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`Case 1:99-mc-09999 Document 1920 Filed 12/12/19 Page 1 of 21 PageID #: 183449Case 1:19-cv-02270-UNA Document 1 Filed 12/13/19 Page 1 of 21 PageID #: 1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
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`TIM FLYNN, Individually and on Behalf of All
`Others Similarly Situated,
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`Plaintiff,
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`X
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`CLASS ACTION COMPLAINT FOR VIOLATIONS OF SECTIONS 14(a) AND 20(a)
`OF THE SECURITIES EXCHANGE ACT OF 1934
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`Civil Action No. ___________
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`CLASS ACTION
`
`JURY TRIAL DEMAND
`
` v.
`
`FITBIT, INC., JAMES PARK, ERIC N.
`FRIEDMAN, LAURA J. ALBER,
`MATTHEW BRONBERG, GLENDA
`FLANAGAN, BRADLEY M. FLUEGEL,
`STEVEN MURRAY, CHRISTOPHER
`PAISLEY, MAGNOLIOPHYTA INC., and
`GOOGLE LLC,
`
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`Defendants.
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`Plaintiff Tim Flynn (“Plaintiff”), individually and on behalf of all others similarly situated,
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`alleges the following upon information and belief, including investigation of counsel and review
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`of publicly-available information, except as to those allegations pertaining to Plaintiff, which are
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`alleged upon personal knowledge:
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`NATURE OF THE ACTION
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`1.
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`Plaintiff brings this class action on behalf of the public stockholders of Fitbit, Inc.
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`(“Fitbit” or the “Company”) against Fitbit’s Board of Directors (the “Board” or the “Individual
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`Defendants”) for their violations of Sections 14(a) and 20(a) of the Securities Exchange Act of
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`1934, 15.U.S.C. §§ 78n(a), 78t(a), and SEC Rule 14a-9, 17 C.F.R. 240.14a-9, arising out of the
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`Board’s attempt to sell the Company to Google LLC through its wholly-owned subsidiary
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`Magnoliophyta Inc. (collectively, “Google”).
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`1
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`2.
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`Defendants have violated the above-referenced sections of the Exchange Act by
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`causing a materially incomplete and misleading preliminary proxy statement (the “Proxy”) to be
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`filed with the United States Securities and Exchange Commission (“SEC”) on November 25, 2019.
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`The Proxy recommends that Fitbit shareholders vote in favor of a proposed transaction (the
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`“Proposed Transaction”) whereby Fitbit is acquired by Google. The Proposed Transaction was
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`first disclosed on November 1, 2019, when Fitbit and Google announced that they had entered into
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`a definitive merger agreement (the “Merger Agreement”) pursuant to which Google will acquire
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`all of the outstanding shares of common stock of Fitbit for $7.35 per share (the “Merger
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`Consideration”). The deal is valued at approximately $2.1 billion and is expected to close in 2020.
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`3.
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`The process leading to the execution of the Merger Agreement was tainted by
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`allowing the Company’s co-founders to take part, given their control over the Company with their
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`combined voting power. Furthermore, the Proxy is materially incomplete and contains misleading
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`representations and information in violation of Sections 14(a) and 20(a) of the Exchange Act.
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`Specifically, the Proxy contains materially incomplete and misleading information concerning the
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`sales process, financial projections prepared by Fitbit management, and the financial analyses
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`conducted by Qatalyst Partners LP (“Qatalyst”), Fitbit’s financial advisor.
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`4.
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`For these reasons, and as set forth in detail herein, Plaintiff seeks to enjoin
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`defendants from taking any steps to consummate the Proposed Transaction unless and until the
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`material information discussed below is disseminated to Fitbit’s shareholders. In the event the
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`Proposed Transaction is consummated without the material omissions referenced below being
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`remedied, Plaintiff seeks to recover damages resulting from the defendants’ violations.
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`PARTIES
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`Plaintiff is, and has been at all relevant times, the owner of shares of common stock
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`5.
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`2
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`of Fitbit.
`6.
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`Defendant Fitbit is a corporation organized and existing under the laws of the State
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`of Delaware. The Company’s principal executive offices are located at 199 Fremont Street, 14th
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`Floor, San Francisco, California 94105. Fitbit common stock trades on NYSE under the ticker
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`symbol “FIT.”
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`7.
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`Defendant James Park (“Park”) has been President, Chief Executive Officer
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`(“CEO”) and a director of the Company since 2007. Defendant Park has been Chairman of the
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`Board since 2015.
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`8.
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`Defendant Eric N. Friedman (“Friedman”) has been a director of the Company
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`since 2007. Defendant Friedman currently serves as Chief Technology Officer.
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`Defendant Laura J. Alber (“Alber”) has been a director of the Company since 2016.
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`Defendant Matthew Bromberg (“Bromberg”) has been a director of the Company
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`9.
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`10.
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`since 2018.
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`11.
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`Defendant Glenda Flanagan (“Flanagan”) has been a director of the Company since
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`2016.
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`12.
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`Defendant Bradley M. Fluegel (“Fluegel”) has been a director of the Company
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`since 2018.
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`13.
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`Defendant Steven Murray (“Murray”) has been a director of the Company since
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`2013.
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`14.
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`Defendant Christopher Paisley (“Paisley”) has been a director of the Company
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`since 2015.
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`15.
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`Defendants James, Friedman, Alber, Bromberg, Flanagan, Fluegel, Murray and
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`Paisley are collectively referred to herein as the “Board” or the “Individual Defendants.”
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`3
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`16.
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`Defendant Google LLC is a Delaware limited liability company based at 1600
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`Amphitheatre Parkway, Mountain View, California 94043.
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`17.
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`Defendant Magnoliophyta Inc. is a Delaware corporation and is a wholly-owned
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`subsidiary of Google LLC.
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`JURISDICTION AND VENUE
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`18.
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`This Court has subject matter jurisdiction pursuant to Section 27 of the Exchange
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`Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331 (federal question jurisdiction) as Plaintiff alleges
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`violations of Section 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9.
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`19.
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`Personal jurisdiction exists over each defendant either because the defendant
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`conducts business in or maintains operations in this District, or is an individual who is either
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`present in this District for jurisdictional purposes or has sufficient minimum contacts with this
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`District as to render the exercise of jurisdiction over defendant by this Court permissible under
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`traditional notions of fair play and substantial justice.
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`20.
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`Venue is proper in this District under Section 27 of the Exchange Act, 15 U.S.C. §
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`78aa, as well as under 28 U.S.C. § 1391, because: (i) a significant amount of the conduct at issue
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`took place and had an effect in this District; and (ii) Fitbit is incorporated in this District.
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`CLASS ACTION ALLEGATIONS
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`21.
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`Plaintiff brings this action on his own behalf and as a class action on behalf of all
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`owners of Fitbit common stock and their successors in interest and/or their transferees, except
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`defendants and any person, firm, trust, corporation or other entity related to or affiliated with the
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`defendants (the “Class”).
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`22.
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`This action is properly maintainable as a class action for the following reasons:
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`4
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`(a)
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`The Class is so numerous that joinder of all members is impracticable. As
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`of October 28, 2019, Fitbit had approximately 228.8 million shares of Class A common stock
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`outstanding.
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`(b)
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`Questions of law and fact are common to the Class, including, inter alia,
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`the following:
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`(i) Whether defendants have violated Section 14(a) of the Exchange
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`Act and Rule 14a-9 promulgated thereunder;
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`(ii) Whether the Individual Defendants have violated Section 20(a) of
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`the Exchange Act;
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`(iii) Whether Plaintiff and other members of the Class would suffer
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`irreparable injury if the Proposed Transaction is consummated as
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`presently anticipated; and
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`(iv) Whether the Class is entitled to injunctive relief or damages as a
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`result of Individual Defendants’ wrongful conduct.
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`(c)
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`Plaintiff is committed to prosecuting this action, is an adequate
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`representative of the Class, and has retained competent counsel experienced in litigation of this
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`nature.
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`(d)
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`(e)
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`(f)
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`Plaintiff’s claims are typical of those of the other members of the Class.
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`Plaintiff has no interests that are adverse to the Class.
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`The prosecution of separate actions by individual members of the Class
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`would create the risk of inconsistent or varying adjudications for individual members of the Class
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`and of establishing incompatible standards of conduct for the party opposing the Class.
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`5
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`(g)
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`Conflicting adjudications for individual members of the Class might as a
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`practical matter be dispositive of the interests of the other members not parties to the adjudications
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`or substantially impair or impede their ability to protect their interests.
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`(h)
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`Plaintiff anticipates that there will be no difficulty in the management of
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`this litigation. A class action is superior to other available methods for the fair and efficient
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`adjudication of this controversy.
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`SUBSTANTIVE ALLEGATIONS
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`A. Background of the Company and the Proposed Transaction
`Defendants Park and Friedman co-founded Fitbit in 2007, which offers wearable
`23.
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`technology, including smartwatches and health and fitness trackers, as well as software and
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`services that provide users with data analytics and virtual coaching. Fitbit’s devices track daily
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`steps, heart rate, sleep duration, or allow users to receive calls.
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`24.
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`On November 1, 2019, the Board approved Fitbit’s entry into the Merger
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`Agreement with Google.
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`25.
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`According to the press release issued on November 1, 2019 announcing the
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`Proposed Transaction:
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`Fitbit to be Acquired by Google
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`SAN FRANCISCO, 1 November 2019 - Fitbit, Inc. (NYSE: FIT) today
`announced that it has entered into a definitive agreement to be acquired by Google
`LLC for $7.35 per share in cash, valuing the company at a fully diluted equity value
`of approximately $2.1 billion.
`
`“More than 12 years ago, we set an audacious company vision - to make everyone
`in the world healthier. Today, I’m incredibly proud of what we’ve achieved towards
`reaching that goal. We have built a trusted brand that supports more than 28 million
`active users around the globe who rely on our products to live a healthier, more
`active life,” said James Park, co-founder and CEO of Fitbit. “Google is an ideal
`partner to advance our mission. With Google’s resources and global platform, Fitbit
`will be able to accelerate innovation in the wearables category, scale faster, and
`make health even more accessible to everyone. I could not be more excited for what
`
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`6
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`lies ahead.”
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`"Fitbit has been a true pioneer in the industry and has created terrific products,
`experiences and a vibrant community of users," said Rick Osterloh, Senior Vice
`President, Devices & Services at Google. "We're looking forward to working with
`the incredible talent at Fitbit, and bringing together the best hardware, software and
`AI, to build wearables to help even more people around the world."
`
`Fitbit pioneered the wearables category by delivering innovative, affordable and
`engaging devices and services. Being “on Fitbit” is not just about the device - it is
`an immersive experience from the wrist to the app, designed to help users
`understand and change their behavior to improve their health. Because of this
`unique approach, Fitbit has sold more than 100 million devices and supports an
`engaged global community of millions of active users, utilizing data to deliver
`unique personalized guidance and coaching to its users. Fitbit will continue to
`remain platform-agnostic across both Android and iOS.
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`Consumer trust is paramount to Fitbit. Strong privacy and security guidelines have
`been part of Fitbit’s DNA since day one, and this will not change. Fitbit will
`continue to put users in control of their data and will remain transparent about the
`data it collects and why. The company never sells personal information, and Fitbit
`health and wellness data will not be used for Google ads.
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`The transaction is expected to close in 2020, subject to customary closing
`conditions, including approval by Fitbit’s stockholders and regulatory approvals.
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`Qatalyst Partners LLP acted as financial advisor to Fitbit, and Fenwick & West
`LLP acted as legal advisor.
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`B. The Proposed Transaction is the Product of a Conflicted Process
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`26.
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`Defendant Park is the CEO of Fitbit, Chairman of the Board and a co-founder of
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`the Company. He currently holds 34% of the total voting power of Fitbit. Defendant Friedman is
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`the Chief Technology Officer and a co-founder of Fitbit. He holds 36.4% of the total voting power
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`of Fitbit. And the Board allowed defendant Park and “senior management” to lead the sales
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`process.
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`27.
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`At a meeting on April 26, 2019, the Board discussed exploring Fitbit’s strategic
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`alternatives. The Board discussed that it would be helpful to have a financial advisor to be a part
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`of the preliminary discussions, and decided to discuss strategic alternatives on July 1, 2019.
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`7
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`Between April 26 and July 1, members of senior management met with financial advisors and
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`essentially selected Qatalyst.
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`28.
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`The July 1, 2019 meeting included discussions on Qatalyst’s preliminary financial
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`perspectives on the Company, designing a sales process, and third parties that might be potentially
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`interested in acquiring Fitbit. The Proxy is silent as to whether the Board decided to start a sales
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`process, or whether the Board decided which parties to contact concerning their interest in
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`acquiring Fitbit. Yet, “at the direction of the Board,” members of senior management worked with
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`Qatalyst to contact nine strategic parties, including Google.
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`29.
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`The Board met on July 25, 2019 and received an update on the outreach. From then
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`until October 8, 2019, the Board did not have a meeting or call concerning the sales process.
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`Instead, over the next two months defendant Park held meetings with Party A and members of
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`Fitbit’s senior management held meetings with Google.
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`30. When the deadline for initial bids approached, no party submitted a proposal.
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`Despite informing Qatalyst on September 19, 2019 that it was not prepared to submit an offer,
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`Google noted that members of Google’s executive team wanted to meet with defendant Park to
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`discuss a potential transaction. Defendant Park met with members of Google’s executive team on
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`September 24 and 25, 2019. One week later, Google submitted a proposal to acquire Fitbit.
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`31.
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`The Board met on October 8, 2019 to discuss the status of discussions with Party
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`A and Google. The Board met again on October 10, 2019 to discuss Google’s proposal, and at that
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`meeting directed Qatalyst to counter at $6.00 per share, and to inform Party A that it needs to
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`submit a proposal as soon as possible. The next day Google submitted a revised offer, which was
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`topped by Party A the morning of October 12, 2019. Members of senior management directed
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`Qatalyst to go back to Google about increasing its offer, which it did. Then Qatalyst went back to
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`8
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`Party A about increasing its offer. The Board met that day and directed Qatalyst to inform Google
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`and Party A to submit their best and final offers within a few hours. When only Google submitted
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`a revised offer, the Board agreed to accept Google’s offer. But when Party A submitted a higher
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`offer later that evening, defendant Park decided to go back to Google to try and increase its offer.
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`The next day Google did increase its offer, and defendant Park accepted the offer without
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`discussing with the Board first. The Board ratified defendant Park’s action on October 14, 2019.
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`32.
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`Approximately two weeks later, on October 31, 2019, the Board approved the
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`Proposed Transaction.
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`C. Fitbit’s Officers Stand to Receive Benefits Unavailable to the Class
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`33.
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`The Proxy acknowledges that the Company’s executive officers have interests in
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`the merger that may differ from those of the stockholders and may create conflicts of interest.
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`34.
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`Options, restricted stock units and performance stock units that have been awarded
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`to and are held by Fitbit’s executive officers and directors will vest and be converted into the right
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`to receive either the Merger Consideration or another amount. The treatment of these equity
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`awards, in addition to benefits provided to executive officers through offer letters, employment
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`agreements and executive retention agreements, will create a windfall for Fitbit’s executive
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`officers and directors that is unavailable to the common stockholders. The members of the Board
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`and the executive officers stand to gain handsomely just from their equity award holdings, as they
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`will receive more than $63.9 million. And as demonstrated in the following chart, the executive
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`officers of Fitbit in total stand to receive up to $23.4 million, if they are let go without “cause” or
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`voluntarily leave for “good reason” after the Proposed Transaction closes:
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`9
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`Case 1:99-mc-09999 Document 1920 Filed 12/12/19 Page 10 of 21 PageID #: 183458Case 1:19-cv-02270-UNA Document 1 Filed 12/13/19 Page 10 of 21 PageID #: 10
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`Named Executive Officer
`James Park
`Eric Friedman
`Ronald Kisling
`Andy Missan
`Jeff Devine
`
`Equity
`
`
`
`Awards
`Cash
` $3,000,000 $8,348,513
`
`$796,250 $3,875,537
`
`$739,846 $2,219,825
`
`$780,362 $1,567,762
`
`$704,615 $1,333,724
`
`Heath Insurance
`
`Total
`Premiums
`$14,937 $11,363,450
`$29,430
`$4,701,217
`$9,958
`$2,969,629
`$30,016
`$2,378,140
`$29,903
`$2,068,242
`
`35.
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`Three of the executive officers will receive cash retention payments if they stay on
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`after the Proposed Transaction closes. The same executive officers were also granted Fitbit
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`restricted stock units valued at $110,250 that will vest over two years. The special compensation
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`is a benefit that Fitbit’s other stockholders will not benefit from.
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`36.
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`Finally, defendants Park and Friedman have received offers of employment from
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`Google. The offer letter for defendant Park includes an annual salary of $475,000, a retention
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`bonus of $16 million, and $11 million in restricted stock units to acquire the Class C stock of
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`Alphabet, Google’s parent company. Defendant Friedman’s offer letter includes an annual salary
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`of $450,000, a retention bonus of $7 million, and $5 million in restricted stock units to acquire
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`Alphabet Class C stock. None of the other executive officers have received similar offers of
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`employment from Google.
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`D. The Preclusive Deal Protection Devices
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`37.
`
`As part of the Merger Agreement, defendants agreed to certain preclusive deal
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`protection devices that ensure that no competing offers for the Company will emerge.
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`38.
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`By way of example, Section 6.02(a) of the Merger Agreement includes a “no
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`solicitation” provision barring the Company from soliciting or encouraging the submission of an
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`acquisition proposal. Section 6.02(a) further demands that the Company cease and terminate all
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`discussions or negotiations with any party concerning an acquisition proposal.
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`
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`10
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`39.
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`Despite already locking up the Proposed Transaction by agreeing not to solicit
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`alternative bids, the Board consented to additional provisions in the Merger Agreement that further
`
`guarantee the Company’s only suitor will be Google. For example, pursuant to Section 6.02(f) of
`
`the Merger Agreement, the Company must notify Google of any offer, indication of interest, or
`
`request for information made by an unsolicited bidder. That includes the identity of any party
`
`making a proposal and the material terms of that proposal. Thereafter, should the Board determine
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`that the unsolicited offer is superior, Section 6.02(e) requires that the Board grant Google four (4)
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`business days to negotiate the terms of the Merger Agreement to render the superior proposal no
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`longer superior. In other words, the Merger Agreement gives Google access to any rival bidder’s
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`information and allows Google a free right to top any superior offer. Accordingly, no rival bidder
`
`is likely to emerge and act as a stalking horse for Fitbit, because the Merger Agreement unfairly
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`assures that any “auction” will favor Google and allow Google to piggy-back upon the due
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`diligence of the foreclosed second bidder.
`
`40.
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`In addition, pursuant to Section 8.03(a) of the Merger Agreement, Fitbit must pay
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`Google a termination fee of $80 million if the Company decides to pursue another offer, thereby
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`essentially requiring that the alternate bidder agree to pay a naked premium for the right to provide
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`the shareholders with a superior offer.
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`41.
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`Ultimately, these preclusive deal protection provisions restrain the Company’s
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`ability to solicit or engage in negotiations with any third party regarding a proposal to acquire all
`
`or a significant interest in the Company. The circumstances under which the Board may respond
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`to an unsolicited written bona fide proposal for an alternative acquisition that constitutes or would
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`reasonably be expected to constitute a superior proposal are too narrowly circumscribed to provide
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`
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`11
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`an effective “fiduciary out” under the circumstances. Likewise, these provisions also foreclose any
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`likely alternate bidder from providing the needed market check of Google’s inadequate offer price.
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`E. The Materially Incomplete and Misleading Proxy
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`42.
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`The Individual Defendants must disclose all material information regarding the
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`Proposed Transaction to Fitbit stockholders so that they can make a fully informed decision
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`whether to vote in favor of the Proposed Transaction.
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`43.
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`On November 25, 2019, defendants filed the Proxy with the SEC. The purpose of
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`the Proxy is, inter alia, to provide the Company’s stockholders with all material information
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`necessary for them to make an informed decision on whether to vote their shares in favor of the
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`Proposed Transaction. However, significant and material facts were not provided to Plaintiff and
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`the Class. Without such information, Fitbit shareholders cannot make a fully informed decision
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`concerning whether or not to vote in favor of the Proposed Transaction.
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`Materially Misleading Statements/Omissions Regarding the Management-
`Prepared Financial Forecasts
`
`44.
`
`The Proxy discloses management-prepared financial projections for the Company
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`that are materially misleading. The Proxy indicates that in connection with the rendering of
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`Qatalyst’s fairness opinion, Qatalyst reviewed “certain forward-looking information relating to
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`Fitbit, including certain non-public unaudited financial forecasts for Fitbit as a standalone
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`company, prepared by [Fitbit’s] management.” Accordingly, the Proxy should have, but failed to,
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`provide certain information in the projections that Fitbit’s management provided to the Board and
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`Qatalyst.
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`45.
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`Notably, defendants failed to disclose the projection line items for “The
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`Projections,” including: a) research and development expense; b) sales and marketing expense; c)
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`general and administrative expense; and d) stock-based compensation expense. The Proxy also
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`12
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`fails to disclose the projection line items for “The Advocacy Case,” including: a) research and
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`development expense; b) sales and marketing expense; c) general and administrative expense; d)
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`stock-based compensation expense; e) non-GAAP tax adjustment; f) NOPAT; g) capital
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`expenditures; h) depreciation; i) investment in working capital; and j) unlevered free cash flow.
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`This omitted information is necessary for Fitbit stockholders to make an informed decision on
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`whether to vote in favor of the Proposed Transaction.
`
`Materially Incomplete and Misleading Disclosures Concerning Qatalyst’s
`Financial Analyses
`
`46. With respect to the Discounted Cash Flow Analysis, the Proxy fails to disclose the
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`individual inputs and assumptions utilized to derive the discount rate range of 12.5% to 16.5%.
`
`The Proxy further false to disclose the amount of forecasted tax attributes outstanding as of
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`December 31, 2023, the specific statutory tax rate, and the resulting net present value amount of
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`Fitbit’s tax attributes. In addition, the Proxy fails to disclose the specific inputs, assumptions and
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`methodologies by which the “estimated net effects of equity issuances and cancellations related to
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`future equity compensation, based on estimates of future dilution” were determined for use in the
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`analysis.
`47. With respect to the Selected Companies Analysis, the Proxy fails to disclose what
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`benchmarking analyses, if any, Qatalyst performed for Fitbit relative to the selected companies.
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`The Proxy also fails to disclose how, if at all, Qatalyst accounted for the value of Fitbit’s tax
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`savings from future usage of tax attributes.
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`Materially Incomplete and Misleading Disclosures Concerning the Flawed
`Process
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`48.
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`The Proxy also fails to disclose material information concerning the sales process.
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`For example, in May 2019, members of Fitbit’s senior management met with a financial advisory
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`firm to discuss strategic alternatives. The Proxy does not disclose whether the financial advisory
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`firm prepared any financial analyses of the Company, as Qatalyst did, before the July 1, 2019
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`Board meeting.
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`49.
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`Qatalyst prepared its preliminary financial perspectives on Fitbit and discussed
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`them with members of the Company’s senior management on June 18, 2019. The Proxy does not
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`disclose these preliminary financial perspectives. Qatalyst then provided its preliminary financial
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`perspectives on Fitbit at the July 1, 2019 Board meeting. The Proxy does not disclose these
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`preliminary financial perspectives or whether they differ from the perspectives discussed on June
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`18, 2019.
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`50.
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`The Proxy notes that after the July 25, 2019 Board meeting, Qatalyst and members
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`of Fitbit’s management contacted four parties to determine their interest in a potential transaction
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`with Fitbit. The Proxy does not disclose whether the parties were strategic or financial, when they
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`were contacted and who chose those parties.
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`51.
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`The Company entered into confidentiality agreements with Party A, Party B, Party
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`C, and Party D, and amended its confidentiality agreement with Google. According to the Proxy,
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`none of the agreements had a standstill provision that would prevent the party from making an
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`acquisition proposal if Fitbit entered into a merger agreement with another party. The Proxy does
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`not disclose whether the confidentiality agreements contained standstill provisions, and if so what
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`the exact provision allowed or restricted. Instead, the Proxy is vague about the existence of any
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`standstill provisions.
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`52.
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`Party A was not provided with a bid process letter because it was pursuing a parallel
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`process. The Proxy does not disclose when the parallel process began, why Party A was not
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`included in the sales process, and what the parallel process entailed.
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`53.
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`Qatalyst reviewed “certain financial aspects” of Google’s October 2, 2019 proposal
`
`with the Board on October 10, 2019. The Proxy does not disclose whether those aspects included
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`analyses and, if so, does not disclose the analyses.
`
`54.
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`On October 13, 2019, the legal advisor for Google informed the legal advisor for
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`Fitbit that Google wanted to negotiate post-closing employment with defendants Park and
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`Friedman. The Proxy does not disclose whether Google had discussed employment with
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`defendants Park and Friedman before the Board accepted its offer, or when defendants Park and
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`Friedman were informed of Google’s interest in their continued employment.
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`55.
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`The Proxy notes that the Projections had been updated to reflect the quarter ended
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`September 28, 2019. Those updated Projections were ratified for use by Qatalyst in its financial
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`analyses. The Proxy does not disclose these updated Projections or how they differed from the
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`Projections provided to Google.
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`56.
`
`Qatalyst’s fairness opinion notes that Qatalyst did not have a material relationship
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`with Fitbit or Google in the two years prior to its opinion. The Proxy does not disclose how material
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`relationship was defined or whether Qatalyst had any relationship of any kind with either Google
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`or Fitbit prior to rendering its fairness opinion.
`
`57.
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`This information is necessary to provide Company stockholders a complete and
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`accurate picture of the sales process and its fairness. Without this information, stockholders were
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`not fully informed as to the defendants’ actions, including those that may have been taken in bad
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`faith, and cannot fairly assess the process. Without all material information, Fitbit stockholders are
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`unable to make a fully informed decision in connection with the Proposed Transaction and face
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`irreparable harm, warranting the injunctive relief sought herein.
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`58.
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`In addition, the Individual Defendants knew or recklessly disregarded that the
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`Proxy omits the material information concerning the Proposed Transaction and contains the
`
`materially incomplete and misleading information discussed above.
`
`59.
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`Specifically, the Individual Defendants undoubtedly reviewed the contents of the
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`Proxy before it was filed with the SEC. Indeed, as directors of the Company, they were required
`
`to do so. The Individual Defendants thus knew or recklessly disregarded that the Proxy omits the
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`material information referenced above and contains the incomplete and misleading information
`
`referenced above.
`
`60.
`
`Further, the Proxy indicates that on October 31, 2019, Qatalyst reviewed with the
`
`Board its financial analysis of the Merger Consideration and delivered to the Board an oral opinion,
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`which was confirmed by delivery of a written opinion of the same date, to the effect that the Merger
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`Consideration was fair, from a financial point of view, to Fitbit shareholders. Accordingly, the
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`Individual Defendants undoubtedly reviewed or were presented with the material information
`
`concerning Qatalyst’s financial analyses which has been omitted from the Proxy, and thus knew
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`or should have known that such information has been omitted.
`
`61.
`
`Plaintiff and the other members of the Class are immediately threatened by the
`
`wrongs complained of herein, and lack an adequate remedy at law. Accordingly, Plaintiff seeks
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`injunctive and other equitable relief to prevent the irreparable injury that