Oracle Corporation et al v. SAP AG et al
Filing
814
Declaration of Tharan Gregory Lanier in Support of 813 Motion for Partial Summary Judgment (FILED PURSUANT TO D.I. 810) filed by SAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S, # 20 Exhibit T, # 21 Exhibit U, # 22 Exhibit V, # 23 Exhibit W, # 24 Exhibit X)(Related document(s) 810 ) (Froyd, Jane) (Filed on 8/27/2010) Modified on 8/27/2010 (vlk, COURT STAFF).
Oracle Corporation et al v. SAP AG et al
Doc. 814 Att. 23
EXHIBIT W
Dockets.Justia.com
FLETCHER CYCLOPEDIA
OF THE LAW OF
CORPORATIO S
WILLIAM MEADE FLETCHER
2 0 0 6 R E V I S E D VOLUME
B y CAROL A. J O N E S , J.D.
VOLUME 1
THOMSON \NEST
For Customer Assistance Call 1-800-328-4880
Mat # 4 0 4 0 0 2 5 6
·
CORPORATE ENTITY OR PERSONALITY
§ 36
p a r t i c i p a t i n g s h a r e h o l d e r a l s o i s guilty.9 V i o l a t i o n s o f p e n a l laws a r e g o v e r n e d by t h e s a m e p r i n c i p l e s , a n d e a c h v i o l a t o r may be liable. 10
§ 35
Distinctness of corporate entity-Domicile, residence or citizenship
Research References West's Key N u m b e r D i g e s t , C o r p o r a t i o n s e:::>1.3
B e c a u s e a c o r p o r a t i o n is a n e n t i t y d i s t i n c t from i t s officers, directors a n d s h a r e h o l d e r s , t h e r e s i d e n c e o f i t s officers, direct o r s o r s h a r e h o l d e r s d o e s n o t d e t e r m i n e t h e domicile, c i t i z e n ship or residence of the corporation. 1 The citizenship, domicile a n d r e s i d e n c e o f c o r p o r a t i o n s i s f u l l y a d d r e s s e d i n another chapter of this treatise. 2
§ 36
Distinctness of corporate entity-Litigation by and against corporation or its members
Research References W e s t ' s Key N u m b e r D i g e s t , C o r p o r a t i o n s e:::>1.3
The c a p a c i t y o f s u i n g a n d b e i n g s u e d i n i t s own n a m e is
9 C o n n . - S t a t e v. P i c h e c a , 2 Conn C i r 584, 203 A2d 242 (conviction of m a j o r i t y s h a r e h o l d e r a n d officer who c o n t r o l l e d c o r p o r a t i o n a n d was i t s a l t e r ego). N . Y . - P e o p l e v. T r a p p , 2 0 NY2d 6 1 3 , 2 8 6 N Y S 2 d 11, 2 3 3 NE2d 1 1 0 ( s u s t a i n i n g c o n v i c t i o n o f principal s h a r e h o l d e r a n d p r e s i d e n t for f a i l u r e t o m a k e c o r p o r a t e p a y m e n t s i n violation o f s t a t u t e ) . T e n n . - B o o k o u t v. C i t y o f C h a t t a n o o g a , 5 9 T e n n A p p 576, 4 4 2 SW2d 6 5 8 ( c o n v i c t i o n f o r v i o l a t i n g Sunday ordinance where defendant owned a n d o p e r a t e d c o r p o r a t i o n ) . Wash.-One who is the p r e s i d e n t , m a n a g i n g officer, a n d o w n e r o f p r a c t i c a l l y a l l o f t h e capit a l s t o c k m a y be c r i m i n a l l y l i a b l e for a m i s a p p r o p r i a t i o n o f money b y t h e c o r p o r a t i o n . S t a t e v. T h o m a s , 123 W a s h 2 9 9 , 2 1 2 P 2 5 3 . 1 ° m . - C h i c a g o Union Traction Co. v. C i t y o f Chicago, 1 9 9 III 579, 65 N E 470. [Section 35) 1Iowa-Home Savings & L o a n A s s ' n v. I o w a C i t y I n n , Inc., 152 N W 2 d 5 8 8 ( I o w a ) . M o . - C i t y o f S t . L o i u s v. Wiggins F e r r y Co., 40 Mo 580; S t a t e v. M i l l e r , 217 Mo App 16, 272 S W 1066. 2 C i t i z e n s h i p , domicile, r e s i dence and habitancy of corporat i o n s , s e e c h 48; c h o i c e o f l a w f o r corporate issues and the internal a f f a i r s d o c t r i n e , s e e § 4223.50. 93
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FLETCHER CYCLOPEDIA CORPORATIONS
o n e o f t h e c o r p o r a t e a t t r i b u t e s . l A c c o r d i n g l y , s u b j e c t to s o m e exceptions, a s h a r e h o l d e r m u s t s u e only on r i g h t s p e r t a i n i n g to that shareholder as an individual and the corporation o n l y on r i g h t s b e l o n g i n g t o i t . 2 A c t i o n s b y a n d a g a i n s t corporations a r e covered i n a n o t h e r c h a p t e r o f t h i s t r e a t i s e . 3 The distinction between direct shareholder actions and s h a r e h o l d e r d e r i v a t i v e a c t i o n s i s also a d d r e s s e d e l s e w h e r e i n t h i s t r e a t i s e . 4 S h a r e h o l d e r d e r i v a t i v e a c t i o n s t h e m s e l v e s also are covered in detail elsewhere in this treatise. s The rule barring suits by shareholders individually where the rights sued upon belong to the corporation also applies equally w h e r e a l l t h e s t o c k i n t h e c o r p o r a t i o n is h e l d b y o n e p e r s o n o r a s m a l l n u m b e r o f people. 6 T h e r u l e a p p l i e s e v e n w h e r e the corporation is a Subchapter S corporation, since that s t a t u s p e r t a i n s only to a c o r p o r a t i o n ' s a n d s h a r e h o l d e r ' s t a x l i a b i l i t y a n d does n o t affect t h e g e n e r a l l a w o f c o r p o r a t i o n s . 7 S i m i l a r l y , w h i l e s h a r e h o l d e r s a n d d i r e c t o r s h a v e t h e r i g h t to " t a k e a c t i o n " on t h e c o r p o r a t i o n ' s b e h a l f , t h a t d o e s n o t e n t i t l e those persons to practice law on behalf of the corporation b e c a u s e t h e c o r p o r a t i o n is a s e p a r a t e l e g a l e n t i t y t h a t c a n n o t a p p e a r on i t s b e h a l f t h r o u g h a n a g e n t o t h e r t h a n a n a t t o r n e y . s A n a c t i o n o r s u i t s h o u l d be b r o u g h t by t h e corporat i o n o r by t h e m e m b e r , w h i c h e v e r h a s t h e r i g h t o f action, a n d a g a i n s t t h e o n e o r t h e o t h e r , w h i c h e v e r is liable, a n d i t s h o u l d be i n t h e n a m e o f t h e p r o p e r p a r t y p l a i n t i f f a n d n a m e
[Section 36] l V . S . - L o y d v. P a i n e W e b b e r , I n c . , 2 0 8 F 3 d 7 5 5 (CA9 2 0 0 0 ) . l l l . - A c o r p o r a t i o n is a l e g a l entity, separate and distinct from i t s s h a r e h o l d e r s , officers a n d d i r e c tors, and generally must be sued in its own name and not in the name of its shareholders, officers or d i r e c t o r s . G o u l d i n g v. A g - R e - C o , I n c . , 233 I I I A p p 3 d 8 6 7 , 5 9 9 N E 2 d 1094 ( 9 9 2 ) . M d . - L l e w e l l y n v. Q u e e n C i t y D a i r y , Inc., 187 M d 4 9 , 4 8 A 2 d 322, q u o t i n g t h i s t r e a t i s e . 2 M d . - L l e w e H y n v. Q u e e n C i t y D a i r y , I n c . , 187 M d 4 9 , 4 8 A 2 d 322, q u o t i n g t h i s t r e a t i s e . 94
3S e e ch 51. 4S e e §§ 5 9 0 7 e t s e q . s S e e §§ 5 9 3 9 e t s e q . 6Effect o f o w n e r s h i p o f a l l t h e stock or a controlling interest, see § 5910. 7 M o n t . - G u l l e t t v. V a n D y k e C o n s t r u c t i o n Co., 3 2 7 M o n t 30, 111 P 3 d 2 2 0 ( M o n t 2005). T e n n . - H a d d e n v. City of Gatlinburg, 746 SW2d 687 (Tenn 1988l. Taxation of S corporations, s e e §§ 6 9 7 0 . 1 9 1 ; t a x a t i o n o f c o r p o r a t i o n s g e n e r a l l y , s e e c h 14A. 8Requirement that corporation conduct and defend litigation t h r o u g h a n a t t o r n e y , s e e § 4217.
CORPORATE ENTITY OR PERSONALITY
§ 36
t h e p r o p e r d e f e n d a n t , i n o r d e r t o o b t a i n j u d g m e n t i n accordance w i t h t h e r i g h t . a W h i l e i t i s t r u e t h a t a n i n d i v i d u a l cannot s u e h i m o r herself, s h a r e h o l d e r s o f a corporation m a y sue t h e c o r p o r a t i o n , o r be s u e d b y i t , s i n c e t h e c o r p o r a t i o n a n d i t s s h a r e h o l d e r s a r e n o t i n a n y l e g a l s e n s e t h e s a m e . 10 I n accordance w i t h t h e s e principles, a s h a r e h o l d e r c a n n o t toll s t a t u t o r y t i m e r e q u i r e m e n t s b y c o m m e n c i n g a n a c t i o n t h a t r e q u i r e s e n f o r c e m e n t o f a r i g h t b y t h e c o r p o r a t i o n . 11 So a shareholder has no capacity to sue or to maintain a counterclaim or a third-party claim as an individual on a d e r i v a t i v e c l a i m e v e n t h o u g h t h a t s h a r e h o l d e r i s a sole o r p r i n c i p a l s h a r e h o l d e r o f t h e c o r p o r a t i o n . 12 N o r d o e s a c o r p o r a t i o n h a v e i n d e p e n d e n t s t a n d i n g t o s u e for i n j u r i e s done t o a s i s t e r o r s u b s i d i a r y c o r p o r a t i o n , d e s p i t e t h e f a c t t h a t t h e i r b u s i n e s s e s a r e i n t e r t w i n e d a n d t h e s u c c e s s o f one is d e p e n d e n t o n t h a t o f t h e o t h e r . 13 S u i t s c a n n o t b e b r o u g h t
aA l a . - A l a b a m a I n d e p e n d e n t S e r v i c e S t a t i o n A s s ' n v. McDowell, 242 A l a 4 2 4 , 6 S o 2 d 5 0 2 . M d . - L l e w e l l y n v. Q u e e n C i t y D a i r y , I n c . , 1 8 7 M d 49, 4 8 A 2 d 322, q u o t i n g t h i s t r e a t i s e . Pleadings in actions by and a g a i n s t c o r p o r a t i o n s , s e e §§ 4 4 8 2 e t seq.; n a m i n g p a r t i e s i n s h a r e h o l d e r d e r i v a t i v e s u i t s , s e e § 6004. 1 O U . S . - C u l b e r t s o n v. W a b a s h N a v . Co., 4 M c L e a n 5 4 4 , F e d C a s No. 3 , 4 6 4 . Ga.-Commonwealth United Corp. v. R o t h b e r g , 221 G a 175, 143 S E 2 d 741 ( a c t i o n b y m a j o r i t y s h a r e holder against corporation). N e v . - S e a b o r n v. W i n g f i e l d , 56 N e v 260, 4 8 P 2 d 881. S . C . - T o d d v. Zaldo, 3 0 4 S C 275, 4 0 3 S E 2 d 6 6 6 (SC A p p 1 9 9 1 ) ; W a r i n g v. C a t a w b a Co., 2 B a y 109. T e x . - E v a n s v. G e n e r a l I n s . Co. o f A m e r i c a , 3 9 0 S W 2 d 8 1 8 ( T e x Civ A p p ) ( s u i t b y p r e s i d e n t - m a j o r i t y s h a r e h o l d e r a g a i n s t c o r p o r a t i o n for personal injuries). V t . - R o g e r s v. D a n b y U n i -
v e r s a l i s t S o c i e t y , 1 9 V t 187. A c t i o n s b y a n d a g a i n s t corpor a t i o n s g e n e r a l l y , s e e c h 51. 1 1 0 k l a . - G a r r e t t v. D o w n i n g , 185 O k l a 77, 9 0 P 2 d 636. 12U.S.-Shareholders who had personally guaranteed corporation's d e b t s could not, o n s u i t b y c r e d i t o r , c o u n t e r c l a i m a s s h a r e h o l d e r s , although they were permitted to counterclaim as guarantors of an insolvent principal. Continental G r o u p , I n c . v. J u s t i c e , 5 3 6 F S u p p 6 5 8 CD D e l 1 9 8 2 ) , c i t i n g t h i s treatise. Alaska-Guarantors, as s h a r e h o l d e r s a n d officers o f a c o r p o ration, have no right to assert a corporation's counterclaims on their o w n behalf. A r c t i c C o n t r a c t o r s , Inc. v. S t a t e , 5 7 3 P 2 d 1 3 8 5 ( A l a s k a ) , quoting this treatise. N . Y . - R o g e r s v. C i p r i a n , 2 6 A D 3 d 1 , 8 0 5 N Y S 2 d 3 6 (2005); V a l m a r t F o o d B u y i n g S e r v i c e , I n c . v. Sterngass, 30 AD2d 551, 290 N Y S 2 d 671. 1~.S.-Picture L a k e C a m p 95
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FLETCHER CYCLOPEDIA CORPORATIONS
by or against the individual shareholders on the corporation's c o n t r a c t , b u t m u s t b e b r o u g h t b y o r a g a i n s t t h e c o r p o r a t i o n . 14 It is equally true that a shareholder's contract is not the contract of the corporation, on which it must sue and the s h a r e h o l d e r c a n n o t . 15 T h e s a m e r u l e a p p l i e s t o t o r t s 16 a n d t o t h e e l e m e n t s o f d a m a g e s . 17 Shareholders are not parties to an action by or against the c o r p o r a t i o n a l o n e , 1 8 n o r i s i t a p a r t y b e c a u s e t h e y a r e . 19 A suit brought against the shareholders or the corporation g r o u n d , Inc. v. H o l i d a y I n n s , I n c . , 497 F S u p p 8 5 8 1.~3
1.6(3)
or-porate veil
1'3. Pluml
22
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