Kreutter v. Teladoc Health, Inc.
- Gregory Woods
- 1:19-cv-05875
- U.S. District Court · Southern District of New York
- 6
In Kreutter v. Teladoc Health, Inc., Judge Woods granted defendants’ motion to dismiss without leave to amend for failure to plead demand futility.
Misty Pickett and Chantelle Kreutter’s derivative claims on behalf of Teladoc Health, Inc. were dismissed, and the defendants obtained judgment after the court denied further amendment.
What happened
Misty Pickett and Chantelle Kreutter brought Kreutter v. Teladoc Health, Inc. on behalf of Teladoc, asserting claims including alleged violations of Section 14(a) of the Exchange Act and breaches of fiduciary duty. The defendants moved to dismiss, arguing that the plaintiffs had not first asked Teladoc to pursue the claims and had not adequately explained why such a request would have been futile.
Magistrate Judge Barbara Moses recommended dismissing the joint amended complaint because the plaintiffs had not adequately pleaded that a demand on Teladoc would have been futile. The plaintiffs did not challenge that recommendation. They objected only to the recommendation that they not receive another opportunity to amend their complaint.
The court adopted the recommendation in full. Judge Gregory H. Woods granted the defendants’ motion to dismiss without leave to amend, directed the Clerk to enter judgment for the defendants, and closed the case.
The detailed version
- Kreutter v. Teladoc Health, Inc. · No. 1:19-cv-05875
- Gregory Woods
- Sept. 17, 2021
Background
Misty Pickett and Chantelle Kreutter brought a derivative action on behalf of Teladoc Health, Inc. A derivative action is brought by shareholders on behalf of a company. The plaintiffs asserted claims including alleged violations of Section 14(a) of the Exchange Act, breach of fiduciary duty, and other alleged misconduct by company officers and directors.
The defendants moved to dismiss the joint amended complaint because the plaintiffs had not made a pre-suit demand on Teladoc and had not adequately pleaded that making such a demand would have been futile. Magistrate Judge Barbara Moses issued a Report and Recommendation advising that the complaint be dismissed and that the plaintiffs not be allowed to amend it again.
The plaintiffs did not object to the recommendation that the complaint be dismissed. They objected only to the recommendation denying leave to amend, meaning permission to file another amended complaint.
Court’s analysis
The court reviewed the unchallenged recommendation concerning dismissal for clear error and found none. It therefore adopted the recommendation that the joint amended complaint be dismissed for failure to adequately allege demand futility.
The court reviewed the recommendation denying further amendment independently. It noted that the joint amended complaint was the third complaint filed in the action, that the plaintiffs had already had substantial time to develop their allegations, and that the complaint was 96 pages long, excluding exhibits and incorporated documents. The court also noted that the plaintiffs did not identify what additional facts they would plead in a fourth complaint to correct the deficiencies. The court concluded that another opportunity to amend was not appropriate.
Disposition
The court adopted Magistrate Judge Moses’s Report and Recommendation in full. Judge Gregory H. Woods granted the defendants’ motion to dismiss without leave to amend, directed the Clerk of Court to enter judgment for the defendants, terminated the pending motions, and closed the case. The opinion does not state that the court decided the underlying fiduciary-duty or Exchange Act claims on their merits.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.