SWANSON v. WEIL
CHARLES D. SWANSON, derivatively on behalf of Janus Capital Group Inc., Plaintiff,
RICHARD M. WEIL; STEVEN L. SCHEID; TIMOTHY ARMOUR; PAUL BALSER; G. ANDREW COX; JEFFREY DIERMEIER; J. RICHARD FREDERICKS; DEBORAH GATZEK; LAWRENCE KOCHARD; ROBERT PARRY; JOCK PATTON; GLENN SCHAFER; JONATHAN D. COLEMAN; GREGORY A. FROST; JAMES P. GOFF; and R. GIBSON SMITH, Defendants,
JANUS CAPITAL GROUP INC., Nominal Defendant.
Civil Action No. 11-cv-02142-WYD-KLM.
United States District Court, D. Colorado.
September 26, 2012.
WILEY Y. DANIEL, Chief District Judge.
This is a shareholder derivative action purportedly brought by Plaintiff Charles D. Swanson ["Plaintiff"] on behalf of nominal defendant Janus Capital Group, Inc. ["Janus"] against its directors and certain executive officers. The Amended Verified Shareholder Derivative Complaint [hereinafter "complaint"] asserts claims of breach of fiduciary duty, violation of the Securities Exchange Act of 1934 ["the Exchange Act"], and unjust enrichment. These claims relate to the Janus Board's approval of, and Janus executive officers' receipt of, 2010 executive compensation payments. Plaintiff alleges that these payments were excessive and unwarranted in light of Janus' dismal 2010 financial performance. Plaintiff also alleges that the Board made false and misleading statements in Janus' Definitive Proxy Statement on Schedule 14A ["Proxy"].
There are two pending motions to dismiss before the Court: Nominal Defendant Janus' Motion to Dismiss and the Individual Defendants' Motion to Dismiss. Janus seeks to dismiss the Complaint on the basis that Plaintiff did not make a pre-litigation demand on Janus' Board of Directors and has allegedly failed to meet the stringent requirements for showing how such a demand would have been futile.
The individual Defendants join Janus' motion, and also seek to dismiss the Complaint on the basis that the claims for breach of fiduciary duty, violation of section 14(A) of the Exchange Act, and unjust enrichment fail to state a claim upon which relief can be granted. They assert that "[t]he Complaint is one of over a dozen meritless, cookie-cutter complaints filed across the country in the wake of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), enacted by Congress on July 21, 2010." (Memo. of Law in Supp. of Individual Defs.' Mot. to Dismiss at 1.) Dodd-Frank "requires that public companies hold a non-binding advisory shareholder vote on executive compensation at least once every three years (an advisory "say on pay" vote.) (Id.)
Plaintiff contends in response that his complaint details facts demonstrating that Janus' Board has acted directly against the best interests of Janus' shareholders and harmed Janus by giving excessive compensation to its senior executives in violation of Janus' own stated pay for performance plan. He argues that not only has he sufficiently pled that Defendants are liable, he has also alleged sufficient facts to establish that demand on the Board is excused as futile (or at least to raise the requisite reasonable doubt that the Board would impartially consider a demand). Finally, Plaintiff argues that he has alleged sufficient facts to support his claims and that the individual Defendants' motion to dismiss pursuant to Rule 12(b)(6) should be denied.