Zynga, the online and mobile gaming company that created Farmville, had a rule that its insider could not trade their Zynga stock until three days after an earnings announcement. The plaintiff alleged, however, that Zynga had allowed some insiders including Mark Pincus (its chairman, controlling stockholder, and former CEO) and Reid Hoffman (board member), to trade in violation of this rule. These insiders sold 20l3 million shares of stock while knowing that unfavorable earnings announcements were pending. Afterwards, the stock price fell from $12.00 to $3.18. 

The plaintiff filed suit, alleging that these sales constituted a violation of the business judgment rule. When the plaintiff failed to make demand, the defendants moved to dismiss the case. Plaintiff argued that demand was futile.

The Zynga board had nine directors, including: Pincus, Hoffman, William Gordon, John Doerr, Ellen Siminoff, and Don Mattrick. The Court of chancery ruled for Zynga, holding that the plaintiff was required to make demand because five of the nine directors did not have a conflict of interest and therefore could make a fair decision in the case. The Plaintiff appealed.

Questions:

1. Did a majority of the board have a conflict of interest? Was demand futile?

2. What does the plaintiff allege that Pincus and Hoffman did wrong here?

3. Did they in fact sell shares? 

4. Why did the independence, or lack of it, of the other board members in this case matter?

5. What kind of evidence was there that the remaining board members were also compromised?

6. What did the court conclude?