A. Copeland v. Raymond Lane

FILED
NOT FOR PUBLICATION OCT 26 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
A. J. COPELAND, individually and No. 13-16251
derivatively on behalf of Hewlett-Packard
Company, D.C. No. 5:11-CV-01058-EJD
Plaintiff - Appellant,
MEMORANDUM*
v.
RAYMOND J. LANE; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Submitted October 20, 2015**
San Francisco, California
Before: D.W. NELSON, CLIFTON, and N.R. SMITH, Circuit Judges.
A.J. Copeland appeals the dismissal of his Second Amended Complaint
(SAC) with prejudice. We have jurisdiction pursuant to 28 U.S.C. § 1291. We
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
affirm.
The district court correctly found that Copeland failed to plead particular
facts raising a reasonable doubt regarding the independence, good faith, and due
care with which Hewlett Packard Company’s (HP) board investigated his litigation
demand. By making the demand, Copeland conceded that a majority of the board
was disinterested when he made the demand. Rales v. Blasband, 634 A.2d 927,
935 n.12 (Del. 1993). He has not asserted non-conclusory, factual allegations that
could prove post-demand interestedness. See Scattered Corp. v. Chicago Stock
Exch., Inc., 701 A.2d 70, 74–75 (Del. 1997), overruled on other grounds by Brehm
v. Eisner, 746 A.2d 244, 253 n.13 (2000). Copeland alleges that the board
entrusted the investigation of his demand to an independent committee that was a
“sham” from the outset. This allegation is similarly conclusory and devoid of
particular facts that could show an absence of good faith. See Grimes v. Donald,
673 A.2d 1207, 1220 (Del. 1996), overruled on other grounds by Brehm, 746 A.2d
at 253 n.13. Nor has Copeland alleged particular facts raising a reasonable doubt
regarding the due care with which the board investigated his demands.
The district court did not err by dismissing Copeland’s claim that HP
violated Section 14(a) of the Securities Exchange Act based on alleged omissions
and misrepresentations in the 2012 Proxy Statement. To the extent the disclosure
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claim is based on the same mismanagement alleged in Copeland’s derivative
claims, the disclosure claim should also be treated as derivative, because the harm
alleged is one suffered by the corporation, not the individual shareholder. See
Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031, 1036 (Del. 2004).
However, to the extent that the alleged omissions and misrepresentations denied
Copeland the right to a fully informed vote independent of any alleged injury to
HP itself, and thus constitute a direct claim, see N.Y.C. Emps.’ Ret. Sys. v. Jobs,
593 F.3d 1018, 1023 (9th Cir. 2010) (overruled on other grounds by Lacey v.
Maricopa Cty., 693 F.3d 896, 928 (9th Cir. 2012) (en banc)), we nonetheless
affirm the district court. Because the directors elected in 2012 had substantially
completed their terms when Copeland filed the SAC, Copeland fails to request a
type of relief that can be granted. See In re J.P. Morgan Chase & Co. S’holder
Litig., 906 A.2d 808, 825 (Del. Ch. 2005). Therefore, any direct claim should be
dismissed, because Copeland has “failed to suggest any form of relief that can be
granted to [him] in a direct claim.” In re Tyson Foods, Inc., 919 A.2d 563, 602
(Del. Ch. 2007).
Finally, the district court did not abuse its discretion in refusing Copeland
leave to file the proposed Third Amended Complaint (TAC). The proposed TAC
fails to cure the pleading defects regarding the board’s investigation of Copeland’s
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claims, and leave need not be granted where amendment is futile.
AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 951 (9th Cir. 2006).
AFFIRMED.
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