David Defrees v. John Kirkland

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JUN 16 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
DAVID L. DEFREES, in the right of and No. 12-55144
for the benefit of U.S. Aerospace Inc., and
SIMON GERSHON, in the right of and for D.C. No. 2:11-cv-04272-GAF-SP
the benefit of U S Aerospace Inc.,
Plaintiffs - Appellees, MEMORANDUM*
v.
JOHN C. KIRKLAND,
Defendant - Appellant,
and
LUCE, FORWARD, HAMILTON and
SCRIPPS LLP; et al.,
Defendants.
CAMOFI MASTER LDC; et al., No. 12-55155
Plaintiffs - Appellees, D.C. No. 2:11-cv-04574-GAF-SP
v.
JERROLD PRESSMAN; et al.,
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
AMERICAN DEFENSE INVESTMENTS
LLC; et al.,
Defendants,
and
JOHN C. KIRKLAND,
Defendant - Appellant.
DAVID L. DEFREES, in the right of and No. 12-56377
for the benefit of U.S. Aerospace Inc.; et
al., D.C. No. 2:11-cv-04272-GAF-SP
Plaintiffs - Appellees,
v.
JOHN C. KIRKLAND; et al.,
Defendants - Appellants,
and
LUCE, FORWARD, HAMILTON and
SCRIPPS LLP; et al.,
Defendants.
CAMOFI MASTER LDC; et al., No. 12-56385
Plaintiffs - Appellees, D.C. No. 2:11-cv-04574-GAF-SP
v.
JERROLD PRESSMAN; et al.,
Defendants,
and
MICHAEL GOLDBERG; et al.,
Defendants - Appellants.
CAMOFI MASTER LDC; et al., No. 12-56755
Plaintiffs - Appellees, D.C. No. 2:11-cv-04574-GAF-SP
v.
JERROLD PRESSMAN, LUCE
FORWARD HAMILTON and SCRIPPS
LLP; et al.,
Defendant,
and
MICHAEL GOLDBERG; et al.,
Defendants - Appellants.
DAVID L. DEFREES, in the right of and No. 12-56756
for the benefit of U.S. Aerospace Inc.; et
al., D.C. No. 2:11-cv-04272-GAF-SP
Plaintiffs - Appellees,
v.
JOHN C. KIRKLAND; et al.,
Defendants - Appellants,
and
LUCE, FORWARD, HAMILTON and
SCRIPPS LLP; et al.,
Defendants.
Appeal from the United States District Court
for the Central District of California
Gary A. Feess, District Judge, Presiding
Argued and Submitted June 2, 2014
Pasadena, California
Before: REINHARDT, NOONAN, and MURGUIA, Circuit Judges.
In this consolidated appeal arising from two related shareholder derivative
actions brought on behalf of nominal defendant U.S. Aerospace (“USAE”), various
directors, outside counsel, and affiliates of USAE (together, “Defendants”) appeal
the district court’s denial of their numerous pre-answer motions. We affirm for the
most part, and remand in part.
1. Whether a party has derivative standing to bring a shareholder suit is a
legal issue reviewed de novo. Quinn v. Anvil Corp., 620 F.3d 1005, 1012 (9th Cir.
2010). Defendants maintain that the shareholder plaintiffs lost standing following
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USAE’s reincorporation merger, dated May 3, 2013, yet offer no evidence of the
alleged merger. Except in unusual circumstances, not present here, our review is
limited to the record before the district court. See Lowry v. Barnhart, 329 F.3d
1019, 1024-25 (9th Cir. 2003) (“It is a basic tenet of appellate jurisprudence . . .
that parties may not unilaterally supplement the record on appeal with evidence not
reviewed by the court below.” (brackets omitted)). Absent evidence to the contrary,
the shareholder plaintiffs satisfy the standing requirement of Federal Rule of Civil
Procedure 23.1 for the purposes of this appeal.
2. We review de novo a district court’s determination that diversity
jurisdiction exists, Kroske v. U.S. Bank Corp., 432 F.3d 976, 979 (9th Cir. 2005),
and conclude that complete diversity exists in the DeFrees action because no
additional parties need be joined under Federal Rule of Civil Procedure 19(a) and
realignment of USAE as a plaintiff is inappropriate, In re Digimarc Corp.
Derivative Litig., 549 F.3d 1223, 1234 (9th Cir. 2008) (realignment is
inappropriate “when a corporation’s officers or directors are ‘antagonistic’ to the
interests of the shareholder plaintiff(s).” (internal citation omitted)). The same
arguments raised with respect to jurisdiction in the CAMOFI action also fail.
However, to the extent the citizenship of KC-X remains unresolved in that action,
we remand to the district court to make a factual determination of KC-X’s
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citizenship in the first instance. See United States v. Anderson, 663 F.2d 934, 941
(9th Cir. 1981).
3. We have jurisdiction under 9 U.S.C. § 16(a)(1)(C) to review the district
court’s denial of Defendants’ motions to compel arbitration. Our review is de
novo. Balen v. Holland Am. Line Inc., 583 F.3d 647, 652 (9th Cir. 2009). We
affirm the district court as to all of Defendants’ motions to compel arbitration.
First, the district court properly exercised its discretion under the California
Arbitration Act in denying arbitration under the Luce Forward Engagement
Agreement to avoid “conflicting rulings on [ ] common issue[s] of law or fact.”
Cal. Civ. Proc. Code. § 1281.2(c). Second, Defendants waived their right to
compel arbitration under the individual releases from liability by waiting until after
their first motion to compel had proved fruitless. St. Agnes Med. Ctr. v. PacifiCare
of Cal., 31 Cal. 4th 1187, 1196 (2003) (unreasonable delays by a party or bad faith
may constitute waiver and justify a refusal to compel arbitration).
4. We have jurisdiction under 28 U.S.C. § 1291 to review the district court’s
denial of Defendants’ motions to strike under California’s anti-Strategic Lawsuit
Against Public Participation (“anti-SLAPP”) statute, Cal. Civ. Proc. Code §
425.16. Once more, our review is de novo. Vess v. Ciba-Geigy Corp. USA, 317
F.3d 1097, 1102 (9th Cir. 2003). We affirm the district court because Defendants
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failed to demonstrate that the shareholder plaintiffs’ claims arise from protected
speech or petitioning activity. See Aguilar v. Goldstein, 207 Cal. App. 4th 1152,
1164 (2012).
Under California’s anti-SLAPP statute, the prevailing party may recover
attorney’s fees “for the expense of responding to a baseless lawsuit.” Robertson v.
Rodriguez, 36 Cal. App. 4th 347, 362 (1995). The district court determined that
Defendants’ anti-SLAPP motions were “frivolous and solely intended to cause
unnecessary delay,” yet with remarkably similar briefing, Defendants rehash the
same arguments to this court. Reasonable attorney’s fees are therefore warranted in
connection with the anti-SLAPP appeal. See, e.g., Baharian-Mehr v. Smith, 189
Cal. App. 4th 265, 273-76 (2010). The proper fees and costs shall be determined
by the district court. Id.
5. We decline to exercise pendent jurisdiction over the district court’s denial
of individual defendant John Kirkland’s motion to dismiss. Kirkland’s motion
bears no more than a tangential relationship to and is not “inextricably intertwined”
with Defendants’ anti-SLAPP motions. Batzel v. Smith, 333 F.3d 1018, 1023 (9th
Cir. 2003).
6. We deny all remaining motions, including the shareholder plaintiffs’
motion for judicial notice, as moot.
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AFFIRMED in part; REMANDED in part.
Defendants shall bear all costs for this appeal.
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