In Re Carvana Stockholders Litigation.pdf

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN RE CARVANA CO.
STOCKHOLDERS LITIGATION
Consol. C.A. No. 2020-0415-KSJM
ORIGINAL FILED:
August 20, 2021
PUBLIC VERSION FILED:
August 27, 2021
VERIFIED AMENDED DERIVATIVE
AND CLASS ACTION COMPLAINT
Co-Lead Plaintiffs Anthony Franchi, Construction Industry and Laborers
Joint Pension Trust for Southern Nevada, St. Paul Electrical Construction Pension
Plan, St. Paul Electrical Construction Workers Supplemental Pension Plan (2014
Restatement), and Retirement Medical Funding Plan for the St. Paul Electrical
Workers (collectively, “Plaintiffs”), by and through the undersigned Co-Lead
Counsel, bring claims against Defendants Ernest Garcia II (“Garcia Senior”) and
Ernest Garcia III (“Garcia Junior” and, together with Garcia Senior, the “Garcias”).
Plaintiffs bring claims individually and on behalf of a class of similarly situated
stockholders and derivatively on behalf of Nominal Defendant Carvana Co.
(“Carvana” or the “Company”). The allegations set forth herein are based on the
knowledge of Plaintiffs as to themselves, and on information and belief, including
the investigation of counsel, the review of publicly available information, and the
review of books and records produced by the Company in response to Plaintiffs’
EFiled: Aug 27 2021 03:19PM EDT
Transaction ID 66885157
Case No. 2020-0415-KSJM

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demands made under 8 Del. C. § 220 (the “Section 220 Demands”), as to all other
matters.
I. NATURE OF THE ACTION
1. Garcia Senior is the controlling stockholder of DriveTime Automotive
Group, Inc. (“DriveTime”), a privately held company, which spun out Carvana in
2017. Carvana is a publicly traded Delaware corporation that sells used cars online.
Garcia Senior owns a minority economic interest, but he controls (and, at all relevant
times, has controlled) a majority of the Company’s voting power through super-
voting Class B shares.
2. Because Garcia Senior has a serious criminal record (a felony
conviction for bank fraud), he is not an officer or director of the publicly traded
Company. Instead, Garcia Senior installed his son, Garcia Junior, as Carvana’s CEO.
Together, the Garcias control Carvana.
3. Carvana has a long and troubling history of related-party transactions
with the Garcias, including related-party transactions with DriveTime worth over
$75 million in 2019 alone.1
The focus of this action, however, is an unnecessary,
extraordinarily rushed $600 million sale of Carvana common stock in late March
1
The Company has also, historically, sold tens of millions of dollars’ worth of
automotive finance receivables to entities controlled by another large investor, Mark
Walter (“Walter”).

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2020 to select investors handpicked by the Garcias that included a $50 million sale
of common stock to the Garcias themselves, all at a price per share that was below
market and far below fair value (the “Direct Offering Transaction”).2
4. In March 2020, it became clear that the COVID-19 pandemic was going
to disrupt life in the United States. Carvana’s publicly traded stock plummeted,
falling from a high of more than $110 per share in late February to a low of less than
$23 per share on March 19. This decline was not driven by news specific to the
Company. Rather, the entire market was temporarily driven down by blind panic and
forced sales before quickly recovering to exceed pre-COVID-19 levels.
5. Carvana was well positioned to ride out the short-term turmoil. It allows
customers to buy and sell cars without interacting with anyone in person.
And on March 24, 2020, the Company announced
2
In the Direct Offering Transaction, the Company sold another $550 million worth
of common stock to other investors handpicked by Garcia Senior and Garcia Junior
for special treatment, including Walter. As described below, the Garcias have a
history of according special treatment to handpicked individuals and entities,
including their lieutenants and other loyalists. Upon information and belief, the
Garcias see this as a way to reward past loyalty, ensure loyalty going forward, and/or
ensure there is a financial incentive to look the other way when it comes to the
Garcias’ numerous financial shenanigans. Plaintiffs and the vast majority of
Carvana’s other public investors were not invited or able to participate in the Direct
Offering Transaction.

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significant good news: a new agreement with its largest asset-based lender, Ally
Financial (“Ally”). Carvana’s Class A shares closed at over $51 per share on March
24, 2020.
6. Even though the Company was on firm financial footing—with a
business model almost tailor-made to profit from social distancing—the Garcias
decided to take advantage of the temporary dislocation in the stock price and buy
more stock at an artificially low price. Less than a week after announcing the Ally
deal, Carvana sold, at a price of $45 per share, $600 million in newly issued Class
A shares to select investors including $50 million of shares
to the Garcias themselves. The $45 per share price
was less than the market price and substantially lower
than fair value. Today, those shares are worth many, many millions of dollars more
than the unfair price at which they were bought.
II. PARTIES
7. Plaintiff Anthony Franchi is a beneficial owner of Carvana common
stock and has held Carvana common stock continuously since at least January 14,
2020.
8. Plaintiff Construction Industry and Laborers Joint Pension Trust for
Southern Nevada is a beneficial owner of Carvana common stock and has held
Carvana common stock continuously since at least July 11, 2019.

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9. Plaintiff St. Paul Electrical Construction Pension Plan is a beneficial
owner of Carvana common stock and has held Carvana common stock continuously
since at least February 19, 2020.
10. Plaintiff St. Paul Electrical Construction Workers Supplemental
Pension Plan (2014 Restatement) is a beneficial owner of Carvana common stock
and has held Carvana common stock continuously since at least February 19, 2020.
11. Plaintiff Retirement Medical Funding Plan for the St. Paul Electrical
Workers is a beneficial owner of Carvana common stock and has held Carvana
common stock continuously since at least February 19, 2020.
12. Defendant Garcia Senior is, and at all relevant times has been,
Carvana’s largest stockholder and Garcia Junior’s father. Garcia Junior and Garcia
Senior are close and live next door to one another.
13. Defendant Garcia Junior has served as Carvana’s president, Chief
Executive Officer, and Chairman since 2012.
14. Nominal Defendant Carvana is a Delaware corporation headquartered
in Tempe, Arizona. Carvana is publicly traded on the New York Stock Exchange
under the ticker symbol “CVNA.”
III. OTHER RELEVANT NON-PARTIES
15. Michael Maroone has been a Carvana director since the Company went
public in 2017.

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16. Neha Parikh has been a Carvana director since April 2019.
17. Ira Platt has been a Carvana director since the Company went public in
2017.
18. James Danforth “Dan” Quayle has been a Carvana director since the
Company went public in 2017.
19. Gregory Sullivan has been a Carvana director since the Company went
public in 2017.
20. At all relevant times, Carvana had (and has) a six-member board of
directors (the “Board”), consisting of Garcia Junior, Maroone, Parikh, Platt, Quayle,
and Sullivan.
IV. SUBSTANTIVE ALLEGATIONS
A. GARCIA SENIOR CREATES DRIVETIME AND APPOINTS HIS
LINCOLN SAVINGS & LOAN SCANDAL CRONIES AS SENIOR
EXECUTIVES
21. In October 1990, Garcia Senior pled guilty to felony bank fraud arising
from the Lincoln Savings & Loan scandal.
22. In 1992, Garcia Senior consented to a censure and permanent bar from
membership or employment or association with any New York Stock Exchange
member or member organization. Garcia Senior also consented to the entry of a
permanent injunction against further violations of securities laws.

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23. After a personal bankruptcy and the bankruptcy of certain entities he
controlled, Garcia Senior purchased the assets of a rental car company called the
Ugly Duckling Rent-a-Car System, which he reorganized into an entity called Ugly
Duckling Corporation. Ugly Duckling operated a chain of used car dealerships and
associated financing services focused on consumers with subprime credit profiles.
24. Garcia Senior took Ugly Duckling public in mid-1996. Given his
permanent ban from the NYSE, Garcia Senior took Ugly Duckling public on
NASDAQ. The timing of the IPO was not coincidence: the terms of Garcia Senior’s
probation banned him from becoming an officer, director, or employee of any
federally insured financial institution or a securities firm without governmental
approval until 1996.
25. Garcia Senior retained majority control of Ugly Duckling after its IPO.
26. Garcia Senior hired Sullivan as a consultant in 1995, and appointed
Sullivan as President and Chief Operating Officer in early 1996, a few months before
the IPO. Garcia made Sullivan a director of Ugly Duckling in 1998. In 1999, Garcia
Senior stepped down as CEO of Ugly Duckling and appointed Sullivan in his place.
27. The Ugly Duckling IPO documents fail to disclose Sullivan’s
involvement in the matters that led to Garcia Senior’s felony conviction. Sullivan
worked for Garcia Senior in the 1980s and was one of only four attendees at the
initial meeting between Garcia Senior and Charles Keating, the central figure in the

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Lincoln Savings & Loan scandal. The Ugly Duckling IPO documents also fail to
disclose that Sullivan was suspended by the NYSE as a result of his work for Garcia
Senior.
28. In addition, a few months after Ugly Duckling’s IPO, Garcia Senior
installed Ray Fidel (“Fidel”), another Savings & Loan crony, as President of Ugly
Duckling’s Cygnet Deal Finance Division in early 1997. Thereafter, Garcia Senior
made Fidel the Executive Vice President and Chief Operating Officer of Ugly
Duckling.
29. In the late 1980s, Fidel was the President of Lincoln Savings and Loan,
until its takeover by the federal government’s Resolution Trust Corporation. Fidel
also pled guilty to fraud charges arising from the Lincoln Savings & Loan scandal.
30. In late 2001, after the tragedy of 9/11 and the accompanying shock to
the stock market, Garcia Senior and Sullivan launched an opportunistically timed,
lowball tender offer to take advantage of market uncertainty and disruption and
buyout Ugly Duckling’s publicly held shares on the cheap. On information and
belief, Garcia Senior provided and arranged for the vast bulk of the financing for the
tender offer, with Sullivan essentially along for the ride as Ugly Duckling’s CEO.
31. The tender offer closed in January 2002. Stockholders tendered
approximately 3.774 million shares in the tender offer, for total consideration of

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approximately $13.3 million. The tender offer was followed by a short-form merger
for another approximately $3.5 million in early March 2002.
32. Immediately following the management buyout, Garcia Senior and
Sullivan were left as the sole owners of Ugly Duckling. Garcia Senior owned the
majority interest in Ugly Duckling, and Sullivan owned a small minority interest.
Sometime later in 2002, Fidel also purchased a minority interest in Ugly Duckling.
33. In August 2002, Ugly Duckling announced that it was changing its
name, effective September 1, 2002, to DriveTime Automotive Group, Inc.
DriveTime described itself in public disclosures as the largest used car dealership
chain in the country focused exclusively on the sub-prime market.
34. In 2004, Garcia Senior appointed Fidel as CEO, President and a director
of DriveTime.3
35. By early 2010, Garcia Senior was the sole stockholder of DriveTime
Automotive Group, Inc., as well as its sister company DT Acceptance Corporation
(which focuses on financing activities).4
3
In March 2021, when Garcia Junior was asked to name the CEO that he most
looked up to, Garcia Junior said “[h]is name is Ray F[i]del….”
4
DriveTime and DT Acceptance Corporation are described as sister companies
operating collectively under common control and, generally, DriveTime Automotive
Group, Inc. directs retail vehicle sales operations and DT Acceptance Corporation
directs financing and loan servicing operations.

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36. In late 2010, Garcia Senior awarded Fidel restricted shares equaling a
1.7% interest in DriveTime. As of 2014, when DriveTime ceased making public
disclosures in mid-2014, Fidel’s interest in DriveTime had increased to 2.4%.
37. Carvana’s public filings state that Garcia Senior remains DriveTime’s
controller stockholder and chairman of its board of directors. The other stockholders
of DriveTime are not known to Plaintiffs or the public.
B. CARVANA EMERGES FROM DRIVETIME
38. In 2012, DriveTime formed a wholly owned subsidiary entity called
Carvana Group, LLC (“Carvana Group”), which converted from an Arizona LLC to
a Delaware LLC in 2015. Garcia Senior’s son, Garcia Junior, co-founded Carvana
and has served as its president and CEO since 2012. Carvana’s public filings have
never disclosed Garcia Senior’s criminal history.
39. In 2017, the Garcias took Carvana public through a so-called Up-C
structure, which created a publicly traded holding company (Carvana Co.) that holds
LLC units in Carvana Group (“LLC Units”). Carvana’s LLC Units are its only
material asset. The operating entity, Carvana Group, operates an e-commerce
platform for buying and selling used cars.

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40. The diagram below shows the Company’s corporate structure:
C. THE GARCIAS CONTROL CARVANA
41. The public parent, Carvana Co., has two classes of common stock:
Class A and Class B. As of February 25, 2020, Carvana had approximately 50.6
million shares of Class A common stock outstanding and 101.2 million shares of
Class B common stock outstanding.
42. Class A stockholders have all of the economic rights in Carvana. Class
B shares have no economic rights. Holders of Class A and Class B common stock
vote together as a single class on all matters presented to stockholders for their vote
or approval, except as otherwise required by applicable law.

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43. The Garcias hold their economic interest in the Carvana structure
primarily through their ownership of LLC Units of Carvana Group, which are
exchangeable into Carvana common shares.
44. The Garcias have cemented majority voting control through Carvana’s
dual-class stock. Class A shares, which are publicly traded, have one vote per share.
As of February 25, 2020, the Garcias owned approximately 88.4 million shares of
Class B common stock,5
which are entitled to ten votes per share, giving them
majority voting control over the Company.6
(Indeed, Garcia Senior’s shares alone
5
This included 52,937,458 shares of Class B common stock owned directly by
Garcia Senior and 8,000,000 shares of Class B common stock owned by ECG II
SPE, of which Garcia Senior is the 100% owner. This number also included
3,664,526 shares of Class B common stock owned directly by Garcia Junior,
11,834,021 shares of Class B common stock owned by the Ernest Irrevocable 2004
Trust III, of which Garcia Junior is the sole beneficiary, and 11,952,000 shares of
Class B common stock owned by the Ernest C. Garcia III Multi-Generational Trust
III, of which Garcia Junior is a beneficiary together with his children. Garcia Senior
is the investment trustee for the Ernest C. Garcia III Multi-Generational Trust III,
but the trust is irrevocable and he is not a beneficiary. Similarly, the Garcias are the
joint investment trustees over Ernest Irrevocable 2004 Trust III; the trust is
irrevocable and Garcia Senior is not a beneficiary.
6
Carvana’s Class B shares are not publicly traded. Instead, they are all held by
holders of Carvana Group LLC Units, including the Garcias. Moreover, only the
Class B shares held by the Garcias are entitled to 10 votes per share. The Class B
shares held by others are entitled to only one vote per share. The Garcias shall be
entitled to 10 votes per Class B share so long as they beneficially own at least 25%
of the outstanding Class A shares determined on an as-converted basis and assuming
the Garcias convert all of their Carvana Group LLC Units into Class A shares.

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are enough to give him majority voting control.) Combined, the Garcias controlled
approximately 92% of Carvana’s voting power.
45. The Company’s Form 10-K filed on February 26, 2020 states:
We are a ‘controlled company’ within the meaning of the rules of the
NYSE and, as a result, we qualify for exemptions from certain
corporate governance requirements. Our stockholders do not have
the same protections afforded to stockholders of companies that are
subject to such requirements.
The Garcia Parties continue to control a majority of the combined
voting power of Carvana Co. As a result, we continue to be a controlled
company within the meaning of the NYSE corporate governance
standards.
D. BOARD MEMBERS HAVE EXTENSIVE TIES TO THE GARCIAS
46. When the Company filed the prospectus for the Direct Offering
Transaction, it emphasized the Garcias’ control over the Board, stating that:
the Garcia Parties have the ability to elect all of the members of our
Board and thereby control our policies and operations, including the
appointment of management, future issuances of our Class A common
stock or other securities, the payment of dividends, if any, on our Class
A common stock, the incurrence of debt by us, amendments to our
amended and restated certificate of incorporation and amended and
restated bylaws, and the entering into of extraordinary transactions.
47. Carvana’s Board had and has six members, one of whom is Garcia
Junior. At least two other members have extensive ties to the Garcias.
1. Gregory Sullivan
48. Gregory Sullivan has a long history with Garcia Senior. As noted
above, Sullivan was an employee of Garcia Senior in the 1980s, the same period in

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which Garcia Senior engaged in the misconduct that ultimately led to his felony
conviction. Indeed, according to Garcia Senior’s testimony during the congressional
investigation of the Lincoln Savings and Loan scandal, Sullivan was one of only
four attendees of the initial meeting between Garcia Senior and Charles Keating, the
central figure in the scandal.
49. Sullivan was also suspended by the NYSE as a result of his work for
Garcia Senior. Garcia Senior purchased an Arizona regional brokerage, Young,
Smith & Peacock, Inc. (“YS&P”) in May 1987, which Sullivan quickly joined as a
managing director and executive vice president. After YS&P incurred substantial
losses during the October 1987 “Black Monday” crash, it borrowed $2.5 million
from another Garcia-controlled entity through a subordinated loan arrangement.
Although the NYSE expressly prohibited YS&P from repaying this loan due to the
firm’s poor financial situation, Sullivan evaded this prohibition by purchasing a $2.4
million note from the same Garcia entity in January 1988. As a result of these
actions, Sullivan was censured by the NYSE in 1993 and suspended from holding
any supervisory role with any NYSE member for six months.
50. In 1995, fresh off the heels of Sullivan’s NYSE suspension, Garcia
Senior hired Sullivan as a consultant to DriveTime (i.e., Ugly Duckling until its
name change in 2002). Garcia Senior named Sullivan president of DriveTime in

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early 1996. Sullivan served as DriveTime’s president from 1996 to 2004, its CEO
from 1999 to 2004, and its vice chairman from 2004 to 2007.
51. As noted above, Garcia Senior partnered with Sullivan to take
DriveTime private on the cheap in late 2001, with a lowball tender offer timed to
take advantage of widespread uncertainty and temporary dislocation in the U.S.
stock market arising from the events and aftermath of 9/11.
52. On information and belief, Garcia Senior provided or otherwise
arranged for the bulk of the financing for the transaction. Following the take-private
transaction, Garcia Senior owned the vast majority of DriveTime, with Sullivan
owning a minority interest.
53. In 2007, contemporaneous with stepping down as vice chairman of the
DriveTime, Sullivan again partnered with Garcia Senior, this time to co-found the
travel media company AFAR Media LLC.
54. A 2012 story by Folio Magazine states that “Afar is independently
operated with Sullivan, [Joe] Diaz and long-time business partner Ernie Garcia [i.e.,
Garcia Senior] the primary investors.”
55. A 2014 article published by AdWeek states that AFAR Media was
launched with “a combined $20 million investment from Joe Diaz, Greg Sullivan,

In Re Carvana Stockholders Litigation.pdf

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59. Sullivan’s $10 million investment put at risk all (or, at a minimum, the
bulk) of Sullivan’s net worth. Indeed, as he stated in a 2009 television interview,
Sullivan was “all in” as a result of his personal investments and “counting on it
working.” Garcia Senior’s multi-million dollar investment was therefore critical to
the success of Sullivan’s AFAR venture.
60. Indeed, according to an article published by the Nieman Foundation for
Journalism at Harvard: “For most fledgling magazines, print cannot pull in the
necessary advertising dollars. Crowd-funding goes only so far, and few print
magazines launch with enough subscribers to entice advertisers. Nor are many
sufficiently well funded at launch to keep publishing long enough to build the
circulation and reputation that attracts advertisers. (Afar is one exception; its
founders, Diaz and Sullivan, as well as another investor, Ernie Garcia, have pumped
$20 million into it.)”
61. Sullivan remains the chief executive officer of AFAR Media.
62. AFAR, as a travel magazine that relies on ad revenue, has struggled
during the COVID pandemic and, as Sullivan acknowledged in July 2020, been
forced to implement cost-savings measures. Given the critical importance of the
success of this venture to Sullivan’s net worth, Garcia Senior’s continued support
for AFAR is paramount to Sullivan.

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63. The table below summarizes the compensation that Sullivan has earned
as a Carvana director:
Year Cash Stock Total
2020 $57,500 $322,235 $379,735
2019 $106,250 $155,783 $262,033
2018 $95,000 - $95,000
2017 $64,400 $271,241 $335,641
$323,150 $749,259 $1,072,409
2. Ira Platt
64. Ira Platt also has a long relationship with the Garcias that stretches back
for more than twenty years.
65. Platt’s profile in American Banker states that he was a Managing
Director at Greenwich Capital7
“from 1997 through 2008,” where “he directed a staff
of 12 while leading the Non-Mortgage Principal Finance business.… Mr. Platt’s
investment mandate covered a wide range of consumer and commercial finance sub-
sectors.”
66. Platt’s relationship with the Garcias began when Platt served as
Greenwich Capital’s primary relationship banker with the Garcias and Ugly
Duckling in the late 1990s and through at least the early 2000s.
7
Greenwich Capital was acquired by Royal Bank of Scotland in 2000 and thereafter
was known as RBS Greenwich Capital and/or RBS Securities.

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67. Platt’s relationship with the Garcias and DriveTime was a natural fit,
given his particular focus throughout his career on investments involving consumer
finance and, in particular, non-prime automotive finance.
68. Public filings with the SEC show that Ugly Duckling entered into a
number of agreements with Greenwich Capital (and its affiliates), which listed Platt
as the signatory and/or person to be given notice for Greenwich Capital. They
include the following:
Date Agreement Citation
Nov. 12, 1998
Stock Pledge
Agreement
Ex. 10.43(A) to Form 10-K
filed by Ugly Duckling on
Mar. 30, 1999
Nov. 12, 1998
Loan Agreement
($20 million)
Mar. 30, 1999
Mar. 16, 1999
Engagement Letter
(exclusive placement-
agent services for $300
million of surety bonds)
Ex. 10.1 to Form 10-Q filed by
Ugly Duckling on May 14,
1999
Mar. 17, 1999
Commitment Letter
($100 million revolving
credit facility)
Ugly Duckling on May 14,
1999
Mar. 18, 1999
Stock Pledge
Agreement
Ex. 10.3(a) to Form 10-Q filed
by Ugly Duckling on May 14,
1999
Mar. 1, 2001
Loan and Security
Agreement
Ugly Duckling on November
14, 2001
Apr. 13, 2001 Intercreditor Agreement
April 17, 2001

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69. The agreements between Greenwich Capital and Ugly Duckling that
Platt signed were highly material financing arrangements for Ugly Duckling and the
Garcias. The public disclosures show that Platt was the lead banker for Greenwich
Capital in providing tens and hundreds of millions of dollars in financing when Ugly
Duckling was a public company, and also in signing critically important waiver
letters on behalf of Greenwich Capital that ensured the financing tap would not be
turned off when Garcia Senior and Sullivan took Ugly Duckling private.
70. DriveTime ceased filing disclosures with the SEC for a lengthy period
following the go-private transaction through 2010. Disclosures filed with the SEC at
various times nonetheless show that, while Platt was still at Greenwich Capital in
the 2000s, Greenwich Capital continued to provide substantial financing to
DriveTime and Garcia Senior. Upon information and belief, this financing activity
continued to generate significant fees for Greenwich Capital and Platt.
71. Garcia Junior was an associate at Greenwich Capital from 2005 to
2006, focusing on consumer credit-based investments (Platt’s area of expertise). In
fact, Platt was the head of the Non-Mortgage Principal Finance Business at
Greenwich Capital at the time Garcia Junior worked there. Upon information and
belief, Garcia Junior worked for Platt. Garcia Junior graduated from Stanford in
2005, so his job at Greenwich Capital was his first job out of college. It is fair to
infer that Platt arranged for Greenwich Capital to hire Garcia Junior as a favor to

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Garcia Senior, which, in turn, is suggestive of a close personal relationship. It is also
fair to infer that Platt is a mentor for Garcia Junior.
72. One of the DriveTime financing agreements referenced in public
disclosures about this time period is a Loan and Security Agreement, dated as of
August 21, 2006, by and among DriveTime and Greenwich Capital, among others.
73. Garcia Senior appointed Platt to the DriveTime board of directors in
February 2014, where Platt served as a director until the Garcias switched him over
to the Carvana Board in 2017.
74. Garcia Senior also appointed Platt to the board of DT Acceptance
Corporation (subsequently known as Bridgecrest Acceptance Corporation) where he
served from 2014 to at least 2016.
75. Platt’s appointment to the boards of two of Garcia Senior’s most
important privately held companies demonstrates the very special and loyal
relationship between Platt and the Garcias.
76. Platt’s special relationship with the Garcias has not gone unrewarded.
Indeed, Platt has made millions of dollars through one or more exclusive “friends
and family” investment opportunities made available to him by the Garcias and
highly valuable LLC units that the Garcias reserve for employees.
77. On March 24, 2015, the Garcias caused their private Carvana Group
LLC entity to grant Platt 200,000 Class B common units of Carvana Group, LLC.

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The grant of units was approved under the rubric of an Equity Incentive Plan for
Platt. These Class B common units can be converted to 0.8 shares of Class A
common stock of Carvana.8
78. On August 7, 2020, Platt converted 88,750 of his Class B common units
into 71,000 shares of Class A common stock of Carvana, which he then immediately
sold for a volume weighted average price of $210.94—i.e., nearly $15 million.
79. On August 10, 2021, Platt converted 34,375 of his Class B common
units into 27,500 shares of Class A common stock of Carvana, which he then
immediately sold at a volume weighted average price of over $340 per share, for a
total of approximately $9.5 million.
80. Following Platt’s conversion of Class B common units on August 7,
2020, he still owned at least 76,876 Class B common units.
81. The Garcias have granted Class B common units to no other director of
Carvana. Instead, the other owners of Class B common units that Carvana discloses
are employees of Carvana, namely Carvana’s Chief Financial Officer, Chief
8
The Class B common units did not vest immediately. Instead, 40,000 vested on
March 1, 2016, and 3,333 vested on the first of each month thereafter. Thus, the
200,000 units did not finish vesting until the first half of 2020. Upon information
and belief, if the Garcias removed Platt as a director, Platt would cease vesting in his
Class B units. Various governing documents also permit the Garcias to impose other
unknown restrictions on the ownership of Class B units, including provisions for the
forfeiture of such units.

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Operating Officer, Chief Brand Officer, Chief Product Officer, General Counsel,
and Vice President for Financial Planning and Analysis (formerly Carvana’s Senior
Director of Accounting and Controller).
82. Carvana’s public filings state that Platt is the president of Georgiana
Ventures, LLC (“Georgiana Ventures”),9
which is supposedly a venture capital firm
that purportedly provides equity and debt capital to specialty finance companies,
acquires portfolios of consumer finance receivables, and offers consulting services
to the specialty finance industry.
83. Agreements filed with the SEC show that Platt is the managing member
of Georgiana Ventures, and that Georgiana Ventures in turn is the manager of GV
Auto I, LLC. Platt’s disclosures with the SEC list him as a member of GV Auto I,
LLC.
84. Georgiana Ventures otherwise lacks any Internet footprint. With one
exception, the only references to Georgiana Ventures that appear in a Google search
or a search of SEC filings relate to Carvana. That exception is Platt’s LinkedIn page
which claims that Georgiana Ventures led the Series B capital raise for a small
privately held company called Tactual Labs in 2018.10
9
Platt’s wife is named Georgiana.
10
According to CrunchBase—a database of private venture-backed companies—
Tactual Labs has raised, in total, $4.5 million in the company’s history.

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85. In July 2016, when Platt was a director of DriveTime and DT
Acceptance Corporation, the Garcias rewarded Platt with the admission of GV Auto
I, LLC to their Carvana Group, LLC entity.
86. In particular, Garcia Senior permitted Platt (via GV Auto I, LLC) the
exclusive opportunity to invest alongside them through the purchase of Class C
Preferred Units of Carvana Group, LLC.
87. In addition to Platt’s GV Auto I, LLC, Garcia Senior permitted only
himself, Fidel, and billionaire Mark Walter to purchase the Class C Preferred Units.
88. GV Auto I, LLC purchased 1,672,179 Class C Preferred Units.
89. The Class C Preferred Units accrued a return at a coupon rate of 12.5%
compounding annually.
90. In 2017, in connection with the IPO, all of the issued and outstanding
Class C Preferred Units automatically converted into Class A Common Units of
Carvana Group, LLC on a one-for-one basis and, for each Class A Common Unit
then held following conversion, members were issued 0.8 shares of Class B common
stock of Carvana.
91. The Class A Common Units of Carvana Group, LLC are exchangeable
for 0.8 shares of Class A common stock of Carvana.11
11
To the extent the holder of Class A Common Units holds Class B common stock
of Carvana, the holder is also required to deliver to Carvana a number of shares of

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92. Platt’s Form 4 filings disclose that, on numerous occasions, he, his son
and/or his GV Auto I, LLC investment vehicle have exchanged Class A Common
Units for shares of Class A common stock of Carvana, which were immediately sold
for many millions of dollars.
93. One or more of Platt’s family members own minority member interests
in Platt’s GV Auto I, LLC. Upon information and belief, one or more other
individuals or entities also have membership interests in Platt’s GV Auto I
investment vehicle and, as a result, Platt’s filings substantially understate and fail to
fully disclose GV Auto I, LLC’s ownership of and transactions in Carvana and
Carvana Group, LLC securities on his Form 4 filings with the SEC.12
94. In connection with the IPO, both Platt and Platt’s GV Auto I, LLC also
entered into a Tax Receivable Agreement with Carvana whereby they, along with
other LLC unitholders, receive 85% of the amount of benefits that Carvana realizes
under certain circumstances.
Class B common stock equal to the number of shares of Class A common stock for
which the Class A Common Units are being exchanged.
12
GV Auto I, LLC appears to have been a special purpose investment vehicle
established in 2016 by Platt to raise funds to purchase and then hold the Class C
Preferred Units. Based on filings with the SEC, it appears that Platt conducted an
exempt offering of securities in GV Auto I, LLC to undisclosed investors in June
2016 for up to $10 million, just prior to GV Auto I, LLC purchasing the Class C
Preferred Units from Carvana Group, LLC in July 2016.

26
95. Because Carvana Group, LLC is the operating entity in the Carvana
corporate structure, Platt and his GV Auto I, LLC have also benefitted from their
status as Class A and Class B unitholders of Carvana Group, LLC because they stand
to benefit from direct distributions from Carvana Group, LLC. As Carvana’s
February 2019 10-K, for example, explains:
In certain circumstances, Carvana Group will be required to make
distributions to us and the LLC Unitholders and the distributions may
be substantial.
Carvana Group is treated as a partnership for U.S. federal income tax
purposes and, as such, is not subject to U.S. federal income tax. Instead,
taxable income is allocated to its members, including us. We intend to
cause Carvana Group to make tax distributions quarterly to the holders
of Class A Units (including us) on a pro rata basis based on Carvana
Group’s net taxable income and to the holders of Class B Units based
on such holder’s allocable share of Carvana Group’s net taxable income
(rather than on a pro rata basis).[13]
Funds used by Carvana Group to
satisfy its tax distribution obligations will not be available for
reinvestment in our business. Moreover, these tax distributions may be
substantial, and will likely exceed (as a percentage of Carvana Group’s
income) the overall effective tax rate applicable to a similarly situated
corporate taxpayer. As a result of the potential differences in the
amount of net taxable income allocable to us and the LLC Unitholders,
particularly in light of the reduction in corporate tax rates passed in
2017, it is possible that we will receive distributions significantly in
excess of our tax liabilities and obligations to make payments under the
Tax Receivable Agreement. To the extent we do not distribute such
cash balances as dividends on our Class A common stock and instead,
13
Carvana’s disclosures provide that “[v]ested Class B Units participate in any
distributions of Carvana Group in excess of those required for the Class A Units
subject to the participation threshold.” As the participation threshold for Platt’s Class
B units is $0.000, Platt’s Class B units participate fully in any such distributions by
Carvana Group.

27
for example, hold such cash balances or lend them to Carvana Group,
the LLC Unitholders would benefit from any value attributable to such
accumulated cash balances as a result of its ownership of Class A
common stock following an exchange of its LLC Units (including any
exchange upon an acquisition of us).
96. Plaintiffs and the public do not know the full amount of distributions to
Platt or GV Auto I, LLC by Carvana Group, LLC.
97. Plaintiffs and the public do not know the full extent of benefits that Platt
and his family receive, directly or indirectly, from Platt’s ownership of LLC units in
Carvana Group, LLC or from the GV Auto I, LLC investment vehicle, including
without limitation the full extent of the proceeds they make from managing GV Auto
I, LLC.
98. In addition to the foregoing, Platt’s son, Jeremy Platt, was an intern at
Carvana during the summer of 2015, immediately following his freshman year of
college. Jeremy Platt’s description of this role on his public LinkedIn page provides
that he made one or more presentations to Carvana executives. It is fair to infer that
Platt’s son was hired as a favor to his father, mirroring Platt’s earlier hiring of Garcia
Junior. This further suggests a close personal relationship between Platt and Garcia
Junior.

28
99. The table below summarizes the compensation that Platt has earned as
a Carvana director:
Year Cash Stock Total
2020 $57,500 $322,235 $379,735
2019 $111,250 $155,783 $267,033
2018 $100,000 - $100,000
2017 $67,800 $271,241 $339,041
$336,550 $749,259 $1,085,809
100. Neither Plaintiffs nor the public know what compensation Platt earned
as a DriveTime or DT Acceptance Corporation director.
E. CARVANA ENGAGES IN SUBSTANTIAL RELATED-PARTY
TRANSACTIONS
101. According to the Company’s annual proxy filings, the Company has
“adopted a written policy with respect to the review, approval, and ratification of
related party transactions. Under the policy, [the Company’s] Board is responsible
for reviewing and approving related party transactions.” History shows that Board
members have been extremely accommodating and repeatedly allowed Carvana to
engage in extensive related-party transactions with DriveTime. In 2019 alone, the
Company:
• Recognized approximately $55.6 million in revenues
from the sale of vehicle service contracts administered
by DriveTime;
• Paid $4.3 million for servicing and administrative
functions provided by DriveTime;

29
• Paid $1.8 million for insurance policies purchased from
an affiliate of DriveTime;
• Paid $2.5 million to DriveTime to lease space at
inspection and reconditioning centers (each an “IRC”)
in Blue Mound, Texas, and Delanco, New Jersey;
• Paid $900,000 to DriveTime to sublease a portion of
Carvana’s corporate offices in Tempe, Arizona;
• Paid $2.8 million to a DriveTime affiliate to lease an
IRC in Tolleson, Arizona;
• Paid DriveTime $1.1 million to lease an IRC in Winder,
Georgia;
• Paid $800,000 to DriveTime to lease office space and
parking spaces at unspecified DriveTime facilities;
• Paid $4.3 million to DriveTime to purchase leasehold
improvements and equipment at an IRC in Cleveland,
Ohio;
• Paid $700,000 to DriveTime to lease an IRC in
Cleveland, Ohio;
• Paid $2 million to DriveTime to purchase leasehold
improvements and equipment at an IRC in Nashville,
Tennessee;
• Paid $60,200 to DriveTime to lease an IRC in
Nashville, Tennessee;
• Paid $42,500 to a DriveTime affiliate to lease office
space in Tempe, Arizona;
• Entered into a servicing agreement with DriveTime,
pursuant to which DriveTime earned $2.4 million for
performing servicing functions on loans originated by
Carvana before the loans were sold to third parties;

30
• Originated and sold loans to third parties in 2019, with
DriveTime earning $4.4 million for performing
servicing functions on these loans;14
• Sold $1.9 billion in finance receivables to certain
purchaser trusts which engaged DriveTime to perform
servicing functions for which DriveTime earned $7.8
million; and
• Arranging credit facilities such that DriveTime earned
$1.8 million for performing related servicing functions.
102. In 2020, the Company:
• Paid $2.4 million to DriveTime in lease payments for IRCs in Texas
and New Jersey;
• Paid $800,000 to an affiliate of Verde in lease payments for office
space in Tempe, Arizona;
• Paid $2 million to Verde in lease payments for an IRC in Arizona;
• Paid $21.7 million to Verde to purchase the land and related assets at
a Tolleson IRC;
• Paid $1.1 million to DriveTime in lease payments for an IRC in
Georgia;
• Paid $1.3 million to DriveTime in lease payments for office and
parking space at various DriveTime hubs;
• Paid $700,000 to DriveTime in lease payments for an Ohio IRC;
• Entered into two revolving credit facilities that were serviced by
DriveTime and from which DriveTime received $3.5 million;
14
In 2019, DriveTime also earned $9.7 million for performing servicing functions
on loans Carvana originated and sold to third parties in prior years.

31
• Purchased insurance policies from an affiliate of DriveTime for
$27,000;
• Paid DriveTime $6.1 million for administering GAP waiver coverage;
• Redeemed $15 million worth of senior unsecured notes owned by
Verde and paid $1.3 million to Verde in interest payments in
connection with such notes;
• Reimbursed DriveTime $200,000 for use of aircraft; and
• Sold vehicles to DriveTime for $4.1 million.
103. Also in 2020, DriveTime earned $45.8 million from servicing loans
originated by Carvana.
104. The Board has also allowed Carvana to engage in related-party
transactions with another large investor, Mark Walter, the CEO of Guggenheim
Partners. Through entities he controls (CVAN Holdings, LLC, Delaware Life
Holdings Parent, LLC, Delaware Life Holdings Parent II, LLC, and Delaware Life
Holdings Manager, LLC), Walter has consistently owned a substantial number of
LLC Units, which means he was a pre-IPO investor in Carvana when it was the
Garcias’ private company.
105. In January 2016, Carvana entered into transfer agreements to sell
automotive finance receivables meeting certain underwriting criteria to certain
unrelated trusts which each engaged Carvana as Trust Administrator of the trusts
and DriveTime as servicer of the receivables. Pursuant to certain note purchase and

32
security agreements entered into in connection with the transfer agreements, the
trusts issued notes to certain parties, including Delaware Life Insurance Company
(“Delaware Life”), in which Walter has a substantial ownership interest. Delaware
Life also served as administrative agent and paying agent on behalf of the note
purchasers.
106. Pursuant to the note purchase and security agreements, Delaware Life
advanced $63 million through December 31, 2016 to the trusts that purchased
Carvana’s automotive finance receivables, but made no additional advances during
the year ended December 31, 2017. On February 27, 2017, Delaware Life sold its
interest in the notes under the note purchase and security agreements to an unrelated
third party but remained the administrative agent and paying agent for the note
purchasers. On March 30, 2020, Carvana disclosed that it had “received a voluntary
request from the SEC requesting information about our related party disclosure and
accounting policies and procedures for historical loan sales and refinancings.”
107. Based on the information known to Plaintiffs, it does not appear that
the Board created any special committee to review or negotiate any of these related-
party transactions. None was approved by a stockholder vote.

33
F. THROUGH THE DIRECT OFFERING TRANSACTION, THE GARCIAS
WERE ABLE TO ACQUIRE $50 MILLION WORTH OF CARVANA
STOCK AT A BELOW-MARKET PRICE
108. In early March 2020, Carvana’s stock price began to fall—along with
the rest of the market—as it became clear to investors that the United States was
going to be seriously affected by COVID-19.
109. During this period, the price of Carvana’s publicly traded Class A
shares followed the broader market and plummeted from a high of over $110 per
share on February 21, 2020 to a low of less than $30 per share on March 20, 2020.
110. This decline was driven entirely by the broader market, which sharply,
but temporarily, declined during the early stages of the COVID-19 pandemic.
Carvana itself was still performing well. In fact, as a company that allows customers
to buy and sell cars entirely online, Carvana was (and is) uniquely situated to thrive
in a pandemic. Carvana has even boasted about its “touchless delivery” service as a
way of staying safe during the pandemic.
111. Numerous internal documents and communications produced in
response to Plaintiffs’ Section 220 Demands show that
For example, on March 5, 2020,
On March 10, 2020,

34
112. On March 13, the Company’s Chief Financial Officer Mark Jenkins,
sent a to
Board members. The document stated that
15
Ultimately, as Garcia Junior explained on a May 6 earnings call, “Q1 was [still] a
strong quarter for Carvana in light of the extreme disruption to our nation, industry
and company brought on by COVID-19. Retail units sold in Q1 totaled 52,427, an
increase of 43%. Total revenue was $1.1 billion, an increase of 45%.”

35
113. In a subsequent update to on March 20, management
wrote that
Nonetheless, the
March 20 update
114. On the morning of March 24, 2020, Carvana emailed Ally, with which
it had been negotiating a new agreement to sell finance receivables,
That
document notes that

37
to have the expertise and agility to deliver a financing agreement
that supports Carvana’s innovative, digital consumer experience.”
116. Through the agreement, Ally increased its commitment to purchase
Carvana’s receivables by approximately $1.6 billion.
117. Carvana’s stock price soared on the announcement. After closing at
$35.80 per share on March 23, 2020, the stock closed at $51.21 per share on March
24, 2020 (a 43% increase on a day when the S&P 500 increased by 9%).
118. The stock price reflected Carvana’s strong position in the market and
the Ally news. Moreover, the Company’s strong Q1 2020 results had not yet been
released and thus had not yet impacted the stock price.
119. Garcia, acting in his role as an officer and director of the Company,
moved quickly and pushed the Company to hastily do an unnecessary capital raise
while the Company’s stock was trading at an artificially low price.
120. Email correspondence produced by the Company in response to
Plaintiffs’ Section 220 Demands shows that,
17
email production shows that

38
121.
122.
the Section 220 production reflects
123.

40
126.
127. Despite management’s to the Board in the evening
of March 24, the email correspondence reveals that the
128.

41
129. Instead, the Board had a one-hour call beginning at 11:00 a.m. on
March 25. The minutes state that
and that
130. Meanwhile, Garcia Junior continued to work on
131. The Board held a second, twenty-minute call that evening. Garcia
Junior

42
132. These back-to-back updates were necessary because
133. Garcia Junior continued to work on
On the night of Wednesday,
March 25,

43
134. The Board met again for forty minutes on Thursday, March 26, 2020,
at 1:00 p.m. Garcia Junior and Quayle did not attend that meeting. Breaux and
Jenkins provided the attending members of the Board
135. Immediately after that meeting, Jenkins
sent a slide deck to the directors
regarding

44
The plan said that
136. The plan also stated that
137. The plan noted that
There was simply no need for
Carvana to issue stock when the entire market was experiencing historic volatility in
late March 2020.
138. Approximately forty minutes after Jenkins circulated the plan, the
Board, plus Breaux and Jenkins, held another thirty-minute call. Quayle was absent.
On the call,

45
139. On the evening of March 26, Breaux
20
20
The Company was warned, a day earlier, on March 25, that

46
140. Noticeably absent from as well as from
is any indication that
management put together a $600
million deal with little involvement by the Board, without a financial advisor, and
without a disinterested representative to negotiate the deal. This was the deal that
management even though the price of Carvana
stock continued to rise and the Company’s impressive results had yet to be disclosed
to the market.
141. On March 26, 2020, the price for Carvana’s Class A common stock
continued trading substantially above its bottom, with the closing price at $56.55 per
share.
142. There was nothing preventing the Company at that time from carefully
considering whether a capital raise was necessary in the then-existing economic
environment. There was nothing preventing Board members from hiring a financial
advisor to advise them about possible avenues to raise capital. But Garcia Junior did
not permit the Board any time to properly consider the transaction or to hire a
financial advisor. As each day passed and the stock price rose, the Garcias’
opportunity dwindled.
143. Early the next morning, March 27, the Board convened by phone for
forty minutes

47
144. Shortly before the Board call,
145. , Platt did not participate in the call,
absenting himself from the meeting and vote.
146. Garcia Junior participated in an early discussion, in which
Garcia
Junior then left and did not participate in the vote.
147.

50
153. On Friday, March 27, 2020, the Company’s Class A shares closed at
$49.04 per share.
154. Before trading opened on Monday, March 30, 2020, the Company
announced the Direct Offering Transaction: “a registered direct offering of 13.3
million shares of Class A Common Stock … to certain existing investors. Each share
of Common Stock is being sold for a purchase price of $45.00, resulting in gross
proceeds of $600 million. The offering included investments of $25 million each
from Ernest Garcia III, the Company’s founder and CEO, and Ernest Garcia II, the
Company's controlling shareholder.” Carvana stock had not traded at or below $45
per share since the Ally announcement. Thus, Garcia Junior decided to cause
Carvana to sell stock to himself and his father at a discount to the Company’s trading
price and at the lowest price authorized by the Board.
155. Garcia Senior and Garcia Junior each purchased 555,556 Class A shares
in the offering, and Mark Walter purchased an additional 400,000 Class A shares.
These Class A shares were immediately tradeable.
156. On March 31, 2020, Carvana filed a prospectus (the “March
Prospectus”) to register the shares sold in the Direct Offering Transaction. The
March Prospectus confirmed that the Company had no need to raise the money and

51
nothing specific to spend it on.22
Instead, the Company admitted that it had “not
specifically identified a material single use for which [it] intend[ed] to use the net
proceeds” and instead would use the money for “general corporate purposes.”
Indeed, the Company admitted that it was contemplating simply investing the
proceeds in short- and intermediate-term certificates of deposit or U.S. bonds until
the Company could figure out what to do with them.
157. The offering closed on March 30, and the Company received the equity
investment on or about April 1, 2020.
158. An April 5 update from management made clear that
22
Analyst reports issued in the immediate aftermath of the Direct Offering also
suggested that Carvana did not need to raise capital. These reports noted that
Carvana had “sufficient liquidity” (J.P. Morgan) and “remain[ed] poised to meet
first-quarter expectations.” (William Blair).

52
159. As set forth above, the process that led to the Direct Offering
Transaction was unfair:
• There was no stockholder vote.
• The process was extremely rushed and conducted without adequate
Board involvement or oversight.
• Despite his patent conflicts, Garcia Junior
•
despite the fact that the Audit Committee’s charter
states that “[t]he Committee shall review with both management and
the independent auditors and approve all related party transactions or
dealings between parties related to the Company.” Platt, who sits on
the Audit Committee, did not participate in the vote.
•

54
161. Moreover, the price at which the Company completed the Direct
Offering Transaction was unfair. As the chart below demonstrates, in the year
leading up to the Direct Offering Transaction, Carvana had traded below $45 for
only a few days—driven by irrational market-wide panic selling in response to
COVID-19—and it immediately traded above that level as soon as Carvana
announced the latest agreement with Ally.
162. The Direct Offering Transaction was rushed by the Company’s
management to take advantage of the artificial and temporary dip in the Company’s
stock price.
As a result, Carvana sold common stock at the worst possible time—
and the Garcias benefited.
$25
$45
$65
$85
$105
April 1, 2019 July 1, 2019 October 1, 2019 January 1, 2020 April 1, 2020

56
165. In addition to purchasing Company stock at a significant discount, the
Garcias (as well as their cronies), also benefited from the issuance through their
ownership and control of Carvana Group LLC units. Due to the Company’s
accounting treatment of non-controlling interests, the Garcias and the other
unitholders (other than Carvana Co.) saw the book value of their units—as reported
on the Company’s balance sheet—increase by $644 million in 2020 as a result of
Class A share issuances (including the April 2020 offering) despite not having
invested a penny in the financing through those LLC units.24
As a result of this
accounting, even transactions that appear dilutive to Garcias stock position can
24
The Company’s Consolidated Statements of Stockholders’ Equity in its 2020 10-
K shows $644 million of $1,058 million Class A issuance (or 61%) allocated away
from Carvana Co. and to the other LLC unitholders, including the Garcias, on a line
item titled “Adjustments to non-controlling interests related to equity offering.”

58
168. On May 6, 2020, Carvana released its earnings from the first quarter of
2020, which included a 43% year-over-year increase in car sales and a 45% increase
in year-over-year revenue. On an analyst call, Garcia Junior commented that he,
along with outside observers, believed Carvana would benefit from the health crisis:
“I think across the economy, across different retail verticals and certainly in
automotive, I think there seems to be a broadly held expectation that e-commerce
will be a relative outperformer during this time and coming out of this time.”
169. Carvana’s stock closed at $97.67 on the day following this earnings
release—more than double the price paid by the Garcias in the Direct Offering
Transaction. Notably, the Company’s strong Q1 performance would have been
known to the Garcias at the time the Direct Offering Transaction was completed.
170. On May 18, 2020, the Company announced another offering of five
million shares of Class A common stock. Unlike the Direct Offering Transaction,
this offering was made available to the public. The Company stated that its
underwriters had agreed to purchase those shares at $92 per share.

59
171. The minutes from the May 18 Board meeting
The meeting lasted just 14 minutes.
172. On June 15, 2020, Garcia Senior entered into a trading plan pursuant to
Rule 10b5-1 through which he will be able to realize profits by selling stock he
bought in the Direct Offering Transaction.
173. On August 6, 2020, Carvana announced its earnings for the second
quarter of 2020, which occurred during the pandemic. Carvana reported a 25% year-
over-year increase in retail units sold, a 13% year-over-year increase in revenue, and
a 9% year-over-year increase in total gross profits. Carvana also reported 40% year-
over-year sales growth late in the quarter and that this sales strength continued in
July.
174. In a letter to shareholders released with the earnings, Garcia Junior
declared that “we believe the long-term opportunity of the business is even larger
than we previously thought and that the medium-term opportunity may be materially
larger as COVID-19 and its follow on effects have likely accelerated the adoption of
ecommerce across retail verticals.” Garcia Junior also stated that Carvana is

60
“currently seeking more demand for our offering than we’ve ever seen in our
history.” The Company further reported that in a recent survey, 60% of respondents,
up from 32% in a prior survey, were open to buying a car online. Garcia “believe[s]
this shift is here to stay” and that Carvana “emerged from the first half of 2020 even
stronger than we entered it.”
175. In fact, the main impediments to Carvana going forward were
which
made it difficult for the Company to keep up with demand.
176. The market believed the Company’s second quarter results were
spectacular; Carvana’s stock increased 28% to $222.99 the following trading day,
proving that Carvana was well suited to thrive in the current market environment
and had no need to conduct the Direct Offering Transaction.
177. Section 16 of the Securities and Exchange Act of 1934 requires a public
company’s officers, directors, and holders of more than 10% of any class of equity
security to report their transactions in such company’s securities and to disgorge any
“short-swing” profits earned on any purchase and sale of company stock if both
transactions occur within six months of each other. Thus, the Garcias would have
been required to disgorge any profits on any sale of Carvana stock that took place
within six months of the Direct Offering. The “short-swing” period expired on
September 30 and Garcia Senior promptly began liquidating his profits.

63
Transaction, and to the Garcias in particular, for millions upon millions of dollars
less than the price at which those shares now trade. The chart below, which reflects
Carvana’s stock price from the beginning of January 2020, through the beginning of
April 2021, shows that the Garcias timed the Direct Offering Transaction to
purposefully profit from a temporary and artificial dip in the Company’s trading
price:
V. PERSONAL JURISDICTION
182. The Garcias have consented to personal jurisdiction in this Court.
Garcia Junior is an officer and a director, and both Garcias caused the Company to
adopt a Delaware forum-selection provision. When the Garcias took the Company

64
public in the IPO, the Company’s certificate of incorporation included Article
Twelve of the Company’s charter, which states that:
Unless this Corporation consents in writing to the selection of an
alternative forum, the Court of Chancery of the State of Delaware (or,
if the Court of Chancery does not have jurisdiction, the United States
District Court for the District of Delaware) shall, to the fullest extent
permitted by law, be the sole and exclusive forum for (i) any derivative
action or proceeding brought on behalf of the Corporation, (ii) any
action asserting a claim of breach of a fiduciary duty owed by any
director, officer, employee or stockholder of the Corporation to the
Corporation or the Corporation’s stockholders, (iii) any action asserting
a claim arising pursuant to any provision of the DGCL or as to which
the DGCL confers jurisdiction on the Court of Chancery of the State of
Delaware, the Certificate of Incorporation or the Bylaws or (iv) any
action asserting a claim governed by the internal affairs doctrine. As
used in this Certificate of Incorporation, the term “Claim” means the
actions, proceedings or claims referred to in clauses (i) through (iv) on
this Section 1.
…
Any Person purchasing or otherwise acquiring or holding any interest
in shares of capital stock of the Corporation (including, without
limitation, shares of Common Stock) shall be deemed to have notice of
and to have consented to the provisions of this ARTICLE TWELVE.
183. The Garcias have owned and continue to own their shares of Carvana
stock subject to the charter’s exclusive forum provision. Indeed, the Garcias
purchased their shares of Carvana common stock in the Direct Offering Transaction
in full knowledge of and subject to the terms of Carvana’s charter, including its
exclusive forum provision.

65
184. In addition to their control over Carvana’s day-to-day operations,
business relationships and governance, the Garcias control Carvana by virtue of their
ownership of high-vote Class B common stock of Carvana.
185. Carvana’s certificate of incorporation provides that the Class B
common stock retains its high-vote status only so long as the “Garcia Parties”
continue to own at least 25% of the Class A common stock. (The charter specifically
defines “Garcia Parties” as Garcia Senior, Garcia Junior and each of the entities
controlled by one or both of them.) Pursuant to the charter, the 25% ownership
threshold for the Garcias’ Class B common stock retaining its high-vote status is
determined based on the Garcia Parties’ beneficial ownership of Class A common
stock, assuming that each Class A Common Unit of Carvana Group, LLC (other than
units held by Carvana Co. Sub LLC) “was exchanged for Class A Common Stock
in accordance with the terms and conditions of the Exchange Agreement (as defined
[in the charter]) and the LLC Agreement (as defined [in the charter]).”
186. The Exchange Agreement, the LLC Agreement entered into at the time
of the IPO in order “to give effect to the IPO Transactions,” and the current LLC
Agreement all contain exclusive Delaware forum provisions.26
26
In addition to irrevocably submitting to exclusive Delaware jurisdiction, each of
those agreements provides that each of the parties thereto irrevocably and
unconditionally waives, and agrees not to plead or claim, that the courts of the state
of Delaware are an improper venue or inconvenient forum.

66
187. Notably, both of the Garcias individually signed the Exchange
Agreement and the LLC Agreement entered into at the time of the IPO in order “to
give effect to the IPO Transactions.”
188. Thus, the Garcias are controllers of Carvana by virtue of the charter and
multiple agreements (two of which the Garcias themselves signed) that all specify
Delaware as the exclusive forum for litigation.
189. In addition, the charter uniquely identifies the Garcia Parties (separately
and together) for multiple important special rights, powers and privileges in addition
to the treatment of their high-vote Class B common stock. This includes special
rights, powers and privileges with respect to competing with Carvana, corporate
opportunities, the removal of directors, the calling of special meetings of
stockholders, and an exemption from the definition of “Interested Stockholder.”
190. The specific references to both Garcia Senior and Garcia Junior in the
charter, and the numerous special rights, power and privileges accorded to them
therein, further evidence the Garcias’ knowledge of and agreement to the terms of
Carvana’s charter, including its exclusive Delaware forum provision.

67
VI. CLASS ACTION ALLEGATIONS
191. “The same set of facts c[an] give rise to both” direct and derivative
claims (so-called “dual-natured” claims).27
“A breach of fiduciary duty claim having
this dual character arises where,” as here, “(1) a stockholder having majority or
effective control causes the corporation to issue ‘excessive’ shares of its stock in
exchange for assets of the controlling stockholder that have a lesser value; and
(2) the exchange causes an increase in the percentage of the outstanding shares
owned by the controlling stockholder, and a corresponding decrease in the share
percentage owned by the public (minority) shareholders.”28
192. Here, as set forth above, the Garcias had majority control of the
Company and caused it to issue them additional shares in exchange for cash of lesser
value. And, as set forth in the table below, the Direct Offering Transaction increased
the percentage of Class A stock owned by the Garcias (and thus their economic
ownership of the Company):
Time Period Garcias Total Percentage
Pre-Offering 129,21829
50,602,132 0.3%
Post-Offering 1,240,33030
63,935,465 1.9%
27
El Paso Pipeline GP Co., L.L.C. v. Brinckerhoff, 152 A.3d 1248, 1260 (Del. 2016).
28
Gentile v. Rossette, 906 A.2d 91, 99–100 (Del. 2006).
29
100,000 owned by Garcia Senior; 29,218 by Garcia Junior.
30
655,556 owned by Garcia Senior and 584,774 owned by Garcia Junior.

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193. Thus, Plaintiffs can bring direct claims. Plaintiffs, stockholders in the
Company, bring this action individually and as a class action pursuant to Rule 23 of
the Rules of the Court of Chancery of the State of Delaware on behalf of themselves
and all stockholders of the Company (except the Defendants herein and any person
or entity that participated in the Direct Offering Transaction) (the “Class”) to redress
the Defendants’ breaches of fiduciary duties and other violations of law.
194. This action is properly maintainable as a class action.
195. A class action is superior to other available methods of fair and efficient
adjudication of this controversy.
196. The Class is so numerous that joinder of all members is impracticable.
The number of Class members is believed to be in the thousands, and the Class
members are likely scattered across the United States. Moreover, damages suffered
by individual Class members may be relatively small, making it overly expensive
and burdensome for individual Class members to pursue redress on their own.
197. There are questions of law and fact which are common to all Class
members and which predominate over any questions affecting only individuals,
including, without limitation:
a. whether the Defendants owed fiduciary duties to the Plaintiffs
and the Class;

69
b. whether the Defendants breached and continue to breach their
fiduciary duties to Plaintiffs and the Class; and
c. the extent of the Class’s damages.
198. Plaintiffs’ claims and defenses are typical of the claims and defenses of
other Class members, and Plaintiffs have no interests antagonistic or adverse to the
interests of other Class members. Plaintiffs will fairly and adequately protect the
interest of the Class.
199. Plaintiffs are committed to prosecuting this action and have retained
competent counsel experienced in litigation of this nature.
200. Defendants have acted in a manner that affects Plaintiffs and all
members of the Class alike, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the Class as a whole.
201. The prosecution of separate actions by individual members of the Class
would create a risk of inconsistent or varying adjudications with respect to individual
members of the Class, which would establish incompatible standards of conduct for
Defendants; or adjudications with respect to individual members of the Class would,
as a practical matter, be dispositive of the interest of other members or substantially
impair or impede their ability to protect their interests.

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VII. DEMAND FUTILITY
202. To the extent Plaintiffs’ claims are derivative and/or subject to a
demand requirement, demand would be futile because the Board is incapable of
making an independent and disinterested decision to prosecute this action. As set
forth in detail above, at least three of the six members of the Board are conflicted
and are therefore not capable of disinterested evaluation of claims arising from the
Transactions:
a. Garcia Junior was a participant in, and the architect of, the Direct
Offering Transaction; he is the son of Garcia Senior and an officer of the company
that he controls; and Garcia Junior faces a substantial risk of liability for his actions
in directing the Direct Offering Transaction;
b. Sullivan has a long personal and business relationship with Garcia
Senior; he was involved in the matters that led to Garcia Senior’s felony conviction;
he co-owned, and served as CEO for, Garcia Senior’s DriveTime entity and owes
Garcia Senior’s employment of him and buyout of his interest in DriveTime for the
bulk of his net worth, which Sullivan then invested in his only current business, Afar
Media; and Garcia Senior was and remains a highly critical investor in Afar Media;
c. Platt has a long personal and business relationship with both of the
Garcias, which began decades ago when Platt served as the lead relationship banker
between Greenwich and the Garcias’ Ugly Duckling entity. The Garcias

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subsequently appointed Platt to the boards of their private entities and awarded Platt
one or more highly valuable, exclusive “friends and family” investment
opportunities and highly valuable LLC units that the Garcias reserve for employees.
Platt has made many millions of dollars due to his service to the Garcias and can
expect to make many millions more so long as he remains loyal to them. Platt’s
decision to absent himself from the vote to approve the Direct Offering Transaction
further demonstrates that he, himself, recognized that he was not disinterested and
lacked independence from the Garcias.
COUNT I
Individual And Class Claim For Breach
Of Fiduciary Duty Against The Defendants
203. Plaintiffs repeat and reallege each and every allegation above as if set
forth in full herein.
204. As officers, directors, and/or controlling stockholders, the Defendants
owed Plaintiffs and the Class fiduciary duties of loyalty and care.
205. The Defendants breached their fiduciary duties by causing and entering
into the Direct Offering Transaction through an unfair process on terms that were
not entirely fair to Plaintiffs and other public stockholders. These breaches include
violations of the duty of care committed by Garcia Junior in his capacity as an officer

72
of the Company, which are not exculpated under the Company’s Amended and
Restated Certificate of Incorporation.
206. As a result of the foregoing, Plaintiffs and the Class have been harmed.
COUNT II
Derivative Claim For Breach Of
Fiduciary Duty Against The Defendants
207. Plaintiffs repeat and reallege each and every allegation above as if set
forth in full herein.
208. As officers, directors, and/or controlling stockholders, the Defendants
owed the Company fiduciary duties of loyalty and care.
209. The Defendants breached their fiduciary duties by causing and entering
into the Direct Offering Transaction through an unfair process on terms that were
not entirely fair to the Company. These breaches include violations of the duty of
care committed by Garcia Junior in his capacity as an officer of the Company, which
are not exculpated under the Company’s Amended and Restated Certificate of
Incorporation.
210. As a result of the foregoing, the Company has been harmed.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs demand judgment and preliminary and permanent
relief, including injunctive relief, in their favor, in favor of the Class, and/or in favor
of the Company and against all Defendants as follows:

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A. Declaring that this action is properly maintainable as a class action
and certifying Plaintiffs as Class Representatives;
B. Declaring that the Defendants breached their fiduciary duties;
C. Awarding equitable relief to the Class and/or the Company;
D. Awarding monetary damages to the Class and/or the Company,
including pre- and post-judgment interest;
E. Awarding Plaintiffs the costs and disbursements of this action,
including attorneys’ and experts’ fees; and
F. Granting the Company and/or Plaintiffs and the other members of the
Class such further relief as the Court deems just and proper.

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Dated: August 20, 2021
OF COUNSEL:
BLOCK & LEVITON LLP
Jason M. Leviton
Joel A. Fleming
Lauren Godles Milgroom
Amanda R. Crawford
260 Franklin St., Suite 1860
Boston, MA 02110
(617) 398-5600
BLOCK & LEVITON LLP
/s/ Nathan A. Cook
Nathan A. Cook (#4841)
Mae Oberste (#6690)
3801 Kennett Pike, Suite C-305
Wilmington, DE 19807
(302) 499-3600
GRANT & EISENHOFER P.A.
/s/ Christine M. Mackintosh
Christine M. Mackintosh (#5085)
Rebecca A. Musarra (#6062)
123 Justison Street
(302) 622-7000
LABATON SUCHAROW LLP
Domenico Minerva
John Vielandi
David MacIsaac
140 Broadway
New York, NY 10005
(212) 907-0700
/s/ Ned Weinberger
Ned Weinberger (#5256)
300 Delaware Avenue, Suite 1340
(302) 573-2540
Co-Lead Counsel for Co-Lead Plaintiffs

CERTIFICATE OF SERVICE
I hereby certify that, on August 27, 2021, I caused a true and correct copy of
the foregoing Verified Amended Derivative and Class Action Complaint (Public
Version) to be served electronically upon the following counsel:
Michael J. Barry, Esquire
Christine M. Mackintosh, Esquire
Rebecca A. Musarra, Esquire
GRANT & EISENHOFER, P.A.
123 Justison Street
Ned Weinberger, Esquire
300 Delaware Avenue, Suite 1340
David E. Ross, Esquire
ROSS ARONSTAM & MORITZ LLP
100 S. West Street, Suite 400
John L. Reed, Esquire
Kelly L. Freund, Esquire
Peter H. Kyle, Esquire
Ronald N. Brown III, Esquire
DLA PIPER LLP (US)
1201 North Market Street, Suite 2100
/s/ Mae Oberste
Mae Oberste (#6690)

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