Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
In re TIBCO Software Inc. Stockholders Litigation
Citation: Not availableDocket: CA 10319-CB
Court: Court of Chancery of Delaware; October 20, 2015; Delaware; State Appellate Court
Original Court Document: View Document
A stockholder of TIBCO Software Inc. challenges the $24 per share consideration agreed upon in a merger with Vista Equity Partners that closed on December 5, 2014. The merger agreement indicated an aggregate equity value of approximately $4.144 billion based on fully diluted shares, a figure that was accepted by over 96% of TIBCO’s stockholders. However, both TIBCO and Vista operated under a mistaken belief that the aggregate equity value was approximately $4.244 billion, which would have implied an additional $100 million or $0.57 per share. This error stemmed from a capitalization spreadsheet that erroneously double-counted shares, utilized during the bidding process and in Goldman Sachs’ fairness analysis. The error was identified after the merger agreement was signed on September 27, 2014, and was disclosed in a preliminary proxy statement filed by TIBCO on October 16, 2014. Following this disclosure, the plaintiff sought to enjoin the merger, claiming the TIBCO board breached its fiduciary duty by failing to act to secure the additional equity value after the error was revealed, and pressed for reformation of the merger agreement. On November 25, 2014, an opinion was issued denying the plaintiff’s motion for a preliminary injunction. The court found that the plaintiff demonstrated a reasonable probability of success regarding the reformation claim, showing that Vista and TIBCO operated under a mistaken assumption about the merger's implied equity value of $4.244 billion. However, the plaintiff failed to prove that Vista and TIBCO had a specific prior agreement to consummate the merger at that equity value, as their negotiations were expressed in terms of a share price ($24 per share) instead of an aggregate value. The merits of the fiduciary duty claim were not addressed due to the plaintiff's inability to show irreparable harm and because the balance of equities favored allowing TIBCO’s stockholders to approve the merger. After the merger, the plaintiff amended the complaint to include claims for reformation, breach of fiduciary duty, aiding and abetting (against Goldman), professional malpractice (against Goldman), and unjust enrichment (against Vista and Goldman). The defendants moved to dismiss these claims. The court concluded that all claims, except for aiding and abetting against Goldman, failed to state a claim for relief. The reformation claim remained legally insufficient because the plaintiff did not allege an antecedent agreement inconsistent with the merger price term. While the court acknowledged the plaintiff's desire to recover an additional $100 million, the reformation claim did not meet Delaware's stringent legal requirements for contract modification. The fiduciary duty claim indicated a potential breach of duty of care by TIBCO’s directors for failing to adequately inform themselves about the share count error. However, since directors are exculpated for breaches of duty of care, this claim was dismissed. The aiding and abetting claim against Goldman was sufficiently pled, as the amended complaint suggested that Goldman failed to inform the board of critical information, indicating potential complicity in the breach of duty. The professional malpractice claim against Goldman was dismissed due to California law not permitting such claims without privity. Lastly, the unjust enrichment claims were dismissed as they were governed by a comprehensive contract. Defendant TIBCO Software Inc., a Delaware corporation in the enterprise software sector based in Palo Alto, California, is named solely as a necessary party in a lawsuit seeking to reform the September 27, 2014 Agreement and Plan of Merger. The Director Defendants, comprising eight members of TIBCO's board during the relevant period, include Chairman and CEO Vivek Ranadivé, alongside Nanci Caldwell, Eric C.W. Dunn, Manuel A. Fernandez, Philip M. Fernandez, Peter J. Job, David J. West, and Philip K. Wood. Vista Equity Partners V, L.P., a private equity fund, is also a defendant through its entities Balboa Intermediate Holdings, LLC and Balboa Merger Sub, Inc. Goldman, Sachs & Co., TIBCO’s financial advisor, received $47.4 million for its services related to the merger. Plaintiff Paul Hudelson, a TIBCO stockholder during the pertinent time frame, brings the lawsuit on behalf of himself and other stockholders, excluding defendants and their affiliates, from September 26, 2014, to December 5, 2014, when the merger closed. In early 2014, TIBCO received interest from several private equity firms regarding potential transactions, which the Board initially did not pursue. After disappointing financial results were announced in June 2014, the Board held a special meeting to discuss the company’s outlook and potential sale, with Goldman presenting various strategic alternatives. By July 2014, the Board had engaged Goldman for a comprehensive review of strategic options and formally decided to explore a sale by late July. Subsequently, on August 16, 2014, the Board formed a Special Committee consisting of Caldwell, Dunn, and West to manage the sales process and evaluate all strategic alternatives for TIBCO. On August 18, 2014, the Special Committee convened and instructed Goldman to approach potential acquirers for the entire Company. Although Goldman analyzed strategic alternatives for TIBCO starting in June 2014 and engaged with potential buyers from August 2014, formal engagement occurred on September 1, 2014, upon signing an Engagement Letter. This agreement provided Goldman a $500,000 retainer, which would be forfeited if no transaction occurred, and a 1% transaction fee of the total payment for the Company’s equity, based on a transaction price of $24.50 per share or less, making nearly all of Goldman’s potential fee of $47.4 million contingent on a successful deal. On September 3, 2014, TIBCO announced the formation of the Special Committee to explore strategic options. Goldman managed negotiations and due diligence for twenty-four potential acquirers, ultimately narrowing it down to two serious bidders: Vista and Sponsor B, who accessed the data room. On August 30, 2014, Vista submitted a non-binding proposal for an all-cash transaction between $23.00 to $25.00 per share, including assumptions about outstanding shares. TIBCO and Goldman prepared a First Cap Table as of August 15, 2014, detailing share counts but failing to clarify the inclusion of approximately 4.3 million unvested restricted shares in both the unvested and outstanding totals, leading to double-counting. This error created significant misunderstandings regarding the total purchase price for the merger, as Vista was misled into calculating its bid based on inflated share counts. In mid-September 2014, Vista and Sponsor B requested updated share information, leading to a Second Cap Table prepared on September 19, 2014, which perpetuated the same error of double-counting the unvested restricted shares, now reported as approximately 4.2 million. On September 21, 2014, Goldman distributed the Second Cap Table to bidders, leading to Sponsor B's initial proposal of $21 per share on September 23, followed by Vista's bid of $23 per share on September 24. Sponsor B then increased its offer to $22.50 per share on September 25. Subsequently, Goldman requested final proposals by early afternoon on September 26. On that morning, a joint meeting of TIBCO's Board, Special Committee, and Goldman reviewed the bids, with the Board instructing Goldman to maximize the bids and discussing the financial model for a fairness opinion. Vista's internal Committee evaluated its maximum bid based on its target internal rate of return (IRR), analyzing TIBCO's projections and potential exit value to determine the maximum equity investment needed to meet its hurdle rate. The Vista Committee ultimately approved a bid for TIBCO reflecting a maximum equity value of $4.237 billion, equating to an enterprise value of $4.305 billion, which translated to a maximum price of $24.25 per share. On September 26, prior to submitting a higher bid, TIBCO identified a share count error in the Second Cap Table, specifically the omission of about 3.7 million shares related to the Long Term Incentive Plan (LTIP). TIBCO and Goldman revised the Second Cap Table to create the Final Cap Table, correcting the LTIP share count but failing to address the inclusion of unvested restricted shares in the total common stock outstanding, leaving that error uncorrected. Goldman promptly notified bidders of an LTIP share count error, suspending final bids until corrected data was provided. On September 26, Goldman sent Vista revised share count data that still double-counted unvested restricted shares. Vista requested a full updated capitalization table, which Goldman subsequently provided. After analyzing the corrected data, Vista determined that the maximum bid it could offer decreased from $24.25 to $23.97 per share, leading to a final bid of $23.85 per share, reflecting an aggregate equity value of $4.217 billion. Sponsor B submitted a competing bid of $23.75 per share. Goldman indicated that the bids were not significantly different and requested revised best and final offers. Vista increased its bid to $24 per share, resulting in an aggregate equity value of $4.244 billion. Later that evening, Goldman informed Vista that it won the auction and that TIBCO’s counsel would finalize a merger agreement. Shortly after midnight on September 27, Vista’s counsel sent an equity commitment letter to TIBCO’s counsel, promising up to $4.859 billion to finance the merger, which included a detailed calculation of the commitment amount based on the Final Cap Table. On the same day, the Special Committee and Board reviewed Vista’s final bid and Sponsor B’s proposal during concurrent meetings, where Goldman presented its fairness opinion based on the flawed share count data from the Final Cap Table. Goldman Sachs provided the Board and Special Committee with key economic insights regarding a proposed merger, indicating an implied enterprise value of $4.311 billion and an equity value for stockholders of $4.244 billion. Vista was set to acquire approximately 176.8 million shares, resulting in a valuation multiple of 18 times the latest twelve months’ EBITDA. Despite using an erroneous share count from the Final Cap Table that matched Vista's Final Bid, Goldman determined that a price of $24 per share was fair. Following Goldman’s presentation, the Special Committee recommended and the Board unanimously approved the merger, which was formalized with the signing of the Merger Agreement on September 27, 2014, under Delaware law. The Merger Agreement stipulated that each share of TIBCO common stock would convert to cash at $24.00 without interest and included a 'Company Capitalization' representation indicating 163,851,917 outstanding shares, encompassing 4,147,144 unvested restricted shares. Based on the accurate share count, Vista needed to acquire 172,670,009 fully diluted shares rather than the erroneously assumed 176,817,153. The Agreement also allowed Vista to terminate the deal if the Cap Rep was inaccurate, with any inaccuracies leading to costs exceeding $10 million. The Agreement's termination fee and liability cap were negotiated based on the equity value of $4.244 billion. The termination fee was set at 2.75% of this value, amounting to $116,700,000, down from Vista's initial request of 3.25%. Section 8.3(f) of the Merger Agreement establishes Vista's maximum liability for breaches of the agreement, termed the 'Liability Cap,' which is set at $275,800,000. This amount represents 6.5% of the total enterprise value of $4.244 billion, or twice the initially proposed termination fee of 3.25%. Despite TIBCO negotiating the termination fee down to 2.75%, Vista's Liability Cap remained unchanged. Following the merger announcement on September 29, 2014, TIBCO, Vista, and Goldman jointly released a statement indicating that TIBCO stockholders would receive $24.00 per share, totaling approximately $4.3 billion, including net debt assumptions. This valuation was based on TIBCO’s earnings before interest, depreciation, and amortization (EBITDA) for the prior twelve months. Although Vista intended to procure debt financing for part of the commitment, its presentations to lenders and rating agencies initially relied on an erroneous share count. After the merger announcement, Vista’s draft presentations continued to reflect the incorrect enterprise value until corrected on October 17, 2014. Goldman also indicated that the implied enterprise value was approximately $4.311 billion. On October 5, 2014, an error was identified in the proxy statement draft when it was revealed that 4,147,144 unvested restricted shares had been double-counted, leading to a revised total implied equity value of about $4.144 billion, a decrease of approximately $100 million from the earlier valuation. Goldman and TIBCO failed to promptly investigate whether Vista or Sponsor B relied on incorrect share count data. After being informed of the error on October 11, 2014, TIBCO's Board convened a special meeting attended by Goldman, where a revised analysis of the Merger was presented. This analysis corrected the capitalization numbers by eliminating double-counting, resulting in a decrease of the enterprise value from $4.311 billion to $4.212 billion, equity value from $4.244 billion to $4.144 billion, and the EBITDA multiple from 18 to 17.6. Goldman asserted that its previous Fairness Opinion remained unchanged, and the Board determined this revised analysis did not alter its recommendation for the Merger. The Preliminary Proxy was updated to include a disclosure regarding the share count error. On October 14, 2014, after reaffirming its approval of the Merger, TIBCO informed Vista of the share count error, which resulted in a $100 million reduction in equity value. Vista expressed confusion, believing the agreed payment was $4.311 billion. The following day, Vista forwarded an email from Goldman that included the flawed data used in its Final Bid. Goldman did not inform the Board that Vista had relied on this inaccurate data. James Ford, COO of Vista, testified that he felt 'pleasure' upon realizing the financial advantage from the reduced share count. On October 16, 2014, TIBCO filed the Preliminary Proxy, which disclosed the share count error and noted that the corrected $24 per share consideration implied an enterprise value of approximately $4.2 billion, or $100 million less than previously stated. The financial press highlighted the significant reduction in equity value, the limited disclosure regarding the error, and TIBCO's lack of intent to seek remedies for the lost $100 million for stockholders. Courts may consider SEC filings as non-hearsay evidence for judicial notice under D.R.E. 201. On October 23, 2014, the Board discussed a share count error but lacked clarity on its origin. No Board member inquired how the error occurred, whether it was Goldman’s fault, or if Goldman had communicated with Vista about the implications of the overstated share count on the merger terms. The Complaint alleges that Goldman failed to inform the Board that Vista had acknowledged reliance on the inaccurate share count during its Final Bid on October 15, 2014. Minutes from the October 23 meeting indicated uncertainty about which party used incorrect data. Special Committee member West cited the lack of information as a reason not to challenge Vista on the purchase price. The Board only learned during litigation that Vista had relied on the erroneous data and that Goldman was aware of this reliance. Subsequently, on October 29, 2014, TIBCO scheduled a special meeting for stockholders, who approved the merger, which closed on December 5, 2014. Goldman received a total fee of $47.4 million for its services, with approximately 99% contingent on the merger's closing, calculated as 1% of the aggregate consideration defined in Goldman’s Engagement Letter, amounting to $4.74 billion, inclusive of convertible securities. Plaintiff argues that Goldman should not receive any fee related to the convertible notes for two main reasons: (i) Vista did not commit to purchasing the convertible notes in the Merger, meaning no consideration was provided to the convertible noteholders, and (ii) Goldman is entitled to a fee solely on 1% of the amount net of the exercise price, and no noteholder received compensation exceeding the exercise price. Additionally, the Plaintiff asserts that Vista acknowledged this understanding by not accounting for any payment to Goldman concerning the $600 million in convertible notes after revising its financial model with information from the Engagement Letter. However, Vista did not dispute Goldman’s inclusion of the convertible notes' value in its final fee calculation. The procedural history reveals that the first of seven class action lawsuits challenging the Merger was filed on October 6, 2014. The Plaintiff sought to delay the Merger until the agreement was amended to include an additional $100 million for TIBCO's equity, alleging breach of fiduciary duty against the Board and aiding and abetting against Vista and Goldman. The court consolidated the cases and appointed the Plaintiff as lead counsel. The Plaintiff later amended the complaint to include TIBCO and additional unjust enrichment claims against Vista and Goldman. A motion for a preliminary injunction was denied on November 25, 2014. The Verified Second Amended Class Action Complaint was filed on March 10, 2015, followed by motions to dismiss from the defendants in April 2015. On July 23, 2015, the Plaintiff voluntarily dismissed the aiding and abetting claim against Vista, leaving six claims for consideration: (1) reformation of the Merger Agreement, (2) breach of fiduciary duty against the Director Defendants, (3) aiding and abetting against Goldman, (4) professional malpractice and negligence against Goldman, (5) unjust enrichment against Vista, and (6) unjust enrichment against Goldman. Under the Court of Chancery Rule 12(b)(6), a motion to dismiss can only be granted if the Plaintiff cannot recover under any conceivable circumstances, with all reasonable inferences drawn in the Plaintiff's favor. For the reformation claim, Rule 9(b) requires specific details regarding the alleged mutual mistake. Rule 9(b) mandates that facts supporting a claim for reformation must be stated with sufficient particularity to inform the defendant of the allegations. In Count I of the Complaint, the plaintiff seeks reformation of the Merger Agreement, citing an alleged mutual mistake regarding the share price, which was set at $24 per share. The accurate share count suggested an enterprise value of approximately $4.211 billion and an equity value of $4.144 billion. The plaintiff contends that the Merger Agreement should reflect a higher enterprise value of $4.311 billion and an equity value of $4.244 billion, equating to roughly $24.57 per share. Reformation is described as an equitable remedy aimed at aligning the written contract with the parties' true agreement. The Court of Chancery has the authority to reform contracts to accurately reflect the parties' intentions but cannot create new contracts merely because a party is dissatisfied with the outcome. Reformation requires evidence of an antecedent agreement that the written document fails to express. Mistakes leading to reformation must stem from the drafting process, not from misunderstandings about the contract’s terms. If there is a lack of mutual assent, the court will not create a contract for the parties. Reformation in law aims to correct a written instrument to align with the true intentions of the parties involved, rather than simply producing a reasonable result. Clear and convincing evidence is required to support a claim for reformation, as established by Delaware Supreme Court cases such as *Cerberus International, Ltd. v. Apollo Management, L.P.*, which outlines a three-part framework for analyzing reformation claims. To succeed, the plaintiff must demonstrate: (1) that all parties believed the written agreement reflected a specific prior understanding concerning the terms, (2) that both parties were mistaken regarding the written terms, and (3) that the parties had a mutual agreement on the terms that differ from what was executed. This high standard is intended to maintain the integrity of written agreements and ensure that modifications to contracts are not made lightly. The example from *Cerberus* illustrates this framework, where a dispute arose over the interpretation of a merger agreement regarding the purchase price, requiring proof of mutual misunderstanding by both parties about specific terms. Vista and TIBCO both believed that the Merger would occur at an aggregate equity value of $4.244 billion and had reached a pre-agreement understanding to this effect. The current procedural context involves a motion to dismiss, under which the plaintiff must allege specific facts regarding a mutual mistake that are plausible enough for the court to believe the plaintiff could prove each element by clear and convincing evidence. In the preliminary injunction (PI) opinion, it was found that the plaintiff had a reasonable probability of proving the first two elements of the Cerberus test—showing that both Vista and TIBCO mistakenly believed the total payment for TIBCO's equity would be $4.244 billion. However, the plaintiff failed to demonstrate a reasonable probability regarding the third element, which is critical to the current dispute. The court concluded that while both parties had the mistaken belief, the plaintiff did not establish that they had specifically agreed to the $4.244 billion value in the Merger Agreement, ultimately indicating that the agreement did not accurately represent their mutual understanding of the essential economic term of the deal at $24.00 per share. Key evidence from September 26 and 27 indicates that the agreement between Vista and TIBCO was expressed in terms of a per-share price of $24.00, rather than an aggregate equity value. This is supported by three primary documents: Vista's September 26 bid letter, the September 27 Board meeting minutes confirming acceptance of the $24.00 offer, and the executed Merger Agreement from September 27, which specifies the consideration for TIBCO stockholders as $24.00 per share. The transaction was conducted on a per-share basis, consistent with the auction process managed by Goldman on behalf of TIBCO. There was no specific aggregate equity value offered or accepted during negotiations, as the number of fully diluted shares was variable and subject to change until a definitive agreement was reached. The Merger Agreement also acknowledged that the number of fully diluted shares could further fluctuate, allowing Vista a termination right if inaccuracies in share counts increased acquisition costs by more than $10 million. Importantly, the agreement did not stipulate that the $24.00 per share consideration would adjust based on share count changes. Therefore, it is challenging to assert that a fixed aggregate equity value of $4.244 billion was explicitly agreed upon, as the parties instead allocated the risk associated with the aggregate equity value through various contractual provisions in the Merger Agreement. TIBCO communicated this understanding to its stockholders in the proxy statement. Overall, the Plaintiff has not demonstrated a reasonable probability of proving a specific agreement for a $4.244 billion aggregate equity value, as the Merger Agreement accurately reflects the consensus on the per-share economic term. Vista, representing all defendants for Count I, argues for the dismissal of the reformation claim based on two theories: standing and the sufficiency of allegations. The court opts to address only the sufficiency of the allegations. Vista does not contest the first two elements of the reformation claim, which assert that both Vista and TIBCO believed the Merger would occur at an aggregate equity value of $4.244 billion at the time the Merger Agreement was signed. However, Vista claims Count I is fundamentally flawed because it fails to adequately plead that Vista and TIBCO had a mutual agreement on this equity value prior to signing the agreement, asserting instead that the Merger Agreement accurately reflects a consideration of $24.00 per share. The plaintiff counters that the Complaint sufficiently alleges an antecedent agreement for an enterprise value of $4.3 billion and an equity value of $4.244 billion, attributing the discrepancy to a mutual mistake regarding TIBCO’s share count. The plaintiff presents nine reasons in support of this assertion, emphasizing that Vista intended to convey an offer reflecting the equity value of $4.244 billion during its Final Bid. Vista based its Final Bid for TIBCO on a mistaken share count, believing it was offering $4.244 billion for the entire company. This amount was explicitly stated in the Equity Commitment Letter and supported by Goldman Sachs' Fairness Opinion. The TIBCO Board approved the Final Bid under the impression it reflected an equity value of $4.244 billion, which also influenced the calculation of the Termination Fee and Parent Liability Cap in the Merger Agreement. After realizing the share count error, Vista's representatives expressed shock that the agreement did not ensure $4.244 billion for TIBCO's stockholders. However, the plaintiffs failed to present particularized facts demonstrating that Vista and TIBCO had an antecedent agreement regarding a different equity value than the $24 per share outlined in the Merger Agreement. The plaintiffs' arguments fell into four categories: (1) Vista's state of mind, (2) TIBCO's state of mind, (3) the significance of the Termination Fee and Liability Cap, and (4) post-agreement statements about the Merger. The allegations regarding Vista's state of mind suggest a misunderstanding of its bid value but do not indicate any prior agreement with TIBCO regarding the total purchase price. Most evidence cited by the plaintiffs was internal to Vista and not communicated to TIBCO, failing to substantiate claims of a different price agreement. The Equity Commitment Letter is a pivotal document referenced in Section 4.11 of the Merger Agreement, which asserts that Balboa has provided TIBCO with a complete copy of the executed commitment letter from Vista V, obligating Vista V to invest up to $4.859 billion for funding the Merger. TIBCO is explicitly identified as a third-party beneficiary with rights to enforce this commitment, including seeking equitable relief to ensure the investment is funded as stipulated. The plaintiff's claims involve various factors related to Vista's internal processes and decision-making regarding the bid for TIBCO, including Vista’s internal hurdle rate, calculations for the aggregate reserve price, and the bid authorization process. However, the language in Section 4.11 does not establish an agreement between TIBCO and Vista regarding the specific consideration for TIBCO's equity, nor has the plaintiff provided evidence of such an agreement in the Equity Commitment Letter. A mistake in a legal context requires a discrepancy between an offeror's intent and the offer itself, serving as a necessary but not sufficient condition for a claim of reformation. Reformation necessitates an antecedent agreement aligned with the terms in the Equity Commitment Letter, which is essential to the complaint. The Delaware Supreme Court, as stated in Cerberus, mandates that a plaintiff must demonstrate, with clear and convincing evidence, a specific prior understanding that materially differs from the written agreement. The complaint lacks particularized allegations of such an understanding. Regarding TIBCO’s state of mind, the plaintiff asserts that Goldman’s Fairness Opinion quantified Vista's Final Bid at $24 per share, implying an equity value of $4.244 billion for TIBCO. These assertions are pivotal to demonstrating TIBCO’s mindset, indicating a belief that the bid represented a total payment of $4.244 billion. However, the plaintiff's argument relies on the assumption of a prior agreement tied to customary industry practices. The referenced case, Breckenridge, is not applicable here, as it involved clear prior contractual terms in communications between parties, unlike the current situation lacking actual evidence of such an agreement. Consequently, the allegations regarding TIBCO's understanding do not substantiate a claim of a specific prior understanding that Vista would offer more than the stated $24 per share. Plaintiff contends that the Termination Fee and Liability Cap in the Merger Agreement were calculated based on an implied equity value of $4.244 billion, arguing that including these provisions would be illogical if the parties intended a lower equity value. Support for this claim is drawn from minutes of a Board meeting on October 23, 2014, indicating an overstated capitalization. However, even if the plaintiff could establish a prior understanding inconsistent with the Merger Agreement, the allegations do not specify a prior agreement regarding the per-share price in Section 2.7(a)(ii). The plaintiff admits that Vista's bids were communicated on a per-share basis without an implied total equity value, and acknowledges that Vista did not make a bid reflecting the $4.244 billion equity value. Therefore, without an explicit offer from Vista to purchase all TIBCO shares at this implied equity value and TIBCO's acceptance, the plaintiff's claim lacks sufficient basis. Additionally, the plaintiff's last two contentions relate to post-agreement statements made by Vista, TIBCO, and Goldman, mistakenly believing the equity value was $4.244 billion, and subsequent reactions after discovering a share count error, including Goldman’s revision of its fairness opinion to a reduced equity value of $4.144 billion. However, these events do not demonstrate any pre-agreement understanding. Vista, TIBCO, and Goldman expressed mistaken beliefs about the equity value of Vista's Final Bid of $24 per share before a share count error was discovered. The plaintiff contends that had the Merger Agreement lacked a reformable mistake affecting the intended agreement, Goldman would not have needed to reassess its valuation of the transaction. However, this argument is dismissed as a non sequitur; the legal standard for reformation does not imply that revisiting the analysis after recognizing a mistake would be imprudent. The plaintiff compares this case to Cerberus, where the Supreme Court found sufficient evidence of a prior understanding regarding a specific deal term. In contrast, the plaintiff has not identified any similar evidence here; no specific prior understanding inconsistent with the Merger Agreement's price term has been established. The complaint lacks allegations that Vista offered a specific aggregate value for TIBCO's equity or that TIBCO accepted any such offer. The Merger Agreement correctly documented the per-share price and the number of TIBCO shares outstanding. The Cerberus decision focused on an alleged mistake of fact in drafting the merger agreement, a situation not mirrored in this case. A strict three-part analysis is required for modifying unambiguous contract terms, necessitating clear and convincing evidence of a specific prior understanding. This standard aligns with Delaware law, which allows reformation only in cases of a "mistake" in documenting an agreement. The plaintiff has not provided sufficient allegations to support a claim for reformation, particularly lacking evidence of an antecedent agreement contradicting the Merger Agreement’s price term, resulting in the dismissal of Count I. Count II alleges the Director Defendants breached their fiduciary duties to TIBCO by neglecting to address a discovered share count error and failing to seek correction from Vista, which allegedly compromised their duty under Revlon to secure the highest possible value during a change of control. The Revlon doctrine does not redefine fiduciary duties but emphasizes the obligation to maximize sale price. Although heightened scrutiny applies, plaintiffs must still present sufficient facts for breach claims. Furthermore, the Delaware Supreme Court mandates that for claims seeking monetary damages against directors protected by exculpatory provisions, plaintiffs must plead non-exculpated claims to survive dismissal. The Director Defendants are shielded from monetary liability for duty of care breaches under TIBCO’s Certificate of Incorporation. Plaintiff acknowledges that the Complaint fails to allege any interest or lack of independence among the Director Defendants. To establish a claim for breach of fiduciary duty not protected by exculpation, the plaintiff must demonstrate that the directors acted in bad faith, which requires a high standard of proof. The Supreme Court's ruling in Lyondell emphasizes that disinterested directors only breach their duty of loyalty if they completely fail to fulfill their responsibilities. The inquiry should focus on whether the directors made any effort to secure the best sale price, rather than whether they did everything they could. Plaintiff admits the difficulty of proving bad faith, asserting that fiduciary actions must appear inexplicable except for bad faith. Two theories are presented: (1) the Board allegedly did not attempt to recover the $100 million agreed by Vista, and (2) the Board purportedly failed to adequately inform itself regarding the Share Count Error and potential recovery strategies. The opinion concludes that neither theory sufficiently alleges bad faith conduct. However, the second theory may support a duty of care claim, which the Director Defendants would be exculpated from but could serve as a basis for an aiding and abetting claim. Furthermore, the assertion that Vista had agreed to pay the $100 million is incorrect, as the relevant Merger Agreement specified a per-share price of $24, reflecting an aggregate equity value of $4.144 billion. The key issue in the plaintiff's first theory revolves around the Board's decision not to pursue negotiations with Vista regarding a potential recovery of $100 million from the Merger Agreement. The conclusion is that this decision did not fall outside the realm of reasonable judgment and cannot be solely attributed to bad faith. Engaging with Vista posed the risk of them rejecting the agreed $24 per share transaction, which had been deemed fair by Goldman Sachs and was supported by over 96% of TIBCO’s stockholders. The Board faced a dilemma: risking a binding transaction worth $4.144 billion to seek an additional $0.57 per share. This decision was influenced by various factors, including the likelihood of success in a reformation claim and market dynamics affecting Vista's financing. The potential risk, although possibly minor, warranted consideration and reasonable disagreement among prudent individuals. The plaintiff's assertion that the Board failed in its fiduciary duties by not renegotiating with Vista lacks sufficient support, as there is no credible evidence of intentional disregard for these duties. The second aspect of the plaintiff's argument concerns the Board's failure to adequately inform itself after discovering a share count error. Allegations include that the Board did not investigate the nature of the error or its implications and did not question Goldman regarding its responsibility or discussions with Vista. These allegations raise significant concerns regarding the Board's diligence in fulfilling its responsibilities. The Board of Directors convened twice after discovering a share count error, meeting on October 11 and 23, and including discussions with Goldman. It is deemed improbable that the independent members of the Board acted in bad faith or completely neglected their fiduciary duties, as per Lyondell’s standards regarding efforts to secure the best sale price. Nevertheless, the allegations presented are sufficient to suggest a breach of the Director Defendants’ duty of care. According to Delaware law, the fiduciary duty of care requires directors to act with the diligence that a prudent person would exercise under similar circumstances and to consider all relevant information in their decision-making process. Deficiencies in a director's process are actionable only if they demonstrate gross negligence, defined as a reckless disregard for stockholders or actions beyond reasonable bounds. In this case, the allegations indicate a significant disparity between the actions taken by the Board and what would be expected after identifying a major flaw in the sale process. It is reasonable to expect that the Board would have sought comprehensive explanations from Goldman regarding the share count error and its implications, which could have informed their assessment of options to maximize the perceived $100 million equity value of the transaction. A more thorough understanding would have better positioned the Board to evaluate risks associated with reengaging Vista, pursuing claims against Vista or Goldman, or altering their recommendation to stockholders before the merger vote. Disinterested Board members' handling of information related to a share count error raises questions about potential gross negligence and failure to fulfill their duty of care, but does not inherently indicate bad faith. The distinction between gross negligence and bad faith is critical, as supported by case law, meaning a lack of inquiry does not equate to bad faith. The Board is exculpated from liability for breaches of duty under TIBCO’s charter, leading to the dismissal of Count II for failure to state a claim. However, the allegations provide sufficient grounds for a duty of care claim against the Director Defendants, prompting an examination of the aiding and abetting claim against Goldman, the financial advisor. For the aiding and abetting claim to succeed, the plaintiff must prove the existence of a fiduciary relationship, a breach of that duty, and Goldman’s knowing participation in the breach. The plaintiff has adequately alleged the first two elements, and the determination of Goldman’s participation hinges on whether it can be reasonably inferred that Goldman acted with knowledge of the fiduciary breach, potentially through involvement in board decisions or conspiratorial actions. Plaintiff alleges that Goldman Sachs, aware of the Director Defendants' obligation to secure the highest value for TIBCO shareholders, knew from the October 11 board meeting that the Board was uninformed about an error in the share count. The Board did not inquire about the error's origin or potential remedies. On October 15, Goldman learned via email from Vista that Vista had based its Final Bid on the incorrect share count, yet failed to inform the Board of this crucial information. This omission is corroborated by the minutes from the October 23 Board meeting, which indicated uncertainty about whether Vista or another bidder used the incorrect share count. The allegations support a potential aiding and abetting claim against Goldman. Citing the Rural Metro case, the court suggested that a third party could be liable if it knowingly participates in a board's breach of duty by creating an informational gap. It is inferred that Goldman, as a sophisticated investment bank, recognized the Board's failure to gather essential information regarding the share count error. Goldman, serving as the primary negotiator with Vista, is accused of concealing the fact that Vista relied on the erroneous information for its bid, creating an informational vacuum during a pivotal moment in the Board's decision-making process. The plaintiff posits that had the Board known the truth, it might have reconsidered its options regarding Vista or Goldman to address a $100 million equity value shortfall. Furthermore, Goldman allegedly had a motive to conceal this information to protect its substantial fee, which was largely contingent on the transaction's closure, and to maintain a favorable relationship with Vista. Although Goldman disputes these claims, the court must rely on the well-pleaded allegations in the Complaint, and further factual development is needed to resolve the matter. Goldman Sachs is alleged in the Complaint to have improperly claimed 1% of the $600 million convertible notes' face value under its Engagement Letter, arguing that no consideration was paid to noteholders or that no noteholder received compensation above the exercise price of the notes. The Complaint highlights connections between Goldman and Vista, noting that Vista’s co-founders and a majority of its principals are former Goldman bankers, and that Goldman had previously advised Vista on a significant acquisition. Goldman argues that the contingent nature of its fee is typical for bankers and does not imply a motive to facilitate a breach of fiduciary duty. However, the Complaint posits that the high contingency level provided Goldman an incentive to withhold critical information from Vista's Board, particularly after the Board reaffirmed its Fairness Opinion. Allegations suggest Goldman may have created an informational vacuum regarding Vista’s reliance on the Final Cap Table during the merger discussions, which could lead to uncertainty about the share numbers considered by the Board. Despite Goldman's assertion that the Board could have inferred necessary information from other sources, the Complaint argues that the Board remained uncertain about the numbers it relied upon, especially given Vista's admission of using incorrect data provided solely to Goldman. This failure to disclose material information at a crucial decision-making time raises reasonable inferences about Goldman’s potential motivations and actions that could have negatively affected the Board's ability to negotiate effectively regarding the merger's equity value. The Complaint adequately alleges a claim for aiding and abetting the Director Defendants’ duty of care, resulting in the denial of the motion to dismiss Count IV for failure to state a claim. Count V asserts that Goldman is liable for professional malpractice and negligence to TIBCO’s stockholders for not timely correcting a share count error in its financial advisory services. This claim is based on California law, where TIBCO is located and where the services were provided. The plaintiff references the California Supreme Court’s 1958 ruling in Biakanja v. Irving, which established that a professional may owe a duty to third parties even without a contractual relationship. The plaintiff emphasizes that determining such duty involves policy considerations, including the transaction's intended impact on the plaintiff, foreseeability of harm, and the closeness of the defendant’s conduct to the plaintiff’s injury. The plaintiff argues that it was foreseeable that an error in the share count would adversely affect stockholders' merger prices. Additionally, the case cites Houseman v. Sagerman to contrast Goldman’s role with that of KeyBanc, asserting that Goldman’s involvement was more comprehensive and directly tied to the board’s decision-making process. The argument posits that unlike KeyBanc’s limited engagement, Goldman’s actions created a significant reliance by the board, thus substantiating the claim of negligence. Overall, the plaintiff contends that Goldman should be held accountable for the alleged miscalculation, as it directly impacted TIBCO’s stockholders. Goldman asserts that the plaintiff lacks standing to bring a professional malpractice claim against it, as the claim is exclusively the purview of its client, the Special Committee, per their Engagement Letter. This letter explicitly states that Goldman has no obligations to TIBCO’s stockholders. Goldman contends that the precedent set by Biakanja has been narrowed in subsequent rulings to apply only to professionals, such as contractors and architects, whose actions result in physical harm. The California Supreme Court's decision in Bily v. Arthur Young Co. confirmed that auditors do not owe a general duty of care to investors for whom they perform auditing services, limiting liability to their direct clients. The court argued against extending Biakanja’s foreseeability-based liability to allow claims from all foreseeable third-party users of audit reports. It highlighted three public policy concerns: 1) the risk of disproportionate liability for auditors, 2) the ability of sophisticated investors to protect themselves through diligence, and 3) the potential negative impact on the availability and cost of professional services from a broad liability rule. Bily’s reasoning may extend to other professionals who provide information and evaluations, such as attorneys and engineers. Professionals, similar to auditors, can face lawsuits from third parties who claim to have relied on their professional opinions and information. Following the precedent set in *Bily*, California courts have generally held that third parties cannot sue professional service firms for negligence. A 1997 decision by a California intermediate court referenced *Bily* to conclude that a law firm had no negligence liability to a non-client. Similarly, in 1998, the California Supreme Court extended this principle, asserting that, with rare exceptions, businesses do not have a duty to prevent financial losses to parties they do not have a direct relationship with. The Ninth Circuit has adopted a similar view, limiting the application of *Biakanja* in light of *Bily* and subsequent rulings. For instance, in *Glenn K. Jackson Inc. v. Roe*, the Ninth Circuit ruled that an accountant owed no duty to a third party it audited for a client, reinforcing that the limitations established by *Bily* are broadly applicable. Additionally, a subsequent Ninth Circuit ruling affirmed that a firm providing actuarial services had no duty of ordinary care to non-clients. The plaintiff did not cite any case allowing a third party to sue a financial advisor for malpractice, with the only exceptions involving claims of physical damage to property against a contractor or architect. The Ninth Circuit's analysis included various cases where there was no duty owed to third parties by professionals such as appraisers and claims adjusters. Although *Bily* originated in the context of accountants, its implications are seen as applicable across various professional fields. Goldman contends that California law restricts professional negligence claims against financial advisors in merger contexts to clients only, referencing a case against Goldman that did not address the Biakanja framework. The analysis indicates that TIBCO's stockholders lack standing to sue Goldman for economic loss under California law, which generally limits liability for professional service firms to cases of physical harm or property damage. The distinction in tort law emphasizes that recovery for pure economic loss is typically denied unless there is personal injury or tangible property damage. The Carrigan case reinforced that claims related to Goldman’s advisory role are derivative and belong to its client. Count VI of the Complaint alleges unjust enrichment against Vista, claiming it was unjustly enriched by $100 million due to underpayment for TIBCO’s stock. Vista argues for dismissal, citing the governing Merger Agreement. The legal standard for unjust enrichment involves the unjust retention of a benefit to another's detriment, which the plaintiff's reliance on Delaware law does not sufficiently support in this case. Thus, the claim for Count V fails under California common law, and Count VI is also likely to be dismissed. To establish a claim for unjust enrichment, a plaintiff must demonstrate: 1) an enrichment, 2) an impoverishment, 3) a connection between the enrichment and impoverishment, 4) absence of justification, and 5) lack of a legal remedy. Courts first assess whether a contract governs the parties' relationship; if it does, the contract dictates the plaintiff's rights, and unjust enrichment claims will be dismissed. If a contract's validity is disputed, unjust enrichment claims may proceed. Both breach of contract and unjust enrichment claims can coexist if they are pled as alternative recovery theories, particularly when the recovery is not dictated by contract terms or the contract itself constitutes unjust enrichment. In this case, a comprehensive Merger Agreement governs the relationship, specifying the per-share price for TIBCO stock. The plaintiff's primary claim seeks to reform this agreement to increase the purchase price by $100 million, indicating reliance on the contract. Despite referencing legal precedents allowing unjust enrichment claims to survive under certain circumstances, the court finds that the plaintiff fails to challenge the contract's validity adequately. Consequently, the plaintiff cannot demonstrate a lack of justification for Vista to expect the contract terms to be honored, regardless of any potential misunderstandings about the payment. Ultimately, since the plaintiff has not established a legal basis for reformation, the comprehensive contract solely governs the parties' rights, leading to the dismissal of Count VI. The cited case, McPadden v. Sidhu, is distinguishable as it did not address whether a binding contract governed the unjust enrichment claim. Count VII of the Complaint alleges unjust enrichment against Goldman, claiming it was improperly enriched by at least $6 million due to the inclusion of TIBCO's convertible notes, valued at $600 million, in the calculation of a 1% transaction fee under the Engagement Letter. However, the court finds that the Engagement Letter, a contract signed by Goldman, TIBCO, and the Special Committee, governs this issue. The Complaint itself indicates that the basis for Goldman’s enrichment is tied to the terms of this contract, which leads to the conclusion that any dispute regarding the inclusion of the convertible notes in the fee calculation is determined by the contract's meaning. As such, Count VII fails to state a viable claim for relief, leading to the dismissal of this count along with Counts I, II, V, and VI. Goldman’s motion to dismiss Count IV is denied.