Data Key Partners, Plaintiff-Appellant v. Permira Advisers LLC, Raphael Holding Company and Raphael Acquisition…

Summary

The Wisconsin Supreme Court held that Wisconsin's codified business judgment rule, Wis. Stat. § 180.0828(1), is both substantive law and a burden-allocating procedural device, so a plaintiff challenging director conduct must plead facts plausibly showing the conduct falls within the statute's exceptions — willful failure to deal fairly in a matter of material conflict of interest, violation of criminal law, improper personal profit, or willful misconduct. Applying that framework, the court held the minority shareholders' complaint failed to state claims against the non-Paul directors (board tenure, vesting options, and mandatory indemnification are not improper benefits, and preferring the certain Permira sale over contingent Plato bids was legitimate business judgment) or against the Pauls as majority shareholders (who took less per share than the minority and whose alleged software license was not alleged to exceed the minority's $10 million premium). The court reversed the court of appeals, which had reinstated both claims. Chief Justice Abrahamson, joined by Justices Bradley and Crooks, dissented, contending Wisconsin's notice pleading imposes no Twombly plausibility requirement and that the complaint pleaded around the business judgment rule; she would have affirmed and remanded.