SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Wood
JUDGE: Jon B. Counsell
JUSTICES:
CONCURRED:
DISSENTED: ABRAHAMSON, C.J., BRADLEY, CROOKS, JJ., dissent.
(Opinion filed.)
NOT PARTICIPATING:
ATTORNEYS:
For the defendants-respondents-petitioners, there were
briefs by Jonathan C. Medow and Mayer Brown LLP, Chicago; Leon
S. Schmidt Jr. and Schmidt & Grace, Wisconsin Rapids; and Howard
A. Pollack, Michael B. Apfeld, and Godfrey & Kahn, S.C.,
Milwaukee; and oral argument by Jonathan C. Medow and Michael B.
Apfeld.
2
2014 WI 86
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2012AP1967
(L.C. No. 2011CV563)
Plaintiff-Appellant,
v.
Defendants-Respondents-Petitioners,
Defendant.
1
Data Key Partners v. Permira Advisers LLC, 2013 WI App
107, 350 Wis. 2d 347, 837 N.W.2d 624.
No. 2012AP1967
to show that they are entitled to relief because they have not
2
The Honorable Jon M. Counsell of Wood County presided.
3
The Second Amended Complaint reflects that plaintiffs are
the entity, Data Key Partners, and "partners of Data Key
Partners" who are suing individually because Data Key Partners
"owned shares of Renaissance's common stock." Second Amended
Complaint, 10. The caption, however, indicates that the
partners are suing on behalf of the entity, Data Key Partners.
4
All subsequent references to the Wisconsin Statutes are to
the 2011-12 version unless otherwise indicated.
2
No. 2012AP1967
I. BACKGROUND
directors).
not part of this review.5 (Counts III and IV, Second Amended
Complaint.)
Permira offered to pay $15 per share to the Pauls and $16.60 per
share to the minority shareholders. Renaissance's board of
5
Plaintiffs claimed that the directors failed to disclose
necessary information in the proxy statement, such as the Pauls'
relationship to Goldman Sachs, a commercial banking firm that
the directors hired to handle the financial aspects of the
transaction. Plaintiffs also claimed Permira aided and abetted
the directors and the Pauls in breaching their obligations to
minority shareholders. The circuit court dismissed these claims
and the court of appeals affirmed that dismissal. Data Key, 350
Wis. 2d 347, 47-59. The plaintiffs have not sought review of
the court of appeals decision; accordingly, these two claims are
not before us.
4
No. 2012AP1967
shareholders accepted it, with the sale set to close October 19,
and majority shares. This last offer would have netted the
also was rejected, but not before plaintiffs sued to stop the
Permira sale.
5
No. 2012AP1967
6
Second Amended Complaint, 27. As we mentioned
previously, Wis. Stat. 180.0828 is Wisconsin's codification of
the business judgment rule, which is central to the directors'
actions in regard to the sale of Renaissance.
7
Id., 30.
6
No. 2012AP1967
shares when compared with the public exchange price prior to the
shareholders received $10 million more than what they would have
received if all shareholders were paid the same per share price
by Permira.
the directors and the Pauls. (Counts I and II, Second Amended
with Plato might not close and concluded that the business
23.
8
See supra, note 5.
7
No. 2012AP1967
review.
II. DISCUSSION
A. Standard of Review
8
No. 2012AP1967
N.W.2d 180; Mitchell v. Lawson Milk Co., 532 N.E.2d 753, 756
(Ohio 1988).
B. Well-Pleaded Complaint
Wis. 2d 555, 699 N.W.2d 205. However, a court cannot add facts
law.9
9
Factual assertions are evidenced by statements that
describe: "who, what, where, when, why, and how." See State v.
Allen, 2004 WI 106, 23, 274 Wis. 2d 568, 682 N.W.2d 433.
10
Subsection 1 of Wis. Stat. 802.02 is based on Federal
Rule 8(a). Charles D. Clausen & David P. Lowe, The New
Wisconsin Rules of Civil Procedure: Chapters 801-803, 59 Marq.
L. Rev. 1, 37 (1976).
10
No. 2012AP1967
concluding that the district court had tested the complaint "by
the wrong standard." Id. at 553. The Second Circuit "held that
The Court explained that Federal Rule 8(a)(2) requires "a short
Court explained that the district court had applied the correct
Given the potential for abuse, the Court held that "basic
U.S. at 562-63. The passage oft quoted from Conley was: "the
11
The Supreme Court recognized that discovery in civil
cases "accounts for as much as 90 percent of litigation costs
when discovery is actively employed." Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 559 (2007).
13
No. 2012AP1967
is properly [pled]").
claims.
C. All Directors
1. Potential liability
14
No. 2012AP1967
the company" cannot form the basis for a legal claim against
Id., 17.
12
Wisconsin Stat. 180.0828(1) provides as follows:
15
No. 2012AP1967
19, 235 Wis. 2d 646, 612 N.W.2d 78; Reget, 242 Wis. 2d 278, 18
were done in good faith and in the honest belief that its
(1946).
16
No. 2012AP1967
13
Wisconsin Stat. 180.0828(1)(b) addresses a violation of
criminal law. There is no such contention here, so we do not
address it in this opinion.
17
No. 2012AP1967
under the Sherman Act, the pleader must allege facts that create
Id. at 557.
58-61 (6th ed. 2009). A leading case taking this approach seems
14
In re Tower Air, Inc., 416 F.3d 229 (3d Cir. 2005), was
decided before Twombly.
18
No. 2012AP1967
judgment rule on the face of the complaint, the court held that
must be dismissed.
15
Second Amended Complaint, 27.
16
Id.
19
No. 2012AP1967
Kaye v. Lone Star Fund V (U.S.), L.P., 453 B.R. 645, 679 (N.D.
2. Application
17
See also NCS Healthcare, Inc. v. Candlewood Partners,
LLC, 827 N.E.2d 797, 802-03 (Ohio Ct. App. 2005) ("Fed. R. Civ.
P. 12(b)(6) and Del. Ch. R. 12(b)(6) are textually identical,"
and therefore, a plaintiff must allege "facts sufficient to
overcome the business-judgment-rule protections" under state
law).
20
No. 2012AP1967
entitled to relief.
18
Second Amended Complaint, 5.
21
No. 2012AP1967
Weinstein Enters., Inc. v. Orloff, 870 A.2d 499, 512 (Del. 2005)
(Del. 2000))).
The bids from Plato were far from creating a certain sale. In
19
Id., 25.
22
No. 2012AP1967
Permira sale was only days away from closing and contained a $13
a bird in the hand was worth two in the bush. There is nothing
improper about such a decision. See Tower Air, 416 F.3d at 239
20
Petitioners' Brief, p. 31.
21
Second Amended Complaint, 26, 62(a).
23
No. 2012AP1967
sale to Permira." Data Key, 350 Wis. 2d 347, 28. The Second
not just upon a sale to Permira. Id., 29. However, the court
not assert that this benefit would occur only upon the sale to
22
Renaissance's filing with Securities and Exchange
Commission, Appellant's Supplemental Appendix, pp. 110-11.
23
Second Amended Complaint, 62(e).
24
No. 2012AP1967
Rev. 407, 411 n.23 (1988). "The director and officer liability
dismissed.
D. Majority Shareholders
of Renaissance.
125 Wis. 651, 661-62, 104 N.W. 985 (1905) (concluding that the
24
Id., 62(b).
27
No. 2012AP1967
allegation that this license was worth more than the $10 million
was involved in the sale. They do not explain, however, how the
Corp., 768 A.2d 492, 496 (Del. Ch. 2000) (director who was a
25
Id., 30.
28
No. 2012AP1967
shareholders received the same equity and cash payment per share
more per share than did the minority shareholders. As with the
sale of Synthes, plaintiffs here have stated no claim that
29
No. 2012AP1967
prevents the Pauls' from coming within the safe harbor, as the
III. CONCLUSION
30
No. 2012AP1967
review.
reversed.
31
No. 2012AP1967.ssa
1
See Data Key Partners v. Permira Advisors LLC, 2013 WI App
107, 25, 350 Wis. 2d 347, 837 N.W.2d 624.
2
Majority op., 21 (emphasis added). The footnote cited
for this proposition does not describe "plausibility" at all.
Majority op., 21 n.9.
3
See majority op., 22, 28-31, 37-38.
4
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
5
Bivens v. Six Unknown Named Agents of Fed. Bureau of
Narcotics, 403 U.S. 388 (1971).
1
No. 2012AP1967.ssa
I have written before that this court should give counsel the
adversarial system:
6
Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)
7
Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625, 630
(6th Cir. 2009) (granting a motion to dismiss a plaintiff's
claim that his union discriminated against him on the basis of
race, despite deeming the plaintiff's claim for relief
"plausible"). See generally 5 Charles Alan Wright & Arthur R.
Miller et al., Federal Practice & Procedure 1216 (3d ed. 2014)
("[C]ourts continue to struggle to categorize what allegations
meet the [Twombly and Iqbal] decisions' amorphous
requirements.").
8
Patricia W. Hatamyar, The Tao of Pleading: Do Twombly and
Iqbal Matter Empirically?, 59 Am. U. L. Rev. 553, 583 (2010).
9
See, e.g., David Freeman Engstrom, The Twiqbal Puzzle and
Empirical Study of Civil Procedure, 65 Stan. L. Rev. 1203, 1231
(2013) (collecting empirical studies of post-Twombly/Iqbal
grants of motions to dismiss in federal district courts, all of
which demonstrate increases).
2
No. 2012AP1967.ssa
. . . .
. . . .
as counsel:
10
Maurin v. Hall, 2004 WI 100, 119-121, 274 Wis. 2d 28,
682 N.W.2d 866 (Abrahamson, C.J., & Crooks, J., concurring),
(overruled on other grounds by Bartholomew v. Wis. Patients
Comp. Fund, 2006 WI 91, 293 Wis. 2d 38, 717 N.W.2d 216.)
11
Attorney's Title Guar. Fund v. Town Bank, 2014 WI 63,
56, ___ Wis. 2d ___, ___ N.W.2d ___ (Bradley, J., dissenting);
see also Maurin, 274 Wis. 2d 28, 120 (Abrahamson, C.J. &
Crooks, J., concurring) ("The rule of law is generally best
developed when matters are tested by the fire of adversarial
briefs and oral arguments.").
3
No. 2012AP1967.ssa
* * * *
Learning, Inc.
12
Data Key Partners v. Permira Advisors LLC, 2013 WI App
107, 350 Wis. 2d 347, 837 N.W.2d 624.
4
No. 2012AP1967.ssa
13
The other two claimsa claim against the directors for
failure to disclose information and a claim against Permira for
allegedly aiding and abetting breaches of fiduciary duty by the
other defendantswere dismissed by the circuit court. The court
of appeals upheld dismissal of these claims. The parties do not
address these claims, and neither do I.
14
Wisconsin Stat. 180.0828 creates a statutory version of
the business judgment rule: A director is not liable for damages
for liabilities arising from a breach of, or failure to perform,
any duty resulting solely from his or her status as a director,
unless the claimant proves that the breach or failure to perform
falls within one of the exceptions set forth in the statute.
802.02(1).
6
No. 2012AP1967.ssa
officers.
7
No. 2012AP1967.ssa
for the sale, at the Pauls' request. The sale attracted two
Learning, Inc.
agreement.
agreement with Permira. The new terms were that Permira would
pay $15 per share to the majority shareholders (the Pauls) and
the Pauls and $18 per share for the minority shareholders,
directors that the Pauls would not vote in favor of the revised
Plato offer. The Pauls were concerned that the Plato deal had a
8
No. 2012AP1967.ssa
offer from Plato and finalized the sale to Permira at $15 per
share for the Pauls and $16.60 per share for the minority
shareholders.
15
For a general discussion of a director's fiduciary duty
to the corporation and shareholders, see American Law Institute,
Principles of Corporate Governance: Analysis and
Recommendations, Part V. Duty of Fair Dealing, Introductory Note
at 199-204 (1994).
9
No. 2012AP1967.ssa
the company."
the Pauls had the right to sell their shares and to vote their
16
Wisconsin Stat. 802.06(2)(a)6. provides:
. . . .
10
No. 2012AP1967.ssa
complaint.
influence over the board's actions went beyond the mere sale of
shareholders.
II
17
Johnson v. Rogers Mem'l Hosp., Inc., 2001 WI 68, 15, 244
Wis. 2d 364, 627 N.W.2d 890.
18
MBS-Certified Public Accountants, LLC v. Wis. Bell, Inc.,
2012 WI 15, 25, 338 Wis. 2d 647, 809 N.W.2d 857.
19
Below v. Norton, 2008 WI 77, 18, 310 Wis. 2d 713, 751
N.W.2d 351.
11
No. 2012AP1967.ssa
can be granted under any set of facts that a claimant can prove
20
Wis. Stat. 802.02(6) ("All pleadings shall be so
construed as to do substantial justice."); Doe v. Archdiocese of
Milwaukee, 2005 WI 123, 35, 284 Wis. 2d 307, 700 N.W.2d 180
("[C]laims are to be liberally construed so as to do substantial
justice.") (internal quotation marks and citations omitted);
Kaloti Enters., Inc. v. Kellogg Sales Co., 2005 WI 111, 11, 283
Wis. 2d 555, 699 N.W.2d 205 ("[P]leadings are liberally
construed.").
21
Ollerman v. O'Rourke Co., Inc., 94 Wis. 2d 17, 24, 288
N.W.2d 95 (1980) (citations omitted); Anderson v. Cont'l Ins.
Co., 85 Wis. 2d 675, 683, 271 N.W.2d 368, 373 (1978) (citing
Charles D. Clausen & David P. Lowe, The New Wisconsin Rules of
Civil Procedure: Chapters 801-803, 59 Marq. L. Rev. 1, 38
(1976)).
22
Anderson, 85 Wis. 2d at 683 (citing Clausen & Lowe, supra
note 21, at 38); Ollerman, 94 Wis. 2d at 24 (citations omitted).
23
Doe, 284 Wis. 2d 307, 20 (internal quotation marks and
citations omitted).
12
No. 2012AP1967.ssa
Procedure.25
24
For background on the adoption of notice pleading, see
Charles D. Clausen and David P. Lowe, The New Wisconsin Rules of
Civil Procedure: Chapters 801-803, 59 Marq. L. Rev. 1, 36-42
(1976). See also Alonge v. Rodriquez, 89 Wis. 2d 544, 552-53,
279 N.W.2d 207 (1979) (describing the change from "ultimate
fact" pleading to "notice" pleading).
25
"Subsection (1) [of Wis. Stat. 802.02] is based on
Federal Rule 8(a). Unlike the Federal Rule, however, this rule
does not require a jurisdictional statement in the original
pleading since Wisconsin state courts do not have the
jurisdictional problems of minimum dollar amount or diversity of
citizenship." Clausen & Lowe, supra note 21, at 37.
13
No. 2012AP1967.ssa
26
Id. at 38.
27
Hansher v. Kaishian, 79 Wis. 2d 374, 385, 255 N.W.2d 564
(1977).
28
Clausen & Lowe, supra note 21, at 39 (citing Wis. Stat.
802.06(5)).
29
Doe, 284 Wis. 2d 307, 36 (internal quotations marks and
citations omitted).
14
No. 2012AP1967.ssa
occurrences out of which the claim arises and showing that the
III
110 I first examine the plaintiff's claim that the
defendants.
15
No. 2012AP1967.ssa
defendant breached that duty; and (3) the breach of duty caused
for them."34
30
Reget v. Paige, 2001 WI App 73, 12, 242 Wis. 2d 278, 626
N.W.2d 302.
31
Second Amended Complaint, 24.
32
Grognet v. Fox Valley Trucking Serv., 45 Wis. 2d 235,
241-42, 172 N.W.2d 812 (1969).
33
Rose v. Schantz, 56 Wis. 2d 222, 228, 201 N.W.2d 593
(1972).
34
Grognet, 45 Wis. 2d at 242 (internal quotation marks)
(citing Timme v. Kopmeier, 162 Wis. 571, 575, 156 N.W. 961
(1916)).
16
No. 2012AP1967.ssa
interested benefits that led them to vote for the Permira offer
35
See Zastrow v. Journal Communic'ns, Inc., 2006 WI 72,
28-29, 291 Wis. 2d 426, 718 N.W.2d 51 (holding that fiduciary
duty includes duty of loyalty and duty to refrain from acting in
self-interest); Modern Materials, Inc. v. Advanced Tooling
Specialists, Inc., 206 Wis. 2d 435, 442, 557 N.W.2d 835 (Ct.
App. 1996) ("It is well established that a corporate officer
or director is under a fiduciary duty of loyalty, good faith and
fair dealing in the conduct of corporate business.").
17
No. 2012AP1967.ssa
statute.
36
Limitations provided by articles of incorporation are not
at issue in the present case.
18
No. 2012AP1967.ssa
personal liability.37
37
"The business judgment rule . . . contributes to judicial
economy by limiting court involvement in business decisions
where courts have no expertise and contributes to encouraging
qualified people to serve as directors by ensuring that honest
errors of judgment will not subject them to personal liability."
Reget, 242 Wis. 2d 278, 17 (a summary judgment case).
19
No. 2012AP1967.ssa
regard is In re Tower Air, Inc., 416 F.3d 229, 238-39 (3d Cir.
2005).
38
The court of appeals discusses its reasoning in more
detail in its opinion, Data Key Partners, 350 Wis. 2d 347, 23-
26.
39
Defendants-Respondents-Petitioners' Brief at 17.
40
Data Key Partners, 350 Wis. 2d 347, 24; Defendants-
Respondents-Petitioners' Brief at 16.
41
Reget, 242 Wis. 2d 278, 18-22.
42
Defendants-Respondents-Petitioners' Brief at 16.
43
See Yates v. Holt-Smith, 2009 WI App 79, 22-26, 319
Wis. 2d 756, 768 N.W.2d 213 (business judgment rule does not
shield director who evidence shows has acted in bad faith);
Reget, 242 Wis. 2d 278, 20 (deciding application of business
judgment rule on summary judgment after review of "sufficient
evidentiary facts").
20
No. 2012AP1967.ssa
courts that "do not require a claimant to set out in detail the
21
No. 2012AP1967.ssa
130 The Tower Air court's analysis did not stop here. It
Tower Air, 416 F.3d at 238 (citing ALA, Inc. v. CCAIR, Inc., 29
Tower Air was decided prior to Twombly, 550 U.S. 544, and
Iqbal, 555 U.S. 1030, regarding the federal pleading standard
necessary to survive a motion to dismiss under Rule 12(b)(6).
22
No. 2012AP1967.ssa
were taken in bad faith." Tower Air, 416 F.3d at 234. Thus,
the Tower Air court reasoned that the shareholder claimant had
facts.
general trend of federal cases both before and after Tower Air,
47
See 93, infra.
24
No. 2012AP1967.ssa
dismiss phase.48
way.
federal case law supports the proposition that the Tower Air
48
The court of appeals, Data Key Partners, 350 Wis. 2d 347,
23, cites one commentator who summarizes the general view in
federal case law that "determination and application of the
business judgment rule requires a fact-intensive analysis that
is inappropriate at the motion-to-dismiss stage." Zachary H.
Starnes, The Business Judgment Rule After Twombly and Iqbal:
Must Plaintiffs Now Plead Around the Rule to Survive a 12(b)(6)
Motion To Dismiss?, 35 Am. J. Trial Advoc. 639, 655 (Spring
2012) (footnotes omitted).
49
See Defendants-Respondents-Petitioners' Brief at 26.
50
The court of appeals rejected an argument from the
director-defendants based on Delaware law, which relied heavily
on Mendel v. Carroll, 651 A.2d 297 (Del. Ch. 1994). The court
of appeals determined that the case was inapplicable, because of
the differences between Wisconsin and Delaware pleading
requirements. Data Key Partners, 350 Wis. 2d 347, 30-33.
25
No. 2012AP1967.ssa
judgment rule.
51
1 Stephen A. Radin, The Business Judgment Rule 60-61 &
n.247 (6th ed. 2009). See also FDIC v. Baldini, 983 F. Supp. 2d
772, 783, (S.D. W. Va. 2013), listing "overwhelming [federal]
authority to support . . . [the position] that the business
judgment rule is highly fact dependent and, therefore,
inappropriate for consideration on a motion to dismiss."
52
Wilson v. Cont'l Ins. Cos., 87 Wis. 2d 310, 316, 274
N.W.2d 679 (1979).
26
No. 2012AP1967.ssa
Citing Tower Air, the court declared that as a general rule the
Polacheck v. Michiwaukee Golf Club Land Co., 198 Wis. 78, 82,
53
See also Wolford, 554 F. Supp. 2d at 556-59 (a complaint
must meet the notice pleading requirements of the federal rules
and does not have to plead around the business judgment rule).
27
No. 2012AP1967.ssa
requirements as follows:
. . . .
pleading.
process exclusively;56
54
Anderson, 85 Wis. 2d at 683-84 (citing Clausen & Lowe,
supra note 21, at 38).
55
Data Key Partners, 350 Wis. 2d 347, 21.
56
Second Amended Complaint, 47.
28
No. 2012AP1967.ssa
bidding process;57
Permira;59
57
Id., 49.
58
Id., 57.
59
Id., 62-63.
60
Id.
61
Id., 27.
29
No. 2012AP1967.ssa
their shares and that the sale of the corporation led to a loss
had not been sold, the stock would have been worth more than the
offers: "[T]he Plato offers illustrate that the price that [the
than the shares' value."62 The complaint details that the Plato
offer would have paid $18 per share; the buyer-defendant's offer
62
Data Key Partners, 350 Wis. 2d 347, 45.
63
Liebovich v. Minn. Ins. Co., 2008 WI 75, 40 310
Wis. 2d 751, 751 N.W.2d 764 (holding that claimants' allegation
that the defendants "interfered with [their] interests" and that
they were "aggrieved by" the conduct is sufficient to allege
injury for purpose of triggering a duty to defend).
30
No. 2012AP1967.ssa
corporation.64
IV
duty are: (1) the defendant had a fiduciary duty; (2) the
defendant breached that duty; and (3) the breach of duty caused
minority shareholders.67
64
Data Key Partners, 350 Wis. 2d 347, 46 ("To the extent
that there are legal standards that would limit the methods by
which [the plaintiff] may prove the value of its shares, the
defendants will be free to argue those standards as applied to
the evidence as the factual record develops.").
65
The statutory version of the business judgment rule, Wis.
Stat. 180.0828, applies to directors, not controlling or
majority shareholders. An analysis of the business judgment
rule's application to the pleading stage is not relevant to the
issue of a majority shareholder's breach of fiduciary duty.
66
Reget, 242 Wis. 2d 278, 12.
67
Second Amended Complaint, 24.
31
No. 2012AP1967.ssa
68
Prod. Credit Ass'n of Lancaster v. Croft, 143
Wis. 2d 746, 754, 423 N.W.2d 544 (Ct. App. 1988) (citing S. Pac.
Co. v. Bogert, 250 U.S. 483, 487-88 (1919)).
32
No. 2012AP1967.ssa
by the Pauls";70
69
See 2 James Cox & Thomas Hazen, Treatise on the Law of
Corporations 11:11 (3d ed. 2013) ("The basis for the
controlling stockholder's fiduciary obligation is the sound
policy that, just as directors are bound by certain fiduciary
obligations, one who has the potential to control the board's
actions should be subject to an obligation as rigorous as those
applied to the directors."); Yanow v. Teal Indus., Inc., 422
A.2d 311, 322, 178 Conn. 262, (1979) ("[T]he majority has the
right to control, but when it does so, it occupies a fiduciary
relationship toward the minority, as much as the corporation
itself or its officers and directors."); Knaebel v. Heiner, 663
P.2d 551, 552-53 (Alaska 1983) ("It is well established that
majority stockholders are considered fiduciaries with respect to
minority stockholders within the same corporation. This
fiduciary duty encompasses the obligation to act in good faith,
to enter into transactions that are fair, and to fully disclose
material facts."); Linge v. Ralston Purina Co., 293 N.W.2d 191,
193-94 (Iowa 1980) ("[M]ajority shareholders do owe a fiduciary
duty to minority shareholders.").
70
Second Amended Complaint, 47.
71
Second Amended Complaint, 47, 67.
33
No. 2012AP1967.ssa
duty, the duty is one of good faith, fair dealing, and loyalty.74
72
Second Amended Complaint, 48.
73
Second Amended Complaint, 49.
74
See Zastrow, 291 Wis. 2d 426, 28-29 (holding that
fiduciary duty includes duty of loyalty and duty to refrain from
acting in self-interest); Modern Materials, 206 Wis. 2d at 442
("It is well established that a corporate officer or director is
under a fiduciary duty of loyalty, good faith and fair dealing
in the conduct of corporate business.").
75
Notz v. Everett Smith Group, Ltd., 2009 WI 30, 20, 316
Wis. 2d 640, 764 N.W.2d 904 (quoting Rose, 56 Wis. 2d at 228-
29).
34
No. 2012AP1967.ssa
shareholders.
which this court must accept as true, can constitute a claim for
received a tangible personal benefit from one offer and not the
other. The plaintiff alleges that the Pauls rejected the higher
Plato bid and accepted the Permira bid for several reasons, but
alleges that at least one reason was that the higher Plato bid
76
Second Amended Complaint, 54.
77
Cf. In re A.S., 2001 WI 48, 35, 243 Wis. 2d 173, 626
N.W.2d 712 (noting, in another civil context, that "in reviewing
a motion to dismiss, we do not weigh the facts . . . .").
35
No. 2012AP1967.ssa
Pauls got a personal benefit in the Permira deal but not in the
78
When a controlling shareholder sits on both sides of a
transaction, the burden is on that controlling shareholder to
demonstrate that the transaction was fair. 12B William Meade
Fletcher, Fletcher Cyclopedia of the Law of Corporations,
5811.10 (West 2009) ("When a majority, dominant or controlling
shareholder deemed to be a fiduciary is challenged for having
engaged in self-dealing in property or services of the
corporation, that shareholder has the burden of coming forward
with evidence and the burden of persuasion to show that the
transaction was scrupulously fair.").
79
Second Amended Complaint, 4.
80
See 83-85, supra.
36
No. 2012AP1967.ssa
169 For the reasons set forth, I would agree with the
802.02(1).
* * * *
37
No. 2012AP1967.ssa