily described their terms. Despite the company’s
15 desperate financial straits, the Defendants did not formally meet to review the competing offers6.
16
17 In his November 7th email, Tripathi stated his preference to pursue the NanoAmp offer. He
18 informed the Outside Board Members that the NanoAmp offer would retain a “functioning Tripath”
19 and would allow the company to avoid filing a bankruptcy. Although his email concluded by asking
20 for any comments and advice, this court is unaware of any evidence indicating that the Outside
21 Board Members responded to this solicitation. Instead, the only evidence before this court is that
22 defendant Acharya responded by email stating that it was “OK” for Tripathi to pursue the NanoAmp
23 offer. Defendant Goto may not have seen this email until after he returned from vacation.
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25 The Outside Board Members authorized Tripathi to reject the Wolfson offer and pursue the
26 NanoAmp without the advice of an investment banker. Hermerding contends that Tripathi down
27
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28 For example, defendant Goto was on vacation from November 1st through November 13th.
6
1 played the Wolfson offer due to his strong desire to avoid the stigma of his eponymous company
2 filing for bankruptcy, and there is some deposition testimony supporting his contention. Tripathi’s
3 November 7th email did not disclose this reasoning to the Outside Board Members. Nor did it
4 disclose Wolfson’s belief that the company would have sufficient funds after it filed its Chapter 11
5 to confirm a Chapter 11 plan.
6
7 Tripathi signed the October 30, 2006 NanoAmp letter of intent on November 10, 2006.
8 More than a month passed before the Board of Directors met to consider it. On December 12, 2006,
9 in their first full board of directors meeting since August, the Defendants considered the NanoAmp
10 offer and the previously rejected Wolfson deal. The board minutes starkly state that the company
11 was insolvent, could not pay its D & O insurance premium, and was facing debenture defaults and
12 an unlawful detainer proceeding from its landlord. The minutes also indicate that Defendants
13 approved the NanoAmp proposal. On December 13, 2006, the day after the board meeting,
14 Tripathi sent an email to NanoAmp’s CEO requesting that NanoAmp prepare and forward to him
15 “the paper work for my employment/consulting contract (including the complete
16 medical/dental/vision coverage through the year end 2007), and commitment for Howard Rice
17 payments,7 prepared as a part of signing all needed documents. I would still like to ask for my
18 severance to include full salary until June 30, 2007, for asking me to resign after ten and half years
19 of service in the CEO capacity. Also as we discussed yesterday, we still need the commitment for
20 the sabbatical as well.”
21
22 The evidence strongly suggests that in December 2006, Tripathi backdated favorable
23 changes in the company’s sabbatical policy to July 2006 that would allow him to receive three
24 months of paid sabbatical from NanoAmp.
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As part of the deal, NanoAmp may have agreed to reimburse Tripathi for certain legal fees
28 he had paid on Tripath’s behalf.
7
1 On December 15, 2006, NanoAmp terminated its negotiations with Tripath, stating that its
2 “decision is based on an overall review of the risks and benefits of the transaction. Economic
3 concessions or adjustments would not change this assessment.”
4
5 Tripath filed its Chapter 11 bankruptcy on February 8, 2007. It assets were purchased during
6 the bankruptcy for $4 million by Cirrus Logic. Hermerding’s expert witnesses have testified that
7 had Defendants retained an investment broker or a finance expert to provide them with strategic
8 advice, Tripath possibly could have negotiated a significantly larger sale without a bankruptcy.
9 Hermerding’s expert quantified the damages at $8.2 million to $18.7 million.
10
11 MOTION FOR SUMMARY JUDGEMENT STANDARD
12
13 The summary judgment standard under F.R.B.P. 7056 is well settled. Summary judgment
14 should be granted “if the pleadings, the discovery and disclosure materials on file, and any affidavits
15 show that there is no genuine issue as to any material fact and that the movant is entitled to judgment
16 as a matter of law. Fed. R. Civ. P. 56(c)(2); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23,
17 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Only disputes “over facts that might affect the outcome of
18 the suit under the governing law will properly preclude the entry of summary judgment.” Anderson
19 v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). This court’s
20 duty is not to weigh the evidence and decide the truth of the allegations, but to determine whether
21 there is a genuine issue for trial. Id. at 249. Where the non-moving party bears the burden of proof
22 at trial “[s]ummary judgment is warranted if the nonmovant fails to ‘make a showing sufficient to
23 establish the existence of an element essential to [his] case. Nebraska v. Wyoming, 507 U.S. 584,
24 590, 113 S. Ct. 1689, 124 L. Ed. 2d 317 (1993) (quoting, Celotex, 477 U.S. at 322). The moving
25 party can meet its burden by pointing out the absence of evidence from the non-moving party,” and
26 it “need not disprove the other party’s case.” Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987
27 (9th Cir. 2006). Accordingly, the “nonmoving party must come forward with specific facts showing
28 there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
8
1 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Finally, since Hermerding, the plaintiff, is the non-
2 movant, all justifiable inferences must be drawn in his favor. Anderson, 477 U.S. at 255, 106 S. Ct.
3 at 2513.
4
5 BREACH OF FIDUCIARY DUTY CLAIMS
6
7 Tripath is a Delaware corporation, and all parties agree that Delaware law governs the breach
8 of fiduciary duty claims. Under Delaware law, corporate directors and officers owe their
9 shareholders fiduciary duties of loyalty and care. Gantler v. Stephens, 965 A.2d 695, 708-09 (Del.
10 2009). While Hermerding’s complaint specifically identifies instances of the defendants’ alleged
11 breach of their duty of loyalty, it only generally alleges that defendants’ conduct violated their duty
12 of due care. Delaware’s General Corporation law authorizes a corporation to include it its charter a
13 provision “eliminating or limiting the personal liability of a director to the corporation or its
14 stockholders for monetary damages for breach of fiduciary duty as a director.” Del. Code. Ann. tit.
15 8, § 102(b)(7). Tripath’s charter contains such exculpatory language, and defendants have asserted
16 this provision as an affirmative defense. Accordingly, to the extent that Hermerding asserts that
17 Defendants breached their duty of due care as directors, this court grants summary judgment in favor
18 of Defendants with regard to those claims. The court also grants summary judgment with regard to
19 any allegations that Tripathi breached his duty of due care as a Tripath officer. “The law is clear
20 that where it is impossible to separate actions taken in fulfillment of a defendant’s directorial duties
21 from actions taken in fulfillment of that defendant’s duties as a corporate officer, then any duty of
22 care claim stated against that individual is exculpated.” Brown v. Brewer, 2010 U.S. Dist. LEXIS
23 60863, 2010 WL 2472182, at *3 (C.D. Cal. Jun. 17, 2010). Hermerding has not identified any
24 actions taken by Tripathi solely in his capacity as a Tripath officer.
25
26 Defendants’ motion for summary judgment with regard to their claim for breach of the duty
27 of loyalty is, however, denied. To hold a director liable for breaching the duty of loyalty,
28 Hermerding must demonstrate that “a majority of the Director Defendants either [1] stood on both
9
1 sides of the merger or were dominated or controlled by someone who did; or [2] failed to act in good
2 faith, i.e., where a fiduciary intentionally fails to act in the face of a known duty to act,
3 demonstrating a conscious disregard for his duties.” Brown, 2010 WL 2472182, at *3, citing,
4 Lyondell Chem Co. v. Ryan, 970 A.2d 235, 239-40 (Del. 2009). Only the second element appears to
5 be at issue in this case.
6
7 The Delaware Supreme Court has described bad faith in the corporate fiduciary context as
8 encompassing a spectrum of directorial conduct. In re Walt Disney Co. Derivative Litig., 906 A.2d
9 27, 64 (Del. 2006). At one end lies a “category of acts involving non-exculpable, so-called
10 ‘subjective bad faith,’ that is, fiduciary conduct motivated by an actual intent to do harm.” Brown,
11 2010 WL 2472182, at *4, citing, Disney, 906 A.2d at 64. The opposite end of the spectrum involves
12 conduct demonstrating “a lack of due care – that is, fiduciary action taken solely by reason of gross
13 negligence and without any malevolent intent. . . .” Brown, 2010 WL 2472182, at *4. In the middle,
14 a third category consists of “intentional dereliction of duty or a conscious disregard for one’s
15 responsibilities.” Disney, 906 A.2d at 66. “[S]uch misconduct . . . is properly treated as a non-
16 exculpable, . . . violation of the fiduciary duty to act in good faith.” Id. It is this last category that is
17 at issue in this case.
18
19 Stated differently, imposition of liability requires a showing that the directors knew that they
20 were not discharging their fiduciary obligations. Where directors “fail to act in the face of a known
21 duty to act, [thereby] demonstrating a conscious disregard for [their] duties,” they breach their duty
22 of loyalty by failing to discharge that fiduciary obligation in good faith.” Disney, 906 A.2d at 67.
23
24 Because of the emphasis on intent, claims asserting a breach of the duty of loyalty are not
25 readily susceptible to resolution by summary judgment. More profoundly, however, this court
26 disagrees with the Defendants’ contention that the Delaware Supreme Court’s decision in Lyondell
27 heightens the standard for establishing a breach of the duty of loyalty based on lack of good faith.
28 Defendants assert that, under Lyondell, this court must grant their summary judgment motion if it
10
Case: 09-05004 Doc# 77 Filed: 05/12/11 Entered: 05/13/11 18:15:39 Page 10 of
14
1 cannot find that the Defendants “utterly failed” in their duties to find a buyer for Tripath’s assets or a
2 lender who could have preserved the company. For the reasons explained more fully by the district
3 court in Brown, this court agrees with that court’s conclusion that the Lyondell court did not
4 “supplant the definition of bad faith set forth in Disney. Nor did it suggest any unprecedented
5 diminishment of Revlon duties, as suggested by the minimalist standard Defendants advance. If
6 such a radical departure were intended, we think the court would have taken pains to say as much.”
7 Brown 2010 WL 2472182, at *8.
8
9 Accordingly, the court must determine whether there is a genuine issue of material fact
10 regarding whether Defendants consciously disregarded their duties in the face of Tripath’s ongoing
11 financial crisis.
12
13 The court reminds the parties that its role is not to make findings of fact but to determine
14 whether there are genuine issues of material fact after drawing all justifiable inferences in
15 Hermerding’s favor. The court believes that there are genuine issues of material fact regarding
16 whether Defendants consciously disregarded their duties. The Defendants knew in 2005 that Tripath
17 was teetering on the financial edge, that it would run out of cash in 2006, and that its auditors
18 believed that it had less than a year to survive unless the company sold itself or found substantial,
19 additional capital. Tripath’s experienced outside counsel informed them that they needed to respond
20 to this crisis by, if nothing else, meeting more frequently to stay abreast of the company’s financial
21 crisis and direct Tripathi’s efforts. The mid-August 2006 competing emails that they received from
22 Enable, Tripathi and Tripath’s controller and CFO are stark examples that the Outside Board
23 Members should have demanded far more information from Tripathi regarding the multiple deals
24 that he was negotiating on their behalf, and that they should have insisted on a much more active
25 role in the company’s efforts to preserve its value. Instead, the Outside Board Members allowed
26 Tripathi, who apparently had no experience negotiating the sale of a company, to take the lead, and
27 furthermore did not retain or even consider retaining an investment banker to assist his efforts. The
28 Outside Board Members were at best docile and at worst willfully and consciously delinquent in
11
14
1 their board duties. The trier of act must decide where on the Disney spectrum they fall.8
2
3 The court also holds that there are substantial questions of fact regarding Tripathi’s conduct.
4 The facts and the reasonable inferences therefrom indicate that Tripathi was primarily interested in
5 transactions that would preserve his employment status and sabbatical rights, as well as keep his
6 self-named company out of bankruptcy. Indeed, the evidence strongly suggests that he back-dated
7 amendments to Tripath’s sabbatical policy in order to negotiate a better employment deal with
8 NanoAmp (the impact of which could not have improved Tripath’s chances of consummating a
9 NanoAmp transaction). He terminated the employment of Tripath employees who apparently were
10 willing to assist the Outside Board Members in analyzing transactions that did not meet his personal
11 goals, failed to keep the Outside Board Members timely and fully apprised of the status of his
12 negotiations, ignored the need for the Board to meet more frequently, and failed to consult with an
13 investment broker. This conduct, and in particular, Tripathi’s interest in deals that would protect his
14 reputation, employment status and benefits, indicates that he may have violated his duty to advance
15 “corporate well-being” over his own. If true, such conduct violates a board member’s duty of
16 loyalty. See Revlon, Inc. v. MacAndews & Forbes Holdings, Inc., 506 A. 2d 173 (Del. 1986).
17
18 Finally, the court finds that there are substantial questions of fact regarding damages that
19 merit a trial. Experts routinely testify on a “wide range of subjects pertinent to damages.” Wright
20 and Gold, Federal Practice and Procedure - Evidence § 6264, p. 241 (1997). As “a general rule, the
21 factual basis of an expert opinion goes to the credibility of the testimony, not the admissibility, and it
22 is up to the opposing party to examine the factual basis for the opinion in cross-examination.” In re
23
8
24 Defendants contend that their failure to retain an investment banker and decision to entrust
the company’s president with negotiating with potential bidders and investors do not, standing
25 alone, demonstrate that they consciously disregarded their duties. The court believes, however, that
there is “‘no single blue-print’ for fulfilling the duty to maximize value.” Toys “R” Us, Inc.
26
Shareholder Litigation, 877 A.2d 975, 1000 (Del. Ch. 2005), quoting, Barkan v. Amsted Indus., 567
27 A.2d 1279, 1286 (Del. 1989). The facts presented to this court indicate that the Outside Board
Members did little beyond delegating their responsibilities to Tripathi, and may have willfully
28 remained ignorant of his efforts.
12
14
1 Japanese Electronic Products Antitrust Litig., 723 F. 2d 238, 279, (3d Cir. 1983), rev. on other
2 grounds, Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed.2d
3 538 (1986). While plaintiff’s expert testimony may be less persuasive because no pre-petition deal
4 was consummated, the factual underpinnings of this testimony is a matter for the trier of fact to
5 weigh.
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7 * * * END OF ORDER * * *
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1 COURT SERVICE LIST
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3 George S. Trevor
Pearson, Simon, Warshaw and Penny
4 44 Montgomery St. #2450
San Francisco, CA 94104
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Robert A. Jigarjian
6 Jigarjian Law Office
128 Tunstead Ave.
7 San Anselmo, CA 94960
8 David Priebe
DLA Piper LLP US
9 2000 University Ave.
East Palo Alto, CA 94303
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11 Rajiv Dharnidharka
DLA Piper LLP US
12 2000 University Ave.

East Palo Alto, CA 94303

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Entered on Docket

May 13, 2011

13 RICHARD C. HERMERDING, as Adversary No. 09-5004

13 conditions, including: 1) Tripath’s retention of an investment banker to “seek strategic alternatives

12 2000 University Ave.

East Palo Alto, CA 94303

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