United States Court of Appeals
`For the Eighth Circuit
`___________________________
`
`No. 20-3216
`___________________________
`
`Carpenters’ Pension Fund of Illinois; Iron Workers Pension Fund, Local 11; Peoria
`Police Pension Fund; Laura Wood; Harkishan Parekh, derivatively on behalf of
`Centene Corporation
`
` Plaintiffs - Appellants
`
`v.
`
`Michael Neidorff; Jeffrey A. Schwaneke; Robert K. Ditmore; David Steward; John
`R. Roberts; Tommy G. Thompson; Frederick H. Eppinger; Richard Gephardt;
`Orlando Ayala; Vicki B. Escarra; K. Rone Baldwin; Carol E. Goldman; Centene
`Corporation, a Delaware corporation
`
` Defendants - Appellees
`____________
`
`Appeal from United States District Court
`for the Eastern District of Missouri - St. Louis
`____________
`
`Submitted: September 23, 2021
`Filed: April 7, 2022
`____________
`
`
`Before SHEPHERD, WOLLMAN, and KOBES, Circuit Judges.
`____________
`
`
`SHEPHERD, Circuit Judge.
`
`Following the merger of Centene Corporation (Centene) and Health Net, Inc.
`
`(Health Net), certain shareholders of Centene (collectively, Appellants) brought five
`
`

`

`claims on behalf of the corporation against certain of its former and then-current
`directors and officers and nominal defendant Centene (collectively, Appellees):
`(1) violation of § 14(a) of the Securities Exchange Act of 1934; (2) breach of
`fiduciary duties of good faith, fair dealing, loyalty, and due care; (3) breach of
`fiduciary duty of loyalty, good faith, and candor in connection with securities law
`violations; (4) insider trading; and (5) unjust enrichment. Appellants did not make
`pre-suit demand on Centene’s Board of Directors (the Board) and the district court1
`dismissed their complaint with prejudice, finding that Appellants had failed to plead
`particularized facts demonstrating that demand would have been futile. Appellants
`appeal the district court’s dismissal, and having jurisdiction under 28 U.S.C. § 1291,
`we affirm.
`
`
`I.
`
`
`Centene is a Delaware corporation that sells health insurance policies for
`
`Medicaid, Medicare Advantage, and Medi-Cal, among other products. Prior to its
`merger with Centene, Health Net sold health insurance policies to individuals,
`families, and businesses; offered behavioral health, substance abuse, and employee
`assistance programs; and offered plans for the provision of prescription drugs. In
`November 2014, Centene’s President and CEO, Michael F. Neidorff, contacted
`Health Net’s CEO, Jay Gellert, to discuss their respective businesses. On June 8,
`2015, Neidorff informed Gellert that Centene was interested in pursuing a potential
`business combination with Health Net. Throughout the remainder of June 2015, the
`Board met on several occasions to discuss the proposed transaction. On July 1, 2015,
`the Board unanimously approved a merger of the two companies, and the next day,
`Centene and Health Net put out a joint press release announcing the merger.
`
`Centene and Health Net issued a joint proxy statement (the Proxy Statement)
`
`on September 21, 2015, asking for shareholder approval of the merger. The Proxy
`
`
`1The Honorable Catherine D. Perry, United States District Judge for the
`
`Eastern District of Missouri.
`
`
`
`-2-
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`

`

`Statement detailed the considerations made and rationale in pursuing the transaction,
`negotiations between the companies, and risk factors associated with the transaction.
`On October 23, 2015, Centene’s shareholders voted to approve the merger, which
`ultimately closed on March 24, 2016, after regulatory approval. Appellants allege
`that at the time the Proxy Statement issued, and continuing through the closing date,
`Centene’s directors and officers concealed their knowledge of Health Net’s
`significant financial problems from shareholders, including that Health Net had
`poorly designed and unprofitable policies, was subject to liability based upon its
`refusal to pay claims from substance abuse treatment centers in California, and had
`significant potential tax liabilities.
`
`On April 26, 2016, Centene filed a SEC Form 10-Q (the April 10-Q) reporting
`
`its first-quarter financial performance. There, Centene stated that due to the timing
`of the merger’s closing, only preliminary estimates of Health Net’s assets and
`liabilities as of the date of acquisition were available for reporting and such estimates
`were subject to change. The April 10-Q did not address any premium deficiency
`reserves (PDRs)2 that may have been necessary to cover Health Net liabilities, even
`though Centene’s audit committee had determined on April 25, 2016, the day before
`the form was filed, that the PDRs for Health Net needed to be set, at a minimum, to
`$117 million. Following the filing of the April 10-Q, Neidorff and other Centene
`officers assured the public of the merger’s success on multiple occasions.
`
`
`On July 26, 2016, Centene released its second-quarter financial results. These
`results disclosed a $390 million increase in reserves for Health Net’s increased
`liabilities, including a $90 million increase in reserves for disputed claims arising
`from Health Net’s dealings with substance abuse treatment centers and a $300
`million PDR booked to account for potential losses related to underperforming
`contracts. Following this disclosure, Centene’s stock price dropped more than 8%,
`amounting to a loss of over $1 billion in stockholder value. Neidorff later admitted
`
`2“A premium deficiency reserve is an accounting tool that acknowledges that
`
`a firm’s projected losses are greater than its projected premiums.” United States v.
`Aetna Inc., 240 F. Supp. 3d 1, 87 (D.D.C. 2017).
`-3-
`
`
`
`

`

`that Centene knew of problems with Health Net’s business and policies prior to the
`merger. Further, between the time the merger was approved by shareholders and the
`release of Centene’s second-quarter financial results, several Centene directors and
`officers sold or disposed of nearly half-a-million shares of Centene stock worth more
`than $28 million in total.
`
`After the district court consolidated Appellants’ separate derivative actions,
`
`Appellants filed their Verified Consolidated Amended Stockholder Derivative
`Complaint (the Amended Complaint). Significantly, Appellants did not demand that
`the Board bring the desired lawsuit, instead arguing that demand would be futile
`because a majority of the Board could not have impartially considered whether to
`bring such suit. At the time Appellants filed the Amended Complaint, the Board
`consisted of nine directors: inside-director Neidorff and eight outside directors.
`Appellees include Neidorff and outside-directors Robert K. Ditmore, David L.
`Steward, John R. Roberts, Tommy G. Thompson, Frederick H. Eppinger, Richard
`A. Gephardt, and Orlando Ayala (collectively, the Director Defendants).
`Outside-director Jessica Blume, who was not a director when the Proxy Statement
`issued in September 2015, is not named as a defendant.
`
`Appellees filed a motion to dismiss the Amended Complaint, arguing that
`
`Appellants failed to plead demand futility. The district court granted Appellees’
`motion and dismissed the case with prejudice, finding that Appellants failed to plead
`facts with sufficient particularity that would excuse pre-suit demand. Appellants
`timely brought the present appeal, arguing that the district court erred in finding that
`the Amended Complaint failed to demonstrate demand futility.
`
`II.
`
`We review a district court’s grant of a motion to dismiss de novo, accepting
`
`all allegations within the complaint as true. Gomes v. Am. Century Cos., 710 F.3d
`811, 815 (8th Cir. 2013). “To survive a motion to dismiss, a complaint must plead
`‘enough facts to state a claim to relief that is plausible on its face.’” Id. (quoting
`-4-
`
`
`
`

`

`Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Federal Rule of Civil
`Procedure 23.1, however, subjects complaints in a derivative action to a heightened
`pleading standard, requiring that shareholders “state with particularity . . . any effort
`. . . to obtain the desired action from the directors or comparable authority” and “the
`reasons for not obtaining the action or not making the effort.” Fed. R. Civ. P.
`23.1(b)(3). This Court recognizes Rule 23.1 as “‘a rule of pleading’ that ‘requires
`that the complaint in such a case allege the facts that will enable a federal court to
`decide whether such a demand requirement has been satisfied.’” Gomes, 710 F.3d
`at 815 (citation omitted). Thus, where shareholders do not make demand on the
`board, those shareholders must plead with particularity the reasons why such
`demand would have been futile and should therefore be excused.
`
`Before reaching the merits of the issue, we must first determine the proper
`
`framework for assessing demand futility. Because Centene is a Delaware
`corporation, Delaware law applies. See Cottrell ex rel. Wal-Mart Stores v. Duke,
`829 F.3d 983, 989 (8th Cir. 2016). For many years, Delaware courts applied one of
`two tests for demand futility, with the appropriate test dictated by the composition
`of the board upon which demand was to be made (the demand board). The first test,
`set forth in Aronson v. Lewis, applied where the complaint challenged a decision
`made by the demand board and required plaintiffs to plead particularized facts
`demonstrating a reasonable doubt that “(1) the directors are disinterested and
`independent [or] (2) the challenged transaction was otherwise the product of a valid
`exercise of business judgment.” Rales v. Blasband, 634 A.2d 927, 933 (Del. 1993)
`(alteration in original) (quoting Aronson v. Lewis, 473 A.2d 805, 814 (Del. 1984),
`overruled on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000)).
`Alternatively, the second test, set forth in Rales v. Blasband, applied “where the
`board that would be considering the demand did not make a business decision which
`is being challenged in the derivative suit.” 634 A.2d at 933-34. The Rales test
`required the court to “determine whether or not the particularized factual allegations
`of a derivative stockholder complaint create a reasonable doubt that, as of the time
`the complaint is filed, the board of directors could have properly exercised its
`
`
`
`-5-
`
`

`

`independent and disinterested business judgment in responding to a demand.” Id. at
`934.
`
`
`After the district court entered its order dismissing the Amended Complaint,
`
`the Delaware Supreme Court eliminated this distinction and announced a new,
`“universal” test that encompasses both the Aronson and Rales tests. See United
`Food & Com. Workers Union & Participating Food Indus. Emps. Tri-State Pension
`Fund v. Zuckerberg (Tri-State), 262 A.3d 1034, 1058-59 (Del. 2021). This new test
`consists of three questions to be analyzed on a director-by-director basis3 when
`making a demand futility determination:
`
`
`(i) whether the director received a material personal benefit from the
`alleged misconduct that is the subject of the litigation demand;
`
`(ii) whether the director faces a substantial likelihood of liability on any
`of the claims that would be the subject of the litigation demand; and
`
`(iii) whether the director lacks independence from someone who
`received a material personal benefit from the alleged misconduct that
`would be the subject of the litigation demand or who would face a
`substantial likelihood of liability on any of the claims that are the
`subject of the litigation demand.
`
`
`
`3Here, as in Cottrell, where we declined “to fault the shareholders for not
`
`‘plead[ing] facts director-by-director’” because “the shareholders’ theory of the case
`was that the relevant directors all learned about the investigators’ suspicions of
`bribery in the same way and faced liability for the same reasons,” Appellants allege
`that a majority of the Board learned about the problems with Health Net in the same
`way. See 829 F.3d at 992 n.10 (alteration in original). Therefore, to the extent that
`the Amended Complaint does not plead all facts “director-by-director” but, instead,
`pleads some facts against the Director Defendants as a group, “we see nothing that
`would have been gained by demanding that they repeat the same allegations
`‘director-by-director’ in their complaint” and do not fault Appellants for their failure
`to do so. Id.
`
`
`
`
`-6-
`
`

`

`Id. at 1059. Demand is excused as futile if the answer to any of the above questions
`is “yes” for at least half of the members of the demand board. Id. Importantly, this
`test “does not change the result of [the] demand-futility analysis” and “is consistent
`with and enhances Aronson, Rales, and their progeny,” which “remain good law.”
`Id. at 1058-59. Thus, because this new test is merely a synthetization of Delaware
`precedent that was available to Appellants at the time the Amended Complaint was
`filed, we find that granting Appellants’ request that we remand to allow Appellants
`the opportunity to replead would not afford Appellants any opportunity that was not
`already within their reach.
`
`With the proper framework established, we now turn to the question of
`
`whether Appellants have pled demand futility as to each of their five claims.4 No
`detailed analysis is needed as to the first Tri-State question because the Amended
`Complaint makes no allegation that at least half of the Board received a material
`personal benefit from the conduct alleged. Similarly, we need not delve into the
`
`
`4As to their first three claims, Appellants failed to structure the argument
`
`section of their opening brief in a claim-by-claim manner, instead focusing entirely
`on what information the Board knew at various points. At oral argument, Appellants
`indicated that this Court’s opinion in Cottrell served as the blueprint for their
`Amended Complaint. From what we can discern, Appellants implemented the same
`strategy in drafting their opening brief. Cottrell, however, does not override
`Delaware law’s instruction that “[d]emand futility analysis is conducted on a
`claim-by-claim basis.” Beam ex rel. Martha Stewart Living Omnimedia, Inc. v.
`Stewart (Beam I), 833 A.2d 961, 977 n.48 (Del. Ch. 2003). In Cottrell, it was
`unnecessary for this Court to address the details of the shareholders’ individual
`claims because a common threshold requirement—namely, knowledge of the
`alleged misconduct—underlying each claim was not met. 829 F.3d at 990 & n.8.
`Appellants seem to take from Cottrell that if they can demonstrate that the Board
`knew of the problems with Health Net, then they have adequately pled demand
`futility. See Appellants’ Br. 45-47. This is not so. Had the shareholders in Cottrell
`met the threshold requirement, an analysis of their individual claims would still have
`been required to determine whether at least half of the directors faced a substantial
`likelihood of liability as to each alleged claim. See 829 F.3d at 990 n.8.
`
`
`
`
`-7-
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`

`third question because Appellants have failed to argue it on appeal.5 See Falco v.
`Farmers Ins. Grp., 795 F.3d 864, 868 (8th Cir. 2015) (“Questions not raised, briefed
`
`
`5Even had Appellants made this argument, they have not pled facts
`
`demonstrating that at least half of the Board lacks independence from a director who
`either received a material personal benefit from the alleged misconduct or faces a
`substantial likelihood of liability on any of the claims alleged in the Amended
`Complaint.
`
`
`To show a lack of independence, a derivative complaint must plead
`with particularity facts creating “a reasonable doubt that a director is
`. . . so ‘beholden’ to an interested director . . . that his or her ‘discretion
`would be sterilized.’”
`
`
`. . . The plaintiff must allege that “the director in question had
`ties to the person whose proposal or actions he or she is evaluating that
`are sufficiently substantial that he or she could not objectively
`discharge his or her fiduciary duties.”
`
`
`Tri-State, 262 A.3d at 1060-61 (first and second alteration in original) (first quoting
`Beam ex rel. Martha Stewart Living Omnimedia, Inc. v. Stewart (Beam II), 845 A.2d
`1040, 1050 (Del. 2004); then quoting Kahn v. M & F Worldwide Corp., 88 A.3d
`635, 649 (Del. 2014) (overruled on other grounds by Flood v. Synutra Int’l, Inc., 195
`A.3d 754 (Del. 2018))).
`
`
`Appellants allege that the Board members lack independence from one
`another because a majority have been on the Board for “at least 12 consecutive
`years”; they have instituted “self-serving measures that foster their entrenchment,”
`such as “imposing a staggered board”; and each Board committee has had the same
`chairperson for at least 12 years. R. Doc. 45-1, at 77-78. Appellants further make
`the bare assertion that the Board members are “personal friends” with “entangling
`financial alliances, personal and business interests and other dependencies.” R. Doc.
`45-1, at 84. Without more, these allegations do not demonstrate a lack of
`independence. See Beam II, 845 A.2d at 1050-52 (“Allegations of mere personal
`friendship or a mere outside business relationship, standing alone, are insufficient to
`raise a reasonable doubt about a director’s independence.”); In re MFW S’Holders
`Litig., 67 A.3d 496, 509-10 (Del. Ch. 2013) (“[T]he simple fact that there are some
`financial ties between the interested party and the director is not disqualifying.”); In
`re BJ’s Wholesale Club, Inc. S’holders Litig., No. 6623–VCN, 2013 WL 396202, at
`-8-
`
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`

`

`or argued will ordinarily be given no consideration by an appellate court.” (citation
`omitted)).
`
`
`This leaves the second Tri-State question, which is the same question
`addressed by the district court and briefed by the parties: whether at least half of the
`Board (i.e., five of the nine directors) faces a substantial likelihood of liability as to
`any of Appellants’ five claims. See 262 A.3d at 1059. As a preliminary matter,
`though Appellants allege on appeal that all nine directors face a substantial
`likelihood of liability because they knew of material problems with Health Net’s
`business and concealed them from stockholders, the Amended Complaint does not
`name Blume as a defendant or explain how she could have participated in such
`conduct prior to joining the Board. Because Blume does not face a substantial
`likelihood of liability as to any of Appellants’ five claims, our focus is on the
`remaining eight directors (the Director Defendants).
`
`
`A.
`
`
`
`Appellants’ first claim alleges that the Director Defendants violated § 14(a)
`of the Securities Exchange Act of 1934 by “negligently” issuing “false and
`misleading statements” within the Proxy Statement and failing to disclose additional
`information concerning Health Net’s problems. R. Doc. 45-1, at 87. “Section 14(a)
`. . . provides that it is unlawful to solicit a proxy respecting any registered security
`in contravention of SEC rules and regulations. SEC Rule 14a-9(a) provides that no
`proxy statement may contain any false or misleading statement or omission with
`respect to a material fact.” SEC v. Shanahan, 646 F.3d 536, 546 (8th Cir. 2011).
`“Section 14(a) ‘was intended to promote the free exercise of the voting rights of
`stockholders by ensuring that proxies would be solicited with explanation to the
`stockholder of the real nature of the questions for which authority to cast his vote is
`
`
`*6 n.63 (Del. Ch. Jan. 31, 2013) (finding allegation that board members had served
`on board together nearly twenty years insufficient to raise reasonable doubt as to
`director’s independence).
`
`
`
`-9-
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`

`

`sought.’” SEC v. Das, 723 F.3d 943, 953 (8th Cir. 2013) (quoting TSC Indus., Inc.
`v. Northway, Inc., 426 U.S. 438, 444 (1976)).
`
`A plaintiff who alleges a claim under § 14(a) must show that “(1) a proxy
`
`statement contained a material misrepresentation or omission which (2) caused the
`plaintiff injury and (3) that the proxy solicitation itself, rather than the particular
`defect in the solicitation materials, was an essential link in the accomplishment of
`the transaction.” Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 212, 228 (3d Cir.
`2007) (citation omitted); see also Kuebler v. Vectren Corp., 13 F.4th 631, 637 (7th
`Cir. 2021) (same); N.Y.C. Emps.’ Ret. Sys., 593 F.3d 1018, 1022 (9th Cir. 2010)
`(same), overruled on other grounds by Lacey v. Maricopa Cnty., 693 F.3d 896 (9th
`Cir. 2012). Further, because “[t]he Private Securities Litigation Reform Act
`(‘PSLRA’) imposes heightened pleading standards in securities-fraud cases,”
`Campbell v. Transgenomic, Inc., 916 F.3d 1121, 1124 (8th Cir. 2019) (citation
`omitted), the Amended Complaint must also “1) specify each statement alleged to
`have been misleading, [and] the reason or reasons why the statement is misleading,
`and 2) state with particularity facts giving rise to a strong inference that the defendant
`acted with the required state of mind,” Little Gem Life Scis. v. Orphan Med., 537
`F.3d 913, 916-17 (8th Cir. 2008) (alteration in original) (citation omitted); see also
`15 U.S.C. § 78u-4(b) (stating requirements for securities fraud actions). This Court
`has held that “scienter is an element” of § 14(a) claims brought “against outside
`directors,” which seven of the eight Director Defendants were at the time the
`Amended Complaint was filed. Shanahan, 646 F.3d at 546.
`
`“The question of materiality . . . is an objective one, involving the significance
`
`of an omitted or misrepresented fact to a reasonable investor.” TSC Indus., 426 U.S.
`at 445. An alleged misrepresentation must have been, “at the time and in the light
`of the circumstances under which it is made . . . false or misleading with respect to
`any material fact.” 17 C.F.R. § 240.14a-9(a). “A fact is material ‘when there is a
`substantial likelihood that the disclosure of the omitted fact would have been viewed
`by the reasonable investor as having significantly altered the total mix of information
`made available.’” Smelko v. Stratasys Ltd. (In re Stratasys Ltd. S’holder Sec. Litig.),
`-10-
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`864 F.3d 879, 882 (8th Cir. 2017) (quoting Matrixx Initiatives, Inc. v. Siracusano,
`563 U.S. 27, 38 (2011)). “The court views factual allegations most favorably to the
`plaintiff and assumes the truth of particularly pled allegations, but not of ‘catch-all’
`or ‘blanket’ assertions that do not meet the particularity requirements of the statute.”
`Campbell, 916 F.3d at 1124 (citation omitted).
`
`Here, Appellants allege that the Proxy Statement “failed to disclose (i) the
`
`existing problems regarding claims from Health Net’s substance abuse facilities;
`(ii) poorly designed and unprofitable policies in California and Arizona;
`(iii) potentially massive tax liabilities in California; and (iv) Health Net’s purported
`involvement in a scheme to defraud Medicare.” R. Doc. 45-1, at 32. Appellants
`argue in their reply brief that these alleged omissions rendered both the pro forma
`analyses included in the Proxy Statement and the Proxy Statement as a whole
`“incomplete and misleading.” Appellants’ Reply Br. 16. “As a general rule, we will
`not consider arguments raised for the first time in a reply brief. We are not precluded
`from doing so, however, particularly where, as here, the argument raised in the reply
`brief supplements an argument raised in a party’s initial brief.” Barham v. Reliance
`Standard Life Ins. Co., 441 F.3d 581, 584 (8th Cir. 2006) (citation omitted). Here,
`we consider Appellants’ argument in their reply brief to be further development of
`an argument raised in their opening brief, and therefore, it is appropriate for our
`consideration. See Appellants’ Br. 35.
`
`
`Appellants’ argument that the alleged omissions rendered the entire Proxy
`Statement misleading is a “blanket” assertion that lacks the specificity required by
`the PSLRA. See Campbell, 916 F.3d at 1124. As to Appellants’ argument that the
`alleged omissions rendered the pro forma analyses misleading, we find that the
`cautionary language included in the Proxy Statement “renders the alleged . . .
`omissions immaterial as a matter of law.” Chambers v. AMDOCS Ltd. (In re
`AMDOCS Ltd. Sec. Litig.), 390 F.3d 542, 548 (8th Cir. 2004) (per curiam).
`“[C]autionary language must ‘relate directly to that by which plaintiffs claim to have
`been misled.’” Parnes v. Gateway 2000, Inc., 122 F.3d 539, 548 (8th Cir. 1997)
`(citation omitted). Here, the Proxy Statement contains language in bold type
`-11-
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`

`

`warning shareholders of “the uncertainties inherent in the unaudited financial
`projections” and cautioning them “not to place undue, if any, reliance on such
`unaudited financial projections.” R. Doc. 79-3, at 118 (emphasis omitted).6 We find
`that this language relates directly to the pro forma analyses by which Appellants
`claim to have been misled and, therefore, renders the alleged omissions immaterial.
`
`Appellants additionally allege that the Proxy Statement “falsely or
`
`misleadingly states that: ‘[t]he combination of Health Net and Centene would
`maintain and enhance Health Net’s strong commercial business in California, which
`could also serve as a model for other states in which similar opportunities can be
`identified.’” Appellants’ Br. 35 (alteration in original). Our review of the Amended
`Complaint, however, reveals that though Appellants note this statement in the
`
`6Among other cautionary language, the Proxy Statement also provides:
`
`
`
`
`There can be no assurance that the underlying assumptions or projected
`results will be realized, and actual results will likely differ, and may
`differ materially, from those reflected in the unaudited financial
`projections, whether or not the merger is completed. As a result, the
`unaudited financial projections cannot necessarily be considered
`predictive of actual future operating results, and this information should
`not be relied on as such.
`
`
`. . . In the view of Centene’s management and Health Net’s
`management, the respective forecasts prepared by them were prepared
`on a reasonable basis based on the information available to Centene’s
`management and Health Net’s management, respectively, at the time of
`their preparation. The unaudited financial projections, however, are not
`facts and should not be relied upon as being necessarily indicative of
`actual
`future
`results,
`and
`readers of
`this
`joint proxy
`statement/prospectus are cautioned not to place undue, or any, reliance
`on this information. The inclusion of the unaudited financial
`projections in this joint proxy statement/prospectus is not an admission
`or representation by Centene or Health Net that such information is
`material.
`
`
`R. Doc. 79-3, at 117.
`
`
`
`-12-
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`

`

`Amended Complaint, they at no point explicitly allege that this statement was
`misleading, and therefore, Appellants fail to meet the heightened pleading
`requirements under the PSLRA, which require that the Amended Complaint “specify
`each statement alleged to have been misleading.” 15 U.S.C. § 78u-4(b)(1); see R.
`Doc. 45-1, at 24, 31.
`
`
`As to Appellants’ argument that the failure to update the Proxy Statement
`rendered it materially misleading, Appellants have not cited, and we have not found,
`any authority supporting the proposition that § 14(a) requires a company to update
`its proxy statement.7 Moreover, this argument is inconsistent with the text of Rule
`14a-9(a), which provides that a proxy statement may not contain “any statement
`which, at the time and in the light of the circumstances under which it is made, is
`false or misleading with respect to any material fact,” 17 C.F.R. § 240.14a-9(a)
`(emphasis added), and the language of the Proxy Statement itself, which provides in
`all capital letters that neither Centene nor Health Net intends to update the Proxy
`Statement and that both companies disclaim any responsibility to do so, R. Doc.
`79-3, at 118.
`
`For the reasons set forth above, Appellants have failed to plead facts showing
`that the Proxy Statement contained a material misrepresentation or omission and,
`consequently, have failed to plead particularized facts demonstrating that at least
`half of the Board faces a substantial likelihood of liability on their § 14(a) claim.
`Tri-State, 262 A.3d at 1059. We therefore affirm the district court’s finding that the
`Amended Complaint does not allege facts showing the Director Defendants faced a
`substantial likelihood of liability on the claim that the Proxy Statement was
`misleading. Though the district court primarily focused on the outside directors’
`state of mind, because Appellants’ failure to show that the Proxy Statement
`contained a material misrepresentation or omission is dispositive, we need not
`
`7The one case Appellants cite in support of their argument, ZVI Trading Corp.
`
`Emps. Money Purchase Pension Plan & Tr. v. Ross (In re Time Warner Inc. Sec.
`Litig.), is not a case about proxy statements. 9 F.3d 259 (2d Cir. 1993).
`
`
`
`
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`

`

`address whether the Amended Complaint states with particularity facts giving rise
`to a strong inference that the outside directors acted with scienter.8 See INS v.
`Bagamasbad, 429 U.S. 24, 25 (1976) (“As a general rule courts . . . are not required
`to make findings on issues the decision of which is unnecessary to the results they
`reach.”); Carlsen v. GameStop, Inc., 833 F.3d 903, 910 (8th Cir. 2016) (“[W]e may
`affirm a judgment on any ground supported by the record[.]” (alteration in original)
`(citation omitted)).
`
`
`B.
`
`Appellants’ second claim alleges that all Appellees, including the Director
`
`Defendants, breached their fiduciary duties of good faith, fair dealing, loyalty, and
`due care when they allowed Centene to enter the merger based upon “inadequate due
`diligence and flawed process,” overpay for Health Net, disseminate a “materially
`false and misleading” Proxy Statement, and “issue materially false and misleading
`
`8Because the information included in the Registration Statements attached to
`
`Appellants’ Motion to Supplement the Record and/or for Judicial Notice would not
`change our resolution of this issue, we deny the motion as moot. Robinson v. Pulaski
`Tech. Coll., 698 F. App’x 859, 859 (8th Cir. 2017) (per curiam); see also Dakota
`Indus., Inc. v. Dakota Sportswear, Inc., 988 F.2d 61, 63 (8th Cir. 1993) (“Th[e]
`authority to enlarge a record is rarely exercised and is a narrow exception to the
`general rule that an appellate court may consider only the record made before the
`district court.”). Further, we find Appellants’ efforts to introduce this evidence at
`this stage of the litigation vexatious. Appellants seek to supplement the record to
`include the Registration Statements containing the Proxy Statement to support their
`allegation that the Director Defendants signed the Proxy Statement, which itself is
`already part of the record. R. Doc. 79-3. Appellees disputed Appellants’ argument
`that the seven outside directors signed the Proxy Statement in their motion to dismiss
`the Amended Complaint below, putting Appellants on notice that the contents of the
`Proxy Statement were in dispute. See R. Doc. 78, at 18 n.9. Appellants now seek
`to introduce the Registration Statements, which are not referenced in the Amended
`Complaint, to bolster their argument on appeal. “[W]e find no compelling reason to
`allow [Appellants] to supplement the record with evidence available from the [SEC]
`long before the district court decided this case.” Bell v. Pfizer, Inc., 716 F.3d 1087,
`1092 (8th Cir. 2013).
`
`
`
`-14-
`
`

`

`information concerning its business and Health Net’s finances.”9 R. Doc. 45-1, at
`88. The directors of a Delaware corporation owe two overarching fiduciary duties
`to the corporation and its shareholders: the duties of care and loyalty. Dohmen v.
`Goodman, 234 A.3d 1161, 1168 (Del. 2020). The Delaware Supreme Court has
`stated that “[w]henever directors communicate publicly or directly with shareholders
`about the corporation’s affairs, with or without a request for shareholder action,
`directors have a fiduciary duty to shareholders to exercise due care, good faith and
`loyalty.” Malone v. Brinecat, 722 A.2d 5, 10 (Del. 1998).
`
`As to the duty of care, under Delaware law, a corporation may include a
`
`provision in its charter protecting directors from personal liability for breach of the
`duty of care. Del. Code Ann. tit. 8, § 102(b)(7). In Tri-State, along with articulating
`the proper test for demand fu