Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 1 of 17
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`San Francisco Division
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`NATALIE OCEGUEDA, derivatively on
`behalf of Facebook,
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`Plaintiff,
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`v.
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`MARK ZUCKERBERG, et al.,
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`Case No. 20-cv-04444-LB
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`ORDER GRANTING MOTION TO
`DISMISS
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`Re: ECF No. 46
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`Defendants.
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`INTRODUCTION
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`In this shareholder derivative action, the Facebook defendants (nominal defendant Facebook
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`and members of its board of directors and executive team) moved to dismiss the complaint, which
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`challenges Facebook’s alleged lack of diversity (on its board and executive team, and in its
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`workplace), its allegedly discriminatory advertising practices, and its failure to curb hate speech as
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`(1) a violation of the directors’ fiduciary duty to the corporation and its shareholders and (2) false
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`and misleading statements (because they contradict Facebook’s public proxy statements about its
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`commitment to diversity), in violation of § 14(a) of the Exchange Act, 15 U.S.C. § 78n(a), and SEC
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`Rule 14a-9, 17 C.F.R. § 240.14a-9. The defendants moved to dismiss in part on the following
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`grounds. First, the plaintiff did not make a pre-suit demand on the board or plead with particularity
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`that a demand was excused as futile, as required by Federal Rule of Civil Procedure 23.1. Second,
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`the plaintiff sued in the wrong forum: Facebook’s Restated Certificate of Incorporation has a
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 2 of 17
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`binding forum-selection clause requiring derivative actions to be filed in the Delaware Court of
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`Chancery. Third, the plaintiff did not plausibly state a § 14(a) claim because she did not identify any
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`materially false and misleading statements, in violation of Rule 8(a) and the heightened pleading
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`standards of Rule 9(b) and the Private Securities Litigation Reform Act of 1995 (PLSRA).
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`The court grants the motion to dismiss. The plaintiff did not make a pre-suit demand, and her
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`excuses — the defendants’ disregard of unlawful practices, alleged liability for false statements, and
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`lack of independence — do not plausibly plead futility. The forum-selection clause also precludes
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`the lawsuit here. Finally, the plaintiff’s allegations do not plausibly plead a materially false
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`statement under § 14(a) primarily because the aspirational assertions in the proxy statements are
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`non-actionable.
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`STATEMENT
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`Facebook, a social network, is a Delaware corporation headquartered in Menlo Park,
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`California.1 Its May 22, 2012 Restated Certificate of Incorporation has a forum-selection clause:
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`Unless the corporation consents in writing to the selection of an alternative forum, the
`Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be
`the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf
`of the corporation, (2) any action asserting a claim of breach of a fiduciary duty owed by,
`or other wrongdoing by, any director, officer, employee or agent of the corporation to the
`corporation or the corporation’s stockholders, . . . in each such case subject to said Court of
`Chancery having personal jurisdiction over the indispensable parties named as defendants
`therein. Any person or entity purchasing or otherwise acquiring any interest in shares of
`capital stock of the corporation shall be deemed to have notice of and consented to the
`provisions of this ARTICLE IX.2
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`It also has a limitation-of-liability clause for its directors:
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`1 Compl. – ECF No. 1 at 18 (¶ 37). Citations refer to material in the Electronic Case File (“ECF”);
`pinpoint citations are to the ECF-generated page numbers at the top of documents.
`2 Restated Certificate of Incorporation, Ex. F to Barry Decl. – ECF No. 47-6 at 14 (Art. IX). To the
`extent that the court references documents that Facebook submitted, it does so by judicial notice for
`the public filings or under the incorporation-by-reference doctrine for the other documents. Fed. R.
`Evid. 201(b) (e.g., SEC filings, Exs. A–K); In re Intel Corp. Sec. Litig., No. 18-cv-00507-YGR, 2019
`WL 1427660, at *6 (N.D. Cal. Mar. 29, 2019) (same); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir.
`2005) (e.g., Exs. B–D and G, referenced throughout the complaint).
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 3 of 17
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`1. Limitation of Liability. To the fullest extent permitted by law, no director of the
`corporation shall be personally liable to the corporation or its stockholders for
`monetary damages for breach of fiduciary duty as a director. . . .3
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`Plaintiff Natalie Ocegueda has been a Facebook shareholder since she bought her stock on May
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`21, 2012.4 The defendants are members of Facebook’s board of directors, or were previously, and
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`some also are members of its executive team. Their names — which are relevant to the plaintiff’s
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`individual challenges to them (as discussed in the analysis) — are Mark Zuckerberg (also
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`Facebook’s founder, chairman, and CEO), Sheryl Sandberg (also Facebook’s COO), Marc
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`Andreessen, Andrew Houston, Erskine Bowles (director from September 2011 to at least April 12,
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`2019), Jeffrey Zients (director from May 2018 to April 10, 2020), Susan Desmond-Hellman
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`(director from March 2013 to October 30, 2019), Nancy Killefer, Tracey Travis, Robert Kimmitt,
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`Reed Hastings (director from June 2011 to at least April 12, 2019), and Peter Thiel.5
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`The plaintiff alleges that the directors ignored red flags about Facebook’s unlawful business
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`practices — its lack of diversity (on the board, in senior management, and in its workplace), its
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`discriminatory advertising, and its failure to curb hate speech — and thereby violated their fiduciary
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`duty to the company and its shareholders and rendered materially false the assertions in Facebook’s
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`2019 and 2020 proxy statements that Facebook is committed to diversity and inclusion.6
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`First, as to Facebook’s lack of diversity, the plaintiff points to the composition of Facebook’s
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`board, its executive team, and its employees. She alleges that the board has only one black member
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`and that, “[w]hile Facebook states that it is committed to building a diverse workforce, . . . there are
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`no Blacks or other minorities among its senior executives.7 Also, “[i]nstead of recommending well-
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`qualified Black and minority candidates,” the board’s nominating committee has “perpetuated a
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`lack of diversity on the Board under the pretext that the existing members’ ‘experience’ and long
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`3 Restated Certificate of Incorporation, Ex. F to Barry Decl. – ECF No. 47-6 at 13 (Art. VII).
`4 Compl. – ECF No. 1 at 18 (¶ 36).
`5 Id. at 18–20 (¶¶ 38–50).
`6 Id. at 13–14 (¶¶ 22–28); Opp’n – ECF No. 51 at 11–17.
`7 Compl. – ECF No. 1 at 38–39 (¶¶ 102, 104).
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 4 of 17
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`tenure on the Board is beneficial to Facebook.”8 She alleges that Facebook discriminates in its
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`hiring and promotion, quoting a July 2018 newspaper article about a Facebook diversity report:
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`“Facebook is inching toward increasing the diversity of its workforce but it still has a big problem:
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`It’s hiring very few black and Hispanic women.”9 A November 2018 article reported a former Black
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`employee’s experiences at Facebook and his assessment of a corporate environment that
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`marginalized Black employees.10
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`Second, as to Facebook’s discriminatory advertising practices, she cites Facebook’s CEO Mark
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`Zuckerberg’s April 2018 testimony before the Senate Judiciary Committee about Facebook’s
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`advertising practices, which allowed advertisers to discriminate by race in housing ads. This
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`testimony allegedly showed the board’s knowledge of the issue. Despite its knowledge, the “illegal
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`and discriminatory advertising continued and even proliferated” after the Congressional hearing.11
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`In August 2018, the U.S. Department of Housing and Urban Development “filed a complaint”
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`alleging that Facebook violated the Fair Housing Act by allowing advertisers to target ads to
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`Facebook users based on race and color (among other categories) by targeting certain zip codes.12 In
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`September 2018, the ACLU sued Facebook for gender discrimination on the ground that Facebook
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`allowed advertisers to target men for “Help Wanted” and job ads.13 In March 2019, Facebook
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`settled five lawsuits and eliminated the ability of advertisers to target based on age, gender, and ZIP
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`code for all ads offering housing, employment, or credit opportunities.14
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`8 Id. at 60 (¶ 146).
`9 Id. at 25 (¶ 64) (quoting Jessica Guynn, Facebook’s diversity efforts failing African-American and
`Hispanic women, U.S.A. TODAY, July 12, 2018).
`10 Id. at 27 (¶ 69) (quoting Jessica Guynn, Facebook has a problem with black people, former
`employee charges, U.S.A. TODAY, Nov. 27, 2018).
`11 Id. at 22–25 (¶¶ 57–63).
`12 Id. at 26 (¶¶ 65–66).
`13 Id. (¶ 67).
`14 Id. at 29 (¶ 76).
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`ORDER – No. 20-cv-04444-LB
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`Third, the plaintiff alleges that Facebook did not stop hate speech, including allegedly incendiary
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`posts from then President Donald Trump in May 2020, which resulted in protests from Facebook
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`employees and announcements by advertisers in June 2020 that they would boycott Facebook.15
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`Fourth, the plaintiff alleges that these practices contradict the representations in Facebook’s
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`2019 and 2020 proxy statements that it is committed to diversity and inclusion, including
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`“building a workforce that is as diverse as the communities [it] serves” and including individuals
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`from diverse backgrounds at the board level.16
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`The Facebook defendants contest the plaintiff’s allegations that Facebook’s practices are
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`unlawful, emphasizing its commitment to diversity and inclusion and citing — among other things
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`— the actual composition of its board and its nomination process: two of nine directors are Black,
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`a third Black director stepped down in March 2020 to join Berkshire Hathaway, four of nine
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`directors are women, one is openly gay, and, since its adoption of its diversity policy in 2018, a
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`majority of new nominees have been Black or women. It identifies diversity in its senior
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`executives: several are non-white, including the head of infrastructure engineering, the head of
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`new-product experimentation, the head of workplace, the Chief Diversity Officer, and the former
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`Chief Marketing Officer. It points to its resolution of the advertising issues and its reaction to the
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`Trump speech issues.17
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`The plaintiff’s complaint has the following claims: (1) breach of fiduciary duty (against all
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`defendants); (2) aiding and abetting the breach of fiduciary duty (against all defendants); (3) abuse
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`of control (against Mark Zuckerberg); (4) unjust enrichment (against all defendants); and (5) false
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`and misleading statements (against all defendants), in violation of § Section 14(a) of the Exchange
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`Act, 15 U.S.C. § 78n(a), and SEC Rule 14a-9, 17 C.F.R. § 240.14a-9.18 She did not make a pre-suit
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`15 Id. at 3–4 (¶¶ 4–5), 10 (¶ 16), 30–31 (¶¶ 79–80).
`16 Id. at 21–22 (¶¶ 52–53), 38 (¶¶ 100–01).
`17 Mot. – ECF No. 46 at 11–17 (citing Compl. – ECF No. 1 at 3, 10–13, 18–22, 26, 29–33, 39, 70 (¶¶
`1, 17–21, 37–49, 52, 65–67, 76, 79–84, 103, 183)); 2020 Proxy Statement, Ex. B to Barry Decl. – ECF
`No. 47-2 at 11–14, 64, 68, 93; 2019 Proxy Statement, Ex. C to Barry Decl. – ECF No. 47-3 at 51–52,
`54; Zuckerberg Post, Ex. D to Barry Decl. – ECF No. 47-4 at 2.
`18 Compl. – ECF No. 1 at 79–83 (¶¶ 222–47).
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 6 of 17
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`demand under Rule 23.1 and alleged that it would be futile because the defendants abandoned their
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`duties wholesale (ignoring red flags of unlawful practices), they face a substantial likelihood of
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`liability for their false statements in the 2019 and 2020 proxy statements, and Facebook’s CEO and
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`COO cannot exercise independent and disinterested judgment.19
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`The defendants moved to dismiss under Rules 12(b)(6) and (as to ripeness) 12(b)(1) on the
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`following grounds: (1) the plaintiff’s failure to make a pre-suit demand or plausibly allege futility;
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`(2) the forum-selection clause precludes the lawsuit here; (3) the plaintiff did not plausibly plead a
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`claim for materially false or misleading statements; and (4) the plaintiff seeks speculative damages
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`that are not ripe. The parties agreed that the defendants would defer their arguments under Rule
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`12(b)(6) that the plaintiff did not plausibly plead her state-law claims for breach of fiduciary duty,
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`aiding and abetting a breach of fiduciary duty, abuse of control, and unjust enrichment.20
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`The court held hearing on March 18, 2021. All parties consented to magistrate-judge
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`jurisdiction and do not dispute that the court has subject-matter jurisdiction because there is
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`federal-question jurisdiction for the Exchange Act claim and supplemental jurisdiction for the
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`state-law claims. 28 U.S.C. § 1331; 15 U.S.C. § 78aa; 28 U.S.C. § 1367.21
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`LEGAL STANDARD
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`A complaint must contain a “short and plain statement of the claim showing that the pleader is
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`entitled to relief” to give the defendant “fair notice” of what the claims are and the grounds upon
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`which they rest. Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
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`complaint does not need detailed factual allegations, but “a plaintiff’s obligation to provide the
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`‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic
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`19 Id. at 71–76 (¶¶ 188–207); Opp’n – ECF No. 51 at 20–28.
`20 Mot. – ECF No. 46 at 10 & n.2.
`21 Consent – ECF Nos. 10, 13, 33; Compl. – ECF No. 1 at 16–17 (¶¶ 31–32) (also alleges diversity
`jurisdiction under 28 U.S.C. § 1332 because the parties are diverse and the amount in controversy
`exceeds $75,000).
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`ORDER – No. 20-cv-04444-LB
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`recitation of the elements of a cause of action will not do. Factual allegations must be enough to
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`raise a claim for relief above the speculative level[.]” Twombly, 550 U.S. at 555 (cleaned up).
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`To survive a motion to dismiss, a complaint must contain sufficient factual allegations, which
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`when accepted as true, “‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
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`U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when
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`the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
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`defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a
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`‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
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`unlawfully.” Id. (citing Twombly, 550 U.S. at 557). “Where a complaint pleads facts that are
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`merely consistent with a defendant’s liability, it stops short of the line between possibility and
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`plausibility of ‘entitlement to relief.’” Id. (cleaned up) (quoting Twombly, 550 U.S. at 557).
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`For § 14(a) claims alleging that a defendant made an untrue statement of material fact (or
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`omitted a material statement), the complaint must specify each statement alleged to be misleading
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`and the reason or reasons why the statement is misleading and, if an allegation regarding the
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`statement is made on information or belief, the complaint must “state with particularity all facts on
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`which that belief is formed.” 15 U.S.C. § 78u-4(b)(1); Desaigoudar v. Meyercord, 223 F.3d 1020,
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`1023 (9th Cir. 2000). In any case where plaintiffs may recover damages only on proof that a
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`defendant acted with a particular state of mind, the complaint must “state with particularity facts
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`giving rise to a strong inference that the defendant acted with the required state of mind.” 15
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`U.S.C. § 78u-4(b)(2); In re Zoran Derivative Litig., 511 F. Supp. 2d 986, 1012 (N.D. Cal. 2007).
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`If a plaintiff’s federal securities claim sounds in fraud, then the heightened pleading standards of
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`Rule 9(b) apply. In re Zoran, 511 F. Supp. 2d at 1010. “In alleging fraud . . . a party must state with
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`particularity the circumstances constituting fraud. . . . Malice, intent, knowledge, and other
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`conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). “Averments of fraud
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`must be accompanied by the ‘who, what, when, where, and how’ of the misconduct charged.” Vess
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`v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003).
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`Like the basic “notice pleading” demands of Rule 8, Rule 9(b) assures that defendants are given
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`fair notice of the charges against them. In re Lui, 646 F. App’x 571, 573 (9th Cir. 2016) (“Rule 9(b)
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 8 of 17
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`demands that allegations of fraud be specific enough to give defendants notice of the particular
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`misconduct . . . so that they can defend against the charge and not just deny that they have done
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`anything wrong.”) (quotation omitted); Odom v. Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2007)
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`(Rule 9(b) requires particularity “so that the defendant can prepare an adequate answer”).
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`If a court dismisses a complaint, it should give leave to amend unless the “pleading could not
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`possibly be cured by the allegation of other facts.” United States v. United Healthcare Ins. Co.,
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`848 F.3d 1161, 1182 (9th Cir. 2016) (cleaned up).
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`ANALYSIS
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`The court dismisses the complaint because the plaintiffs did not make a pre-suit demand or
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`plead plausibly that a demand was excused as futile, the forum-selection clause precludes a
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`lawsuit here, and the plaintiffs did not plausibly plead a § 14(a) claim.
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`1. Futility
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`A shareholder bringing a derivative action “must state with particularity: (A) any effort by the
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`plaintiff to obtain the desired action from the directors. . . ; and (B) the reasons for not obtaining the
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`action or making the effort.” Fed. R. Civ. P. 23.1(b)(3)(B). The plaintiff did not make a demand but
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`alleged that it would be futile because the defendants are not disinterested, ignored unlawful
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`practices, and face substantial liability for their conduct and the false statements in the proxy
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`statements, and Facebook’s CEO and COO are not independent.22 The plaintiff must plead with
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`particularity why the demand would be futile. In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970,
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`989 (9th Cir. 1999); In re Facebook, Inc. S’holder Derivative Privacy Litig., 367 F. Supp. 3d 1108,
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`1123 (N.D. Cal. 2019). The plaintiff has not plausibly alleged any facts about the directors’ actual
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`or constructive knowledge of illegal conduct, their failure to act, or their lack of independence, and
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`thus she has not pled futility with particularity.
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`22 Compl. – ECF No. 1 at 71–79 (¶¶ 188–221); Opp’n – ECF No. 51 at 20–28.
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`ORDER – No. 20-cv-04444-LB
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`Rule 23.1 controls the adequacy of the pleadings, but Delaware law controls whether a demand
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`is futile because Delaware is Facebook’s state of incorporation. City of Birmingham Relief & Ret.
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`Sys. v. Hastings, No. 18-cv-02107-BLF, 2019 WL 3815722, at *4 (N.D. Cal. Feb. 13, 2019). The
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`parties agree on the legal standard under Delaware law.23 The “directors are entitled to a
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`presumption that they were faithful to their fiduciary duties,” and “the burden is on the plaintiff in
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`a derivative action to overcome that presumption.” In re Facebook, 367 F. Supp. 3d at 1123
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`(quoting Beam ex. rel. Martha Stewart Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1048–
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`49 (Del. 2004)). The demand is excused if the plaintiff alleged particularized facts that “create a
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`reasonable doubt that, as of the time the complaint is filed, the board of directors could have
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`properly exercised its independent and disinterested business judgment in responding to a
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`demand.” Rales v. Blasband, 634 A.2d 927, 934 (Del. 1993). Directors are deemed “interested”
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`only “when the potential for liability is not a mere threat and instead may rise to a substantial
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`likelihood.” Ryan v. Gifford, 918 A.2d 341, 355 (Del. Ch. 2007).
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`This inquiry focuses on the capability of the board — at the time the lawsuit is filed — to
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`consider the pre-suit demand. Id. A court assesses demand futility on a director-by-director basis,
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`and the complaint must “plead facts specific to each director, demonstrating that at least half of
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`them could not have exercised disinterested business judgment in responding to a demand.” In Re
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`Facebook, 367 F.3d at 1124 (quoting Desimone v. Barrows, 924 A.2d 908, 943 (Del. Ch. 2007));
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`accord Towers v. Iger, 912 F.3d 523, 539 (9th Cir. 2018). Furthermore, where “directors are
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`contractually or otherwise exculpated from liability for certain conduct, then a serious threat of
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`liability may [] be found to exist [only] if the plaintiff pleads a non-exculpated claim against the
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`directors based on particularized facts.” Facebook, 367 F.3d at 1124 (cleaned up) (quoting Wood
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`v. Baum, 953 A.2d 136, 141 (Del. 2008)).
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`23 Mot. – ECF No. 46 at 18; Opp’n – ECF No. 51 at 19; see In re CNET Networks, Inc., 483 F. Supp.
`2d 947, 954 (N.D. Cal. 2007) (setting forth two-part test under Delaware law, the test for decisions
`made by a board of directors and the test where the directors did not make the decision (citing Aronson
`v. Lewis, 473 A.2d 805, 814 (Del. 1984)).
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 10 of 17
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`Facebook’s certificate of incorporation exculpates its directors from personal liability for
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`breaches of fiduciary duty “to the fullest extent permitted by law.”24 Thus, the plaintiff must “plead
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`particularized facts that demonstrate that the directors acted with scienter, i.e., that they had actual or
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`constructive knowledge that their conduct was legally improper.” Wood, 953 A.2d at 141; see In re
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`Facebook, 367 F. Supp. 3d at 1124.
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`The plaintiff contends that a demand is excused as futile because (1) directors Zuckerberg,
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`Sandberg, Andreessen, Thiel, Houston, Killefer, Travis and Kimmitt face substantial liability for
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`ignoring red flags about Facebook’s unlawful conduct, and directors Andreessen, Thiel, Travis,
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`and Houston, as members of the audit committee, consciously disregarded the red flags, (2) the
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`directors — directors Zuckerberg, Sandberg, Andreessen, and Thiel for the 2019 proxy statement
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`and directors Zuckerberg, Sandberg, Andreessen, Thiel, Houston, Killefer, Travis and Kimmitt for
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`the 2020 proxy statements — face substantial liability for disseminating false statements in the
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`proxy statements, and (3) CEO Zuckerberg and COO Sandberg cannot exercise independent and
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`disinterested judgment.25
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`First, as to the directors’ liability for ignoring red flags about Facebook’s allegedly illegal
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`conduct, some of the plaintiff’s allegations — about diversity on the board, the problematic
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`nomination process, and the diversity of senior executives — are contradicted by the record about the
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`actual composition of the board and the nomination process. As to the advertising practices, Mr.
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`Zuckerberg’s Congressional testimony is not plausibly a red flag either. The timeline of the
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`advertising conduct — May 2018 testimony, August 2018 HUD complaint, and September 2018
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`lawsuit — was relatively short and resulted in Facebook’s resolving the challenges to the advertising
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`practices by March 2019 (and not ignoring them). The newspaper articles about diversity and
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`inclusion in the workplace identify issues, but the plaintiff has not alleged — for the employment
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`issues or otherwise — “particularized facts that demonstrate that the directors acted with scienter, i.e.,
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`24 Restated Certificate of Incorporation, Art. VII (¶ 1), Ex. F to Barry Decl. – ECF No. 47-6 at 13; see
`supra Statement (quoting id.).
`25 Opp’n – ECF No. 51 at 20–28; Reply – ECF No. 54 at 15 (noting that the plaintiff no longer asserts a
`lack of independence by other board members (citing Compl. – ECF No. 1 at 74–79 (¶¶ 204–21), where
`the plaintiff alleged that the board lacked independence because Facebook’s CEO controlled it)).
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 11 of 17
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`that they had actual or constructive knowledge that their conduct was legally improper,” Wood, 953
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`A.2d at 141, and that a majority of the board did nothing. Rosenbloom v. Pyott, 765 F.3d 1137, 1151–
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`52 (9th Cir. 2014); cf. Wood, 953 A.2d. at 1146–47 (FDA sent letters warning Allergan that its
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`promotional activities about Botox were misleading). The allegations are broad, and the plaintiff did
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`not state facts specific to each director “demonstrating that at least half of them could not have
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`exercised disinterested business judgment in responding to a demand.” Towers, 912 F.3d at 539
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`(quoting Desimone, 924 A.2d at 943). Also, as Facebook points out, all of the “red flag” events
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`occurred before four of the nine directors joined the board, and most occurred before a fifth member
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`joined the board.26
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` Second, as to the directors’ alleged substantial liability for having approved Facebook’s
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`allegedly false assertions in the proxy statements about its commitment to diversity, the plaintiff
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`contends that the proxy statements omitted three facts that would have been material and
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`contradicted the assertions in the proxy statements: (1) the board was not committed to diversity,
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`never wanted minority candidates, and wanted minorities to be seen and not heard; (2) the lack of
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`an independent chair resulted in great harm to Facebook because the chair, as Facebook’s CEO,
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`engaged in unlawful conduct in the form of discriminatory advertising, hiring, and pay practices,
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`and (3) executive compensation was based “in large part” on the unlawful practices.27 These are
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`not facts: these are conclusions. And given Facebook’s exculpatory clause, the plaintiff did not
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`plead particularized facts that the directors had actual or constructive knowledge that their conduct
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`was legally improper. Wood, 953 A.2d at 141; see In re Facebook, 367 F. Supp. 3d at 1124.
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`Third, the plaintiff alleged that CEO Zuckerberg and COO Sandberg cannot exercise
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`independent and disinterested judgment because they are Facebook executives, and Ms. Sandberg
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`is “not independent of Zuckerberg.”28 That allegation does not sufficiently plead that they are
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`interested. “The mere fact that Zuckerberg is a controlling shareholder is not enough to establish
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`26 Mot. – ECF No. 46 at 20–21; Reply – ECF No. 54 at 12.
`27 Opp’n – ECF No. 51 at 22–25 (citing Compl. – ECF No. 1 at 38–39, 42, 49–51 (¶¶ 102, 109, 118, 121)).
`28 Id. at 20–21.
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 12 of 17
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`his lack of independence because that would eviscerate the disinterested prong of the demand
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`futility text and would find a director involved in the day-to-day running of a company to be
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`‘interested’ under any set of facts.” In re Facebook, 367 F. Supp. 3d at 1128 (quotation omitted).
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`Also, Mr. Zuckerberg’s status “does not automatically mean that the other [directors] are
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`incapable of exercising judgment. . . . [The plaintiff makes no] particularized allegations of
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`relationships between the directors and [Mr. Zuckerberg] demonstrating that the directors are
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`beholden to [him].” Id. (quotation omitted).
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`* * *
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`In sum, the plaintiff did not plead futility with particularity.
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`2. Forum-Selection Clause
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`Facebook’s May 22, 2012 Restated Certificate of Incorporation has a forum-selection clause
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`that provides that the Court of Chancery in the state of Delaware is the exclusive forum for
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`derivative actions (like this) and actions asserting breaches of a fiduciary duties by directors.29 It is
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`enforceable against the plaintiff.
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`Courts enforce a forum-selection clause through the doctrine of forum non conveniens. Atl.
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`Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 61 (2013). Normally, to
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`prevail on a motion to dismiss on the ground of forum non conveniens, a defendant must show an
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`adequate alternative forum and that the balance of private and public factors favors dismissal in
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`favor of the other forum. In re Facebook, 367 F.3d at 1119; see Atl. Marine, 571 U.S. at 58, 62–63.
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`But with a valid forum-selection clause, the clause is “given weight in all but the most exceptional
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`circumstances.” Atl. Marine, 571 U.S. at 63. The court must enforce the clause “unless the
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`contractually selected forum affords the plaintiffs no remedies whatsoever.” In re Facebook, 367 F.
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`Supp. 3d at 1119 (quoting Yei A. Sun v Advanced China Healthcare, Inc., 901 F.3d 1081, 1092 (9th
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`29 Restated Certificate of Incorporation, Ex. F to Barry Decl. – ECF No. 47-6 at 14 (Art. IX); see supra
`Statement (quoting clause).
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`ORDER – No. 20-cv-04444-LB
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`Case 3:20-cv-04444-LB Document 61 Filed 03/19/21 Page 13 of 17
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`Cir. 2018)). Also, with a forum-clause, the court does “not consider arguments about the parties’
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`private interests.” Atl. Marine, 571 U.S. at 64.
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`When parties agree to a forum-selection clause, they waive the right to challenge the
`preselected forum as inconvenient or less convenient for themselves or their witnesses, or
`for their pursuit of the litigation. A court accordingly must deem the private-interest factors
`to weigh entirely in favor of the preselected forum.
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`Id. “As a consequence, a district court may consider arguments about public-interest factors only.”
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`Id. There are five public-interest factors considered by courts in this circuit:
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`(1) local interest in the lawsuit; (2) the court’s familiarity with the governing law; (3) the
`burden on local courts and juries; (4) congestion in the court; and (5) the costs of resolving
`a dispute unr