Transeo S.A.R.L. v. Bessemer Venture Partners VI L.P. (936 F. Supp. 2d 376, 2013)

United States District Court for the Southern District of New York 2013-03-29

Citations

Full opinion text

OPINION AND ORDER

SEIBEL, District Judge.

Before the Court is Defendants’ Motion to Dismiss Plaintiffs Second Amended Verified Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 26.) For the following reasons, Defendants’ Motion is GRANTED IN PART and DENIED IN PART.

I. Background

For the purposes of the present Motion, the Court accepts as true the facts (but not the conclusions) stated in Plaintiffs’ Second Amended Verified Complaint (“SAC”), (Doc. 17).

A. Factual Background

1. The Parties

Plaintiff Transeo S.A.R.L. (“Transeo”) is a French limited liability company with its principal place of business in Paris, France. (SAC ¶ 8.) Laurent Marteau owns Transeo, which acts as a holding company for shares of stock in Nominal Defendant Neutral Holdings, Inc. (“NHI”). (Id. ¶¶ 2,18.) NHI is a Delaware corporation formed in 2007 when Bessemer Venture Partners (“BVP”), a venture capital firm, through Defendants Bessemer Venture Partners VI L.P., Bessemer Venture Partners VI Institutional L.P., and Bessemer Venture Partners Co-Investment L.P., all Delaware limited partnerships (collectively, “Bessemer”), acquired a controlling interest in Intego S.A., a French corporation, and its wholly-owned subsidiary, Intego, Inc., a Florida corporation (collectively, “Intego”). (Id. ¶¶2, 5, 15-17.) NHI is the holding company for Intego shares. (Id. ¶ 18.) Marteau was the President and Chief Executive Officer (“CEO”) of NHI and CEO of Intego. (Id. ¶ 22.)

Intego is a software company founded by Marteau in 1997 that specializes in security software solutions for Apple, Inc. computers and devices. (Id. ¶ 16.) In June 2007, through a stock purchase agreement (“SPA”), Bessemer acquired a controlling interest in Intego. (Id. ¶ 17.) Today, Bessemer owns slightly less than 85% of NHI’s outstanding shares; Transeo owns slightly less than 15%; and Plaintiff Philippe Gelblat and John Goldsmith, who is not a party to this action, each own less than 1%. (Id. ¶¶ 18, 29, 32.) At all times, Bessemer was the majority shareholder of NHI. (Id. ¶ 27.)

Gelblat is a French citizen residing in Switzerland and was a director of NHI until February 2011. (Id. ¶¶ 9, 80.) Defendant Deer VI & Co. LLC (“Deer”) is a Delaware limited liability company that is the general partner of each of the Bessemer limited partnerships. (Id. ¶¶ 5,11, 231-32.) Defendant Jeremy Levine is a partner at BVP and a director of NHI and Intego. (Id. ¶ 12.) Defendant Jeffrey Erwin is the President, CEO, and a director of NHI and Intego. (Id. ¶ 13.) Defendant Peter Price is the Secretary and Chief Financial Officer (“CFO”) of NHL (Id. ¶ 14.)

2. The NHI Stockholders’ Agreement

At the same time that the SPA was executed in June 2007, Bessemer, Transeo, Gelblat, and NHI entered into the Stockholders’ Agreement (“SA”). (Id. ¶ 19; id. Ex. 1.) Pursuant to the SA, NHI’s Board of Directors (“BOD”) could consist of five individuals — one nominated by Transeo at its sole discretion; two nominated by Bessemer at its sole discretion; and two nominated by Bessemer subject to the approval of the other members of the BOD. (Id. ¶ 30; id. Ex. 1 § 7.1.) Although the SA allowed five directors, NHI had only four directors at all relevant times. (Id. ¶ 78.) From its initiation until February 2011, the BOD consisted of Marteau (appointed solely by Transeo); Gelblat and Levine (appointed solely by Bessemer); and Goldsmith (appointed by Bessemer and approved by the other members of the BOD). (Id. ¶¶ 74, 80.) In February 2011, Erwin took Gelblat’s position following his removal. (Id. ¶¶ 80-81.)

The SA also contains provisions on share redemptions and the sale of NHI. Section 5.1(a) states:

At any time, and from time to time (but subject to - Section 5.1(b) below), after June 7, 2012, each Major Stockholder (the “Redeeming Holders”) shall be entitled by written request ... to require that any or all of the- Shares held by such Redeeming Holder be redeemed.

(Id. Ex. 1 § 5.1(a) (emphasis omitted).) The following section states:

Subject to Laurent Marteau being the Chief Executive Officer of the Company, on or after June 7, 2012 Transeo shall be entitled to request that the Company appoint an investment bank to conduct a sale of the Company.

(Id. Ex. 1 § 5.1(b).) .

3. The Proposed Loan

Bessemer approached Silicon Valley Bank without informing the NHI BOD to secure a term sheet for an $8,000,000 loan — formalized in November 2010 — to finance a cash dividend payment to NHI shareholders, which allegedly was structured to give a disproportionate tax benefit to Bessemer. (Id. ¶¶ 34-35, 40.) Both Marteau and Gelblat opposed the proposed loan, which Bessemer eventually agreed not to pursue, apparently after lengthy discussions with Marteau. (Id. ¶¶ 42-43, 46.)

4. The Promissory Note Dividend

On December 28, 2010, NHI paid a dividend in the form of a promissory note to its stockholders, which allegedly was structured so that Bessemer did not have to report the proceeds as taxable income in the United States. (Id. ¶¶ 46-48.)

5. Relocation of Intego Assets

Plaintiffs allege that following the dividend dispute, Bessemer relocated most of Intego’s assets — its computer web services and associated intellectual property, including source code — from Intego’s headquarters in Paris to the United States, apparently in an effort to exercise “tighter control” of Intego’s assets and to use “NHI’s assets and cash” for Bessemer’s benefit. (Id. ¶¶ 50, 57, 63.) Plaintiffs allege that the relocation disrupted Intego’s services; compromised the security of Intego’s clients; damaged Intego’s reputation; facilitated the hacking of Intego’s website; and potentially violated European data privacy laws. (Id. ¶¶ 60-61, 65.)

6. The AVG Offer & Gelblat’s Removal from the NHI BOD

Beginning in June 2009, AVG Technologies N.V. and its affiliates (collectively, “AVG”), a Dutch internet software security company, approached NHI about a possible sale, and AVG expressed renewed interest in early 2011. (Id. ¶¶ 67, 69.) On February 24, 2011, Levine wrote an email in which he stated that the NHI BOD expected to “receive an M & A offer from AVG [that] week,” and it would be important to respond to AVG quickly “to keep the deal alive and warm.” (Id. ¶ 96.) Goldsmith also wrote an email dated February 26, 2011 acknowledging that the NHI BOD “must meet and deliberate” to satisfy its duty “to do what is in the best interest of the company.” (Id. ¶ 97.)

AVG memorialized its offer in a February 28, 2011 letter, which annexed a non-binding letter of intent valid until March 2, 2011. (Id. ¶ 69; Órmond Decl. Ex. B.) AVG offered to acquire NHI for $25 million on a “cash free” basis, which meant that NHI’s cash on hand would be distributed pro rata to shareholders. (SAC ¶ 70.) Levine had indicated earlier in February 2011, before receiving the AVG offer letter, that Bessemer would regard as “compelling” an offer to acquire NHI for $20 million, or possibly as low as $17 million. (Id. ¶ 66.) Approximately $10 million of the $25 million AVG offer was tied to various contingencies, including “the retention of key employees,” which Plaintiffs allege refers to Marteau remaining active with NHI and Intego. (Id. ¶¶ 71-72; Ormond Decl. Ex. B, at 2.)

Half of the NHI BOD — Marteau and Gelblat — favored pursuing the AVG offer, and Plaintiffs allege that Bessemer removed Gelblat from the NHI BOD on February 24, 2011 because of his stance vis-á-vis the offer. (SAC ¶¶ 79-80.) Erwin — who was not a BVP employee but allegedly' had an “extensive and longstanding” relationship with the venture capital firm — filled Gelblat’s position on the NHI BOD. (Id. ¶ 81.)

7. Marteau’s Termination from NHI and Intego

At a BOD meeting on March 1, 2011, which was purportedly scheduled to examine the AVG offer, the NHI BOD ratified the terminations of Marteau as President and CEO of NHI and of Transeo’s consulting and management services contract with NHI. (Id. ¶¶ 86, 98.) There were no deliberations at the meeting related to these terminations — which were allegedly not based on dissatisfaction with Marteau’s or Transeo’s performance or any other valid business reason, and instead occurred on Bessemer’s orders — and Erwin replaced Marteau as NHI’s President and CEO. (Id. ¶¶ 87-88, 99.) A few days after the March 1 meeting, Marteau was terminated as an officer and director of Intego, which is the subject of a pending lawsuit in France. (Id. ¶¶ 113-14.)

8. Refusal to Consider the AVG Offer

Following Marteau’s termination as NHI’s President and CEO at the March 1 meeting, Marteau volunteered to be a member of a committee to continue discussions with AVG and advised the BOD that it should conduct the appropriate analysis to determine the strength of the offer, but Erwin moved to take sole control of talks with AVG — a motion supported by the other NHI BOD members. (Id. ¶¶ 94, 102-04,120.) Subsequently, neither Erwin nor the other Bessemer-affiliated NHI directors took steps to analyze the AVG offer, such as procuring an outside analysis by an investment bank, conducting a valuation of NHI, considering a counter-offer, or anything beyond the cursory discussions at the March 1 meeting. (Id. ¶¶ 109, 118-19.) The AVG offer expired on its own terms on March 2, 2011, and it has not been pursued by either NHI or AVG since that date. (Id. ¶¶ 111-12.)

9. Transeo Demands to Inspect NHI’s Books & Records

Transeo demanded an inspection of NHI’s books and records pursuant to Section 220(c) of the Delaware General Corporation Law (“DGCL”> by letters dated June 20, 2011 and June 30, 2011. (Id. ¶¶ 129, 133.) NHI has not responded to Transeo’s demands. (Id. ¶ 134.)

10. Marteau’s Termination from the NHI BOD

In a letter dated July 14, 2011, Erwin advised the NHI BOD that three directors had requested a special meeting, which was held on August 1, 2011. (Id. ¶¶ 137, 142; id. Ex. 2.) Several of the enumerated agenda items for the meeting were either entirely unaddressed or insufficiently addressed. (Id. ¶¶ 147-49, 156-63.) At the end of the meeting, Erwin demanded Marteau’s resignation from the NHI-BOD. (Id. ¶ 164.) When Marteau did not voluntarily resign, Erwin read a prepared statement advising Marteau that NHI had formed a committee composed of other members of the BOD, and the committee had already elected to remove Marteau as a director. (Id. ¶ 166.) Since the August 1 meeting, Bessemer has denied Marteau access to documents and information to which directors are entitled, including draft and approved meeting minutes of the BOD, and has not paid him directors’ fees. (Id. ¶¶ 168,181.)

11. Bessemer’s Other Improper Conduct

Plaintiffs allege that Bessemer has caused Erwin and Price, as officers and directors of NHI, to commit the following improper or illegal activities: (1) creation of false documents and commission of fraud in connection with the adoption of the “Neutral Holdings, Inc. 2009 Stock Option Plan for Employees and Directors of French Affiliates,” (the “2009 Stock Option Plan”), which was purportedly approved at a February 14, 2012 NHI shareholder meeting that neither Transeo nor Gelblat knew of nor attended, and also allegedly approved by the NHI BOD at a meeting Marteau neither knew of nor attended; (2) creation of false and fraudulent documents in connection with grants of stock options pursuant to the 2009 Stock Option Plan; (3) forgery of a false document regarding the Annual General Meeting of Intego S.A. that stated that Erwin attended the meeting in person when he allegedly did not; (4) refusal to provide information about NHI’s financials to Plaintiffs for tax reporting and other business purposes despite demand; and (5) refusal to permit Transeo to inspect NHI’s books and records despite demand. (Id. ¶ 171.)

B. Procedural Background

Transeo initiated the instant suit against the Bessemer Defendants on July 29, 2011 and filed an Amended Complaint against the same defendants on August 23, 2011. (Docs. 1, 3.) At a conference on January 6, 2012, I granted Transeo leave to amend. The SAC, filed on May 14, 2012, added Gelblat as a Plaintiff; Deer, Levine, Erwin, and Price as Defendants; and NHI as a Nominal Defendant, and alleged nine causes of action under Delaware and New York law. (Doc 17.) Defendants filed the instant Motion to Dismiss on July 27, 2012. (Doc. 26.)

II. Legal Standard

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim has' facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (alteration, citations, and internal quotation marks omitted). While Federal Rule of Civil Procedure 8 “marks a notable and generous departure .from the hyper-technical, code-pleading regime of a prior era, ... it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937.

In considering whether a complaint states a claim upon which relief can be granted, the court “begin[s] by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth,” and then determines whether the remaining well-pleaded factual allegations, accepted as true, “plausibly give rise to an entitlement to relief.” Id. at 679, 129 S.Ct. 1937. Deciding whether a complaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. “[WJhere the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not ‘shown’ — ‘that the pleader is entitled to relief.’ ” Id. (alteration omitted) (quoting Fed.R.Civ.P. 8(a)(2)).

III. Discussion

A. Delaware Law Claims

1. Direct Breach of Fiduciary Duty

Transeo and Gelblat bring a direct breach of fiduciary duty claim against Bessemer. Plaintiffs allege that under Delaware law, Bessemer — as NHI’s majority shareholder — owed a fiduciary duty to them as NHI’s minority shareholders, and that it breached that duty by using its influence with the NHI BOD to ensure that the BOD’s decisions disproportionately benefitted Bessemer. (SAC ¶¶ 173-74.) Specifically, Plaintiffs allege that Bessemer’s actions with respect to the proposed loan, promissory note dividend, termination of key employees and officers, movement of Intego’s assets to the United States, failure to examine the AVG offer, and causing or acquiescing in improper or illegal conduct (ie., the creation of false documents and refusal to provide NHI’s financial information) constituted acts of self-dealing in breach of Bessemer’s fiduciary duties to Plaintiffs. (Id. ¶¶ 174-75.) Defendants respond that Plaintiffs’ claim is derivative in nature because it seeks relief for harm caused to all of NHI’s shareholders — not just the minority shareholders— and accordingly Plaintiffs lack standing to bring a direct breach of fiduciary duty claim. (Ds’ Mem. 10-13.) In the alternative, Defendants argue that Plaintiffs have failed to allege that Bessemer’s actions benefitted it at Plaintiffs’ expense. (Id. at 13-16.)

As NHI is a Delaware corporation, Delaware law governs whether Plaintiffs’ breach of fiduciary duty claim is direct or derivative. San Diego Cnty. Enmps. Ret. Ass’n v. Maounis, 749 F.Supp.2d 104, 126 (S.D.N.Y.2010). Whether a claim is direct or derivative “turn[s] solely on the following questions: (1) who suffered the alleged. harm (the corporation or the suing stockholders, individually); and (2) who would receive the benefit of any recovery or other remedy (the corporation or the stockholders, individually)?” Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1033 (Del. 2004) (emphasis in original). For a claim to be direct, Plaintiffs must allege an injury “independent of any alleged injury to the corporation” and be able to “prevail without showing an injury to the corporation.” Id. at 1039.

That Bessemer’s actions diluted the value of NHI’s shares is the gravamen of the majority of Plaintiffs factual allegations in support of their direct breach of fiduciary duty claim. First, Plaintiffs allege that terminating Marteau from his NHI and Intego positions was self-dealing that allowed Bessemer to use NHI’s assets and cash for its own purposes and to install a CEO who would “comply with Bessemer’s demands, all to the detriment of the minority stockholders of NHI,” which “resulted in a diminution in the value of NHI [and] further prejudiced the minority stockholders by reducing the value of their ownership irrespective of the AVG Offer.” (SAC ¶¶ 63, 90, 93, 95, 128.) Further, the BOD’s failure to examine the AVG offer “depressed the value of NHI” by over $10 million. (Id. ¶¶ 101, 126.) Finally, Plaintiffs allege that creating false documents in connection with stock option grants that valued NHI at below its fair market value “dilut[ed] the value of [shareholders’] NHI stock holdings.” (Id. ¶ 171.)

“Equity dilution claims are typically viewed as derivative under Delaware law.” Feldman v. Cutaia, 956 A.2d 644, 655 (Del.Ch.2007), aff'd, 951 A.2d 727 (Del.2008). Because NHI, not Plaintiffs exclusively, suffered harm from any alleged diminution of value, Plaintiffs allegations that Bessemer’s actions reduced the value of their NHI shares cannot form the basis of a direct breach of fiduciary duty claim. Gentile, 906 A.2d at 99 (“In the eyes of the law, such equal ‘injury’ to the shares ... is hot viewed as, or equated with, harm to specific shareholders individually.”); Kramer v. W. Pac. Indus., Inc., 546 A.2d 348, 353 (Del.1988) (“[Wjhere a plaintiff shareholder claims that the value of his stock will deteriorate and that the value of his proportionate share of the stock will be decreased as a result of alleged director mismanagement, his cause of action is derivative in nature.”); see Debussy LLC v. Deutsche Bank AG, No. 05-CV-5550, 2006 WL 800956, at *3 (S.D.N.Y. Mar. 29, 2006) (“Because injury alleged by a diminution of investment value is indirect and contingent upon injury to the corporation, the claim is derivative.”), aff'd, 242 Fed.Appx. 735 (2d Cir.2007).

As for Plaintiffs’ remaining allegations, the SAC states that the proposed loan to finance a cash dividend could “put NHI at substantial risk as a going concern,” thereby reducing the value of Transeo’s right to redemption under the SA while disproportionately benefitting Bessemer through a tax benefit not realized by the minority shareholders. (SAC ¶¶ 35, 41, 44.) This allegation is not actionable, however, as NHI never borrowed money to finance a dividend. Moreover, although the promissory note dividend was allegedly structured so Bessemer could avoid having to report the proceeds as taxable income in the United States, (id. ¶ 48), that Bessemer may have received a tax advantage from the structure does not plausibly allow me to infer that Plaintiffs were correspondingly harmed by the dividend’s structure in the absence of such an allegation and factual support for it. Likewise, the movement of Intégo’s assets into the United States allegedly allowed Bessemer to use NHI’s assets and cash for its own purposes, but the SAC only alleges that this action harmed Intego — not Plaintiffs— through disruption of Intego’s services; compromising the security of Intego’s clients; damage to Intégo’s reputation; hacking of Intego’s website; and potentially violation of European data privacy laws. (Id. ¶¶ 60-61, 63, 65, 95, 128.) ' There are no facts rendering plausible the inference that the move in fact reduced the value of NHI, let alone Plaintiffs’ shares in particular.

In opposition, Plaintiffs advance new arguments related to its direct breach of fiduciary duty claim — specifically, that Transeo suffered a distinct harm through the denial of its contractual right to have Marteau on the BOD and termination of its service contract without the required notice. (Ps’ Mem. 9.) Any allegation regarding the SA’s provisions dictating the composition of the BOD underlies Plaintiffs’ breach of contract claim, {see SAC. ¶¶ 177-83; id. ¶ 178 (“Pursuant to the Stockholders’ Agreement, Transeo was and is entitled to appoint Marteau to the NHI BOD.”)), and thus cannot be the basis for a breach of fiduciary duty claim. See Nemec v. Shrader, 991 A.2d 1120, 1129 (Del.2010) (“It is a well-settled principle that where a dispute' arises from obligations that are expressly addressed by contract, that dispute will be treated as a breach of contract claim. In that specific context, any fiduciary claims arising out of the same facts that underlie the contract obligations would be foreclosed as superfluous.”). Regarding Transeo’s service contract with NHI, the SAC states that “Bessemer, without explanation and operating through the NHI BOD, used this majority position to terminate ... Transeo’s consulting and management services contract with NHI ... [at] a special meeting of the NHI BOD to ratify this decision ... on March 1,’ 2011” and “without providing the period of notice called for under that contract.” (SAC ¶¶ 86, 206.) As the required notice also appears contractual in nature, this allegation cannot be addressed in a breach of fiduciary duty claim. See Nemec, 991 A.2d at 1129.

As Plaintiffs have not alleged any harm independent of diminution in the value of NHI’s stock, Defendants’ Motion to Dismiss is granted with respect to Plaintiffs’ direct breach of fiduciary duty claim against Bessemer.

2. Derivative Breach of Fiduciary Duty Claim

In the alternative, Plaintiffs allege a derivative breach of fiduciary duty claim on behalf of Nominal Defendant NHI against Bessemer, Deer, Erwin, and Levine based on: the BOD’s failure to consider the AVG offer; the BOD’s purported removal of Marteau; and Erwin’s “[b]latant [misconduct” related to the 2009 Stock Option Plan, the Annual General Meeting of Intego S.A., withholding financial results from Plaintiffs, refusal to allow Transeo access to NHI’s books and records, and relocation of Intego’s assets to the United States. (SAC ¶¶ 227, 238-49.) Plaintiffs concede that they did not make demand on the NHI BOD to pursue such a claim on the corporation’s behalf and allege that such demand would have been futile. (Id. ¶¶ 253-56.)

a. Demand Futility , .

Defendants contend that Plaintiffs inadequately pleaded futility of demand. (Ds’ Mem. 27-28.) Directors are entitled to the presumption that they will be faithful to their fiduciary duties, and demand will be excused only if Plaintiffs can show that the NHI BOD is “incapable of making an impartial decision regarding the pursuit of the litigation.” Beam v. Stewart, 845 A.2d 1040, 1049 (Del.2004).

The demand requirement for derivative actions contains both a procedural aspect — enumerated in Federal Rule of Civil Procedure Rule 23.1(b) — and a substantive requirement under state law. Cordts-Auth, 815 F.Supp.2d at 793 (“There are two components to the demand requirement; one procedural, the other substantive.... While Rule 23.1 governs the procedural aspects of the demand requirement, the second, substantive dimension of the demand requirement, which concerns the adequacy of the efforts actually put forth by a'plaintiff, is governed by state law.”) Rule 23.1 is solely concerned with the adequacy of the SAC, “merely requiring] that, [it] allege the facts that will enable [the] court to decide whether such a demand requirement has been satisfied.” Halebian v. Berv, 590 F.3d 195, 211 (2d Cir.2009) (internal quotation marks omitted). For the reasons set forth below, I find that Plaintiffs have pleaded particularized facts plausibly rebutting the presumption that the Bessemer-affiliated directors were independent, thus satisfying the procedural requirements of Rule 23.1.

Substantively, Delaware law governs whether Plaintiffs’ allegations of demand futility are adequate. To show demand futility for an exercise of BOD action, Plaintiffs must plead facts creating “a reasonable doubt ... that: (1) the directors are disinterested and independent and (2) the challenged transaction was otherwise the product of a valid exercise of business judgment.” Aronson v. Lewis, 473 A.2d 805, 814 (Del.1984), overruled on other grounds, Brehm v. Eisner, 746 A.2d 244 (Del.2000). “If a plaintiff can demonstrate a reasonable doubt as to the first or second prong of the Aronson test, then he has demonstrated that demand would have been futile.” In re'Goldman Sachs Mortg: Servicing S’holder Derivative Litig., No. 11-CV-4544, — F.Supp.2d -, -, 2012 WL 3293506, at *4 (S.D.N.Y. Aug. 14, 2012). Where the complaint alleges BOD inaction, however, the demand futility inquiry focuses only on the first prong of Aronson — whether Plaintiffs have established a “reasonable doubt that ... the board of directors could have properly exercised its independent and disinterested business judgment in responding to a demand.”' Rales v. Blasband, 634 A.2d 927, 934 (Del.1993). “Where there is no conscious decision by directors to act or refrain from acting, the business judgment rule has no application.” Id.-at 933.

b. Directorial Independence and Disinterestedness

Although Defendants allege that the Aronson test applies to Plaintiffs’ allegations that challenge BOD action or the decision to refrain from acting — i.e., the failure to review the AVG offer and Marteau’s purported removal as a director — and the Rales test applies to the examples of Erwin’s alleged misconduct, (Ds’ Mem. 28 n. 11), Plaintiffs argue that the distinction between the. two tests is inconsequential in this case because demand would be futile where, as here, there was no majority of disinterested and independent directors, (Ps’ Mem. 25). If the SAC pleads facts raising a reasonable doubt as to the NHI BOD’s disinterestedness and independence, see In re J.P. Morgan Chase & Co. S’holder Litig., 906 A.2d 808, 820 (Del.Ch.2005) (“The two prongs of the Aronson test are disjunctive, meaning that if either part is satisfied, demand is excused.”), aff'd, 906 A.2d 766 (Del.2006), demand will be futile with respect to all of Plaintiffs’ allegations. The SAC alleges that demand was futile generally because half of the NHI BOD — Erwin, a Bessemer affiliate, and Levine, a Bessemer employee — was under the “domination and control of Bessemer,” (SAC ¶ 254), and thus interested and not independent. See In re The Limited, Inc. S’holders Litig., No. CV-17148, 2002 WL 537692, at *7 (Del.Ch. Mar. 27, 2002) (“[Wjhere the challenged actions are those of a board consisting of an even number of directors, plaintiffs meet their burden of demonstrating the futility of making demand on the board by showing that half of the board was either interested or not independent.”).

Under Delaware law, “[a] director is considered interested where he or she will receive a personal financial benefit from a transaction that is not equally shared by the stockholders. Directorial interest also exists where a corporate decision will have a materially detrimental impact on a director, but not on the corporation and the stockholders.” Rales, 634 A.2d at 936 (citation omitted). Although the SAC contains a conclusory allegation that the majority of NHI’s BOD was “not disinterested” with respect to the AVG offer, (SAC ¶ 243), it contains no allegations that any NHI directors stood to receive a personal financial benefit from, or that any director might be injured by, the decisions at issue — a failure to pursue the AVG offer; the purported removal of Marteau; and Erwin’s alleged misconduct— except potentially Erwin, as an employee and director of NHI and Intego, who perhaps benefitted from the 2009 Stock Option Plan. The essence of Plaintiffs’ allegations is that Bessemer purposely acted to diminish the value of NHI by using its influence on NHI’s BOD to let the AVG offer expire, to remove Marteau from leadership positions, and to allow Erwin’s allegedly tortious actions. While it is alleged that Bessemer stood to gain through the misappropriation of NHI’s cash and assets and that Bessemer sought to maximize NHI’s short-term profits — at the expense of its long-term prospects — the SAC does not specifically allege that any potentially interested director — Erwin, Levine, or Goldsmith — would have received a personal benefit, or suffered a materially detrimental impact, not equally shared by the shareholders. The SAC thus does not plausibly allege interestedness.

“Independence means that a director’s decision is based on the corporate merits of the subject before the board rather than extraneous considerations or influences____[I]t is not enough to charge that a director was nominated by or elected at the behest of those controlling the outcome of a corporate election.” Aronson, 473 A.2d at 816. Specifically, “a plaintiff charging domination and control of one or more directors must allege particularized facts manifesting a direction of corporate conduct in such a way as to comport with the wishes or interests of the corporation (or persons) doing the controlling.” Id. (internal quotation marks omitted). With respect to Levine, Plaintiffs allege that he is a partner at BVP and a Bessemer-appointed NHI director, (SAC ¶ 12), who also:

• stated in February 2011 that Bessemer would consider an offer in the range of $17 to $20 million for NHI to be “compelling,” but who shortly thereafter terminated Gelblat as an NHI director because of his support for the $25 million AVG offer and replaced him "with Erwin, who voted as directed by Bessemer to block consideration of any AVG acquisition, (id. ¶¶ 66, 70, 80-81, 85);

• emailed the NHI BOD on February 24, 2011 about expecting an offer from AVG and stressing the importance of responding quickly to “keep the deal alive and warm” only to replace Marteau with Erwin as CEO and President of NHI at the March 1, 2011 meeting to facilitate the rejection of the AVG offer by removing an employee AVG allegedly considered essential, (id. ¶¶ 86, 89, 96);

• conspired with the other Bessemer- ' appointed directors, Erwin and Goldsmith, to form an unsanctioned committee that voted to remove Marteau as a director of NHI prior to the August-1, 2011 special meeting of the BOD, (id. ¶¶ 166,180-81); and

• proposed increasing NHI’s authorized shares by 20,000,000 at the August 1 meeting to benefit Erwin and Price, (id. ¶¶ 157-58), and participated in a BOD meeting that excluded Marteau where the 2009 Stock Op- . tion Plan was approved, (id. ¶ 171).

With respect to Erwin, Plaintiffs allege that he had a long-standing relationship with Bessemer, who chose him to replace Marteau as the CEO ,and President of Intego and NHI despite Erwin’s lack of professional and practical skills necessary for the positions, such as experience with Apple’s hardware and software products and requisite French language ability to communicate with the majority of Intego’s Paris-based employees. (Id. ¶¶ 55, 81-84, 90.) Installing Erwin allegedly furthered Bessemer’s control of NHI and Intego as he:

• ■ replaced Gelblat on the NHI BOD to block consideration of the AVG offer, which he accomplished by moving to take sole control of the talks with AVG at the BOD meeting, a motion that was supported only by the other Bessemer-appointed directors,' and subsequently failing to pursue the offer at all by, for éxample, obtaining outside advisors to assess its merits, conducting due diligence, or making a counter-proposal, (id. ¶¶ 104, 109, 117-19);

• conspired with the other Bessemer-appointed directors, Levine and Goldsmith, to form an unsanctioned committee that voted to remove Marteau as a director of NHI prior to the August 1, 2011 special meeting of the BOD, (id. ¶¶ 166,180-81);

• proposed a stock option grant that would primarily benefit himself and Price, (id. ¶ 157), and participated in a BOD meeting that excluded Marteau where the 2009 Stock Option Plan was approved, (id. ¶ 171);

• created false and fraudulent documents in connection with the approval of the 2009 Stock Option Plan by NHI’s , shareholders and directors; the fair market value of the stock options granted pursuant to the plan; and the minutes of Intego S.A.’s annual meeting held on June. 29, 2011, (id.);

• withheld financial information and the books and records of NHI from Plaintiffs, (id.); and

• relocated Intego’s cash and assets from France to the United States, (id. ¶ 249).

While Defendants are correct that conclusory allegations, regarding the influence of a third party on the NHI BOD are insufficient to satisfy Plaintiffs’ obligations to plead independence with particularity, see Fink v. Weill, No. 02-CV-10250, 2005 WL. 2298224, at *3 (S.D.N.Y. Sept. 19, 2005), the SAC has done more than merely state that Bessemer had influence over Levine and Erwin. Independence involves “an inquiry into whether the director’s decision resulted from that director being controlled by another,” which can occur if a director is “dominated by that other party” or “beholden to the allegedly controlling entity.” Orman v. Cullman, 794 A.2d 5, 25 n. 50 (Del.Ch.2002) (emphases in original). Although “mere personal friendship or a mere outside business relationship” is insufficient to raise a reasonable doubt about a director’s independence, Beam, 845 A.2d at 1050, and “a director’s appointment at the behest of a controlling shareholder does not suffice to establish a lack of independence,” In re Tyson Foods, Inc. Consol. S’holder Litig., 919 A.2d 563, 588 (Del.Ch.2007), Plaintiffs have alleged sufficiently more control over and influence on the decisions of Levine and Erwin by Bessemer than exists in a typical business relationship. First, Gelblat’s removal from the NHI BOD and the installation of Erwin — -who had an “extensive and longstanding” relationship with Bessemer but lacked qualifications related to Intego’s business — as his replacement shortly before NHI’s failure to consider an offer for at least $5 million more than the price Levine had stated only a month earlier would be a “compelling” offer raises a reasonable doubt as to whether Levine’s and Erwin’s actions in not pursuing AVG’s offer were based on “extraneous considerations or influences.” Aronson, 473 A.2d at 816. Moreover, taking all of Plaintiffs allegations as true, the same doubts are raised by the actions of Levine and Erwin in removing Marteau — the successful founder of Intego — from his positions at Intego, NHI, and eventually (purportedly) the NHI BOD, particularly if Marteau was so integral to the companies that the AVG offer was contingent on his continued employment. . As Plaintiffs have pleaded particularized facts plausibly raising doubts as to the independence of half of the NHI BOD at this stage, In re Limited, Inc., 2002 WL 537692, at *7 (demand futile where half of board “either interested or not independent”) — in other words, facts rendering it plausible that a BOD composed of Levine, Erwin, and Goldsmith (with or without Marteau) would not vote to sue Bessemer or themselves — Plaintiffs’ demand on the NHI BOD is thus excused.

c. Breach of Fiduciary Duty i. . AVG Offer

Plaintiffs allege that the failure to investigate and respond to the AVG offer resulted in a breach of the fiduciary duties of loyalty, care, and good faith owed by Bessemer and Deer (collectively, “Shareholder Defendants”), and Erwin and Levine (collectively, “Director Defendants”), to Plaintiffs. (SAC ¶ 240.) Defendants argue that Plaintiffs have failed to articulate a basis of derivative liability as to the Shareholder Defendants, and that no Delaware law suggests that the Director Defendants have a duty of care or loyalty to examine an unsolicited offer to buy NHL (Ds’ Mem. 31, 33.) Moreover, they argue, the exculpatory provision in NHPs Certificate of Incorporation pursuant to DGCL § 102(b)(7), (Ormond Decl. Ex D, art. Seven), immunizes Erwin and Levine from personal liability for breaches of the duty of care, and there is no other duty allegedly breached in connection with the BOD’s refusal to consider the AVG offer. (Ds’ Mem. 31 n. 16.)

As a preliminary matter, the NHI Certificate of Incorporation is not attached to the SAC or incorporated in the SAC by reference. Defendants assert that I may take judicial notice of the “significant fact” that it exculpates the directors to the fullest extent available under Delaware law. See La. Mun. Police Emps. Ret. Sys. v. Blankfein, No. 08-CV-7605, 2009 WL 1422868, at *7 (S.D.N.Y. May 19, 2009). Where an exculpatory provision in the Certificate of Incorporation is raised for the first time in a brief in support of a Rule 12(b)(6) motion, however, it is properly considered only on summary judgment. Cf. Ad Hoc Comm. of Equity Holders of Tectonic Network, Inc. v. Wolford, 554 F.Supp.2d 538, 561 (D.Del.2008) (footnote omitted) (“Delaware state courts characterize a [Section] 102(b)(7) charter provision as in the nature of an affirmative defense .... [and] such defenses will generally not form the basis of a Rule 12(b)(6) dismissal.”); Malpiede v. Townson, 780 A.2d 1075, 1092 (Del.2001) (although not reversible error when district court considered exculpatory provision without converting to motion for summary judgment, stating for future cases that, “[i]n the case of a Rule 12(b)(6) motion, as here, if the Section 102(b)(7) charter provision is raised for the first time in the motion or brief in support of the motion, it is a matter outside the pleading. If not excluded by the court, the existence of such matter means that the motion will be converted, by clear force of the pleading rules, into a motion for summary judgment under Rule 56 .... ”). Further, “when a duty of care breach is not the exclusive claim, a court may not dismiss based upon an exculpatory provision.” Alidina v. Intemet.com Corp., No. CV-17235, 2002 WL 31584292, at *8 (Del.Ch. Nov. 6, 2002) (emphasis in original). Because Plaintiffs allege that the Director Defendants breached the duty of loyalty as well, “the [Section] 102(b)(7) provision cannot operate to negate plaintiffs’ duty of care claim on a motion to dismiss,” id., and I will not consider any potential effect of the Certificate of Incorporation’s exculpatory provision here.

1) Director Defendants

All directors of a Delaware corporation are fiduciaries of the corporation’s stockholders — here, Plaintiffs, Goldsmith, and Bessemer. See Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d 1261, 1280 (Del.1989). Defendants argue that the directors’ refusal to pursue the AVG offer does not implicate the duties of care or loyalty, as Plaintiffs suggest.

“Any time a stockholder challenges an action taken by the board of directors, the Court must first determine the appropriate standard of review to use in analyzing the challenged action.” eBay Domestic Holdings, Inc. v. Newmark, 16 A.3d 1, 27 (Del.Ch.2010). The business judgment rule presumes that “in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.” Aronson, 473 A.2d at 812. To avoid application of this deferential standard, “[t]he burden falls upon the proponent of a claim to rebut the presumption by introducing evidence either of director self-interest, if not self-dealing, or that the directors either lacked good faith or failed to exercise due care.” Citron v. Fairchild Camera & Instrument Corp., 569 A.2d 53, 64 (Del.1989).

In analyzing demand futility, I found that Plaintiffs had plausibly pleaded that the Director Defendants were not independent and were instead controlled by Bessemer, NHI’s majority shareholder. Presuming the truth of Plaintiffs allegations, the SAC plausibly alleges that Bessemer used the Director Defendants to effect its plan to maintain access to NHI’s cash and assets through refusing to consider the AVG offer. Specifically, Levine— despite having recently indicated that an offer of $17 million to $20 million would be “compelling” — notified Gelblat that he would no longer be an NHI director after Gelblat expressed support for pursuing the offer, and Bessemer selected Erwin to replace Gelblat on the BOD to ensure that the AVG offer would not reach fruition. (SAC ¶¶ 79-81). When the offer was discussed at the March 1, 2011 meeting, Erwin moved to take sole control of talks with AVG, a motion supported by the other Bessemer-controlled NHI BOD members, and the BOD subsequently took no actions to analyze the offer, such as hiring an investment bank or conducting a valuation of NHI. (Id. ¶¶ 104, 109, 117-19.)

Although the Director Defendants might eventually be protected by the Certificate of Incorporation’s exculpatory provision, the SAC’s allegations, taken as true, plausibly suggest that their actions were not undertaken in good faith to advance the best interest of NHI, and thus do not merit protection under the business judgment rule. See In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 67 (Del.2006) (“The good faith required of a corporate fiduciary includes not simply the duties of care and loyalty ... but all actions required by a true faithfulness and devotion to the interests of the corporation and its shareholders. A failure to act in good faith may be shown, for instance, where the fiduciary intentionally acts with a purpose other than that of advancing the best interests of the corporation ....”) (internal quotation marks omitted). Because Plaintiffs have plausibly alleged that the Director Defendants may not be entitled to business judgment protection for their actions in ensuring NHI would not pursue the AVG offer, Defendants’ motion to dismiss on that ground is denied.

2) Shareholder Defendants

Majority shareholders owe fiduciary duties to minority shareholders, see Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 958 (Del.1985) (citing Allied Chem. & Dye Corp. v. Steel & Tube Co. of Am., 120 A. 486, 491 (Del.Ch.1923)), but the duty is narrow and breached when majority shareholders exploit the minority shareholders, Thorpe v. CERBCO, Inc., No. CV-11713, 1993 WL 443406, at *7 (Del.Ch. Oct. 29, 1993) (“The principle that a controlling shareholder may not utilize his control to deprive minority shareholders of the value of their stock is, however, far different from the proposition that a controlling stockholder qua stockholder has an affirmative duty to support a particular transaction, even if it is not in their interest as a shareholder to do so.... Controlling shareholders, while not allowed to use their control over corporate property or processes to exploit the minority, are not required to act altruistically towards them.”); Jedwab v. MGM Grand Hotels, Inc., 509 A.2d 584, 599 (Del.Ch.1986) (breach of fiduciary duty where the minority was financially injured and the majority shareholder gained what the minority shareholders lost). Defendants allege that Plaintiffs have not shown that the Shareholder Defendants’ purported conduct benefitted the majority at Plaintiffs’ expense, but rather only that the Shareholder Defendants were benefitted disproportionately to Plaintiffs, (Ds’ Mem. 13; Ds’ Reply Mem. 6), and Delaware law does not require a parity of benefits between majority and minority shareholders, Nixon v. Blackwell, 626 A.2d 1366; 1376 (Del.1993) (“It is well established in our jurisprudence that stockholders need not always be treated equally for all purposes.”); eBay, 16 A.3d at 37 n. 122 (“Disparate treatment of stockholders is not a per se violation of Delaware law.”).

. Even though the fiduciary duty owed by the majority is narrow, the SAC contains allegations — convoluted though they may be — that render plausible Plaintiffs’ claim that Shareholder Defendants exercised control over the NHI BOD to ensure the AVG offer would not be pursued, which ultimately benefitted the Shareholder Defendants at Plaintiffs’ expense. Specifically, Plaintiffs allege that the Shareholder Defendants sought to maximize NHI’s short-term cash flow and ensure their access to its cash and intellectual property, while Plaintiffs sought to protect and advance NHI’s long-term prospects and goodwill. (SAC ¶ 241.) After the Shareholder Defendants replaced Gelblat — one of their, own appointed directors — once his support for pursuing the offer became known, the Shareholder Defendants could control the actions of the NHI directors, aside from Marteau, with respect to the consideration of the offer. (Id. ¶¶ 79-81, 85.) The Shareholder Defendants allegedly did not want to sell NHI in March 2011 because a sale would have culminated in a distribution of cash pro rata to all shareholders and ended their access to Intego’s intellectual property, (id. ¶ 101), while letting the offer lapse instead depressed NHI’s value, making it unlikely that Transeo would invoke its right of redemption or demand a sale after June 2012, actions that would have further hindered the Shareholder Defendants’ access to cash and assets, (id. ¶¶ 101, 126, 128). Taking all of Plaintiff’s allegations in the SAC as true, as I must on a motion to dismiss, Plaintiffs have alleged facts sufficient to suggest that Shareholder Defendants ensured that the NHI BOD would not consider the AVG offer, in order to maintain their access to NHI and Intego’s cash and assets at the expense of the minority shareholders, who were thereafter “deprive[d] ... of the value of their stock.” Thorpe, 1993 WL 443406, at *7. Defendants’ Motion on this ground is accordingly denied.

ii. Marteau’s Purported Removal from the NHI BOD

Plaintiffs allege that since August 1, 2011, following Marteau’s purported removal from the BOD, Marteau has not been afforded notice of NHI BOD meetings, given minutes of prior meetings, or provided with information about NHI to which a director is entitled. (SAC ¶¶ 245-46.) Plaintiffs further allege that any meeting held without all directors present violates the SA and renders several actions taken by the NHI BOD after August 1, 2011 void. (Id. ¶¶ 247-48.) Defendants contend, on the other hand, that Plaintiffs have failed to allege that Marteau’s exclusion from BOD business breached any identifiable fiduciary duty or that any breaches were committed in bad faith. (Ds’ Mem. 32.)

It is clear that any claim based on Marteau’s alleged removal or exclusion from the BOD arises from the contractual provisions of the SA — a fact acknowledged by Plaintiffs. (See SAC ¶ 47 (“The conduct of any meeting of the NHI BOD without all directors present violates Section 7.2 of the Stockholders’ Agreement .... ”); Ps’ Mem. 29 (“The purported removal [of Marteau] was. in violation of the Stockholders’ Agreement, as was Board action to establish such a committee in the first place without Marteau’s presence in person or by proxy.”).) Because Plaintiffs’ injury is contractual, it is not redressable through a breach of fiduciary duty claim, see Nemec, 991 A.2d at 1129, and Plaintiffs have thus failed to state a claim related to Marteau’s purported termination or exclusion from the NHI BOD. Defendants’ Motion to Dismiss is granted with respect to this aspect of the derivative breach of fiduciary duty claim.

in. Erwin’s Misconduct

Plaintiffs allege that Erwin — with either the direct knowledge or acquiescence of the Bessemer-eontrolled NHI directors— created false documents in connection with the adoption and approval of the 2009 Stock Option Plan; forged a false document about the Intego S.A. annual meeting; withheld NHI’s financial information from Plaintiffs; refused to permit Transeo to inspect NHI’s books and records; and relocated Intego’s assets and cash from France to -the United States. (SAC ¶ 249.) Through these actions, the SAC alleges that the Shareholder and Director Defendants breached their duty of loyalty to Plaintiffs. (Id. ¶ 250.) Defendants respond that Plaintiffs have identified no basis for liability for either the Shareholder or Director Defendants, and that pursuant to the Certificate of Incorporation, the Director Defendants can only face liability for breaches of the duty of loyalty or for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, which Plaintiffs have failed to plausibly allege. (Ds’ Mem. 33.)

As a preliminary matter, this Court does not have subject matter jurisdiction related to Plaintiffs’ claims for withholding financial .information or inspection of NHI’s books and records, as discussed in more detail below. See Del. Cod. Ann. tit. 8, § 220(c) (“If the corporation, or an officer or agent thereof, refuses to permit an inspection sought by a stockholder ... [t]he Court of Chancery is hereby vested with exclusive jurisdiction to determine whether or not the person seeking inspection is entitled to the inspection sought.”). Moreover, Delaware courts have held that books and records violations should be litigated in distinct proceedings, not via breach of fiduciary duty claims. Cf. Ravenswood Inv. Co., L.P. v. Winmill & Co., No. CV-7048, 2013 WL 396178, at *1 (Del.Ch. Jan. 31, 2013) (“The Section 220 and fiduciary duty claim should not have been brought together.... It is perhaps worth noting that, unlike most cases, the Section 220 aspect and the fiduciary duty aspect do overlap and relate to the rights of minority shareholders to receive corporate information. The Court holds the view that moving forward with the books and records aspect of this matter will clarify the issues .... Thus, the Court will separate the two claims; resolve the Section 220 aspect; and then, address the fiduciary duty claim, if it remains.”) (footnote omitted); TravelCenters of Am., LLC v. Brog, No. CV-3516, 2008 WL 868107, at *1 (Del.Ch. Mar. 31, 2008) (general rule that books and records violations should be litigated in proceedings distinct from other claims); Khanna v. Covad Commc’ns Grp., Inc., No. CV-20481, 2004 WL 187274, at *6 (Del.Ch. Jan.23, 2004) (“A Section 220 action is not the proper forum for litigating a breach of fiduciary duty case.”); Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 714 A.2d 96, 103-04 (Del.Ch.1998) (“This Court has consistently rejected the injection into a [Section] 220 proceeding of collateral issues .... ”). It would be an end-run around the rule that a Section 220 action should be a distinct proceeding brought only in the Delaware Court of Chancery were I to consider allegations in Plaintiffs’ breach of fiduciary duty claim premised upon conduct redress-able in the first instance through a Section 220 claim. I -will thus not analyze whether the Director or Shareholder Defendants plausibly breached their fiduciary duties by withholding financial information or refusing to allow an inspection of NHI’s books and records.

1) Director Defendants

The duty of loyalty is implicated where there are allegations of self-dealing — where, for example, a director is on both sides of a transaction or stands to benefit financially from it. Cf. Stone, 911 A.2d at 370. Although the SAC refers to the examples of Erwin’s misconduct in conclusory fashion as “self-dealing that is not in the best interest of NHI,” (SAC ¶ 250), it contains no specific allegations that the Director .Defendants’ actions in allegedly falsifying documents and relocating Intego’s assets were interested transactions or enriched the Director Defendants at the shareholders’ expense. See Zimmerman v. Crothall, No. CV-6001, 2012 WL 707238, at *13 (Del.Ch. Mar. 27, 20:12).

The duty of loyalty is also implicated in instances “where the fiduciary fails to act in good faith.” Stone, 911 A.2d at 370. “A failure to act in good faith may be shown, for instance, where the fiduciary intentionally acts with a purpose other than that of advancing the best interests of the corporation, where the fiduciary acts with the intent to violate applicable positive law, or where the fiduciary intentionally. fails to act in the face of a known duty to act, demonstrating a conscious disregard for his duties.” Walt Disney, 906 A.2d at 67 (internal quotation marks omitted). . .

[A] plaintiff must also plead particularized facts that demonstrate that the directors acted with scienter, i.e., that they had actual or constructive knowledge that their conduct was legally improper. Therefore, the issue before [the Court] is whether the [SAC] alleges particularized facts that, if proven, would show that ... the [Director Defendants knowingly engaged in fraudulent or illegal conduct or breached in bad faith the covenant of good faith and fair dealing.

Wood v. Baum, 953 A.2d 136, 141 (Del.2008) (footnote and internal quotation marks omitted).

The SAC alleges several instances where Erwin — allegedly with the direct knowledge or acquiescence of the other Bessemer-appointed NHI directors, including Levine — plausibly failed to act in good faith through intentional violations of the law. First, the SAC alleges that Erwin created false and fraudulent documents in connection with the adoption of the 2009 Stock Option Plan that recited its approval at (improperly convened) meetings of NHI stockholders and the BOD, whereas Plaintiffs and Marteau, respectively, were not notified of or in attendance at these meetings. (SAC ¶ 171.) Further, the SAC alleges that Erwin created false and fraudulent documents in connection with the stock options granted pursuant to the 2009 Stock Option Plan that valued NHI below fair market value in violation of Section 409A of the Internal Revenue Code. (Id.) Next, the SAC alleges that Erwin forged a document falsely indicating he was present in person at a July 29, 2011 Annual Meeting of Intego S.A. in violation of- French law. (Id.) Finally, the SAC alleges that Erwin took steps to relocate Intego’s cash and assets from France to the United States, and that this relocation potentially violated European data privacy laws. (Id. ¶¶ 65, 249.) Taking the allegations in the SAC as true, Plaintiffs have plausibly alleged that Erwin directly, and Levine indirectly, knowingly falsified business records and relocated NHI’s cash and assets, and further that these actions potentially violated applicable laws, thus rendering plausible that the Director Defendants breached their fiduciary duties to NHI. In re Massey Energy Co., No. CV-5430, 2011 WL 2176479, at *20 & n. 145 (Del.Ch. May 31, 2011) (“[A] fiduciary of a Delaware corporation cannot be loyal to a Delaware corporation by knowingly causing it to seek profit by violating the law.”) (collecting eases); Guttman, 823 A.2d at 506 n. 34 (“[O]ne cannot act loyally as a corporate director by causing the corporation to violate the positive laws it is obliged to obey.”); see Se. Pa. Transp. Auth. v. Volgenau, No. CV-6354, 2012 WL 4038509, at *3 n. 16 (Del.Ch. Aug. 31, 2012) (“[A] decision to cause a corporation to take an act in violation of its certificate of incorporation would appear analogous to a decision to cause the corporation to take an illegal act, which is typically viewed as a breach of the duty of loyalty.”). Accordingly, Defendants’ Motion to Dismiss is denied with respect to this aspect of Plaintiffs’ derivative breach of fiduciary duty claim.

' 2) Shareholder Defendants

The SAC fails to allege that the Shareholder Defendants had any involvement in — or knowledge of — Plaintiffs’ allegations that Erwin created false documents for the 2009 Stock Option Plan and forged a document related to the Intego S.A. annual meeting. A majority shareholder’s fiduciary duty to the minority is breached when the majority’s actions benefit themselves at the expense of the minority, see Gentile, 906 A.2d at 103; Thorpe, 1993 WL 443406, at *7, and the SAC is bereft of any allegations connecting the Shareholder Defendants to Erwin’s actions or explaining how any alleged misconduct with respect to these documents exploited Plaintiffs in particular. Accordingly, Defendants’ Motion to Dismiss is granted with respect to this aspect of Plaintiffs’ derivative breach of fiduciary duty claim.

Finally, Plaintiffs’ assertion that the Shareholder Defendants breached their fiduciary duty to the minority through Erwin’s steps to relocate Intego’s assets and cash from France to the United States is unavailing. Although Bessemer allegedly sought to relocate Intego’s assets, (see, e.g., SAC ¶¶ 56-57, 63-65, 128), the SAC alleges only that the relocation harmed Intego, (id. ¶¶ 60-61, 65), not that the harm to Intego reduced the value of Plaintiffs’ interest in NHI, and thus not that the Shareholder Defendants’ access to Intego’s assets “benefit[ted] [themselves] at the expense of the minority stockholders,”' Gentile, 906 A.2d at 103. Moreover, the SAC makes only conclusory allegatiohs that the Shareholder Defendants sought to relocate Intego’s assets so they might exercise “tighter control” of them, (SAC ¶ 57), but it fails to allege that the Shareholder Defendants did anything to cause Erwin to relocate the assets. See Gentile, 906 A.2d at 103. Although Plaintiffs have plausibly alleged that Bessemer exercised control over the Bessemer-affiliated directors, the SAC’s factual allegations do not plausibly allow me to infer “more than the mere possibility of misconduct” by the Shareholder Defendants in connection with Erwin’s alleged relocation of Intego’s assets, Iqbal, 556 U.S. at 679, 129 S.Ct. 1937, and thus Defendants’ Motion to Dismiss is granted with respect to this aspect of Plaintiffs’ derivative breach of fiduciary duty claim.

3. Breach of DGCL § 220(c)

Transeo brings a claim against Bessemer for refusing to allow Transeo to inspect NHI’s books and records in violation- of -DGCL § 220(c). (SAC ¶ 192-960 Although Section 220 permits a stockholder to examine a corporation’s books and records, it also vests exclusive jurisdiction with the Delaware Court of Chancery to determine whether the person seeking inspection is entitled to the inspection. Del. Cod. Ann. tit. 8, § 220(c); See Reserve Solutions Inc. v. Vernaglia, 438 F.Supp.2d 280, 289 (S.D.N.Y.2006) (finding court lacked subject matter jurisdiction to adjudicate Section 220 claim).

Plaintiffs do not seem to dispute Defendants’ contention that this Court lacks subject matter jurisdiction to adjudicate a Section 220 claim. (Ps’ Mem. 17 n. 12.) Defendants’ Motion to Dismiss the Section 220 claim is thus granted.

B. New York Law Claims

1. Breach of Contract

Plaintiffs bring a breach of contract claim against Bessemer for violation of the SA. Specifically, Plaintiffs allege that the SA grants Transeo the right to appoint Marteau to the NHI BOD and to remove Marteau, and specifies that meetings of the NHI BOD may not be held without the required quorum. (SAC ¶¶ 178-79, 182.)

“To state a claim for breach of contract under New York law, a plaintiff must allege (1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages.” Landmark Ventures, Inc. v. Wave Sys. Corp., No. 12-CV-3634, 2013 WL 909184, at *1 (2d Cir. Mar. 12, 2013) (summary order) (internal quotation marks omitted). When interpreting a contract, “words and phrases should be given their plain meaning, and the contract should be construed so as to give full meaning and effect to all of. its provisions.” LaSalle Bank Nat’l Ass’n v. Nomura