Opinion
I.D. No. 9903023368.
Submitted: January 24, 2000.
Decided: March 21, 2000.
Cynthia R. Kelsey and Daniel R. Miller, Deputy Attorneys General, Department of Justice, Attorneys for the State.
Kevin J. O'Connell and John J. Duffy, Duffy and Green, Attorneys for Defendant.
Pamela S. Tikellis and James C. Strum of Chimicles Tikellis, Wilmington, Delaware. Attorneys for Plaintiff.
Barry M. Klayman and Todd C. Schiltz of Wolf, Block, Schorr and Solis-Cohen, Wilmington, Delaware. OF COUNSEL: Richard J. Morvillo, Luther Zeigler and Kenneth F. Rossman of Crowell Moring, Washington, D.C. Attorneys for Individual Defendants.
Kenneth J. Nachbar of Morris, Nichols, Arsht Tunnell, Wilmington, Delaware. Attorneys for Nominal Defendant.
MEMORANDUM OPINION
I. INTRODUCTION
On March 31, 1999, James Christopher DeAngelo (Defendant) was arrested at his home in West Chester, Pennsylvania and charged with the 1990 murder in Delaware of William Perez (Perez). The State alleges that Defendant shot Perez in the head over a disputed drug transaction at Defendant's home at 110 Bird Street, Wilmington, Delaware. The body of the alleged victim has never been found by law enforcement authorities. Defendant has filed motions to suppress which ask this Court to "exclude from trial any reference or any transcript to any statement which Defendant made to either the West Chester Police or to the Wilmington Detectives before he was represented by counsel." Defendant contends that this Court should, suppress Defendant's recorded statement made to Detectives Cunningham and Conner of the Wilmington Police Department during the custodial interrogation on March 31, 1991, because Defendant, who (Defendant claims) was given an "abbreviated version of the Miranda warnings," "never explicitly waived his Miranda rights." Defendant further asks this Court to suppress Defendant's statements made to Sergeant Yarnall of the West Chester Police Department immediately afterwards because the statements were made" [in] Pennsylvania, by someone arrested in Pennsylvania to a Pennsylvania police officer," and "those statements must be suppressed because the conduct of a state's agents are governed by that state's laws," and "[i]n Pennsylvania when a defendant invokes his right to counsel, all police questioning must cease until counsel is present," and lastly because the statements were made after Defendant had "clearly and unequivocally invoked his right to talk to a lawyer."
Defendant's "Memorandum of Law in Support of a Motion to Suppress Statement Made to West Chester Police" at 4-5
Defendant's "Motion for a Bill of Particulars and To Exclude Certain Irrelevant and Prejudicial Evidence, Motion to Suppress and Motion to Exclude Evidence of Prior Criminal Record" at 6.
Defendant's "Memorandum of Law in Support of a Motion to Suppress Statement Made to West Chester Police" at 3.
Id. at 3.
Id. at 2.
Id. at 3.
Id. at 2.
The State contends that Defendant's motions to suppress should be denied. Addressing the motion relating to the recorded statement made to the two Wilmington detectives during the March 31, 1999 custodial interrogation, and Defendant's claimed invocation of the right to counsel, the State challenges the Defendant's credibility and argues that even if the Court finds that the defendant was not advised that he was under arrest prior to the taped statement, the defendant's motion to suppress must fail. The sworn testimony of two police officers with relatively little interest in the outcome of this litigation stands in direct contradiction to the uncorroborated testimony of a person who has made a life out of crime, and whose motive to lie has never been more powerful.
State's "Supplemental (Post-Hearing) Response To The Defendant's Motion to Exclude the 'Taped' Statement and the "Yarnall' Statement" at 67.
Addressing the statements made by Defendant to Sergeant Yarnall, the State contends that the statements were volunteered by Defendant and should not be suppressed regardless of which State's law applies because they were not elicited during a custodial interrogation. The State asserts that the Court does not need to address the choice of law issue because "post invocation comments by the defendant amount to spontaneous utterances that are afforded no constitutional protection."
Id. § 9.
For the reasons set forth below, Defendant's motion to suppress the recorded statement made to Detectives Cunningham and Conner is GRANTED in part and DENIED in part. Defendant's recorded statement will be admissible until Answer 91 where (as the State acknowledges) Defendant explicitly invokes his right to counsel. Defendant's motion to suppress the statements made to Sergeant Yarnall is DENIED.
II. FACTUAL AND PROCEDURAL HISTORY
A. The Arrest at Defendant's Home
The following facts were developed at the suppression hearing held on January 10, 2000. On March 31, 1999, Defendant was arrested at his home in West Chester, Pennsylvania pursuant to Delaware arrest warrants for the 1990 murder of William Perez, in a joint operation between police officers of the West Chester Police Department and the Wilmington, Delaware Police Department. At the hearing, Defendant's testimony was contradicted in many instances by the testimony of Detective Cunningham and Sergeant Yarnall. Detective Cunningham and Sergeant Yarnall both testified that, at the time of arrest at Defendant's home, Defendant appeared like he had been ready to run, that he had refused to cooperate when he was being handcuffed, and that there had been a brief struggle. Furthermore, at the hearing Defendant testified that the only person struggling was Detective Cunningham who had difficulty handcuffing Defendant. However, Sergeant Yarnall testified that the arrest of Defendant had been a West Chester Police Department operation and that Detective Cunningham had not taken physical part in the arrest. Detective Cunningham also testified that at no time prior to the start of the tape, during the custodial interrogation, did Defendant invoke his right to counsel.
The police further claim that later on March 31, 1999, while waiting to be arraigned at a Pennsylvania state court, Defendant was seated outside of the doorway of the courtroom, in the prisoner holding area, Defendant stood up and ran out of the door way leading outside. Sergeant Yarnall gave chase and caught the Defendant by tackling him to the ground.
Defendant testified at the suppression hearing and claimed that when he was arrested at his home, no one told him why he was being arrested and that Detective Cunningham had trouble getting the handcuffs on him. Defendant also stated that he had not resisted his arrest at his home and he testified that he had cooperated completely. Defendant further claimed at the hearing that, after he had been taken to the police station, but prior to the tape recorder being turned on, he had invoked his right to counsel several times. Defendant stated at the hearing that the opening comments on the tape by Detective Cunningham to the effect that "[i]t's on tape, you know what I'm saying? We can't make any allegations against you and all that, alright [sic]" supported this claim.
Transcript of Defendant's custodial interrogation of March 31, 1999 at 1. There is no dispute as the accuracy of the transcription prepared by the State.
Defendant was transported to the West Chester Police Department and a custodial interrogation was there conducted by Detectives Cunningham and Conner of the Wilmington Police Department about the 1990 murder. The transcript shows that during the custodial interrogation, Defendant had been read his rights, had acknowledged that he understood those rights, had been asked about his knowledge of and relationship with Perez, had been informed that he was arrested for murder first degree, and (at the end of the interview) invoked his right to counsel. At the conclusion of Detective Cunningham's and Conner's custodial interrogation, Defendant was taken to a lockup area in the West Chester Police Department. At that time, Defendant initiated a conversation with Sergeant Yarnall.
B. Excerpts From The Recorded Statement Made by Defendant During Custodial Interrogation Conducted by Detectives Cunningham and Conner
The specific contents of that statement are discussed infra at II. B.
The specific contents of that statement are discussed infra at II. C.
On March 31, 1991, while in the custody at the West Chester Police Department, Wilmington Police Detectives Cunningham and Conner conducted a custodial interrogation of Defendant. During the interrogation, Defendant was read his rights and indicated that he understood those rights, he was questioned about his knowledge of and relationship with the alleged victim, and he was informed that he was under arrest for murder first degree. The pertinent portions of Defendant's statement relating to the motion to suppress evidence are provided below.
Q1 It's on tape, you know what I'm saying. We can't make any allegations against you and all that, alright?
A1 Um hum.
RC [Detective Robert Cunningham] You have the right to remain silent. Anything you say can and will be used against you in a Court of Law. You have the right to talk to a lawyer and have him present with you while your [sic] being questioned. You can decide any time not to answer any questions or make any statements, urn, if you cannot afford to hire a lawyer, the State will provide one free of charge. At any time you can ah, stop answering questions.
Q2 Do you understand you rights, do you understand that?
A2 Yeah.
Q3 Alright.
A3 Am I being arrested for something?
Q4 Well we're going to get to that. You were, is this the John Miller you were talking about? That dude?
Transcript of Defendant's custodial interrogation of March 31, 1999 at 1-2.
* * *
Q55 Alright well, I guess you're wondering why you're here?
A55 Yeah, sure.
Q56 I mean think back to 1990, October the 2nd, did anybody come visit you? I guess it's a long time ago, but I mean it should really stick out in your mind. I don't know about that specific date, but I mean October should really . . .
A56 Am I — am I being arrested for something?
Q57 It should really stick out? Ju . . . think? Nothing?
A57 Well around that time the cops all came down there and they asked me about this Willie guy.
Q58 Um hum, right?
A58 And they took me in and they questioned me about him, and then I got released.
Q59 Alright that's why you're here. We have-we have a warrant for you for Murder 1st Degree. For the murder of William Perez and that's why you're here.
A59 So I'm being arrested for murder?
Id. at 12-13.
* * *
PC [Detective Patrick Conner] What was your relationship with Willie Perez?
A63 Hardly any relationship at all.
Q64 [PC] You never, how do you know him?
A64 I know him from just being down the Scoreboard. The bar on the corner.
Q65 Did you drink with him?
A65 Not — not particularly with him, urn, but in the bar. He would be in the bar.
Q66 You did drugs with him?
A66 Nah.
Q67 [RC] Did you ever buy any drugs from him?
A67 Man, if you guys arresting me, I've got, I'm not saying nothing else about it.
Q68 Well let's look at it this way, this is the time to help yourself out because after this it's over with. Once we walk out of here.
A68 So what's-what's-what's . . .
Q69 It's-it's-it's done deal. It's a done deal.
A69 How am I being arrested.
Q70 Basic . . . basically . . .
A70 Why am I being arrested for this.
Q71 That's why we're here to talk to you. Obviously we have information that indicates that you had a part in that. We have other information and now we need your side.
A71 I don't have any information to give you.
Q72 Well you knew-you knew the guy that they were looking for right? When the Police talked to you in `90, what was your relationship?
A72 Not much of one.
Q73 Did you ever get in a fight with this guy?
A73 I better not tell you nothing else about it. If you're arrested me for murder that sounds pretty serious.
A79 So I'm being arrested for murder, Murder 1, 1st Degree Murder?
Q80 Correct, what I'm asking you is in 1990, why would the police talk to you?
A91 You know, I don't know I should tell you guys anything about it. You're arresting me for murder man, that's pretty serious. Can I talk to a lawyer about it.
Id. at 14-16.
Id. at 18.
Id. at 14-16.
Id. at 18.
Q92 That's your right.
A92 I'd like to talk to a lawyer about it.
Id. at 21.
C. The Statements Made By Defendant to Sergeant Yarnall
At the conclusion of the March 31, 1999, interrogation conducted by Detectives Cunningham and Conner, after Defendant had explicitly invoked his right to counsel at Answer 91, Defendant was taken to a lockup area in the West Chester Police Department. At that time, Defendant initiated a conversation with Sergeant Yarnall.
At the suppression hearing on January 10, 2000, Sergeant Yarnall testified that he knew Defendant very well because of Defendant's prior involvement with the West Chester criminal justice system. Sergeant Yarnall stated that Defendant had been arrested on March 31, 1999 by the West Chester Police at his home and that he had told Defendant at that time that the State of Delaware had issued a murder warrant against him. Sergeant Yarnall testified that the Defendant was taken to the police station and questioned by Detectives Cunningham and Conner. Sergeant Yarnall then stated that at the conclusion of the custodial interrogation of the Defendant by Detectives Cunningham and Conner, he had taken Defendant to the lockup area where Defendant had then initiated a conversation. Sergeant Yarnall stated that the other officer accompanying him had left and Defendant had then asked several questions pertaining to the charges against him. Sergeant Yarnall testified that Defendant stated, "I can't imagine what evidence they could have against me," and that "[t]hey don't have a body." Sergeant Yarnall then testified that he had explained to Defendant that he could not answer any questions and further stated that he had never asked the Defendant any questions. The next morning Sergeant Yarnall made a report of the conversation. Sergeant Yarnall testified that Defendant made the statements on his own initiative and they were not the result of a custodial interrogation. At the hearing, although he took the witness stand to testify about his earlier statements to the Wilmington detectives, Defendant did not testify as to Sergeant Yarnall's account of the conversation he had with Defendant.
III. STANDARD OF REVIEW
A. Implied Waiver of Fifth Amendment Rights
The Fifth Amendment to the United States Constitution provides that no person "shall be compelled in any criminal case to be a witness against himself" The privilege against self incrimination governs state as well as federal proceedings through the Due Process clause of the Fourteenth Amendment to the United States Constitution. In Miranda v. Arizona, the United States Supreme Court extended this privilege to the "custodial interrogation" of one accused or suspected of a crime. The Supreme Court in Miranda recognized that the interrogation of a suspect in a custodial setting contains "inherently compelling pressures which work to undermine the individual's will to resist and to compel him to speak where he would not otherwise do so freely." As a result, an individual may not be subjected to custodial interrogation unless that person is advised of specific rights protective of his or her privilege against compelled self-incrimination.
U.S. Const. amend. V.
Malloy v. Hogan, 378 U.S. 1, 8 (1964).
384 U.S. 436 (1966).
Id. at 467.
Id; DeJesus v. State, Del. Supr., 655 A.2d 1180, 1189 (1995).
Id.
The burden of proof is on the State to demonstrate that Defendant was advised of his Miranda rights and has knowingly and intelligently waived those rights. "These issues must be determined under a totality of the circumstances including the behavior of the interrogators, the conduct of the defendant, his age, his intellect, his experience, and all other pertinent factors." The State may show that Defendant agreed to waive his rights without producing a written waiver. B. Invocation of Fifth Amendment Right To Counsel
DeJesus at 1192.
Whalen v. State, Del. Supr., 434 A.2d 1346 (1980), cert. denied, 455 U.S. 910 (1982) ( citing North Carolina v. Butler, 441 U.S. 369 (1979)).
See, e.g., Howard v. State, Del. Supr., 458 A.2d 1180, 1182-1183 (1983) (holding that defendant's waiver of rights was knowing, intelligent and voluntary where defendant's waiver was oral); Traylor v. State, Del. Supr., 458 A.2d 1170, 1175-1176 (1983) (holding that defendant's statement to police was properly admitted where defendant indicated orally that he understood his rights and agreed orally to waive them); Whalen, 434 A.2d at 1351 (holding that State had met its burden of proving valid waiver where defendant answered orally that he wanted to talk to officers).
Under federal constitutional law, the factual determination of whether a suspect invoked the right to counsel calls for an objective inquiry. The inquiry is whether a suspect has communicated to his interrogator a statement "that a reasonable police officer in the circumstances would understand the statement to be a request for an attorney." The objective standard for evaluating a purported invocation of the right to counsel serves the purpose of providing "clear and unequivocal" guidelines to law enforcement officers for determining when questioning must be cut off. Thus, law enforcement officers under federal constitutional law will not be required to cease questioning when there is a mere likelihood that the suspect may desire counsel. Rather, law enforcement officers will be required to cease questioning only when the suspect makes a statement that can be reasonably construed as an expression of a desire for the assistance of an attorney.
Davis v. United States, 512 U.S. 452, 459 (1994).
Id.
Arizona v. Roberson, 486 U.S. 675, 682 (1988).
McNeil v. Wisconsin, 501 U.S. 171, 178 (1991).
Id.
Thus, when a suspect makes an ambiguous or equivocal request for counsel, the United States Constitution imposes no duty to cease questioning. The United States Supreme Court recognized that, although it is often good police practice to clarify whether an ambiguous statement is a request for counsel, such clarification is not constitutionally required.
Davis v. United States, 512 U.S. 452, 459 (1994).
Id.
However, it is possible for a state to provide greater constitutional rights than those provided under the federal constitution, and Delaware has done so. The law in Delaware is that when a Defendant makes an ambiguous statement regarding the right to counsel, the Delaware constitution requires police to clarify the statement before continuing with the interrogation.
State v. Crawford, Del. Supr., 580 A.2d 571, 577 (1990).
IV. DISCUSSION
A. Defendant Did Not Invoke His Right to Counsel Prior To The Start of the Recorded Statement
Defendant argues that he had invoked his right to counsel several times before the tape recorder was turned on for the custodial interrogation. The State contends that at no time prior to the start of the tape had Defendant attempted to invoke his Fifth Amendment rights.
At the beginning of the interrogation, Detective Cunningham stated
RC You have the right to remain silent. Anything you say can and will be used against you in Court of Law. You have the right to talk to a lawyer and have him present with you while your being questioned. You can decide any time not to answer any questions or make any statements, um, if you cannot afford to hire a lawyer, the State will provide one free of charge. At any time you can ah, stop answering questions.
Q2 Do you understand your rights, do you understand that?
Transcript of Defendant's custodial interrogation of March 31, 1999 at 1.
Detective Cunningham testified that Defendant had been brought into the interrogation room and had not been read his rights until the tape recorder was turned on. Detective Cunningham testified specifically that Defendant had not invoked his right at any time prior to the start of the recording.
The Court finds that Detective Cunningham's account of the events pertaining to the custodial interrogation more credible and therefore finds that Defendant did not invoke his right to counsel before the recorded statement began. Notably, Defendant did not assert in his motion to suppress that Defendant had attempted to invoke his right to counsel prior to the start of the tape; as the State points out, that assertion was made for the first time at the suppression hearing. Moreover, Defendant could have invoked his right to counsel when Detective Cunningham had informed Defendant the tape was recording, or after Defendant had been read his rights and had been asked if he understood them. If Defendant had intended to invoke his right to counsel before the interrogation started, he had ample time to do so, but this Court finds that he did not do so.
B. Defendant Understood His Miranda Rights at the Time He Gave a Statement to Detectives Cunningham and Conner
Defendant claimed at the suppression hearing that he had invoked his right to counsel several times before the tape recorder was turned on for the custodial interrogation. Defendant contends that the statement taken by Detectives Cunningham and Conner was therefore violative of his Fifth Amendment rights. The State contends that Defendant had been read his rights by Detective Cunningham and that he had understood those rights and that at no time prior to the tape recorder being turned on did he invoke his right to counsel.
At the beginning of the interrogation, Detective Cunningham stated
RC You have the right to remain silent. Anything you say can and will be used against you in Court of Law. You have the right to talk to a lawyer and have him present with you while your being questioned. You can decide any time not to answer any questions or make any statements, urn, if you cannot afford to hire a lawyer, the State will provide one free of charge. At any time you can ah, stop answering questions.
Q2 Do you understand your rights, do you understand that?
Id.
At the hearing, Detective Cunningham testified that after he had read Defendant his rights, he had not asked Defendant if he had waived his Miranda rights because the defendant had already begun to speak with him.
Any statements made by a suspect during a custodial interrogation will be admissible in the prosecution's case-in-chief only after the prosecution demonstrates that the suspect has been advised of Fifth Amendment rights and that the suspect waived those rights knowingly, intelligently and voluntarily. Even when a suspect waives Fifth Amendment rights, the suspect may subsequently invoke those rights at any stage of the questioning and police are required to respect that invocation. Therefore, if a suspect "indicates in any manner and at any stage of the process that he wishes to consult with an attorney," questioning must cease.
Miranda v. Arizona, 384 U.S. 436 (1966).
Id. at 444-445.
At the suppression hearing, Detective Cunningham stated that he believed that Defendant had been aware of his rights and that he had understood them when they had been read to him. Detective Cunningham further testified that Defendant, after having been read his rights, had answered the questions freely and in a cooperative manner.
At the hearing, Defendant acknowledged that he had been read his Miranda rights several times in connection with unrelated other arrests prior to March 31, 1999. At the custodial interrogation on March 31, 1999, Defendant had been read his rights by Detective Cunningham and had answered "yeah" when asked if he understood those rights. After being read his Miranda rights and asserting that he had understood those rights, Defendant then freely cooperated with the Detectives and proceeded to answer questions. Defendant did not make any colorable attempt to invoke his right to stop the questioning until Answer 67 when he said, "[m]an, if you guys arresting me, I've got, I'm not saying nothing else about it," and again at Answer 73 when Defendant had said that "I better not tell you nothing else about it. If you're arrested me for murder. That sounds pretty serious." This Court finds that Defendant had not unambiguously invoked his right to counsel until Answer 91 when he had said, "[c]an I talk to a lawyer about it." Thus, at Answer 91, Defendant made it clear that he understood that he had the right to stop the questioning and speak to a lawyer. The State concedes that Defendant invoked his right to counsel at Answer 91.
Transcript of Defendant's custodial interrogation of March 31, 1999 at 15.
Id. at 16.
Id. at 21.
This Court finds that Defendant understood his Miranda rights after Detective Cunningham had read them to him based on (1) his prior involvement with the criminal justice system, (2) his affirmative answer of "yeah" when asked if he understood the Miranda rights that had just been read to him, (3) Defendant's willingness to freely respond to the questions posed by the Detectives and the cooperative manner in which he had given his statement, and (4) the fact that Defendant had been aware of his right to counsel to some extent based on the explicit invocation of those rights at Answer 91 when he had stated, "[c]an I talk to a lawyer about it." Based on the totality of the circumstances, this Court finds that Defendant did not invoke his right to counsel prior to the start of the recording and that Defendant understood his Miranda rights when he began to give his recorded statement to the Detectives.
Id at 21.
C. Defendant Made an Implied Waiver of His Miranda Rights to Detective Cunningham
Defendant contends that his statement to Detectives Cunningham and Conner should be suppressed because Defendant never explicitly waived his Miranda rights which is apparently required by Pennsylvania law, which Defendant contends should apply. The State argues that Pennsylvania law does not apply, that Defendant impliedly waived his rights through his actions and words, and that an implied waiver of Miranda rights is recognized in Delaware.
Commonwealth v. Bussey, Penn. Supr., 404 A.2d 1309 (1979) (holding that an explicit waiver of Miranda rights is a mandatory requirement under Pennsylvania law).
In State v. Siple, this Court addressed the issue of which state law will govern the admissibility of a suspect's statement made in a Delaware criminal prosecution to Delaware law enforcement authorities outside of Delaware. The Siple Court held that "where the admissibility of a defendant's incriminating statement to Delaware authorities is challenged in a Delaware prosecution, Delaware law will govern, regardless of whether the statement was taken outside of Delaware." Here, Delaware law will apply in the analysis of Defendant's statements to Delaware law enforcement authorities made in Pennsylvania.
Del. Super., Cr. A. Nos. IN94-12-1641 to IN94-12-1672, Cooch, J. (July 19, 1996) (Mem. Op.).
Siple at 8 (analyzing State v. Lui, Del. Supr., 628 A.2d 1376 (1993) (without explicitly addressing the issue of choice of law, applying Delaware law to determine the standard by which the prosecution must prove voluntariness of the defendant's statement taken by Delaware police in a New York police station) and State v. Mollica, N.J. Supr., 554 A.2d 1315 (1989) (holding that where evidence was lawfully seized according to the situs state's law, in the situs state by that state's officers, the forum state will not impose its own state constitutional standards on the admissibility of evidence which was not seized by its own agents)).
The United States Supreme Court in Miranda v. Arizona required that the admissibility of a suspect's statement made during a custodial interrogation had to be done "[a]fter such warnings had been given, and such opportunity afforded him, the individual . . . knowingly and intelligently waive[s] these rights and agree[s] to answer questions or make a statement." The United States Supreme Court held in North Carolina v. Butler that "[am express written or oral statement of waiver of the right to remain silent or of the right to counsel is usually strong proof of the validity of that waiver, but is not inevitably either necessary or sufficient to establish waiver." However, mere silence after the warnings are given, does not constitute waiver. "The courts must presume that a defendant did not waive his rights; the prosecution's burden is great; but in at least some cases waiver can be clearly inferred from the actions and words of the person interrogated."
334 U.S. 436 [ 384 U.S. 436] (1966).
Id. at 479.
441 U.S. 369, 373 (1979).
Id. (citing Miranda, 384 U.S. at 475.)
Id.
However, Delaware, like many other states, has recognized an implied waiver of Miranda rights. In addressing an implied waiver, the court must consider the implications of obtaining an incriminating statement from a defendant who has asserted an understanding of the Miranda warnings. The issue is whether a Defendant's actions and words in giving a statement constitute a course of conduct indicating an implied waiver of rights.
See Wayne R. LaFave et al., Criminal Procedure § 6.9(d) at 591(1999); see, e.g., North Carolina v. Butler, supra n. 39; Gorham v. Franzen, 7th Cir., 760 F.2d 786 (1985), cert. denied, 474 U.S. 922 (1985); United States v. Ogden, 5th Cir., 572 F.2d 501 (1978); Fleming v. State, Ark. Supr., 681 S.W.2d 390 (1984); People v. Johnson, Calif. Supr., 450 P.2d 865 (1969); State v. Aversa, Conn. Supr., 501 A.2d 975 (1992); Lockett v. State, Miss. Supr., 459 So.2d 246 (1984); State v. Williams, N.C. Supr., 434 S.E.2d 588 (1993).
In Siple, this Court held that, although the defendant never explicitly waived his Miranda rights, the words and actions of the defendant constituted an implied waiver of his Miranda rights. The Siple Court, addressing four incriminating statements made by Defendant during a custodial interrogation conducted by a Delaware law enforcement agent in Maryland, relied on several cases from other jurisdictions in reaching its holding that Delaware law applied and that an implied waiver of Miranda rights is permissible in Delaware.
Siple, at 14.
Thus, in Gorham v. Franzen, the Seventh Circuit held that the defendant had waived his rights even though he did not sign an express waiver. The Gorham Court based its decision on defendant's previous and substantial contact with the criminal justice system, the fact that he had been advised of his Miranda rights several times during the day of the arrest and that he stated that he understood those rights because he continued to answer the questions, and because he failed to clearly articulate any desire to remain silent.
Gorham, supra n. 52.
Id. at 795.
In State v. Aversa, the Connecticut Supreme Court addressed the issue of an implied waiver and held that the defendant knowingly and voluntarily had waived his right to remain silent. The Aversa Court stated that "[a]lthough there was no express waiver, the defendant's willingness to speak and his course of conduct after being given his Miranda warnings constituted "explicitly affirmative act[s] evidencing waiver.'" The Aversa Court also stated that defendant had been read his rights twice and "[o]n both occasions he said that he understood what was told to him . . . [and] the defendant never expressed any desire to remain silent or that the officers stop asking him questions. Instead, the defendant initiated conversation with the officers and freely responded to questions."
Aversa, supra n. 52.
Id. at 375.
Id. (citing State v. Harris, 452 A.2d 634 (1982)).
Id.
In Faulkner v. State, the Texas Court of Appeals, adhering to a totality of the circumstances standard when addressing the issue of an implied waiver held that the defendant intended to waive his rights. Prior to the interrogation, the defendant had been read his Miranda rights and stated that he understood those rights. The Court ruled that the affirmative statement by the defendant relating that he understood his rights supported an implied waiver.
Tex. Ct. App., 727 S.W.2d 793 (1987).
Id. at 798.
This Court finds that the State has met its burden of proof that the Defendant had impliedly waived his constitutional rights by his words and actions. This conclusion is drawn from evidence which is not in dispute. The recorded statement shows that Defendant had been read his rights and that he had understood them.
RC You have the right to remain silent. Anything you say can and will be used against you in Court of Law. You have the right to talk to a lawyer and have him present with you while your being questioned. You can decide any time not to answer any questions or make any statements, um, if you cannot afford to hire a lawyer, the State will provide one free of charge. At any time you can ah, stop answering questions.
Q2 Do you understand your rights, do you understand that?
Transcript of Defendant's custodial interrogation of March 31, 1999 at 1.
This fact is further supported by the fact that Defendant acknowledged that he had previously been given Miranda warnings in connection with several prior unrelated involvements with the criminal justice system. Furthermore, proof that Defendant had understood his Miranda rights is evidenced by the invocation of his right to remain silent at Answer 67 when he had said, "I'm not saying nothing else about it," at Answer 73 when he had said, "I better not tell you nothing else about it," and when he invoked his right to counsel at Answer 91 when he had said "[clan I talk to a lawyer about it." Additionally, Defendant spoke open and freely with Detectives Cunningham and Conner up until the point when he had explicitly invoked his right to counsel. Based on the totality of the circumstances and the actions and words of the Defendant, this Court finds that the Defendant made a knowingly and voluntary implied waiver of his Miranda rights.
In Siple. in addition to the defendant's prior involvement with the criminal justice system, the Delaware law enforcement agent had also obtained an oral waiver from the defendant by using a Maryland "Explanation of Rights" form.
Transcript of Defendant's custodial interrogation of March 31, 1999 at 15.
Id. at 16.
Id. at 21.
D. Defendant Did Not Make An Ambiguous or Equivocal Statement of His Right to Counsel Which Required Clarification by Detectives Cunningham and Conner
Defendant contends that he invoked his right to remain silent at Answer 67 when he had said, "I'm not saying anything else about it," at Answer 73 when he had said, "I better not tell you nothing else about it," and his right to counsel at Answer 91 when he had said, "[clan I talk to a lawyer about it." Defendant argues that all statements made after the invocation at Answer 67 should be suppressed and are violative of his constitutional rights. The State argues that the Defendant made no invocation of counsel, ambiguous or otherwise, and that the full statement, until Answer 91, should be admissible.
Transcript of Defendant's custodial interrogation of March 31, 1999 at 15.
Id. at 16.
Id. at 21.
Turning to the issue of choice of law, this Court addressed the admissibility of a defendant's incriminating statement to made to Delaware authorities in another state in State v. Siple. This Court there held that Delaware law will govern in that situation regardless of whether the statement was taken outside of Delaware. The Siple Court then stated that "a defendant subject to prosecution in Delaware may invoke the protections of the Delaware constitution with regard to the actions of Delaware authorities. "
Siple, supra n. 52.
Id. at 8.
Id.
The Delaware Supreme Court in State v. Crawford held that when a defendant makes an ambiguous statement regarding the right to counsel, the Delaware constitution requires police to clarify the statement before continuing with the interrogation. This clarification requirement was held in Siple to exist as a state constitutional requirement despite the United States Supreme Court's subsequent decision in Davis v. United States which held that police officers were not required to cease questioning when a defendant made an ambiguous or equivocal reference to an attorney. In Siple, this Court, applying Crawford, noted that the Defendant made an ambiguous statement regarding his right to counsel. Under the Delaware Constitution, authorities questioning a Defendant are required to clarify the ambiguous statement before continuing with the interrogation.
Del. Supr., 580 A.2d 571 (1990).
Id. at 577.
Siple at 9.
Davis at 459.
Crawford at 577.
In Steckel v. State, the Delaware Supreme Court revisited the issue of whether Delaware still requires the "clarification approach" adopted in Crawford, despite the United States Supreme Court's subsequent holding in Davis. The Steckel Court analyzed the factors which led to the Crawford Court's adoption of the "clarification approach" and concluded that "the clarification approach, which has been adopted by the majority of jurisdictions, represents good police practice. We, thus, reaffirm that clarification, as described in Crawford, is required pursuant to Article 1 § 7 of the Delaware Constitution."
Del. Supr., 711 A.2d 5 (1998).
Id. at 10-11.
This Court recently addressed the "clarification approach" in State v. Culp, which applied the rule in Crawford to defendant's statements made during an interrogation. The Culp Court noted that "when an individual is unclear in their invocation, the police may continue to ask questions, but only for the limited purpose of clarifying the individual's intent." In that case, the defendant indicated to the interrogating officers that she did not want to talk about the incident, that she wasn't from the area, and that she did not know anyone. The police persisted in the interrogation and continued to ask defendant questions. The Culp Court held that "it was clear that [defendant] invoked her right to remain silent [when defendant said] "[w]ell I don't want to talk' . . . the detectives should have scrupulously honored her wishes and ceased all questioning."
Del. Super., Cr. A. Nos. IK-98-08-0027-0028, Ridgely, J. (Aug. 2, 1999) (ORDER).
Id. at 1 ( citing Crawford).
Id. at 2.
Although the issue of what constitutes an ambiguous statement requiring clarification has not been addressed extensively in Delaware, other states have determined what type of statements require clarification. "The Supreme Court has held that defendant's statement that "maybe I should talk to a lawyer' does not qualify as invocation of the right to counsel, and many lower court cases have found similarly equivocal or ambiguous assertions to be likewise insufficient."
Wayne R. LaFave et al., Criminal Procedure § 6.9(g) at 609-610(1999); see also LaFave n. 148 at 610-611 citing numerous cases with quoted phrases that are considered equivocal or unequivocal under Davis.
Defendant was interrogated by Wilmington Police Detectives Cunningham and Conner in Pennsylvania and therefore has the protection afforded by the Delaware Constitution. However, this Court finds that the statement made by Defendant at Answer 67 of his taped statement, "I'm not saying anything else about it" did not constitute an "ambiguous" statement which required clarification by the detectives. No mention at all is made of a "lawyer" or an "attorney" at Answer 67. The statement made by Defendant at Answer 73 of his taped statement "I better not tell you nothing else about" similarly does not refer to a "lawyer" or an "attorney" and did not constitute an ambiguous statement which required clarification by the Detectives. Defendant did not make any statement until Answer 91 which could be construed as a request for an attorney or representation by counsel. Detectives Cunningham and Conner had no duty to utilize the "clarification approach" required by Article 1 § 7 and Crawford and therefore all of the answers provided by Defendant in the recorded statement until Answer 91, when Defendant explicitly invoked his right to counsel, will be admitted.
Defendant has not moved to suppress that part of his statement occurring after Answer 67 and/or Answer 73 on the grounds that he wished to terminate the interrogation; that issue has not been briefed. Therefore, this Court does not reach this issue.
E. Defendant's Statements to Detective Yarnall Were Not The Result of an Interrogation.
Defendant contends that his statements made to Sergeant Yarnall after the custodial interrogation concluded were violative of his Fifth Amendment rights. Sergeant Yarnall testified that he and Defendant were friendly and knew each other because of Defendant's prior involvement with the criminal justice system for prior, unrelated arrests. Sergeant Yarnall stated that Defendant had said "I can't imagine what evidence they could have against me," and that "[t]hey don't have a body." Defendant asks this Court to suppress these statements because he had already invoked his Fifth Amendment rights during the custodial interrogation and under Pennsylvania law all questioning must cease until counsel is present.
The State contends that the statements should not be suppressed because Defendant initiated the conversation with Sergeant Yarnall and that therefore no "interrogation" took place. The State argues, and this Court finds, that Sergeant Yarnall said or did nothing that constituted the "functional equivalent of interrogation."
Rhode Island v. Innis, 446 U.S. 291, 300-301(1980) (holding that "the term 'interrogation' under Miranda refers not only to express questioning but also to any words or actions on the part of the police . . . that the police should know are reasonably likely to elicit an incriminating response from the suspect").
In Edwards v. Arizona, the United States Supreme Court stated that an accused, "having expressed his desire to deal with the police only through counsel, is not subject to further interrogation by the authorities until counsel has been made available to him, unless the accused himself initiates further communication, exchanges or conversations with the police." If, however, after a suspect has invoked the right to counsel, police re-initiate conversation, a purported waiver will be ineffective and any statements taken in reliance on that invalid waiver will be inadmissible. When there is no police interrogation and the Defendant proffers statements spontaneously, there is deemed to be no custodial interrogation and the statements are then admissible.
451 U.S. 477 (1981).
Id. at 484-485.
Id. at 484, 487.
Johnson v. State, Del. Supr., No. 12, 1999 Holland, J. (Nov. 12, 1999) (ORDER) at 2 (holding that Miranda warnings were not required because of the "spontaneous" nature of the statements made by the defendant and the lack of any police-initiated interrogation).
Sergeant Yarnall testified at the suppression hearing that after Detective Cunningham and Conner's custodial interrogation had concluded, he had placed Defendant in the lockup area when Defendant asked if he could talk with him in private. Sergeant Yarnall stated that Defendant then said to him "I can't imagine what evidence they could have against me," and that "[t]hey don't have a body." Sergeant Yarnall also testified that the conversation had been initiated by Defendant and at no time had he asked any questions. No facts were adduced by Defendant at the hearing which dispute Sergeant Yarnall's testimony regarding this conversation.
This Court finds that Defendant's statements were not made pursuant to a police interrogation and that the conversation was initiated at the behest of Defendant. Having concluded that the statements were not a result of a police interrogation, Defendant's motion to suppress his volunteered statements made to Sergeant Yarnall is denied.
V. CONCLUSION
This Court finds that the Defendant understood his Miranda rights at the time he had given the statement to Detectives Cunningham and Conner. This Court further finds that Defendant had made an implied waiver of his Miranda rights to Detectives Cunningham and Conner and that he had later invoked his right to counsel at Answer 91 of his statement. The recorded statement Defendant had made to Detectives Cunningham and Conner is admissible up until Answer 91 and the remaining portion of the statement after Answer 91 will be suppressed during the State's case-in-chief.
This Court finds that the statements made to Sergeant Yarnall were not the result of an interrogation and they will not be suppressed. Defendant's motion to suppress the recorded statement made to Detectives Cunningham and Conner is GRANTED in part and DENIED in part. Defendant's motion to suppress the statements made to Sergeant Yarnall is DENIED.
IT IS SO ORDERED.
MEMORANDUM OPINION
Plaintiff files this shareholder derivative action complaining that the board of directors of Individual Investor Group, Inc. improperly re-priced stock options issued under a shareholder approved plan. Plaintiff alleges that the re-pricing constituted corporate waste and that the directors breached their fiduciary duty of loyalty. Defendants move to dismiss plaintiffs claims for: (1) failure to make pre-suit demand under Court of Chancery Rule 23.1; and, (2) failure to state a claim upon which relief can be granted under Court of Chancery Rule 12(b)(6).
I find it unnecessary to determine whether plaintiff failed to make pre-suit demand under Rule 23.1. There is no real need to examine whether demand should have been made on the Board; and, if not, whether the failure to do so can be excused.
Plaintiffs purported claims are for breach of the fiduciary duty of loyalty and corporate waste. Plaintiffs allegations of corporate waste are merely conclusory and lack any factual basis to survive a motion to dismiss. Because the plaintiff has failed to make out a claim of waste and the claim of breach of fiduciary duty rests upon an act of corporate waste, there can be no underlying breach of the fiduciary duty of loyalty. Therefore, I grant defendants' motion to dismiss for failure to state a claim.
I. BACKGROUND
A. The Parties
The plaintiff is a shareholder of Individual Investor Group, Inc., a Delaware corporation that provides financial services information to both individual and professional investors alike. The individual defendants are members of IIG's board of directors' and the nominal defendant is IIG itself.
Defendant, Jonathan L. Steinberg, is both the Chairman and CEO of IIG; the remaining defendants, Sokoloff, Ziemba, and Meigher are all outside non-employee directors of IIG.
B. Nature of the Proceedings
Plaintiff filed this shareholder derivative action on March 31, 1999, alleging that IIG's directors committed corporate waste and breached their fiduciary duty of loyalty when they approved the re-pricing of stock options held by both employee and non-employee directors of IIG. Plaintiff amended the complaint on August 4, 1999.
Defendants moved to dismiss plaintiffs claims under Court of Chancery Rules 23.fn1 and 12(b)(6). The Court held oral argument on the motion on February 23, 2000.
C. Stock Option Re-pricing Decisions
On November 19, 1998, the board of directors agreed to a resolution that would substantially reduce the exercise price for stock options held by employees of IIG. Defendant Steinberg, an employee director holding approximately 680,000 stock options, benefited from the directors' decision to re-price. The outside directors received no benefit from this transaction.
Under this re-pricing decision, 1,479,801 options with a weighted average exercise price of $5.34 per share were re-priced at $1.25 per share.
The options defendant Steinberg held had an exercise price ranging from $4.9375 to $7.50. Am. Compl. ¶ 20.
Over one month after the board of directors approved a re-pricing decision that significantly impacted options held by Steinberg, the board approved repricing options held by non-employee directors. The remaining non-employee directors, Sokoloff, Ziemba, and Meigher received replacement options at a reduced exercise price.
The committee granted the non-employee directors an opportunity to exercise their options at $2.00 per share. Am. Compl. ¶ 22.
II. CONTENTIONS
A. Plaintiff's ContentionsPlaintiff contends that both the November 19, 1998 and the December 23, 1998 re-pricing decisions should be treated as a singular transaction because of their proximity in time and the circumstances surrounding their approval. Furthermore, plaintiff eschews any need to plead particular facts demonstrating that the two decisions should be treated as one arguing that it is reasonable to infer, based upon the plain allegations in the amended complaint, that the decisions are, in fact, mutually dependent. The directors' decision to separate the two decisions in time in an attempt to make them distinct exhibits a breach of the "duty of good faith."
Moreover, plaintiff claims the decisions to re-price constituted corporate waste because they "resulted in a diversion of corporate assets for improper and unnecessary purposes" without any consideration flowing to IIG. Consistent with her allegations of corporate waste, plaintiff maintains that the defendant directors breached their fiduciary duty of loyalty to IIG because the re-priced options were unauthorized gifts granted only to benefit the defendants.
Am. Compl. ¶¶ 42-43.
Am. Compl. ¶ 46.
B. Defendants' Contentions
Defendants move to dismiss this action on all counts for (1) failure to comply with the demand requirements for shareholder derivative actions, under Court of Chancery Rule 23.1; and, (2) failure to state a claim upon which relief can be granted, under Court of Chancery Rule 12(b)(6). Defendants maintain that plaintiff offers no specific allegations of fact to support her claim and relies upon nothing more than conclusory allegations.
After contending that the two stock option re-pricing decisions should be treated as independent transactions, defendants maintain that the claims surrounding the November 19, 1998 employee stock option re-pricing decision must be dismissed because plaintiff failed to make pre-suit demand on the board and admittedly failed to plead why demand should be excused. Defendants' assert that the plaintiff fails to plead facts demonstrating that the three nonemployee director majority were motivated by self-interest or lacked the independence to evaluate and approve the employee stock option re-pricing objectively.
Finally, while conceding the directors' interest in the December 23, 1998 decision, defendants assert that since plaintiffs amended complaint fails to allege facts establishing claims for corporate waste the directors could not have breached their fiduciary duty of loyalty in re-pricing their own or the employees' stock options.
III. LEGAL STANDARD
The standard for a motion to dismiss is well-established under Delaware law: that under any possible set of facts consistent with the facts alleged in the complaint the plaintiff would still not be entitled to judgment. In reviewing plaintiffs complaint, I am permitted to accept all well-pleaded facts as true and must construe all reasonable inferences from the facts in a light that is most favorable to the non-movant. Allegations that are merely conclusory and lacking factual basis, however, will not survive a motion to dismiss.
Lewis v. Austen , Del. Ch., C.A. No. 12937, mem. op. at 4, Jacobs, V.C. (June 2, 1999) ("a plaintiff must allege facts that, taken as true, establish each and every element of a claim upon which relief could be granted.").
O'Reilly v. Transworld Healthcare, Inc ., Del. Ch., C.A. No. 16507, mem. op. at 11, Steele, V.C. (August 20, 1999).
In re Walt Disney Co. Derivative Litig ., Del. Ch., 731 A.2d 342, 353 (1998), aff'd in part, rev'd in part sub nom. Brehm v. Eisner ., Del. Supr., No. 469, 1998, 2000 WL 174619 (Feb. 9, 2000).
IV. ANALYSIS
A. Demand Analysis ExceptedWhether or not plaintiffs amended complaint alleges sufficient facts to support allegations of director self-interest in the December 23, 1998 transaction, and lack of independence in regard to the November 19 transaction there is no real need to engage in a demand analysis. The board of directors acted according to a predetermined stock option plan, approved by the shareholders, which included the re-pricing option. The plaintiff raises no issue that the board lacked authority to re-price the options or that they implemented the re-pricing in a manner unintended or unexpected by the shareholders.
At oral argument, plaintiff conceded that the plan gave the directors the authority to re-price the options and carried out the re-pricing according to the plan.
Even after drawing every possible inference from the facts supporting plaintiffs contentions, the directors merely implemented a plan presumably entirely consistent with the interests of the corporation and its shareholders because the shareholders knowingly endorsed the parameters of the plan.
The focus of this case should be plaintiffs purported claims for breach of the duty of loyalty arising from acts of corporate waste. The plaintiff alleges that the directors breached their duty of loyalty by re-pricing options in a manner which constituted corporate waste.
B. Corporate Waste Claim
I now turn to the standard for corporate waste which is "very rarely satisfied by a shareholder plaintiff." To support a claim, a shareholder must demonstrate that the transaction in question either served no purpose or was so completely bereft of consideration that the "transfer is in effect a gift." In so doing, plaintiff must allege facts that, if true, establish that the defendant directors "authorize[d] an exchange that is so one sided that no business person of ordinary, sound judgment could conclude that the corporation has received adequate consideration."
Steiner v. Meyerson , Del. Ch., C.A. No. 13139, mem. op., at 2, Allen, C. (July 19, 1995).
Lewis v. Vogelstein , Del. Ch., 699 A.2d 327, 336 (1997).
Glazer v. Zapata Corp ., Del. Ch., 658 A.2d 176, 183 (1993); see also Stein v. Orloff , Del. Ch., C.A. No. 7276, 11 Del. J. Corp. L. 312, 319, 1985 WL 11561, *3, Hartnett, V.C. (May 30, 1985) ("the test for finding a waste of corporate assets is whether the consideration received by the corporation was so inadequate that no person of ordinary sound business judgment would deem it worth that which the corporation paid"), appeal refused by Del. Supr., 504 A.2d 572 (1986); Saxe v. Brady , Del. Ch., 184 A.2d 602 (1962).
Defendants' motion requires that I address the sufficiency of plaintiffs pleading. In order to find that plaintiff has pleaded her claims sufficiently, I must be satisfied that the facts alleged in the amended complaint establish a complete failure of consideration. Insufficient or inadequate consideration is difficult to demonstrate since the alleged acts "have to be so blatant that no ordinary business person would ever consider the transaction to be fair to the corporation." In other words, the company would have to receive virtually nothing for what it gave.
See Lewis , 699 A.2d at 338 ("The Court of Chancery has interpreted the waste standard in the ratified option context as invoking not a proportionality or reasonableness test a la Kerbs but the traditional waste standard referred to in Michelson.").
In Re 3Com Corp. Shareholders' Litig ., Del. Ch., C.A. No. 16721, mem. op., at 11, Steele, V.C. (Oct. 25, 1999).
Plaintiffs allegation that the directors wasted corporate assets by authorizing the re-pricing is unaccompanied by any facts demonstrating that the corporation received nothing in kind and is merely conclusory. Plaintiff does not, for example, contend that this plan or any series of earlier plans, prohibited the re-pricing the directors implemented or even that unlike earlier plans, this repricing was not specifically authorized. The re-pricing objected to here was a part of an overall plan, approved by the shareholders, to incentivize performance or encourage retention of key employees and non-employee directors. Plaintiffs only factual allegation is that the defendant directors had re-priced a substantial amount of their own options (and of an employee director to whom they were beholden) to purchase common stock without any consideration to IIG. However, their legal allegations, specifically that the re-pricing was "gross, reckless, willful and intentional" and that no person of ordinary, sound business judgment would be expected to entertain a view that the consideration or, indeed, lack of consideration was fair," are wholly conclusory. Here, plaintiff calls into question the defendant directors' "diversion of corporate assets for improper and unnecessary purposes" in the face of a shareholder plan authorizing a repricing that was carried out, concededly, according to its terms. Under these circumstances the complaint can not raise a reasonable doubt that any business person of ordinary judgment could conclude that IIG received nothing in exchange for re-pricing the director defendants' options. Is not the only reasonable inference to be drawn from the shareholders' approval of the plan that the shareholders themselves believed the re-pricing to be an appropriate performance incentive for the corporation's managers and directors? Must I infer that the majority of shareholders who approved the plan were persons lacking "ordinary, sound business judgment?"
Cf. Sanders v. Wang , Del. Ch., C.A. No. 16640, mem. op., at 25-27, Steele, V.C. (Nov. 8, 1999) (plaintiffs had sufficiently stated claim for waste to survive a motion to dismiss by pleading particularized facts that the company's board authorized the issuance of shares of Computer Associates International, Inc. common stock under the stock ownership plan ("KESOP") in an amount far exceeding the number authorized by the plan.
Am. Compl., ¶ 42.
Am. Compl., ¶ 43.
I invite the reader to review Vice Chancellor Strine's in depth analysis of the implications of shareholder pre-approval of acts alleged to constitute corporate waste in Harbor Finance Partners v. Huizenga , C.A. No. 14933, Strine, V.C. (Nov. 7, 1999).
Plaintiff claims that the defendant directors' grant of stock options amounted to an unwarranted gift unsupported by any valid consideration. Plaintiff requests that this Court infer that the directors' were unjustly enriched by their re-priced options without factual support for the allegation that JIG failed to benefit from the transaction. Plaintiff has failed to allege facts that either directly, or inferentially, indicate why the shareholders, who approved the plan allowing the re-pricing, were so ill informed about the plan they approved that neither they nor any reasonable person could not believe that JIG would benefit from the re-priced options and that the re-priced options they authorized would amount to a gratuity and thus, corporate waste.
There is no legal basis for this Court to question the sufficiency of the consideration for those re-priced options or to second guess the shareholders when they adopted a plan authorizing the stock option re-pricing. To do so would be to frustrate the shareholders' authority to determine the parameters of executive compensation plans and to substitute my judgment for both their and the board's business judgment when it decided to implement the re-pricing. As our Supreme Court recently stated: "To rule otherwise would invite courts to become super-directors, measuring matters of degree in business decision making and executive compensation." Plaintiffs allegations that JIG received no consideration for the director employee and non-employee benefit from the stock option re-pricing, are nothing more than conclusory and are insufficient, as a matter of law, to meet the standard required for a claim of waste. Carrying out a predetermined stock option plan, approved by shareholders, entirely consistently with the plan can hardly be characterized as an act of a "disloyal" fiduciary. Because the plaintiff has failed to make out a claim of waste, there can be no underlying breach of the fiduciary duty of loyalty.
Brehm v. Eisner ., Del. Supr., No. 469. 1998, 2000 WL 174619 at *16 (Feb. 9, 2000), aff'g in part, rev'g in part sub nom. In re Walt Disney Co. Derivative Litig ., Del. Ch., 731 A.2d 342 (1998).
C. Allegation of Lack of Good Faith Raised at Oral Argument
Plaintiffs counsel raised for the first time at oral argument the spectre that the defendant directors either breached a fiduciary duty of "good faith" when they implemented the plan or breached an implied contractual duty of good faith which attached to the stock option plan. Quite apart from a failure to support either of these intriguing themes with facts in the pleading, the suggestions came too late for defendants to respond. Plaintiffs complaint, I understand, has already been amended once. Whether there may be a basis to assert differently styled claims now or whether the introduction of a good faith litmus test was merely to question the "good faith" of the directors' decision to separate one transaction into two, I can not tell. Plaintiff presented a copy of our Supreme Court's decision in Brehm v. Eisner ("Disney") , to me just before oral argument, apparently to suggest that if I granted defendants' motion that I should do so without prejudice and allow plaintiff yet another chance to amend her complaint in the absence of a contention new facts have come to light. I have neither the authority nor the predilection to entertain a practice where I, as a trial judge, develop my own theories of possible recovery for plaintiffs or hear them for the first time from plaintiffs at oral argument, and then allow them to replead until some viable claim hits the wall and sticks. That practice would undermine our adversary system and suggests that practitioners who draft pleadings know less about the facts available to support potential causes of actions than judges who rule on motion practice issues. I resist the temptation to dismiss without prejudice in the hope that a third complaint might finally generate a viable cause of action. Had there been such a possibility, I am sure counsel would have pleaded accordingly in their first or second attempt to state a claim. I do not share plaintiffs counsel's belief that Disney suggests that trial judges should treat every complaint like a Phoenix ever ready to spring to life from its ashes upon learning of its imminent demise. Motion practice is no place for trial judges to attempt to usurp the Supreme Court's role to make new law or clarify the old in a way which can resuscitate a defective complaint.
Brehm , supra note 20.
V. CONCLUSION
Plaintiffs allegations indicating corporate waste and breach of duty of loyalty are merely conclusory and lack any factual basis to survive a motion to dismiss. Defendants' motion to dismiss for failure to state a claim, under Court of Chancery Rule 12(b)(6) is granted .
IT IS SO ORDERED.