Justice Eileen Bransten
Defendants moved for dismissal of plaintiffs’ shareholder derivative and putative class action claims. Plaintiffs, five purported Avon shareholders, challenged the Board of Directors’ decision regarding whether to engage in negotiations with Coty Inc. about a potential sale of Avon. Plaintiffs argued the board’s refusal to enter discussions with Coty constituted a breach of its fiduciary duties. Plaintiffs also argued that a demand on the board was not made, as required under Business Corporation Law §626(c), as it would have been futile. However, the court noted plaintiffs made no argument that a majority of the directors were interested. Plaintiffs merely contended that Avon directors failed to inform themselves of Coty’s offer, thus failed to exercise their business judgment in refusing to engage Coty. The court disagreed finding plaintiffs failed to allege with the requisite particularity facts supporting either of the Marx v. Akers grounds for excusing demand. The court noted while plaintiffs may not agree with the board’s reasons for refusing to engage in negotiations, they contradicted plaintiffs’ assertions the board "reflexively refused to entertain any of Coty’s offers." Thus, defendants’ motion to dismiss was granted with prejudice.
