Cindy Harcum v. John Lovoi

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

CINDY HARCUM, on Behalf of Herself and )
all Others Similarly Situated, )
)
Plaintiff, )
)
v. ) C.A. No. 2020-0398-PAF
)
JOHN LOVOI, PAUL B. LOYD, JR., )
MICHAEL RALEIGH, ANTHONY )
TRIPODO, ROAN HOLDINGS, LLC, JVL )
ADVISORS, LLC, JOSEPH A. MILLS, and )
RICHARD GIDEON, )
)
Defendants. )

MEMORANDUM OPINION

Date Submitted: September 21, 2021
Date Decided: January 3, 2022

Blake A. Bennett, COOCH AND TAYLOR, P.A., Wilmington, Delaware; Michael
J. Palestina, KAHN SWICK & FOTI, LLC, New Orleans, Louisiana; Juan E.
Monteverde, Miles D. Schreiner, MONTEVERDE & ASSOCIATES PC, New
York, New York; Attorneys for Plaintiff Cindy Harcum.

Rolin P. Bissell, James M. Yoch, Jr., Alberto E. Chávez, YOUNG CONAWAY
STARGATT & TAYLOR, LLP, Wilmington, Delaware; Michael C. Holmes,
Virginia DeBeer, VINSON & ELKINS L.L.P., Dallas, Texas; Attorneys for
Defendants John Lovoi, Paul B. Loyd, Jr., Michael Raleigh, Joseph A. Mills,
Anthony Tripodo, Richard Gideon, Roan Holdings, LLC, and JVL Advisors, LLC.

FIORAVANTI, Vice Chancellor
 Plaintiff Cindy Harcum, individually and on behalf of a purported class of

former stockholders of Roan Resources, Inc. (“Roan” or the “Company”), seeks to

recover damages for alleged breaches of fiduciary duties by certain officers,

directors, and stockholders of the Company arising from a 2019 going-private

merger (the “Merger”). In the Merger, Citizen Energy Operating, LLC (“Citizen

Buyer”) acquired the Company in an all-cash transaction through which Roan

stockholders received the right to payment of $1.52 per share of their Roan common

stock. Harcum, a former contract employee of Roan and a predecessor company,

alleges the Merger was a scheme devised to transfer control of the Company to a

few insiders for insufficient consideration. Plaintiff contends that persons and

entities affiliated with defendant John Lovoi controlled the Company, stood on both

sides of the transaction, and received unique benefits not shared with the remaining

stockholders of the Company. Plaintiff also alleges that a subset of the Company’s

board of directors (the “Board”) breached their fiduciary duties and made material

misrepresentations and omissions in the proxy statement that was disseminated to

stockholders to obtain their vote for the Merger. Plaintiff also alleges two of the

Company’s officers breached their fiduciary duties in connection with the proxy

statement disclosures. The defendants have moved to dismiss the complaint in its

entirety. This opinion grants that motion.
I. BACKGROUND

The facts recited in this Memorandum Opinion are drawn from the Verified

Amended Class Action Complaint (the “Complaint”) and documents integral thereto

or otherwise subject to judicial notice.1

A. The Parties

Defendant JVL Advisors, LLC (“JVL”) is a Texas limited liability company

with its principal place of business located in Houston, Texas.2 Defendant John

Lovoi is JVL’s founder and managing partner. 3 Defendant Roan Holdings, LLC

(“Roan Holdings”) is a Delaware limited liability company with its principal place

of business in Houston, Texas. 4 At the time of the Merger, Roan Holdings owned

49.7% of Roan’s outstanding common stock. Lovoi is alleged to have controlled

Roan through his control over JVL, Roan Holdings, and his ownership of additional

shares of Roan common stock that, when combined, amounted to over 50% of

Roan’s voting power.

Roan was formed in September 2018. It is a holding company for oil and gas

assets and created through a joint venture between Linn Energy, Inc. (“LINN”) and

1
See DEL. R. EVID. 201.
2
Dkt. 34, Verified Amended Class Action Complaint (“Compl.”) ¶ 21.
3
Id. ¶ 16.
4
Id. ¶ 22.

2
Citizen Energy II, LLC (“Citizen II”). The Roan Board that approved the Merger

consisted of eight members: Defendants Lovoi, Paul B. Loyd, Michael P. Raleigh,

Anthony Tripodo (“the Director Defendants”), and Joseph A. Mills, and non-

Defendants Andrew Taylor, Matthew Bonanno, and Evan Lederman.5

Mills was Roan’s Executive Chairman and interim Principal Executive

Officer from April 15, 2019 through September 29, 2019. 6 Mills is only being sued

in his capacity as an officer and not as a director. Defendant Richard Gideon (with

Mills, the “Officer Defendants”) served as Roan’s CEO from September 29, 2019

until December 6, 2019 (the Director Defendants, the Officer Defendants, Roan

Holdings, and JVL, are hereinafter referred to as the “Defendants”).7

Plaintiff Cindy Harcum was a contract employee of Roan and held stock in

Roan throughout the time period when the Complaint alleges that wrongdoing

occurred. 8

B. Citizen II

In November 2014, James Woods, Robert Woodard, Gregory Augsburger,

and JVL formed Citizen II.9 Woods, Woodard, Augsburger (collectively, the

5
Id. ¶¶ 16–19, 23, 30–32.
6
Id.
7
Id. ¶ 24.
8
Id. ¶ 15.
9
Id. ¶¶ 25, 49.

3
“Citizen Principals”), and “their personal network of investors” contributed

approximately 76% of Citizen II’s capital, while JVL contributed the remaining

24%.10 Following recapitalizations in 2015 and 2016, JVL’s contributions made up

about 85% of Citizen II’s total capital.11 The Citizen II operating agreement

provided for four managers: three “Management Representatives” and one “Investor

Representative.” The Citizen Principals were appointed as the three Management

Representatives.12 JVL, which was entitled to appoint the one Investor

Representative, selected Kelly Loyd for that position. 13 Citizen II’s operating

agreement also provided the Citizen Principals with “incentive interests” if they

were able to return the initial capital contributions to all of Citizen II’s investors in

addition to a 9% annual preferred return. 14 The Complaint does not describe or

quantify these “incentive interests,” but repeatedly refers to them. 15 In these early

years Citizen II saw quick success, drilling over 60 horizontal wells, which produced

13,000 barrels of oil equivalent per day.16

10
Id. ¶ 49.
11
Id. ¶ 51, 54.
12
Id. ¶ 50.
13
Id.
14
Id.
15
See id. ¶¶ 50, 66, 74, 127.
16
Id. ¶ 52.

4
 In mid-2017, Citizen II and LINN, a publicly traded oil and gas company

formed in a bankruptcy reorganization, entered into a joint venture (the “Joint

Venture”). As part of the Joint Venture, Citizen II and LINN would combine their

assets to develop 140,000 acres across three oil-rich formations in south and central

Oklahoma.17 Citizen II and LINN stated that they intended to take the Joint Venture

public by early 2018. 18

In light of these planned events, the Citizen Principals anticipated ceding

managerial control of Citizen II; however, they would only do so on two conditions:

(1) there would need to be a partial separation between investors affiliated with JVL

(“JVL Investors”) and those not affiliated with JVL (“Non-JVL Investors”), and (2)

the Citizen Principals would need to retain representation on the future public

company’s board of directors.19 At this time, Non-JVL Investors owned about

23.1% of Citizen II.20

C. Roan LLC Is Formed in Anticipation of the Joint Venture.

On May 30, 2017, the Citizen Principals, JVL, Paul Loyd, Kelly Loyd, and

Raleigh formed Roan Resources, LLC (“Roan LLC”), which was created to

17
Id. ¶ 56.
18
Id.
19
Id. ¶ 57.
20
Id.

5
eventually hold the Joint Venture’s assets.21 On June 27, 2017, LINN and Citizen

II announced that they had executed an agreement where each company would

contribute certain upstream assets in Oklahoma to Roan LLC in exchange for

respective 50% equity interests in Roan LLC. 22 Each 50% equity interest was valued

at approximately $1.3 billion.23 Woods and Woodard signed this agreement on

behalf of both Citizen II and Roan LLC.24 The announcement also stated that Roan

LLC would be focused on the development of the land that had already been targeted

by the Joint Venture. 25

On August 31, 2017, the Roan LLC operating agreement was amended to

provide for an eight-member board. Under the agreement, LINN and Citizen II

would each elect half of these members. 26 Citizen II initially appointed Woods,

Woodard, James Bush, and Paul Loyd. 27

21
Id. ¶ 59.
22
Id. ¶ 60.
23
Id.
24
Id.
25
Id.
26
Id. ¶ 61.
27
Id.

6
 D. The Citizen Principals Negotiate a Separation Agreement with JVL

Days after the signing of Roan LLC’s Amended and Restated Limited

Liability Company Agreement, JVL proposed transferring all of Citizen II’s assets

to Crazyhorse Holdings, LLC and Roan Holdings, two entities which had recently

been created by JVL.28 Roan Holdings’ initial managers were Woods, Kelly Loyd,

Paul Loyd, and Raleigh.29 JVL asserted that it had the authority to effectuate the

transfer because it controlled the majority of Citizen II’s Class A units. Shortly

thereafter, JVL transferred all of Citizen II’s assets and units in Roan LLC to Roan

Holdings.30 JVL then informed the Citizen Principals of this development while

also notifying them that it would be replacing Woodard, Augsburger, and Bush with

Lovoi, Paul Loyd, and Raleigh as members of the Roan LLC board.31

On September 6, 2017, counsel for the Citizen Principals sent a letter to JVL

asserting that the recent transfer of Citizen II’s assets was a “sham that served no

economic or business purpose other than stripping [the Citizen Principals] of their

28
Id. ¶ 63.
29
Id. ¶ 64.
30
Id. ¶ 63.
31
Id. The Complaint is inconsistent. In Paragraph 61, it alleges that the Citizen II
appointees to the Roan LLC board were Woods, Woodard, Bush, and Paul Loyd, but in
Paragraph 63 alleges that Augsburger was being removed from the Roan LLC board, even
though there is no allegation that he ever served on that board.

7
bargained-for governance rights.”32 The Citizen Principals also contended that JVL

“was engaging in self-dealing and other actions that were only in JVL’s interests and

not in the best interest of Citizen II . . . and that JVL’s actions were in bad faith” and

in breach of its fiduciary duties.33

On October 11, 2017, the Citizen Principals, JVL, and their affiliates entered

into an Omnibus Separation Agreement (the “Separation Agreement”).34 Under the

terms of the Separation Agreement, the Citizen Principals would convert their

incentive interests in Citizen II into “a material portion of Citizen II’s assets” that

would be transferred into a new entity, Citizen Energy III, LLC (“Citizen III”).35

Plaintiff alleges that at that time “funds managed by JVL continued to have an

interest” in Citizen III. 36 The Complaint contains no other allegations concerning

these funds or the nature of the alleged interest.

The parties to the Separation Agreement also agreed to enter into a series of

transactions, including a Second Amended & Restated LLC Agreement for Roan

32
Compl. ¶ 65.
33
Id.
34
Id. ¶ 66. The parties to the Separation Agreement were Citizen II, Woods, Woodard,
Augsburger, JVL, SPQR Energy, LP, and Citizen Energy Holdings, LLC (“Citizen
Holdings”), which was an affiliate of Warburg Pincus, LLC (“Warburg Pincus”). Id.
35
Compl. ¶ 66.
36
Id. (italics omitted).

8
Holdings, LLC that was executed on November 1, 2017. 37 Under that agreement,

JVL was granted three seats on the Roan Holdings board of managers while the Non-

JVL Investors were entitled to appoint one independent manager unless their

collective ownership of Roan Holdings’ Class A units fell below 10%. 38 As of May

2, 2019, Non-JVL Investors owned more than 25% of these Class A units. 39

E. Roan LLC Prepares to Go Public.

In March 2018, Roan Holdings and LINN discussed plans to take Roan LLC

public by the end of 2018.40 In general terms, the plan contemplated LINN and Roan

Holdings creating a public holding company for Roan LLC (the “Proposal”). LINN,

which was already publicly traded, would reorganize itself to form Roan as a new

publicly traded company with LINN’s stockholders and Roan Holdings each owning

half of Roan. 41 Roan, in turn, would own Roan LLC in its entirety. 42

Internal disputes continued on the Roan Holdings side of the Proposal. Woods

believed that the Non-JVL Investors in Roan Holdings should be allowed to own

their interests in Roan LLC directly, rather than indirectly through their interests in

37
Id. ¶ 68.
38
Id.
39
Id.
40
Id. ¶ 70.
41
Id.
42
Id.

9
Roan Holdings. 43 Woods also contended that the Roan Holdings Second Amended

& Restated LLC Agreement obligated “Roan Holdings and the Investor Managers”

to nominate Woods “as the designee of the Non-JVL Members” on Roan’s future

board of directors. 44

The dispute between Woods and JVL spilled over into a Roan Holdings board

meeting in August 2018. During that meeting, JVL proposed that Roan Holdings

appoint Lovoi, Paul Loyd, Raleigh, and Tripodo to the future Roan board of

directors. 45 Woods protested and argued that he should be appointed as one of

Roan’s directors.46 Woods, however, was ultimately outvoted by Paul Loyd, Kelly

Loyd, and Raleigh, who approved JVL’s proposal.47

F. Roan LLC Goes Public

On September 18, 2018, Roan LLC was introduced to the public markets

through a master reorganization agreement executed by LINN, Roan Holdings, and

Roan LLC. 48 Under this agreement, LINN and Roan Holdings’ respective 50%

equity interests in Roan LLC were reorganized into the new company Roan, which

43
Id. ¶ 71.
44
Id.
45
Id. ¶ 75.
46
Id.
47
Id.
48
Id. ¶ 77.

10
acquired all of Roan LLC’s consolidated interests. 49 Roan’s Class A common stock

was initially traded in the OTCQB market, and two months later began trading on

the New York Stock Exchange.50 Roan’s Board originally consisted of eight

directors, including four who were selected by JVL: Lovoi, Paul Loyd, Raleigh, and

Tripodo.51 JVL disbanded Roan LLC’s board of managers after Roan went public.52

G. Potential Acquirors Express Interest in Taking Roan Private

As early as April 1, 2019, potential buyers began expressing interest in

purchasing Roan. 53 On April 15, a representative of Warburg Pincus, Citizen

Holdings (to which Warburg Pincus had committed $300 million), and its wholly

owned subsidiary Citizen Buyer (the “Acquirors”), approached Lovoi to request a

meeting.54 By this time, two other potential buyers had already expressed interest

in an acquisition.55 Also on April 15, Tony Maranto, Roan’s Chairman of the Board,

49
Id.
50
Id. ¶¶ 77, 84.
51
Id. ¶ 81.
52
Id. ¶ 82.
53
Dkt. 44, Ex. 5 (“Proxy”) at 35.
54
Compl. ¶¶ 88, 67. Citizen Buyer was thus also an affiliate of Warburg Pincus. See id. ¶
35. Plaintiff does not allege that Woods, Woodard, or Augsburger had an equity interest
in Citizen Buyer, but alleges they were either “leaders” or “principals.” E.g., id. ¶¶ 128
(“principals”), 131 (“leaders”).
55
See Proxy at 35.

11
President, and CEO, resigned. 56 Roan’s press release announcing the resignation

said it was not “the result of any dispute or disagreement with the Company or any

matter related to the Company’s operations, policies or practices.” 57 Following

Maranto’s resignation, Mills became Roan’s Executive Chairman and interim

Principal Executive Officer.58

On April 17, 2019, a representative from Warburg Pincus had a conversation

with Lovoi. During the conversation, the representative explained that Warburg

Pincus and Citizen Buyer had a shared interest in pursuing an acquisition of Roan.59

The next day, Citizen Buyer delivered an initial indication of interest to acquire Roan

for $6.75 per share. 60

Around this time, the Board began exploring a possible transaction for Roan.

On April 23, 2019, the Company’s management team interviewed several “leading

investment banking firms” to assist Roan in reviewing the indications of interest that

it had been receiving.61 The Company eventually selected Citigroup Global Markets

Inc. (“Citi”) and Jeffries LLC (“Jeffries”) to be its financial advisors regarding a

56
Compl. ¶ 89.
57
Id.
58
Id. ¶¶ 89, 23.
59
Id. ¶ 90.
60
Id.
61
Proxy at 36.

12
potential transaction.62 Between May and July, representatives of the Company or

its financial advisors contacted 44 potential counterparties and entered into 20

confidentiality agreements at the Board’s direction.63

On May 2, 2019, the Citizen Principals filed an arbitration action against JVL,

Paul Loyd, Kelly Loyd, Raleigh, and Roan Holdings (the “Arbitration Action”).64

The Arbitration Action alleged that JVL, Paul Loyd, Raleigh, and Kelly Loyd

“breached fiduciary duties they owed to Woods, Woodard, Augsburger and their

associates” through “misusing [Woods, Woodard, and Augsburger’s] assets to seize

an effectively controlling interest of” Roan. 65 The Arbitration Action also sought an

order to compel Woods’s appointment to Roan’s Board. 66 In its request for relief,

the Arbitration Action sought dissolution of Roan Holdings or, alternatively, a

distribution of its Roan stock to its members. 67

Citizen Buyer’s acquisition approach came as Roan’s stock price had been

steadily falling amid flagging oil prices. On October 1, 2018, Roan closed at $18.49

62
Id. at 3, 36.
63
Id. at 38.
64
Dkt. 42, Ex. 2 (“Arbitration Action”) at 1–2; see Compl. ¶ 91. The Complaint has
incorporated the Arbitration Action by reference.
65
Compl. ¶ 91 (italics and internal quotations omitted) (bracketing in original).
66
Id.
67
Arbitration Action at 16.

13
per share while oil was trading at $75.37 per barrel.68 By January 2, 2019, Roan had

lost over half its value, closing at $8.45 per share whereas oil was now trading at

only $46.31 per barrel.69 While oil prices somewhat recovered following the new

year, trading as high as $66.24 on April 23, 2019, Roan’s stock price did not follow

suit.70 On May 1, 2019, Roan closed at $5.42 per share. 71

On May 3, 2019, Citizen Buyer sent a letter to the Board reiterating its

proposal to acquire Roan at $6.75 per share. 72 In its letter, Citizen Buyer also noted

that it “would be open to allowing certain qualified [Roan] stockholders . . . to roll

over a portion of their equity interests” so long as Citizen Buyer’s equity holders

68
Compare Roan Resources Inc. Stock Price, STOCKINVEST.US, available at
https://stockinvest.us/stock-price/ROAN?page=7 (last visited Dec. 27, 2021), with Crude
Oil Prices, FRED ECONOMIC DATA, available at
https://fred.stlouisfed.org/graph/?g=KhUv (last visited Dec. 27, 2021). The court may take
judicial notice of these stock and oil prices because they are not subject to reasonable
dispute. DEL. R. EVID. 201(b)(2); Lee v. Pincus, 2014 WL 6066108, at *4 n.11 (Del. Ch.
Nov. 14, 2014).
69
Compare Roan Resources Inc. Stock Price, STOCKINVEST.US, available at
https://stockinvest.us/stock-price/ROAN?page=6 (last visited Dec. 27, 2021), with Crude
Oil Prices, FRED ECONOMIC DATA, available at
https://fred.stlouisfed.org/graph/?g=KhUv (last visited Dec. 27, 2021).
70
Crude Oil Prices, FRED ECONOMIC DATA, available at
https://fred.stlouisfed.org/graph/?g=KhUv (last visited Dec. 27, 2021).
71
Roan Resources Inc. Stock Price, STOCKINVEST.US, available at
https://stockinvest.us/stock-price/ROAN?page=4 (last visited Dec. 27, 2021).
72
Compl. ¶ 93.

14
could maintain at least two-thirds ownership of the new company. 73 On May 20,

2019, Roan announced that it had engaged financial advisors to assist it in evaluating

strategic alternatives. 74

Also on May 3, Roan Holdings, JVL, Kelly Loyd, Paul Loyd, and Raleigh

responded to the Arbitration Action by filing a complaint seeking a declaratory

judgment in this court (the “Declaratory Judgment Action”).75 Specifically, the

plaintiffs in the Declaratory Judgment Action requested that the court permanently

enjoin the Arbitration Action,76 and on June 11, 2019, the plaintiffs moved for

expedited proceedings. 77

Roan’s stock price continued to decline through May and June. On May 31,

2019, Roan closed at $2.09 per share. 78 On June 13, Roan reached a new low for

73
Id. There is no allegation that any Roan stockholders rolled their equity interest into the
new company.
74
Id. ¶ 95.
75
See Roan Hldgs., LLC v. Woods, C.A. No. 2019-0374-AGB, Dkt. 1; see also Compl.
¶ 94. The Complaint has incorporated the Declaratory Judgment Action by reference.
76
Woods, C.A. No. 2019-0374-AGB, Dkt. 3 at 26 ¶ B; see also Compl. ¶ 94.
77
See Woods, C.A. No. 2019-0374-AGB, Dkt. 10; see also Compl. ¶ 94. At an August 15,
2019 motions hearing, the court requested supplemental briefing. See Woods, C.A. No.
2019-0374-AGB, Dkt. 41; see also Compl. ¶ 100. On September 16, 2019, the parties to
the Declaratory Judgment Action agreed to a stay until the Arbitration Action was resolved;
neither party had submitted supplemental briefing since the August 15, 2019 hearing. See
Woods, C.A. No. 2019-0374-AGB, Dkt. 43; see also Compl. ¶ 103.
78
Roan Resources Inc. Stock Price, STOCKINVEST.US, available at
https://stockinvest.us/stock-price/ROAN?page=4 (last visited Dec. 27, 2021).

15
the year, closing at $1.16.79 On June 19, 2019, Roan and Citizen Buyer entered into

a mutual confidentiality agreement; Roan’s price remained virtually unchanged as

the Company closed at $1.19 that day.80

Also on June 19, 2019, Roan entered into a $100 million term loan facility

with lenders Elliott Management Corporation (“Elliott”), York Capital Management

Global Advisors, LLC (“York”), and “funds affiliated with JVL” (the “Term

Loan”). 81 Both Elliott and York owned Roan common stock when the Company

agreed to the Term Loan. 82 Under the Term Loan, Roan’s repayment obligations

would be accelerated upon a change of control transaction. 83 Specifically, if a

change of control were to occur, Roan would be required to pay the Term Loan’s

lenders: (1) all accrued and unpaid interest; (2) a 1% repayment premium; and (3)

if the Term Loan had been drawn for less than one year, the amount of interest that

would have accrued if the amount borrowed had been outstanding for one year.84

Before agreeing to the Term Loan, Roan had a “special committee of disinterested

79
Id.
80
Id.
81
Compl. ¶ 133.
82
Id. ¶ 135. At the Merger’s signing, Elliott and York owned 10.6% and 6% of Roan
common stock respectively. Proxy at 115.
83
Compl. ¶ 136.
84
Id.

16
Board members” review and approve its terms.85 Plaintiff does not challenge the

Term Loan or allege that its terms were unfair to the Company. 86 On June 26, Roan

drew down $50 million from the Term Loan to repay outstanding debt under a

revolving credit facility.87

H. Roan Considers Initial Proposals from Strategic Buyers.

On July 24, 2019, three potential strategic buyers submitted initial proposals

to Roan: Company B, Company G, and Citizen Buyer. 88 Company B proposed an

all-stock, merger of equals with Roan, where Roan’s stockholders would receive

shares of Company B’s common stock.89 Company B also proposed that it would

evenly split the new company’s equity with Roan’s stockholders. 90 On August 1,

2019, the Board countered with terms that gave Roan’s stockholders a 75% equity

stake in the new company. 91 Company B responded by offering Roan’s stockholders

60% of the new company, with a caveat that the new company would also have to

85
Proxy at 76.
86
This was confirmed by Plaintiff’s counsel at oral argument. Dkt. 58 (“Hrg.”), 55:15–16
(“We’re not challenging the terms of the loan.”).
87
Compl. ¶ 134.
88
Id. ¶ 98.
89
Id. ¶ 98(a).
90
Id.
91
Id.

17
raise $300 million to repay the two parties’ combined debt. 92 The Board determined

that the proposed equity raise was “unacceptable,” and Company B consequently

withdrew from consideration on August 15, 2019.93

Company G’s proposal consisted of a stock-for-stock merger where the

combined company would continue to be publicly traded and under the supervision

of Company G’s management. 94 This proposal did not contain details regarding an

equity split among the stockholders of the two companies, but similar to Company

B’s proposal, required a $400 million equity raise by the combined company. 95 On

September 12, 2019, Company G withdrew from consideration. 96

Citizen Buyer’s initial proposal was a cash offer to acquire Roan for $2.50 per

share, significantly below its initial indication of interest in April of $6.75. 97 On

August 16, 2019, Citizen Buyer lowered its offer to $1.75 per share and

communicated shortly thereafter its desire to quickly finalize a transaction.98 Both

offers constituted significant premia compared to where Roan was trading. On July

92
Id.
93
Id.
94
Id. ¶ 98(b).
95
Id.
96
Id.
97
Id. ¶ 98(c).
98
Id. ¶ 99.

18
24, when Citizen Buyer made its initial proposal, Roan closed at $1.20 per share; on

August 16, Roan’s price had fallen to $1.09 per share.99

On August 22, 2019, Roan submitted a counteroffer of $2.50 per share to

Citizen Buyer’s second proposal. 100 The next day, Citizen Buyer responded, saying

that it would only pay as much as $1.85 per share and stressed that time was of the

essence. 101 On August 26, 2019, the Board agreed to proceed at $1.85 per share.102

On September 26, Citizen Buyer reduced its offer to $1.50 per share. 103 Eventually,

the Board and Citizen Buyer settled on a price of $1.52 per share. 104

I. The Merger Agreement Is Signed

On October 1, 2019, the Roan Board held a meeting where Citi and Jeffries

separately presented their financial analyses and stated that the merger consideration

that Roan’s stockholders would be receiving was “fair, from a financial point of

view, to such holders.” 105 During the same meeting, and following the presentations

by Citi and Jeffries, the Board unanimously voted to approve the Agreement and

99
Roan Resources Inc. Stock Price, STOCKINVEST.US, available at
https://stockinvest.us/stock-price/ROAN?page=3 (last visited Dec. 27, 2021).
100
Compl. ¶ 101.
101
Id.
102
Id.
103
Id.
104
Id.
105
Proxy at 49–50.

19
Plan of Merger (the “Merger Agreement”). 106 Later that morning, before the U.S.

markets had opened, Roan and Citizen Buyer issued a joint press release announcing

the Merger. 107 The previous day, Roan’s stock closed at $1.23 per share.108

Stockholders who held approximately 77% of Roan’s common stock entered into

agreements with Citizen Buyer in which they agreed to vote in favor of the

Merger. 109 Among those stockholders were Lovoi, Elliott, and York.110 Also on

October 1, the Board approved Gideon’s hiring as CEO, which was to be effective

as of September 29.111 In the press release announcing the Merger, the Company

disclosed Gideon’s hiring, noting that he had been a former LINN executive. 112 The

press release also stated that Mills had ceased to be an officer of the Company, but

106
Id. at 50.
107
Id.
108
Roan Resources Inc. Stock Price, STOCKINVEST.US, available at
https://stockinvest.us/stock-price/ROAN?page=2 (last visited Dec. 27, 2021).
109
Compl. ¶ 109.
110
Id.
111
Id. ¶ 107. On August 27, 2019, the Board decided to hire Gideon as CEO, contingent
on the Merger’s completion. Id. ¶ 102.
112
See Roan Resources, Inc., Current Report (Form 8-K) (October 1, 2019) at 5, available
at
https://www.sec.gov/Archives/edgar/data/0001326428/000119312519259889/d808728d8
k.htm. The court may consider this press release, which is referenced in the Complaint.
See Compl. ¶ 107.

20
would remain as a director.113 On October 9, 2019, the parties to the Declaratory

Judgment Action agreed to dismiss the action with prejudice.114

On November 4, 2019 the Company filed a proxy statement with the United

States Securities and Exchange Commission soliciting stockholder approval of the

Merger (the “Proxy”). On November 27, 2019, the Company filed a supplement to

the Proxy in response to multiple federal securities class action lawsuits challenging

the Merger (the “Supplement”). 115 The Company’s stockholders overwhelmingly

approved the Merger on December 4, 2019. 116 The Merger closed two days later.117

J. Procedural History

On May 22, 2020, Plaintiff filed her initial complaint.118 In the initial

complaint, Plaintiff alleged that all of Roan’s eight directors that approved the

Merger Agreement—as opposed to the four Director Defendants named in the

amended complaint—had breached their fiduciary duties to the Company’s

113
Id.
114
See Woods, C.A. No. 2019-0374-AGB, Dkt. 45; Compl. ¶ 108.
115
See Dkt. 44, Ex. 7 (“Supplement”) at 2.
116
Compl. ¶ 110; Dkt. 44, Ex. 8. There were 136,875,069 votes cast in favor of the Merger,
while 540,446 shares voted against the Merger. Dkt. 44, Ex. 8. There were 21,567 shares
that abstained. Id. According to the Proxy, there were 154,333,746 shares issued and
outstanding and entitled to vote on the Merger. Proxy at 2. Thus, over 88% of all eligible
shares were voted in favor of the Merger.
117
Compl. ¶ 110.
118
See Dkt. 1.

21
stockholders or aided and abetted others in so doing.119 The initial complaint also

alleged that Elliott and York were two of Roan’s controlling stockholders that were

liable for breaches of fiduciary duty.120 Plaintiff’s initial complaint also asserted that

Warburg Pincus, Citizen Buyer, and Citizen Energy Pressburg, Inc. (Citizen Buyer’s

acquisition vehicle) aided and abetted all eight directors in their breaches of fiduciary

duty. 121

On September 28, 2020, Plaintiff filed an amended complaint containing three

causes of action, which this opinion refers to as Counts I through III. 122 Count I

alleges that the four Director Defendants breached their fiduciary duties by engaging

in a sale process that ultimately undervalued the Company in exchange for benefits

that were unique to them. 123 Additionally, Plaintiff alleges that the Director

Defendants failed to provide the Company’s stockholders with “all material

information necessary to cast an informed vote on the Merger” via a deficient

Proxy.124 In Count II, Plaintiff alleges that Lovoi, JVL, Paul Loyd, Raleigh, and

Roan Holdings violated their fiduciary duties to the Company in their capacity as

119
Id. ¶¶ 8–15, 84–88.
120
Id. ¶¶ 21, 89–90.
121
Id. ¶¶ 22–25, 110–13.
122
See Dkt. 34.
123
See Compl. ¶¶ 158–62.
124
Id. ¶ 161.

22
controlling stockholders based on a nearly identical theory to that alleged in Count

I. 125 Count III alleges that Gideon and Mills breached their fiduciary duties in their

capacities as officers of the Company.126 Specifically, Plaintiff alleges that Mills

and Gideon failed to ensure that the Proxy disclosed all material information to

Roan’s stockholders, and thus, the stockholders could not make a fully-informed

vote on the proposed Merger. 127

See id. ¶¶ 163–67. Plaintiff asserts the same theory in two of her substantive counts.
125

Compare Compl. ¶ 161:
In addition, by agreeing to the Merger, the Director Defendants capped the
price of ROAN’s stock at a price that did not adequately reflect ROAN’s true
value. Moreover, the Director Defendants failed to sufficiently inform
themselves of ROAN’s value, or disregarded the true value of the company,
in an effort to benefit themselves,
with Compl. ¶ 166:
In addition, by agreeing to the Merger, Lovoi/JVL, Paul Loyd, Raleigh, and
Roan Holdings capped the price of ROAN stock at a price that did not
adequately reflect its true value. Moreover, Lovoi/JVL, Paul Loyd, Raleigh,
and Roan Holdings failed to sufficiently inform themselves of ROAN’s
value, or disregarded the true value of ROAN, in an effort to benefit
themselves.
Plaintiff seems to have merely recycled the claim from an entirely different complaint. See
In re Saba Software, Inc. S’holder Litig., 2017 WL 1201108, at *18 (Del. Ch. Mar. 31,
2017), as revised (Apr. 11, 2017) (quoting the complaint):
In addition, by agreeing to the Merger, the Individual Defendants capped the
price of Saba stock at a price that does not adequately reflect the Company's
true value. Moreover, the Individual Defendants disregarded the true value
of the Company, in an effort to benefit themselves.
126
See Compl. ¶¶ 168–73.
127
Id. ¶ 173.

23
 On October 12, 2020, Defendants filed a motion to dismiss the Complaint.128

Following briefing,129 the court heard argument on Defendants’ motion on

September 21, 2021.

II. ANALYSIS

On a motion to dismiss for failure to state a claim under Court of Chancery

Rule 12(b)(6):

(i) all well-pleaded factual allegations are accepted as true; (ii) even
vague allegations are well-pleaded if they give the opposing party
notice of the claim; (iii) the Court must draw all reasonable inferences
in favor of the non-moving party; and ([iv]) dismissal is inappropriate
unless the plaintiff would not be entitled to recover under any
reasonably conceivable set of circumstances susceptible of proof.

Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (internal citations and

quotation marks omitted). Although the pleading standards are minimal, Central

Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 536 (Del.

2011), “a trial court is required to accept only those ‘reasonable inferences that

logically flow from the face of the complaint’ and ‘is not required to accept every

strained interpretation of the allegations proposed by the plaintiff,’” In re Gen.

128
See Dkt. 36. Gideon was not included in this motion, but subsequently moved to dismiss
the Complaint on October 27, 2020. See Dkt. 40.
129
See Dkt. 41, Defendants’ Opening Brief in Support of Motion to Dismiss Verified
Amended Class Action Complaint (“Defs.’ Op. Br.”); Dkt. 48, Brief in Opposition to
Defendants’ Motion to Dismiss the Verified Amended Class Action Complaint (“Pl.’s Ans.
Br.”); Dkt. 49, Defendants’ Reply Brief in Support of Motion to Dismiss Verified
Amended Class Action Complaint (“Defs.’ Reply Br.”).

24
Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006) (quoting Malpiede

v. Townson, 780 A.2d 1075, 1083 (Del. 2001)). The court need not “simply accept

conclusory allegations unsupported by specific facts, nor . . . draw unreasonable

inferences in the plaintiff’s favor.” Clinton v. Enter. Rent-A-Car Co., 977 A.2d 892,

895 (Del. 2009). “Moreover, a claim may be dismissed if allegations in the

complaint or in the exhibits incorporated into the complaint effectively negate the

claim as a matter of law.” Malpiede, 780 A.2d at 1083.

The Complaint asserts claims against three groups of defendants: the Director

Defendants (Lovoi, Paul Loyd, Raleigh, and Tripodo); the “Alleged Controllers”

(Lovoi, JVL, Roan Holdings, Paul Loyd, and Raleigh); and the Officer Defendants

(Mills and Gideon). I first address Plaintiff’s claims against the alleged controlling

stockholders. Next, I consider Defendants’ argument that the Merger was approved

by a fully informed and uncoerced majority of Roan’s stockholders and, thus, was

cleansed under Corwin v. KKR Financial Holdings LLC, 125 A.3d 304, 312 (Del.

2015). I then address the fiduciary duty claims against the Director Defendants and

the Officer Defendants.

A. The Standards of Review and Exculpation

“Delaware’s default standard of review is the business judgment rule.”

Frederick Hsu Living Tr. v. ODN Holding Corp., 2017 WL 1437308, at *25 (Del.

Ch. Apr. 14, 2017). Under this deferential standard, the court examines whether a

25
business decision “was rational in the sense of being one logical approach to

advancing the corporation’s objectives.” Id. (internal citations omitted).

Delaware’s most stringent standard—entire fairness review—will override

the business judgment rule “when the board labors under actual conflicts of interest.”

In re Trados Inc. S’holder Litig. (“Trados II”), 73 A.3d 17, 44 (Del. Ch. 2013). It

also applies if the plaintiff demonstrates that a transaction involves a conflicted

controller. Tornetta v. Musk, 250 A.3d 793, 798, 800 (Del. Ch. 2019). If entire

fairness applies, the defendants must establish that the transaction was the product

of fair dealing and fair price. Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156,

1163 (Del. 1995).

Between business judgment and entire fairness lies an intermediate standard

of enhanced scrutiny. Under that standard, the fiduciaries must establish the

reasonableness of their actions. See Firefighters’ Pension Sys. of City of Kansas

City, Missouri Tr. v. Presidio, Inc., 251 A.3d 212, 249 (Del. Ch. 2021) (“Framed

generally, enhanced scrutiny requires that the fiduciary defendants ‘bear the burden

of persuasion to show that their motivations were proper and not selfish’ and that

‘their actions were reasonable in relation to their legitimate objective.’” (quoting

Mercier v. Inter-Tel (Del.), Inc., 929 A2d 786, 810 (Del. Ch. 2007)). Enhanced

scrutiny applies in the sale of a corporation for cash. See Revlon, Inc. v. MacAndrews

& Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986); In re Mindbody, Inc., 2020 WL

26
5870084, at *13 (Del. Ch. Oct. 2, 2020) (observing that a “cash-for-stock Merger

[is] a final-stage transaction presumptively subject to enhanced scrutiny under

Revlon”). In this context, the directors must establish both the reasonableness of

their decision-making process and the reasonableness of their action in light of the

existing circumstances. Paramount Commc’ns, Inc. v. QVC Network, Inc., 67 A.2d

34, 45 (Del. 1994); Presidio, 251 A.3d at 249.

As Vice Chancellor Laster recently discussed in Presidio, even when a higher

standard of review is employed to evaluate a fiduciary’s conduct, the failure to meet

that standard “does not lead ineluctably to liability for the fiduciaries who made the

decision.” Presidio, 251 A.3d at 250. Thus, even where entire fairness or enhanced

scrutiny applies, “a plaintiff can recover monetary damages for a breach of the duty

of loyalty only by proving that the fiduciary harbored self-interest adverse to the

stockholders’ interests, acted to advance the self-interest of an interested party . . . ,

or otherwise acted in bad faith.” Id. at 253 (quotations and bracketing omitted). To

recover damages for a breach of the duty of care, the plaintiff must establish that the

fiduciary was grossly negligent. Id. And, as here, where the corporation’s certificate

of incorporation contains an exculpatory provision adopted pursuant to 8 Del. C.

27
§ 102(b)(7),130 no monetary liability can be had against the directors for any breach

of the duty of care. Corwin, 125 A.3d at 312. Thus, to survive a motion to dismiss,

Plaintiff’s claims against the Director Defendants must allege that these defendants

either breached their respective duties of loyalty or acted in bad faith. See In re

Essendant, Inc. S’holder Litig., 2019 WL 7290944, at *7 (Del. Ch. Dec. 30, 2019)

(citing In re Cornerstone Therapeutics Inc, S’holder Litig., 115 A.3d 1173, 1175,

1179–80 (Del. 2015)).

B. Does the Complaint State a Claim for Breach of Fiduciary Duty by
a Conflicted Controlling Stockholder?

Count II alleges that Lovoi, JVL, Roan Holdings, Paul Loyd, and Raleigh i.e.,

the Alleged Controllers, breached their fiduciary duties as controlling stockholders

of Roan and their conduct is subject to entire fairness review. The Defendants have

moved to dismiss for failure to state a claim. Their primary defense relies upon

Corwin cleansing. Plaintiff argues that Corwin is inapplicable, and even if it were

applicable, Defendants cannot satisfy it.

Under Corwin, “when a transaction not subject to the entire fairness standard

is approved by a fully informed, uncoerced vote of the disinterested stockholders,

130
Dkt. 42, Ex. 1 art. IX. The court can take judicial notice of the Company’s certificate
of incorporation in deciding a motion to dismiss. McPadden v. Sidhu, 964 A.2d 1262, 1273
n.28 (Del. Ch. 2008).

28
the business judgment rule applies.” Corwin, 125 A.3d at 309. Corwin cleansing is

available only if the transaction is not subject to the entire fairness standard ab initio.

Larkin v. Shah, 2016 WL 4485447, at *13 (Del. Ch. Aug. 15, 2016). “A transaction

involving a non-conflicted controlling stockholder is subject to Corwin cleansing.”

Presidio, 251 A.3d at 254–55. Therefore, as to Count II, the threshold issue is

whether Corwin cleansing is available. That issue turns on whether the Merger

involved a conflicted controlling stockholder. Thus, I will determine the

applicability of entire fairness ab initio, which, if applicable, would preclude Corwin

cleansing. In the below analysis, I will consider whether the Complaint alleges facts

from which it is reasonably conceivable that (1) at least one of the Alleged

Controllers was a controlling stockholder, and (2) if so, were they conflicted as to

the Merger. See In re Crimson Expl. Inc. S’holder Litig., 2014 WL 5449419, at *14

(Del. Ch. Oct. 24, 2014).

1. The Controller Theories

“Under Delaware law, a controller owing fiduciary duties arises in two

circumstances: (1) the alleged controller owns more than 50% of the voting power

of a corporation or (2) owns less than 50% of the voting power of the corporation

but exercises control over the business affairs of the corporation.” In re Vaxart, Inc.

S’holder Litig., 2021 WL 5858696, at *15 (Del. Ch. Nov. 30, 2021) (quoting In re

GGP, Inc. S’holder Litig., 2021 WL 2102326, at *12 (Del. Ch. May 25, 2021))

29
(internal quotations omitted). In the latter circumstance, the plaintiff must plead

facts to support a reasonable inference that the defendant either controlled (1) “the

corporation’s business affairs in general” or (2) “the corporation specifically for

purposes of the challenged transaction.” Voigt v. Metcalf, 2020 WL 614999, at *11

(Del. Ch. Feb. 10, 2020).

Plaintiff asserts that she has alleged sufficient facts to find all five Alleged

Controllers were controlling stockholders under both prongs of the test. First,

Plaintiff contends that Lovoi owns a majority of Roan’s voting power i.e., de jure

control. 131 Second, Plaintiff argues that the “Alleged Controllers collectively

exercised de facto control over the Company, even if their combined ownership of

Roan did not exceed 50%.132

Plaintiff argues that Lovoi owned a majority of Roan after aggregating his

various holdings. Plaintiff points to the Proxy as the basis for this allegation. The

relevant portion of the Proxy states:

JVL indirectly and beneficially owns approximately a 74.14% interest
in Roan Holdings and has a contractual right to appoint a majority of
the members of the board of managers of Roan Holdings. Mr. Lovoi
may be deemed to share dispositive power over the securities held
directly and indirectly by JVL, Roan Holdings and other entities

131
Pl.’s Ans. Br. 16.
132
Id.

30
 managed by JVL and may therefore be deemed to be the beneficial
owner of these shares of Company Common Stock. 133

Based on the Proxy, Plaintiff asserts that because JVL was entitled to appoint a

majority of the members of the Roan Holdings board of managers, Lovoi effectively

controlled Roan Holdings through his control of JVL. According to Plaintiff, Roan

Holdings owned 49.7% of Roan’s common stock, which Lovoi ultimately

controlled.134 When combined with additional Roan stock held by other entities

under Lovoi’s control, Lovoi controlled 50.8% of Roan’s voting power.135

Defendants do not dispute this contention. Defendants concede, for purposes

of this motion, that Lovoi was Roan’s controlling stockholder.136 Therefore, at this

stage of the proceedings, it is reasonably conceivable that Lovoi was a controller of

Roan.

Plaintiff also alleges that JVL, Roan Holdings, Paul Loyd, and Raleigh “were

each beneficial owners of the same 49.7% block of [Roan] stock” that was owned

by Roan Holdings. 137 Again, Plaintiff points to the Proxy in support of her

allegation:

133
Proxy at 71; see Compl. ¶ 121.
134
Compl. ¶ 120.
135
Id. ¶ 122.
136
See Defs.’ Op. Br. 24–25; Defs.’ Reply Br. 7; Hrg. 8:22–9:8.
137
Pl.’s Ans. Br. 16; see Compl. ¶ 120.

31
 In addition to being directors of the Company, Messrs. Loyd and
Raleigh are members of the board of managers of Roan Holdings,
appointed to such position by JVL pursuant to JVL’s contractual right
to appoint a majority of the members of the board of managers of Roan
Holdings. Messrs. Loyd and Raleigh may be deemed to share
dispositive power over the securities held by Roan Holdings and may
therefore be deemed to be beneficial owners of these shares of
Company Common Stock.138

Under both of Plaintiff’s controlling stockholder theories—which are not pled

alternatively—five persons (both natural and corporate) are each individual

controlling stockholders.139 Plaintiff cites no authority and no facts to support her

contention that Paul Loyd or Raleigh was a controlling stockholder of Roan or that

they were, collectively with Lovoi, controlling stockholders. At oral argument,

Plaintiff’s counsel conceded that the only basis for alleging that Raleigh and Paul

Loyd were controlling stockholders is their having been designated as directors by

138
Proxy at 71; see Compl. ¶ 121.
139
At oral argument, Plaintiff’s counsel alluded to pleading a control group. Hrg. 58:4–
12. But neither the Complaint nor Plaintiff’s briefing on this motion addresses such a
theory. To have adequately pleaded a control group, Plaintiff would have had to
demonstrate that the Alleged Controllers were “connected in some legally significant
way—such as by contract, common ownership, agreement, or other arrangement—to work
together toward a shared goal.” Sheldon v. Pinto Tech. Ventures, L.P., 220 A.3d 245, 251–
52 (Del. 2019) (internal quotations omitted). Plaintiff must have alleged “more than a mere
concurrence of self-interest among” the Alleged Controllers; “there must [have been] some
indication of an actual agreement.” Id. at 252 (internal quotations omitted). Plaintiff has
not alleged that the Alleged Controllers had an agreement to exert their collective power
toward a share goal. Just as a plaintiff may not amend her complaint through her brief,
California Pub. Emps.’ Ret. Sys. v. Coulter, 2002 WL 31888343, at *12 (Del. Ch. Dec. 18,
2002), she may not do so at oral argument.

32
Lovoi.140 The Complaint does not allege that Raleigh and Paul Loyd are part of a

“control group.” Nor does the Complaint allege facts that would support their being

considered part of a control group. Plaintiff offers no legal support for the assertion

that a director becomes a controlling stockholder merely because he or she is

designated by a controlling stockholder. I reject this unsupported theory. See Frank

v. Elgamal, 2014 WL 957550, at *22 (Del. Ch. Mar. 10, 2014) (“Merely because a

director is nominated and elected by a large or controlling stockholder does not mean

that he is necessarily beholden to his initial sponsor.”).

As for JVL and Roan Holdings, the Complaint alleges they each own 49.7%

of Roan’s voting power. For purposes of this decision, I need not decide whether

Plaintiff has alleged facts to support a reasonable inference that JVL and Roan

Holdings are also controlling stockholders of Roan. Even assuming that they are,

and owed fiduciary duties to Plaintiff, the Complaint does not state a claim against

them for breach of fiduciary duty. 141

140
Hrg. 58:4–11 (“So the controllers we’re focusing is Mr. Lovoi, JVL, and the two
designee directors, Mr. Raleigh and Mr. Loyd, and I think that’s who we referred to as the
control group, and I think JVL and Lovoi are the easier . . . it’s easier to check the box with
them too, and Raleigh and Loyd I think is just by designation that we’re including them.”).
141
Plaintiff’s authority for her de facto control theory is inapposite. While the minority
stockholders in Plaintiff’s cited cases were found to be controllers, they were all also found
to have dominated their respective corporations or boards of directors. In this case,
Plaintiff does not explain how the Alleged Controllers under her de facto theory dominated
the Board. See FrontFour Cap. Grp. LLC v. Taube, 2019 WL 1313408, at *22 (Del. Ch.
Mar. 11, 2019) (“[plaintiff] has proven that at least half of the Special Committee members

33
 2. The Alleged Conflicts

The presence of a controller during a transaction will not trigger entire fairness

review on its own; the controller must be conflicted as well. Crimson, 2014 WL

5449419, at *12. “A controller engages in a conflicted transaction when (1) the

controller stands on both sides; or (2) the controller competes with the common

stockholders for consideration.” In re Viacom Inc. S’holders Litig., 2020 WL

7711128, at *11 (Del. Ch. Dec. 29, 2020) (internal quotations omitted). The court

has identified three examples within this latter category: “(1) where the controller

receives greater monetary consideration for its shares than the minority stockholders;

(2) where the controller takes a different form of consideration than the minority

stockholders; and (3) where the controller gets a unique benefit by extracting

were not independent from the [controllers]”); In re Zhongpin Inc. S’holders Litig., 2014
WL 6735457, at *9 (Del. Ch. Nov. 26, 2014) (finding that the controller “possessed active
control over [the company’s] day-to-day operations” and that the company “relied so
heavily on him to manage its business and operations that his departure from [the company]
would have had a material adverse impact on the [c]ompany”), rev’d on other grounds, sub
nom. In re Cornerstone Therapeutics Inc, S’holder Litig., 115 A.3d 1173 (Del. 2015);
Williamson v. Cox Commc’ns, Inc., 2006 WL 1586375, at *5 (Del. Ch. June 5, 2006)
(reasonable to infer controllers where the corporation “depended on their cooperation”
because they were its “only significant customers” and held veto power over the board’s
decision making); Calesa Assocs., L.P. v. Am. Cap., Ltd., 2016 WL 770251, at *10 (Del.
Ch. Feb. 29, 2016) (“Plaintiffs have pled sufficient facts to demonstrate that a majority of
the Board was under the actual control and influence of ACAS”). Here, Plaintiff has not
shown how Paul Loyd or Raleigh could have individually dominated Roan or its Board.
Rather, under her de jure theory of control, Lovoi was able to exert control over the other
Alleged Controllers. Therefore, Plaintiff’s de facto control theory is not reasonably
conceivable.

34
something uniquely valuable to the controller, even if the controller nominally

receives the same consideration as all other stockholders.” IRA Tr. FBO Bobbie

Ahmed v. Crane, 2017 WL 7053964, at *6 (Del. Ch. Dec. 11, 2017) (internal

quotations and citations omitted). A complaint pleading the latter category must also

allege an improper diversion of consideration that would otherwise have gone to the

stockholders. In re Martha Stewart Living Omnimedia, Inc. S’holder Litig., 2017

WL 3568089, at *13 & n.50 (Del. Ch. Aug. 18, 2017).

Here, Plaintiff contends that the Alleged Controllers were conflicted because

they stood on both sides of the Merger and stood to gain unique benefits to the

exclusion of the other stockholders. I have already determined that Paul Loyd and

Raleigh are not controlling stockholders. Therefore, I address Plaintiff’s controlling

stockholder theory as to Lovoi, JVL, and Roan Holdings.

a. Lovoi, JVL, and Roan Holdings Did Not Stand on Both
Sides of the Merger.

Plaintiff argues that Lovoi, JVL, and Roan Holdings stood on both sides of

the transaction, but they make no allegation that any of those defendants had any

financial interest in Citizen Buyer. Instead, they conjure theories that are

unsupported. First, Plaintiff argues that Lovoi, JVL, and Roan Holdings were on

both sides of the transaction because Woods, Woodard, and Augsburger are

members of Roan Holdings, Woods serves as one of its four managers, and they had

35
“a direct say in how its 49.7% block [of Roan stock] was voted.” 142 But this theory

is directly contradicted by the allegation that Lovoi and JVL control Roan Holdings.

It is also contradicted by the allegations that Woods, Woodard, and Augsburger were

being marginalized by Lovoi and JVL in Roan Holdings. Thus, it is not reasonably

conceivable that Lovoi, JVL, or Roan Holdings stood on both sides of the transaction

on this theory.

Second, the mere fact that Woods, Woodard, and Augsburger were affiliated

with Citizen Buyer, placing them on the buy side of the Merger, does not place

Lovoi, JVL, and Road Holdings on the buy side, too. Again, Plaintiff cites no

persuasive factual or legal argument to support this theory. The allegation that JVL

and Lovoi had a prior history of co-investment with Woods, Woodard, and

Augsburger does not place JVL and Lovoi on the other side of the Merger.

Third, the fact that Lovoi and/or JVL may have owed fiduciary duties to

Woods, Woodard, and Augsburger as members of Roan Holdings does not create a

dual fiduciary conflict. The duties owed to Woods, Woodard, and Augsburger were

in their capacities as members of Roan Holdings. Roan Holdings’ only asset was its

interest in Roan.

142
Pl.’s Ans. Br. 21.

36
 i. Lovoi, JVL, and Roan Holdings Did Not Have a
Dual Fiduciary Conflict

A dual fiduciary conflict exists if an individual owes multiple fiduciary

obligations and the interests associated with those obligations are not aligned.

Trados II, 73 A.3d at 46–47. Plaintiff contends that Lovoi “owed conflicting

contractual and fiduciary duties to both Citizen Buyer’s Principal’s [sic] and

[Roan’s] stockholders, creating a classic dual fiduciary conflict and [] causing [him]

to stand on both sides of the Merger.”143 Plaintiff cites to three sets of facts in the

Complaint in support of her theory. First, Woods was one of Roan Holdings’ four

managers.144 Second, the Arbitration Action alleges that Lovoi owed a fiduciary

duty to Woods, Woodard, Augsburger, and Roan Holdings.145 Third, Lovoi owed a

fiduciary duty to Roan’s stockholders as Roan’s controller. 146 It is unclear, though,

how these facts show that Lovoi’s fiduciary duties were misaligned on the buy side

of the transaction.

The claimants in the Arbitration Action alleged that Lovoi and the other

respondents breached their fiduciary duties to Roan Holdings and its members,

143
Pl.’s Ans. Br. 24.
144
Id. (citing Compl. ¶¶ 64, 68, 128).
145
Id. (citing Compl. ¶¶ 65, 91); Arbitration Action at 15.
146
Pl.’s Ans. Br. 24 (citing Compl. ¶¶ 16–18, 21–22).

37
which included the Citizen Principals. 147 The Arbitration Action thus alleges that

Lovoi owed the Citizen Principals a fiduciary duty through their membership in

Roan Holdings, not via their affiliation with Citizen Buyer or any of its affiliates.

Additionally, Roan Holdings was on the same side of the Merger as Roan through

its 49.7% ownership stake in the Company, aligning the two entities’ respective

interests. Therefore, neither Lovoi, JVL, nor Roan Holdings had a dual fiduciary

conflict vis a vis the Merger. See, e.g., Trados II, 73 A.3d at 46–47 (holding that

seller’s directors were conflicted dual fiduciaries where those directors were also

partners in funds that were invested in seller and received liquidation preferences

during merger).

ii. Lovoi, JVL, and Roan Holdings’ Purported
Financial Interests in Citizen Buyer

Plaintiff next argues that Lovoi, JVL, and Roan Holdings were on both sides

of the Merger because unspecified funds managed by JVL had some preexisting,

unspecified “interest” in a Citizen affiliate.148 This does not create a pleadings-stage

inference that Lovoi, JVL, or Roan Holdings stood on both sides of the Merger.

Plaintiff asserts that to be considered on both sides of the transaction, “a controller

need merely have an economic interest in the buyer—not be its owner or controller

147
See Arbitration Action at 15, 10, 6.
148
Compl. ¶ 66.

38
as well.”149 The cases upon which Plaintiff relies do not support her allegations in

this case.

In William Penn Partnership v. Saliba, 13 A.3d 749, 752 (Del. 2011), the

conflicted fiduciaries owned 50% of the equity of the seller, served as its managing

partners, owned 40% of the acquiror, and formed a majority of the acquiror’s board

of directors. Similarly, in In re BGC Partners, Inc. Derivative Litigation, 2019 WL

4745121 (Del. Ch. Sept. 30, 2019), defendant Howard Lutnick and two affiliates

owned 60% of the voting power of the buyer, controlled an affiliate of the seller, and

Lutnick “personally stood to receive almost 47% of every dollar that [the buyer]

allegedly overpaid for [the asset] because Lutnick’s economic interest in [the

affiliate of the seller] far exceeded his economic interest in [the buyer].” Id. at *9.

Contrary to Plaintiff’s assertions, and unlike in BGC, Plaintiff has not shown that

Lovoi sits “on top of a complicated web of affiliated entities and appear[s] on both

sides of the Transaction.”150 Cf. id. at *2 (explaining that Lutnick sat “on top of a

complicated web of affiliated entities and appear[ed] on both sides of the

Transaction”).

In Katell v. Morgan Stanley Group, Inc., 1993 WL 10871 (Del. Ch. Jan. 14,

1993), Morgan Stanley was “presumed interested, since it allegedly appeared on

149
Pl.’s Ans. Br. 28.
150
See id. at 29; Hrg. 51:2–10.

39
both sides of the transaction,” but only because it “was not only involved in the . . .

transaction as the seller, but had affiliates involved as the buyers.” 1993 WL 10871,

at *5. Here, Plaintiff has not alleged that Citizen Buyer is a Lovoi, JVL, or Roan

Holdings affiliate.

Unlike in Saliba, BGC, and Katell, there are no allegations that Lovoi, JVL,

or Roan Holdings were buyers or managers of Citizen Buyer. There are no

allegations that Lovoi, JVL, or Roan Holdings had a buy-side interest in the

transaction. To the contrary, the Complaint alleges that “Citizen Buyer and its

affiliated entities are managed and controlled by” Woods, Woodard, and

Augsburger.151 The allegation that “funds managed by JVL continued to have an

interest” in Citizen III, which was created in 2017,152 does not create a pleadings-

stage inference that Lovoi, JVL, or Roan Holdings stood on both sides of the

transaction.153 The Complaint does not allege anything about that supposed

“interest” held by funds managed by JVL, let alone a buy-side interest in the Merger.

Thus, Plaintiff cannot even satisfy her own (inaccurate) articulation of the law

concerning conflicted fiduciaries. The Complaint does not allege that Lovoi, JVL,

151
Compl. ¶ 3.
152
Id. ¶ 66 (italics omitted).
Furthermore, this allegation is contradicted in the very next paragraph of the Complaint,
153

which alleges: “Citizen Buyer . . . appears to wholly own Citizen III.” Id. ¶ 67.

40
or Roan Holdings had “an economic interest in the buyer.”154 Accordingly, Plaintiff

has not alleged that Lovoi, JVL, or Roan Holdings stood on both sides of the

transaction, triggering entire fairness review.

b. Lovoi, JVL, and Roan Holdings Did Not Receive a
Unique Benefit Not Shared with the Other
Stockholders.

“The second variety of controller transactions implicating entire fairness

review involves situations where the controller does not stand on both sides of the

transaction, but nonetheless receives different consideration or derives some unique

benefit from the transaction not shared with the common stockholders.” Crimson,

2014 WL 5449419, at *12. Plaintiff contends that Lovoi, JVL, and Roan Holdings

received two forms of consideration that the remainder of Roan’s stockholders did

not receive, i.e., the resolution of the Arbitration Action and repayment of the Term

Loan.

i. Resolution of the Arbitration Action

Plaintiff contends that the Citizen Principals used the pending Arbitration

Action to pressure Lovoi, JVL, and Roan Holdings into selling Roan at an unfair

154
See Pl.’s Ans. Br. 28. Plaintiff contends she has further established that Lovoi, JVL,
and Roan Holdings stood on both sides of the Merger because the parties to the Separation
Agreement, including Lovoi and JVL, “agreed to enter into a series of transactions,”
meaning their financial and contractual ties would persist. Id. at 26–27 (citing Compl. ¶¶
66–68, 127). But that vague allegation as to an agreement to enter into unspecified other
transactions does not create a reasonable inference that Lovoi, JVL, or Roan Holdings had
a financial interest in the buy side of the Merger.

41
price. In support of her contention, Plaintiff points to the timeline of events. 155 First,

the Acquirors, including Citizen Buyer, which was led by the Citizen Principals,156

approached Lovoi to purchase Roan. Two weeks later, the Citizen Principals filed

the Arbitration Action, threatening Lovoi, JVL, and Roan Holdings’ control over

Roan. And immediately following that filing, the Acquirors offered Lovoi the

opportunity to roll over his equity in the event of a merger. Plaintiff asserts that

Lovoi, JVL, and Roan Holdings were likely to lose both the Arbitration Action and

the related Declaratory Judgment Action and were therefore incentivized to tie “the

progression of the Arbitration and Declaratory Judgment Actions to the Merger

negotiations” so as to appease the Citizen Principals.157 According to Plaintiff, the

voluntary dismissal of the Declaratory Judgment Action eight days after the signing

of the Merger Agreement is further evidence of a “classic quid pro quo.” 158

Plaintiff does not allege that Lovoi, JVL, and Roan Holdings were bound to

lose the Arbitration Action. Indeed, the facts alleged in the Complaint cannot sustain

such a claim. See In re Riverstone Nat’l, Inc. S’holder Litig., 2016 WL 4045411, at

*8 (Del. Ch. July 28, 2016) (reasoning that “[i]f a conclusory allegation” relating to

155
See Pl.’s Ans. Br. 30–31.
156
Compl. ¶ 126.
157
Pl.’s Ans. Br. 31.
158
Id.

42
potential litigation “was sufficient to show that directors were interested in [a]

merger, much ground for strike suits and other mischief would be possible”); see

also In re AmTrust Fin. Servs., Inc. S’holder Litig., 2020 WL 914563, at *11 (Del.

Ch. Feb. 26, 2020) (agreeing with the reasoning in Riverstone). Plaintiff points to

an August 15, 2019 hearing in the Declaratory Judgment Action where the court

expressed skepticism as to the plaintiffs’ ability to challenge the arbitrability of the

Arbitration Action. But the issue there was solely whether the claims were

arbitrable, not the merits of the Arbitration Action itself. 159

I am not persuaded that there are well-pleaded facts to support the theory that

Lovoi and JVL extracted a unique benefit in the Merger arising from the Arbitration

Action to the detriment of Roan’s stockholders. Nor does Plaintiff’s focus on the

timeline lend credence to her theory that Lovoi, JVL, and Roan Holdings obtained a

unique benefit by settling the Arbitration Action. The Roan Board had already been

approached with a potential offer prior to the commencement of the Arbitration

Action. Thus, the Complaint does not allege well-pleaded facts that Lovoi or JVL

initiated the sale process, let alone having done so out of concern over a potential

claim by Woods, Woodard, and Augsburger over Roan Holdings. Furthermore,

given his significant equity ownership of Roan Holdings, the loss-of-control theory

159
See Woods, 2019-0374-AGB, Dkt. 41 at 5:15–6:8, 9:17–10:13.

43
is unpersuasive. Plaintiff alleges Lovoi and JVL owned over 74% of the Roan

Holdings equity, allowing them to control 49.7% of Roan. Lovoi also owned

additional shares of Roan separate and apart from Roan Holdings. In the off chance

that Lovoi might lose mathematical control over a majority of Roan’s voting power

in a forced dissolution or distribution, he would still hold the largest block of Roan

stock with at least 37%. In addition, Lovoi, Paul Loyd, and Raleigh (two directors

that Plaintiff alleges were aligned with Lovoi and JVL) would constitute three of the

eight Roan directors, which was classified through the 2020 annual meeting. Thus,

the Arbitration Action presented no immediate threat to Lovoi’s board seat or those

of the Roan Holdings designees.160 I am therefore not persuaded that the allegations

of the Complaint support a reasonable inference that Lovoi, JVL, or Roan Holdings

was motivated to sell the Company to Citizen Buyer at an unfair price due to any

potential threat of loss of mathematical control over Roan as a result of the

Arbitration Action. See Presidio, 251 A.3d at 258 (concluding complaint did not

support a reasonable inference that controller was motivated to sell the company due

to the possibility it would own only 42% of the company’s stock and would no longer

be able to designate a mathematical majority of the board). There is also no

160
Nor was there a credible threat that Lovoi would be removed as a director. The Roan
certificate provides that directors can only be removed at a meeting of stockholders, and
stockholders cannot act by written consent. Dkt. 42, Ex. 1 §§ 5.3 & 6.1.

44
allegation whatsoever as to the terms of any resolution of the Arbitration Action.

There was no claim in that proceeding for money damages against Lovoi, JVL, or

Roan Holdings, and Plaintiff does not allege that Lovoi, JVL, or Roan Holdings was

motivated to sell Roan to Citizen Buyer in order to avoid a potential monetary

judgment in the Arbitration Action.

The Complaint also contains no allegations that Lovoi unfairly tilted the sale

process toward Citizen Buyer. Roan considered at least two other offers once it

began the sale process. According to the Complaint, the other two bidders exited

the sale process on their own volition. And Plaintiff does not allege that Citizen

Buyer’s bid was inferior to the other two bids. It is thus not reasonably conceivable

that Lovoi, JVL, or Roan Holdings obtained a unique benefit in the Merger due to

resolution of the Arbitration Action to the detriment of the other Roan stockholders.

ii. Repayment of the Term Loan

Plaintiff alleges that Lovoi and JVL obtained a unique financial benefit in the

Merger through repayment of the Term Loan. At the time of the Merger, Roan owed

JVL and other lenders $50 million that it drew from the Term Loan. Plaintiff does

not allege JVL’s portion of the Term Loan. Around this time, Roan’s net debt

“ballooned,” and therefore there were “concerns” regarding Roan’s ability to repay

45
the Term Loan.161 According to Plaintiff, the Term Loan’s lenders would only

receive an immediate and entire repayment of the $50 million Term Loan plus

$6,550,807.41 in interest if Roan was sold in an all-cash transaction. 162 Plaintiff

argues that Roan could have pursued a more valuable transaction for its stockholders

if not for Lovoi’s conflict that favored the Merger. 163

The Complaint only makes conclusory allegations that Roan could have

received greater value in an asset sale.164 Indeed, Roan engaged with financial

advisors to consider strategic alternatives and entertained offers from multiple

bidders. 165 Plaintiff has not pleaded that any of the other options that Roan evaluated

would have been more lucrative for its stockholders. Nor does Plaintiff allege that

these alternatives would not have constituted a change of control under the Term

Loan. The Complaint quotes a letter that was sent by one of Roan’s largest

stockholders, Pelican Bay Capital Management, LLC (“Pelican Bay”), to the Board

voicing its “strong disagreement” with the Merger to bolster its argument, but that

161
Pl.’s Ans. Br. 34; see Compl. ¶¶ 135–36.
162
See Pl.’s Ans. Br. 34; Compl. ¶¶ 136–37.
163
See Pl.’s Ans. Br. 34; Compl. ¶ 137.
164
See Compl. ¶¶ 136–37.
165
Id. ¶¶ 95, 98–99; Proxy at 37 (“On May 20, 2019, the Company publicly announced
that it had engaged the Financial Advisors to assist the Company in evaluating strategic
alternatives.”).

46
letter is likewise conclusory.166 While Pelican Bay argued that Roan received higher

price targets by investment banking analysts, it did not state that a better deal was

available.

Plaintiff does not contend that the terms of the Term Loan itself were unfair

and conceded as much at oral argument. 167 Instead, Plaintiff relies entirely on the

Term Loan’s existence to argue that Lovoi was improperly incentivized to pursue an

all-cash transaction, which would trigger a repayment of the Term Loan before the

Company became illiquid. 168 The Term Loan was negotiated, however, while the

Company was actively pursuing a deal that would likely result in a change in control,

and would thus be aware that a transaction would likely trigger the Term Loan’s

change in control provision. Furthermore, following the Term Loan’s negotiation,

all three initial proposals—contemplating either mergers or an acquisition—would

surely have constituted a change in control.

Plaintiff’s authority is also unpersuasive. In New Jersey Carpenters Pension

Fund v. Infogroup, Inc., 2011 WL 4825888 (Del. Ch. Sept. 30, 2011), the court held

that a director was interested in a merger where the complaint had pleaded facts

166
See id. ¶¶ 116–17.
167
Hrg. 55:15–18 (“We’re not challenging the terms of the loan. We’re saying that the fact
that JVL gave a loan, which the circumstances may be suspect or not, but that’s irrelevant
for me.”).
168
Pl.’s Ans. Br. 35–36; Hrg. 55:19–21 (“What’s relevant is [Lovoi] only would get it paid
back if the merger took place, and that’s a unique benefit.”).

47
demonstrating the director’s “desperate need of liquidity.” Id. at *9–10. There, the

court found that the plaintiff had pleaded a “confluence of factors” evidencing that

liquidity was material to this director: he had debts exceeding $25 million, was

starting a business that would require “a significant amount of cash to fund the

company’s launch,” and “had no discernible, significant sources of cash inflow.” Id.

at *9. Additionally, the complaint also alleged that the director “could not obtain

the necessary magnitude of liquidity, absent a sale of the entire Company or a

willingness to accept a significant liquidity discount on the sale of his block of

shares.” Id. In making its determination, the court reasoned that the complaint

adequately pleaded that this alleged liquidity benefit was material to the director—a

requirement to plead that he was interested in the merger. Id. at *10. Here, however,

Plaintiff has not pleaded facts showing that Lovoi or JVL were “desperate” for cash.

Cf. Presidio, 251 A.3d at 258–59 (rejecting “liquidity-driven conflict theory” where

plaintiff pled facts showing controller’s “extensive sales of over twenty-one million

shares in four secondary offerings” and the additional liquidity that only a merger

could provide); In re Merge Healthcare Inc., 2017 WL 395981, at *8 (Del. Ch. Jan.

30, 2017) (rejecting similar theory where the complaint did not allege that the alleged

controller was in financial distress or that his previous sales of stock resembled a

“fire sale”).

48
 Plaintiff’s citation to In re Ply Gem Industries., Inc. Shareholders Litigation,

2001 WL 755133 (Del. Ch. June 26, 2001), is also inapt. There, the company’s CEO

and Chairman of the Board, who owned more than a quarter of the company’s

outstanding stock, “received payment for the termination of his employment contract

and his non-competition agreement and the forgiveness of his debt to [the company]”

following the sale of the company. Id. at *6. The court determined that the CEO

was interested in the transaction because the payment he received was a personal

benefit that was not shared by the company’s other shareholders. See id. Here, the

Complaint does not allege that Lovoi secured any of the personal benefits that were

obtained by the CEO in Ply Gem. And while, in Ply Gem, the CEO owed a debt to

the company, here, Roan owed JVL a portion of the Term Loan repayment.

Plaintiff has not demonstrated that Roan’s stockholders would have otherwise

received additional consideration but for the Term Loan’s repayment—a

requirement to establish that a conflict existed. See Martha Stewart Living, 2017

WL 3568089, at *13 & n.50 (recognizing that, to sustain a disparate consideration

claim, plaintiff must allege facts that, but for an improper side payment, the

consideration would have gone to the stockholders); In re Straight Path Commc’ns,

Inc. Consol. S’holder Litig., 2018 WL 3120804, at *13 (Del. Ch. June 25, 2018)

(holding allegations that controlling stockholder insisted on settlement of

indemnification claim supported a reasonable inference that the controller

49
“improperly diverted proceeds that would have, if [he] had acted properly, ended up

in the consideration paid to the target stockholders” (quoting Golaine v. Edwards,

1999 WL 1271882, at *9 (Del Ch. Dec. 21, 1999))). It is thus not reasonably

conceivable that Lovoi or JVL obtained a unique benefit and, thus, was conflicted

due to the Term Loan.

* * *

Plaintiff has not alleged well-pleaded facts to create a reasonable inference

that Lovoi, JVL, Roan Holdings, Paul Loyd, or Raleigh either stood on both sides of

the Merger or obtained a unique benefit to the detriment of the other stockholders.

Therefore, the Complaint does not state a claim against those defendants as

conflicted controlling stockholders subject to entire fairness review of the Merger.

Accordingly, Corwin cleansing is available.

C. Corwin Cleansing Applies.

Plaintiff argues that even if the Merger is not subject to entire fairness review

ab initio, it should still be subject to heightened scrutiny under Revlon. Defendants

argue that Plaintiff has not stated a claim under Revlon, and Plaintiff’s claims must

be dismissed under Corwin.

“[W]hen a transaction not subject to the entire fairness standard is approved

by a fully informed, uncoerced vote of the disinterested stockholders, the business

judgment rule applies.” Corwin, 125 A.3d at 309. Thus, an “uncoerced, informed

50
stockholder vote is outcome-determinative, even if Revlon applied to the merger.”

Id. at 308. Plaintiff does not argue that the stockholder vote was coerced. Plaintiff

contends that Corwin does not apply because the vote was uninformed.

To determine the adequacy of the stockholder vote at the pleadings stage, the

court must consider whether the “complaint, when fairly read, supports a rational

inference that material facts were not disclosed or that the disclosed information was

otherwise materially misleading.” Morrison v. Berry, 191 A.3d 268, 282 (Del.

2018). In this context, the materiality standard text is as follows:

An omitted fact is material if there is a substantial likelihood that a
reasonable shareholder would consider it important in deciding how to
vote. Framed differently, an omitted fact is material if 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. But, to be sure, this
materiality test does not require proof of a substantial likelihood that
disclosure of the omitted fact would have caused the reasonable
investor to change his vote.

Id. at 282–83 (internal quotations and citations omitted); accord Mindbody, 2020

WL 5870084, at *26.

“[T]here must be 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.” Malpiede v. Townson, 780

A.2d 1075, 1086 (Del. 2001) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S.

438, 449 (1976)). “While disclosure allegations ‘need not be pleaded with

51
particularity,’ some factual basis must be provided from which the Court can infer

materiality of an identified omitted fact.” In re Novell, Inc. S’holder Litig., 2013

WL 322560, at *13 (Del. Ch. Jan. 3, 2013) (quoting Loudon v. Archer-Daniels-

Midland Co., 700 A.2d 135, 146 (Del. 1997)).

“Although a defendant asserting a defense under Corwin bears the burden of

proving at trial that the stockholder vote was fully informed, a plaintiff bears the

burden to plead disclosure deficiencies.” Mindbody, 2020 WL 5870084, at *26

(citing In re Solera Hldgs., Inc. S’holder Litig., 2017 WL 57839, at *7–8 (Del. Ch.

Jan. 5, 2017)).

1. Relationships Between Roan and Citizen Buyer

Plaintiff argues that the Proxy failed to disclose numerous preexisting

relationships and conflicts of interest between Roan and Citizen Buyer’s leadership.

First, Plaintiff vaguely argues that “the Proxy failed to clearly and candidly disclose

the long-standing, preexisting relationship and conflicting contractual and

fiduciaries [sic] duties between Citizen Buyer’s Principals and the Controllers.”169

Plaintiff provides no further clarity as to this assertion beyond stating that the

Alleged Controllers had some unspecified “financial interests in a sale to Citizen

169
Pl.’s Ans. Br. 38; see Compl. ¶ 139 (“[T]he Proxy failed to clearly and candidly disclose
the long-standing, preexisting relationship between the leadership of Citizen Buyer
(Woods, Woodard, and Augsburger) and [Roan’s] controlling stockholders and affiliated
directors (Lovoi/JVL, Paul Loyd, Raleigh, Roan Holdings, and Tripodo).”).

52
Buyer,” citing her brief’s entire statement of facts and over one-third of the

Complaint.170 See Loudon, 700 A.2d at 141 (“a pleader must allege that facts are

missing from the proxy statement, identify those facts, state why they meet the

materiality standard and how the omission caused injury”); In re Santa Fe Pac.

Corp. S’holder Litig., 669 A.2d 59, 65–66 (Del. 1995) (“Conclusory allegations will

not be accepted as true without specific supporting factual allegations. Non-

disclosure claims must provide some basis for a court to infer that the alleged

omissions were material.” (citations omitted)). I have already determined that the

Complaint lacks well-pleaded allegations that any of the Defendants was a conflicted

controlling stockholder in the Merger, and Plaintiff alleges no well-pleaded facts that

any Defendant had a financial interest in Citizen Buyer. 171

Plaintiff alleges that the Proxy should have disclosed that the Citizen

Principals “and their network of friends and family” collectively owned 26% of

Roan Holdings and that Woods served on Roan Holdings’ board of managers.172

The Proxy discloses that JVL beneficially owns approximately 74.14% of Roan

170
Pl.’s Ans. Br. 38–39.
Plaintiff alleges Citizen Buyer was wholly owned by Citizen Holdings and that Citizen
171

Buyer “appears to wholly own Citizen III.” Compl. ¶ 67. There is no allegation that any
Defendant has any ownership interest in any of those entities.
172
Compl. ¶ 139.

53
Holdings.173 And the Supplement discloses that “[a]n affiliate of Citizen [Buyer]

owns a 7.6% interest in Roan Holdings” and “an officer of Citizen [Buyer] is a

manager on the board of managers of Roan Holdings.”174 Plaintiff does not dispute

that these disclosures are accurate. Plaintiff does not allege that the Citizen

Principals control the collective 26% of Roan Holdings that they and their network

of friends and family own. Nor does she explain how that minority ownership

position of a holding company controlled by Lovoi would be important to a Roan

stockholder voting on the Merger. “Delaware law does not require a play-by-play

description of every consideration or action taken by a Board, especially when such

information would tend to confuse stockholders or inundate them with an overload

of information.” In re Cogent, Inc. S’holder Litig., 7 A.3d 487, 511–12 (Del. Ch.

2010). Without further, relevant context, disclosing the collective, minority

ownership of Roan Holdings would likely confuse rather than inform a reasonable

stockholder. Nor does Plaintiff explain why identifying Woods by name as a

manager of Roan Holdings’ board significantly adds to the total mix of information

already disclosed. Plaintiff has failed to show why this information would be

material.

173
Proxy at 71.
174
Supplement at 4.

54
 Plaintiff further alleges that the Proxy failed to disclose that Citizen II received

a 50% equity interest in Roan that was held in Roan Holdings. 175 Additionally,

Plaintiff alleges that because Lovoi controlled Roan Holdings through JVL, the

Proxy should have also disclosed that Lovoi managed Citizen II’s equity interest in

Roan. 176 But the Proxy does disclose that Lovoi, through his interests in JVL and

Roan Holdings, “may be deemed to share dispositive power over the securities held

directly or indirectly by JVL, Roan Holdings and other entities managed by JVL.”177

This disclosure sufficiently explains both Lovoi’s and Roan Holdings’ relationship

with Roan. Indeed, Plaintiff’s allegations of Lovoi’s control over Roan are based on

the Proxy disclosures. 178

Most of these alleged omissions were either included in the Proxy or the

Supplement. Meanwhile, Plaintiff neglects to explain why any of these omissions

were material or, at a minimum, provide the court with a factual basis from which

to infer materiality. The court has remained unconvinced of Plaintiff’s theory that

the Merger was inherently conflicted due to a “complicated web of preexisting

investments and contracts” and it will not labor to infer such a theory on its own.179

175
Compl. ¶ 139.
176
Id.
177
Proxy at 71.
178
Compl. ¶¶ 120–22.
179
Id. ¶ 11; see also id. ¶¶ 4, 129, 141 (repeating this unsubstantiated theory).

55
See Novell, 2013 WL 322560, at *13 (“While disclosure allegations need not be

pleaded with particularity, some factual basis must be provided from which the

Court can infer materiality of an identified omitted fact.” (internal quotations

omitted)).

2. The Arbitration and Declaratory Judgment Actions

Plaintiff contends that the Proxy’s omission of the Arbitration and Declaratory

Judgment Actions was material. First, Plaintiff argues that these actions establish

that Lovoi and the other Director Defendants owed the Citizen Principals fiduciary

duties, which would have been important to a stockholder voting on the Merger.180

Second, Plaintiff asserts that the Arbitration Action was material because it showed

that the Citizen Principals were attempting to wrest control of Roan away from the

Alleged Controllers. 181 Plaintiff argues that this information was material to the

extent that the Arbitration Action may have incentivized the Alleged Controllers to

sway the sale process toward Citizen Buyer and the Citizen Principals.182 I have

already found, however, that both of Plaintiff’s theories are not reasonably

180
See Pl.’s Ans. Br. 43.
181
Id.
182
See id.

56
conceivable. 183 Therefore, the omission of both the Arbitration and Declaratory

Judgment Actions was not material.

3. Vinson & Elkins’s Alleged Conflict

Plaintiff argues that the Proxy should have disclosed that the law firm advising

Roan during the sale process, Vinson & Elkins (“V&E”), was conflicted while

providing legal advice to the Company.184 Plaintiff alleges that V&E was conflicted

in two ways: (1) by having an interest of its own in Roan LLC and (2) through

representing the Woods, Woodard, and Augsburger “during 2018 and/or 2019 in

conjunction with protecting their interests in [Roan LLC].”185 The Complaint

devotes only two sentences to these cursory allegations.186 Plaintiff has not

identified or described anything about V&E’s purported interest in Roan LLC. At

183
See supra II.A.2.a.i, II.A.2.b.i.
184
Pl.’s Ans. Br. 44.
185
Compl. ¶ 143; Pl.’s Ans. Br. 44.
186
The entirety of the allegation reads:
Third, the Proxy failed to disclose the fact that (1) Vinson & Elkins, L.L.P.—
the outside counsel that advised the Public Company [Roan] during the sales
process—had represented the leadership behind Citizen Buyer—Woods,
Woodard, and Augsburger—during 2018 and/or 2019 in conjunction with
protecting their interests in [Roan LLC] and (2) Vinson & Elkins had an
interest in [Roan LLC]. Thus, the management of [Roan] and the four
directors who are not named as defendants in this action were being advised
by conflicted legal counsel.
Compl. ¶ 143 (italics in original). The Complaint also contains an introductory paragraph
that previews this allegation, but provides no further facts. See id. ¶ 13.

57
oral argument, Plaintiff’s counsel admitted that he “doesn’t know what the interest

is of [V&E] in [Roan LLC].”187 And a Roan public filing, which is incorporated by

reference in the Proxy, directly refutes this allegation, stating that Roan LLC is a

“wholly owned subsidiary of [Roan].”188 This allegation is also directly contradicted

in the Complaint, which states that “[Roan LLC] would be reorganized under a

newly formed company, [Roan] . . . , which would fully consolidate all interests of

[Roan LLC] into [Roan].”189 Therefore, I find this first allegation to be conclusory

and not well pleaded.

Plaintiff also fails to allege any facts or circumstances concerning V&E’s past

representation of the Citizen Principals or how it presented a potential or actual

conflict of interest in advising the Roan Board on the Merger with Citizen Buyer.

Plaintiff has not alleged that V&E’s prior representation of Woods, Woodard, and

Augsburger was related at all to its representation of Roan leading up to the Merger.

In arguing that the above omissions were material, Plaintiff cites two cases,

contending that “[a]dvisor conflicts, even potential ones, must be disclosed.”190 The

187
Hrg. 54:2–3.
188
Roan Resources, Inc., Quarterly Report (Form 10-Q) (June 30, 2019) at 10, available at
sec.gov/Archives/edgar/data/1326428/000132642819000015/q22019draft.htm; see Proxy
at 120 (incorporating Roan’s June 30, 2019 10-Q by reference).
189
Compl. ¶ 77.
190
Pl.’s Ans. Br. 44.

58
first, In re Southern Peru Copper Corp. Shareholder Derivative Litigation, 52 A.3d

761 (Del. Ch. 2011), aff’d sub nom. Americas Mining Corp. v. Theriault, 51 A.3d

1213 (Del. 2012), analyzed the Delaware Supreme Court’s opinion Kahn v. Tremont

Corp., 694 A.2d 422 (Del. 1997), and noted that the Supreme Court, in its entire

fairness analysis, “found problematic” that “supposedly outside directors[]” had

selected “advisors who were in some capacity affiliated with the controlling

stockholder.” Southern Peru, 52 A.3d at 790 (citing Kahn, 694 A.2d at 426–27).

Here, though, Plaintiff does not contend that V&E was affiliated with Citizen Buyer.

The second case cited by Plaintiff, Morrison v. Berry, is likewise not

analogous to this case. Plaintiff asserts that Morrison stands for the proposition that

“legal advisor conflicts [are] particularly important given [the] role they play in

crafting disclosures.” 191 Although advisor conflicts should be disclosed,192 a

plaintiff must provide sufficient facts to establish that the conflict or potential

conflict was material. “Allegations that are merely conclusory and lacking factual

basis, however, will not survive a motion to dismiss.” Criden v. Steinberg, 2000

191
Id. (bracketing and quotations omitted).
192
See In re John Q. Hammons Hotels Inc. S’holder Litig., 2009 WL 3165613, at *16 (Del.
Ch. Oct. 2, 2009) (“This Court, however, has stressed the importance of disclosure of
potential conflicts of interest of financial advisors.”); see, e.g., RBC Capital Markets, LLC
v. Jervis, 129 A.3d 816, 860–61 (Del. 2015) (holding that proxy should have disclosed
seller’s financial advisor’s pursuit of financing arrangements with potential buyers). There
are no allegations that the Proxy did not disclose all material information concerning the
Board’s financial advisors.

59
WL 354390, at *2 (Del. Ch. Mar. 23, 2000). The Complaint’s conclusory allegations

concerning V&E’s prior representation of Woods, Woodard, and Augsburger and its

unspecified “interest” in Roan LLC do not provide any basis to conclude they would

have been material to a Roan stockholder. Therefore, they do not render the

stockholder vote uninformed under Corwin.

4. Maranto’s Departure

Plaintiff next contends that the Proxy should have disclosed that Maranto

resigned from Roan due to his “very hostile relationship” and disagreements with

the Board. 193 According to Plaintiff, the Proxy’s omission of these details makes it

appear as if Maranto’s resignation was “unilateral” and “amicable.”194 Plaintiff,

however, has not provided the court with any facts as to the nature of Maranto’s

hostile relationship or disputes with the Board i.e., a basis “to infer that the alleged

[omissions] were material.” See Malpiede, 780 A.2d at 1087 (Del. 2001) (internal

quotations omitted). Nor does the Complaint allege that Maranto’s alleged dispute

with the Board was even related to the Merger.

193
Compl. ¶¶ 89, 144 (internal quotations omitted). Initially, the Complaint alleges that a
press release stated that Maranto’s resignation was “not the result of any dispute of
disagreement with the Company or any matter related to the Company’s operations,
policies or practices.” Id. ¶ 89. Later, the Complaint alleges that this quote came from the
Proxy. Id. ¶ 144. The Proxy does not appear to include this quote while recounting
Maranto’s resignation. See Proxy at 35. Therefore, I will assume that Plaintiff is alleging
a material omission rather than a misstatement.
194
Compl. ¶ 144.

60
 Plaintiff suggests that the timing of Maranto’s departure was suspect because

he resigned on the same day that the Acquirors first approached Lovoi about a

potential transaction.195 Thus, Plaintiff argues that due to the timing of Maranto’s

resignation and “the Proxy’s misleading characterization” it is reasonably

conceivable that Maranto resigned as a result of the Merger.196 The court need not

make such an inferential leap. Plaintiff’s cited authority is also unavailing. In

Gilmartin v. Adobe Resources Corp., 1992 WL 71510 (Del. Ch. Apr. 6, 1992), the

court held that a proxy statement materially misled investors when it did not indicate

that two of the company’s directors had expressed to other board members that they

believed it was a bad time to sell. 1992 WL 71510, at *10. Here, Plaintiff cannot

point to any such definitive statement made by Maranto or any well-pleaded facts to

infer that the Proxy’s disclosure was materially misleading.

In Malpiede v. Townson, the court held that it was reasonable to infer “for

notice pleading purposes” that two directors resigned due to a “disagreement over

corporate policy” when their resignation occurred “immediately before” the board

voted to approve a merger. 780 A.2d at 1088 (emphasis added). The court also held

that because those directors resigned three months before stockholders were asked

to approve the merger agreement, a “significant logical leap” was required “to

195
See Pl.’s Ans. Br. 45; Compl. ¶¶ 89, 144.
196
Pl.’s Ans. Br. 45.

61
suppose that reasonable stockholders would consider this information significant in

the total mix of information.” Id. Here, the Board voted to approve the Merger over

five months after Maranto resigned, and the stockholder vote came seven months

after the resignation. Thus, in this case, an even greater “logical leap” would be

required to find that Maranto’s resignation would be significant to a reasonable

stockholder.

5. The Term Loan’s Approval

Plaintiff’s last challenge to the Proxy disclosures alleges that the Proxy falsely

stated that the special committee that approved the Term Loan (the “Special

Committee”) was “disinterested.”197 Plaintiff alleges that one of the Special

Committee’s two members, Tripodo, was in fact beholden to Lovoi, and thus the

Special Committee must have been beholden to Lovoi as well.198 This assertion is

frivolous. There is no allegation that Tripodo had any interest in the approval of the

Term Loan. He was not a lender and there is no allegation that he stood to gain

financially or in any other way from its approval. The mere fact that he is alleged to

have been previously selected by JVL to serve on the Board does not even suggest

that Tripodo was interested in the approval of the Term Loan.

197
Compl. ¶ 145; Pl.’s Ans. Br. 45–46; see Proxy at 76.
198
See Compl. ¶¶ 145–46. As noted above, Plaintiff does not allege that the terms of the
Term Loan were unfair or that it was the product of a fiduciary breach.

62
 “It is well-settled Delaware law that a director’s independence is not

compromised simply by virtue of being nominated to a board by an interested

stockholder.” In re KKR Fin. Holdings LLC S’holder Litig., 101 A.3d 980, 996 (Del.

Ch. 2014) (collecting cases), aff’d sub nom. Corwin, 125 A.3d 304 (Del. 2015).

While “personal or other relationships” may cause a director to be beholden to an

interested party, In re Oracle Corp. Deriv. Litig., 824 A.2d 917, 938–39 (Del. Ch.

2003) (internal quotations omitted), “[a]llegations of mere personal friendship or a

mere outside business relationship, standing alone, are insufficient to raise a

reasonable doubt about a director’s independence,” Beam ex rel. Martha Stewart

Living Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1050 (Del. 2004).

Our law is clear that mere allegations that directors are friendly with,
travel in the same social circles, or have past business relationships with
the proponent of a transaction or the person they are investigating, are
not enough to rebut the presumption of independence. Rather, the
Supreme Court has made clear that a plaintiff seeking to show that a
director was not independent must meet a materiality standard, under
which the court must conclude that the director in question’s material
ties to the person whose proposal or actions she is evaluating are
sufficiently substantial that she cannot objectively fulfill her fiduciary
duties.

In re MFW S’holders Litig., 67 A.3d 496, 509 (Del. Ch. 2013) (footnotes omitted),

aff’d sub nom. Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014).

With no citation to authority, Plaintiff contends that Tripodo was conflicted

because he (1) was “hand-picked” as a Roan-director by JVL; (2) worked as a

consultant for Roan LLC in 2018; and (3) “served for almost a decade as an officer

63
and director of another company [Helix Energy Solutions Group, Inc. (“Helix”)] in

which Lovoi/JVL had significant holdings, positions from which he received

millions in compensation and retirement benefits.”199 When assessed collectively,

these allegations do not rise to the level of the materiality standard contemplated by

the caselaw. Plaintiff does not allege that Lovoi chose Tripodo to serve on the

Special Committee, but rather only the Board. Even if Lovoi had selected Tripodo

to sit on the Special Committee, that decision would not have been fatal to the

Special Committee’s independence. See Se. Pa. Transp. Auth. v. Volgenau, 2013

WL 4009193, at *5 n.39 (Del. Ch. Aug. 5, 2013) (“Although not fatal to the

independence of the Special Committee, [the controller’s] selection of the majority

of the committee’s members was not ‘the best practice.’” (citations omitted)), aff’d,

91 A.3d 562 (Del. 2014).

The remaining two allegations merely constitute, at best, attenuated past

business relationships. Nothing about Tripodo’s consulting work for Roan LLC

suggests that he would have been beholden to Lovoi. Plaintiff does not allege that

Tripodo’s position as a Roan LLC consultant was contingent on Lovoi or that Lovoi

was responsible for his hiring there. There is no allegation that Tripodo’s

compensation from this arrangement was material to him. Plaintiff similarly fails to

199
Pl.’s Ans. Br. 46; see Compl. ¶¶ 75, 125.

64
allege facts that would suggest Tripodo lacked independence from Lovoi or JVL

arising from Tripodo’s prior employment at Helix. While Lovoi and JVL are alleged

to have been “one of Helix’s largest shareholders,” Plaintiff does not allege that

Lovoi or JVL were responsible for Tripodo’s attaining or maintaining his position,

had any influence over his maintaining that position, or in setting Tripodo’s

compensation at Helix. 200 And the Complaint is devoid of allegations that Helix was

controlled by either JVL or Lovoi. There are no allegations suggesting that

Tripodo’s past employment at Helix rendered him beholden to Lovoi or JVL or that

Tripodo lacked independence from them. Furthermore, Plaintiff does not allege that

Lovoi and Tripodo had any personal or professional relationship during Tripodo’s

time at either Helix or Roan LLC. The allegations of the Complaint do not come

close to a reasonable inference that Tripodo was interested as to the Term Loan or

the Merger, or that he was not independent.

* * *

Under Corwin, the business judgment rule will be invoked when a transaction

is not subject to entire fairness ab initio and has been approved by a “fully informed,

uncoerced majority of the disinterested stockholders.” Corwin, 125 A.3d at 312.

200
Compl. ¶ 125.

65
Having concluded that the stockholders were fully informed when they voted on the

Merger, any Revlon claim is “cleansed” under Corwin.

D. Even Without Corwin Cleansing, Plaintiff’s Fiduciary Duty Claims
Must be Dismissed.

Even if Corwin is not satisfied, Plaintiff has not stated a claim for breach of

fiduciary duty giving rise to money damages against any of the Defendants.

1. Plaintiff Has Not Stated a Claim Under Revlon Against the
Alleged Controllers or the Director Defendants.

The parties dispute whether, absent Corwin cleansing, the complaint states a

claim against the Alleged Controllers and the Director Defendants under Revlon.

Defendants contend that, because Lovoi (or any of the other Alleged Controllers)

was not conflicted in the Merger, the business judgment standard applies. 201 For

this, Defendants rely on In re Synthes, Inc. Shareholder Litigation, 50 A.3d 1022

(Del. Ch. 2012), a pre-Corwin decision of this court, holding that the business

judgment standard applied where the controlling stockholder was not conflicted in a

merger in which all stockholders received the same consideration. 50 A.3d at 1035.

Plaintiff, however, contends that the Complaint still states a claim against the

Alleged Controllers under Revlon.202

201
Defs.’ Op. Br. 22–23.
In Presidio, Vice Chancellor Laster noted that under McMullin v. Beran, 765 A.2d 910
202

(Del. 2000), the Delaware Supreme Court applied enhanced scrutiny to a controller’s

66
 Defendants contend that the Complaint fails to allege a claim for breach of

fiduciary duty under Revlon against any of the Defendants. In addition, Defendants

maintain that the Complaint does not state a non-exculpated claim against the

Director Defendants.

a. Damages Claims Against the Alleged Controllers

As explained above, the Complaint does not allege well-pleaded facts creating

a reasonable inference that either Lovoi, JVL, Roan Holdings, Paul Loyd, or Raleigh

was a conflicted controlling stockholder in the Merger. “Because [their] interests

were aligned with those of the stockholders as a whole, the only possible theory of

recovery would be for a breach of the duty of care.” Presidio, 251 A.3d at 284.

Assuming, without deciding, that the Alleged Controllers could be subject to a claim

of a breach of the duty of care in this circumstance, the Complaint does not allege

facts to support one.

decision to sell its controlled subsidiary, even in a transaction in which the controller and
the other stockholders received the same consideration. Presidio, 251 A.3d at 265. The
Vice Chancellor reasoned that maintaining the “safe harbor” of Synthes in light of the
Supreme Court’s post-Synthes decision in Corwin would “conflict with Corwin by
bestowing the protections of the business judgment rule without the fully informed
stockholder vote that Corwin deemed crucial.” Id. at 266. The court emphasized, however,
that applying enhanced scrutiny in this context absent Corwin cleansing did not require
abandoning the core holding of Synthes, which is that entire fairness does not apply to a
controlling stockholder in a transaction “unless the controller either (i) stood on both sides
of the transaction or (ii) used the transaction to extract a benefit not shared by the
stockholders as a whole.” Id.

67
 To plead a duty of care claim against the Alleged Controllers, Plaintiff must

allege well-pleaded facts to support a reasonable inference that the Alleged

Controllers acted with “gross negligence.” Id. at 287. “In the corporate context,

gross negligence means reckless indifference to or a deliberate disregard of the

whole body of stockholders or actions which are without the bounds of reason.” Id.

(quoting Tomczak v. Morton Thiokol, Inc., 1990 WL 42607, at *12 (Del. Ch. Apr. 5,

1990) (internal quotations omitted)).

The Complaint does not contend that the Alleged Controllers acted with

recklessness. Nor are there any well-pleaded allegations that either Lovoi, JVL, or

Roan Holdings engaged in any conduct rising to the level of recklessness. 203 There

are no well-pleaded allegations that any of the Alleged Controllers exercised undue

influence on the other directors, steered the process to any particular bidder, or took

action to exclude potential bidders. As alleged controllers of approximately 50% of

Roan’s outstanding common stock, the Alleged Controllers had an interest in

obtaining the best price reasonably available and, thus, their interests were aligned

203
The Complaint does not allege facts creating a reasonable inference that a majority of
the Board lacked independence or were beholden to any of the Alleged Controllers. The
Plaintiff concedes that the three non-Defendant directors are independent and disinterested.
Plaintiff also has not asserted claims against Gideon or Mills in their capacities as directors,
and there are no well-pleaded allegations that they lacked independence, were not
disinterested, or were beholden to any of the Alleged Controllers. And as discussed above,
the allegations of the Complaint fall far short of creating a reasonable inference that
Tripodo was conflicted, lacked independence, or was beholden to Lovoi, JVL, or Roan
Holdings, or anyone else for that matter.

68
with those of the other stockholders. The bare allegation that the Alleged Controllers

“capped the price of ROAN stock at a price that did not adequately reflect its true

value” is conclusory.204 Thus, the Complaint fails to state a claim for monetary

damages against the Alleged Controllers.

b. Damages Claims Against the Director Defendants

As mentioned above, Roan’s certificate of incorporation exculpates the

Company’s directors from liability arising from a breach of their fiduciary duties to

the fullest extent that Delaware law allows. 205 Delaware law permits a corporation

to exculpate its directors from “monetary liability for a breach of the duty of care,

but not for conduct that is not in good faith or a breach of the duty of loyalty.” Stone

ex rel. AmSouth Bancorporation v. Ritter, 911 A.2d 362, 367 (Del. 2006); see 8 Del.

C. § 102(b)(7). Therefore, to successfully plead a claim under Revlon as to the

Director Defendants, Plaintiff must allege that the Director Defendants breached

their duties of loyalty or acted in bad faith. Presidio, 251 A.3d at 283 (citing

Cornerstone, 115 A.3d at 1175–76); see e.g., Rudd v. Brown, 2020 WL 5494526, at

*13 (Del. Ch. Sept. 11, 2020) (dismissing complaint that failed to plead a non-

exculpated breach of fiduciary duty claim under Revlon alleging that directors were

204
Compl. ¶ 166.
205
Dkt. 42, Ex. 1 art. IX.

69
conflicted); van der Fluit v. Yates, 2017 WL 5953514, at *12 (Del. Ch. Nov. 30,

2017) (same).

Plaintiff’s argument in support of the fiduciary duty claims against the

Director Defendants merely rehashes the arguments and generally relies on the same

facts asserted against the Alleged Controllers. Plaintiff argues that three of Roan’s

eight directors were beholden to Lovoi. Because Lovoi was a director himself,

Plaintiff argues Lovoi would have “effective control over half the Board.” 206 As

explained above, however, the Complaint contains no well-pleaded allegations

creating a reasonable inference that Tripodo lacked independence, was interested in

the transaction, or was otherwise beholden to anyone.207 Furthermore, as explained

above, the Complaint lacks any well-pleaded allegations that Lovoi, JVL, or Roan

Holdings was conflicted.

Plaintiff also contends that Lovoi favored a deal with Citizen Buyer.208

Plaintiff, however, does not allege well-pleaded facts creating a reasonable inference

that anything about the sale process was unfair, let alone rising to the level of bad

206
Pl.’s Ans. Br. 56.
207
Because I conclude that there is no pleadings-stage inference that a majority of the
Board lacked independence or was interested in the transaction, I need not separately reach
the allegations as to Paul Loyd and Raleigh. Those allegations are essentially the same
allegations against Lovoi and JVL, which Plaintiff seeks to impute to Paul Loyd and
Raleigh due to their having been selected for appointment to the Roan Board by Lovoi and
JVL.
208
Pl.’s Ans. Br. 56.

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faith. Plaintiff alleges, the Board had other alternatives to a potential Merger, such

as selling individual assets, 209 but that does not constitute an unreasonable process,

let alone bad faith. See Paramount Commc’ns, 637 A.2d at 45 (“If a board selected

one of several reasonable alternatives, a court should not second-guess that choice

even though it might have decided otherwise or subsequent events may have cast

doubt on the board’s determination.”); see also In re Dollar Thrifty S’holder Litig.,

14 A.3d 573, 595 (Del. Ch. 2010) (“As is well known, Revlon does not require that

a board, in determining the value-maximizing transaction, follow any specific plan

or roadmap in meeting its duty to take reasonable steps to secure—i.e., actually

attain—the best immediate value.”). Plaintiff alleges that during substantive

negotiations “Citizen Buyer repeatedly secured concession after concession from the

Director Defendants on crucial Merger Agreement terms (like the Board’s ability to

change its recommendation absent a superior proposal).”210 But the Complaint does

not describe the concession concerning the ability to change its recommendation

absent a superior proposal and does not identify any other concession. It is, in other

words, a conclusory allegation.

Plaintiff makes no well-pleaded allegations suggesting that Lovoi steered the

process toward Citizen Buyer, interfered in the negotiations with other bidders, or

209
E.g., Compl. ¶¶ 9, 126, 133.
210
Id. ¶ 104.

71
even initiated the sale process. Nor does Plaintiff challenge, let alone identify, any

of the Merger’s deal protection measures. When the sale process had begun, the

Company negotiated with the Acquirors for over five months and considered other

offers from as well. And during that time, the Board contacted 44 potential

counterparties and entered into 20 confidentiality agreements with potential

bidders. 211

Plaintiff also argues that the Director Defendants breached their duty of

loyalty and acted in bad faith due to their “intentional failure” to disclose the Alleged

Controllers “fiduciary duties to, affiliations with, and financial interests in Citizen

Buyer’s Principals and affiliates.”212 The only allegation of bad faith is a blanket

assertion that “these bad faith disclosure violations were intentionally designed to

hide the glaring conflicts of interest that tainted the Merger.”213 As explained above,

these disclosure allegations are not well-pleaded, and in any event, do not support a

reasonable inference that any of the alleged misstatements or omissions was

intentional or constituted bad faith. Therefore, this claim also cannot survive

Defendants’ motion to dismiss.

211
Proxy at 38.
212
Pl.’s Ans. Br. 54–55.
213
Compl. ¶ 148.

72
 2. The Complaint Does Not State a Disclosure Claim Against
the Officer Defendants.

Count III alleges that Mills and Gideon breached their fiduciary duties as

officers of the Company. Plaintiff alleges that Mills breached his fiduciary duties

through his “conduct as an officer during the sales process.”214 Plaintiff also alleges

that Mills and Gideon breached their fiduciary duties as officers by being involved

in the preparation of the Proxy and “allow[ing] the Proxy to omit . . . material facts

and details regarding the conflicts of interest that permeated the sales process.” 215

Officers owe the same fiduciary duties as directors of Delaware corporations.

Gantler v. Stephens, 965 A.2d 695, 708 (Del. 2009). Unlike directors, they are not

covered in that capacity under an exculpation provision under 8 Del. C. § 102(b)(7).

Gantler, 965 A.2d at 709 n.37. To state a claim against the Officer Defendants, the

Complaint must allege facts from which it is reasonably conceivable that the Officer

Defendants’ conduct was grossly negligent, i.e., rising to the level of recklessness.

In re Baker Hughes Inc. Merger Litig., 2020 WL 6281427, at *15 (Del. Ch. Oct. 27,

2020).

The allegations concerning Mills’s involvement in the Merger negotiations do

not give rise to an inference of gross negligence. The Complaint merely recites

214
Id. ¶ 171.
215
Id. ¶ 173.

73
meetings he had with potential bidders about a potential transaction, informing the

Board about his discussions, seeking Board authority for certain actions, and

following the Board’s instructions to contact financial advisory firms.216 The broad,

generalized assertion that Mills allowed the Company to be sold “despite the glaring

conflicts of interest,” “failed to enact protections . . . to guard against such conflicts,”

and “acquiesced to the sale of ROAN at a price that was grossly insufficient” does

not state a claim. 217 First, the alleged conflicts are based on the faulty assertion that

Lovoi, JVL, and Roan Holdings were conflicted in the Merger. Second, the

Complaint does not allege what protections Mills was required to or could have

“enacted” as an officer. Third, Plaintiff does not even attempt to articulate how, as

an officer, Mills “acquiesced to the sale” of the Company at a “grossly insufficient”

price, or how that gives rise to a breach of duty as an officer. Nor does Plaintiff back

her allegations with any facts as to Mills’s conduct.

As discussed above, the Complaint does not state a claim that the Proxy

contained material omissions or inaccurate disclosures. Even if any of the alleged

omissions or inaccurate disclosures were material, I am not persuaded that they were

216
Id. ¶ 170.
217
See id. ¶ 171.

74
the product of gross negligence on the part of Mills or Gideon in their capacities as

officers of the Company.218

A corporate officer who prepares a materially misleading proxy statement

may be liable for breach of his or her fiduciary duties. In re Hansen Med., Inc.

S’holders Litig., 2018 WL 3025525, at *11 (Del. Ch. June 18, 2018) (holding that a

complaint stated a claim against an officer for violation of the fiduciary duty of

disclosure and noting that directors and officers of a corporation generally owe the

same fiduciary duties); see also Teamsters Loc. 237 Additional Sec. Benefit Fund v.

Caruso, 2021 WL 3883932, at *26 (Del. Ch. Aug. 31, 2021); Baker Hughes, 2020

WL 6281427, at *15–16; City of Warren Gen. Emps.’ Ret. Sys. v. Roche, 2020 WL

7023896, at *18 (Del. Ch. Nov. 30, 2020); Morrison, 2019 WL 7369431, at *25, 27.

The Complaint alleges that the Officer Defendants were “intricately involved

in the sales process and Proxy preparation process.” 219 As a threshold matter, the

allegation that Mills had any involvement in preparing the Proxy as an officer is

conclusory and contradicted by the allegations of the Complaint. Mills ceased being

218
Plaintiff did not defend this claim in her briefing or at oral argument. Indeed, Plaintiff
chides Defendants for “try[ing] to bolster” Mills’s independence, insisting that the Officer
Defendants have only been named for failing to fulfill their duty of disclosure. Pl.’s Ans.
Br. 54 n.6; see also id. at 58 (defending claim against the Officer Defendants only to the
extent that they breached their “duty of candor as officers”).
219
Compl. ¶ 173.

75
an officer no later than the date that the Board approved the Merger Agreement.220

There is no allegation that the Proxy was prepared before that date. Therefore, to

the extent that he had any role in preparing the Proxy, the Complaint alleges no well-

pleaded facts that Mills did so while he was an officer of the Company.

Gideon signed the Proxy in his capacity as Roan’s CEO.221 Therefore,

Gideon could have been liable, if any of the above disclosure claims had been well

pleaded. See Caruso, 2021 WL 3883932, at *26 (holding CEO could be liable for

breach of the duty of care for a misleading proxy disclosure where he “played an

integral role” during the merger negotiations and signed the proxy); Roche, 2020

WL 7023896, at *18 (same); Baker Hughes, 2020 WL 6281427, at *15–16 (same);

Hansen Med., 2018 WL 3025525, at *11 (“Vance affixed his signature to the Proxy

in his capacity as President and CEO and presented the information to the

stockholders for their consideration. This means he may be liable for material

misstatements in the Proxy in his capacity as an officer [and] as a director.”).

220
Roan Resources, Inc., Current Report (Form 8-K) (October 1, 2019) at 5, available at
https://www.sec.gov/Archives/edgar/data/0001326428/000119312519259889/d808728d8
k.htm. The October 1 press release announcing Gideon’s hiring explains that his hiring
became effective two days earlier. Id. The press release also states that Mills’s last day as
an officer was retroactively adjusted to coincide with Gideon’s official September 29 start
date. Id. Despite the Board’s retroactive adjustment, however, I cannot simply ignore that,
during this two-day period, Mills was operating as an officer under the authority of the
Roan Board. Nevertheless, it does not affect my conclusion that the Complaint fails to
allege well-pleaded facts that Mills was involved in drafting the Proxy as an officer.
221
Compl. ¶¶ 172–73.

76
 Although Gideon signed the Proxy in his capacity as CEO, he did not become

an officer until a few days before the Board approved the Merger Agreement. There

are no allegations that he was involved in the Merger negotiations or the events and

transactions upon which Plaintiff’s disclosure claims are based. Gideon was a

former LINN executive. There are no allegations that he had any affiliation with

Lovoi, JVL, Citizen Buyer, or any of Citizen Buyer’s affiliates. To the extent any

of Plaintiff’s disclosure claims had merit, the Complaint lacks well-pleaded facts

that Gideon was grossly negligent in preparing the Proxy statement.

III. CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss is GRANTED.

77