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$IQST - IQSTEL just updated website. Home Menu: 2 new blue buttons, Telecommunication link, Telecom link, and added Divisions Menu ?
@Etelix
? ?
@visamoneyone
? #telecom #iot #batteriesforev #fintech #visadebitcard #blockchain #uplisting
Could be.
Tokens are selling.
https://etherscan.io/token/0xde865ed1c50e753d248a0f2c9c5ae02b9e41b6ae#balances
4 new ones today so far.
0xd1b2f29afe198130a5cd90a82cf03a8e486925e1c7de390e59c7b6822be36a0f 7 mins ago 0x7a6cd138683957ddebee3022cb4ac6abe9e8567e
0x620459538ac3d448d16d9073923aad84f293a9ce 1,750
0x1356cf73bf06baeef8fa85957e98d09355a768d14182edecf2ea19a3efdff455 1 hr 38 mins ago 0x7a6cd138683957ddebee3022cb4ac6abe9e8567e
0xf43609d114a9d4879bdda3a6f9e5d4fa4e964495 1,238
0xcb3d65ee431741386269a4b1bbd41b9c1143d2dca8bb9d0d25a204547052f9b3 1 hr 52 mins ago 0x7a6cd138683957ddebee3022cb4ac6abe9e8567e
0x85e0c643c083bbbb3841652a7c71a50b8b5e86ae 2,728
0x4385a4759806304adb275e265d7944b8591330c9254c45aadba406f9ee23994d 5 hrs 12 mins ago 0xa913641be3e1831f5bc9fcb852625615b24a88ad
0x7a6cd138683957ddebee3022cb4ac6abe9e8567e 26,234
0x7893835988611241f0e0ce02a7009f599e8f6b3a2e083da5cb0d1cf9d2101926 21 hrs 28 mins ago 0xa913641be3e1831f5bc9fcb852625615b24a88ad
0x4f8266a13af075ad30fc08f5a5d6604a337bb26f 1,931
0xe688c390bc940598129b8936354941770775cafd14222e4e76cf8ce9a4184b96 22 hrs 30 mins ago 0xa913641be3e1831f5bc9fcb852625615b24a88ad
0x4f8266a13af075ad30fc08f5a5d6604a337bb26f 1,835
0x82d99f44a332a45c258f325ba88d9e723cb805a617da31e583a12eb40cdabe5c 23 hrs 44 mins ago RevoltToken: Deployer
0xa913641be3e1831f5bc9fcb852625615b24a88ad 30,000
0x32977a0079685368db644dc529e1d9e12a6b2faa7d4e2ccbd5e6b26bfcdab4f6 292 days 8 hrs ago RevoltToken: Deployer
0x1c11ab451acdfca1f382234b0a2aed68d91fe9c8 10
0x721dcaeeeb69e89b4d533e53514b2e28949e4967692c345aa2cdb55ce68f2f3f 358 days 5 hrs ago RevoltToken: Deployer
0x5866621ef55045688c62b0e3e82061cba3e0797a 1
Don't think the 60 mil included Vonage. That was before the deal but would be nice if they expanded on it.
Good Morning, Ambassadors
Our Team is hard at work!
Ambassador Q & A,
Announcements & NEWS Expected Soon!
Another $9-25M in revenue just added!
Good ol Calvin. If you ever want to win a case
Don’t hire him
Access to 1 billion subscribers is noteworthy.
May-2020: China Mobile came into partnership with QGlobal SMS, an international and domestic SMS termination, by iQSTEL. The partnership focused on facilitating the business exchange between iQSTEL and China Mobile. Additionally, the partnership opened the doors for iQSTEL to analyze offering the extensive product and service portfolio to their 1 Billion subscribers that include End User Mobile Number Portability blockchain-based application, and IoT applications.
iQSTEL
1tSrptonchsaored ·
Hello Ambassadors, a couple things to discuss:
* Yes, this group is run by IQSTEL and is official.??
* Yes, we are already putting out news again as we did yesterday and expect more soon. ??
* The market is not reflective of our value and in our technical, fundamental and humble opinion, we have much room for the PPS to grow. ????
* This group is for Ambassadors, long holding shareholders. Patience is sometimes required as a means of support. ????
And most importantly, we appreciate each and everyone here. Thank you! ?? ??
Another day closer to that big whistle blower check!
United States Court of Appeals
for the Fifth Circuit
___________
No. 20-30464
___________
Securities and Exchange Commission,
Plaintiff—Appellee,
versus
Bruce A. Gwyn,
Defendant—Appellant.
____________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:15-CV-2451
____________________________
CLERK'S OFFICE:
Under 5TH Cir. R. 42.3, the appeals are dismissed, as to Appellants Ronald L. Blackburn and Michael A. Mulshine, as of February 1, 2021, for want of prosecution. The appellants failed to timely file appellants' briefs and record excerpts. CaCsea:s 2e0 2-3:1054-6c4v- 0 2 4D5o1c-CumJBe-nJtV: 0M0 5 1D5o7c2u7m3e4n7t 2 8 P8a gFeil:e 1d 0 2 D/0a1te/2 F1 il e Pda: g0e2 /10 1o/f2 2021
A True Copy
Certified order issued
Clerk, U.S. Court of Appeals, Fifth Circuit
Feb 01, 2021
20-30464
2
LYLE W. CAYCE
Clerk of the United States Court
of Appeals for the Fifth Circuit
By: _________________________
Shea E. Pertuit, Deputy Clerk
ENTERED AT THE DIRECTION OF THE COURT
CaCsea:s 2e0 2-3:1054-6c4v- 0 2 4D5o1c-CumJBe-nJtV: 0M0 5 1D5o7c2u7m3e4n7t 2 8 P8a gFeil:e 2d 0 2 D/0a1te/2 F1 il e Pda: g0e2 /20 1o/f2 2021
Q. When is the10-K filed?
A. Ambassadors, our 10-K should be filed in March 30, and we can request a time extension until April 15. We are working to file the 10-K to file without asking for a time extension.
Obviously they would sell every share they could. Question is what was the cease and desist on the share selling, how many were issued after fact, and who did they go to?
Thanks. I see they turned off the whole thread to comments.
The admin has temporarily turned off commenting.
Company sure doesn't appear to very honest today. Yesterday they hyped news coming all day long. Still nothing.
iQSTEL
roeYoesatiiemtfSporhtnday nlmatccs 6o:0ohrn4endg AM ·
NEWS COMING:
Please Standby...
UPDATE: Conference Room and Zoom burning up with Execs' hard at work! We will update again ASAP.
3:55 Update - The whole office at iQSTEL is buzzing with excitement about the forthcoming announcement from our CEO, Leandro! ??
When ask about it my post was immediately taken down:
You can't post or comment in this group.
The admin has temporarily turned off your ability to post or comment in the group until February 11, 2021, 7:46 AM. Learn More
Should be reporting earnings next week or the following Monday 15th.
Where's the news that's supposed to be out today?
Fine with me. Never had a twit acct and never will!
Dorsey's plan was just exposed on Hannity tonight. Expect this to drop more in the morning.
Down another $6 $246 to go....
They're restricted shares anyway aren't they?
LOL! Yep. Just like beating one of the innocent kids and giving candy to spoiled brat that committed the act.
You only have to watch the news. Under $200 by friday.
"basic rules applied to all parties/groups/individuals involved" That's the problem. They're not.
Are some of the dead clownfish floating to the surface again? The Wookie conspiracy theory was debunked years ago. Gay Louie is the only one who would buy shares. Can't afford the Charmin!
Members are leaving in droves! When the numbers drop the stock price follows. Nobody wants to be controlled or censored by media clowns and lawsuits are already starting to pile up.
Twitter should be around $8 sh by the end of week.
I’m sure it will get smacked down as soon as it hits the bench. I don’t think Barbier has ever had a ruling reversed.
LOL! Put one in the cylinder, spin, and see how many clicks you get. A better question would be what does the bottom line look like when it's over.
I think the clowns are trying another appeal.
Gotta luv a $250K + day!
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
POSCO Energy Co., Ltd. f/k/a POSCO Power,
Plaintiff,
v.
FuelCell Energy, Inc.,
Defendant.
Case No.: 1:20-cv-07509-MKV
MEMORANDUM OF LAW IN SUPPORT OF THE
POSCO ENERGY’S OPPOSITION TO FUELCELL ENERGY, INC’S
MOTION TO DISMISS THE COMPLAINT
ARNOLD & PORTER KAYE SCHOLER LLP
James D. Herschlein
Jonathan E. Green
250 West 55th Street
New York, New York 10019-9710
Telephone: (212) 836-8000
Facsimile: (212) 836-8689
Email: james.herschlein@arnoldporter.com
jonathan.green@arnoldporter.com
James K. Lee (pro hac vice)
44th Floor, 777 South Figueroa Street
Los Angeles, CA 90017-5844
Telephone: (213) 243-4000
Facsimile: (212) 243-4199
Email: james.lee@arnoldporter.com
Attorneys for POSCO Energy Co., Ltd.
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 1 of 26
i
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT .................................................................................................... 1
STATEMENT OF FACTS ............................................................................................................. 3
A. FCE Was Obligated To Ensure the Removal of Restrictive
Legends From PE’s Share Certificates................................................................... 4
B. Delaware Law Requires the Removal of Restrictive Legends Upon
Request of the Stockholder..................................................................................... 6
C. PE Requested Removal of the Restrictive Legends, and FCE
Responded by Engaging in a Campaign of Delay .................................................. 6
ARGUMENT.................................................................................................................................. 8
I. The Complaint Properly States Claims Under DGCL § 8-401 and §
158....................................................................................................................................... 9
A. The Motion to Dismiss Should Be Denied Because There Are
Factual Questions as to When FCE Was Required to Remove the
Restrictive Legend Under Delaware Law............................................................... 9
B. FCE Violated Section 8-401 by Unreasonably Delaying the
Issuance of Unrestricted Stock Certificates.......................................................... 12
C. Section 158 Is Not Limited to Injunctive Relief................................................... 15
II. FCE Misstates the Complaint’s Breach of Covenant Claim and
Misapplies New York Law on Conditions Precedent....................................................... 15
III. The Complaint Adequately Alleges a Tortious Interference With
Prospective Business Advantage ...................................................................................... 18
CONCLUSION............................................................................................................................. 20
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 2 of 26
ii
TABLE OF AUTHORITIES
Cases Page(s)
1199 Hous. Corp. v. Int’l Fid. Ins. Co.,
14 A.D.3d 383 (N.Y. App. Div. 2005) ..............................................................................16, 17
Albemarle Theatre, Inc. v. Bayberry Realty Corp.,
27 A.D.2d 172 (N.Y. App. Div. 1967) ....................................................................................18
Allis-Chalmers Mfg. Co. v. Malan Const. Corp.,
30 N.Y.2d 225 (N.Y. 1972) .....................................................................................................16
Allocco Recycling, Ltd. v. Doherty,
378 F. Supp. 2d 348 (S.D.N.Y. 2005) .....................................................................................19
Ashcroft v. Iqbal,
556 U.S. 662 (2009)...................................................................................................................9
AYDM Assocs., LLC v. Town of Pamelia,
205 F. Supp. 3d 252 (N.D.N.Y. 2016), aff’d, 692 F. App’x 78 (2d Cir. 2017).......................19
Baraliu v. Vinya Capital, L.P.,
No. 07 CIV. 4626 (MHD), 2009 WL 959578 (S.D.N.Y. Mar. 31, 2009) ...............................17
Bender v. Memory Metals, Inc.,
514 A.2d 1109 (Del. Ch. 1986)........................................................................................ passim
Campbell v. Liberty Transfer Co.,
No. CV-02-3084, 2006 WL 3751529 (E.D.N.Y. Dec. 19, 2006)............................................14
CAPM Corp. v. Protegrity, Inc.,
No. C.A. 18676-NC, 2001 WL 1360122 (Del. Ch. Oct. 30, 2001).........................................14
Caravias v. Interpath Commc’ns, Inc.,
No. CIV.A. 3301-VCN, 2008 WL 2268355 (Del. Ch. May 28, 2008) ...................................15
DiFolco v. MSNBC Cable L.L.C.,
622 F.3d 104 (2d Cir. 2010).................................................................................................9, 10
Graham v. Commercial Credit Co.,
41 Del. Ch. 580 (1964) ............................................................................................................15
In re Executive Telecard. Ltd. Sec. Litig.,
913 F. Supp. 280 (S.D.N.Y. 1996) ............................................................................................9
In re Skat Tax Refund Scheme Litig.,
356 F. Supp. 3d 300 (S.D.N.Y. 2019) .....................................................................................18
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 3 of 26
iii
Jing Jing v. Weyland Tech, Inc.,
No. CV 17-446, 2017 WL 2618753 (D. Del. June 15, 2017)..................................................13
JW Acquisitions, LLC v. Shulman,
No. 1712-N, 2006 WL 4782399 (Del. Ch. Oct. 25, 2006) ......................................................14
Kirch v. Liberty Media Corp.,
449 F.3d 388 (2d Cir. 2006).....................................................................................................19
Klita v. Cyclo3pss Corp.,
No. CIV.A. 15374, 1997 WL 33174421 (Del. Ch. Apr. 8, 1997) ...........................................15
Kriss v. Bayrock Grp. LLC,
No. 10CIV3959LGSDCF, 2016 WL 7046816 (S.D.N.Y. Dec. 2, 2016) ................................17
Leonard Loventhal Account v. Hilton Hotels Corp.,
No. CIV.A.17803, 2000 WL 1528909 (Del. Ch. Oct. 10, 2000), aff’d sub nom.
Account v. Hilton Hotels Corp., 780 A.2d 245 (Del. 2001) ....................................................15
Marsalis v. Schachner,
01 Civ. 10774(DC), 2002 WL 1268006 (S.D.N.Y. June 6, 2002) ............................................9
Mehrhof v. Monroe-Woodbury Cent. Sch. Dist.,
168 A.D.3d 713 (N.Y. App. Div. 2019) ..................................................................................19
Mirage Entm’t, Inc. v. FEG Entretenimientos S.A.,
326 F. Supp. 3d 26 (S.D.N.Y. 2018) .......................................................................................11
Nash v. Coram Healthcare Corp.,
No. 96 CIV. 0298 (LMM), 1996 WL 363166 (S.D.N.Y. June 28, 1996) ...............................14
Oppenheimer & Co. v. Oppenheim Appel, Dixon & Co.,
86 N.Y.2d 685 (N.Y. App. Div. 1995) ....................................................................................17
Planète Bleue Télévision, Inc. v. A&E Television Networks, LLC,
No. 16 CIV. 9317 (PGG), 2018 WL 10579873 (S.D.N.Y. Sept. 19, 2018) ............................17
POSCO Energy Co., Ltd. v. FuelCell Energy, Inc.,
Del. Ch., C.A. No. 2020-0713-MTZ, Zurn, V.C. (Oct. 22, 2020) (Letter Op.).......................10
Redwing Constr. Co. v. Sexton,
181 A.D.3d 1027 (N.Y. App. Div. 2020) ................................................................................17
Robb Evans & Assocs. LLC v. Sun Am. Life Ins.,
No. 10 CIV. 5999 GBD, 2012 WL 488257 (S.D.N.Y. Feb. 14, 2012)....................................17
S & S Hotel Ventures Ltd. P’ship v. 777 S.H. Corp.,
108 A.D.2d 351 (N.Y. App. Div. 1985) ..................................................................................18
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 4 of 26
iv
United Res. Recovery Corp. v. Ramko Venture Mgmt., Inc.,
584 F. Supp. 2d 645 (S.D.N.Y. 2008) .....................................................................................17
Utica Mut. Ins. Co. v. Clearwater Ins. Co.,
906 F.3d 12 (2d Cir. 2018).......................................................................................................17
White Winston Select Asset Funds, LLC v. Prof’l Diversity Network, Inc.,
No. SUCV201803878BLS1, 2019 WL 2605707 (Mass. Super. May 31, 2019).........13, 14, 15
Statutes
6 Del. C. § 8-401.................................................................................................................... passim
8 Del. C. § 158 .......................................................................................................................6, 9, 15
Other Authorities
17 C.F.R. § 230.144............................................................................................................... passim
17 C.F.R. § 230.506.....................................................................................................................3, 4
Fed. R. Civ. P. 8(a)(2)......................................................................................................................8
Fed. R. Civ. P. 12(b)(6)................................................................................................................2, 9
CPLR 3015 ..............................................................................................................................16, 17
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 5 of 26
1
Plaintiff POSCO Energy Co., Ltd. (Plaintiff, or “PE”) respectfully submits this
memorandum of law in support of its opposition to the Motion to Dismiss the Complaint of
Defendant FuelCell Energy, Inc. (Defendant, or “FCE”). Plaintiff’s Complaint sufficiently states
all causes of action, and Defendant’s arguments rely on mistakes of law or disputes of fact that
cannot be resolved at this stage of litigation. Accordingly, Defendant’s motion should be denied.
1
PRELIMINARY STATEMENT
The Complaint details the facts of Defendant FCE’s unlawful campaign to hinder and delay
Plaintiff PE from selling shares of FCE stock. As PE will establish at trial, FCE feared that a
divestiture by PE—once FCE’s largest minority shareholder—would negatively impact the price
of its stock and cause significant embarrassment to FCE. On June 4, 2018, Plaintiff, an owner of
30,786,418 shares of FCE stock bearing a restrictive legend, sought to sell some of its shares
following the expiration of the holding period, and requested that such legend be removed. Rather
than complying with PE’s ministerial request, which should have taken no more than a few days,
FCE engaged in a series of dilatory and obstructive tactics designed to prevent PE from exercising
its lawful rights as a stockholder. It was not until September 11, 2018—more than three months
after PE’s initial request—that FCE finally relented and issued the new stock certificates without
the restrictive legend.
Among other wrongful tactics, FCE demanded that PE provide a written representation
that it did not possess any material nonpublic information. The Complaint alleges that this demand
served as mere pretext for delay. FCE was well aware that PE had no obligation to provide any
such representation, as evidenced by the fact that FCE ultimately agreed to remove the restrictive
1 “¶ __” refers to the paragraphs of the Complaint; and “FCE Br. __” refers to the
Memorandum of Law in Support of FuelCell Energy, Inc.’s Motion to Dismiss the Complaint.
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 6 of 26
2
legend without any material nonpublic information representation from PE. But by then, the
damage had been done. Between June 4 and September 11, 2018, the price of FCE stock
plummeted from $23.28 to $12.72 per share, causing PE over one million dollars in losses. FCE’s
motion ignores altogether PE’s well-pleaded allegations that FCE delayed issuing shares through
its pretextual requirement for a material nonpublic information representation.
In its motion, rather than establishing that dismissal is warranted based on the allegations
of the Complaint, FCE presents its own factual narrative, which is contrary to the allegations of
the Complaint. Federal Rules of Civil Procedure (“FRCP”) 12(b)(6) directs that a court accept as
true all well-pleaded allegations, and thus FCE’s factual creation—with a selective assortment of
documents that it improperly attaches to its motion—should be rejected for this reason alone. At
best, FCE’s factual assertions underscore that there are significant factual disputes to be decided
by the trier of fact and discovery is necessary, including regarding whether FCE’s insistence on
the material nonpublic information representation was legitimate and whether its delay in
removing the restricted legend was reasonable.
Moreover, Defendant’s argument that it had no duty to remove the restrictive legend under
the Delaware statutes because PE did not deliver the original stock certificate and Rule 144 opinion
letter from counsel is meritless and seeks to excuse FCE’s misconduct when it improperly told PE
it would not remove the legend without a material nonpublic information representation. The
motion invites the Court to predict—without discovery of any sort—that FCE would have removed
the legend earlier, contrary to its repeated demands for a material nonpublic information
representation, if only PE just ignored FCE’s demands and presented the stock certificates. Not
surprisingly, FCE cites no law warranting such relief. FCE further relies on the incorrect provision
in the parties’ Securities Purchase Agreements (“SPAs”) to argue that PE failed to allege a
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 7 of 26
3
condition precedent—where there is no condition precedent under the correct provision actually
alleged in the Complaint, and New York law clearly provides that no condition precedent need be
alleged.
Finally, for PE’s tortious interference with prospective business advantage claims, FCE
presents a hodgepodge of miscellaneous arguments, none of which have merit. While FCE argues
that the tortious interference with prospective business advantage claim should be dismissed for
being duplicative, the claim is actually alleged in the alternative. Furthermore, FCE’s argument
that no specific third-party relationship has been identified ignores the realities of securities trading
on listed exchanges, which, definitionally, involves anonymous third-party purchasers. FCE’s
motion apparently takes no issue with PE’s allegations that FCE’s interference was dishonest,
unfair, or improper by alleging that FCE improperly demanded a representation that PE did not
possess any material nonpublic information, when such a demand was transparently pretextual and
designed to delay the removal of the restrictive legends.
STATEMENT OF FACTS
On February 7, 2007, June 9, 2009, and April 30, 2012, PE purchased a total of 30,786,418
shares of FCE, a publicly traded company listed on the Nasdaq, pursuant to three separate SPAs.
¶ 14. Because these shares were purchased in a private placement, as opposed to a registered
public offering of securities, the shares were required to conform to the requirements of Rule 506
of Regulation D, which provides exemptions from registration for companies when they offer and
sell securities. ¶ 19. Shares issued under Rule 506 are restricted unless the requirements of Rule
144 are met. Among other things, Rule 506 and Rule 144 require that purchasers hold their shares
for six months, and to ensure that shares are not sold prematurely, stock certificates typically come
with a restrictive legend indicating that they may not be resold. See 17 C.F.R. § 230.506; 17 C.F.R.
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 8 of 26
4
§ 230.144(d)(1). Thus, in order to sell its shares of FCE stock, PE needed FCE to instruct its
transfer agent to issue PE new share certificates with the restrictive legends removed. Both the
SPAs and Delaware law require PE to cooperate in the removal of these legends. See, e.g., ¶¶ 21-
23. As discussed below, FCE violated its obligations under both the SPAs and Delaware law,
resulting in substantial harm to PE.
A. FCE Was Obligated To Ensure the Removal of Restrictive Legends From PE’s
Share Certificates
Plaintiff PE engages in a wide range of business activities in the energy sector, including
the supply of energy, off-gas combined cycle power generation, coal-fired power generation, fuel
cell development, renewable energy, and the recycling of resources. ¶ 12. PE is Korea’s largest
independent power producer. Id.
PE is an investor in Defendant FCE, which, according to filings with the U.S. Securities
and Exchange Commission, is a company that markets and sells a proprietary, molten-carbonate
fuel cell technology. ¶ 13. Between 2007 and 2012, pursuant to three SPAs, Plaintiff purchased
30,786,418 shares of FCE stock. ¶ 14. The stock certificates bore a restrictive legend because PE
acquired them directly from FCE in a private placement made pursuant to Rule 506 of Regulation
D. ¶ 19. The SPAs also contained representations, warranties, and covenants that required FCE
to facilitate the removal of the restrictive legends. See, e.g., ¶¶ 19-23, SPA §§ 3.8, 6.6, 4.8.
First, each of the three SPAs contained an identical § 3.8(b), which states that PE may
request that FCE remove, and that FCE agrees to remove, the restrictive legends “if such Shares
are eligible for sale without restrictions under Rule 144 or under any no-action letter issued by the
SEC.” SPA § 3.8(b). The same provision further states:
Following the time a legend is no longer required for any Shares hereunder, the Company
will, no later than five (5) Business Days following the delivery by the Purchaser to the
Company or the Company’s transfer agent of a legended certificate representing such
Shares, accompanied by such additional information as the Company or the Company’s
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 9 of 26
5
transfer agent may reasonably request, deliver or cause to be delivered to the Purchaser a
certificate representing such Shares that is free from all restrictive and other legends.
SPA § 3.8(b); ¶ 21.
Second, each of the three SPAs contained an identical § 6.6(1), which provides that FCE
“shall cooperate” with PE
to facilitate the timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts, as the case
may be, as such Holder may reasonably request and registered in such names as such
Holder may request.
SPA § 6.6(l); ¶ 22.
Third, each of the three SPAs contained an identical § 4.8, pursuant to which FCE
covenanted that “[f]rom and after the date hereof, the Company shall use its reasonable best efforts
to obtain as promptly as practicable any consent or approval of any Person, including any
regulatory authority, required in connection with the transactions contemplated hereby.” SPA §
4.8; ¶ 23. Accordingly, SPA § 4.8 requires FCE to “use its reasonable best efforts to obtain as
promptly as practicable” any consents or approvals required to remove the restrictive legend from
the stock certificates upon PE’s request, as the SPAs expressly contemplated that the stock PE
purchased pursuant to the agreements would eventually be resold. Id.
The three SPAs additionally provide PE with certain rights relating to its ownership of
shares, including the right to appoint an individual to FCE’s Board of Directors upon the
satisfaction of certain qualifications and the right to subscribe to new issuances on particular terms.
SPA §§ 4.15, 4.17; ¶¶ 24-26. Each of the three SPAs also expressly state that “covenants contained
herein shall survive the execution of this Agreement and the Closing of the transactions
contemplated hereby (except to the extent expressly provided in this Agreement).” See SPA §
7.13; ¶ 27.
Case 1:20-cv-07509-MKV Document 26 Filed 11/18/20 Page 10 of 26
6
B. Delaware Law Requires the Removal of Restrictive Legends Upon Request of
the Stockholder
Because FCE is incorporated in Delaware, claims made under the Uniform Commercial
Code (“UCC”) proceed under Delaware law. ¶ 31. It is undisputed that under Delaware law,
stockholders have the right to obtain certificates without restrictive legends when certain
conditions are met, as established by 6 Del. C. § 8-401 and 8 Del. C. § 158. ¶ 32. Section 158
provides that “[e]very holder of stock represented by certificates shall be entitled to have a
certificate signed by, or in the name of, the corporation by any 2 authorized officers of the
corporation representing the number of shares registered in certificate form.” Section 158 “y
necessary implication” also provides shareholders with the “right to a proper certificate without a
legend or restriction, where such a legend is no longer appropriate.” Bender v. Memory Metals,
Inc., 514 A.2d 1109, 1115 (Del. Ch. 1986). ¶ 33. In addition to Section 158, Section 8-401(a)
provides for an issuer’s obligation to register transfer of a security upon request of a stockholder.
¶ 34. Similarly to Section 158, Section 8-401 also applies to removal of a restrictive legend
because a removal is deemed a registered transfer. Id.; Bender, 514 A.2d at 1115. Section 8-
401(b) provides for damages for “loss resulting from unreasonable delay in registration or failure
or refusal to register the transfer.” ¶ 35.
C. PE Requested Removal of the Restrictive Legends, and FCE Responded by
Engaging in a Campaign of Delay
With the trade restriction period having long expired, on June 4, 2018, PE requested that
FCE remove the restrictive legend on the shares. ¶ 38. Complying with this request typically
takes a few days, but instead, FCE began a months-long campaign of delay. ¶¶ 39-54. FCE
dragged its feet in responding, requiring PE to follow up numerous times. Following PE’s June 4
request, FCE informed PE that it had forwarded PE’s request to FCE’s external counsel for review.
¶ 39. Hearing no response, on June 11, 2018, PE again requested that FCE remove the restrictive
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legends and for FCE to provide PE with any necessary procedures to remove the restrictive
legends. ¶ 40. After several more days of no progress, on June 14, 2018, PE followed up once
more by asking FCE to share any documentation required by FCE to remove the restrictive legend.
¶ 41.
FCE refused to remove the restrictive legend, despite its obligations to do so under
Delaware law and the SPAs. ¶ 42. Instead, FCE sought to impose a variety of conditions that PE
purportedly had to meet before FCE would agree to remove the restrictive legend, which had the
intended effect of delaying PE’s sale of its FCE stock. Id. Among FCE’s unreasonable tactics
was a baseless demand that PE certify that it was not in possession of material nonpublic
information relating to FCE (a fact that is conspicuously absent from FCE’s motion.). ¶¶ 43-44.
This demand served no legitimate purpose.
Over the course of the next couple of months, PE repeatedly attempted to secure the
removal of the restrictive legend from its stock certificates, including by offering—on July 20,
2018—to agree to FCE’s demand that PE permanently waive its bargained-for board member
appointment right pursuant to Section 4.17 of the 2012 SPA. ¶ 50. During this period, FCE’s
stock price fell precipitously. Between June 4, 2018 to July 3, 2018 alone, FCE’s stock price fell
from a split-adjusted price of $23.28 to $16.20, and the price continued to decline over the next
two months. ¶ 47. In an apparent attempt to prevent further declines to its stock price, FCE
continued to drag its feet and to withhold its consent to removing the restrictive legend. ¶ 51.
Eager to sell its shares, on August 17, 2018, PE sent FCE a draft letter waiving its board
appointment rights and a representation letter under Rule 144. ¶ 51. Although not set out in Rule
144, transfer agents and issuers require an opinion of counsel as to the application of Rule 144
prior to removing the legend from securities and allowing their sale under Rule 144. See, e.g.,
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Bender, 514 A.2d at 1116 (“Since the plaintiff's shares were not registered, an opinion of counsel
was required for a transfer to occur”). Because it had no legal obligation to do so, PE’s Rule 144
letter did not represent that it lacked material nonpublic information regarding FCE. Tellingly,
despite its earlier insistence on this representation, FCE did not object to this omission, thereby
demonstrating that its request was a mere ruse to discourage PE from selling its stock. ¶ 51. On
August 22, 2018, PE entered into a letter waiving its board appointment rights under SPA § 4.17,
pursuant to which it acceded to FCE’s other demands in order to effectuate the removal of the
restrictive legends as expeditiously as possible. ¶ 52.
Even after the signature of the waiver letter, FCE engaged in further dilatory tactics, and
failed to remove the restrictive legend from PE’s stock certificates for yet another two weeks after
the signing of the waiver letter. It was not until September 11, 2018 that FCE’s stock transfer
agent finally notified PE that the stock could now be transferred. ¶ 53. In the end, FCE took more
than three months to fulfill its statutory and contractual obligations. Id. During the period of this
delay, FCE’s stock price declined over 45%, resulting in significant losses to PE. ¶¶ 55-57.
Following the removal of the restrictive legends, PE sold a total of 1,800,000 shares at prices
ranging from $6.72 to $8.51. ¶ 55. As a result, PE realized a loss of over $1,000,000.00 from its
inability to sell its shares due to FCE’s unjustified and unlawful delays. ¶ 57.
ARGUMENT
All that is required under Rule 8(a)(2) of the FRCP is that a claim for relief contain a “short
and plain statement of the claim showing that the pleader is entitled to relief.” “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’ A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
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for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (citation omitted).
Courts must “accept [] all factual allegations as true, and draw[] all reasonable inferences in the
plaintiff's favor.” DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 110 (2d Cir. 2010). As
discussed below, PE easily meets the pleading standards.
I. The Complaint Properly States Claims Under DGCL § 8-401 and § 158
Under Delaware law, stockholders have the right to obtain certificates without restrictive
legends when certain conditions are met. See 6 Del. C. § 8-401 and 8 Del. C. § 158. ¶ 32. Section
158 provides that “[e]very holder of stock represented by certificates shall be entitled to have a
certificate signed by, or in the name of, the corporation by any 2 authorized officers of the
corporation representing the number of shares registered in certificate form.” Section 158 “y
necessary implication” also provides shareholders with the “right to a proper certificate without a
legend or restriction, where such a legend is no longer appropriate.” Bender, 514 A.2d at 1115; ¶
33. Section 8-401(a) additionally provides for an issuer’s obligation to register transfer of a
security upon request of a stockholder. ¶ 34. Similarly to Section 158, Section 8-401 also applies
to removal of a restrictive legend because a removal is deemed a registered transfer. Id.; Bender,
514 A.2d at 1115. Section 8-401(b) provides for damages for “loss resulting from unreasonable
delay in registration or failure or refusal to register the transfer.” ¶ 35.
A. The Motion to Dismiss Should Be Denied Because There Are Factual
Questions as to When FCE Was Required to Remove the Restrictive Legend
Under Delaware Law
As a preliminary matter, FCE improperly asks the Court to determine questions that are
inherently factual in nature and that cannot be decided upon on a motion to dismiss under Rule
12(b)(6) of the FRCP. See, e.g., In re Executive Telecard. Ltd. Sec. Litig., 913 F. Supp. 280, 286
(S.D.N.Y. 1996) (“[T]his claim presents disputed factual issues that cannot be decided within the
confines of a motion to dismiss.”); Marsalis v. Schachner, 01 Civ. 10774(DC), 2002 WL 1268006,
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at *4 (S.D.N.Y. June 6, 2002) (“[T]he grounds asserted in [the] motion raise factual issues that
cannot be resolved on a motion to dismiss.”). For instance, Defendant invites the Court to question
FCE’s intent for bringing this lawsuit by raising disputes between the parties that are extraneous
and irrelevant to this proceeding.2 FCE Br. at 3-6.
More importantly, Defendant argues that the Complaint should be dismissed because it
fails to allege precisely when POSCO satisfied the relevant prerequisites under 6 Del. C. § 8-401.
FCE Br. at 11. By cherry-picking a handful of correspondence to present to the Court—which are
not representative of the full factual record between the parties—Defendant purports to
demonstrate that PE did not satisfy the alleged prerequisites of furnishing the original stock
certificates and a Rule 144 opinion from counsel until late August 2018. Defendant erroneously
suggests that the Complaint should be dismissed because these documents were not provided on
June 4, 2018, when PE made its initial request for FCE to remove the restrictive legend from its
stock certificates.3 FCE Br. at 11. Rather than establishing that the dismissal of the Complaint is
2 Not only is this saga irrelevant, FCE has resorted to similar distractions and attacks in the
parties’ other disputes by mischaracterizing PE’s motivations, including by lodging multiple,
frivolous demands for sanctions. Indeed, Vice Chancellor Zurn’s rebuke of FCE sums up a
Delaware action in which FCE also filed a meritless motion to dismiss:
FuelCell has invoked Court of Chancery Rule 11 casually and repeatedly in this matter. . .
. it is distracting, detrimental to the famed collegiality of the Delaware bar, and
counterproductive to the “just, speedy and inexpensive determination” of judicial
proceedings to summon Rule 11 in rhetoric.
POSCO Energy Co., Ltd. v. FuelCell Energy, Inc., Del. Ch., C.A. No. 2020-0713-MTZ, Zurn,
V.C. (Oct. 22, 2020) (Letter Op.), at 6.
3 Defendant improperly asked the Court to take judicial notice of correspondence that it
seeks to introduce, none of which is attached to the Complaint. A district court may typically
consider only “the facts alleged in the complaint, documents attached to the complaint as exhibits,
and documents incorporated by refence in the complaint.” DiFolco, 622 F.3d at 111. To introduce
a document that is not incorporated by reference, Defendant must establish that “the complaint
‘relies heavily upon its terms and effect,’ thereby rendering the document integral to the
complaint,” and “‘even if a document is ‘integral’ to the complaint, it must be clear on the record
Footnote continued on next page.
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warranted based on the allegations therein, Defendant’s motion succeeds only in raising factual
questions that must be resolved with the benefit of discovery.
Defendant conveniently ignores the crux of PE’s allegations. FCE was required to
promptly remove the legend after PE’s June 4, 2018 request. Instead of doing so, Defendant
purposefully engaged in a campaign of delay in order to prevent PE from selling its stock—which,
due to PE’s status as Defendant’s largest outside stockholder at the time, would have had a
detrimental impact on Defendant’s already-dwindling stock price. This campaign relied on
unreasonable demands that PE provide a representation, among others, that it did not possess any
material nonpublic information relating to FCE. As set forth in the Complaint, PE initially asked
FCE to remove the restrictive legend on June 4, 2018. ¶ 38. After a week went by without any
substantive response, on June 11, PE sent FCE a second request and asked about the procedures
required to remove the restrictive legend. ¶ 40. On June 14, after PE followed up once more
regarding the procedural requirements, FCE demanded, among other things, that PE represent that
it did not possess any material nonpublic information relating FCE, making clear that it would
refuse to issue the delegended certificates unless its requirements were met. ¶¶ 41-44. Despite
multiple subsequent attempts by PE to secure the release of the unrestricted certificates, Defendant
did not budge from this unreasonable position until more than two months later. ¶¶ 51-52. Until
PE consented to remove the legends on August 22, 2018, any attempt by PE to furnish the original
that no dispute exists regarding the authenticity or accuracy of the document,’” and “there exist[s]
no material disputed issues of fact regarding the relevance of the document.” Id. (citations
omitted). The e-mails that plaintiff has cherry-picked do not reflect the full evidentiary record and
thus, there is a material dispute as to their relevance. See id. at 112-13 (reversing district court’s
decision to consider emails in a breach of contract dispute where such documents were ambiguous
as to their meaning, finding that “the duty of a court ‘is merely to assess the legal feasibility of the
complaint, not to assay the weight of the evidence which might be offered in support thereof.’”);
see also Mirage Entm’t, Inc. v. FEG Entretenimientos S.A., 326 F. Supp. 3d 26, 33 (S.D.N.Y.
2018) (factual issues precluded the consideration of emails on a motion to dismiss).
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certificates or the Rule 144 opinion would have been futile. This sequence of events raises multiple
questions of fact relating to communications, dates, and actions taken or not taken.
FCE’s demand for a representation that PE lacked material nonpublic information relating
to FCE had no basis in law or fact, and it is therefore reasonable to infer that the demand itself was
nothing more than a ruse to delay the negative impact that PE’s sales would have had on FCE’s
stock price, and to avoid the embarrassment of PE’s divestiture. Indeed, it is telling that FCE has
not even attempted to justify this unreasonable demand. This is perhaps because, as FCE is surely
aware, use of material nonpublic information by a stockholder does not involve the issuer, or create
a risk of liability for the issuer, and an issuer therefore has no legitimate basis for requiring a
representation that a stockholder does not possess any material nonpublic information. ¶ 44.
FCE’s demand for this representation was not a “reasonabl[] request” in the language of SPA §
3.8(b). ¶ 21.
B. FCE Violated Section 8-401 by Unreasonably Delaying the Issuance of
Unrestricted Stock Certificates
The Complaint properly states a claim under 6 Del. C. § 8-401. As discussed above, FCE’s
argument that it had no duty to issue the unrestricted stock certificates because PE did not furnish
the original stock certificates and a Rule 144 letter at the time of its initial request is untenable. It
is uncontested that on June 14, 2018, FCE explicitly informed PE that it would not issue the
delegended certificates unless its pretextual conditions were met. ¶ 42. FCE would have the Court
believe that, if PE were to have ignored FCE’s illegitimate demands and tendered the original
certificate along with any Rule 144 opinion letter, FCE would have promptly removed the
restrictive legend notwithstanding its own statements to the contrary. That is pure fiction; but
more importantly, FCE asks the court to draw a baseless and impermissible inference in resolving
a motion to dismiss. An issuer cannot evade liability under 6 Del. C. § 8-401 or any other
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applicable laws by protesting that a stockholder failed to meet the statutory requirements when the
issuer makes clear that any attempt to do so would be futile.
Defendant unreasonably delayed the issuance of delegended stock certificates until
September 11, 2018 in an effort to dissuade PE from selling its shares in violation of 6 Del. C. §
8-401. Its argument that it had no duty to remove the restrictive legend because its own wrongful
refusal prevented PE from supplying the original certificates and the Rule 144 opinion letter at an
earlier date is meritless and disingenuous. White Winston Select Asset Funds, LLC v. Prof'l
Diversity Network, Inc., No. SUCV201803878BLS1, 2019 WL 2605707 (Mass. Super. May 31,
2019) is instructive. Just like in this case, the defendant in White Winston wrongfully refused
plaintiff’s initial request for the issuance of new stock certificates without the restrictive legend on
the purported basis that defendant possessed material nonpublic information, and delayed the
issuance of the clean certificates until more than three months after plaintiff’s initial request, by
which time plaintiff’s opportunity to sell the shares at favorable prices had passed. Id. at *1-2.
The court noted as a preliminary matter that the issue of whether plaintiff engaged in delay because
it “feared that the sale of [defendant’s] large block would depress share prices” “remains for factual
development through discovery.” Id. at *2.
Also just like FCE’s position here, the White Winston defendant relied upon Jing Jing v.
Weyland Tech, Inc., No. CV 17-446, 2017 WL 2618753 (D. Del. June 15, 2017) to argue that it
had no duty under 6 Del. C. § 8-401 to remove the restrictive legend because plaintiff did not
present the original stock certificates. The court held that, “f presentment is generally a
precondition to a request for unlegended certificates, [plaintiff] may well be able to prove that
[defendant] is estopped by its behavior from relying on that condition,” and “to the extent that the
Jing Jing decision was intended to announce a general new pleading obligation of presentment in
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circumstances like those alleged in this case, this court declines to adopt it.” White Winston, 2019
WL 2605707 at *3. In doing so, the court distinguished Jing Jing on the basis that, unlike in White
Winston—or here—“there was a substantial issue as to who rightfully owned and held the legended
shares in dispute,” and that well-established authority from the Delaware Chancery Court “make[]
no reference to an obligation to plead presentment (something that may certainly be required of a
security holder before a new certificate is delivered).” Id. (citing Bender, 514 A.2d 1109). Based
on the foregoing, the White Winston court denied plaintiff’s motion in its entirety. White Winston,
2019 WL 2605707 at *4. This Court should reach the same conclusion.4
Defendant’s argument that PE has not adequately alleged that it has satisfied the seven
statutory prerequisites, including whether the transfer was “rightful,” under Section 8-401 is
similarly misguided. Those are defenses, not pleading requirements. And as the cases cited by
FCE demonstrate, any questions regarding whether PE has established that it has satisfied those
conditions are reserved for after the parties have had the benefit of discovery. See, e.g., CAPM
Corp. v. Protegrity, Inc., No. C.A. 18676-NC, 2001 WL 1360122 (Del. Ch. Oct. 30, 2001)
(decision on a summary judgment motion); Bender., 514 A.2d at 1116 (same); Campbell v. Liberty
Transfer Co., No. CV-02-3084, 2006 WL 3751529, at *1 (E.D.N.Y. Dec. 19, 2006) (decision on
a post-trial motion for entry of judgment); JW Acquisitions, LLC v. Shulman, No. 1712-N, 2006
WL 4782399, at *1 (Del. Ch. Oct. 25, 2006) (decision on motion for entry of judgment).
4 Nash v. Coram Healthcare Corp., No. 96 CIV. 0298 (LMM), 1996 WL 363166 (S.D.N.Y.
June 28, 1996) is inapposite. In Nash, the plaintiff sought to amend the complaint to add a breach
of common law duty under New York law based on the existence of 6 Del. C. § 8-401. Plaintiff
was unable to avail itself of the statutory remedy, apparently because the shares were not in
registered form. Id. at *2. Accordingly, any statements made by the Nash court regarding 6 Del.
C. § 8-401 were mere dicta.
Further, unlike in the cases cited by Defendant, there is no dispute that PE eventually furnished
the original certificates and the Rule 144 opinion letter. As discussed in Section I.A, at best, FCE
has succeeded in establishing that there is a question of fact as to whether it acted reasonably and
promptly in response to PE’s request.
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Accordingly, it is inappropriate to address such issues at this juncture and FCE’s motion should
be denied.
C. Section 158 Is Not Limited to Injunctive Relief
FCE’s argument that PE fails to state a claim under 8 Del. C. § 158 also fails. FCE is
wrong that an action under 8 Del. C. § 158 offers only equitable relief. FCE Br. at 20-21. While
FCE cites cases granting injunctive relief under Section 158, the language of Section 158 does not
state that the only remedy is in equity. The mere availability of injunctive relief does not preclude
the possibility of damages. Indeed, FCE does not cite any cases refusing to grant damages on
Section 158 claims; at best, FCE’s cases merely state that the plaintiffs in those cases seek
injunctive relief, or that it is possible to award injunctive relief for a Section 158 claim. See
Leonard Loventhal Account v. Hilton Hotels Corp., No. CIV.A.17803, 2000 WL 1528909, at *8
(Del. Ch. Oct. 10, 2000), aff’d sub nom. Account v. Hilton Hotels Corp., 780 A.2d 245 (Del. 2001);
Bender, 514 A.2d at 1115; Klita v. Cyclo3pss Corp., No. CIV.A. 15374, 1997 WL 33174421, at
*2 (Del. Ch. Apr. 8, 1997); Graham v. Commercial Credit Co., 41 Del. Ch. 580, 584 (1964);
Caravias v. Interpath Commc’ns, Inc., No. CIV.A. 3301-VCN, 2008 WL 2268355, at *3 (Del. Ch.
May 28, 2008). In contrast, at least one court has found that a plaintiff adequately stated a claim
for damages under 8 Del. C. § 158 even though the defendant ultimately provided the plaintiff
with delegended stock certificates, thereby rendering injunctive relief moot. White Winston Select
Asset Funds, LLC, 2019 WL 2605707, at *3.
Accordingly, Defendant’s argument that PE’s statutory claims should be dismissed is
frivolous.
II. FCE Misstates the Complaint’s Breach of Covenant Claim and Misapplies New York
Law on Conditions Precedent
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FCE’s claims regarding PE’s breach of covenant fail because (1) FCE’s arguments are
based on the wrong SPA provision; the Complaint brings a breach of covenant claim, not breach
of contract; (2) under New York law, the Complaint need not allege conditions precedent at all,
much less when conditions precedent occurred; and (3) even though the Complaint need not plead
when the breach began to run, the Complaint does in fact allege that the breach began to run from
the first request for removal of restrictive legends on June 4, 2018, ¶ 38.
As an initial matter, FCE mischaracterizes the Complaint’s breach of covenant suit as a
breach of contract suit based on Section 3.8(b) of the SPAs. See, e.g., FCE Br. at 12-15 (“The
Complaint Fails to State a Claim for Breach of Contract.”) In fact, as clearly stated in the
Complaint, PE’s claim is a “breach of covenant” claim based on Section 4.8 of the SPAs. ¶ 59;
see also ¶ 23. Section 4.8 states that “[f]rom and after the date hereof, the Company shall use its
reasonable best efforts to obtain as promptly as practicable any consent or approval of any Person,
including any regulatory authority, required in connection with the transactions contemplated hereby.” SPA ¶ 4.8; ¶¶ 23, 59. There is no condition precedent in this breach of covenant provision.
This fact alone is fatal to FCE’s argument that the Complaint fails to allege conditions precedent
with specificity.
Moreover, under New York law, the Complaint need not allege conditions precedent at all,
much less when conditions precedent occurred. New York Civil Practice Law and Rule (“CPLR”)
3015(a) states that “[t]he performance or occurrence of a condition precedent in a contract need
not be pleaded.” “In enacting CPLR 3015 (subd. [a]), the Legislature . . . eliminated any
requirement that performance or occurrence of conditions precedent be pleaded.” Allis-Chalmers
Mfg. Co. v. Malan Const. Corp., 30 N.Y.2d 225, 232 (N.Y. 1972). Courts have found that
dismissing a complaint on the grounds that a plaintiff failed to allege compliance with conditions
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precedent places an “improper pleading burden” on the plaintiff. 1199 Hous. Corp. v. Int’l Fid.
Ins. Co., 14 A.D.3d 383, 384 (N.Y. App. Div. 2005); see also Kriss v. Bayrock Grp. LLC, No.
10CIV3959LGSDCF, 2016 WL 7046816, at *21 (S.D.N.Y. Dec. 2, 2016), on reconsideration in
part, No. 10CIV3959LGSDCF, 2017 WL 1901966 (S.D.N.Y. May 8, 2017); United Res. Recovery
Corp. v. Ramko Venture Mgmt., Inc., 584 F. Supp. 2d 645, 657 (S.D.N.Y. 2008).
FCE does not cite a single New York state case that requires the pleading of a condition
precedent at the motion to dismiss stage, where the “scope of a court’s inquiry . . . is narrowly
circumscribed.” 1199 Hous. Corp., 14 A.D.3d at 384. For example, Oppenheimer & Co. v.
Oppenheim Appel, Dixon & Co., 86 N.Y.2d 685, 690 (N.Y. App. Div. 1995) is an appeal from a
motion for judgment notwithstanding the verdict after a jury trial. Redwing Constr. Co. v. Sexton,
181 A.D.3d 1027 (N.Y. App. Div. 2020) and Utica Mut. Ins. Co. v. Clearwater Ins. Co., 906 F.3d
12 (2d Cir. 2018) are both appeals from summary judgment. And Baraliu v. Vinya Capital, L.P.,
No. 07 CIV. 4626 (MHD), 2009 WL 959578 (S.D.N.Y. Mar. 31, 2009), Robb Evans & Assocs.
LLC v. Sun Am. Life Ins., No. 10 CIV. 5999 GBD, 2012 WL 488257 (S.D.N.Y. Feb. 14, 2012),
and Planète Bleue Télévision, Inc. v. A&E Television Networks, LLC, No. 16 CIV. 9317 (PGG),
2018 WL 10579873 (S.D.N.Y. Sept. 19, 2018) are inapposite because they concern pleading under
federal law, whereas PE’s claims are governed by New York law. The SPAs contain a New York
choice of law clause, see SPA ¶ 7.3; ¶ 10, and federal courts recognize that CPLR 3015 applies in
cases under New York law that are before a federal court. See, e.g., Kriss, 2016 WL 7046816, at
*21.
Finally, to the extent FCE argues that “plaintiff cannot plausibly allege unreasonable delay
without alleging when the duty to act actually arose,” FCE Br. at 14, the Complaint alleges that
“[o]n June 4, 2018, PE requested that FCE remove the restrictive legends.” ¶ 38. This is when
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FCE’s obligation to “use its reasonable best efforts” under Section 3.8(b) began. See id.
(describing June 4, 2018 request for removal of the restrictive legends). Even though the
Complaint need not plead when the breach occurred, the Complaint does, in fact, provide precisely
such a date.5 FCE’s bare claim that this is “not enough to state a claim based on FuelCell’s alleged
unreasonable delay” is an assertion, not an argument, and a flawed one at that. FCE Br. at 14.
III. The Complaint Adequately Alleges a Tortious Interference With Prospective
Business Advantage
FCE’s arguments regarding PE’s tortious interference with prospective business advantage
claim misconstrues PE’s arguments and are inadequate on the law. FCE’s argument that PE’s
tortious interference with prospective business advantage claim is “duplicative” of its other claims
misses the point that this claim is pled in the alternative. See, e.g., In re Skat Tax Refund Scheme
Litig., 356 F. Supp. 3d 300, 325 (S.D.N.Y. 2019) (“A claim is alternative and not duplicative if a
plaintiff may fail on one but still prevail on the other.”) However, even if the Court finds for FCE
on PE’s statutory or breach of covenant claims, FCE may still have violated its common law legal
duty extraneous to the contract. “Although the same acts which constitute the basis for the first
cause of action for breach of contract are re-alleged [in the tortious interference with performance
of contract claim], the additional allegations that defendant maliciously withheld its consent or
delayed such consent for its own benefit are sufficient affirmative action.” S & S Hotel Ventures
Ltd. P’ship v. 777 S.H. Corp., 108 A.D.2d 351, 354 (N.Y. App. Div. 1985); see also Albemarle
Theatre, Inc. v. Bayberry Realty Corp., 27 A.D.2d 172, 177 (N.Y. App. Div. 1967) (“In the case
at bar the . . . defendants, it is alleged, wilfully and intentionally improperly performed their
5 While Section 3.8(b) is not the basis of any claims in this case, PE, does, in fact, allege that
the condition precedent in Section 3.8(b) is satisfied. The Complaint expressly asserts that PE
provided FCE with “a Rule 144 opinion letter from counsel, and the original share certificates.” ¶
45.
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contract . . . and did so, in connection with their other acts, in a manner calculated drastically to
decrease its competitive position and value, to their own substantial benefit. This constituted not
only a breach of their contract with the plaintiff, but a violation of their legal common law duty
extraneous to the contract not to act willfully to destroy the property of another, including the
plaintiff.”).
FCE’s argument that PE “has not identified a specific business relationship, or a third party
to whom it would have sold its shares” ignores the realities of securities trading on listed
exchanges, which, definitionally, involves anonymous third-party purchasers. FCE Br. at 24. Not
a single one of FCE’s cases addresses the situation at issue in this case, where a party seeks to sell
listed shares traded in significant volume on a public exchange. See Kirch v. Liberty Media Corp.,
449 F.3d 388, 400 (2d Cir. 2006) (concerning negotiations over television content distribution
deals); AYDM Assocs., LLC v. Town of Pamelia, 205 F. Supp. 3d 252, 274 (N.D.N.Y.
2016), aff’d, 692 F. App’x 78 (2d Cir. 2017) (concerning the lease or sale of townhouses); Mehrhof
v. Monroe-Woodbury Cent. Sch. Dist., 168 A.D.3d 713, 714 (N.Y. App. Div. 2019) (concerning
an employment contract); Allocco Recycling, Ltd. v. Doherty, 378 F. Supp. 2d 348, 375 (S.D.N.Y.
2005) (concerning the Department of Sanitation’s denial of a permit for a recycling center).
Because sales on listed exchanges are anonymous, FCE’s requirement that PE identify an
individual potential purchaser of shares would preclude all claims for tortious interference with
prospective business advantage where the relevant business relationship is the sale of listed
securities on a public exchange.
Finally, the Complaint adequately alleges that FCE’s interference was “dishonest, unfair,
or improper.” FCE Br. at 25. As the Complaint shows, FCE employed multiple stratagems to
dishonestly, unfairly, and improperly delay the issuance of unrestricted legends to PE. ¶¶ 38-54.
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In particular, FCE illegitimately demanded that PE provide a representation that PE did not possess
any material nonpublic information. ¶¶ 43-44. As described in the Complaint, such a claim was
transparently pretextual, and was obviously done for the improper purpose of depriving PE of its
bargained-for rights in an effort to avoid further reduction in FCE’s flagging stock price. ¶¶ 44,
51.
CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests that the Court deny Defendant’s
Motion to Dismiss. In the alternative, should the Court find that dismissal is warranted, Plaintiff
respectfully requests that such dismissal be without prejudice and for leave to file an amended
complaint to remedy any pleading defects.
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Dated: November 18, 2020 ARNOLD & PORTER KAYE SCHOLER LLP
By:
James D. Herschlein
Jonathan E. Green
250 West 55th Street
New York, New York 10019-9710
Telephone: (212) 836-8000
Facsimile: (212) 836-8689
Email: james.herschlein@arnoldporter.com
jonathan.green@arnoldporter.com
James K. Lee (pro hac vice)
44th Floor, 777 South Figueroa Street
Los Angeles, CA 90017-5844
Telephone: (213) 243-4000
Facsimile: (212) 243-4199
Email: james.lee@arnoldporter.com
Attorneys for POSCO Energy Co., Ltd
Out for now. Good luck! Be careful.
Probably not unless something significant comes out.
No. Responses are due by 18 Nov.
LMAO! Love it when the judge ID's the victims for payment. Another day closer.
INTRODUCTION
This is the latest in a series of meritless and harassing lawsuits that POSCO Energy Co.,
Ltd. (“POSCO”) has brought against FuelCell Energy, Inc. (“FuelCell”) in retaliation for referring
the parties’ true dispute to arbitration (the “breach-of-contract arbitration”). Notwithstanding
POSCO’s irrelevant and false allegations regarding the nature of the parties’ communications, this
is a straightforward matter subject to straightforward grounds for dismissal. POSCO’s allegations
— which are simply one claim repackaged four ways — amount to a complaint that FuelCell did
not act quickly enough in removing a restrictive legend from POSCO’s unregistered stock
certificates, causing POSCO to lose out on the opportunity to sell its shares while stock prices were
relatively higher. But the Complaint, which is premised on FuelCell’s alleged delay in acceding
to POSCO’s request, cannot support POSCO’s claims because it omits when POSCO “met all of
the statutory prerequisites for removal of the restrictive legend, triggering FuelCell’s duty to
remove [it].”1
See Compl. ¶¶ 67–68, ECF No. 8.
Careful to plead around the relevant timeline, the Complaint alleges that (i) POSCO asked
FuelCell on June 4, 2018 to remove the restrictive legend from POSCO’s stock certificates, and
(ii) on some unspecified date in the future, POSCO satisfied the statutory prerequisites for its
removal — namely, presenting FuelCell with the stock certificates, themselves, and providing a
letter representing that FuelCell could lawfully remove the restrictive legend because POSCO was
exempt from registration under the securities laws. See id. ¶¶ 38, 45, 67–68. That is insufficient
to demonstrate POSCO’s plausible entitlement to relief.
To begin with, the Complaint makes clear that POSCO did not satisfy the contractual or
statutory prerequisites for removal of the restrictive legend from its shares as of its June 4, 2018
1 For clarity, this Brief has substituted “FuelCell” for “FCE” and “POSCO” for “PE” when
quoting the allegations in the Complaint.
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request, which forecloses POSCO’s demands for relief as of that date. Furthermore, because the
Complaint conspicuously omits when POSCO allegedly satisfied those prerequisites, the
Complaint cannot demonstrate that FuelCell “unreasonably delayed” in fulfilling POSCO’s
request. A plaintiff does not adequately plead a plausible claim for “unreasonable delay” when it
fails to plead the dates of the critical events to establish liability. Finally, there is a reason that
POSCO attempts to plead around the critical dates. As documents integral to the Complaint and
referenced therein demonstrate,
2 POSCO, in fact, did not satisfy either prerequisite until late
August 2018, with the issuance of new, unrestricted shares following just four days later.
Because the Complaint does not allege sufficient facts to support the conclusion that
FuelCell “unreasonably delayed” in reissuing POSCO’s stock certificates — the basis for all four
counts — POSCO’s Complaint must be dismissed.
BACKGROUND
A. The POSCO-FuelCell Relationship and Breach-of-Contract Arbitration
FuelCell is an industry leader in providing clean, efficient, and affordable energy through
fuel cell solutions. Fuel cells are sources of energy that resemble batteries — except that, unlike
batteries, a fuel cell will continue to generate electricity as long as fuel is supplied (subject to
2
“In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a
district court may consider the facts alleged in the complaint, documents attached to the complaint
as exhibits, and documents incorporated by reference in the complaint.” DiFolco v. MSNBC Cable
LLC, 622 F.3d 104, 111 (2d Cir. 2010). Furthermore, “matters judicially noticed by the District
Court are not considered matters outside the pleadings.” Staehr v. Hartford Fin. Servs. Grp., Inc.,
547 F.3d 406, 426 (2d Cir. 2008). “Where a document is not incorporated by reference, the court
may nevertheless consider it where the complaint relies heavily upon its terms and effect, thereby
rendering the document integral to the complaint.” DiFolco, 622 F.3d at 111 (internal quotation
omitted). “If a plaintiff chooses not to attach to the complaint or incorporate by reference a
document upon which it implicitly relies and which is integral to the complaint, the defendant may
proffer that document when attacking the complaint for its failure to state a claim.” Baraliu v.
Vinya Capital, L.P., No. 07-4626, 2009 WL 959578, at *4 (S.D.N.Y. Mar. 31, 2009).
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degradation over time). Fuel cells create almost no pollutants, are vastly more efficient than
similarly sized combustion engines, provide continuous energy (unlike intermittent solar and wind
power), and have a very small footprint compared with other clean energy technologies.
In 2005, POSCO approached FuelCell to facilitate the sale of FuelCell’s first three power
plants in the Republic of South Korea (“Korea”). Two years later, POSCO proposed a strategic
partnership to market FuelCell’s power plants directly. The basis of the partnership was for
FuelCell to license its technology and know-how to POSCO and for POSCO, in turn, to receive
the exclusive right to sell, service, and eventually manufacture FuelCell’s technology and products
throughout all of Asia. In exchange for these grants and licenses and for the tens of thousands of
hours that FuelCell spent training POSCO to use, build, and sell FuelCell’s proprietary power
plants, the parties agreed that FuelCell would receive royalties on POSCO’s resulting sales.3
Between 2007 and 2012, FuelCell and POSCO memorialized their relationship in four
licensing and related agreements (collectively, the “Transaction Agreements”). In the same
timeframe, they also executed three Securities Purchase Agreements (“SPAs”), through which
POSCO purchased more than 30 million FuelCell shares. Compl. ¶ 2. Because POSCO purchased
the shares directly from FuelCell, and the shares were not registered with the Securities and
Exchange Commission (“SEC”), the stock certificates representing POSCO’s shares bore a
common restrictive legend that limited the circumstances under which POSCO could transfer
them. See id. ¶¶ 2–3, 20.
Initially, the POSCO-FuelCell partnership was productive. Together, POSCO and
FuelCell opened and expanded the Korean fuel cell market, and POSCO realized hundreds of
3 See FuelCell Energy, Inc., Current Report, Item 8.01 (Form 8-K) (Apr. 7, 2020),
https://sec.report/Document/0001564590-20-015607/.
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millions of dollars in FuelCell sales. But in 2015, POSCO abruptly announced its intention to exit
the fuel cell sector. That year, POSCO completed work on its own manufacturing facility —
meaning that, from that point on, POSCO could apply the knowledge it had received from FuelCell
and manufacture FuelCell’s technology for itself. Although customers continued to contact
POSCO, and POSCO was still under a contractual duty to commercialize FuelCell’s technology,
POSCO refused to make any sales. During the same period, POSCO also attempted to coerce
FuelCell into granting POSCO perpetual, royalty-free rights to all of FuelCell’s intellectual
property, including intellectual property for products not encompassed in the original license.
POSCO was explicit about its strategy: if FuelCell failed to convey an unlimited technology
transfer, POSCO would bring unfounded litigations and arbitrations against FuelCell until
FuelCell gave in to POSCO’s demands.
FuelCell refused to give in. In February 2020, FuelCell formally notified POSCO that it
was in material breach of the Transaction Agreements.4
Because POSCO refused to cure its
material breaches, on June 28, 2020, FuelCell terminated the Transaction Agreements and initiated
parallel arbitration proceedings seated in London and Singapore, pursuant to the parties’ relevant
agreements and the rules of the International Chamber of Commerce.
5
Consistent with its threats,
POSCO immediately initiated two suits in the U.S. Courts against FuelCell in retaliation.
B. POSCO’s Delaware Lawsuit
A little over one month after FuelCell initiated arbitration proceedings and terminated the
parties’ Transaction Agreements, POSCO submitted a baseless demand to inspect FuelCell’s
4 See FuelCell Form 8-K, Item 8.01 (Apr. 7, 2020).
5 See GARRIGUES, International Arbitration Newsletter – July 2020 (July 30, 2020),
https://www.garrigues.com/en_GB/new/international-arbitration-newsletter-july-2020-regionaloverview-asia-pacific.
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books and records under Section 220 of the Delaware General Corporation Law (“DGCL”). See
POSCO Energy Co., Ltd. v. FuelCell Energy, Inc., No. 2020-07-13-MTZ, Dkt. 1 (Del. Ch. Aug.
28, 2020) (“Del. Compl.”).
6 POSCO’s demand focuses primarily on a SEC investigation that
(i) arose out of a self-disclosure by FuelCell regarding certain omissions it discovered in past
securities filings and (ii) resulted in no penalties or fines to the company — largely because the
SEC confirmed that FuelCell had relied on the advice of outside securities counsel to prepare the
at-issue statements. See Del. Compl. Ex. A; In the Matter of FuelCell Energy, Inc., No. 3-19957,
Order Instituting Cease-And-Desist Proceedings Pursuant To Section 8A Of The Securities Act
Of 1933, Making Findings, And Imposing A Cease-And-Desist Order, ¶ 15 (SEC, Sep. 3, 2020),
https://www.sec.gov/litigation/admin/2020/33-10831.pdf. POSCO’s demand also seeks
information about FuelCell’s use of Paycheck Protection Program loans, its debts, and inquiries
by any government or regulatory agency, in an obvious fishing expedition to identify “potential
breaches of fiduciary duty.” Del. Compl. Ex. A.
While FuelCell considered POSCO’s request — in particular, how POSCO could make
such a request when FuelCell’s records and POSCO’s public statements indicated that POSCO
had sold all of its shares7 — POSCO filed a complaint with the Delaware Court of Chancery to
compel the requested inspection under DGCL 220. Having sold virtually all of its shares,
announced its intention to exit the fuel cell industry, and sought information that could not possibly
support a breach of fiduciary duty claim — weeks after FuelCell initiated the arbitrations — it is
clear that POSCO’s demand is not related to its “interests as a stockholder” or otherwise intended
6 The Court may take judicial notice of documents filed on the Delaware docket because
they are “publicly available and [their] accuracy cannot reasonably be questioned.” Apotex Inc. v.
Acorda Therapeutics, Inc., 823 F.3d 51, 60 (2d Cir. 2016).
7 See Park Jae-hyk, POSCO Energy to Sell 2.9% stake in FuelCell Energy, THE KOREA
TIMES, http://m.koreatimes.co.kr/pages/article.asp?newsIdx=258700 (last visited Oct. 1, 2020).
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for a “proper purpose,” see 8 Del. C. § 220, and was intended instead to harass FuelCell and to
improperly solicit documents for use in the arbitrations.
C. POSCO’s New York Lawsuit
Two weeks after POSCO filed the Delaware lawsuit and as part of its campaign to harass
and retaliate, POSCO filed the present meritless litigation, based on stale conduct more than two
years in the past. After POSCO announced its intention to leave the fuel cell business, POSCO
asked FuelCell to remove the restrictive legend from POSCO’s shares so that POSCO could sell
its FuelCell stock. Compl. ¶ 36. The SPAs and POSCO’s stock certificates anticipated that
POSCO would eventually seek to sell its shares and explained how POSCO should initiate that
process. The SPAs provided:
Following the time a legend is no longer required for any Shares hereunder, the
Company will, no later than five (5) Business Days following the delivery by the
Purchaser to the Company or the Company’s transfer agent of a legended certificate
representing such Shares, accompanied by such additional information as the
Company or the Company’s transfer agent may reasonably request, deliver or cause
to be delivered to the Purchaser a certificate representing such Shares that is free
from all restrictive and other legends.
Id. ¶ 21 (quoting SPA § 3.8(b)). The restrictive legend on POSCO’s stock certificates provided
that POSCO’s shares could not be resold or offered for sale unless registered with the SEC or
“pursuant to an available exemption from . . . the Securities Act . . . as evidenced by a legal opinion
of counsel to the transferor to such effect.” Id. ¶ 20 (quoting restrictive legend).
In other words, as POSCO concedes in its Complaint, before FuelCell could replace
POSCO’s restricted shares with unrestricted shares, POSCO had to (i) provide FuelCell with the
physical stock certificates to be replaced, and (ii) provide a letter from POSCO’s counsel,
confirming that POSCO was exempt from the registration requirements imposed by the securities
laws, such that FuelCell could lawfully delegend POSCO’s shares. Id. ¶¶ 67–68. Because POSCO
claimed an exemption from registration under SEC Rule 144, it refers to the latter requirement as
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providing a “Rule 144 opinion letter.” See, e.g., id. ¶¶ 36, 45, 68. The law echoes both
requirements. See UCC § 8–401 (adopted by both Delaware and New York).
POSCO’s June 4, 2018 request did not provide any of the required materials. See Compl.
¶ 38 (alleging POSCO submitted a delegending request on June 4, 2018), ¶ 45 (alleging separately
that POSCO submitted “a Rule 144 opinion letter from counsel, and the original share certificates”
“n the hopes of moving things forward”); see also Ex. 1, POSCO Delegending Request (June 4,
2018). In fact, POSCO did not provide the required letter from counsel until August 17, 2018.
See Compl. ¶ 51; Ex. 2, Email from Korean Counsel for POSCO (Aug. 17, 2018). And POSCO
did not locate or provide its stock certificates to FuelCell until August 24, 2018. See Compl. ¶ 45;
Ex. 3, Email from POSCO’s Transfer Agent (Aug. 23, 2018) (“The stock certificate has just been
arrived. I’ll keep some record and send it to the agent tonight or early tomorrow morning.”); Ex.
4 at 7, Email from FuelCell (Aug. 24, 2018) (“Copied on this email is Jae Ryu, POSCO Energy’s
broker. . . . I have a courier headed to Jae’s office right now to pick up the share certificate and
deliver it to AST [FuelCell’s transfer agent].”).
After POSCO satisfied those contractual and statutory prerequisites, FuelCell’s transfer
agent promptly delegended POSCO’s shares on August 28, 2018. Ex. 5, Direct Registration BookEntry Advice (Aug. 28, 2018). POSCO received the shares on September 11, 2018, following its
own delay to complete additional steps to comply with Korean law. See Compl. ¶ 53; Ex. 4 at 1,
Email from POSCO’s Transfer Agent (Sept. 11, 2018) (“A FedEx messenger service will deliver
the medallion stock power to the address given around 11:00~12:00pm.”); id. at 6, Email from
POSCO’s Transfer Agent (Aug. 24, 2018) (“POSCO needs to finish some paper works required
by the Korean regulator to receive the shares. . . . It can’t be done [in] just one or two days.”). Put
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differently, POSCO did not submit a valid delegending request until August 24, 2018, and clean,
delegended stock certificates were available to POSCO four days later.
D. Extraneous Material in the Complaint
The Complaint includes a host of extraneous allegations regarding the parties’
communications about POSCO’s delegending request, which culminated in POSCO’s decision to
waive certain “bargained-for rights” at the advice of its own counsel. See, e.g., Compl. ¶¶ 5, 48–
50 (alleging FuelCell “forced POSCO to waive its bargained-for right to appoint a board designee”
and “strong-armed POSCO into surrendering its pro rata rights”). Because those allegations (i) do
not form the basis for any count in the Complaint and (ii) precede the date when FuelCell’s duty
to delegend POSCO’s shares arose, they are irrelevant. But, to the extent that the Court considers
them, they demonstrate that POSCO’s June 4, 2018 delegending request was not only incomplete
— because it did not include a Rule 144 opinion letter or POSCO’s legended stock certificates —
but also was not “rightful,” as the law independently requires. See 6 Del. C. § 8–401(a)(7).
A stock issuer like FuelCell may not delegend shares in connection with a sale that it knows
would violate the Securities Act of 1933 (the “1933 Act”), and is justified in requesting information
to show that the contemplated transfer can be made in accordance with the law. See, e.g., Catizone
v. Memry Corp., 897 F. Supp. 732, 736 (S.D.N.Y. 1995) (“Since the transfer violated the 1933 act,
it cannot be considered rightful, and defendants . . . were under no duty to register the transfer.”);
Bender v. Memory Metals, Inc., 514 A.2d 1109, 1116 (Del. Ch. 1986) (“A transfer is not ‘rightful’
if it would violate the 1933 Act.”); Charter Oak Bank & Tr. Co. v. Registrar & Transfer Co., 141
N.J. Super. 425, 434 (N.J. Super. Ct. Law Div. 1976) (applying UCC § 8–401) (“A transfer agent
cannot be required by state law to transfer stock in violation of the Securities Act. Therefore, when
a transfer agent has reasonable cause to believe that a transfer will be in violation of the Securities
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Act, it has a right to refuse to make the transfer until it has received an explanation or showing that
the proposed transfer would not violate the Securities Act.”).
Here, POSCO’s June 4, 2018 delegending request raised concerns as to whether POSCO
was, in fact, free to sell unregistered shares pursuant to an SEC exemption. In particular, while
POSCO purported to fall within a safe harbor provided by SEC Rule 144 for non-affiliates, see
Compl. ¶ 36, an “affiliate” for purposes of the Rule presumptively includes both large shareholders
and officers or directors, see, e.g., Sec. & Exch. Comm’n, “Rule 144: Selling Restricted and
Control Securities” (Jan. 16, 2013)8
(“An affiliate is a person, such as an executive officer, a
director or large shareholder, in a relationship of control with the issuer.”).9
Because POSCO
was a longtime, large shareholder with appointment rights to a seat on FuelCell’s board, Compl.
¶¶ 2, 25, POSCO’s own counsel was concerned as to whether POSCO “could be deemed an
affiliate because of its right to appoint a member to the board,” see id. ¶¶ 42–43, 48.
Ultimately — consistent with its stated intention to exit the fuel cell sector, discontinue its
selling relationship with FuelCell, and divest itself of FuelCell stock — POSCO opted to waive its
right to a seat on FuelCell’s board, which FuelCell accepted as a reasonable solution to the issue
of whether POSCO would be deemed an affiliate. See Compl. ¶ 50.
LEGAL STANDARD
A complaint must give a defendant “fair notice of what the . . . claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). A
plaintiff cannot discharge this obligation by reciting “labels and conclusions,” or by providing a
“formulaic recitation of the elements of a cause of action.” Id. Rather, a plaintiff must allege
8
https://www.sec.gov/reportspubs/investor-publications/investorpubsrule144htm.html.
9 Unless otherwise noted, all emphasis in this Brief has been added.
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“sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Bautista v. CytoSport, Inc., 223 F. Supp. 3d 182, 187 (S.D.N.Y. 2016) (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)). “Where a complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement
to relief.’” Elias v. Rolling Stone LLC, 872 F.3d 97, 104 (2d Cir. 2017) (quoting Twombly, 550
U.S. at 557).
ARGUMENT
As POSCO’s Complaint necessarily acknowledges, there were two prerequisites (among
others) that POSCO was required to satisfy before FuelCell could remove the restrictive legends
from POSCO’s shares. First, pursuant to Delaware’s Uniform Commercial Code (the “Delaware
UCC”) and the express terms of the parties’ SPAs, POSCO had to provide FuelCell with its
original, legended stock certificates before FuelCell could replace them with new, unrestricted
shares. See 6 Del. C. § 8–401; Compl. ¶ 21 (quoting SPA § 3.8(b)). Second, pursuant to the
Delaware UCC and the language printed on the certificates themselves, POSCO was also required
to provide a letter from counsel, opining that FuelCell’s removal of the restrictive legends from
POSCO’s unregistered shares was appropriate under applicable securities laws. See 6 Del. C. §§
8–401(a)(5), 8–204; Compl. ¶ 20 (quoting restrictive legends).
It is clear from the face of the Complaint that POSCO failed to satisfy either prerequisite
with its June 4, 2018 request. See Compl. ¶¶ 38, 45. As a result, FuelCell was not under a duty to
delegend POSCO’s certificates on June 4, 2018, and the Complaint on its face forecloses POSCO’s
demands for relief as of that date. See, e.g., Utica Mut. Ins. Co. v. Clearwater Ins. Co., 906 F.3d
12, 22 (2d Cir. 2018) (“A condition precedent . . . must occur before a duty to perform a promise
in the agreement arises.” (quoting Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86
N.Y.2d 685, 690 (N.Y. 1995))); 6 Del. C. § 8–401 cmt. 1 (“If any of the preconditions do not exist,
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there is no duty to register transfer.”).
Furthermore, because the Complaint conspicuously fails to allege when POSCO satisfied
the relevant prerequisites, it has not alleged sufficient facts to support the conclusion that FuelCell
“unreasonably delayed” in acting on POSCO’s request. See Planète Bleue Télévision, Inc. v. A&E
Television Networks, LLC, No. 16-9317, 2018 WL 10579873, at *12–13 (S.D.N.Y. Sept. 19, 2018)
(dismissing breach-of-contract claims based on delayed performance because complaint’s failure
to plead when plaintiff satisfied conditions precedent rendered its “allegations regarding the
delayed royalty payments [] too conclusory to defeat [defendant’s] motion to dismiss”); Jing Jing
v. Weyland Tech, Inc., No. 17-446, 2017 WL 2618753, at *3 (D. Del. June 15, 2017) (dismissing
§ 8–401 claim because Iqbal does not permit the Court to “infer compliance with the statute’s
requirements”); see also Baraliu, 2009 WL 959578, at *5 (dismissing breach-of-contract claim
because plaintiff failed to adequately allege conditions precedent had occurred).
Finally, documents integral to the Complaint, and referenced therein, confirm that POSCO,
in fact, did not satisfy either prerequisite until late August 2018, and that FuelCell’s transfer agent
delegended POSCO’s shares just four days later. Cf. Landmark Ventures, Inc. v. Wave Sys. Corp.,
No. 11-8440, 2012 WL 3822624, at *3 n.5 (S.D.N.Y. Sept. 4, 2012), aff’d, 513 F. App’x 109 (2d
Cir. 2013) (holding breach-of-contract claim was “premature” when email attached to motion to
dismiss showed that condition precedent had not yet occurred); Leggat v. Equifax Info. Servs., Inc.,
No. 3:09-263, 2009 WL 2432371, at *2 (E.D. Va. Aug. 6, 2009) (“The Complaint — whether
intentionally or inadvertently — omits the dates of repossession and sale of the vehicle at issue.
However, these dates are central to Plaintiff’s claim, and Chase’s affidavit provides this critical
information.”). Because the Complaint does not adequately allege that FuelCell unreasonably
delayed in reissuing POSCO’s stock certificates, all four claims must be dismissed.
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Counts Three and Four of the Complaint suffer from additional, fundamental defects,
which independently require their dismissal. Count Three, which seeks damages under Section
158 of the DGCL, is untenable because Section 158 offers equitable relief alone — specifically,
the power to compel a corporation to issue appropriate stock certificates. See 8 Del. C. § 158; 1
Corp. & Com. Prac. in Del. Ch. § 9.03 (“[A]n action will lie under Section 158 to compel a
corporation to issue a certificate where one has not theretofore been issued.”). Because POSCO
does not seek equitable relief and, in any event, has already received the delegended certificates
that Section 158 provides for, Section 158 can offer POSCO no further relief as a standalone claim.
Count Four, which alleges that FuelCell tortiously interfered with POSCO’s prospective
business advantage, is duplicative of POSCO’s remaining claims and patently fails to state a claim
under New York law. In New York, tortious interference with prospective business advantage
requires intentional interference with “a specific business relationship with an identified third
party.” Mehrhof v. Monroe-Woodbury Cent. Sch. Dist., 168 A.D.3d 713, 714 (N.Y. App. Div.
2019). Count Four must also be dismissed because the Complaint does not allege “a specific
business relationship with an identified third party,” but rather is based only on the possibility that
POSCO could have sold its shares earlier, but for FuelCell’s alleged delay.
I. THE COMPLAINT FAILS TO STATE A CLAIM FOR BREACH OF CONTRACT.
Count One of the Complaint alleges that FuelCell breached the SPAs because it failed to
use “reasonable best efforts” to reissue POSCO clean, delegended stock certificates following
POSCO’s June 4, 2018 request. Compl. ¶¶ 58–64. In support, the Complaint alleges that each of
the parties’ SPAs “contained an identical § 3.8(b), which states that POSCO may request that
FuelCell remove, and that FuelCell agrees to remove, the restrictive legends ‘if such Shares are
eligible for sale without restrictions under Rule 144 or under any no-action letter issued by the
SEC.’” Id. ¶ 21 (quoting SPA § 3.8(b)). The same provision describes the process by which
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POSCO could effect such removal:
Following the time a legend is no longer required for any Shares hereunder, the
Company will, no later than five (5) Business Days following the delivery by the
Purchaser to the Company or the Company’s transfer agent of a legended
certificate representing such Shares, accompanied by such additional information
as the Company or the Company’s transfer agent may reasonably request, deliver
or cause to be delivered to the Purchaser a certificate representing such Shares that
is free from all restrictive and other legends.
Id. (quoting SPA § 3.8(b)).
As the SPAs make clear, a condition precedent to FuelCell’s removal of the restrictive
legends was “delivery by [POSCO]” of the actual “legended certificate[s] representing [POSCO’s]
shares.” Id. As discussed below, with respect to Count Two, presentment of the legended shares
was also a statutory prerequisite to removal of the restrictive legend. See 6 Del. C. § 8–401; 7
Frederick H. Miller, Hawkland Unif. Com. Code Series § 8–401:02 (2013) (“Perhaps the most
obvious requirement that must be satisfied before the issuer’s duty to register a transfer arises, is
that the certificate be presented.”); see also Nash v. Coram Healthcare Corp., No.
96-0298, 1996 WL 363166, at *3 (S.D.N.Y. June 28, 1996) (“[U]nder New York law, a
corporation’s duty to register a transfer of restricted stock arises when the stockholder submits to
the issuer (i) the certificates evidencing the restricted shares; and (ii) a ‘no action’ letter from the
SEC.”). The SPAs and relevant securities laws impose this requirement because, “f a new
certificate was registered and issued without the old one being surrendered, the issuer could find
itself subject to claims based upon both.” 7 Miller, § 8–401:02.
It is axiomatic that a contractual duty to act does not arise until conditions precedent are
met. Utica Mut. Ins. Co., 906 F.3d at 22 (“A condition precedent . . . must occur before a duty to
perform a promise in the agreement arises.” (quoting Oppenheimer & Co., 86 N.Y.2d at 690)).
Consequently, FuelCell was not under a duty to remove the restrictive legend from POSCO’s
shares — and indeed could not have properly removed the restrictive legend — until POSCO
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surrendered its legended stock certificates. See Compl. ¶ 21.
The Complaint does not allege that POSCO satisfied the contractual conditions precedent
to POSCO’s delegending request. See Compl. ¶¶ 58–64; cf. Fed. R. Civ. P. 9(c); Baraliu, 2009
WL 959578, at *5 (“Under the Federal Rules, a plaintiff is required to ‘allege generally that all
conditions precedent have occurred or been performed.’ Plaintiff fails to do so . . . hence this claim
must be dismissed.” (quoting Fed. R. Civ. P. 9(c)). At best, the Complaint alleges that FuelCell
invoked Section 3.8(b) of the parties’ SPAs on June 4, 2018, and that — at some point in the future
— “n the hopes of moving things forward, POSCO provided FuelCell with all other
documentation FuelCell requested, including a Rule 144 opinion letter from counsel, and the
original share certificates.” Compl. ¶¶ 38, 45. That is not enough to state a claim based on
FuelCell’s alleged unreasonable delay.
On its face, the Complaint thus forecloses any suggestion that FuelCell’s duty to act arose
on June 4, 2018. That is, the Complaint is explicit that POSCO had not satisfied the conditions
precedent by that date.
Moreover, by omitting when POSCO presented its stock certificates to FuelCell, the
Complaint has not plausibly alleged that FuelCell failed to exercise “reasonable best efforts” on
account of its “unjustified and unlawful delays.” See Redwing Constr. Co. v. Sexton, 181 A.D.3d
1027, 1028 (N.Y. App. Div. 2020) (“[N]o action for breach of contract lies where the party seeking
to enforce the contract has failed to perform a specified condition precedent.” (internal quotation
omitted)). A plaintiff cannot plausibly allege unreasonable delay without alleging when the duty
to act actually arose. See Planète Bleue, 2018 WL 10579873, at *12–13 (holding breach-ofcontract claim based on delayed payment “too conclusory” to withstand dismissal when
defendant’s obligation to pay was “contingent on Plaintiff having performed” and complaint failed
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15
to allege “when Plaintiff completed the necessary performance”); see also Robb Evans & Assocs.
LLC v. Sun Am. Life Ins., No. 10-5999, 2012 WL 488257, at *2 (S.D.N.Y. Feb. 14, 2012) (“The
Receiver cannot escape dismissal by omitting the relevant payment dates from its second
complaint and simply pleading the legal conclusion that the payments occurred within the
limitations period. While legal conclusions can provide the framework for a complaint, they are
not entitled to an assumption of truth, and must be supported by factual allegations.”).
Finally, documents that are integral to the Complaint and referenced therein demonstrate
that POSCO, in fact, did not provide its stock certificates to FuelCell until August 24, 2018. See
Compl. ¶ 21 (alleging FuelCell had a duty to delegend POSCO’s shares “following the delivery
by [POSCO] . . . of a legended certificate representing such shares”), ¶ 45 (alleging POSCO
“provided FuelCell with . . . the original share certificates”); Ex. 4 (demonstrating POSCO did not
provide FuelCell with the original share certificates until August 24, 2018). FuelCell’s transfer
agent removed the restriction from POSCO’s shares four days later, Ex. 5, and the delegended
shares were available to POSCO on September 11, 2018, to accommodate POSCO’s “need to
finish some paper works required by the Korean regulator to receive the shares,” Ex. 4 at 1, 6; see
also Compl. ¶ 53 (alleging “FuelCell’s stock transfer agent finally notified POSCO on or about
September 11, 2018 that the stock could now be transferred”).
Because FuelCell could not have delegended POSCO’s shares until POSCO provided its
original share certificates, Count One — which is based on FuelCell’s allegedly unreasonable
delay and consequent failure to exercise reasonable best efforts — “must fail based on the terms
of the contract and [POSCO’s] implicit admission in the complaint that the conditions precedent
were not satisfied” when it demanded action. See Baraliu, 2009 WL 959578, at *4.
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II. THE COMPLAINT FAILS TO STATE A CLAIM UNDER DGCL § 8–401.
Count Two fails for the same reasons and others. Count Two alleges that FuelCell’s
“unreasonable delay” in reissuing POSCO’s stock certificates also violated Section 8–401 of the
DGCL, which requires a stock issuer to reissue a certificated security upon request and provides
damages for losses to the stockholder resulting from unreasonable delay. See 6 Del. C. § 8–401.
The Complaint fails to plead a Section 8–401 claim for three reasons. First, as noted above,
presenting a certificated security to the issuer was not only a contractual condition precedent, but
also a statutory prerequisite to a Section 8–401 demand. Second, Section 8–401 further required
POSCO to provide a valid Rule 144 letter before FuelCell could reissue POSCO’s shares. Third,
and relatedly, the Complaint does not allege that POSCO met the other prerequisites imposed by
Section 8–401, including the requirement that “the transfer is in fact rightful.” See id. POSCO
consequently cannot demonstrate that FuelCell “unreasonably delayed” in delegending POSCO’s
stock certificates, or that POSCO suffered damages as a result.
It is well-established that a threshold requirement for a Section 8–401 demand is the actual
presentment of the certificated securities, as the Complaint necessarily acknowledges. See 7
Miller, § 8–401:02 (“Perhaps the most obvious requirement that must be satisfied before the
issuer’s duty to register a transfer arises, is that the certificate be presented.”); Compl. ¶¶ 67–68;
see also Nash, 1996 WL 363166, at *3 (dismissing DGCL § 8–401 claim when, “nlike the cited
cases, and in contravention of the UCC’s requirements, the shares in this instance were neither in
registered form nor presented to the issuer”). Without surrendering the original stock certificates
to the issuer, the issuance of new, delegended certificates would result in the existence of duplicate
shares. 7 Miller, § 8–401:02; Jing Jing, 2017 WL 2618753, at *3 (“Presenting the certificated
security is not a technicality. . . . Without presenting the security, duplicate shares would exist, and
the issuer would be liable for litigation arising out of both the re-issued shares and the old shares.”).
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For the reasons discussed above, the Complaint (i) does not allege that POSCO met this
threshold requirement on June 4, 2018, and (ii) does not plausibly allege delay because it fails to
specify when POSCO provided the certificates to FuelCell. Moreover, POSCO, in fact, did not
provide its stock certificates to FuelCell until late August 2018, at which point FuelCell promptly
reissued POSCO’s stock certificates just four days later. See Exs. 4, 5.
POSCO was subject to a second statutory prerequisite, which it also did not satisfy until
August 2018. Specifically, before FuelCell could remove the restrictive legend from POSCO’s
stock certificates, POSCO was required to provide a letter from counsel, confirming that POSCO
was exempt from registering its shares under SEC Rule 144.
DGCL Section 8–204 provides an issuer’s right to impose restrictions on transfer if they
are “noted conspicuously on the security certificate.” 6 Del. C. § 8–204. Section 8–401 only
applies if the contemplated sale “does not violate any restriction on transfer imposed by the issuer
in accordance with Section 8–204.” 6 Del. C. § 8–401(a)(5); see also 6 Del. C.
§ 8–401 cmt. 1 (“If any of the preconditions do not exist, there is no duty to register transfer.”).
Here, POSCO’s stock certificates stated that, before POSCO could sell or offer to sell its shares,
POSCO was required to provide a “legal opinion of counsel” that the contemplated sale was
exempt from the registration requirements of applicable securities laws. Compl. ¶ 20 (quoting
restrictive legends); see also id. ¶¶ 67–68 (recognizing that “provid[ing] a Rule 144 opinion letter”
was a “statutory prerequisite for removal of the restrictive legend”).
The Complaint alleges that POSCO intended to sell its shares pursuant to a Rule 144
exemption from registration, and that POSCO provided FuelCell with a letter from counsel to that
effect. Id. ¶¶ 36, 45. But, foreclosing the possibility that POSCO satisfied this second prerequisite
as of June 4, 2018, the Complaint alleges that POSCO did not provide a Rule 144 letter to FuelCell
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until August 17, 2018. See Compl. ¶ 51. Because the Complaint does not adequately allege that
FuelCell’s removal of the restrictive legend was “unreasonably delayed” following POSCO’s
satisfaction of this second statutory prerequisite, and documents integral to the Complaint confirm
that it was not, see Exs. 2, 5, Count Two must be dismissed for this independent reason, see Kolber
v. Body Cent. Corp., 967 F. Supp. 2d 1061, 1066 (D. Del. 2013) (“As the Court has already ruled,
there was no duty for Defendants to respond to Plaintiffs’ inquiries before the Rule 144 opinion
was issued.”).
Finally, the Complaint does not adequately allege that POSCO satisfied any of the other
Section 8–401 requirements, including demonstrating that the contemplated stock sale was “in fact
rightful.” See 6 Del. C. § 8–401(a). Section 8–401 lists seven statutory prerequisites that must be
satisfied to trigger a stock issuer’s duty to reissue a stock certificate. See id. A plaintiff pursuing
a Section 8–401 claim bears the burden of demonstrating that all seven requirements — in addition
to the presentment requirement — have been met. See CAPM Corp. Advisors AB v. Protegrity,
Inc., No. 18676, 2001 WL 1360122, at *6 (Del. Ch. Oct. 30, 2001) (“[I]n order for CAPM to
establish that Protegrity breached its duty to register the transfer under § 8–401, it must further
establish that no material issue of fact exists regarding whether the seven additional conditions
were met.”); see also Campbell v. Liberty Transfer Co., No. 02-3084, 2006 WL 3751529, at *11
(E.D.N.Y. Dec. 19, 2006) (“To determine whether plaintiff has satisfied his burden of showing
that the requested transfer of PMWP shares was ‘rightful,’ thus satisfying UCC § 8-401(a)(7),
requires reference to the [1933 Act] and to regulation 17 C.F.R. § 230.144 (‘Rule 144’).”).
For purposes of Section 8–401, a “rightful” stock transfer must comply with the registration
requirements of the 1933 Act. See Bender, 514 A.2d at 1116 (“A transfer is not ‘rightful’ if it
would violate the 1933 Act.”). Thus, a transfer agent is under no obligation to issue stock
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certificates pursuant to DGCL Section 8–401 to facilitate a transfer that would violate the Act.
See, e.g., JW Acquisitions, LLC v. Shulman, No. 1712-N, 2006 WL 4782399, at *1 (Del. Ch. Oct.
25, 2006) (“According to the Uniform Commercial Code provision at issue, the LLC’s entitlement
to relief [under §§ 8–401 and 158] depends on whether the ‘transfer [was] in fact rightful.’”);
Catizone, 897 F. Supp. at 736 (“Since the transfer violated the 1933 act, it cannot be considered
rightful, and defendants Memry and AST&T were under no duty to register the transfer.”
(collecting cases)).
The Complaint does not allege that POSCO’s prospective sale of unregistered shares was
“rightful,” as Section 8–401 requires. Nor does it plead sufficient factual matter from which the
Court could so conclude. To the contrary — the Complaint explains that POSCO was a longtime,
large FuelCell shareholder with a perpetual right to appoint a director to FuelCell’s board. See
Compl. ¶¶ 2, 25. POSCO, in other words, fell squarely within the SEC’s presumptive definition
of an “affiliate.” See, e.g., PWP Xerion Holdings III LLC v. Red Leaf Res., Inc., No. 2017-0235,
2019 WL 5424778, at *8 (Del. Ch. Oct. 23, 2019) (“As customarily interpreted, an officer or
director of an entity is affiliated with that entity.”); United States v. Shkreli, No. 15-637, 2018 WL
9539774, at *14 (E.D.N.Y. Feb. 26, 2018), aff’d, 779 F. App’x 38 (2d Cir. 2019) (reciting expert
testimony defining a Rule 144 affiliate as “someone who can exert a certain amount of control
over a company, either they are an officer or director or they own a large amount of shares”).
Consequently, the Complaint fails to allege that POSCO’s Section 8–401 demand was
“rightful” at least until POSCO entered into a waiver letter on August 22, 2018, waiving its seat
on FuelCell’s board. See Compl. ¶ 52; see also SEC v. Lybrand, 200 F. Supp. 2d 384, 396
(S.D.N.Y. 2002) (“[T]o accept [defendants’] argument that the literal transfer of majority
ownership constitutes the moment at which a former affiliate may sell freely into the market is to
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ignore the guiding purpose of the Securities Act — the protection of ‘those who do not know
market conditions from the overreachings of those who do.’” (internal quotations omitted)).
Because POSCO has not pleaded a plausible Section 8–401 claim, Count Two must be
dismissed.
III. THE COMPLAINT FAILS TO STATE A DGCL § 158 CLAIM.
The Complaint also fails to state a claim under 8 Del. C. § 158. To the extent Section 158
supports an independent cause of action apart from Section 8–401,
10 it provides equitable relief
alone — which POSCO does not seek and, in any event, has already received.
Section 158 of the DGCL provides that “[e]very holder of stock represented by certificates
shall be entitled to have a certificate signed by, or in the name of, the corporation by any 2
authorized officers of the corporation representing the number of shares registered in certificate
form.” Compl. ¶ 33 (quoting 8 Del. C. § 158). Delaware courts have clarified that, “y necessary
implication this includes the right to a proper certificate without a legend or restriction, where
such a legend is no longer appropriate.” Leonard, 2000 WL 1528909, at *8 (quoting Bender,
514 A.2d at 1115 (alterations omitted)). Count Three of the Complaint alleges that, by delaying
the removal of the restrictive legend from POSCO’s shares, FuelCell denied POSCO the
certificates to which it was entitled under Section 158 and caused POSCO over $1 million in losses
as a result. Id. ¶¶ 77–80. POSCO seeks an award of monetary damages to redress its alleged loss.
Id. at 17 (Prayer for Relief).
Unlike Section 8–401, which provides for damages under appropriate circumstances, see
10 The rights POSCO seeks to enforce under Sections 8–401 and 158 are coextensive. Often,
they are pleaded together as single claim. See, e.g., Leonard Loventhal Acct. v. Hilton Hotels
Corp., No. 17803, 2000 WL 1528909, at *8 (Del. Ch. Oct. 10, 2000), aff’d sub nom. Account v.
Hilton Hotels Corp., 780 A.2d 245 (Del. 2001); Klita v. Cyclo3pss Corp., No. 15374, 1997 WL
33174421, at *1 (Del. Ch. Apr. 8, 1997); Bender, 514 A.2d at 1115.
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6 Del. C. § 8–401(b), Section 158 provides injunctive relief alone. In particular, “an action will
lie under Section 158 to compel a corporation to issue a certificate where one has not theretofore
been issued.” 1 Corp. & Com. Prac. in Del. Ch. § 9.03; accord Graham v. Com. Credit Co., 200
A.2d 828, 831 (Del. 1964) (“[T]his action was brought to compel the issuance to the appellant of
new certificates for 11,600 shares pursuant to 8 Del. C. § 158.”); Caravias v. Interpath Commc’ns,
Inc., No. 3301, 2008 WL 2268355, at *3 (Del. Ch. May 28, 2008) (“[Plaintiff] seeks an order
compelling Interpath to issue the Deficiency Shares in accordance with the requirements of 8 Del.
C. § 158.”); Klita, 1997 WL 33174421, at *1–2 (“Count V seeks to compel Cyclo3pss to issue to
plaintiff unrestricted shares of common stock in accordance with 6 Del. C. § 8–401 and 8 Del. C.
§ 158. . . . [P]laintiff’s right under section 158 to a ‘clean’ certificate is no different than the specific
performance claim under Count I.”).
POSCO does not seek injunctive relief in this case. See Compl. at 17. And, in any event,
POSCO has already received the delegended stock certificates to which it was allegedly entitled.
Id. ¶ 53. Count Three thus seeks relief that is not authorized by the statute, and is moot as to the
only relief that Section 158 could provide. See, e.g., In re Fisher for DNAinfo, 722 F. App’x 40,
41 (2d Cir. 2018) (“A case becomes moot, at any stage of litigation, when there is no longer a live
case or controversy for a court to decide, such as when the plaintiff has already received the relief
sought.”); Schlenger v. Fid. Emp. Servs. Co., LLC, 785 F. Supp. 2d 317, 336–37 (S.D.N.Y. 2011)
(granting summary judgment as to ERISA claim seeking monetary damages when statute provided
only equitable relief).
Even if that were not the case, however, POSCO’s Section 158 claim would fail for the
same reasons as its claim under Section 8–401. Section 158 entitles a stockholder to a delegended
stock certificate only “where such a legend is no longer appropriate.” Compl. ¶ 33 (quoting
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Bender, 514 A.2d at 1115). For the same reasons that the Complaint has not adequately pleaded
a claim under Section 8–401, it has not adequately alleged that FuelCell failed to remove a
restrictive legend that was no longer appropriate. Namely, the complaint does not allege when the
restrictive legend was no longer appropriate — i.e., when POSCO satisfied all the preconditions
for its removal. And documents integral to the Complaint and referenced therein demonstrate that
FuelCell, in fact, removed the restrictive legend from POSCO’s shares promptly after POSCO
fulfilled its statutory and contractual conditions precedent. See Exs. 2, 4, 5; see also Leonard,
2000 WL 1528909, at *8–9 (dismissing claim under both §§ 8–401 and 158 when plaintiff failed
to show restrictive legend was “no longer appropriate”). For all of these reasons, Count Three
must be dismissed.
IV. THE COMPLAINT FAILS TO STATE A CLAIM FOR TORTIOUS INTERFERENCE WITH
PROSPECTIVE BUSINESS ADVANTAGE UNDER NEW YORK LAW.
Count Four, alleging tortious interference with POSCO’s prospective business advantage,
is duplicative of Counts One through Three and fails to state a claim in any event. “Under New
York law, claims are duplicative [and are properly dismissed as such] when both ‘arise from the
same facts and seek the identical damages for each alleged breach.’” Deutsche Bank Nat. Tr. Co.
v. Quicken Loans Inc., 810 F.3d 861, 869 (2d Cir. 2015) (quoting Amcan Holdings, Inc. v.
Canadian Imperial Bank of Com., 70 A.D.3d 423, 426 (N.Y. App. Div. 2010)). A tortious
interference claim is duplicative of a breach of contract claim when “the conduct that allegedly
constitutes tortious interference . . . is exactly the same conduct [p]laintiffs assign as a breach of
contract.” Norte v. Worldbusiness Capital, Inc., No. 14-10143, 2015 WL 7730980, at *12
(S.D.N.Y. Nov. 24, 2015), aff’d sub nom. Maricultura Del Norte, S. de R.L. de C.V. v. Umami
Sustainable Seafood, Inc., 769 F. App’x 44 (2d Cir. 2019). Likewise, a common law claim is
duplicative of a statutory claim when the former “rise[s] and fall[s]” with the latter. In re Novartis
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& Par Antitrust Litig., No. 18-11835, 2019 WL 3841711, at *7 (S.D.N.Y. Aug. 15, 2019). That
is precisely the case here.
The Complaint alleges that FuelCell tortiously interfered with the prospective sale of
POSCO’s shares by “failing to reasonably and timely respond to POSCO’s request,” causing
POSCO to suffer “damages in excess of over $1,000,000.00.” Compl. ¶¶ 81–88. POSCO’s
tortious interference claim, in other words, rests on exactly the same facts, and seeks exactly the
same damages, as the three claims before it. See id. ¶¶ 58–64 (Count One) (“POSCO realized a
loss of over $1,000,000.00 from its inability to sell its shares due to FuelCell’s unjustified and
unlawful delays.”); ¶¶ 65–74 (Count Two) (“POSCO realized a loss of over $1,000,000.00 from
its inability to sell its shares due to FuelCell’s unjustified and unlawful delays.”); ¶¶ 75–80 (Count
Three) (“POSCO realized a loss of over $1,000,000.00 from its inability to sell its shares due to
FuelCell’s unjustified and unlawful delays.”). Because Count Four arises from the same facts and
seeks the same damages as Counts One through Three, it should be dismissed as duplicative. See
Deutsche Bank, 810 F.3d at 869; Rinaldi v. SCA La Goutte, D’Or, No. 16-1901, 2020 WL
5441290, at *6 (S.D.N.Y. Sept. 9, 2020) (dismissing unfair competition and breach of fiduciary
duty claims as duplicative of breach of contract claim); Ethelberth v. Choice Sec. Co., 91 F. Supp.
3d 339, 362 (E.D.N.Y. 2015) (dismissing common law claims seeking the same recovery and
“premised on the same facts” as statutory claims).
In any event, however, Count Four must be dismissed because the Complaint fails
completely to state a tortious interference claim. Under New York law, a claim for tortious
interference with prospective economic advantage lies only when “(1) [the plaintiff] had a business
relationship with a third party; (2) the defendant knew of that relationship and intentionally
interfered with it; (3) the defendant acted solely out of malice, or used dishonest, unfair, or
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improper means; and (4) the defendant’s interference caused injury to the relationship.” Kirch v.
Liberty Media Corp., 449 F.3d 388, 400 (2d Cir. 2006) (citation omitted). “The failure to identify
a specific business relationship renders a plaintiff’s allegations to the speculative level and, thus,
insufficient.” AYDM Assocs., LLC v. Town of Pamelia, 205 F. Supp. 3d 252, 276 (N.D.N.Y. 2016),
aff’d, 692 F. App’x 78 (2d Cir. 2017); see also Mehrhof, 168 A.D.3d at 714 (“In order to state a
cause of action to recover for tortious interference with prospective economic advantage, the
plaintiff must allege a specific business relationship with an identified third party with which the
defendants interfered.”).
POSCO has not identified a specific business relationship, or a third party to whom it would
have sold its shares, but for FuelCell’s alleged interference. Instead, Count Four — and, indeed,
the Complaint as a whole — rests on the possibility that POSCO could have sold its shares earlier
and for a greater sum if FuelCell had delegended them more quickly.
11
See Compl. ¶ 82. That is
not enough to state a claim under New York law. See, e.g., Allocco Recycling, Ltd. v. Doherty,
378 F. Supp. 2d 348, 375 (S.D.N.Y. 2005) (“Plaintiff does not allege that it had any specific
business relationship with which Defendants interfered and therefore has failed to plead that but
for [Defendants’] actions it would have consummated a business relationship.” (internal quotation
omitted)); see also AYDM Assocs., LLC, 205 F. Supp. 3d at 276 (“Tortious inference with a
business relationship is, by definition, conduct directed not at the plaintiff itself, but at the party
with which the plaintiff has or seeks to have a relationship. Therefore, any conduct alleged to be
tortious interference must be directed at the third party.” (internal quotations and citation omitted)).
11 Notably, POSCO’s own public announcement demonstrates that POSCO’s board did not
even approve the decision to sell POSCO’s stake in FuelCell until November 15, 2018. See
Yonhap News Agency, POSCO Energy Board OKs Sale of Stake in U.S. Fuel Cell Firm (Nov. 15,
2018), https://en.yna.co.kr/view/AEN20181115009200320.
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Nor does the Complaint adequately allege that FuelCell’s alleged interference was
“dishonest, unfair, or improper,” as the third element requires. See Kirch, 449 F.3d at 400. “In all
but the most egregious circumstances, ‘dishonest, unfair, or improper means’ must amount to
misconduct that constitutes either a crime or an independent tort.” PKG Grp., LLC v. Gamma
Croma, S.p.A., 446 F. Supp. 2d 249, 251 (S.D.N.Y. 2006). As discussed above, FuelCell was not
under any duty to remove the restrictive legend from POSCO’s stock certificates until POSCO
satisfied the prerequisites for removal, which FuelCell promptly did upon their satisfaction. See
Compl. ¶¶ 21, 67–68; 6 Del. C. § 8–401 cmt. 1 (“A duty exists only if certain preconditions exist.
If any of the preconditions do not exist, there is no duty to register transfer.”). Because the
Complaint fails to adequately plead the elements of a tortious interference claim, Count Four must
likewise be dismissed.
CONCLUSION
For the foregoing reasons, the Complaint should be dismissed with prejudice