Opinion
No. CV 08 4036740
January 16, 2009
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO DISMISS (#105)
The issue presently before the court is whether to grant the defendants' motion to dismiss for lack of subject matter jurisdiction. It is the defendants' contention that the plaintiffs currently lack standing to bring the instant action, as they have failed to demonstrate in their derivative action that a formal demand was made upon the defendant corporation's board of directors and that no responsive action was taken by the board. In the alternative, the defendants contend that the plaintiffs have failed to plead particularized facts which would excuse the demand requirement.
FACTS
On May 1, 2008, the plaintiffs, Jugal Taneja, Mihir Taneja, Mandeep Taneja, William Legamba, Michele Lagamba, Anthony Lagamba, Courtney Lagamba, Nicholl Lagamba and Steve Waters ("plaintiffs"), filed a one-count shareholder derivative action against the defendants, Familymeds Group, Inc., Phillip Gerbino, Peter Grua, Mark Majeske, Edgardo Mercadante, James Searson, Alison Kiene and Laura Witt ("defendants"), alleging that the defendants breached their fiduciary duties and the duty of good faith and fair dealing owed to the plaintiff shareholders by: (1) conducting a reverse stock split; (2) voting to discontinue its wholesale consumer pharmaceutical business; (3) retaining the services of consultants at exorbitant costs; (4) wasting corporate assets on unnecessary business trips, lavish travel accommodations and unjustified bonuses and salary increases; (5) refusing reasonable offers to purchase the majority of the corporation's stock; (6) endowing themselves extravagant severance packages; and (7) selling the assets of the corporation and issuing unsecured loans to themselves
These purported breaches of duty arise from the following facts, as derived from the plaintiffs' complaint: Familymeds Group, Inc. ("Familymeds Group") was a corporation duly organized under the laws of the state of Nevada with its principal place of business in Farmington, Connecticut. According to the complaint, Familymeds Group was a private enterprise with a successful business in the retail marketing of consumer pharmaceutical products. Familymeds Group's board of directors included Gerbino, Grua, Witt, Searson and Majeske, with Kiene acting as senior vice president, secretary and general counsel. On or about December 2004, Familymeds Group completed a merger with Drugmax, Inc., a corporation duly organized under the laws of the state of Nevada and with its principal place of business in Farmington, Connecticut. Drugmax, Inc. was a publicly traded enterprise whose business comprised of the wholesale marketing of consumer pharmaceutical products. At the time of the merger, Jugal Taneja, Mandeep Taneja and Mihir Taneja were the owners of 2,513,875 shares of Familymeds Group stock; William Lagamba, Nicholl Lagamba, Michele Lagamba, Anthony Lagamba and Courtney Lagamba were the owners of 412,636 shares of said stock, and; Waters was the owner of 633,794 shares of Familymeds Group stock.
The plaintiffs maintained their stock share totals after the merger of the two corporations. According to the merger, Drugmax, Inc. became the surviving business entity, with Familymeds Group owning two-thirds of the surviving entity and Drugmax, Inc. owning the remaining one-third share. At the time of said merger, shares of the surviving entity, Drugmax, were allegedly valued at $4.00 per share. Following the merger, Mercadante and Jugal Taneja were cochairmen of the Drugmax board of directors and shortly thereafter, with the support of Gerbino, Grua, Majeske, Searson, Kiene and Witt, Mercadante became president of Drugmax. The plaintiffs allege that following his ascendency, Mercadante appointed members to an executive committee, which he controlled and attempted to use for the purpose of removing Jugal Taneja as co-chairman. However, Mercadante's attempt to remove Mr. Taneja was unsuccessful.
Hereinafter, the court will refer to the surviving post-merger entity as "Drugmax." Any references to the prior pre-merger entity will be referred to as "Drugmax, Inc."
The plaintiffs also maintain that following the merger, Mercadante, Gerbino, Grua, Majeske, Searson, Kiene and Witt voted to discontinue Drugmax's wholesale consumer pharmaceutical business, despite the fact that one of the expressed goals of the merger and its future business plan was to take advantage of this aspect of its business. These seven individuals allegedly constituted a majority of the board of directors. On or about October 2006, at the objection of the plaintiffs, Drugmax completed a stock reversal, the terms of which were ten shares of Drugmax, Inc. to one share of Familymeds Group Following this stock reversal, the surviving entity was renamed Familymeds. Over the objection of the plaintiffs, each of the seven defendants then voted to retain the services of consultants at exorbitant costs and voted to place venture capitalists, who had conflicting interests, on Familymeds' board of directors. The Familymeds board then spent over $80,000,000 in corporate assets on office facilities, business trips, travel expenses, and increases in salary and bonuses, all of which the plaintiffs objected to.
The court will refer to the corporation following the stock reversal as "Familymeds." Any reference to the prior entity before the December 2004 merger will be referred to as "Familymeds Group."
According to the plaintiffs' complaint, the stock value of Drugmax (and later Familymeds) declined dramatically following the merger, due to the defendants' mismanagement and unjustified expenditures. On or about January 20, 2007, the company Geo Pharma offered to purchase fifty-one percent of Familymeds in exchange for Geo Pharma preferred stock, at a rate of $4.00 per share, despite Familymeds' precipitous decline in stock value. Geo Pharma also offered to invest a significant amount of money into Familymeds in order to reverse the dramatic decline in stock value and ensure the company's viability. However, because the defendants were not convinced Geo Pharma would maintain an employment relationship with each defendant, the defendants voted to refuse the Geo Pharma's offer. On or about February 10, 2007, the plaintiff Jugal Taneja made an offer to purchase all of the Familymeds stock at the rate of $2.25 per share. This offer was also refused by the defendants, and by July 2007 the value of Familymeds stock had fallen to sixty cents per share. Around June 2007 Searson resigned as a member of the board of directors and assumed the position of chief financial officer. It was then that Searson and Mercadante, with the board's approval, sold the remaining assets of Familymeds and issued $600,000 worth of unsecured loans to themselves. According to the complaint, Familymeds was officially dissolved on or about July 31, 2007.
It is the plaintiffs' contention that the mismanagement, misconduct and wasting of company assets by the defendants proximately caused the corporation to fail and ultimately dissolve. They further charge that the acts and omissions of the defendants constituted a breach of their fiduciary duties and their duty of good faith and fair dealing, as they acted outside the scope of their authority and with deliberate knowledge that such acts were not in the best interests of the corporation.
On July 21, 2008, the defendants filed a motion to dismiss the plaintiffs' action for a lack of subject matter jurisdiction. It is the defendants' position that the plaintiffs lack standing, as a shareholder seeking to bring a derivative claim on a corporation's behalf must either: (1) demonstrate that he or she has made a demand on the corporation's board of directors and the board refused to initiate any responsive action, or (2) plead particularized facts that would show making such a demand would have been futile. Because the plaintiffs have failed to satisfy either requirement of demand, the defendants argue that the court should dismiss the instant action, as it presently lacks subject matter jurisdiction.
The plaintiffs counter that they had no obligation to make a demand on the Familymeds board of directors prior to bringing this action, as the corporation was defunct at the time the plaintiffs sought to make their claims. They also argue that any demands made by the plaintiffs would have been futile, as the defendant directors were parties to the alleged wrongdoing, breached their fiduciary duties and profited from their misdeeds. The plaintiffs also state that prior to dissolution, demands were made upon the board of directors to cease and desist their course of action, but that these demands were not responded to.
DISCUSSION
"The grounds which may be asserted in [a motion to dismiss] are: (1) lack of jurisdiction over the subject matter; (2) lack of jurisdiction over the person; (3) improper venue; (4) insufficiency of process; and (5) insufficiency of service of process." Zizka v. Water Pollution Control Authority, 195 Conn. 682, 687, 490 A.2d 509 (1985), citing Practice Book § 10-31. "The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." St. George v. Gordon, 264 Conn. 538, 544, 825 A.2d 90 (2003). "When a court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007); Cox v. Aiken, 278 Conn. 204, 211, 897 A.2d 71 (2006); Filippi v. Sullivan, 273 Conn. 1, 8, 866 A.2d 599 (2005).
General Statutes § 33-727 provides: "In any derivative proceeding in the right of a foreign corporation, the matters covered by [sections 33-720 to 33-727, dealing with derivative actions brought in Connecticut,] shall be governed by the laws of the jurisdiction of incorporation of the foreign corporation . . ." In accordance with § 33-727, the court will apply Nevada law to the present derivative action, as both Drugmax, Inc. and Familymeds Group were incorporated in that state. Nevada rules of civil procedure rule 23.1 sets forth the requirements of a shareholder derivative suit: "In a derivative action brought by one or more shareholders or members to enforce a right of a corporation . . . the complaint shall be verified and shall allege that the plaintiff was a shareholder or member at the time of the transaction of which the plaintiff complains . . . The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority . . . and the reasons for the plaintiff's failure to obtain the action or for not making the effort."
It should be noted that rule 23.1 of the federal rules of civil procedure also sets forth the requirements for bringing forth a derivative action and contains virtually the same exact requirements as rule 23.1 of the Nevada rules of civil procedure. However, all references made hereinafter refer to rule 23.1 of the Nevada rules of civil procedure.
In Shoen v. SAC Holding Corp., 122 Nev.Adv.Op. No. 57, 137 P.3d 1171, 1180 (2006), the Nevada Supreme Court noted that rule 23.1 "imposes heightened pleading imperatives in shareholder derivative suits . . . [M]erely conclusory assertions will not suffice under NRCP 23.1's `with particularity' standard." Id. The court went on to add that "[a] shareholder's failure to sufficiently plead compliance with the demand requirement deprives the shareholder of standing and justifies dismissal of the complaint for failure to state a claim upon which relief may be granted." Id. Consequently, if it is found that the plaintiffs have failed to properly make a demand before bringing the present derivative action or that they have failed to plead "with particularity" that such a demand would have been futile, then the present action should be dismissed under rule 23.1.
As a preliminary matter, the court will address the plaintiffs' argument that they were not required to make a demand, as the corporation was defunct at the time suit was brought. The plaintiffs cite to Christiani v. BenefitPoint, Inc., Superior Court, complex litigation docket at Hartford. Docket No. X07 CV04 4025119 (March 7, 2008, Berger, J.) to argue that there is no requirement of a pre-suit demand when the subject corporation is defunct. The court disagrees. While Christiani noted the subject corporation's dissolution to support its finding of demand futility, that fact was not dispositive. In fact, the Christiani court acknowledged that there is a split of authority on this matter. It is for this reason that the court finds it necessary to look to Nevada law in order to determine which side that state has taken.
While the plaintiffs point to the case of Pioche Mines Consolidated, Inc. v. Dolman, 333 F.2d 257, 264-65 (9th Cir. 1964) to show that Nevada excuses demand when a corporation is defunct, the court finds that Dolman did not set forth such a broad holding. In Dolman, the complaint alleged that the corporations at issue had been controlled for many years by a particular individual, who solely "managed, directed and controlled all of [its] activities" and who had left Nevada, abandoning the properties, assets and business of the various corporations. The complaint was also accompanied by an affidavit which stated that only one stockholders' meeting had been held in several years and that the plaintiff's demands for more meetings had been ignored. It also alleged that the plaintiff had been denied access to the corporate books and that the individual in control had filed incorrect lists of directors with the Nevada secretary of state. Based upon all of these factors, the CT Page 1746 Dolman court agreed with the plaintiff and found that any demand made upon the defendants would have been futile. As such, the court concluded that the demand requirement had been excused and the court had authority to proceed to the merits of the derivative action. In interpreting Dolman, the court finds that Dolman did not make its finding of demand futility on the mere fact that the corporation was defunct. Rather, the Dolman court's determination was based upon the sufficient factual background the plaintiffs had provided in their allegations. Thus, the plaintiffs in Dolman were able to avoid the demand requirement not just because they were defunct, but because they had provided additional factual allegations that, taken cumulatively, allowed them to satisfy rule 23.1's "with particularity" standard.
Because the court finds that Dolman did not create an automatic exception to demand upon a finding of dissolution, it is still left with the question of how Nevada views the demand requirement when a corporation is defunct. Section 78.585 of the Nevada Statutes sheds light on such an inquiry. Section 78.585 provides that "[t]he dissolution of a corporation does not impair any remedy or cause of action available to or against it or its directors, officers or shareholders arising before its dissolution and commenced within 2 years after the date of the dissolution. It continues as a body corporate for the purpose of prosecuting and defending suits, actions, proceedings and claims of any kind or character by or against it . . ." Based on this statute, it is apparent that Nevada treats dissolved and defunct corporations as entities still capable of handling causes of action and other remedies brought against it, so long as such actions are brought within two years of the company's dissolution. The court finds that in reading § 78.585 in the context of this case, Nevada allows shareholders to maintain derivative suits against defunct corporations so long as such actions are brought within two years of the corporation's dissolution. Presently, the plaintiffs have alleged that Familymeds was dissolved on July 31, 2007, bringing this action well within the two-year limitation period. Therefore, the requirement of formal demand was not excused simply because the corporation was defunct. Several other courts have also held that dissolution of a corporation does not preclude derivative claims. See Macene v. MJW, Inc., 951 F.2d 700 (6th Cir. 1991) (plaintiff shareholder brought derivative action on behalf of a dissolved corporation); Pfahler v. National Latex Company, 405 F.Sup.2d 839, fn. 8 (N.D. Ohio 2005) ("[N]umerous courts have permitted, both implicitly and explicitly, derivative actions brought on behalf of dissolved corporations"); Firstcom, Inc. v. Qwest Corporation, civil no. 04-995 ADM/AJB (Minn. 2004) ("It is well established that shareholders may assert a derivative claim on behalf of a dissolved corporation limited only by the time period provided for under the applicable survival statute"); Independent Investor Protective League v. Time, Inc., 50 N.Y.2d 259, 264 (1980) ("But when the corporation has dissolved, the shareholder's interest does not abruptly end. At a minimum, the stockholder possesses a substantial interest in the distribution of corporate assets").
Due to the court's finding that Nevada law permits a dissolved or defunct corporation to maintain a derivative action within two years of dissolution, it is necessary to determine if the plaintiffs properly complied with the requirements of rule 23.1. The first question which must be asked as a part of this analysis is whether the plaintiffs ever made a formal demand upon the corporation before bringing the instant action. "[The] demand requirement recognizes the corporate form in two ways. First, a demand informs the directors of the complaining shareholder's concerns and gives them an opportunity to control any acts needed to correct improper conduct or actions, including any necessary litigation . . . Second, the demand requirement protects clearly discretionary directorial conduct and corporate assets by discouraging unnecessary, unfounded, or improper shareholder actions." (Internal quotation marks omitted.) Shoen v. SAC Holding Corp., supra, 137 P.3d 1179.
While the plaintiffs argue that they made a sufficient demand, the court is not convinced. The only support the plaintiffs provide in support of their position is an allegation that they "continually made demands to the board of directors to cease and desist from their course of action that plaintiffs believed was in violation of defendants' duties, not in good faith, and detrimental to Familymeds and/or Drugmax." (Complaint, p. 3). As Shoen made clear, "a derivative complaint must state, with particularity, the demand for corrective action that the shareholder made on the board of directors . . . [A] shareholder must set forth . . . particularized factual statements that are essential to the claim that a demand has been made and refused . . . [M]ere conclusory assertions will not suffice under NRCP 23.1's `with particularity' standard." (Internal quotation marks omitted.) Shoen v. SAC Holding Corp., supra, 137 P.3d 1179-80. Even in reading the allegations of the complaint in a light most favorable to the plaintiffs, the court finds that the plaintiffs have offered nothing but a conclusory statement asserting that a demand was made. The plaintiffs fail to specify who made such demands, when such demands were made, what the demands sought to correct or what individuals the demands were made upon. Due to this lack of specificity, the court finds that the plaintiffs have failed to bring a formal demand upon the corporation's board of directors.
Because the court finds that the plaintiffs have failed to make a formal demand upon Drugmax and/or Familymeds' board of directors, the plaintiffs are required to plead sufficient facts to establish that such a demand would have been futile. In Shoen, the Nevada Supreme Court set forth how to satisfy the demand futility requirement: "When evaluating demand futility, Nevada courts must examine whether particularized facts demonstrate: (1) in those cases in which the directors approved the challenged transactions, a reasonable doubt that the directors were disinterested or that the business judgment rule otherwise protects the challenged decisions or (2) in those cases in which the challenged transactions did not involve board action or the board of directors has changed since the transactions, a reasonable doubt that the board can impartially consider a demand." Shoen v. SAC Holding Corp., supra, 137 P.3d 1184. These two tests both arise from landmark derivative action cases and involve challenges to two separate types of corporate decisions. The first test derives from case of Aronson v. Lewis, 473 A.2d 805, 812, (Del. 1984), and is implicated when the alleged wrong constitutes a business decision made by the whole board of directors. The second test derives from Rales v. Blasband, 634 A.2d 927, 934 (Del. 1993), and is employed when the board members who decided the challenged act have since changed or when the challenged act does not constitute a business decision by the board. In looking at the plaintiffs' complaint, it is clear that the actions which are being challenged are those which were taken by the board of directors, as the complaint challenges certain decisions made collectively by the defendants, who constituted a majority of the board. Thus, the court must decide the question of demand futility based on the test set forth in Aronson.
"When the alleged wrong constitutes a business decision by the whole board of directors, a court should employ the Aronson test, which evaluates whether, under the particularized facts alleged, a reasonable doubt is created that: 1) the directors are disinterested and independent; or 2) the challenged transaction was otherwise the product of a valid exercise of business judgment." In re Computer Sciences Corp. Derivative Litigation, 244 F.R.D. 580, 586 (C.D.Cal. 2007). The court begins its analysis under the first prong of the Aronson test. "Directorial `interest' exists whenever divided loyalties are present, or where the director will receive a personal financial benefit from a transaction that is not equally shared by the stockholders, or when a corporate decision will have a `materially detrimental impact' on a director but not the corporation or its stockholders . . . The personal benefit must arise `from the challenged transaction.'" Id., quoting Rales v. Blasband, 634 A.2d 927, 933-36, (Del. 1993). "Director `independence' exists when a director's decision is based on `the corporate merits of the subject before the board' rather than on `extraneous considerations or influences.'" Id., quoting Aronson v. Lewis, supra, 473 A.2d 816. "When a lack of independence is charged, the plaintiff must allege particularized facts showing that the board is either dominated by an officer or director who is the proponent of the challenged transaction, perhaps by a close personal friend or familial relationship or by force of will, or that the board is so under the director or officer's influence that its discretion is `sterilized." Id., quoting Rales v. Blasband, supra, 634 A.2d 936.
Even in reading the complaint in a light most favorable to the plaintiffs, this court finds that they have failed to satisfy the first part of the Aronson test. While the plaintiffs have charged that the defendants constituted a majority of the board of directors and "took advantage of their positions . . . to adopt policies and make decisions that caused irreparable harm to" the corporation and its shareholders, its allegations do not contain the specificity that rule 23.1 and Shoen require. It is true that the complaint alleges that the defendants hired consultants at "exorbitant" costs; voted to place venture capitalists, whose interests conflicted with those of the corporation, on the board of directors; "wasted" over $80,000,000 in corporate assets through "mismanagement and excess" and the purchase of "extravagant" facilities, unnecessary business trips and unjustified salaries and bonuses; refused advantageous offers to sell the corporation, and; dissolved the corporation, selling the remaining assets below fair market value in order to receive unwarranted severance packages and unsecured personal loans. However, these allegations are not supported by specific facts. Instead, the complaint provides very little detail about the individual members of the board, aside from the fact that they voted for the transactions and decisions that the plaintiffs dispute.
This leaves the court to guess as to how each defendant was personally interested in each of the challenged actions, or how Mercadante "dominated" or "controlled" each of them. Further, while the plaintiffs argue demand futility based on the fact that each of the defendants were parties to the wrongdoing, this argument is unavailing. See Kanter v. Barella, 489 F.3d 170, 180 (3rd Cir. 2007) ("A plaintiff may not bootstrap allegations of futility merely by alleging that the directors participated in the challenged transaction or that they would be reluctant to sue themselves"). Indeed, it is true that Aronson and rule 23.1's "particularity" requirement fall short of demanding that actual evidence be presented; however, it requires more than a mere allegation that the defendants were interested. While the plaintiffs have certainly alleged that the defendants were interested directors, they have failed to show the court how they were interested. Consequently, these allegations fail to create a reasonable doubt that the defendants were disinterested and are therefore insufficient as a matter of law.
As for the second part of the Aronson test, the court is similarly unpersuaded that the plaintiffs have met their burden. "To establish demand futility under Aronson's second prong, a complaint must raise a reasonable doubt that the challenged transaction was the product of a valid exercise of business judgment. This is a high standard to satisfy . . . [A] plaintiff who seeks to excuse demand through the second prong of Aronson . . . faces a task closely akin to proving that the underlying transaction could not have been a good faith exercise of business judgment." (Emphasis in original; internal quotation marks omitted.) Postorivo v. AG Paintball Holdings, Inc., p. 18 (Del.Ch. February 29, 2008). "[E]ven a bad decision is generally protected by the business judgment rule's presumption that the directors acted in good faith, with knowledge of the pertinent information, and with an honest belief that the action would serve the corporation's interests." Shoen v. SAC Holding Corp., supra, 137 P.3d 1181. For the same reasons the plaintiffs fail to state with particularity how the defendants were individually "interested," the plaintiffs have not raised a reasonable doubt that their actions were the result of a valid exercise of business judgment. While the plaintiffs assert conclusory allegations as a part of their complaint, they fail to provide a sufficient factual basis in their attempt to show that the defendants acted with gross negligence, in bad faith or in some other deficient manner which would strip them of the business judgment rule protection. In reading the complaint in its current form, the facts seem to highlight nothing more than a retrospective outline of bad decisions. As Shoen makes clear, bad decisions are not enough in raising a reasonable doubt as to the defendants' exercise of business judgment.
In fact, in trying to determine how the defendants were interested directors or how their decisions could not have been the product of valid business judgment, more questions are generated from the complaint than are answers. For instance, it is not clear how the interests of the venture capitalists, whom the defendants allegedly voted onto the board of directors, conflicted with those interests of the corporation, nor is it known in what ways Mercadante controlled the other defendants as the corporation's president. It is also not known from the complaint how many members the board of directors consisted of or of how many shares they controlled, leaving the court with a question as to the size of the defendant's majority and whether any other individuals not a party to this action voted for the challenged decisions. Also not clear is what the fair market value of the stocks were at the time the offers from Geo Pharma and Jugal Taneja were presented to the defendants, making it impossible to know whether such refusals could have been based on individual interests. The complaint is also absent any specify breakdowns in dollar amounts as to how the company wasted $80,000,000 in assets. With the possible exception of Mercadante and Searson, the complaint is completely devoid of facts that might create a reasonable doubt as to whether the defendants properly exercised business judgment or were personally interested. It is for this reason the court finds that the plaintiffs have failed to plead sufficient facts "with particularity" in order to create a reasonable doubt as to the defendant's disinterestedness or their use of the business judgment rule.
When a plaintiff has failed to satisfy the Aronson test, it is well established that dismissal is warranted. See Potter v. Hughes, 546 F.3d 1051, 1058 (9th Cir. October 10, 2008) (" `[I]n order to evaluate the demand futility claim, the court must be apprised of facts specific to each director from which it can conclude that that particular director could or could not be expected to fairly evaluate the claims of the shareholder plaintiff'"); Mitzner v. Hastings, No. C 04 3310, 6 (N.D.Cal. January 14, 2005) ("Plaintiff's pleading burden is thus more onerous than that required to withstand an ordinary motion to dismiss. Conclusory `allegations of facts or law not supported by allegations of specific fact may not be taken as true'"); Postorivo v. AG Paintball Holdings, Inc., No. 299 1-VCP, 311 1-VCP, 15 (Del.Ch. February 29, 2008) ("Rather than stating particularized factual allegations that raise a reasonable doubt that the board of directors could have exercised independent and disinterested business judgment in responding to a demand, the complaint contains only vague accusations and restatements of the demand futility standards. Rule 23.1 requires more"); Jaroslawicz v. Krass, Superior Court, judicial district of Danbury, Docket No. CV 98 0331117 (June 16, 1999, Moraghan, J.) ("It is the opinion of this court that the plaintiff has failed to allege enough facts with particularity in the complaint to create a reasonable doubt that the defendants were independent, disinterested and within the purview of the business judgment rule when they allegedly violated the securities statute and participated in insider sales . . . The defendants' individual motions to dismiss the plaintiff's complaint are, accordingly, granted").
CONCLUSION
For the foregoing reasons, the defendants' motion to dismiss is granted, as the plaintiffs have failed to plead particularized facts as required by rule 23.1 and Aronson.