Summary
categorizing claims as derivative because unexercised warrants "could not have been at the `sole expense' of the minority shareholders"
Summary of this case from Agostino v. HicksOpinion
C.A. No. 17242
Date Submitted: November 19, 2002
Date Decided: December 18, 2002
Pamela S. Tikellis and Robert J. Kriner, Jr., of CHIMICLES TIKELLIS LLP, Wilmington, Delaware, and Norman Monhait, of ROSENTHAL MONHAIT GROSS GODDESS, P.A., Wilmington, Delaware; OF COUNSEL: Nicholas E. Chimicles, of CHIMICLES TIKELLIS LLP, Haverford, Pennsylvania, and Lawrence A. Sucharow, Joseph Sternberg, and Christopher J. Keller, of GOODKIND LABATON RUDOFF SUCHAROW LLP, New York, New York, Attorneys for Plaintiffs.
Kenneth J. Nachbar and Brian J. McTear, of MORRIS, NICHOLS, ARSHT TUNNELL, Wilmington, Delaware; OF COUNSEL: Jeffrey B. Rudman, James W. Prendergast, Daniel W. Halston, and John J. Butts, of HALE AND DORR LLP, Boston, Massachusetts, Attorneys for Defendants.
MEMORANDUM OPINION
Plaintiff stockholders of Berkshire Realty Company, Inc., ("BRC") filed a Second Amended Complaint and Consolidated Class Action Complaint ("SAC") alleging various breaches of fiduciary duties by individual and corporate defendants. Defendants have moved for partial dismissal of just six paragraphs of the seventy-one paragraph complaint on the basis that they either assert derivative claims or do not state claims upon which relief can be granted. Defendants' motion has been fully briefed and oral argument was heard on November 19, 2002. This Opinion decides defendants' motion.
I. PROCEDURAL HISTORY
After the first complaint in this action was filed, this Court issued a bench ruling, directing plaintiffs to amend the complaint to clarify certain allegations. Following this ruling, plaintiffs filed their SAC on September 19, 2001. Defendants moved thereafter to dismiss.
II. FACTS
Plaintiffs are former stockholders of BRC. Defendants include:
• BRC;
• Berkshire Realty Holdings, L.P. ("Parent") and BRI Acquisition, LLC, an entity wholly-owned by Parent, both of which were formed to effect a management-led buyout of the public stockholders of BRC;
• Members of the Buyout Group, which include Blackstone Real Estate Advisors III L.L.C., Whitehall Street Real Estate Limited Partnership XI, Douglas Krupp, the general partners of Parent (Berkshire GP, WXI/BRH Gen-Par, L.L.C. and BRE/Berkshire GP, L.L.C.); and
• Individual directors of BRC.
BRC is a company that acquires, renovates, rehabilitates, develops and operates apartment communities throughout the Mid-Atlantic and Southeast regions of the United States, Florida, and Texas. Article I Section 3 of BRC's charter provided that its board will prepare and submit a plan of liquidation to the stockholders for their approval. This provision required the liquidation proposal to include anticipated costs and estimated per share realizable proceeds, as well as recent property appraisals. Another portion of the charter limited the voting rights of holders of excess shares; that is, any individual or group owning greater than 9.8% of the total outstanding shares would not receive voting rights for any shares in excess of the 9.8%.
SAC at ¶ 28. Article I Section 3 of BRC's Restated Certificate of Incorporation states in pertinent part that
On or before December 31, 1998, the Board of Directors of the Corporation shall prepare and submit to the holders of Voting Stock of the Corporation a proposal to adopt a plan of liquidation (the "Plan of Liquidation") pursuant to which, if the Plan of Liquidation is approved by the holders of Voting Stock, the Corporation would sell all of its properties and other assets and distribute the net proceeds of such sale to the shareholders."
Id. at ¶ 29.
Id. at ¶ 30.
In 1996 and 1997, almost two years before the BRC board presented its liquidation proposal, BRC acquired an Advisory Group (in exchange for 1.3 million OP Units valued at $13 million, plus additional OP Units if the BRC stock price met certain benchmarks over the succeeding six years), and a Management Group (in exchange for 1.7 million OP Units valued at $17.6 million). As discussed below, plaintiffs challenge these acquisitions as a breach of fiduciary duty because they allegedly depleted the value of BRC's future liquidation proposal.
According to the SAC, OP Units are units of BRI OP Limited Partnership, or the Operating Partnership. SAC at ¶ 8(b). On May 1, 1995, BRC was restructured as an Umbrella Partnership, when it contributed substantially all of its assets to the Operating Partnership (subject to substantially all of its liabilities) in exchange for OP Units. SAC at ¶ 25. These OP Units could then be used by BRC to acquire properties and other assets on a tax-deferred basis to sellers. Id. While not alleged in the SAC, plaintiffs' answering brief alleges that these OP Units "were treated in effect as shares of common stock for purposes of liquidating distribution" in the 1999 liquidation vote. Answering Br. at 12. As discussed below, however, there is no indication that the OP Units were ever converted into shares of BRC common stock.
Then, in early 1998, BRC explored strategic combinations for BRC with the assistance of Lehman Brothers, Inc., and Lazard ("Lehman"). A Special Committee, that excluded Krupp, was formed to consider these business combinations and recommended a management buyout transaction in April 1999. Plaintiffs allege that these potential combinations were nevertheless limited to tax-sensitive options to enable Krupp to defer substantial tax gains.
As a result of the board deliberations, the BRC board prepared both a liquidation plan and a merger plan, but decided not to recommend the liquidation plan to the stockholders. Instead, the board prepared and disseminated a liquidation proxy statement dated June 21, 1999, recommending that the stockholders vote against the liquidation plan, which offered an estimated per share liquidation amount of $10.82 per share. In the liquidation proxy, the board also indicated that its recommendation to vote against the plan was based upon a merger agreement entered into by BRC on April 13, 1999, that would entitle the stockholders to $12.25 per share, and because the value of the company as a going concern was likely greater than its liquidation value. The liquidation proxy did not disclose the going concern value of BRC, even though it had been evaluated by the BRC board. Plaintiffs challenge several disclosures contained in the liquidation proxy statement, only some of which are relevant to the current motion to dismiss. Thus, I defer further description of these alleged disclosure violations until the portions of the analysis in which they become relevant.
III. ANALYSIS
Defendants move to dismiss two portions of the complaint. First, defendants argue that plaintiffs' allegations concerning the Management and Advisory Group acquisitions must be dismissed because they are derivative and conclusory. Second, defendants argue that plaintiffs' disclosure claims should be dismissed because either: 1) plaintiffs were not harmed by any nondisclosure; 2) the allegations are conclusory; or 3) defendants had no duty to disclose the allegedly missing information.
A. Standard of Review on a Motion to Dismiss
Defendants have moved to dismiss portions of plaintiffs' second amended complaint pursuant to Chancery Rule 12(b)(6), asserting that certain paragraphs fail to state a claim upon which relief can be granted. In deciding a motion to dismiss, a trial court must assume the truth of all well-pled, non-conclusory allegations in the complaint. The court must additionally extend the benefit of all reasonable inferences that can be drawn from those allegations to the non-moving party, the plaintiffs here. The court may, however, exclude allegations that are conclusory and lack factual support. Thus, a court will dismiss the claim only when the plaintiffs fail to plead facts supporting an element of the claim, or when the facts pled could not support a claim for relief under any reasonable interpretation of those facts.
Loudon v. Archer-Daniels-Midland Co., 700 A.2d 135, 140 (Del. 1997).
Id.
In re Walt Disney Co. Derivative Litig., 731 A.2d 342, 353 (Del. Ch. 1998).
Del. State Troopers Lodge v. O'Rourke, 403 A.2d 1109, 1110 (Del. Ch. 1979). of course, plaintiffs' pleading burden is more onerous under Rule 23.1 than that required to withstand a motion to dismiss under Rule 12(b)(6). Here, however, I have assessed plaintiffs' allegations under the more lenient 12(b)(6) standard because plaintiffs insist that their claim is a direct, not a derivative, claim. The issue on this motion, therefore, is how to characterize the true nature of plaintiffs' claim.
B. Advisor and Property Management Acquisitions
Defendants first challenge paragraphs 37(c) and 38(c) of the complaint, dealing with BRC's acquisition of the Advisory and Management Groups, as being derivative and/or conclusory.
Paragraph 37(c) alleges that
[t]he acquisition of the Advisory Company conferred special benefits upon Defendant Krupp. The acquisition enabled the Krupp brothers and Gerber to receive 1.3 million OP Units on a tax-free basis. The terms of the acquisition also provided for BRC to pay additional OP Units to the Krupps and Gerber if the BRC stock price exceeded certain benchmarks over the succeeding six years, and to pay the Krupps and Gerber upon a sale of BRC or approval of a liquidation, an amount calculated based on the per common share transaction price or liquidation distribution as if the OP Units were shares of common stock.
Paragraph 38(c) alleges that
[a]s with the acquisition of the Advisory Company, the acquisition of the Management Company conferred special benefits upon Defendant Krupp. Krupp and his brother obtained the OP Units on a tax-deferred basis. The acquisition of the Management Company also heightened the conflict between the interests of Krupp and the interests of the public shareholders in the event of a liquidation of the properties and other assets of BRC, as the acquisition increased the already substantial deferred gain that would be triggered by a liquidation under Article I Section 3 of the Charter.
1. Direct vs. Derivative Nature of the Claim
Defendants assert that plaintiffs' allegations regarding the Management and Advisory Group acquisitions are derivative rather than direct and, therefore, should be dismissed for plaintiffs' failure to comply with the requirements of Chancery Rule 23.1. They argue that the injuries alleged within these paragraphs are not special, but are injuries that fall equally upon all shareholders and do not injure any other shareholder right separate from any alleged injury to the corporation.
Plaintiffs argue that these claims are direct because they allege two special injuries: one to their charter-based liquidation right, and one to their voting rights resulting from potential dilution of their shares.
Plaintiffs' ability to challenge the acquisition of the Management and Advisory Groups depends upon whether they have standing directly or derivatively. An action seeking compensation for a special injury that is different from an injury to the corporation or other shareholders is a direct action; whereas an action seeking compensation for injury to the corporation is a derivative action. This distinction has important procedural implications for a litigating plaintiff because additional procedures are required to bring a derivative claim. Consequently, if a suit is derivative and plaintiffs unjustifiably failed to comply with the requirements to bring a derivative suit, the suit will generally be dismissed because they lack standing to bring it. Plaintiffs cannot avoid these results by cloaking their derivative suit in direct suit clothing, as a court will independently examine the nature of the wrong alleged and any potential relief to make its own determination of the suit's proper classification. This determination is for the court to make based upon the body of the complaint; plaintiffs' designation of the suit is not binding.
According to Rule 23.1, a shareholder must either make demand upon the board of the corporation before bringing suit or must have a justifiable reason for not making demand, such as futility.
Kramer v. Western Pacific Indus., Inc., 546 A.2d 348, 352 (Del. 1988).
Id.
In order to bring a direct claim, a plaintiff must have experienced some "special injury." A special injury is a wrong that "is separate and distinct from that suffered by other shareholders, . . . or a wrong involving a contractual right of a shareholder, such as the right to vote, or to assert majority control, which exists independently of any right of the corporation." For example, because the right to vote is a contractual right, a corporation may directly injure a stockholder's individual contractual right by giving another shareholder veto power over certain shareholder actions. Such injuries may be maintained as a direct action, even though the same wrong injures the corporation as well.
Lipton v. News Int'l., 514 A.2d 1075, 1079 (Del. 1986).
Moran v. Household Int'l, Inc., 490 A.2d 1059, 1070 (Del.Ch. 1985), aff'd, 500 A.2d 1346 (Del. 1986).
Lipton, 514 A.2d at 1078-79 (finding that allegations concerning exchange agreement that increased a stockholder's interest by 19%, and gave this stockholder veto power over all stockholder actions subject to supermajority approval, asserted a direct claim).
Id. at 1079.
Claims for waste are generally derivative in nature. Similarly, as stated in Kramer, "where a plaintiff shareholder claims that the value of his stock will deteriorate and that the value of his proportionate share of the stock will be decreased as a result of the alleged director mismanagement, his cause of action is derivative in nature."
Kramer v. Western Pacific Indus., Inc., 546 A.2d 348, 349 (Del. 1988).
Id. at 353.
Here, plaintiffs argue that their right to a liquidation proposal was an individual contractual right because it was based in BRC's charter. Plaintiffs contend that this right was directly injured because the acquisition of the Management and Advisory Groups poured corporate funds into assets that would have no value in a future liquidation of the company. Instead, such expenditures would only have value for the company as a going concern. Plaintiffs characterized these acquisitions as "value penalties" in oral argument because they penalized the shareholders' contractual right to elect to receive their full proportionate interest through a liquidation.
Plaintiffs' argument falls short of stating a direct injury, however. Although the liquidation proposal right was a contractual right of the shareholders, the Berkshire board fulfilled this obligation once it prepared a liquidation proposal and put it to a shareholder vote. The board recommended against accepting the liquidation proposal because it deemed the merger proposal the better transaction. The board had no contractual duty to recommend the liquidation proposal to the shareholders. On the contrary, if the board, in the exercise of its business judgment, determined that liquidation was not in the best interests of the corporation and its stockholders, it could not have recommended a liquidation without violating its fiduciary duty to the stockholders.
Further, the challenged asset acquisitions were completed almost two years before the liquidation proposal. Under plaintiffs' theory, a board would have to cease treating the corporation as a going concern just because it expects to prepare a liquidation proposal at some point in the future. The "value penalty" plaintiffs assert thus boils down to nothing more than a claim for waste. As such, the direct injury is to the corporation and the shareholders suffer only indirectly in proportion to the pro rata share of their equity holdings. Accordingly, because the charter-based liquidation right was discharged by the corporation, the remaining allegations of waste cannot serve as a basis for a direct action.
The other contract-based right that plaintiffs allege was directly injured by the challenged acquisitions was their voting right, because their votes could have been diluted if certain options (the OP Units) were exercised before the vote on the liquidation and merger proposals. Like waste claims, dilution claims are generally considered derivative claims. Such an alleged injury is indirect because it falls upon all shareholders equally and falls only upon the individual shareholder in relation to his proportionate share of stock as a result of the direct injury being done to the corporation.
Elster v. American Airlines, Inc., 100 A.2d 219, 222 (Del.Ch. 1953) ("Plaintiff claims that the value of his stock will deteriorate and that his proportionate share of the stock will be decreased as a result of the granting and exercise of the stock options. Assuming plaintiffs contention is correct, this would apply to the stock of all other stockholders as well. . . . Here the wrong of which plaintiff complains is not a wrong inflicted upon him alone or a wrong affecting any particular right which he is asserting — such as his preemptive rights as a stockholder, rights involving the control of the corporation, or a wrong affecting the stockholders and not the corporation — but is an indirect injury as a result of the wrong done to the corporation.").
Specifically, shareholder plaintiffs allege that BRC issued OP Units as part of the Management and Advisory Group acquisitions and that these OP Units allegedly would have been treated as shares of common stock for voting purposes if the options were exercised. Plaintiffs further assert that this issuance was intended to benefit Krupp, BRC's largest shareholder, and was at the "sole expense" of the public minority shareholders whose shares may have been diluted. Plaintiffs' allegations fail for two reasons, however. First, as demonstrated in the proxy materials for both the liquidation and merger proposals, it is clear that these OP Units were never actually converted. Second, even if the OP Units had been converted, no shareholder was entitled to vote more than 9.8% regardless of their holdings. If the shareholders' votes were diluted to any extent, such dilution would be minimal and would still consist of an indirect injury to the shareholders, not a direct injury. For both of these reasons, the OP Units that were issued (but never converted to common stock) could not have been at the "sole expense" of the minority shareholders. Thus, paragraphs 37(c) and 38(c) state derivative, not direct, claims, and are dismissed for failure to comply with Chancery Rule 23.1.
Defendants note that this allegation was not actually contained in the challenged paragraphs of the complaint. However, it is an inference that may be drawn from the allegations contained within those paragraphs. Thus, the argument will be addressed, even though it was only asserted in plaintiffs' answering brief, since I must give the benefit of all reasonable inferences to plaintiffs at this stage.
"Together Tri-Star and Boston University stand for the proposition that dilution claims are individual in nature when a significant stockholder's interest is increased "at the sole expense of the minority.'" In re Paxson Communications Corp. S'holders Litig., 2001 Del. Ch. LEXIS 95 at *15 (Del.Ch.) (citations omitted).
Defs.' Opening Br. in Support of their Mot. for Partial Dismissal, Ex. D (Specifically, p. 10 of the Liquidation Proxy and p. 117 of the Merger Proxy). Because the proxy statements are necessarily incorporated into the SAC, I will consider them upon this motion to dismiss. In re Lukens S'holders Litig., 757 A.2d 720, 727 (Del.Ch. 1999).
2. Conclusory
Because I find that plaintiffs do not have standing to bring this portion of their claim, I need not address whether it was also conclusory.
C. Disclosure Claims
The SAC alleges several disclosure deficiencies in the liquidation proxy solicitation materials. Defendants have moved to dismiss four of these disclosure allegations for various reasons, as addressed separately below.
As an initial matter, defendants challenge all of the following disclosures as not alleging an independent remediable harm, and as being conclusory. Although it is true that plaintiffs must allege distinct compensatory damages in this instance, which includes causation and quantifiable damages, a review of the SAC (with an eye to providing all reasonable inferences to the responding party) indicates that the requisite pleading requirements have been met. In the four challenged paragraphs, plaintiffs allege specific disclosure violations, i.e., the breach. Causation is alleged in the next paragraph, where plaintiffs assert that the shareholders, "as a result of the foregoing wrongful conduct," rejected the liquidation plan. Quantifiable damages have been alleged because plaintiffs have itemized elsewhere the inflated expenses assigned to the liquidation plan. Plaintiffs assert that if these expenses had been disclosed accurately, the value of the liquidation would have increased from $10.82 per share to $14.00 per share, a figure that would have been significantly higher than the merger plan. Thus, plaintiffs have asserted the requisite causation and quantifiable damages arising from the alleged disclosures, separate from their general breach of fiduciary duty allegations. Further, the allegations are pleaded with sufficient particularity.
O'Reilly v. Transworld Healthcare, Inc., 745 A.2d 902, 919 (Del. Ch. 1999) ("in order for a request for compensatory damages arising from a violation of the duty of disclosure to survive, a plaintiff will have to set forth in a well-pleaded complaint allegations to support those damages. As a result, causation and actual quantifiable damages are elements of the compensatory damages portion of a claim for breach of the fiduciary duty of disclosure.") (emphasis in original) (citations omitted).
1. The Buyout Group's Internal Model
Defendants move to dismiss paragraph 50(e) of the complaint, which alleges that "[t]he Individual Defendants submitted to the BRC shareholders in the Plan of Liquidation estimated disposition costs that were materially inflated over the costs included in an undisclosed internal model as discussed above, in breach of their duties of good faith, loyalty, care and disclosure." Defendants argue that the allegedly "undisclosed internal model" was not a required disclosure because it was not information possessed by BRC, even though Krupp, BRC's Chairman and director, was also a member of the Buyout Group and helped create the model. Plaintiffs, however, insist that the internal model should be imputed to BRC.
SAC at ¶ 50(e).
It is unclear from the SAC whether the Buyout Group's internal model could be imputed to BRC. Although Krupp was a member of both relevant bodies and owed BRC a fiduciary duty of disclosure, it is unclear whether he actually participated in the cost estimates for the liquidation plan. As noted by defendants, a special committee was formed to consider the merger and this special committee excluded Mr. Krupp. But the challenged paragraph in the complaint concerns the liquidation plan, not the merger. I have been unable to determine from the pleadings and briefs whether Krupp participated in producing BRC's cost estimates in the liquidation plan. Therefore, I cannot say that Krupp did not have a duty to disclose the internal model of the Buyout Group, and paragraph 50(e) cannot be dismissed for this reason.
Plaintiffs separately assert that even if Krupp had no duty to disclose the model, the estimates in the liquidation plan also exceeded those provided to BRC by Lehman. This fact, however, does not support the inference that the Buyout Group's model should be imputed to BRC, which is the sole foundation of paragraph 50(e). Further, this allegation is contained in paragraph 49(d)(ii), which defendants have not moved to dismiss.
2. Undisclosed Liabilities of $0.06 per Share
Defendants move to dismiss paragraph 50(i), which alleges that defendants failed to itemize a $0.06 per share estimate of undisclosed liabilities in the liquidation plan. Although the quantum of the liability was disclosed, plaintiffs assert that the expenses should have been itemized. As a matter of law, however, this additional information would not have been material. Plaintiffs fail to explain why a shareholder would consider the itemization of such a small amount important in deciding how to vote, when over 99% of the liabilities were itemized. Therefore, I conclude, as a matter of law, that paragraph 50(i) does not state a claim upon which relief can be granted.
Rosenblatt v. Getty Oil Co., 493 A.2d 929, 944 (Del. 1985) (requiring the disclosure of information only when a reasonable shareholder would consider it important in deciding to vote); see also Citron v. E.I. DuPont de NeMours, Inc., 584 A.2d 490, 503 (Del.Ch. 1990) (dismissing disclosure claim because the undisclosed appraisal constituted only 1.7% of the total assets of the company and was thus "qualitatively insignificant").
3. Bid Solicitation Process
Defendants move to dismiss paragraph 50(k), which alleges that the liquidation proxy failed to disclose "material limitations on the solicitation process." They argue that because plaintiffs alleged that the limitations were only material, rather than absolute, the allegation does not state a claim upon which relief can be granted. It is likely, however, that a shareholder would consider a material limitation just as important as an absolute limitation, if it materially affected the process of bid solicitation.
Further, if BRC imposed Krupp's tax constraints upon bid solicitations and failed to disclose this limitation in the liquidation proxy as alleged, such board conduct is strikingly similar to the ARCO Chemical Board's conduct in McMullin v. Beran. There, the Chemical Board failed to tell its stockholders about certain cash restrictions that were placed upon potential bidders. The Supreme Court held in McMullin that such an allegation was sufficient to withstand a motion to dismiss. Here, giving plaintiffs the benefit of all reasonable inferences, plaintiffs have sufficiently alleged that: 1) the BRC board had a duty to disclose all material information in the liquidation proxy; 2) the tax restriction was a material limitation on the bid solicitation process; 3) the board failed to disclose this material limitation; and 4) a reasonable stockholder would have found this material limitation important when deciding to vote. As with the similar allegations in McMullin, paragraph 50(k) is sufficient to withstand defendants' motion to dismiss.
765 A.2d 910, 921-25 (Del. 2000).
4. Going Concern Value
Last, defendants contend that paragraph 50(1), alleging that defendants failed to disclose the going concern value of BRC in the liquidation proxy, is insufficient to withstand a motion to dismiss because this value was immaterial. They argue that any rational shareholder would have rejected the liquidation proposal regardless of Berkshire's going concern value because there was a higher merger proposal on the table and because the board disclosed that the liquidation would likely result in less value than continuing as a going concern. Defendants assert that this value would not be material to the liquidation proxy decision because it would only have affected the merger vote.
Plaintiffs assert that this information was material and that the BRC board had a duty to disclose it because it was material information that was in its possession. They argue that the information was material because it was used to dissuade stockholders both from accepting the liquidation plan and from maintaining the company as a going concern. Additionally, plaintiffs argue that the board had a duty to disclose the information because directors must avoid making misleading partial disclosures. Because the board had already calculated this value, and referred to it in the proxy solicitation, plaintiffs argue that fairness mandates that the actual value be fully disclosed. Stockholders, they argue, may have considered this information important because they may have wanted to approve the liquidation "in the hope that potential purchasers, recognizing the higher going concern value, might seek to acquire the entire business or large segments thereof and bid the liquidation prices up closer to going concern value and higher than the price being offered by the Krupp-led group."
Pls.' Answering Br. at 20.
This is sufficient to establish, at this stage, that the defendants may have had a duty to disclose the going concern value. A stockholder would likely want to know the actual value of the three options he or she was choosing among. Although the stockholders knew the value they could receive for the liquidation and for the merger proposal, they did not know the value of their third option — rejecting both proposals in favor of maintaining the company as a going concern.
Additionally, this information could possibly have forced the merger offer higher if the going concern value yielded a higher value than the liquidation or the merger. If the information was, in fact, in the possession of the defendants, no obvious reason comes to mind why the value should not have been disclosed to the stockholders in a liquidation proxy that encouraged stockholders to reject the liquidation plan in favor of a merger. At this stage of the proceeding, I am satisfied that paragraph 50(1) cannot be dismissed under Rule 12(b)(6).
IV. CONCLUSION
For the foregoing reasons, defendants' motion for partial dismissal is granted in part and denied in part. The motion to dismiss paragraphs 37(c) and 38(c) of the second amended complaint is GRANTED because these paragraphs state derivative claims and plaintiffs have not complied with Rule 23.1. The motion to dismiss paragraph 50(i) is GRANTED because the alleged nondisclosure is immaterial. The motion to dismiss paragraphs 50(e), (k) and (l) is DENIED.
IT IS SO ORDERED.