In re Oracle Corporation Derivative Litigation

COURT OF CHANCERY OF THE STATE OF DELAWARE

Consolidated
IN RE ORACLE CORPORATION DERIVATIVE
C.A. No. 2017-0337-SG
LITIGATION

MEMORANDUM OPINION

Date Submitted: December 22, 2022
Date Decided: May 12, 2023

Joel Friedlander, Jeffrey M. Gorris, and David Hahn, of FRIEDLANDER &
GORRIS, P.A., Wilmington, Delaware; OF COUNSEL: Randall J. Baron and David
A. Knotts, of ROBBINS GELLER RUDMAN & DOWD LLP, San Diego,
California; Christopher H. Lyons, of ROBBINS GELLER RUDMAN & DOWD
LLP, Nashville, Tennessee; Gregory Del Gaizo, of ROBBINS LLP, San Diego,
California, Attorneys for Lead Plaintiffs Firemen’s Retirement System of St. Louis
and Robert Jessup.

Blake Rohrbacher and Susan M. Hannigan, of RICHARDS, LAYTON & FINGER,
P.A., Wilmington, Delaware, Attorneys for Nominal Defendant Oracle Corporation.

Elena C. Norman, Richard J. Thomas, and Alberto E. Chávez, of YOUNG
CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; OF
COUNSEL: Peter A. Wald, of LATHAM & WATKINS LLP, San Francisco,
California; Blair Connelly, of LATHAM & WATKINS LLP, New York, New York,
Attorneys for Defendants Lawrence J. Ellison and Safra A. Catz.

GLASSCOCK, Vice Chancellor
 In this derivative matter, the Plaintiff stockholders of Oracle Corporation

allege that Oracle overpaid to acquire NetSuite Corporation. They seek damages on

behalf of Oracle. The initial complaint was filed on May 3, 2017, and has been

vigorously litigated1 since. The matter has been tried. What follows is my post-trial

decision.

At its heart, the instant complaint alleges that Defendant Larry Ellison, the

founder and a director and officer of Oracle, used his outsized influence at the

company to cause it to acquire NetSuite at a premium. Because he owned a larger

percentage of NetSuite than he did Oracle, it was in his interest, financially at least,

that Oracle overpay. Because Ellison, per Plaintiffs, was a conflicted controller, the

transaction must be reviewed under the entire fairness standard, a burden (again per

Plaintiffs) that Ellison and his co-Defendant Oracle CEO Safra Catz cannot carry.

I find based on the trial record that Ellison, a corporate fiduciary, withdrew

from Oracle’s consideration of the NetSuite acquisition just before the initial

presentation to the Oracle board, and that the remaining directors empowered a

special committee to conduct the negotiation of any acquisition of NetSuite. This is

adequate to cleanse Ellison’s conflict as a director and officer standing on both sides

1
The matter was stayed to accommodate consideration of the derivative claim by a special
litigation committee on Oracle’s behalf.
1
of the transaction. The Plaintiffs assert, however, that these actions cannot remove

the review of the transaction from the purview of entire fairness, because Ellison

must be viewed as a controller.

This Court has had many occasions to comment on the fiduciary duties of

corporate controllers. Nonetheless, our jurisprudence is not entirely clear.2 My

understanding may be summarized as follows. A stockholder who owns a majority

of the voting stock of a company, or who, as a result of voting ability combined with

other opportunities, may control the actions of the board, nonetheless remains a

stockholder to whom fiduciary duties run, from the directors and the officers. As

fiduciaries potentially subject to conflicts with respect to corporate decisions, the

directors and officers are held to a standard of fidelity to the entity and the

stockholders. Where these fiduciaries cause the corporation to engage in a

transaction in which they are conflicted, they are liable unless the transaction was

entirely fair.3 But when does a controlling stockholder become liable herself for

fiduciary duties to the entity?

The answer is: when the control that the stockholder enjoys over the directors

is leveraged by the stockholder in a way that diminishes the directors’ ability to bring

2
See Lawrence A. Hammermesh, Jack B. Jacobs, and Leo E. Strine, Jr., Optimizing the World’s
Leading Corporate Law: A Twenty-Year Retrospective and Look Ahead, 77 Bus. Law. 321, 339
(2022) (discussing the development of the inherent coercion doctrine).
3
Weinberger v. UOP, Inc., 457 A.2d 701, 710–11 (Del. 1983).
2
business judgment to bear on the exercise of their duties. In that scenario, the

controlling stockholder exercises dominion over the property of others—the

minority stockholders—and thus becomes a fiduciary herself. At the pleading stage,

the well-pled allegation of a controller who receives a non-ratable benefit is typically

sufficient to defeat a motion to dismiss, absent employment of procedural safeguards

that replicate an arms-length transaction.4 This is because of the inherently-coercive

nature of the presence of a controller who can benefit from a transaction, with respect

to the directors whom she is able to control.5 The resulting conflicted transaction is

subject to entire fairness review, accordingly.

The coercive nature of the conflicted controller applies most compellingly in

the case of a squeeze-out merger. The instant case involves an acquisition by, not a

sale of, Oracle. Nonetheless, decisions of this Court hold that the inherent coercion

rationale applies in such transactions with a conflicted controller, compelling entire

fairness review.6 Under the Ezcorp rationale, if Ellison was a controller, and if the

protections of MFW (requiring negotiation and approval by a special committee of

independent directors and approval by a majority of the non-controlled shares) were

4
In re Ezcorp Inc. Consulting Agreement Derivative Litig., 2016 WL 301245, at *30 (Del. Ch.
Jan. 25, 2016); see Kahn v. M & F Worldwide Corp., 88 A.3d 635, 645 (Del. 2014).
5
Ezcorp, 2016 WL 301245, at *11.
6
See id. at *11–30 (explaining inherent coercion in the context of controller cases).
3
not in place, entire fairness review must result. The transaction under review here

did not require, or involve, a stockholder vote.7

Ellison is not a majority stockholder of Oracle. Our caselaw has recognized

that, in certain scenarios, minority stockholders may be deemed controllers if they

have control of the corporate machinery which they employ for their own benefit,

even without the ability to oust the directors by majority vote. The Plaintiffs allege

that one such example is present here: a large blockholder, also a director and officer,

who, as founder, is so identified with the company and so respected by the other

directors and officers that he has the ability to influence decisions of the board to an

extent that fiduciary duties attach, for the reasons expressed above. In case-

dispositive motion practice, I found the facts alleged (and in the case of summary

judgment, the factual issues remaining) sufficient to bring this matter to trial. In

deciding the standard of review post-trial, I must determine, on a full and final

record, whether Ellison was a controller.

7
Because I find Ellison was not a controller and did not attempt to control the transaction at issue,
I need not decide whether the existence of a well-functioning special committee can cleanse a non-
squeeze out transaction involving a conflicted controller, which did not require a stockholder vote.

4
 Ellison held roughly a quarter8 of the voting equity of Oracle. He was not in

control of Oracle generally; he relinquished even executive control in 2014 when he

resigned as CEO and became Oracle’s Chief Technology Officer. The evidence

demonstrates that he did not control Oracle, and that he absented himself from the

acquisition of NetSuite. Moreover, the directors appointed a special committee, and

I find that body well-functioning and independent of Ellison.

Ellison is a force at Oracle, no doubt; he is the main creative party and a face

of the company. I acknowledge that it is plausible that Ellison could have influenced

the directors’ decision here, had he made an effort to do so, which he did not. The

concept that an individual—without voting control of an entity, who does not

generally control the entity, and who absents himself from a conflicted transaction—

is subject to entire fairness review as a fiduciary solely because he is a respected

figure with a potential to assert influence over the directors, is not Delaware law, as

I understand it.

All application of equity involves a balance of interests. In a perfect world,

the standard of review would be applied in such a way that the onerous burden of

entire fairness would never be imposed where directors could and did apply their

8
“As of September 19, 2016, Ellison beneficially held 1,166,041,236 shares of Oracle common
stock, an approximate ownership stake in Oracle of 28.4%.” Joint Pre-Trial Order ¶ 46, Dkt. No.
734.
5
untainted business judgment on the corporation’s behalf, but would always be

imposed where they could not. In reality, a court of equity can only aspire to

approach that ideal; thus the presumption of inherent coercion in the context of a

controller who receives a non-ratable benefit from a corporate transaction. Plaintiff-

friendly presumptions were sufficient to carry this matter to trial, but post-trial I find

that Ellison was not a controller and that the facts do not invoke entire fairness.

That does not end the matter. Ellison is a fiduciary, as an officer and director

of Oracle; Catz, as CEO and a director, is also bound by fiduciary duties. The

Plaintiffs allege that both breached duties of loyalty by misinforming the Special

Committee, to conceal material facts regarding the acquisition on behalf of Oracle,

thus defrauding the Special Committee and invoking entire fairness review. In that

scenario, the Defendants would be liable for damages for breach of the duty of

loyalty. On the evidence presented at trial, I find those allegations unsupported as

well.

My reasoning follows.

6
 I. BACKGROUND

A. Factual Background

The following factual findings were either stipulated to by the parties or

proven by a preponderance of the evidence at trial.9 Trial lasted ten days.10

1. Ellison, the Companies, and the Industry

Nominal Defendant Oracle Corporation (“Oracle”) is a Delaware

incorporated, California headquartered technology company in the business of

selling hardware, software, and cloud computing products.11 Defendant Lawrence

J. Ellison founded Oracle in 1977 and has served on its board of directors since that

time.12 Ellison also served as Oracle’s CEO until September 2014 when he assumed

9
Citations in the form of “JX__ at __” refer to exhibits jointly submitted at trial, they are referred
to according to the numbers provided on the parties’ joint exhibit list and with page numbers
derived from the stamp on each JX page. Citations in the form of “PTO __” refer to paragraphs
in the Joint Pre-Trial Order, Dkt. No. 734. Citations in the form of “Tr. __:__ refer to Trial
Transcript - Volume I, Dkt. No. 769, Trial Transcript - Volume II, Dkt. No. 770, Trial Transcript
- Volume III, Dkt. No. 771, Trial Transcript - Volume IV, Dkt. No. 772, Trial Transcript - Volume
V, Dkt. No. 772, Trial Transcript - Volume VI, Dkt. 774, Trial Transcript - Volume VII, Dkt. No.
775, Trial Transcript - Volume VIII, Dkt. No. 776, Trial Transcript - Volume IX, Dkt. No. 777,
Trial Transcript - Volume X, Dkt. No. 778.
10
See Tr. 2636.
11
PTO ¶ 51.
12
PTO ¶ 44.
7
the role of Chief Technology Officer and Executive Chairman of the Board.13 Catz

became CEO at that time.14

Starting in the 2000’s, Oracle ramped up its strategy of growth by acquiring

other companies.15 Strategic acquisitions allowed Oracle to minimize the risks of

research and development, which are particularly pronounced for companies in the

enterprise resource planning (“ERP”) space, in part because of the stickiness of

customers.16 ERP software allows businesses to automate and manage business

processes such as accounting, risk management, and supply chain operations.

Between 2006 and 2015, Oracle closed 111 acquisitions,17 through which it

purchased both revenue and products.18 In 2006, Doug Kehring became Oracle’s

Head of Corporate Development19 and institutionalized Oracle’s mergers and

acquisitions strategy by implementing a standard framework to assess potential

targets.20 As part of this framework, Oracle’s Corporate Development team kept

13
PTO ¶ 44.
14
PTO ¶ 49. Catz served as co-CEO with Hurd until the death of the latter in 2019.
15
Tr. 530:5–531:24; JX2469 at 8; JX391 at 11.
16
See Tr. 2668:12-2670:13.
17
JX612 at 12.
18
Tr. 530:9–535:18.
19
Tr. 529:21–531:2.
20
Tr. 529:11–531:2, 549:20–23, 551:14–552:20.
8
dossiers on potential takeover targets which it routinely kept up to date.21 One of

those monitored companies was NetSuite.

2. NetSuite, the Target

Prior to its acquisition by Oracle, NetSuite was a Delaware-incorporated,

California headquartered company in the business of selling cloud-based

financials/ERP and omnichannel commerce software suites.22

More than 20 years after Oracle’s formation, Ellison co-founded NetSuite

with Evan Goldberg, a former Oracle employee, in 1998.23 Both Oracle and

NetSuite sell, and at the time of the transaction sold, ERP software. Oracle primarily

sold on-premises customized products to large customers,24 and NetSuite primarily

sold off-the-shelf cloud-based software to smaller customers.25

21
See Tr. 455:5–14.
22
PTO ¶ 56.
23
PTO ¶ 57; Tr. 1831:17–1832:3.
24
JX2470 at 24–40, 83–87.
25
JX2470 at 40–49, 83–87.
9
 3. Oracle Considers Acquiring NetSuite

At the time of the transaction, Ellison owned approximately 28.4% of Oracle

common stock26 and 39.8% of NetSuite stock.27

Ellison was a longtime proponent of an Oracle acquisition of NetSuite and

regularly made this known to “anyone who would listen” and “even to people who

wouldn’t.”28 This included officers and directors at both NetSuite and Oracle.29 As

far as Ellison was concerned, the question was when, not if, the acquisition should

occur.30

After Ellison stepped down as Oracle’s CEO in 2014,31 discussions at Oracle

of whether to purchase NetSuite began in earnest.32 In February 2015, Ellison and

Oracle’s co-CEOs, Mark Hurd and Safra Catz, met to discuss a potential acquisition

of NetSuite, but determined the timing was not right.33 While Hurd supported the

26
PTO ¶ 46 (“As of September 19, 2016, Ellison beneficially held 1,166,041,236 shares of Oracle
common stock, an approximate ownership stake in Oracle of 28.4%.”).
27
PTO ¶ 48 (“As of February 28, 2015, through NetSuite Restricted Holdings LLC, Ellison held
31,964,891 shares (41.3%) of NetSuite’s common stock. When combined with 5,660,599 shares
held by his family members, trusts for their benefit, and related entities, Ellison and his affiliates
beneficially owned, in aggregate, roughly 48.6% of NetSuite’s common stock as of February 28,
2015.”).
28
Tr. 1664:15–23, 1980:4–15.
29
Tr. 1664:15–23.
30
Tr. 1953:1–5 (“To me, it was simply a matter of the right timing.”).
31
PTO ¶ 49. Hurd passed away in 2019 prior to the opportunity to take his testimony in this action.
32
JX328 at 1–3; JX400 at 1–2; Tr. 577:19-583:4.
33
Tr. 1959:24–1963:9.
10
purchase of NetSuite at that time, Catz was neutral if not slightly opposed, and

Ellison was strongly opposed to a transaction.34 Ellison’s reasons for opposing a

deal at that date were several and ultimately echoed by Catz.35 At the time, NetSuite

was trading at a multiple that would have made a deal dilutive to Oracle’s earnings.36

Ellison also believed that Oracle was in a state of transition and a transaction

between Oracle and NetSuite had the potential to both distract management and

cause “confusion in the marketplace.”37

Oracle, which had primarily functioned by licensing its software to customers

who ran that software on their own on premises machines,38 determined that a sea

change was occurring with the development of cloud computing.39 This allowed

cloud-based product offerings that were sold by subscription rather than license.40

Oracle’s cloud-based ERP product, Fusion, was a ground-up rewrite of its software

that took around ten years to develop.41 In 2015, Fusion was just gaining traction in

34
Tr. 1962:8–19.
35
Tr. 1407:9–1408:5.
36
Tr. 1960:14–1961:19.
37
Notice of Lodging of Dep. Transcripts and Video Recordings Ex. 23, at 67:14–68:2, Dkt. No.
731; Tr. 1956:8–1957:3.
38
Tr. 534:18–536:5.
39
Tr. 535:5–14.
40
Tr. 535:19–536:5.
41
Tr. 1772:24–1773:2, 1899:5–23.
11
the market.42 Ellison feared that if Oracle purchased NetSuite, a cloud ERP

company, it would hinder the rollout of Oracle’s similar product.

As a result of this discussion, Oracle did not pursue an acquisition of NetSuite

in 2015.

4. NetSuite Struggles to Meet Projections

On July 8, 2015, Ellison called Goldberg and expressed concern with

NetSuite’s direction.43 Ellison criticized NetSuite’s growth rate, stating that Oracle

was going to “crush” NetSuite and that Workday, another tech company, had “blown

by” NetSuite.44 Similarly, Ellison expressed concern with NetSuite’s ability to

compete in its up-market, and with the company’s lack of verticals.45

In September 2015, NetSuite was not meeting the projections that its CEO

Zachary Nelson had set for year-on-year bookings increases.46 The original

expectation was a 35 percent year-on-year increase in bookings for 2015, 2016, and

42
Tr. 1773:3–1774:15. Oracle launched Fusion in 2011.
43
JX485 at 3–4; JX484; Tr. 793:5–796:5.
44
JX485 at 3–4; JX484; Tr. 793:5–796:5.
45
JX485 at 3–4; JX484; Tr. 793:5–796:5.
46
JX528 at 60.
12
2017, but NetSuite adjusted that target down to 25 percent for those three years.47

Ellison was aware of and displeased by this change.48

The slowdown in bookings was caused by NetSuite’s pursuit of customers

who required significant customization.49 Although these customers brought in

revenue for customization, that revenue was non-recurring and low margin.50

Further, the required customization bogged down implementation.51

5. Ellison Redirects NetSuite

To counter NetSuite’s now flagging growth numbers, Ellison laid out (with

Goldberg, Jim McGeever, and Nelson) a strategy of investment in verticals and

micro-verticals,52 which he and NetSuite President McGeever had previously

recommended.53

The result was Project Atlas, NetSuite’s implementation of Ellison and

McGeever’s plans to invest in verticals and micro-verticals. Project Atlas, later

47
JX528 at 60.
48
Tr. 1943:3–1944:9.
49
Tr. 920:3–921:3, 1781:13–1782:12, 1787:7–1788:13, 1790:3–1792:3.
50
Tr. 884:21-886:10; 1778:4–1781:10.
51
Tr. 1037:15-1038:19.
52
JX549. Verticals and micro-verticals are specialized slivers of markets/industries that could be
beneficially addressed with limited customization after building features for those markets. Tr.
607:15–24.
53
Tr. 1921:13–24, 900:2–901:13.
13
called SuiteSuccess, was a tool to streamline sales and implementation of NetSuite.54

The goal was to “sell what [NetSuite] delivered and deliver what [NetSuite]

sell[s].”55 Rather than spending time creating “a flashy demo” based on a guess of

what the customer wanted, wiping the slate clean, and then building software based

on customer conversations, SuiteSuccess was created to sell prebuilt software

designed for the customer’s industry.56 This process would only leave the “last-mile

implementation” for each customer to tailor the software to “the things that were

very unique to their situation.”57 The benefit to the customer was less

implementation and thus lower upfront cost and time.58 The benefit to NetSuite was

less low-margin implementation fees, less time to implement, and improved

customer sentiment.59 To do this, Atlas/SuiteSuccess focused on verticals and would

be most efficient where limited customization was required.60 The Atlas plan was

focused on building out these verticals for specific industries, with the intention of

doing one to two per year.61

54
Tr. 910:22–913:2.
55
Tr. 912:2–5.
56
Tr. 912:2–913:2.
57
Tr. 912:17–913:2.
58
Tr. 910:22–913:2, 936:3–938:10.
59
Tr. 919:3–920:21, 936:3–938:10; see Tr. 910:22–913:2.
60
Tr. 916:18–917:1.
61
Tr. 752:17–754:16, 921:4–14.
14
 6. The 2016 Negotiation and Tender Offer

a. The Preliminary Stages

On January 14–15, 2016, the Oracle board held an annual offsite meeting at

Porcupine Creek, Ellison’s property in California.62 At that meeting, among other

issues discussed, Kehring presented on three potential takeover targets, one of which

was NetSuite.63 This was the first time that Oracle management approached the

board with the proposal to purchase NetSuite.64

Prior to the presentation on NetSuite, Ellison left the room and recused

himself from the discussion.65 Per Catz, at this time and prior to leaving the room,

Ellison did not advocate for or against the acquisition, he was “not not supportive.”66

The wind had shifted since 2015. Specifically, Fusion had settled on the market and

NetSuite had grown, but its trading price had decreased as a function of a market

62
PTO ¶ 58.
63
PTO ¶ 59; JX624 at 5–6. Kehring also informed the board that negotiations with another
takeover target had ceased.
64
Tr. 463:5–7. Management, including Ellison, discussed the potential NetSuite acquisition prior
to adding it to the Porcupine Creek agenda. Tr. 1416:1–9.
65
JX624 at 6 (“Mr. Ellison noted that he would recuse himself from any discussions related to
Napa-given his ownership interest in Napa.”). Plaintiff attempted to show that Ellison’s recusal
was ineffective, however, the evidence at trial showed that he left the meeting. Tr. 1415:9–24,
1136:2–9, 40:4–23.
66
Tr. 1661:23–1662:21, 1665:17–1666:21.
15
wide software as a service (“SaaS”) downturn.67 As a result, 2016 NetSuite was a

more attractive acquisition target than 2015 NetSuite had been.

After Ellison left the room, the board, Catz, Hurd, and Kehring discussed the

strategic benefits and challenges associated with a potential transaction involving

NetSuite.68 Following the discussion, the Oracle board decided to continue to

explore a potential transaction involving NetSuite, and directed Catz and Hurd to

assess NetSuite’s interest in an acquisition.69 However, the board instructed the co-

CEOs not to discuss price.70

Catz then set up a dinner with NetSuite’s CEO, Zachary Nelson, for January

19, 2016.71 Although the Oracle board instructed Catz not to discuss price, on the

day of the meeting, Kehring sent Catz a presentation that included an

accretion/dilution analysis and other information about NetSuite. 72 At dinner, Catz

asked Nelson if NetSuite would be open to an offer for Oracle to purchase

NetSuite.73 Nelson testified that his response was that an acquisition would have to

garner a “Concur-type multiple,” a revenue multiple similar to what SAP, another

67
Tr. 1967:9–1971:2, 587:15–588:24, 1410:3–21; JX716 at 1, 6.
68
JX624 at 6.
69
JX624 at 6.
70
JX624 at 6.
71
JX630.
72
JX633.
73
Tr. 1425:17–1429:3.
16
technology company, paid for Concur Technologies in 2014. 74 As the Oracle board

had instructed, Catz did not engage with Nelson in substantive price negotiations 75

or make an offer at this initial meeting.76

Nelson followed up with Catz by telephone on each of the next two days.77

Both phone calls lasted twelve minutes.78 Although Nelson again mentioned the

“Concur multiple,” he did not explain what it meant or express it in dollars per

share.79 While the evidence was in conflict as to these discussions, I find based on

the preponderance of the evidence that, beyond Nelson’s mention of the “Concur-

Type” multiple, Catz did not engage with Nelson in price discussions.80 Instead, the

74
Tr. 1062:5–1063:4.
75
Nelson testified “And I brought up the subject that, you know, we would expect something at
least as high as what SAP paid for Concur, which was a recent transaction in the marketplace. And
she said, well, what does that equate to? I said, oh, it’s something like — this is all sort of off the
cuff — something like ten times revenue. And she said, well, what does that mean in terms of
stock price? And that, I didn’t really have. I sort of did some quick math in my head. I said, it’s
something like 100 or $125 a share. And as I recall, she said, wow, that’s a big number. And that
was really sort where we left it . . . . She didn’t [give any indication about price], other than to say,
wow, that’s a big number.” Tr. 1062:14–1063:6. Catz testified that she did not believe the Concur
multiple was mentioned at dinner. Tr. 1428:6–20.
76
Tr. 1436:19–1437:1.
77
JX2435. Nelson and Catz also exchanged text messages on the 23rd. Tr. 1620:1–12.
78
Tr. 1620:1–12; JX2435.
79
Tr. 1432:1–1433:12.
80
See Tr. 1620:1–23. Unofficial notes from a NetSuite board meeting held on January 25 mention
the Concur multiple and list “Z at $120. S more at $100.” JX703 at 2. Non-contemporaneous
internal documents at T. Rowe Price (“TRP”), a major NetSuite stockholder, reference a Catz-
Nelson discussion of a $100 to $125 per share price range. JX1541 at 1; JX1555 at 4. These
numbers are likely derived from the Concur multiple, and when coupled with Catz and Nelson’s
believable testimony that Catz did not proffer a price, they suggest that a specific price range was
not discussed. See Tr. 1431:20–1433:12, 1620:13–1621:5.
17
pair primarily discussed that Ellison’s former NetSuite co-founder, Evan

Goldberg—NetSuite’s Chief Technology Officer and Chairman of the Board81—

was unwilling to sell.82

Eight days after Catz’s dinner with Nelson, on January 27, 2016, Goldberg

called Ellison on the telephone83 and asked whether Oracle’s decision to pursue

NetSuite was punishment.84 Ellison replied in the negative and explained that Oracle

and NetSuite together “could be more successful than . . . separate.”85 Nonetheless,

Goldberg was not excited about a potential return to Oracle, a company he left almost

20 years earlier.86 Goldberg was used to, and enjoyed, being his own boss.87 He

was unhappy about the potential of coming back to Oracle where he would once

again be a subordinate.88 Goldberg was concerned about NetSuite’s level of

81
PTO ¶ 57.
82
Tr. 1620:1–1622:1 (“Then the next day or the day after that, I start hearing about Evan. And
Evan came back, it’s just about Evan. That’s what the conversations were all about.”).
83
Tr. 834:5–9.
84
Tr. 834:10–12. A prior unrelated interpersonal issue sat in the background of this phone call.
Tr. 781:1–24. Ellison said, “I mean, he and I had very different points of view on a specific issue,
and neither one of us are shy about expressing our views.” Tr. 1832:4–21.
85
Tr. 834:13–16.
86
Tr. 1831:17–1832:3.
87
Tr. 1831:17–1832:3.
88
Tr. 1831:17–1832:3.
18
independence following a potential acquisition, and whether NetSuite would be a

Global Business Unit (“GBU”), and thus retain some autonomy, if acquired.89

Ellison assured Goldberg that, in the event of a transaction, Oracle’s intention

was to retain NetSuite’s management team with Goldberg at the helm, that Goldberg

would report to Hurd, or Ellison if he preferred, and that Hurd “liked running the

larger acquisitions as global business units.”90 Further, Ellison provided some

insight into Oracle’s strategy for NetSuite post acquisition, which included building

out a human capital management product, exporting NetSuite to more countries,

creating more verticals, and generally increasing the company’s growth rate.91

Ellison told Goldberg that he would not “force [him] to do anything,” which

Goldberg took to mean that the decision to sell was properly with NetSuite’s

directors and officers.92 In essence, Ellison told Goldberg that he was recusing from

NetSuite’s decision-making process. Goldberg reported the conversation and

Ellison’s intention to recuse from NetSuite’s decision to the NetSuite board.93

89
Tr. 834:17–835:15, 1679:1–1680:15. Rather than coalescing into Oracle, many of Oracle’s
acquisitions operate as GBUs, which sit under Oracle’s umbrella, answer to Oracle management,
and use Oracle resources, but remain quasi-independent. Tr. 1831:9–16. Goldberg and Ellison had
previously discussed NetSuite’s level of independence following an Oracle acquisition. Tr.
1829:24–1831:8.
90
Tr. 1679:1–1680:15, 1829:24–1831:8.
91
Tr. 1679:21–1681:9.
92
Tr. 836:4–22.
93
JX1497 at 21; Tr. 1833:9–1834:20.
19
 b. The First Round of Offers

Following the January 15–16, 2016 offsite meeting at Porcupine Creek,

Oracle’s board began taking steps to prepare for negotiations with NetSuite.

Oracle’s directors completed a conflict questionnaire.94 Counsel recommended

Renee James, Leon Panetta and George Conrades, who each reported no conflicts,95

to serve as an independent special committee (the “Special Committee”) designated

to negotiate the potential transaction with NetSuite (the “Transaction”) on behalf of

Oracle.96

On March 18, 2016, the Oracle board, except for Ellison who recused, met to

discuss the creation of the Special Committee.97 Catz reported NetSuite was open

to a bid,98 but she did not report the phone calls with Nelson or his mention of a

“Concur multiple.”99 Ellison was not present and did not disclose his January 27,

2016, phone call with Goldberg.100 The Oracle board approved the creation of the

94
JX683; JX687; JX688.
95
JX683; JX687; JX688.
96
JX743.
97
PTO ¶ 60.
98
JX759 at 1.
99
JX759 at 1; Tr. 1584:4–1585:7, 1625:12–1626:1 (“If it had been a demand, and I had considered
it seriously in any way, I would have immediately told the board that there was nothing for us to
talk about because a Concur multiple was not in the view of what we were thinking in January of
2016. The market had gone down dramatically at that time. And it didn’t even register when he
said it because had it, we would have had nothing to discuss.”).
100
Tr. 2001:20–2002:18.
20
Special Committee comprised of James, Panetta, and Conrades101 and empowered it

to:

a) evaluate alternatives to the Potential Transaction, including
alternative acquisition targets and internal development
opportunities, available to the Corporation;
b) establish, approve, modify, monitor and direct the process and
procedures related to the negotiation, review and evaluation of the
Potential Transaction, including the authority to determine not to
proceed with any such process, procedures, review or evaluation;
c) formulate, structure, propose and negotiate terms with respect to,
and review, negotiate, evaluate and document the terms and
conditions of, the Potential Transaction;
d) determine on behalf of the Board and the Corporation whether the
Potential Transaction is advisable and fair to, and is in the best
interests of, the Corporation and its stockholders;
e) reject or approve the Potential Transaction;
f) effectuate the Potential Transaction; and
g) take such other actions as the Special Committee may deem to be
necessary or appropriate in order for the Special Committee to
discharge its duties[.]102
The Special Committee was further empowered to retain its own independent

legal counsel, and to hire consultants and other advisors of its choosing.103

101
PTO ¶ 60.
102
JX759 at 2–3.
103
JX759 at 3–5 (“6. The Special Committee is hereby authorized and empowered to retain
independent legal counsel, at the expense of the Corporation, to advise it and assist it in connection
with fulfilling its duties as delegated by the Board;
7. The Special Committee is hereby authorized and empowered to retain such other consultants
and agents, including, without limitation, independent financial advisors, at the expense of the
Corporation, as the Special Committee may deem necessary or appropriate to advise it and assist
it in connection with fulfilling its duties as delegated by the Board and to perform such services
and render such opinions as may be necessary or appropriate in order for the Special Committee
to discharge such duties;

21
 Over the course of the next seven months, the Special Committee met

fifteen times to assess the Transaction.104 On April 8, 2016, the Special

Committee held a meeting, with Skadden, Arps, Slate, Meagher, and Flom

LLP (“Skadden”) and members of management, including Catz and Kehring,

in attendance.105 At this first meeting, the Special Committee elected James

as its chair,106 engaged Skadden as its independent legal advisor,107 and heard

from Catz and Kehring on the strategic rationale of the Transaction.108

Kehring and the Corporate Development team created a Powerpoint

presentation which Catz presented to the board.109 The presentation noted the

8. The Special Committee is hereby authorized and empowered to enter into (and to cause the
Corporation to enter into) such contracts providing for the retention, compensation, reimbursement
of expenses and indemnification of such legal counsel, investment bankers, consultants and agents
as the Special Committee may deem necessary or appropriate, and that the Corporation is hereby
authorized and directed to pay all fees, expenses and disbursements of such legal counsel,
investment bankers, consultants and agents on presentation of statements approved by the Special
Committee, and that the Corporation shall pay all fees, expenses, and disbursements of such legal
counsel, investment bankers, consultants, and agents and shall honor all other obligations of the
Corporation under such contracts; and any such contract entered into (or approved) by the Special
Committee is hereby approved, adopted, confirmed and ratified, and, to the extent necessary or
appropriate, the officers of the Corporation are hereby authorized and directed to execute any such
contract, for and on behalf of the Corporation, and the execution shall represent the Corporation’s
acknowledgement and acceptance of the terms and conditions thereof;”).
104
Compendium of Defendants’ Trial Demonstratives Ex. 9, Dkt. No. 764.
105
JX779 at 1. Catz and Kehring were only present for the discussion of the strategic rationale of
the Transaction. Skadden was not present for the discussion of and vote to retain its legal services.
106
PTO ¶ 64.
107
PTO ¶ 65.
108
JX779 at 2–3.
109
JX820 at 2–9.
22
importance of keeping pace, the complementary nature of the two companies’

offerings, and the synergies available by virtue of Oracle’s infrastructure.110

After reviewing four potential independent financial advisors and

narrowing the choice to Evercore Group LLC (“Evercore”) and Moelis &

Company LLC (“Moelis”), the Special Committee held a meeting on April

19, 2016 to determine which advisor to engage.111 Members of Evercore,

members of Moelis, and lawyers from Skadden were in attendance.112 Each

of the two finalists proposed a contingent fee structure and the Special

Committee determined that this structure benefited Oracle because of the

possibility that a transaction would not occur.113 The Special Committee

discussed whether there “were any personal or financial conflicts that would

call into question the independence of each of the potential financial

advisors.”114 Ultimately, the Special Committee engaged Moelis based on

that firm’s emphasis on alternatives to the Transaction, including no

acquisition; its demonstrated ability to challenge management; and its

commitment to devote senior management attention to the Special

110
JX820 at 3.
111
PTO ¶ 66; see JX779 at 2–3; JX797 at 1–4.
112
JX797 at 1.
113
JX797 at 2.
114
JX797 at 3.
23
Committee’s needs.115 In exchange for its assistance, Moelis was to receive

$1 million if the engagement did not result in an acquisition and $17 million

if it did.116

On April 26, 2016, Moelis began its diligence by asking Catz and

Kehring a series of prepared questions.117 Moelis’s intent was to begin by

evaluating Oracle, its present and future capabilities, its customers, its

geographic goals, the ERP/SaaS landscape, and alternatives to the Proposed

Transaction.118 After examining Oracle and the market generally, Moelis was

to move to an examination of NetSuite based on public and available non-

public information.119

On May 5, 2016, James joined Moelis, Skadden, Kehring, and two

other Oracle employees for an all-day diligence session with NetSuite

representatives.120 Based on its research, Moelis concluded that although

Fusion was seeing success in the “enterprise” and “near enterprise” market,

115
JX797 at 3.
116
JX912 at 2; Tr. 2525:8–2526:21. The Special Committee was also able to negotiate a reduction
in Moelis’s fee. Tr. 2343:1–19.
117
JX815.
118
JX815 at 5.
119
JX815 at 5.
120
PTO § 68.
24
that is, with larger companies,121 it was not as well received by small and

medium-sized businesses.122 In its evaluation of NetSuite, Moelis determined

that NetSuite was strong in the areas where Fusion was weak.123

While Oracle’s target customer base was the Fortune 500,124 NetSuite’s

target customer base has “affectionally been referred to as the Fortune 5

million.”125 That is not to say that NetSuite did not serve or sell to large

customers.126 While the bulk of NetSuite’s business was the mid-market,127

121
Tr. 2349:16–2350:8 (“So those larger like medium, mid-market companies that were leaning
more towards size and capabilities like the enterprise, that’s where Oracle was seeing—to the
extent they were seeing success, that’s where they were seeing success.”).
122
Tr. 2349:16–2350:8 (“In that mid-market, though, in sort of the bulk of the market in the SME
market, that’s not where their product was showing great traction.”).
123
Tr. 2351:10–2352:1 (“Again, just the opposite. Having great success. So when I think about
that part of the market, they don’t need all the feature functions that the large enterprises need . . . .
they had a simpler feature function set that really met the needs of that middle market, and they
were finding success there.”); see Tr. 2513:24–2514:16.
124
See JX2470 at 24–40, 83–87.
125
Tr. 691:16–692:17.
126
Tr. 996:22–997:6 (“Splunk, Slack, Spotify, Snapchat, Groupon, and Box, we would run the
financials for those companies. And these were examples of the unicorn, well-known brand names
that we would use to market to growing customers, to show them you could grow with us.”).
127
Tr. 721:23–722:6. Notably, there is no singular market size classification scheme within the
industry (or even within each organization) and market size can be defined by either customer
revenue or number of employees. In one stratification Oracle’s up-market coalesced at above one
billion dollars in revenue, the mid-market at 250 million to one billion dollars in revenue, and the
small and medium business (“SMB”) market at below 250 million dollars in revenue. Tr. 398:1–
9. In another stratification, the mid-market was divisible at 1000 employees with the upper-mid-
market occupying 1000-5000 employees or 50 million to three billion dollars in revenue and the
lower-mid-market occupying under 1000 employees and below 50 million dollars in revenue.
JX453 at 5. Markets were similarly squishy at NetSuite, Tr. 716:22–717:18, but its enterprise
market encompassed companies with above 50 to 100 million dollars in revenue, Tr. 801:12–15.
To NetSuite the mid-market was companies with between five million and 100 million dollars in
revenue and up to 1000 employees. Tr. 800:17–801:11, 854:6–10.
25
the company also sold to larger organizations in a number of ways. NetSuite’s

sales team sold to larger customers because they had an incentive to do so.128

Management did not push back because these larger customers came with

benefits, and as the product got better, it was better able to serve larger

customers.129 However, these larger customers also came with downsides. As

NetSuite’s CFO, Ron Gill, phrased it, “larger customers will pull you towards

features and functions for larger customers.”130 In other words, these larger

customers require customization, which is non-recurring and low margin

revenue.131 Further, customization is time-consuming, and led to service

backlogs, delayed implementation, and delayed revenue recognition.132

NetSuite also sought large customers in the form of subsidiaries of

enterprise companies.133 The distinction between selling to the enterprise’s

subsidiaries and the enterprise itself is known as two-tier deployment.134 As

described above, tier one was the replacement of the ERP system at a

company’s headquarters such that NetSuite would become the system of

128
Tr. 722:21–723:13 (“The gravity is such that the sales organization will pull you up-market
because they want to sell a larger deal.”).
129
Tr. 722:12–724:13.
130
Tr. 722:21–723:1.
131
Tr. 883:20–886:10, 1778:13–1781:10.
132
Tr. 1037:15–1038:19.
133
Tr. 742:24–743:21, 995:21–996:18.
134
Tr. 921:19–922:13.
26
record for the entire company.135 Tier two was a sale to a subsidiary such that

the enterprise would maintain their existing ERP but the subsidiary would use

NetSuite.136 NetSuite’s Enterprise Sales Team was thus tasked with selling to

a subsidiary of a larger enterprise with the hope that implementation would

go well and successive sales to that enterprise’s other subsidiaries would

follow.137

NetSuite made use of a “land and expand” strategy and took advantage

of selling to smaller but growing customers.138 NetSuite was a full ERP suite;

its smaller customers would adopt the software for its accounting functionality

and would then expand to use other functionality.139 The use of these

additional features fortified the business’s reliance on NetSuite’s ERP

software and would increase the number of users, which increased NetSuite’s

revenue from that customer.140 Similarly, NetSuite’s model of pay per user

allowed its fees to grow as its customers grew.141

135
Tr. 922:7–10.
136
Tr. 921:22–922:6.
137
Tr. 720:2–721:22.
138
Tr. 880:24–882:13.
139
Tr. 880:24–881:16.
140
See Tr. 881:2–882:13.
141
Tr. 881:2–882:13.
27
 On May 13, 2016, the Special Committee held a meeting with Skadden

in attendance.142 No member of Oracle management was present.143 James

reported on the May 5 diligence session, noting the “potentially

complementary nature of the two companies and their respective addressable

markets.”144

On May 20, 2016, the Special Committee held a meeting with lawyers

from Skadden, members of Moelis, and members of Oracle management,

including Catz and Kehring, in attendance.145 Catz and Kehring gave a

presentation on the importance of offering “best-of-breed” software, the need

for further investment in ERP software so that Oracle could offer a

“gracefully” migratable “spectrum of solutions,” and NetSuite’s strategic

fit.146 The presentation specifically noted, “[NetSuite] generally used by

customers wanting a solution where robustness of services is most important”

and “Oracle generally used by customers wanting a solution where robustness

142
JX931 at 1.
143
See JX931 at 1.
144
JX931 at 1; Tr. 1154:1–1155:18 (“So I had learned from Mr. McGeever’s presentation . . . how
NetSuite viewed the market. And I think I had a fairly good view of Oracle’s view of the market,
and I was at Intel and Oracle prior to Fusion, the on-premise product user. So after listening to the
presentation and seeing how they think about the market, versus how the market, you know, really
works in enterprise software, I found them very complementary.”).
145
PTO § 69.
146
JX947 at 4.
28
of software features is most important.”147 Oracle management recommended

that the Special Committee move forward with the acquisition.148 After

management left the meeting, Moelis made a presentation to the Special

Committee.149 Moelis’s presentation similarly touted that a NetSuite

acquisition could “directly address the [Oracle] shortcomings in Cloud ERP,”

which “should be viewed as a strategic imperative.”150 The presentation noted

that “Corporate IT spending is rapidly moving towards the Cloud and [Oracle]

lacks a meaningful presence in Cloud ERP” but further explained that this was

particularly the case “with companies seeking narrow functionality.”151 It

further explained that the acquisition would complement Oracle’s current

offerings, allow it to provide a two-tier solution, and that the time was right

strategically to pursue the transaction.152

The Special Committee determined that “acquisition of [NetSuite]

could be highly beneficial to [Oracle], that alternatives for participation in this

market segment were unattractive or not ready or timely available and that an

acquisition of [NetSuite] could fill a strategic gap for [Oracle] that it was

147
JX947 at 4.
148
JX952 at 1–2.
149
JX952 at 2.
150
JX948 at 4.
151
JX948 at 6.
152
JX949 at 2.
29
important for [Oracle] to address.”153 Further, the Special Committee

believed that it was time to make an offer and tasked Moelis and Oracle

management with valuing NetSuite and addressing the “tactical

considerations” of an initial offer.154 Nonetheless, the Special Committee

determined that it would “remain open-minded about potential alternatives if

they were to emerge.”155

On May 23, 2016, representatives of Oracle and Moelis spoke over the

phone and discussed a preliminary financial model for NetSuite and the

underlying assumptions.156 Three days later, on the afternoon of May 26,

2016, Skadden shared rules of recusal, which had been approved by the

Special Committee, with Oracle management, who forwarded them to

Ellison.157 The rules of recusal prohibited Ellison from discussing the

Transaction with anyone but the Special Committee, required Oracle

employees brought in to assess the Transaction to be made aware of Ellison’s

recusal, and forbade Oracle officers and other employees from participating

in the negotiation process absent Special Committee direction.158

153
JX949 at 2.
154
JX949 at 2.
155
JX949 at 2.
156
JX975 at 5.
157
JX972 at 1.
158
JX971 at 1.
30
 That same day, Catz had a conversation with Goldberg during which

Goldberg expressed a lack of desire to sell NetSuite, but that he understood

his fiduciary duties, and that Oracle would need to offer a good price.159 Catz

reassured him that Oracle intended to run NetSuite independently.160 After

the call, Goldberg reported the conversation to NetSuite’s in-house counsel.161

On May 27, 2016, the Special Committee held a meeting with Skadden,

Moelis, and Oracle management, including Catz and Kehring, in

attendance.162 Oracle management and Moelis separately presented their

valuations to the Special Committee.163 Oracle management prepared an

incremental model, discounted cash flow analyses, and multiples based on

precedent transactions.164 Kehring, with the assistance of Catz and Hurd, set

the assumptions underlying these models.165 The incremental model projected

NetSuite revenues lower than Wall Street’s projections of NetSuite as a

standalone company and did not include revenue synergies for Oracle.166 On

the assumption of use of Oracle’s infrastructure and resources, NetSuite’s

159
JX988; see also Tr. 784:9–786:15.
160
Tr. 784:9–19, 982:4–10.
161
JX988; Tr. 785:12–13.
162
JX979 at 1–2.
163
PTO § 70.
164
JX979 at 1; JX980.
165
Tr. 479:16–480:11.
166
JX973 at 13; JX1287 at 19; Tr. 550:2–555:1, 1544:12–1546:4, 1548:4–14.
31
EBIT margins gravitated towards those of Oracle.167 Oracle’s management

recommended an opening bid of $100.00 per share.168 Prior to her exit from

the meeting,169 Catz failed to report her May 26, 2016 conversation with

Goldberg to the Special Committee.170

Moelis reviewed these models, performed diligence on their

assumptions, questioned management about them, and concluded that they

were reasonable.171 Moelis’s own presentation, which it gave after

management departed the meeting,172 reported public market price targets,

revenue multiples, and precedent transactions.173

The Special Committee discussed price and preliminarily settled on an

initial offer of $102.00 to $105.00 per share.174 After discussing the risks

associated with an offer lower than that range, and noting management’s

support of an initial proposal of $100.00 per share, the Special Committee

determined that Moelis should communicate an offer of $100.00 per share to

167
Tr. 560:4–560:15; see JX980 at 2.
168
JX979 at 2.
169
JX979 at 2.
170
Tr. 1577:3–5.
171
Tr. 2389:10–2393:9; 2398:20-2399:15 (“Yeah, we believed them—we certainly took note of
them. They were reasonable. From a cost savings perspective, they struck us as reasonable. And
then we looked at the revenue scale, interestingly enough, if I remember correctly, it was maybe
even conservative.”).
172
JX979 at 2.
173
JX975; JX979 at 2.
174
JX979 at 2; Tr. 1163:6–19; 56:15–20, 215:20–216:21.
32
NetSuite’s financial advisor.175 Moelis communicated the initial proposal on

June 1, 2016.176

On June 7, 2016, NetSuite responded with a counterproposal of

$125.00 per share.177 The next day, the Special Committee (except for

Conrades)178 held a meeting with Skadden, Moelis, and Oracle management,

including Catz and Kehring, in attendance.179 The Special Committee

discussed NetSuite’s June 7 counterproposal and decided to raise its offer, via

Moelis, to $106.00 per share.180 The Special Committee’s 106.00 per share

offer was intended to maintain room to negotiate below a $110.00 ceiling.181

Both the ceiling and the offer were informed by Oracle management’s

opinion.182 Specifically, $110.00 was the limit at which the acquisition would

no longer be accretive.183

175
JX979 at 2–3 (The Special Committee determined that the Potential Transaction should be
subject to i) approval by a fully empowered independent special committee of NetSuite and ii)
subject to a non-waivable condition requiring a majority of the minority vote of shares not owned
or associated with Ellison and his children); Tr. 1163:15–1165:6, 55:23–57:5, 216:2–217:7.
176
JX1005 at 1.
177
PTO ¶ 71.
178
JX1026 at 1.
179
JX1026 at 1.
180
PTO ¶ 72; JX1026 at 1–3.
181
Tr. 1167:1–1169:8.
182
Tr. 1167:1–1168:10.
183
Tr. 1167:11–20 (“Well, you know, we had a—a presentation from management that said, you
know, from their perspective and their financial model, that they could support nothing above—in
their opinion, nothing above 110. And, you know, Secretary Panetta and Mr. Conrades and I felt

33
 On June 11, 2016, NetSuite countered at $120.00 per share and

indicated that it had little room left to negotiate a lower price.184 On June 14,

2016, the Special Committee held a meeting with Skadden, Moelis, and

Oracle management, including Catz and Kehring, in attendance.185 Catz

expressed frustration with the counterproposal because she believed it was not

proportional to the Special Committee’s move.186 Kehring noted Microsoft’s

recent acquisition of LinkedIn and how this expenditure had removed

Microsoft from potential competition for NetSuite.187 Management, including

Catz, recommended that the Special Committee decline to counter NetSuite’s

offer.188 Then, the members of Oracle management left the meeting, and

Moelis stated its agreement that $120.00 per share was unreasonable and that

declining to counter would “send a very strong message.”189 After weighing

the risks, the Special Committee directed Moelis to inform NetSuite’s advisor

that the supportability of a deal, you know, has to fit in a P&L. So we were very attentive to this
number 110.”).
184
PTO ¶ 73; JX1046 at 1–2.
185
JX1046 at 1.
186
JX1046 at 2; Tr. 1471:12–1472:1.
187
JX1046 at 2.
188
JX1046 at 2.
189
JX1046 at 2.
34
that it would not provide a counter-proposal.190 The Special Committee was

prepared to let the deal die.191

On June 22, 2016, Catz called Goldberg.192 Over the course of the 17-

minute phone call,193 Goldberg expressed concern that Ellison was angry with

him,194 in part because Goldberg had not received an invitation to Ellison’s

cherry blossom party.195 Catz explained that Ellison was not permitted to have

contact with Goldberg.196

c. The Second Round of Offers and Price Agreement

By June 28, 2016, the deal appeared to be dead.197 In fact, Oracle’s chief

financial advisor, Stuart Goldstein, was on vacation when he received a call from

NetSuite’s financial advisor, Qatalyst Partners (“Qatalyst”), indicating an interest in

190
PTO ¶ 74; JX1046 at 2.
191
Tr. 1173:6–1173:9.
192
Tr. 1633:18–1635:13.
193
Tr. 1633:18–1635:13.
194
Tr. 1636:11–17.
195
Tr. 1636:18–1637:4, 1649:14–1650:7.
196
Tr. 1636:18–1637:2.
197
JX1086. Nonetheless, Proactive Investors published a story entitled “NetSuite advances over
takeover rumors”, which noted the swirl of continuing rumors about that company and the potential
of an Oracle takeover. JX1088:1.
35
moving the deal forward and stating that NetSuite had more flexibility than

previously communicated,198 given market turmoil surrounding the Brexit vote.199

On June 30, 2016, the Special Committee held a meeting with Skadden,

Moelis, and Oracle management, including Catz and Kehring, in attendance.200 Catz

did not report her June 22, 2016 call with Goldberg to the Special Committee.201

Catz and Kehring recommended that the Special Committee organize a diligence

session to understand NetSuite’s soon-to-be-published Q2 financials.202 After the

members of Oracle management left the meeting, the Special Committee decided to

engage in additional diligence, which could inform its decision of whether to re-

engage in negotiations.203 Although there was a risk that the window of opportunity

to ink a deal would close, the Special Committee thought that requesting diligence

signaled toughness on price and a lack of anxiety to re-start negotiations.204 “The

Special Committee then directed and authorized Moelis to communicate back to

198
Notice of Lodging of Dep. Transcripts and Video Recordings Ex. 13, at 199:1–25, 253:7–14,
273:7–19, Dkt. No. 730; JX1104 at 1–2.
199
JX1104 at 1–2.
200
JX1104 at 1.
201
Tr. 1636:3–8.
202
JX1104 at 2; Tr. 1174:6–16.
203
JX1104 at 2.
204
JX1104 at 2.
36
Qatalyst that the Special Committee requested a due diligence session with”

NetSuite management.205

On July 6, 2016, Gill presented NetSuite’s Q2 results to Oracle management

and James.206 NetSuite had met its earnings projections; nonetheless, NetSuite’s

SaaS bookings growth was down.207

On July 8, 2016, the Special Committee held a meeting with Skadden, Moelis,

and Oracle management, including Catz and Kehring, in attendance.208 Catz

reported on the July 6 diligence call.209 “The Special Committee discussed with

Management and Moelis whether [NetSuite’s Q2] results indicated a softening in

[NetSuite]’s core business and how these financial results might impact the

incremental financial model for the acquisition.”210 After Oracle management left

the meeting, the Special Committee determined that from a “tactical and substantive

standpoint,” the correct course of action was to ask for more information.211 The

205
JX1104 at 3.
206
PTO ¶ 77.
207
JX1138 at 1–2; Tr. 1477:6–15.
208
JX1138 at 1.
209
PTO ¶ 78; Tr. 1477:6–1480:8 (Catz relayed that NetSuite had a lumpy and disappointing quarter
and that she believed the Special Committee could use it as negotiating leverage).
210
JX1138 at 2.
211
JX1138 at 2.
37
intention was to impress upon NetSuite’s transaction committee why Oracle’s

current offer of $106.00 was reasonable.212

On July 11, 2016, NetSuite stock saw unusual options activity, and on July

12, 2016, rumor of the Transaction leaked to the financial press.213 To reflect

NetSuite’s Q2 results and the recent diligence, Catz revised Oracle’s incremental

model for NetSuite downwards.214 On July 12, 2016, the Special Committee held a

meeting with Skadden, Moelis, and Oracle management, including Catz and

Kehring, in attendance.215 During that meeting, Oracle management reviewed the

additional diligence, presented its revised model, and answered questions before

leaving.216 The Special Committee authorized Moelis to convey to NetSuite that the

Special Committee’s prior offer of $106.00 was still available but that it was not

raising its offer at that time.217 After the Special Committee meeting, NetSuite

countered the Special Committee’s non-bid by offering to accept $111.00 per share,

down substantially from its last offer of $120.218

212
See JX1138 at 2.
213
JX1176.
214
JX1183 at 7–8; Tr. 1481:2–1482:1.
215
PTO ¶ 79; JX1186 at 1.
216
JX1186 at 1–2; Tr 1481:2–1482:9.
217
JX1186 at 2; Tr. 1183:1–7.
218
PTO ¶ 80.
38
 On July 13, 2016, the Special Committee held a meeting with Skadden,

Moelis, and Oracle management, including Catz and Kehring, in attendance.219

Oracle management presented revised incremental models reflecting conservative,

base, and upside results.220 The conservative model matched the revised model that

was presented to the Special Committee on July 12, 2016, and the base case matched

the original model that was before the Special Committee.221 Catz reverted to the

use of the un-revised base case after reflection on questioning from the Special

Committee.222 Specifically, Panetta noted the regularity of lumpiness within

NetSuite bookings growth and questioned if a downwards revision was truly

warranted.223 Catz acknowledged she made an analytical mistake in shifting from

the original model.224

The Special Committee discussed the three models with Oracle management

as well as next steps.225 When asked how to counter NetSuite’s $111.00 offer, Catz

recommended that the Special Committee offer $108.50 to split the difference.226

Oracle management left the meeting, and the Special Committee discussed how to

219
PTO ¶ 81; JX1206 at 1.
220
JX1206 at 2; JX1204 at 2–5.
221
See JX1204 at 2–4; JX1183 at 7-8; JX1215.
222
Tr. 1484:22–1485:22.
223
Tr. 1484:22–1485:15.
224
Tr. 1484:22–1485:22; JX1215.
225
JX1206 at 2.
226
Tr. 1186:19–21, 1488:15–24.
39
proceed with Moelis.227 Moelis recommended communicating a “best and final”

offer and the Special Committee agreed.228 The members of the Special Committee

felt that deal dynamics favored an offer at a full dollar increment and directed Moelis

to convey a best and final offer of $109.00 to NetSuite.229 That same day, July 13,

2016, NetSuite accepted the $109.00 per share offer.230 The Special Committee paid

a dollar less than their ceiling.

d. Price Agreement to Closing

On July 15, 2016, Oracle and NetSuite “‘entered into an exclusive period of

diligence.’”231 Oracle management, Moelis, and Skadden held a diligence meeting

on July 17, 2016.232 Following this meeting, on the week of July 18, 2016, members

of Oracle management held additional diligence meetings.233 On July 25, 2016, the

Special Committee held a meeting with Skadden and Moelis in attendance.234

Moelis presented its valuation analyses to the Special Committee. 235 Moelis noted

227
JX1206 at 2.
228
JX1206 at 2.
229
PTO ¶ 81; JX1206 at 2; Tr. 1186:22–1189:3, 2454:16–2455:15.
230
PTO ¶ 82.
231
PTO ¶ 83.
232
PTO ¶ 84.
233
PTO ¶ 84.
234
JX1291 at 1.
235
PTO ¶ 85.
40
that Oracle management’s conservative case for projected revenue was below those

Wall Street analysts while the base case and upside case straddled NetSuite’s

projections.236 Although it used the incremental models’ projections, Moelis

performed its own DCF analyses.237 Moelis similarly created its own list of

comparable companies and transactions.238 Overall, Moelis reported that it was

prepared to provide a written fairness opinion stating that $109.00 per share was fair

to Oracle stockholders from a financial point of view.239

Two days later, on July 27, 2016, the Special Committee held a meeting with

Skadden, Moelis, and Oracle management, including Catz and Kehring, in

attendance.240 Oracle management updated the Special Committee on its “bring-

down” diligence and presented a financial model.241 Oracle management confirmed

that NetSuite and Fusion would “coexist in the marketplace” and that its diligence

provided confidence in the incremental model.242 After Oracle management left the

meeting,243 Moelis presented an oral version of its fairness opinion and confirmed

236
Tr. 2460:21–2463:2; see JX1287 at 19.
237
Tr. 2466:23–2468:12, 2396:23–2400:16; JX1287 at 27–29.
238
Tr. 2463:8–2466:19, 2468:7–2468:12; JX1291 at 2; JX1287 at 25–26.
239
PTO ¶ 85. Moelis’s engagement letter entitled it “to assume that financial forecasts and
projections [Oracle], the [Special Committee] or [NetSuite made] available to [it were] reasonably
prepared on bases reflecting the best currently available estimates and judgments of the
management of [Oracle] or [NetSuite].” JX912 at 3.
240
PTO ¶ 86; JX1329 at 1.
241
PTO ¶ 86.
242
JX1306 at 2, 5, 15; JX1329 at 1–2; Tr. 1497:19–1498:4, 1511:1–12.
243
JX1329 at 2.
41
that it would provide a written fairness opinion that $109.00 per share was fair to

Oracle’s stockholders.244 The Special Committee approved the Agreement and Plan

of Merger between Oracle and NetSuite (the “Merger Agreement”), subject to

receiving a formal fairness opinion from Moelis.245 Oracle and NetSuite executed

and announced the Merger Agreement on July 28, 2016.246 Following the signing

of the Merger Agreement, Catz was quoted as saying “‘We expect this acquisition

to be immediately accretive to Oracle’s earnings on a non-GAAP basis in the first

full fiscal year after closing.’”247 Moelis delivered its formal fairness opinion on

July 29, 2016.248

e. The Tender Offer

The Merger Agreement structured the deal as a tender offer, requiring a

majority of NetSuite shares not affiliated with Ellison, NetSuite’s officers, or

NetSuite’s directors to tender in support of the transaction. 249 Absent an extension,

if the requisite number of shares were not tendered by September 15, 2016, the

244
PTO ¶ 86.
245
PTO ¶ 86.
246
PTO ¶ 89; JX1405.
247
Jx1405 at 1.
248
PTO ¶ 86.
249
JX1405 at 1.
42
transaction would fail.250 Additionally, the transaction was conditioned on the

Department of Justice’s antitrust approval.251 The Department of Justice completed

its review quickly and approved the transaction on September 26, 2016.252

T. Rowe Price (“TRP”) was NetSuite’s largest stockholder other than

Ellison.253 In a letter dated September 6, 2016, TRP indicated to the NetSuite

transaction committee that it would refuse to tender its shares at $109.00 per share.254

It provided a number of reasons why NetSuite’s negotiation was deficient: among

these was mention of Catz’s January 19, 2016 dinner with Nelson, which it described

as a “loose, pre-due-diligence, exploratory conversation where a price range of

$100-125 was discussed.”255 TRP believed this discussion anchored the price too

low.256

On September 9, 2016, the Special Committee extended the deadline to tender

shares to October 6, 2016 in order to facilitate the completion of the Department of

Justice’s antitrust review.257 TRP and another large stockholder, who together

250
JX51497 at 5; JX1498 at 9.
251
PTO ¶ 93.
252
PTO ¶ 95; JX1636.
253
JX1555 at 3.
254
JX1555 at 3, 5.
255
JX1555 at 4; Nelson made TRP aware of the conversation with Catz at an August 30, 2016,
meeting between NetSuite management and directors and TRP. JX1555 at 3.
256
JX1555 at 4.
257
PTO ¶ 94; JX1571 at 1.
43
owned approximately 45.5% of NetSuite’s outstanding, unaffiliated shares, had not

tendered by October 4, 2016.258 The Special Committee held a meeting with

Skadden and Oracle management, including Catz and Kehring, in attendance.259

Management recommended extending the deadline to tender shares but not raising

Oracle’s offer.260 After Oracle management left the meeting, the Special Committee

determined that it would extend the deadline one final time to November 4, 2016,

and would not raise Oracle’s offer.261

As they had done previously,262 Oracle management continued to publicly

state that $109.00 was Oracle’s “best and final” offer.263 On October 27, 2016, TRP

sent a letter to the Special Committee stating that it would tender its shares if Oracle

increased its offer to $133.00 per share.264 TRP reasoned that its valuation was

consistent with the valuations of the financial advisors consulted by Oracle and

NetSuite.265 The Special Committee reviewed the letter, determined that $109.00

was the price,266 and responded by publicly filing TRP’s letter with a statement that

258
JX1649 at 1.
259
JX1649 at 1.
260
JX1649 at 1; Tr. 2478:6–17 (Oracle’s banker noted, “I’ll quote. Safra Catz, quote, unquote, we
are not going to pay a single penny more.”).
261
PTO ¶ 96; JX1649 at 2; JX1658 at 1.
262
JX1601.
263
JX1733 at 1.
264
JX1753 at 3.
265
JX1753 at 3.
266
JX2727.
44
insufficient tender by NetSuite’s unaffiliated stockholders for $109.00 per share will

terminate the deal.267

The Special Committee held a meeting on November 4, 2016, with, Moelis,

and Oracle management, including Catz and Kehring, in attendance.268 The Special

Committee met to consider the potential outcomes of the tender offer, which was

due to expire later that evening.269 Ultimately, the tender offer period expired on

November 4, 2016, with 53.2% of NetSuite’s unaffiliated shares tendered, and the

acquisition closed on November 7, 2016.270

B. Procedural History

This is my seventh memorandum opinion in this action, which was initiated

more than six years ago, on May 3, 2017.271 Since filing, it has taken a somewhat

circuitous and procedurally complex path to trial. I outline that path below.

267
JX1762 at 3.
268
JX1792 at 1.
269
JX1792 at 1–2.
270
PTO ¶¶ 97–98.
271
PTO ¶ 4; See In re Oracle Corp. Deriv. Litig., 2018 WL 1381331 (Del. Ch. Mar. 19, 2018); In
re Oracle Corp. Deriv. Litig., 2019 WL 6522297 (Del. Ch. Dec. 4, 2019); In re Oracle Corp.
Deriv. Litig., 2020 WL 3410745 (Del. Ch. June 22, 2020); In re Oracle Corp. Deriv. Litig., 2020
WL 3867407 (Del. Ch. July 9, 2020); In re Oracle Corp. Deriv. Litig., 2021 WL 2530961 (Del.
Ch. June 21, 2021); In re Oracle Corp. Derivative Litig., 2022 WL 3136601 (Del. Ch. May 20,
2022).
45
 The initial complaint was filed on May 3, 2017, and a separate action was

filed was filed on July 18, 2017, following a books and records inspection.272 The

two actions were consolidated under the caption In re Oracle Corporation

Derivative Litigation, C.A. No. 2017-0337-JTL.273 Vice Chancellor Laster

appointed Firemen’s Retirement System of St. Louis (“Firemen’s”) as the lead

plaintiff for the consolidated action.274

On January 11, 2018, the case was reassigned to me.275 On March 19, 2018,

following briefing and oral argument, I denied Ellison’s and Catz’s motions to

dismiss under Court of Chancery Rules 23.1 and 12(b)(6), 276 concluding that the

Plaintiffs had adequately alleged facts that made it reasonably conceivable that a

majority of the Oracle board lacked independence from Ellison277 and that Ellison

and Catz had acted disloyally with respect to the Transaction.278 Plaintiffs

voluntarily dismissed former Defendants Hurd, Jeffrey Henley, Michael Boskin,

Jeffrey Berg, Hector Garcia-Molina, Naomi Seligman, Conrades, Bruce Chizen,

Panetta, James, and H. Raymond Bingham without prejudice on March 28, 2018.279

272
PTO ¶¶ 4–5.
273
PTO ¶ 6.
274
PTO ¶ 7.
275
Case Reassignment Letter, Dkt. No. 65.
276
PTO ¶ 8.
277
In re Oracle Corp. Derivative Litig., 2018 WL 1381331, at *20 (Del. Ch. Mar. 19, 2018).
278
Id.
279
PTO ¶ 9.
46
 On May 4, 2018, Oracle’s board of directors formed a special litigation

committee to investigate the claims asserted in this action (the “SLC”).280 I stayed

the action pending that committee’s investigation.281 In February of 2019, I lifted

the stay to allow the SLC to seek non-party discovery from TRP.282 I similarly lifted

the stay in July 2019 to allow Plaintiffs to file an amended complaint, which

reasserted claims against the voluntarily-dismissed Oracle directors and officers and

asserted new claims against Goldberg and Nelson.283

In a move that could fairly be called “surprising,” the SLC declined either to

take over this derivative litigation or to dismiss it.284 The case was returned to the

Plaintiffs because there were risks to both plaintiff and defendants stemming from

the likelihood that the question of the standard of review would not be resolved until

trial.285 This proved prescient.

From late August to mid-September 2019, Defendants fired a salvo of motions

to dismiss.286 On November 27, 2019, Firemen’s filed its Verified Second Amended

280
PTO ¶ 10.
281
PTO ¶ 11.
282
PTO ¶ 13.
283
PTO ¶ 15.
284
PTO ¶ 16; see In re Oracle Corp. Derivative Litig., 2019 WL 6522297, at *1, 17 n.246 (Del.
Ch. Dec. 4, 2019).
285
PTO ¶ 16.
286
PTO ¶¶ 17–19.
47
Derivative Complaint.287 Henley, Conrades, James, Panetta, Boskin, Berg, Garcia-

Molina, Seligman, Chizen, Bingham, and Paula R. Hurd as Trustee of the Hurd

Family Trust moved to dismiss the second amended complaint on December 13,

2019.288 Upon stipulation by the parties, I dismissed Boskin, Berg, Garcia-Molina,

Seligman, Conrades, Chizen, Bingham, and Panetta with prejudice.289

Plaintiffs filed their third amended complaint on February 18, 2020, which

removed claims against the proximately dismissed defendants.290 On February 20,

2020, Henley, James, and Paula R. Hurd as Trustee of the Hurd Family Trust filed a

motion to dismiss the third amended complaint.291

On April 29, 2020, I granted Plaintiff Robert Jessup’s motion to intervene.292

Ellison and Catz filed a motion for summary judgment against Firemen’s for lack of

standing.293 In July, following briefing and oral argument, I held that motion in

abeyance and granted an order appointing Jessup as co-lead Plaintiff.294

287
PTO ¶ 20.
288
PTO ¶ 21.
289
PTO ¶ 22.
290
PTO ¶ 23.
291
PTO ¶ 24.
292
PTO ¶ 25.
293
PTO ¶ 26.
294
PTO ¶¶ 28–29.
48
 On October 22, 2022, the Plaintiffs requested, and I granted, leave to file a

fourth amended derivative complaint.295 This complaint removed claims against

Nelson and Goldberg, who were previously successful in their motions to dismiss

Count II of the Verified Third Amended Derivative Complaint.296 On December 11,

2020, Plaintiffs again requested, and I granted, leave to file an amended complaint.297

Plaintiffs’ filed their Verified Fifth Amended Derivative Complaint that same day.298

On June 21, 2021, following briefing and oral argument, I denied James’ motion to

dismiss, but granted the motions to dismiss of Henley and Paula R. Hurd (as Trustee

of the Hurd Family Trust).299

The Parties took discovery, exchanged expert reports, and took depositions

between February 2019 and December 2021.300 James moved for summary

judgment on December 23, 2021.301 Following briefing and oral argument, I granted

James’ motion for summary judgment as to the allegation that James acted in bad

faith, but denied the motion as to the allegation that she breached her duty of loyalty

by acting to advance the self-interest of an interested party—Ellison—from whom

295
PTO ¶ 30.
296
PTO ¶¶ 27, 30.
297
PTO ¶ 31.
298
PTO ¶ 31.
299
PTO ¶ 32.
300
PTO ¶¶ 33–35.
301
PTO ¶ 36.
49
she could not be presumed to act independently, finding that pertinent factual issues

remained for trial.302

On July 6, 2022, the parties filed their pre-trial briefs.303 A ten day Trial was

scheduled for July 18 to July 29, 2022.304 The first five days, July 18 to July 22 were

held in person.305 An outbreak of Covid forced the trial to move to a hybrid format

for July 25.306 The Parties used July 26 to work out the logistics for moving the

remainder of the trial to Zoom.307 The last three regularly scheduled days, July 27

to July 29, took place over Zoom,308 and I held the final day of trial over Zoom on

August 16, 2022.309 The Parties completed post-trial briefing on November 1,

2022.310 I held post-trial oral argument in Dover on November 18, 2022.311 The

Parties stipulated to the dismissal with prejudice of James on December 22, 2022,

302
PTO ¶ 36.
303
PTO ¶ 37.
304
PTO ¶ 39.
305
Tr. 1:1–3:12, 312:1–314:12, 632:1– 634:12, 958:1–960:12, 1202:1–1204:12.
306
Tr. 1492:1–1495:18.
307
Tr. 1752:2–1753:13.
308
Tr. 1756:1–1758:12, 2038:1–2040:12, 2328:1–2330:15.
309
Tr. 2636:1–2638:15.
310
See Answering Post-Trial Br. Defs. Safra A. Catz and Lawrence J. Ellison, Dkt. No. 814.
311
See Tr. Post-Trial Oral Arg., Dkt. No. 823.
50
and I granted that order on December 27, 2022.312 I consider the matter fully

submitted as of December 27, 2022.313

II. ANALYSIS

A. Legal Standard

Plaintiffs seek to prove a derivative314 overpayment claim. Plaintiffs theorize

that Ellison, who had a financial incentive to prefer the interests of NetSuite over

Oracle, and Catz, seeking to advance Ellison’s interests, manipulated the Oracle

Special Committee to overpay for NetSuite.315 Specifically, per Plaintiffs, “‘Ellison

wanted Oracle to buy NetSuite before industry participants and market analysts

realized what Ellison already knew: [That] NetSuite’s business strategy of moving

up-market was doomed in light of Oracle’s rollout of . . . Fusion.’”316 Further, the

Plaintiffs argued that Ellison and Catz “caused . . . Oracle to pay more for NetSuite

because they were paying for part of NetSuite’s business that Oracle did not need,

312
See Stipulation and [Proposed] Order of Voluntary Dismissal with Prejudice of Renee J. James,
Dkt. No. 825; Order of Voluntary Dismissal with Prejudice of Renee J. James, Dkt. No. 826.
313
Unfortunately, circumstances beyond my control delayed my consideration of the matter and
the issuance of this post-trial opinion.
314
That is, the claim was originally derivative. It is being pursued now with the consent of the
Special Litigation Committee.
315
Tr. 42:21–43:17.
316
Tr. 43:7–15.
51
did not want, and . . . was of little or no value because Oracle was already poised to

dominate that part of the” market.317 Finally, the Plaintiffs contend that

“immediately after acquisition, and” on a continuing basis, “the company that Oracle

has in NetSuite and is using in NetSuite isn’t as valuable as the company that”

Ellison, Catz, and Oracle management “presented to . . . the [S]pecial [C]ommittee,

in order to cause” it to move forward with that transaction.318

“Delaware’s default standard of review is the business judgment rule.”319

Absent a showing by the Plaintiff that the business judgment rule has been rebutted,

that rule will serve as the lens of review.320

To bring the transaction within the exacting standard of entire fairness,

Plaintiffs proffer two theories. First, the Plaintiffs argue that Ellison was a controller

who sat on both sides of the transaction.321 Second, the Plaintiffs contend that

Ellison, on his own and through Catz, misled the Oracle board and the Special

Committee, thereby rendering the transaction a product of fraud.322

These theories are addressed, below.

317
Tr. 44:8–17.
318
Tr. 45:1–8.
319
In re Columbia Pipeline Grp., Inc., 2021 WL 772562, at *30 (Del. Ch. Mar. 1, 2021).
320
Cinerama, Inc. v. Technicolor, Inc., 663 A.2d 1156, 1162 (Del. 1995).
321
Pls.’ Corrected Opening Post-Trial Br. 88, Dkt. No. 795.
322
Id.
52
 1. Ellison Was a Conflicted Director

Delaware’s default standard of review is business judgment.323 That standard

is inapplicable, however, “[w]here at least half of the directors who approved the

transaction were not disinterested or independent.”324

Here Ellison, an Oracle director and officer, received a benefit from the sale

of his stock in NetSuite that Oracle’s other stockholders did not receive.325

Appropriately, Ellison insulated himself from the board’s discussion of NetSuite

acquisition, throughout the process. Moreover, in light of Ellison’s conflict of

interest, Oracle’s board formed a Special Committee with the power to assess

alternatives, negotiate the Transaction, and approve or reject the Transaction.326 The

Special Committee was composed of three members. The Plaintiffs did not contend

at trial that two members, Conrades and Panetta, were dependent on Ellison or

interested in the transaction, or otherwise conflicted. The evidence at trial proved

that the third member, James, was likewise unconflicted, and Plaintiffs, post trial,

dismissed claims against James as well.327 In other words, Plaintiffs abandoned their

323
Columbia Pipeline, 2021 WL 772562, at *30.
324
In re KKR Fin. Holdings LLC S’holder Litig., 101 A.3d 980, 990 (Del. Ch. 2014), aff’d sub
nom. Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304 (Del. 2015).
325
See PTO ¶¶ 44–48, 98 (noting Ellison’s holdings in both companies).
326
JX759 at 2–5.
327
Order of Voluntary Dismissal with Prejudice of Renee J. James, Dkt. No. 826; Order of
Dismissal as to Certain Defs., Dkt. No. 304.
53
theory at trial, which was that James had ambitions to be a CEO in the tech industry,

an ambition for which she was reliant on Ellison; Plaintiffs’ theory was that she

accordingly skewed the transaction in his favor, and breached her own duty of

loyalty to Oracle. The evidence at trial did not support this theory.328 I find by the

preponderance of the evidence that James, like her fellow committee members, was

independent of Ellison.

The appropriate standard of review is business judgment, unless the Plaintiffs

have proven either of their theories; that Ellison was a controller with respect to the

transaction,329 or that he and Catz defrauded the Board.

2. Was Ellison a Controller?

An individual (or entity) holding more than 50% of the voting power of a

corporation is in hard control of the entity, because of her ability to remove, and thus

328
This theory, strongly disproved, in my view, by the trial evidence, had some odor of denigrating
the abilities of women executives to succeed based on their merits.
329
Because I find Ellison was not a controller, I need not address whether his recusal, and the
establishment by the remainder of the Board of an independent and fully-functioning special
committee, would be sufficient under the facts here to cleanse a controller conflict.
54
influence, the directors.330 Ellison, however, held less than 30 % of the voting power

in Oracle, and did not enjoy hard control.331

[A] shareholder who owns less than 50% of a corporation’s outstanding
stocks does not, without more, become a controlling shareholder of that
corporation, with a concomitant fiduciary status. For a dominating
relationship to exist in the absence of controlling stock ownership, a
plaintiff must allege domination by a minority shareholder through
actual control of corporation conduct.332

Of course, more than mere allegation is required post-trial. A plaintiff must show

that the alleged controlling stockholder in actuality dominated the corporate

conduct, either generally or with respect to the transaction in question, to hold the

stockholder to duties as a fiduciary.

Did Ellison control the operation of Oracle at the time of the transaction, thus

usurping the power of the directors and imposing upon himself fiduciary duties? I

find from the evidence that he did not.

“The inquiry of actual control seeks to answer whether, ‘as a practical matter,

[the alleged controller was] no differently situated than if it had majority voting

330
See Williamson v. Cox Commc’ns, Inc., 2006 WL 1586375, at *4 (Del. Ch. June 5, 2006) (citing
Kahn v. Lynch Commc’n Sys., Inc., 638 A.2d 1110, 1113–14 (Del. 1994).
331
PTO ¶¶ 45–46.
332
Kahn v. Lynch Commc’n Sys., Inc., 638 A.2d 1110, 1114 (Del. 1994) (quoting Citron v.
Fairchild Camera & Instrument Corp., 569 A.2d 53, 70 (Del. 1989)).
55
control.’”333 The Delaware Supreme Court has identified various potential indicia

of “general control,” including the ability to:

(a) elect directors; (b) cause a break-up of the corporation; (c) merge it
with another company; (d) cash-out the public stockholders; (e) amend
the certificate of incorporation; (f) sell all or substantially all of the
corporate assets; or (g) otherwise alter materially the nature of the
corporation and the public stockholders’ interests.334

Bearing these and other indicia of control in mind, for an individual or entity

to exercise general control over the corporate machinery, the power of the

putative controller must be such that independent directors “‘cannot freely

exercise their judgment’” for fear of retribution.335

In post-trial briefing, Plaintiffs highlighted Ellison’s status as Oracle’s

founder and “visionary leader,”336 his control over Oracle’s product direction,337 and

his Oracle stock ownership, which “dwarf[ed] the ownership of the board as a whole

or any institutional investor.”338 Further, Plaintiffs noted that, “in light of Oracle’s

director majority voting policy,” Ellison’s voting block “was indispensable to re-

333
In re GGP, Inc. Stockholder Litig., 2021 WL 2102326, at *20 (Del. Ch. May 25, 2021), aff’d
in part, rev’d in part and remanded, 282 A.3d 37 (Del. 2022), reargument denied (Aug. 10, 2022)
(quoting In re PNB Holding Co. Shareholders Litig., 2006 WL 2403999, at *9 (Del. Ch. Aug. 18,
2006)).
334
Id. (quoting Paramount Commc’ns Inc. v. QVC Network Inc., 637 A.2d 34, 43 (Del. 1994)).
335
In re Morton’s Rest. Grp., Inc. Shareholders Litig., 74 A.3d 656, 665 (Del. Ch. 2013) (quoting
In re PNB Holding Co. S’holders Litig., 2006 WL 2403999, at *9 (Del.Ch. Aug. 18, 2006)).
336
Pls.’ Corrected Opening Post-Trial Br. 83, 100, Dkt. No. 795.
337
Id. at 100.
338
Id. at 99–100.
56
electing incumbent outside directors,”339 providing, as one example, the 2013 re-

election of Cizen, Conrades, and Seligman in which Ellison’s votes were purportedly

indispensable.340

The evidence presented at trial demonstrated that the Oracle board vigorously

debated assumptions and was not afraid to stand opposed to Ellison.341 For example,

in one instance, the board forced Ellison to fire a senior member of his team over his

strong objection.342 In light of that evidence, I find Ellison had clout, but did not

exercise general control. The same can be said of Ellison’s relationship with Catz

and Hurd, Oracle’s co-CEOs. For example, when Catz determined that it was not in

Oracle’s best interest to pursue multi-cloud with Microsoft and shut the project

down, it took Ellison in his capacity as CTO a year to convince her to change her

mind.343 In both relationships, senior management gave Ellison’s ideas a respectful

hearing but did not appear cowed or overawed by him. In 2016, the executive

function of Oracle resided in its dual CEOs, Catz and Hurd. While Ellison remained

a potent force in Oracle, his role at the time of the merger was Chief Technology

339
Id. at 100.
340
Id.
341
Tr. 197:9–198:4 (“Debating assumptions is a characteristic of Oracle meetings.”), 27:18–28:15
(noting that there were times that Ellison was in favor of an idea and after raising it with the board
it was not pursued).
342
Tr. 1871:7–1872:1.
343
Tr. 1865:18–1866:20.
57
Officer. The record does not show that he controlled the day-to-day function of

Oracle, or dictated the operation of the company to the Board. I cannot find actual

control of the Company from the evidence presented at trial.

I do find it, however, more likely than not that the Ellison could have exerted

control as to particular transactions, if he had so desired. Ellison was so closely

identified with Oracle that an insistence on a particular policy or result had the

potential to sway the business judgment of the directors and the executives of Oracle.

At trial and in briefing, the Plaintiffs highlighted instances where Catz referred to

Ellison as her boss344 or Oracle’s “visionary leader.”345 For example, Plaintiffs

excerpted from a 2019 public interview where Catz said:

It’s a team effort. It’s a team sport. You have to have a leader. Larry
Ellison is it. Don’t let titles fool you. I am – I am very, very helpful,
as is Mark Hurd, who is my co-CEO. We are good executors, good
editors on his vision, but like many of you who are also founders and
CEOs and chairmen, you’re guiding lights of your company, and
there’s no substitute for what you do. None. It is, though, quite helpful
to have others on the team who share your vision. Who are focused on
executing your vision. Who have no individual alternative agenda. The
one thing Larry can count on, in my case, I am now finishing my 20 th
year at Oracle, and I’m one of the new kids, and – is he never has to
worry that I’ve got an agenda any different than to make – to make
Oracle successful and to make his vision come true.346

344
Pls.’ Corrected Opening Post-Trial Br. 5, 85 n.473, Dkt. No. 795.
345
Id. at 100 (citing Tr. 1701).
346
Tr. 1702:1–17; JX2856.
58
 Did Ellison attempt to wield this potential control in regard to the NetSuite

acquisition? The evidence demonstrates that he did not.

The timeline of the transaction is instructive. Oracle historically had an

aggressive policy of growth by acquisition.347 Prior to the annual offsite meeting at

Porcupine Creek on January 14–15, 2016, Hurd and Catz discussed the acquisition

of NetSuite with Ellison.348 Ellison’s lack of opposition was necessary to any

transaction due to his ownership position in NetSuite.349 Ellison did not oppose an

acquisition.350 Accordingly, Catz put the purchase of NetSuite as one of several

potential acquisitions to be discussed with the board.351 At the meeting with the

board, when a NetSuite deal was broached, Ellison left the meeting.352 Oracle’s

directors agreed to consider an acquisition.353 Catz and Hurd were authorized by the

directors (without Ellison) to approach NetSuite to see if it was open to a discussion

of a merger, but the Oracle executives were instructed not to discuss price terms.354

347
Tr. 530:5–531:24; JX2469 at 8; JX391 at 11.
348
Tr. 1981:16–1982:11; see also Tr. 1661:23–1662:21 (“Larry did not say let’s not do it. He said
he wouldn’t object to it. And he left, and then it just left me, unfortunately, just left me and Mark
to argue it out and talk with our board in January”).
349
See PTO ¶¶ 47–48 (providing Ellison’s stake in NetSuite).
350
Tr. 1661:23–1662:21, 1665:17–1666:21.
351
See Tr. 1415:16–21 (“It only made sense to do it last, because then we could have Larry in for
all the other conversations, and then when this one came up, he could go out.”).
352
Tr. 1415:9–24, 1136:2–9, 40:4–23.
353
JX624 at 6.
354
JX624 at 6.
59
Once Catz reported that NetSuite might entertain a deal,355 the Board (again without

Ellison) created a Special Committee, fully empowered to negotiate an acquisition

and consider alternatives, including not buying NetSuite.356 Thereafter, Ellison

scrupulously avoided any discussion of the transaction with the Special

Committee.357 I find, accordingly, that Ellison, although he had the potential to

influence the transaction, did not attempt to do so, and that the Special Committee

completed the transaction unmolested by his influence.

This is evidenced not only by the lack of contact between Ellison and the

Special Committee; it is also clear from examination of the Special Committee’s

negotiations. Prior to making an offer, the Special Committee investigated

alternatives to and the prudence of the acquisition itself.358 In its initial offer of

$100.00 per share, the Special Committee weighed the risks of posing an offer below

the range of $102.00 to 105.00 per share, the range it initially settled upon.359

Following NetSuite’s disappointing June 11, 2016 offer, the Special Committee

355
JX759 at 1.
356
JX759 at 2–5.
357
Tr. 1828:23–1829:23; see also JX624 at 6 (noting Ellison’s intent to recuse given his ownership
interest in NetSuite).
358
JX949 at 2.
359
JX979 at 2–3 (The Special Committee also determined that the transaction, if any, should be
subject to i) approval by a fully empowered independent special committee of NetSuite and ii)
subject to a non-waivable condition requiring a majority of the minority vote of NetSuite shares
not owned by, or associated with, Ellison and his children); Tr. 1163:15–1165:6, 55:23–57:5,
216:2–217:7.
60
declined to counter.360 In the intervening period between June 11, 2016 and June

28, 2016, the deal appeared to be dead.361 On the resumption of negotiations, the

Special Committee held fast to its non-offer and sought diligence to understand and

strengthen its negotiating position despite the risk such delay posed to the potential

deal.362 The Special Committee maintained this tack in its request for further

diligence on July 8, 2016,363 and ultimately reaffirmed its non-bid on July 12,

2016.364 NetSuite bid against itself on July 12, 2016, a month after Oracle had

declined to counter-offer.365 The Special Committee ultimately negotiated a deal at

$109.00 per share, which was a dollar less than its price ceiling.366

Moreover, when the requisite approval from the NetSuite minority appeared

not to be forthcoming, the Special Committee was prepared to let the deal die rather

than increase Oracle’s offer.367

The record, in other words, demonstrates that the Special Committee, aided

by its advisors, negotiated in a hard-nosed fashion that reduced the deal price in a

360
PTO ¶ 74; JX1046 at 2.
361
JX1086.
362
JX1104 at 2.
363
JX1138 at 2.
364
JX1186 at 2; Tr. 1183:1–7.
365
PTO ¶ 80.
366
PTO ¶ 82; Tr. 1167:1–1169:8.
367
JX1649 at 2; JX1658 at 1.
61
way that—given Ellison’s greater interest in the target than in Oracle—was against

Ellison’s interest.

Plaintiffs, however, maintain that Ellison nonetheless wielded actual control

of the transaction. Their theory primarily rests on Ellison’s publicly held view that

a transaction with NetSuite, eventually, would make sense, as well as Ellison’s

January 27, 2016 phone call with Goldberg, and Catz’s loyalty to Ellison, which, per

Plaintiffs, allowed him to control the transaction through her.368 I address these in

turn, below.

i. Ellison Did Not Propose the Transaction

Based upon the evidence at trial, the Plaintiffs contend that Ellison raised the

concept of buying NetSuite.369 As noted, Ellison had been a longtime, vocal

proponent of a merger with NetSuite.370 However, in early 2015, Ellison, Catz, and

Hurd debated whether to purchase NetSuite, and Ellison, at that time, was the driving

force against the transaction, which he felt would be confusing to the marketplace,

and overpriced.371 In early 2016, NetSuite was one of the companies that Kehring

368
Pls.’ Corrected Opening Post-Trial Br. 101–102, Dkt. No. 795.
369
Id. at 101; Pls.’ Answering Post-Trial Br. in Response to the Opening Post-Trial Br. of Defs.
Safra A. Catz and Lawrence J. Ellison 7–8, Dkt. No. 813.
370
Tr. 1664:7–23, 1980:4–1981:22.
371
Tr. 1962:8–19, 1407:9–1408:5.
62
regularly monitored as a potential takeover target, and corporate development again

raised the idea of purchasing NetSuite.372

In the weeks preceding the 2016 Oracle board’s offsite meeting at Porcupine

Creek, Catz and Ellison had a series of private conversations around purchasing

NetSuite.373 Ellison’s prior worries about the purchase had been assuaged.374 First,

given the then-recent downturn of cloud stocks, NetSuite was effectively on sale.375

Second, Fusion was now mature enough that the purchase would not cause

disproportionate marketplace confusion.376 Ellison told Catz that he would not

oppose the Transaction.377 Ellison’s agreement with the concept of the Transaction,

under these facts, does not show actual control.378

Plaintiffs also attempted to demonstrate that Ellison was the driving force

behind the Transaction because at Oracle’s annual offsite board meeting at

372
Tr. 1408:11–21, 462:8–463:4.
373
Tr. 1966:10–1972:14.
374
Tr. 1972:4–10.
375
Tr. 1967:9–1971:2, 587:15–588:24, 1410:3–21; JX716 at 1, 6.
376
Tr. 1967:9–1971:2.
377
Tr. 1972:4–10, 1662:5–21, 1665:17–1666:21.
378
See In re Rouse Properties, Inc., 2018 WL 1226015, at *20 (Del. Ch. Mar. 9, 2018) (discussing
Morton’s Rest. Grp., 74 A.3d at 662) (noting that initiation of the transaction in question, when
coupled with other factors, was not enough to confer actual control); see also Kahn v. Tremont
Corp., 694 A.2d 422, 431 (Del. 1997) (“Initiation[,] . . . standing alone, is not incompatible with
the concept of fair dealing so long as the controlling shareholder does not gain financial advantage
at the expense of the controlled company”). Further, the Plaintiffs’ contentions that Ellison
directed the timing of the transaction to overcome familial financial needs were decidedly
unconvincing, and I find by a preponderance of the evidence that neither Ellison or his son were
in need of a cash infusion sufficient to motivate an action by Ellison against Oracle’s interests.
63
Porcupine Creek, he spoke to the board on “‘the benefits, challenges, and

opportunities associated with the continued evolution of [Oracle’s] suite of cloud

products’ immediately before Kehring’s discussion of . . . NetSuite.”379 They

contend that the presentation “ensured [a] lack of ‘resistance or second thoughts

from other fiduciaries.’”380 This theory borders, to my mind, the metaphysical.

Ellison’s presentation on Oracle’s move to the cloud did not numb the minds or

overcome the business judgment of the other directors.381 The move to the cloud

had been a decade-long undertaking and one that the board rightfully should have

been regularly updated on. Thus, these presentations were within the ordinary

course of business. Although necessary to the board’s determination of whether to

investigate the potential transaction, these presentations, I find, are manifestly

insufficient to show that Ellison drove Oracle’s board in any particular direction or

trampled over the “resistance or second thoughts [of] other fiduciaries.”382 It does

379
Pls.’ Corrected Opening Post-Trial Br. 101, Dkt. No. 795 (citing JX624 at 5).
380
Id. (quoting Basho Techs. Holdco B, LLC v. Georgetown Basho Inv’rs, LLC, 2018 WL
3326693, at *28 (Del. Ch. July 6, 2018)).
381
See Basho Techs. Holdco B, LLC v. Georgetown Basho Inv’rs, LLC, 2018 WL 3326693, at *28
(Del. Ch. July 6, 2018), aff’d sub nom. Davenport v. Basho Techs. Holdco B, LLC, 221 A.3d 100
(Del. 2019) (“Probative evidence can include statements by participants or other contemporaneous
evidence indicating that a defendant was in fact exercising control over a decision. A court also
can consider whether the defendant insisted on a particular course of action, whether there were
indications of resistance or second thoughts from other fiduciaries, and whether the defendant’s
efforts to get its way extended beyond ordinary advocacy to encompass aggressive, threatening,
disruptive, or punitive behavior.”).
382
Id.
64
not show any control over the Special Committee, who independently investigated

both the prudence and price of the NetSuite merger.

ii. Ellison Did Not Control the Transaction Through His

January 27 Call with Goldberg

Plaintiffs also contend that Ellison indirectly controlled merger negotiations

through his control over principals of NetSuite. Although Ellison recused himself

on both sides of the transaction,383 the Plaintiffs’ argument is essentially that

Ellison’s NetSuite holdings were coercive such that Goldberg felt an obligation to

sell. Perhaps this argument would make sense if the Plaintiffs represented NetSuite

stockholders and believed the transaction to have garnered too low a price, but that

theory does not translate well to the buy side. Obviously, Ellison was conflicted,

and, at least, an influential blockholder of NetSuite. This evidence fails to show that

Ellison controlled Oracle with respect to the transaction.

For similar reasons, Plaintiffs focus on a January 27, 2016 call between

Ellison and Goldberg, but this call does not demonstrate Ellison’s control over the

merger negotiations on behalf of Oracle. After Catz and Nelson had dinner to

383
JX624 at 6; JX1497 at 21; Tr. 1828:23–1829:23, 1833:9–1835:24.
65
determine if NetSuite would be open to an offer and the NetSuite board met to

discuss that dinner,384 Goldberg called Ellison on January 27, 2016.385 During that

conversation, Ellison told Goldberg that he would recuse from NetSuite’s

consideration of the transaction, and that NetSuite’s decision was out of his hands.386

Ellison did indicate that Oracle’s intention was to retain NetSuite management and

that he expected Hurd to run the company as a global business unit.387

This was not an act of control of the transaction itself, nor did it make

overpayment likely. As I understand the Plaintiffs’ argument to the contrary, they

posit that this conversation foreclosed the Special Committee’s ability to launch a

hostile tender offer because Goldberg now knew that Oracle’s intention was to keep

management. But Plaintiffs conceded that the Special Committee did not know

about this conversation, because Ellison walled himself off from the Special

Committee.388 Thus, the Special Committee’s decision not to “go hostile” was its

own.

384
JX645 at 2–3.
385
Tr. 834:5–9.
386
Tr. 1833:9–1835:24.
387
Tr. 1679:1–1680:15, 1829:24–1831:8.
388
I do not mean to imply that it was best practice for Ellison not to report this conversation, but
simply that it was not an exercise of control over the Special Committee.
66
 iii. Ellison Did Not Control the Transaction Through

Catz

The Plaintiffs theorize that Ellison drove the deal through Catz, who provided

faulty information to the Special Committee in order to cause Oracle to overpay for

NetSuite.389 They aver that Catz was not independent of Ellison because of their

long friendship and because he controlled her employment.390 This theory fails, as

Plaintiffs failed to prove at trial that Catz, as a putative controller’s surrogate, ran

the negotiation process or took actions to advance Ellison’s interests.391

First, the Special Committee, not Catz, ran the negotiation process. The

Special Committee engaged its own independent and highly experienced advisors,

performed its deliberations after management left its meetings, and questioned

management’s assumptions. In an attempt to show that Catz coopted the Special

Committee’s decision-making process on behalf of Ellison, the Plaintiffs point to an

email from the Special Committee chairwoman James, post transaction, thanking

Catz “for all the babysitting and strategy to get this done.”392 This tongue-in-cheek

email simply thanks Catz for her time, not for her oversight. As the primary

389
Pls.’ Corrected Opening Post-Trial Br. 84–85, 88, 93–97, 101, Dkt. No. 795.
390
Id. at 84.
391
See FrontFour Capital Grp. LLC v. Taube, 2019 WL 1313408, at *22–25 (Del. Ch. Mar. 11,
2019) (examining director independence in a specific actual control analysis).
392
Pls.’ Corrected Opening Post-Trial Br. 101, Dkt. No. 795 (citing JX1800).
67
representative of Oracle management, Catz was fundamental to the ultimate deal.

However, the Special Committee and its advisors ran the process.

Although Ellison openly discussed his opinions about NetSuite with Catz,393

the Plaintiffs were unable to produce any persuasive evidence of collusion to

orchestrate the merger. In short, there is nothing to indicate that Ellison attempted

to, or did, assert control over Catz to control the negotiations or acquisition, to secure

an overpayment or otherwise, as his surrogate.

Catz’s actions with respect to the negotiations in fact demonstrate loyalty to

the company, not Ellison’s conflicted interests. During negotiations, Catz showed

herself to be a tough negotiator on behalf of Oracle, who was prepared to let the deal

die if it was not in Oracle’s best interests to pursue. On June 11, 2016, after NetSuite

countered Oracle’s offer of $106.00 per share with an offer of $120.00 per share and

a note that NetSuite had little room to negotiate, Catz and Oracle management

recommended that the Special Committee decline to counter.394 This was the course

of action the Special Committee took.395 When the deal was resuscitated by market

turmoil stemming from the Brexit vote,396 Catz and Oracle management

393
Tr. 1957:20–1959:5.
394
JX1046 at 1–2.
395
PTO ¶ 74; JX1046 at 2.
396
JX1104 at 1–2.
68
recommended diligence, not rapid reengagement.397 As the Special Committee

noted, such a measured approach required time and posed the risk of closing the

window of opportunity.398 Similarly, at the fourteenth meeting of the Special

Committee on November 4, 2016, when determining whether to extend the tender

offer deadline and raise Oracle’s offer, Catz recommended standing firm, saying,

“we are not going to pay a single penny more.”399 Throughout the process, Catz

agitated for Oracle to pay the lowest price possible and her advice led to several

stalls that jeopardized the transaction. These actions are incongruent with the theory

that Catz drove the deal as an agent of Ellison. Ellison did not control the transaction

through Catz.

To recapitulate, at the time of the transaction, Ellison did not have hard control

of Oracle. He did not exercise control generally in regard to Oracle’s operations.

He did not attempt to assert control in the transaction by which Oracle acquired

NetSuite, and as a director and officer abstained from participation in the transaction.

He was, I find by a preponderance of evidence, a holder of potential control over a

transaction in which he was interested. Does such a finding mandate entire fairness

review?

397
JX1104 at 2; Tr. 1174:6–13.
398
JX1104 at 2.
399
Tr. 2478:6–17; JX1649 at 1.
69
 The Defendants point to caselaw defining control over a transaction, outside

the context of pure voting control, narrowly. To exercise actual control such that a

minority stockholder is deemed a controller, she must “exercise[] such formidable

voting and managerial power that, as a practical matter, [she] is no differently

situated than if [she] had majority voting control.”400 In wielding such power, a

minority stockholder deemed controller can “either (i) control . . . the corporation’s

business and affairs in general or (ii) control . . . the corporation specifically for

purposes of the challenged transaction.”401 Because I have found neither, under this

understanding, Ellison was not a controller and business judgment applies.

It is instructive to consider here, I think, the development of the fiduciary

concept of the controller, starting with Kahn v. Lynch.402 Delaware courts have long

held that “‘a shareholder owes a fiduciary duty only if it owns a majority interest in

or exercises control over the business affairs of the corporation.’”403 “‘[A] plaintiff

must allege domination by a minority shareholder through actual control of

corporate conduct’” in order to show an exercise of control.404 In Kahn v. Lynch,

400
In re Rouse, 2018 WL 1226015, at *11 (quoting Morton’s Rest. Grp., 74 A.3d at 664–65)
(internal quotations omitted).
401
Voigt v. Metcalf, 2020 WL 614999, at *11 (Del. Ch. Feb. 10, 2020).
402
638 A.2d 1110 (Del. 1994).
403
Id. at 1113–14 (quoting Ivanhoe Partners v. Newmont Mining Corp., 535 A.2d 1334, 1344
(Del. 1987) (emphasis added)).
404
Id. at 1114 (quoting Citron v. Fairchild Camera & Instrument Corp., 569 A.2d 53, 70 (Del.
1989)).
70
the Delaware Supreme Court held that an interested squeeze-out merger by a

controlling stockholder would undergo entire fairness review despite receiving “the

informed approval of a majority of minority stockholders or an independent

committee of disinterested directors.”405 The court reasoned that entire fairness was

required in the squeeze-out context because minority stockholders may hesitate to

vote in their own economic interest given the risk of subsequent retaliation by the

controlling stockholder if they vote against the merger.406 The court later held in

MFW that a squeeze-out merger involving a conflicted controller could regain

business judgment protection when conditioned ab initio on both the approval of an

independent, adequately empowered special committee that fulfills its duty of care

and the informed, uncoerced vote of a majority of the minority stockholders.407

Eight years after Lynch, then-Vice Chancellor Strine extended the reach of the

doctrine of inherent coercion, in In re Cysive.408 As in Lynch, the transaction at issue

in Cysive was a conflicted squeeze-out merger involving an alleged controller.409

405
Id. at 1117. In Kahn, the court found that the controller had exercised actual control over the
company despite an ownership stake of only 43.3%. Id. at 1113-17.
406
Id. at 1116.
407
Kahn v. M & F Worldwide Corp., 88 A.3d 635, 644 (Del. 2014), overruled on other grounds
by Flood v. Synutra Int’l, Inc., 195 A.3d 754 (Del. 2018) (clarifying that a plaintiff can plead a
duty of care violation only by showing the special committee acted with gross negligence, not by
merely questioning the sufficiency of price).
408
836 A.2d 531 (Del. Ch. 2003).
409
Accounting for options and holdings by family members, plaintiffs alleged holdings as high as
44%. Id. at 535.
71
However, rather than assess the minority stockholder’s actual control of the

company, the Cysive Court looked to the purported controller’s ability “to be the

dominant force in any contested Cysive election” and the inherently coercive threat

that ability presented “to the independent directors and public stockholders” in the

squeeze-out merger context.410 In reaching this conclusion, the Court held:

[I]t cannot be that the mere fact that [the controller] did not interfere
with the special committee is a reason to conclude that he is not a
controlling stockholder . . . . the analysis of whether a controlling
stockholder exists must take into account whether the stockholder, as a
practical matter, possesses a combination of stock voting power and
managerial authority that enables him to control the corporation, if he
so wishes.411

This Court’s decision in Ezcorp also extended the theory of inherent coercion,

this time from controlled squeeze-out mergers to all conflicted transactions

involving a controller.412 Ezcorp involved a dual class share structure in which an

individual holding a minority equity position nonetheless retained 100% of the

company’s voting power—thus, the defendant had hard control.413 There, the

challenged transactions involved consulting agreements between the company and

entities affiliated with the controlling stockholder.414 After a thorough and scholarly

410
Id. at 552–53 (emphasis added).
411
Id.
412
In re Ezcorp Inc. Consulting Agreement Derivative Litig., 2016 WL 301245 (Del. Ch. Jan. 25,
2016).
413
Id. at *2.
414
Id. at *2–7.
72
review of the caselaw, the Court found that entire fairness was the appropriate

standard of review at the pleadings stage.415

Following MFW and Ezcorp, this Court has issued relatively few post-trial

opinions involving challenges to conflicted controller transactions.416 Each of these

cases found the principal defendant to be a controller417 based on a combination of

stock holdings and, importantly, affirmative actions taken to control the transaction.

Cases more analogous to the situation here have also survived a motion to dismiss.418

However, they have done so with the benefit of plaintiff-friendly inferences. Indeed,

buoyed by such inferences, the present case survived a motion to dismiss in which I

found that Plaintiffs had pled sufficient facts to support, at that stage of the litigation,

the allegation that Ellison was a controller.419 I now have, however, a full trial record

on which to assess Ellison’s attempt to control this transaction, or lack thereof.

Based on the facts produced at trial as laid out above, and applying the

doctrine of our caselaw as I understand it, I determine that Ellison did not function

415
See id. at *11–30.
416
Basho Techs., 2018 WL 3326693; FrontFour, 2019 WL 1313408; In re Tesla Motors, Inc.
Stockholder Litig., 2022 WL 1237185 (Del. Ch. Apr. 27, 2022), judgment entered sub nom. In re
Tesla Motors, Inc. (Del. Ch. 2022); In re BGC Partners, Inc. Derivative Litig., 2022 WL 3581641
(Del. Ch. Aug. 19, 2022), judgment entered sub nom. In re BGC Partners, Inc. (Del. Ch. 2022).
417
With the notable exception of Tesla, where the Court assumed Elon Musk to be a controller but
ultimately found that the transaction occurred at a fair price. In re Tesla Motors, 2022 WL
1237185.
418
See, e.g., Voigt, 2020 WL 614999 (involving similar allegations of a controller who caused the
company to acquire a controller affiliate).
419
See In re Oracle Corp. Derivative Litig., 2018 WL 1381331 (Del. Ch. Mar. 19, 2018).
73
as a controller here. He neither possessed voting control, nor ran the company de

facto. He likely had the potential to control the transaction at issue, but made no

attempt to do so; in fact, he scrupulously avoided influencing the transaction. In

addition, the transaction was negotiated by a special committee of independent

directors who hired independent advisors. The Special Committee vigorously

bargained for price and demonstrated a willingness to walk away from the

transaction. I find, in light of these facts, that this is not a controlled transaction.

Accordingly, business judgment applies, unless I determine that the Defendants

breached fiduciary duties arising outside the controller context, allegations of which

I address below.

The Plaintiffs posit that Defendants committed fraud on the Special

Committee, disabling its ability to negotiate with NetSuite. I address that theory,

below.

3. Fraud on the Board

To shift the standard of review governing the Transaction from the business

judgment rule to entire fairness, Plaintiffs posit that Ellison and Catz perpetrated a

fraud on the board. Specifically, they argue that “Ellison and Catz manipulated the

deliberative process of the Board and the Special Committee, by not disclosing
74
material facts relating to the value of NetSuite and their interactions with

NetSuite.”420

To shift the standard of review under a “fraud on the board” theory, Plaintiffs

must prove 1) that the fiduciary was materially interested, 2) that the board was

inattentive or ineffective, 3) that the fiduciary deceived or manipulated the board, 4)

that the deception was material, and 5) that the deception tainted the decision-

making process of the board.421 At minimum, for a fraud on the board claim to

result in entire fairness, a defendant must have manipulated a supine board.422 Here,

the first element is satisfied.

“[A]n omission is ‘material’ to a board if the undisclosed fact is relevant and

of a magnitude to be important to directors in carrying out their fiduciary duty of

care in decisionmaking.”423 In other words, the Court must determine if a defendant

420
Pls.’ Corrected Opening Post-Trial Br. 88, Dkt. No. 795.
421
See In re Pattern Energy Grp. Inc. Stockholders Litig., 2021 WL 1812674, at *33 (Del. Ch.
May 6, 2021) (providing the standard for fraud on the board at the motion to dismiss stage); see
also City of Warren Gen. Empls.’ Ret. Sys. v. Roche, 2020 WL 7023896, *10, 15, 17 (Del. Ch.
Nov. 30, 2020).
422
Pattern Energy, 2021 WL 1812674, at *34.
423
Id. at *33 (quoting In re Mindbody, Inc., 2020 WL 5870084, at *23 (Del. Ch. Oct. 2, 2020)).
“[T]he term “material,” when used in the context of a director’s obligation to be candid with the
other members of the Board, is distinct from the use of the term ‘material’ in the quite different
context of disclosure to stockholders in which [a]n omitted fact is material if there is a substantial
likelihood that a reasonable shareholder would consider it important in deciding how to vote.”
City of Fort Myers Gen. Employees’ Pension Fund v. Haley, 235 A.3d 702, 719 (Del. 2020)
(internal quotation omitted).
75
caused a deprivation of material information that corrupted the board or committee’s

decision making process.424

As explained below, at trial, Plaintiffs were unable to prove that Ellison or

Catz perpetrated a fraud on the board or, more cogently, on the Special Committee.

a. Ellison Did Not Defraud the Oracle Board or the Special
Committee

The Plaintiffs contend that Ellison misled the Special Committee by failing to

disclose to the board or the Special Committee (i) his critiques of NetSuite’s business

strategy, (ii) the business strategies that he planned to implement at NetSuite

following the Merger, and (iii) his January 27, 2016 phone call with Goldberg.425

These supposed omissions fail to convince me that Ellison perpetrated a fraud on the

board. I assess them in turn.

i. Critiques of NetSuite’s Business Strategy

Plaintiffs first argue that Ellison materially misled the Oracle board by failing

to disclose his belief that NetSuite was on a path to be “crushed” by Oracle if it did

424
In re Baker Hughes Inc. Merger Litig., 2020 WL 6281427, at *20 (Del. Ch. Oct. 27, 2020).
425
Pls.’ Answering Post-Trial Br. in Response to the Opening Post-Trial Br. of Defs. Safra A. Catz
and Lawrence J. Ellison 44–45, Dkt. No. 813.
76
not correct its course.426 Plaintiffs contend that NetSuite was moving up-market

while Oracle, with Fusion, was moving down-market.427 The inevitable clash, which

Plaintiffs aver was already occurring and NetSuite was going to lose,428 was going

to depress NetSuite’s future share price, and Ellison knew this.429

The Plaintiffs’ theory that Ellison materially misled the board by not voicing

his criticisms of NetSuite relies, in part, on his supposed knowledge that competition

between Oracle and NetSuite in the future would be such that only one could thrive.

It also relies on a lack of action by NetSuite to adjust course in response to Ellison’s

advice to NetSuite’s management, supposedly dooming NetSuite’s prospects.

Plaintiffs put forward a significant amount of evidence regarding competition, and I

include the most compelling examples below. However, in light of the evidence

below, I find that the two companies were not significant competitors, although they

competed at the margins. Further, Ellison’s critiques of NetSuite’s business strategy

would not have been material to the Special Committee because NetSuite was in the

process of implementing them.

426
Pls.’ Corrected Opening Post-Trial Br. 91, Dkt. No. 795.
427
Id. at 90–91.
428
Id. at 22–27, 29–32.
429
Id. at 90–91; Pls.’ Answering Post-Trial Br. in Response to the Opening Post-Trial Br. of Defs.
Safra A. Catz and Lawrence J. Ellison 30, Dkt. No. 813.
77
 In April 2015, Oracle executive Rod Johnson reported to Oracle’s Committee

on Independence Issues regarding competition between Oracle and NetSuite.430 He

noted that although NetSuite “competes”431 were growing in the upper mid-market,

they were still a low percentage of potential ERP sales.432 However, he expected

such competes to grow in number as Oracle grew coverage in the mid-market.433 He

noted that Oracle “dominate[ed]” in the larger opportunities.434 Overall, however,

Johnson did not believe that NetSuite was a “significant or major” Oracle

competitor.435

In May 2015, Jeff Henley, a salesman and Vice Chairman of the board, was

seeing NetSuite “trying to come up market” while Oracle, with Fusion, was going

“down to smaller and smaller” companies.436 In an email to a fellow Oracle

salesman, Henley agreed to call or email any smaller company that was thinking of

making the switch to Oracle.437 As an exclamation and to show his enthusiasm

Henley wrote, “Love crushing Ne[t]Suite!”438

430
JX427.
431
That is, Johnson used “compete” as a noun, meaning what native speakers of English might
refer to, quaintly, as “an instance of competition.” I reluctantly adopt Johnson’ usage throughout.
432
JX427 at 17.
433
JX427 at 17.
434
JX427 at 17.
435
JX440 at 1.
436
Tr. 22:3–13.
437
JX933.
438
JX933 at 1.
78
 In August 2015, Catz received a presentation deck that showed 26% of

Oracle’s cloud wins in the first three fiscal quarters were over NetSuite.439 That

presentation, however, did not state the number of competes or losses. 440 Later, in

August 2016, an Oracle presentation on ERP wins and losses showed Oracle as

winning 75% of the deals they compete in against NetSuite in the upmarket and 58%

in the mid-market.441 There was no discussion of how these win-rates relate to either

company’s broader deal flow.

When discussing the anti-trust risks of the Proposed Transaction, Kehring

wrote,

I don’t see anything below that is harmful from an antitrust perspective.
the only area I think we should be careful in is not to suggest different
markets for SMEs, enterprises etc but to position the different target
customer categories as fluid and constraining each other and part of a
broader market. While it might be tempting to say that [NetSuite] serves
e.g. only smaller businesses and therefore they are in a different
antitrust market and there is no or very small overlap with us, that type
of rigid segmentation is something we have consistently argued against
since Peoplesoft.442

Oracle displayed Fusion’s functionality at the OpenWorld conference in

September, 2016.443 This provided NetSuite the opportunity to investigate its soon

439
JX512 at 9.
440
See JX512 at 9.
441
JX1471 at 4.
442
JX765 at 1 (errors in original).
443
Tr. 2742:3–17, 2867:2–5.
79
to be sister product.444 A NetSuite employee wrote that Fusion was a better product

than he had thought; it was indeed a ground up re-write, but not a unified

codebase.445 Fusion was meant to be adopted piecemeal to allow a gradual transition

for existing customers, which meant NetSuite would “continue to have an

opportunity to differentiate and sell to customers who value a unified suite rather

than a well-integrated one.”446 As far as customer targets, the employee wrote,

“there is currently more overlap . . . than I had previously thought,” “they’re starting

by getting good for the mid-market and then adding sophistication to move up,” and

“[t]wo-tier ERP is a focus for them too.”447 That said, he also noted that the biggest

limitations in the mid-market for Fusion were that “platform-implementations may

be too expensive,” the sales team may not be good at reaching the mid-market, and

high operations cost.448 The employee’s conclusion was “I think their functionality

and usability for the upper mid-market means we should focus on the lower- and

mid-mid-market and the larger small businesses — the 20–1000 employee

market.”449

444
See JX1623.
445
JX1623 at 1.
446
JX1623 at 1.
447
JX1623 at 3.
448
JX1623 at 3.
449
JX1623 at 3.
80
 As they contend Oracle was pushing downwards, the Plaintiffs argue that

NetSuite was pushing upwards and out of its core market. They cite to NetSuite’s

2016 Plan, which calls for that company to “double down on areas of Enterprise

success,”450 a May 5, 2016 diligence presentation which noted, “moving up market

and going global with One World” was a part of NetSuite’s winning strategy,451 and

a post-acquisition presentation which noted that prior to acquisition, NetSuite was

“making a big push to move upmarket” but after acquisition it was “re-focusing on

the mid-market and the Suite.”452

Although there was competition between Oracle and NetSuite at the margins,

I find that the two were not significant competitors. To quote NetSuite’s other

founder, Goldberg, “We used to have a saying about Oracle ERP, that if both of us

were in the same room, one of us was in the wrong room.”453 When viewed as a

percentage of NetSuite deals in Q1 2014 and Q1 2015, Oracle was a competitor in

3% and 2% of NetSuite deals respectively.454 NetSuite won 50% of the 28 total

450
JX596 at 26.
451
JX889 at 3.
452
JX1974 at 13.
453
Tr. 941:2–4.
454
JX430 at 2; Tr. 746:12–748:16; see also Tr. 2688:8–2690:9 (“9,000 sales opportunities that
occurred over that six-quarter period. Oracle was identifiably present at the same firm about 11
percent of the time, 942 opportunities. And of those, Oracle won the opportunity — they got the
contract — 2 1/2ish percent of the time. And this, I think, gives you some initial sense that, yes,
Oracle and NetSuite do encounter each other, but it’s not a big part of NetSuite’s sales book. And,
in fact, the encounters between Oracle and NetSuite are relatively rare.”).
81
deals and 55% of the annual recurring revenue.455 When looking at the six financial

quarters of competition from 2015 to mid-year 2016, out of 9,000 NetSuite sales

opportunities, Oracle was identifiably present 11% of the time and Oracle won less

than a quarter of those interactions.456 The two companies excelled in different

markets, and it was not fraudulent for Ellison not to affirmatively declare otherwise

to the Special Committee.

At trial, the Plaintiffs suggested that I should confine my analysis to the

overlapping market segment.457 In that segment, they argue, there was increasing

competition between Oracle and NetSuite, and NetSuite was fighting a losing war.458

In my view, Plaintiffs’ position is logically flawed and incongruent with the data.459

First, despite the Plaintiffs’ protestations,460 NetSuite had not abandoned its

down-market to push upwards. Plaintiffs’ evidence for this abandonment was a

single bullet point on NetSuite market strategy in the notes of an Oracle employee

who attended a diligence presentation given to Oracle.461

455
JX430 at 2.
456
Tr. 2688:8–2690:9. This dataset was likely overinclusive of competition as it did not take into
account instances where NetSuite and Oracle were bidding for different projects within the same
company. Tr. 2690:23–2691:17.
457
Tr. 2722:5–2741:12.
458
Tr. 2722:5–2741:12.
459
See Tr. 2695:2–2696:7.
460
Tr. 2719:22–2720:12 (citing JX921 at 5).
461
Pls.’ Corrected Opening Post-Trial Br. 23, Dkt. No. 795 (quoting JX921) (“Do not go after
small companies (<100 employees)”).
82
 In fact, NetSuite was in the process of implementing changes to address

Ellison’s 2015 concerns and the Special Committee knew about these efforts.

Though he disagreed at first, Goldberg came around to Ellison’s way of thinking.462

NetSuite developed project Atlas, later marketed as SuiteSuccess, to increase its

profitability and ability to scale.463 Rather than focusing on expensive one-off

customizations, the purpose of project Atlas was to create templates for industries—

“verticals”—and subsections of industries—“micro-verticals”—that could be

tailored to each customer with little customization.464 Atlas and the verticalization

of NetSuite were priorities of NetSuite following the discussion with Ellison and

part of the company’s “Winning Growth Strategy.”465 However, individual verticals

take time and NetSuite planned to build one to two per year,466 starting with the retail

apparel vertical.467

Plaintiffs contend that NetSuite failed to abandon its push upmarket, noting

that “moving up market and going global with OneWorld” was part of NetSuite’s

462
JX525 at 3.
463
Tr. 1044:9–1045:1, 930:12–932:12.
464
Tr. 916:4–917:1.
465
See JX889 at 3; see also Tr. 752:17–754:17.
466
Tr. 921:4–16, 752:17–53; JX546 at 2 (indicating that NetSuite intended first to adopt a pilot
industry for its verticalization initiative, and then develop 1 to 2 additional verticals per year);
JX584 at 13.
467
Tr. 757:8–15, 930:20–931:1.
83
“Winning Growth Strategy.”468 That same presentation included “Key Business

Drivers” such as “[g]rowing [the] average selling price in the mid-market” in part

by “selling to larger, mid-size enterprises” and increasing enterprise customer count

as well as deal size.469 Plaintiffs further noted NetSuite’s target market, the “Fortune

5 Million: US Enterprise & Mid-Market SMBs,” included firms with over 1000

employees as well as the substantial percentage of its revenue, 15%, that NetSuite

derived from these large businesses.470

NetSuite did have some large customers and, for a time, it was moving up-

market. However, NetSuite tempered its indiscriminate move upmarket when it

began developing Atlas.471 Further, of the two initiatives, Atlas and verticalization

in the mid-market was the initiative that got more resources.472 NetSuite was not

designed for “large” customers473 and James, from her own experience, noted that

the software did not function above a certain number of users.474 NetSuite sought

larger customers opportunistically, but many of their enterprise clients were “tier

468
Pls.’ Answering Post-Trial Br. in Response to the Opening Post-Trial Br. of Defs. Safra A. Catz
and Lawrence J. Ellison 15, Dkt. No. 813 (citing JX889 at 3).
469
JX889 at 18.
470
Pls.’ Answering Post-Trial Br. in Response to the Opening Post-Trial Br. of Defs. Safra A. Catz
and Lawrence J. Ellison 15–16, Dkt. No. 813 (citing JX1242 at 23, 7).
471
Tr. 953:2–21.
472
Tr. 953:2–21.
473
Tr. 874:23–876:3.
474
Tr. 1304:6–1305:2.
84
two” deployments of NetSuite to subsidiaries.475 Further, there was no indication

that NetSuite’s win rate against Oracle was on a downward trend.476

The ambiguous nature of competition in the cloud segment described above

in perhaps excessive detail demonstrates that Ellison did not defraud the Special

Committee by not providing it with his views. Beyond this, the Special Committee

performed diligence and was not supine or naive. James was an experienced

executive who worked at Intel for decades and presided over a myriad of

acquisitions.477 Conrades was a similarly experienced executive who “spent 61

years marketing and selling hardware and software to business enterprises and

governments around the world.”478 Panetta, a former CIA director and Secretary of

Defense, lacked the executive experience of James and Conrades but brought

poignant analytical skills to the Special Committee.479

The Special Committee brought their collective experience to bear in the

performance of diligence. At the Special Committee’s first meeting on April 8,

2016, after Oracle management presented on the strategic rationale of the acquisition

of NetSuite, the Special Committee requested a “more in depth presentation” of the

475
Tr. 921:17–922:13, 1850:10–17; JX903 at 1.
476
Tr. 2741:7–12 (“I did test whether or not Oracle generally had a trend in increasing win rates,
and that was not significant. It wasn’t even close.”).
477
Tr. 192:2–21.
478
Tr. 177:19–190:16.
479
Tr. 191:4–192:1.
85
topic and potential alternatives.480 On May 5, 2016, James attended a six hour in-

person diligence meeting with the Special Committee’s advisors, members of Oracle

management (not including Catz), and representatives of NetSuite.481 That meeting

included a discussion of NetSuite’s “market positioning” and “competitive

environment,”482 and on May 13, 2016, James reported the “potentially

complimentary nature” of Oracle and NetSuite as well as their “respective

addressable markets.”483 On May 20, 2016, Oracle management and Moelis

separately presented to the Special Committee on the strategic rationale of acquiring

NetSuite and potential alternatives.484 In its presentation, Moelis noted Oracle’s lack

of a small and medium business ERP product and that NetSuite could “address

[Oracle’s] shortcomings in Cloud ERP.”485 The Special Committee’s advisor also

noted the importance of quick action given the lack of competitors in that market

segment.486 In consideration of the presentations, the Special Committee came to

480
JX779 at 2–3.
481
PTO ¶ 68; JX1265.
482
JX1265 at 5.
483
JX931 at 1.
484
PTO ¶ 69; Tr. 1155:24–1157:14 (“I thought Moelis’s presentation was extraordinarily helpful.
This presentation was very detailed, and it looked at the market, and they had — they had their
own assessment of Oracle, which I think was very important for us to get somebody else’s view
of what Oracle — you know, how Oracle’s Fusion is seen in the market, and alternatives, and, you
know, what’s out there.”), 592:21–594:9.
485
JX977 at 33; Tr. 2349:16–2350:8, 2377:4–22, 2372:15–2374:10.
486
Tr. 2356:12–2357:23 (“Again, and this also was validated in our third-party research and our
own understanding of the market, this market was evolving quickly. I think it was very, very

86
the conclusion that “an acquisition of [NetSuite] could be highly beneficial to

[Oracle], that alternatives for participation in this market segment were unattractive

or not readily or timely available and that an acquisition of [NetSuite] could fill a

strategic gap for [Oracle] that it was important for [Oracle] to address.”487 At this

point, one and a half months after its formation, the Special Committee determined

that it was ready to consider making an initial offer for NetSuite.488

In sum, I do not find any evidence that Ellison or Catz breached fiduciary

duties by “concealing” the extent of competition between Oracle and NetSuite.

ii. Post-Closing Business Strategies

Plaintiffs contend that Ellison’s failure to disclose his post-close business

strategies for NetSuite was a fraud on the board because, if followed, Ellison’s

strategies would entail “significant cost and risk, as well as reduced revenues,”

which were not accounted for in the analyses given to the Special Committee. 489 Per

important while there was still a lot of untapped issues, I think we had approximately like 50
percent of the market was still greenfield, it was important to have your solution now, because a
lot of other people saw this market as highly attractive too.”); JX977 at 33–35.
487
JX949 at 2.
488
JX949 at 2.
489
Pls.’ Corrected Opening Post-Trial Br. 93, Dkt. No. 795.
87
Plaintiffs, the evidence for this claim is found in Ellison’s January 27, 2016 phone

call with Goldberg.490

As discussed below, in acquiring NetSuite, Oracle followed its usual practice

in M&A transactions. Typically, in Oracle’s acquisitions, post-close plans and

structuring are not decided until after a deal is signed and Oracle’s Financial

Planning and Analysis team draws up an operating budget for the soon to be acquired

entity. Therefore, Ellison’s thoughts on the post-close running of NetSuite,

addressed to Goldberg or otherwise, would have had no impact on the Special

Committee’s deliberations and therefore were immaterial.

Oracle institutionalized its M&A strategy in 2006 after Kehring took over

Corporate Development.491 This included the implementation of a standard

framework to assess potential targets.492 Corporate Development kept tabs on

potential takeover targets and frequently presented them to the executive team.493

Once a potentially viable target was lined up and the financial framework was ready,

Corporate Development sat down with leadership, typically Catz and Hurd, to

discuss the use of the business as part of Oracle.494 To assess a potential acquisition

490
Id. at 92.
491
Tr. 529:11–531:2, 549:20–23, 551:14–552:1.
492
Tr. 569:14–570:8, 529:11–531:2, 549:20–23, 551:14–552:20.
493
See Tr. 455:5–14.
494
Tr. 550:2–14.
88
target, the Corporate Development team created an incremental model based on

public information and any diligence that had been performed.495 “The purpose of

the incremental model is to reflect the incremental revenue and expenses as a result

of owning the target by which [they thought], over a five-year horizon, [Oracle

could] accomplish.”496 These models were not operating plans; rather, they were

financial plans.497 Corporate Development projected the potential target’s revenue

based on its prior performance rather than its expected performance based on

synergies and cross-sales with Oracle products.498 However, when examining costs,

the model took into account additional costs to Oracle as well as synergies and

savings.499 Thus, the incremental cost to Oracle, such as hiring additional personnel

within Oracle’s various divisions to accommodate the putative target, were added to

the model.500 Similarly, cost savings to the putative target, such as use of Oracle’s

database that the company was previously paying for, were incorporated into the

model.501 Oracle’s prior acquisitions, overall corporate activities, and financial

495
Tr. 550:22–551:6.
496
Tr. 548:7–17.
497
Tr. 550:15–21.
498
Tr. 554:11–555:1 (“Q. Does Oracle include the projected revenue from those cross-sales in its
incremental models? A. No. On the revenue side, in order to be conservative, we only project
out the revenue of the acquired company’s products and services.”).
499
Tr. 556:7–20.
500
Tr. 555:17–556:20.
501
Tr. 555:17–20, 501:19–502:12.
89
results helped to inform the inputs for the model, which were ultimately provided by

Catz and Hurd.502 As due diligence progressed and new information came to light,

the model was updated to reflect that information.503

In addition to the incremental model, the Corporate Development team

assessing an acquisition performed several other analyses.504 These included a

discounted cash flow analysis, discounted future value analysis, accretion/dilution

analysis, comparable publicly traded company multiples analysis, comparable M&A

transaction multiples analysis, review of 52-week highs, and institutional analyst

price targets analysis.505

While the incremental model was Oracle’s primary assessment tool before

signing and remained an important barometer post-acquisition,506 Oracle

management’s modeling method changed post-signing. Post-signing, Oracle’s

Financial Planning and Analysis team built a “bottoms-up” operating budget.507 The

operating budget treated pre-existing expenditures differently than an incremental

model would.508 As such, the operating budget assigned to the target a portion of

502
Tr. 557:1–558:1.
503
Tr. 557:1–8.
504
Tr. 567:5–24.
505
Tr. 567:18–24.
506
Tr. 551:14–552:14.
507
Tr. 540:24–542:1, 225:1–18.
508
Tr. 540:24–545:6.
90
Oracle’s pre-existing expenditures useful to that company.509 For example, the

incremental model would not include a cost for use of Oracle’s database or

previously unused Oracle office space, where the operating budget would.510

The NetSuite transaction followed the same framework as Oracle’s other

deals. Oracle management prepared an incremental model, discounted cash flow

analyses, and multiples based on precedent transactions.511 Kehring with the

assistance of Catz and Hurd set the assumptions underlying these models.512 On

receipt of more information, Catz revised the incremental model of NetSuite

downwards taking a more conservative view of NetSuite’s value.513 As a result of

Special Committee questioning and push-back, she later acknowledged that this

downwards shift was an analytical mistake514 and provided the revised model to the

Special Committee alongside two other models. 515 In doing so, Catz left the decision

of what model to follow to the Special Committee, and the transaction followed the

usual pre-signing path.

509
Tr. 540:24–545:6.
510
See 501:19–504:7, 1543:3–1544:5.
511
JX979 at 1–2; JX980.
512
Tr. 479:16–480:12, 492:20–493:23.
513
JX1183 at 7–8; Tr. 1481:2–1482:9.
514
Tr. 1485:1–22.
515
JX1206 at 2; JX1204 at 2–5.
91
 Further, Ellison’s failure to reveal managements’ post-closing plans was not

material to Oracle or the Special Committee’s deliberation process. Post-close,

Oracle invested heavily in NetSuite, focused on international expansion, and

continued the verticalization efforts.516 There is no reason to think that these actions

were taken to decrease Oracle/NetSuite’s value; to the contrary, all the fiduciaries

had an incentive to maximize NetSuite’s value to Oracle, post-acquisition.

The same reasoning, I note, applies to Plaintiffs’ allegations on this matter

concerning Catz.

iii. Ellison’s “Assurances” to Goldberg

Plaintiffs contend that Ellison’s failure to inform the board of the “assurances”

he made to Goldberg were a fraud on the board because they deprived the Oracle

board of negotiating leverage.517 In their conversation on January 27, 2016, initiated

by Goldberg, Ellison stated his expectations for how Hurd would treat NetSuite.

Similarly, he said that Oracle’s intent was to continue to employ NetSuite

management. This was consistent with Oracle’s standard practice in many of its

large acquisitions, which was to treat the acquired companies as global business

516
JX1667; JX1785; Tr. 294:2–11, 1499:18–1500:5, 1527:10–1528:18.
517
Pls.’ Corrected Opening Post-Trial Br. 94, Dkt. No. 795.
92
units.518 This conversation should have been, and was not, disclosed to the board or

Special Committee, presumably because Ellison was recused from discussions with

the board over NetSuite. Though it would have been prudent for Ellison to err on

the side of greater disclosure, Plaintiffs did not show, and logic does not dictate, that

Ellison’s failure to disclose the telephone conversation to the Special Committee

corrupted the Special Committee’s process.

Plaintiffs’ theory has already been addressed and rejected; they contend that

the failure to disclose this conversation gave up Oracle negotiating leverage by

foreclosing hostile negotiation tactics519 and “greased the skids for a deal.”520 As

discussed earlier, the Special Committee independently chose not to engage in

hostile negotiation.

In fact, even if Ellison’s non-committal statements assuaged Goldberg’s

concerns, I fail to see how this is an issue for Oracle’s Special Committee such that

it tainted their process. In other words, Ellison’s effort to open Goldberg’s mind to

a potential transaction, if the call can be characterized as such, in no way impacted

518
Notice of Lodging of Dep. Transcripts and Video Recordings Ex 19, at 75:6–16, Dkt. No. 730;
see Tr. 1452:21–1453:4 (highlighting that Oracle had eight global business units at the time of the
NetSuite acquisition).
519
Pls.’ Corrected Opening Post-Trial Br. 94, Dkt. No. 795.
520
Pls.’ Answering Post-Trial Br. in Response to the Opening Post-Trial Br. of Defs. Safra A. Catz
and Lawrence J. Ellison 36, Dkt. No. 813.
93
the Special Committee’s deliberations about or negotiations regarding the

transaction.

b. Catz Did Not Defraud the Oracle Board or the Special
Committee

Plaintiffs contend that Catz breached her fiduciary duties by failing to disclose

her “assurances to Goldberg,” by failing to inform the board and the Special

Committee of her “prohibited price discussion” with Nelson, by not “truthfully and

completely” answering Moelis’s questions about the competitive landscape, and by

providing “Moelis and the Special Committee with phony projections.”521

i. Catz’s “Assurances” to Goldberg

Plaintiffs contend that Catz made assurances to Goldberg and that these

assurances deprived the Special Committee of negotiating leverage.522 Underlying

this claim are Catz’s May 26, 2016,523 and June 22, 2016,524 calls with Goldberg,

which she did not report to the Oracle board.525 Plaintiffs aver that “Catz [was] . . .

521
Pls.’ Corrected Opening Post-Trial Br. ii, 94–99, Dkt. No. 795.
522
Id. at 94.
523
JX988; Tr. 784:9–786:15.
524
Tr. 1633:18–1636:17.
525
Pls.’ Corrected Opening Post-Trial Br. 94, Dkt. No. 795.
94
in selling mode when speaking to Goldberg” and “NetSuite was empowered to

demand a high price, secure in the knowledge that” Oracle would not “take a hard

line in negotiations, criticize NetSuite, or otherwise go public or go hostile.”526 I do

not find this theory consistent with the evidence.

During the first conversation on May 26, 2016, Goldberg expressed a lack of

desire to sell NetSuite, that he understood his fiduciary duties, and that Oracle would

need to offer a good price.527 Catz did try to overcome his unwillingness to sell by

stating that the plan was to keep NetSuite independent.528 During the second

conversation, Catz testified credibly that the pair did not discuss the transaction.529

As stated in respect to Ellison, because the Special Committee was unaware of the

conversations, its decision not to go hostile was its own. No leverage was lost. The

Special Committee process was not corrupted. While the conversations should have

been reported, failure to do so did not amount to a fraud on the Special Committee.

526
Id.
527
JX988; see also Tr. 784:9–786:15.
528
Tr. 784:16–19, 982:4–21.
529
Tr. 1649:14–1650:7, 1636:18–1637:4.
95
 ii. Price Discussion with Nelson

Plaintiffs contend that Catz negotiated with Nelson and that the discussion of

a Concur multiple anchored price negotiations at $125 per share.530 From there, they

contend that this discussion anchored Catz’s thinking in the creation of projections

and that the Special Committee should have been made aware of this.531

I have found that despite the mention of the Concur multiple, Catz and Nelson

did not negotiate a price for NetSuite. Catz did not mention the requested multiple

to the Special Committee. I cannot find that the omitted information was material

to the Special Committee so as to justify a finding of fraud on the board.

The Special Committee made the opening bid, and its deliberative process was

clear. Catz and Oracle management presented their analyses to the Special

Committee and recommended an opening bid of $100.00 per share.532 That figure

was based on NetSuite’s 52 week high of $99.73 and the roughly 25% premium over

the trading price that $100.00 per share represented.533 Moelis reviewed the models,

questioned management about them, and concluded they were reasonable.534 After

530
Pls.’ Corrected Opening Post-Trial Br. 95–96, Dkt. No. 795.
531
Id.
532
PTO § 70; JX979 at 1–2.
533
Tr. 618:21–621:3, 1459:10–1465:20; JX980 at 7.
534
Tr. 2389:16–2393:9, 2398:20–2399:22 (“Yeah, we believed them — we certainly took note of
them. They were reasonable. From a cost savings perspective, they struck us as reasonable. And

96
management left the meeting,535 Moelis gave its report and analyses on public

market price targets, revenue multiples, and precedent transactions.536 Based on its

own analyses, Moelis also suggested $100.00 per share.537 Their reasoning rested

on similar grounds: NetSuite’s 52 week high, trading multiples for SaaS companies,

and the psychological necessity of starting with a “three-figure” price per share.538

Despite initially settling on $102.00 to $105.00 per share, the Special Committee

reflected on the advice of Oracle management and its advisors and offered $100.00

per share.539 Catz’s and management’s recommended first offer was in line with that

of Moelis’s independent advice.

While Catz should have informed the Committee of the “Concur multiple”

suggested by Nelson, Catz’s actions did not materially mislead the Oracle Special

Committee or corrupt its proceedings.

then we looked at the revenue scale, interestingly enough, if I remember correctly, it was maybe
even conservative.”); see JX975.
535
JX979 at 2.
536
JX979 at 2; JX975.
537
See Tr. 2420:12–22.
538
Tr. 2419:3–2420:22.
539
JX979 at 2; Tr. 1163:6–1165:6; 56:8–57:5; 215:9–216:21.
97
 iii. Competitive Landscape

As with Ellison, Plaintiffs contend that Catz withheld knowledge of

competition between Oracle’s fusion product and NetSuite, and that she provided

Moelis with inaccurate information on Oracle’s cloud ERP capabilities.540 I have

already found, above, that the Special Committee process was not corrupted by

misleading the Special Committee as to competition between the products.

The Special Committee and its advisors were apprised of the level of

competition between NetSuite and Oracle. By virtue of their presence at the

meeting, the members of the Special Committee were aware of Olsen’s reports at

Porcupine Creek.541 Similarly, Moelis provided the Special Committee with analyst

reports highlighting the potential of competition between the Oracle and NetSuite.542

Overall, the level of competition was not deliberately hidden from the Special

Committee, on the contrary, the Special Committee was briefed and aware of the

two companies’ positions within the market. The Special Committee and its

advisors were free to draw on or request information from a broad range of sources

including those cited by the Plaintiffs. Catz was not the exclusive source for this

information and, given the limited competition between the two entities, Catz did

540
Pls.’ Corrected Opening Post-Trial Br. 96–97, Dkt. No. 795.
541
JX624; JX614; JX637.
542
Tr. 2444:1–2445:20; JX1131.
98
not breach her fiduciary duties with respect to non-disclosure of materials relating

to the competition between NetSuite and Oracle.

iv. “Phony” Projections

Plaintiffs contend that “Catz oversaw the creation of artificial and inflated

financial projections.”543 The incremental model for NetSuite, they claim, was

overly aggressive and “did not reflect Ellison’s actual plans for NetSuite” or the

eventual operating budget.544 I have already rejected this allegation regarding fraud

on the Special Committee by Ellison; the allegations against Catz suffer the same

fate.

As discussed above, Oracle followed its M&A playbook in acquiring

NetSuite. The seeming incongruence between the incremental model and the

operating budget are therefore unsurprising, as the two had entirely different

purposes.545 By Plaintiffs own contention, Catz’s analytical role concluded with

bidding.546 Overall, the Plaintiffs contentions boil down to an assertion that Catz’s

model did not match what Oracle ultimately did with NetSuite and that Catz used

543
Pls.’ Corrected Opening Post-Trial Br. 97, Dkt. No. 795.
544
Id.
545
Tr. 501:19–504:7, 540:24–545:6, 1543:3–1544:5.
546
Pls.’ Corrected Opening Post-Trial Br. 62, Dkt. No. 795.
99
incorrect, aggressive assumptions.547 The record does not indicate that Catz

breached fiduciary duties in this regard, or that the Special Committee was defrauded

by Catz.

III. CONCLUSION

This transaction was negotiated at arm’s length by a fully empowered Special

Committee. Ellison was conflicted, but recused from the acquisition process. He

did not exercise control over the transaction, nor did he or Catz materially mislead

or defraud the Special Committee so as to taint the process. After the foregoing

review of the post-trial record, I find that business judgment obtains. Accordingly,

I find for the Defendants.

547
Id. at 97–98.
100