Zync, Inc. v. Porsche Investments Management, S.A.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE ZYNC, INC., Plaintiff, v. C.A. No. 2025-0284-JTL PORSCHE INVESTMENTS MANAGEMENT, S.A., PORSCHE DIGITAL, INC., CHRISTIAN KNÖRLE, and ULRICH THIEM, Defendants. OPINION DENYING RULE 12(B)(6) MOTIONS Date Submitted: February 11, 2026 Date Decided: May 29, 2026 Christopher H. Lyons, Jason M. Avellino, ROBBINS GELLER RUDMAN & DOWD LLP, Wilmington, Delaware; Randall J. Baron, Michaela Park, ROBBINS GELLER RUDMAN & DOWD LLP, San Diego, California; Attorneys for Plaintiff. Thomas W. Briggs, Jr., Sara Carnahan, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Charles A. DeVore, Carrie M. Stickel, KATTEN MUNCHIN ROSENMAN LLP, Chicago, Illinois; Zoe Lo, KATTEN MUNCHIN ROSENMAN LLP, New York, New York; Attorneys for Defendants Porsche Investments Management, S.A., Porsche Digital, Inc., Christian Knörle, and Ulrich Thiem. LASTER, V.C.  The venture capital arm of a luxury automaker funded an automotive technology startup through a convertible note. The startup also executed an investor rights agreement and a voting rights agreement that gave the automaker a board seat and various blocking rights. The voting rights agreement contained a provision that purported to limit the automaker’s liability. The automaker placed one of its employees on the board. Over the next two years, the designee refused to approve transactions unless he received permission from the automaker. The designee also demanded that the startup share confidential information about its dealings with the automaker’s competitors before the automaker would consider providing additional financing. The designee’s inaction prevented the startup from securing third-party capital, and the automaker never provided more money of its own. The startup had to shut down. In this action, the startup sued the designee for breach of fiduciary duty. The startup sued the automaker for aiding and abetting its designee’s breaches of fiduciary duty, tortious interference with prospective economic advantage, and breach of the implied covenant of good faith and fair dealing inherent in the investor rights agreement. The automaker and its designee moved to dismiss the complaint for failure to state a claim on which relief can be granted. This decision denies that motion.  I. FACTUAL BACKGROUND The facts are drawn from the complaint, the documents it incorporates by reference, and materials submitted by the parties in connection with their motions.1 At this procedural stage, the court must credit the complaint’s well-pled allegations and draw all reasonable inferences in the plaintiff’s favor. A. The Company And The Porsche Note Before its demise, Zync, Inc. (the “Company”) offered a cloud-based platform that provided video streaming, on-demand content, and other experiences for in- vehicle entertainment. Rana Sobhany founded the Company in 2020 and served both as its CEO and as a member of its board of directors (the “Board”). The Company sought a strategic partnership that would provide capital and a path to commercialization. The Company’s technology attracted interest from Porsche AG, Mercedes-Benz AG, BMW AG, and other luxury manufacturers. Porsche has an investment arm that backs technology startups. The entities in the investment arm include Porsche Investments Management S.A. (“Porsche Investments”) and Porsche Digital, Inc. (“Porsche Digital”). 2 Porsche Investments manages all of Porsche’s investments in startups and venture capital funds. Porsche 1 Citations in the form “Compl. ¶ ___” refer to paragraphs of the verified amended complaint, which is the operative pleading. Dkt. 14. Citations in the form “OB Ex. ___ at ___” refer to exhibits defendants filed in support of their motion. Dkt. 20. 2 Porsche Investments was known as Porsche Investments GmbH before reincorporating in Luxembourg in 2023. 2 Digital identifies strategic investments for Porsche Investments. Distinguishing among the Porsche entities is not important for purposes of this decision, so unless specificity is warranted, this decision refers to Porsche. Porsche saw promise in the Company and invested $2.9 million through a convertible note (the “Porsche Note”). 3 Porsche also received 305,430 shares of common stock, representing 5% of the Company’s equity on a fully-diluted basis. The parties entered into a voting rights agreement (the “Voting Agreement”) under which the Company committed to maintain a three-member board. The Voting Agreement granted Porsche the right to designate one director (the “Porsche Director”). Porche’s rights under the Voting Agreement persist as long as Porsche holds at least 2% of the Company’s common stock.4 The parties also entered into an investor rights agreement (the “Investor Agreement”) under which the Company could not take specified actions without the approval of the Porsche Director. The pertinent provision provided that, without the Porsche Director’s approval, the Company cannot: (a) liquidate, dissolve or wind-up the business and affairs of the Company, effect any merger or consolidation or any other Deemed Liquidation Event, or consent to any of the foregoing; (b) amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Company; 3 The complaint alleges that the Porsche Note carried customary conversion rights and preferences. Compl. ¶¶24–26. 4 See OB Ex. 2 (“VA”) § 1.2. 3 (c) create, authorize the creation of, or issue any security convertible into or exercisable for any equity security (other than any capital stock issued pursuant to any equity (or equity-linked) compensation plan approved by the Board of Directors); (d) purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Company other than repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of such employment or service at no greater than the original purchase price thereof; (e) create, or authorize the creation of, or issue, or authorize the issuance of any debt security; (f) create, or hold capital stock in, any subsidiary that (i) is not wholly owned . . . and (ii) has a board of directors or other governing body . . . that does not permit a Stockholder who has the right to designate one or more directors to the Board of Directors to designate a comparable percentage of directors to [its board], or permit any subsidiary to create, or authorize the creation of, or issue or obligate itself to issue, any shares of any class or series of capital stock, or sell, transfer or otherwise dispose of any capital stock of any director indirect subsidiary of the Company, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or a series of related transactions) of all or substantially all of the assets of such subsidiary; . . . (g) increase or decrease the authorized number of directors constituting the Board of Directors; (h) change the compensation of any executive officer or director over €10,000 in any 12-month period, including any option grants or stock awards; or (i) make any payments or enter into any commercial, lending, or other arrangements with any of the Company’s stockholders, officers or directors or any of their Affiliates, except (x) normal payments in accordance with employment agreements with the company; and (y) 4  normal advances for business expenses in the ordinary course of business that do not exceed €10,000.5 The agreement also gave Porsche Investments a right of first offer on any issuance of new securities.6 Porsche designated Christian Knörle as the Porsche Director. Knörle served as the Head of Company Building at Forward31, a business unit within Porsche Digital. In that role, he reported to Ulrich Thiem, a Managing Director with Porsche Investments. Throughout the events giving rise to this dispute, Knörle, Sobhany, and Jizong Bruce Chan comprised the Board. Because of the blocking rights in the Voting Agreement, a Board majority comprising Sobhany and Chan could not take action on a covered issue unless Knörle gave his approval. B. Porsche Fails To Make Timely Advances Under The Note. The Porsche Note contemplated five advances to the Company, each at a specified time. The first two were due in September 2020. The third was due in November 2020. The final two were tied to commercialization goals and targeted for March and September 2021. The Porsche Note would mature and repayment would become due in mid-April 2023.7 5 See OB Ex. 3 (“IA”) § 5.4. 6 See IA § 4.1. 7 See OB Ex.1 § 1(p) (defining “Maturity Date” as “the earlier of (i) 18 months from the date on which the Final Principal Payment is funded, and (ii) September 17, 2023.”). The final advance was paid in mid-October 2021. See Compl. ¶ 33. 5  Porsche began delaying its advances in November 2020. The Company was a startup with limited cash, and the delays jeopardized the Company’s stability. In June 2021, after two delayed advances, Sobhany contacted e&Co. AG (the “Bridge Lender”) about a short-term loan. With the Board’s unanimous approval, the Company borrowed €350,000 from the Bridge Lender in August (the “Bridge Loan”). Sobhany guaranteed the Bridge Loan personally. C. Porsche Exercises Its Veto Rights. The Company saw the Porsche Note as the initial step in a long-term business relationship. In October 2021, the Company pitched its product to Porsche and received positive feedback. Two months later, however, Porsche declined to move forward, telling the Company that Porsche had “decided to go with another kind of concept.”8 Although Porsche declined to proceed with the Company’s technology, other major automakers remained interested. By late 2021, the Company was negotiating significant contracts. But the prospect of securing those contracts made the Company’s capital needs more pressing. Without capital, the Company could not scale its business to meet demand. With Porsche’s ardor having cooled, the Company sought alternative sources of financing. 8 Compl. ¶ 35. 6  1. The VC Financing In November 2021, a venture capital fund proposed to lead a Series A financing round of $8 million at a pre-money valuation of $32 million (the “VC Financing”). The Company and the fund executed a term sheet dated December 2, 2021. After greater- than-expected investor interest, the fund expanded the round to $10 million at a pre- money valuation of $40 million. The VC Financing involved issuing Company securities, which required the Porsche Director’s approval under the Investor Agreement. Sobhany called Knörle, who told Sobhany he could not approve the deal without Thiem’s permission. Over the next two months, Knörle met with Thiem several times seeking instructions. Meanwhile, the Bridge Lender began pressing the Company for repayment. Sobhany emphasized the urgency of the situation, but Knörle would not act without permission. In April 2022, Knörle finally agreed to hold a vote on the VC Financing. Knörle delayed the meeting from April 11 to April 12 so he could obtain instructions. When the Board convened, Knörle stated that he would vote against the VC Financing, killing the deal. 2. The Potential For Partner Financing While Porsche stalled on the VC Financing, two automakers provided potential alternatives. In early March 2022, an American automaker expressed interest in an investment. Later that month, a German automaker expressed interest. At this same time, the Company had made serious progress toward commercial agreements with other automakers. After a successful pilot program in March 2022, 7 BMW proposed a deployment. In April, the Company began finalizing terms with Mercedes. Sobhany shared those developments with the Board. On April 19, 2022. she reported that the Mercedes deal could be signed and announced by May 15.9 On May 7, she reported that the Company had received a draft contract from Mercedes and a separate term sheet from the American automaker. The following week, Sobhany reported that the Mercedes contract was ready to sign. The agreement was formally executed on June 3 and announced publicly on June 21. The agreement contemplated a per-vehicle licensing fee that the Company projected could produce $40 million in revenue through 2028. 3. Porsche Proposes A Bridge Loan. Shortly after blocking the VC Financing, Knörle suggested that Porsche could offer the Company a bridge loan of $750,000. But on April 26, 2022, after speaking with Thiem, Knörle lowered the amount to “10% of [Porsche’s] prior funding”—i.e., $290,000—that would be provided when the Company signed its first commercial agreement. 10 Sobhany told Knörle that the amount was too small to solve the Company’s liquidity problems. During discussions about the bridge loan, Knörle pressed Sobhany for a copy of the draft contract with Mercedes, indicating he would send it to Thiem to “kickstart 9 Id. ¶ 48. 10 Id. ¶ 49. 8 the process” for the bridge financing. 11 Sobhany shared a draft on May 9, underscoring that it was highly confidential. She shared another draft on May 19.12 On June 7, 2022, Sobhany told Knörle that the Company had signed the contract with Mercedes and returned a revised term sheet to the American automaker. Sobhany re-emphasized the need for bridge financing. 13 Knörle told Sobhany to send him the competitors’ internal data and a copy of the final Mercedes agreement, then the money would follow.14 Sobhany complied, but Porsche stalled on the loan. Knörle reported that an internal meeting to discuss the loan had been postponed and that Porsche wanted to partner with the venture arm of the American automaker on the funding.15 On June 24, 2022, Porsche reneged on its original offer. Now, Porsche demanded a personal guarantee from Sobhany and an additional Board seat. Sobhany refused. 4. The PE Financing In late June 2022, shortly after the Mercedes announcement, a private equity firm offered to acquire the Company for $50 million. Sobhany contacted Knörle, who 11 Id. ¶¶ 50–51. 12 Id. 13 Id. ¶ 53. 14 Id. 15 Id. ¶ 54. 9 refused to provide any feedback until there was a signed term sheet so he could seek approval from Thiem.16 Sobhany asked the fund to consider a $4 million loan followed by a $15 million equity investment at a $60 million pre-money valuation. Of the initial loan amount, $3.335 million would be used to buy out Porsche at a premium. The fund expressed willingness to invest $15 million if coupled with a path to a whole company acquisition (the “PE Financing”). Sobhany again sought Knörle’s input. Knörle again declined to weigh in, stating that he needed to discuss the idea with Thiem. He told Sobhany that he would not approve the PE Financing without instructions, but that an internal Porsche committee would consider the proposal on August 26, 2022. At the last minute, that committee meeting was postponed. On August 29, 2022, the Company and the fund executed a term sheet for the PE Financing. Sobhany and Chan approved the deal. Knörle refused to act without instructions. By mid-September 2022, Knörle still had not acted. Thiem and his team said they would block the deal unless they could speak directly to the fund. In mid- October, Porsche told the fund that Knörle would only be authorized to approve the transaction if the fund indemnified Knörle and Porsche for any damages. The fund refused, and the PE Financing fell through. 16 Id. ¶¶ 59–60. 10 D. The Company Shuts Down. In August 2022, the Bridge Loan matured. In September, the Bridge Lender sued the Company and Sobhany for the amounts due. A default judgment was ultimately entered against the Company for approximately €244,500. After the Bridge Lender sued, Porsche instructed Knörle to cut ties with the Company. Knörle resigned effective October 31, 2022. With Knörle no longer an obstacle, Sobhany tried to revive the PE Financing. The fund declined to proceed, citing the “overhang of Porsche’s lack of cooperation and its outstanding contractual rights[.]”17 Other potential investors also declined to invest, citing Porsche’s governance rights. Without the ability to raise capital, the Company effectively shut down. Sobhany has since learned that the Company’s experience was not unique. She believes that Porsche employs a “catch and kill”18 investment strategy that involves making a seed investment in a startup in return for governance rights, then using the governance rights to block other sources of capital. By making the startup 17 Id. ¶ 71. 18 In journalism, the term “catch and kill” refers to the practice of buying an exclusive story for the explicit purpose of not publishing it. See, e.g., Ronan Farrow, Catch and Kill (2019) (describing the widespread use of this practice to prevent publication of stories about Harvey Weinstein). In the corporate context, a similar phenomenon has been termed the “killer acquisition,” where a firm acquires an innovative target to terminate the target’s growth and preempt competition. See generally Colleen Cunningham, Florian Ederer, & Song Ma, Killer Acquisitions, 129 J. Pol. Econ. 649 (2021) (coining the term and presenting empirical data supporting the phenomenon in the pharmaceutical industry). 11 dependent on Porsche, Porsche gains control of its new and potentially disruptive technology. If Porsche wants to deploy the technology, it can. If not, Porsche can force the startup to shut down, while maintaining control over its intellectual property. The complaint cites exchanges between Sobhany and other founders or executives that support this theory. Knörle acknowledged the pattern.19 E. This Litigation In March 2025, the Company filed suit. The operative complaint contains four counts. Count I asserts that Knörle breached his fiduciary duties by acting to harm the Company and for the benefit of Porsche. Count II asserts that Thiem, Porsche Investments, and Porsche Digital aided and abetted Knörle’s breaches of fiduciary duty. Count III claims that Thiem, Porsche Investments, and Porsche Digital tortiously interfered with the VC Financing and PE Financing. Count IV claims that Porsche Investments’ use of the Porsche Director’s approval rights to block transactions violated the implied covenant of good faith and fair dealing in the Investor Agreement. The defendants moved to dismiss the operative complaint for failing to state a claim on which relief can be granted. Thiem moved for dismissal, contending that the 19 Id. ¶¶ 74–75. 12 court cannot exercise personal jurisdiction over him. In a separate decision, the court granted Thiem’s motion.20 This decision addresses Knörle and Porsche’s motions. II. LEGAL ANALYSIS A motion under Rule 12(b)(6) asserts that a complaint fails to state a claim on which relief can be granted.21 When evaluating a Rule 12(b)(6) motion, “a trial court should accept all well-pleaded factual allegations in the Complaint as true” and “draw all reasonable inferences in favor of the plaintiff.” 22 The court should “deny the motion unless the plaintiff could not recover under any reasonably conceivable set of circumstances susceptible of proof.”23 The “conceivability” standard “is more akin to ‘possibility,’ while the federal ‘plausibility’ standard falls somewhere beyond mere ‘possibility’ but short of ‘probability.’”24 Under a notice pleading standard, a court should “accept even vague allegations in the Complaint as ‘well-pleaded’ if they provide the defendant notice of the claim.”25 “[T]he trial court is not required to accept every strained interpretation 20 See Zync, Inc. v. Porsche Invs. Mgmt., S.A., 2026 WL 1470324 (Del. Ch. May 26, 2026). 21 See Ct. Ch. R. 12(b)(6). 22 Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 536 (Del. 2011). 23 Id. 24 Id. at 537 n.13. 25 Id. 13 of the allegations proposed by the plaintiff,” but only “reasonable inferences that logically flow from the face of the complaint.”26 A. Count I: The Claim For Breach Of Fiduciary Duty Against Knörle The complaint asserts that Knörle breached his fiduciary duties as a director through a course of conduct that included failing to approve the VC Financing, failing to approve the PE Financing, and extracting confidential information from the Company to share with Porsche. The Company contends that Knörle acted disloyally and in bad faith by favoring Porsche’s interests over the Company’s. This theory states a claim on which relief can be granted. A plaintiff can sufficiently allege that a director acted disloyally in three primary ways: 1. By pleading facts showing that the director received “a personal financial benefit from a transaction that is not equally shared by the stockholders,”27 26 Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001); accord Page v. Oath Inc., 270 A.3d 833, 842 (Del. 2022); Caspian Alpha Long Credit Fund, L.P. v. GS Mezzanine P’rs 2006, L.P., 93 A.3d 1203, 1205 (Del. 2014); In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006); see Norton v. K-Sea Transp. P’rs L.P., 67 A.3d 354, 360 (Del. 2013) (“We do not, however, credit conclusory allegations that are not supported by specific facts, or draw unreasonable inferences in the plaintiff’s favor.”). 27 Rales v. Blasband, 634 A.2d 927, 936 (Del. 1993), overruled in part on other grounds by United Food & Com. Workers Union & Participating Food Indus. Emps. Tri-State Pension Fund v. Zuckerberg, 262 A.3d 1034 (Del. 2021); accord Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 362 (Del. 1993) (“Classic examples of director self- interest in a business transaction involve either a director appearing on both sides of a transaction or a director receiving a personal benefit from a transaction not received by the shareholders generally.”), modified on other grounds, 636 A.2d 956 (Del. 1994); Pogostin v. Rice, 480 A.2d 619, 624 (Del. 1984) (“Directorial interest exists 14  2. By pleading facts showing the director is sufficiently loyal to, beholden to, or otherwise influenced by an interested party to undermine the director’s ability to judge the matter on its merits,28 or whenever . . . a director either has received, or is entitled to receive, a personal financial benefit from the challenged transaction which is not equally shared by the stockholders.”), overruled in part on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000). “[A] subjective ‘actual person’ standard [is used] to determine whether a ‘given’ director was likely to be affected in the same or similar circumstances.” McMullin v. Beran, 765 A.2d 910, 923 (Del. 2000) (quoting Cinerama, Inc. v. Technicolor, Inc. (Technicolor Plenary IV), 663 A.2d 1156, 1167 (Del. 1995)). “[T]he benefit received by the director must be ‘of a sufficiently material importance, in the context of the director’s economic circumstances, as to have made it improbable that the director could perform her fiduciary duties . . . without being influenced by her overriding personal interest.’” In re Trados Inc. S’holder Litig. (Trados I), 2009 WL 2225958, at *6 (Del. Ch. July 24, 2009) (quoting In re Gen. Motors Class H S’holders Litig., 734 A.2d 611, 617 (Del. Ch. 1999)). 28 Aronson v. Lewis, 473 A.2d 805, 815 (Del. 1984) (stating that one way to allege successfully that an individual director is under the control of another is by pleading “such facts as would demonstrate that through personal or other relationships the directors are beholden to the controlling person”), overruled in part on other grounds by Brehm, 746 A.2d 244; see also Friedman v. Beningson, 1995 WL 716762, at *4 (Del. Ch. Dec. 4, 1995) (“The requirement that directors exercise independent judgment, (insofar as it is a distinct prerequisite to business judgment review from a requirement that directors exercise financially disinterested judgment), directs a court to an inquiry into all of the circumstances that are alleged to have inappropriately affected the exercise of board power. This inquiry may include the subject whether some or all directors are ‘beholden’ to or under the control, domination or strong influence of a party with a material financial interest in the transaction under attack, which interest is adverse to that of the corporation.”). Classic examples involve familial relationships, such as a parent’s love for and loyalty to a child. See, e.g., Harbor Fin. P’rs v. Huizenga, 751 A.2d 879, 889 (Del. Ch. 1999) (“That Hudson also happens to be Huizenga’s brother-in-law makes me incredulous about Hudson’s impartiality. Close familial relationships between directors can create a reasonable doubt as to impartiality. The plaintiff bears no burden to plead facts demonstrating that directors who are closely related have no history of discord or enmity that renders the natural inference of mutual loyalty and affection unreasonable.” (footnote omitted)); Chaffin v. GNI Gp. Inc., 1999 WL 721569, at *5 (Del. Ch. Sept. 3, 1999) (holding father-son relationship was sufficient to rebut presumption of independence, stating “[i]nherent in the parental relationship is the parent’s natural desire to help his or her child succeed . . . . [M]ost parents would find 15  3. By pleading facts supporting an inference that the director failed to act in good faith.29 A common variant of the second option involves alleging that the director was a dual fiduciary and owed a competing duty of loyalty to a person or entity with a conflict of interest of its own.30 The complaint pleads that Knörle was a conflicted dual fiduciary. He also inferably acted in bad faith. 1. The Dual-Fiduciary Problem Knörle faced the dual fiduciary problem when making decisions for the Company that Porsche wanted him to oppose. In Weinberger, the Delaware Supreme it highly difficult, if not impossible, to maintain a completely neutral, disinterested position on an issue, where his or her own child would benefit substantially if the parent decides the issue a certain way.”); see also London v. Tyrrell, 2010 WL 877528, at *14 n.60 (Del. Ch. Mar. 11, 2010) (“[I]n the pre-suit demand context, plaintiffs can often meet their burden of establishing a lack of independence with a simple allegation of a familial relationship. Surely then . . . it will be nigh unto impossible for a corporation bearing the burden of proof to demonstrate that an SLC member is independent in the face of plaintiffs’ allegation that the SLC member and a director defendant have a family relationship.”). 29 In re Chelsea Therapeutics Int’l Ltd. S’holders Litig., 2016 WL 3044721, at *1 (Del. Ch. May 20, 2016) (“Good faith—the absence of actions taken in bad faith— prohibits board action intended for purposes other than corporate weal, even though taken by independent, disinterested directors.”). 30 See Weinberger v. UOP, Inc., 457 A.2d 701, 710–11 (Del. 1983) (holding that officers of parent corporation faced conflict of interest when acting as subsidiary directors regarding transaction with parent); accord Sealy Mattress Co. of N.J., Inc. v. Sealy, Inc., 532 A.2d 1324, 1336–38 (Del. Ch. 1987) (same); see also Trados I, 2009 WL 2225958, at *8 (treating directors as interested for pleading purposes in transaction that benefited preferred stockholders when “each had an ownership or employment relationship with an entity that owned Trados preferred stock”). 16 Court explained that “[t]here is no dilution of [fiduciary] obligation where one holds dual or multiple directorships.”31 If the interests of the beneficiaries to whom the dual fiduciary owes duties are aligned, then there is no conflict of interest.32 But if the interests of the beneficiaries diverge, the fiduciary faces an inherent conflict of interest.33 31 Weinberger, 457 A.2d at 710. 32 Quadrant Structured Prods. Co., Ltd. v. Vertin, 102 A.3d 155, 186 (Del. Ch. 2014); see, e.g., Van de Walle v. Unimation, Inc., 1991 WL 29303, at *11 (Del. Ch. Mar. 7, 1991). 33 In re Trados Inc. S’holder Litig. (Trados II), 73 A.3d 17, 46–47 (Del. Ch. 2013) (citation omitted); see Metro Storage Int’l LLC v. Harron, 2019 WL 3282613, at *23 (Del. Ch. July 19, 2019) (“[P]ersons frequently make decisions on behalf of one entity while simultaneously owing fiduciary duties to a different entity, whether as agents or otherwise. To the extent the competing duties conflict, the dual fiduciary does not lose the ability to exercise managerial authority. The conflicted dual fiduciary instead faces heightened liability risk.”); see also Krasner v. Moffett, 826 A.2d 277, 283 (Del. 2003) (“[T]hree of the FSC directors . . . were interested in the MEC transaction because they served on the boards . . . of both MOXY and FSC.”); McMullin, 765 A.2d at 923 (“The ARCO officers and designees on Chemical’s board owed Chemical’s minority shareholders ‘an uncompromising duty of loyalty.’ There is no dilution of that obligation in a parent subsidiary context for the individuals who acted in a dual capacity as officers or designees of ARCO and as directors of Chemical.” (citation omitted) (internal quotation marks omitted)); Rabkin v. Philip A. Hunt Corp., 498 A.2d 1099, 1106 (Del. 1985) (holding that parent corporation’s directors on subsidiary board faced conflict of interest because “individuals who act in a dual capacity as directors of two corporations . . . owe the same duty of good management to both corporations” (citation omitted)); Weinberger, 457 A.2d at 710 (holding that officers of parent corporation faced conflict of interest when acting as subsidiary directors regarding transaction with parent); see also Rales, 634 A.2d at 933 (explaining for purposes of demand futility that “‘[d]irectorial interest exists whenever divided loyalties are present’” (quoting Pogostin, 480 A.2d at 624)); Goldman v. Pogo.com, Inc., 2002 WL 1358760, at *3 (Del. Ch. June 14, 2002) (“Because Khosla and Wu were the representatives of shareholders which, in their institutional capacities, are both alleged to have had a direct financial interest in this 17  As a Company director, Knörle owed fiduciary duties to the Company and its stockholders.34 As Porshe’s employee, Knörle owed fiduciary duties to Porsche.35 It is therefore reasonably conceivable that Knörle faced a conflict of interest when Porsche instructed him to withhold consent for the VC Financing and the PE Financing. It is reasonably conceivable that both transactions were in the Company’s best interests, yet Knörle withheld his approval because Porsche would not authorize them. It is transaction, a reasonable doubt is raised as to Khosla and Wu’s disinterestedness in having voted to approve the . . . [l]oan.”); Sealy, 532 A.2d at 1336–37 (similar). 34 McRitchie v. Zuckerberg, 315 A.3d 518, 526 (Del. Ch. 2024). 35 An employee is an agent. Restatement (Third) of Agency § 7.07(3)(a) (A.L.I. 2006), Westlaw (database updated Oct. 2024); see Restatement (Second) of Agency § 2 (A.L.I. 1958), Westlaw (database updated Oct. 2024) (“A servant is an agent employed by a master . . . .”); Matthew T. Bodie, Employment as Fiduciary Relationship, 105 Geo. L.J. 819, 820 (2017) (“The hoary ‘master–servant’ doctrine holds that employees are agents of their employers and owe the traditional fiduciary duties of loyalty and performance.”). An agent is a fiduciary. Metro Storage Int’l LLC v. Harron, 275 A.3d 810, 843 (Del. Ch. 2022); Restatement (Third) of Agency, supra, § 1.01 (“Agency is the fiduciary relationship that arises when one person (a ‘principal’) manifests assent to another person (an ‘agent’) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.”); id. § 8.01 (“An agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the agency relationship.”); see Sci. Accessories Corp. v. Summagraphics Corp., 425 A.2d 957, 962 (Del. 1980) (“It is true, of course, that under elemental principles of agency law, an agent owes his principal a duty of good faith, loyalty and fair dealing.”); Barak Orbach, D&O Liability for Antitrust Violations, 59 Santa Clara L. Rev. 527, 528 n.2 (2020) (“All agents are fiduciaries but not all fiduciaries are agents.”); Thomas Earl Geu, A Selective Overview of Agency, Good Faith and Delaware Entity Law, 10 Del. L. Rev. 17, 20 (2008) (explaining that fiduciary status is “a result of agency” and collecting authorities establishing the point); Ramon Casadesus-Masanell & Daniel F. Spulber, Trust and Incentives in Agency, 15 S. Cal. Interdisc. L.J. 45, 68 (2005) (“While all agents are fiduciaries, not all fiduciaries are agents.”). 18 reasonably conceivable that in making that decision, Knörle acted to pursue Porsche’s interests rather than the Company’s. It is likewise reasonably conceivable that Knörle faced a conflict of interest when insisting that Sobhany share competitors’ confidential information with Porsche, including drafts of the agreement with Mercedes. It is reasonably conceivable that sharing that information with Porsche harmed the Company, rather than advancing its best interests. It is reasonably conceivable that Porsche wanted that information for its own purposes, rather than to pursue the best interests of the Company. By going along with Porsche’s instructions to obtain the information, Knörle inferably acted disloyally. To defeat the dual-fiduciary problem, Porsche contends that it could not conceivably have a conflict of interest with the Company because it backed the Company as a noteholder and owned shares of the Company as a stockholder. Porsche argues that it would have been irrational to harm the Company because that would impair the value of its common shares and reduce the likelihood of repayment on the Porsche Note. “Delaware law presumes that investors act to maximize the value of their own investments.”36 When directors or their affiliates own “material amounts” 36 Katell v. Morgan Stanley Gp., Inc., 1995 WL 376952, at *12 (Del. Ch. June 15, 1995) (citing Unitrin, Inc. v. American Gen. Corp., 651 A.2d 1361, 1380–81 (Del. 1995)). 19 of common stock, those holdings generally align their interests with other stockholders and the best interests of the corporation as a whole.37 But there are exceptions to any general rule. Circumstances may cause the interests of a director and its affiliated investor to diverge from the interests of corporation and its stockholders as a whole. For example, “particular types of investors may espouse short-term investment strategies and structure their affairs to benefit economically from those strategies, thereby creating a divergent interest in pursuing short-term performance at the expense of long-term wealth.”38 A desire for liquidity may also cause an investor and its affiliated director to face a conflict.39 It is far from clear that the amounts Porsche invested in the Company were material to Porsche. In any event, the complaint pleads that Porsche had incentives of its own that caused its interests to diverge from those of the Company and its stockholders. The complaint sufficiently alleges that Porsche and other automakers compete to access new technologies, particularly those potentially attractive to buyers of luxury automobiles. The complaint sufficiently alleges that the Company’s 37 In re PLX Tech. Inc. S’holders Litig., 2018 WL 5018535, at *41 (Del. Ch. Oct. 16, 2018) (cleaned up). 38 Id. 39 See generally Firefighters’ Pension Sys. of City of Kan. City, Mo. Tr. v. Presidio, Inc., 251 A.3d 212, 255–57 (Del. Ch. 2021) (collecting and summarizing authorities on liquidity-driven conflicts). 20 technology fell into that category. The complaint sufficiently alleges that Porsche could secure a comparative advantage in the automotive market by gaining access to an alternative technology while preventing its competitors from accessing that technology. It is reasonable to infer that this strategy could benefit Porsche far more than any harm it would suffer from writing off its comparatively small investment in the Company. The complaint’s timeline supports this inference. Porsche initially backed the Company’s technology, then informed the Company that it was pursuing a different option. After that point, Porsche learned that its competitors were showing interest in the Company’s technology. It is reasonably conceivable that Porsche saw a benefit in preventing key competitors—including Mercedes and BMW—from securing a competitive offering. At a minimum, Porsche could delay its competitors’ access to the Company’s technology. Porsche inferably sacrificed its investment in the Company to achieve broader competitive gains. Chess players make sacrifices all the time. A particular sacrifice may not work, but no one thinks all sacrifices are irrational. The Porsche Note and Porsche’s equity position do not defeat a pleading-stage inference of self-interested conduct. 2. Action Not In Good Faith The complaint separately pleads facts sufficient to support an inference that Knörle failed to act in good faith because he consciously pursued Porsche’s objectives rather than the best interests of the Company. 21  A director fails to act in good faith when “the fiduciary intentionally acts with a purpose other than that of advancing the best interests of the corporation.” 40 A plaintiff can call into question a director’s good fait