Weinfeld et al v. Minor et al

Filing 79

ORDER granting 57 Motion to Dismiss, with leave to amend. Signed by Judge Robert C. Jones on 3/8/16. (Copies have been distributed pursuant to the NEF - JC)

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1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 6 7 8 9 10 11 ______________________________________ ) ) JOSEPH WEINFELD et al., ) ) Plaintiffs, ) ) vs. ) ) BILL L. MINOR et al., ) ) Defendants. ) ) 3:14-cv-00513-RCJ-WGC ORDER 12 13 This is a shareholder derivative action. Pending before the Court is a Motion to Dismiss 14 (ECF No. 57). For the reasons given herein, the Court grants the motion, with leave to amend. 15 I. FACTS AND PROCEDURAL HISTORY 16 Sixteen individuals and Congregation Beth Joseph brought this shareholder derivative 17 action in the Eastern District of New York on behalf of Precious Minerals Mining & Refining 18 Corp. (“PMMR”) against PMMR President Bill Minor and PMMR Board Members John 19 Reynolds and Walter Marting for breach of fiduciary duties, unjust enrichment, abuse of control, 20 usurpation of corporate opportunities, and ultra vires actions. PMMR is a Nevada corporation 21 holding certain mining rights in Lyon County, which it exercises under permission of the U.S. 22 Forest Service (“USFS”) (which owns the relevant land) to mine a substance sold commercially 23 as Orykta and used as fertilizer and animal feed. (Second Am. Compl. ¶ 1, ECF No. 54). From 24 1 of 14 1 1999 to 2001, Minor sold shares of PMMR to investors throughout the United States and 2 Canada, including Plaintiffs, who are New York residents. (Id. ¶¶ 3, 31). Minor used PMMR “as his own personal piggybank,” selling Orykta to only one 3 4 customer in Costa Rica over a 14-year period. (Id. ¶ 5). Minor repeatedly misrepresented 5 PMMR’s prospects to shareholders, including lying about a nonexistent imminent contract with 6 China, in order to deflect scrutiny, and he refused to entertain sales leads from them, even 7 threatening bodily harm when they made suggestions. (Id. ¶¶ 6–7, 59–66). Minor has used a 8 fraudulent stock transfer document purporting to transfer non-existent shares to himself in order 9 to falsely portray himself as a majority shareholder. (Id. ¶¶ 69–73). Minor made false promises 10 of dividend distributions in order to deflect questions about the viability of PMMR. (Id. ¶¶ 74– 11 76). 12 All Defendants consistently failed to provide basic information about PMMR to 13 shareholders, with Minor even threatening bodily harm when they made requests. (Id. ¶ 8). 14 Defendants have not produced an audited financial statement since 1995 and have produced only 15 one unaudited financial statement from the fourth quarter of 2009. (Id. ¶ 9). Defendants failed to 16 properly file for various business permits and to file correct tax returns, jeopardizing the 17 corporation’s legal status. (Id. ¶¶ 10–11). The failure of Defendants to maintain compliance with 18 the USFS’s terms of permissible activities has resulted in a criminal and civil investigation of 19 PMMR. (Id. ¶¶ 54–57). 20 Although PMMR obtained approximately $15–20 million from the sale of its stock to 21 shareholders, it has never made a profit and has failed to account for these funds. (Id. ¶¶ 78, 80). 22 Rather, Defendants have simply awarded themselves large compensation packages and paid 23 themselves large consultancy fees. (Id. ¶ 78). Minor also paid for his son’s flying lessons using 24 PMMR’s assets. (Id. ¶ 79). 2 of 14 1 Minor abused his control of PMMR by treating PMMR’s assets as his own and 2 transferring PMMR’s assets into his own name, i.e., the title of at least one of PMMR’s mining 3 claims was transferred into Minor’s name from 2007–2010. (Id. ¶¶ 81–83). At various times, 4 Minor transferred mining claims between himself and PMMR to suit his personal needs. (Id. 5 ¶ 84). Defendants have usurped corporate opportunities by selling Orykta through a company 6 named Wrightsville Fertilizer Co. (“WFC”); Plaintiffs deduce this from the fact that there is no 7 evidence WFC ever paid PMMR to purchase Orykta. (Id. ¶ 85). Defendants have engaged in 8 ultra vires actions by issuing stock, stock options, and rights without shareholder approval, 9 thereby diluting the value and control of existing shareholders. (Id. ¶ 86). 10 The U.S. District Court for the Eastern District of New York transferred the case to this 11 District under 28 U.S.C. § 1404(a) as an alternative to a request to dismiss for lack of personal 12 jurisdiction and improper venue. The transferor court did not rule on contemporaneous requests 13 to dismiss the First Amended Complaint (“FAC”) for failure to comply with Rules 8(a), 9(b), 14 and 23.1(b). This Court dismissed the FAC under the latter rule and Rule 11(a) because it was 15 not verified or even signed by any attorney. Plaintiffs filed the Second Amended Complaint 16 (“SAC”), and Defendants have moved to dismiss it. 17 II. LEGAL STANDARDS 18 Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the 19 claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of 20 what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 21 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action 22 that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 23 12(b)(6) tests the complaint’s sufficiency. See N. Star Int’l v. Ariz. Corp. Comm’n, 720 24 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for 3 of 14 1 failure to state a claim, dismissal is appropriate only when the complaint does not give the 2 defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell 3 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is 4 sufficient to state a claim, the court will take all material allegations as true and construe them in 5 the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th 6 Cir. 1986). The court, however, is not required to accept as true allegations that are merely 7 conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden 8 State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a 9 10 plaintiff must plead facts pertaining to his own case making a violation “plausible,” not just 11 “possible.” Ashcroft v. Iqbal, 556 U.S. 662, 677–79 (2009) (citing Twombly, 550 U.S. at 556) 12 (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to 13 draw the reasonable inference that the defendant is liable for the misconduct alleged.”). That is, 14 under the modern interpretation of Rule 8(a), a plaintiff must not only specify or imply a 15 cognizable legal theory (Conley review), but also must allege the facts of his case so that the 16 court can determine whether the plaintiff has any basis for relief under the legal theory he has 17 specified or implied, assuming the facts are as he alleges (Twombly-Iqbal review). Put 18 differently, Conley only required a plaintiff to identify a major premise (a legal theory) and 19 conclude liability therefrom, but Twombly-Iqbal requires a plaintiff additionally to allege minor 20 premises (facts of the plaintiff’s case) such that the syllogism showing liability is logically 21 complete and that liability necessarily, not only possibly, follows (assuming the allegations are 22 true). 23 24 “Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the 4 of 14 1 complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner 2 & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, “documents 3 whose contents are alleged in a complaint and whose authenticity no party questions, but which 4 are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) 5 motion to dismiss” without converting the motion to dismiss into a motion for summary 6 judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule 7 of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay 8 Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court 9 considers materials outside of the pleadings, the motion to dismiss is converted into a motion for 10 summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 11 2001). 12 III. ANALYSIS 13 A. The Gottesman Action 14 Defendants first argue that the claims are precluded by a case finally adjudicated in the 15 New York courts. (See Order in Gottesman v. Minor, No. CV-41467-10/KI, ECF No. 59-3). 16 There, Emil Gottesman (who is not a party to the present case, but who Defendants claim is a 17 member of Congregation Beth Joseph, as are the other Plaintiffs) sued Minor (then President and 18 Chairman of the Board) for waste, fraud, usurpation, breach of fiduciary, etc., based on Minor’s 19 acts occurring no later than 2003. (Id. 1–2). The court granted summary judgment to Minor. (Id. 20 ¶ 4). 21 The Court finds that claim preclusion does not apply. Plaintiffs were neither parties nor 22 privies to the previous action. It is not disputed that they were not parties. Defendants argue that 23 under New York law, Plaintiffs are in privity with Gottesman: 24 Because the claim asserted in a stockholder’s derivative action is a claim belonging to and on behalf of the corporation, a judgment rendered in such an 5 of 14 1 2 3 4 5 6 action brought on behalf of the corporation by one shareholder will generally be effective to preclude other actions predicated on the same wrong brought by other shareholders. The foregoing rule is qualified by the condition that the judgment being raised as a bar not be the product of collusion or other fraud on the nonparty shareholders and by the further condition that the shareholder sought to be bound by the outcome in the prior action not have been frustrated in an attempt to join or to intervene in the action that went to judgment. Parkoff v. Gen. Tel. & Elecs. Corp., 425 N.E.2d 820 (1981) (citations omitted). But New York law may not be applicable here. The Court must first determine whether 7 Nevada’s or New York’s choice of law rules apply before it can determine which state’s 8 substantive law applies. When a district court orders a change of venue, the choice of law rules 9 of the transferor jurisdiction follow the case if personal jurisdiction and venue were proper in the 10 transferor court, i.e., § 1404(a) transfers, see Van Dusen v. Barrack, 376 U.S. 612, 639 (1964), 11 but the choice of law rules of the transferee jurisdiction control where venue or personal 12 jurisdiction in the transferor jurisdiction was not proper, i.e., § 1406(a) transfers, see Nelson v. 13 Int’l Paint Co., 716 F.2d 640, 643 (9th Cir. 1983). The transferee court must determine whether 14 the transfer had the effect of curing a defect in venue or personal jurisdiction, and if so, it applies 15 the choice of law rules of the transferee jurisdiction. Muldoon v. Tropitone Furniture Co., 1 F.3d 16 964, 966–67 (9th Cir. 1993). Here, the transferor judge in the Eastern District of New York 17 considered both §§ 1404(a) and 1406(a). (See Transfer Order, ECF No. 23). Although the 18 transferor judge expressed reservations about personal jurisdiction over Defendants in New 19 York, he ultimately transferred under § 1404(a) because “Nevada is a superior forum.” (Id. 13). 20 The question of personal jurisdiction or venue in New York remains open, then. This 21 Court must address the issues, because it cannot impose New York’s choice of law rules if 22 personal jurisdiction or venue in New York was lacking. The Court agrees with the transferor 23 judge that Defendants as Nevada residents are not “at home” in New York for the purposes of 24 general jurisdiction. See Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014). As to specific 6 of 14 1 jurisdiction, the relationship must arise out of minimum contacts a defendant creates with the 2 forum state, not simply out-of-forum contacts the defendant creates with persons who reside in 3 the forum state. See Walden v. Fiore, 134 S. Ct. 1115, 1121–23 (2015). Plaintiffs have alleged 4 enough here, because Defendants’ contacts with New York Plaintiffs were not purely in Nevada. 5 Rather, Defendants did business with New York Plaintiffs while the Plaintiffs were in New 6 York, routinely sending communications to that state, and even visiting the state on at least one 7 occasion to meet with Plaintiffs to address their concerns giving rise to this lawsuit. Nor would 8 the exercise of personal jurisdiction have been unreasonable in this case. As to venue, there was 9 venue in the Eastern District of New York under 28 U.S.C. § 1391(b)(2), because a substantial 10 part of the events giving rise to the claim is alleged to have occurred there, i.e., the December 11 2008 meeting in Brooklyn, New York at which Minor allegedly lied about the prospect for a 12 contract with China. 13 The Court being satisfied that transfer was not required under § 1406(a), New York’s 14 choice of law rules apply. Under New York law, the state of incorporation governs the substance 15 of shareholder derivative actions. See Hart v. Gen. Motors Corp., 517 N.Y.S.2d 490, 492 (App. 16 Div. 1987) (citing Diamond v. Oreamuno, 301 N.Y.S.2d 78 (1969)). That means Nevada law 17 governs the law of corporations in this case, because PMMR is a Nevada corporation. The 18 Parkoff rule of claim preclusion in shareholder derivative actions is particular to the law of 19 corporations, and the Court therefore finds that under New York’s own choice of law rules 20 Parkoff does not apply here (unless the Nevada Supreme Court has itself adopted the rule). 21 The Nevada Supreme Court has noted in an unpublished opinion that under the 22 Restatement (Second) of Judgments § 59(3)(a) (1982), sole or controlling stockholders may be 23 found to be in privy with the corporation itself. Apart from that, the Court can find no rule in 24 Nevada similar to the Parkoff rule. The Restatement states a general rule against claim 7 of 14 1 preclusion, with several exceptions. See id. § 59. The potentially applicable exception here is 2 subsection (2), which states: 3 4 The judgment in an action to which the corporation is a party is binding under the rules of res judicata in a subsequent action by its stockholders or members suing derivatively in behalf of the corporation, and the judgment in a derivative action by its stockholders or members is binding on the corporation. 5 Id. § 59(2). This does not directly answer the precise question presented here: whether a 6 judgment in an action by a corporation’s stockholders suing derivatively on behalf of the 7 corporation is binding under the rules of res judicata in a subsequent action by other stockholders 8 suing derivatively on behalf of the corporation. The Restatement provides more guidance, 9 however: 10 12 Whether the judgment in . . . a representative suit is binding upon all stockholders or members is determined by the rules stated in §§ 41 and 42. If it is binding under those rules, it precludes a subsequent derivative action by stockholders or members who were not individually parties to the original action. 13 Id. § 59 cmt. c. Section 41 in turn binds parties to judgments entered in actions where the 14 following persons were parties: (1) a trustee of an estate or interest of which the party to be 15 bound was a beneficiary; (2) a person invested with authority by the party to be bound to 16 represent him; (3) an executor, administrator, guardian, conservator, or similar fiduciary of an 17 interest of which the party to be bound was a beneficiary; (4) an official or agency invested by 18 law with authority to represent the interests of the party to be bound; and (5) the representative of 19 a class of persons similarly situated, designated as such with the approval of the court, of which 20 the party to be bound is a member. Id. § 41(1)(a)–(e). None of these exceptions applies here. 21 Section 42 provides exceptions to § 41 that the Court needn’t address, because no provision of 22 § 41 applies. 11 23 24 Although the Third Circuit has ruled that because derivative claims belong to a corporation itself, shareholders asserting such claims are necessarily bound by a previous 8 of 14 1 adjudication of the same claims brought by other shareholders, see Cramer v. Gen. Tel. & Elecs. 2 Corp., 582 F.2d 259, 267 (3d Cir. 1978), the Ninth Circuit has distinguished Cramer where the 3 earlier plaintiff(s) did not purport to represent the corporate entity, see Mertens v. Black, 948 4 F.2d 1105, 1106 (9th Cir. 1991) (holding that ERISA beneficiaries’ claims were not precluded 5 by the previous adjudication of similar claims of another beneficiary where the previous claimant 6 did not purport to represent the ERISA plan but only himself). Although the Gottesman court 7 noted that Gottesman’s affidavit included claims implicating doctrines such as corporate waste, 8 (see Order in Gottesman v. Minor 1–2), Gottesman’s claim was for common law fraud and was 9 pursued only on his own behalf, and the court dismissed for failing to state a claim under that 10 11 theory; it did not treat the claim as a derivative shareholder claim. The Court finds that the Gottesman Action does not preclude the present lawsuit because 12 Plaintiffs were not privies thereto. Furthermore, the Gottesman court made clear that the 13 allegations in that case concerned acts “occur[ing] no later than August 5, 2003.” (See id. 2). It 14 is not clear when each of the acts are alleged to have occurred in the present case. The Court 15 will therefore not presume at the dismissal stage that they are only the same acts complained of 16 in the Gottesman Action. 17 B. The Curley Action 18 Defendants next argue that the claims are precluded by a case finally adjudicated in the 19 Nevada courts. (See Order in Curley v. PMMR, No. CV08-1954, ECF No. 59-2). In that case, 20 the plaintiffs asked the Nevada court to order an election of directors for PMMR. The court 21 dismissed the case as moot after PMMR agreed to hold an election of directors. Curley was the 22 only named plaintiff in that case. He sought to represent other stockholders, but the court 23 dismissed the case as moot, which is not a final adjudication on the merits of anything, much less 24 9 of 14 1 the particular claims of wrongdoing brought here. The Court therefore finds that the Curley 2 Action does not preclude the present lawsuit. 3 C. Rule 23.1 4 Defendants next argue that some Plaintiffs have failed to verify the SAC as required by 5 Rule 23.1, and that the SAC does not contain particularized allegations of any demand made on 6 the directors nor any particularized allegations of why a demand would have been futile, as also 7 required by the rule. It is true that Plaintiffs Carl Isaac, Gerald Katz, Solomon Schlafrig, Jacob 8 Kellner, David Goldstein, David Schwartz, and Hannah Cohen have not verified the SAC. 9 Those Plaintiffs’ claims are therefore dismissed, without leave to amend. See Fed. R. Civ. P. 10 23.1(b). The Court will not give leave to amend again for these Plaintiffs to verify the 11 Complaint, because it dismissed the FAC for precisely this reason (failure to verify the FAC). 12 Next, the SAC must “state with particularity . . . any effort by the plaintiff to obtain the 13 desired action from the directors or comparable authority and, if necessary, from the 14 shareholders or members []and the reasons for not obtaining the action or not making the effort.” 15 Fed. R. Civ. P. 23.1(b)(3)(A)–(B). Plaintiffs allege that “Aside from previous counsel’s Demand 16 Letter to Defendant/s [sic], Plaintiffs have not made another pre-suit demand . . . because such a 17 demand would be futile . . . .” (Second Am. Compl. ¶ 94). Plaintiffs allege a demand would be 18 futile because the current directors (Minor and Reynolds) and the former director (Marting) each 19 “face[] a substantial likelihood of liability for [their] actions during [their] membership on the 20 Board” and these Defendants’ own pursuit of the allegations would expose their own misconduct 21 such that they are fatally conflicted. (Id. ¶¶ 96–100). 22 “Although Rule 23.1 supplies the pleading standard for assessing allegations of demand 23 futility, ‘[t]he substantive law which determines whether demand is, in fact, futile is provided by 24 the state of incorporation of the entity on whose behalf the plaintiff is seeking relief.’” 10 of 14 1 Rosenbloom v. Pyott, 765 F.3d 1137, 1148 (9th Cir. 2014) (quoting Scalisi v. Fund Asset Mgmt., 2 L.P., 380 F.3d 133, 138 (2d Cir. 2004)) (alteration in Rosenbloom). In Nevada, allegations that a 3 majority of directors participated in the wrongful acts is not enough. Shoen v. SAC Holding 4 Corp., 137 P.3d 1171, 1180–81 (Nev. 2006). The Nevada Supreme Court has adopted the 5 approach of the Delaware Supreme Court, finding that the underlying standards of director 6 interestedness and the business judgment rule are incorporated into the antecedent pleading issue 7 of demand futility: 8 9 10 11 [A] plaintiff challenging a business decision and asserting demand futility must sufficiently show that either the board is incapable of invoking the business judgment rule’s protections (e.g., because the directors are financially or otherwise interested in the challenged transaction) or, if the board is capable of invoking the business judgment rule’s protections, that that rule is not likely to in fact protect the decision (i.e., because there exists a possibility of overcoming the business judgment rule’s presumptions that the requisite due care was taken when the business decision was made). 12 Id. at 1181 (citing Aronson v. Lewis, 473 A.2d 805, 814 (Del. 1984)). Where a decision is 13 carried out by a majority of disinterested directors, the presumption of due care is “bolstered,” 14 and the plaintiff has a “heavy burden” to avoid a presuit demand. Id. (citing Grobow v. Perot, 15 539 A.2d 180, 190 (Del. 1988)). 16 According to the original Complaint, Reynolds was a director of PMMR at the time the 17 present lawsuit was initiated, Marting was a director “during the time of the complaints alleged 18 herein,” and Minor was the President and had held various officer positions. (See Compl. ¶¶ 32– 19 34, ECF No. 1). The SAC contains similar allegations. (See Second Am. Compl. ¶¶ 32–34). 20 Without allegations concerning which persons (Defendants and non-defendants alike) constituted 21 the entire Board at the relevant times, the Court cannot find that demand futility has been pled 22 with particularity under Nevada law, because the Court cannot determine which and what 23 fraction of board members were disinterested in various actions of the Board and therefore 24 cannot even determine to which acts or omissions the business judgment rule should apply. 11 of 14 1 Moreover, as Defendants note, there are scarce allegations of the wrongdoings of Reynolds and 2 Marting. The vast majority of allegations focus on Minor, and it is unclear from the SAC 3 whether he was a director at the time the present lawsuit was filed; he is only alleged to have 4 been an officer as of the time of the filing of the Complaint. 5 In their response, Plaintiffs claim that they sent a demand letter to the Board in June 6 2008, and at that time the Board consisted entirely of Minor, Reynolds, and Marting. Plaintiffs 7 cite their allegation in paragraph 27 of the Complaint. Paragraph 27 of the Complaint is the 8 same as paragraph 27 of the SAC. The paragraph reads in its entirety: 9 10 11 In June of 2008, previous counsel to a group of local investors sent a letter to the Corporation and Defendant Mr. Minor spelling out their concerns about specific wrongdoings and demanding immediate remedial action be taken. The letter stated that in the event the shortcomings are not addressed, the investors themselves may pursue legal action. This Demand Letter was met with complete inaction. 12 (Second Am. Compl. ¶ 27). The allegations made therein are not the same as what is claimed in 13 the response brief, and they do not satisfy Rule 23.1. The allegation is that other shareholders 14 sent a demand letter, not Plaintiffs. Even assuming it doesn’t matter who sent the demand letter, 15 the allegation is conclusory as to the demand. It does not specify with particularity what 16 complaints were made but merely notes that the letter included particular complaints. The 17 allegation also seems to imply that Minor was not a director at the time the demand letter was 18 sent, whereas the response brief claims he was. Even assuming the response brief could 19 substitute for pleading allegations, which it cannot, the response brief fares no better in this 20 regard. Furthermore, if Plaintiffs were to rely on the June 2008 demand letter, the affirmative 21 defense of the statute of limitations would appear on the face of the SAC, necessitating dismissal 22 for that reason, because events complained of in June 2008 must have both occurred and been 23 discovered before that date, the Complaint was not filed until 2014, and the longest limitations 24 period at issue here is four years. In re Amerco Derivative Litig., 252 P.3d 681, 703 (Nev. 2011) 12 of 14 1 (three-year limitations period for breach of fiduciary duty); Nanyah Vegas LLC v. Rogich, No. 2 66823, 2016 WL 606896, at *1 (Nev. Feb. 12, 2016) (four-year limitations period for unjust 3 enrichment, which is in the nature of an unwritten contract); Nev. Rev. Stat. § 11.220 (four-year 4 limitations period for actions not otherwise provided for, assuming abuse of control, usurpation 5 of corporate opportunities, and ultra vires actions fall into this category). 6 The Court disagrees with Defendants, however, that amendment is futile. The Court will 7 grant leave to amend one final time to cure the deficiencies noted herein. Specifically, Plaintiffs 8 must allege: the identities of all of the board members at the time the lawsuit was filed; the 9 details of any presuit demand made to them, i.e., the date and method of the demand and the 10 specific acts thereby complained of; and (if Plaintiffs wish to allege futility) which directors were 11 self-interested and how, which directors approved which complained-of acts, and how the 12 complained-of acts approved were unprotected by the business judgment rule. 13 D. The Merits, Marting and Reynolds, and the Statute of Limitations 14 Defendants also attack the sufficiency of the allegations generally, argue that no claims at 15 all have been articulated against Marting and Reynolds, and argue that the statute of limitations 16 has run on the claims, in any case. The Court will not examine these arguments directly at this 17 time. Plaintiffs may amend the allegations or not with respect to these issues when filing a third 18 amended complaint, but if the Court finds the allegations lacking for any of these reasons it will 19 not give leave to amend again. 20 /// 21 /// 22 /// 23 /// 24 /// 13 of 14 CONCLUSION 1 2 3 4 5 IT IS HEREBY ORDERED that the Motion to Dismiss (ECF No. 57) is GRANTED, with leave to amend. IT IS SO ORDERED. th DATED: 29th day of February, 2016. Dated thisThis 8 day of March, 2016. 6 7 8 _____________________________________ ROBERT C. JONES United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 14 of 14

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