This section contains the nature of the case and procedural background.

P alleges two derivative claims, each centering on allegations that certain top managers and directors at Zynga-including its former CEO, Chairman, and controlling stockholder Mark Pincus (D)-were given an exemption to the company's standing rule preventing sales by insiders until three days after an earnings announcement. Zynga insiders sold 20.3 million shares of stock for $236.7 million as part of a secondary offering before Zynga's April 26, 2012 earnings announcement, an announcement that P contends involved information that placed downward pressure on Zynga's stock price. P alleges that these insiders sold their shares at $12.00 per share and that, immediately after the earnings announcement, the market price dropped 9.6% to $8.52. Three months later, following the release of additional negative information, which P alleges was known by Zynga management and the board when it granted the exemption, Zynga's market price declined to $3.18, a decrease of 73.5% from the $12.00 per share offering price. P alleges that the insiders who participated in the sale breached their fiduciary duties by misusing confidential information when they sold their shares while in possession of adverse, material non-public information and also asserts a duty of loyalty claim against the directors who approved the sale. Ds moved to dismiss this action under Rule 23.1 for P's failure to make a pre-suit demand on the board. The Court of Chancery determined that the two directors who participated in the transaction, D and Hoffman (D), were interested in the transaction. The Court of Chancery then examined the independence of directors Katzenberg, Meresman, Gordon, Doerr, and Siminoff. It found that all five were independent and thus, that demand was not excused. It did not analyze the independence of directors Paul and Mattrick.

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