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In re Tyson Foods, Inc. Consol. S'holder Litig.

In re Tyson Foods, Inc. Consol. S'holder Litig.

Court of Chancery of Delaware, New Castle

September 20, 2006, Submitted ; February 6, 2007, Decided

Consolidated C.A. No. 1106-N

Opinion

CHANDLER, Chancellor

 [*570]  Before me is a motion to dismiss a lengthy and complex complaint that includes almost a decade's worth of challenged transactions. Plaintiffs level charges, more or less indiscriminately, at eighteen individual defendants, one partnership, and the company itself as a nominal defendant. Several allegations are leveled at clearly inappropriate directors or challenge actions well beyond the statute of limitations. Over six hundred [**2]  pages of additional documents and briefs have been filed by one party or another in order to provide context for my decision. Although I do not grant defendants' motion in its entirety, I may at this point winnow the grist of future proceedings from chaff that may be dismissed.

My decision is divided roughly into three parts. First, I describe in some detail the parties, the facts alleged in plaintiffs' complaint  [*571]  (and any appropriate accompanying materials), and the parties' primary contentions. Second, I describe the legal standards that are applicable across most counts in the complaint: the demand requirement and the statute of limitations. Finally, I evaluate each count of the consolidated complaint separately, highlighting the relevant legal issues and determining the extent to-which a particular count may be limited or dismissed altogether.

] In evaluating a motion to dismiss, I must accept as true all well-pleaded factual allegations. 1 Such facts must be asserted in the complaint, not merely in briefs or oral argument. 2 I must draw all reasonable inferences in favor of the non-moving party, and dismissal is inappropriate unless the "plaintiff would not be entitled to recover [**3]  under any reasonably conceivable set of circumstances susceptible of proof." 3 

I. PARTIES AND PROCEDURAL HISTORY

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919 A.2d 563 *; 2007 Del. Ch. LEXIS 19 **; 41 Employee Benefits Cas. (BNA) 1069

IN RE TYSON FOODS, INC. CONSOLIDATED SHAREHOLDER LITIGATION

Subsequent History: Motion denied by In re Tyson Foods, Inc., 2007 Del. Ch. LEXIS 120 (Del. Ch., Aug. 15, 2007)

Disposition: Counts I, VIII, and VII were dismissed. Count IV remained only with regard to related-party transactions either not disclosed before or undertaken after February 16, 2002, and were allegedly not reviewed by an independent committee. Count V went forward only as to disclosure failures in regard to perquisites that led to an SEC settlement. Counts II, VI and IX survived, while count III survived as to seven members of a compensation committee.

CORE TERMS

transactions, shareholders, related-party, options, proxy statement, plaintiffs', disclosure, perquisites, settlement, statute of limitations, allegations, shares, consolidated, annual compensation, motion to dismiss, spring-loaded, consulting contract, documents, benefits, lease, special committee, contracts, stock, violations, annual, contempt, good faith, insiders, Counts, tolled

Civil Procedure, Responses, Defenses, Demurrers & Objections, Motions to Dismiss, Evidence, Inferences & Presumptions, Inferences, Business & Corporate Law, Management Duties & Liabilities, Fiduciary Duties, Business Judgment Rule, Actions Against Corporations, Derivative Actions, Procedural Matters, Duty of Loyalty, Causes of Action, Self-Dealing, Motions to Dismiss, Failure to State Claim, General Overview, Governments, Legislation, Statute of Limitations, Time Limitations, Burdens of Proof, Allocation, Pleadings & Proof, Tolling, Labor & Employment Law, Employment Relationships, Employment Contracts, Business & Corporate Compliance, Contracts Law, Types of Contracts, Option Contracts, Contracts Law, Contract Interpretation, Estate, Gift & Trust Law, Gifts, Personal Gifts, Directors & Officers, Terms in Office, Compensation, Appeals, Standards of Review, Duty of Good Faith, Burden Shifting, Presumptions, Salaries, Equitable Estoppel, Fraud & Misrepresentation, Remedies, Courts, Authority to Adjudicate, Provisional Remedies, Torts, Damages, Types of Damages, Nominal Damages, Preliminary Considerations, Equity