Document: McPadden v. Sidhu, et al. & i2 Tech., C.A. No. 3310-CC, Chandler, C. (Del. Ch. August 29, 2008)
Plaintiff brought suit against officers and directors of i2 Technologies (“i2”) for their conduct surrounding the sale of Trade Services Corporation (“TSC”), a wholly-owned subsidiary of i2. The board placed Defendant Dubreville, a TSC officer, in charge of selling TSC with knowledge that he was personally interested in acquiring the subsidiary through a management buyout. Dubreville’s team subsequently acquired TSC at a bargain price after very limited efforts to market the company, relying on valuations conducted by Dubreville himself. Thereafter, Dubreville’s team flipped TSC for a price 2.7 times larger than they had paid. The Court held that, although the Plaintiffs’ allegations supported a finding that the board was grossly negligent for not considering material and reasonably available information regarding the sale, they were not sufficient to establish that the board acted in bad faith. The Court granted the Director Defendants’ motions to dismiss breach of fiduciary claims, as they were protected by an exculpatory provision in i2’s certificate of incorporation applying to breaches of the duty of care. However, the Court allowed claims of breach of fiduciary duty and unjust enrichment to proceed against Defendant Dubreville, as he was an officer and could not claim the benefits of the exculpatory clause.