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Rare California 630.638 matches Plaintiffs with Errata Rico Antitrust PhoneHacking Class Action Consolidates into 100,000+ Federal Class Action as Huthart Dodges Motion to Strike, Motion for Sanctions, and Errata. May 31, 2014.Meanwhile in the UK, the same companyfaces 20 or more criminal convictions of itstop executives between 2005-2014. someare calling for terrorism investigation of News Corporation for its attack on UK soldiers and MOD in UK. the NOTW would bribe thousands of bribes to stymie and embarrassUK MOD and create loss of promised protection by grieving families. This cost billions in looses for MOD in UK. Typical American Media company?Criminal Convictions heat up RICO claimsas shareholders wonder how long shareholder money will be used tobalkanize the Directors who oversee the criminal acts: Viet Dinh, Tom Perkins, Kleiner Perkins, Murdoch, James Murdoch, Breyer, Ortellini, Doerr, Schmidt, Jobs, Antitrust crimes proven on all, now hacking HP, Hurd,CA Injunction 17200 is wildcard, expertssay News Corporation may have a jury trialon preliminary injunction its in violationof CA Atty general 2006 cease and desist.Shareholders and institutional investorsmay have to consider top 20 liability forbeing shareholder of Delaware criminal organization in violation of statuesthere that are specialized fraud 1503(d).If they survive that test (noting: they have already lost the phone hacking criminal coverup and about to lose more guilty convictions by middle of June 2014.Then antitrust and privacy violations in CA,and RICO which appears quite stuck into the Directors of same ConspiracySilicon Valley silently refers to as StarWarsNoBidWars led by George Lucas.Cannibals. tore 20% flesh off top workersin No bid gruesome criminal act.Jobs, page, brin, campbell, hurd, andreessen, Their companies generate billions in criminalfines for shareholders. But large shareholdersmay rethink their shady tips for purchase support if the RICO claimssucceed with News News, New NEws, the current strategy of NEws Corporation is rapidname change to escape liability suits.
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NOTICE OF ERRATA
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Brad Greenspan, Pro Se 14938 Camden Ave Suite 47 San Jose, CA 95124
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) Case No. CV 13-4253 MWF ) Plaintiff, ) Honorable Michael W. Fitzgerald v. ) ) ) ) ) ) NOTICE OF ERRATA REGARDING MOTION TO INTERVENE NEWS CORPORATION, NI GROUP LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ) LIMITED, and JOHN and JANE ) DOES 1-10 ) ) Defendants. ) )
)
NOTICE OF ERRATA
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TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE Petitioner respectfully submit the following corrections to certain limited portions of the pleadings Entered into the Court filing system on May 6, 2014. Specifically, petitioner wishes to correct certain pleadings as set forth below. Plaintiff Motion to Intervene Conclusion section And Exhibits. Because of the last minute clerical changes to the numbering of certain exhibits and conversion of pleadings from a Word document - prior to filing the document – the spacing and formatting and certain sections were omitted and inserted erroneously from incorrect versions. Plaintiff did not realize the error in these citations until after the Pleadings were filed and Defendant’s May 19, 2014 claims were reviewed. In particular, Plaintiff wishes to make the following corrections to certain Documents in the pleadings A. Correction #1 – on page 22 of filed May 2, 2014 Motion To Intervene: “39. The Intervenor further respectfully requests the Court grant in such motion, the right to serve the Complaint in Intervention (Exhibit #2) , Motion for Partial Summary Judgment (Exhibit #3) , and Motion for Preliminary 17200 Injunction and/or Motion of Contempt for Violation 2006 California State Attorney 17200 Permanent Injunction entered into consent decree on behalf of Defendant News Corporation with State Attorney (Exhibit #4) related and precedential rulings and briefings attached as herein.
be replaced with the phrase “
NOTICE OF ERRATA
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“39. The Intervenor further respectfully requests the Court grant in such motion, the right to serve the Complaint in Intervention (Exhibit #2) , Motion for Consolidation and/or Motion of Contempt for Violation 2006 California State Attorney 17200 Permanent Injunction entered into consent decree on behalf of Defendant News Corporation with State Attorney (Exhibit #3) related and precedential rulings and briefings attached as herein.”
B. Correction #2 Corrected Complaint in Intervention as Exhibit A is attached
C. Correction #3 Corrected Motion for Consolidation as Exhibit B.
DATED: May 23, 2014 respectfully submitted, Brad Greenspan, in Pro Per
NOTICE OF ERRATA
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EXHIBIT A-
NOTICE OF ERRATA
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EXHIBIT B
COMPLAINT IN INTERVENTION
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Brad Greenspan, Pro Se 264 South La Cienega Suite 1216 Beverly Hills, CA 90211
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) Case No. CV 13-4253 MWF ) Plaintiff, ) Honorable Michael W. Fitzgerald v. ) ) ) ) ) NEWS CORPORATION, NI GROUP ) COMPLAINT IN INTERVENTION LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ) LIMITED, and JOHN and JANE ) DOES 1-10 ) ) Defendants. ) )
) )
COMPLAINT IN INTERVENTION
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TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD HEREIN: PRELIMINARY STATEMENT
1. This is a civil action brought against Defendants for damages for violations of Plaintiff’s right to privacy; for the unlawful access to stored communicationl and for the intrusion into, interception of, email and other wire communications while Plaintiff was living in Los Anglees in violation of 18 U.S.C. 2701, 2707; 18 U.S.C. 2510, 2511, 2520; Article I, Section 1of the California State Constituion; 630-637.0 of the California Penal Code; 1708.8 of the California Civil Code; and California common law. JURISDICTION AND VENUE This action is brought pursuant to 18 U.S.C. 2701 and 2707, 18 U.S.C. 2510, 2511 and 2520. This Court has jurisdiction of the action pursuant to 28 U.S.C. 1331, as this is a civl action arising under the laws of the United States. This Court has jurisdiction over the supplemental claims arising under the Constituion of the State of California, California State law and California common law pursuant to 28 U.S.C. 1367(a). Venue is proper in the United States District Court for the Central District of California pursuant to 28 U.S.C 1391(a) and (b)(2) because the claims arose in this district. PARTIES
2. Plaintiff BRAD GREENSPAN “Plaintiff” is a citizen of the United States. Petitioner owned approximately 3.9 million of a 35 million share class certified in Federal Court June 2009 in the Brown v. Brewer Federal Security Fraud Class Action, 2:0603731.over 4000+ individual victim shareholders of the public company that stopped traded when Defendant News Corporation forced cash out of all shareholders that hadn’t thrown in the towel at $12.00 per share. 3. Plaintiff SubClass A – Federal Brown v. Brewer shareholders
i. Subclass B- UK and US victims of at list one of Defendants or Rico Associated in Fact Enterprise- HAND’s privacy invasion or predicate act.
ii. Subclass C – U.S. employees part of HiTech Class in San jose Federal certified class action who were
victims of privacy violation by Google, Defendants, or Rico Associated in Fact Enterprise: HAND
B. Defendants are also RICO Defendants and members Of ‘HAND’ criminal Associated in Fact Enterprise ‘HAND”
3. Defendant NEWS CORPORATION, a Delaware incorporated company. Defendant NI GROUP LIMITED f/k/a NEWS INTERNATIONAL LIMITED (“NEWS INTERNATIONAL”) IS A BRITISH newspaper publisher, and a wholly-owned subsidiary of NEWS CORPORATION. It is the holding company of NEWS GROUP NEWSPAPERS LIMITED (“NEWS ROUP NEWSPAPERS), the publisher of The Sun newspaper,
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4. Defendant NEWS GROUP NEWSPAPERS, a subsidiary of NEWS INTERNATIONAL, is a United Kingdom company
5. (Hereinafter, NEWS CORP, NEWS CORPORATION, NEWS INTERNATIONAL and NEWS GROUP NEWSPAPERS, are referred to, collectively as the “NEWS CORP Defendants”
6. Defendants JOHN and JANE DOES 1-3, whose identities are presently unknown to the Plaintiff., are
private investigators who work or worked for on
9. Defendants JOHN and JANE DOES 4-7, whose identities are presently known tio the Plaintiff, are journalists, who were employed y agents ofm, and/or independent contractors some or all of the NEWS CORPORATION
10. Defendants JOHN and JANE DOES 8-10, whose identities presently unknwont ot the Plaintiff, are
current or former officers and executives of some or all of the NEWS CORPORAITON Defendants (collectively, the “UNIDENTIFIED EXECUTIVES”), and in such capacity, ivilated laws nad Plaintiff’s right ot privacy, and with some or all of the Defendants, knew, or should have known of and did nothing to stop the unlawful access to stored communications, the intrusioninto, the interceptio fo, the interference with, Plaintiff’s email communications with other Class Members during July 18, 2005 thru December 31, 2012. 11. Google, Inc.
i. Defendant Marissa Meyer, on Google EMG during Rico and antitrust predicate acts between 2005 thru at least 2011.
ii. Defendant Sheryl Sandberg, on Google EMG during Rico and antitrust predicate acts between
2005 thru at least 208. iii. Larry Page iv. Defendant Sergey Brin v. Defendant Alan Eustace vi. Defendant David Drummond vii. Defendant Pinchette, Google CFO. viii. Defendant Amazon.com
12. Defendants eUniverse Inc. aka Intermix, Inc. ( “MySpace Parent Company”) 22. MySpace, Inc.
23. Defendant Brett Brewer. Brewer was former President but not a founder or cofounder of
eUniverse Inc. Brewer is a citizen of California. Brewer was a director throughout the Relevant Period
and was responsible for the preparation, review and/or dissemination of the 2003 Proxy and the 2005
Proxy, both of which were false and misleading when filed with the SEC, disseminated to Intermix
shareholders and voted upon by shareholders at the January 2004 and September 2005 shareholder
meetings. By preparing, reviewing and/or disseminating the false and misleading 2003 Proxy, Brewer
was able to maintain his seat on the Intermix Board, procure millions of dollars worth of personal
COMPLAINT IN INTERVENTION
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benefits in the form of continued employment and stock option grants and ensure that the VantagePoint
Transactions were approved by Intermix shareholders. Brewer also received material personal benefits in
connection with the Acquisition and his preparation, review and/or dissemination of the 2005 Proxy,
including the expectation that the consummation of the Acquisition would extinguish his liability in the
existing derivative suits, indemnify him for prior and contemporaneous misconduct, and immediately
monetize his illiquid stock holdings in the CompanyDefendant Brewer signed or authorized the signing
of the false andmisleading Registration and Proxy Statements
24.Defendant Edell. Defendant Edell signed or authorized the signing of the false and misleading Registration and Proxy Statements. 25. Defendant Chris DeWolfe DeWolfe its uncontested was in a critical position to determine what
law firm to retain for Fog Cutter and the budget and amounts paid to FogCutter counsel for each of the years
2003, 2004, and 2005.
26. Defendant Dan Mosher 27. Defendant Tom Flahie
28. Defendant Richard Rosenblatt 30. Defendant VantagePoint Partners, LLC.
31. Defendant Alan Salzman, principal& managing Partner VantagePoint Partners,LLC. 32. Defendant Carlick. Defendant Carlick signed or authorized the signing of the false and misleading Registration and Proxy Statements.
33. Defendant Sheehan. signed or authorized the signing of the false and misleading Registration and Proxy Statements. 34.Defendant Orrick Herrick law firm was the outside counsel for Fog Cutter Capital
Group, Inc. since at least 2002.. i. FogCutter held at least its 2002 and 2003 Annual meetings at the Orrick Herrington NY
headquarters, according to company’s November 22, 2002 14A filing
ii. Orrick Herrick law firm was sued by the city of San Diego in November 2005 and paid
$2.8 million to settle charges of negligence, breach of fiduciary duty, and breach of contract. Orrick law firm
according to former city employees failed to report disclosure problems of their paying client the city of San
Diego prior to 2005. Orrick law firm according to the city of San Diego’s attorneys,
“[Orrick] possessed for many years all the information one would need to know that the disclosures
regarding the status of the city’s pension system were false.”
35.Defendant Richard Harroch who was employed by Orrick in 2003 thru 2004 and sometime in
2005 hired and began and to work for VantagePartners LLC solely. Harroch worked as the lead corporate
counsel for VantagePoint whileTeaming with Carlick to consummate the 2003 investment intoeUniverse.
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36. Latham Watkins
37. Defendant Richard Rosenblatt. Rosenblatt signed or authorized the signing of the false and misleading Registration and Proxy Statements 38. Defendant Ask Jeeves, Inc.
39. Defendant Geoff Yang. Principal and owner of Defendant RedPoint. Redpoint Ventures was
founded in 1999 by top partners from Brentwood Venture Capital and Institutional Venture Partners
(“Redpoint”), two leading venture firms in Silicon Valley. Redpoint has over $1.7 billion under management.
Since its inception, Redpoint has demonstrated a deep knowledge and insight into the emerging convergence of
media and broadband networks, having successfully invested in companies such as Excite, Ask Jeeves, TiVo,
Netflix, WebTV, MySpace.com, Juniper Networks, Foundry Networks, MMC Networks, and Bay Networks. Geoff
Yang, one of the managing partners of Redpoint Ventures, is a founding member of the M2Z Board.”
40. Defendant RedPoint Partners
41. Defendant Allen & Co.Managing Partner Nancy Peretsman admits in Fortune Magazine in 2009
Article titled, “50 Most Powerful Women”: “M&A specialist Peretsman helped broker Google’s 11th- hour, $1
billion bid for a 5% stake in AOL (and an advertising partnership) that thwarted an AOL – Microsoft alliance. “
ii. On December 5, 2005, an article appears in Business Week, 'Googling For Gold'
(BusinessWeek),, where Quincy smith an Allen & Co. banker is quoted, stating and described,
"Google's own bankers have also seen the possibilities lurking in the company's $120 billion shadow. "You almost bank on other companies becoming successful because of Google," says banker Quincy Smith of Allen & Col. Which represents Google. He points to Advertising.com, an e-marketing client that appeared on his radar when he noticed that 40% of its revenue came through Google. Allen & Co. helped sell the company"
i. The Underwriter Defendants drafted and disseminated the offering
documents and were paid millions of dollars in connection therewith. The Underwriter Defendants’ failure to conduct an adequate diligence and failed to Report to SEC under SEC Statue 306 and 307 42. Defendant Stan Shuman was and is a Managing Director of Allen & co. and has served on the
Board of News Corp since at least 2004.one of News Corp’s long time directors was senior Allen & Co.
investment banker Stan Shuman who resigned October 3, 2005, days after the News Corp acquisition of
MySpace closed and about one month before Comscore perhaps accidentally discloses a list of Search engine
assets ranked by # of unique users visiting each search websites. MySpace Search was growing at such a rapid
rate that the very month after the shareholder vote MySpace is ranked for October 2005 for by 3rd party audit
firm Comscore as having 25% of the Search audience as AOL with over 8 million unique users. The Comscore
disclosure is made first in November 2005 reporting the October 2005 data and proving that the fast growing
MySpace.com unique user audience had been hiding a parallel not disclosed fast growing Search Engine
audience and therefore undisputed asset that had never been disclosed to Intermix shareholders prior to
September 30, 2005.
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ii. Defendant John Doerr, Director Google, Inc.
ii. Intuit , Chairman and Director Bill Campbell
43. Defendant IAC Corp. IAC entered the search engine business upon signing a merger agreement
with Ask Jeees, Inc. In March 2005 and also needed to find partners with large online audiences to further such
its commercal business.IAC closed its merger with Ask Jeeves giving ASK Jeeves a $1.8 billion
dollar value in its stock for stock merger deal on July 19, 2005.IAC’s SEC filings in 2005 state clearly that IAC
had historically retained Allen & Co. to provide Investment banking services and strategy consulting services.
One of IAC’s Directors Charles Kenough served during the relevant period as Chairman of Allen & Co.
44. Defendant Dara Khosrowshai was CEO of IAC in 2005 and was previously an investment banker
at Allen & Co. 45. Defendant Jonathan Miller who between March 2005 and December 2005 is the CEO of AOL.i.
Miller was a top aide to IAC Chairman Mr. Diller until 2002.Defendant Jonathan Miller was CEO of Time Warner internet unit, AOL during the 2005 year and period many of the predicate acts and damages incurred by Petitioner.
iii. In 2007 Miller left AOL as CEO and replaced News Corp’sExecutive Ross Levinsohn where
he currently continues to serve as head of digital media.
47. Defendant JP Morgan. Defendant J.P. Morgan Securities Inc. (“JP Morgan”) is the U.S.
investment banking arm of financial services giant JPMorgan Chase & Co. Morgan acted as joint book-running
manager and underwriter for Google’s 2005 $4.2 billion dollar Secondary, helping to draft and disseminate the
offering documents.
48. Defendant Zakour, worked on the investment banking team for Citibank that was retained by
AskJeeves, Inc. in early 2005 at the Direction of AskJeeves Directors Carlick and Yang. Zakour on or around
May 2005 went to work at JP Morgan. At JP Morgan and on or around July 13, 2005 he was that paid and
engaged by News Corp to serve as their banker to acquire MySpace’s Parent Company.
Zakour was paid and received compensation in his role for JPMorgan
advising and providing a $1.4 Billion dollar valuation report of MySpace.com’s value as of July 13, 2005 which
only News Corp had the advantage and received the benefit of such information by signing a merger agreement
on July 18, 2005 to acquire MySpace.com and its parent company for an aggregate total of $650 million dollars.
However, Zakour’s Citibank arranged deal where he was compensated for the
AskJeeves acquisition by Carlick and Yang did not close until July 19, 2005.
50. Defendant Eric Schmidt
51. Defendant John Doerr. Doerr sat on the board of Excite@Home on behalf of MF until it went
bankrupt in 2001 and was co-investors with Geoff Yang, also a board member for most of the life of
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Excite@Home. MF’s Caufield and Barksdale were since 2001 and thru all relevant periods, lead directors of
Time Warner/AOL. Time Warner’s controlled AOL subsidiary was in acquisition and strategic discussions with
Intermix thru at least July 18, 2005. AOL’s decision in the summer of 2005 as to whether they would sign a new
search engine partnership with Google, or opt to work with a new partner was well followed by the media. The
process was coined a ‘search partnership auction’ that was widely speculated about during this period
culminating in Google paying AOL $1 billion dollars while valuing AOL at $20 billion based on the terms of the
investment and search partnership Time Warner/AOL was able to command.
On or around August 2005, Geoff Yang and Google Director John Doerr co-invest together into broadband
startup, M2Z, Inc. Yang and Doerr having invested together behind M2Z CEO Milo Medin years ago when he
was part of the Excite@Home group of companies merged together that both Yang’s Institutional Venture
Partners (IVP) and Doerr’s Kleiner Perkins Caufield Byers (MFB) had financed before the company went
bankrupt in 2001.Both Yang and Doerr are Directors of M2Z according to same filing.The M2Z filing with FCC
states investors have committed in excess of $400 million “M2Z’s financial backers are Kleiner Perkins
Caufield & Byers, Charles River Ventures, and Redpoint Ventures.” And
“Kleiner Perkins Caulfield & Byers was formed in 1972”;
” John Doerr, a managing partner of the firm, is a founding board member of M2Z.”
ii. Doerr is on WhiteHouse Economic Counsel, including Paul Otellini, and Richard D.
Parsons, Sheryl Sandberg, and Matthew Rose,
53. Defendant Time Warner. Time WarnerAOL’s AOL subsidiary and IAC’s AskJeeves subsidiary
appear to benefit the most from Intermix’s first search asset’s precipitous p demise when Intermix volunteers to
cease operating the division in June 2005 as part of settlement where Intermix also agrees to pay out penalties to
the NY AG of $7.5 million dollars which is approximately 90% of its cash on hand at the time. Both Time
Warner/AOL & IAC almost immediately benefit and indeed publicly brag of unexpected gains in their Paid
Search divisions in a July 21, 2005 press release made by these companies in conjunction with Comscore. The
press release cites the percentage share of the U.S. “search marketplace” attributed to AskJeeves & AOL
compared to the previous 12 month percentage share.
54. Defendant Caulfield. Caufield has made significant political donations in California and the
Unied States.Ten years ago, Caulfield was featured in NY Times article,
“Politicians Getting a Warm Reception” February 10, 2002 by Shawn Hubler,
“Venture capitalist Frank Caufield and his wife, Karen, said they, too, had familiarity in mind when they asked Pelosi to preside over their wedding at Caufield's sprawling second home in Montecito. Caufield, a longtime contributor to Democratic causes, also lives in SanFrancisco, a block from Pelosi in Pacific Heights. "Frank's been involved in Washington, D.C., quite a bit, so
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he knew she could do it," said Karen Caufield. "And she was just darling. She did a beautiful job. She had to fly in on Saturday afternoon because they were in session because of Sept. 11. “
Haig has had a long relationship with Henry Kissinger, to whom Haig became senior military advisor in
1969. January 1982, Reagan replaced his national security advisor, Richard Allen, with William P. Clark,
another Paperclip person, and who was Haig's deputy. Nixon said, "When you see the lights burning late
in Henry's [Kissinger] office, it's usually Al Haig." (*War In The Falklands, the Full Story* by the
*Sunday Times* of London Insight Team, Harper & Row, New York, 1982, p. 123.)
55. Defendant Jim Barksdale is a partner of Kleiner Perkins and also sat on board of TimeWarner/AOL during period of claims.
56. Defendant Kleiner Perkins. Kleiner Perkins Caufield Byers LLC (“MF”) scheme to control Time Warner.“FTC's Facebook-Instagram Inquiry Ensnares Google, Twitter:
Source”By Alexei Oreskovic(Reuters) - The U.S. Federal Trade Commission has reached out to Google
Inc and Twitter inan investigation into Facebook Inc's $1 billion acquisition of photo-sharing service
Instagram, asource familiar with the probe told Reuters
57. Defendant Thomas J. Perkins ("Perkins") if founding partner of MF. Perkins was lead Director
and controlled News Corporation from 1996 until his resignation as head of Audit and Nominating Governance
Committee of News Corp in October 2011.Defendant Perkins was a member of the Board's Audit, Nominating
and Corporate Governance and Compensation committees. For the fiscal year ended 2010, Perkins
earned$258,000 for his role at the Company. Because of defendant Perkin's experience and positions at News
Corp, his access to internal corporate documents, conversations and connections with
other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non-public information about the business o fNews Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company. Thomas Perkins of Perkins was since 1995 and thru all relevant times, one of two lead directors of News Corp that occupy the committees of Audit, Compensation, and Nominating and Corporate Governance. Perkins would have been significant beneficiary if Google was able to reach A commercial search partnership in 2005 with MySpace instead of competitors such as Yahoo and
Microsoft. Perkins’ partner Doerr would have been a significant beneficiary also. Both owned Google stock in
significant amounts thru MF and/or other designated holding companies entities or personally.
58. Defendant K. Rupert Murdoch ("Murdoch") has been CEO of the Company since 1979 and its Chairman since 1991. The Murdoch family owns 12% of the overall equity of the Company and the Murdoch family trust owns almost 40% ofNews Corp's voting Class B common stock, and thus has effective control over corporate matters. Defendant Murdoch is the father of defendants James and Lachlan Murdoch. For the fiscal year of 2008, Defendant Murdoch received over $30 million in compensation from News Corp. For each of 2009 and
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2010, defendant Murdoch received $22 million. Because of defendant Murdoch's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company. Plaintiff is informed and believes that defendant Murdoch is a citizen of the State of New York. CEO Admits April 2012, he has been victim and Company has been victim of “Coverup”. This is critical date that fraudulent concealment of evidence activities admitted by CEO. CEO thru April 2012 admission under oath at Leveson Inquiry is significant in that it also is admitting that based on defective internal controls and systems the Directors and CEO were not aware of the actions of the executives beneath them. Thus admitting gross negligence. While Gross Negligence is all that is necessary to prove Petitioner’s damages under Dodd Frank, Petitioner also believes certain actions defendants will be to found willfully aware Of criminal activity including the “Under Fair market” bid rigging benefitting Google, MF, and News Corp.
59. Defendant Les Hinton was formerly the Executive Chairman of News International. On 7 December 2007 he ceased to be Executive Chairman of News International and was appointed Chief Executive of Dow Jones, which had recently been acquired by News Corporation. He resigned on 15 July 2011 and cited the phone-hacking scandal .resignation. He gave oral evidence to the Committee on 25 March 2003, 6 March 2007and 15 September 2009. 60. Defendant Julia Angwin has been and is an employee of NewsCo since 2007. 61.Defendant Ross Levisohn was an executive and employee of NewsCo in 2005 thru 2007.
62. Defendant James R. Murdoch ("James Murdoch") has been a Director since 2007. As of March 30, 2011, James Murdoch became Deputy Chief Operating Officer as well as Chief Executive Officer of the Company's international divisions. James Murdoch is the son -of defendant Murdoch and the brother of defendant Lachlan Murdoch. Defendant James Murdoch received over $17 million in News Corp compensation for the fiscal year of 2008. In each of 2009 and 2010, defendant James Murdoch received over $10 million. Because of
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Defendant James Murdoch's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non public information about the business of News Corp, its lack of internal controls and the existence and cover up ofthe widespread hacking scandal at the Company. Plaintiff is informed and believes that defendant James Murdoch is a citizen of the State of Connecticut. As Director, Proxy’s are sent to the shareholders which is a violation of RICO 1431, predicate act of mail fraud by causing 2005 -2012 false annual Proxy statements, known as Def14as, to be distributed which is illegal in United States that omitted the UK hacking facts including that there as the CEO described in September 2010, just “one rogue hacker” as well as also omitting the fact NewsCorp was violating the FCPA and UK anti-bribery rules thru bribing public officials in the UK including,
63. Defendant Lachlan K. Murdoch ("Lachlan Murdoch") has been a Director of the Company since 1996. He served as an advisor to the Company from 2005 to 2009, and served as its Deputy Chief Operating Officer from 2000 to 2005. For the fiscal year ended June 30, 2010, Lachlan Murdoch received almost $2 million for his role with the Company. Because of Defendant Lachlan Murdoch's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew the adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
64. Defendant Chase Carey ("Carey") has been the President, Chief Operating Officer and Deputy Chairman of the Board since July 2009. Carey previously served the Company and its affiliates as Co-Chief Operating Officer from 1996 to 2002, consultant from 2002 to 2003 and as a Director from 1996 to 2007. For the fiscal year ended June 30, 2010 2002 to 2003 and as a Director from 1996 to 2007. For the fiscal year ended June 30, 2010
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Carey received over $26 million in compensation from News Corp. Because of defendant Carey's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
65. Defendant David F. DeVoe ("DeVoe") has been a Director of the Company and its Chief Financial Officer since 1990. Defendant DeVoe has served as Senior Executive Vice President since 1996. Defendant DeVoe received News Corp compensation for the fiscal years ended 2008 through 2010 of almost $10 million, $9 million and $7 million respectively. Because of defendant DeVoe's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew the adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
66. Defendant Joel Klein ("Klein") joined the Board in January 2011 and currently serves as Executive Vice President, Office of the Chairman. Defendant Klein is also the Chief Executive Officer ofNews Corp's education division. Defendant Klein is expected to receive a yearly salary of $2 million, and an annual bonus of at least $1.5 million, in addition to his $1 million signing bonus. Because of defendant Klein's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non-public information about the business of News Corp, its lack of internal controls and the
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existence and cover up of the widespread hacking scandal at the Company. Plaintiff is informed and believes that defendant Klein is a citizen of the State ofNew York. Klein is married to Defendant Seligmann who is employed as CFO of Defendant Sony USA Corp.
67. Defendant Arthur M. Siskind ("Siskind") has been a Director of the Company since 1991 and senior advisor to defendant Murdoch since 2005. Defendant Siskind served as the Company's Group General Counsel from 1991 to 2005, as Senior Executive Vice President from 1996 to 2005 and as Executive Vice President from 1991 to 1996. For the fiscal year ended June 30, 2010, Siskind earned almost $4 million for his role with the Company. Because of defendant Siskand's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
68. Defendant Sir Roderick I. Eddington ("Eddington") is employed by JP Morgan currently and during the 2005 period. Eddington has been a Director of News Corp since 1999, and serves as the Chairman of the Board's Audit Committee and as a member of the Compensation Committee. For the fiscal year ended June 30, 2010, Eddington earned $274,000 for his role with the Company. Because of defendant Eddington's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof an via reports and other information provided to him in connection therewith, he knew the adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
69. Defendant Andrew S.B. Knight ("Knight") has been a Director of the Company since 1991 and serves as a member of the Board's Audit and Compensation Committees. Defendant Knight was the Chairman of News International, a subsidiary of the Company and
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parent of News of the World from 1990 to 1995. For the fiscal year ended June 30, 2010, defendant Knight earned $281,690 for his role with the Company. Because of defendant Knight's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew the adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
70. Defendant Peter L. Barnes ("Barnes") has been a Driector of the Company since 2004 and is a member of the Board's Audit Committee. For the fiscal year ended June 30, 2010, defendant Barnes earned $236,000, for his role with the Company. Because of defendant Barnes' experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non-public information about thebusiness of News Corp, its lack of internal controls and the existence and cover up of thewidespread hacking scandal at the Company.
71. Defendant Natalie Bancroft ("Bancroft") has been a Director of the Companysince 2007. For the fiscal year ended June 30, 2010, Bancroft earned $220,000 for her role withthe Company. Because of defendant Bancroft's experience and positions at News Corp, heraccess to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, she knewadverse non-public information about the business of News Corp, its lack of internal controlsand the existence and cover up of the widespread hacking scandal at the Company
72. Defendant Kenneth E. Cowley ("Cowley") has been a Director of the Company since 1979. Defendant is a member of the Board's Nominating and Corporate Governance Committee. Defendant Cowley served as a senior executive of News Limited, a subsidiary of the Company from 1964 to 1997, including as its Chairman and Chief Executive from 1980 to 1997. For the fiscal year ended June 30, 2010, defendant Cowley earned $231,000 for his role with the Company. Because of defendant Cowley's experience and positions at News Corp, hisaccess to internal corporate documents, conversations and connections with other corporate
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offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, she knew the adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
73. Defendant Viet Dinh ("Dinh") has been a Director of the Company since 2004. Defendant Dinh is a member of the Board's Nominating and Corporate Governance and Compensation Commitees. For the fiscal year ended June 30, 2010, Dinh earned $258,000 forhis role with the Company. Because of defendant Dinh's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with othercorporate offices and employees, attendance at management and Board meetings and committees thereof and via reports and other information provided to him in connection therewith, he knew adverse non-public information about the business of News Corp, its lack of internal controls and the existence and cover up of the widespread hacking scandal at the Company.
74. Defendant John L. Thornton ("Thornton") has been a Director of the Companysince 2004. Defendant Thornton serves as a member of the Board's Nominating and CorporateGovernance and Compensation Committees. Because of defendant Thornton's experience and positions at News Corp, his access to internal corporate documents, conversations and connections with other corporate offices and employees, attendance at management and Boardmeetings and committees thereof and via reports and other information provided to him inconnection therewith, he knew adverse non-public information about the business of NewsCorp, its lack of internal controls and the existence and cover up of the widespread hackingscandal at the Company. 75. Defendant Hogan & Lovell Law LLC, HHLAW is conflicted by having fraudulently concealed the fact that HHLAW was working for News Corp while creating the merger agreement in July 2005.(60b3 Declaration Exhibits104,105), and should be disqualified as Counsel in Brown v. Brewer and from acting as counsel for News Corp in this or related State or Federal actions because of such conflict. New Evidence reveals from the May 2012 Leveon Inquiry in the UK that Hogan and Lovell was conducting and leading the BskyB acquisition’s dealings and negotiations with the UK Government and multiple regulatory bodies there that began as early as December 2010 and continued thru July 2011 when the bid was dropped by News Corporation according to its public statements. (Exhibit)
75. Defendant Richard Stone a lawyer working for Hogan Lovell and News Corporation and representing defendants in Brown v. Brewer case in Federal Court which is securities fraud Class Action. 76. Defendant Julie Shephard a lawyer working for Hogan Lovell and News Corporation and representing defendants in Brown v. Brewer case in Federal Court which is securities fraud Class Action.
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77. Defendant Christine Varney lobbyist for News Corp and Hogan Lovell now Swarthmore Cravin law firm. Varney was nominated for the position of Assistant Attorney General forthe Antitrust Division of the Department of Justice on February 23, 2009, and confirmed by the Senate on April 20, 2009.[8] Before her appointment, Varney had experience working in both the Private and public sectors. After the election of President Barack Obama, Varney served as Personnel Counsel on the Obama-Biden Transition Project.[9] Before joining the Obama campaign, Varney was a fundraiser for the Hillary Clinton campaign during the 2008 United States Presidential Election.[3] Until her appointment as an Assistant Attorney General, Varney was a partner at the Washington, D.C. law firm Hogan and Hartson, where she led the internet practice group.[1][10] As a lawyer and lobbyist, Varney represented and advised companies on matters such as antitrust, privacy,business planning and corporate governance, intellectual property, and general liability issues. Notably, she represented Netscape during U.S. v. Microsoft and its merger with AOL.[11] Other clients included eBay,DoubleClick, The Washington Post Company's Washingtonpost and Newsweek interactive businesses, Dow Jones & Company, AOL, Synopsys, Compaq, Gateway, the Liberty Alliance, and Real Networks.[12] According to the Center for Responsive Politics, as a lobbyist Varney represented mostly computer and internet firms, but also oil & gas interests. 77. Sharis Arnold Posen, On or around April 2009, Sharis transitioned from Hogan & Lovell into the Antitrust division, 78. Defendant Mary Ellen Callahan lobbyist for News Corp and Hogan Lovell 79. Defendant Mark Hurd. Hurd was CEO of HP a public company from 2005 thru 2010. Hurd was on Board of News Corp between 2007-2011 and a member of the Governance and Nominating Committee of News Corp.Hurd gave evidence to Congress and admitted his role in illegal conduct as
80. Vinod Khosla
81. Khosla Ventures
82. Samir Kaul 83. Amryis 84. Defendant Jim Breyer (“Breyer”) is the largest preferred stock holder of FaceBook, inc. , and
serves on the News Corp Board as of October 2011. According to its S1: “James W. Breyer directors Accel Partners, Brightcove Inc., Dell, Inc., , Prosper Marketplace,
Inc., Wal-Mart Stores, Inc., where he is the lead/presiding independent director. Defendant serves as head of News Corp Nominating and Governance
85. Accel Partners LLC
87. Defendant Sheryl Sandberg. According to faceBook’s s1, Sandbegr has:
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“ seved as Chief Operating Officer since March 2008. From November 2001 to March 2008, Ms. Sandberg served in various positions at Google, Inc., most recently as Vice President, Global Online Sales & Operations. Ms. Sandberg also is a former Chief of Staff of the U.S. Treasury Department and previously served as a consultant with McKinsey & Company, a management consulting company, and as an economist with The World Bank. In addition to serving as our Chief Operating Officer, Ms. Sandberg has been a member of the board of directors of the Walt Disney Company since December 2009. Ms. Sandberg holds an A.B. in economics from Harvard University and an M.B.A. from Harvard Business School.” 88. Defendant David A. Ebersman according to the Facebook S1: “ has served as our Chief Financial Officer since September 2009. Prior to joining us, Mr. Ebersman served in various positions at Genentech, Inc., a biotechnology company, including as its Chief Financial Officer 89. Marc L. Andreessen directors Opsware, Inc. (formerly known as Loudcloud Inc.), as Chief
Technology Officer of America Online, Inc., , directors of eBay Inc. and the Hewlett-Packard Company.
90. Donald E. Graham Chief Executive Officer of The Washington Post Company, Defendant signed or authorized the signing of the false and misleading Registration Statement. 91. Washington Post Corporation 94. Defendant Alex Voxman of Latham & Watkins
Latham & Watkins was conflicted from their role as both Intermix counsel in the very transaction in
dispute. In addition, Latham’s Alex Voxman has been Rosenblatt’s corporate attorney and an investor in his
business ventures. Voxman’s bio also states he was also involved in,
“Representation of Intermix Media in connection with the formation, recapitalization and preferred stock
financing of its majority-owned subsidiary MySpace.com and the sale of Intermix/MySpace to News Corp” and
“Representation of emand Media in connection withpreferred stock equity financing and its acquisition of
eHow.com, BulkRegister.com, Intermix Networks, expertvillage.com, Pluck Corporation and numerous other
Internet Media.
95. Defendant Ernst & Young LLC
96. Defendant RGRD Law LLC
97. Defendant Jim Brown,
98. Defendant Randall Baron is lead partner for Defendant RGRDLAW . 99. Defendant Darren Robbins
101. Defendant Sony 550 LLC 102. Defendant SonyMusic Corp., 103. Defendant Sony USA Corp (“Sony”).
104. Defendant Lisa Seligman, C Legal Officer of Sony USA Corp. and Married to
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103. News Corp’s Joel Klein. Assistant Attorneyy General April 29 and Holder as Deputy Attorney General on June 13, 1997. 105th Congress, they are approved.
In 2002-2003, Richard Clark, Special Advisor to the President and Ray Lane.
105. Robert Wiesenthal, Chief Financial Officer of Sony Corporation
106. Howard Stringer, CEO Sony USA Corporation.
107. Elliot Spitzer, 2004-2005 member of WAVC, Western Association oof Venture Capitalists,
along with, “John Muleta, Chief FCC Wiresless Telecommunications Bureau” Robert Klein II, Klein Financing
Corporation, Philip Zlikow, Executive Directoor 9/11 Commissions, Eliot Spitzer, New York State Attorney
General, Brian Robert, CEO Comcast, “
107. EMI Music Corporation
108. Warner Music Corporation
109. Arent Fox Law Firm 110. Defendant Answers.com, Inc.
111. Defendant Joe Klein 113. Defendant Andreeson Horowitz LLC 115. Defendant Covington Burlington
113. Plaintiff is currently unaware of the names, addresses, and/or involvement of all of the other individuals who may have participated in some/all of the tortuous and/or illegal activities that are described herein- and/or who may have benefitted financially from the operations of one or more of the Business Entities. In this regard, the Plaintiff reserves the right to amend this Verified Complaint to include those other individuals as that information becomes available during the discovery process in this lawsuit. Plaintiff is currently unaware of the names, addresses, and/or involvement of all of the other law firms and attorneys who may have participated in some/all of the tortuous and/or illegal activities that are described herein- and/or who may have benefitted financially from the operations of one or more of the Business Entities. In this regard, the Plaintiff reserves the right to amend this Verified Complaint to include those other individuals as that information becomes available during the discovery process in this lawsuit.
IV - CLASS ACTION ALLEGATIONS
23. Plaintiffs bring this action on behalf of themselves and all others similarly situated (the “Class”)
pursuant to Federal Rules of Civil Procuedre 23(a), 23(b)(2), and 23(b)(3). The Class is defined as follows: The questions of law or fact common to the Class include but are not limited to: whether the conduct of Defendants violated the Clayton Act, Sherman Act or Cartwright Act, or RICO
b. whether Defendants’ conspiracy and associated agreements, or any one of them, constitute a per se violation of the Clayton Act, Sherman Act or Cartwright Act; c.hether Defendants’ agreements are void as a matter of law under California
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Business and Professions Code 16600; d.whether the conduct of Defendants violated California Business and Professions Code 17200, et seq.; whether Defendants fraudulently concealed their conduct or obstructed justice.whether Defendants’ conspiracy and associated agreements restrained trade, commerce, or competition for internet acquisitions or search engine commercial agreements.Whether Plaintiffs and the sub Classes suffered antitrust or RICO injury or were threatened with injury;The difference between the acquisition compensation received by subclass Plaintiffs , and the acquisition compensation Plaintiffs and the Class would have received from Defendants in the absence of the illegal acts, contracts, combinations, and The type and measure of damages suffered by Plaintiffs and the Sub Classes.conspiracy allged herein; Whether Defendants engaged in a pattern of mail and wire fraud in direct violation of RICO statutes;Plaintiffs claims are typical of the claims of the Class as they may include antitrust injuries and Rico and Privacy InvasionPlaintiff will fairly and adequately represent the interestes of the Class and have no conflict with the interest of the Class. FACTUAL ALLEGATIONS THE HACKING SCANDAL- A Pervasive Scheme Over the past decade, employees at News Corp subsidiaries engaged in a widespread scheme to eavesdrop on voicemail and other forms of electronic communication inorder to obtain stories for their publications. NewsCorp’s CEO Rupert Murdoch and Janet Nova, the Deputy Group General Counsel of News Corp were on the News International Board thru late 2011. Resigning shortly after executive Mockridge stated to the Leveson Inquiry in October 2010, “the board of directors of NI Group Limited continues to play a key role in ensuring the appropriate corporate governance standards of the company and its subsidiaries.” (Leveson Report 2.41, pg. 106) Most recently, News Corp told the Leveson Inquiry “audits were planned at NI in relation to, inter alia, advertising revenue, circulation revenue, compliance with the UK Bribery Act and NI’s digital media operations” Ms. Brooks' comments to the British House of Commons Culture committee in March 2003 are particularly disturbing. Ms. Brooks told the committee that the story of MillyDowler was an example of how News of the World handled stories sensitively and respected thewishes of grieving parents because the paper only sent one reporter and one photographer to theMs. Dowler's funeral. Although she deceived the committee about the true nature of the papers egregious actions with regard to Milly Dowler, Ms. Brooks did hint at the scandal to come whenshe admitted before the committee that News of the World "paid the police for information inthe past." In November 2005, Clive Goodman, News of the World's royal editor wrote a brief story revealing that Prince William had strained a tendon in his knee and sought medical advice. A week later, he revealed that the prince had borrowed broadcasting equipment from a friend. Another article quoted verbatim a hacked voicemail in which Prince William imitatedhis girlfriend. Mr. Goodman garnered his information through the unlawful hacking of PrinceWilliam's voicemail. In 2005, Prince William's staff notified authorities that his phone hadbeen hacked after intimate details were reported in Mr. Goodman's articles. An initial police investigation into the police's misconduct resulted in the January 2007 convictions of Clive Goodman and Glenn Mulcaire. A desk editor who was working for Andy Coulson, News of the Worlds, editor when police arrested Goodman was the only one who went down.Despite this, Mr. Coulson represented to the public that the Royal hacking was a one-off instance and the work of rogue reporters. Les Hinton, News
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International Group's then executive director and close confidant of defendant Murdoch made similar misrepresentations.News Corp misled the public regarding its internal controls and its failure to properly respond to the unlawful activities alleged herein. The misconduct not only has caused harm to News Corp's reputation but has resulted the shuttering of a 168-year-old newspaper. Additionally, the scandal has scuttled the Company's attempted acquisition of BSkyB. NEWS CORPORATION ANTI-RETALIATORY ATTACKS breaches of the Individual Defendants fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment, as well as the aiding and abetting thereof, by the Individual Defendants. News Corp and other Defendants that are part of a RICO Associate in Enterprise are named as a defendant because they have benefitted from the anti-retaliatory acts of omission, harassment, and violations of Section 1513 (e) and (f) its employees carry out for the financial gain of the overall company. However, the Individual Defendants are responsible for failing to oversee the internal Controls of a publicly traded company even as they have collected millions in compensation for turning a blind eye to the criminal and civil anti-retaliatory violations generated by the many subsidiaries of News Corporation whose executives operate and carry out the predicate criminal and civil violations of law and generally illegal conduct. Therefore, by NewsCorp having compromised internal controls and Directors willing to accept 100% of the money for serving as an SEC Director of a public company but Failing to discharge 100% of the duty, time, and effort needed to operate as a Director and Operate a compliant Board and that Board operate a compliant group of managers which included the CEO, Rebekah Brooks, Les Hinton, Ross Levinsohn, as the top executives. Instead, the Directors and Board of News Corporation and other Defendants such as Hogan Lovell and Ernst & Young utterly failed and turned a blind eye and did not attempt over years of neglect, to sound the alarm to outside auditors or Regulators. Therefore, any victims of News Corporation anti-retaliatory Attacks under Dodd Frank and Sarbanes Oxley. the individual News Corporation Directors are liable for The News Corporation’s defective and broken internal controls and compliance safeguards, Because these Directors have allowed false public filings to mask and hide the true State of danger the public was under because the entire business could be operated in an unlawful or corrupt or recklessly illegal way, and the Directors and Company would conceal and not disclose the true set of facts. Worse the Directors gladly buried years of illegal predicate actsin their SEC Financials by simply omitting them and allowing their CEO and CFO to liein their Officer Certificates and the individual Directors turned a blind eye to the criminalconduct. Finally with the 2011 July breaking of the UK phone hacking, the public could begin to notice the United States SEC significant defective Enron like financial off balance sheet, omitted from legal liabilities and frauds the Officers were allowing including admitting they were paying bribes to police and as the MET POLICE Sue Akers said in January 2012, News Corporation had operated one of its newspapers as an operation to payout thousands of illegal bribes and coverup the bribes by mislabeling the use of proceeds. News Corporation admitted its financial statements were defective which was yet more proof of the defective internal controls and systems of News Corporation historically and currently. The Company has admitted in its 14A Proxy Statement filed with the SEC on October 15, 2010 that defendants Murdoch, James Murdoch, Lachlan Murdoch, Chase Carey,David F. DeVoe, Joel Klein, and Arthur M. Siskind and are not independent directors pursuant to the requirements of the NASDAQ Capital Markets, including NASDAQ Listing Rule5605(a)(2), and applicable SEC regulations. Additionally, defendants Knight, Dinh,Eddington, Perkins and Thornton lack independence from defendants Murdoch, James Murdocn, Carey, and DeVoe as they are defendants who are not disinterested and/or
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independent and who exert influence over the compensation for defendants Murdoch, JamesMurdoch, Carey, and DeVoe by virtue of their positions as members of the Compensation Committee. The Compensation Committee annually reviews and approves corporate goals and objectives relevant to the compensation for defendants Murdoch, James Murdoch, Carey, and DeVoe evaluates their performance in light of those goals and objectives, and approves their compensation level based upon these evaluations. This lack of independence renders defendants Knight, Dinh, Eddington, Perkins and Thornton incapable of impartially. Defendants face a substantial likelihood of being held liable for breaching their fiduciary duties of loyalty and good faith as alleged herein, and are therefore incapable of disinterestedly and independently providing relief for Petitioners thru fixing the defective internal controls and compliance of News Corporation including the reckless managementof outside law firms like Hogan Lovell and Connolly Law, Covington Burlington. The principal professional occupation of defendants Murdoch, Carey, James Murdoch and DeVoe is their employment with the Company, pursuant to which they received significant compensation from the Company . 26. The entire News Corp Board and senior management participated in the wrongs complained of herein. For the reasons described herein, New Corp's directors are not disinterested or independent. Pursuant to their specific duties as Board members, each was charged with the management of the Company and the conduct of its business affairs. Each of the above referenced defendants breached the fiduciary duties they owed to News Corp and its shareholders in that they failed to prevent and correct the dissemination of the Company's false and misleading statements. Thus, the News Corp Board cannot exercise independent objective judgment because its members are personally interested in the outcome because their actions have subjected News Corp to millions of dollars in potential liability for violations of applicable securities laws; Defendants Murdoch and DeVoe certified certain of News Corp's SEC filings. Amd face a substantial likelihood of liability for breach of fiduciary duties owed to News Corp; The Individual Defendants concealed the true scope of the hacking scandal and Petitioner’s whistleblower evidence and News Corporation’s legal liabilities during the Relevant Period; Defendants Eddington, Barnes, Knight and Perkins were aware of the Company's ongoing unlawful and improper business practices and the dissemination of materially false and misleading statements and, yet, still permitted the Company to portray to the public the Company's false and misleading information despite their heightened fiduciary obligations as members of the Company's Audit Committee. Defendant Eddington served as Chair of News Corp's Audit Committee during the Relevant Period and defendants Barnes,Knight and Perkins served as
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members of News Corp's Audit Committee during the RelevantPeriod. The purpose of News Corp's Audit Committee was to assist the Board in fulfilling Its oversight responsibilities. Specifically, the Audit Committee was to assist the Board in overseeing: (1) the integrity of the Company's financial reporting processes and systems of internal control (2) the qualifications, independence, and performance of the Company's independent registered public accounting firm; (3) the Company's compliance with legal and regulatory requirements, involving financial, accounting, and internal control matters, (4) investigations into complaints concerning financial matters, (5) risks that may have a significant impact on the Company's financial statements, and (6) the review, approval and ratification of transactions with related parties. Moreover, as part of its oversight role with respect to the Company's financial statements and the public disclosure of the Company's financial results, the Company's Audit Committee regularly reviewed and discussed with New Corp's management the financial statements included in the Company's annual reports onForm 10-K and quarterly reports on Form 10-Q. The Audit Committee also met regularly in separate executive sessions with News Corp's CFO, Chief Accounting Officer, and other members of the Company's executive management team. The Company's Audit Committee also operates pursuant to a written charter approved by the Company's Board, which provides, among other things, that Audit Committee members must: "[r]eport to the Board of Directors on a regular basis, and this report shall include a review of any issues that arise with respect to the quality or integrity of the Company's financial statements, the Company's legal and regulatory requirements, the qualifications, independence and performance of the Company's independent registered public accounting firm and the performance of the corporate audit function." As a result, defendants Eddington, Barnes, Knight and Perkins knew, or should have known, of the Company's wrongdoing alleged herein, but intentionally or recklessly violated their duties as members of the Audit Committee. The failure of defendants Eddington, Barnes, Knight and Perkins to perform their duties as members of the Audit Committee with loyalty and in good faith raises a substantial likelihood of non-exculpated personal liability on their part. Each of the key officers and directors knew of and/or directly benefited from the wrongdoing complained of herein thereby rendering demand futile; The Individual Defendants approved and/or permitted the wrongs alleged herein to have occurred and participated in efforts to conceal or disguise those wrongs from News Corp's stockholders and the public or recklessly and/or negligently disregarded the wrongs complained of herein, and are therefore not disinterested parties; All of News Corp's directors have extensive business and personal entanglements, which they will not do, thereby excusing demand; The acts complained of constitute violations of the fiduciary duties owed by News Corp's officers and directors and these acts are incapable of ratification; Each of the Individual Defendants authorized and/or permitted the false statements disseminated directly to the public and which were made available and distributed to shareholders, authorized and/or permitted the issuance of various of the false and misleading statements and are principal beneficiaries of the wrongdoing alleged herein,. GOOGLE-AUC-NONCOMPETE (‘GAN’) “association-in-fact “enterprise,
Each of the Defendants at all times relevant to this action, qualify as a RICO “person” within the meaning of 18 U.S.C. §§ 1961(3) and 1962(c).
Defendants have used an association-in-fact “enterprise,” within the meaning of 18 U.S.C. § 1961(4), to carry out its pattern of racketeering activity. This enterprise consists of Defendants: News Corporation, Ernst & Young, Connolly Law Firm, Google, TimeWarner/AOL, New News, 21st Century Fox, Allen & Co., Kleiner Perkins Caufield, Hogan Lovell, Latham & Watkins, Orrick Herrington, VantagePoint Partners, RedPoint, JPMorgan, Facebook Inc., Intel Corporation, Khosla Ventures LLC, Washington Post Corporation, Amazon.com, Accell Partners LLC, RGRD Law LLC, Sony Corporation, LOUIS A. KARASIK , ALSTON & BIRD LLCBRENDAN V. SULLIVAN, JR. , TOBIN J. ROMERO ,JOSEPH M. TERRY, JONATHAN B. PITT, WILLIAMS & CONNOLLY LLP,Sony Music Corporation, Arent Fox, EMI, Warner Brothers Music, MySpace Inc., Intermix Inc., Ernst & Young, Markel Foundation, Varney, Mary Beth Callahan, Viet Dinh, Mary Jo white, JPMorgan, Jamie Dimon, Comcast, Rodin, Stephen Burke, Seligman, CLO of Sony USA, Robert
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Wiesenthal, Barry Diller, Sheryl Sandberg, Mark Andreeson, Mark Hurd, Dan Evans, Rebekah Wade Brooks, Andy Coulson, Clive Goodman, Les Hinton, Marrisa Meyer, Larry Page, Jonathan Rosenberg, Eric Schmidt, Bill Campbell, HP, Kleiner Perkins Caufield, James Barksdale, Joel, Rupert Murdoch, James Murdoch, Paul Otellini, John Thompson, Jim Breyer,Covington Burlington, Vinod Khosla, Al Gore Jr Apple Director, Mark Zuckerberg, Donald Graham, Keker & Co Law, as well as certain of their Officers, Directors, and employees (“Enterprise”). This Enterprise possessed and continues to possess a common purpose and goal, a membership, organizational structure, and ongoing relationships.with sufficient longevity to permit and enable pursuit of the Enterprise’s purpose and long-term objective through a continuous course of conduct that affected and continues to affect interstate and foreign commerce. Google and other defendants qualify as a “person” under the civil RICO statute because each knowingly and fraudulently conducted and participated in the conduct, the management and the operation of the Enterprise’s affairs, directly or indirectly, through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c). Google and Defendants engaged in such unlawful interstate mail and wire fraud. Pursuit of profit is not per se violative of the mail and wire fraud statutes or civil RICO. Google and defendants violated RICO and injured Plaintiffs and class members in their business or property by reason of its conduct of the Enterprise not to pursue gain, but to do so by unlawful means: to maximize its gain and profit through a pattern and practice of misrepresentation and concealment of the systematic decisions that placed financial goals above safety considerations, that was conducted in violation of applicable laws and regulations, that made such operation perilous to human and environmental health and safety, and that rendered Google, Defendants and the Enterprise unable to prevent, criminal acts from manifesting in the operations of fellow RICO defendants such as News Corporation Phone Hacking, bribery, and “coverup” announced by CEO inApril 2012. As the direct, proximate and foreseeable result of this violative pattern And disasters created, Plaintiffs and the class have been injured in their businesses and property. The Enterprise exists separate and apart from its pattern of racketeering activity, in as much as Google Inc. and other Defendants and the Enterprise have multiple goals, not all of which are fraudulent. The lawful activity engaged in by the Enterprise includes ongoing partnerships to sell online advertising, selling public and private internet company stock generating commissions, trying to identify and investing control or non control equity stakes in new internet technology, advertising, or marketing companies, offering for sale intellectual property drivencontent thru pay per view or subscription sales, legal and accounting vendor services are bought and sold.Google and other defendants have, since at least 2004, used this enterprise to conduct the related acts of mail and wire fraud along with other RICO violations comprising the pattern of racketeering.Plaintiffs allege a conspiracy of multiple RICO “persons” an example and evidence This RICO & Antitrust Class Action Complaint makes allegations of, and places Defendants on notice that Plaintiffs may seek, certification of one or more classes and/or subclasses, as appropriate, for the classwide determination of common issues of law and/or fact relating to the liability of Defendants to the members of such classes and/or subclasses for actual, compensatory, and treble damages for the economic harm and damage to business and property Plaintiffs have incurred as a result of Defendant’s culpable knowledge, fraudulent conduct, acts and omissions as set forth herein, and for appropriate equitable relief. Plaintiffs will seek to maintain this action as a class action, and/or the class certification of particular issues herein, under Rule 23 of the Federal Rules of Civil Procedure, including, as appropriate, Rule 23(a)(1)-(4); (b)(1)(B); (b)(2); (b)(3); (c)(4); and (c)(5). PREDICATE ACTS & THE PATTERN OF RACKETEERING ACTIVITY Defendants and Enteprise engaged in a fraudulent scheme to defraud shareholders of its acquisition targets, competitors in online advertising and search markets, victims of criminal wiretap violations, phone hacking, and bribery in the US and UK, employees working for defendants, petitioner, and the public.
For the purpose of devising and carrying out their scheme and artifice to defraud the government re gulators and plaintiff victims by means of false and fraudulent pretenses, representations and promises, Defendants did place in an authorized depository for mail, or did deposit or cause to be deposited with private commercial interstate carriers and knowingly caused to be delivered by the United States postal service, letters, memoranda, and other
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matters, in violation of 18 U.S.C. § 1341, or aided and abetted in such criminal acts, as previously described, under 18 U.S.C. § 2. For the purpose of devising and carrying out their schemes and artifice to defraud the government regulators and plaintiff victims by means of false and fraudulent pretenses, representations and promises, Defendants and Enterprise caused to be transmitted by means of wire communication in interstate commerce, writings, signals and sounds, to wit, interstate electronic mail messages and/or facsimile in violation of 18 U.S.C. § 1343, or aided and abetted in such criminal acts, as previously described, under 18 U.S.C. § 2.
The Pattern Of Racketeering Activity Defendants’s alleged RICO predicate acts in furtherance of its scheme to defraud governmental regulators constituted a pattern of racketeering activity within the meaning of 18 U.S.C. § 1961(5) because the predicate acts are related and continuous. Each predicate act had the same or similar purpose: the predicate acts involved material misrepresentations, omissions and concealment in a scheme to defraud the regulators into believing Defendants would conduct operations legally.Included in these predicate acts are those situations where Defendants communicated by mail, interstate wire or interstate carrier giving approval for Defendant’s various actions. This pattern of racketeering is separate from and distinct from the legitimate online advertising sales activity or investment banking or cquisition business of the Enterprise alleged herein.Additionally, under Dodd Frank and Sarbanes Oxley, Plaintiff prior employment, as individual claims exist to allege that a wrongful predicate act, retaliation under 18 U.S.C. § 1513(e), proximately caused his injuries. Rico Defendants engaged in retaliatory acts against Petitioner starting in 2003 in violation of 18 U.S.C. § 1513(e)-(f) by terminating his employment, filing a lawsuit against him, and disseminating defamatory statements to the press. pattern of racketeering activity under § 1962(c). Relatedness And Continuity Of The Racketeering Activity
All of the predicate acts alleged above are related to the scheme of Defendants and Enterprise – defrauding regulators and plaintiff victims thru their operations. Continuity is demonstrated by the predicate acts alleged above because the pattern of racketeering involves multiple predicate acts and related predicate acts tha have taken place over many years. These predicate acts in furtherance of its scheme illustrate a threat of continued racketeering activity and evince that the predicate acts constitute the regular way that Defendants and Enterprise conduct business. As a proximate result of the pattern of racketeering activity and RICO violations engaged in by Defendants, Plaintiffs and the Class members have suffered injury to their business and property. The RICO Defendants’ acts were not isolated, but rather formed a pattern of conduct through which the RICO Defendants used the enterprise to defraud and to silence Plaintiffs from complaining about and exposing such illegal and fraudulent acts.Alternatively, the RICO Defendants, through an agreement to commit two or more predicate acts, conspired to conduct or participate in the conduct of an enterprise, although not a legal entity . . . ." 18 U.S.C. § 1961(4) (1982). From approximately 2003 and continuing through present, the RICO Enterprise and the Defendants, as well as others known or unknown, being persons employed by and associated with Enterprise and Defendants and, which were engaged in and the activities of which affected and affect interstate commerce, unlawfully and knowingly conducted or participated, directly or indirectly, in the affairs of the enterprise through a pattern of racketeering activity, that is, through the commission of two or more racketeering acts set forth herein.PlaintiffS seek to prohibit the RICO Defendants from utilizing the patternof unlawful conduct in which they have continually engaged during the relevant time period.The pattern of the RICO Defendants’ illegal racketeering activity, as defined by 18 U.S.C. §§ 1961(1)(B) and 1961(5) and 1962(c), includes: a. Multiple instances of mail fraud in violation of 18 U.S.C. § 1341;
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b. Multiple instances of wire fraud in violation of 18 U.S.C. § 1343. c. Multiple instances of violation of 18 U.S.C. § 1512 (relating to tampering with a witness, victim, or an informant) d. Multiple instances of violation of 18 U.S.C. § 1519 (relating to destruction, alteration, or falsification of records in Federal investigation and bankruptcy) e. Multiple instances of violation of 18 U.S.C. § 1513 (relating to retaliating against a witness,victim, or an informant f. 18 U.S.C. § 201 (relating to bribery) 18 U.S.C. § 1028 (relating to fraud and related activity in connection with identification documents) 18 U.S.C. § 1029 (relating to fraud and related activity in connection with access devices) 18 U.S.C. § 1084 (relating to the transmission of gambling information) 18 U.S.C. § 1344 (relating to financial institution fraud) 18 U.S.C. § 1503 (relating to obstruction of justice) 18 U.S.C. § 1510 (relating to obstruction of criminal investigations) 18 U.S.C. § 1511 (relating to the obstruction of State or local law enforcement) 18 U.S.C. § 1512 (relating to tampering with a witness, victim, or an informant) 18 U.S.C. § 1513 (relating to retailiating against a witness, victim, or an informant) 18 U.S.C. § 1546 (relating to fraud and misuse of visas, permits, and other documents) 18 U.S.C. § 1951 (relating to interference with commerce, robbery, or extortion) 18 U.S.C. § 1952 (relating to to racketeering) 18 U.S.C. § 1956 (relating to the laundering of monetary instruments) 18 U.S.C. § 1957 (relating to engaging in monetary transactionsin property derived from specified unlawful activity) 18 U.S.C. § 1960 (relating to illegal money transmitters) 18 U.S.C. § 2314 (relating to interstate transportation of stolen property) 18 U.S.C. § 2315 (relating to 18 U.S.C. § 2319A (relating to ybaytgiruzed fixation of and trafficking in sound recordings)
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29 U.S.C. § 186 (dealing with restrictions payments and loans to labor organizations) (F) any act which is indictable under the Immigration and Nationality Act, section 274 (relating to bringing in and harboring certain aliens), section 277 (relating to aiding or assisting certain aliens to enter the United StateS), or section 278 (relating to importation of alien for immoral purpose) if the act indictable under such section of such Act was committd for the purpose of financial gain, or 18 U.S.C. § 1346 (relating to bribery)and are based on the following facts and examples of these predicate acts (but are not limited to as upon information and belief, numerous others will be identified in the process of discovery): Therefore, a recent decision Federal Court must take note of Is precedential decision that found News Corp and Jobs negotiated Directly 2010-2011 and were found in 2013 by DOJ guilty of Antitrust violations. So Campbell worked with News Corp directly For example and spoke and dealt with Murdoch who is on the Email correspondence meetings that encompass the anti-competitive Agreements Judge Koh already ruled several other companies besideNews Corp were guilty of, and these companies admitted the unlawfulAgreements existed.
The Jury will find the News Corp privacy violations of Subclass CAre identical or close to identical to the types of damages and harm and invasions of privacy sufferered by Subclass B also. Therefore Sandberg and her associates will be found to be guilty of the same sort of offenses as Rebecca Brooks who will go on trial with other News Corp employeesin September 2013 for criminal offenses. Therefore, this complaint and Plaintiffs are in agreement that the Jury trial in this case will be delayed and in the interests of justice be after the September 2013 News Corp Brooks trial in the UK where if crime is found for Brooks and NewsCorp, then the SubClass A, B, C, and D this complaint and Motion for Class Certification filed hberin will both want to be part of record and facts for Jury and Judge going forward less being able to apply to Sandberg, Schmidt, Page, Murdoch, Campbell, Doerr, Perkins, whose character and level of liability in the privacy violations will need be judged to be honest mistake of busy executives with large Compensation packages will be applied by a Jury. And criminal findingsIn the UK will be fair evidence to draw an analogous aspirsion of the Google defendant and alternatively and jointly Google as part of Antitrust and Rico Noogle Association in fact Enterprise or Google’sAiding and abetting the unlawful actions of one or more public companies Or private including sponsorship of Markel Foundation between at least 2005-2013. Therefore, an additional RICO and Antitrust conspiracy formed around existing commercial online advertising and this conspiracy included: (1) agreements allowing AskJeeves Director Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below fair market value using his RedPoint fund where he is managing Director; (2) agreements allowing Google, TimeWarner/AOL, News Corporation, AskJeeves, IAC, and other defendants to collude to gain economic benefits by A) Defendants, ongoing, systematic and fraudulent scheme to maximize financial gain Facilitated by the conduct of Google, and Intel, Objective unlawful scheme was to obtain billions of dollars in proceeds and profits from i. rigging the sales of competing internet assets at below fair market prices ii) benefitting from profits generated from illegal phone hacking iii) benefitting and trading confidential information received from the illegal phone hacking iv) covering up the illegal activity using their media properties iv) extorting silence from victims and/or government regulators including bribing police, UK Government ministers, United States Senators, California State Senators and California State Congressmen and Congresswomen
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and United States Congressmen and Congress serving women, and several related and affiliated lobby qualified law firms, and other agency intermediators, v) offering ad credits and ad promotion in kind without disclosing such transactions to the public or accounting for them in their SEC GAAP Accounting, and government ministers. 4. Without intervention, plaintiff will be further harmed. The intervention is also necessary to raise additional matters, facts, and Claims while providing to the court, supporting evidence. The claims were created from a behind the scenes series of meetings and communications since late 2003 thru May 1, 2014 between : i) Intermix/MySpace, Inc. ii) News Corp iii) Yahoo iv) Google v) MSN, vi) AskJeeves vii) JP Morgan viii) Iac Corp ix) Time Warner, Inc.,x) Aol Inc. xi) Fox Interactive xii)i) fabricating prior sale of MySpace stock with backdated agreement in November 2004 and ii) delaying closing of a competitive EUNI MySpace search engine auction for a new commercial search engine agreement in the months leading up to News Corporation acquiring 100% of eUniverse in September 2005; (3) agreements allowing Google to ensure its $4.4 Billion dollar August 2005 secondary is completed by tying up the fast growing online audience of MySpace, significantly growing its share of online search engine advertising while shrinking share of main rival #2 Yahoo; (4) agreements allowing News Corporation to purchase MySpace.com at below fair market value, growing its market valuation and generating billions in incremental profits and a massive online audience to seed new online assets for years to come, while preventing a competitive auction with main rival Viacom. (5) Violating the privacy of thousands of Citizens of the United States and the United Kingdom for commercial benefit. (6) Google, Ask Jeeves, Inc. IAC, Intel, and News Corporation fraudulently concealed the agreements and failed to disclose them in their SEC filings, violating security law and fiduciary obligations Boards and executives of those companies had between 2005-2010. The intended and actual effect of these agreements was to fix and suppress Competition. Defendants conspiracy and agreements restrained trade and are per se Unlawful under Federal law. Plaintiffs seek injunctive relief and damages.shows an additional member of the no poach illegal antitrust agreements was News Corporation scheme co-leader to fix and suppress the compensation of their employees. Without the knowledge or consent of their employees, Defendants’ senior executives entered into an interconnected web of express agreements to eliminate competition among them for skilled labor. This conspiracy included: (1) agreements not to recruit each other’s employees; (2) agreements to notify each other when making an offer to another’s employee; and (3) agreements that, when offering a position to another company’s employee, neither company would counteroffer above the initial offer. II. JURISDICTION AND VENUE This Court has jurisdiction over the subject matter of this action pursuant to 18 U.S.C. §§1961, 1962, and 1964, 28 U.S.C. §§1331, 1332, 1367, 1337, and jurisdiction pursuant to Sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15 and 26). This Court has personal jurisdiction over the Defendants pursuant to 18 U.S.C.
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§§1965(b) and (d). This Court has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. §1367.Venue is proper in this district pursuant to 18 U.S.C. §1965(a), 28 U.S.C.§1391(b), §12 of the Clayton Act, 15 U.S.C. §22, and 28 U.S.C. §1391(b), (c), and (d)
A. AOL, AskJeeves, IAC participated in the anti-solicitation agreements. Documents disclosed by Bill Campbell in 2013 and and other defendants in the Hitech Class Action Case 5:1102509 prove that both Time Warner/AOL, Ask Jeeves Inc., and IAC Corporation participated in the anti-soliciation agreements. Specifically:Page 3 of Document 428-10, disclosed publicly filed May 17, 2013 is a version distributed to Bill Campbell by Google sometime after January 7, 2008 and is titled: “Special Agreement Hiring Policy Protocol for “Restricted Hiring,” “Do Not Cold Call,” and “Sensitive” Companies”. Below the title is a bold line and under The bold line the document further states,
“Due to our partnerships, the following companies (and by association, their subsidiaries listed in Appendix B) fall under the “Sensitive” companies list:” “Parent Companies:” lists “AOL, Inc.” and “Ask.com”Page 9-10 of Document 428-10, disclosed publicly filed May 17, 2013 has a list titled: “Appendix B” and in such section both “AOL, Inc.” and “Ask.com” are listed. Since AOL was owned by Time Warner as of 2008 and Ask.com is owned by IAC, both have a designation of “N/A” under “Parent Company”.In addition, AOL is listed as the Parent Company in “Appendix B” for another Company it owns, “Advertising.com”.
i)July 17, 2005 at 4:13AM, Lang emails Sheehan, Subject: 'Purchase Agreement' and states,
"On the issues, let's close on the remaining ones in a fair and reasonable way-- so we can build out relationship. 1. We are willing to pay the liquidation preference upon sale 2. from the beginning we've appreciatred your commitment to selling your shares. This is thereason why
Peter gave on the upside protection in the event of a Fox counter - to ask for profit if we hose is a stretch Please appreciate how our Management may feel in this scenario, and we believe the break up is really not relevant to this issue. 3. We feel like we have given indemnification on the shares and the purchase agreement itself to do so on any issue we have had no involvement in whatsoever (i.e. Greenspan) - that seems like too much.
Andy, I know we are very eager to get this done. Let do it so both sides can feel good and move forward aon our longer-term relationship." New Evidence includes, Resignation and Report on Les Hinton’s involvement in CEO’s confessed “Coverup” . Hinton reported up to CEO from 2008-2011, the senior executive was President of Dow Jones where he oversaw and orchestrated the Angwin “Stealing MySpace” scheme to coverup the legal liabilities and true facts related to the value of the September 2005 acquisition of MySpace and to defame, harass, and violate Section 1533 of Dodd Frank against Petitioner. 2009 COMPUTER INTRUSION: Retaliatory Attack of the RICO Defendant Law Firms and Partners
199. Defendant’s leverage their relationship with acquiror to create defamatory and fabricated lies thru publication Petitioner first reads in late 2010 which Les Hinton instructed News Corp employee Angwin to publish in late 2009 book, ‘Stealing MySpace’ which: Petitioner is also aware of the relationship and status of Google in 2003. This information is critical and without such information, Petitioner and Class could not make Significant and valuable new Anti-Trust Claims including a Clayton Act Violation of Section 8 for Interlocking
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Directors.Petitioner is main fact witness in Federal Class Action Security Fraud case Brown v. Brewer, and in 2009, NewsCo uses Hinton in series of schemes to obstruct justice and coverup the legal Facts that would give rise to NewsCo disclosing it had billions more in legal liability in its 10Qs and 10KS. This disclosure if made would have lowered NewsCo stock price and earnings and lowered the salary and payment and bonuses for Officers that operate NewsCo.Petitioner brings individual claims of breach of contract and breach of the covenant of good faith with Defendants. Petitioner individually pleads an unjust enrichment claim against all Defendants, and a claim of contractual tortious interference. It was part of the RICO Defendants’ scheme to use the United States Postal Service to deliver fraudulent audit reports for News Corporation and SEC 10Q and 10K public filings to shareholders and to the SEC and public in 2005, 2006, 2007, 2008, 2009, 2010, 2011, and 2012 And omit and conceal the errors contained in violation of 18 U.S.C. § 1341. In May 2009 by filing a Joint Motion after RGRD and Hogan Lovell is Aware of Hogan Lovell agreement to depose and receive evidence from Petitioner for Federal Security fraud Class Action Brown v. Brewer case. Defendants induced RGRD and Randall Baron to sign May 2009 “Joint Stipulation” to eliminate role, evidence and testimony of Petitioner, days before Petitioner was set to fulfill an agreement to be deposed and provide such information to the Defendants as part of Discovery.RGRD was reckless because at the time they struck “agreement” to remove Petitioner on or around May 1, 2009,RGRD could not predict if in future the lay witness would be needed. It does not appear that RGRD ever read the Julia Anwin “Stealing MySpace” book before making a terminal decision to bet the Class’s legal asset future on Acquiror’s version of the story uncontested. It appears the book was first published inApril 2009. So RGRD expect the Court to believe that somehow they knew a controversial set of facts had been produced by Acquiror’s employee and RGRD both read it cover to cover, checked the facts against discovery but did not discuss these with the petitioner the previous sole historical witness they used, but determined the book was so credible it could be used as a one stop fact replacement with the largest common stockholder, Chairman and CEO who was volunteering to put the proper facts into the record and was scheduled to be deposed imminently. MySpace Search was omitted from consideration by Class’s damage experts. RGRD had poisoned the Class’s legal asset greatly diluting the upside. RGRD thru its actions, robs the Class of receiving fair shake in the Federal Judiciarysystem, specifically the right of an equitable discovery process. The Class gets neither: i) A Class Counsel Fiduciary acting in good faith during discovery, or ii) its Rule 701 lay witness adding new evidence or decoding discovery for RGRD in similar manner before RGRD eliminated Petitioner first as source of evidence, later from Settlement mediation and later from using a scheme to ban Petitioner as member of Class after previously confirming to Petitioner he was a member of the Class in 2009. After RGRD realizes they could have used Rule 701 fact witness who is petitioner, instead of righting their wrong, RGRD continues down path of further transgressions. Additional act of fraudulent concealment is part of scheme by defendants tied to 2009 Angwin published book that uses fabricated documents to support critical contentions. altering, destroying, mutilating, or concealing a document with the intent to obstruct justice in violation of 18 U.S.C. § 1512(c)(1); Plan of RICO Defendant Edell, News Corp, Hinton, Angwin, Hogan Lovell launched in 2009 as Edell works with News Corporation’s Les Hinton and Julia Angwin to create and promote publication “Stealing MySpace”. Such scheme benefits and is used by Defendants to corrupt, damage, and diminish the Federal Class Action Brown v. Brewer Damage Experts and claims. Edell conspires and working with News Corp employee Julia Angwin and other Defendants using
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inaccurate defamatory false statements in highly promoted Book published in April 2009.Petitioner a fact witness with testimony that was adverse to Defendants was excluded and obstructed from entering evidence into the Brown v. Brewer case, immediately before Defendants plugged in Angwin’s false facts and testimony while using “Stealing MySpace” as an uncontested source of facts to corrupt the Class’s case And damage/expert reports. RICO Defendants destroyed the following evidence and have kept it from being submitted into Federal Court including blocking Petitioner testimony from”appearing” which damages Petitioner and violates Section 1512(d) which criminalizes the actions of “[w]hoever intentionally harasses another person and thereby hinders, delays, prevents, or dissuades any person from” appearing before an official proceeding, law enforcement officer, or United States judge. Angwin fraudulently conceals evidence of Edell’s true work experience and back ground and his violation of SEC rules in 2003 and 2004. Rico Defendants conceal their knowledge of this scheme thru the March 19, 2012 Approval of the Federal Brown Brewer settlement that Petitioner and 4 other Class members attempted to object to or Intervene To remove RGRD and Jim Brown from representing the Federal Class and agreeing to An Inadequate consideration for the settlement and failure to assert more valuable claims and evidence into the Court prior to approving settlement. Angwin, Hinton, News Corporation, Hogan Lovell, RGRD, and RICO Defendants violate in violation of 18 U.S.C. § 1512(c)(1) and 18 U.S.C. § 1519.by hiding evidence of Edells two resignations on his bio that were really his last two jobs instead of submitting an accurate bio, defendants stretched the job of Edell that was actually 3 jobs prior, and increased this 3rd job by another 2 years, to the year 2002 (from 2000). Edell both omits to accomplish his end goal of making detection and disclosure of his true track record and financial history as difficult as possible. Edell in the section where individuals are supposed to declare if any company Went bankrupt within last five years (more recently the rule changed to 10 years) names a Company called the failures of the two most recent corporations where Edell was CEO, resigned in both cases, and one which he lists as ‘ShoWorks’ appear to be less then positive end results. Edell admits in his D&O Questionaire on October 2, 2005 that. RICO Defendants , Angwin, News Corporation, Hinton, Murdoch and Orrick Conceal the false revised BIO of Edell filed in July 2004 SEC filings: "Mr. Edell was the Chief Executive Officer of Showorks Entertainment Group. Inc., a Delaware corporation that later changed its name to Media Technology Source of Delaware, Inc. Within two years of the time that Mr. Edell resigned from that company, it filed a petition for relief under the United States Bankruptcy Code." Based on information and belief, Defendant’s scheme entailed Creating a fictitious Glowing work experience for Edell using a fabricated Resume in 2003 that News Corporation, Hinton, Angwin, and Murdoch determined would be used to harm Petitioner In a book thatwas published called “Stealing MySpace” and was sent in US Mail to bookstores Across the United States and overseas with the fabricated false facts related to Edell’s true work Experience and his SEC violations in 2003, 2004, 2005 in violation of Rule 401, this violated section 18 U.S.C. § 1341.Petitioner also is victim of Defendant’s illegal tampering with a witness in violation of U.S.C. § 1512(b)(3) and of § 1512b(2). RGRD Law, News Corporation, Les Hinton, Julia Angwin, News Corporation, Orrick Herrick, Rupert Murdoch, Jim Brown, and Hogan Lovell violated and tampered with Rule 702 expert and fact witness by misleading the Federal Court in May 2009 thru the Joint Motion to agree to not use Greenspan testimony or Evidence in Federal Court even though Rico defendants knew this was tampering with a witness and obstruction of justice and was removing and destroying evidence that would have inurred to the benefit of Petitioner claims and Federal Shareholder claims.
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Therefore NewsCorp inherits fraudulently concealed Dodd Frank, Sarbane Oxley, and liability freely Admits in the following email not submitted by Class Counsel RGRD into the record as an Anti-retaliatory attack on Petitioner in May 2009. Defendants have omitted key discovery previously that caused key evidence and facts to be fraudulently concealed. The fraudulent concealment includes affirmative acts like the planning to coordinate planting the false story via News Corp employee Angwin who omits many key facts to protect News Corp & Defendants. Therefore, tolling would not take place until the fraudulent concealment is fully disclosed. 7th Circuit Baker v. F&F Investment, 420 F.2d 1191 (7th Cir. 1970), cert. den., 400 U.S. 821 (1970) (self-concealing conspiracy demonstrates fraudulent concealment) 2009- a Predicate Act is the publishing of Hinton’s false facts
into U.S., Europe and around the world thru “Stealing MySpace”
employee of News Corp published and generated revenue and income for herself
in addition to the salary received by News Corporation yearly thru her employment at that company between
2007-2012.Angwin’s book summarizes 10% shareholder/Viacom bid by omitting any mention of Viacom and
misleadingstocholders, “he couldn’t muster enough support, and a few days later, the News Corp., deal was
approved.”And “Once again Greenspan took his fight for Intermix to court.”
New Evidence includes, Resignation and Report on Les Hinton’s involvement in CEO’s confessed “Coverup” . Hinton reported up to CEO from 2008-2011, the senior executive was President of Dow Jones where he oversaw and orchestrated the Angwin “Stealing MySpace” scheme to coverup the legal liabilities and true facts related to the value of the September 2005 acquisition of MySpace and to defame, harass, and violate Section 1533 of Dodd Frank against Petitioner. New Evidence in May 2012 of “Fabrication” a regular occurrence, During October 2010, RGRD was again disloyal by working with defendants to i) keep MySpace Founder fromappearing at settlement meeting ii) Then facilitating joint motion to ban containing facts RGRD knew to be false.In December 2010, RGRD was again disloyal by changing the Class Certification to reduce the # of eligibleshares. Another sign of class counsel RGRD’s lack of adequate representation is display of a generally lack of knowledge about background of Intermix including the # of shares which were part of original certified class. RGRD could not identify number of shareholders or shares that makeup the Federal Class. RGRD concealed the fact that they knew once they altered the Class definition 50% of previous stated 35 million Class shares were instantly eliminated. RGRD expects the Court to forget that RGRD in 2009 argued in front of court to preserve the same definition from being changed by defendants motion. Based upon information and belief, defendants bribed and extorted Class Counsel RGRD to destroy the Class Action Brown v. Brewer legal asset that was the property of the shareholders. RGRD agreed to a sham $45 million dollar settlement in 2011 while at the same time committing fraud against the shareholders and breached their fiduciary duty.After the Federal Class Action survived the Demurrer stage in a 2008 Victory for the Plaintiff shareholders, and the uncorking of evidence from discovery in summer of 2009 and depositions and summary judgement, News Corporation knew it had significant liability with its MySpace.com asset that had
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already generated billions in profits for the $50 Billion dollar market valued media company. Most importantly, News Corporation had been able to use the audience and traffic from MySpace.com to populate multiple new internet assets it owned 100% or major stakes in such as i.Hulo.com and IGN gaming network.Digital Ad Network Companies launched, mobile new entities launched v.most or all of the Audience that exists for 100% of its current online websites across globe News Corp determined to effectively upload the data of most or all of the MySpace.com user base registered to News Corp controlled or affiliated Ad Networks that then interacted with Google, Inc., FaceBook, Inc., WashingtonPost, sharing the data that MySpace.com contributed in a one time exchange of data for a long term revenue share that News Corp was able to Spread and recognize thru other subsidiaries relationships with the same RICO Defendants News Corporation further recognized that FaceBook, Inc. could exist without the legal liability that threatened to rescind or cause siginificant legal damages to force sale of Myspace.com.Such facts included the Violation and evidence that Petitioner sent to Mr. Randall Baron and RGRD and other defendants in 2010 and 2011 which RGRD refused and DefendantJim Brown refused to submit into Federal Court prior to the Settlement Effort began in September 2010. This was a breach of fiduciary duty owed to Petitioner and also a breach Of agreement from a 2006 agreement made between Brown, RGRD, and Petitioner. Petitioner its uncontested recruited Brown for Federal Brown v. Brewer in 2006.However, RGRD’s 100% position to date in Federal Court during period of 2010-2012 is opposite of fact in part (i). Additionally RGRD and the $45 Million dollar settlement in such case Being fair and equitable relies on RGRD and Baron’s validity and statements taken By Judge King as true. Yet RGRD has fraudulently concealed the evidence by destroying all copies and versions of the signed 2007 Common Interest Agreement that RGRD owes a duty To that is ehanced above and beyond the scope of the fiduciary duty that was owed to Petitioner when RGRD took the prior actions that are clearly breaches of fiduciary duty Not withstanding the RICO predicate violations that Baron is guilty of , lap dog of a corrupt organization that wanted $15 million in contingency fee and thus guilty of breach of agreement, plus fiduciary duty to Petitioner thru violating RICO predicate acts to underwrite the damages and harassment to Petitioner since 2009 thru present . and its statements consist Of claims that no agreement was ever entered into with Petitioner despite clear evidence
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RGRD has not disputed. Above Defendants violated further 18 U.S.C. § 1512 (relating to tampering with a witness, victim, or an informant) 18 U.S.C. § 1513 (relating to retaliating against a witness,victim, or an informant) and 18 U.S.C. § 1519 (relating to destruction, alteration, or falsification of records in Federal investigation and bankruptcy) by omitting and destroying the evidence they possessed at the time the above actions were taken that would have provided new facts and information and claims not raised or in State proceeding and that would have the effect of voiding the defendant’s motion. At end of 2010 RGRD launches a new scheme to create an economic ‘kick back’ for defendant. RGRD then argues June 2009 motion that the changed wording was not a mistake. That RGRD gives this economic asset to defendants for no disclosed consideration and RICO Defendants file false Summary Judgement facts to obstruct justice i.Summary Judgement Fact #1 is fals and Defendants violate Document Destruction Under § 1519c Section, Aguilar thus makes clear that “nexus” requires more than mere knowledge of a pending proceeding.187 262 See id. (citing Lewy v. Remington Arms Co., 836 F.2d 1104, 1112 (8th Cir. 1988) (“[A] corporation cannot blindly destroy documents and expect to be shielded by a seemingly innocuous document retention policy.”)). these newer statutes as well. In many respects, § 1512(c)(2) appears destined to become the new Omnibus Clause.By obstructing Petitioner, following facts have been obstructed from Federal Court thru clear breach of fiduciary duty of Class Counsel and violation of Section Violation of Section 1519. Plaintiff was directly injured by the RICO Defendants’ acts of racketeering activity. The June 17, 2010 Federal Summary Judgement Ruling related To certain defendants and facts related to the September 30, 2005 Acquisition and Security Class Action breaches of fiduciary duty and Proxy Fraud claims. Case 2:0603731 Judge George King. Central district Los Angeles. NewsCorp & creator and/or aider and abettor of causing to be Published on or about April 2005, “Stealing MySpace”, Using the resources and John Doe 1-10 of the Dow Jones Company Purchased in 2007, and other assets where Hinton lived and worked During and thru the time he was employed by Dow Jones after Resigning as CEO of NI. Les Hinton was called to testify before the British House of Commons Culture Committee regarding the alleged hacking. A July 10, 2011 article by The Guardian regardingthe incident stated: “Hinton, who then ran NI, which is owned by News Corp, spoke to the Commons culture committee looking into the Goodman affair on 6 March 2007. He was asked whether the News of the World had "carried out a full rigorous internal inquiry" into phone hacking and whether he was "absolutelyconvinced" the practice was limited to a single reporter.” Describing the News International Investigation into the incident The GuardianReported: “The NI investigation began after Clive Goodman, the News of the World's former
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royal editor, and Glenn Mulcaire, its £100,000-a-year private investigator, were jailed for hacking into phones belonging to aides of Prince William and Harry. It was conducted with the help of lawyers Harbottle & Lewis, and was led by NTs director of legal affairs, Jon Chapman, who has since left the company.Lawrence Abramson, managing partner of Harbottle & Lewis, wrote to Chapman to say that they had not found anything irregular in their examination of the internal emails.” The letter, which was presented to the select committee, concluded: "We did not find anything in those emails which appeared to us to be reasonable evidence that Clive Goodman's illegal actions were known about and supported by both or either of Andy Coulson, the editor, and Neil Wallis, the deputy editor, and/or that Ian Edmondson, the news editor, and others were carrying out similar illegal procedures." News International performed the investigation prior to Mr. Hinton's providing testimony to the committee. Additionally, in contrast to Mr. Hinton's testimony and NewsInternational's representations to the committee, The Guardian alleges that the internal report conducted in 2007 found evidence that the phone hacking was more widespread than the admitted by the Company. According to The Guardian, Mr. Hinton was among five executives who had access to the report. Mr. Hinton's misrepresentations to the Culture Committee allowed the scandal to continue. The Company was later chastised for its handling of thescandal by the British Government which in a February 9, 2010 report on the incident, that stated that Clive Goodman was a scapegoat and the Company failed to carry out a full investigation. In 2006, the police focused their investigations on two men. Both went to jail.But the News of the World and News International failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose. As a result, the News of the World. News International, and News Corp. wrongly maintained that these issues were confined to one reporter. It was part of the RICO Defendants’ scheme to interfere with Plaintiff’s livelihood by disseminating defamatory statements about Plaintiff to the public through various media outlets in retaliation for providing truthful information to the SEC, DOJ, FTC, andFederal and State court relating to the RICO Defendants’ scheme, in violation of 18 U.S.C. § 1513(e). It was part of the RICO Defendants’ scheme to conspire to interfere with Plaintiff’s livelihood by disseminating defamatory statements about Plaintiff to the public through various media outlets in retaliation for providing truthful information to the SEC, DOJ, FTC, andFederal and State court relating to the RICO Defendants’ scheme, in violation of 18 U.S.C. § 1513(e) and 1513(f), including: In September 2010, by RGRD, Baron, Hogan Lovell, Stone, News Corporation and other RICO Defendants filing a Joing Motion to ban fact witness and Petitioner from the Federal Class to delay and harass Petitioner from appearing before Federal Judge. Orrick knew the motion to ban the petitioner could not be true unless Orrick could continue to suppress new evidence and discovery from entering the Federal Brown V. Brewer ongoing case. Other Evidence destroyed by Orrick included their ties and business with MySpace Parent Company executive Chris DeWolfe. Orrick and DeWolfe work together in 2004 and 2005 to document a fabricated sale of equity of MySpace at rock bottom prices for DeWolfe. RGRD, Defendant, HHLAW and News Corp are also guilty of anti- Retaliatory violations against petitioner which damaged petitioner personally and the Class thru damaging and lessening value of the legal asset when compared to a similar legal asset where defendants had already fully disposed of and disclosed similar facts such as a whistleblower notification. In 2010, Baron and News Corporation and Hogan & Lovell, and Stone, and RGRD and Orrick violated 18 U.S.C. § 1341 (relating to mail fraud) by sending notice of the Joint Motion to Brief the “Motion to Ban Brad Greenspan” for purported “res judicata” they intended to file in Federal Court via email to Petitioner’s then lawyer Mr. Lawrence.
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Above Defendants violated further 18 U.S.C. § 1512 (relating to tampering with a witness, victim, or an informant) 18 U.S.C. § 1513 (relating to retaliating against a witness,victim, or an informant) and 18 U.S.C. § 1519 (relating to destruction, alteration, or falsification of records in Federal investigation and bankruptcy) by omitting and destroying the evidence they possessed at the time the above actions were taken that would have provided new facts and information and claims not raised or in State proceeding and that would have the effect of voiding the defendant’s motion. RGRD, Baron, Wissbroecker violated their fiduciary duty to Petitioner as well as aiding and abetting above violations of other Defendants. UK Leveson Report and Testimony of News Corporation employees UK Members of Parliament 11th edition report on phone hacking, News International and ruling CEO Murdoch “Unfit” based on his and Les Hinton testimony over server years In 2010, Defendants further violated Federal Law obstructing Justice, initiating plan to induce Randall Baron into a below fair market settlement after Class won favorable Summary Judgement decision in June 2010. In 2011 Defendants lied to Federal Court and induced Lead Representative and Randall Baron’s RGRD Law firm to also file false statements and conceal evidence from Court. Such acts harmed Petitioner and Class of Federal Shareholders. Defendants efforts and scheme to coverup Search was part of the same effort to Coverup and fraudulently conceal the June 2005 Whistleblower Notification, the Fabricated Director Edell, the Fabricated MySpace Purchase Agreement released by issuer in November 2004 MySpace, and the violation of Clayon Act for having Interlocking Directors on the Issuer and MySpace Board conflicted by serving as Directors of competitor Ask Jeeves. The evidence further triangulates that there was collusion that effectively precluded the public issuer from securing a timely new commercial search partner. RICO Defendants destroy the following evidence and keeps it from being submitted into Federal Court including blocking Petitioner testimony from”appearing” which damages Petitioner and violates Section 1512(d) RGRD knew petitioner was valuable Federal 701 lay witness for the Class in April 2009, October 2010, and May 2011 as RGRD filed pleadings which aided and abetted defendant’s efforts to cover up & obstruct new evidence from entering this case. RGRD was notified by petitioner of new evidence on multiple occasions such as in July 2010 regarding: i) Heckman’s admissions in Angwin book about the Searchauction timing and economics of January 2006 Microsoft bid ii) value of missing MySpace Search. Rule 701 allows for the admission of lay testimony, where three requirements are met. The Eleventh Circuit recently considered the application of these requirements in a case in which an agent was permitted to provide lay testimony concerning code words concerning international terrorism activities. In United States v. Jayyousi, F.3d (11th Cir. Sept. 19, 2011), the majority concluded testimony was admissible under FRE 701. 23RGRD and News Corporation starting in May 2009 obstructed justice by eliminating Petitioner as a fact witness and instead put forth false information to dilute and suppress new claims and damages that had become
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available.lying publicly to attempt to fraudulently conceal facts. First Ross Levinsohn lies in 2011 in violation of Section 1341as his lie is published via wire service and printed in newspapers that are sold and transported and carried across state lines in the United States. i.Newsco admitted it had violated AS 340 450– and its CEO among Other Officers had filed false 10Q Officer Certificates on November 8, 2011 (Exhibit #4) and possibly Other financial statements. A number of the anti-retaliatory attacks Petitioner seeks relief from are caused by breaches of fiduciary duty by certain of defendants, namely RGRD which serves as Class Counsel in the State and Federal Class Actions related to the September 2005 acquisition of Myspace’s Parent Company, eUniverse (1999-2004) aka Intermix (after July 2004). The definitionof Juduciary for purposes of this complaint and evaluation Of the many anti-retaliatory attacks of Defendants include: 2012 In 2012, as Petitioner and other shareholders sought to put this new evidence into the record for Brown v. Brewer, the intervenors and objectors were attacked thru having their email hacked, defamation, and other fraudulent acts by RGRD and News Corporation. Petitioner as whistleblower and fact witness has resisted the criminal acts including anti-retaliatory attacks by defendants and has now found new evidence put forth herein that shows RGRD and defendants obstructed justice and fraudulently concealed antitrust claims, additional security fraud, RICO claims, and violations of Federal Wiretap statue. In 2012 after shareholders including Petitioner discovered yet newevidence of obstruction of justice, RGRD aided defendants in falsifying facts to push thru the sham settlement against 4 objecting shareholders and intervenors. In 2012, Petitioner is harassed and the Class is damaged by Defendants including News Corporation, HHLAW, Ross Levinsohn, and Rupert Murdoch inducing RGRD and Baron to ignore new evidence raised by Shareholders and members of the Class like the CA Doctor who sent in an objection to the Federal Judge in Los Angeles George King.Thru violation of 1341 andThru violation of 1513(e) and (f) In 2005, 2006, 2007, 2008, 2009, 2010, 2011, and 2012, It was part of the RICO Defendants’ scheme to alter, destroy and falsify business records to impede the Petitioners discovery of the errors and omissions contained in its Proxy Reports in 2005, and the RICO Defendants’ illegal concealment thereof, in violation of 18 U.S.C. § 1519.Defendants benefitted from fraudulently concealing key State discovery email evidence and the JP Morgan Valuation Report showing a $1.4 Billion Valuation for MySpace was known as of July 16, 2005 or earlier. evidence of bribery, and email discovery in the State Class Action and Petitioner’s action related to News Corp’s acquisition of the MySpace Parent company in September 2005.iii.Additionally the acts were done to obstruct the availability of these records in any future proceedings brought by the DOJ, SEC, FTC, or Petitioner or Federal or State Class Member or other regulators against RICO Defendants and MF , in violation of 18 U.S.C. § 1512(c)(1).Defendants also took actions to impede and derail the Federal Class Action in Brown v. Brewer where Petitioner was one of Class Members, violating Section 1519. Section 1519 does not require that the defendant act “corruptly,” but merely that the defendant “knowingly” destroy documents with intent to hamper a federal investigation.Moreover, § 1519 requires only that the defendant engage in document destruction “in. . . contemplation of” an official proceeding.
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Defendants destroyed evidence of the MySpace Search value and the dealbetween defendants to reap the benefit of a deal with Google by delaying the opportunity until after the sale on September 30, 2005. Defendant RGRD also destroyed evidence brought to them by Petitioner showing violations by defendants of the Clayton Act Section Eight for violationsof interlocking Directors.Ceo and Chairman of News Corporation admits this Coverup occurred and CEO admits in April 2012 that the defective internal controls of News Corp allowed such Coverup. RICO Defendants admit violation of Section 1519 for destroying the evidence of as CEO in April 12 admitted Coverup he and Petitioner were Victim to was “several layers” down inside News Corporation. An 18 U.S.C. § 2511 violation includes a claim of damages suffered by Victim. If any of Class members can prove or show the Court damage has been received by a Class Member from an action caused or aided and abetted by RGRDLaw and/or Jim Brown then inadequate representation is proven. Violations of law by Defendants and RGRDLaw ofDodd Frank The court erred in overlooking allegations in Intervener’s pleadings When making ruling March 19, 2012. The Court first failed to consider the Valid Federal New Claims under Dodd Frank claims being put into Court for disposition in the January 30, 2012 Motion of Intervention.Nelson in his Intervention Motion clearly requests if Judge provides no relief for Summary Judgement then Nelson requests right to file claims under Rico & Dodd Frank for Anti-Retaliatory Damages and Relief that victims have De Novo right to The Court never responded or ruled that Mr. Nelson nor Mr. Greenspan nor Dr. Bordow is not eligable to receive or file claims for relief under Dodd Frank Anti- Retaliatory statues a Jury Hearing in Federal Court for disposition of such claims and for relief.Additional overlooked allegation by the Court was the claim and evidence in Mr. Nelson’s pro se Judicial Notice Motion on March 5, 2012. Providing evidence of a 2nd new Dodd Frank Anti-Retaliatory Act which included report of new evidence (against two other Class member Bordow and Greenspan) and notice of claim and request for Relief from court.Breach of Duty of Candor and inadequate representation by RGRDLaw was an additional allegation overlooked by Court. Prior to the March 19, 2012 order approving settlement, the Court overlooked the evidence from Nelson, Bordow, and Greenspan U.S.C. § 2511(1)(d) (prohibiting the disclosure or use of the contents of an electronic communication obtained “through .. interception . . . in violation of this subsection.”). The court had a fiduciary duty to absentee Class to protect the Shareholders from becoming victim of further schemes, frauds, or losses caused by breaches of fiduciary duty or violations of the duty of candor. allegation
FIRST CLAIM FOR RELIEF
(Violation Of The Stored Communications Act, 18 U.S.C. 2701 and 2707- All Defendants) Plaintiff repeats and realleges each and ever allegation contained herein
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The Stored Communications Act (the “SCA”) broadly defines an “electronic communication” as “any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, phottoelectronic or photooptical system that affects interstate or foreign commerce …” 18 U.S.C. 2711(1); 18 U.S.C. 2510(12). The SCA broadly defines a “wire communication” as “any aural transfer made in whole or in part through the use of facilities for the transmission of communications by the aid of wire, cable, or other like connection between the point of origin and the point of reception (including the use of such connection in a switching station) furnished or operated by any person engaged in providing or operating such facilities for the transmission of interstate or foreign communications or communications affecting interstate or foreign commerce …” 18 U.S.C 2711(1); 18 U.S.C. 2510(1).Pursuant to the SCA, “electronic storage” means (a) “temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof,” and (b) “any storage of such communication by an electronic communication service for purposes of backup protection of such communication.” 178 U.S.C 2711(1); 18 U.S.C 2510(17)(A)(B). This type of electronic storage includes communications in intermediate electronic storage that have not yet been delivered to their recipient.Congress enacted the SCA to prevent “unauthorized persons deliberately gaining access to, and sometimes tampering with, electronic or wire communications that are not intended to be available to the public.” Senate Report No. 99-541, S. REP. 99- 541, 35, 1986 U.S.C.C.A.N. 355, 3589. 45. As such, the SCA mandates, among other thing, that it is unlawful for a person to obtain access without authorization to stored communications, including communications sent to and temporarily stored on a cellular telephone’s voice-mail system. 18 U.S.C. 2701(a). SUB-CLASS A: EUNICE & SIMILAR SITUATED;Est 5000 victims UK&US Defendants violated 18 U.S.C. 2701 (a)(1), in that they accessed a “facility through which an electronic communication service is provided.” (18 U.S.C. 2701(a)) by intentionally accessing Plaintiff’s voicemails without authorization and obtaining and/or altering authorized access to a wire or electronic communication while in electronic storage by collecting and accessing temporarily stored voicemails or those maintained for purposes of backup protection. This occurred while Plaintiff or
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Plaintiff’s relatives and/or Spouse visited and traveled in or through Los Angeles in 2004 and 2005 Defendants had actual knowledge of, participated in, directed and/or approved of, and benefitted from, this practice. Additionally, Defendants violated 18 U.S.C. 2701(a)(2) because they intentionally exceeded or had no authorization to access Plaintiff’s communications and obtained, altered, or prevented authorized access to a wire or electronic communication while in electronic storage by interfering with Plaintiff’s temporarily stored voicemails, as disclosed hereinabove. Defendants had actual knowledge of, participated in, directed and/or approved of, and benefitted from, this practice.As a result of Defendants’ conduct described herein, and their violation of 2701, Plaintiff has suffered injuries and seeks an award of the maximum staturoty actual damages, including profits made by Defendants, plus reasonable attorneys’ fees and costs pursuant to 18 U.S.C. 2707.
SECOND CLAIM FOR RELIEF
(Violation of Wiretap Act, 18 U.S.C. 2510, 2511 & 2520 – All Defendants) 49. Plaintiff repeats and realleges each and every allegation contained herein 18 U.S.C. § 2511 provides, in relevant part, that any person who intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication, knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of this subsection; The Wiretap Act generally prohibits the “interception” of “wire,oral,or electronic communications.” 18 U.S.C. 2511(1) The Wiretap Act provides a private right of action against any person who “intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication,” be subject to [civil liability]. See 18 U.S.C. § 2511(1) (West Supp. 1999) (emphasis added)18 U.S.C. 2511(1)(a), or who “intentionally uses, or endeavors to use, the contents of any wire, oral, or electronic communication,knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of [the Wiretap Act.] 2511(1)(c) (“intentionally discloses, or endeavors to disclose, to any other person the contents…”). The statue prohibits “interceptions” of electronic communications and defines “intercept” as “the aural or other acquisition of the content s of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device.” 2510(4). The “contents” of a communication, in turn, are defined in the statues as “any information concerning the substance, purport, or meaning of that
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communication.” 2510 (8). “Any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce,” with certain exceptions, qualifies as an “electronic communication.” 2510(12). “Content” includes information the user intended to communicate, such as the words spoken during a phone call that are preserved in voice-mail messages, which were wrongfully hacked and intercepted. SUB-CLASS A: UK & EUNICE Defendants intercepted “”wire, oral or electronic communications” and used or disclosed their contents, by contemporaneously hacking into Plaintiff’s cellular telephone system. Defendants captured and obtained voice-mail messages intended for Plaintiff before Plaintiff could access them. Defendants listened to these messages, copied their contents and/or disseminated them in violation of the Wiretap Act. This occurred while Plaintiff or Plaintiff’s relatives and/or Spouse visited and traveled in or through Los Angeles in 2004 and 2005 Defendants had actual knowledge of, participated in, directed and/or approved of, and benefitted from, this practice. As a direct result of Defendants’ actions as alleged here, Plaintiff suffered irreparable harm in his personal and professional life and is entitled to the greater of actual damages and any profits made by Defendants due to their violations of 18 U.S.C. 2520 and 2511 or statutory damages, pursuant to 18 U.S.C. 2520.As a result of Defendants’ actions as alleged here, Plaintiff is also entitled to punitive damages, as well as reasonable attorneys’ fees and costs, pursuant to 18 U.S.C. 2520. SUB-CLASS B: NELSON, MEMBER FEDERAL JUDGE KING PLAINTIFF CLASS SUB-CLASS C: Employees or opportunity seekers who interviewed With at least 1 officer
THIRD CLAIM FOR RELIEF
(Violation of Article I, Section I Of The California State Constitution – All Defendants) Plaintiff repeats and realleges each and every allegation contained herein The aforementioned wrongful actions and practices of Defendants violated Plaintiff’s rights under Article I, Section 1 of the California State Constitution which provides: “All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing and protecting property, and pursuing and obtaining safety, happiness and privacy.” (Emphasis added.) 58. The California State Constitution was amended to add the constitutional right to privacy following a 1972 ballot initiative. The California Supreme Court has since
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suggested the State Constitution’s enumerated right to privacy is sometimes greater than the United States Constitution’s unenumerated right to privacy. SUB CLASS A: EUNICE/UK 59. During 2004 and 2005, Defendants repeatedly intercepted, accessed and listened to voice-mail messages intended solely for Plaintiff’s private cellular telephone system. Further, Defendants knew and/or should have known that the voice mail messages were intended solely for Plaintiff, and yet they continued to intercept, access and listen to them. Defendants’ actions rendered Plaintiff unable to retrieve voice-mail messages intended solely for him, which were on Plaintiff’s cellular telephone system. 61. Defendants published information, including articles in The Sun and News Of The World, using sensitive, private and confidential information intended solely for Plaintiff. Defendants’ unauthorized interceptions of Plaintiff\’s voice-mail messages were an egregious breach of well-established social norms that recognize the need to maximize individual control over the dissemination and use of such information in order to prevent unjustified embarrassment and indignity, and violated Plaintiff’s reasonable expectation of privacy.As a result of Defendants’ actions, Plaintiff was unable to make intimate decisions or conduct personal activities relating to both his family and career without observation, intrusion, or interference.Defendants’ actions violated Plaintiff’s specific, legally protected privacy interest and reasonable expectation of privacy through conduct that was sufficiently serious in its nature, scope and actual or potential impact to constitute an egregious breach of the social norms underlying the privacy right.As a result of Defendants’ action as alleged here, Plaintiff was caused irreparable harm in his personal and professional life and is entitled to general and specific damages. Pursuant to 28 U.S.C. 1367, this Court has pendent or supplemental jurisdiction to hear and adjudicate such claims.
FOURTH CLAIM FOR RELIEF
(Violation of California Penal Code 630, 631, 632, 632.7 & 637(2)(a) – All Defendants) . Plaintiff repeats and realleges each and every allegation contained herein. The actions and practices of Defendants violated Plaintiff’s rights under the California Penal Code 630, 631, 632, 632.7 and 637.2(a).The purpose of the California Penal Code 630 is to protect private communications in an era of ever improving technology. California Penal Code 630 begins as follows:
“The Legislature hereby declares that advances in science and technology have led to the development of new devices and techniques for the purpose of eavesdropping upon private communications and that the invasion of privacy resulting from the continual and increasing use of such devices and techniques has
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created a serious threat to the free exercise of personal liberties and cannot be tolerated in a free and civilized society.“
CA Statue 637.2 states,
“(a) Any person who has been injured by a violation of this chapter may bring an action against the
person who committed the violation for the greater of the following amounts: (1) Five thousand dollars ($5,000).
(2) Three times the amount of actual damages, if any, sustained by the plaintiff.” California Penal Code 631(a) defines the acts that violate the law as follows:
“Any person who, by means of any machine, instrument, or contrivance, or in any other manner, intentionally taps, or makes any unauthorized connection, whether physically, electrically, acoustically, inductively, or otherwise, with any telegraph or telephone wire, line, cable, or instrument, including the
wire, line, cable, or instrument of any internal telephonic communication system, or who willfully and without the consent of all parties to the communication, or in any unauthorized manner, reads, or attempts to read, or to learn the contents or meaning of any message, report, or communication while the same is in transit or passing over any wire, line, or cable, or is being sent from, or received at any place within this state; or who uses, or attempts to use, in any manner, or for any purpose, or to communicate in any way, any information so obtained, or who aids, agrees with, employs, or conspires with any person or persons to unlawfully do, or permit, or cause to be done any of the acts or things mentioned above in this section, “
While Plaintiff or spouse or relatives traveled thru or visited California in 2004 and 2005, Defendants and/or their agents, employees or representatives intentionally intercepted, interfered with, accessed and hacked Plaintiff’s voice-mail messages on his cellular telephone system or directed, caused, permitted, and/or conspired for Plaintiff’s cellular telephone voice-mail to be intercepted, interfered with, accessed and hacked. Defendants intentionally made unauthorized connections to the voice-mail on Plaintiff’s cellular telephone system without the consent of Plaintiff or any other party to the voice-mail communications. Defendants also made unauthorized attempts to learn the contents of confidential communications contained in the voice-Mail of Plaintiff’s cellular telephone system. Defendants used or attempted to use and/or communicated information that was obtained through such activities. Defendants’ actions were thus in violation of 631 of the California Penal Code. Defendants had actual knowledge or, participated in, directed and/or approved of, and benefitted from, this practice .A violator of California Penal Code 632(a) is defined as “Every person
who, intentionally and without the consent of all parties to a confidential communication, by means of any electronic amplifying or recording device, eavesdrops upon or records the confidential communication, whether the communication is carried on among the parties in the presence of one another or by means of a telegraph, telephone, or other device, except a radio, “
California Penal Code 632 (b) defines “person” in this context as including any “individual, business association, partnership, corporation, limited liability company….” SUBCLASS C: HiTech employees
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California Penal Code 632(c) defines the term "confidential communication" to include “any communication carried on in circumstances as may reasonably indicate that any party to the communication desires it to be confined to the parties thereto,” excluding public proceedings or other instances where there would not be an expectation of privacy. SUBCLASS C: Hitech Employees:A Violator of California Penal Code 632.7(a) is defined as “every person who, without the consent of all parties to a communication, intercept or receives and intentionally records, or assists in the interception or reception and intentional recordation of, a communication transmitted between two cellular radio telephones, a cellular radio telephone and a landline telephone, two cordless telephones, a cordless telephone and a landline telephone, or a cordless telephone and a cellular radio telephone…“
While Plaintiff traveled thru or visited California in 2004 and 2005, Defendants and/or their agents, employees or representatives intentionally, and without the consent of all parties to the communications, used an electronic dvice to access and to record Plaintiff’s voice-mail messages on his cellular telephone system, including voice-mail messages generated by calls from other cellular phones and landlines. Defendants then used or attempted to use the information obtained in this manner. The voice-mail messages left and stored on Plaintiff’s
cellular telephone system were private and confidential because at least one party to the communication reasonably expected the communication to be limited to the parties. Defendants’ actions were thus in violation of
631, 632, and 632.7 of the California Penal Code. Defendants had actual
knowledge of, participated in, directed and/or approved of, and benefitted from , this practice. As a result of Defendants’ actions as alleged here, Plaintiff was caused irreparable harm in his personal and professional life. Plaintiff’s actual damages include but are not limited to, emotional distress, anxiety, embarrassment, humiliation, the deterioration of family relationships, and the fear of, or actual loss of, professional credibility and integrity. Defendants’ actions were a substantial factor in causing this harm. Under 637.2(a) of the California Penal Code, “any person who has been injured by a violation of this chapter may bring an action against the person who committed the violation.”By reason of the foregoing, Plaintiff is entitled to the greater of statutory damages, pursuant to 637.2(a)(1), or three times the actual damages suffered for each instance in which Defendants violated 631, 632, and 632.7 of the California
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Penal Code, pursuant to 637.2(a)(2).Pursuant to 28 U.S.C. 1367, this Court has pendent or supplemental jursidction to hear and adjudicate such claims.. Any person who trespasses on property for the purpose of committing any
Every person not a party to a telegraphic or telephonic communication who willfully discloses the contents of a telegraphic or telephonic message, or any part thereof, addressed to another person, without the permission of that person, unless directed so to do by the lawful order of a court, is punishable by imprisonment pursuant to subdivision (h) of Section 1170, or in a county jail not exceeding one year, or by fine not exceeding five thousand dollars ($5,000), or by both that fine and imprisonment. Every person not connected with any telegraph or telephone office who, without the authority or consent of the person to whom the same may be directed, willfully opens any sealed envelope enclosing a telegraphic or telephonic message, addressed to another person, with the purpose of learning the contents of such message, or who fraudulently represents another person and thereby procures to be delivered to himself any telegraphic or telephonic message addressed to such other person, with the intent to use, destroy, or detain the same from the person entitled to receive such message, is punishable as provided in Section 637.” confidential communications sent or delivered by one or more of foreclosing defendants to Plaintiff related to the subject of Plaintiff’s mortgage and/or the December 2012 foreclosure public sale. Defendant Ray hid such information and communications and the topics revealed from such communications from lawful recipient, Plaintiff.Plaintiff also under CA Statue 637.2(b) petitions Court to “enjoin and restrain” Defendants from further violations.
FIFTH CLAIM FOR RELIEF
(Violation of California Civil Code 1708.8(b), 1708.8(d) & 1708.8(e) – All Defendants) Plaintiff repeats and realleges each and every allegation contained herein The actions and practices of Defendants violated Plaintiff’s rights under the California Civil Code 1708.8(b), 1708.8(d) & 1708.8(e).California Civil Code 1708.8(b) states:
“A person is liable for constructive invasion of privacy when the defendant attempts to capture, in a manner that is offensive to a reasonable person, any type of visual image, sound recording, or other physical impression of the plaintiff engaging in a person or familial activity under circumstances in which the plaintiff had a reasonable expectation of privacy, through the use of a visual or auditory enhancing device, regardless of whether there is a physical trespass, if this image, sound recording, or other physical impression could not have been achieved without a trespass unless the visual or auditory enhancing device was used.”
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California Civil Code 1708.8(e) states:
“A person who direct, solicits, actually induces, or actually causes another person, regardless of whether there is an employer-employee relationship, to violate any provision of subdivision (a), (b), or (c) is liable for any general, special, and consequential damages resulting from each said violation…”
Defendants constructively invaded Plaintiff’s privacy when they and/or their agents, employees, or represent aibgces, directed, induced, caused, or employed others to attempt or themselves attempted to capture a sound recording, in a manner that was offensive to a reasonable person. The sound recording that Defendant scaputrued or attempted ot capture involved matters related to Plaintiff’s personal and/or familial activity and otherwise could not have been captured without trespass. In doing so, Defendants and/or their agents, employees, or representtaitves iviolated California Civil Code 1708.8(b) and 1708.8(e).Defendants invaded Plaintiff’s priuvacy for a commercial purpose, with the intention of selling, publishing, or otherwise transmitting these records for financial gain or other consideration.As a result of Defendants’ actions alleged here, Plaintiff was caused irreparable harm in his personal and professional life.By reason of the foregoing, pursuant to California Civil Code 1708.8(d) Plaintiff is entitled to up to three times his general and specific damages, as well as punitive damages, as a result of the violations of 1708.8(b). Under California Civil Code 1708.8(d), Defendants are also subject to disgorgement upon a demonstration that Defendants committed the invation of privacy “for a commercial purpose.” Because Defendants committed the invasion of privacy primarily for commercial purposes, including publishing articles in the publications The Sun and News Of The World, Defendants are subject to disgorgement of “any proceeds or other consideration obtained as a result of [these violations’.”Pursuant to 28 U.S.C. 1367, this Court has pendent or supplemental jurisdiction to hear and adjusdicate such claims.
SIXTH CLAIM FOR RELIEF
(Intrusion Into Private Affairs – California Common Law– All Defendants) Plaintiff repeats and realleges each and every allegation contained herein While Plaintiff was living, traveling thru, and visiting Los Angeles in 2004 to 2005, he had a reasonable expectation of privacy concerning his voice-mail messages on his cellular telephone system. However, Defendants intercepted, interfered with, accessed and hacked his voice-mail messages on his cellular telephone system. In so doing, Defendants surreptitiously intruded upon Plaintiff’s private affairs, concerns and communications. Defendants’ actions and conduct in intentionally and willfully intercepting, interfering with, intruding upon, accessing and hacking Plaintiff’s voice-mails on his cellular telephone system even though Plaintiff had clearly never authorized Defendants to do so, was highly offensive and highly objectionable to Plaintiff and to a reasonable person of ordinary sensibilities. Defendants acted with reckless disregard of Plaintiff’s privacy rights and for the fact that a reasonable person of ordinary sensibilities would find such invasion and intrusion highly offensive. Defendants had actual knowledge of, participated in, directed and/or approve of, and benefited from this practice. Defendants’ actions were highly offensive because the degree of intrusion into Plaintiff’s personal and professional life was significant, the context, conduct and circumstances surrounding the intrusion revealed a complete disregard of Plaintiff’s privacy rights, and the Defendant’s motives and objectives
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were for financial profit at Plaintiff’s expense.Defendants’ intercepting, interfering with, intruding upon, accessing and hacking Plaintiff’s voicemails on his cellular telephone was malicious and served no legitimate public interest. The facts publicly disclosed and published by Defendant s were private and confidential matters- involving Plaintiff, and Plaintiff’s close friends and business associates – which were offensive and objectionable to a reasonable person and not of legitimate public concern, and which Plaintiff was entitled ot keep private and confidential.Defendants were motivated for financial profit and gain and to exploit Plaintiff’s private and confidential information for their own ends without regard to Plaintiff’s privacy rights.As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff suffered emotional distress, an invasion of his rights of privacy and other incidential and consequential damages. Plaintiff was harmed and Defendants’ conduct was a substantial factor in causing such harm.By reason of the foregoing, Plaintiff is entitled ot actual damages in an amount to be determined by the Court.By reason of Defendants’ actions, which constitiued outrageous conduct, were reckless, showed a callous indifference to, and willful disregard, of Plaintiff’s rights of priuvacy, and were contrary to the public policy of the State of California, Plaintiff is also entitled to punitive damages in an amount to be determined by the Court.Pursuant to 28 U.S.C. 1367, this Court has pendent or supplemtnal jurisdiction to hear and adjudicate such claims.
SEVENTH CLAIM FOR RELIEF
(Violation of 17200 2006 Consent Decree with California State Attorney, after consent by News Corporation Director Perkins was required after its December 7, 2006 filing and being entered into– All Defendants-For additional specific evidence please see Motion for Consolidation Injunction)
NINTH CLAIM FOR RELIEF
(Violation Of 18 U.S.C. § 1962(d) By Conspiring To Violate 18 U.S.C. § 1962(c)) Plaintiffs reallege and incorporate by reference all previous paragraphs.
The Racketeering Influenced and Corrupt Organizations Act (“RICO”) provides:It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section. 18 U.S.C. § 1962(d).Defendants violated 18 U.S.C. § 1962(d) by conspiring to engage in the predicate acts alleged to form the violation of 18 U.S.C. § 1962(c), as described The relevant time period for conspiracy stems from at least the year 2004, and likely earlier but at this point
in discovery as yet unknown, and continues to the filing of this RICO Class Action Complaint.
As a proximate result of the overt acts taken by Defendants, Plaintiffs and the Class Members have suffered injury to their business and property. As alleged with particularity above, the facts demonstrate that the RICO Defendants conspired to violate 18 U.S.C. § 1962(c) by conducting, or participating directly or indirectly in the conduct of, the affairs of Enterprise through a pattern of racketeering activity. greed to the objective of this conspiracy. BP took overt acts, along with Transocean, in furtherance of that conspiracy.As alleged with particularity above, as a direct and proximate result of the RICO Defendants’ aforementioned RICO conduct, Plaintiff’s s and Class Members have suffered injury to their business and property As alleged with particularity above, the RICO Defendants are jointly and severally liable to Plaintiff for treble damages, together with all costs for this action, plus reasonable attorneys fees as provided by 18 U.S.C. § 1964. To the extent permitted by law, Plaintiff is entitled to damages, plus court costs, and pre and post-judgment interest at the legally allowable limit. Section 1962(d) of RICO makes it unlawful “for any person to conspire to violate any
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of the provisions of subsection (a), (b) or (c) of this section.” Each RICO Defendant agreed to participate, directly or indirectly, in the conduct of the affairs of through a pattern of racketeering activity comprised of numerous acts of mail fraud, tampering and retaliation, and each RICO Defendant so participated in violation of 18 U.S.C. § 1962(c). Plaintiff incorporates by reference and realleges each allegation set forth above.
First RICO Predicate Offense Defendants, acting in concert and with criminal purpose, are in violation of 18 U.S.C. §1961 concerning
racketeering activity in that they, in violation of 18 U.S.C. §1512, have tampered with witnesses or informants namely each of the Plaintiffs to attempt to hinder or prevent the Plaintiffs through threats and other actions within their employment, from providing evidence to officials regarding violations of Federal Law,
Second RICO Predicate Offense That the Defendants, in furtherance of their criminal enterprise and corrupt organization have conspired together to violate 18 U.S. C. §1513 by retaliating against a witness or an informant by taking actions harmful to Plaintiffs including interference with the lawful employment or livelihood of the Plaintiffs for providing information to authorities
. Defendants’ violations of RICO laws have caused damages to the Plaintiffs in the form of general and special damages and each Plaintiff is entitled to recover from Defendants, jointly and severally, Treble damages in an amount to be determined at Trial together with Plaintiffs Attorney’s fees.
Section 18 U.S.C. § 1964(c) (1982): Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee. PRAYER FOR RELIEF AS TO RICO COUNTS WHEREFORE, Plaintiff respectfully requests that this Court grant the following relief:
a. Treble the amount of all wages and benefits Plaintiff would have received but for Defendants’ unlawful conduct, including but not limited to back pay, front pay, and pre-judgment interest;
b. Compensatory damages in an amount to be determined at trial to compensate Plaintiff for the damage to reputation, loss of career, humiliation, anguish an
a. Treble the amount of all wages and benefits Plaintiff would have received but for Defendants’
unlawful conduct, including but not limited to back pay, front pay, and pre-judgment interest; b. Compensatory damages in an amount to be determined at trial to compensate Plaintiff for the damage
to reputation, loss of career, humiliation, anguish and emotional distress caused by the RICO Defendants’ unlawful conduct; c. Treble and/or punitive damages as allowed by law;
d. An award of reasonable attorneys’ fees, costs and litigation expenses pursuant to 18 U.S.C. § 1964(c) and all other applicable statutes; and
e. Such other relief as the Court may deem just or equitable. PRAYER FOR RELIEF
1. An award of the maximum statutory actual damages, including profits made by Defendanrts, pursuant to 18 U.S.C. 2707;Punitive damages, pursuant to 18 U.S.C. 2707(b)(3);Reasonable attorney’s fees and costs, pursuant to 18 U.S.C. 2707(b)(3)l andSuch other and further relief as the Court may deem just, proper and equitable.On the Second Claim for Relief.
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The greater of actual damages and any profits made by Defendants by their violations of 18 U.S.C. 2520 and 2511, or statutory damages, pursuant to 18 U.S.C. 2520. Punitive damages, pursuant to 18 U.S.C. 2520
1. Reasonable attorneys’ fees and costs, pursuant to 18 U.S.C. 2520 Such other and further relief as the Court mauy deem just, proper and equitable. On the Third Claim for Relief 1. General and specific damages, in an amount to be determined by the Court; and The greater of statutory damages, pursuant to 637(2)(a)(1) or three times the actual damages Plaintiff
suffered for each instance in which Defendants violated 631 and 632 of the California Penal Code, pursuant to 637(2)(a)(2)l and Such other and further relief as the Court may deem just, proper and equitable. On the Fifth Claim for Relief. An award of three times Plaintiff’s general and specific damages, pursuant to 1708.8(d) of the California Civil Code;Disgorgement of any proceeds or other consideration obtained by Defendants as a result of thei violations of Plaintiff’s rights under 1708.8(d) of the Californai Civil Code;Punitive damages by reason of Defendants’ violations of Plaintiff’s rights under 1708.8(d) of the California Civil Code; andSuch other and further relief as the Court may deem just, proper and equitable. On the Sixth Claim for Relief:
1. Actual damages in an amount to be determined by the court; 2. Punitive Damages in an amount to be determined by the Court; and 3. Such other and further relief as the Court may deem just, proper and equitable.”
Plaintiff demands trial by jury. Dated: May 2, 2014
BRAD D. GREENSPAN, PRO SE 264 South La Cienega, Suite 1216 Beverly Hills, CA 90211 EXHIBIT #1 Other Predicate Acts:
However the jig was up for News Corporation in 2012 as it became clear thru the May 1, 2012 release of UK Parliamentary report and the November 29, 2012 Leveon Inquiry Report, concluding that News Corporation, Directors and officers were running a criminal organization: hiding evidence, hacking, and bribing police and other public officials. News Corp had indemnified the other defendants in Brown v. Brewer and was operating the case’s U.S. legal strategy,
i. News Corporation’s general counsel resigned in 2011
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ii. NewsCorp CEO appearing under oath at the Leveson Inquiry admitted
he was the victim of a “coverup” and that all the criminal acts exposed had gone on without his knowledge.
iii. News Corporation conceded its internal controls were defective as a result of the exposure of years of bribes its UK subsidiaries had paid out and hidden by falsifying its financials. In November 2012, News Corporation’s top executives Brooks and Coulson were charged with criminal bribery in the UK. Bribery is also the key illegal act NewsCorp and defendants used to damage Plaintiffs during 2005 purchase of MySpace.com for $650 million instead of the fair value of $96 Billion. At least one of the Defendants, News Corporation, has already conceded a defense for the illegal acts proven in the UK. According to the CEO Rupert Murdoch, News Corporation’s internal controls were defective and the CEO didn’t know what was going on and was a victim of a “coverup”.Therefore, News Corporation must use the same defense for the criminal actions its accused of herein. News Corporation’s lack of credibility and proven defective internal controls can be seen thru comparing a) The statements and communications of News Corporation key Directors in 2006 and 2007 related to illegal phone hacking vs. b) The actions of News Corporation between 2005-2011 in regards to Investigating phone hacking vs. c) The false statements at the 2010 Annual Meeting by the CEO, Viet Dinh, Director and member of the Nominations and Governance Committee, Sir Rod Eddington Director and member of the Audit Committee vs. d) the findings by the Parliament Committee in May 2012, the findings by the Leveson Inquiry in November 2012, and admissions by News Corporation in 2012: A)
i. June 19, 2006 at 1:18PM, Tom Perkins emails HP Counsel Sonsini,
Subject: HP Confidential, stating, “Today I was at a NewsCorp board meeting in London, and I discussed the events of the most recent HP board meeting, with a fellow director, Viet Dinh, as you probably know, Viet is a professor of Law at Georgetown, and his most popular course is “Corporate Governance.” “Viet was shocked at the HP chairman’s recording of board members telephone and computer inter-connections. I emphasized that no communications were actually transcribed. He said that even monitoring connections and/or e-mail addresses requires a subpoena (which as far as I know was never obtained) but, with or witheout a subpoena, such monitoring was simply “unconscionable.” June 20, 2006 at 10:00AM, Tom Perkins emails HP Counsel Sonsini, Subject:RE: HP Confidential,
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“the investigation was “unknown to the board, except perhaps in the most vague and imprecise terms, with the possible exception of Mark, who she may have briefed. “ “In view of Viet’s unqualified opinion that it was illegal, I think, the board needs to know the potential risks, if any. I resigned from the board and as chair of the N&G committee before I could look into this personally. If it was illegal, it occurred under my purview, and on my watch, so to speak, and I would like to know whether or not I share some responsibility.”
iii. July 18, 2006 at 3:22AM, TOM PERKINS emails Sonsini, Mark Hurd, and Ann Baskins, Subject: “RE: Minutes”, and states,
“Thank you for sending the draft minutes of the May 18th meeting.” “As written the minutes state that I concurred in the nature of the investigation –it is not true. I was under the impression that the investigation involved examining calendars, travel schedules, and such. I had no idea that personal communications were involved and had I known that this was the case I would have brought the matter (of the intrusive nature of the investigation) to the board, for full examination, well in advance of this May 18th meeting.”
iv. July 28, 2006, at 1:52PM, Tom Perkins emails Sonsini, Baskins,
Babbio, Sbaldauf, Dunn, Hurd, Hammergren, and others, Subect: Confidential: May 18th HP Board of Directors Meeting.
“Dear Ann and HP Board Members”;” the essential point to be acknowledged is that the sub-rosa surveillance of the HP Board member’s personal communications was, and is, illegal. I attach a memo from Larry Sonsini, in which he acknowledges that HP hired consultants who engaged in ‘pretextings,” a practice using an illegal misrepresentation – the pretext- of identity to carrier companies in order ot obtain confidential telecommunications records. This is a fraudulent practice. Interestingly, HP has on its board an expert in the matter, namely Larry Babbio, whose company Verison, has testied before the F.C.C. on the illegality of the practice, and has filed suits against consultants who engage in “pretexting”;”That the illegal pretext was done by a consultant is no excuse or defense to HP, which authorized, induced, and benefited from the illegal fraud. “As Chairman of HP’s Nominating and Governance Committee, had I been informed of these illegal activities prior to the May 18th meeting, I would have stopped them, or failing that, brought them to the attention of the full board. Now, I must insist that the HP board undertake a full investigation of the practices, via an independent committee of the board (not including the Chairman, who initiated the illegal behavior) and take whatever disclosure and/or corrective action is required.
This is an extremely serious matter, and I have engaged counsel for advice. I attach a copy of his CV from the Georgetown U. Law School, where he is a professor. I did not resign from the board for frivolous reasons, but because HP was standing into dangerous waters –waters hazardous with both illegal and unconscionable governance practices- and because my advice was being ignored.”
October 9, 2006, Maria Bartiromo CNBC interview states, “Viet Dinh represents Tom Perkins”;”He is generally credited with authoring the controversial USA Patriot Act.”
“How did you first learn of the spying at HP? Tom Perkins approached me at a News Corp. (NWS) dinner and asked me for advice. [Both
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Perkins and Dinh are on the News Corp. board] He laid out a rather dramatic tale about how he had just resigned from HP in protest over an investigation “ “Do you have any sense of how widespread snooping on employees or even journalists is in Corporate America?
Not as a general matter, but my phone has been ringing quite steadily since the publicity about HP-matters relating to pretexting and spying on competitors”
“the silver lining to this episode is that everyone in Corporate America is on notice that this type of activity has no place in our country, and least of all in corporate leadership.”
“You mean rival companies to HP are calling you?
Well, some rival companies, but more so other companies unrelated to HP who think competitors have been spying on them. They also are worried about pretexting their employees.” “You’re widely considered the chief architect of the Patriot Act. Do you see any irony that you are a voice of outrage over alleged privacy violations at HP? No. There is a distinct difference between the government using its power of subpoena and search warrants to protect America against security threats and private citizens and companies breaking the law in order to pursue their own interests and personal agendas.” Vi.Decmber 6, 2006, Susan Beck writes “Where will the Troubles End for Sonsini” for the American Lawyer, stating,
“Perkins’ version of the boardroom discussions is supported by an e-mail he sent a week later, on May 31, to the directors of News Corp. Perkins, who also sits on the News Corp. board, explained in the message that he wanted to “spike the rumors” about why he resigned from the HP board. “(This email was turned over to Congress)”
“One of the people who got this message was Dinh, who is also a News Corp. director and chairs that company’s corporate governance committee. (Dinh was not representing Perkins at the time he resigned.) Dinh told Perkins that the gathering of third party phone records was illegal and unconscionable. (At this point, Perkins and Dinh did not know that pretexting was involved. )) Dinh, as it turns out, is one of the nation’s legal expers on surveillance tactics. A former assistant attorney general for legal policy at the U.S. Department of Justice, the 38-year-old is credited with authoring the Patriot Act.
“The day after recieving that letter, Dinh opted to get the power of the government behind him. He called the SEC’s deputy general counsel of enforcement, told him about this dispute and gave him the e-mails and letters that had bounced back and forth between him, his client, HP and Sonsini. He also contacted the U.S. Attorney’s Office in San Francisco and the California attorney general to tell them about the prexting.”
“The corporate law professor objected to the choice of Wilson Sonsini to do an investigation. In an Aug 23 letter to Sonsini’s partner, Boris Feldman, Dinh questioned how the firm could legitimately
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investigate events that involved the “key participation” of its Chairman: “My personal respect for your and Mr. Sonsini’s legal ability and professional integrity does not mitigate the conflicts of interest arising from your firm’s longstanding relationship as counsel to [HP].”
“I only know one way to practice law, and that is to call things the way I see it,” said Dinh.” “Over a Washington, D.C. lunch in which Dinh quickly downed three glasses of wine, three orders of oysters and a seafood gumbo, the former government lawyer recalled he was startled when Perkins first told him about the
leaksinvestigation, “I had an instant and almost instinctive recognition [of illegal investigative methods],” he recalls. “Title Three of the Omnibus Crime Act prescribes that [the government] must get judicial approval for a [telephone] track and trace device, and [access to] phone records requires a subpoena or a search warrant. He states, “I could not see how a private entity could get such access without consent.” “Dinh stresses that he called the authorities only after months of trying to get HP to do the right thing. “There is literally no internal corporate governance mechanism that can substitute for this type of sunshine,” he notes.
“I do what I do, I say what I say, I think what I think, and I leave the labeling to others,” he said. “I don’t think of myself as a fellow traveler or an ideologue or a rubber-stamper. Or a renegade.” In fact, there is a label for Mr. Dinh. In Washington, people who see Mr. Dinh’s ebullient, easy demeanor as opportunistic politicking have coined it “Viet Spin.” Here, possibly, is an example of Viet Spin at work: Mr. Dinh is making headlines these days representing venture capitalist Tom Perkins, the former Hewlett-Packard board member whose outrage over the methods used to uncover a leaker on the company’s board triggered a full-blown scandal at the company. Just as aggressively as he argued that the government could use wiretaps to root out terrorists, he is now arguing that the company overstepped its bounds in allowing unethical and possibly illegal techniques to be used to obtain board members’ phone records. “I guess my expertise in national security and electronic surveillance and the U.S.A. Patriot act helped me very easily to recognize the legality or propriety of certain investigative techniques,” said Mr. Dinh. At issue at Hewlett-Packard is the use of “pretexting”—the technique whereby investigators pose as clients of a phone service, providing Social Security numbers and the like, in order to obtain phone records. The phone records of Mr. Perkins, other board members and journalists who were the recipients of the leaks were accessed, the company has disclosed. On Tuesday, chairwoman Patricia Dunn—who had called for the investigation but says she was unaware of the methods used—was stripped of her title and replaced by company chief executive Mark Hurd, though Ms. Dunn will remain on the board. “I asked Tom whether he had given consent, and he said no,” Mr. Dinh said. “Even without
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knowing the method of the investigation, having been around this town and having seen and participated in a lot of leak investigations, you know, these are not easy things to do even when you have full subpoena and search-warrant power.” Traveling on his boat in the Mediterranean, Mr. Perkins could not be reached for comment, but he released a statement over the weekend calling for Ms. Dunn’s resignation. MR. DINH WAS 10 YEARS OLD when he fled Saigon in 1978, part of a wave of “boat people” who were fleeing communist rule. His father, a city councilman, had been sent to a reeducation camp. Mr. Dinh, his mother and five siblings left on a small fishing boat, on which they spent 12 days without food and water. They finally docked in Malaysia. Mr. Dinh’s mother quickly realized that the Malaysians would probably send them right back out to sea, so that night she hacked at the boat with an ax to destroy its seaworthiness. After some months in a refugee camp, the Dinhs were sent to Portland, Ore. The family picked strawberries for menial wages, but when Mount St. Helens erupted, the crop damage was so severe that the family relocated to Fullerton in Southern California. There, Mr. Dinh worked alongside his mother in a sewing shop and flipped burgers after school. He earned a scholarship to Harvard and then attended Harvard Law School. His public profile rose steadily from there. He wrote an op-ed in The New York Times in 1992 on his sister’s struggle to enter the United States, and his odyssey was described by Times columnist Anthony Lewis the following year as an inspiring counter-example to those concerned about “the immigrant threat.” After law school, he clerked for Judge Laurence Silberman, a Reagan appointee, whose alumni network of mostly conservative lawyers form a tight clique. The next year, he clerked
for Sandra Day O’Connor.
44. SEPTEMBER 13, 2006, 8:58 AM ET H-P: Bill Lockyer, Viet Dinh, Morgan Lewis & More!By Peter Lattman
“Let’s catch you up on the H-P scandal. Here’s what’s going down: The NewsHour with Jim Lehrer broke some news yesterday when California AG Bill
Lockyer told the show that state investigators have “sufficient evidence to bring criminal charges against individuals inside Hewlett-Packard as well as outside the company.” Lockyer added: “People’s identities were taken falsely, and it’s a crime. People accessed computer records that have personal information. That’s a crime.” H-P has said that it hired a P.I. firm to carry out its inquiry, and that firm in turn hired a second entity that used “pretexting,” or false identification, to obtain the private phone records of board members and journalists. Both the New York Observer and the WSJ today profile Viet Dinh, a Georgetown University law professor and former Justice O’Connor law clerk. Dinh has served as counsel to venture capitalist Thomas Perkins in his recent dealings with H-P’s board, from which Perkins resigned in May. In June, the 38-year-old Dinh emboldened Perkins to press concerns about H-P’s probe of board leaks that involved obtaining directors’ personal phone records. The Recorder reports that there’s another outside lawyer besides Larry Sonsini working for H-P. The tech company has hired lawyers at Morgan, Lewis & Bockius, which sat down with San Francisco federal prosecutors on Monday as part of a “proffer” session. In “proffer” session, a company offers up information to the feds in an effort to show cooperation with the investigation. John Hemann, a Morgan Lewis partner who until last year was an AUSA in San Fran, reportedly attended the meeting.”
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NY Times, published September 12, 2006 article from Damon Darlin, titled, “E-Mail Offers Peek Into Debate”
“On Sunday, Mr. Perkin’s lawyer, Viet D. Dinh, sent a message with the subject line “This is funny” to Mr. Perkins and George A. Keyworth II, the director at the center of the board controversy after being identified as a source of news leaks. It passed along a column from the
Houston Chronice mocking Ms. Dunn, and also referred to the cover story in this week’s issue of Newsweek, which focused on her as well.”
“Kaplan’s piece was perfect,” the message said, referring to David A. Kaplan, the author of the Newsweek article. “Tom, loved the helicopter story-perfect color,” it added, referring to an anecdote about a prank Mr. Perkins had played on Ms. Dunn at a dinner party. Mr. Perkins, “ Perkins “forwarded the e-mail to two dozen people. They included Lucilee S. Salhany, a former TV executive who serves on the H.P. board, and Shane V. Robison, the company’s executive vice president and chief strategy and technology officer. Among the recipients were Rupert Murdoch, the Chief executive ofr News Corporation, Judith Regan, the publisher with her own imprint at HarperCollins, Stanley S. Shuman, managing director at Allen & Company, the investment firm, two partners at Kleiner Perkins Caulfield & Byers, the Silicon Valley venture capital firm of which Mr. Perkins was a founder; and Mr. Kaplan, the Newsweek reporter, who is writing a book about a yacht that Mr. Perkins recent had built.A copy of the message was provided to a reported by someone to whom it had in turn been forwarded, apparently in error. Mr. Dinh could not be reached for comment, but Mr. Perkin’s spokesman, Mark Corallo did not dispute the email’s authenticity.”
Corallo was an employee of the Department of Justice for the United States. immediately before taking role of “Spokesman” for Tom Perkins.
c) the statements of the company denying any employees had been involved in phone hacking or bribery since 2007. On October 15, 2010, News Corp at its annual shareholder meeting in response to questions of shareholder Stephen Mayne who published the following transcript on his website www.maynereport.com:
“Stephen Mayne: what's your personal view of the phone bugging issue in theUK”
Rupert Murdoch: we have very very strict rules. There was an incident more than 5 years ago. The person who bought a bugged phone conversation was immediately fired and in fact he subsequently went to jail. There has been two parliamentary inquires, which have found no further evidence or any other thing at all. If anything was to come to light, we challenge people to give us evidence, and no one has been able to. If any evidence comes to light, we will take immediate action like we took before. Stephen Mayne: did you read the 5000-word piece in the New York Times claiming they had spoken to no less than 12 former editors and reporters for the News of the World, confirming that the practice was wide spread?
Rupert: no.
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Stephen Mayne: you haven't read that New York Times piece?
Rupert Murdoch: no.
Stephen Mayne: The actual committee said in its report, there was "deliberate obfuscation" by our executives, there was "collective amnesia" by the executives and you've just demonstrated this again,”
Rupert Murdoch: I'm sorry. Journalists who have been fired, who are unhappy, or work for other organizations - I don't take them as an authority, and least of all I don't take The New York Times as authority which is the most motivated of all.
Stephen Mayne: I would like to refer to page 16 of the proxy statement, where you say "directors are encouraged to attend and participate" in the company's annual meeting to stockholders, I would like to direct a couple of questions now to both Viet Dinh and Sir Rod Eddington. Sir Rod is our lead independent director and Viet Dinh as our chair of our nomination and corporate governance committee. Gentlemen, could you please tell shareholders what steps you've taken to ensure that the code of ethics that this company has on its website and claims to adhere to, has been followed in relation to the phone hacking issue in the UK.
Viet Dinh: The code of ethics and standards of business conduct obviously describe the overall framework through which we govern ourselves. We trust our executives, our management and our personnel to follow them, and where infractions are made, appropriate actions are taken as the chairman has indicated. At the board level the audit committee obviously has oversight over any allegations of financial mismanagement or impropriety. The board, including its nominated corporate governance committee has oversight over other risk areas and other allegations of impropriety. I think these procedures have served us well in the past, and will continue to serve us well into the future.”
Sir Rod Eddington: To add to that Mr. Mayne, the audit committee also, we have a sensible and comprehensive whistle blower policy, and in addition to the things Viet Dinh has mentioned, when concerns are raised internally, confidentially, by employees about conduct within the organization, they are handled and reviewed in a substantial way, and those concerns are brought to the audit committee. So the audit committee also uses that mechanism, and in my experience, the organization takes seriously any breaches of conduct and the code of ethics.
Rupert Murdoch: I think that answers you filly and can we move on to the next question?”
a) the fact over 50 News Corporation employees have been arrested and/or charged
for the very same criminal conduct denied in October 2010. 7. News Corporation’s SEC corporate counsel Hogan Lovell was proven to have led the coverup between 2005-2012 in the UK, and is responsible for the coverup of the matters alleged herein.
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i. May 2012 UK Parliament report
ii. The Leveson Inquiry: which included: “nine months of oral hearings, 337 witnesses gave evidence in person and the statements of nearly 300 others (individuals or groups) were read into the evidence”(pg. 4 Leveson Report Executive Summary)
iii. News Corp’s insistence and “Coverup” that it had investigated the 2005 hacking and determined there was not other employees engaged in phone hacking, bribery, or other criminal acts. Versus 2012 admissions by News Corp plus Information current at 31 October 2012 is as follows. “Operation Weeting concerned with interception of mobile phone messages has led to 17 arrests; 8 have been charged; 7 are also charged with conspiracy to pervert the course of justice. Operation Elveden (payments to public officials) has led to 52 arrests involving 27 current or former journalists (over three newspaper groups) and 12 current or former public officials: 5 have been charged. Operation Tuleta (dealing with other complaints of data intrusion such as computer hacking and access to personal records) has, to date, led to 17 arrests and one further person interviewed under caution.” 1
8. Therefore, incorporate by reference the following and petitioner should get full
benefit of the inferences and findings from the following reports and cases along with the concessions already made by key defendant, News Corporation. After the Brown v. Brewer Class won summary judgement in June 2010,
petitioner in 2011 tried to bring new evidence to the attention of Class Counsel indicating the true damages were related to the value of MySpace’s search value, the claims and facts which had never been put before the Federal Court. Petitioner also provided a Rule 701 damage report providing New Evidence shows damages of $32 Billion for MySpace Shareholders. stock. Class Counsel ignored the evidence and breached its fiduciary duty by joining with defendants in a brazen scheme to: i) mislead and initiate a fraud upon the Court by changing the definition of the certified class to eliminate upwards of 60% of the
1 See the final st atement of DAC Sue Akers dated 31 October 2012 at http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Fourth-Witness-Statement-of-DAC-Sue-Akers.pdf together with the public statement of the CPS on 20 November 2012 at http://cps.gov.uk/news/press_statements/charging_announcement_in_relation_to_operation_elveden/.
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eligible shares and shareholders and ii) enter into a sham settlement for pennies on the dollar accepted by the Federal Court in March 2012. Bribery and corruption2.12Again, the present state of affairs in relation to Operation Elveden is set out elsewhere.17Asof 31 October 2012 (Deputy Assistant Commissioner Sue Akers’ fourth witness statement) a total of 52 individuals had been arrested by officers working on Operation Elveden; of these, 27 were current and former journalists (including journalists from The Sun; the Daily Mirror and its sister paper, the Sunday Mirror; and the Daily Star Sunday).18 In an important piece of evidence, DAC Akers pointed out that offences of this nature were suspected to have been committed in at least three separate newspaper groups right up to early 2012.19 2.13The fact that these arrests have occurred does not of course prove that an unlawful and unethical practice existed within the press of inducing, or seeking to induce, public officials to disclose confidential information about individuals or organisations; given the test required to justify arrest in the first place, it merely raises reasonable grounds to suspect that various offences may have been committed. Further, the ongoing crimin al investigation hampers the ability of the Inquiry to explore the available evidence. Recognising these constraining factors, these developments cannot be dismissed as irrelevant. (pg. 475) “PLEA AGREEMENT BETWEEN THE UNITED STATES OF AMERICA AND ZAO HEWLETT-PACKARD A.O., “HP Russia Manager 2” had an employment contract with HP RUSSIA between in or about 1994 and 2012.” “HP Russia Manager 2 also worked as a Finance Manager for the ESG business unit in the ISE sub-region” “Concurrent with these misrepresentations and internal control violations” “conspirators e-mailed a diagram purporting to identify all payment so subcontractos, but that ocne agains omitted any reference to the slush fund payments and recipients. “Based on these false reprsentations, Credit Officer granted credit approval, observing the the approval memor that the “subcontractual relations are clearly illustrated in the Scheme attached; i.e. who has subcontract with whom and on which conditions.” “The SBC was promulgated at HP CO.’s headquarters in the Northern District of California.” “On or about November 19, 2003, , HP Russia Executive 1 falsely certified that “there are no deficienceies in internal controls that would impact ESG’s ability to record, process, summarize and report financial data,” and “I am not aware of any fraud involving employees in ESG’s management or other employees that have a significant role in ESG’s internal controls.” HP #2 The Company admits, accepts, and acknowledges that it is responsible under United States law for the acts of its officers, directors, employees, and agents as set forth in the Statement of Facts attached hereto as Attachment A and incorporated by reference into this Agreement, and that the facts described in Attachment A are true and accurate. The Company and HP Co. expressly agree that they shall not, through present or future attorneys, officers, directors, employees, agents, or any other person authorized to speak for the Company or HP Co., make any public statement, in litigation or otherwise, contradicting the acceptance of responsibility by the Company set forth above or the facts described in the Statement of Facts
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attached hereto as Attachment A.” Criminal Conduct 8. Beginning by at least mid-2008, HP MEXICO began presales activities and discussions with Petroleos Mexicanos, Mexico’s state-owned petroleum company, commonly known as “Pemex,” to sell to Pemex a suite of business technology optimization (“BTO”) software, hardware, and licenses. BTO is a niche product that requires sophisticated knowledge to integrate with other software products. The contracts for this software sale (collectively, the “BTO Deal”) were for approximately $6 million. 9. HP MEXICO sales managers on the BTO Deal ultimately decided that they could not win the business without working with, and making payments to, a Mexican informationtechnology consulting company (collectively, with its affiliated companies and agents, “CONSULTANT”). HP MEXICO sales managers knew that Pemex’s Chief Operating Officer (“OFFICIAL A”) was a former principal of CONSULTANT. HP MEXICO employees also knew that OFFICIAL A supervised Pemex’s Chief Information Officer (“OFFICIAL B”), who was a key signatory on behalf of Pemex for the BTO Deal maximum permissible under HP’s policies without seeking additional approvals—there was no money left over for the INTERMEDIARY’s fee. On or about December 12, 2008, HP MEXICO executives involved in the BTO Deal sought permission from regional management to increase CONSULTANT’s authorized deal commission by 1.5% to 26.5%. In support of their request, HP MEXICO executives sent an e-mail claiming that CONSULTANT deserved an increased commission primarily because it had put in extra work and successfully managed discounts with Pemex. The justification omitted any reference to the role of, or payments to, the INTERMEDIARY. With little or no additional review, HP regional officials approved the increased commission request on that same day. 14. On or about December 22, 2008, HP MEXICO signed the contracts with Pemex for the BTO Deal. OFFICIAL B, among others, signed on behalf of Pemex. 15. On or about January 20, 2009, HP MEXICO advised the INTERMEDIARY that it had received the INTERMEDIARY’s payment request “for recommending an HP solution to your customer.” Later that day, the INTERMEDIARY advised CONSULTANT of the expected payment schedule from HP MEXICO. On or about January 23, 2009, HP MEXICO informed the INTERMEDIARY that it had approved the payment request. HP MEXICO’s records falsely reflect that the INTERMEDIARY was due a commission for the BTO Deal. 16. The INTERMEDIARY submitted two invoices—on or about January 28, 2009, and on or about February 5, 2009—to HP MEXICO totaling $1,663,503, purportedly for commissions on the BTO Deal. 17. HP MEXICO paid those two invoices on or about February 10 and 12, 2009. HP MEXICO made those payments via wire transfer in U.S. dollars through a correspondent bank account in the United States 18. On or about February 11, 2009, the INTERMEDIARY transferred approximately $517,821 to CONSULTANT. On or about February 23, 2009, the INTERMEDIARY transferred an additional $892,493.23 to CONSULTANT. Together, these two transfers totaled approximately $1.41 million. 19. By arranging payments to be made through the INTERMEDIARY to CONSULTANT, HP MEXICO was able to circumvent HP Co.’s policies requiring pre-approval of channel partners and written agreements for third-party payments. HP MEXICO further circumvented HP Co.’s controls by failing to identify the role of INTERMEDIARY in the BTO
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Deal when seeking a 1.5% increase in the commission for CONSULTANT. In addition, HP MEXICO’s books and records falsely reflected that the INTERMEDIARY was the deal partner and principal recipient of the commission from the BTO Deal, which ultimately caused certain HP Co. books and records to be falsified. 20. On or about March 2, 2009, within weeks of receiving its second commission payment from HP MEXICO through the INTERMEDIARY, CONSULTANT made a cash payment of approximately $30,000 to an entity controlled by OFFICIAL B. On or about March 30, 2009, CONSULTANT made three additional cash payments totaling approximately $95,000 to the OFFICIAL B-controlled entity. 21. In total, HP MEXICO received approximately $2,527,750 as its net benefit on the BTO Deal. HP #3 Defendant Hewlett-Packardd Polska, SP. Zo.o. “DEFERRED PROSPECUTION AGREEMENT BETWEEN THE UNITED STATES AND HEWLETT-PACKARD POLSKA< SP. Zoo0. $15, 450, 224 penalty “HP POLAND Exuective,” a citizen of Poland “from in or around July 2005 to in or around January 2010. From 2006 through 2010, public sector sales at HP Poland Accounted for approximately 50% of HP Poland’s gross revenue” “KGP” was the Polish National Policy agency” “8. “Polish Official” was the Director of Information and Communcaitons Technology within the KGP, and later a senior official within the Interior Minirsty, from in or around 2005 to in or around 2011. “11. Although HP Co. had certain anti-corruptiuon policies nad ocntrols in place during the relevant period, those policies and controls were not adequate to prevent the conduct descriubed herein and were insufficient implements at HP POLAND. This allowed onoe or more HP POLAND employees to circumvent HP Co.’s internal accounting controls and falsify its books and records.”” “Overview of Criminal conduct” “12. From in or around 2006 through at least in or around 2010, one or more HP POLAND emplotyees together with others, (i) cuased the falsification of HP CO.’s books and records, and (ii) circumvented HP CO.’s existing internal controls, in connection with a scheme to make corrupt
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“1. One or more Polan d employees facilitated the corrupt relationship with POLAND Official through covert means. In addition to communicating through anonymous e-mail accounts and prepaid mobile telphones, HP POLAND Executive would sometimes drive Polish Official in an HP POLALND-provided vehicle to remote locations, and the two would type messages in a text file, passing the computer between themselves. Communications were made in this fashio to avoid possible audio recording of the discussions by hidden devices, and to circumvent HP CO.’s internal controls. These messages addressed, among other topics, information about upcoming tenders, and bdirbe amounts. In one text file about a particular tender, for example Polish Official wrote that the finformation was difficult to obtaint , and if anyone were to discover that Polish Official had given the materials to HP POLAND, Polish Offical and HP POLAND would have a “BIG PROBLEM!!” In another message, Plish Official detailed amounts that one or more HP POLAND employees and agents had paid to thim to date, and satest that “THERE IS STILL 760K” in Polish currentcy that was owed him. Polish Official added that “SOON” he would need to be paid “1.2% from 22M + 1.2% with 5M.” These Satestmetns were in reference to forthcoming contract awaredfs to HP POLAN Dby the Polish government, for which Poliush Offical sought 1.2% of HP POLAND’s net revenue.” “In mid-2008, Polish Official was promoted to a new position with in the Interior Ministry. Whistel the corrupt relationship continued, both the amount of bribes paid and the contracts HP POLAND received decreasesd.” “19. “ In or about March 2007, Polish Official signed a KPGP Contract with HP POLAnd valued at approximately $15.8 million. Around this date, HP POLAND Executive delived rto Polish Official’s personal residence a bag filled with approximately $150,000 in cahs. On another occasion in 2007, HP Officla Poland Executive met Polish Official in a Warsaw parking lot and gave Polish Official another bag filled with approximately 4100,000 I n cash.”
MOTION TO CONSOLIDATE
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Brad Greenspan, Pro Se 264 South La Cienega Suite 1216 Beverly Hills, CA 90211
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) Case No. CV 13-4253 MWF ) Plaintiff, ) Honorable Michael W. Fitzgerald v. ) ) ) ) ) )
MOTION TO CONSOLIDATE RELATED ACTIONS MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
NEWS CORPORATION, NI GROUP LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ) LIMITED, and JOHN and JANE ) DOES 1-10 ) ) Defendants. ) )
) )
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TABLE OF CONTENTS I. INTRODUCTION II. ARGUMENT III. CONCLUSION
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MEMORANDUM OF POINTS AND AUTHORITIES TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD PLEASE TAKE NOTICE that on June 30, 2014, at 10:00 a.m., or as soon thereafter as the matter may be heard and hereby does, move the Court for an Order consolidating the following actions for all purposes under Rule 42 of the Federal Rules of Civil Procedure: I. INTRODUCTION
1. Presently pending in this District are two related invasion of privacy
lawsuits, (Huthhart v. News Corporation & Petitioner’s Complaint in Intervention) identified.Movant seeks to consolidate the above related actions pursuant to Rule 42(a)1 of the Federal Rules of Civil Procedure. Each action asserts substantially the same claims and raises Substantially the same questions of fact and law. Thus, consolidation of these actions is appropriate. II. ARGUMENT This Court Should Consolidate These Related Actions for Purposes of Efficiency A. Consolidation pursuant to Rule 42(a) 1 Rule 42(a) allows this Court to order consolidation of separate actions: When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay. 1 The grant of the injunction turned on Delaware law per the internal affairs doctrine.
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2. Consolidation is proper when actions involve common questions of law
and fact.2 Courts have recognized that class action shareholder suits, in particular, are ideally suited to consolidation pursuant to Rule 42(a) because their unification expedites pretrial proceedings, reduces case duplication, avoids the contacting of parties and witnesses for inquiries in multiple proceedings, and minimizes the expenditure of time and money by all persons concerned.
3. The actions pending before this Court present virtually identical factual and legal issues, each one Alleges violations of the same sections of the Exchange Act and each action names similar defendants. Because these actions are based on the same facts and involve the same subject matter, the same discovery will be relevant to all lawsuits. Thus, consolidation is appropriate here. Intervening Plaintiff has first 6 of 6 identical claims from same defendant causing injury and same facts as nexus:
FIRST CLAIM FOR RELIEF
(Violation Of The Stored Communications Act, 18 U.S.C. 2701 and 2707- All Defendants)
SECOND CLAIM FOR RELIEF
(Violation of Wiretap Act, 18 U.S.C. 2510, 2511 & 2520 – All Defendants)
THIRD CLAIM FOR RELIEF
(Violation of Article I, Section I Of The California State Constitution – All Defendants) 2 In re Equity Funding Corp. of Am. Sec. Litig., 416 F. Supp. 161, 175 (C.D. Cal.1976). This Court has broad discretion under this Rule to consolidate cases pending within this District. Investors Research Co. v. United States Dist. Court for Cent. Dist., 877 F.2d 777 (9th Cir. 1989); Perez-Funez v. District Director, Immigration & Naturalization Service, 611 F. Supp. 990, 994 (C.D. Cal. 1984) ("A court has broad discretion in deciding whether or not to grant a motion for consolidation, although, typically, consolidation is favored.") (citation omitted).
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FOURTH CLAIM FOR RELIEF
(Violation of California Penal Code 630, 631, 632, 632.7 & 637(2)(a) – All Defendants)
FIFTH CLAIM FOR RELIEF
(Violation of California Civil Code 1708.8(b), 1708.8(d) & 1708.8(e) – All Defendants)
SIXTH CLAIM FOR RELIEF
(Intrusion Into Private Affairs – California Common Law– All Defendants)
4. This motion is brought on the grounds that these actions are substantially identical because each Alleges claims for based upon similar factual allegations against substantially the same defendants. The motion is also brought on the ground that consolidation of these cases will promote efficiency. This motion is based upon this notice of motion, memorandum of points and authorities, the such oral argument as the Court May consider in deciding this motion.Case should be determined by Delaware statue definition of preliminary injunction.Since News Corporation Delaware Corporation and sells the most of its products revenue recognized thru parent Delaware Corporation and its parent a Delaware Corporation that invests and spends billions in film industry and television industry, and its Delaware Corporation that is selling each day newspapers to consumers in U.S. and UK and other countries. The grant of the injunction turns on Delaware law per the internal affairs doctrine. Consolidation is proper when actions involve common questions of law and fact.3 Courts have recognized consolidation expedites pretrial 3 In re Equity Funding Corp. of Am. Sec. Litig., 416 F. Supp. 161, 175 (C.D. Cal.1976). This Court has broad discretion under this Rule to consolidate cases pending within this District. Investors Research Co. v. United States Dist. Court for Cent. Dist., 877 F.2d 777 (9th Cir. 1989); Perez-Funez v. District Director, Immigration & Naturalization Service, 611 F. Supp. 990, 994 (C.D. Cal. 1984)
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proceedings, reduces case duplication, avoids the contacting of parties and witnesses for inquiries in multiple proceedings, and minimizes the expenditure of time and money by all persons concerned.4
B. The PSLRA Requires that the Question of Consolidation Be Decided Prior to the Determination of the Appointment of Lead Plaintiff.
5.The PSLRA provides, among other things, for consolidation of
substantially similar actions. The PSLRA states in pertinent part: If more than one action asserting substantially the same claim or claims arising under this chapter has been filed, and any party has sought to consolidate those actions for pretrial purposes or for trial, the court shall not make the determination [of appointment of lead plaintiff under §21D(a)(3)(B)] until after the decision on the motion to consolidate is rendered .... 15 U.S.C. §78u-4(a)(3)(B)(ii).
6. Thus, the PSLRA establishes a two-step process for resolving lead plaintiff and consolidation Issues where more than one action on behalf of a class asserting substantially the same claims has been filed. The court "shall" first decide the consolidation issue and thereafter decide the lead plaintiff issue, "[a]s soon as practicable" after the consolidation motion has been decided. Id. Given that the selection of lead plaintiff and lead counsel is the necessary first step to prosecute the actions, ("A court has broad discretion in deciding whether or not to grant a motion for consolidation, although, typically, consolidation is favored.") (citation omitted).
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Movant urges the Court to grant the consolidation motion as soon as practicable and consolidate these related actions under the lowest case number. A prompt determination is reasonable and warranted under Rule 42(a), given the common questions of fact and law presented by the actions now pending in this District.
C. This Court Should Order the Preservation of Documents
7. Through this motion, Movant also requests that the Court order the preservation of documents relating to this litigation in accordance with 15 U.S.C. §78u- 4(b)(3)(C)(i), both prior to and after the filing of any motion to dismiss. In complex cases involving companies with numerous employees, such an order is appropriate and will prevent the loss of key documents, whether through inadvertence or otherwise. D. Consolidation and Injunction is appropriate under Rule 65. A(2)
8. Rule 65 A(2) states: “(a) PRELIMINARY INJUNCTION.
(1) Notice. The court may issue a preliminary injunction only on notice to the adverse party.
(2) Consolidating the Hearing with the Trial on the Merits. Before or after beginning the hearing on a motion for a preliminary injunction, the court may advance the trial on the merits and consolidate it with the hearing. Even when consolidation is not ordered, evidence that is received on the motion and that would be admissible at trial becomes part of the trial record and need not be repeated at trial. But the court must preserve any party's right to a jury trial.”
E. DEL CODE § 2598 VIOLATION OF ORDER OR INJUNCTION; PENALTY
9. Injunction is appropriate under DEL CODE § 2598 which states:
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(a) A person who violates any order or injunction issued pursuant to this chapter or who breaches an agreement forming the basis of a cease and desist order issued pursuant to this chapter shall forfeit and pay to the State a civil penalty of not more than $25,000 per violation.
(b) The Attorney General may petition the Superior Court in the county in which an order, injunction or cease and desist order was issued, in order to obtain recovery of a civil penalty as provided pursuant to this section. Such petition may be made whenever it appears to the Attorney General that a person subject to any order, injunction or cease and desist order issued pursuant to any provision of this chapter has violated such order or injunction or breached a material term of an agreement forming the basis for such cease and desist order.
(c) Nothing in this section shall prevent the Attorney General from initiating any additional or alternative action under lawful powers which otherwise seeks enforcement of any statute or requests sanctions for any such violation of an order, injunction or cease and desist order. (71 Del. Laws, c. 470, § 1; 70 Del. Laws, c. 186, § 1.;)
F. 2521 - Injunction against illegal interception
10. Injunction is warranted under Sec. 2521 which states:
“Injunction against illegal interception “ “Whenever it shall appear that any person is engaged or is about to engage in any act which constitutes or will constitute a felony violation of this chapter, the Attorney General may initiate a civil action in a district court of the United States to enjoin such violation. The court shall proceed as soon as practicable to the hearing and determination of such an action, and may, at any time before final determination, enter such a restraining order or prohibition, or take such other action, as is warranted to prevent a continuing and substantial injury to the United States or to any person or class of persons for whose protection the action is brought. A proceeding under this section is governed by the Federal Rules of Civil Procedure, except that, if an indictment has been returned against the respondent, discovery is governed by the Federal Rules of Criminal Procedure.
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IV. CONCLUSION For the reasons stated above, and in order to promote judicial economy, Movant respectfully requests that the Court consolidate the related actions identified herein, permit the filing of a consolidated complaint within 60 days from entry of the Court's Order granting this motion, and require the preservation of documents in this action. Under Rule 65, and Sec 2521 Injunction should be granted Because Defendant is in breach of Consent Order at Exhibit #1, specifically Mark Hurd and Tom Perkins who served as Directors of HP And News Corporation Between 2005 thru 2012. DATED: May 2, 2014 Respectfully submitted,
Brad D. Greenspan Pro Se
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EXHIBIT #1 “SUPERIOR COURT OF T i lE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA 106C V -076U 8 ~ PEOPLE OF THE STATE OF CALIFORNIA, P la int i f f , v . HEWLETT-PACKARD COMPANY, a De laware Corporat ion, Defendant .
1. This action is brought against Hewlett-Packard Company. a Delaware corporation (hereinafter"Hewlett-Packard"or"HP"), who, inviolation ofCaliforniaBusinessand ProfessionsCodesection 17200,engaged in a nunlawful scheme to spy on its own employees and directors. third parties and family members of these individuals (collectively "Victims").
2. HP'stactics violate the right to privacy of theVictims,violates everal PenalCode sections prohibiting the obtaining of confidential information from telecommunications utilities under false pretenses, and constitute unfair business practices within the meaning of California Business and Professions Code section 17200. Unless enjoined and restrained by an order of the Court. HP will continue to engage in the unlawful acts and conduct set forth in this Complaint. HP at all times mentioned herein has transacted business in the County of Santa Clara and elsewhere within the State of California. HP authorized and directed the unlawful investigations at issue from its offices in the State of California, and the violations of law described herein occurred in the County of Santa Clara and elsewhere in the State of California. 1. Whenever reference is made in this Complaint to any act or transaction of any corporation. partnership, business or
other organization, that allegation shall be deemed to mean that the corporation . partnership ,business or the organization did or authorized the acts alleged in this Complaint through its principals. officers, directors, employees, members, agents and representatives while they were acting within the actualor ostensible scope of their authority
DEFENDANT'S BUSINESSPRACTICES 7. In 2005, HP launched an investigation ostensibly to determine who among its HP board members had "leaked"
informationt othemedia. During the course of this investigation, Hl' authorized and permitted the usc of "pretexting'' or "social engineering," by which HP investigators obtained the personal, home and cellular telephone records of current and former liPdirectors and employees,several journalists,and their families (collectively"Victims"), by posing as the Victims.
8. In 2006, after the 2005 investigation failed to reveal the source of the leaks, HP launched a second investigationtodeterminethesource ofnew leaksto themediathattookplace in January 2006. (The 2005 and 2006 investigations arc hereafter collectively referred to as '"the Kona Investigation.")
9. During the KanaI nvestigation, HPutilized unlawful,unfair and deceptive investigative tactics to obtain confidential personal information about the Victims, including:
a. using pretcxting to obtain the telephone or facsimile records of Hewlett-Packard employees, former or current Hewlett-Packard Board members or their families, and journalists and their family members.
b. authorizing the use of pretcxting to obtain telephone or facsimile telephone call records by duping telecommunications carriers into providing confidential information andl or by creating an online account using confidential information supplied by Hewlett-Packard, including portions of the Victims' Social Security Numbers.
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c. permitting and authorizing the use and disclosure of Social Security Numbers and confidential personal information to obtain, through pretexting, the telephone call information of employees, current or former Hewlett-Packard Board members and journalists.
FIRST CAUSE OF ACTION VIOLATIONSOFBUSINESSANDPROFESSIONS CODE SECTION17200 (UNFAIR COMPETITION) 10. Plaintiffre alleges and incorporates by reference paragraphs 1-9 above, as though they arc set forth in full herein. I I. Beginning at an exact date unknown to plaintiff, HP engaged in unfair competition as defined in California Business and Professions Code section 17200. 12. During the course of the Kona Investigation, HP's acts and practices of unfair competition include the
following:
a. HP deceptively obtained telecommunications consumer account information by Various means.sometimes termed "prctcxting' and/or"social engineering,"which includes misrepresenting themselves as the Victim. an agent of the Victim or someone acting on the Victim's behalf in calls to the Victim's telecommunications carrier's customer service representatives or on the telecommunication carrier's websites. HP thus obtained the Victim's private and confidential information, without the consent or authorization of the Victim.
b. HP, by means of false pretenses, induced telecommunications companies to provide confidential information regarding the Victims to HP. in violation of California Penal Code section 538.5. c. HP knowingly accessed and without permission used data, computers. computer systems or computer networks in order to devise or execute a scheme to defraud or deceive telecommunications companies to provide HP with confidential personal information about the Victims and/or to wrongfully obtain data regarding the Victims, in violation of California PenalCodesection502(c)(I).
d. HP knowingly accessed and without permission took. copied, or made use of data from a computer, computer system, or computer network and/or took or copied supporting documentation, in order to obtain confidential personal information about the Victims, in violation of California Penal Code section 502(c)(2).
e. Consumers have an expectation of privacy in their telephone records and other personal information. This expectation of privacy is guaranteed by Article L Section I of the California Constitution, as well as by California Public Utility Code section 2891 , which prohibits telecommunications companies from providing residential telephone call records of a consumer without the consumer' s consent. HP violated the right to privacy of Victims by obtaining confidential telephone records and other personal information about them without their knowledge or consent.
f. HP purchased, offered to purchase or conspired to purchase telephone calling pattern records or lists of the Victims without their written consent and/or through fraud or deceit, attempted to procure or obtain the telephone calling pattern records or lists of the Victims.
g. HP used false pretenses to willfully obtain personal identifying information about
Respectfully submitted,
BILL LOCKYER, Attorney General of the State of California
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the Victims and used that information in violation of California Penal Code section 530.5. h. HP' s investigative tactics during the course of the Kona Investigation, as described in part in paragraphs 1-2 and 7-12 above. constitute unfair competition within the meaning of California Business and Professions Code section 17200.
PRAYER FOR RELIEF WHEREFORE, plaintiff prays forjudgment as follows: I. Pursuant to California Business and Professions Code section 17203. that HP, its successors, agents,
representatives, employees, and all persons who act in concert with HP be permanently enjoined from committing any acts of unfair competition, including the violations alleged in the First Cause of Action.
2. Pursuant to California Business and Professions Code section 17206, that HP be ordered to pay a civil penalty in the amount of Two Thousand Five Hundred Dollars ($2,500) for each violation of California Business and Professions Code section 17200 by HP, as proved at trial.
J.,That Plaintiff recover its costs of suit herein, including costs of investigation.
4. For such other and further relief as the Court may deem just and proper. Dated: December 2006” PEOPLE OF THE STATE OF CALIFORNIA, v. HEWLETT-PACKARD COMPANY, 106CV-076081 CASE NO. : " * F INAL JUDGMENT AND PERMANENT INJUNCTION Plaintiff, the People of the State of California, appearing through its attorneys, Bill Lockyer, Attorney General of the State of California, by Chief Assistant Attorney General Tom Greene, Senior Assistant Attorney General Albert Norman Shelden, and Deputy Attorney General Catherine Z. Ysrael, and defendant Hewlett-Packard Company, a Delaware corporation (hereinafter, "HP"), appearing through its attorneys Morgan, Lewis & Bockius LLP, by Michael J. Holston and John H. Hemann, and it appearing to the Court that the parties hereto, in the Stipulation for Entry of Final Judgment and Permanent Injunction (hereafter "Stipulation") on file herein, have stipulated and consented to the entry of this Final Judgment and Permanent Injunction without the taking of proof and without trial or adjudication of any fact or law herein,
D. The injunctive provisions of this Final Judgment and Permanent Injunction shall be applicable to defendant HP, as well as its subsidiaries; its successors and the assigns of all or substantially all of the assets of its businesses; and its directors, officers, employees, agents, independent contractors, partners, associates and representatives of each of them.
PERMANENT INJUNCTION
E. Pursuant to California Business and Professions Code section 17203, HP shall be and hereby is permanently enjoined and restrained from directly or indirectly doing any of the following acts or practices in connection with the conduct of investigations:
(1) Using false or fraudulent pretenses, representations, personations, or promises to obtain from a public utility any confidential, privileged, or proprietary information, including customer or billing records, in violation of California Penal Code section 538.5.
(2) Obtaining and unlawfully using personal identifying information, including social security numbers, in
violation of California Penal Code section 530.5.
(3) Knowingly accessing and without permission using any data, computer, computer system, or computer network in order to (a) devise or execute any scheme or artifice to defraud,deceive, or extort, or (b) wrongfully obtain property or data, in violation of California Penal Code section 502(c)(1)
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(4) Knowingly accessing and without permission taking, copying, or making use of any data from a computer,
computer system, or computer network, or taking or copying any supporting documentation, whether existing or residing internal or external to a computer, computer system, or computer network, in violation of California Penal Code section 502(c)(2).
(5) Violating California Penal Code section 638, effective January 1, 2007, which prohibits the purchasing, offering
to purchase or conspiring to purchase any telephone "calling pattern record or list" without the written consent of the subscriber or, through fraud or deceit, attempting to procure or obtain any telephone "calling pattern record or list," as set forth in the statute. (a) With regard to the CECO's oversight of HP's investigative practices, the CECO shall provide reports to the Independent Director. The CECO will be authorized to hire appropriate staff and obtain other appropriate resources to perform his duties, and also will be authorized to engage independent legal
advisors as necessary without obtaining approval from the CEO or General Counsel, subject to review by the Independent Director and the board of directors. (b) The CECO shall review HP's investigative practices (both as performed internally and as conducted by third parties), the SBC, and codes of conduct applicable to outside investigation firms. The CECO shall consult with the Qualified Authority discussed in paragraph F(3) below in order to review the findings and recommendations provided by the Qualified Authority. On or before July 31, 2007, the CECO will report the results of this review and make recommendations for improvements in those practices to the CEO, the Independent Director, and the Board of Directors. HP will provide a copy of such report to the California Attorney General, which shall be exempt from disclosure under the California Public Records Act pursuant to Government Code sections 6254(b), 6254(f), and 6254.15. Thereafter, the CECO will provide annual reports, and additional reports as appropriate, to the CEO and Board of Directors regarding HP's compliance with recommendations for improvements in HP's practices with respect to its SBC, applicable codes of conduct and other policies regarding business ethics and privacy protection. (3) HP has employed a qualified authority ("Qualified Authority") who is in the process of performing a comprehensive review of HP's compliance with applicable legal requirements and ethical standards, as these standards apply to HP's policies and practices regarding investigations. The Qualified Authority shall make recommendations for ensuring that any investigations performed by or on behalf of HP are legal, ethical and appropriate. The Qualified Authority shall report his or her findings directly to the CECO, the Independent Director and the Board of Directors. Based on this review, HP will adopt internal processes and controls designed to prevent misconduct in future HP investigations. The Qualified Authority's conclusions and recommendations shall be incorporated into the initial report written by the CECO referenced in paragraph F(2)(b) above. (4) HP shall expand the duties and responsibilities of HP's Chief Privacy Officer to include responsibility for reviewing HP's investigation protocols to ensure they appropriately address matters related to privacy and ethics. Such investigation protocols shall ensure there are adequate approval and oversight policies with respect to investigations conducted either within HP or by its outside vendors. (5) HP shall establish a Compliance Council chaired by the CECO. The members of the Council will include the CECO (chair), the Chief Privacy Officer, the Deputy General Counsel for compliance matters, the head of Internal Audit, and several Ethics and Compliance liaisons (chosen by the CECO from each business segment and function). The Compliance Council will
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develop, initiate, maintain and revise policies and procedures for the general operation of HP's ethics and compliance programs consistent with applicable laws and regulations. The Compliance Council will provide written semi-annual reports to each of the CEO, the Audit Committee and the Nominating and Governance Committee, and written annual reports to the Board. Additionally, the Council's liaisons shall report to the Compliance Council as needed with respect to the investigatory methods used in investigations within their area of responsibility, including those conducted by outside vendors.
(6) The CECO will report any material violation of the codes of conduct applicable to outside investigation firms to the head of the appropriate business segment or function, who, in consultation with the CECO, will take appropriate action. The CECO will also report any material violation of the SBC, with respect to investigations conducted in-house, to the head of the appropriate business segment or function, who, in consultation with the CECO, will take appropriate action. Such action may include adverse employment actions, reallocation of resources, corrective actions or other methods reasonably necessary to remediate the violation. If the head of the appropriate business segment or function does not take appropriate action, the CECO shall report the violation to the CEO and the Independent Director. The CECO will report in writing to the Compliance Council semi-annually on all actions taken, and the Compliance Council shall review the appropriateness of the action taken, including for consistency as compared to other actions taken.
(7) In the event of a dispute regarding the appropriateness of any action to be taken by the Independent Director, the CECO, the Qualified Authority, the Chief Privacy Officer, or the Compliance Council pursuant to this Final Judgment and Permanent Injunction, the matter shall be referred by the Independent Director or the CECO to the Audit Committee for resolution. (8) HP shall enhance its current training program as follows: (a) Under the direction of the CECO and the Compliance Council, the existing annual training requirement will be redesigned and updated to ensure that the business ethics component plays a more prominent role. (b) Additional training will be required for those HP employees who are engaged in the conduct of investigations for HP. That training will be designed by the CECO, with input from the Chief Privacy Officer and, as appropriate, independent counsel. (c) The Board and senior management will be given training on potential and actual conflicts of interest that may arise with respect to outside attorneys representing not only HP but also the Board or any of its Committees. The Board shall be trained regarding the hiring of independent counsel and conduct of investigations. (d) The Chief Privacy Officer will review the training program implemented pursuant to this paragraph to ensure that it appropriately addresses privacy matters. (e) The Independent Director shall approve the training program implemented pursuant to this paragraph 8. (f) In addition to the applicable supplier codes of conduct, all outside investigation firms will be provided written standards of conduct, developed by HP, that pertain specifically to privacy and business ethics concerns regarding investigatory methods used in the course of investigations. HP shall require these outside investigation firms to certify that their employees who work on HP matters have reviewed, understand, and will comply with these written standards of conduct. Compliance with these written standards of conduct, as well as the applicable codes of conduct for outside vendors, shall be a material term of any contract HP enters into with any outside investigation firm.
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K. Conditioned upon HP making full payment as provided under Paragraphs G, H, 20 and I of this Final Judgment and Permanent Injunction, defendant and all of its present and former officers, directors, shareholders, any parents or affiliates, subsidiaries, employees, successors, predecessors and assigns (collectively, the "Released Parties") are discharged from all claims, to the extent permitted by law, related to or arising from the conduct of HP directors, officers, employees, agents, and contractors in connection with the "Kona Investigation" as described in the Complaint filed in this matter that the Attorney General could have brought pursuant to California Business and Professions Code sections 17200, or Penal Code sections 502(c)(l)-(2), 530.5, or 538.5.
Provided, however, notwithstanding any term of this Judgment or this paragraph, specifically reserved and excluded from the scope and terms of this paragraph as to any entity or person are any and all of the following:
(1) Any criminal liability, save and except that HP shall not be barred or prevented from raising and asserting the
defenses of res judicata, collateral estoppel, and double jeopardy to the extent such defenses are applicable to any matter that served as the basis for this litigation;
(2) Any personal injury, property damage, indemnification, or contribution claims by the State; (3) Any tax liability; (4) Any obligations created under this Judgment; and
(5) Any unlawful conduct not covered by the injunctive terms of this Judgment
L. Nothing in this: Final Judgment and Permanent Injunction shall be deemed permit or authorize any violation of any law or regulation of the State of California or otherwise be construed to relieve Defendant of any on-going duty to comply with such applicable laws,rules and regulations; nor shall anything herein be deemed to constitute permission to engage in any acts or practices prohibited by such laws, rules or regulations.
M. The waiver or failure of any party to exercise any rights under this Final Judgment and Permanent Injunction shall not be deemed a waiver of any right or any future rights. N. This Final Judgment and Permanent Injunction shall take effect entry thereof, without further notice to HP.
O. The clerk is ordered to enter this Final Judgment and Permanent Injunction forthwith DATED: DEC - 7 2006
JACK KOMAR
MEMORANDUM IN SUPPORT OF MOTION FOR SANCTIONS
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Brad Greenspan, Pro Se 14938 Camden Ave Suite 47 San Jose, CA 95124 Fax: (408)677-5655
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) Case No. CV 13-4253 MWF ) Plaintiff, ) Honorable Michael W. Fitzgerald v. ) ) ) ) ) ) MEMORANDUM IN SUPPORT NEWS CORPORATION, NI GROUP OF MOTION FOR SANCTIONS LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ) LIMITED, and JOHN and JANE ) DOES 1-10 ) ) Defendants. ) )
)
MEMORANDUM IN SUPPORT OF MOTION FOR SANCTIONS
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TABLE OF CONTENTS I. INTRODUCTION II. SUMMARY OF ALLEGATIONS III. ARGUMENT IV. CONCLUSION
MEMORANDUM IN SUPPORT OF MOTION FOR SANCTIONS
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NOTICE OF MOTION TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD PLEASE TAKE NOTICE that on July 21, 2014, at 10:00 a.m., or as soon thereafter as the matter may be heard. This motion is based upon this notice of motion, memorandum of points and authorities, the such oral argument as the Court May consider in deciding this motion. MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION
1. Petitioner moves the Court to grant sanctions against Defendant and
Its attorneys that filed or co-filed or aided and abetted the May 19, 2014 filing
“DEFENDANTS’ EX PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION OF BRAD GREENSPAN PENDING THE COURT’S DETERMINATION ON DEFENDANTS’ MOTION TO DISMISS”
II. SUMMARY OF ALLEGATIONS Petitioner files this Motion for sanctions for two reasons:
A. Defendant’s May 19, 2014 Pleading because it contains false
statements and is underpinned by lies.
2. MR 4.1 provides that a lawyer shall not knowingly (1) make a false statement of material fact or law to a third person.
i. B&PC 6068(d) prohibits California lawyers from making false statements of fact or law to any judge or judicial officer.
ii. B&PC 6106 provides that the commission of any act of moral
MEMORANDUM IN SUPPORT OF MOTION FOR SANCTIONS
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turpitude or dishonesty constitutes a cause for disbarment or suspension. B&PC � 6106 is sufficiently broad to prohibit false statements by lawyers to third parties.
iii. DR 7-102(A)(5) provides that "[i]n his representation of a client, a lawyer shall not . . . [k]nowingly make a false statement of law or fact." 3. It is also clear that a California lawyer may not make false or misleading statements in affidavits or other court papers. See, e.g., Lee v. State Bar (1970) 2 Cal.3d 927, 88 Cal.Rptr. 361, 472 P.2d 449 (disciplinary action against lawyer who made false statements in sworn testimony); Sturr v. State Bar (1959) 52 Cal.2d 125, 338 P.2d 897 (involving affidavit containing false statements); Vickers v. State Bar (1948) 32 Cal.2d 247, 196 P.2d 10 (disciplinary action against lawyer who made false statement in proceeding for letters of special administration that he was the surviving husband of decedent).
4. This broad interpretation is supported by the case law in California. For example, in People v. Petas (1st Dist. 1989) 214 Cal.App.3d 70, 262 Cal.Rptr. 467, the court held that a lawyer could be charged with a misdemeanor where the lawyer presented a false or fraudulent claim for payment of insurance by falsely representing in insurance demand letters that the client's injuries resulted from a single accident when the lawyer knew that they did not.
B. Defendant’s May 15, 2014 telephone call to Plaintiff’s attorneys And false representations related to Claims of Petitioner contained in Complaint in Intervention
5. Besides prohibiting false statements, the provisions of the B&PC prohibit all forms of deceit, including selective presentation of incomplete facts. For example, a California lawyer may not author a legal opinion on a transaction that discloses only facts favorable to his client where the lawyer is aware of other adverse material facts that may affect another's decision in the transaction. Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (2nd Dist. 1976) 57
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Cal.App.3d 104, 128 Cal.Rptr. 901. But see Price v. Superior Court (2nd Dist. 1983) 139 Cal.App.3d 518, 188 Cal.Rptr. 832 (criminal defense counsel must disclose to prosecutor that another prosecutor had previously refused a plea bargain that defense counsel was now proposing to the prosecutor). Moreover, a California lawyer has an affirmative duty to correct prior misleading statements by disclosing true facts or new information to persons who may act in reliance on the original statement. Failure to disclose correct facts or new information constitutes tortious abuse in California. See, e.g., Dyke v. Zaiser (4th Dist. 1947) 80 Cal.App.2d 639, 182 P.2d 344. 6. B&PC 6128 provides that "every attorney is guilty of a misdemeanor who . . . is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party." Taken together, B&PC 6068(d) and B&PC 6128 require California lawyers to be truthful in all statements, whether to the court, opposing parties, clients, or third parties. III- ARGUMENT 7. Plaintiff admits to receiving and being in possession of petitioner’s “proposed Complaint in Intervention” as of May 2, 2014.
“Greenspan additionally served on Defendants’ local counsel a proposed Complaint in Intervention, “ (Document 65 Filed 05/19/14 Page 5 of 12)
FALSE STATEMENT #1: Document 65 Filed 05/19/14 Page 6 of 12
“Greenspan does not allege he is the victim” of “any allegedly wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik Decl., ¶ 4.)”
8. To determine if Statement #1 is false, the Court must review and compare Defendant’s claim Petitioner “does not allege” “any allegedly wrongful
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conduct by Defendants similar to that complained of by Huthart” 9. The Huthart complaint’s first claim:
i. “FIRST CLAIM FOR RELIEF (Violation Of The Stored Communications Act, 18 U.S.C. 2701 and 2707- All Defendants)
ii. is exactly the same as Petitioner’s first claim:
“FIRST CLAIM FOR RELIEF (Violation Of The Stored Communications Act, 18 U.S.C. 2701 and 2707- All Defendants) (pg. 54 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
10. The Huthart complaint’s second claim:
i. “SECOND CLAIM FOR RELIEF (Violation of Wiretap Act, 18 U.S.C. 2510, 2511 & 2520 – All Defendants)”
ii. is exactlty the same as Petitioner’s second claim:
“SECOND CLAIM FOR RELIEF (Violation of Wiretap Act, 18 U.S.C. 2510, 2511 & 2520 – All Defendants) (pg. 56 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Strike)
11. The Huthart complaint’s third claim:
i. “THIRD CLAIM FOR RELIEF (Violation of Article I, Section I Of The California State Constitution – All Defendants)”
ii. is exactly the same as Petitioner’s third claim:
“THIRD CLAIM FOR RELIEF (Violation of Article I, Section I Of The California State Constitution – All Defendants) (pg. 58 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
12. The Huthart complaint’s fourth claim:
i. “FOURTH CLAIM FOR RELIEF (Violation of California Penal Code 630, 631, 632, 632.7 & 637(2)(a) – All Defendants)”
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ii. is exactly the same as Petitioner’s fourth claim:
“FOURTH CLAIM FOR RELIEF (Violation of California Penal Code 630, 631, 632, 632.7 & 637(2)(a) – All Defendants)” (pg. 59 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
13. The Huthart complaint’s fifth claim:
i. “FIFTH CLAIM FOR RELIEF (Violation of California Civil Code 1708.8(b), 1708.8(d) & 1708.8(e) – All Defendants)”
ii. is exactly the same as Petitioner’s fifth claim:
“FIFTH CLAIM FOR RELIEF (Violation of California Civil Code 1708.8(b), 1708.8(d) & 1708.8(e) – All Defendants)” (pg. 64 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
14. The Huthart complaint’s sixth claim:
i. “SIXTH CLAIM FOR RELIEF (Intrusion Into Private Affairs – California Common Law– All Defendants)”
iii. is exactly the same as Petitioner’s sixth claim:
“SIXTH CLAIM FOR RELIEF (Intrusion Into Private Affairs – California Common Law– All Defendants)” (pg. 65 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
FALSE STATEMENT #2: Document 65 Filed 05/19/14 Page 6 of 12
“Greenspan does not allege he is the victim of any voicemail hacking”
15. Defendant’s claim petitioner “does not allege he is the victim of any voicemail hacking” is a false statement and lie when compared to Petitioner’s Complaint in Intervention that Defendant admits Defendant has received
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and reviewed.
i. “46. Defendants violated 18 U.S.C. 2701 (a)(1), in that they accessed a “facility through which an electronic communication service is provided.” (18 U.S.C. 2701(a)) by intentionally accessing Plaintiff’s voicemails without authorization and obtaining and/or altering authorized access to a wire or electronic communication while in electronic storage by collecting and accessing temporarily stored voicemails or those maintained for purposes of backup protection.
47. Additionally, Defendants violated 18 U.S.C. 2701(a)(2) because they intentionally exceeded or had no authorization to access Plaintiff’s communications and obtained, altered, or prevented authorized access to a wire or electronic communication while in electronic storage by interfering with Plaintiff’s temporarily stored voicemails, as disclosed hereinabove. Defendants had actual knowledge of, participated in, directed and/or approved of, and benefitted from, this practice” (pg. 55 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Strike) FALSE STATEMENT #3: Document 65 Filed 05/19/14 Page 8 of 12 “he has already filed a lawsuit in Delaware advancing these very claims.” FALSE STATEMENT #4: (At footnote 4: Document 65 Filed 05/19/14 Page 9 of 12)
“the existence of a pending action in Delaware where Greenspan is advancing the same claims that are the subject of the proposed intervention.
16. Delaware action cited by Defendants: “VI. CLAIM COUNTS” on page 25, has 16 counts which consist of following: “COUNT # 1 - § 1503 (a) Violation COUNT # 2 - § 1503. (b) Violation COUNT #3 - § 1503 (c) Violation COUNT # 4 - § 1503(d) Violations. COUNT # 5 –§ 1504 TRIGGERED PETITIONER RIGHT TO CIVIL REMEDY UNDER § 1505(f) COUNT # 6 - (BREACH OF AGREEMENT) COUNT # 7 - (“inseparable fraud”) VIOLATION COUNT #8 –PAREXEL TYPE FRAUD VIOLATION THRU FAILURE TO DISCLOSE “COMPLIANCE FAILURES”
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COUNT #9 – RULING BASED ON DELAWARE STATUE AND CODE 1304 THAT 2004 MYSPACE TRANSFER AND 2005 TRANSACTIONS “FRAUDULENT” COUNT #10 – VIOLATION OF DODD-FRANK WHISTLEBLOWER STATUTE – SECTION 922) &18 U.S.C. §1513(e)) COUNT # 11 - Blasisus violation COUNT # 12 - Contempt Violation COUNT # 13 - Ruling certain transactions after October 17, 2003 are Void. COUNT # 14 - VOID Defendants right to exculpation under 102(b)(7) COUNT #15 - Ruling certain transactions after October 17, 2003 are Void. COUNT #16 INDEMNIFICATION AND ADVANCEMENT CLAIMS” 17. Defendants lied in May 19, 2014 pleading because they read page 20 of Motion for Intervention filed May 2, 2014 which stated: “Claims And The Underlying Actions
33. The Proposed Intervenor claims are based upon same violations of federal law as the underlying action.”
And the first page of the Complaint in Intervention shows the Claims in the Complaint in Intervention are identical to Plaintiff Huthart and are not the same claims filed in Delaware which are listed in paragraph 16 above. Comparing:
“1. This is a civil action brought against Defendants for damages for violations of Plaintiff’s right to privacy; for the unlawful access to stored communicationl and for the intrusion into, interception of, email and other wire communications while Plaintiff was living in Los Anglees in violation of 18 U.S.C. 2701, 2707; 18 U.S.C. 2510, 2511, 2520; Article I, Section 1of the California State Constituion; 630-637.0 of the California Penal Code; 1708.8 of the California Civil Code; and California common law. JURISDICTION AND VENUE 2. This action is brought pursuant to 18 U.S.C. 2701 and 2707, 18 U.S.C. 2510, 2511 and 2520. “
FALSE STATEMENT #5: (At footnote 4: Document 65 Filed 05/19/14 Page 9 of 12)
“1 Among other things, Greenspan’s intervention pleadings violate Federal Rule of Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for relief, “
COMPARE “PRAYER FOR RELIEF”
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18. PAGE 35-37 HUTHART ORIGINALLY AND ONLY FILED
COMPLAINT:
“1. An award of the maximum statutory actual damages, including profits made by Defendanrts, pursuant to 18 U.S.C. 2707; 2. Punitive damages, pursuant to 18 U.S.C. 2707(b)(3); 3. Reasonable attorney’s fees and costs, pursuant to 18 U.S.C. 2707(b)(3)l and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Second Claim for Relief. 1. The greater of actual damages and any profits made by Defendants by their violations of 18 U.S.C. 2520 and 2511, or statutory damages, pursuant to 18 U.S.C. 2520 2. Punitive damages, pursuant to 18 U.S.C. 2520 3. Reasonable attorneys’ fees and costs, pursuant to 18 U.S.C. 2520 4. Such other and further relief as the Court mauy deem just, proper and equitable. On the Third Claim for Relief 1. General and specific damages, in an amount to be determined by the Court; and 2.Such other and further relief as the Court may deem just, proper and equitable. On the Fourth Claim For Relief: 1. The greater of statutory damages, pursuant to 637(2)(a)(1) or three times the actual damages Plaintiff suffered for each instance in which Defendants violated 631 and 632 of the California Penal Code, pursuant to 637(2)(a)(2)l and 2. Such other and further relief as the Court may deem just, proper and equitable. On the Fifth Claim for Relief. 1. An award of three times Plaintiff’s general and specific damages, pursuant to 1708.8(d) of the California Civil Code; 2. Disgorgement of any proceeds or other consideration obtained by Defendants as a result of thei violations of Plaintiff’s rights under 1708.8(d) of the Californai Civil Code; 3. Punitive damages by reason of Defendants’ violations of Plaintiff’s rights under 1708.8(d) of the California Civil Code; and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Sixth Claim for Relief: 1. Actual damages in an amount to be determined by the court;
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2. Punitive Damages in an amount to be determined by the Court; and 3. Such other and further relief as the Court may deem just, proper and equitable.” DEMAND FOR JURY TRIAL: Plaintiff demands trial by jury.” VS.
19. PETITIONER COMPLAINT IN INTERVENTION: PRAYER FOR RELIEF (pg. 67) (attached as Exhibit #1 in Motion to Strike)
“1. An award of the maximum statutory actual damages, including profits made by Defendanrts, pursuant to 18 U.S.C. 2707; 2. Punitive damages, pursuant to 18 U.S.C. 2707(b)(3); 3. Reasonable attorney’s fees and costs, pursuant to 18 U.S.C. 2707(b)(3)l and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Second Claim for Relief. 1. The greater of actual damages and any profits made by Defendants by their violations of 18 U.S.C. 2520 and 2511, or statutory damages, pursuant to 18 U.S.C. 2520 2. Punitive damages, pursuant to 18 U.S.C. 2520 3. Reasonable attorneys’ fees and costs, pursuant to 18 U.S.C. 2520 4. Such other and further relief as the Court mauy deem just, proper and equitable. On the Third Claim for Relief 1. General and specific damages, in an amount to be determined by the Court; and 2.Such other and further relief as the Court may deem just, proper and equitable. On the Fourth Claim For Relief: 1. The greater of statutory damages, pursuant to 637(2)(a)(1) or three times the actual damages Plaintiff suffered for each instance in which Defendants violated 631 and 632 of the California Penal Code, pursuant to 637(2)(a)(2)l and 2. Such other and further relief as the Court may deem just, proper and equitable. On the Fifth Claim for Relief. 1. An award of three times Plaintiff’s general and specific damages, pursuant to 1708.8(d) of the California Civil Code; 2. Disgorgement of any proceeds or other consideration obtained by Defendants as a result of their violations of Plaintiff’s rights under 1708.8(d) of the Californai
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Civil Code; 3. Punitive damages by reason of Defendants’ violations of Plaintiff’s rights under 1708.8(d) of the California Civil Code; and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Sixth Claim for Relief: 1. Actual damages in an amount to be determined by the court; 2. Punitive Damages in an amount to be determined by the Court; and 3. Such other and further relief as the Court may deem just, proper and equitable.” DEMAND FOR JURY TRIAL: Plaintiff demands trial by jury.” 20. Defendants misled Plaintiff on May 15, 2014 i. Page 2 “ex parte application” states: “Notice of this Application was provided to Plaintiff’s counsel by telephone call on May 15, 2014, and Plaintiff’s counsel advises that Plaintiff does not joint the ex parte and intends to oppose the motion to intervene. (Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 7.)” IV. CONCLUSION
21. For the reasons stated above, namely false statements and lies in Defendant’s pleading, Petitioner requests Court approve this Motion for Sanctions
22. Legal Standard for FRCP Rule 11
Under Rule 11, the Federal Rules of Civil Procedure require that every “paper” presented to the court with factual contentions “have evidentiary support,” and that “denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.” Fed. R. Civ. P. 11. The Rule provides for sanctions against “any attorney, law firm, or party that violated the rule or is responsible for the violation.” Id.; see also Worrell v. Houston Can! Academy, 2008 WL 2753405 at *3 (5th Cir. July 16, 2008).
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AUTHORITY FOR SANCTIONS
23. CA Statue 2023.010 provides the statuatory authority for sanctions to be
awarded against Defendant and/or his attorney of record. DEFENDANT’S FALSE STATEMENTS
24. MR 4.1 provides that a lawyer shall not knowingly (1) make a false statement of material fact or law to a third person.
i. B&PC 6068(d) prohibits California lawyers from making false statements of fact or law to any judge or judicial officer.
ii. B&PC 6106 provides that the commission of any act of moral turpitude or
dishonesty constitutes a cause for disbarment or suspension. B&PC � 6106 is sufficiently broad to prohibit false statements by lawyers to third parties.
iii. DR 7-102(A)(5) provides that "[i]n his representation of a client, a lawyer shall not . . . [k]nowingly make a false statement of law or fact." FALSE CLAIMS 25. It is also clear that a California lawyer may not make false or misleading statements in affidavits or other court papers. See, e.g., Lee v. State Bar (1970) 2 Cal.3d 927, 88 Cal.Rptr. 361, 472 P.2d 449 (disciplinary action against lawyer who made false statements in sworn testimony); Sturr v. State Bar (1959) 52 Cal.2d 125, 338 P.2d 897 (involving affidavit containing false statements); Vickers v. State Bar (1948) 32 Cal.2d 247, 196 P.2d 10 (disciplinary action against lawyer who made false statement in proceeding for letters of special administration that he was the surviving husband of decedent). 26. `Besides prohibiting false statements, the provisions of the B&PC prohibit all forms of deceit, including selective presentation of incomplete facts. For example, a California lawyer may not author a legal opinion on a transaction that discloses only facts favorable to his client where the lawyer is aware of
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other adverse material facts that may affect another's decision in the transaction. Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (2nd Dist. 1976) 57 Cal.App.3d 104, 128 Cal.Rptr. 901. But see Price v. Superior Court (2nd Dist. 1983) 139 Cal.App.3d 518, 188 Cal.Rptr. 832 (criminal defense counsel must disclose to prosecutor that another prosecutor had previously refused a plea bargain that defense counsel was now proposing to the prosecutor). Moreover, a California lawyer has an affirmative duty to correct prior misleading statements by disclosing true facts or new information to persons who may act in reliance on the original statement. Failure to disclose correct facts or new information constitutes tortious abuse in California. See, e.g., Dyke v. Zaiser (4th Dist. 1947) 80 Cal.App.2d 639, 182 P.2d 344.
ii. C.O.P.R.A.C. Op. 93-131 (lawyer may not indirectly communicate using a client as a ploy to obtain an unfair advantage;
iii.B&PC 6128 provides that "every attorney is guilty of a misdemeanor who . . . is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party." Taken together, B&PC 6068(d) and B&PC 6128 require California lawyers to be truthful in all statements, whether to the court, opposing parties, clients, or third parties. DATED: May 23, 2014 Respectfully submitted,
Brad D. Greenspan Pro Se
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Brad Greenspan, Pro Se 14938 Camden Ave Suite 47 San Jose, CA 95124 Fax: (408)677-5655
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) Case No. CV 13-4253 MWF ) Plaintiff, ) Honorable Michael W. Fitzgerald v. ) ) ) ) )
) MEMORANDUM IN SUPPORT OF MOTION TO STRIKE
NEWS CORPORATION, NI GROUP LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ) LIMITED, and JOHN and JANE ) DOES 1-10 ) ) Defendants. ) )
)
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TABLE OF CONTENTS I. INTRODUCTION II. SUMMARY OF ALLEGATIONS III. ARGUMENT IV. CONCLUSION
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MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION
1. Petitioner moves the Court to strike its May 19, 2014 filed:
“DEFENDANTS’ EX PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION OF BRAD GREENSPAN PENDING THE COURT’S DETERMINATION ON DEFENDANTS’ MOTION TO DISMISS”
II. SUMMARY OF ALLEGATIONS
2. Petitioner files this Motion to Strike Defendant’s May 19, 2014 Pleading because it contains false statements and is underpinned by lies.
3. Under 12(f) petitioner may file a Motion to Strike
“any insufficient defense, redundancy, or scandalous matter”
4. Further, MR 4.1 provides that a lawyer shall not knowingly (1) make a false statement of material fact or law to a third person.
i. B&PC 6068(d) prohibits California lawyers from making false statements of fact or law to any judge or judicial officer.
ii. B&PC 6106 provides that the commission of any act of moral turpitude or dishonesty constitutes a cause for disbarment or suspension. B&PC � 6106 is sufficiently broad to prohibit false statements by lawyers to third parties.
iii. DR 7-102(A)(5) provides that "[i]n his representation of a client, a lawyer shall not . . . [k]nowingly make a false statement of law or fact." 5. It is also clear that a California lawyer may not make false or misleading statements in affidavits or other court papers. See, e.g., Lee v. State Bar (1970) 2 Cal.3d 927, 88 Cal.Rptr. 361, 472 P.2d 449 (disciplinary action against lawyer who made false statements in sworn testimony); Sturr v. State Bar (1959)
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52 Cal.2d 125, 338 P.2d 897 (involving affidavit containing false statements); Vickers v. State Bar (1948) 32 Cal.2d 247, 196 P.2d 10 (disciplinary action against lawyer who made false statement in proceeding for letters of special administration that he was the surviving husband of decedent).
6. This broad interpretation is supported by the case law in California. For example, in People v. Petas (1st Dist. 1989) 214 Cal.App.3d 70, 262 Cal.Rptr. 467, the court held that a lawyer could be charged with a misdemeanor where the lawyer presented a false or fraudulent claim for payment of insurance by falsely representing in insurance demand letters that the client's injuries resulted from a single accident when the lawyer knew that they did not.
7. Besides prohibiting false statements, the provisions of the B&PC prohibit all forms of deceit, including selective presentation of incomplete facts. For example, a California lawyer may not author a legal opinion on a transaction that discloses only facts favorable to his client where the lawyer is aware of other adverse material facts that may affect another's decision in the transaction. Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (2nd Dist. 1976) 57 Cal.App.3d 104, 128 Cal.Rptr. 901. But see Price v. Superior Court (2nd Dist. 1983) 139 Cal.App.3d 518, 188 Cal.Rptr. 832 (criminal defense counsel must disclose to prosecutor that another prosecutor had previously refused a plea bargain that defense counsel was now proposing to the prosecutor). Moreover, a California lawyer has an affirmative duty to correct prior misleading statements by disclosing true facts or new information to persons who may act in reliance on the original statement. Failure to disclose correct facts or new information constitutes tortious abuse in California. See, e.g., Dyke v. Zaiser (4th Dist. 1947) 80 Cal.App.2d 639, 182 P.2d 344. 8. B&PC 6128 provides that "every attorney is guilty of a misdemeanor who . . . is guilty of any deceit or collusion, or consents to any deceit or collusion, with
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intent to deceive the court or any party." Taken together, B&PC 6068(d) and B&PC 6128 require California lawyers to be truthful in all statements, whether to the court, opposing parties, clients, or third parties. ARGUMENT 9. Plaintiff admits to receiving and being in possession of petitioner’s “proposed Complaint in Intervention” as of May 2, 2014.
“Greenspan additionally served on Defendants’ local counsel a proposed Complaint in Intervention, “ (Document 65 Filed 05/19/14 Page 5 of 12)
FALSE STATEMENT #1: Document 65 Filed 05/19/14 Page 6 of 12
“Greenspan does not allege he is the victim” of “any allegedly wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik Decl., ¶ 4.)”
10. To determine if Statement #1 is false, the Court must review and compare Defendant’s claim Petitioner “does not allege” “any allegedly wrongful conduct by Defendants similar to that complained of by Huthart” 11. The Huthart complaint’s first claim:
i. “FIRST CLAIM FOR RELIEF (Violation Of The Stored Communications Act, 18 U.S.C. 2701 and 2707- All Defendants)
ii. is exactly the same as Petitioner’s first claim:
“FIRST CLAIM FOR RELIEF (Violation Of The Stored Communications Act, 18 U.S.C. 2701 and 2707- All Defendants) (pg. 54 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
12. The Huthart complaint’s second claim:
i. “SECOND CLAIM FOR RELIEF (Violation of Wiretap Act, 18
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U.S.C. 2510, 2511 & 2520 – All Defendants)”
ii. is exactlty the same as Petitioner’s second claim:
“SECOND CLAIM FOR RELIEF (Violation of Wiretap Act, 18 U.S.C. 2510, 2511 & 2520 – All Defendants) (pg. 56 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
13. The Huthart complaint’s third claim:
i. “THIRD CLAIM FOR RELIEF (Violation of Article I, Section I Of The California State Constitution – All Defendants)”
ii. is exactly the same as Petitioner’s third claim:
“THIRD CLAIM FOR RELIEF (Violation of Article I, Section I Of The California State Constitution – All Defendants) (pg. 58 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
14. The Huthart complaint’s fourth claim:
i. “FOURTH CLAIM FOR RELIEF (Violation of California Penal Code 630, 631, 632, 632.7 & 637(2)(a) – All Defendants)”
ii. is exactly the same as Petitioner’s fourth claim:
“FOURTH CLAIM FOR RELIEF (Violation of California Penal Code 630, 631, 632, 632.7 & 637(2)(a) – All Defendants)” (pg. 59 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
15. The Huthart complaint’s fifth claim:
i. “FIFTH CLAIM FOR RELIEF (Violation of California Civil Code 1708.8(b), 1708.8(d) & 1708.8(e) – All Defendants)”
ii. is exactly the same as Petitioner’s fifth claim:
“FIFTH CLAIM FOR RELIEF (Violation of California Civil Code
MEMORANDUM IN SUPPORT OF MOTION TO STRIKE
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1708.8(b), 1708.8(d) & 1708.8(e) – All Defendants)” (pg. 64 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
16. The Huthart complaint’s sixth claim:
i. “SIXTH CLAIM FOR RELIEF (Intrusion Into Private Affairs – California Common Law– All Defendants)”
iii. is exactly the same as Petitioner’s sixth claim:
“SIXTH CLAIM FOR RELIEF (Intrusion Into Private Affairs – California Common Law– All Defendants)” (pg. 65 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
FALSE STATEMENT #2: Document 65 Filed 05/19/14 Page 6 of 12
“Greenspan does not allege he is the victim of any voicemail hacking”
17. Defendant’s claim petitioner “does not allege he is the victim of any voicemail hacking” is a false statement and lie when compared to Petitioner’s Complaint in Intervention that Defendant admits Defendant has received and reviewed.
i. “46. Defendants violated 18 U.S.C. 2701 (a)(1), in that they accessed a “facility through which an electronic communication service is provided.” (18 U.S.C. 2701(a)) by intentionally accessing Plaintiff’s voicemails without authorization and obtaining and/or altering authorized access to a wire or electronic communication while in electronic storage by collecting and accessing temporarily stored voicemails or those maintained for purposes of backup protection. 47. Additionally, Defendants violated 18 U.S.C. 2701(a)(2) because they intentionally exceeded or had no authorization to access Plaintiff’s communications and obtained, altered, or prevented authorized access to a wire or electronic communication while in electronic storage by interfering with Plaintiff’s temporarily stored
MEMORANDUM IN SUPPORT OF MOTION TO STRIKE
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voicemails, as disclosed hereinabove. Defendants had actual knowledge of, participated in, directed and/or approved of, and benefitted from, this practice”
(pg. 54-69 COMPLAINT IN INTERVENTION Exhibit #2 attached to Motion to Intervene)
FALSE STATEMENT #3: Document 65 Filed 05/19/14 Page 8 of 12 “he has already filed a lawsuit in Delaware advancing these very claims.” FALSE STATEMENT #4: (At footnote 4: Document 65 Filed 05/19/14 Page 9 of 12)
“the existence of a pending action in Delaware where Greenspan is advancing the same claims that are the subject of the proposed intervention.
18. Delaware action cited by Defendants: “VI. CLAIM COUNTS” on page 25, has 16 counts which consist of following: “COUNT # 1 - § 1503 (a) Violation COUNT # 2 - § 1503. (b) Violation COUNT #3 - § 1503 (c) Violation COUNT # 4 - § 1503(d) Violations. COUNT # 5 –§ 1504 TRIGGERED PETITIONER RIGHT TO CIVIL REMEDY UNDER § 1505(f) COUNT # 6 - (BREACH OF AGREEMENT) COUNT # 7 - (“inseparable fraud”) VIOLATION COUNT #8 –PAREXEL TYPE FRAUD VIOLATION THRU FAILURE TO DISCLOSE “COMPLIANCE FAILURES” COUNT #9 – RULING BASED ON DELAWARE STATUE AND CODE 1304 THAT 2004 MYSPACE TRANSFER AND 2005 TRANSACTIONS “FRAUDULENT” COUNT #10 – VIOLATION OF DODD-FRANK WHISTLEBLOWER STATUTE – SECTION 922) &18 U.S.C. §1513(e)) COUNT # 11 - Blasisus violation COUNT # 12 - Contempt Violation COUNT # 13 - Ruling certain transactions after October 17, 2003 are Void. COUNT # 14 - VOID Defendants right to exculpation under 102(b)(7) COUNT #15 - Ruling certain transactions after October 17, 2003 are Void. COUNT #16 INDEMNIFICATION AND ADVANCEMENT CLAIMS”
MEMORANDUM IN SUPPORT OF MOTION TO STRIKE
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19. Defendants lied in May 19, 2014 pleading because they read page 20 of Motion for Intervention filed May 2, 2014 which stated: “Claims And The Underlying Actions
33. The Proposed Intervenor claims are based upon same violations of federal law as the underlying action.”
And the first page of the Complaint in Intervention shows the Claims in the Complaint in Intervention are identical to Plaintiff Huthart and are not the same claims filed in Delaware which are listed in paragraph 16 above. Comparing:
“1. This is a civil action brought against Defendants for damages for violations of Plaintiff’s right to privacy; for the unlawful access to stored communicationl and for the intrusion into, interception of, email and other wire communications while Plaintiff was living in Los Anglees in violation of 18 U.S.C. 2701, 2707; 18 U.S.C. 2510, 2511, 2520; Article I, Section 1of the California State Constituion; 630-637.0 of the California Penal Code; 1708.8 of the California Civil Code; and California common law. JURISDICTION AND VENUE 2. This action is brought pursuant to 18 U.S.C. 2701 and 2707, 18 U.S.C. 2510, 2511 and 2520. “
COLLATERAL CHALLENGE AND ATTACK WITHOUT GRANTING MOTION TO STRIKE INEQUITABLE, UNTIMELY, “DEFENDANTS’ EX PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION” ERRONEOUSLY GIVES DEFENDANT EX PARTE UNREPLIABLE SUMMARY JUDGEMENT PLEADING FALSE STATEMENT #5: (At footnote 4: Document 65 Filed 05/19/14 Page 9 of 12)
“1 Among other things, Greenspan’s intervention pleadings violate Federal Rule of Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for relief, “
COMPARE “PRAYER FOR RELIEF”
20. PAGE 35-37 HUTHART ORIGINALLY AND ONLY FILED COMPLAINT:
MEMORANDUM IN SUPPORT OF MOTION TO STRIKE
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“1. An award of the maximum statutory actual damages, including profits made by Defendanrts, pursuant to 18 U.S.C. 2707; 2. Punitive damages, pursuant to 18 U.S.C. 2707(b)(3); 3. Reasonable attorney’s fees and costs, pursuant to 18 U.S.C. 2707(b)(3)l and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Second Claim for Relief. 1. The greater of actual damages and any profits made by Defendants by their violations of 18 U.S.C. 2520 and 2511, or statutory damages, pursuant to 18 U.S.C. 2520 2. Punitive damages, pursuant to 18 U.S.C. 2520 3. Reasonable attorneys’ fees and costs, pursuant to 18 U.S.C. 2520 4. Such other and further relief as the Court mauy deem just, proper and equitable. On the Third Claim for Relief 1. General and specific damages, in an amount to be determined by the Court; and 2.Such other and further relief as the Court may deem just, proper and equitable. On the Fourth Claim For Relief: 1. The greater of statutory damages, pursuant to 637(2)(a)(1) or three times the actual damages Plaintiff suffered for each instance in which Defendants violated 631 and 632 of the California Penal Code, pursuant to 637(2)(a)(2)l and 2. Such other and further relief as the Court may deem just, proper and equitable. On the Fifth Claim for Relief. 1. An award of three times Plaintiff’s general and specific damages, pursuant to 1708.8(d) of the California Civil Code; 2. Disgorgement of any proceeds or other consideration obtained by Defendants as a result of thei violations of Plaintiff’s rights under 1708.8(d) of the Californai Civil Code; 3. Punitive damages by reason of Defendants’ violations of Plaintiff’s rights under 1708.8(d) of the California Civil Code; and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Sixth Claim for Relief: 1. Actual damages in an amount to be determined by the court; 2. Punitive Damages in an amount to be determined by the Court; and 3. Such other and further relief as the Court may deem just, proper and equitable.”
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DEMAND FOR JURY TRIAL: Plaintiff demands trial by jury.” VS.
21. PETITIONER COMPLAINT IN INTERVENTION: PRAYER FOR RELIEF (pg. 67) (attached as Exhibit #1)
“1. An award of the maximum statutory actual damages, including profits made by Defendanrts, pursuant to 18 U.S.C. 2707; 2. Punitive damages, pursuant to 18 U.S.C. 2707(b)(3); 3. Reasonable attorney’s fees and costs, pursuant to 18 U.S.C. 2707(b)(3)l and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Second Claim for Relief. 1. The greater of actual damages and any profits made by Defendants by their violations of 18 U.S.C. 2520 and 2511, or statutory damages, pursuant to 18 U.S.C. 2520 2. Punitive damages, pursuant to 18 U.S.C. 2520 3. Reasonable attorneys’ fees and costs, pursuant to 18 U.S.C. 2520 4. Such other and further relief as the Court mauy deem just, proper and equitable. On the Third Claim for Relief 1. General and specific damages, in an amount to be determined by the Court; and 2.Such other and further relief as the Court may deem just, proper and equitable. On the Fourth Claim For Relief: 1. The greater of statutory damages, pursuant to 637(2)(a)(1) or three times the actual damages Plaintiff suffered for each instance in which Defendants violated 631 and 632 of the California Penal Code, pursuant to 637(2)(a)(2)l and 2. Such other and further relief as the Court may deem just, proper and equitable. On the Fifth Claim for Relief. 1. An award of three times Plaintiff’s general and specific damages, pursuant to 1708.8(d) of the California Civil Code; 2. Disgorgement of any proceeds or other consideration obtained by Defendants as a result of their violations of Plaintiff’s rights under 1708.8(d) of the Californai Civil Code;
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3. Punitive damages by reason of Defendants’ violations of Plaintiff’s rights under 1708.8(d) of the California Civil Code; and 4. Such other and further relief as the Court may deem just, proper and equitable. On the Sixth Claim for Relief: 1. Actual damages in an amount to be determined by the court; 2. Punitive Damages in an amount to be determined by the Court; and 3. Such other and further relief as the Court may deem just, proper and equitable.” DEMAND FOR JURY TRIAL: Plaintiff demands trial by jury.” 22. Defendants misled Plaintiff on May 15, 2014 i. Page 2 “ex parte application” states: “Notice of this Application was provided to Plaintiff’s counsel by telephone call on May 15, 2014, and Plaintiff’s counsel advises that Plaintiff does not joint the ex parte and intends to oppose the motion to intervene. (Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 7.)” IV. CONCLUSION For the reasons stated above, namely false statements and lies in Defendant’s pleading, Petitioner requests Court approve this Motion to Strike May 19, 2014 Pleading by Defendant. DATED: May 23, 2014 Respectfully submitted,
Brad D. Greenspan Pro Se
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EXHIBIT #1
MEMORANDUM IN SUPPORT OF MOTION TO STRIKE
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EXHIBIT #2
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 1
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Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge Deputy Clerk: Court Reporter: Rita Sanchez Not Reported Attorneys Present for Plaintiff: Attorneys Present for Defendant: None Present None Present Proceedings (In Chambers): ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS FOR FORUM NON CONVENIENS [41], DENYING MOTION TO INTERVENE AS MOOT [61], AND DENYING EX PARTE APPLICATION TO CONTINUE MOTION TO INTERVENE AS MOOT [65]
This matter is before the Court on the Motion to Dismiss Under FRCP Rules
12(b)(2), 12(b)(6), and for Forum Non Conveniens (the “Motion”), filed by Defendants News Corporation (“News Corp.”), NI Group Limited f/k/a News International Limited (“NI”), and News Group Newspapers Limited (“NGN”). (Docket No. 41). The Court read and considered the papers filed on this Motion, and held a hearing on February 24, 2014. Following additional briefing, the Court GRANTS the Motion.
The underlying facts here do not seem to be in dispute, at least by these parties. It appears, and certainly is alleged, that Plaintiff Eunice Huthart has suffered a grotesque invasion of her privacy. This harm arose for no reasons other than Huthart’s successfully pursuing a demanding career associated with Los Angeles and having a friend who likewise is at the summit of success in an industry associated with Los Angeles. Nonetheless, for the reasons explained in this Order, the Court concludes that Huthart must obtain her relief from the courts of England and Wales.
Background
Case 2:13-cv-04253-MWF-AJW Document 66 Filed 05/21/14 Page 1 of 22 Page ID #:2069
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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On June 13, 2013, Huthart initiated this action by filing a Complaint in this Court. (Docket No. 1). The Complaint alleges that Huthart is a citizen of the United Kingdom and resides in Liverpool, England. (Compl. ¶ 4). But between early January 2004 to mid-June 2004, and from mid-March 2005 to mid-May 2005, Huthart lived and worked in Los Angeles, California as a professional stunt double for actress Angelina Jolie. (Compl. ¶ 4). The Complaint alleges that during this time period, various British media companies, primarily agents working for two British newspapers, The Sun and News of the World, unlawfully intercepted her voice-mail messages on cellular telephone systems to obtain information about Jolie. (Compl. ¶¶ 11, 12, 16-21, 45-68). The Complaint alleges that these actions were part of a large-scale hacking scheme (Compl. ¶¶ 11-44), which have received much media attention and will be referred to in this Order as the “Hacking Scheme.”
The Complaint alleges six claims: (1) violation of the Stored Communications Act, 18 U.S.C. §§ 2701, 2707; (2) violation of the Wiretap Act, 18 U.S.C. §§ 2510, 2511, 2520; (3) violation of the California Constitution, art. I, § 1; (4) violation of California Penal Code §§ 630, 631, 632, 632.7, 637(2)(a); (5) violation of California Civil Code §§ 1708.8(b), 1708.8(d), 1708.8(e); and (6) a common law claim for intrusion into private affairs.
On September 20, 2013, Defendants filed this Motion. On December 10, 2013, Huthart filed an Opposition to Defendants’ Motion to Dismiss (the “Opposition”). (Docket No. 49). On January 22, 2014, Defendants filed a Reply in Support of Defendants’ Motion to Dismiss (the “Reply”). (Docket No. 54). The briefs complied with the deadlines and page limits set by this Court. (See Docket Nos. 40, 47).
After the hearing on February 24, 2014, the Court ordered supplemental briefing on two issues: (1) whether England’s managed litigation system set up to deal with claims arising from the Hacking Scheme, the Mobile Telephone Voicemail Interception Litigation (“MTVIL”), would accept Huthart’s claim; and (2) whether Huthart would otherwise be able to bring a lawsuit in the regular civil litigation system in England. (Docket No. 56).
Case 2:13-cv-04253-MWF-AJW Document 66 Filed 05/21/14 Page 2 of 22 Page ID #:2070
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 3
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On March 17, 2014, Defendants filed a Supplemental Briefing Pursuant to the Court’s February 25, 2014 Order (“Defendants’ Brief”). (Docket No. 57). That same day, Huthart also filed a Supplemental Memorandum of Position and Authorities in Opposition to Defendants’ Motion to Dismiss (“Huthart’s Brief”). (Docket No. 58). Both briefs were timely filed.
Evidentiary Objections
Both sides have submitted numerous evidentiary objections. (See Docket Nos. 50-1, 50-2, 50-3, 50-4, 50-5, 50-6, 54-9, 54-10, 54-11, 54-12). Most of these objections are not aimed at the evidence relevant to the forum non conveniens analysis, on which this Order turns. To the extent that the objections are relevant to the forum non conveniens analysis, they challenge very specific details for lack of foundation. However, the Hacking Scheme and the investigations and legal proceedings related to it are set forth in sufficient detail in the Complaint itself. Moreover, these events have been the subject of significant media attention worldwide. Furthermore, it does not appear that the parties dispute Huthart’s access to the regular civil litigation system of England, as opposed to the specialized venues established to address the Hacking Scheme. Accordingly, the Court’s analysis and conclusion would have not differed, regardless of whether the objections were sustained are overruled.
Therefore, both parties’ objections are OVERRULED as moot.
Requests for Judicial Notice
Pursuant to Federal Rule of Evidence 201, the Court may take judicial notice of “a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b).
Defendants filed two requests for judicial notices: (1) Request for Judicial Notice in Support of Motion to Dismiss (“Defendants’ First Request”) (Docket No. 41-
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 4
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8), and (2) Request for Judicial Notice in Support of Defendants’ Reply in Support of Motion to Dismiss (“Defendants’ Second Request”). (Docket No. 54-1). Of the documents for which Defendants seek judicial notice, only two are relevant to the forum non conveniens analysis.
First, Exhibit 1 of the Declaration of Christa Jane Band (the “Band Declaration”) (Docket No. 41-2) is a court order in the consolidated litigation in England relating to the Hacking Scheme. (Band Decl., Ex. 1). Because that litigation is related to this one, the Court order is appropriate for judicial notice. See United States v. Howard, 381 F.3d 873, 876 n.1 (9th Cir. 2004) (citing United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980)) (stating that a court may take judicial notice of court records in another case).
Second, Exhibit 2 of the Band Declaration is the Terms of Reference of the Leveson Inquiry, which investigated the Hacking Scheme. (Band Decl., Ex. 2). Exhibit 2 was taken from the Leveson Inquiry’s website, and is appropriate for judicial notice. See Matthews v. Nat’l Football Council, 688 F.3d 1107, 1113 & n.5 (9th Cir. 2012) (taking judicial notice of relevant statistics available on the NFL’s website); O’Toole v. Northrop Grumman Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) (“It is not uncommon for courts to take judicial notice of factual information found on the world wide web.”).
Therefore, Defendants First Request is GRANTED as to these two Exhibits. The remainder of Defendants’ First Request and Defendants’ Second Request is DENIED as irrelevant.
On December 10, 2013, Huthart filed a Request for Judicial Notice in Opposition to Motion to Dismiss (“Huthart’s Request”). (Docket No. 49-1). Of the documents for which Huthart seeks judicial notice, items 1-7, 13, and 15 are relevant to the forum non conveniens analysis. These documents consist of relevant public documents found online and documents filed in relevant litigation. For the reasons stated above, both of these categories of documents are appropriate for judicial notice.
Case 2:13-cv-04253-MWF-AJW Document 66 Filed 05/21/14 Page 4 of 22 Page ID #:2072
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 5
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Therefore, Huthart’s Request is GRANTED as to items 1-7, 13, and 14. The remainder of Huthart’s Request is DENIED as irrelevant.
Motion to Dismiss
The Motion seeks dismissal of this action on four grounds: (1) forum non conveniens; (2) lack of personal jurisdiction, under Federal Rule of Civil Procedure 12(b)(2), as to NI and NGN, which are citizens of the United Kingdom; (3) failure to state a claim, under Rule 12(b)(6), as to News Corp., on the ground that the Complaint fails to establish a basis to pierce the corporate veil; and (4) failure to state a claim, under Rule 12(b)(6), on the grounds that two of the statutes governing Huthart’s claims do not apply to extraterritorial conduct, three of her claims lack sufficient factual allegations, and all claims are time-barred. (Mot. at 6-7).
This Court can examine the merits of the forum non conveniens argument before addressing the jurisdictional issues. The Supreme Court has stated:
We hold that a district court has discretion to respond at once to a defendant’s forum non conveniens plea, and need not take up first any other threshold objection. In particular, a court need not resolve whether it has authority to adjudicate the cause (subject-matter jurisdiction) or personal jurisdiction over the defendant if it determines that, in any event, a foreign tribunal is plainly the more suitable arbiter of the merits of the case.
Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 425, 127 S. Ct. 1184, 167 L. Ed. 2d 15 (2007). Because the proposed alternative forum in this action is England, the appropriate analysis is the forum non conveniens doctrine, as opposed to a motion to transfer pursuant to 28 U.S.C. § 1404. See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. __, 134 S. Ct. 568, 580 (2013) (stating that § 1404 is the appropriate mechanism when “the transferee forum is within the federal court system,”
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 6
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but that courts should apply the doctrine of forum non conveniens in cases seeking transfer to a “nonfederal forum”); Sinochem Int’l, 549 U.S. at 430 (same).
Under the forum non conveniens doctrine, the party moving to dismiss bears the burden of showing that (1) there is an adequate alternative forum for this action, and (2) the balance of private and public interest factors favors dismissal. See Sinochem Int’l, 549 U.S. at 429 (summarizing the legal standard for forum non conveniens).
Adequate Alternative Forum
“The first requirement for a forum non conveniens dismissal is that an adequate alternative forum is available to the plaintiff.” Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th Cir. 2001). “The Supreme Court has held that an alternative forum ordinarily exists when the defendant is amenable to service of process in the foreign forum.” Id. Moreover, “[t]he foreign forum must provide the plaintiff with some remedy for [her] wrong in order for the alternative forum to be adequate.” Id.
Here, England provides an adequate alternative forum.
With regard to jurisdiction and service of process, England would have jurisdiction over NI and NGN because they are incorporated, registered, and headquartered in England. (Declaration of Craig Wyndham Orr QC ¶¶ 22-24 (the “Orr Declaration”) (Docket No. 41-4)). England would also have jurisdiction over News Corp., the only non-English Defendant, because it has agreed to waive any challenge to personal jurisdiction in the English courts. (Orr Decl. ¶¶ 25; see also Mot. at 8). Moreover, it appears that England may have jurisdiction over News Corp., even if it did not submit to personal jurisdiction there. (Orr Decl. ¶¶ 26-27).
With regard to the entity consenting to personal jurisdiction, Defendants explain that on June 28, 2013, News Corp. separated into two independent publicly traded companies. (Declaration of Gerson A. Zweifach ¶ 2 (the “Zweifach Declaration”) (Docket No. 41-7)). The entity named in the Complaint, News Corp., changed its name to 21st Century Fox, Inc. (“21st Century”) and continued to be the parent
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 7
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company of most of News Corp.’s entertainment-related entities. (Zweifach Decl. ¶ 2). A new company was also created bearing the name News Corporation (“New News Corp.”) and became the parent company of most of News Corp.’s news media-related entities. (Zweifach Decl. ¶ 2). News Corp.’s successor, 21st Century, agrees to waive any challenge to personal jurisdiction. (Zweifach Decl. ¶ 3).
In the supplemental briefing, Huthart argues for the first time that she cannot bring her claims against all Defendants in England because the real party in interest is not 21st Century, but New News Corp., which did not consent to jurisdiction. (Huthart’s Brief at 2-4). Huthart argues that the print media entities involved in the Hacking Scheme are now attributed to New News Corp., that it can be inferred that the bulk of relevant documentary evidence is maintained by New News Corp., and that Securities and Exchange Commission filings confirm that New News Corp. is liable for civil claims arising out of the hacking scheme. (Huthart’s Brief at 3).
In response, Defendants filed an Objection to Plaintiffs’ Supplemental Memorandum and Request to File Supplemental Declaration (“Defendants’ Objection”) on March 21, 2014, after the deadline for supplemental briefing. (Docket No. 59). Defendants object to Huthart’s insinuation that Defendants misled the Court when they asserted that 21st Century would consent to personal jurisdiction. (Defendants’ Objection at 1). Defendants explain that 21st Century was the entity that consented to personal jurisdiction because News Corp., the defendant named in the Complaint, essentially became 21st Century. (Id.). Defendants also request leave to file the Second Declaration of Gerson A. Zweifach (the “Second Zweifach Declaration”) (Docket No. 59-1), attesting that if Huthart also sues New News Corp. in England, New News Corp. would consent to personal jurisdiction. (Second Zweifach Decl. ¶ 3; see also Defendants’ Objection at 2).
Huthart, in turn, objects to the Defendants’ Objection and the Second Zweifach Declaration because they were filed after the deadline for supplemental briefing. (See Plaintiff’s Objection to Defendant’s March 21, 2014 Filing and Request That It Be Stricken from the Record at 2 (Docket No. 60)).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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While Huthart is correct that these documents were filed late, the Court refrains from striking them and permits the filing of the Second Zweifach Declaration. Defendants’ Objection responded to a new argument in Huthart’s Brief, which was arguably outside the scope of the supplemental briefing. Moreover, the Court would have likely asked for a response from Defendants to clarify which is the correct entity to consent to personal jurisdiction. The Court also notes that this issue could have been raised in the Opposition because the first Zweifach Declaration was filed with the Motion. However, the Court does not treat the issue as waived. Rather, it is resolved for the reasons stated.
In any event, there appears to be no dispute at this point that both 21st Century and New News Corp. would be willing to submit to personal jurisdiction in England. Therefore, Huthart would be able to sue all Defendants in England. Contrary to Huthart’s contention (see Opp. at 6), the adequate alternative forum requirement “will be satisfied when the defendant is ‘amenable to process’ in the other jurisdiction.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255, n. 22, 102 S. Ct. 252, 70 L. Ed. 2d 419 (1981) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507, 67 S. Ct. 839, 91 L. Ed. 1055 (1947), superseded by statute on other grounds).
It further appears that England can provide some remedy to Huthart. Defendants described two avenues in England specifically created to handle claims related to the Hacking Scheme: (1) a voluntary compensation scheme, and (2) the MTVIL system in the English High Court. (Mot. at 4).
Huthart has submitted the Declaration of Mark Lewis (the “Lewis Declaration”) (Docket No. 49-3), which establishes that the first avenue is now closed. (Lewis Decl. ¶ 7). Therefore, the Court does not consider the voluntary compensation scheme as an available venue.
Huthart also argues that the second avenue, the MTVIL, is unavailable to her. (Huthart’s Brief at 5). The MTVIL is a “managed litigation” system that was instituted in the English courts to deal with claims arising from the Hacking Scheme. (Declaration of Hugh Tomlinson ¶ 7 (the “Tomlinson Declaration”) (Docket No. 58-3);
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see also Band Decl. ¶¶ 4-8; Third Declaration of Craig Wyndham Orr QC ¶¶ 4-5 (the “Third Orr Declaration”) (Docket No. 57-2)). The MTVIL provides consolidated case management, expedited discovery from the London Metropolitan Police Service and NGN, mechanisms to obtain discovery from third parties, early assessment of claims, and procedures for managing litigation costs. (Band Decl. ¶ 7). All cases filed in the English civil courts that fall within the scope of the MTVIL are automatically referred to the MTVIL. (Id.). Based on the criteria for MTVIL claims (Third Orr Decl. ¶ 5), Huthart’s claims likely fall within the scope of the MTVIL.
The litigation of claims in the MTVIL has proceeded in “tranches.” The current tranche of claims, Tranche 2, closed on January 31, 2014. (Tomlinson Decl. ¶¶ 10-11). Huthart also asserts that the managing judge for the MTVIL is disinclined to further extend the cut-off date for Tranche 2, and no new claims can join Tranche 2. (Huthart’s Brief at 5 (citing Tomlinson Decl. ¶¶ 11-12)). Moreover, the MTVIL has not yet created a Tranche 3. (Tomlinson Decl. ¶ 16). If Huthart were to file claims in the English courts that fell within the scope of the MTVIL, her claims would be stayed pending the resolution of the Tranche 2 claims. (Tomlinson Decl. ¶¶ 13-15; see also Third Orr Decl. ¶¶ 8-9). Defendants assert that Huthart would nonetheless be able to apply to the court to lift the stay and to have her claim included with the Tranche 2 claims set for trial on October 1, 2014. (Third Orr Decl. ¶ 9).
The above facts do not demonstrate that the MTVIL is unavailable to Huthart. They simply indicate that if Huthart’s claims were referred to the MTVIL, their resolution may be delayed because they were filed after Tranche 2 closed. Huthart has cited no legal authority establishing that such a stay or delay of resolution renders a forum inadequate.
Even if the MTVIL is no longer open to Huthart, Defendants have established that “the regular civil litigation processes of the courts of England and Wales” remain open to Huthart. (Reply at 4). Defendants’ expert attests that “[i]f a claim does not qualify for inclusion in the MTVIL, it will be able to be brought in any division of the High Court in the normal way.” (Third Orr Decl. ¶ 7). In fact, Huthart acknowledges that “it is technically correct that if no MTVIL Tranche 3 is established, then [she] can
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file suit in the English Civil Court Proceedings.” (Huthart’s Brief at 6). However, Huthart objects that proceeding in the regular civil court would be “the litigation equivalent of purgatory” because her claims would be stayed pending the resolution of MTVIL claims. (Huthart’s Brief at 7 & n.4). As noted above, the fact or possibility that Huthart’s claims might be stayed does not render England an unavailable or otherwise inadequate forum. In our court system, for example, claims are routinely stayed to facilitate efficient administration, to avoid duplicative actions, and for other docket management reasons. Such stays do not mean that our courts are closed to those claims.
Therefore, Defendants have established that both the English court system and the MTVIL are available to Huthart to bring her claims. Moreover, England would provide some remedy for Huthart’s claims, as discussed below.
English law recognizes claims for breach of confidence and misuse of private information. (Orr Decl. ¶¶ 11-16). Under English law, remedies for these claims include compensatory damages, account of profits, and injunctive relief. (Orr Decl. ¶ 17). Moreover, England has enacted a number of statutes, which prohibit the interception of communications over telecommunication systems, the unauthorized disclosure of personal data, and the unauthorized accessing of data held on a computer. (Orr Decl. ¶ 18). Therefore, English law provides some remedy for Huthart’s injuries.
Huthart argues that the MTVIL is an inadequate forum because it is structured to address claims against NGN and Glenn Mulcaire (who is the main NGN investigator implicated in the Hacking Scheme), whereas she has also alleged claims against NI and News Corp. (Huthart’s Brief at 8). However, Defendants have established that claims against NI and News Corp. would not be barred from the MTVIL, so long as Huthart’s claims meet the basic criteria. (Third Orr Decl. ¶ 6; see also Third Declaration of Christa Jane Band ¶ 6 (Docket No. 57-3) (noting that other claimants in the MTVIL have named defendants in addition to NGN and Mulcaire)).
Huthart also argues that the MTVIL is inadequate because its system of “paired” settlement offers is designed to favor early settlement and creates a disincentive for
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claimants to go to trial. (Opp. at 5; Lewis Decl. ¶¶ 16-24). However, the fact that the MTVIL incentivizes early settlement demonstrates that some remedy is available to Huthart, and nothing indicates that this remedy would be so inadequate as to constitute no remedy at all. Moreover, Huthart could simply choose to proceed in the general civil court system, which does not appear to operate under the paired settlement system.
Huthart also argues that English law offers no remedy for a significant portion of her claims. (Huthart’s Brief at 7-8). In particular, she argues that England provides no cause of action to hold NI and News Corp. directly liable because they knew or should have known about NGN’s hacking activity, failed to stop NGN’s hacking, and participated in the cover-up of the hacking. (Huthart’s Brief at 8; Tomlinson Decl. ¶ 20). Again, this argument could have been raised in the Opposition, but was not.
On the merits, this argument appears to be more artful, than substantive. Huthart has not explained what she means, or what claim for relief under American law would hold NI and News Corp. directly liable for such actions. The Complaint does not allege a separate claim for relief specifically asserting that NI and News Corp. are liable for activities that they knew or should have known about, failed to stop, or participated in covering up. Rather, it seems the gravamen of the Complaint is that all Defendants participated in the Hacking Scheme. Each claim is alleged against all Defendants, and many of the claims turn on intentional or willful conduct. (See, e.g., Compl. ¶¶ 75, 76, 78, 81, 83, 100-104, 120). Therefore, based on the allegations in the Complaint, it appears that there would be liability against all Defendants for their actions. Huthart’s expert, Hugh Tomlinson, is certainly well credentialed. (See Tomlinson Decl. ¶¶ 3-4). But he has not opined, nor would the Court find it credible if he did, that if all the allegations in the Complaint were true, NI and News Corp. would escape liability under English law. In light of the Complaint’s allegations that all Defendants committed the alleged acts, it is immaterial that there is no cause of action in England to hold NI and News Corp. liable for activities they knew or should have known about, failed to stop, or participated in covering up.
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Huthart also argues that England is an inadequate forum for her claims under the Stored Communications Act and the Wiretap Act. (Opp. at 4). In the supplemental briefing, Huthart further explains that the Stored Communications Act permits a claim for unauthorized accessing, obtaining, interfering with, or preventing access to a stored wired communication, without requiring that the person committing such acts actually obtain or listen to the content of the wire communication. (Huthart’s Brief at 9). In contrast, “[n]o cause of action independent of actually listening to the communication or otherwise obtaining the content of the communication exists in England and Wales.” (Tomlinson Decl. ¶ 22). Therefore, Huthart argues that she cannot litigate the subject matter of her claim in England. (Huthart’s Brief at 9).
The Court is likewise not persuaded that Huthart would be unable to litigate the subject matter of her claims in England. The Complaint alleges that Mulcaire and other unidentified investigators working for Defendants reset the pin number and password on the voicemails of their targets, and then “used and exploited the unlawfully-obtained information to note, record and/or transcribe voice-mail messages.” (Compl. ¶ 19). Mulcaire and other unidentified investigators then provided the direct mobile numbers, passwords, and pin numbers to NGN journalists “to enable them to hack and/or listen to, or to read transcripts of voice-mail messages of targets.” (Compl. ¶ 20). Mulcaire and others used the information in these voice-mail messages “in the preparation of articles or stories to be published by the Sun and News of the World.” (Compl. ¶¶ 19, 20). The Complaint then alleges that Mulcaire and other investigators and journalists engaged in the above activities with regard to Huthart’s cellphone, intercepting her voice-mail messages in order to obtain “the private and confidential information” on them. (Compl. ¶ 54).
In other words, the subject matter of Huthart’s claim is not limited to the allegation that Defendants and their agents simply accessed or interfered with her voicemails. Rather, those allegations are part and parcel of a scheme, in which Defendants and their agents are alleged to have intercepted and obtained the information in Huthart’s voicemails to use such information in tabloid stories. Tellingly, the Ninth Circuit has described the offense of accessing a communication under the Stored Communications Act as a “lesser included offense” of the offense of
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intercepting a communication under the Wiretap Act. United States v. Smith, 155 F.3d 1051, 1058 (9th Cir. 1998). Defendants have established that English law provides a cause of action for the unauthorized interception of communications under the Regulation of Investigatory Powers Act of 2000. (Orr Decl. ¶ 18).
Huthart analogizes this case to Phoenix Canada Oil Co. Limited v. Texaco, Inc., 78 F.R.D. 445, 456 (D. Del. 1978), in which the court found Ecuador to be an inadequate forum, in part, because no remedy existed under Ecuadorian law for two of three legal theories advanced by the complaint. (See Huthart’s Brief at 7-8). However, the Court does not find Phoenix analogous. Here, it appears that England does not recognize only one of six claims for relief in the Complaint. Even so, that one claim is intertwined with and could be considered a lesser included offense of another claim, interception of communications, which is recognized under English law.
Therefore, the fact that Huthart may not have an additional claim against Defendants for accessing her voicemails does not render England inadequate. See Gemini Capital Group, Inc. v. Yap Fishing Corp., 150 F.3d 1088, 1092 (9th Cir. 1998) (“[T]he fact that Plaintiffs could not assert a RICO cause of action under Yap or FSM [Federated States of Micronesia] law ‘does not preclude a forum non conveniens dismissal.’”). It is generally irrelevant that the courts in the other jurisdiction may apply substantive law that is less favorable to Huthart. Piper Aircraft, 454 U.S. at 249 (stating that “dismissal may not be barred solely because of the possibility of an unfavorable change in law”). “The district court [i]s not required to ask whether Plaintif[f] could bring this lawsuit in [the alternate forum], but rather, whether [the alternate forum] offers a remedy for their losses.” Lueck, 236 F.3d at 1143 (finding that New Zealand was an adequate alternative foreign, where New Zealand law did not permit Plaintiffs’ to maintain the exact suit as in the United States, but New Zealand nonetheless provided a remedy for Plaintiffs’ loses). There is simply no evidence that the remedy available in England would be “so clearly inadequate or unsatisfactory, that it is no remedy at all.” Lueck, 236 F.3d at 1143 (quoting Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764, 768 (9th Cir. 1991)).
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Accordingly, Defendants have established that England is an adequate alternative forum for Huthart’s claims.
Private Interest Factors
“Given the existence of an adequate alternative forum, a district court must consider the balance of private and public interest factors to determine whether to dismiss on grounds of forum non conveniens.” Lockman Found., 930 F.2d at 769.
“[U]nless the balance [of private and public interest factors] is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.” Gulf Oil, 330 U.S. at 508. However, “a foreign plaintiff’s choice of forum merits less deference than that of a plaintiff who resides in the selected forum, and the showing required for dismissal is reduced.” Lueck, 236 F.3d at 1145; see also Piper Aircraft, 454 U.S. at 255 (stating that the “presumption in favor of the plaintiff’s choice of forum . . . applies with less force when the plaintiff or real parties in interest are foreign”); Gemini Capital, 150 F.3d at 1091-92 (holding that the plaintiff’s decision to sue in Hawaii was properly accorded less deference than if Hawaii had been his true home forum). Moreover, a “truly ‘foreign’ plaintiff (i.e., someone who is not a United States citizen or resident)” is accorded less deference than “an American citizen suing in a state other than his state of residence.” Boston Telecommc’ns Group, Inc. v. Wood, 588 F.3d 1201, 1207 (9th Cir. 2009). But “even as to such quintessentially foreign plaintiffs, it is clear that ‘less deference is not the same thing as no deference.’” Id.
Huthart is a citizen and resident of the United Kingdom. (Compl. ¶ 4; Declaration of Eunice Huthart ¶ 2 (the “Huthart Declaration”) (Docket No. 49-2)). She, however, “has worked in Los Angeles, California on numerous occasions” and is the sole owner of a California corporation. (Huthart Decl. ¶¶ 3, 4). Accordingly, the Court accords some deference to Huthart’s choice of forum, but it is less deference than would be accorded if Huthart were a United States citizen or a California resident.
Courts consider the following private interest factors: (1) “the residence of the parties and the witnesses”; (2) “the forum’s convenience to the litigants”; (3) “access to
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physical evidence and other sources of proof”; (4) “whether unwilling witnesses can be compelled to testify”; (5) “the cost of bringing witnesses to trial”; (6) “the enforceability of the judgment”; and (7) “‘all other practical problems that make trial of a case easy, expeditious and inexpensive.’” Lueck, 236 F.3d at 1145 (quoting Gulf Oil, 330 U.S. at 508).
First, with regard to the residence of the parties and witnesses, this factor weighs
in favor of England. Huthart herself, her husband, her daughter, and current and former NGN employees involved in the alleged hacking are located in England. (Compl. ¶¶ 45, 50-51; Band Decl. ¶ 18; Mot. at 12). Huthart argues that other potential witnesses, such as Jolie and employees of her California company, are located in California. (Opp. at 8; Huthart Decl. ¶ 14).
“[A] court’s focus should not rest on the number of witnesses or quantity of evidence in each locale. Rather, a court should evaluate ‘the materiality and importance of the anticipated [evidence and] witnesses’ testimony and then determine[] their accessibility and convenience to the forum.” Lueck, 236 F.3d at 1146.
It appears that the most important witnesses are NGN’s current and former employees who were allegedly involved in and/or knew about the hacking because they would be crucial to establishing Defendants’ liability. Similarly, the most important evidence is that collected by the London Metropolitan Police Service since it connects Defendants’ agents to the Hacking Scheme. For example, the Complaint alleges that Huthart’s “name, cellular telephone number, her account number, and/or her PIN number appear on four separate pages” of notes recovered by the London Metropolitan Police Service from the home of an investigator who was working for NGN. (Compl. ¶¶ 16, 17, 52).
While Huthart argues that Jolie and employees of her California company are relevant to establishing how the intercepted voice messages harmed her business relationships (Opp. at 8), it would appear that Huthart could also testify about the harm
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to her business relationships. Therefore, these witnesses appear to be less important than the NGN employees.
Even according some deference to Huthart’s choice of forum, it appears that the first factor weighs in favor of England.
Second, with regard to the forum’s convenience to the litigants, this factor is neutral. While it appears that the two United Kingdom Defendants would be inconvenienced to some degree if forced to litigate here, as opposed to England, Defendants have not addressed this factor head-on. (See Mot. at 12 (stating only that “the UK is clearly the most convenient forum for this litigation”)). Moreover, given Huthart’s residence in England, the Court cannot assume that litigation in this forum would be convenient for her. “When the [plaintiff’s] home forum has been chosen, it is reasonable to assume that this choice is convenient. When the plaintiff is foreign, however, this assumption is much less reasonable.” Piper Aircraft, 454 U.S. at 255-56.
Given the lack of information regarding the forum’s convenience to either party, the second factor provides little help in the analysis.
Third, with regard to access to sources of proof, this factor weighs in favor of England. It appears that most of the relevant documents and physical evidence are located in England, including files recovered by the London Metropolitan Police Service, contracts between private investigators and NGN, and documents relating to British news stories that allegedly published information taken from Huthart’s cellphone. (Compl. ¶¶ 16, 17, 31, 60-65; Band Decl. ¶¶ 15-17).
It is true that the Ninth Circuit has deemphasized the inconvenience of transporting witnesses and documents overseas, due to advances in technology. See Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1336 (9th Cir. 1984) (“[A] district court should keep in mind that ‘the increased speed and ease of travel and communication . . . makes, especially when a key issue is the location of witnesses, no forum “as inconvenient [today] as it was in 1947,”’ when the Supreme Court decided Gilbert.”). However, Defendants have established that they cannot simply scan and upload to a
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database the documents relevant to this action. (Reply at 10). Instead, a number of the documents relevant to this litigation are being held by the London Metropolitan Police Service, and obtaining those documents would require applications to English courts. (Id.). Accordingly, it would appear more burdensome and difficult to obtain these documents for litigation in this forum, when some of those documents are already being used in litigation in England. Moreover, Huthart has not shown that any documents or other key pieces of evidence are located in California. (See Opp. at 9 n.6 (stating only vaguely that “[e]vidence may also exist in the U.S.”)).
Accordingly, this factor weighs in favor of England.
Fourth, with regard to the ability to compel unwilling witnesses, this factor weighs in favor of England. As indicated above, most of the witnesses relevant to this action are located in United Kingdom and appear to be citizens of the United Kingdom. Accordingly, they are outside of this Court’s subpoena power. See Fed. R. Civ. P. 45(b)(2) & (3) (providing for service of a subpoena in the United States, or service of a subpoena on a United States national or resident who is in a foreign country).
Additionally, a party “can carry its burden” in showing that unwilling witnesses exist “by providing circumstantial evidence . . . that an ongoing ‘criminal investigation provid[es] a major disincentive to voluntary testimony.’” Duha v. Agrium, Inc., 448 F.3d 867, 877 (6th Cir. 2006) (quoting First Union Nat’l Bank v. Banque Paribas, 135 F. Supp. 2d 443, 450 (S.D.N.Y. 2001)). Here, it appears that potential witnesses in this action are being criminally prosecuted in England for their involvement in the Hacking Scheme, as alleged in the Complaint and as established by Defendants. (Compl. ¶¶ 16, 27, 29, 37; Second Declaration of Jonathan B. Pitt, Exs. 9 & 10 (Docket No. 54-6)). Conversely, the parties have not identified any unwilling witnesses who are not subject to the compulsory process in England.
Accordingly, this factor weighs in favor of England.
Fifth, with regard to the cost of bringing witnesses to trial, this factor weighs in favor of England. As indicated above, the majority of the witnesses and virtually all of
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the most important witnesses in this action are located in the United Kingdom. While it seems likely that some of those witnesses, including Huthart, her family, and Jolie, can access this forum with relative ease, this forum appears to be less accessible to NGN’s former and current employees, especially those facing criminal charges.
Accordingly, this factor weighs in favor of England.
Sixth, with regard to the enforceability of judgment, this factor appears neutral. Neither side has raised arguments that a judgment in this forum would be more or less enforceable than one in England.
Seventh, with regard to other practical problems that make trial easy, expeditious, and inexpensive, this factor weighs in favor of England. Each case is unique, and thus, the details of Huthart’s specific claims likely differ to some degree from other claims related to the Hacking Scheme. Nonetheless, because the courts in England are experienced in handling other claims related to the Hacking Scheme, and the English courts have the authority to subpoena documents from the London Metropolitan Police Service and to compel unwilling witnesses located there to testify, it appears likely that litigation in England would be more efficient. See Lueck, 236 F.3d at 1147 (“Given the existence of the related proceedings [in New Zealand], it is all the more clear that the private interest factors weigh in favor of dismissal.”); Creative Tech., Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696, 703 (9th Cir. 1995) (affirming the district court’s finding that “all other factors that render trial of the case expeditious and inexpensive” weighed in favor of dismissal because a “parallel action in the High Court of Singapore was further advanced than the United States action”).
Therefore, five factors weigh in favor of England, two factors are neutral, and no factors weigh in favor of this forum. The private factors thus strongly favor of England.
Public Interest Factors
Courts also consider the following public interest factors: (1) “local interest of lawsuit,” (2) “the court’s familiarity with governing law,” (3) “burden on local courts
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and juries,” (4) “congestion in the court,” and (5) “the costs of resolving a dispute unrelated to this forum.” Lueck, 236 F.3d at 1147. The only factor truly at issue is the local interest factor.
First, with regard to local interest, California has some identifiable interest in
this action, but that interest is outweighed by the other factors pointing to England as the appropriate site for litigation.
Both parties agree that England has a strong interest in this action. (Mot. at 15-
16; Opp. at 12). Huthart is a United Kingdom citizen, and two Defendants are United Kingdom entities. (Compl. ¶¶ 4, 6, 7). A number of the potential witnesses are in the United Kingdom. The information obtained through the alleged hacking was published in British newspapers. Accordingly, England has devoted substantial efforts to addressing the Hacking Scheme: the London Metropolitan Police Service has conducted multiple criminal investigations; numerous individuals have been arrested and charged in England; England established the voluntary compensation scheme and the MTVIL system specifically for claims arising from the Hacking Scheme; and the Parliament of the United Kingdom has conducted numerous hearings on the phone hacking. (See Mot. at 15-16).
Although Huthart objects to the manner in which Defendants introduced
evidence regarding the events described above, Huthart does not dispute that the underlying events occurred. In fact, Huthart references the above events in her Complaint. (Compl. ¶¶ 11, 16, 23, 25, 27, 30-32, 36-37, 40, 60, 61).
It is clear from the resources and activity devoted to addressing the Hacking
Scheme that England has a very high interest in this action. See, e.g., Lueck, 236 F.3d at 1141, 1147 (finding that “the interest in New Zealand regarding this suit is extremely high,” where the action related to a crash involving a New Zealand airline carrying New Zealand passengers in New Zealand, and a New Zealand commission investigated the causes and circumstances of the accident).
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Huthart argues that California also has an interest in this litigation because her voicemail messages were hacked not only when she was in England, but also when she was in Los Angeles. (Opp. at 12-13; Compl. ¶ 49). Huthart also argues that while she was in Los Angeles, her voicemails were stored temporarily on facilities in the United States and then transmitted on United States-based networks to the United Kingdom. (Opp. at 37). Defendants dispute that any United States networks or facilities were used in the alleged hacking. (Reply at 12, n. 18). Defendants argue that even while Huthart was in Los Angeles, her “voicemails were stored in servers owned and maintained in the UK by the UK provider Vodafone,” and that her “voicemails were accessed from the UK, by UK citizens working for a UK publication owned by NGN.” (Mot. at 15).
The Court need not resolve this factual dispute to determine this Motion. Even
assuming that Huthart’s messages were stored temporarily in the United States and transmitted using United States-based networks, this activity does not create a sufficiently strong interest to outweigh the private interest factors and England’s strong interest in this action. See Vivendi SA v. T-Mobile USA Inc., 586 F.3d 689, 694 (9th Cir. 2009) (holding that the local interest in the case was “tenuous” where the only asserted connection to the United States was the use of “U.S. wires” in various communications between the parties); see also Piper Aircraft, 454 U.S. at 261 (finding that “[t]he American interest in this accident [was] simply not sufficient to justify the enormous commitment of judicial time and resources that would inevitably be required if the case were to be tried here,” where the action related to an airplane accident in Scotland, the pilot and all decedents’ heirs were Scottish citizens, and British authorities had investigated the accident, even though Defendants were American manufacturers); In re Air Crash Over Mid-Atl. on June 1, 2009, 760 F. Supp. 2d 832, 846 (N.D. Cal. 2010) (finding that “[t]he American interest . . . ensuring the quality of component parts on aircraft and protecting the rights of two American citizens, is real and legitimate but less significant than the French interest,” where “an Air France flight left Brazil for France carrying a plurality of French citizens and just two Americans living abroad at the time of the crash”).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 21
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Accordingly, while California has some minimal interest in this action, that interest does not justify the burden that litigation in this action would impose on this court system and the local jury. Second, with regard to the court’s familiarity with the governing law, this factor is neutral at best. Huthart argues that she has brought claims under federal and California state law, and that this Court is more familiar with those laws, than an English court. (See Opp. at 16). However, Huthart relies on case law that interprets a choice-of-law clause. (See Opp. at 15 (citing Wash. Mutual Bank v. Superior Court, 24 Cal. 4th 906, 919, 103 Cal. Rptr. 2d 320 (2001)). No such choice-of-law agreement is present here. If this action were dismissed and brought in England, it appears that English courts would most likely apply English law under England’s choice-of-law rules. (Second Declaration of Craig Wyndham Orr QC ¶¶ 29-34 (the “Second Orr Declaration”) (Docket No. 54-5)). However, even if the English courts were to find that federal or California state law applied, it appears that the English Courts are accustomed to applying foreign laws, including those of the United States. (Second Orr Decl. ¶ 35).
Third, with regard to court congestion, this factor also does not aid the Court’s analysis. Defendants have provided some data as to the congestion of the Central District of California. (See Mot. at 16). While the MTVIL system in England would appear to provide a more efficient mechanism for resolving Huthart’s claims, her claims could possibly be stayed for some time if filed in the MTVIL. (Tomlinson Decl. ¶¶ 13-15; see also Third Orr Decl. ¶¶ 8-9). The parties have provided no information about the congestion of the general civil litigation system in England. Accordingly, the Court cannot determine the “real issue,” which is “not whether a dismissal will reduce a court’s congestion but whether a trial may be speedier in another court because of its less crowded docket.” Gates Learjet, 743 F.2d at 1337. Moreover, administrative considerations such as docket congestion are given little weight in this Circuit in assessing dismissal under forum non conveniens. See id. (“The forum non conveniens doctrine should not be used as a solution to court
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 22
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congestion; other remedies, such as placing reasonable limitations on the amount of time each side may have to present evidence, are more appropriate.”).
Even giving some deference to Huthart’s choice of forum and acknowledging that California has a minimal interest in this action, the private interest factors and England’s interest in this action weigh strongly in favor of dismissal.
The Motion is GRANTED.
The Motion to Intervene (Docket No. 61) filed by Brad Greenspan, and Defendants’ Ex Parte Application to Continue Motion for Intervention of Brad Greenspan Pending the Court’s Determination on Defendants’ Motion to Dismiss (Docket No. 65) are both DENIED as moot.
This Order shall constitute notice of entry of judgment pursuant to Federal Rule of Civil Procedure 58. Pursuant to Local Rule 58-6, the Court ORDERS the Clerk to treat this Order, and its entry on the docket, as an entry of judgment.
IT IS SO ORDERED.
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EX PARTE APPLICATION
LEGAL02/34840112v1
Louis A. Karasik (Cal. Bar # 100672) Alston & Bird LLP 333 South Hope Street, 16th Floor Los Angeles, CA 90071-3004 Telephone: (213) 576-1148 Facsimile: (213) 576-1100 Email: [email protected] Brendan V. Sullivan (Pro Hac Vice) Tobin J. Romero (Pro Hac Vice) Joseph M. Terry (Pro Hac Vice) Jonathan B. Pitt (Pro Hac Vice) Williams & Connolly LLP 725 Twelfth Street, N.W. Washington, DC 20005 Telephone: (202) 434-5000 Facsimile: (202) 434-5029 Email: [email protected] Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, Plaintiff, v. NEWS CORPORATION, NI GROUP LIMITED f/k/a NEWS INTERNATIONAL LIMITED, NEWS GROUP NEWSPAPERS LIMITED, and JOHN and JANE DOES 1-10, Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No. CV 13-4253 MWF (AJWx) Honorable Michael W. Fitzgerald DEFENDANTS’ EX PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION OF BRAD GREENSPAN PENDING THE COURT’S DETERMINATION ON DEFENDANTS’ MOTION TO DISMISS [Filed concurrently with Declaration of Louis A. Karasik and [Proposed] Order] Date: TBD Time: TBD Courtroom: 1600
Complaint Filed: June 13, 2013
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 1 of 12 Page ID #:1929
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TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE that Defendants News Corporation, NI Group
Limited, and News Group Newspapers Limited (collectively “Defendants”) hereby
apply ex parte to continue the June 30, 2014 hearing on the pro se motion to
intervene filed on May 2, 2014 by Brad Greenspan (“Greenspan”), pending the
Court’s determination on Defendants’ Motion to Dismiss the underlying action. If
the Motion to Dismiss, which presently is under submission after supplemental
briefing filed by the parties on March 17, 2014, is granted, Greenspan’s intervention
motion will be moot.
As set forth more fully in the accompanying Memorandum of Points and
Authorities and the Declaration of Louis A. Karasik filed concurrently herewith, a
continuance of the hearing and the time for filing any opposition papers by
Defendants regarding Greenspan’s pro se motion will promote judicial economy and
avoid potentially unnecessary proceedings to address the many defects apparent on
the face of Greenspan’s rambling and incoherent pleadings. Greenspan seeks to
intervene to air accusations against California State Senators and United States
Congressman for allegedly participating in vague, undefined conspiracies with
companies such as Google, Yahoo, AOL, JP Morgan and many others, including
News Corp., related in some way to News Corp.’s acquisition of MySpace nearly ten
years ago. If Defendants’ pending Motion to Dismiss is granted, Greenspan’s
motion to intervene will be moot because there will be no underlying action, and thus
no proceeding in which Greenspan might seek to intervene. A postponement may
thus avoid the Court having to hear an unnecessary motion and avoid the necessity of
Defendants responding to the pleadings submitted by Greenspan, promoting judicial
economy for all parties and the Court. A continuance of this matter would not
prejudice Greenspan, particularly since he is pursuing substantially similar claims in
a lawsuit filed in the Delaware Court of Chancery. In contrast, if Defendants were
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required to oppose Greenspan’s motion prior to a decision on the Motion to Dismiss,
they would be forced to incur fees and costs to detail the many reasons the pro se
motion fails to state grounds to intervene1—costs that would be unnecessary in the
event that this Court rules that this case should be dismissed under the doctrine of
forum non conveniens.
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This Application is being made pursuant Local Rule 7-19 and this Court’s
courtroom procedures and standing order. Notice of this Application was provided
to Plaintiff’s counsel by telephone call on May 15, 2014, and Plaintiff’s counsel
advises that Plaintiff does not joint the ex parte and intends to oppose the motion to
intervene. (Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 7.) The only
contact information provided in Greenspan’s papers are a mailing address, so
Defendants attempted to provide notice of this Application to Greenspan by
attempting to hand deliver a letter to that address on May 16, 2014. (Karasik Decl., ¶
1 Among other things, Greenspan’s intervention pleadings violate Federal Rule of Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for relief, lack any nexus to the claims pursued by plaintiff Huthart, consist of rambling allegations of conspiracy untethered to any facts or legal theories and are barred by the statute of limitations and the existence of a pending action in Delaware where Greenspan has filed substantially the same disjointed allegations.
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8.) The address provided by Greenspan was a rented mailbox, and we were advised
by the proprietor that it was canceled over a year ago for nonpayment.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 4 of 12 Page ID #:1932
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Defendants News Corporation, NI Group Limited, and News Group
Newspapers Limited (collectively “Defendants”) make this Ex Parte Application in
order to avoid the premature and potentially unnecessary briefing and consideration
of a frivolous pro se motion to intervene filed by Brad Greenspan. Specifically,
Defendants seek a continuance of the motion to intervene until such time as the
Court rules on Defendants’ Motion to Dismiss the underlying action, which, if
granted, would render moot Greenspan’s motion to intervene and spare the Court
and the parties from the burden of considering and briefing Greenspan’s meritless
and unintelligible motion.
Plaintiff Eunice Huthart (“Huthart” or “Plaintiff”) filed her complaint on June
13, 2013. The suit concerns allegations of voicemail hacking that occurred in the
United Kingdom. Defendants filed a Motion to Dismiss Huthart’s complaint on
September 20, 2013. 2 (See Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 2.)
The Motion to Dismiss came on for hearing on February 24, 2014. (Id.)
Supplemental briefing related to the issue of forum non conveniens—and specifically
whether Huthart could bring her claims in England—was ordered on February 25,
2014 and was concluded in March 2014. (Id.) The matter remains under
submission.
Pro se litigant Greenspan filed a purported motion to intervene and related
papers on May 2, 2014.3 His pleadings were served on counsel for Defendants in
2 Defendants’ Motion to Dismiss refers to the Motion to Dismiss Case Under
FRCP Rules 12(b)(2), 12(b)(6) and for Forum Non Conveniens and supporting papers filed by Defendants on September 20, 2013. See Huthart v. News Corporation et al., Case No. CV 13-4253 MWF (AJWx), Dkt. No. 41.
3 Greenspan’s motion papers consist of a Notice of Motion to Intervene (Dkt. No. 61), a Memorandum in Support (Dkt. No. 62), Declaration of Brad Greenspan in Support (Dkt. No. 63), and a Proof of Service by Mail (Dkt. No. 64), all filed on May 2, 2014. Greenspan additionally served on Defendants’ local counsel a proposed
(cont'd)
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Los Angeles, but not on Defendants’ lead counsel, the Williams & Connolly firm in
Washington, D.C. (Karasik Decl., ¶ 3.) The matter has been set for hearing on June
30, 2014.
Greenspan’s motion to intervene has nothing to do with Huthart’s complaint.
Greenspan does not allege he is the victim of any voicemail hacking or any allegedly
wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik
Decl., ¶ 4.) Rather, Greenspan appears to allege, though the incoherent nature of his
allegations makes it difficult to discern, that he has been harmed by a vast conspiracy
involving everything from allegedly wrongful employment practices by technology
companies like Google, Intel and Yahoo to the bribery of and misconduct by
California State Senators and United States Congressmen. The intervention papers
advance convoluted claims that all of this misconduct is related in some fashion to
News Corp.’s acquisition in 2005 of Intermix Media Inc., which owned and operated
several websites including MySpace. (See Exh. A to Karasik Decl., Greenspan’s
Complaint in Intervention at 3:20-67:24.) This is not the first time Greenspan has
filed claims on that subject: Greenspan was the founder of E-Universe, the
predecessor of Intermix; his claims challenging News Corp.’s acquisition of
MySpace and several other attempts to raise challenges to that transaction have been
dismissed over the years by both state and federal courts. The first dismissal of
Greenspan’s challenges to the MySpace transaction was in 2006. See Greenspan v.
Intermix Media, Inc., Case No. B196434, 2008 WL 4837565 (Cal. App. Nov. 10,
2008)) (affirming 2006 dismissal of individual and shareholder actions brought by
Greenspan challenging the MySpace transaction). The next attempt to challenge the
transaction was rejected in Brown v. Brewer, Case No. 2:06-cv-3731 (C.D. Cal.),
where the federal court in 2010 dismissed Greenspan as a putative class member
________________________ (cont'd from previous page) Complaint in Intervention, attached to the Karasik Declaration, that has not been filed with the Court.
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 6 of 12 Page ID #:1934
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from a shareholder derivative action challenging the merger, and in 2011 denied
Greenspan’s motion to intervene in that matter. (Karasik Decl., ¶ 5; Exhibits B and
C.) Though Greenspan’s involvement in these matters has been concluded for
several years, Greenspan most recently filed a pro se complaint on April 22, 2014 in
the Delaware Court of Chancery, naming News Corp. and twenty other defendants in
a pleading that advances the same or similar conspiracy claims found in the
intervention papers, all tied to the acquisition of Intermix in 2005. See Greenspan v.
News Corp. et al., Case No. 9567 (Del. Ch. April 22, 2014). (Karasik Decl., ¶ 5;
Exh. D.) The apparent purpose of the proposed intervention is to air Greenspan’s
views that hacking incidents in the UK show that News Corp. has engaged in bad
acts—albeit wholly unrelated to those of which he complains. See Dkt. No. 62,
Greenspan Memorandum in Support of Motion to Intervene at 5:1-18.
As detailed below, if Defendants’ pending Motion to Dismiss is granted,
Greenspan’s intervention will be moot. Ex parte relief to postpone Greenspan’s
further pursuit of his incoherent intervention proceeding will promote the interests of
judicial economy and avoid potentially unnecessary proceedings.
II. JUDICIAL ECONOMY IS ACHIEVED BY CONTINUING THE
INTERVENTION MOTION BECAUSE GREENSPAN’S MOTION
WILL BE MOOT IF THE UNDERLYING ACTION IS DISMISSED
The Court may issue ex parte relief extending the time within which an act is
required or allowed to be done upon a showing of good cause. Fed. R. Civ. P. 6(b).
“Good cause” is broadly construed in a manner that affords the Court broad
discretion to manage its calendar. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253,
1259 (9th Cir. 2010); Danjaq LLC v. Sony Corp., 263 F.3d 942, 961 (9th Cir. 2001)
(noting that a court has broad discretion in granting continuances). “[R]equests for
extensions of time made before the applicable deadline has passed should normally .
. . be granted in the absence of bad faith on the part of the party seeking relief or
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prejudice to the adverse party.” Ahanchian, 624 F.3d at 1259. (internal citations
omitted.) Here, the deadline to oppose Greenspan’s intervention has not passed, the
applying Defendants have not acted in bad faith, and there is no prejudice to
Greenspan. Good cause exists for a continuance of Greenspan’s motion to intervene
because it would promote the most efficient use of the Court’s and the parties’
resources. A postponement of the matter would give the court time to rule on
Defendants’ pending motion to dismiss before the parties are forced to incur the cost
of responding to Greenspan’s convoluted motion. If Defendants’ Motion to Dismiss
is granted, Greenspan’s intervention would be moot because a prerequisite for
intervention is the existence of an underlying action. See Hartley Pen Co. v. Lindy
Pen Co., 16 F.R.D. 141, 146 (S.D. Cal. 1954) (“A pending suit within federal
jurisdiction is by definition prerequisite to intervention.”); see also Arakaki v.
Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (intervention inappropriate where
underlying claim dismissed).
An application for a continuance of a hearing is the type of routine
administrative relief that is particularly appropriate on an ex parte basis. See In re
Intermagnetics Am., Inc., 101 B.R. 191, 193-94 (C.D. Cal. 1989) (noting that
“legitimate ex parte applications . . . may be necessary when a party seeks a routine
order” such as adjusting the hearing date of a motion). This Motion simply seeks to
ensure the proper sequencing of motions. There is no prejudice to Greenspan from a
continuance. See Fuller v. Amerigas Propane, Inc., C 09-2493TEH, 2009 WL
2390358 at*1 (N.D. Cal. Aug. 3, 2009) (no prejudice in connection with a short
delay). Indeed, there is no possible prejudice to Greenspan, because he does not
need to intervene in this matter to raise his assertions: he has already filed a lawsuit
in Delaware advancing these very claims. Defendants, by contrast, would be
significantly prejudiced if forced to respond at this time to Greenspan’s motion,
especially if Defendants’ substantive opposition is mooted by the subsequent
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dismissal of the case on Defendants’ pending Motion to Dismiss. See In re Apple
iPhone 3G Products Liab. Litig., C 09-02045 JW, 2010 WL 9517400 at *2 (N.D.
Cal. Dec. 9, 2010) (holding that prejudice to defendants and to the court of moving
forward with proceedings that could be mooted by other proceedings supported a
stay). And in the event that the Motion to Dismiss is denied, Greenspan’s Motion to
Intervene may be properly addressed at that time.4
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4 As noted in the ex parte application, Plaintiffs intend to oppose Greenspan’s
purported motion, and if opposition is required, Defendants will show that Greenspan’s motion fails to state any grounds to intervene, fails to state a cognizable claim, is rife with rambling and frivolous allegations of vast conspiracies, seeks to re-litigate Greenspan’s oft rejected challenges to News Corp.’s acquisition of MySpace almost a decade ago, and is barred by the statute of limitations and by the existence of a pending action in Delaware where Greenspan is advancing the same claims that are the subject of the proposed intervention.
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III. CONCLUSION
Good cause exists for a continuance because a postponement of the
intervention motion would allow the Court to rule on Defendants’ pending Motion to
Dismiss without requiring the parties or the Court to expend time and effort to
respond to a motion that could be rendered moot. Defendants respectfully request
that this Court postpone any hearing on Greenspan’s motion in order to promote
judicial economy and minimize prejudice to Defendants.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 10 of 12 Page ID #:1938
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CERTIFICATE OF SERVICE
I declare that I am over the age of eighteen (18) and not a party to this action.
My business address is 333 South Hope Street, 16th Floor, Los Angeles, CA 90071-
1410.
On May 19, 2014, I served the following document(s): EX PARTE
APPLICATION on the following parties in case CV 13-4253 MWF (AJWx) via
either Notice of Electronic Filing generated by the Court’s CM/ECF system,
pursuant to the Court’s local rules.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.
/s/ Louis A. Karasik Attorney for Defendant
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PROOF OF SERVICE
I, Louis A. Karasik, declare:
I am employed in the County of Los Angeles, State of California. My business address is Alston + Bird LLP, 333 South Hope Street, Sixteenth Floor, Los Angeles, CA 90071. I am over the age of eighteen years and not a party to the action in which this service is made.
On May 19, 2014, I served the document(s) described as EX PARTE
APPLICATION on the interested parties in this action by enclosing the document(s) in a sealed envelope addressed to the parties as listed as follows:
Brad D. Greenspan
264 South La Cienega Blvd. Unit 1216
Beverly Hills, CA 90211
BY MAIL: I am "readily familiar" with this firm's practice for the collection and the processing of correspondence for mailing with the United States Postal Service. In the ordinary course of business, the correspondence would be deposited with the United States Postal Service at 333 South Hope Street, Los Angeles, California 90071 with postage thereon fully prepaid the same day on which the correspondence was placed for collection and mailing at the firm. Following ordinary business practices, I placed for collection and mailing with the United States Postal Service such envelope at ALSTON + BIRD LLP, 333 South Hope Street, Los Angeles, California 90071.
[Federal] I declare under penalty of perjury that the foregoing is true and correct.
Executed on May 19, 2014, at Los Angeles, California.
/s/ Louis A. Karasik Louis A. Karasik
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 12 of 12 Page ID #:1940
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EX PARTE APPLICATION
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Louis A. Karasik (Cal. Bar # 100672) Alston & Bird LLP 333 South Hope Street, 16th Floor Los Angeles, CA 90071-3004 Telephone: (213) 576-1148 Facsimile: (213) 576-1100 Email: [email protected] Brendan V. Sullivan (Pro Hac Vice) Tobin J. Romero (Pro Hac Vice) Joseph M. Terry (Pro Hac Vice) Jonathan B. Pitt (Pro Hac Vice) Williams & Connolly LLP 725 Twelfth Street, N.W. Washington, DC 20005 Telephone: (202) 434-5000 Facsimile: (202) 434-5029 Email: [email protected] Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, Plaintiff, v. NEWS CORPORATION, NI GROUP LIMITED f/k/a NEWS INTERNATIONAL LIMITED, NEWS GROUP NEWSPAPERS LIMITED, and JOHN and JANE DOES 1-10, Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No. CV 13-4253 MWF (AJWx) Honorable Michael W. Fitzgerald DEFENDANTS’ EX PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION OF BRAD GREENSPAN PENDING THE COURT’S DETERMINATION ON DEFENDANTS’ MOTION TO DISMISS [Filed concurrently with Declaration of Louis A. Karasik and [Proposed] Order] Date: TBD Time: TBD Courtroom: 1600
Complaint Filed: June 13, 2013
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 1 of 12 Page ID #:1929
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TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE that Defendants News Corporation, NI Group
Limited, and News Group Newspapers Limited (collectively “Defendants”) hereby
apply ex parte to continue the June 30, 2014 hearing on the pro se motion to
intervene filed on May 2, 2014 by Brad Greenspan (“Greenspan”), pending the
Court’s determination on Defendants’ Motion to Dismiss the underlying action. If
the Motion to Dismiss, which presently is under submission after supplemental
briefing filed by the parties on March 17, 2014, is granted, Greenspan’s intervention
motion will be moot.
As set forth more fully in the accompanying Memorandum of Points and
Authorities and the Declaration of Louis A. Karasik filed concurrently herewith, a
continuance of the hearing and the time for filing any opposition papers by
Defendants regarding Greenspan’s pro se motion will promote judicial economy and
avoid potentially unnecessary proceedings to address the many defects apparent on
the face of Greenspan’s rambling and incoherent pleadings. Greenspan seeks to
intervene to air accusations against California State Senators and United States
Congressman for allegedly participating in vague, undefined conspiracies with
companies such as Google, Yahoo, AOL, JP Morgan and many others, including
News Corp., related in some way to News Corp.’s acquisition of MySpace nearly ten
years ago. If Defendants’ pending Motion to Dismiss is granted, Greenspan’s
motion to intervene will be moot because there will be no underlying action, and thus
no proceeding in which Greenspan might seek to intervene. A postponement may
thus avoid the Court having to hear an unnecessary motion and avoid the necessity of
Defendants responding to the pleadings submitted by Greenspan, promoting judicial
economy for all parties and the Court. A continuance of this matter would not
prejudice Greenspan, particularly since he is pursuing substantially similar claims in
a lawsuit filed in the Delaware Court of Chancery. In contrast, if Defendants were
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 2 of 12 Page ID #:1930
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required to oppose Greenspan’s motion prior to a decision on the Motion to Dismiss,
they would be forced to incur fees and costs to detail the many reasons the pro se
motion fails to state grounds to intervene1—costs that would be unnecessary in the
event that this Court rules that this case should be dismissed under the doctrine of
forum non conveniens.
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This Application is being made pursuant Local Rule 7-19 and this Court’s
courtroom procedures and standing order. Notice of this Application was provided
to Plaintiff’s counsel by telephone call on May 15, 2014, and Plaintiff’s counsel
advises that Plaintiff does not joint the ex parte and intends to oppose the motion to
intervene. (Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 7.) The only
contact information provided in Greenspan’s papers are a mailing address, so
Defendants attempted to provide notice of this Application to Greenspan by
attempting to hand deliver a letter to that address on May 16, 2014. (Karasik Decl., ¶
1 Among other things, Greenspan’s intervention pleadings violate Federal Rule of Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for relief, lack any nexus to the claims pursued by plaintiff Huthart, consist of rambling allegations of conspiracy untethered to any facts or legal theories and are barred by the statute of limitations and the existence of a pending action in Delaware where Greenspan has filed substantially the same disjointed allegations.
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8.) The address provided by Greenspan was a rented mailbox, and we were advised
by the proprietor that it was canceled over a year ago for nonpayment.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Defendants News Corporation, NI Group Limited, and News Group
Newspapers Limited (collectively “Defendants”) make this Ex Parte Application in
order to avoid the premature and potentially unnecessary briefing and consideration
of a frivolous pro se motion to intervene filed by Brad Greenspan. Specifically,
Defendants seek a continuance of the motion to intervene until such time as the
Court rules on Defendants’ Motion to Dismiss the underlying action, which, if
granted, would render moot Greenspan’s motion to intervene and spare the Court
and the parties from the burden of considering and briefing Greenspan’s meritless
and unintelligible motion.
Plaintiff Eunice Huthart (“Huthart” or “Plaintiff”) filed her complaint on June
13, 2013. The suit concerns allegations of voicemail hacking that occurred in the
United Kingdom. Defendants filed a Motion to Dismiss Huthart’s complaint on
September 20, 2013. 2 (See Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 2.)
The Motion to Dismiss came on for hearing on February 24, 2014. (Id.)
Supplemental briefing related to the issue of forum non conveniens—and specifically
whether Huthart could bring her claims in England—was ordered on February 25,
2014 and was concluded in March 2014. (Id.) The matter remains under
submission.
Pro se litigant Greenspan filed a purported motion to intervene and related
papers on May 2, 2014.3 His pleadings were served on counsel for Defendants in
2 Defendants’ Motion to Dismiss refers to the Motion to Dismiss Case Under
FRCP Rules 12(b)(2), 12(b)(6) and for Forum Non Conveniens and supporting papers filed by Defendants on September 20, 2013. See Huthart v. News Corporation et al., Case No. CV 13-4253 MWF (AJWx), Dkt. No. 41.
3 Greenspan’s motion papers consist of a Notice of Motion to Intervene (Dkt. No. 61), a Memorandum in Support (Dkt. No. 62), Declaration of Brad Greenspan in Support (Dkt. No. 63), and a Proof of Service by Mail (Dkt. No. 64), all filed on May 2, 2014. Greenspan additionally served on Defendants’ local counsel a proposed
(cont'd)
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Los Angeles, but not on Defendants’ lead counsel, the Williams & Connolly firm in
Washington, D.C. (Karasik Decl., ¶ 3.) The matter has been set for hearing on June
30, 2014.
Greenspan’s motion to intervene has nothing to do with Huthart’s complaint.
Greenspan does not allege he is the victim of any voicemail hacking or any allegedly
wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik
Decl., ¶ 4.) Rather, Greenspan appears to allege, though the incoherent nature of his
allegations makes it difficult to discern, that he has been harmed by a vast conspiracy
involving everything from allegedly wrongful employment practices by technology
companies like Google, Intel and Yahoo to the bribery of and misconduct by
California State Senators and United States Congressmen. The intervention papers
advance convoluted claims that all of this misconduct is related in some fashion to
News Corp.’s acquisition in 2005 of Intermix Media Inc., which owned and operated
several websites including MySpace. (See Exh. A to Karasik Decl., Greenspan’s
Complaint in Intervention at 3:20-67:24.) This is not the first time Greenspan has
filed claims on that subject: Greenspan was the founder of E-Universe, the
predecessor of Intermix; his claims challenging News Corp.’s acquisition of
MySpace and several other attempts to raise challenges to that transaction have been
dismissed over the years by both state and federal courts. The first dismissal of
Greenspan’s challenges to the MySpace transaction was in 2006. See Greenspan v.
Intermix Media, Inc., Case No. B196434, 2008 WL 4837565 (Cal. App. Nov. 10,
2008)) (affirming 2006 dismissal of individual and shareholder actions brought by
Greenspan challenging the MySpace transaction). The next attempt to challenge the
transaction was rejected in Brown v. Brewer, Case No. 2:06-cv-3731 (C.D. Cal.),
where the federal court in 2010 dismissed Greenspan as a putative class member
________________________ (cont'd from previous page) Complaint in Intervention, attached to the Karasik Declaration, that has not been filed with the Court.
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from a shareholder derivative action challenging the merger, and in 2011 denied
Greenspan’s motion to intervene in that matter. (Karasik Decl., ¶ 5; Exhibits B and
C.) Though Greenspan’s involvement in these matters has been concluded for
several years, Greenspan most recently filed a pro se complaint on April 22, 2014 in
the Delaware Court of Chancery, naming News Corp. and twenty other defendants in
a pleading that advances the same or similar conspiracy claims found in the
intervention papers, all tied to the acquisition of Intermix in 2005. See Greenspan v.
News Corp. et al., Case No. 9567 (Del. Ch. April 22, 2014). (Karasik Decl., ¶ 5;
Exh. D.) The apparent purpose of the proposed intervention is to air Greenspan’s
views that hacking incidents in the UK show that News Corp. has engaged in bad
acts—albeit wholly unrelated to those of which he complains. See Dkt. No. 62,
Greenspan Memorandum in Support of Motion to Intervene at 5:1-18.
As detailed below, if Defendants’ pending Motion to Dismiss is granted,
Greenspan’s intervention will be moot. Ex parte relief to postpone Greenspan’s
further pursuit of his incoherent intervention proceeding will promote the interests of
judicial economy and avoid potentially unnecessary proceedings.
II. JUDICIAL ECONOMY IS ACHIEVED BY CONTINUING THE
INTERVENTION MOTION BECAUSE GREENSPAN’S MOTION
WILL BE MOOT IF THE UNDERLYING ACTION IS DISMISSED
The Court may issue ex parte relief extending the time within which an act is
required or allowed to be done upon a showing of good cause. Fed. R. Civ. P. 6(b).
“Good cause” is broadly construed in a manner that affords the Court broad
discretion to manage its calendar. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253,
1259 (9th Cir. 2010); Danjaq LLC v. Sony Corp., 263 F.3d 942, 961 (9th Cir. 2001)
(noting that a court has broad discretion in granting continuances). “[R]equests for
extensions of time made before the applicable deadline has passed should normally .
. . be granted in the absence of bad faith on the part of the party seeking relief or
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prejudice to the adverse party.” Ahanchian, 624 F.3d at 1259. (internal citations
omitted.) Here, the deadline to oppose Greenspan’s intervention has not passed, the
applying Defendants have not acted in bad faith, and there is no prejudice to
Greenspan. Good cause exists for a continuance of Greenspan’s motion to intervene
because it would promote the most efficient use of the Court’s and the parties’
resources. A postponement of the matter would give the court time to rule on
Defendants’ pending motion to dismiss before the parties are forced to incur the cost
of responding to Greenspan’s convoluted motion. If Defendants’ Motion to Dismiss
is granted, Greenspan’s intervention would be moot because a prerequisite for
intervention is the existence of an underlying action. See Hartley Pen Co. v. Lindy
Pen Co., 16 F.R.D. 141, 146 (S.D. Cal. 1954) (“A pending suit within federal
jurisdiction is by definition prerequisite to intervention.”); see also Arakaki v.
Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (intervention inappropriate where
underlying claim dismissed).
An application for a continuance of a hearing is the type of routine
administrative relief that is particularly appropriate on an ex parte basis. See In re
Intermagnetics Am., Inc., 101 B.R. 191, 193-94 (C.D. Cal. 1989) (noting that
“legitimate ex parte applications . . . may be necessary when a party seeks a routine
order” such as adjusting the hearing date of a motion). This Motion simply seeks to
ensure the proper sequencing of motions. There is no prejudice to Greenspan from a
continuance. See Fuller v. Amerigas Propane, Inc., C 09-2493TEH, 2009 WL
2390358 at*1 (N.D. Cal. Aug. 3, 2009) (no prejudice in connection with a short
delay). Indeed, there is no possible prejudice to Greenspan, because he does not
need to intervene in this matter to raise his assertions: he has already filed a lawsuit
in Delaware advancing these very claims. Defendants, by contrast, would be
significantly prejudiced if forced to respond at this time to Greenspan’s motion,
especially if Defendants’ substantive opposition is mooted by the subsequent
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dismissal of the case on Defendants’ pending Motion to Dismiss. See In re Apple
iPhone 3G Products Liab. Litig., C 09-02045 JW, 2010 WL 9517400 at *2 (N.D.
Cal. Dec. 9, 2010) (holding that prejudice to defendants and to the court of moving
forward with proceedings that could be mooted by other proceedings supported a
stay). And in the event that the Motion to Dismiss is denied, Greenspan’s Motion to
Intervene may be properly addressed at that time.4
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4 As noted in the ex parte application, Plaintiffs intend to oppose Greenspan’s
purported motion, and if opposition is required, Defendants will show that Greenspan’s motion fails to state any grounds to intervene, fails to state a cognizable claim, is rife with rambling and frivolous allegations of vast conspiracies, seeks to re-litigate Greenspan’s oft rejected challenges to News Corp.’s acquisition of MySpace almost a decade ago, and is barred by the statute of limitations and by the existence of a pending action in Delaware where Greenspan is advancing the same claims that are the subject of the proposed intervention.
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III. CONCLUSION
Good cause exists for a continuance because a postponement of the
intervention motion would allow the Court to rule on Defendants’ pending Motion to
Dismiss without requiring the parties or the Court to expend time and effort to
respond to a motion that could be rendered moot. Defendants respectfully request
that this Court postpone any hearing on Greenspan’s motion in order to promote
judicial economy and minimize prejudice to Defendants.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
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CERTIFICATE OF SERVICE
I declare that I am over the age of eighteen (18) and not a party to this action.
My business address is 333 South Hope Street, 16th Floor, Los Angeles, CA 90071-
1410.
On May 19, 2014, I served the following document(s): EX PARTE
APPLICATION on the following parties in case CV 13-4253 MWF (AJWx) via
either Notice of Electronic Filing generated by the Court’s CM/ECF system,
pursuant to the Court’s local rules.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.
/s/ Louis A. Karasik Attorney for Defendant
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PROOF OF SERVICE
I, Louis A. Karasik, declare:
I am employed in the County of Los Angeles, State of California. My business address is Alston + Bird LLP, 333 South Hope Street, Sixteenth Floor, Los Angeles, CA 90071. I am over the age of eighteen years and not a party to the action in which this service is made.
On May 19, 2014, I served the document(s) described as EX PARTE
APPLICATION on the interested parties in this action by enclosing the document(s) in a sealed envelope addressed to the parties as listed as follows:
Brad D. Greenspan
264 South La Cienega Blvd. Unit 1216
Beverly Hills, CA 90211
BY MAIL: I am "readily familiar" with this firm's practice for the collection and the processing of correspondence for mailing with the United States Postal Service. In the ordinary course of business, the correspondence would be deposited with the United States Postal Service at 333 South Hope Street, Los Angeles, California 90071 with postage thereon fully prepaid the same day on which the correspondence was placed for collection and mailing at the firm. Following ordinary business practices, I placed for collection and mailing with the United States Postal Service such envelope at ALSTON + BIRD LLP, 333 South Hope Street, Los Angeles, California 90071.
[Federal] I declare under penalty of perjury that the foregoing is true and correct.
Executed on May 19, 2014, at Los Angeles, California.
/s/ Louis A. Karasik Louis A. Karasik
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 12 of 12 Page ID #:1940
FtLED
Brad Greenspan, Pro Se 264 South La Cienega Suite 1216
I
Beverly Hills, CA 90211 u
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) )
Plaintiff, ) V. )
)
)
)
)
NEWS CORPORATION, NI GROUP )
LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ), LIMITED, and JOHN and JANE ) DOES 1-10 )
)
Defendants. ) )
)
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Case No. CV 13-4253 MWF
Honorable Michael W. Fitzgerald
MEMORANDUM IN SUPPORT AND MOTION FOR INTERVENTION
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 1 of 41 Page ID #:1883
1
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3 INDEX
4 0- CASE LAW CITED pg. 3
6 I- INTRODUCTION pg. 4
7 11-BACKGROUND ph. 4
8
9 III CONCLUSION p. 22
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PLAINTIFFS’ MOTION TO INTERVENE
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j
I CASE LAW CITED See Luther v. Countrywide Homes Loans Servicing LP, 533 F. 3d 1031, 1033-34 pg. 7(9th
2 Cir. 2008) Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) pg. 10
3 Donnelly v. Glickman, 159 F. 3d 405, 409 (9th Cir. 1998) pg.] 0 Northwest Forest Res. Council v. Glickman, 82 F. 3d 825, 836 (9th Cir. 1996) pg.]]
4 United States v. Washington, 86 F. 3d 1499 (9th Cir. 1996) pg.]] Engra, Inc. v. Gabel, 958 F.2d 643, 644 (5th Cir. 1992). Pg. 12 Northwest Forest Resource Council, 82 F. 3d at 837. Pg. 12
6 Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993) pg. 12 Donnelly, 159 F. 3d at 409; pg. 12
7 U.S. v Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004) pg. 12 California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir. 2006). Pg. 13
8 Forest Conserv. Council v. U.S. Forest Service, 66 F. 3d 1489, 1494 (9th Cir. 1995) pg. 13
9 Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998). Pg.13 Yniguez v. Arizona, 939 F.2d 727, 735 (9th Cir. 1991). Pg.13
10 Southwest Ctr. for Biological Diversity, 268 F. 3d at 822 pg. 13 Sierra Club, 995 F. 2d at 1486 pg. 14
11 California v. Tahoe Reg’l Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)). Pg. 14
12 Crawford v. Equfax Payment Services, 201 F. 3d 877 (7th Cir. 2000). Pg. 15 M & I. Corp. v Von Clemm, and Atlantic Refining Co. v Standard Oil Co., pg. 15
13 both supra; Wolpe v Poretsky, 144 F2d 505 (DC Cir 1944), cert den 323 US 777, 85 L Ed 22, 61 S Ct 115, 132 ALR 741 (1944); pg. 15
14 Ford Motor Co. v Bisanz Bros., 249 F2d 22 (8th Cir 195 7) pg. 15
15
16 Annot 84 ALR2d]4]2 (1962) pg. 15
17 Defenders of Wildlife v. Johanns, No. C 04-4512 PJH, 2005 WL 3260986, at pg. 21 *8 (ND. Cal. Dec. 1, 2005))
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26 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
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28 PLAINTIFFS’ MOTION TO INTERVENE
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1 MOTION TO INTERVENE
2
INTRODUCTION
3
4 1. Pursuant to Federal Rule of Civil Procedure 24(a), Plaintiffs
5 ("Intervenor") move to intervene. In the alternative, Plaintiffs moves to intervene
6 permissively as defendants pursuant to Rule 24(b).
7 BACKGROUND
8
9 2. Plaintiff seeks permission to join the litigation to protect interests,
10 which may not be adequately protected without involvement of Plaintiff.
11
12 New evidence disclosed for the first time to public May 2013 in the
13 Hitech Class Action Case 5:1102509: specifically document
14 confirms for first time and proves Google had additional undisclosed illegal bilateral
15 16 agreements in place with AskJeeves,TimŁ/Wamer AOL, and other potential corporate
17 entities as of March 6, 2005. Such partners and agreements that existed including
18 between AskJeeves, Inc, its surviving acquiror IAC Corp., and TimeWarner/AOL, and 19 20 Google are uncontested to have existed 6ut were not previously identified by
21 Defendants and HiTech Federal Class Action Plaintiffs had not previously
22 alleged or known to have existed and which violated Federal antitrust statues. All three I 23 24 companies fraudulently concealed the agreements and failed to disclose them in their
25 SEC filings, violating security law and breaching their fiduciary obligations Directors
26 and officersall companies had. 27
28 4
PLAINTIFFS’ MOTION TO INTERVENE
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I
1 3. Plaintiff was injured in their business or property by reason of
2
A) Defendants, ongoing, systematic and fraudulent scheme to maximize financial
3 4 gain Facilitated by the conduct of Google, and Intel, Objective unlawful scheme was
5 to obtain billions of dollars in proceeds and profits from i. rigging the sales of
6 competing internet assets at below fair market prices ii) benefitting from profits
7 8 generated from illegal phone hacking iii) benefitting and trading confidential
9 information received from the illegal phone hacking iv) covering up the illegal activity
10 using their media properties iv) extorting silence from victims and/or government
11 12 regulators including bribing police, UK Government ministers, United States Senators,
13 California State Senators and California State Cdgressmen and Congresswomen
14 and United States Congressmen and Congress serving women, and several related and 15 16 affiliated lobby qualified law firms, and other agency iritermediators, v) offering ad
17 credits and ad promotion in kind without disclosing such transactions to the public or
18 accounting for them in their SEC GAAP Accounting, and government ministers. 19
20 4. Without intervention, plaintiff will be further harmed. The intervention i 21 22 also necessary to raise additional matters, facts, and Claims while providing to the
23 supporting evidence. The claims were created from a behind the scenes series of
24 meetings and communications since late 2003 thru May 1, 2014 between: i) 25 26 Intermix/MySpace, Inc. ii) News Corp iii) Yahoo iv) Google v) MSN, vi) AskJeeves
27 vii) JP Morgan viii) lac Corp ix) Time Warner, Inc.,x) Aol Inc. xi) Fox Interactive xii)
28
5
PLAINTIFFS’ MOTION TO INTERVENE
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1 I Fox xiii) Washington Post
2 3 I VICTIM OF SAME "BROAD CONSPIRACY"
4
5. Submitted herein and by reference and thus such facts and findings
5 6 will not be re-litigated in these pleadings unless Defendants disputes the accuracy
7 of the rulings and court orders and estoppel created by such settlements entered into by
8 Defendants. This conspiracy included: (1) agreements allowing AskJeeves Director
9 10 Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below fair market
11 value using His RedPoint fund where he is managing Director; (2) agreements allowing
12 Google, TimeWarner/AOL, News Corporation, AskJeeves, IAC, and other defendants
13 14 to collude to gain economic benefits by i) fabricating prior sale of MySpace stock
15 backdated agreement in November 2004 and ii) delaying closing of a competitive
16 MySpace search engine auction for a new commercial search engine agreement in the
17 18 months leading up to News Corporation acquiring 100% of eUniverse in September
19 2005; (3) agreements allowing Google to ensure its $4.4 Billion dollar August 2005
20 secondary is completed by tying up the fast growing online audience of MySpace, 21 22 significantly growing its share of online search engine advertising while shrinking
23 share of main rival #2 Yahoo; (4) agreements allowing News Corporation to purchase
24 MySpace.com at below fair market value, growing its market valuation and generating 25 26 billions in incremental profits and a massive online audience to seed new online assets
27 for years to come, while preventing a competitive auction with main rival Viacom.
28 6
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 6 of 41 Page ID #:1888
S
1 ii. The intended and actual effect of these agreements was to fix and
2 suppress competition. Defendants conspiracy and agreements restrained trade and are
3 per se unlawful under federal law.
4 Plaintiffs seek injunctive relief and damages for 5
6 6. Pursuant to private right of action under antitrust Federal law, more
7 then 5000 shareholders of MySpace parent company, former publicly traded e
8 Inc. "EIJNI" are entitled to a private cause of action for damages suffered as a result of 9
10 an Antitrust conspiracy among Defendants.
11
7. According to SEC documents, Brad D. Greenspan incorporated
12 Entertainment Universe, Inc. ("EUNI"). On April 14, 1999, eUniverse completed 3 w 13 14 reverse merger arranged by first CEO, main operator and principal control officer
15 under SEC Sarbanes Oxley federal laws, serving as Chairman and CEO thru October
16 30, 2003 when as victim of fraud set in motion by Google, refused to participate in 17 18 Defendants further fraud against and including public shareholders and petitioner
19 Resigned as Officer, and in December from the Board of Directors, which is publicly
20 Stated forth in the eUniverse see SEC Filings including 8k, acquired along with its 21 22 100% owned and controlled Myspace.com website assets that News Corporation
23 acquired after misleading shareholders to vote to approve such transaction at the end
24 of September 2005.
25 8. The credibility of News Corp’s Board including Kleiner Perkins Partner
26 Perkins and Intel Director Thornton has greatly diminished between 2005 and 2012 27
28
’1
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 7 of 41 Page ID #:1889
t )
1 fueled by its involvement in illegal phone hacking in the UK and the incredible effort
2 made to cover up and deny the deeds for years before finally in 2012, admitting indeed
3 the company had misled the public. Most recently CEO Rupert Murdoch personally
4 donated over $1 million dollars to charity as part of a $6 million dollar single settlemeni
5 with the family of a UK 13 year old girl who had gone missing and was murdered whil
6 also falling victim to one of News Corp’s operatives hacking her phone and erasing’
7 voice mail evidence in the process of trying to find fresh angles for new stories.
8 Its been widely reported that the UK MET has over 5000 suspected victim’s of
9 phone hacking from News Corp and while only approximately 200 of the suspected
10 victims have been contacted by police to date, already there are 60 lawsuits in the UK
11 from News Corp phone hacking victims.
12
i. The credibility of Google largest shareholder Doerr Director of Defendant
13 is very poor historically and he was forced to abandon a Director seat at Apple, Inc. in 14 15 2010 after he was threatened with a complaint by the FTC. Doerr employee Reported
16 the following acts he is a current defendant in a Sexual harassment lawsuit pending
17 in San Francisco State Court., 18
19 9. News Corporation, struck an undisclosed bilateral agreement with at
20 least Google, on or around September 30, 2005 before the Myspace and parent
21 corporation eUniverse operating in California (later thru name change operated as 22 23 Intermix, Inc) were acquired and ceased to be publicly traded.
24
10. News Corporation which operates Fox and Fox Interactive among other
25 subsidiaries is also alleged and believed to have struck related arrangements or
26 27 agreements with Ask Jeeves, Inc., IAC Corp, or TimeWarner/AOL, Inc. during
28 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 8 of 41 Page ID #:1890
j
1 such time. 2
11. At least one Officer and/or Director of News Corporation and Go ogle
4 have admitted to a second bilateral agreement existing as of late 2006,which
5 Therefore defendants agreements already in place
6 for not poaching each other’s employees which included Google, AskJeeves, and
7 8 TimeWarner/AOL formed around existing commercial online advertising
9 agreements to provide and promote Google’s online search product. News Corporatio
10 11 was merely telling a fabricated story of its 2005 agreement with Google in
12 the 2006 published story by its own employee it got 3rd party publisher to distribute
13 globally, "Stealing MySpace", which it recounted its deal with Google, Kleiner Perkins
14 15 Partner Doerr on Google Board with Perkins working or representing News
16 12. During this period, Google was in need of new commercial partners
17 to help it grow. Google’s main focus was finding or securing new partner companies
18 19 that had significant number of unique visitors coming to their owned website properties
20 i. Deal #1: Commercial Ad Sense Pilot Partner Ad Buy and Endorsement permission as part of commercial $20,000 purchase made by Google on or around
21 January 2003, became aware that Greenspan was Chairman and CEO or the 22
principal executive officer by or before February 2003. Google negotiated and 23 consummated its first direct agreement with eUniverse February 2003. Google had grea 24 success after target of Deal#1 profits emerged shortly after eUniverse and Greenspan
25 agreed to deal and endorsement.
26 ii. Deal #2: Commercial Search:
27
28 .9
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 9 of 41 Page ID #:1891
1 at least two of Google’s top business development executives thru 2009, Gerber, Morris, worked or contacted petitioner directly via email in
2 attempting to consummate a direct commercial search engine online
3 advertising agreement. Petitioner opted to terminate Google discussions after announcing
4 execution of a Commercial Search agreement with Yahoo in late October
5 2003, and launch of its SirSearch.com consumer facing brand by and for benefit of eUniverse and its 100% owned MySpace division, launched
6 August 2003 but not announced to public until February 2004.
7
8
9 I. Leal Standard for a Motion to Intervene
10 14. Petitioner is entitled to intervention as a matter of right under
11 12 Federal Rule of Civil Procedure 24(a)(2). Rule 24(a)(2) provides that:
13 "Upon timely application anyone shall be permitted to intervene in an action, when the applicant claims an interest relating to
14 the property or transaction which is the subject of the action and the
15 applicant is so situated that the disposition of the action may as a practical matter impair, or impede the applicant’s ability to protect that
16 interest, unless the applicant’s interest is adequately represented by
17 existing parties. Fed R. Civ. P.24(a)"
18 The Ninth Circuit construes Rule 24 liberally in favor of movants for
19 20 intervention. See Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (citing
21 Donnelly v. Glickman, 159 F.3d 405, 409 (9th Cir. 1998)). "Courts are guided primaril)
22 by practical and- equitable considerations." Id. 23 1 When considering a motion to intervene, the court "must accept as true the non-conclusory 24 allegations in the motion." Reich v. ABC/York-Estes Corp., "A motion to intervene as a matte 25 of right, moreover, should not be dismissed unless it appears to a certainty that the
26 intervener is not entitled to relief under any set of facts which could be proved under the
27 complaint." Id. (citing Lake Investors Dcv. Group v. Egidi Dcv. Group,).
28 10
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 10 of 41 Page ID #:1892
1 15. For reasons set forth herein, Intervenor satisfies requirements of
2 F.R.C.P 24(a)(2) to intervene as a matter of right in present action.
4 Intervenor’s Motion to Intervene is Timely.
5 16. In considering the timeliness issue, courts consider three factors: (i) the
6
7 stage of the proceeding at time the applicant seeks to intervene; (ii) prejudice to
8 the existing parties from applicant’s delay in seeking leave to intervene; and (iii) any
9 10 reason for the length of delay in seeking intervention (how long the prospective
intervenor knew or reasonably should have known of her interest in the litigation). See
12 United States v. Washington, 86 F.3d 1499 (9th Cir.1996); Engra, Inc. v. Gabel, 958
13
14 F.2d 643, 644 (5th Cir. 1992).
15 17. Intervention is timely because other Plaintiffs or those who
16 believe they are or should be have recently filed briefs as
17 18 allowed by the court. After these pleadings were reviewed Intervenor came to realize
19 certain facts and discovery exist that allow certain new claims that would greatly
20 benefit all other Plaintiffs. There are also new issues and matters which the 21 22 court has not engaged in yet.
23 18. Defendants will not be prejudiced by the intervention, as they already are
24 on notice as to the claims alleged against them and furthermore, defendants have 25 26 intentionally concealed discovery, documents, and emails from both existing Plaintiff
27
28 11
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 11 of 41 Page ID #:1893
I
and Plaintiff seeking to intervene. Further, Intervenor shares same claims as the currei 2
Federal Plaintiff EH for Intervening Plaintiff to be consolidated to share its recovered
4 pieces of information lost for Existing Plaintiff from result of Defendant’s Fraudulent
5 concealment And newly discovered evidence and facts from the UK criminal trials
6 of 10 News Corporation executives including the CEO’s "surrogate" daughter and
8 Ex-Editor and President of Defendant’s #1 and #2 news publications for CEO
9 To interface with and retain control of such editor run divisions of the GAAP
10 11 Aggregating public issuer, News Corporation, makes this motion to intervene timely.
12 For example, defendants have obstructed justice by eliminating Mr. Greenspan as
13 14 a fact/expert witness after defendants struck an arrangement with class counsel in May
15 2009 to destroy the value of Class’s federal case and upside in Brown V. Brewer.
16 However, by simply toggling in the previously lost Rule 701 Damage Report,
17 18 There is now produced evidence of $32+ billion in earnings and credits that
19 News Corporation received benefit of thru a September 2005 acquisition of 100%
20 Of Intermix, inc. (formerly eUniverse, Inc.) holder of 100% of Myspace.com and its
21 data and user future value.
22
23 Defendant would seek to limit damages to Plaintiff EH and other
24 Victims based on its published and formerly disclosed to be accurate financials.
25 26 This evidence would be sought or required to be seen by future Jury that Plaintiff EH
27 Requested or that Plaintiff would receive benefit of if filing this claim as independent
28 12
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 12 of 41 Page ID #:1894
1 action in Federal Court.
2
3 News Corporation informing Victims and litigants like EH, that is actually earned
4 an additional $32 billion or more from a transaction News Corporation engineered
5 In 2005 at the same time as entering into and facilitating the criminal acts that 3
6 7 employees have admitted were criminal against EH and thousands of other
8 entertainment former employees, consultants, or agents during 2005.
9 10 And that News Corporation had taken special accounting and unlawful accounting
services on and paid for such services to the same service providor, Ernst and Young
12 and Hogan Hartson Law LLC and Hogan Lovell Law 1LC, and such earnings
13 14 previously hidden, could thru Court accepting Intervention of new Plaintiff
15 and allowing (Exhibit #1: Rule 701 Damage Report) represents the fact
16 that News Corporation benefited more then most companies thru digital sales of its
17 18 products between 2005-2014. Its digital products could only be sold by being created
19 with the payments to, hiring, and participation of Actors like Brad Pitt and
20 his wife actress who hired and retained Plaintiff EH during 2005 and 2006 at the very 21 least its uncontested. Because News Corporation sought to maximize profits
22 by creating schemes to bypass the economic limits of the cards he was dealt
23 24 as CEO of News Corporation by late 2004, Rupert Murdoch was scared
25 of losing control and of being ousted by Directors including Perkins and
26 Dinh, later Hurd helped further bully and control the growth of bribery 27
28 13
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 13 of 41 Page ID #:1895
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And hacking as Murdoch began to try to fade out of scene with Acquisition
Of Dow Jones and letting his right hand Les Hinton, the Halderman to Nixon
I FRAUDULENT CONCEALMENT & EMAIL & DISCOVERY SPOILATION
19. Defendants have omitted key discovery previously that caused key
I evidence and facts to be fraudulently concealed. The fraudulent concealment includes
affirmative acts. Therefore, tolling would not take place until the fraudulent
concealment is fully disclosed. 7th Circuit Baker v. F&F Investment, 420 F.2d 1191
(7th Cir. 1970), cert. den., 400 U.S. 821 (1970) (self-concealing conspiracy
demonstrates fraudulent
concealment) (dictum) United National Records, Inc. v. MCA, Inc., 609 F.Supp. 33
(N.D. Ill. 1984) (denial of wrongdoing and false statements regarding price increase
sufficient to establish fraudulent concealment).
Therefore, when comparing the impact of fraudulent concealment by Defendants
And the late period even at the time of Settlement being rejected, the Court has allowed
Intervention for Class Action interventions. 2
Intervenor has a significantly protectable interest in subject matter of the action.
20. Intervenor absolutely can claim "an interest relating to the property or
transaction that is the subject of the action." Fed. R. Civ. Proc. 24(a)(2). Intervenor was
2 (quoting Agretti, 982 F.2d at 247); see also Alümax Mill Prods.v.Congress Fin. Corp., (allowing nonsettling defendant to challenge a partial settlement that dismissed with prejudice its cross-claims and stripped it of Indemnity contribution rights).
14
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 14 of 41 Page ID #:1896
1 the largest common stock shareholder and an officer and Director thru December 10,
2 2003. "It is generally enough that the interest [asserted] is protectable under some law,
3 and that there is a relationship between the legally protected interest and the claims at
4 issue." Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993);
6 The Ninth Circuit has "taken the view that a party has a sufficient interest for
7 8 intervention purposes if it will suffer a practical impairment of its interests as a result of
the pending litigation." California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir.
10 2006).
11
12 21. Intervenor will lose his chance to prove he was harmed by defendant’s
13 newly disclosed illegal bilateral agreements struck with AskJeeves, Inc. in 2005 and/or
14 Google in 2006 that was part of HiTech illegal antitrust conspiracy network of co-
15 16 conspirators and defendants including Intel and Google.
17 22. Plaintiff-Intervenor has a special interest in presenting evidence that will help
18 19 Court and existing Plaintiff. Defendants have also made a significant effort to
20 defame intervenor and continue to this day. Includes lying and misleading the public
21 about the origins of MySpace.com and passing off credit to employees of MySpace.corr 22 23 instead of the management at the time MySpace.com was created in August 2003 which
24 was led by Intervenor. Defendants have and will continue to cause massive damage to
25 intervenor thru Defendant’s false claims spread thru News Corp 26 27 properties and efforts to defame Intervenor. Therefore Intervenor will continue to be
28 15
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 15 of 41 Page ID #:1897
1 damaged unless the new claims, evidence and matters presented in these pleadings are 2
equitably disposed of See Forest Conserv. Council v. U.S. Forest Service, 66 F.3d
4 1489, 1494 (9thCir. 1995)
5 Intervenor’s Interests Would Be Substantially Prejudiced
6 23. To intervene, a movant must show the disposition of the action may "as a
8 practical matter impair or impede" the ability to protect movant’s interest, unless the
9 interest is adequately represented by existing parties. Fed. R. Civ. Proc. 24(a)(2);
10 11 Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998).
12 24. Intervenor Brad Greenspan will lose the ability to protect movant’s interest
13 14 as victim of California Privacy laws and State Constitution.
15 25. Intervention is appropriate where existing parties do not adequately
16 represent the Intervenors’ interests. Donnelly, 159 F.3d at 409 (citation omitted). The
17 18 Ninth Circuit considers three factors in determining the adequacy of representation:
19 "(1) whether the interest of a present party is such that it will undoubtedly make all of a
20 proposed intervenor’s arguments; (2) whether the present party is capable and willing to
21 22 make such arguments; and (3) whether a proposed intervenor would offer any necessary
23 elements to the proceeding that other parties would neglect." Arakaki, 324 F.3d at 1086
24 (citing California v. Tahoe Reg’l Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)). 25
26 EVIDENCE OF DEFENDANTS $32 PLUS BILLION IN BURIED PHONE 27 HACKING PROFITS historical context as Rule 701 lay witness to benefit Class
28 16
PLAINTIFFS’ MOTION TO INTERVENE
I] Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 16 of 41 Page ID #:1898
I Members
2 26. Intervenors will offer perspectives and knowledge that the existing Plaintiff
3 and Defendants are likely to lack, overlook, or undervalue. "The court also may find th
4 a proposed intervenor’s interests are not adequately represented where the intervenor
6 would bring a perspective none of the other parties to the litigation have." Defenders o
7 Wildlife v. Johanns, No. C 04-45 12 PJH, 2005 WL 3260986, at *8 (N.D. Cal. Dec. 1,
8 2005)) (citation omitted); 1994) 3.
10 The Court should grant intervention because "the magnitude of this case is such
11 that intervention will contribute to the equitable resolution of this case." See Kootenai
12 13 Tribe. The early presence of interveners may serve to prevent errors from creeping into
14 the proceedings, clarify some issues, and perhaps contribute to an amicable settlement.
15 16 Postponing intervention in the name of efficiency until after the original parties have
17 forged an agreement or have litigated some issues may, in fact, encourage collateral
18 attack and foster inefficiency. See Kleissler v. U.S. Forest Serv. & also Forest
19 Even if the Court finds Intervenor is not entitled to intervene as a matter of
20 right, the Court should exercise its discretion and permit intervention
21
22 27. A court may grant permissive intervention whenever the movant "has a
23 claim or defense that shares with the main action a common question of law or fact,"
24 and when the intervention would not "unduly delay or prejudice the adjudication of the
25 See Spangler v. Pasadena Board of Education, (the court may consider whether interveners "will
26 significantly contribute to the full development of the underlying factual issues in the Suit and the just
27 and equitable adjudication of the legal questions presented.")
28 17 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 17 of 41 Page ID #:1899
1 original parties’ rights." Fed. R. Civ. P. 24(b). As explained above, Intervenor meets all
2 of these requirements. Intervenor is in an analogous posture, and like appellants in
4 Smoke v. Norton, has satisfied the requirements for intervention as of Right under Rule
5 24(a)(2) and for permission intervention under Rule 24(b)(2).
6 28. When considering a motion to intervene, the court "must accept as true
8 the non-conclusory allegations in the motion." Reich v. AB6’/York-.Estes Corp., 64 F.3d
9 316,321 (7thCir. 1995).
10 29. Permissive intervention is also justified because Intervenor’s participation
12 will facilitate an equitable result. See Spangler v. Pasadena Board of Education, 28 552
13 14 F.2d 1326, 1329 (9th Cir. 1977) (the court may consider whether intervenors "will
15 significantly contribute to the full development of the underlying factual issues in the
16 suit and the just and equitable adjudication of the legal questions presented.").
17 18 Intervenor is needed to provide the full facts which do not exist in the current pleadings’
19 The Court should grant intervention because "the magnitude of this case is such
20 that intervention will contribute to the equitable resolution of this case." Kootenai Tribe
21 22 313 F.3d at 1111. The early presence of intervenors may serve:
23 i) to prevent errors from creeping into the proceedings, clarify some issues, and
24 ii) perhaps contribute to an amicable’ settlement. 25 26 Postponing intervention, encourages collateral attack and foster inefficiency.
27 (see Kleissler v. U.S. Forest Serv. ,157 F.3d 964, 974 (3d Cir. 1998);
28 18
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 18 of 41 Page ID #:1900
1 30. Motion for Leadership
2 Motion for Leadership Memorandum and Memorandum in Support Class Certificate
4 will be submitted to the Court by June 30, 2014.
5 III. 24(b) LEGAL ARGUMENT
6
7 The Court should allow the proposed Intervenor to join as a Co-Plaintiff in the action. Federal Rule of Civil Procedure 24(b) provides that:
8 31. Rule 24(b) allows permissive intervention if three grounds are met: (i) the
10 intervenor shows an independent ground for jurisdiction; (ii) the motion is timely; and
11 (iii) there exists a common question of law and fact between the intervenor’s claim an(
12 13 the main action. See Corner v. Cisneros, 37 F.3d 775, 801 (2d Cir. 1994). See German
14 v. Federal Home Loan Mortgage Corp., 896 F. Supp. 1385, 1391 (S.D.N.Y. 1995) ("Tb
15 16 Rule is to be construed liberally");
17 (1) There Is An Independent Ground For Jurisdiction
18 32. The Proposed Intervenor has claims against one or more same defendants
19 that arise under the federal antitrust laws, these claims are identical in all material
20
21 respects to those alleged in the current Complaint in those actions in which intervention
22 is sought. Claims happen also during same 2003-2006 timeline
23 24 Therefore, pursuant to 28 U.S.C. § 133 1(a), the Court has subject-matter
25 jurisdiction over the claims of the Proposed Intervenor.
26
27 (2) There Exist Common Questions Of Law And Fact Between The Intervenors’
28 19 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 19 of 41 Page ID #:1901
1 Claims And The Underlying Actions
2 33. The Proposed Intervenor claims are based upon same
4 violations of federal law as the underlying action. Thus, it is
5 indisputable that the intervenors’ claims and the claims asserted in the underlying
6 actions have many common -- indeed identical -- questions of law and fact.
8 Diduck v. Kaszycki & Sons Contractors, Inc., 149 F.R.D. 55, 59 (S.D.N.Y. 1993)
9 10 (intervention granted where "the intervenor’ s claims raise identical questions of law
and fact to those currently before the Court");
12 34. A court may grant permissive intervention whenever the movant "has a clam
13 or defense that shares with the main action a common question of law or fact," and
14
15 when the intervention would not "unduly delay or prejudice the adjudication
16
17 of the original parties’ rights." Fed. R. Civ. P. 24(b). As explained above, Intervener
18 meets all of these requirements. Intervener is in an analogous posture, and like
19 20 appellants in Smoke v. Norton, has satisfied the requirements for intervention
21 as of Right under Rule 24(a)(2) and for permission intervention under Rule 24(b)(2).
22 Indeed, as Mayfield makes clear, one may challenge a settlement agreement to which h
23 24 is not a party if the agreement will cause him" ’plain legal prejudice,’ as
25 when ’the settlement strips the party of a legal claim or cause of action.’ "Mayfield, 985
26 F.2d at 10933 Under the discretionary standard, Intervener’s burden is far lower than tha
27
28 20
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 20 of 41 Page ID #:1902
V
1 required for intervention as a matter of right. See Defenders of Wildlife, see also
2 I Northwest Forest Res. Council.
3
4 (3) Policy Considerations In Class Actions Strongly Favor Granting Intervention
5 I Motions
6
7 35. In class actions, intervention is "highly desirable" "to ensure adequate class
8 representation." Triefv. Dun & Bradstreet Corp., 144 F.R.D. 193, 202 (S.D.N.Y. 1992)
9 (rejecting defendants’ argument that intervention was untimely).
10
11 The decision in Shields v. Washington Bancorporation, Civ. A. No. 90-110 1,
12 1992 WL 88004 (D.D.C. Apr. 7, 1992), is instructive. In Shields, the court denied a
13 motion for class certification because the plaintiff was not an adequate class
14
15 representative. Id. at *1. Subsequently, a new plaintiff moved to intervene as the class
16 plaintiff. Id.
17
18 36. In this case, failing to pursue immediate intervention and insertion of new
19 evidence and matters and testimony would harm existing Plaintiff and thousands of
20 other Absentee Class members substantially.
21
22 It also prevent Intervenor from taking advantage of Federal anti-
23 retaliatory whistleblower statues and protections petitioner is due. The impairment to
24 Intervenor’s interest from the Court’s ruling if intervention is not granted is sufficient
25 26 to qualify for intervention as of right.
27 37. The Intervenor is willing to be represented by counsel f so "undue delay,
28 21
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 21 of 41 Page ID #:1903
complication, or procedural difficulty remain unlikely." 2
McNeill, 719 F. Supp. at 250; see also German v. Federal Home Loan Mortgage Corp.,
4 899 F. Supp. 1155, 1166-67(S.D.N.Y. 1995)
5 IV. CONCLUSION
6 38. For the reasons described above, Intervenor respectfully requests the Court
7 8 grant The motion to intervene as a matter of right pursuant to Rule 24(a), or, in the
9 alternative, permissively pursuant to Rule 24(b) and approve the order attached herein.
10 39. The Intervenor further respectfully requests the Court grant in such
12 motion, the right to serve the Complaint in Intervention (Exhibit #2) , Motion for
13 Partial Summary Judgment (Exhibit #3) , ,and Motion for Preliminary 17200 Injunction
14 15 and/or Motion of Contempt for Violation 2006 California State Attorney 17200
16 Permanent Injunction entered into consent decree on behalf of Defendant News
17 Corporation with State Attorney (Exhibit #4) related and precedential rulings and
18 19 briefings attached as herein.
20 DATED: May 2, 2014
21 Respectfully submitted,
Brad D. Greenspan, Pro Se 25 264 South La Cienega Blvd. 26 Suite 1216 27 Beverly Hills, CA 90211
28 22
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 22 of 41 Page ID #:1904
1
2 EXHIBIT #1 3 Rule 701 Damage Report
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PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 23 of 41 Page ID #:1905
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE GREENSPAN,
) C.A. No. 9567-ME Plaintiff, )
V. )
NEWS CORPORATION, et at Defendants
RULE 701 DAMAGE REPORT
1
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 24 of 41 Page ID #:1906
Cases Cited pg.3
I INTRODUCTION pg. 4
II OVERVIEW OF ASSIGNMENT pg. 6
SUMMARY: $32.453 Billion in damages suffered by Class Members
III TRANSACTION BACKGROUND pg. 6
IV COMPANY BACKGROUND 12g.6
V INDUSTRY ENVIRONMENT IN 2005 pg. 6
VI PROBLEMS WITH THE MANAGEMENT FORECAST AND pg. 7 DR. WILLIAM KENNEDY’S DAMAGES REPORT
VII TRANSACTION BACKGROUND AND ASSUMPTIONS 129- 11
VIII DAMAGES ANALYSIS pg. 12
IX- CONCLUSION: 129- 15
EXHIBIT 1 - BACKGROUND / WORK EXPERIENCE pg. 16
EXHIBIT 2�Chart - Monthly unique visitors MySpace pg. 18
2
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 25 of 41 Page ID #:1907
CASES CITED
Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993
pg. 4
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246
(9th Cir. 1997)
pg. 5
Asplundh Mfg. Div. v. Benton Harbor Eng’g, 57 F.3d 1190, 1196
(3dCir. 1995) pg. 6
In Doft & Co. V. Travelocity pg. 8
Marcel v. See, Inc pg. 10
Henry v. Hess Oil Virgin Islands Corp pg. 10
Rowe v. State Farm Mut. Auto. Ins. Co., pg. 10
United States v. Bighead, 128 F.3d 1329, 1335 (9th Cir. 1997) pg. 10
3
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 26 of 41 Page ID #:1908
DECLARATION OF LAY OPINION UNDER RULE 701 BY BRAD D.
GREENSPAN: CEO, DIRECTOR, FOUNDER PAID SEARCH
DIVISION, HEAD OF M&A THRU OCTOBER 30, 2003. ONLY
EXECUTIVE TO HAVE COMPLETED A GOOGLE VS. YAHOO
SEARCH AUCTION
I INTRODUCTION
I, Brad Greenspan, declare:
1. I submit this declaration in support of the Plaintiff Class
Members.
The following is based on upon my personal knowledge and if called as a
Witness I could and would testify competently thereto.
2. This declaration is made under Rule 701 based on my experience.
3. Rule 701 allows lay witness declarations limited to those
opinions or inferences, which are (a) rationally based on the perception of the
witness, and (b) helpful to a clear understanding of the witness’ testimony or
the determination of a fact in issue, and (D not based on scientific, technical,
or other specialized knowledge within the scope of Rule 701.
4. I am also in a unique position to provide a valuation amount
Under Rule 701. Most courts have permitted the owner or officer of a
business to testify to the value or projected profits of the business, without
the necessity of qualifying the witness as an accountant, appraiser, or similar
expert. See, e.g., Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993)
4
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(no abuse of discretion in permitting the plaintiffs owner to give lay opinion
testimony as to damages, as it was based on his knowledge and participation
in the day-to-day affairs of the business). Such opinion testimony is admitted
not because of experience, training or specialized knowledge within the
realm of an expert, but because of the particularized knowledge that the
witness has by virtue of his or her position in the business.
5. The amendment does not distinguish between expert and lay
witnesses, but rather between expert and lay testimony. Certainly it is possible for
the same witness to provide both lay and expert testimony in a single case. See, e.g.,
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246 (9th Cir. 1997) (law
enforcement agents could testify that the defendant was acting suspiciously,
without being qualified as experts; however, the rules on experts were applicable
where the agents testified on the basis of extensive experience that the defendant
was using code words to refer to drug quantities and prices). The amendment
makes clear that any part of a witness’ testimony that is based upon scientific,
technical, or other specialized knowledge within the scope of Rule 702 is governed
by the standards of Rule 702 and the corresponding disclosure requirements of the
Civil and Criminal Rules.
The amendment is not intended to affect the "prototypical example(s) of the
type of evidence contemplated by the adoption of Rule 701 relat(ing) to the
appearance of persons or things, identity, the manner of conduct, competency of a
person, degrees of light or darkness, sound, size, weight, distance, and an endless
number of items that cannot be described factually in words apart from
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 28 of 41 Page ID #:1910
inferences." Asplundh Mfg. Div. V. Benton Harbor Eng’g, 57 F.3d 1190, 1196 (3d Cir.
1995).
II OVERVIEW OF ASSIGNMENT
-Updated/revised damages assessment for benefit of Plaintiff Class Members.
SUMMARY: $32453 Billion in damages suffered by Class Members
III TRANSACTION BACKGROUND
i) $12.00 cash out merger with two investment banks providing fairness
valuation reports created
ii) after the $12.00 price was chosen by CEO and accepted by Board of Issuer.
IV COMPANY BACKGROUND
Company was online entertainment and social networking website creator and also
for purposes of report owned 100% of MySpace, Inc. At the time of its sale in 2005
for approximately $649 million dollars, the purchase of the public shareholder’s
equity was reported to be $580 million and there existed a $69 million dollar
obligation to pay the minority shareholders of MySpace, Inc. according to
agreements signed in February 2005 by and between Redpoint, Inc. and Intermix,
Inc, and MSV LLC.
V INDUSTRY ENVIRONMENT IN 2005
i) Unique in that the pace of online advertising was growing much faster
then other industries in the United States.
6.
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ii) Google had just successfully raised $4.4 billion dollars and announced the
sale in August 2005.
iii) According to company documents and testimony of former head of online
search and CEO and founder of MySpace.com and Issuer, Issuer had opportunity to
run a search auction as of at least August 2005 between at least Google, Yahoo,
Microsoft, AskJeeves, and AOL.
iv) Go ogle and AOL set market price for value of search assets on or around
the 3rd and 4th quarters of calander 2005, closing a new Search Partnership in
December 2005.
v) In this transaction, Google invests $1 Billion into AOL, valuing AOL to be
worth $20 billion by virtue of the 5% stake Google takes for its investment.
VI PROBLEMS WITH THE MANAGEMENT FORECAST AND DR. WILLIAM KENNEDY’S DAMAGES REPORT
0 The damage report by Anders Minkler & Piehi LLP is helpful to
confirm the problem areas with management forecasts and the banker fairness
opinions. The expert also cites certain evidence that is useful in triangulating the
valuations we calculate and conclude in this report are more accurate and sound.
ii) Because of both unreliable forecasting historically proven by
management for MySpace, Inc. and because MySpace was an early stage company
experiencing significantly greater then average growth rates, Kennedy should not
have opted to follow banker’s fairness opinion method to use the 2009/20010 DCF
method for a company like Intermix and merely hoped to gain accurate methods for
(
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an accurate valuation of MySpace merely by adjusting the underlying financials.
iii) In Doft & Co. V. Travelocity, the Delaware Court made several
precedential determinations when faced with the task of weighing using
management forecasts for a new fast growing company in a fast changing market
environment, stating:
a) ’The court may consider "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court."
b) "Both parties used a DCF approach and a comparable company approach to value the shares.
c) "A DCF analysis is a useful tool for valuing shares and is frequently relied on by this court in appraisal actions."
d) "The utility of a DCF analysis, however, depends on the validity and reasonableness of the data relied upon. As this court has recognized, "methods of valuation, including a discounted cash flow analysis, are only as good as the inputs to the model."
e) "The problem in this case is that the most fundamental input used by the experts�the projections offuture revenues, expenses and cash flows�were not shown to be reasonably reliable."
D "Delaware law clearly prefers valuations based on contemporaneously prepared management projections because management ordinarily has the best first-hand knowledge of a company’s operations."
g) "Here, management prepared the 5-year projections for the period 2002-2005 and gave them to Sabre for use in its routine planning processes."
h) "Often, projections of this sort are shown to be reasonably reliable and are useful in later performing a DCF analysis. In this case, however, the court is persuaded from a review of all the evidence that the Travelocity 5-year plan does not provide a reliable basisfo rfo recasting future cash flows."
i) "Travelocity’s management held the strong view that these projections should not be relied upon because the industry was so new and volatile that
iJ
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reliable projections were impossible."
D "Punwanifurther testified that because of the limited financial history of Travelocity, together with a rapidly evolving marketplace, it was difficult "to forecast the next quarter, let alone five years out."
k) "Id. "We were really not in a position to be able to put any credence on the numbers, both on the revenue and on the cost side. And the only way to get credibility in our numbers would have been to take those models and put them through reasonability checks ... [that] were never done because, when we built these frameworks, I’ll call them, in the year 2000, we were in a period of explosive growth. We were growing at 150 percent per year.... No one really knew what the right number was." Id. at 381-82.
1) "Id. at 383. "It was bad enough before when we did the data, and we had this new variable that got thrown into our lap, which totally destroyed our ability to have any confidence in projections beyond one quarter out." Id.
m) "Although it was aware of the 5-year forecasts, Salomon did not conduct a DCF analysis of Travelocity as part of its work in connection with the merger. The testimony ofAnwarZakkour, Salomon’s managing director, is especially relevant on this issue:
n) "Q. Did Salomon Smith Barney prepare a discounted cash flow analysis of Travelocity in connection with this transaction? A. Absolutely not."
o) "Q. Why was no discounted cash flow, analysis prepared in connection with this transaction?"
"A. Because this was an industry that was influx. And the management team itself, which should have been the team that was most able to put together a set of projections, would have told you it was virtually impossible to predict the performance of this company into any sort of reasonable future term. And they in fact had very little confidence with even, their 2002 forecast numbers because of that."
p) "Q. Is a discounted cash flow methodology a methodology that is commonly used by Salomon Smith Barney in valuing companies?
A. Valuing mature companies, yes."
q) "The court reluctantly concludes that it cannot properly rely on either party’s DCF valuation. The goal of the DCF method of valuation is to value future cash
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 32 of 41 Page ID #:1914
flows. Here, the record clearly shows that, in the absence of reasonably reliable contemporaneous projections, the degree of speculation and uncertainty characterizing the future prospects of Travelo city and the industry in which it operates make a DCF analysis of marginal utility as a valuation technique in this case. If no other method of analysis were available, the court would, reluctantly, undertake a DCF analysis and subject the outcome to an appropriately high level of skepticism. The court, however, now turns to the other method of valuation offered by the parties."
iv) The application of the Daubert standard rests on the level of generality of
the expert’s study. The more removed the expert’s data is from the facts of the
particular case the more unreliable and speculative his testimony becomes. For
example, in both Marcel v. See, Inc., and Henry v. Hess Oil Virgin Islands
Corp., the court excluded the expert’s testimony because the projections of
future earnings were based on general industry studies that failed to take into
consideration the specific circumstances of the plaintiff. In Rowe v. State Farm Mut.
Auto. Ins. Co., by contrast, the court allowed the projections because they were
based on the past billing history of the plaintiff, who as a result of his injuries could
not longer practice Law.
v) Rule 702’s analysis is ordinarily prospective. Expert testimony is helpful
if it "will assist the trier of fact." Fed.R.Evid. 702 (emphasis added). Thus a
District court may not exclude expert testimony simply because the court can,
at the time of summary judgment, determine that the testimony does not result
in a triable issue of fact. Rather the court must determine whether there is "a
link between the expert’s testimony and the matter to be proved." United
States v. Bighead, 128 F.3d 1329, 1335 (9th Cir. 1997)
10
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VII TRANSACTION BACKGROUND AND ASSUMPTIONS
iJ Based on the evidence reviewed, the Intermix Board avoided
using the experienced valuation M&A technology banker, JP Morgan’s Zakkour.
News Corp received the benefit of keeping this banker from representing Issuer.
Namely that News Corp did not have to overcome or pay the up to $1.3+ Billion that
Zakkour estimated MySpace was worth prior to the July 18, 2005 merger
Agreement being signed.
a) Zakkour leads Citibank’s valuation/fairness report and is engaged by Ask
Jeeves Board of Directors along with Allen & Co. in February 2005 and values
AskJeeves worth at least $1.85 million at the time it signs a merger agreement with
IAC Corp. in March 2005.
b) AskJeeves lead director David Carlick engaged Zakkour and Allen & co. to
work for and represent Ask Jeeves in February 2005, while he was at the same time
Director and Chairman of Intermix. In addition Andrew Sheehan, his partner in his
venture capital fund VantagePoint, a control shareholder in Intermix was a director
of both Intermix and MySpace, Inc. Geoff Yang a long time director of AskJeeves was
also a director of MySpace, Inc.
c) The AskJeeves/IAC a stock for stock merger does not close until July 19,
2005.
d) In April 2005, Zakkour joins JPMorgan. JPMorgan served as the investment
bank for IAC in the March 2005 announced merger with Ask Jeeves.
e) One Board member of IAC Corp during this period is also the Chairman of
11
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Investment bank Allen & Co. IAC also discloses it retains and works with Allen & Co.
as their banker in ongoing basis.
f] News Corp Director Stan Schuman in 2005 was and is one of most senior
bankers at Allen & Co. of senior bankers at Allen & Co.
gJ As of July 13, 2005 or earlier, Zakkour and JPMorgan have been retained to
value Intermix, Inc. and on July 16, 2005, Zakkour’s team leading the efforts for JP
Morgan and News Corp, provides a valuation for MySpace, Inc. of $1,040 - $1,367.
Zakkour according to Kennedy, uses "2006 EBITDA Multiples"
h) Defendants further determined they would not allow Deutsche Bank to
write a fairness opinion or be one of the two bankers it ultimately retained.
i) On or around July 13, 2005, Issuer retained both Thomas Weisel and
Montgomery. Both banks had not completed the valuation work or provided a full
valuation report prior to being retained. Unlike Montgomery and Thomas Weisel,
Deutsche Bank had already created and provided to at least Rosenblatt and
Sheehan, a Valuation report as of May 2005.
VIII DAMAGES ANALYSIS
1) Financial Projections for MySpace. Inc. using actual 2005 results known:
a) The most accurate way to ascertain the valuation for MySpace, Inc. is to
build a new set of financial projections more reliable then the management forecast
and then combine this data with the most unconflicted comparable valuation report
that existed at the time.
12
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b) We take the last actual quarter to quarter financial results for MySpace,
Inc. and use these as the base information which we know is accurate and build a
multi year forecast, initially we continue the actual growth rate and over time
reduce such growth rate to be conservative.
c) Last Actual results for MySpace, Inc.: $3.74 million in revenue for the
March 2005 ending quarter which grew to $6.15 million in revenue for June 2005
quarter - 64% growth quarter to quarter.
d) Last actual results for MySpace, Inc: $463,000 in EBITDA for the March
2005 quarter which grew to $1.58 million in EBITDA for the June 2005 quarter.
e) Using these growth rates, we then use Kennedy’s 55% EBITDA margin and
being conservative we reduce this to 45% for 2006. In 2007, we reduce growth rate
from 64% to 32%. In 2008, we reduce the quarterly growth rate to 22%.
Below we summarize the annual forecast.
fJ (CY2 006) Our MySpace, Inc. forecast using most recent actual results
shows $264.21 million in annual revenue for 2006 and EBITDA of $118.89 million
g) (CY2007) Our MySpace Inc. forecast shows $999 million in revenue
and EBITDA of $449.55 million.
h) (CY2008) Our MySpace, Inc. forecast shows $2.43 billion & EBITDA
of $1.09 billion.
2) ITS APPROPRIATE TO CONSIDER AND USE A COMPARABLE COMPANY VALUATION ON A STAND-ALONE BASIS
a) We then determine that the May 2005 Deutsche Bank valuation report
13
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which uses comparable company EBITDA valuations is reasonable and the prudent
work of unconflicted investment bankers trying to demonstrate their good faith and
knowledge of the Internet sector to Intermix in their efforts to be retained by
Intermix to contact potential buyers.
b) Our decision is further confirmed thru review of the recent Delaware case
in Doft & Co. V. Travelocity where the court states as part of its decision to reject
management’s forecast and a valuation using DCF in favor of singularly using
comparable company valuation method.
c) "A comparable company analysis is often used in connection with a DCF analysis. The court, however, may usea corn parable company valuation on a stand-alone basis in an appraisal action when it is the only reliable method of valuation offered by the parties. In Borruso v. Communications Telesystems Intl, the court relied on a comparable company analysis because neither expert was comfortable using a DCF analysis to value the company’s shares due to the limited financial data of the company available as of the merger date. 753 A.2d 451, 455 n.5 (Del. Ch. 1999)."
d) We use the Deutsche report 2008 multiple for MySpace, Inc. of 22.5X
which is the top end of the "Estimated multiple range" as we believe this is
appropriate since based on the Kennedy report, Google stood out as the most
similar growth and profitability rates to MySpace, Inc.
e) Next we plug in the MySpace’s new forecast EBITDA for 2008 which is
multiplied by the 22.5X comparable company EBITDA, resulting in a Valuation of
$24.52 Billion for 100% of MySpace, Inc.
fJ We agree with Kennedy’s takeover premium analysis and the need to
adjust valuation based on this analysis. In addition, we again take heed of the recent
14
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Delaware court decision in Doft & Co. V. Travelocity where the court affirms this
analysis and recommends adding a premium to the buyout value as final step,
stating, "Delaware law recognizes that there is an inherent minority
trading discount in a comparable company analysis because "the [valuation] method depends on comparisons to market multiples derived from trading information for minority blocks of the comparable companies. The equity valuation produced in a comparable company analysis does not accurately reflect the intrinsic worth of a corporation on a going concern basis. Therefore, the court, in appraising the fair value of the equity, "must correct this minority trading discount by adding back a premium designed to correct it."
gJ Therefore, we use Kennedy’s 35% takeover premium and summarize:
control Controlling value Option Value premium Indication Exercise MySpace
2008 EBITDA MULTIPLE 35% $33.10213 ($69M) $33.033 Billion
Indication $32.453B
Based on the alternative guideline public company analysis provided above. MySpace was undervalued by $31453 billion ($33.033B - $580M).
IX- CONCLUSION:
I declare on penalty of perjury under the laws of the United States of America that
the foregoing is true and correct. Executed this April 28, 2014 in Los
Angeles
15 Brad D. Greenspan (SEAL)
15
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 38 of 41 Page ID #:1920
EXHIBIT 1 - BACKGROUND / WORK EXPERIENCE
QUALIFICATIONS OF EXPERT
-I have approximately 12 years of industry experience.
-I was CEO and founder of ellniverse, Inc. from its inception in 1998 as my idea thru October 30, 2003.
-I was the founder of MySpace.com while Chairman and CEO of eUniverse in 2003.
PROFESSIONAL QUALIFICATIONS
-Educational & Professional Certification
i) Two years of Law Society Undergraduate at University of Santa Barbara ii) Bachelors of Political Science, 1996 University of Los Angeles
PROFESSIONAL RECOGNITIONS AND AFFILIATIONS
i) Morgan Stanley’s Internet analyst announced in November 2003 that Issuer eUniverse as of October 2003’s 6 month ending data, was the #1 fastest growing portal on the Internet eclipsing AOL and Yahoo.
ii) Founder of Myspace.com .
iii) Founder of eUniverse
PRESENTATIONS AND PUBLICATIONS
i) Between 1999-October 2003 I co-created and presented Issuer’s financial forecasts and was sole decision maker on all internet strategy and determined allocation of funds if any for any new project.
PROFESSIONAL EXPERIENCE
1996-19980 President of Palisades Capital a merchant investment bank where I raised over $60 million dollars for 4 public companies.
1999- October 30, 2003 - Chairman and CEO of eUniverse, Inc.
16
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 39 of 41 Page ID #:1921
-I was initial and first head of Search for ellniverse, Inc., the issuer and signed first search partnership with Overture acquired and operated as Yahoo in 2003.
2004-2005- Palisades Technology - I was partners with Yahoo and operated a search toolbar division for game companies including leading casual games company Big Fish Games and Browser companies like AvantFind.com
2006-president, President LiveUniverse, Inc. - a network of entertainment websites
2008-present, President of LiveVideo, Inc. - a Los Angeles based network of entertainment websites
2006-present, Chairman of BroadWebAsia, Inc., - operates HupoTV.CN a Chinese video entertainment website
2006-2009, Co-Founder and Board Member, Michigan based Draths Corporation, clean technology leader in renewable green chemistry. Management led by Michigan State University professors and green chemistry award winners Dr. Karen Draths and Dr. John Frost.
2006-present, Board Member, Borba Corporation
2010-present- Managing Director of Social Slingshot Pte Ltd, a Singapore based incubator fund partnered with the Singapore Government’s National Research Foundation (NRF). I was awarded this $5 million dollar fund to encourage me to work with Singapore entrepreneurs and their universities entrepreneur programs.
TESTIMONY IN TRIAL OR DEPOSITION
i) Greenspan V. eUniverse, 2004, Delaware Judge Strine. (See summary of trial where I provided Delaware counsel evidence to uncover backdating fraud against defendants)
ii) Delagado V. Intermix. I was expert witness for LA City and provided fact information and background for the city of Los Angeles prosecutors in their adware consumer case against Intermix that was settled after Intermix’s listing expired.
17
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EXHIBIT 2- Monthly unique visitors as reported by Comscore for Myspace.com Compared to certain key months where Microsoft and Google offered MySpace or its parent company certain economic offers which provide a value per month these companies are willing to pay or value MySpace search at for the latest traffic/audience statistics that are available during the month a deal is offered up for MySpace.
July 2005 August 2005 September 2005 October 2005 November 2005 December 2005
January 2006
February 2006 March 2006 April 2006 May2006 June 2006 July 2006
August 2006
September 2006
21.21M uniques 21.81M uniques 21.6M uniques 24.25M uniques 24.68M uniques 32.2M uniques
35.5M uniques
37.34M uniques 41.88M uniques 48.03M uniques 51.44M uniques 52.34M uniques 54.52M uniques
55.78M
$14.807
$22.1 Million Value MSFT$800M OFFER
$25.0 Million Value GOOGLE $900 OFFER
jul
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 41 of 41 Page ID #:1923
1 Case No.: 11-CV-02509-LHK ORDER DENYING DEFENDANTS’ INDIVIDUAL MOTIONS FOR SUMMARY JUDGMENT
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UNITED STATES DISTRICT COURT
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SAN JOSE DIVISION
IN RE: HIGH-TECH EMPLOYEE ANTITRUST LITIGATION
) ) ) ) ) ) )
Case No.: 11-CV-02509-LHK ORDER DENYING DEFENDANTS’ INDIVIDUAL MOTIONS FOR SUMMARY JUDGMENT
THIS DOCUMENT RELATES TO:
ALL ACTIONS
) ) ) ) )
Summary judgment is appropriate if, viewing the evidence and drawing all reasonable
inferences in the light most favorable to the nonmoving party, there are no genuine disputed issues
of material fact, and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is “material” if it “might affect the
outcome of the suit under the governing law,” and a dispute as to a material fact is “genuine” if
there is sufficient evidence for a reasonable trier of fact to decide in favor of the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). At the summary judgment stage, the
Court “does not assess credibility or weigh the evidence, but simply determines whether there is a
genuine factual issue for trial.” House v. Bell, 547 U.S. 518, 559-60 (2006). The moving party has
the burden of demonstrating the absence of a genuine issue of fact for trial. Celotex, 477 U.S. at
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323. To meet its burden, “the moving party must either produce evidence negating an essential
element of the nonmoving party’s claim or defense or show that the nonmoving party does not
have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.”
Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000)
(citation omitted). Once the moving party has satisfied its initial burden of production, the burden
shifts to the nonmoving party to show that there is a genuine issue of material fact. Id. at 1103.
Importantly, at the summary judgment stage, the Court must view the record “in the light most
favorable to the non-moving party.” Brown v. City of Los Angeles, 521 F.3d 1238, 1240 (9th Cir.
2008).
The critical case for the legal standard to be applied to motions for summary judgment in
antitrust cases is Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986),
a case that challenged Japanese manufacturers’ lowering of prices as anti-competitive. In
Matsushita, the Supreme Court held that “a plaintiff seeking damages for a violation of § 1 [of the
Sherman Act] must present evidence ‘that tends to exclude the possibility’ that the alleged
conspirators acted independently.” Id. at 588. Under Matsushita, if Defendants can show a
plausible and justifiable reason for their conduct that is consistent with proper business practice,
Plaintiffs “must show that the inference of conspiracy is reasonable in light of the competing
inferences of independent action or collusive action that could not have harmed [plaintiffs].” Id.
The Ninth Circuit has interpreted Matsushita to mean that where a defendant has demonstrated a
plausible business reason for its conduct, “a plaintiff who relies solely on circumstantial evidence
of conspiracy . . . must produce evidence tending to exclude the possibility that defendants acted
independently.” In re Citric Acid Litig., 191 F.3d 1090, 1096 (9th Cir. 1999). The Second Circuit,
in 2012, interpreted Matsushita and Citric Acid as follows: “[Matsushita] further holds that the
range of inferences that may be drawn . . . depends on the plausibility of the plaintiff’s theory.
Thus, where a plaintiff’s theory of recovery is implausible, it takes ‘strong direct or circumstantial
evidence’ to satisfy Matsushita’s ‘tends to exclude’ standard. By contrast, broader inferences are
permitted, and the ‘tends to exclude’ standard is more easily satisfied, when the conspiracy is
economically sensible for the alleged conspirators to undertake and ‘the challenged activities could
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not reasonably be perceived as procompetitive.’” In re Publ’n Paper Antitrust Litig., 690 F.3d 51,
63 (2d Cir. 2012) cert. denied, 133 S. Ct. 940 (2013).
The Court finds that in light of the summary judgment standard as viewed through the lens
of Matsushita and its progeny, Plaintiffs have presented sufficient evidence that tends to exclude
the possibility that Defendants acted independently even if Defendants satisfied the first prong of
Matsushita by showing a plausible and justifiable reason for their conduct that is consistent with
proper business practices. The Court need not determine whether Defendants have met their burden
with respect to Matsushita’s first prong, because the Court finds that Plaintiffs have satisfied their
burden of providing “specific evidence tending to show that [Defendants were] not engaging in
permissible competitive behavior.” Citric Acid Litig., 191 F.3d at 1094.
Here, as Edward Catmull (Pixar President) noted, it was economically sensible for the
alleged conspirators to undertake the alleged conspiracy, because solicitation “messes up the pay
structure.” Catmull Depo. at 179. As George Lucas (former Lucasfilm Chairman of the Board and
CEO) stated, “we cannot get into a bidding war with other companies because we don’t have the
margins for that sort of thing.” Lucas Depo. at 44. Further, as Meg Whitman (former CEO of eBay)
said to Eric Schmidt (Google Executive Chairman, Member of the Board of Directors, and former
CEO), “Google is the talk of the Valley because [Google is] driving up salaries across the board.”
Cisneros Decl., Ex. 872.
In light of this backdrop, the Court will now review some of the evidence that tends to
exclude the possibility that Defendants acted independently. Defendants have conceded that there
were a series of six bilateral agreements for the purpose of these motions: Pixar-Lucasfilm, Apple-
Adobe, Apple-Google, Apple-Pixar, Google-Intuit, and Google-Intel. All six of these agreements
contained nearly identical terms, precluding each pair from affirmatively soliciting any of each
other’s employees. ECF No. 531, October 24, 2013 Order Granting Plaintiffs’ Supplemental
Motion for Class Cert. (“October Class Cert. Order”) at 30. Defendants’ experts concede that they
are unaware of these types of long-term, all-employee agreements ever occurring between other
firms. See, e.g., Talley Depo. at 35.
Case5:11-cv-02509-LHK Document771 Filed03/28/14 Page3 of 8
4 Case No.: 11-CV-02509-LHK ORDER DENYING DEFENDANTS’ INDIVIDUAL MOTIONS FOR SUMMARY JUDGMENT
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In addition, there is evidence that Defendants themselves recognized the similarities
between the agreements. For example, in an email, Lori McAdams (Pixar Vice President of Human
Resources and Administration), stated that “effective now, we’ll follow a gentleman’s agreement
with Apple that is similar to our Lucasfilm agreement.” October Class Cert. Order at 26. Moreover,
Google maintained an explicit do-not-cold-call list that grouped Apple, Intel, and Intuit together.
ECF No. 187, Ex. 29. Defendants also recognized that these agreements were not designed for
circulation, and tried to ensure that the agreements were known only to recruiters and executives
who had to enforce them. For example, Eric Schmidt (Google Executive Chairman, Member of the
Board of Directors, and former CEO) instructed one of his executives that Mr. Schmidt preferred
that the do-not-cold-call list be shared “verbally, since I don’t want to create a paper trail over
which we can be sued later.” Id. at 27. Similarly, in response to a question from an Intel recruiter,
Paul Otellini (CEO of Intel and Member of the Google Board of Directors) stated regarding the
Intel-Google agreement “we have a handshake ‘no recruit’ between eric [Schmidt] and myself. I
would not like this broadly known.” Id. at 28.
Furthermore, there is evidence that many of the Defendants knew about each other’s anti-
solicitation agreements. For example, according to Edward Catmull (Pixar President), Steve Jobs
(Co-Founder, Former Chairman, and Former CEO of Apple, Former CEO of Pixar) “knew and
understood” the Lucasfilm-Pixar agreement. Catmull Depo. at 61. Similarly, Eric Schmidt of
Google testified that it would be “fair to extrapolate,” based on Mr. Schmidt’s knowledge of Mr.
Jobs, that Mr. Jobs “would have extended [anti-solicitation agreements] to others.” Schmidt Depo.
at 169. Google recruiters were familiar that Apple and Adobe had an agreement. Flynn Depo. at 65.
Paul Otellini (CEO of Intel and Member of the Google Board of Directors) was told by Eric
Schmidt (Google Executive Chairman, Member of the Board of Directors, and former CEO) and
Sergey Brin (Google Co-Founder) about the Apple-Google agreement. Brin Depo. at 74; Schmidt
Depo. at 126. Intel’s own expert testified that Mr. Otellini was likely aware of Google’s other
bilateral agreements by virtue of Mr. Otellini’s membership on Google’s board. Snyder Depo. at
258. In fact, in its Motion, Intel concedes for the purposes of the instant motions that Mr. Otellini
knew the contents of Google’s do-not-cold-call list, which included Apple and Intel. Intel MSJ at 4.
Case5:11-cv-02509-LHK Document771 Filed03/28/14 Page4 of 8
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Next, these agreements were negotiated by a small group of intertwining high-level
executives at the Defendant firms. For example, Steve Jobs (Co-Founder, Former Chairman, and
Former CEO of Apple, Former CEO of Pixar) was personally involved in Apple’s anti-solicitation
agreements with Adobe, Google, and Pixar. With regard to Apple’s agreement with Google, Mr.
Jobs contacted Sergey Brin (Google Co-Founder) directly, which led Mr. Brin to recognize that
“[b]asically, [Mr. Jobs] said ‘if you hire a single one of these people that means war.’” Cisneros
Decl., Ex. 1871. The next day, Bill Campbell (Chairman of Intuit Board of Directors, Co-Lead
Director of Apple, and advisor to Google), a friend of Mr. Jobs, informed Mr. Jobs that “Eric
Schmidt told me that he got directly involved and firmly stopped all efforts to recruit anyone from
Apple.” Cisneros Decl., Ex. 199. Moreover, it was upon Mr. Campbell’s suggestion that Google
agreed to enter into its anti-solicitation agreement with Intuit, of which Mr. Campbell was Board
Chairman. Cisneros Decl., Ex. 597.
As discussed in some detail in this Court’s October Class Certification Order, the same
small group of intertwining high-level executives were involved in strictly enforcing the
agreements. For example, when a Google recruiter contacted an Apple engineer, Steve Jobs (Co-
Founder, Former Chairman, and Former CEO of Apple, Former CEO of Pixar) forwarded the
message to Eric Schmidt (Google Executive Chairman, Member of the Board of Directors, and
former CEO), who had the recruiter terminated within the hour. Id. at 36. Bill Campbell (Chairman
of Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google) similarly emailed
Sergey Brin (Google Co-Founder), stating that “Steve Jobs called me again and is pissed that we
are still recruiting his browser guy.” Id. at 36. Paul Otellini (CEO of Intel and Member of the
Google Board of Directors) similarly forwarded an email regarding recruitment of an Intel
employee by a Google recruiter to Mr. Schmidt, Google’s CEO, who responded by saying that, “If
we find that a recruiter called into Intel, we will terminate the recruiter.” Id. at 37.1 Edward
Catmull (Pixar President) similarly had direct discussions with Steve Jobs regarding whether Pixar
could communicate with specific individual Apple employees. Id. at 37-38. Bill Campbell
1 In an email to Mr. Campbell, Mr. Schmidt indicated that he directed a for-cause termination of another Google recruiter, who had attempted to recruit an executive of eBay, which was on Google’s do-not-cold-call list. Cisneros Decl., Ex. 872.
Case5:11-cv-02509-LHK Document771 Filed03/28/14 Page5 of 8
6 Case No.: 11-CV-02509-LHK ORDER DENYING DEFENDANTS’ INDIVIDUAL MOTIONS FOR SUMMARY JUDGMENT
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(Chairman of Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google) was
also part of enforcing the Google-Intel agreement, because Mr. Campbell in communication with
Google’s executives agreed that Google should call Paul Otellini (CEO of Intel and Member of the
Google Board of Directors) before making an offer to an Intel employee. October Class Cert. Order
at 28. That the agreements were entered into and enforced by a small group of intertwining high-
level executives bolsters the inference that the agreements were not independent.
Moreover, there is evidence that the Defendants shared confidential compensation
information with each other despite the fact that they considered each other competitors for talent.
For example, Adobe saw itself as in a talent war with Google and Apple and that Adobe was in a
six-horse compensation race against Google, Apple, Intuit, and three others. Id. at 47. Apple also
viewed Google and Intel as peer companies in terms of competition for talent. Id. at 48. Adobe
benchmarked its compensation against Google, Apple, and Intel, while Google compared its
compensation to Apple, Intel, Adobe, and Intuit; and Intel benchmarked against Apple and Google.
Id. at 47-48. The evidence shows that HR personnel at Intuit and at Adobe were communicating
about “confidential” information regarding how much compensation each firm would give and to
which employees that year. Cisneros Decl., Ex. 2812 (emphasis in original). Adobe and Intuit
shared confidential compensation information even though the two companies had no bilateral anti-
solicitation agreement, and Adobe viewed Intuit as a competitor in a six-horse compensation race.
Meanwhile, Google circulated an email that expressly discussed how its “budget is comparable to
other tech companies” and compared the precise percentage of Google’s merit budget increases to
that of Adobe, Apple, and Intel. Cisernos Decl., Ex. 621. Google had Adobe’s precise percentage
of merit budget increases even though Google and Adobe had no bilateral anti-solicitation
agreement. Paul Otellini (CEO of Intel and Member of the Google Board of Directors) similarly
circulated information regarding peer companies’ bonus plans that he “lifted from Google.”
Cisneros Decl., Ex. 463. This Google document discusses bonuses at Apple and Intel. A reasonable
jury could infer that this confidential information could be shared safely by competitors only
because the anti-solicitation agreements squelched true competition.
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Finally, there is evidence that Defendants, through many of the same executives who
negotiated and enforced the agreements at issue in this case, expanded and attempted to expand the
anti-solicitation agreements to non-Defendants, which undermines Defendants’ claim of
independent bilateral agreements. For example, Steve Jobs (Co-Founder, Former Chairman, and
Former CEO of Apple, Former CEO of Pixar) called Edward Colligan (former President and CEO
of Palm) to ask Mr. Colligan to enter into an anti-solicitation agreement and threatened patent
litigation against Palm if Palm refused to do so. Colligan Decl. ¶¶ 6-8. This was similar to Mr.
Jobs’ negotiation of the agreement with Adobe, which resulted from Mr. Jobs’ threat to start
aggressively recruiting Adobe’s employees absent such an agreement. Bill Campbell (Chairman of
Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google), in his capacity as an
advisor to Google, unsuccessfully sought to expand Google’s anti-solicitation agreements to
Facebook by responding to an email about Facebook’s solicitation of Google’s employees with
“Who should contact Sheryl [Sandberg] (or Mark [Zuckerberg]) to get a cease fire? We have to get
a truce.” Mr. Chizen of Adobe, in response to discovering that Apple was recruiting employees of
Macromedia (a separate entity that Adobe would later acquire), helped ensure, through an email to
Mr. Jobs, that Apple would honor Apple’s pre-existing anti-solicitation agreements with both
Adobe and Macromedia after Adobe’s acquisition of Macromedia. Cisneros Decl., Exs. 1808,
1812. These expansions and attempted expansions of the anti-solicitation agreements suggest that
the agreements were not isolated, independent bilateral agreements, but rather were part of a
broader conspiracy.
In sum, the Court does not determine at the summary judgment stage which side should
prevail. Rather, the Court’s task is only to determine whether the Plaintiffs have presented
sufficient evidence to warrant adjudication by a jury. For the reasons stated, the Court answers this
question in the affirmative. The similarities in the various agreements, the small number of
intertwining high-level executives who entered into and enforced the agreements, Defendants’
knowledge about the other agreements, the sharing and benchmarking of confidential
compensation information among Defendants and even between firms that did not have bilateral
anti-solicitation agreements, along with Defendants’ expansion and attempted expansion of the
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anti-solicitation agreements constitutes evidence, viewed in the light most favorable to Plaintiffs,
that tends to exclude the possibility that defendants acted independently, such that the question of
whether there was an overarching conspiracy must be resolved by a jury. Accordingly, each of the
Defendants’ individual motions for summary judgment is DENIED.
IT IS SO ORDERED.
Dated: March 28, 2014 ________________________________ LUCY H. KOH United States District Judge
Case5:11-cv-02509-LHK Document771 Filed03/28/14 Page8 of 8
4/27/14 12:46 AMAbigail LeGrow ’04 appointed to Master in Chancery for Delaware Judiciary | Penn State Law
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Abigail LeGrow ’04 appointed to Master inChancery for Delaware JudiciaryFebruary 22, 2012
Abigail LeGrow ’04 was recently appointed Master in Chancery for the Delaware Judiciary, a court which has beenranked first in the nation since 2002.
“To me, working on this court, and for the Delaware Judiciary in general, is a tremendous honor,” said LeGrow. “TheCourt of Chancery is held in high esteem nationwide, both because of the qualifications and dedication of thechancellor and vice chancellors (past and present), and because of the court’s willingness to consider and decideexpedited cases in a very prompt fashion.
The Court of Chancery’s jurisdiction is primarily limited to cases based in equity. Historically speaking, the Mastersin Chancery have handled the “traditional” equity jurisdiction of the Court, particularly trusts and estates,guardianship, and disputes involving real property.
“I’ve only been here a few months, but so far the thing I most enjoy isbeing in a position to help people and make decisions that (hopefully)resolve stressful problems that have arisen in their lives,” said LeGrow.“There is a human, real-life element to the cases on my docket thatwas sometimes missing in private practice.”
Prior to joining the Delaware Judiciary, LeGrow was an associate in theCorporate Group of Potter Anderson & Corroon LLP. “During my timein private practice, I was able to represent different corporations whichgave me the chance to learn about a variety of fields,” said LeGrow.
“Each corporation is different and in order to represent themeffectively I usually had to learn about their business. I became intimately familiar with orphan drugs, the New Yorkreal estate market, differentiated chemicals, residential mortgage-backed securities, and high speed lasers forcardiac imaging, to name a few. It helped keep each case interesting when I was engaged in some of the moremundane aspects of litigation.” Among the many reasons LeGrow chose to practice in corporate law is its dynamicnature. “It is always changing and evolving as businesses grow and change,” said LeGrow.
Her switch from advocacy to impartiality has been challenging for LeGrow, “but in a good way,” she said. “I thinkadvocacy comes easier to most lawyers (myself included), because we are usually arguers by nature, and it is fun tobe told ‘here is your side, here is where you want to end up, now go do it.’ But so far I’ve enjoyed the role ofimpartial decision-maker. It is nice to consider a case from all sides and all angles, and then try to reach the ‘right’result. In that sense, it is similar to a law school exam, only there is a lot more riding on the outcome.”
4/27/14 12:46 AMAbigail LeGrow ’04 appointed to Master in Chancery for Delaware Judiciary | Penn State Law
Page 2 of 2https://law.psu.edu/news/legrow
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LeGrow enjoys living and working in Delaware. “When I was in practice, I worked in a sophisticated, challenging,high-profile field while enjoying the advantages of life in a relatively small city. As a corporate litigator, I representedmultinational corporations, yet my job was a ten-minute commute from my home in the suburbs. Very few peoplecan have the best of both worlds, in that sense. Now, the commute is the same and I’m part of a court that I’veadmired since my summer associate year. It doesn’t get much better than this.”
Her husband, Brian LeGrow ’04 is an associate with the Law Offices of Vincent B. Mancini & Associates, and focuseshis practice on business litigation, commercial litigation, real estate, civil rights section 1983, property law, federalcivil practice, and landlord-tenant law. They met during law school and are the parents of two children.
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4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 1 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
Dilbert
Genre Comedy
Format Animation
Created by Scott Adams
Developed by Scott Adams
Larry Charles
Directed by Rick Del Carmen
James Hull
Voices of Daniel Stern
Chris Elliott
Larry Miller
Gordon Hunt
Kathy Griffin
Jackie Hoffman
Theme music
composer
Danny Elfman
Opening theme "The Dilbert Zone"
Composer(s) Adam Cohen
Ian Dye
Country of origin United States
Original
language(s)
English
No. of seasons 2
Dilbert (TV series)From Wikipedia, the free encyclopedia
Dilbert is an animated television series adaptation ofthe comic strip of the same name, produced byAdelaide Productions, Idbox, and United Media anddistributed by Columbia TriStar Television. The firstepisode was broadcast on January 25, 1999, and wasUPN's highest-rated comedy series premiere at thatpoint in the network's history; it lasted two seasons onUPN and won a Primetime Emmy before itscancellation.[1]
Contents
1 Synopsis2 History
2.1 Conception2.2 Cancellation
3 Cast3.1 Guest stars
4 Episodes4.1 Season 1 (1999)4.2 Season 2 (1999–2000)
5 Reception5.1 Ratings5.2 Awards
6 Home releases7 See also8 References9 External links
Synopsis
The series follows the adventures of a middle-agedwhite collar office worker, named Dilbert who isextremely intelligent in regards to all things that fallwithin the boundaries of electrical engineering.Although Dilbert’s intelligence greatly surpasses that ofhis incompetent colleagues at work, he is unable toquestion certain processes that he believes to beinefficient, due to his lack of power within the
4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 2 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
No. of episodes 30 (List of episodes)
Production
Executive
producer(s)
Scott Adams
Larry Charles
Producer(s) Jeffrey L. Goldstein
Ron Nelson
Kara Vallow
Editor(s) Mark Scheib
Running time 22 minutes
Production
company(s)
Idbox
United Media
Columbia TriStar
Television
Distributor Sony Pictures Television
Broadcast
Original channel UPN
Picture format 4:3 SDTV
Audio format Dolby Surround
Original run January 25, 1999 – July
25, 2000
inefficient, due to his lack of power within theorganization. Thus, he is consistently found to beunsatisfied with the decisions that are made in hisworkplace, because of the fact that many times he hasmany suggestions to improve the decision, yet isincapable of expressing them. Consequently, he isoften found to show a pessimistic and frustratedattitude, which ultimately lands him in various comedicsituations that revolve around concepts like leadership,teamwork, communication and corporate culture.
History
The first season centers on the creation of a newproduct, the "Gruntmaster 6000". The first threeepisodes involve the idea process ("The Name", "TheCompetition", and "The Prototype" respectively); thefifth ("Testing") involves having it survive a malevolentcompany tester named "Bob Bastard" (who issomewhat like Dilbert before being humiliated anddisfigured), and the sixth ("Elbonian Trip") is aboutproduction in the famine-stricken fourth-world countryof Elbonia. The prototype is delivered to an incrediblystupid family in Squiddler's Patch, Texas, during thethirteenth and final episode of the season,"Infomercial", even though it was not tested in a labbeforehand. The family's misuse of the prototypecreates a black hole that sucks Dilbert in; he instantly wakes up in the meeting seen at the start ofthe episode, then locks his design lab to keep the prototype from being shipped out.[2]
The second season features seventeen episodes, bringing the total number of episodes to thirty.Unlike the first season, the episodes are not part of a larger story arc and have a different storylinefor each of the episodes (with the exception of episodes 26 and 27, "Pregnancy" and "TheDelivery"). Elbonia is revisited once more in "Hunger"; Dogbert still manages to scam people in"Art"; Dilbert is accused of mass murder in "The Trial"; and Wally gets his own disciples (the result ofa complicated misunderstanding, the company launching a rocket for NASA, and a brainwashingseminar) in episode 16, "The Shroud of Wally".[3]
The theme music, "The Dilbert Zone", was written by Danny Elfman, and is a slight rewrite from thetheme of the film Forbidden Zone, originally performed by Elfman's band, The Mystic Knights of theOingo Boingo.
Conception
4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 3 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
Scott Adams, the creator of Dilbert, decided to create the series for UPN because the networkpromised 13 episodes on air, while other networks would only consider the series against otherprogramming options. Adams added to that "If we had gone with NBC, they would have givenDilbert a love interest with sexual tension." UPN was the sixth-ranked network at the time andpicked up the show in hopes of broadening their appeal and to prove they were committed to riskieralternative shows. Adams stated about turning Dilbert into a series "It's a very freeing experiencebecause doing the comic strip limits me to three (picture) panels with four lines or less of dialogueper issue, in the TV series, I have 21 minutes per episode to be funny. I can follow a theme frombeginning to end, which will add lots of richness to the characters." Adams wanted the series to beanimated because the live action version shot previously for FOX didn't translate well. Adams addedto that "If Dilbert's going to be at the top of the Alps, you just draw it that way and you don't have tobuild an Alps scene. You can also violate some laws of physics, and cause and effect. Peopleforgive it very easily. So it's much more freeing creatively."[4][5][6][7]
Cancellation
On November 22, 2006, when Adams was asked why the show was canceled, he stated "It was onUPN, a network that few people watch. And because of some management screw-ups between thefirst and second seasons the time slot kept changing and we lost our viewers. We were alsoscheduled to follow the worst TV show ever made: Shasta McNasty. On TV, your viewership is 75%determined by how many people watched the show before yours. That killed us."[8]
Cast
Daniel Stern – Dilbert[9]
Chris Elliott – DogbertLarry Miller – The Pointy-Haired BossGordon Hunt – WallyKathy Griffin – Alice (uncredited)Jackie Hoffman – DilmomJim Wise – Loud HowardTom Kenny – Ratbert, Asok, additional VoicesGary Kroeger – Additional voicesMaurice LaMarche – The World's Smartest Garbageman, Bob the Dinosaur, additional voicesTress MacNeille – Carol, Lena, additional voicesJason Alexander – Catbert
Guest stars
Stone Cold Steve Austin – HimselfJennifer Bransford – AshleyAndy Dick – Dilbert's Assistant AlfonsoJon Favreau – Holden CallfielderGilbert Gottfried – Accounting Troll
4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 4 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
Tom Green – JerroldChristopher Guest – The DupeyBuck Henry – DadbertHarry Kalas – Baseball AnnouncerWayne Knight – Path-E-Tech Security GuardJay Leno – HimselfEugene Levy – Comp-U-Comp's Plug GuardCamryn Manheim – JulietMr. Moviefone – HimselfChazz Palminteri – Leonardo da VinciJeri Ryan – Seven of Nine Alarm ClockJerry Seinfeld – Comp-U-CompBilly West – Vibrating Chair Salesman, Rioting Engineer (Pilot episode only)
Episodes
Season 1 (1999)
# Title Directed by Written by Original air date Productioncode
1 "The Name" Seth Kearsley Larry Charles & ScottAdams January 25, 1999 101
Dilbert is tasked with naming a product that hasn't even been designed yet, and the stress (broughton by a recurring nightmare) makes Dilbert think he's turning into a chicken.
2 "TheCompetition" Seth Kearsley Ned Goldreyer February 1, 1999 103
Dilbert is fired from his job when he is suspected of being a spy for a rival company (which was arumor cooked up by Dogbert's online newsletter) and gets hired at a company that actually treatstheir workers like people.
3 "ThePrototype" Alfred Gimeno Jeff Kahn February 8, 1999 102
Dilbert and Alice must work together to stop a rival team led by the legendary "Lena" from stealingtheir ideas and presenting them to the Boss as her own.
4 "TheTakeover" Andi Klein
Larry Charles, ScottAdams & Ned
GoldreyerFebruary 15, 1999 106
Dilbert and Wally become majority shareholders of their company after Dogbert manipulates thestock market.
5 "Testing" Chris Dozois David Silverman &Stephen Sustrastic February 22, 1999 104
The Gruntmaster 6000 prototype is put to the test by an evil masked test engineer named Bob
4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 5 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
Bastard (Tom Kenny).
6 "ElbonianTrip" Mike Kim David Silverman &
Stephen Sustrastic March 1, 1999 105
Dilbert, Alice, Wally, Dogbert, and the Pointy-Haired Boss take a business trip to Elbonia. Alice andDilbert attempt to free the Elbonian people (Alice adopts an Elbonian baby while Dilbert introducesthe workers to human rights) while Wally becomes a prophet.
7 "Tower ofBabel" Gloria Jenkins David Silverman &
tephen Sustrastic March 22, 1999 108
The repetitive passing-on of the same cold strain in Dilbert's office causes it to mutate and turnsthe coworkers into monsters. Rather than eliminate the virus, the company decides to start fresh bymoving everyone to a new office, which Dilbert is tasked with designing.
8 "LittlePeople" Barry Vodos
David Silverman,Stephen Sustrastic,
Scott Adams & LarryCharles
April 5, 1999 107
Dilbert discovers that the office is inhabited by a race of former employees who have been"downsized" (literally shrunken down to size after they've been laid off) after finding all of hisbelongings used, the dry-erase markers disappearing, and X-rated websites on his computer.
9 "The Knack" Michael Goguen
Larry Charles, ScottAdams, Andrew
Borakove & RachelPowell
April 26, 1999 110
Dilbert loses "the knack" for technology when he gets management DNA from accidentally drinkingfrom the Boss's cup. His resulting mis-steps send the world back to the Dark Ages.
10 "Y2K" Jennifer Graves, BobHathcock & Andi Tom
Larry Charles, ScottAdams, Andrew
Borakove & RachelPowell
May 3, 1999 109
On the eve of the new millennium, everyone — except Dilbert — is making New Year's plans. Whileassuring everyone that the company is prepared for Y2K, Dilbert discovers that the computermainframe's main processor isn't Y2K-compatible and all the company's systems will crash if itisn't fixed. Dilbert is rewarded for discovering this by being assigned to fix it, and he discovers thatthe system's original programmer was Wally. But have years of drudgework dulled his brain toomuch to be able to tackle this crucial task?
11 "Charity" Chris Dozois
Larry Charles, ScottAdams, David
Silverman & StephenSustrastic
May 10, 1999 111
Dilbert is forced to be a charity coordinator for the "Associated Way" charity drive.
Larry Charles, ScottAdams, David
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12 "Holiday" Andi Klein Silverman, StephenSustrastic & Ned
Goldreyer
May 17, 1999 112
Dilbert thinks there are too many time-wasting holidays; Dogbert concurrently convinces Congressto abandon all holidays in favor of a National Dogbert Day.
13 "TheInfomercial"
Todd Frederiksen,Joe Vaux
Larry Charles, ScottAdams & Ned
GoldreyerMay 24, 1999 113
The pre-production—non-lab-tested—Gruntmaster 6000 is scheduled to be tested by a Texanfamily.
Season 2 (1999–2000)
# Title Directed by Written by Original air date Productioncode
14 "The Gift" Gloria Jenkins Ned Goldreyer November 2, 1999 201
Dilbert's mother's birthday is coming up, and in search of the perfect gift, he returns to the mallwhere he was abandoned by his father (voiced by Buck Henry) years ago.
15 "The Shroudof Wally" Andi Klein Scott Adams November 9, 1999 203
Dilbert has a near-death experience at a gas station, and finds that the afterlife is exactly like theoffice. Meanwhile, a group listening to a multi-level marketing speech become hypnotized, andthrough a bizarre accident create a religion based on Wally.
16 "Art" Linda MillerLarry Charles, Scott
Adams & NedGoldreyer
November 16, 1999 205
Dilbert is assigned to create a digital work of art. The result, the "Blue Duck," ends up appealing tothe lowest common denominator of society and destroys the value and popularity of classicartworks.
17 "The Trial" Chris Dozois Joe Port & JoeWiseman November 23, 1999 202
Dilbert is sent to prison after the boss frames him for a fatal traffic accident. Once inside, he applieshis knowledge of mathematics and engineering to prison life and takes over his cell block.
18 "TheDupey" Michael Goguen Larry Charles & Scott
Adams December 7, 1999 204
Dilbert's attempts to design a Furby-style children's toy go horribly awry when the toys gainsentience and mutate into hideous but benevolent creatures that want independence.
19"TheSecurityGuard"
Rick Del Carmen Scott Adams January 18, 2000 207
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After a heated debate, Dilbert and the building's security guard (voiced by Wayne Knight) tradejobs to see who can do the other's job better. Dilbert quickly finds himself in over his head when hediscovers an illegal casino being run underneath the building.
20 "TheMerger" Jim Hull
Larry Charles, ScottAdams, David
Silverman & StephenSustrastic
January 25, 2000 208
The Boss decides that the company needs to merge with another, and chooses a company ofbrain-sucking extraterrestrials.
21 "Hunger" Craig R. Maras Larry Charles & ScottAdams February 1, 2000 206
Dilbert tries to end world hunger by creating a new, safe, artificial food, but it tastes so bad thateven people dying of starvation refuse to eat it – until his mother gets involved.
22"The Off-SiteMeeting"
Seth Kearsley Mark Steen, RonNelson & Scott Adams February 8, 2000 209
Dilbert's home is chosen as the location for an off-site meeting when a dendrophile sues hiscompany because of their deforestation policies.
23 "TheAssistant"
Gloria Jenkins &Declan M. Moran
Larry Charles, ScottAdams, Ron Nelson &
Mark SteenFebruary 15, 2000 210
Dilbert is unwillingly promoted to management and given an assistant (Andy Dick), sparking ashowdown with the other engineers.
24 "TheReturn" Mike Kuntel
Larry Charles, ScottAdams & Ned
GoldreyerFebruary 22, 2000 213
Dilbert tries to buy a computer online but gets the wrong model, leading to an unpleasant surprisewhen he tries to return it to the company warehouse. Jerry Seinfeld and Eugene Levy guest-star asComp-U-Comp and the plug guard, respectively; Jon Favreau guest-stars as Holden Callfielder.
25 "The VirtualEmployee" Perry Zombalas
Larry Charles & ScottAdams & Ned
GoldreyerMay 30, 2000 212
Dilbert and his co-workers find an empty cubicle and start dumping their obsolete computerequipment into it. To keep the marketing department from claiming the cubicle, they hack into thehuman resources database and create a profile for a fake engineer named Todd. The plan backfireswhen Todd is named project leader and develops a messianic reputation.
26 "Pregnancy" Andi Klein Larry Charles & ScottAdams June 6, 2000 216
Ratbert accidentally sends Dilbert's model rocket into space. When it returns with samples of DNAfrom aliens, cows, hillbillies, engineers, and robots, it rectally impales Dilbert, impregnating him.
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27 "TheDelivery" Craig R. Maras Larry Charles & Scott
Adams June 13, 2000 217
Dilbert fights to keep his baby, a human-alien-cow-robot hybrid whose various "parents" sue forjoint custody. Stone Cold Steve Austin guest-stars as himself.
28 "CompanyPicnic" Chris Dozios
Scott Adams, DavidSilverman & Stephen
SustrasticJuly 11, 2000 211
The annual company picnic comes around and so does the softball game between Marketing andEngineering. This episode is based on Romeo and Juliet.
29 "The Fact" Linda MillerLarry Charles, Scott
Adams, Ron Nelson &Mark Steen
July 18, 2000 215
Dogbert is catapulted into fame and fortune when he posts false information on the Internet abouthis imaginary disease, "Chronic Cubicle Syndrome," and releases a best-selling book about it.Ironically, Dilbert is forced to come up with the cure.
30 "Ethics" Michael Goguen Larry Charles & ScottAdams July 25, 2000 214
The company employees are forced to take ethical training classes, then Dilbert is made projectlead for the National Internet Voting Network. An attractive female employee of a special-interestgroup attempts to seduce Dilbert, putting his ethical limitations to the test.
Reception
Ray Richmond of Variety.com liked the show stating "it’s surely the wittiest thing the netlet has everhad the good fortune to schedule, and based on the opening two installments, it has the potential toscore with the same upscale auds that flocked to “The Simpsons” and transformed Fox from awannabe to a player a decade ago."[10] David Zurawik of The Baltimore Sun gave the show apostivie review stating "sit down tonight in front of the tube with more reasonable expectations, andyou will find yourself smiling, if not laughing out loud at least once or twice."[11] Terry Kelleher ofPeople Magazine picked Dilbert for "Show of the week" and said the show featured "smart, pointedhumor aimed at corporate bureaucracy, mendacity and absurdity."[12]
Ratings
Dilbert's premiere episode received a 7.3 rating, the highest of the 1998-1999 season for UPN.[13]
Awards
Primetime Emmy: Outstanding Main Title Design - 1999[14]
Home releases
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Sony Pictures Home Entertainment released the complete series on DVD in Region 1 for the veryfirst time on January 27, 2004. The set included some special features including trailers and clipcompilations with commentary by Scott Adams, executive producer Larry Charles, and voice actorsChris Elliott, Larry Miller, Kathy Griffin, and Gordon Hunt.[15] The DVDs can be played on some PCsand DVD players with Region 2. This release has been discontinued and is now out of print. Thecomplete series is available for free on Hulu and Crackle.[16][17]
On November 8, 2013, it was announced that Mill Creek Entertainment had acquired the rights tothe series. They will be re-releasing the complete series on January 21, 2014.[18]
See also
New Dilbert Animation
References
1. ^ "Dilbert Debut Sets Record For Upn" (http://articles.chicagotribune.com/1999-02-02/features/9902020332_1_pointy-haired-boss-upn-dilbert). Chicago Tribune. February 2, 1999. Retrieved2010-09-09.
2. ^ "Dilbert: The Complete Series : DVD Talk Review of the DVD Video"(http://www.dvdtalk.com/reviews/9457/dilbert-the-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
3. ^ "Dilbert: Complete Series : DVD Talk Review of the DVD Video"(http://www.dvdtalk.com/reviews/9494/dilbert-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
4. ^ Knutzen, Eirik. "An Animated Cartoon `Dilbert' Comes To The Tube On Upn"(http://articles.mcall.com/1999-01-24/entertainment/3241748_1_dilbert-scott-adams-bank-teller/2). TheMorning Call. Retrieved 10 February 2014.
5. ^ Rubin, Sylvia. "Meeting of the Minds / `Dilbert' creators slogged through corporate mire to bring lovableoffice dweeb to TV" (http://www.sfgate.com/entertainment/article/Meeting-of-the-Minds-Dilbert-creators-slogged-2952018.php#page-1). SFGate. Retrieved 10 February 2014.
6. ^ Rozansky, Michael. "`Dilbert' Is Serious Business From The Cubicle To . . . Practically Everywhere."(http://articles.philly.com/1999-01-03/news/25492959_1_dilbert-fans-4s700r-cubicle). philly.com. Retrieved10 February 2014.
7. ^ Jicha, Tom. "Dilbert To Get A New Cubicle -- On Upn" (http://articles.sun-sentinel.com/1999-01-25/lifestyle/9901250155_1_dilbert-scott-adams-upn). SunSentinel. Retrieved 10 February 2014.
8. ^ Foster, Darren. "Scott Adam’s Interview creator of Dilbert" (http://groundreport.com/Scott-Adams-Interview-creator-of-Dilbert/). ground report. Retrieved 9 February 2014.
9. ^ "Upn hopes ride on dilbert's white shirttails new animated series just doesn't do the job"(https://web.archive.org/web/20140209010821/http://www.nydailynews.com/archives/entertainment/upn-hopes-ride-dilbert-white-shirttails-new-animated-series-doesn-job-article-1.829135). The New York DailyNews. Retrieved 2010-10-26.
10. ^ Richmond, Ray. "Review: ‘Dilbert’" (http://variety.com/1999/tv/reviews/dilbert-1200456408/). Variety.Retrieved 9 February 2014.
11. ^ Zurawik, David. "UPN is counting on `Dilbert' " (http://articles.baltimoresun.com/1999-01-25/features/9901250183_1_dilbert-dogbert-omen). The Baltimore Sun. Retrieved 9 February 2014.
12. ^ Kelleher, Terry. "Picks and Pans Main: Tub"(http://www.people.com/people/archive/article/0,,20127492,00.html). People Magazine. Retrieved 9February 2014.
4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 10 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
13. ^ Carter, Bill. "TV NOTES" (http://www.nytimes.com/1999/01/27/arts/tv-notes.html). The New York Times.Retrieved 9 February 2014.
14. ^ "Dilbert" (http://www.emmys.com/shows/dilbert). The Academy of Television Arts & Sciences. Retrieved 9February 2014.
15. ^ "Dilbert - The Complete Series Review" (http://www.tvshowsondvd.com/reviews/Dilbert-Complete-Series/3283). TVShowsOnDVD.com. Retrieved 2013-09-08.
16. ^ "Dilbert" (http://www.hulu.com/dilbert). Hulu. Retrieved 10 February 2014.17. ^ "Dilbert" (http://www.crackle.com/c/dilbert). Crackle.com. Retrieved 10 February 2014.18. ^ Mill Creek to Re-Release 'The Complete Series' on DVD (http://www.tvshowsondvd.com/news/Dilbert-
The-Complete-Series/19158)
External links
Dilbert (http://www.imdb.com/title/tt0118984/) at the Internet Movie DatabaseDilbert (http://www.tv.com/shows/dilbert/) at TV.com
Retrieved from "http://en.wikipedia.org/w/index.php?title=Dilbert_(TV_series)&oldid=601831869"Categories: Dilbert 1990s American animated television series2000s American animated television series Television programs based on comic stripsUPN network shows 1999 American television series debuts2000 American television series endings Comedy Central showsTelevision series by Sony Pictures Television Animated sitcomsTelevision programs featuring anthropomorphic characters Satirical television programmesEnglish-language television programming Lists of television series episodes
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BRAD D. GREENSPAN, Plaintiff Case No: 9567-ML V. NEWS CORPORATION NEWS CORPORATION, 21ST CENTURY FOX CORPORATION, NEWS AMERICA CORPORATION,WASHINGTON POST CORPORATION, SONY CORPORATION, SONY CORPORATION AMERICA, SONY MUSIC ENTERTAINMENT INC., 550 DIGITAL MEDIA VENTURES, INC. SONY BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC NEWS CORPORATION, 21ST CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC, VANTAGEPOINT VENTURE PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP, IAC CORPORATION, MYSPACE, INC., ASKJEEVES, INC., JP MORGAN CHASE CORPORATION, REDPOINT PARTNERS CORPORATION ARENT FOX LAW LLC INC.
Defendants PRAECIPE To: Register In Chancery PLEASE ISSUE Summons and a copy of the Complaint and Motion to Expedite through the Sheriff of New Castle County, 800 N French Street, 5th Floor, Wilmington, Delaware 19801; To be served on the following Defendants in the above listed caption Name: News Corporation & 21st Century Fox Corporation Address: c/o The Corporation Trust Company Corporation Trust Center, 1209 Orange St. Wilmington, Delaware, 19801 Service pursuant to 10 Del. C. 3111 /s/ Brad Greenspan Signature for Pro Se 264 South La Cienega Suite 1216 Beverly Hills, CA 90211 Dated: 4/25/2014
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE BRAD D. GREENSPAN, 264 South La Cienega
Suite 1216 Beverly Hills, CA 90211
Plaintiff,
v.
NEWS CORPORATION, 21ST CENTURY FOX CORPORATION, NEWS AMERICA CORPORATION, WASHINGTON POST CORPORATION,
SONY CORPORATION, SONY CORPORATION AMERICA, SONY MUSIC ENTERTAINMENT INC., 550 DIGITAL MEDIA VENTURES, INC. SONY BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC
NEWS CORPORATION, 21ST CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC, VANTAGEPOINT VENTURE PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP,
IAC CORPORATION, MYSPACE, INC., ASKJEEVES, INC.,
JP MORGAN CHASE CORPORATION, REDPOINT PARTNERS CORPORATION, ARENT FOX LAW LLC INC.
) ) ) ) ) ) ) ) ) ) )
C.A. No. ________
1503 & INDEMNIFICATION COMPLAINT
2
Plaintiff, for his Complaint against the Defendants, alleging as follows: I- PRELIMINARY STATEMENT & SYNOPSIS
1. Plaintiff Brad D. Greenspan (“Plaintiff”), a former Director an Officer of eUniverse, Inc. a Delaware Corporation hereby files this complaint. Petitioner isentitledtoaprivatecauseofactionfordamagessufferedasaresultofDefendantacts,omissions,damages,violations,andotherlossescausedbythelongrunning1503(d)conspiracyamongDefendants.PetitioneralsohascontractualrightsforIndemnificationandAdvancement. II - PARTIES PLAINTIFF 2. Brad Greenspan, former Director, Officer, Shareholder of eUniverse, Inc DEFENDANTS
3. News Corporation, a Delaware Corporation
4. 21st Century Fox Corporation, a Delaware Corporation
5. News America Corporation, Delaware corporations 6. Sony Corporation, incorporated in Japan (herein Sony Corporation
and its subsidiaries listed below will be referred to as “Sony”)
7. Sony Corporation America, a Delaware corporation
8. Sony Music Entertainment Inc., a Delaware Corporation 9. 550 Digital Media Ventures, Inc. (“550 DMV”), a Delaware Corporation
10. SonyBroadbandEntertainment,Inc.,aDelawarecorporation
3
11. eUniverseInc.,(namelaterchangedtoIntermix)aDelaware
Corporation(NewsCorpacquiredin2005)12. Myspace,Inc.,aDelawareCorporation(NewsCorpacquiredin2005)13. RGRDLawLLC,aCaliforniaLLC14. VantagePointVenturePartners,aCaliforniaLLC15. OrrickHerringtonLawLLC,aCaliforniaLLC16. EMIMusic,aDelawareCorporation17. WarnerMusicGroup,aDelawareCorporation18. AskJeevesInc.,aDelawarecorporation(IACCorpacquiredin2005)19. IACCorporation,aDelawarecorporation20. JPMorganChase,aDelawarecorporation21. RedPointPartners,aCaliforniaLLC22. WashingtonPostCorporation,aDelawareCorporation23. ArentFoxLaw,aDelawareLLC
III - JURISDICTION AND VENUE
24. The jurisdiction of this Court is conferred and invoked pursuant to eUniverse, Inc., and its buyer, News Corporation being Delaware incorporated
IV- FACT HISTORY The 1503 & 1505 Claims
25. 1503 & 1505 according to Delaware statute §1501 have a purpose:
4
“ to guard against and prevent the infiltration and illegal acquisition of legitimate economic enterprises by racketeering practices, and the use and exploitation of both legal and illegal enterprises to further criminal activities.“ “to apply to conduct beyond what is traditionally regarded as "organized crime" or "racketeering."
26. Enterprise under § 1502 is defined:
“(3) "Enterprise" shall include any individual, sole proprietorship, partnership, corporation, trust or other legal entity; and any union, association or group of persons associated in fact, although not a legal entity. The word "enterprise" shall include illicit as well as licit enterprises, and governmental as well as other entities.”
27. Members of the “SearchBriberyHacking” (‘SBH’) Enterprise are an association-in-fact “enterprise that are known as of the date of filing this complaint to include: IAC, AskJeeves, News Corporation, Orrick Herrington, VantagePoint Partners, RedPoint Partners, JPMorgan, Washington Post Corporation, RGRD Law LLC, Sony Corporation, Sony Music Entertainment, Arent Fox, EMI, Warner Brothers Music, MySpace Inc., Intermix Inc., Sony Corporation America, 550 DMV, SonyBroadbandEntertainmentInc.,as well as certain of their Officers, Directors, and employees (“Enterprise”).
28. This Enterprise possessed and continues to possess a common
purpose and goal, a membership, organizational structure, and ongoing relationships with sufficient longevity to permit and enable pursuit of the Enterprise’s purpose and long-term objective through a continuous course of conduct that affected and continues to affect interstate and foreign commerce. Most or all of the members of the Enterprise are also Principals, defined under Delaware statue,
5
“(8) "Principal" shall mean a person who engages in conduct constituting a violation, or one who is legally accountable for the unlawful conduct of another person or entity.”
29. The SBH Enterprise, members, and/or Principals engaged, attempted to engage in, or conspired to engage in or to solicit, coerce or intimidate other person to engage in Racketeering violations which under Delaware state law is defined as: “(9) "Racketeering" shall mean to engage in, to attempt to engage in, to conspire to engage in or to solicit, coerce or intimidate another person to engage in:
a. Any activity defined as "racketeering activity" under 18 U.S.C. § 1961(1)(A), (1)(B), (1)(C) or (1)(D); or
b. Any activity constituting any felony which is chargeable under the Delaware Code or any activity constituting a misdemeanor under the following provisions of the Delaware Code:
Chapter 73 of Title 6 relating to the sale of securities; Chapter 5 of Title 11 & Title 6 relating to forgery and counterfeiting; Chapter 5 of Title 11 relating to perjury; Chapter 5 of Title 11 and Title 28 relating to bribery and misuse of public office and improper influence; Chapter 5 of Title 11 relating to tampering with jurors, evidence and witnesses;”
30. SBH Enterprise, members, and Principals that make up the SBH Enterprise initiated a Pattern of racketeering activity between 2003 thru 2013, defined as: “(5) "Pattern of racketeering activity" shall mean 2 or more incidents of conduct:
a. That:
1. Constitute racketeering activity;
2. Are related to the affairs of the enterprise;
3. Are not so closely related to each other and connected in point of time and place that they constitute a single event; and
b. Where:
1. At least 1 of the incidents of conduct occurred after July 9, 1986;
6
2. The last incident of conduct occurred within 10 years after a prior occasion of conduct; and
3. As to criminal charges, but not as to civil proceedings, at least 1 of the incidents of conduct constituted a felony under the Delaware Criminal Code, or if committed subject to the jurisdiction of the United States or any state of the United States, would constitute a felony under the Delaware Criminal Code if committed in the State.”
31. SBH Enterprise “racketeering activity” included: 18 U.S.C. § 1341
(relating to mail fraud), 18 U.S.C. § 1512 (relating to tampering with a witness,
victim, or an informant) 18 U.S.C. § 1513 (relating to retaliating against a witness,
victim, or an informant) and 18 U.S.C. § 1519 (relating to destruction, alteration, or
falsification of records in Federal investigation and bankruptcy).
32. The pattern of racketeering activity is based on the following facts:
33. Principals and members of the SBH enterprise desired and wanted
to fraudulently take control of a publicly traded company that was the #1 fastest growing Top 10 Property in the world as of October 2003.
34. Defendants launch series of schemes and frauds to take control of publicly traded MySpace and its parent corporation eUniverse (later renamed Intermix) and oust founder/CEO Brad Greenspan.
35. Defendants also initiate schemes to defame and harass Petitioner, and additionally obstruct justice.
36. Not satisfied with their existing economic gains, defendants embarked on an ever growing series of schemes and misdeeds to loot the public company. 37. Petitioner on January 23, 2004 published press release titled:
“Substantial Conflicts of Interest with Respect to Verisign Nasdaq:VRSN And Ask Jeeves NASDAQ: ASKJ”
7
stating: i.“eUniverse’s Future Success in Lucrative Paid Search Space Is
Threatened By Existing Director Conflicts”
ii.“certain of eUniverse’s incumbent Directors have substantial conflicts of interest that could threaten the Company’s success in the paid search industry.”
iii.“Daniel Mosher has conflicts of interest arising from his middle management role
at Verisign, Inc. (NASDAQ: VRSN) which introduced the “sitefinder” redirect service in direct competition with eUniverse’s PerfectNav application. “
iv.“David Carlick has a conflict of interest arising from his membership on the Board of Ask Jeeves (Nasdaq: ASKJ), which is a pure play in the paid search space.
V.“Carlick has the ability to influence management decisions which may adversely affect eUniverse’s Paid Search division.” DEFENDANTS ENTRENCHMENT SCHEME SHIFTS CONTROL
38. Petitioner incorporates by reference Exhibit #1 which includes:
i. January 2, 2014 letter to Chancellor Strine
ii. NOTICE MOTION IN CONTEMPT
iii. MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)
iii. DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT iv. JUDGMENT ENTRY SETTING HEARING
(Note: All above unsigned documents were signed and submitted by courier January 2, 2014 to Brenda at intake with copy of December 2013 proof of service to Defendants )
DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATION 39. July 17, 2005 News Corporation Corporate counsel Lang emailed at 4:13AM
to Defendant eUniverse Director Sheehan and states, by interstate wire or interstate
carrier an email furthering the fraudulent concealment scheme to fabricate and
8
fraudulently conceal unlawful acts including contempt of Court to acquiror News
Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal
security fraud class action. “Subject: 'Purchase Agreement”, stating,
"On the issues, let's close on the remaining ones in a fair and reasonable way-- so we can build out relationship.” And
“3. We feel like we have given indemnification on the shares and the purchase agreement itself to do so on any issue we have had no involvement in whatsoever (i.e. Greenspan) - that seems like too much. Andy, I know we are very eager to get this done. Let do it so both sides can feel good and move forward on our longer-term relationship."
Lang’s communication is in violation of 18 U.S.C. § 1341, 18 U.S.C. § 1343, and 18
U.S.C. § 1519 (relating to destruction, alteration, or falsification of records in Federal
investigation and bankruptcy).
2013 HITECH FEDERAL CLASS ACTION EVIDENCE
40. Evidence disclosed for the first time May 2013 in the Hitech Class Action Case 5:1102509, specifically document 198-3, page 37 and 38, proves Google had undisclosed illegal agreements in place with AskJeeves, AOL, Intel, Intuit, IAC Corp. and Apple as of March 6, 2005 or earlier violating Federal antitrust statues. The companies fraudulently concealed the agreements and failed to disclose them in their annual 10K SEC or Proxy filings, violating security law and Director fiduciary duties.
41. The evidence confirms Petitioner and shareholders were victims in
2005 of an bid rigging conspiracy led by Google and enacted in coordination with AskJeeves’s Directors who used their positions on the Boards of both MySpace, Inc. and Parent eUniverse to mislead the other Directors and shareholders while
9
facilitating and enjoying the economic benefits of an illegal bid rigging scheme.
42. This conspiracy included: (i) fabricating prior sale of MySpace stock with backdated agreement in November 2004 (ii) agreements allowing AskJeeves Director Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below fair market value using his RedPoint fund where he is managing Director;
a. September 27, 2004 Vantagepoint internal report proves SBH Enterprise,
Carlick, and AskJeeves manipulated Intermix Directors to forgo using less dilutive debt
financing available, instead facilitating sweetheart equity sale to Yang and RedPoint
Partners.
“Myspace w i l l requ ire approx imate ly $1.5 -2 mi l l ion in the next 2 months for s torage arrays , database servers , sw i tches and routers .”
And “The company is in d iscuss ions w i th S i l i con Va l ley Bank regard ing a $4m l ine o f cred i t , wh ich is l i ke ly to be approved.”
b. October 1, 2004, 3:05PM Rosenblatt contacts Sheehan using interstate wire
or interstate carrier to send and deliver the email:
“Just had a tough ta lk w i th Chr is DeWol f . H is lawyer id def in i te ly g iv ing h im concerns about our o f fer . Heart ache about us tak ing the tech, va lue i f we se l l , e tc . He rea l ly th inks he is worth more independent ly…I am to ld h im that is not go ing to happen.”
the disclosed order of events described in the November 2004 10Q is fabricated and this
email is in violation of both 18 U.S.C. § 1341 & 18 U.S.C. § 1343, and is a Key
component and predicate act in fraudulently concealing the false facts in the November
eUniverse 2004 10Q filing related to hiding backdated MySpace stock purchase
agreement by defendants.
c. October 7, 2004 3:45PM Sheehan contacts Rosenblatt & Carlick by interstate
wire or interstate carrier using an email in violation of 18 U.S.C. § 1341 &/or § 1343
10
furthering the fraudulent concealment scheme to fabricate and fraudulently conceal the
MySpace Stock purchase documents published in the November 2004 10Q were
fabricated and backdated with Subject: “MS thoughts o f the day”,
“My current thoughts on the MS s i tuat ion:
• We need to get in p lace the rev ised agreement before any meaningfu l negot ia t ions w i th any other th i rd par ty .
* I be l ieve I understand Chr is ’ concerns about be ing locked in to an i l l iqu id subs id iary , but that i ts the i r cho ice – they cou ld have MIX s tock i f they want l iqu id i ty .
* They are minor i ty shareho lders and need to accept th is fact . * We, In terMix , need the r ight to be ab le to se l l a l l o f MS. Inc lud ing
founders shares.
• We, In terMix , need the r ight to buy out the founders at a pr ice or a formula
On Redpoint :
* Why not cont inue ta lk ing to them, i t is too hard to f igure out i f they cou ld present the most at t ract ive dea l or not a t th is t ime”
d. November 4, 2004 11:43PM Carlick emails Sheehan, by interstate wire or
interstate carrier an email in violation 18 U.S.C. § 1341 &/or § 1343 furthering the
fraudulent concealment scheme to fabricate and fraudulently conceal the MySpace Stock
purchase documents published in the November 2004 10Q were fabricated and
backdated Subject: “My ta lk w i th Yang” stating,
“Andrew, Spoke w i th Geof f , who ho lds you in the h ighest regard. I am not in the loop on the i r o f fer , wh ich he descr ibed as 23% Redpoint , 25% Founders and pool and 52% Intermix . H is case for the o f fer was in terest ing and compel l ing , as In termix cou ld s t i l l “ fo ld in” the earn ings, t ra f f i c , e tc . I want to d iscuss w i th you my thoughts on the sub ject tomorrow, God know when, as we
11
have no breaks I can count on. In any case, I suggested that Geof f speak w i th you d i rect ly .”
e. November 5, 2004 11:58AM Sheehan contacts Carlick and states, by
interstate wire or interstate carrier an email in violation 18 U.S.C. § 1341 &/or § 1343
furthering the fraudulent concealment scheme to fabricate and fraudulently conceal the
MySpace Stock purchase documents published in the November 2004 10Q were
fabricated and backdated
“what i t comes down to is do we se l l ms now or keep i t . Do ing a dea l where mix keeps 52% doesn’ t make any sense for anyone except Yang. A l l the banks and investors th ink we would be foo l ish to se l l some or a l l o f ms now. We w i l l get much less benef i t to mix i f we own 52% and have g ive a l l sor ts o f r ights to an investor . R ichard wants to keep i t in mix .”
f. November 18, 2004, 3:56PM Orrick’s Richard Harroch contacted Sheehan,
Redpoint & AskJeeves’ Director Yang and RedPoint’s Beasly, by interstate wire or
interstate carrier an email in violation 18 U.S.C. § 1341 &/or § 1343 furthering the
fraudulent concealment scheme to fabricate and fraudulently conceal the MySpace Stock
purchase documents published in the November 2004 10Q were fabricated and
backdated
Subject: ‘MySpace Term Sheet ‘and states,
“Gent leman: As a fo l low up to our conversat ion today, a t tached ia a c lean and red l ined markup of the last vers ion o f the term sheet that was g ive to us in connect ion w i th the Myspace t ransact ion. Let us d iscuss the issues at your conven ience. R ichard Harroch <<MySpace Sa le o f Ser ies A Pre ferred Stock .doc>>”
g. Rosenblatt by interstate wire or interstate carrier uses email in violation 18
U.S.C. § 1341 &/or § 1343 to further the fraudulent concealment scheme forwards an
incoming Orrick email to Chris Lipp and Tom Flahie at 4:28PM to fabricate and
fraudulently conceal the MySpace Stock purchase documents published in the November
2004 10Q, to hide the fact the documents were fabricated and backdated.
The email states: “I have not seen yet”
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Rosenblatt professes to not know the terms that the company has already agreed to sell a
portion of MySpace.com to VantagePoint’s fellow board member on Ask Jeeves, Geoff
Yang and his fund company he is a principal in, Redpoint.
h. November 18, 2004 CFO Flahie emails Rosenblatt, Subject: ‘RE: MySpace
Term Sheet’ and states,
“th is s i tuat ion rea l ly goes beyond anyth ing I want to be a par t o f . I communicated my fee l ings in wr i t ing tw ice now about the lawyer for a large pre ferred stockho lder and one d i rector negot ia t ing a major bus iness t ransact ion on beha l f o f the company w i thout author izat ion o f our board and a l l I rece ived was an admonishment f rom Harroch about my emai l and to ld to shut up in a conference ca l l .”
S ince you have not seen th is yet and I have cer ta in ly not , th is makes a broader s tatement about our Sen ior Management .” “As an o f f icer I wou ld be dere l ic t in my dut ies to our company to a l low th is to cont inue outs ide o f the v iew of the Board w i thout do ing someth ing about i t”
Flahie uses interstate wire or interstate carrier in violation 18 U.S.C. § 1341 &/or § 1343
to deliver email to further the fraudulent concealment scheme to fabricate and
fraudulently conceal the MySpace Stock purchase documents published in the November
2004 10Q, to hide the fact the documents were fabricated and backdated.
i. November 18, 7:20PM Rosenblatt emails Flahie Subject: ‘Re:Myspace Term
Sheet’, stating:
“Tom, I know how th is cou ld look but i t is NOT at-a l l how i t may appear .”
and “Andy NEVER looked at i t as a vantage shareho lder , but as a Board member look ing out for In termix as a whole .”
and
“ I be l ieved (and was r ight) that he was bet ter pos i t ioned than I was to extract terms that would be acceptab le to the Board at large. Over the past week he was, to my surpr ise , ab le to get the
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terms we a l l th ink are BETTER for the company and make the Redpoint dea l a great dea l . “
and
“ In h inds ight , I shou ld have asked h im to g ive those new terms to Chr is and we should have sent the term sheet to Redpoint . I p lan on c lar i fy ing w i th Redpoint tomorrow that Andy was s imply he lp ing us get a dea l done and the Company w i l l take i t f rom here .” i
Rosenblatt uses interstate wire or interstate carrier in violation 18 U.S.C. § 1341 &/or §
1343 to deliver email to further the fraudulent concealment scheme to fabricate and
fraudulently conceal the MySpace Stock purchase documents published in the November
2004 10Q, to hide the fact the documents were fabricated and backdated.
j. November 18, 2004 at 7:51PM, Sheehan forwards the email thread and
CFO’s effective ‘whistleblower notification’ to Orrick’s Harroch who is directly
involved in the incident. Sheehan uses interstate wire or interstate carrier to deliver
email to further the fraudulent concealment scheme to fabricate and fraudulently conceal
the MySpace Stock purchase documents published in the November 2004 10Q, to hide
the fact the documents were fabricated and backdated, to conceal scheme to sell 25% of
Myspace.com to conflicted Interlocking Director violating Clayton Act fellow
AskJeeves Director, Geoff Yang in violationof18U.S.C.§1341,18 U.S.C. § 1343,
andviolationof18U.S.C.§1519(relatingtodestruction,alteration,orfalsification
ofrecordsinFederalinvestigationandbankruptcy).
(iii) agreements allowing Google, TimeWarner/AOL, News Corporation, AskJeeves, IAC, and other defendants to collude to gain economic benefits by delaying closing of a competitive EUNI MySpace search engine auction for a new commercial search engine agreement in the months leading up to News Corporation acquiring 100% of eUniverse in September 2005. This arrangement ensured Google’s $4.4 Billion dollar August 2005 secondary by tying up the fast growing
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online audience of MySpace, significantly growing its share of online search engine advertising while shrinking share of main rival #2 Yahoo; (iv) An arrangement allowing News Corporation to purchase MySpace.com at below fair market value, growing its market valuation and generating billions in incremental profits and a massive online audience to seed new online assets for years to come, while preventing a competitive auction with main rival Viacom.
k. MySpace and eUniverse’s failure to elect 5th MySpace Director was key part of scheme to rig bidding in Search Auction and sale of eUniverse. Failure to disclose Intermix’s majority owned MySpace, Inc. was in breach of this covenant in the August 2005 Proxy was a 14A violation. Defendants breach and non disclosure of such breach are used to effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C. §§ 1341 thru publishing,distributing and mailing the August 2005 Proxy omitting the disclosure of such breach.
l. euniverse’s failure to cure breach of Merger Agreement Sections 6.3 & 6.4 & 6.5. was a key part of scheme to rig bidding in Search Auction and sale of eUniverse. Failure to disclose the breach in the August 2005 Proxy was a 14A violation. Defendants breach and non disclosure of such breach are used to effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C. §§ 1341 thru publishing, distributing and mailing the August 2005 Proxy omitting the disclosure of such breach
m. eUniverse and CEO Rosenblatt by end of June has earmarked $25-30
million in monies the executives are not owed or entitled to which helps float his own
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requests for consideration higher. June 23, 2005 Email from Rosenblatt to
Montgomery on with subject ‘presentation’ and attachment ‘foxmeeting.ppt’ states,
“This deal would need to be a win-win for everybody. I think we could motivate and
energize the Myspace team if we took $25-30mm and put in escrow for 12-24 months.
They would receive that money if they continued to build Myspace and remained at the
Company. Right now, they own 20% and would receive about $20MM (due to the
preference from Redpoint) if we exercised our option. If they could sell for $250mm they
would receive $50mm. While they think Myspace is worth far more than $250mm, the
escrow would clearly be enough incentive to keep them very motivated and want to stay
on board.”
eUniverse and Rosenblatt thru use of such email violate 18U.S.C.§1341&/or§ 1343,
and18U.S.C.§1519(relatingtodestruction,alteration,orfalsificationofrecordsin
Federalinvestigationandbankruptcy). Scheme is designed to bribe certain members
of management to support the below fair market sale of MySpace to News Corporation
while not disclosing such additional payments in the Proxy as required by Federal law.
n. On July 18, 2005 at 8:19PM, eUniverse’s Rosenblatt uses interstate wire to
email News Corporation executive, Levinsohn in violation 18 U.S.C. § 1341 &/or § 1343 to further the fraudulent scheme to sell eUniverse and Myspace below fair market value. The email indicates Rosenblatt is aware the $12.00 per share price he negotiated with News Corporation days earlier is below fair market value and is aware of the correct valuation level for internet assets including the future value Google will use to value AOL in the months ahead,
“Snippet of the press playa. You will be famous…now 20B”
BROWN v. BREWER FEDERAL SECURITY FRAUD CLASS ACTION
42. Petitioner was originally part of a Federal Class Action filed in
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Federal Court as a securities class action, titled Brown v. Brewer. However, the defendants led by News Corporation and Hogan Lovell , engaged in a series of coverups and struck a deal with Class Counsel to remove key evidence and claims including initiating a scheme to blatently obstruct justice by eliminating petitioner before he could submit evidence into the Federal court in 2009 which would have led to adding claims
43. June 17, 2010 Federal Judge King Summary Judgement states:
“ Though Brewer’s failure to recall what everyone had specifically asked back in 2005 would be understandable, a reasonable jury might draw a negative inference from his representation that he could not recall any discussion as to the investment banks’ analyses.
Construing all of the above testimony in the light most favorable to Plaintiff as we must on Defendants’ motion for summary judgment, we conclude that it is at least triable as to whether the remaining six board members consciously disregarded their duties and acted in bad faith. There is evidence in the record suggesting that no one on the board asked any questions about the requested per share price, the treatment of the competing bidders, the fairness valuations, or the relative likelihood of a Viacom bid. A reasonable jury could infer that this evidence demonstrates the other six directors consciously abdicated their roles as corporate fiduciaries required by law to do their utmost to maximize shareholder wealth. “ “Nevertheless, we think a reasonable jury could find that the other six directors exceeded the bounds of negligent conduct, willfully proceeded to their decisions knowing they lacked material information, Gesoff, 902 A.2d at 1165, and thereby consciously disregarded their fiduciary duties. Disney, 906 A.2d at 66”
“2. Self-Interested Transaction In the alternative, Defendants move for summary judgment on the second theory supporting the breach of fiduciary duty claim, arguing that five of the eight Defendants (a majority) were not self interested or controlled by someone who was. “
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“Plaintiff argues that Rosenblatt deliberately misled the other board members regarding the viability of the Viacom bid, steering them into approving the merger without waiting even a couple more days to see if Viacom would top News Corp.’s offer. (Joint Br. 26-27). “This evidence is sufficient to raise an inference that Rosenblatt’s presentation to the board may have been misleading as to Viacom’s seriousness.
According to Mosher’s description of the board meetings, “from the management team estimation standpoint [sic], they were not inclined to make an offer for the company on the time line that we were looking at.” (Id. at 25:18-21). “ there are at least triable issues of fact as to whether Mosher was manipulated by a self interested director, Rosenblatt. Moreover, based on Mosher’s description of the content of Rosenblatt’s presentations to the board, the issue of manipulation is triable with respect to all of the other board members. Accordingly, as a reasonable jury could potentially conclude that a majority of the directors was interested or manipulated by someone who was, we hereby DENY Defendants’ Motion for Summary Judgment on this second basis for Plaintiff’s claim of breach of the duty of loyalty.
A. Alleged Material Omissions
“current revenue and profits” omission, which was so clearly identified in the CSAC (if not so clearly in the interrogatory responses). Accordingly, as this argument was not waived, and Defendants have not made any threshold showing entitling them to summary judgment on this basis, we DENY the Motion for Summary Judgment as to this alleged material omission under Count I
Here, we conclude that there is at least a triable issue as to the materiality of the omission of Intermix’s internal financial projections. Accordingly, Defendants’ Motion for Summary Judgment is DENIED as to this alleged material omission.
Outstanding Derivative Lawsuits
Plaintiff also argues that Defendants failed to disclose one pending
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derivative lawsuit, LeBoyer v. Greenspan, et al., No. CV 03-5603-GHK (JTLx), and the fact that shareholder derivative standing would be extinguished as to both LeBoyer and Greenspan v. Salzman, the two derivative lawsuits pending at the time the Proxy was issued.
Defendants concede that they did not disclose the existence of the pending LeBoyer action. (Joint Br. 56 n.67).
With respect to the disclosed Greenspan v. Salzman action, Defendants argue they had no obligation to further announce the extinguishment of derivative standing.
Here too, the disclosure above is arguably misleading as well, as it did not affirmatively disclose that the Greenspan v. Salzman plaintiffs’ derivative standing would be extinguished under Delaware law. (J.A., Ex. 4, at 332). Instead, it only stated that Fox Interactive Media would seek the dismissal of the action and would do so only if it was not required to pay the plaintiffs or their counsel. (Id.). Accordingly, it is at least triable whether the above language was misleading as to the extinguishment of derivative standing, which was material information. Accordingly, we also hereby DENY Defendants’ Motion for Summary Judgment as to this alleged material omission.”
44. Edell & Defendants in mid-2009 launch another prong of fraudulent
concealment. includes i) publication of a book by employee loyal to News Corp to fabricate the background of Jeff Edell a former Director ii) Using fabricated Edell character to conceal truth that MySpace asset sale documents were not executed until 2004. These schemes create a fraud upon the court and keep petitioner and Class members from getting benefit of fair judicial process.
45. Defendant’s leverage their relationship with acquiror to create defamatory and fabricated lies thru acquiror News Corporation employee Angwin’s published in late 2009 book, ‘Stealing MySpace’ which fraudulently conceals the true background of former Director and Chairman Jeff Edell and his scheme with
19
Brewer to forward a fabricated false resume.
46. This creates further ongoing defamatory damages to Plaintiff and
Shareholders because Class Counsel accepts and uses false Edell facts in book instead of Plaintiff’s facts offered to Class Counsel in 2012 Federal Class Action in Los Angeles Central District. Edell’s false facts allow the fraudulent conveyance Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004. Further, Edell’s false facts which become Acquiror News Corporation false facts, obstruct Plaintiff’s true facts from entering the record for the benefit of the Federal Court learning the true damages and claims rightfully owed to shareholders. Plaintiff and shareholders will continue to suffer until the defective disclosure is cured by Defendants. (70B Declaration, pg. 24-27, paragraphs 114-131)
47. Additional act of fraudulent concealment is part of scheme by defendants tied to 2009 Angwin published book that uses fabricated documents to support critical contentions. altering, destroying, mutilating, or concealing a document with the intent to obstruct justice in violation of 18 U.S.C. § 1512(c)(1);
48. Petitioner a fact witness with testimony that was adverse to Defendants was excluded and obstructed from entering evidence into the Brown Brewer case, immediately before Defendants plugged in Angwin’s false facts and testimony while using “Stealing MySpace” as an uncontested source of facts to corrupt the Class’s case And damage/expert reports. 49. News Corporation destroyed Petitioner testimony from ”appearing” which damages Petitioner and violates Section 1512(d) which criminalizes the actions of
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“[w]hoever intentionally harasses another person and thereby hinders, delays, prevents, or dissuades any person from” appearing before an official proceeding, law enforcement officer, or United States judge.
50. Angwin fraudulently conceals evidence of Edell’s true work experience and back ground and his violation of SEC rules in 2003 and 2004. Defendants conceal their knowledge of this scheme thru the March 19, 2012 Approval of the Federal Brown Brewer settlement that Petitioner and 4 other Class members attempted to object to or intervene to remove RGRD and Jim Brown from representing the Federal Class and agreeing to An Inadequate consideration for the settlement and failure to assert more valuable claims and evidence into the Court prior to approving settlement.
51. Angwin, Hinton, News Corporation, Hogan Lovell, RGRD, and eUniverse
Defendants violate 18 U.S.C. § 1512(c)(1) and 18 U.S.C. § 1519 by hiding evidence of Edells two resignations on his bio that were really his last two jobs instead of submitting an accurate bio, defendants stretched the job of Edell that was actually 3 jobs prior, and increased this 3rd job by another 2 years, to the year 2002 (from 2000). Edell both omits to accomplish his end goal of making detection and disclosure of his true track record and financial history as difficult as possible. i. Angwin, News Corporation, Hinton, Murdoch, RGRD, eUniverse and Orrick Conceal the false revised BIO of Edell filed in July 2004 SEC filings:
"Mr. Edell was the Chief Executive Officer of Showorks Entertainment Group. Inc., a Delaware corporation that later changed its name to Media Technology Source of Delaware, Inc. Within two years of the time that Mr. Edell resigned from that company, it filed a petition for relief under the United States Bankruptcy Code."
52. Defendant’s scheme entailed Creating a fictitious Glowing work experience
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for Edell using a fabricated Resume in 2003 that News Corporation, Hinton, Angwin,
and Murdoch determined would be used to harm Petitioner In a book that was published called “Stealing MySpace” and was sent in US Mail to bookstores Across the United States beginning in March 2009, and overseas with the fabricated false facts related to Edell’s true work Experience and his SEC violations in 2003, 2004, 2005 in violation of Rule 401, this violated section 18 U.S.C. § 1341.
53. After the Class won summary judgement in June 2010, petitioner in
2011 tried to bring new evidence to the attention of Class Counsel indicating the true damages were related to the value of MySpace’s search value, the claims and facts which had never been put before the Federal Court. Petitioner’s Rule 701 damage report providing for damages of over $96 billion dollars was ignored by Class Counsel who instead joined with defendants in a brazen scheme to: i) mislead and initiate a fraud upon the Court by changing the definition of the certified class to eliminate upwards of 60% of the eligible shares and shareholders and ii) enter into a sham settlement for pennies on the dollar which was accepted by the Federal Court in March 2012. 54.InSeptember2010,byRGRD,Baron,HoganLovell,Stone,NewsCorporation,OrrickandotherDefendantsfileaJointMotiontobanfactwitnessandPetitionerfromtheFederalClasstodelayandharassPetitionerfromappearingbeforeFederalJudge.DefendantsknewthemotiontobanthepetitionercouldnotbetrueunlessOrrickcouldcontinuetosuppressnewevidenceanddiscoveryfromenteringtheFederalBrownV.Brewerongoingcase.
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55.OtherEvidencedestroyedbyOrrickincludedtheirtiesandbusinesswithMySpaceParentCompanyexecutiveChrisDeWolfe.OrrickandDeWolfeworktogetherin2004and2005todocumentafabricatedsaleofequityofMySpaceatrockbottompricesforDeWolfe.56.In2010,BaronandNewsCorporationandHogan&Lovell,andStone,andRGRDandOrrickviolated18U.S.C.§1341(relatingtomailfraud)bysendingnoticeoftheJointMotiontoBriefthe“MotiontoBanBradGreenspan”forpurported“resjudicata”theyintendedtofileinFederalCourtviaemailtoPetitioner’sthenlawyerMr.Lawrence.
i. AboveDefendantsviolatedfurther18U.S.C.§1512(relatingtotamperingwithawitness,victim,oraninformant)18U.S.C.§1513(relatingtoretaliatingagainstawitness,victim,oraninformant)and18U.S.C.§1519(relatingtodestruction,alteration,orfalsificationofrecordsinFederalinvestigationandbankruptcy)byomittinganddestroyingtheevidencetheypossessedatthetimetheaboveactionsweretakenthatwouldhaveprovidednewfactsandinformationandclaimsnotraisedorinStateproceedingandthatwouldhavetheeffectofvoidingthedefendant’smotion.ii.RGRD,Baron,WissbroeckerviolatedtheirfiduciarydutytoPetitioneraswellasaidingandabettingaboveviolationsofotherDefendants.iii.Baron&RGRDliedandfabricatedbriefings,pleadings,andaffidavitsin2011and2012tofraudulentlyconcealthepriorcriminalactsinFederalCourt.
57. InDecember2010,RGRDwasagaindisloyalbychangingtheClass
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Certificationtoreducethe#ofeligibleshares.
i. 6/8/09 – Judge King approved “Certified Class” with definition: Most clear is position of RGRD Law at the time:
“Plaintiff responds herein to both questions raised by the Court in its Order re: Plaintiff’s Motion for Class Certification: (1) should the class definition be modified to include only holders of Intermix Media, Inc. common stock who held continuously from July 18, 2005 (the date the merger with News Corporation was announced) through the consummation of the merger on September 30, 2005; and (2) should the plaintiffs in the state court actions be carved out of the class definition? As set forth below, the answer to both questions is no.”
ii. 12/23/10 – Certified Class is victim of definitional change by RGRD
Law, inserting ulawfully, word “continuously”. This cuts approximately 60% of total shares that were eligible under “Certified Class” definition.
iii. December 2011 – RGRD challenged by Shareholders objecting1 to Settlement denied the Class Certificate had been switched.
58. Sony Music Corp and Seligmann using its control position on the Board of the RIAA and its relationship with EMI and Warner Music Group, induced Arent Fox to falsify his affidavit and the fact contained which were used to conceal the fact that EMI and Petitioner’s startup LiveUniverse, Inc. had entered into a music text lyric license prior to Warner Music, EMI, RIAA, Sony Music, and PeerMusic filing a federal 1*Included: -Largest shareholder of original Certified Class defined in 2009, Trafelet & Co., a multi billion dollar NY Hedge Fund which retains law firm referred by Brad Greenspan, another injured shareholder and fact witness. Brad was one of named plaintiffs in State Class action which was dismissed in 2006. -Similar to Cut/lost shares, RGRD switched its position unlawfully, allowing Defendants to file uncontested Motion to Ban state court plaintiffs, un defended, default judgment carved out Brad’s 2,900,000 shares. (Brad was the largest single shareholder, owning about 10% commons stock at time of sale.
24
copyright infringement complaint that claimed LiveUniverse had never entered into such an agreement in 2009. 59. It was part of the Defendants’ scheme to conspire to interfere with Plaintiff’s livelihood by filing a lawsuit against Plaintiff in 2009 in retaliation for providing truthful information to the SEC, DOJ, and FTC relating to the Defendants’ scheme, in violation of 18 U.S.C. § 1513(e) and (f). 60. It was part of the Defendants’ scheme to interfere with Plaintiff’s livelihood by disseminating defamatory statements about Plaintiff to the public through various media outlets in retaliation for providing truthful information to the SEC, DOJ, FTC, and Federal and State court relating to the RICO Defendants’ scheme, in violation of 18 U.S.C. § 1513(e) and 1513(f), NEWS CORPORATION: CRIMINAL HACKING & BRIBERY
61. In 2012, News Corporation, who indemnified director defendants in Brown v. Brewer and was operating the case’s U.S. legal strategy, was exposed as a criminal enterprise that had hacked the phones of over 1000 UK citizens and employed a massive campaign of bribing police and public officials.
62. News Corporation’s general counsel resigned in 2011 and its CEO appearing under oath at the Leveson Inquiry admitted he was the victim of a “coverup” and all criminal acts exposed had gone on without his knowledge.
63. News Corporation conceded its internal controls were defective as a result of the exposure of years of bribes its UK subsidiaries had paid out and hidden by falsifying its financials.
64. At the current time, the CEO’s most trusted lieutenants and top
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employees are on criminal trial for obstruction of justice, bribery of government and police officials, and criminal phone hacking in the UK. 65. Four employees of News Corporation have already pled guilty.
66. News Corporation, has already conceded it has no defense for the illegal acts charged and admits its internal controls were defective and the CEO didn’t know what was going on and the same “coverup” News Corp claims to be a victim of was operating and responsible for the acts petitioner claims herein. V - CONCLUSION:
67. Chancery Court’s failure to force Defendants to honor their promise to fix the defective Disclosure in 2003 is directly responsible for allowing Defendants to steal upwards of $32 Billion in damages (Rule 701 Damage Report) from thousands of shareholders in 2005 including Petitioner.
68. Defendants have failed to respond to a Motion 70(b) filed with Judge Strine January 2, 2014 seeking relief from the contempt of then Vice Chancellor Strine’s order and ruling January 14, 2004 and the included agreed relief for any “technical violation”. VI. CLAIM COUNTS COUNT # 1 - § 1503 (a) Violation 69. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 70. All Defendants have violated Count #1
COUNT # 2 - § 1503. (b) Violation
71. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 72. All Defendants have violated Count #2 COUNT #3 - § 1503 (c) Violation
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73. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 74. All Defendants have violated § 1503 (c)
COUNT # 4 - § 1503(d) Violations. 75. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 76. All Defendants have violated Count #4 COUNT # 5 –§ 1504 TRIGGERED PETITIONER RIGHT TO CIVIL REMEDY UNDER § 1505(f)
77. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 78. News Corporation 2013 UK CRIMINAL GUILTY PLEAS “UNLAWFUL UNDER” 1504 and 1505(f) COUNT # 6 - (BREACH OF AGREEMENT)
79. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 80. Sony has breached TheJuly2003Optionagreementwhichstated,
iv. “Pursuant to the debt financing agreements, eUniverse and VPVP agreed that in the event that VPVP does not exercise the Option within 120 days of its grant, that VPVP may, within 10 days after the expiration of such 120-day period, transfer the Option to eUniverse in exchange for a warrant (the “Warrant”) to purchase 200,000 shares of the Company’s Series C Convertible Preferred Stock.”
81. Sony and VantagePoint Venture Partners have further breached
“OPTION AGREEMENT, dated as of July 15, 2003, among 550 Digital Media Ventures, Inc. (“Seller”), an affiliate of Sony Broadband Entertainment, Inc., eUniverse, Inc., a Delaware corporation (the “Company”), and VP Alpha Holdings IV, L.L.C. (“Buyer”).”
Sections 6 & 7 & 10 & 14 which state:
“6. Representations and Warranties of Seller. Seller represents, warrants and covenants to Buyer, as of the date hereof and as of the Closing Date, that:
27
(e) No Price Stabilization or Manipulation. Seller has not taken and will not take, directly or indirectly, any action designed cause or result in stabilization or manipulation of the price of any of the Shares.
7. Representations and Warranties of Buyer. Buyer represents, warrants and covenants to Seller, as of the date hereof and as of the Closing Date, that:
(c) No Price Stabilization or Manipulation. Buyer has not taken and will not take, directly or indirectly, any action designed to cause or result in stabilization or manipulation of the price of any of the Shares.”
“14. Buyer May Exercise Option For Less Than All Shares. Notwithstanding any
other provision herein to the contrary, Buyer may exercise the Option with respect to
less than all of the Shares, but in no event less than 50% of the Shares.”
10. Certain Transactions. Seller shall vote as a stockholder in favor of an investment
and loan transaction between the Company and Buyer resulting in an additional
investment in the Company by Buyer of no less than $5 million at a price of at least
$1 per share (if an equity transaction), as approved by the Board of Directors of the
Company (the “Transaction”). “
“16. Miscellaneous. This Agreement may not be modified or amended, except by an instrument in writing signed by duly authorized officers of both of the parties hereto.”
82. Proxy notes on page 17. that on “October 31, 2003, the option term
was extended to April 16, 2004 and VantagePoint partially exercised the option and purchased 454,545 shares of our Series B preferred stock from 550 Digital Media Ventures.” The note an exhibit had an original term of 120 days or November 16, 2003 for VantagePoint to purchase the Sony Corp shares under the option.
83. In Intermix 3/31/04 - 10K section 'Certain Relationships’
"On October 31, 2003, the option term was extended to April 16, 2004 and VantagePoint partially exercised the option and purchased 454,545 shares of our Series B preferred stock from 550 Digital Media Ventures. On April 16, 2004, VantagePoint exercised the remainder of the option.”
84. However, The October 31, 2003 ‘extended option’ agreement between
28
Sony and VantagePoint was improper and what was not disclosed to shareholders was that thru Orrick and defendants’ actions, shareholders i) were losing the bargain of the deal which called for Issuer to have the right to purchase 100% of the Sony ‘Option Shares’ after January 16, 2004 as part of an agreement that would transfer 200,000 Series B Warrants of Issuer to VantagePoint and ii) The October 31, 2003 ‘extended option’ actually acted as a way that Orrick and defendants sought to avail themselves of the 19.9% nasdaq and other exchange limits that required Issuer to have a shareholder vote prior to approving any issuance of stock of Issuer including an issuance of stock as part of an integrated deal that shifted more then 19.9% of Issuer’s stock to new party. COUNT # 7 - (“inseparable fraud”) VIOLATION 85. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 86. All Defendants have violated Count #7 COUNT #8 –PAREXEL TYPE FRAUD VIOLATION THRU FAILURE TO DISCLOSE “COMPLIANCE FAILURES”
87. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 88. All Defendants have violated Count #8 COUNT #9 – RULING BASED ON DELAWARE STATUE AND CODE 1304 THAT 2004 MYSPACE TRANSFER AND 2005 TRANSACTIONS “FRAUDULENT”
89. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 90. § 1304. Transfers fraudulent as to present and future creditors.
COUNT #10 – VIOLATION OF DODD-FRANK WHISTLEBLOWER STATUTE – SECTION 922) &18 U.S.C. §1513(e))
91. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein.
29
92. Petitioner is entitled to a private cause of action for damages suffered Pursuant to the Dodd Frank Whistleblower Statute. Mr. Greenspan is entitled to a private cause of action for whistleblowers alleging retaliatory discharge or other discrimination. Id. § 78u-6(h)(1)(B)(i). Relief includes Right to Jury Trial, reinstatement, double the back pay owed, and costs and fees. Id. § 78u-6(h)(1)(C).
i. Damages including loss of employment and Chairman Director position from Myspace Parent company in 2003 under 15 U.S.C. § 78u-6 ("Section 922") and loss of Director employment under the same statues. Petitioner reported information concerning Defendant’s breach of fiduciary duty, disloyalty, and violation of Section 10(b) of the Exchange Act when he resigned as CEO on October 30, 2003. Petitioner reported information concerning Defendant’s breach of fiduciary duty, disloyalty, and violation of Section 10(b) of the Exchange Act when he resigned as Director in December 2003.
Mr. Greenspan was terminated for two reasons: (i) in retaliation for reporting misconduct of Brewer, Edell, Lipp, and other Defendants; and (ii) to stop the CEO from terminating,demoting or decreasing the compensation of Brewer, Edell, Lipp, Moreau. iii) The CEO’s refusal to sign a Board created settlement agreement during the week of October 30, 2003 which would have prevented Greenspan from contacting other shareholders or regulators and disclosing the breach of fiduciary duty or other security violations the Board and certain executives had committed in the process of consummating the VantagePoint Series C Financing in October 2003. The acts had been committed by Defendants
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while blocking the superior rate Common Stock financing sitting in Issuer outside law firm’s bank account. Endangering the entire Public Corporation PETITIONER ALSO HAS CLAIMS AGAINST SONY
ix. Sony Corp executives, Defendants in this Complaint, abused their fiduciary duty to Issuer by misleading the Public and shareholders as part of assisting Defendant’s scheme to take control of eUniverse, Inc. in 2003 and get approval and entrench Defendants as a result of the January 2004 Annual Meeting and Proxy Battle against Petitioner.
x. Sony Corp Defendant’s possessed a critical Board Seat Nomination legal right the Series B Stock possessed. Sony Corp nominated Edell as the Series B Stockholder in 2004 even after evidence in Delaware Court showed Edell and Defendants had mislead shareholders by Filing multiple defective and false proxy statements to Issuer’s shareholders in 2003 and 2004.
xi. As a Result of the applicable Defendant’s involvement in the above-
described conspiracy and conspiratorial scheme, the Plaintiff has suffered severe emotional, financial, mental, and physical harm and other deleterious effects; been unfairly disadvantaged in multiple civil lawsuits initiated against him by several of the Defendants and other parties; had his freedom of speech severely impinged; been forced to spend hundreds of thousands of dollars on legal fees; been forced to; And had his personal and professional reputation severely and permanently damaged. Based upon information and belief, some of the Defendants are continuing to engage in the above-described conspiracy and conspiratorial scheme
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even though they are well aware of the devastating toll that their prior conspiratorial actions have already taken on Petitioner and Petitioner’s business assets. COUNT # 11 - Blasisus violation 93. Plaintiff incorporates by reference and realleges each allegation set forth above. 94. All Defendants are charged with Count #11 COUNT # 12 - Contempt Violation 95. Plaintiff incorporates by reference and realleges each allegation set forth above. 96. Defendants lied to Court regarding Defendant’s Proxy disclosure related to Edell. Defendant’s Failure to “make this right” as claimed by Defendant Delaware counsel is worthy of Contempt violation. COUNT # 13 - Ruling certain transactions after October 17, 2003 are Void. 97. Plaintiff incorporates by reference and realleges each allegation set forth above. 98. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October 17,2003. Defendants fraudulently concealed such properly noticed slate. Defendant’s have also not legally effected a valid closing or vote on the Series C stock sale or transfer from Sony of their Series B shares, blocking public issuer’s option received in three way agreement between Sony, VantagePoint, and public issuer in 2003. The crooked dealings expand when Orrick uses its insider knowledge to produce a commercial benefit for VantagePoint while having Issuer pay 100% of the cost by paying off Sony debt earlier then due.
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COUNT # 14 - VOID Defendants right to exculpation under 102(b)(7) 99. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 100. Defendant Directors right to Exculpation because of Judge King ruling finding “bad faith” and disloyalty must be void. COUNT #15 - Ruling certain transactions after October 17, 2003 are Void. 101. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein.
102. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October 17, Defendants fraudulently concealed such properly noticed slate. Therefore, Defendant’s have also not legally effected a valid closing or vote on the Series C stock sale or transfer from Sony of their Series B shares, blocking public issuer’s option right to rebuy the shares for benefit of common stock shareholders received in three way agreement between Sony, VantagePoint, and public issuer in 2003. 103. voids Blasius Directors compensation post Blasius event 104.voids VantagePoint financing tranche I on October 31, 2003
105.voids VantagePoint financing tranche 2 on January 24, 2003 which was subject to shareholder vote of items in Blasius Proxy created by Blasius Directors. 106.Plaintiff awarded damages to stock owned equal to the dilution caused by Blasius
Directors and Blasius Proxy.
107. Plaintiff awarded Expectency damages as Proxy Slate backer damaged by Blasius Directors and Blasius Proxy. 108. Award to competing Proxy slate compensation as if Slate Directors had not been
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victim of Blasius violation by defendants. COUNT #16 INDEMNIFICATION AND ADVANCEMENT CLAIMS 109. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein 110. PLAINTIFF RIGHT TO INDEMNIFICATION AND ALSO RIGHT TO IDEMNIFICATION FOR ADVANCEMENT LEGAL FEES. INCLUDING ALL MATTERS OR EVENTS OR FACTS CITED � 111. Plaintiff was Director and Officer at Issuer that owes Plaintiff benefit of “contract rights” defined in Section 7 of Issuer Bylaws for Indemnification and Advancement: “The rights conferred upon indemnitees in this ARTICLE VIII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.” (Exhibit 1,Article VIII Section 7. Nature of Rights ) 112. Plaintiff ‘s “Right to Indemnification” is entitled to: i) “indemnification” to “fullest extent authorized by the Delaware General Corporation Law” or “broader indemnification rights”2: 113. Plaintiff is also beneficiary broader protection compared to Del 145 statue limits3 114.Indemnitee in addition to being an Officer, was Director and due benefit of Issuer’s Eighth Bylaw broadening scope of Indemnification and Advancement rights: “EIGHTH: Directors of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve 2“shallbeindemnifiedandheldharmlessbytheCorporationtothefullestextentauthorizedbytheDelawareGeneralCorporationLaw,asthesameexistsormayhereafterbeamended(but,inthecaseofanysuchamendment,onlytotheextentthatsuchamendmentpermitstheCorporationtoprovidebroaderindemnificationrightsthansuchlawpermittedtheCorporationtoprovidepriortosuchamendment),”(ArticleVIIISection1;Exhibit1) 3“anyaction,suitorproceeding,whethercivil,criminal,administrativeorinvestigative(hereinaftera“proceeding”)”(Exhibit1eUniverseArticleVIIISection1.“RighttoIndemnification”)
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intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. “ (Exhibit 2)
INDEMNIFIED FOR “ALL EXPENSE, LIABILITY, AND LOSS” “SUFFERED” 115. Indemnittee “contract” right is Mandatory advancement. Plaintiff is not
limited by standard Delaware 145 Permissive advancement limitations such as allowing “terms and conditions” to be set that a “corporation deems appropriate”. 116. Petitioner seeks to be indemnified for following:
(a1) Damages and impact on Indemnitee from fabricated dividend or fraudulent conveyance of 33% of Myspace.com to insiders initiated in November 2004.
(a2) Damages and impact on Indemnitee from void October 31, 2003 Certificate of Designation of Series C Preferred Stock, void Series C Preferred Stock sale, void Series C Directors, void January 2004 Annual Shareholder meeting, void sale of Skilljam.com,
(a3) Damages and impact on Indemnitee from void February 2005 sale to RedPoint Capital of 25% of Myspace, Inc. stock. (a4) Damages and impact on Indemnitee from void name change by eUniverse, Inc. to Intermix, Inc., and sale of eUniverse, Inc. aka Intermix, Inc. to Defendant in September 2005. (a5) Damages and impact on Indemnitee from void issuances of stock and options to certain Officers and Directors after October 30, 2003. (a6) Damages and impact on Indemnitee from fraudulent concealment by Defendants of valid October 17, 2003 Annual Slate of Directors being validly nominated for Annual Shareholder meeting with a shareholder record date of October 23, 2003. (a7) Damages and impact on Indemnitee from void News Corporation 2005
purchase of eUniverse, Inc. since indemnitee owned 30% of eUniverse, Inc. (a8) Damages and impact on Indemnitee from lost $900 million Google Search Commerciial agreement.
(b1) Damages and impact on Indemnitee’s January 2004 conflicted “search
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engine” conflict and warning notice filed with SEC.
(b2) Damages and impact on Indemnitee’s May 2005 Whistleblower notice to Intermix, Inc. and Intermix’s june 2005 reply and actions.
(b3) Damages and impact to Indemnitee thru Carlick June 2005 fraudulent concealment while Carlick controlled Manatt Law firm misled & manipulated NYAG to investigate Indemnitee
(b4) Damages and impact to Indemnitee and Expectancy Damages from Indemnitee’s $13.50 Counter Offer to Purchase Intermix, Inc. and Myspace Inc (b5) Damages and impact to indemnitee and Expectancy Damages from Indemnitee’s failed online music lyric text community website venture after and as part of Sony facilitated November 30, 2012 Warner Music Group “PeerMusic” lawsuit against Indemnitee.
(b6) Damages and impact to indemnitee and Expectancy Damages from
Indemnitee’s failed buyout of publicly traded Delaware Incorporated Answers.com in 2011.
(b7) Damages and impact to Indemnitee and Expectancy Damages from
Indemnitee’s failed buyout of subsidiary of publicly traded Delaware Corporation, Washington Post Corporation in 2013.
(c1) Damages and impact to Indemitee and Expectancy Damages from
preventing Indemnitee from entering Rule 701 Damage Report into Federal Court in Los Angeles in 2011 and 2012.
(c2) Plaintiff did not receive $2.75 per share despite having qualifying stock
Held of over 2,900,000 shares.
Plaintiff as shareholder was damaged by reason that Plaintiff was Director and Officer of eUniverse, Inc. Plaintiff was obstructed from puttingRule 701 Damage Report into Federal Court before the December 31, 2012 final Disposition.
COMPLAINT FOR DAMAGES Requiring disgorgement and/or imposing a constructive trust upon Defendants’ ill- gotten gains, freezing Defendants’ assets, and/or requiring Defendants to pay restitution to Plaintiff and to all members of the class of all funds acquired by means of any act or
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practice declared by this Court to be an unlawful, unfair, or fraudulent. VIII - RELIEF REQUESTED A. WHERFORE, Plaintiff demands judgment and preliminary and permanent relief,
including injunctive relief, in its favor and in favor of the Class and against the Defendants as follows:
B. Awarding Plaintiff appropriate damages including compensatory damages,
together with pre- and post-judgment interest; C. Awarding Plaintiff the costs, expenses and disbursements of this action, including
any attorneys’ and experts’ fees and, if applicable, pre-judgment and post-judgment interest; and
D. Awarding Plaintiff such other relief as this Court deems just,equitable and proper. Dated: April 16, 2014
_________________________________ Brad D. Greenspan (SEAL)
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EXHIBIT #1
January 2, 2014 Brad D. Greenspan 264 South La Cienega Blvd. Suite 1236 Beverly Hills, CA 90211 Case C.A. No. 106-VCS Greenspan v. Brewer, et. Al. Dear Honorable Chief Chancellor Strine Attached for your consideration under Exhibit A herein is a Motion 60(B)(6) requesting the case be re- opened to allow for the merits of a Motion for Contempt 70(B) to be considered, along with the other relief your ruling explicitly allowed for under the ruling and statements you made during the hearing in January 2004 (A transcript of the hearing is attached as Exhibit #9 of Declaration in support of Motion 70(B) , specifically a Motion to Conform the Evidence, and a Motion for Judgment on the Pleadings. While several years have gone by since the case was closed in 2004, I believe it is meritious for The Chancery Court to accept the Motion 60(B)(6) that attaches as exhibit Motion (70)(B) for filing along with the other documents. First, procedurally, I followed the precedent and sequence for such an action from your decision in C.A. No. 4780-VCS (WIMBLEDON FUND LP – ABSOLUTE ) RETURN FUND SERIES v. SV SPECIAL SITUATIONS FUND, February 2011), in which you stated in the ruling, “the way for a party to obtain relief from a final judgment is for it to file a motion in this court under Court of Chancery Rule 60(b).” Second, because the underlying facts of the Motion for Contempt 70(B) involve fraudulent concealment by the defendants of the scheme that the motion seeks relief from, the amount of time that has passed should not bar this Motion from being accepted by the Court to consider. Specifically, the evidence discovered to pierce the fraudulent concealment scheme only became available after: i) defendants as part of the scheme published a book in 2009 calling “Stealing MySpace” with false facts in an attempt to further the fraudulent concealment which began in Chancery Court after your ruling and findings in 2004. The defendants then induced the Plaintiff Class Counsel RGRD Law to substitute the false facts from the defendant’s published book in place of my evidence I was seeking to submit into the Los Angeles Central District Federal Class Action Security Fraud case (Brown v. Brewer, which consolidated 2005 events and claims surrounding the September 30, 2005 Cash sale of eUniverse, Inc which had changed its name to Intermix to acquiror News Corporation, and certain 2003 claims related to the restatement eUniverse had suffered ). Therefore, I was a member of the Class of Plaintiff shareholders in regards to the 2005 claims, but a potential defendant Director in regards to the 2003 claims from the restatement. A fight broke out as I sought to alert other shareholders of the Class to the fact that Plaintiff Class Counsel had turned into a “renegade” suddenly sprinting to settle the claims for .07 cents on the dollar
after Federal Judge King’s June 2010 Summary Judgment finding in favor of the Plaintiff Class (of which I was a member of such class because of my shareholdings in the underlying public company). Judge King’s Summary Judgment focuses only on the 2005 matters. Both myself and the second largest member of the certified class, an institutional stockholder Trafelet & Co, a NY hedge fund, then attempted to object to the inequitable Settlement fashioned by RGRD Law. Further, I tried to intervene to stop the settlement and get the Federal Court in Los Angeles to review the new evidence covered up by defendant’s fraudulent concealment and fraud on the Chancery Court evidence and matters that I had discovered by March 2012. While I was forced because of monetary constraints (and the breach of a 2007 Common Interests Agreement I signed with RGRD Law) to file pro se, I was not allowed to intervene to inject the newly discovered facts, and the Federal Class Action Security Fraud class action had its final disposition with the December 31, 2012 distribution of $45,000,000 in settlement proceeds to the Class However, my alerting the other Class members led to Trafelet & Co’s retained lawyer being allowed to intervene at which time we discovered that RGRD Law had initiated a scheme to change the definition of the certified class in the settlement documents which effectively removed 60% of the eligible shares for participation in the settlement (RGRDLAW changed the legal definition of the Class in the 2012 settlement documents from the previous May 2009 definition which the federal court certified allowing anyone holding shares as of July 18, 2005 thru September 30, 2005 (date of consummation of the merger) to receive a share of settlement proceeds, to instead a new different legal definition which RGRD Law printed in the 2012 settlement documents which injected the word “Continuously” as a qualifier. RGRD Law had a copy of the 13-F SEC list of institutional holders which they had sent me in 2007, and realized by simply adding this one qualifying word, 60%+ of the eligible shares would be cut out because 80%+ of the institutional shareholders holding shares on July 18, 2005 when the merger was announced, sold their shares before September 30, 2005 when the company announced they would not entertain the competing $13.50 bid I had publicly announced (and in which I was fronting for Viacom, Inc. a rival bidder, who was not given a chance to bid and such scheme discussed by Judge King in his 2010 summary Judgement ruling. Thus the Federal Judge could not consider the facts and evidence including my emails with Viacom, their desire for me to keep their involvement in my bid anonymous unless the Company agreed to delay the September 30, 2005 shareholder meeting to approve the sale to News Corporation). My alerting the other class members resulted in Trafelet & Co. first discovering that they were in fact not eligible to receive any of the award because they had sold all 3 million of their shares before consummation of the merger before September 30, 2005, and working with a boutique law firm in Los Angeles such effort caused the Federal Judge to reject the first Settlement terms. While Judge King noted in his ruling rejecting the first Settlement terms, that it was “odd” that RGRD Law in 2009 had fought to create a certified class that included the type of shares held by Trafelet & Co and that in 2012 RGRD Law was now fighting jointly with the Defendants to claim “continuous” holding of the shares thru the date of the September 30, 2005 consumation was necessary to be a member of the newly defined certified class that RGRD printed in the settlement documents. Judge King appeared exhausted by the proceedings and not desirous to take action on RGRD’s breach of its duty of loyalty, fiduciary duty to the Class members, fraudulent concealment of new evidence, and fraud upon the Court (all of which I sought to be reviewed and considered by the Court in my intervention filings and 60b3 motions which the Court rejected to be heard because more then 12 months since the default judgement banning me as a member of the Class that I sought to vacate had passed) and approved a March 2012 2nd Settlement structure in which RGRD admitted Trafelet & Co.
was a member of the certified class but had shares which were not as valuable as the Continuous shareholder, and a smaller portion per share of the award was given to Non-Continuous shares held that were also members of the 2009 certified class During this time, I became aware of one of the underlying reasons for RGRD Law’s misdeeds. RGRD was sanctioned in 2008 in Chancery Court as part of the findings and rulings of (SS&C TECHNOLOGIES, INC. C.A. No. 1525-VCL). However, RGRD fraudulently concealed this sanction from me and never disclosed it to the Federal Court in Los Angeles. This was because the defendant in the Brown v. Brewer case was represented by Latham Watkins (although Latham directly represented the defendants in the California State Class Action which was dismissed at demurrer stage in 2006 before discovery was reviewed by myself and new findings and claims were created from such discovery that I subsequently shared with RGRD in 2006 which was then filed as part of the Federal Class Action Security fraud claims, Latham wisely allowed Hogan Hartson to sub in for Latham during the Federal Class action), the law firm that was opposite RGRD In SS&C. Thus, RGRD was induced to turn “renegade” against the interests of myself and the other Federal Class members because Latham was willing to pass on launching a new set of claims against RGRD and significant new liability for RGRD (using the findings the Vice Chancellor hints at in the SS&C Sanction ruling) that may have terminated RGRD’s ability to practice law. RGRD also wanted a piece of the $45 million dollar settlement and Latham’s silence on informing the Federal Court that RGRD was fraudulently concealing notice and disclosure of its Sanction from Chancery Court, allowed RGRD to remain as Class Counsel. Noting that I was unaware initially of the SS&C Sanction matter when I began in 2009, sending emails to RGRD indicating I was seeking to have them removed as Class Counsel after they did a joint motion to ban me as a Witness and not use my evidence (May 2009) after I informed them I would submit new evidence into the record I had discovered and had agreed to be subpoened by Defendant’s counsel Hogan Lovell and submit such new evidence imminently) ii) The additional critical evidence that caused me to purchase and review the 2009 “Stealing Myspace” book that RGRD used as the false facts injected into the Federal Court Summary Judgment, as well as the impetus for a below fair market settlement of the case in 2012, was the ongoing Federal Class action HiTech Employees v. Google, Apple, et. Al I discovered existed in 2012 (the class action had been filed in San Jose Federal Court in late 2011). After purchase of the “Stealing Myspace” book I discovered references to interviews with Jeff Edell at the back of the 300 page book (after seeing reference to use of “Stealing Myspace” by RGRD Law in the post 2010 Summary Judgement underlying summary of facts documents I reviewed after being forced to stop my internet business (my full time job at the time) and become “Active” as a class member that became aware RGRD had gone “renegade” and the entire Shareholder Class’s rights and claims were exposed and likely to be lost or severly diminished unless I personally became “active”. Only after launching a new investigation of “Jeff Edell” because the “Stealing Myspace” book underpinned its facts from the interviews with Edell, did I get access to an original D&O Questionaire that Edell had filled out in 2003 and submitted to the Nominating Committee of the eUniverse Board (of which I was not a member). It was this evidence of fraud that is at the heart of the 70(B) motion and is part of the Exhibits that proves clearly a new crime of Fraud Upon the Chancery Court (along with other equitable claims). Additionally new evidence disclosed in discovery in Hitech Employees v. Google only became available in May 2013 (when disclosed in that case’s attempt to Certify its Class), and such new evidence connects Director Carlick with being a party to secret bilateral agreements that Defendants in
that case admitted were formed in 2004 and 2005. As Carlick was a Director of AskJeeves Inc. which was one of the co-bilateral agreement parties that entered the admitted unlawful and illegal agreements With Google (and Google had signed a Settlement admitting as such with the Department of Justice in late 2011). Carlick was simultaneously a Director of eUniverse and his firm was control shareholder after using Edell to help take control and win the 2004 Proxy vs. my competing Proxy bid.). Thus Edell’s continuation of the fraud started in Chancery Court, discovered by Chancery Court, and then doubled up on by defendants, was also the key scheme of the fraudulent concealment that the 2009 “Stealing Myspace” book accelerated, and underpinned RGRD Law’s claims to the Federal Court in Their 2012 joint bid telling the Federal Court that my claims I sought to inject into the Court were lacking in credibility. Therefore, unless the Chancery Court provides the relief I am seeking, I can never recover my credibility versus the fabricated Director Edell scheme that the Motion 70(B) seeks to lance. Further, unless the Chancery Court re-opens the matter under its right to do so via 60(B)(6), then The Chancery Court will be allowing Defendants including Delaware defense counsel to lie to the Court and completely disregard the Court’s rulings when they are made. Therefore, I urge your consideration of the facts included in the attached Motions and appeal to your sense of equitableness in allowing these Motions to be filed in the Chancery Court despite the time since the matter was closed. I also note that because my Slate of Directors was nominated rightfully October 17, 2003 before I resigned as Chairman and CEO, and the Defendants fraudulently concealed this fact from the Chancery Court and the public, doesn’t provide a cure for the VOID actions defendants took after such date, nor does it provide a cure for the VOID actions the defendants took after thumbing their nose at the Chancery Court ruling in January 2004 (and fraudulently concealing from the Chancery Court in July 2004 at which time the Court entertained an award of legal fees but only granted in part because defendants were fraudulently concealing the aforementioned matters which are detailed fully in the underlying Motions). Sincerely,
Brad D. Greenspan
EXHIBIT A
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
BRAD D. GREENSPAN,
Plaintiff,
v.
BRETT BREWER, et al.
Defendants
) ) ) ) ) ) ) ) ) ) )
C.A. No. 106-VCS
MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)
2
I INTRODUCTION……………………………………………………………………………….pg.3 II SUMMARY OF ALLEGATIONS……………………………………………………………..pg. 4 III ARGUMENT……………………………………………………………………………………pg. 5 A. DEFENDANTS WILLFULLY IGNORED WARNINGS AND MULTIPLE NOTICES……………………………………………………….…..pg. 6 B. COURT PROVIDES RECOMMENDATION THAT DEFENDANTS OPTED TO IGNORE………………………………………………………....pg. 6 C. BOTH DELAWARE COUNSEL AND DEFENDANT BROKE PROMISE TO COURT……………………………………………………….pg. 7 D. DEFENDANTS IGNORED FIDUCIARY DUTY TO HONOR OCTOBER 17, 2003 DULY ELECTED PROXY SLATE……………………………….pg. 8 E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATION……………………pg. 8 F. SONY IS CONFLICTED AND HAS INFLICTED MULTIPLE PREDICATE ACTS……………………………………………………………………….pg. 9 G. FRAUDULENT CONCEALMENT USED TO DISCREDIT PLAINTIFF IN 2009 NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEME………………pg. 9 H. DEFENDANT’S “BAD FAITH” & “DISLOYAL” FINDINGS AND ACTS DAMAGING SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED BY FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004 DEFECTIVE DISCLOSURE…………………………………………………………………………pg. 10 IV CONCLUSION………………………………………………………………………………..pg. 10 I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION…………………….pg. 10
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MEMORANDUM OF POINTS AND AUTHORITIES COMES NOW the Plaintiff acting on his own behalf, hereby moves this Honorable Court to enter Judgment on the Pleadings in Plaintiff’s favor and offers in support the following: I - INTRODUCTION
1. The Plaintiff moves the Court to find Defendants in contempt under 70(B),
42(B) and/or 60(B)(3). Additionally, Plaintiff requests Court to sanction Defendants $25,000 per day since Chancery Court January 2004 hearing that “corrective disclosure” ordered by then Vice Chancellor Strine was not undertaken by Defendants and such per day sanction to continue until Defendants provide proof to the Chancery Court that “corrective disclosure” has been made to the public.1
2. During January 2004 trial, then Vice Chancellor finds Defendants guilty of Proxy Disclosure Violations.
i. “clearly, Mr. Edell was not validly elected to a Series B slot on October 6th. He just wasn't He could not have been appointed by the Board to a Series B slot.”(70B Declaration, Exhibit# 9, pg.63)
ii. “It's even odder when it's supposed to be retroactive to October 6th, especially when as of
October 6th, as I understand it, Mr. Edell hasn't even agreed to be on the board.”( 70B Declaration, Exhibit# 9, pg.63)
iii. “As of October 6th, I have got to say, I really -- I think Mr. Lipp basically said the board had
no idea that it was slotting him in a Series B. I think there is a great deal of record evidence-- it's not a big record, but what record evidence there is suggests that the board wasn't really thinking about putting him in as a Series B director but thought Sony was simply waiving its right.”( 70B Declaration, Exhibit# 9, pg.63)
iv. “It's a very strange -- I mean, I have got to say--I will say this on the record. I'm very
dubious about the validity of this election, and there is a certain formality that has to be done around electing people. And I mean, is this a proxy?” (70B Declaration, Exhibit# 9, pg.63)
v. “It's not really, I guess, my job to be Director of Hygiene for eUniverse, but now that very
competent Delaware counsel has been engaged to assist the company, I mean, it's pretty common knowledge that the board of directors has to approve the actual certificate of
1In Gallagher v. Long, the Delaware Supreme Court stated, “[a] trial judge has broad discretion to impose sanctions for failure to abide by its orders,” so long as the sanctions are “just and reasonable.”
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designation amendment that's being proposed. And you know-- and this isn't the first dot come kind of company that's tried to be a bit innovative.” (70B Declaration, Exhibit# 9, pg.63)
v. “There is a certain elegant order in things. You have to -- the board has to approve it. And
they have to approve it in the form they are proposing. Then the stockholders have to do it.” (70B Declaration, Exhibit# 9, pg.63)
vi. “The Court: “I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)
II – SUMMARY OF ALLEGATIONS
3. Defendants, VantagePoint, and Orrick are guilty of Fraud upon the Chancery Court thru first trying to mislead then Vice Chancellor Strine that Proxy disclosure is factual. Next caught in multiple lies before the court, defendants agree to fix defective disclosure and fail to do so.
4. Vice Chancellor Strine further discovered the certificate of designation amendment was
never approved by Board: “THE COURT: Has the board actually voted upon, Mr. Teklits, a final copy of the certificate of designation amendment? MR. TEKLITS: There was some confusion. We had done it with Mr. Lipp, Your Honor. Sony would not consent to an amendment that didn't require Vantage to exercise over 50 percent. They didn't want Vantage to exercise one share and they would lose their right to the seats. I'm not sure what was attached to what. THE COURT: It's not really, I guess, my job to be Director of Hygiene for eUniverse, but now that very competent Delaware counsel has been engaged to assist the company, I mean, it's pretty common knowledge that the board of directors has to approve the actual certificate of designation amendment that's being proposed. And you know-- and this isn't the first dot com kind of company that’s tried to be a bit innovative.” (70B Declaration, Exhibit# 9, pg.63)
5. Omission of Edell’s bankruptcy in Proxy statements is violation of: Rule S-K Item 401 and
Rule S-K Item 401 (f). (70B Declaration, pg.19-21, paragraph #s 94-103)
6. Defendants aware the January 2004 Proxy was defective, fraudulently concealing Edell’s work experience, ignore then Vice Chancellor Strine ruling, don’t cure the defects and make more
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disclosure violations in order to mislead shareholders and shift control of publicly traded eUniverse, Inc.
7. Sony Corp is guilty of aiding & abetting Edell and defendants to violate Rule SK Item 401 and defame Plaintiff and Plaintiff’s competing slate of Directors in January 2004 Proxy contest.
8. Defendants & their Counsel are guilty of Fraudulently concealing Edell’s background in 2003, 2004, 2005, 2009, 2010, and 2012, resulting in damages to Plaintiff and shareholders, as well as fraud upon the Chancery Court in Delaware and the Federal Court in Los Angeles Central District because Defendants induce Shareholder Class Counsel to substitute fabricated facts from fabricated Director Edell instead of Plaintiff’s true facts.
III – ARGUMENT
9. Under Court of Chancery Rule 70(b), this Court may find a party in contempt when it fails to obey a Court order of which it had knowledge. 2
10. The moving party is not required to show that the violation was willful or intentional, but the intentional or willful nature of a contemnor’s acts may be considered in determining the appropriate sanction.3 i. Scienter of Defendants is supported by (70B Declaration, pg.4-22, paragraph #s 20-103)
11. A party moving for a finding of contempt bears the burden of establishing by clear and convincing evidence that a court order was violated. If the movant makes that showing, the burden then shifts to the contemnor to show why it was impossible to comply with the order or why.4
2Court of Chancery Rule 70(b) supplies this court with the power — and broad latitude — to remedy violations of its orders. 327 Mother African Union First Colored Methodist Protestant Church v. The Conference of African Union First Colored Methodist Protestant Church, 1998 WL 892642, at *6 (Dec. 11, 1998). 4State ex rel. Oberly v. Atlas Sanitation Co. Inc., 1988 WL 88494, at *2 (Del. Ch. Aug. 17, 1988) (“[O]nce the party with the burden of proof has introduced evidence from which a fact finder could conclude that he has established a prima facie case, then the burden of going forward with the evidence shifts to the alleged contemnor to . . . [show] it was impossible to comply with the court order.”); see Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir. 1996); F.T.C. v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999); see also AM. JUR. 2D Injunctions § 321.
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12. Defendants based on precedential Delaware rulings, should be sanctioned and fined.5 13. January, July 2004, & August 2005 Proxies omit key facts rendering them defective and void. A. DEFENDANTS WILLFULLY IGNORED WARNINGS AND MULTIPLE NOTICES
14. Warnings by then Vice Chancellor Strine included: i. "But you can get this stuff fixed out or you put me in a position where I have got some sort
of -- this is low hanging fruit” (70B Declaration, Exhibit# 9, pg.63)
ii. “I don't have to say these words and you don't have to go fix them or call your client.” (70B Declaration, Exhibit# 9, pg.63)
iii. “the way the board purported to fill it was invalid.”(70B Declaration, Exhibit# 9, pg.63)
iv. “You may need to do corrective disclosure to begin with, because of this”( 70B Declaration,
Exhibit# 9, pg.63)
v. “Then I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)
vi. “real problem that I may have to take some notice of” (70B Declaration, Exhibit# 9, pg.64) vii. "could I plead with the Delaware lawyers for the company that if we are going to get -- if
you are going to get a consent from Sony, craft it. I mean, it's one thing Mr. Shannon and Mr. Walsh -- it's one thing if they want to do a Blasius thing. You know, you don't want to walk in here again with some sort of technical problem," (70B Declaration, Exhibit# 9, pg.64)
viii. “You know you probably have to amend your proxy statement, then.” (70B Declaration,
Exhibit# 9, pg.64) ix. “make sure you get it done right” (70B Declaration, Exhibit# 9, pg.64) x. “the company amends its proxy statement” (70B Declaration, Exhibit# 9, pg.64) xi. “You clean that up” (70B Declaration, Exhibit# 9, pg.64)
B. COURT PROVIDES RECOMMENDATION THAT DEFENDANTS OPTED TO IGNORE 15. Then Vice Chancellor Strine tips to avoid Blasius and Disclosure violations ignored:
i. "I can't help but observe the other thing, which is if this -- if the company --if the
5(GEORGELITTERSTv.ZENPHSOUNDINNOVATIONS,INC.,C.A.No.7700‐ML,2013)Because First State and CAMI failed to comply with paragraphs 3 and 5 of the PI Order, IDB is entitled to an order holding First State and CAMI in contempt and imposing an appropriate sanction. This Court has broad discretion in formulating a remedy for violations of its orders.6 As part of its broad remedial powers, the Court may impose a fine, for example, to coerce a non-complying party to cease improper conduct.
7
incumbent board is really fine with a fair fight and doesn't mind the common and the preferred voting together to elect a majority even now, which I don't know to be the case -- but if it were and you said, "Let's have a showdown. We have a large stockholder. We have a disagreement. Vantage is in here. Let's have the showdown in the OK Corral. We want Mr. Edell to be on the board." Well, there is an obvious way to do that. Right? And if you don't want to have a legal fight, then you know, you figure out who your four are. You know who the Vantage two are If Edell is one of the fighting four, you make sure the certificate of designation has been approved. You clean that up. You know you probably have to amend your proxy statement, then. Then maybe you change your sale and put Edell on it. And the four that is currently in there, make a decision as to being on the board or not.. You have a fight about the majority. That is the judge trying to be practical in a situation where I have seen both sides,” "I'm saying if it's fair fight time and you are ultimately going to have a majority up, that is a real clean way to do it. I don't know how Blasius comes into that at all. (70B Declaration, Exhibit# 9, pg.64)
ii. "I'm saying if it's fair fight time and you are ultimately going to have a majority up, that is a real clean way to do it. I don't know how Blasius comes into that at all.” (70B Declaration, Exhibit# 9, pg.64)
iii. "So to the extent that Sony -- for example, if Mr. Edell were to resign today, to say, "I am not longer on the board," one of his other colleagues would resign -- and you do it in however elegant fashion to make sure you get it done right. Mr. Edell is immediately reelected to the vacancy a common vacancy, and the company amends its proxy statement and puts him as one of the four.” (70B Declaration, Exhibit# 9, pg.64)
C. BOTH DELAWARE COUNSEL AND DEFENDANTS BROKE PROMISE TO COURT 16. Delaware Counsel Teklits and Defendants plus Sony break promise to Court:
“MR. TEKLITS: We will make sure this is right, Your Honor. I think everybody wants this amendment approved.” (70B Declaration, Exhibit# 9, pg.63)
17. Defendants fail to make Court ordered “corrective disclosure” of:
i. False December 30, 2003 Proxy: (70B Declaration, pg.19-21, paragraph #s 94-103) ii. False October 31, 2003 Press release (70B Declaration, Exhibit #4, pg. 38-39) iii. False Defamatory December 11, 2003 8k: (70B Declaration, Exhibit #6, pg. 44) 18. Defendants opt instead to initiate multiple new “Edell” disclosure violations thumbing nose at Chancery Court and promise made to then Vice Chancellor Strine:
i. Thru “ISS Report” Defamatory attack on Petitioner: (70B Declaration, pg.22, paragraph #s 104-108)
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ii. Thru “Los Angeles Times” Defamatory attack on Petitioner: (70B Declaration, pg. 23, paragraph # 109)
iii. Thru false and defective July 2004 Proxy (70B Declaration, pg. 24, paragraph #s 110-113 &
Exhibit #7, pg.48-49)
iv. False and defamatory January 26, 2004 Proxy Disclosure (70B Declaration, Exhibit #6, pages 45-46)
iv. Misleading investment bankers in 2005 Bidding Contest by failing to correct
previous Proxy statements and disclosures, ensuring Plaintiff status would be “Does not have significant credibility” so that Plaintiff would not have equitable opportunity to participate with $13.50 counter bid announced in September 2005 before Defendants consummated $12.00 per share sale to News Corporation. (70B Declaration, Exhibit #8, page 51)
D. DEFENDANTS IGNORED FIDUCIARY DUTY TO HONOR OCTOBER 17, 2003 DULY ELECTED PROXY SLATE 19. After January 2004 Chancery Court hearing, it was unlawful for Defendants to fraudulently conceal and to not honor Plaintiff’s October 17, 2003 approved Director slate nominated at validly called Board Meeting. (70B Declaration, pg.13, paragraph #48)
20. Voided Edell Director, voids Edell vote during Plaintiff and eUniverse’s October 16, 2003 Vote to Nominate Director slate proposed by Plaintiff before Plaintiff resigned as Chairman and CEO. This effects 3-1-1 win by Plaintiff vs. previous “No pass” Defendants purport existed from 3-1-2 vote before Chancery Court ruled Edell was never validly elected as Director in October 2003. E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATION
21. Defendants pass on fraudulently concealed unlawful acts including contempt of Court to
acquiror News Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal security fraud class action. Such email on July 17, 2005 from Corporate counsel Lang emailed at 4:13AM to Defendant Director Sheehan, “Subject: 'Purchase Agreement”, stating,
"On the issues, let's close on the remaining ones in a fair and reasonable way-- so we can build out relationship.” And
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“3. We feel like we have given indemnification on the shares and the purchase agreement itself to do so on any issue we have had no involvement in whatsoever (i.e. Greenspan) - that seems like too much. Andy, I know we are very eager to get this done. Let do it so both sides can feel good and move forward on our longer-term relationship."
F. SONY IS CONFLICTED AND HAS INFLICTED MULTIPLE PREDICATE ACTS:
22. Sony was an insider shareholder in eUniverse (Intermix, and Myspace by ownership level prior
to Sale of VantagePoint VC firm in July 2003;October30, 2003;April 2004 (SEC disclosure) and had a Director and Series B Nominee Edell in January 2004 Proxy.
23. Sony Corp’s general counsel Seligman is married to Joel Klein who began working for
News Corp in 2009. Sony has fraudulently concealed the defective Edell background & both violations of Rule SK Item 401 in January and July 2004 Proxy and Annual meetings respectively. Sony and/or Seligman are aiding and abetting News Corp for the benefit of Joel Klein who is an executive and Director earning $1m+ per year from News Corp. G. FRAUDULENT CONCEALMENT USED TO DISCREDIT PLAINTIFF IN 2009 NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEME 24. Defendant’s leverage their relationship with acquiror to create defamatory and fabricated lies thru acquiror News Corporation employee Angwin’s published in late 2009 book, ‘Stealing MySpace’ which fraudulently conceals the true background of former Director and Chairman Jeff Edell and his scheme with Brewer to forward a fabricated false resume, misleading CEO to get Edell onto the Board. This creates further ongoing defamatory damages to Plaintiff and Shareholders because Class Counsel accepts and uses false Edell facts in book instead of Plaintiff’s facts offered to Class Counsel in 2012 Federal Class Action in Los Angeles Central District. Edell’s false facts allow the fraudulent conveyance Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004. Further, Edell’s false facts which become Acquiror News Corporation false facts, obstruct Plaintiff’s true facts from entering the record for the benefit of the Federal Court learning the true damages and claims rightfully owed to shareholders. Plaintiff and shareholders will continue to suffer until the defective disclosure is cured by
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Defendants. (70B Declaration, pg. 24-27, paragraphs 114-131)
25. Defendants use ongoing Edell defective disclosure scheme to defame Plaintiff and impugn reputation in book Falsely claiming, “violent mood swings were part of Greenspan’s character”. (70B Declaration, pg. 26, paragraphs 127) H. DEFENDANT’S “BAD FAITH” & “DISLOYAL” FINDINGS AND ACTS DAMAGING SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED BY FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004 DEFECTIVE DISCLOSURE
26. Chancery Court’s failure to force Defendants to honor their promise to fix the defective Disclosure in 2003 is directly responsible for allowing Defendants to steal a minimum of $670 million in damages (Federal Judge King 2010 approved damage report) and upwards of $32 Billion in damages (Rule 701 Damage Report not used by Class Counsel because of ongoing Edell fraud) from thousands of shareholders in 2005. (Exhibit #1, page 12, June 2010 Federal Central District, Judge King, Summary Judgment Ruling) IV- CONCLUSION I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION
27. Rule S-K Item 401 (f) states the requirement for information disclosed in Intermix’s
January 2004 & July 2004 Proxy filings for Director’s “Involvement in certain legal proceedings” stating,
“Describe any of the following events that occurred during the past ten years and that are material an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant:
“A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;”
28. To make Proxy not defective under 14a or Delaware security laws, issuer would have to
disclose that,
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“Our former Chairman who resigned effective December 2003 was replaced by Jeffrey S. Edell. Edell was most recently President and CEO of Showorks Entertainment Group, Inc. from January 2001 thru April 2002. Sometime in 2002, Showorks Entertainment Group, Inc. underwent a name change to MTS, Inc. Sometime in September of 2002 Edell learned that MTS, Inc. had filed for bankruptcy under Chapter 7. Edell was not there at the time of filing. Edell has informed the company Edell was never personally named or contacted as part of the bankruptcy under Chapter 7 or subsequent proceedings. Edell was from 1995 thru December 31, 2000,President and CEO of Soundelux Entertainment Group., Inc.”
29. Defendants also fail to fix disclosure related to fraudulent “Amended” October 31, 2003
Note. Defendants cannot lawfully or validly backdate the October 31, 2003 $2.5 million dollar
note by simply creating a new Note disclosed in December 2003 with a date of October 31, 2003. (70B Declaration, pg.19, paragraph #91) 30. Plaintiff requests Court to sanction Defendants $25,000 per day since Chancery Court January 2004 hearing that “corrective disclosure” ordered by then Vice Chancellor Strine was not undertaken by Defendants and such per day sanction to continue until Defendants provide proof to the Chancery Court that “corrective disclosure” has been made to the public.
31. The interests of justice are properly served by the grant of this Motion.
Respectfully submitted Brad Greenspan, Pro Se
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EXHIBIT #1 June 2010 Federal Central District, Judge King, Summary Judgment Ruling
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
BRAD D. GREENSPAN,
Plaintiff,
v.
BRETT BREWER et al.
Defendants.
) ) ) ) ) ) ) ) ) ) )
C.A. No. 106-VCS
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
2
1. I submit this declaration in order to provide the Court and the parties to the above captioned litigation with information regarding this matter as. 2. I am over 21 years of age and I have personal knowledge of the facts set forth herein and, if called as a witness, could and would testify competently thereto. 3. I was founder of Issuer eUniverse, Inc. (‘eUniverse’) which later changed its named to Intermix, Inc. and was the largest common stock holder from Issuer’s creation and public listing in April 1999, thru the September 30, 2005 merger consummation at issue in this case. 4. On April 14, 1999, eUniverse began publicly trading under the symbol EUNI. The initial Directors and executive officers of eUniverse were Brad D. Greenspan, age 26, Chairman of the Board, Leland W. Silvas, age 44, President Chief Executive Officer and Director, Charles Beilman, Age 39, Chief Operating Officer and Director, and William R. Wagner, age 52, Vice President, Chief Financial Officer. 5. According to the SEC filing in 1999, Chairman and Director BG owned 57.2%.of the company and was a control shareholder of the public corporation as it began public trading. 6. eUniverse closed its first day of trading at $12.50 per share on April 14. 1999, at this time, eUniverse had less then 1 million unique users coming to its network of owned websites. None of the defendants were officers or senior executives of eUniverse at the time of the public listing or by the end of 1999. 7. In December of 1999, eUniverse launched its first social network platform, LivePlace.com, with proprietary technology acquired thru the Big Network Acquisition. Unfortunately, a year later, eUniverse exited the LivePlace business when it determined the technology at the time was not sufficient to prevent websites from slowing down for users after installing the LivePlace technology. However, LivePlace’s launch by eUniverse cements the fact that eUniverse was a pioneer in the social network space. LivePlace was described as: “a proprietary technology that turns a website into a public place where users can meet and interact through chat, instant messaging, and co-browsing.”
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
3
8. On July 31, 2001, eUniverse announces that for its March 31, 2001 quarter, it has generated its first net profit and third consecutive ebitda positive quarter. Becoming profitable was critical for eUniverse because as of its 7/31/2001 SEC filing the company only had $218,000 in cash vs. $2.3 million in cash as of the year before. 9. By October 2001, eUniverse had 31.3 million unique U.S. users and had the 8th largest online audience in United States for the period. By comparison, Ebay was ranked #9 with 31.29 million users and Google was ranked #14 with 26.9 million users. 10. On December 17, 2001, the NY Times features a story on eUniverse titled, “For Some Dot-Coms there Are Real Profits”, stating
“Meet Brad D. Greenspan and at first it seems like he’s a visitor from another era-- the Internet bubble of 1999. He's a 28-year-old chief executive of a public Internet company, eUniverse, with tens of millions of users and big backers like Sony."
11. eUniverse has $33.19 million revenue for 12 months ended March 2002 & $6.64 million EBITDA. 12. eUniverse by the end of 2002 had over 250 employees working in Los Angeles amongst this group, the company had developed highly skilled technology and internet Strategy executives. eUniverse also developed significant technology resources and assets gathered over its many years of operations. 13. Mr. Greenspan resigned as CEO on October 30, 2003 and on November 21, 2003, Morgan Stanley issued its annual internet report ranking eUniverse as the #1 fastest growing Portal based on data from the prior 90 days, ahead of AOL and Yahoo and ‘Excite Network’ which AskJeeves acquired in 2003. 14. The eUniverse board during week ending October 31, 2003 reneged on a common stock financing arranged by ThinkEquity and Greenspan which the same board had approved on October 16, 2003. 15. Instead the Board manipulated by defendants, changed course and determined to sell effective control of eUniverse, Inc. to San Francisco based private equity fund VantagePoint Ventures LLC, issuing below market price preferred stock and simultaneously breaching the 19.9% shareholder vote threshold which the company had also specifically promised it would not do in any financing weeks earlier to the Nasdaq listing panel. 16. VantagePoint had been told the week before by the Chairman and CEO of eUniverse that the
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
4
company had determined not to proceed with their highly dilutive $8 million preferred stock proposal which offered to buy shares at below $1.35 and effect a change of control of the $80 million market capitalized eUniverse without a shareholder vote, which violated the Nasdaq 19.9% threshold rule. 17. VantagePoint was informed that their proposed financing was economically inferior and that because Vantagepoint was still negotiating both terms and documentation and had not finished their diligence, the company had opted to close a $1.85 common stock financing from existing and new institutional investors. However, Chairman and CEO Greenspan invited VantagePoint’s David Carlick and their counsel, Orrick’s Richard Harroch to participate on the same terms as the institutional investors which was a significant discount already to the then approximate $2.25 - $2.40 per share public trading price range of eUniverse. 18. VantagePoint determined to not only reject the offer from eUniverse’s chairman and CEO to invest at $1.85, but embarked on and facilitated a brazen scheme to manipulate and defraud eUniverse’s Board and shareholders that put defendants Carlick, Sheehan, and Harroch in control of eUniverse’s board by October 31, 2003 and allowed defendants to recognize an almost sure windfall on their below market Series C preferred stock financing. 19. Not satisfied with their existing economic gains, defendants then Embarked between late 2003 thru September 30, 2005 on an ever growing series of schemes and misdeeds to loot the public company and effect transactions that benefitted themselves and related parties at the expense of the common stock shareholders who had held the majority of eUniverse. DEFENDANTS SCHEME TO ENTRENCH THEMSELVES AND SHIFT CONTROL 20. Mr. Greenspan was on the verge of terminating the general counsel and Chris Lipp, and the President of eUniverse, Inc. Brett Brewer, for their roles or poor performance in the restatement the company had suffered between October 2002 and May 2003, and ultimately a new controller and CFO were hired and eUniverse refiled via its 10k in August of 2003. Defendants General Counsel Chris Lipp was told the company would transition to a new general counsel after closing the next round of financing and President Brett Brewer was informed in the summer of 2003 he would be demoted.
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
5
21. Mr. Greenspan instead was faced with a scheme by Brewer to take control of the Board and shift control of
company over to VantagePoint and Defendants. The scheme is admitted in a letter from Edell to certain of the
defendants on the night of October 27, 2003, 3 days before Chairman, CEO, founder Brad Greenspan resigns:
“Brett is always on the side of Brad's removal when not around Brad, but has no backbone when in front of him. He is looking for us to do the dirty work but will not stand tall himself. “
i. The first fraud was Brewer recommending and endorsing a friend of his Jeffrey Edell to
come onto the Board of Directors in mid-October 2003. Edell, Brewer, and the Chief Financial Officer Flahie who had worked for Edell at a previous company all misled Mr. Greenspan and the other Directors as to the qualifications of Mr. Edell. Brewer distributed a 3 page resume/background prior to Mr. Greenspan determining to support Edell as a new board member, but such 3 pages did not disclose the truth that Jeffrey Edell had just bankrupted the last company he worked for. Nor did Edell’s public filings or Proxy background or press release made by Edell disclose this pertinent and critical information. Instead, Edell, Brewer, and Flahie knowingly omitted this information in order to get Edell onto the Board where Edell quickly damaged the franchise value of eUniverse, Inc. by several disloyal acts and breaches of fiduciary duty. (EXHIBIT #1, pg. 29. & EXHIBIT #2, pg. 31)
ii. Defendants key strategy that enabled them to take control of the board of eUniverse was by
fabricating or aiding and abetting the fabrication of information to mislead independent directors and CEO about
background of Jeffrey Edell. Instead, defendants artificially branded Edell with false credentials and set him loose to
engage recklessly with the corporate assets and the important financing the CEO had closed with common
stockholders clearly on better terms the the lower priced preferred stock peddled by venture capital firm. Defendants
cover up a recent bankruptcy under his stewardship. Brewer, Flahie, Edell, Lipp, Moreau, Carlick, Harroch, and
Sheehan do not correct the defective proxy that they all approve multiple times between November 2003 and
September 2005. The defect is caused by the omission of Edell’s recent bankruptcy a violation Item 401 Rule-SK
related to Director & Officer work experience background.
iii. Defendants recognized the already locked in profits and upside that existed
for them if they could force eUniverse to accept VantagePoint’s inferior more costly financing.
iv. Defendants use the fabricated Edell resume in a series of Shareholder letters and press releases in an
attempt to cover the unexpected news that the CEO has been forced to resign as part of defendant’s scheme to cause eUniverse shareholders to be diluted and pay for more expensive financing so that the Directors
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
6
led by Brewer could keep their jobs and receive significant upside from the incoming directors from VantagePoint and Orrick’s Harrosh. (Exhibit #4,pg.38-39) is November 2003 press release omitting Edell’s CEO role in the MTS 2002 Chapter 7 bankruptcy and also another turnaround company he ran in 2003 more recently that also failed according to Edell’s accurate D&O submitted to the Nominating Committee. However, Edell continues his sleight of hand and now promotes only the Soundelux CEO role without disclosing end of tenure in 2000 when it was sold and creates Impression he was most recently working as CEO of eLabor, Inc., stating “Additionally, Edell served as Founder, Director and CEO of eLabor, Inc., which was sold to ADP in February of 2003.” In fact, Edell was only a director of eLabor since at least 1995. HIDING ONE BANKRUPTCY AND ONE FAILED TURNAROUND IN PUBLIC DISCLOSURES 22. Edells two resignations on his bio that were really his last two jobs instead of submitting an accurate bio, defendants stretched the job of Edell that was actually 3 jobs prior, and increased this 3rd job by another 2 years, to the year 2002 (from 2000). Edell both omits to accomplish his end goal of making detection and disclosure of his true track record. (EXHIBIT #1, pg. 29, EXHIBIT #2, pg. 31, EXHIBIT #3 pg. 33-36, EXHIBIT #5, pg.41-42) FLAHIE THE NEW CFO 23. Brewer, also a Director, took advantage of his position leading the interviews and recruitment of the company’s new CFO during the summer of 2003 to recommend final candidate, Tom Flahie,
i. Flahie had previously worked as CFO at eLabor, America, Inc. under Brewer’s close friend and
fellow YPO member Jeffrey Edell ‘s brother. Edell was Director of eLabor where Edell’s brother served as CEO Based on Brewer’s recommendation, the CEO met with the candidate, and in August 2003, Tom Flahie was approved and offered a position as the new Chief Financial Officer of eUniverse. EDELL THE NEW DIRECTOR CANDIDATE 24. After current board member Thomas Gewecke, a senior business development executive of Sony Music, informed the board in the summer of 2003 of his desire not to serve as director for another annual term, Chairman/CEO Brad Greenspan agrees to review resume of candidate Jeffrey Edell. 25. In or around August 2003, eUniverse had need to recruit a new independent Board Member who was also qualified to sit on the audit committee. Brewer and Flahie initiated a scheme to promote their associate
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
7
Jeffrey Edell as a candidate for the board slot so that they could be assured job security and benefit in the clear upside that existed to be a senior officer or top employee of Issuer as of October 2003.
i. Based on information and belief, Brewer had been in a Southern California Chapter of the Young
Presidents Organization (YPO) with Edell and they would meet regularly to discuss each other’s business challenges and prospects for three years prior to Edell joining the eUniverse board.
ii. New CFO Flahie had pre existing business relationship with Edell, working for a company
where Jeff Edell served as Director and Edell’s brother served as CEO managing Flahie immediately prior to coming to work for eUniverse in August 2003.
ii. Brewer and Flahie were challenged to get the Chairman/CEO to nominate Edell to the board based on Edell’s actual work experience which would call into question his fitness to serve on the board of a publicly traded company.
iii. The plan to nominate Edell to the eUniverse board based on his real work experience became more challenging when the most recently nominated Director, Lawrence Moreau, who had joined eUniverse’s board in May of 2003, admitted to being less then candid About his track record after a Los Angeles Business Journal article in August of 2003 brought such facts to the attention of the other eUniverse directors.
iv. Based on Information and belief, Brewer, Flahie, and Edell realized that to get the support of the Chairman/CEO to back nomination of Edell to the Board, they would have to inflate and falsify Edell’s track record to make it appear flawless. 26. Defendants thru this fraudulent scheme and omissions of Edell’s true work experience, created a fake Director candidate misleading shareholders and Petitioner with what appeared to be a perfect track record with no negative recent work experience disclosed.
i. Defendants determine to accomplish the deed by omitting Edell’s two most recent work experiences which were both failures and falsifying the time frame he worked as CEO of an, earlier successful venture, ‘Soundelux’.
ii. Defendants accomplished this thru falsifying the Soundelux timeframe Edell worked as CEO by two years while omitting the actual prior two jobs, both negative tenures where Edell had failed to improve the
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
8
Companys where he was principal executive officer.
iii. Defendants fraudulent concealment of Edell’s true work experience allowed Edell to apply to be on eUniverse Board in 2003 and become supported by fellow Board Member, founder, and largest shareholder, CEO Brad Greenspan. 27. Defendants fraudulently conceal the true background of former Director and Chairman Jeff Edell and forward a fabricated false resume, misleading CEO to get Edell onto the Board.
i. Edell benefitted from fraud of fabricating his work experience by gaining access to the public issuer’s board. 28. Edell had not come off a successful business endeavor as his fabricated resume stated but really had failed in his last two ventures including one of two failures resulting in a Chapter 7 Bankruptcy filing. 29. Brewer moved scheme forward with aid of new CFO Flahie whose disloyalty in not reporting to the CEO or public that Edell resume was fabricated demonstrates Scienter intent to defraud & mislead shareholders. 30. Jeff Edell’s omission to trick CEO of Issuer via omission of his immediate two prior employment jobs. A
Director’s last two jobs and such director candidate’s performance or the company’s performance being the most
critical bit of information for Issuer or CEO to parse or review to do his duty.
31. Edell scheme results in eUniverse shareholders being diluted via more expensive VantagePoint financing.
32. On August 26, 2003 at 5:39PM Brewer forwards via email a fabricated three page (EXHIBIT #1. Pg. 29) resume for ‘Jeffrey S. Edell’ to the CEO with CFO Flahie cc’d and states,
“looks strong… again jeff will be here tomorrow to have lunch with tom and i. brad, I’ll set something up for you later this week or next depending on your schedule.”
i. Brewer lies, misleading the CEO further, asserting Edell’s resume “looks strong”, even as
Brewer and Flahie are aware that Edell’s prior two actual jobs are being intentionally omitted from the document sent to Greenspan. Edell, Brewer, and Flahie have destroyed the actual true work experience information prior to sending the fabricated Edell resume, this is a violation of 18 U.S.C. § 1512(c)(1), which prohibits the destruction of records.
ii. Defendants omitted a portion of the true documents and information in the Resume sent to Petitioner, with the intent to obstruct justice in violation of 18 U.S.C. § 1512(c)(1) and also since the false
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
9
document was sent via email, Edell, Brewer, Flahie, and Lipp violate 18 U.S.C. § 1341 (relating to mail fraud), 33. On August 27, 2003, the CEO is deceived by the fabricated resume of Edell and responds to Brewer and Flahie after being misled and reviewing the fabricated resume of Edell, “Great resume!’. Since the CEO is misled via email, this is a violation of 18 U.S.C. § 1341 (relating to mail fraud). 34. On the first page of the fabricated Edell resume Brewer forwards, in the section labeled ‘Professional Experience’. Edell lists first: ‘Soundelux Entertainment Group, Inc. Hollywood, CA, from 1995-2002’ and the next line purports that during this period, Edell was “President/CEO/Director”. Edell & Defendants violate 18 U.S.C. § 1519 (relating to destruction, alteration, or falsification of records in Federal investigation and bankruptcy) and defendants are destroying Edell’s true work experience and put in its place the fake Fabricated work experience purporting that 2000-2002 Edell worked still for Soundelux.
i. Edell’s resume forwarded by Brewer, falsely creates the appearance and assumption that ‘Soundelux Entertainment Group’ has been the sole Professional Experience of Edell’s as a full time Executive since ‘2002’.
ii. Edell’s fabricated ‘Professional Experience’ section creates the appearance that
Edell, “Successfully initiated, negotiated and closed sale of the Hollywood postproduction division of SEG (Soundelux) to the Liberty Media Group” and Edell lists he was President/CEO/Director of Soundelux Entertainment Group from 1995-2002, then the reader of the fabricated document would assume Edell departed as CEO after Soundelux was sold in 2002. Brewer, Edell, Orrick, VantagePoint, Harroch, Carlick, Rosenblatt, Sheehan, DeWolfe, Latham, and Sony Corp violate 18 U.S.C. § 1519 because they have altered records of a Board candidate during the SEC restatement inquiry that ended October 2004.
iii. Defendants specifically violated Section 1512© and U.S.C. § 1519 by destroying and altering
Edell’s true background and work experience which should have truthfully disclosed: “i) ShoWorks, where Edell was CEO starting April 2001 thru 2002 (name changed immediately prior to bankruptcy in September 2002)”
and “ii) Enterprise Entertainment Group LLP at which Edell was President/CEO/Director for less then a year before he resigned from company citing his resignation came after “working on severe turnaround situation” in May of 2003. “ (EXHIBIT #3,. Pg. 33-36)
35. Director Lawrence Moreau on September 30, 2003 at 10:15AM emails Brewer, Mosher, and Lipp,
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Subject: ‘RE: Potential EUNI Board Member’, stating ,
“Also we need to have both he and Jeff Edell complete the company’s D&O questionnaire so we can review it for any problems prior to the Board vote.”
The false and defective October 3, 2003 Nominating Committee Recommendation 36. Larry Moreau, Director and Nominating Committee member tasked with review of Edell, Sends email stating, ‘Jeff Edell – Completed D&O Questionnaire’ to Director Brewer, Director Greenspan, Director Mosher, General Counsel Lipp, and Sony’s sole series B Director Gewecke and states,
i. Moreau and Defendants lie in his email about what is contained in the D&O questionnaire,
failing to disclose Edell’s disclosed recent bankruptcy and declaring:
“Based on my review, there are no negatives for the Nominating Committee to report to the Board.
ii. This false statement is distributed thru email to Petitioner and other Directors misleading them
and causing them to be unaware that Edell’s Proxy disclosure is false. This is a violation of 18 U.S.C. § 1341 (relating to mail fraud). Moreau, heading the nominating committee, concealed his knowledge that Edell does have “negatives” that should be brought to the Board’s attention like fact that Edell has a mandatory disclosable SEC event under Rule S-K Item 401 (f), requiring specific disclosure on Edell’s recent federal bankruptcy.
iii. Furthermore the destruction or altering of the true information by omission which Edell, Brewer,
and Moreau are guilty of in violation of of 18 U.S.C. §1512(c)(1) and violation of 18 U.S.C. § 1519.
iv. Moreau and Defendants further misleads the board by stating: “the Nominating Committee’s previous legal and financial background checks did not disclose any negatives. “Based on the results of the Nominating Committee’s due diligence procedures including meeting and various discussions with Jeff, I think he is an outstanding candidate and hereby recommend that the Board approval his appointment. “
37. An attached D&O questionnaire is distributed in October 3, 2003 email with false claims used to coverup underlying facts, in violation of of 18 U.S.C. § 1341 (relating to mail fraud). 38. In late 2011, Petitioner discovered a D&O questionnaire Edell submitted to eUniverse’s Nominating Committee headed by Director Larry Moreau. Edell’s true work experiences consists of:
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i. On the first page, in the first paragraph, there is information to read for the
questionnaire submission. The third line from the bottom states,
“Accordingly, great care should be exercised in completing this questionnaire. You should be aware that if the Proxy Statement contains any false or misleading statements, the Company and those in control of the Company could be subject to liability under federal securities laws.”
ii. The factual D&O Questionnaire of Edell from Exhibit XX reveals:
a. On the second page of the document titled,
“EUNIVERSE, INC. QUESTIONNAIRE FOR DIRECTORS AND OFFICERS”,
the first section is labeled: “I. Employment, Occupation, and Business Experience.” And it lists information submitted by “Jeffrey S. Edell, 11/10/57”.
b. Under section ©, document states, “Please Indicate all positions and offices which you hold or have held during the past five(5)years”
c. Edell’s ‘Questionnaire For Directors And Officers’ lists 3 submissions under ‘Positions/Office’:
“President/CEO & Director Showorks Entertainment Group, Inc.”
from “January 2001- April 2002” and notes he “resigned April 2002”.
“President/CEO/Director, Soundelux Entertainment Grp., Inc.” from “November 1995- 12/31/2000”.
“President/CEO/Director, Enterprise Entertainment Grp, LLC”. From “November 2002-May2003” and the next line in parenthesis immediately below states, “resigned May 2003, after working on severe turnaround situation.”
d. On page 14 of Edell’s ‘Questionnaire For Directors And Officers’, Edell checks ‘YES’ for section (a) when asked if “any of the following events has occurred since April 1, 1998, please provide a brief description of the event”.
e. Section (a) states:
“A petition under the Federal bankruptcy laws or any states insolvency law was filed by or against you, or any corporation or business association of which you were an executive officer at or within two years before the time of such filing.”
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f. Edell discloses under “Description:”:
“Showorks Entertainment Group, Inc. underwent a name change in 2002 to MTS, Inc. I resigned as President and CEO of this company in April of 2002. Subsequent to my leaving, sometime in September of 2002, I learned that they had filed bankruptcy under Chapter 7.”
39. Therefore, Edell’s scheme to defraud the eUniverse Directors is effected by changing the time frame and term of his Soundelux employment from the factual end of 12/31/2000, to the fabricated and false claim that Edell’s end of his work tenure being thru 2002. This allows Edell to effectively cover up or disguise his true historical work performance and mislead Petitioner & shareholders that need accurate and true professional experience to determine if someone is qualified to be a Director of a public company.
i. As part of scheme, Edell omits his January 2001-April 2002 true employment where he was
“President/CEO & Director Showorks Entertainment Group, Inc.” that he had disclosed in a prior D&O Questionaire.
ii. Edell also omits his November 2002-May 2003 professional experience as
“President/CEO/Director, Enterprise Entertainment Grp, LLC”, resigning after just five months, blaming a “severe turnaround”. (EXHIBIT #3, pg. 33-36)
Predicate Acts related to 2003 press release announcing Edell
40. On October 9, 2003, Brewer furthers the fraudulent concealment scheme by forwarding eUniverse’s PR firm the fabricated resume which incorrectly shows Edell worked at Soundelux Entertainment until 2002 and omits both the Showorks/MTS bankruptcy and working most recently at troubled Enterprise Entertainment Grp, LLC. Brewer also misleads PR firm by sending fabricated work experience and bankruptcy omission from their PR firm.Laurie Eisner,
“laurie-we need a very basic- Thomas Gewecke has resigned from the euniverse board. And jeff edell (bio attached) has been appointed-“
41. October 10, 2003 at 2:05PM, PR firm emails Brewer and Greenspan draft of Edell press release stating,
“Prior to his Board appointment at eUniverse, Edell served as President and CEO of Soundelux Entertainment Group, Inc., a provider of entertainment content technologies, with revenues exceeding $110 million”
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42. October 11, 2003 at 2:43PM, Edell emails Greenspan requesting puffery to be added to the draft press release
about his background, stating,
“Brad, Comments on Release- It says nothing of the record sale to Liberty Media and John Malone for apprx. $100m, the sale of the software company elabor, Inc. that I served as CEO and founder for 10 years, and sold to ADP, the sitting on the Public board of IVC industries and sale of it to Inverness Medical. Also the winner of Entertainment Entrepreneur of the YEAR by NASDAQ and Ernst and Young in 2000, and member of both TV and Film Academies..member of Young Presidents Organization.. Get some bang out of it!! That should all be somewhere in it..please have them take another shot”
43. October 11, 2003 at 4:43PM Edell emails Greenspan and Brewer:
Subject: ‘RE: Press Release: Jeffrey Edell’ and states,
“Your PR dept can do a better job extracting what I have on my bio related to the subjects that are pertinent to eUNI,,, but please do not ease this until we finalize our deal…”
44. October 11, 2003, at 6:15PM Greenspan emails Lipp and Brewer forwarding above Edell
Email and states, “call me to discuss So we can finalize.”’ 45. The October 11, 2003 draft PR submission Defendants Edell and Brewer are hiding and have destroyed the evidence of Edell’s True work experience in the press release draft being distributed as well as the final release in violation of of 18 U.S.C. §1512(c)(1) and violation of 18 U.S.C. § 1519. 46. Also Defendants violate Section 1341 by using email to send false fact draft press release to PR firm
47. Brewer enlists Highland Partners and Jim Quandt to provide background checks for the eUniverse nominating
committee for Director candidate Edell and Ward. As evidence of this scheme, Brewer emails Mosher on October 16,
at 3:56PM and states,
“dan- have you received the background check from highland partners for bradley ward?” 48. BOARD MEETING- October 17, 2003 there is Board meeting where Brad Greenspan attempt to elect the annual board slate and his slate leaves off Lawrence Moreau and Dan Mosher. General counsel Chris Lipp deems Greenspan's slate did not pass even though 3 Directors approved the new slate, 1 disapproved, and 2 Directors Abstained. Lipps Board minutes indicate, "The motion failed with a vote of 3 for, 1 against and 2 abstentions, constituting less then the requisite majority of directors present." 49. On October 30, 2003 at 4:57PM, Flahies emails Lipp, Subject: ‘Bio for New Directors For proxy Draft’
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and provides a bio for Edell which states
“Jeffrey S. Edell has served as a Director since October 14, 2003. Mr. Edell was employed as President and Chief Executive Officer and a director of Showorks Entertainment Group, Inc. (previously known as Soundelux Entertainment Group, Inc.) a provider or entertainment content and technologies, from 1995 until 2002.”
50. On Friday, October 31, 2003 Defendants cause the company to put out a press release with false information:
"eUniverse announces eUniverse Announce CEO Departure and Board of Director Changes Brad Greenspan
Steps Down as Chief Executive Officer Jeffrey Edell eLabor Founder and Former CEO/President of
Soundelux Entertainment Group, and Bradley Ward, CEO of The Game Tree, Join eUniverse Board.”
51. Significant puffery created by Edell and put into press release but omits mention of his true work experience
such as his recent fraudulently concealed MTS Bankruptcy and other employment information provided in the original
D&O Questionnaire Edell provided to eUniverse. Defendants also violate Section 1343 as the defendants cause the
false information to be distributed via news wire to the public. (EXHIBIT #4, pg. 38-39)
52. Sony in fact specifically made it known that it would not allow VantagePoint to take over or transfer the
rights to vote Series B until VantagePoint bought all the stock held by Sony Corp of public issuer.
53. November 7, 2003 at 3:59M- Intermix CFO Tom Flahie sends a draft Proxy to Chris Lipp, Subject: ‘Proxy’
which states,
54. On November 17, 2003, Chris Lipp sends Consents to Sony Corp to sign.
LIPP KNEW SONY DID NOT SIGN THE CONSENT ON NOVEMBER 17th
55. Sony’s Mark Eisenberg only signs the consent to change the Certificate of Designation of the Series B
provided by Lipp.
56. Sony’s Eisenberg executes the consent on November 18, 2003 according to his testimony read in court. i
57. On November 18, 2003 at 12:50PM, Lipp emails Vantagepoint’s Carlick and Sheehan a new draft Series C
consent that appears to have some backdated element of optimizing the prior Notes to the detriment of the
shareholders.
58. Orrick’s Harroch active in the planning of the Proxy and Edell frauds emails Lipp stating,
“I don’t understand the background of this, and it will take some time to review. Chris are you working on the proxy statement language to implement the things required by the Option Agreement?”
59. On November 18, 2003, at 4:09PM, Lipp asks PR company run by Jonathan Heit to put out ‘Annual Meeting
Release’. The release falsely states Issuer’s
“annual meeting of stockholders has been rescheduled for January 21, 2004 so that certain aspects of the Company’s recently announced financing transaction with VantagePoint Venture
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Partners, among other items, may be submitted to the Company’s stockholders for approval. A new record date for the meeting of December 1, 2003 has also been set.”
60. November 20, 2003- Flahie emails Board Members including Edell, Subject 'Director Bios for Proxy' and
states,
"In preparation for filing of the proxy, I have updated the director bio information from the Form 10-K. David, Andy, Jeff and Bradley, I took a first pass to put a bio together for you. Since this information is personal, please make edits to your bio and return the word doc to me. I will make your edits in the actual proxy. Thanks, Tom"ii
DEFENDANTS FALSIFY PROXY HOPING SONY WILL SIGN OFF ON NOMINATING EDELL AS
SERIES B DIRECTOR
61. November 21, 2003- Intermix CFO Tom Flahie sends an email, Subject: 'Proxy', stating,
i. "I completed the first draft of the 2003 proxy."
ii. “Given the major changes to the Board,”
iii. “the proxy needs a close look this year”,
iv. “We intend to file with the SEC on Wednesday.",
62. Flahie attaches a draft of proxy which falsely states, "550 DMV notified the Company that Lawrence Moreau
and Jeffrey Edell have been nominated by the Series B preferred stockholders.”iii
63. Issuer announces on November 21, 2003 that it has raised $2.5 million in Common stock financing selling
1,643,000 shares at $1.50 instead of the $1.85 previously agreed price with the same investors, or a loss of $575,050
for shareholders in the bargain made by management to mitigate one of the agreived parties from defendant’s actions
around the 2004 proxy.
64. At 5:46PM on Saturday November 22, 2003, eUniverse Sr. VP Legal, Chris Lipp emails Orrick’s Harroch and
VantagePoint’s Harroch and internal general counsel Guidero with Subject: Series C Consent re Bylaw Amendment
and attached, ‘Series C Written Consent to Amend Bylaws’ and states,
“Rich, Please find attached the Series C consent with the changes we discussed. Thanks, -Chris”iv
65. On November 24, 2003 at 12:05PM, Flahie emails outside general counsel Cartmell, Subject ‘RE: Proxy’ and
states, “I need to file on Wednesday. I hope that your comments do not impact the schedule”
66. Defendants in November 2003 press release omit Edell’s CEO role in the MTS 2002 Chapter 7 bankruptcy and
failure of another turnaround company he ran in 2003. Edell continues his sleight of hand and promotes only the
Soundelux CEO role without disclosing end of tenure in 2000 when it was sold, creating impression he was most
recently working as CEO of eLabor, Inc., stating, “Additionally, Edell served as Founder, Director and CEO of
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eLabor, Inc., which was sold to ADP in February of 2003.” In fact, Edell was only a director of eLabor since at least
1995.v
NOVEMBER 2003- SONY SERIES B SHAM CONSENT SCHEME
67. November 25, 2003 at 5:33AM, Moreau emails Flahie, Carlick, Mosher, Subject: ‘RE: Nomating Committee-
Dropped nominations’, and states, “Tom, Did you mean to drop David Carlick, Andy Sheehan, Jeff Edell and I from
the Board? Also, when is the proxy deadline?”vi
68. Flahie responds at 8:27AM on November 25th, falsly stating:
“Only three directors are up from election at the January 24 stockholders’ meeting. The Series B stockholders (Sony) have elected Larry Moreau and Jeff Edell. The Series C stockholders have selected Andry Sheehan and David Carlick. The only directors that up for election are Dan Mosher, Brett Brewer and Bradley Ward.” And
“The proxy deadline is driven by the timing of Chris Liupp’s vacation. Chris has put off
a European vacation several times due to the issues we are working through. He will be out all next week. I will prepare the proxy in his absence. “
69. On November 25, 2003, at 10:11PM, Lipp emails Flahie, Subject ‘Proxy Excerpt’ with attached files including
one called ‘By-Laws’ and states,
“Attached is the language I would suggest for Proposal 2 and the Other Business
sections. Also attached is the newly added Section 10 of the Article I of the Bylaws.”
70. On November 25, 2003, Chris Lipp emails Sony's Melissa Cole and Mark Eisenberg, Subject: 'One More Series B Consent' and attaches a draft of Series B consent form re: election of directors, and states, “Melissa- Please find attached what should be the final Series B consent we will need in connection with getting the director issues sorted out"
71. Director Ward is puzzled at the Flahie claim that a new Board slate has been elected which includes Edell and
Moreau as Series B Directors Ward who had just voted with the rest of the Directors to elect the slate on November
20, 2003, states in a November 26, 2003 9:28AM
“Quick question….”The role of the Nominating and Corporate Governance Committee
(“NCGC”) shall be to determine the slate of director nominees for election to the Company’s Board of Directors (the “Board”) to be included in the Company’s annual proxy statement,…” And
“Will this committee solely determine the nominees on the slate and no longer require a full Board vote like we just had last week? In the absence of any specification for a full Board vote, that’s how I read that.”
72. November 26, 2003 at 11:26AM, Outside eUniverse counsel Nate Cartmell emails Chris Lipp, Subject:
'Series B Written Consent re Election of Directors 11-26-03.DOC' and states,
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"Chris, I have modified the consent slightly to deal with the fact that the right belongs to the Series B but that Sony can exercise that right as majority holder. Redline to follow in PDF format'
attaching a document titled:
'ACTION BY WRITTEN CONSENT OF MAJORITY SERIES B STOCKHOLDER OF EUNIVERSE, INC.'
NOVEMBER 26, 2003 - CFO FLAHIE INSTRUCTS STAFF TO FILE PROXY
73. November 26, 2003, 1:41PM, Flahie emails Samina Merchant, Subject: 'Proxy', and states,
"Please send the proxy over to Donnelley for Edgar formatting".
74. As of November 26, Sony had not given its consent to nominate Moreau or Edell as Series B nominees.
DECEMBER 1. 2003 PROXY IS FILED
75. The December 1, 2003 Proxy lists Edell & Moreau as Series B Preferred Nominated Directors stating:
"the majority holder of our Series B preferred stock, has the exclusive right, voting separately
as a single class, to elect two directors" and "550 DMV has notified the Company that it intends to elect Lawrence Moreau and Jeffrey Edell to the Board.”
PROXY CONTEST DECEMBER 2003- JANUARY 2004
76. According to former Director Greenspan, his email sent on December 5, 2003, at 3:17PM, to Lipp, Brewer,
Edell, Fojut, Subject: ‘Need immediate documents’ and states, “Chris/Matt- As both a director and shareholders, I
demand to see the following documents.” did not result in the company sending him the Myspace Asset Sale
agreement that was purported to have been signed on December 17, 2003. This is further key evidence that supports
such agreement not having really existed at such time and prior to November 2004 when defendants first publicly
disclose the claim that the MySpace Asset Agreement selling 33% to DeWolfe’s MSV LLC really occurred on
December 17, 2003.
77. Email evidence shows the chilling effect of defendants fabricating proxy to make it appear Sony had
nominated Edell and originally also, Moreau as Series B Directors. Showing initial response from an informed
investor can be seen thru email on December 4, 2003, at 3:30pm, current board member, former CEO and 20%
stockholder of Issuer emails proxy information to his outside counsel, Subject: ‘Darn’ and states,
“Tougher Road to fight. It looks like these guys got Sony to PURPOSELY elect directors so there are only 3 slots open and 4 forced seats. Only three directors are up for nomination.”
And
“Sony owns the Series B which VantagePoint has a right to purchase and the Series B has rights to elect 2 Board Members, but Vantagepoint had specifically agreed to cancel such rights as part of their acquisition of Sony’s Series B just for the reason of not doubling up on forced directors.” And “Sneaky sneaky…They got Sony to nominate 2 of the existing directors to ‘BulletProof’ these guys….”
78. Edell emails Flahie and states on December 4, 2003,
“Only comment, is please make sure from Nate that this info is clearly necessary of a press release…I am sure you checked already but let me know? Thanks jeff”vii
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79. CFO Flahie a few minutes later replies via email and states,
“Yes, all three lawyers agreed. They also want me to Form 8-k the press release.”viii
80. Lipp emails Harroch on December 8, 2003 at 4:01PM and states,
“Richard, Last time we discussed this, I thought we agreed that it was neither party’s intent to have the shares purchased under the option be anything other than the Series C shares”
81. Ultimately, Lipp capitulates to the dominant Orrick firm and agrees to issue C-1 shares which are worth $2.00
in extra preferred liquidation vs. $1.50. A loss of .50 cents per share for shareholders and additional corporate waste
by defendants, using shareholder money to effect a change of control.
82. December 8, 2003- 2:16PM, from Harroch of Vantage/Orrick to Chris Lipp and other Carlick and Sheehan and
Rodi Guidero;, Subject: Option.
"Chris, we still need to deal with the Sony option, Series B issue. As I see it, the proxy statement should also seek approval for amending the Series B Certificate of Designation to encompass the matters set forth in Exhibit B of the Option Agreement (PIK/dividend for VPVP Shares elimination of company Election concepts, authorized # of shares, etc :) " and,
"If we had a chance to review the proxy statement before you filed it, I would have
pointed this out to you. So let us figure out how we implement this now. Thanks!"
83. December 9, 2003, at 11:29AM, Edell emails Chris Lipp, Sheehan, Carlick, Moreau, Brewer, and states,
“Chris, The meeting took place this morning and the board is in the dark about its results.” and
“Please see to it that Nate reports on the Nasdaq meeting ASAP. I heard that there were some problematic issues, such as dilution that we should have known about with the VP deal, that I would love to sort out.”
84. Lipp sends a revised Note to VantagePoint and the January Proxy confirms that indeed, the ‘Accelerator’ was
part of the January 2004 proxy material and shareholders were forced to vote or be victims the ‘accelerated’ Note
scheme.
85. On December 17, 2003 at 10:46PM, Brewer emails Edell. Lipp, Sheehan, Flahie, Carlick, Moreau, Ward,
Mosher and states,
“Gentlemen- We will be having our board call tomorrow as scheduled at 4 PM sharp.” And
“Also, after speaking with some of the board and management, we think it would be useful to have an in person board meeting next Tuesday in LA.
The meeting will be from 10-4pm and will include Mike Kennedy from WS as well as other lawyers if needed. We have several ratifications of chartes, reports on litigation, proxy contest issues, and other house keeping matters to take care of.”ix
86. December 18, 2003- Greeenspan emails Carlick, Edell, Mosher, Subject: 'Info-' and states,
"Guys- I have lots of additional information on the performance of Brett Brewer, Chris Lipp, and Adam Goldenberg before, during, and after the restatement" and "It sheds a very negative light on all of these gentlemen's performance."x
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87. After getting sent an email sent by former CEO to non-management board members critical of certain
managers and offering to provide information to help Board best evaluate executives at company, Director Edell sends
such email on to principal executive Brewer. Brewer then passes that email onto Lipp and Goldenberg to influence
them to be disloyal with adware and other transgressions against former CEO of Issuer. In Brewer’s email on this date
to Lipp and Goldenberg he states,
“this guy is one of the biggest assholes that ever lived…there is no other way to say it.” xi
88. On Thursday December 18, 2003, at 1:46AM, Brewer emails board and states, “Gentlemen- We will be having
our board call tomorrow as scheduled at 4pm sharp.” xii
89. There is no evidence that the Myspace asset sale agreement was disclosed or voted on by the board at the
December 19, 2003 board meeting. While there is significant evidence there was a focus according to Brewer on,
“modifications of charters, reports on litigation, proxy contest issues”xiii
90. Annual Meeting date rescheduled on December 19, 2003 at 4:14PM, Flahie emails Lipp, Sheehan, Carlick, Moreau, Mosher, Ward, Brewer, Edell, Subject: ‘Filings’ and states,
“The attached proxy amendment was filed today and the attached press release announcing the new meeting date was issued.”xiv
THE 2003 DEFECTIVE ‘AMENDED NOTE’
91. On December 27, 2003, Lipp emails Harroch and Sheehan of VantagePoint with Subject ‘Amended VPVP
Note’ and states, “As discussed, please find attached for your review an amended note.” and attaches a revised $2.5
million note that now has been amended under Section (1) ‘Repayment’ to change the original due date of March 2005
to now be due February 8, 2004 a few days after the planned Shareholder meeting unless ‘stockholders of the
Borrower, provide approvals necessary”.
92. The December 30, 2003 Proxy falsely states:
"Pursuant to the Certificate of Designation of Series B Preferred Stock, 550 Digital Media Ventures, Inc. ("550 DMV"), an indirect subsidiary of Sony Corporation of America, the majority holder of our Series B preferred stock, has the exclusive right voting separately as a single class, to elect two directors in the event the Board consists of six to eight members, 550 DMV has notified the Company that it intends to elect Jeffrey Edell to the Board and leave one Series B Board seat vacant at this time”
93. Sony had not notified the company it intended to elect Edell as of and thru the date of the Chancery Court trial
in January 2004.
The false and defective January 2004 Proxy AND PUFFERY OF EDELL (EXHIBIT #6 pg 44-46) 94. In January 2004, Vantage sealed control over eUniverse thru one of three Proxy frauds perpetuated on common stockholders by Carlick, Sheehan, Brewer, Lipp, Rosenblatt and associates. 2003-2005 Flahie who is disloyal along with Brewer in not revealing Edell’s fabricated resume then colludes with General
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Counsel Lipp to knowingly falsify January 2004, July 2004, August 2005 Proxies, violating Item 102 Rule SK. 95. Defendants decide to make detection of the fraudulently concealed Edell true professional experience more difficult, and on the December 30, 2003 DEF14A Proxy, on page 4, the company states,
“Jeffrey Edell has served as a Director since October 14, 2003 and as Chairman of the Board since November 14, 2003. Mr. Edell is currently a member of eUniverse’s Compensation and Audit Committees. Mr. Edell was employed as President and Chief Executive Officer and a director of Soundelux Entertainment Group, Inc., a provider of entertainment content and technologies, from 1995 until 2002”
96. It was part of the Defendants’ scheme to use the United States Postal Service to deliver fraudulent SEC Proxy to the eUniverse (Intermix) Inc. MySpace Parent Company Shareholders in December 2003, January 2004, July 2004, August 2005, and September 2005 and to conceal the errors contained in the Proxy Disclosure statements on each occasion regarding Edell and Petitioner in violation of 18 U.S.C. § 1341. FRAUD UPON THE CHANCERY COURT (Exhibit #9, pg. 52-64) 97. After adverse ruling that caused general counsel Chris Lipp to admit he had taken several actions without ever getting the critical consents needed as required by law to be first approved by the company’s board of directors and/or by Series B Preferred stockholder Sony Corp. These were also shown to be consents that the general counsel knew were in fact required prior to general counsel taking such actions. These actions were to claim consents and waivers were given and then to include these in Issuer’s proxy and describe they had occurred when in fact such events had never taken place and such waivers or consents had not been given. This behavior and activity was in court and in Judge Strine’s cross examination, shown to have occurred multiple times on multiple dates and thru insertion of such fabricate events into multiple versions of Proxies distributed to shareholders leading up to the 2004 Shareholder Annual meeting thru proxy. 98. Judge Strine was adamant about going on record multiple times during the trial to notify all parties of his views that the testimony of general counsel Lipp was not believable as to Mr. Lipp’s rationales for certain disclosures and statements in the company’s Proxy. SONY’S SECURITIES FRAUD AND AIDING AND ABETTING BLASIUS VIOLATION AND AIDING AND ABETTING FRAUDULENT CONVEYANCE
99. Sony Music Corp in 2004, transacted after a still uncured Federal Securities Violation and these
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transactions damaged and fraudulently conveyed assets to the detriment of Issuer shareholders. 100. Edell’s securities violation makes the Proxy and subsequent 10Qs and 10Ks and next Proxy statement defective, all caused by Sony Music Corp aiding and abetting this securities fraud thru multiple acts in 2003 and 2004. Most directly by opting after Judge Strine’s January 14, adverse ruling to manipulations of defendants and Sony Corp’s interactions relating to upcoming 2004 Proxy Disclosures. 101. After adverse ruling that caused general counsel Chris Lipp to admit he had taken several actions without ever getting the critical consents needed as required by law to be first approved by the company’s board of directors and/or by Series B Preferred stockholder Sony Corp. These were also shown to be consents that the general counsel knew were in fact required prior to general counsel taking such actions. These actions were to claim consents and waivers were given and then to include these in Issuer’s proxy and describe they had occurred when in fact such events had never taken place and such waivers or consents had not been given. This behavior and activity was in court and in Judge Strine’s cross examination, shown to have occurred multiple times on multiple dates and thru insertion of such fabricate events into multiple versions of Proxies distributed to shareholders leading up to the 2004 Shareholder Annual meeting thru proxy. Shockingly with evidence of Defendant’s improprieties laid bare in court and significant red flags raised, Sony then agrees to nominate Edell to serve as Series B Director. Sony’s aid eliminates shareholders ability to keep Edell off Board & further conspiring with Defendants in late 2004 to complete a sweetheart deal to sell almost half of MySpace. Defendants also breach pledge made with Judge Strine & Petitioner, failing to make corrective disclosure in January 2004 Proxy. 102. Defendant’s have also not legally effected a valid closing or vote on the Series C stock sale or transfer from Sony of their Series B shares, blocking public issuer’s option received in three way agreement between Sony, VantagePoint, and public issuer in 2003. The crooked dealings expand when Orrick uses its insider knowledge to produce a commercial benefit for VantagePoint while having Issuer pay 100% of the cost by paying off Sony debt earlier then due. 103. Defendants were aware and admitted the proxy statement was defective in January 2004. Defendants willfully ignore Judge Strine’s ruling and continue to allow A defective proxy to be the final proxy for the annual shareholder
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meeting that occurred in January 2004. Defendants fraudulently conceal Edell’s work experience and omit disclosure of Edell’s bankruptcy of MTS, Inc. Defendants aid and abet Edell in violating Rule SK Item 401. ISS REPORT DEFAMATION
104. Part of the Defendants’ scheme to conspire to interfere with Plaintiff’s livelihood by disseminating defamatory statements about Plaintiff to the public through media outlets in retaliation for providing truthful information to SEC, FTC, DOJ and Chancery Court relating to the Defendants’ scheme, in violation of § 1513(f).
105. Defendants press release titled ““eUniverse Wins ISS Support for Its Director Nominees; ISS Rejects Greenspan's Hand-Picked Director Nominees.”is published January 23, 2004:
“eUniverse, Inc. today announced that Institutional Shareholder Services, Inc. (ISS) has
recommended that eUniverse stockholders vote FOR eUniverse's four director nominees -- Brett Brewer, Daniel Mosher, Lawrence Moreau and Bradley Ward -- and vote FOR the Board's other proposals at the Company's annual meeting on January 29, 2004.
“ISS is widely recognized as the leading independent proxy advisory firm in the nation. Its
recommendations are relied upon by hundreds of major institutional investment firms, mutual funds, and other fiduciaries throughout the country.”
“In recommending that eUniverse stockholders re-elect eUniverse's Board nominees, ISS stated
in its January 22, 2004 report that:”
"[T]he dissident slate does not offer a clear plan to operate the business that distinguishes themselves from the path of the current board of directors.”
“Further, we question the independence of the dissident slate as they were proposed by Mr.
Greenspan and Mr. Greenspan's record as CEO eUniverse is blemished with financial difficulties. “
“ISS also stated that:
"[T]he company's board has independent directors for six out of seven board seats, setup independent board committees as of Nov. 14, 2003, and two new directors added after the company announced its accounting problems.”
“Further, the board has taken steps to improve management of the company by removing Mr.
Greenspan and initiating the process of hiring a new CEO."
“In conclusion, ISS believes that "the [eUniverse] nominees should have an opportunity to implement plans to grow the business, shore up the company's finances, and find new management leadership."
“Jeffrey Edell, Chairman of the eUniverse Board of Directors, said, "We are very pleased that
ISS recognizes that the current Board is best suited to successfully guide eUniverse. We look forward to moving beyond Mr. Greenspan's costly and counterproductive proxy contest and to continuing the progress we have made to build a stronger future for eUniverse and all its stockholders."
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106. However, ISS is basing its report on the fabricated Edell bio and work experience that was created thru emailing and mailing the fraudulent Proxy prior to the ISS report, in violation of Statue 1341. 107. ISS was not able to write an accurate report or reach an equitable conclusion because Defendants destroyed the evidence of Edell’s true background violating 18 U.S.C. §1512(c)(1) and 18 U.S.C. § 1519. 108. January 23, 2004 press release is defamatory attack on Petitioner and misleads all shareholders, and is distributed via wire service in violation of 18 U.S.C. §1343. Los Angeles Times Defamation 109 Defendants scheme to use fabricated and false Director Edell continued in a January 29, 2004 article titled, “Battle of EUniverse Is Up in the Air” that continues to harm Plaintiff and is located at public web link: http://articles.latimes.com/2004/jan/29/business/fi-golden29 stating:
“Battle of EUniverse Is Up in the Air Michael Hiltzik / GOLDEN STATE/January 29, 2004|
There's an old joke about how university campus politics are so vicious because there's so little at stake. From that, we might conclude that the proxy fight over the Internet company EUniverse Inc. would have been more dignified had it concerned an operation that actually turned a profit over the last year and didn't spend several months in the doghouse of a Nasdaq trading suspension.
Instead, the battle pitting EUniverse's founder and ex-chairman, Brad D. Greenspan, against a management team that he had largely appointed himself has reached new standards in backbiting and vituperation.
Over the last few weeks, the existing board has been issuing letters to shareholders with lurid headlines such as: "BRAD GREENSPAN -- THE THREAT TO YOUR COMPANY'S SUCCESS," and "GREENSPAN'S SOUR GRAPES."
Even the Democrats in New Hampshire backed away from this sort of campaigning.
The board accuses the 30-year-old Greenspan of employing "empty rhetoric" and "petty personal attacks" in order to seize control of the Los Angeles-based company for personal financial gain and self-aggrandizement. It notes that the trading suspension and a huge restatement of financial results going back to 2002 occurred on his watch.
The incumbents further charge that he tried to torpedo an $8-million private equity deal that they deem crucial to the survival of the company, which runs a collection of game and entertainment websites, earning revenue from advertising and memberships.
Greenspan has fired back in kind. His shareholder letters accuse the officers and directors of conflicts of interest, self-dealing and mudslinging. ("THERE THEY GO AGAIN! DO NOT BE MISLED BY INCUMBENT MANAGEMENT'S CONTINUING MISSTATEMENTS, OMISSIONS AND
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MANIPULATION OF THE FACTS IN THEIR EFFORTS TO DIVERT YOUR ATTENTION FROM THE REAL ISSUES.")
Greenspan's core charge is that the board colluded with a private venture firm to seize control of EUniverse from the holders of its common shares, of which he owns the largest block. As for its financial problems in the last year, he acknowledges that he was chairman and chief executive during much of that period. But he says he had left day-to-day operations in the hands of some of the same people now sniping at him from the opposite trench, including President Brett Brewer, 31, a board member and his former UCLA classmate.
Under the circumstances, one can only sympathize with the 4,000 shareholders being importuned to vote for one or another slate of four directors (out of seven) at the company's annual meeting, scheduled for today. Both sides say their first order of business will be to hire a professional CEO for EUniverse, obviously an admission that no one in place now is up to the job. Both also claim to possess the strategic key to restoring EUniverse's former luster as one of the rare, pure Internet plays that worked.”
The false and defective July 2004 Proxy (EXHIBIT #7, pg. 48-49) 110. Edell’s July 2004 Proxy disclosure totally omits any notion of bankruptcy. Edell and defendants later after using the fabricated Edell to win the January 2004 Proxy contest, attempt thru a footnote, in second Proxy distributed in July 2004, to avail themselves of the disclosure requirements they know exists by concealing Edell’s true background by disclosing:
"Mr. Edell was the Chief Executive Officer of Showorks Entertainment Group. Inc., a
Delaware corporation that later changed its name to Media Technology Source of Delaware, Inc. Within two years of the time that Mr. Edell resigned from that company, it filed a petition for relief under the United States Bankruptcy Code."
111. However, even with this disclosure of a bankruptcy Edell does not disclose the year that he works for Showorks in his main bio area. Combined with fabricating the year Edell concluded his job at Soundelux to 2002, An informed investor would not be able to deduce that Edell worked for Showorks as CEO in 2001 before its bankruptcy in 2001. Edell misled investors, omitting fact that in 2001 & 2002 he was Showorks CEO. 112. Defendants are guilty of the destruction or altering of the true Edell background information and work experience and bankruptcy by omission violating 18 U.S.C. §1512(c)(1) and 18 U.S.C. § 1519.
113. Defendants violate . § 1341 using email to send fabricated draft Proxy for review furthering scheme. 2009 FRAUD 114. Edell & Defendants in mid-2009 launch another prong of fraudulent concealment. 115. New evidence includes i) publication of a book by employee loyal to News Corp to fabricate the background of Jeff Edell a former Director ii) Using fabricated Edell character to conceal truth that
E-Filed UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
1 In our June 22, 2009 Order, we certified the following class: “All holders of Intermix Media,Inc. (‘Intermix’ or the ‘Company’) common stock, from July 18, 2005 through the consummation of thesale of Intermix to News Corporation (‘News Corp’) at the price of $12.00 per share on September 30,2005 (the ‘Acquisition’), who were harmed by defendants’ improper conduct at issue in the litigation. Excluded from the Class are defendants and any person, firm, trust, corporation or other entity related toor affiliated with any defendant.” (Dkt. No. 197).
2 In our July 14, 2008 Order on the Motion to Dismiss, we dismissed with prejudice DefendantsMontgomery & Co. LLC (“Montgomery”), and Thomas Weisel Partners Group, Inc. and ThomasWeisel Partners LLC (“TWP”), the investment banks which advised the Intermix board during the 2005transaction and completed fairness analyses on the $12 per share price offered by News Corp. in theconsummated merger transaction. (Dkt. No. 110, at 4-5). In that same Order, we also dismissed withprejudice Count I for violation of Section 14(a) of the 1934 Act and SEC Rule 14a-9, which was statedagainst the 2003 Individual Defendants, which included Brewer, Mosher, Moreau, Jeffrey Scott Edell,Bradley Ward, Carlick, Sheehan, and Lipp, and VantagePoint. (Id. at 1-3). Accordingly, Count III forCV-90 (06/04) CIVIL MINUTES - GENERAL Page 1 of 39
Presiding: The Honorable GEORGE H. KING, U. S. DISTRICT JUDGE
Beatrice Herrera N/A N/ADeputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
None None
Proceedings: (In Chambers) Order re: Cross-Motions for Summary Judgment; [213, 218,244, 251, and 261]
This shareholder class action arises out of News Corporation’s (“News Corp.”) 2005 acquisitionof Intermix Media, Inc. (“Intermix”), formerly known as eUniverse Inc. (Brewer Decl. ¶ 3), a companywhich owned, among other internet businesses, the social networking website MySpace. Plaintiff JimBrown (“Plaintiff”), individually and on behalf of all members of the certified class of former Intermixshareholders,1 claims that Defendants Brett Brewer (“Brewer”), Daniel Mosher (“Mosher”), LawrenceMoreau (“Moreau”), David Carlick (“Carlick”), Andrew Sheehan (“Sheehan”), Richard Rosenblatt(“Rosenblatt”), James Quandt (“Quandt”), and William Woodward (“Woodward”) (collectively,“Defendants”), the eight Intermix directors at the time of the company’s sale, breached their fiduciaryduties under state law and violated Section 14(a) of the Securities and Exchange Act of 1934 and SECRule 14a-9 (Counts IV and II, respectively).2 (Consolidated Second Amended Complaint [“CSAC”] ¶¶
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CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
“control person” liability was dismissed as to Edell and Ward, as it was premised on the only otherclaim against them, the dismissed Count I. (Id. at 7-8). The Parties stipulated to dismiss certainDefendants. (Dkt. Nos. 190, 204). On June 10, 2009, pursuant to the Parties’ stipulation, we dismissedwithout prejudice Defendants VantagePoint Venture Partners, VP Alpha Holdings IV L.L.C.,VantagePoint Venture Partners IV (Q) L.P., VantagePoint Venture Partners IV L.P., and VantagePointVenture Partners IV Principals Fund L.P. (Dkt. No. 194). On August 28, 2009, pursuant to the Parties’stipulation, we dismissed without prejudice Defendant Christopher Lipp, Intermix’s General Counsel. (Dkt. No. 205). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 2 of 39
168-74, 179-87; Brewer Decl. ¶ 5). The only other remaining claim is Count III for “control person”liability under Section 20(a) of the 1934 Act against Defendants involved in the 2005 acquisition ofIntermix. (CSAC ¶¶ 175-78). This matter is before us on the Parties’ Cross-Motions for SummaryJudgment. We have considered the papers filed and all of the admissible evidence, and deem this matterappropriate for resolution without oral argument. L.R. 7-15. As the Parties are familiar with the facts inthis case, we will repeat them only as necessary. Accordingly, we rule as follows.
I. Motion for Summary Judgment Standard
Summary judgment should be granted “if the pleadings, the discovery and disclosure materialson file, and any affidavits show that there is no genuine issue as to any material fact and that the movantis entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c)(2); see also Celotex Corp. v. Catrett,477 U.S. 317, 322-23 (1986). “As to materiality, the substantive law will identify which facts arematerial. Only disputes over facts that might affect the outcome of the suit under the governing law willproperly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248(1986). On a motion for summary judgment, our “function is not . . . to weigh the evidence anddetermine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249.
The moving party bears the initial responsibility to point to the absence of evidence of anygenuine issue of material fact. Celotex Corp., 477 U.S. at 323. “When the party moving for summaryjudgment would bear the burden of proof at trial, it must come forward with evidence which wouldentitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the movingparty has the initial burden of establishing the absence of a genuine issue of fact on each issue materialto its case.” Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006) (citation andquotation marks omitted). By contrast, where the non-moving party “bears the burden of proof at trial,summary judgment is warranted if the nonmovant fails to ‘make a showing sufficient to establish theexistence of an element essential to [its] case.’” Nebraska v. Wyoming, 507 U.S. 584, 590 (1993)(quoting Celotex Corp., 477 U.S. at 322) (alteration in original). “[T]he moving party can meet itsburden by pointing out the absence of evidence from the non-moving party,” and it “need not disprovethe other party’s case.” Miller, 454 F.3d at 987 (citation omitted). Accordingly, “[t]he nonmovingparty must come forward with specific facts showing there is a genuine issue for trial.” MatsushitaElec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks and citations
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E-Filed UNITED STATES DISTRICT COURT
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CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
3 Under Delaware law, the business judgment rule creates “a presumption that in making abusiness decision, the directors of a corporation act on an informed basis, in good faith and in the honestbelief that the action taken was in the best interests of the company.” Aronson v. Lewis, 473 A.2d 805,812 (Del. 1984). “A plaintiff challenging a board decision bears the burden to rebut the rule’spresumption by providing evidence that the directors breached their fiduciary duties.” Goodwin v. LiveEntm’t, Inc., No. Civ. A. 15765, 1999 WL 64265, at *24 (Del. Ch. Jan. 25, 1999) (citing Cede & Co. v.Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993), modified by, 636 A.2d 956 (Del. 1994) (“Cede II”);Citron v. Fairchild Camera and Instrument Corp., 569 A.2d 53, 64 (Del. 1989)). “In order to overcomethat presumption, a plaintiff must prove an act of bad faith by a preponderance of the evidence.” In reCV-90 (06/04) CIVIL MINUTES - GENERAL Page 3 of 39
omitted). However, “[i]f the opposing party does not so respond, summary judgment should, ifappropriate, be entered against that party.” FED. R. CIV. P. 56(e)(2); see also Celotex Corp., 477 U.S. at322 (“[T]he plain language of Rule 56(c) mandates the entry of summary judgment . . . against a partywho fails to make a showing sufficient to establish the existence of an element essential to that party’scase, and on which that party will bear the burden of proof at trial.”). The “opposing party may not relymerely on allegations or denials in its own pleading[.]” FED. R. CIV. P. 56(e)(2). “The evidence of thenon-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477U.S. at 255; see also In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (“The court must view all theevidence in the light most favorable to the nonmoving party.”) (citations omitted).
“Only admissible evidence may be considered in deciding a motion for summary judgment.” Miller, 454 F.3d at 988. Under Federal Rule of Civil Procedure 56(e)(1), “[a] supporting or opposingaffidavit must be made on personal knowledge, set out facts that would be admissible in evidence, andshow that the affiant is competent to testify on the matters stated.” See also Block v. City of LosAngeles, 253 F.3d 410, 418-19 (9th Cir. 2001). Conclusory and speculative affidavits that fail to setforth specific facts are insufficient to raise a genuine issue of material fact. Thornhill Publ’g Co., Inc. v.Gen. Tel. & Elecs. Corp., 594 F.2d 730, 738 (9th Cir. 1979). Absent a proper exception, hearsaystatements are inadmissible. See Japan Telecom, Inc. v. Japan Telecom Am., Inc., 287 F.3d 866, 875n.1 (9th Cir. 2002). Furthermore, neither an unverified complaint nor unsworn statements made in theparties’ briefs can be considered as evidence at this stage. See Moran v. Selig, 447 F.3d 748, 759 &n.16 (9th Cir. 2006) (noting that unverified complaint cannot be considered as evidence on motion forsummary judgment); British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978) (“[L]egalmemoranda . . . are not evidence[.]”).
II. Count IV: Breach of Fiduciary Duty Claim
A. Delaware Law on Corporate Fiduciary Duties Generally
Delaware law governs Plaintiff’s state law claim of breach of fiduciary duty. Under Delawarelaw, all directors and officers of a corporation owe their shareholders fiduciary duties of loyalty andcare. Gantler v. Stephens, 965 A.2d 695, 708-09 (Del. 2009).3
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CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
Walt Disney Co. Derivative Litig., 907 A.2d 693 (Del. Ch. 2005). “If the plaintiff fails to rebut thepresumption, the business judgment rule protects the decision made.” Goodwin, 1999 WL 64265, at *4(citation omitted). “If the rule is rebutted, the burden shifts to the defendants . . . to prove that thetransaction was entirely fair to the plaintiff shareholder.” Id. (citation omitted). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 4 of 39
1. Duty of Care
“Director liability for breaching the duty of care ‘is predicated upon concepts of grossnegligence.’” Binks v. DSL.net, Inc., C.A. No. 2823-VCN, 2010 WL 1713629, at *8 (Del. Ch. Apr. 29,2010) (quoting McMullin v. Beran, 705 A.2d 910, 921 (Del. 2000)). The Delaware GeneralCorporation Law permits a corporation to include a provision in its charter “eliminating or limiting thepersonal liability of a director to the corporation or its stockholders for monetary damages for breach offiduciary duty as a director.” DEL. CODE ANN. tit. 8, § 102(b)(7). While such an exculpatory provisionmay eliminate any liability for breaches of the duty of care, it “shall not eliminate or limit the liability ofa director: (i) For any breach of the director’s duty of loyalty to the corporation or its stockholders; (ii)for acts or omissions not in good faith or which involve intentional misconduct or a knowing violationof law; . . . or (iv) for any transaction from which the director derived an improper personal benefit.” Id. Intermix’s charter exculpates Defendants from any duty of care claims. (J.A., Ex. 38, Certificate ofIncorporation). Accordingly, Defendants assert this provision as their fifth affirmative defense: “Thebreach of fiduciary duty claim is barred, in whole or in part, by the exculpatory provision contained inIntermix’s Certificate of Incorporation.” (Dkt. No. 111, Aug. 4, 2008). In light of this provision, weconclude that the director Defendants cannot be liable for any purported breach of fiduciary duty basedsolely on their duty of care. Plaintiff does not argue otherwise.
Defendants also move for summary judgment on the question of whether Brewer and Rosenblatt,who doubled as officers for Intermix, may be held liable for any breaches of the duty of care, sinceSection 102(b)(7) only permits exculpation of duty of care claims for directors. It is undisputed thatboth Brewer and Rosenblatt served as directors and officers of Intermix, Brewer as President andRosenblatt as CEO. (Brewer Decl. ¶ 1; Rosenblatt Decl. ¶ 1). The law is clear that where it isimpossible to separate actions taken in fulfillment of a defendant’s directorial duties from actions takenin fulfillment of that defendant’s duties as a corporate officer, then any duty of care claim stated againstthat individual is exculpated. In Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270 (Del.1994), the Delaware Supreme Court held that since the plaintiff “failed to highlight any specific actions[the defendant] undertook as an officer (as distinct from actions as a director) that fall within the twopertinent exceptions to Section 102(b)(7)[,]” any duty of care claim was precluded under theexculpatory clause. Id. at 1288 (citing R. Franklin Balotti & Jesse A. Finkelstein, Delaware Law ofCorp. & Business Org. § 4.19, at 4-335 (Supp. 1992) (where a defendant is a director and officer, onlythose actions taken solely in the defendant’s capacity as an officer are outside the purview of Section
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102(b)(7))). Plaintiffs have not identified any actions taken by Rosenblatt or Brewer solely in theircapacity as officers. Accordingly, to the extent any claim for breach of the duty of care is embodied inCount IV, we GRANT summary judgment on that specific basis as to all director defendants, includingBrewer and Rosenblatt who also served as officers.
2. Duty of Loyalty
To hold a director liable for breach of the duty of loyalty, the plaintiff must establish that “amajority of the Director Defendants either [1] stood on both sides of the merger or were dominated andcontrolled by someone who did; or [2] failed to act in good faith, i.e., where a fiduciary intentionallyfails to act in the face of a known duty to act, demonstrating a conscious disregard for his duties.” In reNYMEX S’holder Litig., C.A. Nos. 3621-VCN, 3835-VCN, 2009 WL 3206051, at *6 (Del. Ch. Sept. 30,2009) (internal citations and quotation marks omitted); Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 239-40 (Del. 2009) (“Lyondell”) (“Because the trial court determined that the board was independent andwas not motivated by self-interest or ill will, the sole issue is whether the directors are entitled tosummary judgment on the claim that they breached their duty of loyalty by failing to act in goodfaith.”).
With respect to the first basis for demonstrating breach of the duty of loyalty, Delaware lawprovides that “[w]hen directors . . . are on both sides of a transaction, they are required to demonstratetheir utmost good faith and the most scrupulous inherent fairness of the bargain.” Weinberger v. UOP,Inc., 457 A.2d 701, 710 (Del. 1983). “Classic examples [of this type of breach] are when a directorappears on both sides of a transaction or receives a personal benefit not received by the shareholders,generally.” Oliver v. Boston Univ., No. Civ. A. 16570-NC, 2006 WL 1064169, at *18 (Del. Ch. Apr.14, 2006) (citing Cede II, 634 A.2d at 362 (citing Nixon v. Blackwell, 626 A.2d 1366, 1375 (Del.1993))) (internal quotation marks and alterations omitted). “If corporate fiduciaries stand on both sidesof a challenged transaction, an instance where the directors’ loyalty has been called into question, theburden shifts to the fiduciaries to demonstrate the ‘entire fairness’ of the transaction.” Id. (citationsomitted). A showing of “entire fairness” requires proof that the transaction is “the product of both fairdealing and fair price.” Cede II, 634 A.2d at 361 (emphasis in original and citations omitted).
With respect to the second basis for demonstrating breach of the duty of loyalty, Delawarecourts have noted that “the requirement to act in good faith is a subsidiary element, i.e., a condition, ofthe fundamental duty of loyalty.” Stone v. Ritter, 911 A.2d 362, 369-70 (Del. 2006) (citation, alteration,and internal quotation marks omitted) (“[T]he fiduciary duty of loyalty is not limited to cases involvinga financial or other cognizable fiduciary conflict of interest. It also encompasses cases where thefiduciary fails to act in good faith.”). In Stone, the Delaware Supreme Court explained that “althoughgood faith may be described colloquially as part of a ‘triad’ of fiduciary duties that includes the dutiesof care and loyalty, the obligation to act in good faith does not establish an independent fiduciary dutythat stands on the same footing as the duties of care and loyalty.” Id. at 370.
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CIVIL MINUTES - GENERAL
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Title Jim Brown v. Brett Brewer, et al.
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The Delaware Supreme Court has explained what constitutes bad faith by way of a spectrum ofdirectorial conduct. “At one end of the spectrum, [there is] a category of acts involving non-exculpable,so-called ‘subjective bad faith,’ that is, fiduciary conduct motivated by an actual intent to do harm.” Ryan v. Lyondell Chem. Co., C.A. No. 3176-VCN, 2008 WL 4174038, at *3 (Del. Ch. Aug. 29, 2008)(“Ryan”) (quoting In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 64 (Del. 2006) (“Disney”))(internal quotation marks omitted). “The second category of conduct, which is at the opposite end ofthe spectrum, involves lack of due care—that is, fiduciary action taken solely by reason of grossnegligence and without any malevolent intent.” Disney, 906 A.2d at 64. The court observed that“grossly negligent conduct, without more, does not and cannot constitute a breach of the fiduciary dutyto act in good faith.” Id. at 65. The third category identified by the Delaware Supreme Court is the oneat issue in this case: “intentional dereliction of duty or a conscious disregard for one’s responsibilities.” Id. at 66. “Such misconduct, according to the Court, is ‘properly treated as a non-exculpable,non-indemnifiable violation of the fiduciary duty to act in good faith.’” Ryan, 2008 WL 4174038, at *3(quoting Disney, 906 A.2d at 66).
Accordingly, “the distinction between gross negligence and non-exculpable ‘bad faith’ (i.e., thatelusive something ‘more’) has important consequences in Delaware’s jurisprudence and corporatestatutory scheme because, for example, director conduct amounting only to a violation of the duty ofcare, but otherwise taken in good faith, is exculpable under 8 Del. C. § 102(b)(7) or indemnifiable under8 Del. C. § 145.” Id. (citing Disney, 906 A.2d at 64-65).
B. Scope of Plaintiff’s Claim of Breach of the Duty of Loyalty
Inasmuch as the director defendants are exculpated from potential breaches of their duty of care,the success of Count IV necessarily depends on “whether any arguable shortcomings on the part of the .. . directors also implicate their duty of loyalty, a breach of which is not exculpated.” Lyondell, 970A.2d at 239. To that end, in order to rule on Defendants’ motion for summary judgment, we mustascertain whether there are any genuine issues of material fact with respect to whether the directorsbreached their duty of loyalty, not merely their duty of care. In keeping with the Parties’ Joint Brief, weaddress the two bases for breach of the duty of loyalty in the reverse order: first, Plaintiff’s assertion ofbad faith conduct by Defendants, and second, Plaintiff’s allegation of a self-interested transaction notshown to be entirely fair.
1. Bad Faith in Revlon Auction Context
The obligation to act in good faith, which is a necessary component of satisfying the duty ofloyalty, requires directors to act for the purpose of advancing corporate well-being. Therefore, any“intentional dereliction of duty, a conscious disregard for one’s responsibilities[,]” constitutes bad faith,or the failure to act in good faith. Disney, 906 A.2d at 66; Stone, 911 A.2d at 370 (“Where directors failto act in the face of a known duty to act, thereby demonstrating a conscious disregard for theirresponsibilities, they breach their duty of loyalty by failing to discharge that fiduciary obligation ingood faith.”). In this case, Plaintiff and the shareholder class which he represents argue Defendants
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consciously disregarded their responsibilities in selling Intermix to News Corp. for $12 per share, when,so they contend, a likely topping bid from Viacom was imminent.
The seminal case of Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.1986), regulates directorial conduct during a sale or change of control of a publicly held corporation. Revlon holds that directors satisfy their fiduciary duties when their conduct is geared towards “themaximization of the company’s value at a sale for the stockholders’ benefit.” Id. at 182. Revlon istriggered in the following three scenarios: “(1) when a corporation initiates an active bidding processseeking to sell itself or to effect a business reorganization involving a clear break-up of the company;(2) where, in response to a bidder’s offer, a target abandons its long-term strategy and seeks analternative transaction involving the break-up of the company; or (3) when approval of a transactionresults in a sale or change of control.” Arnold v. Soc’y for Sav. Bancorp., Inc., 650 A.2d 1270, 1289-90(Del. 1994) (internal citations and quotation marks omitted). More recently, the Delaware SupremeCourt has stated that Revlon duties attach “when a company embarks on a transaction–on its owninitiative or in response to an unsolicited offer–that will result in a change of control.” Lyondell, 970A.2d at 242. When the company’s “break-up” became “inevitable,” in Revlon, “[t]he directors’ rolechanged from defenders of the corporate bastion to auctioneers charged with getting the best price forthe stockholders at a sale of the company.” 506 A.2d at 182. In addition to its principal holding thatshareholder wealth maximization must be the directors’ foremost objective, the court also noted that“favoritism for a white knight to the total exclusion of a hostile bidder” was impermissible if divorcedfrom the objective of shareholder value maximization. Id. at 184. “[W]hen bidders make relativelysimilar offers, or dissolution of the company becomes inevitable, the directors cannot fulfill their[fiduciary] duties by playing favorites with the contending factions. Market forces must be allowed tooperate freely to bring the target’s shareholders the best price available for their equity.” Id.
The Delaware Supreme Court has clarified that “Revlon did not create any new fiduciaryduties[,]” but rather “simply held that the ‘board must perform its fiduciary duties in the service of aspecific objective: maximizing the sale price of the enterprise.’” Lyondell, 970 A.2d at 239 (quotingMalpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001)). Additionally, Delaware case law has timeand again reaffirmed the anti-favoritism principle, i.e. that directors may not tilt the playing field infavor of one bidder or otherwise skew the auction unless this conduct is designed to maximizeshareholder wealth. In Barkan v. Amsted Industries, 567 A.2d 1279 (Del. 1989), the court warned that“the board must act in a neutral manner to encourage the highest possible price for shareholders.” Id. at1286. To be sure, “there is no single blueprint that a board must follow to fulfill its duties,” and “thereare no legally prescribed steps that directors must follow to satisfy their Revlon duties.” Id.; Lyondell,970 A.2d at 243. Nevertheless, “[w]hen multiple bidders are competing for control, this concern forfairness forbids directors from using defensive mechanisms to thwart an auction or to favor one bidderover another.” Id. at 1286-87 (citation omitted). More recently, in In re Toys “R” Us, Inc.,Shareholder Litigation, 877 A.2d 975 (Del. Ch. 2005), the Delaware Chancery Court stated that “aselfish or idiosyncratic desire by the board to tilt the playing field towards a particular bidder forreasons unrelated to the stockholders’ ability to get top dollar” is a violation of a director’s fiduciaryobligations. Id. at 1000-01.
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4 Favoritism and deal protection devices, such as a termination fee, are permissible so long asthey are strategically designed to maximize the price paid to shareholders. Macmillan, 559 A.2d at1287 (“[T]he board’s primary objective, and essential purpose, must remain the enhancement of thebidding process for the benefit of the stockholders.”). Macmillan set forth a test which tolerates onlyvalue-enhancing preferential treatment:
In the face of disparate treatment, the trial court must first examine whether the directorsproperly perceived that shareholder interests were enhanced. In any event, the board’s actionmust be reasonable in relation to the advantage sought to be achieved, or conversely, to thethreat which a particular bid allegedly poses to stockholder interests.
559 A.2d at 1288; In re J.P. Stevens & Co., Inc. S’holders Litig., 542 A.2d 770, 782 (Del. Ch. 1988)(“The board may tilt the playing field if, but only if, it is in the shareholders’ interest to do so.”). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 8 of 39
To support his claim that Defendants acted in bad faith, Plaintiff cites Mills Acquisition Co. v.Macmillan, Inc., 559 A.2d 1261 (Del. 1988). In that case, Macmillan, Inc.’s Chairman and ChiefExecutive Officer (“CEO”) and its President and Chief Operating Officer (“COO”) orchestrated aleveraged buyout of their own company, resulting in a lock-up agreement “between Macmillan andKohlberg Kravis Roberts & Co. (‘KKR’), an investment firm specializing in leveraged buyouts.” Id. at1264-65. These directors, “as participants in the leveraged buyout, had a significant self-interest inensuring the success of a KKR bid.” Id. at 1279. Indeed, “Macmillan senior management wouldreceive up to 20% ownership in the newly formed company.” Id. at 1273. So strong was the pull ofthat promised 20 percent ownership stake that even before KKR had communicated a bid price, theseself-interested actors indicated that they would “endorse” the acquisition to the full board of directors. Id. To steer the process in the desired direction, they “clandestinely and impermissibly skewed” theauction in KKR’s favor by, among other things, tipping KKR off as to the amount of a competing bidand then concealing this tip from the board of directors. Id. at 1279-81. On appeal, the DelawareSupreme Court held that “discriminatory treatment of a bidder, without any rational benefit to theshareholders, was unwarranted.” Id. at 1282 (emphasis added).4 The court found that “KKR repeatedlyreceived significant material advantages to the exclusion and detriment of [the competing bidder] tostymie, rather than enhance, the bidding process.” Id. at 1281. Moreover, the court concluded that“[t]he board was torpid, if not supine, in its efforts to establish a truly independent auction . . . .” Id. at1280. The court added: “By placing the entire process in the hands of [the chairman], through his ownchosen financial advisors, with little or no board oversight, the board materially contributed to theunprincipled conduct of those upon whom it looked with a blind eye.” Id.
Defendants contend that Macmillan is distinguishable because the directors in that case were onboth sides of the transaction and therefore engaged in self-dealing. However, Defendants have pointedus to no authority for the proposition that Macmillan is only applicable when a court reviews self-interested transactions for fairness and may not support a finding of bad faith conduct in the Revlonauction context.
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5 Although Viacom did not actually submit a bid, we conclude that there are triable issues of factas to whether Viacom was at least a serious potential bidder which was discouraged from actuallysubmitting a bid by Defendants’ alleged bad faith conduct.
6 The Delaware courts have explained that favoritism, untethered to any strategy to drive up bidprices, is a breach of the fiduciary duties which Revlon focused through the lens of shareholder wealthmaximization:
Critically, in the wake of Revlon, Delaware courts have made clear that the enhanced judicialreview Revlon requires is not a license for law-trained courts to second-guess reasonable, but
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We recognize that Wayne County Employees’ Retirement System v. Corti, Civil Action No.3534-CC, 2009 WL 2219260 (Del. Ch. July 24, 2009), distinguishes Macmillan from the single-biddermerger reviewed in that case on the absence of any conflicted insiders seeking to transfer control of acompany to themselves. Id. at *12-13 (“There is much less cause for concern where managers willcontinue their employment with the combined post-transaction entity, than when the conflictedmanagers are bidders in an auction for control of the company, and are thereby seeking to transfercontrol of the company to themselves personally.”). But that discussion has no bearing on theprohibition on favoring a particular bidder in a multiple-bidder context, which this case arguablypresents.5 Defendants suggest that the directors may tilt the playing field in favor of a particular bidder,without regard to shareholder wealth maximization, so long as they are not on both sides of atransaction. We reject this argument. Simply because Macmillan examined “disparate treatment”through the lens of disloyalty premised on a self-interested transaction does not mean field-tilting ispermissible in other contexts. See Emerson Radio Corp. v. Int’l Jensen Inc., Civ. A. Nos. 15130,14992, 1996 WL 483086, at *11-12 (Del. Ch. Aug. 20, 1996) (describing Macmillan as requiringfiduciaries to “treat all bidders equally and fairly in carrying out their Revlon duties” and identifyingself-interested nature of merger transaction as an “addition[al]” or “alternative” theory for breach ofduty of loyalty); Roberts v. Gen. Instrument Corp., CIV. A. No. 11639, 1990 WL 118356, at *8 (Del.Ch. Aug. 13, 1990) (citing Macmillan, 559 A.2d at 1287-88) (“In each instance where the board is notpredominantly self-interested or under the control or dominating influence of a person with a conflictinginterest, the principal judicial inquiries relate to whether the board was adequately informed and actingin good faith. This court has been pointedly instructed, however, that ‘where issues of corporate controlare at stake’ action of even a disinterested board must meet an enhanced test before they will qualify forthe deference that courts ordinarily accord to good faith business judgments.”).
Whatever a director’s particular motivation, evidence that he skewed an auction in favor of aparticular bidder can support a finding of an “intentional dereliction of duty,” Disney, 906 A.2d at 66,i.e. a violation of the obligation to act in good faith. See Nagy v. Bistricer, 770 A.2d 43, 48, n.2 (Del.Ch. 2000) (observing that the duty of good faith may serve as a “constant reminder . . . that, regardlessof his motive, a director who consciously disregards his duties to the corporation and its stockholdersmay suffer a personal judgment for monetary damages for any harm he causes,” even if for a reason“other than personal pecuniary interest”).6
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debatable, tactical choices that directors have made in good faith. For example, the SupremeCourt has held that the duty to take reasonable steps to secure the highest immediately availableprice does not invariably require a board to conduct an auction process or even a targeted marketcanvass in the first instance, emphasizing that there is “no single blue-print” for fulfilling theduty to maximize value. Nor does a board’s decision to sell a company prevent it from offeringbidders deal protections, so long as its decision to do so was reasonably directed to the objectiveof getting the highest price, and not by a selfish or idiosyncratic desire by the board to tilt theplaying field towards a particular bidder for reasons unrelated to the stockholders’ ability to gettop dollar.
Toys “R” Us, 877 A.2d at 1000-01 (emphasis added; citations omitted). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 10 of 39
Defendants’ principal argument is that recent Delaware Supreme Court case law creates a much
more stringent standard for claims of breaches of the obligation to act in good faith. To this end, theycite language in the Delaware Supreme Court’s decision in Lyondell. In that case, Lyondell’s board ofdirectors approved the sale of their company to Basell AF, a privately held Luxembourg company, afternegotiating several increases in the per share bid price up from $40 to $48, and a set of less stringentdeal protection devices, including a “fiduciary out” clause in the standard no-shop provision and areduced termination fee. 970 A.2d at 237-39. The court found no bad faith and therefore no breach ofthe duty of loyalty. Id. at 242-44. The Supreme Court rested its decision on the following facts:
The Lyondell directors met several times to consider Basell’s premium offer. They weregenerally aware of the value of their company and they knew the chemical company market. The directors solicited and followed the advice of their financial and legal advisors. Theyattempted to negotiate a higher offer even though all the evidence indicates that Basell hadoffered a “blowout” price. Finally, they approved the merger agreement, because “it was simplytoo good not to pass along [to the stockholders] for their consideration.” We assume, as we muston summary judgment, that the Lyondell directors did absolutely nothing to prepare for Basell’soffer, and that they did not even consider conducting a market check before agreeing to themerger. Even so, this record clearly establishes that the Lyondell directors did not breach theirduty of loyalty by failing to act in good faith.
Id. at 244.
Contrary to Defendants’ argument, Lyondell did not work any transformation in Delaware lawon the duty of loyalty. Nothing in this case altered the standard definition of bad faith; indeed, the courtreaffirmed that “bad faith will be found if a ‘fiduciary intentionally fails to act in the face of a knownduty to act, demonstrating a conscious disregard for his duties.’” Id. at 243 (quoting Disney, 906 A.2d at67). The court continued: “there is a vast difference between an inadequate or flawed effort to carry outfiduciary duties and a conscious disregard for those duties.” Id. Despite all the references to the
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“conscious disregard” standard, Defendants nevertheless cherry-pick certain language to argue that amore stringent standard applies, including the following lines: (1) “Only if they knowingly andcompletely failed to undertake their responsibilities would they breach their duty of loyalty”; and (2)“[T]he inquiry should have been whether those directors utterly failed to obtain the best sale price.” Id.at 243-44 (emphasis added); (Joint Br. 5-7, 16). Defendants’ citation of this language is out of contextand misleading. A comprehensive review of the Lyondell opinion reveals that the court intended thatlanguage to be synonymous and coterminous with the “conscious disregard” standard. The court didnot suggest that the “utter failure” standard would supplant the definition of bad faith set forth inDisney. Nor did it suggest any unprecedented diminishment of Revlon duties, as suggested by theminimalist standard Defendants advance. If such a radical departure were intended, we think the courtwould have taken the pains to say as much. Divorced from the surrounding text, the “utter failure”language could be said to require that directors simply do anything in the auction process, no matterhow feckless, ineffectual, or at odds with the goal of maximizing shareholder wealth.
The “utter failure” language derives from the Stone and In re Caremark decisions, which thecourt cited. 911 A.2d 362 (Del. 2006); 698 A.2d 959, 971 (Del. Ch. 1996). Both of those decisionsconcerned claims that directors failed to engage in the necessary oversight to ensure compliance withlaws such as the federal Bank Secrecy Act in Stone. That vital factual context helps explain why In reCaremark defined bad faith as follows: “Generally where a claim of directorial liability for corporateloss is predicated upon ignorance of liability creating activities within the corporation, . . . only asustained or systematic failure of the board to exercise oversight—such as an utter failure to attempt toassure a reasonable information and reporting system exists—will establish the lack of good faith that isa necessary condition to liability.” 698 A.2d at 971 (“Such a test of liability—lack of good faith asevidenced by sustained or systematic failure of a director to exercise reasonable oversight—is quitehigh.”). Nevertheless, the Delaware Supreme Court explained in Stone and reaffirmed in Lyondell that:“the Caremark standard is fully consistent with the Disney definition of bad faith.” Lyondell, 970 A.2dat 240 (citing Stone, 911 A.2d at 370). We cannot second-guess that determination as Defendants wish.
Instead of placing “utter failure” between “subjective bad faith” (i.e. “actual intent to do harm”)and “conscious disregard” on the Disney “bad faith” spectrum, Lyondell equated the “utter failure” and“conscious disregard” standards. 970 A.2d at 240. This reasoning was fully in keeping with theSupreme Court’s prior decision in Stone, where it noted that the duty of loyalty could be breached bytwo specific kinds of conduct rising to the level of bad faith: “(a) the directors utterly failed toimplement any reporting or information system or controls; or (b) having implemented such a system orcontrols, consciously failed to monitor or oversee its operations thus disabling themselves from beinginformed of risks or problems requiring their attention.” 911 A.2d at 370. Crucially, though bad faithcould be demonstrated with either of these alternatives, the court emphasized, citing Disney, 906 A.2d at67, that these were coterminous legal standards:
In either case, imposition of liability requires a showing that the directors knew that they werenot discharging their fiduciary obligations. Where directors fail to act in the face of a known
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7 “A failure to act in good faith may be shown . . . where the fiduciary intentionally acts with apurpose other than that of advancing the best interests of the corporation, where the fiduciary acts withthe intent to violate applicable positive law, or where the fiduciary intentionally fails to act in the face ofa known duty to act, demonstrating a conscious disregard for his duties.” In re Walt Disney Co.Derivative Litig., 907 A.2d at 755. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 12 of 39
duty to act, thereby demonstrating a conscious disregard for their responsibilities, they breachtheir duty of loyalty by failing to discharge that fiduciary obligation in good faith.
911 A.2d at 370 (emphasis added). Delaware courts generally seem to read Lyondell in this way. See,e.g., Robotti & Co., LLC v. Liddell, C.A. No. 3128-VCN, 2010 WL 157474, at *11 (Del. Ch. Jan. 14,2010) (characterizing Lyondell as holding that “[b]ad faith, and thus a breach of the duty of loyalty, canarise only when a fiduciary consciously disregards his or her responsibilities”).7
In addition, we do not read Lyondell as diminishing the prohibition on tilting the playing field infavor of a particular bidder for any reason other than maximizing shareholder wealth. The lack of anactual or even potential second bidder was a key undisputed fact on which that court relied, noting:“[The directors] had reason to believe that no other bidders would emerge, given the price Basell hadoffered and the limited universe of companies that might be interested in acquiring Lyondell’s uniqueassets. . . . Finally, no other acquiror [sic] expressed interest during the four months between the mergerannouncement and the stockholder vote.” 970 A.2d at 241. Other cases have distinguished betweensingle-bidder and multiple-bidder contexts as well. See, e.g., Barkan, 567 A.2d at 1286-87; ContinuingCreditors’ Comm. of Star Telecomms., Inc. v. Edgecomb, 385 F. Supp. 2d 449, 466 n.14 (D. Del. 2004)(“In [Macmillan], the claim was that the directors approved the use of a lock-up that stopped rivalbidders from winning the auction for the company so that fellow directors could purchase the companythrough a leveraged buy-out. Here, however, there were no other bidders for Star, the Company was onthe verge of bankruptcy, and the Gotel financing was, by the Plaintiff’s own admission, the onlyfinancing option presented to the Board.”) (emphasis added and citations omitted). Since Lyondell onlyreviewed a merger with a lone bidder, even if we were to read its “utter failure” language as morelenient on Defendants, it is of severely diminished relevance in the multiple-bidder scenario wearguably confront here.
In short, Revlon and Macmillan are not displaced in any way by Stone or Lyondell. Accordingly, we must ask whether there is a genuine issue of material fact as to whether Defendantsconsciously disregarded their duties, i.e. “fail[ed] to act in the face of a known duty to act.” Stone, 911A.2d at 370. There is nothing in the case law to warrant granting judgment as a matter of law forDefendants, simply because they engaged in some bargaining.
Having considered all of the admissible evidence before us and viewing it in the light mostfavorable to Plaintiff as we must under Rule 56, we conclude that there are genuine, triable issues ofmaterial fact sufficient to defeat Defendants’ Motion for Summary Judgment on this Revlon claim.
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8 Although analytically we are reviewing the evidence on the bad faith prong of the duty ofloyalty component of the breach of fiduciary duty claim at this juncture, we consider Rosenblatt’salleged self-interest to the extent that it bears on whether Plaintiff has raised a triable issue of materialfact as to whether Rosenblatt acted in conscious disregard of his duties by impermissibly tilting the fieldin favor of News Corp.CV-90 (06/04) CIVIL MINUTES - GENERAL Page 13 of 39
These issues fall into three categories: (1) whether Intermix CEO Rosenblatt impermissibly tilted theplaying field in favor of News Corp.; (2) whether the remaining board members consciously disregardedtheir duties; and (3) whether the purported risk of a direct bid for MySpace, which would have frozenthe MySpace Option, precludes a finding that Defendants consciously disregard their duties.
a. Rosenblatt
Plaintiff proffers evidence tending to show that during the crucial week leading up to the July18, 2005 merger, Rosenblatt evaded Viacom’s advances, even though Viacom’s representatives werecommunicating that a competing bid was imminent. Plaintiff raises at least two interrelated triableissues: (1) whether Rosenblatt was self-interested in the merger transaction;8 and (2) whether heimpermissibly steered the auction in News Corp.’s favor.
As to Rosenblatt’s purported self-interest, there is evidence of Rosenblatt’s motivation for thealleged bidder favoritism, namely his anticipation of future employment with News Corp. In oneparticularly revealing email sent on July 15, Rosenblatt excitedly endorses News Corp.’s RossLevinsohn’s vision: “So, we create the Fox Internet group, all our units (myspace, alena, grab) fallunder it, plus all new acquisitions, and you are CEO Fox Internet and I am Fox Internet grand Puba!!!!” (J.A., Ex. 184). Rosenblatt continues: “I would like to discuss my specific role and structure wheneveryou are ready. It is no rush unless Peter and Rupert want me to sign an employment agreement bySunday [July 17, 2005] . . . .” (Id.). In an earlier email in that same chain, Rosenblatt wrote: “[I] amburning some real equity with every major media company by getting [the deal] done. . . . u [sic] haveno idea the pain I will suffer on Monday. U [sic] better have a good job for me cause I ain’t [sic] gonnawork in this town again. . . .” (Id.). On July 13, Rosenblatt wrote: “tell Thom Murdoch and I cut thedeal in 30 mins [sic] and I got 100% of what we wanted. Deal closing by Monday.” (Id., Ex. 154). This evidence at least raises the inference that Rosenblatt had a strong interest in seeing a mergertransaction with News Corp. completed and had made up his mind that Intermix would be sold to NewsCorp. as of July 13.
Moreover, Plaintiff points to several key pieces of documentary evidence and witness testimonywhich tend to support his contention that (1) Rosenblatt, in representing the Intermix board through theTransaction Committee (“TC”), (2) Sheehan, who also sat on the TC, and (3) their agents, deliberatelydodged, if not frustrated, an arguably imminent bid from Viacom:
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9 Viacom owns MTV Networks.
10 The Parties initially sought to file Freston’s deposition transcript under seal because itcontained information subject to the governing protective order. On November 13, 2009, the Partiesfiled a joint stipulation to withdraw their application to file under seal unredacted versions of the JointBrief, the Joint Statement of Uncontroverted Facts, and Volumes 2-3 and 5-9 of the Joint EvidentiaryAppendix, as well as several full deposition transcripts, including Freston’s testimony. (Dkt. No. 234). In that document, the Parties stated that: “WHEREAS the Parties have contacted all non-parties thatproduced documents and/or gave deposition testimony which was the subject of the application to fileunder seal, and obtained their permission for the documents to be publicly filed, and therefore withdrawthe Application to File Under Seal[.]” (Id. at 3). Our November 17, 2009 Order regarding the jointstipulation was not clear as to whether the deposition transcripts were also being filed in the publicrecord. (Dkt. No. 236). We now clarify that all of the deposition transcripts labeled “ConfidentialPursuant to Protective Order” and submitted to the Court along with the Cross-Motions for SummaryJudgment SHALL also be filed in the public record pursuant to the Parties’ joint stipulation. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 14 of 39
First, on July 6, Montgomery responded to an email announcing “Viacom coming in hard” bytelling Rosenblatt: “You need to dance with [Viacom] . . . slow them down. I know you can doit.” (Id., Ex. 117).
Second, TWP, specifically Robert Kitts (“Kitts”), was aware that Epstein was trying to reachthem to talk about a potential Viacom bid. (Kitts Tr. at 125:4-7, 126:4-13). Epstein noted onJuly 16 that Kitts never called him back as promised. (J.A., Ex. 191 (“We exchangedsubsequent emails and he indicated he would call me, but he never did.”)).
Third, on July 15, Mosher wrote Rosenblatt following one of Rosenblatt’s updates to the fullboard, saying “Viacom sounds like a pipedream.” (Id., Ex. 182).
Fourth, on July 15, Judy McGrath of MTV9 wrote Rosenblatt to inform him that Viacom was“coming with a bid early next week.” (Id., Ex. 183). She added: “We really want to be with youon this, and hope to get in the ring for it . . . .” (Id.). Rosenblatt replied evasively, failing tocorrect her mistaken impression that the auction would still be ongoing after Monday: “I am on acall but thanks so much for the email . . . . I will call you back soon . . . .” (Id.). Rosenblattcould not recall precisely whether he had returned her call: “I may have tried. I think, actually, Ido think I tried and I couldn’t get a hold of her.” (Rosenblatt Tr. at 108:21-24).
Fifth, Viacom’s CEO Thomas Freston (“Freston”), who reiterated Viacom’s interest inpurchasing Intermix to Rosenblatt, has testified that he was only told that the process with thecompeting bidder was “moving quickly.” (Freston Tr. at 17:12-20, 19:8-11, 22:4-14).10 Hetestified that he could not “recall if [Rosenblatt] said that they were going to do a deal bySunday.” (Id. at 22:21-24). When asked whether Rosenblatt had communicated that a dealwould be completed by Sunday, he stated that he did not believe so. (Freston Tr. at 19:8-11).
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11 Rosenblatt, on the other hand, has testified that he actually told Freston that a deal would“likely be over by Sunday,” or (stated with more certainty) that the deal was “going to be done bySunday.” (Rosenblatt Tr. at 64:5-22, 65:22-25, 92:5-8). For purposes of summary judgment, thisconflicting evidence further supports the existence of a triable issue of fact as to Viacom’s relativeawareness of the impending consummation of the merger with News Corp. Moreover, JasonHirschhorn (“Hirschhorn”), Viacom’s top manager for Internet business, wrote in an internal email onSaturday July 16 that News Corp. “will deliver [its bid] anywhere from today-monday.” (J.A., Ex.192). Freston also states that Rosenblatt told him “a specific deal was imminent.” (Freston Tr. at29:11-16). Though the actual meaning of that statement is obscure as to whether a deal or a bid wouldhave been imminent (particularly given Freston’s other testimony), this ambiguity likewise buttressesour conclusion that there are genuine issues for trial.
12 A reasonable jury could infer from this email that Rosenblatt intended to evade an arguablyimminent competing bid, and that the “[h]ave a great weekend” line at the end of the email wasdismissive, given the fact that the email was sent at nearly 6 p.m. on a Sunday night.
13 We do not read the deposition to suggest that these were his actual words; Kitts was merelyparaphrasing what he recalls saying to Viacom. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 15 of 39
Kitts of TWP also confirmed that he failed to give Viacom any hard deadline by which to submita bid. (Kitts Tr. at 88:21-89:16, 90:11-22, 136:11-14).11
Sixth, on July 17, Jason Hirschhorn emailed Chris DeWolfe, MySpace’s CEO, to document hisdifficulties in staying in the auction process: “chris, quick concerns . . . Intermix managementdid not show up on Friday as promised during our time there . . . Intermix legal cancels theirtime with our legal today at the last minute . . . Heard you guys got called off the ad sales callabruptly . . . In short, I have had a team of 20+ people here working for 72 hours straight on asignificant bid, is there anything I need to know?” (J.A., Ex. 200).
Seventh, on July 17, Van Toffler of MTV also emailed Rosenblatt directly to complain politelyabout the perceived run-around: “They are in the office working round [sic] the clock so we canput forth a number to you this week. They mentioned a couple of calls were cancelled at the endof the day Friday, and seemed a bit concerned. Is there anything I can do to help the process forboth of us as this is clearly on the fast track?” (Id., Ex. 202). Again, Rosenblatt replied in sucha way that a reasonable jury could infer an intent to evade an arguably imminent competing bid:“We like you and your guys a ton also. Chris called back or will your GC today. Have a greatweekend[.]” (Id.).12
Eighth, on July 17, Kitts of TWP, pursuant to the Intermix board’s instructions, informedViacom that it would be “in their best interest” to make a bid that evening.13 (Kitts Tr. at 69:13-70:14, 88:21-89:16). Kitts admitted that he did not give Viacom a hard and fast deadline (see id.at 88:21-89:16, 90:11-22; Epstein Tr. at 53:21-55:5), but that he “relied upon the message [he]
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14 Rupert Murdoch is the Chairman and CEO of News Corp. Peter Chernin was the then-President and COO of News Corp. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 16 of 39
delivered as code that [Epstein] should get a bid in this evening.” (Kitts Tr. at 90:20-22). Furthermore, Kitts admitted in the deposition that he had been instructed to ask for a bid on atimetable that he knew was infeasible. (Id. at 144:1-145:7). Kitts testified that he was aware ofan upcoming Viacom board meeting, “at which [a potential bid] was going to be discussed.” (Id.at 69:13-70:14). The Viacom board was not scheduled to meet until the evening of TuesdayJuly 19, 2005. (Rosenblatt Decl. ¶ 42; Brewer Decl. ¶ 29).
On the other hand, Defendants present the following evidence of events leading up to the July18th merger, which they argue demonstrates the board members’ good faith. News Corp. initiallysignaled that it would be willing to purchase Intermix in the $8-10 per share price range. (RosenblattDecl. ¶ 18). During the Tuesday July 12, 2005 meeting between Rosenblatt, Rupert Murdoch, and PeterChernin,14 News Corp. indicated that it would pay $12 per share, as long as the MySpace Option wasexercised and a merger agreement was executed by no later than Sunday, July 17, 2005. (Id. ¶ 24(describing the “handshake deal”)). At the 2 p.m. meeting on July 15, the Intermix board of directorsrejected News Corp.’s proposal to enter exclusive negotiations as premature. (Id. ¶¶ 29-30). At the 8p.m. meeting on July 15, the Intermix board rejected the non-binding term sheet including a variety ofdeal protection provisions as “too strong a deterrent to other potential bidders.” (Id. ¶ 33; J.A., Ex. 14). At the 8 p.m. meeting on July 16, TWP advised the board that it would be reasonable to approve amerger with News Corp. rather than waiting for Viacom to present an offer. (Brewer Decl. ¶ 27;Rosenblatt Decl. ¶ 37). At the 7:30 p.m. TC meeting on July 17, the committee directed TWP to contactViacom and/or its representative, Morgan Stanley, to ascertain whether Viacom would be making anoffer before the opening of the market the next morning. (Rosenblatt Decl. ¶ 41; Sheehan Decl. ¶ 36;J.A., Ex. 18). At the 10 p.m. Intermix board meeting on July 17, TWP advised that Viacom was notprepared to make any offer until its board met on Tuesday July 19 and approved a bid. (RosenblattDecl. ¶ 42; J.A., Ex. 19). At the 3:45 a.m. board meeting on July 18, both Montgomery and TWPpresented their valuation analyses, explaining that $12 per share was a fair price for Intermix, and theBoard voted to approve the merger. (Rosenblatt Decl. ¶ 44). On July 18, Intermix entered into a mergeragreement with News Corp.’s Fox Interactive Media. (Rosenblatt Decl. ¶ 45; J.A., Ex. 4, at 319). Defendants contend, and the record reflects, that throughout this process the board met repeatedly,authorized ongoing discussions with both competing bidders, and consulted legal and financial advisers. (J.A., Exs. 8-12, 14-19).
Viewing the evidence as a whole and in the light most favorable to Plaintiff, we conclude thatthere are at least triable issues of fact as to whether Rosenblatt acted in good faith, whether heimpermissibly skewed the auction in favor of News Corp. for a purpose other than maximizingshareholder value, knowing that a Viacom bid was likely and imminent, and whether this arguablydisparate treatment of Viacom and News Corp. had any effect on Viacom’s appreciation of the arguableneed to make an offer by the evening of July 17, 2005.
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b. The Other Directors
i. Sheehan
In addition to Rosenblatt, there are also triable issues of fact as to whether Sheehan consciouslydisregarded his fiduciary duties. On Friday July 15, Stuart Epstein (“Epstein”), the Morgan Stanleyinvestment banker representing Viacom, tried to reach Sheehan but was unsuccessful. (Sheehan Tr. at83:12-18; J.A. Ex. 175). Sheehan instructed his secretary as follows: “Do not tell [Epstein] anythingabout what I am doing or where I am[.]” (J.A., Ex. 175). In reply to his email, Sheehan’s secretaryinformed him that she told Epstein that he was “unavailable.” (Id.). A reasonable jury could concludethat this email chain evinces Sheehan’s intent to avoid Viacom’s representatives.
ii. The Other Six Directors
In Gesoff v. IIC Industries, Inc., 902 A.2d 1130 (Del. Ch. 2006), the court stated that bad faithmay be found where directors have “acted with conscious disregard or made decisions with knowledgethat they lacked material information.” Id. at 1165 (emphasis added). Few Delaware cases attempt todefine precisely what conduct reaches the level of actionable bad faith, but there is at least agreementthat “adopting a ‘we don’t care about the risks’ attitude concerning a material corporate decision”constitutes bad faith. In re Walt Disney Co. Derivative Litig., 825 A.2d 275, 289 (Del. Ch. 2003)(finding bad faith claim properly alleged where factual allegations, if true, implied that “the defendantdirectors knew that they were making material decisions without adequate information and withoutadequate deliberation, and that they simply did not care if the decisions caused the corporation and itsstockholders to suffer injury or loss”) (emphasis in original).
Having reviewed the record in full, we conclude that there is sufficient admissible evidence tocreate a triable question of fact as to whether the rest of the board, as in Macmillan, “plac[ed] the entireprocess in the hands of” Rosenblatt and to a lesser extent Sheehan and thereby “materially contributedto the [allegedly] unprincipled conduct of those upon whom it looked with a blind eye.” 559 A.2d at1281.
On February 9, 2005, the Intermix board of directors formed a Transaction Committeecomprised of Rosenblatt, Sheehan, and Quandt. (Rosenblatt Decl. ¶ 6). From that point until July 18,2005 when the merger was announced, it is undisputed that the Board received most of its informationabout the negotiations from its self-interested CEO, Rosenblatt. Indeed, it is undisputed that Rosenblattwas the only board member who had some first-hand information as to the circumstances of Viacom’sefforts to put in a bid. (See, e.g., Joint Statement of Uncontroverted Facts P347 (“Rosenblatt was theonly person from the Intermix Board who negotiated with Viacom.”)). Crucially, one of the boardmembers testified that Rosenblatt had led him to believe “[t]hat Viacom was less urgent about the dealand hadn’t taken the time or done the same level of work as Fox Network” and that Viacom was a“pipedream.” (J.A., Ex. 182; Mosher Tr. at 25:24-26:1). This phrase is admittedly not indicative ofconscious wrongdoing. However, there is a triable question as to whether the other board members
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consciously abdicated their responsibilities as corporate fiduciaries in allegedly swallowingRosenblatt’s version of events and utterly failing to assess the situation for themselves.
More generally, a reasonable fact-finder could conclude that the other board members acted inbad faith by making “decisions with knowledge that they lacked material information.” Gesoff, 902A.2d at 1165. With respect to their knowledge of the relative likelihood of a Viacom bid, Mosher statedthat he could not recall if he or any other board member had “asked any questions regarding Viacom orits status.” (Mosher Tr. at 26:14-21). Additionally, he could not recall whether he had “any knowledgeof whether anyone from management was providing equal information to Viacom and Fox News Corpabout the time line” for submitting a bid for Intermix. (Id. at 43:17-21).
With respect to their knowledge of bidder favoritism, though Mosher testified that he could notrecall the board ever instructing Rosenblatt to favor one bidder over another, he also could notdefinitively represent that the board had not so instructed Rosenblatt. (Id. at 41:10-21). Other boardmembers besides Rosenblatt have also testified that they were unaware that any due diligence meetingswith Viacom had been cancelled. (Brewer Tr. at 119:11-15; Sheehan Tr. at 98:1-20). Furthermore,Brewer testified that he was simply unaware that Viacom was conducting due diligence over the July16-17, 2005 weekend. (Brewer Tr. at 26:5-24).
With respect to their knowledge of the fairness of the merger price, Rosenblatt did not informBrewer that he was requesting $12 per share from News Corp. until the day of the “handshake deal”with Rupert Murdoch; it is unclear when the rest of the board learned this information. (Id. at 122:2-9). He also did not explain how that requested price was derived. (Id. at 122:10-14). Brewer testified thatthe board did not ask, and Mosher could not recall whether any board member sought an explanation. (Id.; Mosher Tr. at 53:6-9). Moreover, Brewer testified that the board as a whole never conducted anyindependent analysis to determine what “an appropriate price per share” would be. (Brewer Tr. at122:15-18; see also Mosher Tr. at 49:24-50:4 (testifying that he himself did not perform anyindependent analysis)). Additionally, Mosher confirmed that the board had not “directed themanagement team to go get the specific valuation work done prior to the acquisition.” (Mosher Tr. at52:4-18). Finally, Brewer has testified that he could not even recall whether any of the directors hadasked “any questions about [Montgomery and TWP’s] fairness presentations.” (Brewer Tr. at 104:2-10). Though Brewer’s failure to recall what everyone had specifically asked back in 2005 would beunderstandable, a reasonable jury might draw a negative inference from his representation that he couldnot recall any discussion as to the investment banks’ analyses.
Construing all of the above testimony in the light most favorable to Plaintiff as we must onDefendants’ motion for summary judgment, we conclude that it is at least triable as to whether theremaining six board members consciously disregarded their duties and acted in bad faith. There isevidence in the record suggesting that no one on the board asked any questions about the requested pershare price, the treatment of the competing bidders, the fairness valuations, or the relative likelihood ofa Viacom bid. A reasonable jury could infer that this evidence demonstrates the other six directorsconsciously abdicated their roles as corporate fiduciaries required by law to do their utmost to maximize
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shareholder wealth. Of course, we remain mindful that even gross negligence, premised on “simpleinattention or failure to be informed of all facts material to the decision[,]” violates only the duty of careand is not actionable as bad faith. Disney, 906 A.2d at 66. Nevertheless, we think a reasonable jurycould find that the other six directors exceeded the bounds of negligent conduct, willfully proceeded totheir decisions knowing they lacked material information, Gesoff, 902 A.2d at 1165, and therebyconsciously disregarded their fiduciary duties. Disney, 906 A.2d at 66 (“Cases have arisen wherecorporate directors have no conflicting self-interest in a decision, yet engage in misconduct that is moreculpable than simple inattention or failure to be informed of all facts material to the decision. To protectthe interests of the corporation and its shareholders, fiduciary conduct of this kind, which does notinvolve disloyalty (as traditionally defined) but is qualitatively more culpable than gross negligence,should be proscribed.”).
c. The MySpace Option
The MySpace, Inc. Stockholders Agreement (“MSA”) (J.A., Ex. 2), executed on February 11,2005, was the culmination of negotiations between MySpace, Inc., MySpace Ventures, LLC, RedpointVentures I, L.P., Redpoint Associates I, LLC, Redpoint Ventures II, L.P., Redpoint Associates II, LLC,Redpoint Technology Partners Q-1, L.P., and/or Redpoint Technology Partners A-1, L.P. (collectively,“the Redpoint Entities”). (Brewer Decl. ¶ 6; Rosenblatt Decl. ¶ 7). Under the agreement, the RedpointEntities purchased a 47 percent minority interest in Intermix, and at the same time, the 53 percentmajority stockholders acquired an option (“the MySpace Option”) to buy back that minority interest if athird party made a “bona fide . . . offer” for 50 percent or more of Intermix’s shares:
So long as Intermix (together with its Affiliates) directly or indirectly holds at least 1,000,000shares of Common Stock . . . , in the event Intermix receives a bona fide third-party offer withrespect to a Change of Control of Intermix . . . within the twelve (12) month-period commencingon the date hereof . . . , then, following receipt of such offer (and provided discussions relatingto such offer are then-ongoing), Intermix shall have the right to purchase . . . up to 100% ofCommon Stock and Common Stock Equivalents of the Corporation held by the otherStockholders, whether now owned or hereafter acquired . . . .
(J.A., Ex. 2 § 7.1.1; Brewer Decl. ¶¶ 6-7; Rosenblatt ¶¶ 7-8). Section 7.1.5 of the MSA precluded themajority from exercising the MySpace Option if a third party made a direct bid for MySpace of over$125 million: “Intermix may not exercise the Purchase Option if (a) the Corporation [MySpace, Inc.]has previously received a bona fide third party offer to purchase the Corporation’s capital stock orassets for a purchase price greater than $125.0 million and discussions regarding such acquisitionbetween the Corporation and such third party are ongoing . . . .” (J.A., Ex. 2 § 7.1.5). The twoprovisions are mutually exclusive: (1) a bid for 50 percent or more of Intermix’s shares precludes anysubsequent direct bid for MySpace (while discussions for the Intermix control share are ongoing); and(2) any direct bid for MySpace precludes any subsequent bid for 50 percent or more of Intermix’sshares (while discussions for the acquisition of MySpace are ongoing).
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Defendants contend their conduct was not in bad faith in light of the risk of a direct third-partybid for MySpace, which would have precluded the 53 percent Intermix majority interest from exercisingthe MySpace Option under the MSA to purchase the minority 47 percent interest. Accordingly, wemust consider whether the purported risk of a direct bid for MySpace, which would have frozen theMySpace Option, dictates a conclusion that Defendants did not consciously disregard their duties as amatter of law.
Defendants claim that the risk of such a freezing bid was real and that any delay inconsummating the merger with News Corp. threatened the loss of an opportunity to capture the value ofIntermix’s crown jewel, MySpace, for their shareholders. (Joint Br. 11-15). At the July 15th boardmeeting at 2 p.m., the directors discussed the status of conversations with News Corp. and Viacom andconsidered the possibility that if either company “viewed itself as unlikely to prevail in acquiring[Intermix], it might submit an offer to acquire only MySpace in order to potentially suspend, at leasttemporarily, [Intermix’s] ability to exercise the MySpace option, thereby potentially jeopardizingeconomically attractive transactions involving the Company including the potential News Corp.transaction then under consideration.” (Rosenblatt Decl. ¶ 31; J.A., Ex. 12). Rosenblatt and the otherdirectors have declared that they “believed that the deadline provided by News Corp. by which toexecute the Merger Agreement was firm and that News Corp. was prepared to walk away if the deal wasnot consummated by the opening of the stock market on July 18, 2005.” (Rosenblatt Decl. ¶ 46).
To substantiate their purported concern over a potential freeze-out bid, Defendants suggest that a“bona fide third-party offer” can only mean a fully executed agreement, as in the written mergeragreement executed on July 18, 2005. (Joint Br. 93-97). We reject Defendants’ assertion that thisproposed construction of “bona fide third-party offer” is compelled as a matter of law. Under Sections7.1.1 and 7.1.5 of the MSA, a subsequent bid for MySpace or the Intermix control share, respectively,will only be precluded if discussions regarding the “bona fide third-party offer” are “ongoing.” Thislanguage in the agreement suggests that the term “bona fide offer” does not contemplate the finalexecution of an agreement, at which point discussions would no longer be “ongoing.”
Even though we reject Defendants’ construction of the phrase “bona fide third-party offer” in theMSA, we also reject Plaintiff’s request that we rule as a matter of law on the purely legal question ofwhat constitutes a “bona fide third-party offer” under Sections 7.1.1 and 7.1.5 of the MSA. In our view,Plaintiff’s request misses the point. We are not here to construe the terms of the MSA, as such. Rather,the question is whether there is a triable issue that Defendants, reasonably fearing being frozen out ofthe MySpace Option, tilted the field in News Corp.’s favor for the permissible purpose of maximizingshareholder wealth, or whether Defendants had no such reasonable fear, but merely used the MySpaceOption as a rationalization for a selfish or idiosyncratic desire to favor News Corp. unrelated to securingtop dollar for the shareholders. We think the evidence fairly presents such triable issues as toDefendants’ purported conscious disregard of their duties. In any event, our post hoc legaldetermination cannot dictate the result of the question of the propriety of Defendants’ conduct thatindisputably occurred without the benefit of our construction of the MSA.
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Accordingly, we hereby DENY Plaintiff’s Motion for Summary Judgment on this question ofcontractual interpretation.
In light of all the reasons set forth above, we hereby DENY Defendants’ Motion for SummaryJudgment on the fiduciary duty claim with respect to Plaintiff’s bad faith theory in the Revlon auctioncontext.
2. Self-Interested Transaction
In the alternative, Defendants move for summary judgment on the second theory supporting thebreach of fiduciary duty claim, arguing that five of the eight Defendants (a majority) were not self-interested or controlled by someone who was. The Delaware Supreme Court summarized the governinglaw in Cinerama, Inc. v. Technicolor, Inc.:
A board of which a majority of directors is interested is not a “neutral decision-making body.”See, e.g., Paramount Communications, Inc. v. QVC Network, Inc., Del.Supr., 637 A.2d 34, 42 n.9 (1994) (“[w]here actual self-interest is present and affects a majority of the directors approvinga transaction, a court will apply [the entire fairness test]”); Aronson v. Lewis, Del.Supr., 473A.2d 805, 812 (1984). A majority of disinterested directors is not “independent” if that majoritywas dominated by an interested director. See Heineman v. Datapoint Corp., Del.Supr., 611 A.2d950, 955 (1992). Similarly, the manipulation of the disinterested majority by an interesteddirector vitiates the majority’s ability to act as a neutral decision-making body. See MillsAcquisition Co. v. Macmillan, Inc., Del.Supr., 559 A.2d 1261, 1279 (1989).
663 A.2d 1156, 1170 n.25 (Del. 1995). Accordingly, Plaintiff must make two showings. “First, theplaintiff must proffer evidence showing that those members of the board had a material self-interest inthe challenged transaction[,]” and this must be “evidence of a substantial self-interest suggestingdisloyalty, such as evidence of entrenchment motives, vote selling, or fraud.” Goodwin, 1999 WL64265, at *25 (citing Cede II, 634 A.2d at 362-63; Cinerama, 663 A.2d at 1169). “Second, the plaintiffmust show that those materially self-interested members either: a) constituted a majority of the board; b)controlled and dominated the board as a whole; or c) i) failed to disclose their interests in the transactionto the board; ii) and a reasonable board member would have regarded the existence of their materialinterests as a significant fact in the evaluation of the proposed transaction.” Id. (citing Cinerama, 663A.2d at 1168).
There were eight directors on the Intermix board at the time of the merger: Rosenblatt, Sheehan,Mosher, Quandt, Brewer, Carlick, Moreau, and Woodward. Rosenblatt was conflicted due to hisinterest in becoming the head of Fox Interactive Media. He aimed to “receiv[e] a personal benefit froma transaction not received by the shareholders generally.” Cede II, 634 A.2d at 362; McGowan, 2002WL 77712, at *2 (deeming contracts for post-merger employment in acquiring entity a “disablingconflict of interest”); Goodwin, 1999 WL 64265, at *25 (finding “a triable issue of fact regardingwhether [directors’] expectations constituted a material interest in the merger not shared by the
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stockholders” but granting summary judgment on lack of evidence that any material interest infecteddeliberative process); Oliver, 2006 WL 1064169, at *19 (“[A]s a consequence of their personal interestin the negotiation of the Accord Agreement, in light of its potential impact on their rights under theiremployment agreements, they also were self-interested.”). Rosenblatt did not simply seek to retain hiscurrent position, but sought to secure a coveted position at the top of a division at News Corp. Accordingly, read in conjunction with other admissible evidence we have cited previously, this self-interested motivation is suggestive of disloyalty.
Defendants argue that Rosenblatt’s interests were coterminous with the shareholders’ interestsbecause every additional dollar increase in the price paid per share would yield roughly an additional $2million for Rosenblatt, a significant shareholder in Intermix. (Rosenblatt ¶ 51; Joint Statement ofUncontroverted Facts D89). This argument, however, misses the point that Rosenblatt arguably stoodto gain more money and prestige by becoming the “grand Puba” of Fox Interactive Media. If ChrisDeWolfe, the former CEO of MySpace, stood to make a $30 million salary over two years if retained bythe merged entity (the Parties appear to agree on this point) (see Joint Br. 37 n.42, 41-42), a reasonablejury could infer that Rosenblatt, as head of Fox Interactive Media, would have been offered an evenhigher salary. As such, a per share price of well above $20 would be needed to offset Rosenblatt’sconflicting interest in a $30 million (or higher) salary. (Id. at 41-42). Defendants only reiterate thatRosenblatt stood to gain a greater benefit from each incremental increase in the per share price.
It is undisputed that no director instructed any other director on how to vote or was influencedby how other board members voted. (Joint Statement of Uncontroverted Facts D95-96; Brewer Decl. ¶36; Carlick Decl. ¶ 38; Mosher Decl. ¶ 34; Moreau Decl. ¶ 36; Quandt Decl. ¶ 42; Rosenblatt Decl. ¶49; Sheehan Decl. ¶ 44; Woodward Decl. ¶ 34). The real question is whether each board member actedindependently and free of any manipulation by the interested members, principally Rosenblatt, i.e.whether “[e]ach Board Member exercised his independent judgment and consideration in deciding howto vote.” (Joint Statement of Uncontroverted Facts D97). In virtually identical declarations, thedirectors claim they were not so manipulated. (Brewer Decl. ¶ 36; Carlick Decl. ¶ 38; Mosher Decl. ¶34; Moreau Decl. ¶ 36; Quandt Decl. ¶ 42; Rosenblatt Decl. ¶ 49; Sheehan Decl. ¶ 44; Woodward Decl.¶ 34). On the other hand, Plaintiff argues that Rosenblatt deliberately misled the other board membersregarding the viability of the Viacom bid, steering them into approving the merger without waiting evena couple more days to see if Viacom would top News Corp.’s offer. (Joint Br. 26-27). Plaintiff cites anemail Mosher sent to Rosenblatt after one of the July 15th meetings, stating: “We need to honor ourcommitment to Fox and get this done. Viacom sounds like a pipedream. Fox sounds dead serious andnot screwing around.” (J.A., Ex. 182). When asked about this email during his deposition, Moshertestified that Rosenblatt’s periodic updates to the board had led him to believe “[t]hat Viacom was lessurgent about the deal and hadn’t taken the time or done the same level of work as Fox Network.” (Mosher Tr. at 25:24-26:1, 26:5-13). He also noted that: “The discussion around Viacom that themanagement team had led indicated that Viacom did not seem as willing to come to the table with anoffer for the company.” (Id. at 25:1-4). This evidence is sufficient to raise an inference thatRosenblatt’s presentation to the board may have been misleading as to Viacom’s seriousness. According to Mosher’s description of the board meetings, “from the management team estimation
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15 Van Toffler of MTV emailed Rosenblatt on July 17 to note that his people were “in the officeworking around the clock so [Viacom could] put forth a number to [him that] week.” (J.A., Ex. 202). On the same day, Jason Hirschhorn of Viacom informed Chris DeWolfe that he has “had a team of 20+people . . . working for 72 hours straight on a significant bid[.]” (Id., Ex. 200).CV-90 (06/04) CIVIL MINUTES - GENERAL Page 23 of 39
standpoint [sic], they were not inclined to make an offer for the company on the time line that we werelooking at.” (Id. at 25:18-21). Viewing the evidence as a whole in the light most favorable to Plaintiff,including the contrary evidence that Viacom was indeed very seriously interested in bidding onIntermix,15 there are at least triable issues of fact as to whether Mosher was manipulated by a self-interested director, Rosenblatt.
Moreover, based on Mosher’s description of the content of Rosenblatt’s presentations to theboard, the issue of manipulation is triable with respect to all of the other board members. Accordingly,as a reasonable jury could potentially conclude that a majority of the directors was interested ormanipulated by someone who was, we hereby DENY Defendants’ Motion for Summary Judgment onthis second basis for Plaintiff’s claim of breach of the duty of loyalty.
III. Count II: Violation of Section 14(a) of the Securities and Exchange Act of 1934 and SECRule 14a-9
On August 25, 2005, Intermix issued a proxy statement (“Proxy”) concerning the News Corp.merger. (Rosenblatt Decl. ¶ 53). On September 30, 2005, a majority of Intermix shareholders voted toadopt the Merger Agreement. (Id. ¶ 55). Plaintiff alleges that there were five material omissions in theProxy. (J.A., Ex. 4). To succeed on “a claim under § 14(a) and Rule 14a-9, a plaintiff must establishthat (1) a proxy statement contained a material misrepresentation or omission which (2) caused theplaintiff injury and (3) that the proxy solicitation itself, rather than the particular defect in thesolicitation materials, was an essential link in the accomplishment of the transaction.” New York CityEmployees’ Ret. Sys. v. Jobs, 593 F.3d 1018, 1022 (9th Cir. 2010) (citation and internal quotation marksomitted); 15 U.S.C. § 78j(b); 17 C.F.R. § 240.14a-9(a) (“No solicitation subject to this regulation shallbe made by means of any proxy statement, form of proxy, notice of meeting or other communication,written or oral, containing any statement which, at the time and in the light of the circumstances underwhich it is made, is false or misleading with respect to any material fact, or which omits to state anymaterial fact necessary in order to make the statements therein not false or misleading or necessary tocorrect any statement in any earlier communication with respect to the solicitation of a proxy for thesame meeting or subject matter which has become false or misleading.”).
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Title Jim Brown v. Brett Brewer, et al.
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A. Alleged Material Omissions
1. MySpace’s Then-Current Revenue and Profits
Defendants first argue that Plaintiff failed to identify the alleged material omission ofMySpace’s then-current revenue and profits as a basis for this Section 14(a) claim in its responses totheir interrogatories, thereby waiving this ground for his Section 14(a) claim. (Joint Br. 45 n.49). Wedisagree. First, the CSAC clearly alleges that Defendants omitted “the current revenues and profitsbeing generated by MySpace.” (CSAC ¶¶ 130-33). Second, our July 14, 2008 Order clearly identifiedthis purported material omission as one of the five surviving bases for the Section 14(a) claim. (Dkt.No. 110, at 5). Third, whether Plaintiff actually identified this alleged material omission in his RevisedObjections and Responses to Defendant VP Alpha Holdings IV, L.L.C.’s First Set of Interrogatories isunclear. (J.A., Ex. 28). Most of the response to Interrogatory No. 1 focused on the conspicuousabsence of internal projections for MySpace’s prospective growth, not the company’s then-currentrevenue and profits. (Id. at 513-15). Plaintiff did not use the phrase “current revenue and profits,” butrather, stated the following:
[S]hareholders . . . were never made aware of MySpace’s true value or its true growth potential,and had no way of comparing the information that was publicly available to management’sprojections and growth assumptions. Thus, even though certain metrics that were used to trackMySpace’s growth were available from some hard to find public sources (and were not madeavailable by the Company directly to its shareholders), shareholders and other members of theinvesting public could not compare this data to the Company’s internal data to determine if theInvestment Banks’ fairness opinions accurately reflected the explosive growth of MySpace.
(Id. at 515 (emphasis added)). Although somewhat opaque, we think the highlighted text above canfairly be read to embrace internal data on MySpace’s then-current financial position. Fourth, during theParties’ Local Rule 7-3 meet and confer, according to Defendants, Plaintiff did not identify this allegedomission. (Joint Br. 45 n.49). Sheehan and Carlick’s counsel has also declared that Plaintiff was askedat the meeting whether they were pursuing “any other misstatements or omissions,” but he does notdeclare that Plaintiff’s counsel answered the question in the negative, thereby waiving this basis. (J.A.,Ex. 30, Knaster Decl. ¶¶ 8-9). Fifth, Plaintiff’s counsel also circulated a letter outlining the issuesdiscussed at the meet and confer, which did not list this purported material omission. (J.A., Ex. 35). However, since this document purports to be an outline of the summary judgment argumentsDefendants identified, we decline to conclude that this document contemplated a waiver of the “currentrevenue and profits” omission, which was so clearly identified in the CSAC (if not so clearly in theinterrogatory responses). Accordingly, as this argument was not waived, and Defendants have not madeany threshold showing entitling them to summary judgment on this basis, we DENY the Motion forSummary Judgment as to this alleged material omission under Count II.
2. Intermix Management’s 2005-2009 Financial Projections
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Plaintiff also alleges that Defendants failed to disclose Intermix management’s internal financialprojections, and that this information was material. The Supreme Court set forth the materialitystandard for Section 14(a) claims in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976): “Anomitted fact is material if there is a substantial likelihood that a reasonable shareholder would considerit important in deciding how to vote.” Id. at 449. The Court added that “there must be a substantiallikelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor ashaving significantly altered the ‘total mix’ of information made available.” Id.
While federal courts generally agree that financial projections, “forward-looking statements,”“puffing,” or other soft financial information need not be disclosed, this case is distinguishable. See,e.g., Walker v. Action Indus., Inc., 802 F.2d 703, 707-08 (4th Cir. 1986); Flynn v. Bass Bros. Enters.,Inc., 744 F.2d 978, 985 (3d Cir. 1984) (noting SEC policy favoring nondisclosure of financialprojections due to their unreliability and potential to mislead voting stockholders). In this case, theProxy disclosed Montgomery and TWP’s fairness analyses but did not disclose the underlying2005-2009 Intermix management projections used in formulating those opinions. In Zemel FamilyTrust v. Philips International Realty Corp., No. 00 CIV. 7438 MGC, 2000 WL 1772608 (S.D.N.Y.Nov. 30, 2000), the court honed in on this distinction:
A company has no duty to include “speculative financial predictions” in a proxy. However, if aProxy discloses valuation information, it must be complete and accurate. Both the proxy and the[financial valuation] opinion address the value of the Third Avenue property and so [thedefendant] has a duty to fully and accurately disclose information related to the valuation.
Id. at *6.
Here, the “total mix” of information before the shareholders did not include any of the projectedgrowth rates. See SEC v. Mozilo, No. CV 09-3994-JFW, 2009 WL 3807124, at *10 (C.D. Cal. Nov. 3,2009) (“[T]he ‘total mix’ of information only includes information that is ‘readily’ or ‘reasonably’available to an investor.”); Koppel v. 4987 Corp., 167 F.3d 125, 132 (2d Cir. 1999) (same). Areasonable shareholder would have wanted to independently evaluate management’s internal financialprojections to see if the company was being fairly valued. “[T]here is a substantial likelihood that areasonable shareholder would consider it important” in making his decision. TSC Indus., Inc., 426 U.S.at 449. As we previously noted in our July 14, 2008 Order, the Ninth Circuit has observed that:“investors are concerned, perhaps above all else, with the future cash flows of the companies in whichthey invest. Surely, the average investor’s interest would be piqued by a company’s internal projections. . . .” United States v. Smith, 155 F.3d 1051, 1064 n.20 (9th Cir. 1998). Delaware courts concur. In acase that also considered a discounted cash flow (“DCF”) analysis in a proxy statement, the sametechnique utilized by Montgomery and TWP, the court held that the underlying projections informing aDCF analysis completed for a fairness opinion were clearly material. See In re Netsmart Techs.S’holders Litig., 924 A.2d 171, 203 (Del. Ch. 2007) (“[P]rojections of this sort are probably among themost highly-prized disclosures by investors. Investors can come up with their own estimates ofdiscount rates or . . . market multiples. What they cannot hope to do is replicate management’s inside
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E-Filed UNITED STATES DISTRICT COURT
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CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
16 Even though this decision concerned a state law duty of disclosure claim, the materialitystandard is the same as set forth in TSC Industries. In re Netsmart Techs., 924 A.2d at 199-200. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 26 of 39
view of the company’s prospects.”).16 Here, we conclude that there is at least a triable issue as to themateriality of the omission of Intermix’s internal financial projections.
Accordingly, Defendants’ Motion for Summary Judgment is DENIED as to this alleged materialomission.
3. Outstanding Derivative Lawsuits
Plaintiff also argues that Defendants failed to disclose one pending derivative lawsuit, LeBoyerv. Greenspan, et al., No. CV 03-5603-GHK (JTLx), and the fact that shareholder derivative standingwould be extinguished as to both LeBoyer and Greenspan v. Salzman, the two derivative lawsuitspending at the time the Proxy was issued. The Proxy merely stated: “Following the effective time of themerger, Fox Interactive Media will use commercially reasonable efforts to take such actions as arewithin its control so as to obtain the dismissal of Greenspan v. Salzman, et al., LASC No. BC328558;provided that it will not be required to make any payments to any of the plaintiffs (or their counsel) insuch litigation to do so.” (J.A., Ex. 4, at 332).
Defendants concede that they did not disclose the existence of the pending LeBoyer action. (Joint Br. 56 n.67). However, Defendants maintain that this lawsuit had been disclosed in Intermix’sprior public filings (see J.A., Exs. 47 (Form 10-Q), 3 (Form 10-K)), which they argue were incorporatedby reference in the Proxy. A document “may be incorporated into proxy materials by reference, at theleast, in circumstances where ‘no reasonable shareholder can be misled.’” Federated Bond Fund v.Shopko Stores, Inc., No. 05 CV 9923(RO), 2006 WL 3378696, at *2 (S.D.N.Y. Nov. 17, 2006) (quotingKramer v. Time Warner Inc., 937 F.2d 767, 777 (2d Cir. 1991)). We do not think this is a case where“no reasonable shareholder can be misled.” Id. Moreover, “[c]orporate documents that have not beendistributed to the shareholders entitled to vote on the proposal should rarely be considered part of thetotal mix of information reasonably available to those shareholders.” United Paperworkers Int’l Unionv. Int’l Paper Co., 985 F.2d 1190, 1199-1200 (2d Cir. 1993) (rejecting notion that public reports and10-K Report submitted to SEC were part of “total mix”). Accordingly, whether the undisclosedderivative lawsuit constituted material information which was not part of the “total mix” of informationis at the very least a triable question.
With respect to the disclosed Greenspan v. Salzman action, Defendants argue they had noobligation to further announce the extinguishment of derivative standing. In Delaware, with only twoexceptions not applicable here, a cash-out merger extinguishes the standing of shareholder plaintiffs tomaintain a derivative suit. Feldman v. Cutaia, 951 A.2d 727, 731 (Del. 2008) (citing Lewis v.Anderson, 477 A.2d 1040, 1049 (Del. 1984)). This is so because a plaintiff must be a stockholder at thetime of the alleged wrongdoing and throughout the litigation. Lewis, 477 A.2d at 1046. The failure to
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disclose the potential extinguishment of a derivative lawsuit is material. See Lichtenberg v. BesicorpGroup Inc., 43 F. Supp. 2d 376, 387 (S.D.N.Y. 1999). In Lichtenberg, the court noted that the proxystated that the shareholder plaintiffs “may” not be able to maintain their derivative suits following themerger. Id. The court found the word “may” to be “affirmatively misleading,” because it “implie[d] apossibility that the plaintiffs will be able to continue the actions as shareholder derivative suits,” whenthat was in fact foreclosed as a matter of New York law. Id. Here too, the disclosure above is arguablymisleading as well, as it did not affirmatively disclose that the Greenspan v. Salzman plaintiffs’derivative standing would be extinguished under Delaware law. (J.A., Ex. 4, at 332). Instead, it onlystated that Fox Interactive Media would seek the dismissal of the action and would do so only if it wasnot required to pay the plaintiffs or their counsel. (Id.). Accordingly, it is at least triable whether theabove language was misleading as to the extinguishment of derivative standing, which was materialinformation.
Accordingly, we also hereby DENY Defendants’ Motion for Summary Judgment as to thisalleged material omission.
4. Alleged Material Omissions Concerning Viacom and the MySpace Option
Plaintiff has also argued that the directors made two other material omissions concerning: (1)Viacom’s ability to make an offer for Intermix or its ability to conduct due diligence; and (2) thelikelihood of a direct bid for MySpace, which would freeze the MySpace Option. This subpart of theSection 14(a) claim essentially seeks to penalize Defendants for their failure to disclose that Viacomwas allegedly stonewalled or otherwise prevented from making a bid during the auction. It also seeks tohold Defendants liable for purportedly exaggerating the threat of a direct bid for Intermix’s crownjewel, MySpace.
However, these purported material omissions are nothing more than the building blocks ofPlaintiff’s fiduciary duty claim. Mandating the disclosure of the above allegations would compelDefendants to essentially accuse themselves of breaching their fiduciary duties. In Koppel v. 4987Corp., the court dismissed Rule 14a-9 claims based on its conclusion that “these allegations constituteno more than state law breach of fiduciary duty claims under a thin coat of federal paint.” 167 F.3d at133. The court explained:
We have long recognized that no general cause of action lies under § 14(a) to remedy a simplebreach of fiduciary duty. See Field v. Trump, 850 F.2d 938, 947 (2d Cir. 1988) (quotingMaldonado v. Flynn, 597 F.2d 789, 796 (2d Cir. 1979)), cert. denied, 489 U.S. 1012, 109 S.Ct.1122, 103 L.Ed.2d 185 (1989); cf. Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 477, 97 S.Ct.1292, 51 L.Ed.2d 480 (1977) (refusing to construe § 10(b) to prohibit “instances of corporatemismanagement . . . in which the essence of the complaint is that shareholders were treatedunfairly by a fiduciary”). Although the Supreme Court has explained that explicit, conclusorystatements concerning the wisdom of a proposed action are actionable, see generally VirginiaBankshares, 501 U.S. 1083, 111 S.Ct. 2749, there is no § 14(a) violation for merely failing to
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Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
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inform shareholders that a proposed action is not subjectively the most beneficial to an entity’sshareholders: “Subjection to liability for misleading others does not raise a duty ofself-accusation; [rather] it enforces a duty to refrain from misleading.” Id. at 1098 n. 7, 111S.Ct. 2749. The securities laws do not “effectively require [an issuer] to accuse [it]sel[f] ofbreach of fiduciary duty.” Id.
Id. at 133-34. The D.C. Circuit has arrived at the same conclusion: “Though Santa Fe does not bar aclaim related to a breach of fiduciary duty if there has been a material misrepresentation or omission, aplaintiff may not ‘bootstrap’ a claim of breach of fiduciary duty into a federal securities claim byalleging that directors failed to disclose that breach of fiduciary duty.” Kas v. Fin. Gen. Bankshares,Inc., 796 F.2d 508, 513 (D.C. Cir. 1986) (citations omitted).
In this case, the Proxy unambiguously disclosed Rosenblatt’s self-interested motivations,anticipated future employment with News Corp., and the immediate vesting of all his unvested options. (J.A., Ex. 4, at 272, 310, 312). The Proxy also disclosed that Viacom (“Company D”) conducted duediligence and remained interested in making a bid for Intermix, but was “not then in a position to makea proposal [prior to] a [Viacom] board meeting later that week . . . .” (Id. at 287, 289). Plaintiff claimsthis disclosure was misleadingly incomplete, because it did not mention Rosenblatt’s alleged evasion ofViacom executives and the alleged deliberate hampering of Viacom’s due diligence efforts. (CSAC ¶¶147-48). Plaintiff claims that these omissions “left shareholders with the false impression that Viacomwas given a full and fair opportunity to bid for the Company.” (Id. ¶ 148). Plaintiff also claims thatDefendants misrepresented Viacom and News Corp.’s ability to block a competing bid by freezing theMySpace Option. (CSAC ¶¶ 149-51 (citing J.A., Ex. 4, at 284, 288)). As there is no duty of self-accusation, these proffered material omissions cannot support a Section 14(a) claim. Indeed, theallegedly omitted details are not necessarily facts, but rather factual allegations, and unless and untiljudgment is granted in Plaintiff’s favor, their omission from the Proxy simply could not have beenmaterial. In Brown v. Perrette, No. CIV.A 13531, 1999 WL 342340 (Del. Ch. May 14, 1999), the courtexplained this distinction:
Although a flawed bidding process would be a material fact, [the plaintiff] must prevail on thesubstantive claim, that the process was flawed, before the alleged flaw becomes material. Once[the plaintiff] prevails on her Revlon claim, the alleged disclosure claim becomes superfluousbecause the defendants’ breach of duty becomes the wrong for which an appropriate remedymust be crafted.
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Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
17 Even though Brown analyzes the relationship between a state law fiduciary duty claim and astate law duty of disclosure claim, brought on the same grounds, the principles articulated are equallyapplicable to a Section 14(a) claim premised on the same allegations supporting a breach of fiduciaryduty claim.
18 Notwithstanding our ruling, nothing in the above discussion precludes Plaintiff fromintroducing evidence of these omissions in the course of his breach of fiduciary duty claim. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 29 of 39
Id. at *10-1117; see also Stroud v. Grace, 606 A.2d 75, 84 n.1 (Del. 1992) (“We recognize thelong-standing principle that to comport with its fiduciary duty to disclose all relevant material facts, aboard is not required to engage in ‘self-flagellation’ and draw legal conclusions implicating itself in abreach of fiduciary duty from surrounding facts and circumstances prior to a formal adjudication of thematter.”) (citation omitted).
Accordingly, since “self-flagellation” omissions are not material, we hereby GRANTDefendants’ Motion for Summary Judgment as to the purported material omissions concerning Viacomand the MySpace Option.18
B. Negligence
In Desaigoudar v. Meyercord, 223 F.3d 1020 (9th Cir. 2000), the Ninth Circuit stated that a“Rule 14a-9 plaintiff must demonstrate that the misstatement or omission was made with the requisitelevel of culpability . . . .” Id. at 1022 (citation omitted). To succeed on a Section 14(a)/Rule 14a-9claim, a plaintiff need only establish that the defendant was negligent in drafting and reviewing theproxy statement. Gerstle v. Gamble-Skogmo, Inc., 478 F.2d 1281, 1300-01 (2d Cir. 1973) (holding thatnegligence suffices for claim based on misleading proxy statement and that plaintiffs “are not requiredto establish any evil motive or even reckless disregard of the facts”). This holding was reaffirmed in theoft-cited case of Wilson v. Great American Industries, Inc., 855 F.2d 987 (2d Cir. 1988): “Liability canbe imposed for negligently drafting a proxy statement.” Id. at 995 (citing Gerstle, 478 F.2d at 1301n.20). “As a matter of law, the preparation of a proxy statement by corporate insiders containingmaterially false or misleading statements or omitting a material fact is sufficient to satisfy the Gerstlenegligence standard.” Id. Accordingly, a director may be found negligent under Section 14(a) for afailure to notice material omissions upon reading a proxy statement. See, e.g., Parsons v. Jefferson-Pilot Corp., 789 F. Supp. 697, 703 (M.D.N.C. 1992) (“Mr. Eagle [a senior in-house lawyer] is not theonly negligent party in this action. Each of the directors who reviewed the proxy statement is equally asnegligent for failing to notice the use of the word ‘restricted’ ten times in the document.”).
Here, each of the Defendants has declared that he was “involved in the process of preparing,reviewing, and disseminating the Proxy Statement to Intermix shareholders.” (Sheehan Decl. ¶ 53(internal citation omitted); Carlick Decl. ¶ 46; Brewer Decl. ¶ 39; Mosher Decl. ¶ 37; Moreau Decl. ¶39; Quandt Decl. ¶ 45; Rosenblatt Decl. ¶ 53; Woodward Decl. ¶ 37). Construing this sworn statementin the light most favorable to Plaintiff, we read it to mean each director personally reviewed the Proxy
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before it was disseminated to the Intermix shareholders. Since we have denied summary judgment withrespect to three of the proffered material omissions in the Proxy, and Defendants have admitted toparticipating in “the process of preparing, reviewing, and disseminating” that Proxy, we must alsoDENY summary judgment with respect to the element of negligence. If Plaintiff can persuade a jury asto both materiality and Defendants’ participation in the preparation and/or review of the Proxy at trial,then a finding of negligence will flow from those findings.
C. Damages
1. Benefit-of-the-Bargain Damages
This theory of damages is wholly inapposite to this case. A request for “benefit-of-the-bargaindamages” seeks the “value that was represented as coming to” the shareholder under a particulartransaction, such as a merger. In re Real Estate Assocs. Ltd. P’ship Litig., 223 F. Supp. 2d 1142, 1152(C.D. Cal. 2002). “[B]enefit-of-the-bargain damages are available in the limited instance where amisrepresentation is made in the proxy solicitations as to the consideration to be forthcoming upon anintended merger.” Id. (citation omitted). As the Ninth Circuit has stated, “[t]he benefit-of-the-bargainmeasure of damages allows a plaintiff to recover ‘the difference between what the plaintiff expected hewould receive . . . and the amount [the plaintiff] actually received . . . .” DCD Programs, Ltd. v.Leighton, 90 F.3d 1442, 1449 (9th Cir. 1996) (quoting Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1426(9th Cir. 1986) (emphasis in original)). Here, the Proxy made no misrepresentation as to the per shareprice offered to and ultimately received by the class members. The Proxy stated the class memberswould receive $12 cash for each common share, and it is undisputed that they received $12 cash foreach common share. (J.A., Ex. 4, at 319; Joint Statement of Uncontroverted Facts D128). Accordingly,this damages theory is not viable. We GRANT summary judgment with respect to this damages theory.
2. Out-of-Pocket Losses
a. Legal Framework
“‘Out-of-pocket’ losses are the standard measure of damages for Rule 10b-5 and Section 14(a)claims.” In re DaimlerChrysler AG Secs. Litig., 294 F. Supp. 2d 616, 626 (D. Del. 2003) (citing Tse v.Ventana Med. Sys., Inc., 123 F. Supp. 2d 213, 222 (D. Del. 2000) (“Tse II”)). Out-of-pocket lossesconstitute “the difference between the fair value of all that the seller received and the fair value of whathe would have received had there been no fraudulent conduct.” Tse II, 123 F. Supp. 2d at 222 (quotingAffiliated Ute Citizens of Utah v. U.S., 406 U.S. 128, 155 (1972)) (quotation marks omitted). The NinthCircuit concurs: “The out-of-pocket rule fixes recoverable damages as ‘the difference between thepurchase price and the value of the stock at the date of purchase.’” Wool v. Tandem Computers Inc.,818 F.2d 1433, 1437 (9th Cir. 1987), impliedly overruled in part on other grounds by Hollinger v. TitanCapital Corp., 914 F.2d 1564, 1577-78 (9th Cir. 1990) (en banc) (citation omitted). “The guidingphilosophy of the out-of-pocket theory of damages . . . is to award not what the plaintiff might have
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gained, but what he has lost by being deceived into the purchase.” Id. at 1437 n.2 (citation and internalquotation marks omitted). Since this theory of damages is premised on an intrinsic valuation of thecompany as it existed at the time of the merger, Plaintiff has produced expert witness testimonyconsisting of two different financial valuations of Intermix/MySpace. Defendants have moved toexclude that testimony as inadmissible.
b. Defendants’ Motion to Exclude; Plaintiff’s Motions to Strike
Defendants move to exclude Plaintiff’s proffered expert testimony by Dr. G. William Kennedyas inadmissible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Plaintiffhas moved to strike both this Motion to Exclude and Defendants’ Motion for Summary Judgment,arguing that this Daubert challenge was not included in the joint brief on the Cross-Motions forSummary Judgment and therefore violates our Order Re: Summary Judgment Motions. (Dkt. No. 123,Oct. 30, 2008). We reject this argument. First, Defendants included virtually the same argumentsattacking Dr. Kennedy’s testimony in the Joint Brief. (Mot. 77-80). Second, the Motion to Exclude is achallenge to the admissibility of evidence crucial to one of Plaintiffs’ damages theories. As we mayonly consider admissible evidence in ruling on the Parties’ Cross-Motions, nothing in the Order Re:Summary Judgment Motions precludes a party from filing a separate motion to exclude certain evidencefrom the Court’s consideration. Third, it is common for litigants to move for the exclusion of certainevidence at the summary judgment stage. See, e.g., In re Hanford Nuclear Reservation Litig., 292 F.3d1124, 1131 (9th Cir. 2002) (“Defendants linked their summary judgment motion to dozens of in liminemotions challenging the admissibility of plaintiffs’ expert witnesses, commonly known as ‘Daubertmotions.’”) (citation omitted); O’Hanlon v. Matrixx Initiatives, No. CV 04-10391-AHM (JTLx), 2007WL 2446496, at *1, 4 (C.D. Cal. Jan. 3, 2007) (considering motions in limine concurrently with motionfor summary judgment). Accordingly, we hereby DENY Plaintiff’s Motions to Strike the Motion toExclude and the Motion for Summary Judgment.
We now consider the merits of the Motion to Exclude. Defendants attack the reliability of Dr.Kennedy’s application of his chosen methodologies for estimating the value of MySpace: (1) discountedcash flow (“DCF”) analysis; and (2) comparable public company analysis. Federal Rule of Evidence702 states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understandthe evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill,experience, training, or education, may testify thereto in the form of an opinion or otherwise, if(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product ofreliable principles and methods, and (3) the witness has applied the principles and methodsreliably to the facts of the case.
In Daubert, the Supreme Court construed Rule 702 to require district courts to “ensur[e] that an expert’stestimony both rests on a reliable foundation and is relevant to the task at hand.” 509 U.S. at 597. TheCourt noted that “[p]ertinent evidence based on scientifically valid principles will satisfy those
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demands” but cautioned that “[t]he focus . . . must be solely on principles and methodology, not on theconclusions that they generate.” Id.; id. at 595. To assist courts in assessing whether the profferedtestimony is scientifically valid, the Supreme Court set forth a non-exhaustive list of factors, including:“whether the theory or technique employed by the expert is generally accepted in the scientificcommunity; whether it's been subjected to peer review and publication; whether it can be and has beentested; and whether the known or potential rate of error is acceptable.” Daubert v. Merrell DowPharms., Inc., 43 F.3d 1311, 1316 (9th Cir. 1995) (“Daubert II”) (citing Daubert, 509 U.S. at 593-94).
The “gatekeeping obligation” Daubert requires us to fulfill “applies not only to testimony basedon ‘scientific’ knowledge, but also to testimony based on ‘technical’ and ‘other specialized’knowledge.” Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999) (quoting Fed. R. Evid.702). “Because there are areas of expertise, such as the social sciences in which the research, theoriesand opinions cannot have the exactness of hard science methodologies, trial judges are given broaddiscretion to determine whether Daubert’s specific factors are, or are not, reasonable measures ofreliability in a particular case.” United States v. Simmons, 470 F.3d 1115, 1123 (5th Cir. 2006) (citingKumho, 526 U.S. at 153) (internal citations and quotation marks omitted). Courts have stated that “[i]nsuch instances, other indicia of reliability are considered under Daubert, including professionalexperience, education, training, and observations.” Id. Though perhaps not to the same degree aspsychology or social psychology, financial valuation is not an exact scientific methodology. Estimations, predictions, and inferences based on professional judgment and experience are keyingredients in any valuation. In a variety of contexts, the circuit courts have noted that economicvaluation is less than an “exact science.” See, e.g., In re Arnold & Baker Farms, 85 F.3d 1415, 1421(9th Cir. 1996) (“Experience has taught us that determining the value of real property at any given timeis not an exact science. Because each parcel of real property is unique, the precise value of land isdifficult, if not impossible, to determine until it is actually sold.”); Metlyn Realty Corp. v. Esmark, Inc.,763 F.2d 826, 830, 835 (7th Cir. 1985) (noting that “[t]he process of valuation is inexact” and that DCFanalyses “are highly sensitive to assumptions about the firm’s costs and rate of growth, and about thediscount rate”).
With respect to the DCF analysis, the principal difference from Montgomery and TWP’s DCFfairness analyses is Dr. Kennedy’s MySpace growth rate projections for 2007-2008 and 2008-2009. (Baron Decl., Ex. 3, Expert Report of Dr. G. William Kennedy [“Kennedy Report”], May 20, 2009). Intermix management projected the following revenue growth rates for the company: 107 percent for2005-2006; 67 percent for 2006-2007; 20 percent for 2007-2008; and 15 percent for 2008-2009. (J.A.,Ex. 242). Montgomery used these projections for its analysis without any modification. (Baron Decl.,Ex. 3, at 39). TWP’s projections differed slightly from management’s projections: 107 percent for2005-2006; 67 percent for 2006-2007; 21 percent for 2007-2008; and 10 percent for 2008-2009. (Id.). Kennedy adopted management’s growth rate projections for 2005-2006 and 2006-2007, derived adeceleration rate of 62.06 percent from those figures, and then used that same deceleration rate tocalculate different revenue growth rates for 2007-2008 and 2008-2009, 41.36 percent and 25.67 percent,respectively. (Id. at 39-40). Based on these new figures, Kennedy calculated new Earnings Before
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Interest, Taxes, Depreciation and Amortization (“EBITDA”) figures for 2008 and 2009 for MySpace. (Id. at 40). Finally, “[u]sing a discount rate of 19% and a terminal EBITDA multiple of 18[,]” Dr.Kennedy calculated “a value of $962.4 million after subtracting the $69 million option exercise pricefrom the present value of MySpace’s Cash Flows.” (Id.). The 19 percent discount rate was chosenbased on the discount rates used in the Montgomery and TWP fairness opinions, which ranged from 17percent up to 25 percent. (Id. at 41).
Defendants make several arguments against the reliability of this procedure. They argue firstthat Dr. Kennedy has insufficiently justified his use of a uniform deceleration rate from 2005 to 2009and the 18x terminal multiple. (Mot. 9-13). Defendants claim that Dr. Kennedy has offered no coherentreason for his rejection of management’s projections for 2007-2008 and 2008-2009. (Id. at 11). Theynote that he has merely declared that Montgomery and TWP’s projections “were unreasonably low andnot consistent with the very rapid rates of growth currently observed at the time of the Proxy andexpected in the social networking sector at the time.” (Id. at 11 (quoting Moriarty Decl., Ex. 7,Kennedy Supplemental Decl. ¶ 6) (emphasis omitted)). Yet, Defendants neglect to mention that Dr.Kennedy explained his use of higher growth rates for 2007-2008 and 2008-2009 by noting that“MySpace revenues consistently outperformed Intermix management’s own projections in each of thefirst four months of 2005.” (Baron Decl., Ex. 3, Kennedy Report, at 35). This is at least one reasonedbasis for his adjustments to what he viewed as demonstrably “conservative” forecasts. (Id.). After all,the entire endeavor is forecasting, not hard science. Projections themselves cannot be tested foraccuracy; they “represent hopes rather than the results of scientific analysis.” Zenith Elecs. Corp. v.WH-TV Broad. Corp., 395 F.3d 416, 420 (7th Cir. 2005); see also In re Orchards Village Invs., LLC,No. 09-30893-rldll, 2010 WL 143706, at *11 (Bankr. D. Or. Jan. 8, 2010) (“[P]rojecting future financialresults from the operations of a business is not an exact science.”).
Additionally, Defendants argue that: “Kennedy provides no theoretical or empirical justificationfor applying this incredibly aggressive 18x terminal multiple, except his statement that it is based onforward EBITDA multiples observed in comparable publicly traded guideline companies” referenced inthe comparable public company analysis below. (Mot. 12-13 (quoting Moriarty Decl., Ex. 1, KennedyReport, at 15) (quotation marks omitted)). They assert that Dr. Kennedy only relied on “the mostprofitable of the 14 comparable companies relied upon by” Montgomery and TWP, including Googleand Yahoo!, and could not summon a single company that had grown at the rate projected with hisrevenue growth rates and terminal value. (Id. at 13 (citing Moriarty Decl., Ex. 1, Kennedy Report, at25; id., Ex. 6, Kennedy Tr. at 123:4-24)).
While these two challenges may be objections to Kennedy’s conclusions on his DCF analysis,they do not render his methodology unreliable. Rather, the deviation from management’s projections,the use of an arguably aggressive terminal multiple, and the alleged selection of the most profitableguideline companies are proper subjects for cross-examination. Defendants do not take issue with the
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19 Lippe v. Bairnco Corp., 288 B.R. 678, 689 (S.D.N.Y. 2003) (“Many authorities recognize thatthe most reliable method for determining the value of a business is the discounted cash flow (‘DCF’)method.”) (citations omitted); see also Children’s Broad. Corp. v. The Walt Disney Co., 245 F.3d 1008,1018 (8th Cir. 2001) (describing DCF analysis as “an uncontroversial accounting method”).CV-90 (06/04) CIVIL MINUTES - GENERAL Page 34 of 39
widely accepted DCF methodology;19 nor do they attack any input that is identical to those used in theMontgomery and TWP projections (for instance, the 2005-2006 and 2006-2007 projections or thediscount rate which fell within the same range in the investment banks’ fairness analyses). Even in lightof Dr. Kennedy’s less than fully reasoned explanations for his choices, given the inherent element ofjudgment in these financial valuation analyses, we cannot say that he failed to identify any “reliableprinciples and methods” or to apply those “principles and methods reliably to the facts of [this] case.” FED. R. EVID. 702. “A court may admit somewhat questionable testimony if it falls within ‘the rangewhere experts might reasonably differ, and where the jury must decide among the conflicting views.’” S.M. v. J.K., 262 F.3d 914, 921 (9th Cir. 2001) (quoting Kumho, 526 U.S. at 153).
Defendants also argue that there is a fundamental flaw in Dr. Kennedy’s DCF analysis, since itallegedly yields an average growth rate into perpetuity above that of the U.S. economy as a whole(12.74 percent versus a historical average of 6.5 percent). (Mot. 13-16; Cornell Decl. in Supp. of Mot.to Exclude ¶ 5). Arguing that this outcome violates a key tenet of financial valuation, Defendants cite toProfessor Aswath Damodaran’s treatise, which states: “The fact that a stable growth rate is sustainedforever, however, puts strong constraints on how high it can be. Since no firm can grow forever at arate higher than the growth rate of the economy in which it operates, the constant growth rate cannot begreater than the overall growth rate of the economy.” (Defs.’ Request for Judicial Notice [“RJN”], Ex.B, ASWATH DAMODARAN, DAMODARAN ON VALUATION: SECURITY ANALYSIS FOR INVESTMENT ANDCORPORATE FINANCE 145 (John Wiley & Sons, Inc. 2d ed. 2006)). We have reviewed Defendants’expert Dr. Bradford Cornell’s declaration in support of this Motion to Exclude, in which he argues that“Dr. Kennedy’s use of an 18x EBITDA forward multiple is unreasonable . . . .” (Cornell Decl. in Supp.of Mot. to Exclude ¶ 5). To cross-check the outcome of Dr. Kennedy’s DCF analysis, Dr. Cornell usedthree hypothetical scenarios, in which MySpace’s revenue growth rate declines by 2 percent, 1 percent,and 0.5 percent, respectively, each year until it reaches 6.5 percent, the average annual growth rate innominal Gross Domestic Product between 1928 and 2008. (Id. ¶¶ 8-10 (citing Defs.’ RJN, Ex. F,Bureau of Economic Analysis News Release, July 31, 2009)). Using Dr. Kennedy’s assumptions andthe Gordon Growth Model (id. ¶¶ 11-13), Dr. Cornell calculated the following total present values as ofJanuary 1, 2010 and implied EBITDA multiples for each scenario: (1) for the 2 percent annualreduction, $549.13 million and a 4.7x multiple; (2) for the 1 percent annual reduction, $606.18 millionand a 5.2x multiple; and (3) for the 0.5 percent annual reduction (what he calls the “most aggressivescenario”), $695.34 million and a 6.0x multiple. (Id. ¶¶ 14-19; see also id., Exs. 5, 6). Applying the 19percent discount rate used by Dr. Kennedy, Dr. Cornell calculates discounted values as of mid-2005 foreach scenario, including: (1) $251.02 million; (2) $277.10 million; and (3) $317.8 million. (CornellDecl. in Supp. of Mot. to Exclude ¶ 20). Finally, Dr. Cornell concludes that “even assuming an instancewhere MySpace’s revenues grow at a rate exceeding that of the economy as a whole for fifteen years
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after 2010, i.e., until 2025, Dr. Kennedy’s implied EBITDA multiple of 18x is three times too highwhen compared with even [Dr. Cornell’s] most aggressive implied EBITDA multiple of 6.0x to give areasonable estimate of MySpace’s value as of mid-2005.” (Id. ¶ 21 (emphasis original)).
Though a jury might conclude at trial that Dr. Kennedy’s selection of an 18x EBITDA multiple
was overzealous, Dr. Cornell’s calculations do not demonstrate that Dr. Kennedy’s methodology isfundamentally unreliable. At base, Dr. Cornell’s challenge to this DCF analysis constitutes an attack onDr. Kennedy’s projections as to MySpace’s annual growth rates and as to how long those growth ratescan be sustained. Since Dr. Cornell is in essence attacking the reasonableness of Dr. Kennedy’sprojections, the generation of which we have already noted is not an exact science, we conclude that hisarguments do not render Dr. Kennedy’s methodology fundamentally unreliable and thereforeinadmissible. Dr. Cornell himself has testified that an adjustment in the terminal multiple based on theexpert’s assessment of the company’s growth potential is appropriate. (Baron Decl., Ex. 2 (Cornell Tr. Iat 167:19-168:3)). Additionally, Dr. Cornell rejected the proposition that “any time that the impliedperpetual growth rate exceeds the growth of the economy, that the terminal value multiple used wouldbe unreliable[.]” (Id., Ex. 1 (Cornell Tr. II at 21:21-22:1)). He further explained that “it’s just aquestion of how much [the implied perpetual growth rate] exceeds [the economy rate,]” and there is nostandardized method to determine whether the difference between the two rates is “unreasonable.” (Id.at 22:3-24:6; id. at 23:12-25 (“Q[:] And then do they use judgment to see whether it’s reasonable tothem or not reasonable to them? . . . . Is there some written scale as to how much variation there can bebefore, in your view, it becomes reasonable or unreasonable; or is that a judgment of the analyst? A[:] Well, there’s not a written scale . . . . And these calculations Dr. Kennedy used struck me as[unreasonable].”)). These statements suggest that Defendants’ Motion turns on a difference ofprofessional opinion, not some fatal methodological flaw.
Based on our review of the papers and evidence submitted, if anything is clear, it is that DCFanalysis is, in not insubstantial measure, an inherently subjective and predictive methodology, whichrelies in part on the expert’s judgment and experience. Indeed, neither Party has presented the Courtwith any accepted, standardized methodology for deriving the required inputs for DCF analysis. Accordingly, we are forced to conclude that DCF analysis is sufficiently pliable so that it mayreasonably lead to a wide breadth of plausible conclusions. Dr. Kennedy’s conclusions and the basestherefor may ultimately be subject to legitimate attacks on cross-examination, but we perceive nofundamental unreliability in his analysis that would counsel in favor of outright exclusion. We agreethat our “gatekeeper role under Daubert is not intended to supplant the adversary system or the role ofthe jury.” DSU Med. Corp. v. JMS Co., Ltd., 296 F. Supp. 2d 1140, 1147 (N.D. Cal. 2003) (citation,quotation marks, and alteration omitted). It is readily apparent that Defendants have thoroughlyresearched the case law on DCF methodology, and in all but one of the several cases they cite, theexpert witness’s DCF analysis was considered at trial and then rejected by the court. Compare In reIridium Operating, LLC, 373 B.R. 283, 350-52 (Bankr. S.D.N.Y. 2007) (rejecting DCF analysesfollowing trial); In re Emerging Commc’ns, Inc. S’holders Litig., No. Civ.A. 16415, 2004 WL 1305745,at *14-15 (Del. Ch. June 4, 2004) (same); Gray v. Cytokine Pharmasciences, Inc., No. Civ.A. 17451,2002 WL 853549, at *8 (Del. Ch. Apr. 25, 2002) (same), with Kipperman v. Onex Corp., 411 B.R. 805,
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844-49 (Bankr. N.D. Ga. 2009) (simultaneously deciding summary judgment and granting motion toexclude an expert’s testimony as unreliable under Rule 702, where the expert rejected management’sprojections and generated his own DCF analysis).
With respect to Dr. Kennedy’s comparable public company analysis, Defendants argue that heonly used the projected MySpace revenue and EBITDA figures for 2006, ignoring the 2005 numberswithout explanation. (Mot. 17-18 (citing Moriarty Decl., Ex. 1, Kennedy Report, at 24)). They argueDr. Kennedy’s explanation for choosing to disregard the 2005 figures was inadequate ipse dixit. Whenasked if 2005 was “an aberrant year for MySpace,” he replied: “No, but it wasn’t who the company wasexpected to be.” (Kennedy Tr. at 129:19-22). Furthermore, Defendants argue that Kennedy cherry-picked only the most profitable guideline companies referenced in Montgomery and TWP’s fairnessanalyses, instead of applying an average of the multiples applicable to several companies. (Mot. 18). Insupport of this latter contention, they cite another treatise, which states: “In employing the guidelinepublicly traded company method, every effort should be made to select as broad a base of comparativecompanies as is reasonably possible, as well as to give full consideration to every possible factor inorder to make the comparison more meaningful.” (Defs.’ RJN, Ex. E, PRATT, REILLY AND SCHWIEHS,THE ANALYSIS AND APPRAISAL OF CLOSELY HELD COMPANIES 233 (2000) (“PRATT, et al.”) (citationand internal quotation marks omitted)). Defendants contend that Dr. Kennedy erred in whittling downthe broader base of comparable public companies identified by Montgomery and TWP to only Googleand Yahoo!, “seasoned” companies with “proven revenue model[s]” that experienced explosive growth. (Mot. 19-20). Though this appears to strike Defendants as litigation-driven, we are instructed toevaluate the methodology, not the ultimate determination reached by the expert. Our “sole purpose is todetermine the reliability of a particular expert opinion through a preliminary assessment of themethodologies underlying the opinion.” DSU Med. Corp., 296 F. Supp. 2d at 1147 (citing Daubert, 509U.S. at 592-93). Of course, we must consider “whether the experts are proposing to testify aboutmatters growing naturally and directly out of research they have conducted independent of the litigation,or whether they have developed their opinions expressly for purposes of testifying.” Daubert II, 43F.3d at 1317. However, there is no evidence in the record that Dr. Kennedy deviated from his standardmethodology for the purposes of testifying in this case.
Dr. Kennedy explained his method as follows. First, he analyzed the companies selected byMontgomery and TWP and restricted his selection to those comparable companies. (Moriarty Decl.,Ex. 1, Kennedy Report, at 18-20). Montgomery had chosen twelve companies (Google, Yahoo!, CNETNetworks, iVillage, Monster Worldwide, Aptimus, ValueClick, Vertrue, Church & Dwight Co.,Herbalife Ltd., Jarden Corp., and Nature’s Sunshine Products) based on the following sectors: onlineadvertising, online content and networking, online direct marketing, and offline direct marketing. (Id. at19). TWP had chosen fourteen guideline companies (Bankrate, CNET, iVillage,1-800-FLOWERS.COM, Blue Nile, Celebrate Express, Netflix, NutriSystem, Overstock.com, ProvideCommerce, Aptimus, Marchex, ValueClick, and Vertrue) based on three sector categories: content,eCommerce, and direct marketing. (Id.). In identifying a narrower set of comparable companies, Dr.Kennedy explained that he considered these to be “the most similar operational, financial, and growth
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guideline publicly traded companies.” (Id. at 20). He justified his deviation from the investment banks,beginning with TWP, as follows:
In implementing the public guideline company method, TWP selected guideline Companiesbased on all of the businesses of Intermix on a combined basis. . . . Montgomery selectedguideline companies based on each business within Intermix because “the three businesses havedifferent economics and peer groups.” As a result, Montgomery selected only “OnlineAdvertising” and “Online Content and Networking” to apply to MySpace. We agree withMontgomery’s approach that each Intermix business segment, and specifically MySpace hasdifferent growth and profit potential and therefore, different multiples would be appropriate toapply to MySpace and the other Intermix business segments. Within TWP’s comparables, onlythe “Content” group is applicable.
(Id. at 20-21). Accordingly, Dr. Kennedy selected the following six comparable companies: Bankrate,CNET, iVillage, Google, Yahoo!, and Monster. (Id. at 21). Then, based on “separate MySpacefinancial performance information,” Dr. Kennedy narrowed the field down to Google and Yahoo!,contending those were the only two companies with comparable revenue and EBITDA growth metrics. (Id. at 21-25). Dr. Kennedy concluded that MySpace “[fell] into the higher profitability tier” of the sixguideline companies, and therefore, he could discount the 2005 figures for MySpace and utilize an“average of the multiples indicated by Google and Yahoo.” (Id. at 24-25).
There is nothing in the record to support the proposition that selecting comparable companiesbased on (1) services provided, (2) revenue metrics, and (3) EBITDA metrics renders a comparablepublic company analysis fundamentally unreliable. We will not exclude this evidence simply becauseDefendants dislike Dr. Kennedy’s conclusion that the only guideline companies left standing in the finalanalysis were Google and Yahoo!. Even Defendants’ cited treatise urges the selection of “as broad abase of comparative companies as is reasonably possible.” (Defs.’ RJN, Ex. E, PRATT, et al., supra, at233 (emphasis added)). Dr. Kennedy concludes, in effect, that the remaining comparable companies areas broad a base of comparable companies as is reasonably possible. Defendants’ disagreement with thisconclusion is properly explored on cross-examination.
Accordingly, we hereby DENY Defendants’ Motion to Exclude Dr. Kennedy’s testimony. AsDr. Kennedy’s testimony is sufficient to at least raise triable issues on damages from out-of-pocketlosses, we also DENY Defendants’ Motion for Summary Judgment on this issue.
3. “Lost Opportunity” Damages
As a final alternative, Plaintiff seeks “lost opportunity” damages based on the allegedlyimpending Viacom bid. “When actual losses cannot be demonstrated,” some circuit courts haverecognized “an alternate theory of establishing damages,” the “lost opportunity” theory. DaimlerChrysler, 294 F. Supp. 2d at 627 (internal quotation marks omitted). Lost opportunity damagesrepresent “loss of a possible profit or benefit, [defined as] an addition to the value of one’s investment,
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unless the loss is wholly speculative.” Tse II, 123 F. Supp. 2d at 223 (internal citations omitted;alteration in original). “Lost opportunity damages are not ‘wholly speculative’ if they are based on‘certain, fixed and demonstrable profits thwarted by a defendant’s alleged fraud.’” DaimlerChrysler,294 F. Supp. 2d at 627 (quoting Rudinger v. Ins. Data Processing, Inc., 778 F. Supp. 1334, 1341 (E.D.Pa. 1991)). “Further, lost opportunities damages ‘are not available where the fact of the loss, i.e.whether there was any lost opportunity at all, is wholly speculative.’” Id. (quoting Tse v. Ventana Med.Sys., Inc., 297 F.3d 210, 220 (3d Cir. 2002) (“Tse III”)). Finally, “‘[t]he risk of uncertainty as to [the]amount of damages is cast on the wrongdoer and it is the duty of the fact finder to determine the amountof the damages as best he can from all the evidence in the case.’” Tse III, 297 F.3d at 220 (quotingGould v. American-Hawaiian S.S. Co., 535 F.2d 761, 781-82 (3d Cir. 1976)).
In support of this theory of damages, Plaintiff argues that Viacom was contemplating a bidabove $750 million, citing a single internal Viacom email, in which Jason Hirschhorn states: “My guessis that News [Corp.] is going to take the $12/share ask from Richard Rosenblatt and add a premium of10-20%. $700-$750 million . . . . Don’t know if offer will be binding from NEWS [Corp.]. But Ibelioeve [sic] they will deliver it anywhere from today-monday.” (J.A., Ex. 192). Viacom never in factput in a bid for Intermix. Therefore, the relevant question on this motion for summary judgment iswhether there is a triable issue of material fact as to whether Viacom would have submitted a bid. Thisquestion must be answered in the negative, since it is undisputed that Viacom’s board simply refused toengage in a public bidding war with its competitor News Corp. Freston, Viacom’s CEO, testified thatthe Viacom board members were adamant on this point: “There already had been an offer and it wasn’tours and it didn’t look like there was an opportunity to counter bid or if there was, we would have to doso in a public way and the board had said on the spot, no, let’s not get involved in that.” (Freston Tr. at35:11-15; see also West Tr. at 123:22-24 (“We had some discussion and we ended up saying that itwasn’t worth pursuing a counterbid strategy.”)). Therefore, given this unwavering refusal to engage ina public bidding war following the July 18th merger announcement, the Proxy, including whateveralleged material omissions, issued in late August had no effect whatsoever on Viacom’s willingness toplace a bid for Intermix. Accordingly, the allegedly defective Proxy cannot support the notion thatIntermix shareholders missed out on an opportunity with Viacom.
While it may be theoretically possible that Viacom would have entered a subsequent bid had theIntermix shareholders not been allegedly deceived by the defective Proxy and had they rejected themerger with News Corp., we conclude that under the totality of the evidence, Plaintiff’s showing is nomore than speculative. Moreover, mere rejection of the News Corp. bid by the shareholders would notnecessarily have eliminated the specter of a public bidding war that Viacom abhorred. Nothingprevented News Corp. from countering any Viacom bid with a counterbid. This is precisely the type ofspeculation and indeterminacy that is insufficient to create a triable issue on the existence of any lostopportunity.
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20 We have no occasion to consider and therefore express no opinion on whether the “lostopportunity” theory of damages premised on a potential Viacom bid would be viable with respect to thebreach of fiduciary duty claim which is based on evidence beyond the alleged material omissions fromthe Proxy. The Parties have not addressed this issue in their Cross-Motions. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 39 of 39
Accordingly, we GRANT Defendants’ Motion for Summary Judgment as to this theory ofdamages.20 On his Section 14(a) claim, Plaintiff may ONLY proceed at trial on his theory of out-of-pocket losses based on an intrinsic valuation of Intermix at the time of the merger.
IV. Count III: Violation of Section 20(a) of the Securities and Exchange Act of 1934
Section 20(a) of the 1934 Act provides that: “Every person who, directly or indirectly, controlsany person liable under any provision of this chapter or of any rule or regulation thereunder shall alsobe liable jointly and severally with and to the same extent as such controlled person to any person towhom such controlled person is liable, unless the controlling person acted in good faith and did notdirectly or indirectly induce the act or acts constituting the violation or cause of action.” 15 U.S.C. §78t(a). The Parties agree that if there is no primary liability under Section 14(a), there can be no controlperson liability. (Joint Br. 87). However, since we have denied summary judgment with respect tothree of the bases for Count II, we likewise DENY the Motion for Summary Judgment with respect toCount III.
V. Conclusion
Plaintiff’s Motion for Summary Judgment is DENIED. Defendants’ Motion for SummaryJudgment is hereby GRANTED in part and DENIED in part as set forth in this Order. Within thirty(30) days hereof, counsel SHALL file a joint status report setting forth their views regarding furthermediation in light of these rulings.
IT IS SO ORDERED.-- : --
Initials of Deputy Clerk Bea
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FtLED
Brad Greenspan, Pro Se 264 South La Cienega Suite 1216
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Beverly Hills, CA 90211 u
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) )
Plaintiff, ) V. )
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NEWS CORPORATION, NI GROUP )
LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ), LIMITED, and JOHN and JANE ) DOES 1-10 )
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I CASE LAW CITED See Luther v. Countrywide Homes Loans Servicing LP, 533 F. 3d 1031, 1033-34 pg. 7(9th
2 Cir. 2008) Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) pg. 10
3 Donnelly v. Glickman, 159 F. 3d 405, 409 (9th Cir. 1998) pg.] 0 Northwest Forest Res. Council v. Glickman, 82 F. 3d 825, 836 (9th Cir. 1996) pg.]]
4 United States v. Washington, 86 F. 3d 1499 (9th Cir. 1996) pg.]] Engra, Inc. v. Gabel, 958 F.2d 643, 644 (5th Cir. 1992). Pg. 12 Northwest Forest Resource Council, 82 F. 3d at 837. Pg. 12
6 Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993) pg. 12 Donnelly, 159 F. 3d at 409; pg. 12
7 U.S. v Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004) pg. 12 California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir. 2006). Pg. 13
8 Forest Conserv. Council v. U.S. Forest Service, 66 F. 3d 1489, 1494 (9th Cir. 1995) pg. 13
9 Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998). Pg.13 Yniguez v. Arizona, 939 F.2d 727, 735 (9th Cir. 1991). Pg.13
10 Southwest Ctr. for Biological Diversity, 268 F. 3d at 822 pg. 13 Sierra Club, 995 F. 2d at 1486 pg. 14
11 California v. Tahoe Reg’l Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)). Pg. 14
12 Crawford v. Equfax Payment Services, 201 F. 3d 877 (7th Cir. 2000). Pg. 15 M & I. Corp. v Von Clemm, and Atlantic Refining Co. v Standard Oil Co., pg. 15
13 both supra; Wolpe v Poretsky, 144 F2d 505 (DC Cir 1944), cert den 323 US 777, 85 L Ed 22, 61 S Ct 115, 132 ALR 741 (1944); pg. 15
14 Ford Motor Co. v Bisanz Bros., 249 F2d 22 (8th Cir 195 7) pg. 15
15
16 Annot 84 ALR2d]4]2 (1962) pg. 15
17 Defenders of Wildlife v. Johanns, No. C 04-4512 PJH, 2005 WL 3260986, at pg. 21 *8 (ND. Cal. Dec. 1, 2005))
18
19
20
21
22
23
24
25
26 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
27
28 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 3 of 41 Page ID #:1885
- p
1 MOTION TO INTERVENE
2
INTRODUCTION
3
4 1. Pursuant to Federal Rule of Civil Procedure 24(a), Plaintiffs
5 ("Intervenor") move to intervene. In the alternative, Plaintiffs moves to intervene
6 permissively as defendants pursuant to Rule 24(b).
7 BACKGROUND
8
9 2. Plaintiff seeks permission to join the litigation to protect interests,
10 which may not be adequately protected without involvement of Plaintiff.
11
12 New evidence disclosed for the first time to public May 2013 in the
13 Hitech Class Action Case 5:1102509: specifically document
14 confirms for first time and proves Google had additional undisclosed illegal bilateral
15 16 agreements in place with AskJeeves,TimŁ/Wamer AOL, and other potential corporate
17 entities as of March 6, 2005. Such partners and agreements that existed including
18 between AskJeeves, Inc, its surviving acquiror IAC Corp., and TimeWarner/AOL, and 19 20 Google are uncontested to have existed 6ut were not previously identified by
21 Defendants and HiTech Federal Class Action Plaintiffs had not previously
22 alleged or known to have existed and which violated Federal antitrust statues. All three I 23 24 companies fraudulently concealed the agreements and failed to disclose them in their
25 SEC filings, violating security law and breaching their fiduciary obligations Directors
26 and officersall companies had. 27
28 4
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 4 of 41 Page ID #:1886
I
1 3. Plaintiff was injured in their business or property by reason of
2
A) Defendants, ongoing, systematic and fraudulent scheme to maximize financial
3 4 gain Facilitated by the conduct of Google, and Intel, Objective unlawful scheme was
5 to obtain billions of dollars in proceeds and profits from i. rigging the sales of
6 competing internet assets at below fair market prices ii) benefitting from profits
7 8 generated from illegal phone hacking iii) benefitting and trading confidential
9 information received from the illegal phone hacking iv) covering up the illegal activity
10 using their media properties iv) extorting silence from victims and/or government
11 12 regulators including bribing police, UK Government ministers, United States Senators,
13 California State Senators and California State Cdgressmen and Congresswomen
14 and United States Congressmen and Congress serving women, and several related and 15 16 affiliated lobby qualified law firms, and other agency iritermediators, v) offering ad
17 credits and ad promotion in kind without disclosing such transactions to the public or
18 accounting for them in their SEC GAAP Accounting, and government ministers. 19
20 4. Without intervention, plaintiff will be further harmed. The intervention i 21 22 also necessary to raise additional matters, facts, and Claims while providing to the
23 supporting evidence. The claims were created from a behind the scenes series of
24 meetings and communications since late 2003 thru May 1, 2014 between: i) 25 26 Intermix/MySpace, Inc. ii) News Corp iii) Yahoo iv) Google v) MSN, vi) AskJeeves
27 vii) JP Morgan viii) lac Corp ix) Time Warner, Inc.,x) Aol Inc. xi) Fox Interactive xii)
28
5
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 5 of 41 Page ID #:1887
1 I Fox xiii) Washington Post
2 3 I VICTIM OF SAME "BROAD CONSPIRACY"
4
5. Submitted herein and by reference and thus such facts and findings
5 6 will not be re-litigated in these pleadings unless Defendants disputes the accuracy
7 of the rulings and court orders and estoppel created by such settlements entered into by
8 Defendants. This conspiracy included: (1) agreements allowing AskJeeves Director
9 10 Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below fair market
11 value using His RedPoint fund where he is managing Director; (2) agreements allowing
12 Google, TimeWarner/AOL, News Corporation, AskJeeves, IAC, and other defendants
13 14 to collude to gain economic benefits by i) fabricating prior sale of MySpace stock
15 backdated agreement in November 2004 and ii) delaying closing of a competitive
16 MySpace search engine auction for a new commercial search engine agreement in the
17 18 months leading up to News Corporation acquiring 100% of eUniverse in September
19 2005; (3) agreements allowing Google to ensure its $4.4 Billion dollar August 2005
20 secondary is completed by tying up the fast growing online audience of MySpace, 21 22 significantly growing its share of online search engine advertising while shrinking
23 share of main rival #2 Yahoo; (4) agreements allowing News Corporation to purchase
24 MySpace.com at below fair market value, growing its market valuation and generating 25 26 billions in incremental profits and a massive online audience to seed new online assets
27 for years to come, while preventing a competitive auction with main rival Viacom.
28 6
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 6 of 41 Page ID #:1888
S
1 ii. The intended and actual effect of these agreements was to fix and
2 suppress competition. Defendants conspiracy and agreements restrained trade and are
3 per se unlawful under federal law.
4 Plaintiffs seek injunctive relief and damages for 5
6 6. Pursuant to private right of action under antitrust Federal law, more
7 then 5000 shareholders of MySpace parent company, former publicly traded e
8 Inc. "EIJNI" are entitled to a private cause of action for damages suffered as a result of 9
10 an Antitrust conspiracy among Defendants.
11
7. According to SEC documents, Brad D. Greenspan incorporated
12 Entertainment Universe, Inc. ("EUNI"). On April 14, 1999, eUniverse completed 3 w 13 14 reverse merger arranged by first CEO, main operator and principal control officer
15 under SEC Sarbanes Oxley federal laws, serving as Chairman and CEO thru October
16 30, 2003 when as victim of fraud set in motion by Google, refused to participate in 17 18 Defendants further fraud against and including public shareholders and petitioner
19 Resigned as Officer, and in December from the Board of Directors, which is publicly
20 Stated forth in the eUniverse see SEC Filings including 8k, acquired along with its 21 22 100% owned and controlled Myspace.com website assets that News Corporation
23 acquired after misleading shareholders to vote to approve such transaction at the end
24 of September 2005.
25 8. The credibility of News Corp’s Board including Kleiner Perkins Partner
26 Perkins and Intel Director Thornton has greatly diminished between 2005 and 2012 27
28
’1
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 7 of 41 Page ID #:1889
t )
1 fueled by its involvement in illegal phone hacking in the UK and the incredible effort
2 made to cover up and deny the deeds for years before finally in 2012, admitting indeed
3 the company had misled the public. Most recently CEO Rupert Murdoch personally
4 donated over $1 million dollars to charity as part of a $6 million dollar single settlemeni
5 with the family of a UK 13 year old girl who had gone missing and was murdered whil
6 also falling victim to one of News Corp’s operatives hacking her phone and erasing’
7 voice mail evidence in the process of trying to find fresh angles for new stories.
8 Its been widely reported that the UK MET has over 5000 suspected victim’s of
9 phone hacking from News Corp and while only approximately 200 of the suspected
10 victims have been contacted by police to date, already there are 60 lawsuits in the UK
11 from News Corp phone hacking victims.
12
i. The credibility of Google largest shareholder Doerr Director of Defendant
13 is very poor historically and he was forced to abandon a Director seat at Apple, Inc. in 14 15 2010 after he was threatened with a complaint by the FTC. Doerr employee Reported
16 the following acts he is a current defendant in a Sexual harassment lawsuit pending
17 in San Francisco State Court., 18
19 9. News Corporation, struck an undisclosed bilateral agreement with at
20 least Google, on or around September 30, 2005 before the Myspace and parent
21 corporation eUniverse operating in California (later thru name change operated as 22 23 Intermix, Inc) were acquired and ceased to be publicly traded.
24
10. News Corporation which operates Fox and Fox Interactive among other
25 subsidiaries is also alleged and believed to have struck related arrangements or
26 27 agreements with Ask Jeeves, Inc., IAC Corp, or TimeWarner/AOL, Inc. during
28 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 8 of 41 Page ID #:1890
j
1 such time. 2
11. At least one Officer and/or Director of News Corporation and Go ogle
4 have admitted to a second bilateral agreement existing as of late 2006,which
5 Therefore defendants agreements already in place
6 for not poaching each other’s employees which included Google, AskJeeves, and
7 8 TimeWarner/AOL formed around existing commercial online advertising
9 agreements to provide and promote Google’s online search product. News Corporatio
10 11 was merely telling a fabricated story of its 2005 agreement with Google in
12 the 2006 published story by its own employee it got 3rd party publisher to distribute
13 globally, "Stealing MySpace", which it recounted its deal with Google, Kleiner Perkins
14 15 Partner Doerr on Google Board with Perkins working or representing News
16 12. During this period, Google was in need of new commercial partners
17 to help it grow. Google’s main focus was finding or securing new partner companies
18 19 that had significant number of unique visitors coming to their owned website properties
20 i. Deal #1: Commercial Ad Sense Pilot Partner Ad Buy and Endorsement permission as part of commercial $20,000 purchase made by Google on or around
21 January 2003, became aware that Greenspan was Chairman and CEO or the 22
principal executive officer by or before February 2003. Google negotiated and 23 consummated its first direct agreement with eUniverse February 2003. Google had grea 24 success after target of Deal#1 profits emerged shortly after eUniverse and Greenspan
25 agreed to deal and endorsement.
26 ii. Deal #2: Commercial Search:
27
28 .9
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 9 of 41 Page ID #:1891
1 at least two of Google’s top business development executives thru 2009, Gerber, Morris, worked or contacted petitioner directly via email in
2 attempting to consummate a direct commercial search engine online
3 advertising agreement. Petitioner opted to terminate Google discussions after announcing
4 execution of a Commercial Search agreement with Yahoo in late October
5 2003, and launch of its SirSearch.com consumer facing brand by and for benefit of eUniverse and its 100% owned MySpace division, launched
6 August 2003 but not announced to public until February 2004.
7
8
9 I. Leal Standard for a Motion to Intervene
10 14. Petitioner is entitled to intervention as a matter of right under
11 12 Federal Rule of Civil Procedure 24(a)(2). Rule 24(a)(2) provides that:
13 "Upon timely application anyone shall be permitted to intervene in an action, when the applicant claims an interest relating to
14 the property or transaction which is the subject of the action and the
15 applicant is so situated that the disposition of the action may as a practical matter impair, or impede the applicant’s ability to protect that
16 interest, unless the applicant’s interest is adequately represented by
17 existing parties. Fed R. Civ. P.24(a)"
18 The Ninth Circuit construes Rule 24 liberally in favor of movants for
19 20 intervention. See Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (citing
21 Donnelly v. Glickman, 159 F.3d 405, 409 (9th Cir. 1998)). "Courts are guided primaril)
22 by practical and- equitable considerations." Id. 23 1 When considering a motion to intervene, the court "must accept as true the non-conclusory 24 allegations in the motion." Reich v. ABC/York-Estes Corp., "A motion to intervene as a matte 25 of right, moreover, should not be dismissed unless it appears to a certainty that the
26 intervener is not entitled to relief under any set of facts which could be proved under the
27 complaint." Id. (citing Lake Investors Dcv. Group v. Egidi Dcv. Group,).
28 10
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 10 of 41 Page ID #:1892
1 15. For reasons set forth herein, Intervenor satisfies requirements of
2 F.R.C.P 24(a)(2) to intervene as a matter of right in present action.
4 Intervenor’s Motion to Intervene is Timely.
5 16. In considering the timeliness issue, courts consider three factors: (i) the
6
7 stage of the proceeding at time the applicant seeks to intervene; (ii) prejudice to
8 the existing parties from applicant’s delay in seeking leave to intervene; and (iii) any
9 10 reason for the length of delay in seeking intervention (how long the prospective
intervenor knew or reasonably should have known of her interest in the litigation). See
12 United States v. Washington, 86 F.3d 1499 (9th Cir.1996); Engra, Inc. v. Gabel, 958
13
14 F.2d 643, 644 (5th Cir. 1992).
15 17. Intervention is timely because other Plaintiffs or those who
16 believe they are or should be have recently filed briefs as
17 18 allowed by the court. After these pleadings were reviewed Intervenor came to realize
19 certain facts and discovery exist that allow certain new claims that would greatly
20 benefit all other Plaintiffs. There are also new issues and matters which the 21 22 court has not engaged in yet.
23 18. Defendants will not be prejudiced by the intervention, as they already are
24 on notice as to the claims alleged against them and furthermore, defendants have 25 26 intentionally concealed discovery, documents, and emails from both existing Plaintiff
27
28 11
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 11 of 41 Page ID #:1893
I
and Plaintiff seeking to intervene. Further, Intervenor shares same claims as the currei 2
Federal Plaintiff EH for Intervening Plaintiff to be consolidated to share its recovered
4 pieces of information lost for Existing Plaintiff from result of Defendant’s Fraudulent
5 concealment And newly discovered evidence and facts from the UK criminal trials
6 of 10 News Corporation executives including the CEO’s "surrogate" daughter and
8 Ex-Editor and President of Defendant’s #1 and #2 news publications for CEO
9 To interface with and retain control of such editor run divisions of the GAAP
10 11 Aggregating public issuer, News Corporation, makes this motion to intervene timely.
12 For example, defendants have obstructed justice by eliminating Mr. Greenspan as
13 14 a fact/expert witness after defendants struck an arrangement with class counsel in May
15 2009 to destroy the value of Class’s federal case and upside in Brown V. Brewer.
16 However, by simply toggling in the previously lost Rule 701 Damage Report,
17 18 There is now produced evidence of $32+ billion in earnings and credits that
19 News Corporation received benefit of thru a September 2005 acquisition of 100%
20 Of Intermix, inc. (formerly eUniverse, Inc.) holder of 100% of Myspace.com and its
21 data and user future value.
22
23 Defendant would seek to limit damages to Plaintiff EH and other
24 Victims based on its published and formerly disclosed to be accurate financials.
25 26 This evidence would be sought or required to be seen by future Jury that Plaintiff EH
27 Requested or that Plaintiff would receive benefit of if filing this claim as independent
28 12
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 12 of 41 Page ID #:1894
1 action in Federal Court.
2
3 News Corporation informing Victims and litigants like EH, that is actually earned
4 an additional $32 billion or more from a transaction News Corporation engineered
5 In 2005 at the same time as entering into and facilitating the criminal acts that 3
6 7 employees have admitted were criminal against EH and thousands of other
8 entertainment former employees, consultants, or agents during 2005.
9 10 And that News Corporation had taken special accounting and unlawful accounting
services on and paid for such services to the same service providor, Ernst and Young
12 and Hogan Hartson Law LLC and Hogan Lovell Law 1LC, and such earnings
13 14 previously hidden, could thru Court accepting Intervention of new Plaintiff
15 and allowing (Exhibit #1: Rule 701 Damage Report) represents the fact
16 that News Corporation benefited more then most companies thru digital sales of its
17 18 products between 2005-2014. Its digital products could only be sold by being created
19 with the payments to, hiring, and participation of Actors like Brad Pitt and
20 his wife actress who hired and retained Plaintiff EH during 2005 and 2006 at the very 21 least its uncontested. Because News Corporation sought to maximize profits
22 by creating schemes to bypass the economic limits of the cards he was dealt
23 24 as CEO of News Corporation by late 2004, Rupert Murdoch was scared
25 of losing control and of being ousted by Directors including Perkins and
26 Dinh, later Hurd helped further bully and control the growth of bribery 27
28 13
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 13 of 41 Page ID #:1895
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
And hacking as Murdoch began to try to fade out of scene with Acquisition
Of Dow Jones and letting his right hand Les Hinton, the Halderman to Nixon
I FRAUDULENT CONCEALMENT & EMAIL & DISCOVERY SPOILATION
19. Defendants have omitted key discovery previously that caused key
I evidence and facts to be fraudulently concealed. The fraudulent concealment includes
affirmative acts. Therefore, tolling would not take place until the fraudulent
concealment is fully disclosed. 7th Circuit Baker v. F&F Investment, 420 F.2d 1191
(7th Cir. 1970), cert. den., 400 U.S. 821 (1970) (self-concealing conspiracy
demonstrates fraudulent
concealment) (dictum) United National Records, Inc. v. MCA, Inc., 609 F.Supp. 33
(N.D. Ill. 1984) (denial of wrongdoing and false statements regarding price increase
sufficient to establish fraudulent concealment).
Therefore, when comparing the impact of fraudulent concealment by Defendants
And the late period even at the time of Settlement being rejected, the Court has allowed
Intervention for Class Action interventions. 2
Intervenor has a significantly protectable interest in subject matter of the action.
20. Intervenor absolutely can claim "an interest relating to the property or
transaction that is the subject of the action." Fed. R. Civ. Proc. 24(a)(2). Intervenor was
2 (quoting Agretti, 982 F.2d at 247); see also Alümax Mill Prods.v.Congress Fin. Corp., (allowing nonsettling defendant to challenge a partial settlement that dismissed with prejudice its cross-claims and stripped it of Indemnity contribution rights).
14
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 14 of 41 Page ID #:1896
1 the largest common stock shareholder and an officer and Director thru December 10,
2 2003. "It is generally enough that the interest [asserted] is protectable under some law,
3 and that there is a relationship between the legally protected interest and the claims at
4 issue." Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993);
6 The Ninth Circuit has "taken the view that a party has a sufficient interest for
7 8 intervention purposes if it will suffer a practical impairment of its interests as a result of
the pending litigation." California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir.
10 2006).
11
12 21. Intervenor will lose his chance to prove he was harmed by defendant’s
13 newly disclosed illegal bilateral agreements struck with AskJeeves, Inc. in 2005 and/or
14 Google in 2006 that was part of HiTech illegal antitrust conspiracy network of co-
15 16 conspirators and defendants including Intel and Google.
17 22. Plaintiff-Intervenor has a special interest in presenting evidence that will help
18 19 Court and existing Plaintiff. Defendants have also made a significant effort to
20 defame intervenor and continue to this day. Includes lying and misleading the public
21 about the origins of MySpace.com and passing off credit to employees of MySpace.corr 22 23 instead of the management at the time MySpace.com was created in August 2003 which
24 was led by Intervenor. Defendants have and will continue to cause massive damage to
25 intervenor thru Defendant’s false claims spread thru News Corp 26 27 properties and efforts to defame Intervenor. Therefore Intervenor will continue to be
28 15
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 15 of 41 Page ID #:1897
1 damaged unless the new claims, evidence and matters presented in these pleadings are 2
equitably disposed of See Forest Conserv. Council v. U.S. Forest Service, 66 F.3d
4 1489, 1494 (9thCir. 1995)
5 Intervenor’s Interests Would Be Substantially Prejudiced
6 23. To intervene, a movant must show the disposition of the action may "as a
8 practical matter impair or impede" the ability to protect movant’s interest, unless the
9 interest is adequately represented by existing parties. Fed. R. Civ. Proc. 24(a)(2);
10 11 Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998).
12 24. Intervenor Brad Greenspan will lose the ability to protect movant’s interest
13 14 as victim of California Privacy laws and State Constitution.
15 25. Intervention is appropriate where existing parties do not adequately
16 represent the Intervenors’ interests. Donnelly, 159 F.3d at 409 (citation omitted). The
17 18 Ninth Circuit considers three factors in determining the adequacy of representation:
19 "(1) whether the interest of a present party is such that it will undoubtedly make all of a
20 proposed intervenor’s arguments; (2) whether the present party is capable and willing to
21 22 make such arguments; and (3) whether a proposed intervenor would offer any necessary
23 elements to the proceeding that other parties would neglect." Arakaki, 324 F.3d at 1086
24 (citing California v. Tahoe Reg’l Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)). 25
26 EVIDENCE OF DEFENDANTS $32 PLUS BILLION IN BURIED PHONE 27 HACKING PROFITS historical context as Rule 701 lay witness to benefit Class
28 16
PLAINTIFFS’ MOTION TO INTERVENE
I] Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 16 of 41 Page ID #:1898
I Members
2 26. Intervenors will offer perspectives and knowledge that the existing Plaintiff
3 and Defendants are likely to lack, overlook, or undervalue. "The court also may find th
4 a proposed intervenor’s interests are not adequately represented where the intervenor
6 would bring a perspective none of the other parties to the litigation have." Defenders o
7 Wildlife v. Johanns, No. C 04-45 12 PJH, 2005 WL 3260986, at *8 (N.D. Cal. Dec. 1,
8 2005)) (citation omitted); 1994) 3.
10 The Court should grant intervention because "the magnitude of this case is such
11 that intervention will contribute to the equitable resolution of this case." See Kootenai
12 13 Tribe. The early presence of interveners may serve to prevent errors from creeping into
14 the proceedings, clarify some issues, and perhaps contribute to an amicable settlement.
15 16 Postponing intervention in the name of efficiency until after the original parties have
17 forged an agreement or have litigated some issues may, in fact, encourage collateral
18 attack and foster inefficiency. See Kleissler v. U.S. Forest Serv. & also Forest
19 Even if the Court finds Intervenor is not entitled to intervene as a matter of
20 right, the Court should exercise its discretion and permit intervention
21
22 27. A court may grant permissive intervention whenever the movant "has a
23 claim or defense that shares with the main action a common question of law or fact,"
24 and when the intervention would not "unduly delay or prejudice the adjudication of the
25 See Spangler v. Pasadena Board of Education, (the court may consider whether interveners "will
26 significantly contribute to the full development of the underlying factual issues in the Suit and the just
27 and equitable adjudication of the legal questions presented.")
28 17 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 17 of 41 Page ID #:1899
1 original parties’ rights." Fed. R. Civ. P. 24(b). As explained above, Intervenor meets all
2 of these requirements. Intervenor is in an analogous posture, and like appellants in
4 Smoke v. Norton, has satisfied the requirements for intervention as of Right under Rule
5 24(a)(2) and for permission intervention under Rule 24(b)(2).
6 28. When considering a motion to intervene, the court "must accept as true
8 the non-conclusory allegations in the motion." Reich v. AB6’/York-.Estes Corp., 64 F.3d
9 316,321 (7thCir. 1995).
10 29. Permissive intervention is also justified because Intervenor’s participation
12 will facilitate an equitable result. See Spangler v. Pasadena Board of Education, 28 552
13 14 F.2d 1326, 1329 (9th Cir. 1977) (the court may consider whether intervenors "will
15 significantly contribute to the full development of the underlying factual issues in the
16 suit and the just and equitable adjudication of the legal questions presented.").
17 18 Intervenor is needed to provide the full facts which do not exist in the current pleadings’
19 The Court should grant intervention because "the magnitude of this case is such
20 that intervention will contribute to the equitable resolution of this case." Kootenai Tribe
21 22 313 F.3d at 1111. The early presence of intervenors may serve:
23 i) to prevent errors from creeping into the proceedings, clarify some issues, and
24 ii) perhaps contribute to an amicable’ settlement. 25 26 Postponing intervention, encourages collateral attack and foster inefficiency.
27 (see Kleissler v. U.S. Forest Serv. ,157 F.3d 964, 974 (3d Cir. 1998);
28 18
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 18 of 41 Page ID #:1900
1 30. Motion for Leadership
2 Motion for Leadership Memorandum and Memorandum in Support Class Certificate
4 will be submitted to the Court by June 30, 2014.
5 III. 24(b) LEGAL ARGUMENT
6
7 The Court should allow the proposed Intervenor to join as a Co-Plaintiff in the action. Federal Rule of Civil Procedure 24(b) provides that:
8 31. Rule 24(b) allows permissive intervention if three grounds are met: (i) the
10 intervenor shows an independent ground for jurisdiction; (ii) the motion is timely; and
11 (iii) there exists a common question of law and fact between the intervenor’s claim an(
12 13 the main action. See Corner v. Cisneros, 37 F.3d 775, 801 (2d Cir. 1994). See German
14 v. Federal Home Loan Mortgage Corp., 896 F. Supp. 1385, 1391 (S.D.N.Y. 1995) ("Tb
15 16 Rule is to be construed liberally");
17 (1) There Is An Independent Ground For Jurisdiction
18 32. The Proposed Intervenor has claims against one or more same defendants
19 that arise under the federal antitrust laws, these claims are identical in all material
20
21 respects to those alleged in the current Complaint in those actions in which intervention
22 is sought. Claims happen also during same 2003-2006 timeline
23 24 Therefore, pursuant to 28 U.S.C. § 133 1(a), the Court has subject-matter
25 jurisdiction over the claims of the Proposed Intervenor.
26
27 (2) There Exist Common Questions Of Law And Fact Between The Intervenors’
28 19 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 19 of 41 Page ID #:1901
1 Claims And The Underlying Actions
2 33. The Proposed Intervenor claims are based upon same
4 violations of federal law as the underlying action. Thus, it is
5 indisputable that the intervenors’ claims and the claims asserted in the underlying
6 actions have many common -- indeed identical -- questions of law and fact.
8 Diduck v. Kaszycki & Sons Contractors, Inc., 149 F.R.D. 55, 59 (S.D.N.Y. 1993)
9 10 (intervention granted where "the intervenor’ s claims raise identical questions of law
and fact to those currently before the Court");
12 34. A court may grant permissive intervention whenever the movant "has a clam
13 or defense that shares with the main action a common question of law or fact," and
14
15 when the intervention would not "unduly delay or prejudice the adjudication
16
17 of the original parties’ rights." Fed. R. Civ. P. 24(b). As explained above, Intervener
18 meets all of these requirements. Intervener is in an analogous posture, and like
19 20 appellants in Smoke v. Norton, has satisfied the requirements for intervention
21 as of Right under Rule 24(a)(2) and for permission intervention under Rule 24(b)(2).
22 Indeed, as Mayfield makes clear, one may challenge a settlement agreement to which h
23 24 is not a party if the agreement will cause him" ’plain legal prejudice,’ as
25 when ’the settlement strips the party of a legal claim or cause of action.’ "Mayfield, 985
26 F.2d at 10933 Under the discretionary standard, Intervener’s burden is far lower than tha
27
28 20
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 20 of 41 Page ID #:1902
V
1 required for intervention as a matter of right. See Defenders of Wildlife, see also
2 I Northwest Forest Res. Council.
3
4 (3) Policy Considerations In Class Actions Strongly Favor Granting Intervention
5 I Motions
6
7 35. In class actions, intervention is "highly desirable" "to ensure adequate class
8 representation." Triefv. Dun & Bradstreet Corp., 144 F.R.D. 193, 202 (S.D.N.Y. 1992)
9 (rejecting defendants’ argument that intervention was untimely).
10
11 The decision in Shields v. Washington Bancorporation, Civ. A. No. 90-110 1,
12 1992 WL 88004 (D.D.C. Apr. 7, 1992), is instructive. In Shields, the court denied a
13 motion for class certification because the plaintiff was not an adequate class
14
15 representative. Id. at *1. Subsequently, a new plaintiff moved to intervene as the class
16 plaintiff. Id.
17
18 36. In this case, failing to pursue immediate intervention and insertion of new
19 evidence and matters and testimony would harm existing Plaintiff and thousands of
20 other Absentee Class members substantially.
21
22 It also prevent Intervenor from taking advantage of Federal anti-
23 retaliatory whistleblower statues and protections petitioner is due. The impairment to
24 Intervenor’s interest from the Court’s ruling if intervention is not granted is sufficient
25 26 to qualify for intervention as of right.
27 37. The Intervenor is willing to be represented by counsel f so "undue delay,
28 21
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 21 of 41 Page ID #:1903
complication, or procedural difficulty remain unlikely." 2
McNeill, 719 F. Supp. at 250; see also German v. Federal Home Loan Mortgage Corp.,
4 899 F. Supp. 1155, 1166-67(S.D.N.Y. 1995)
5 IV. CONCLUSION
6 38. For the reasons described above, Intervenor respectfully requests the Court
7 8 grant The motion to intervene as a matter of right pursuant to Rule 24(a), or, in the
9 alternative, permissively pursuant to Rule 24(b) and approve the order attached herein.
10 39. The Intervenor further respectfully requests the Court grant in such
12 motion, the right to serve the Complaint in Intervention (Exhibit #2) , Motion for
13 Partial Summary Judgment (Exhibit #3) , ,and Motion for Preliminary 17200 Injunction
14 15 and/or Motion of Contempt for Violation 2006 California State Attorney 17200
16 Permanent Injunction entered into consent decree on behalf of Defendant News
17 Corporation with State Attorney (Exhibit #4) related and precedential rulings and
18 19 briefings attached as herein.
20 DATED: May 2, 2014
21 Respectfully submitted,
Brad D. Greenspan, Pro Se 25 264 South La Cienega Blvd. 26 Suite 1216 27 Beverly Hills, CA 90211
28 22
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 22 of 41 Page ID #:1904
1
2 EXHIBIT #1 3 Rule 701 Damage Report
4
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8
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10
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12
13
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PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 23 of 41 Page ID #:1905
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE GREENSPAN,
) C.A. No. 9567-ME Plaintiff, )
V. )
NEWS CORPORATION, et at Defendants
RULE 701 DAMAGE REPORT
1
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 24 of 41 Page ID #:1906
Cases Cited pg.3
I INTRODUCTION pg. 4
II OVERVIEW OF ASSIGNMENT pg. 6
SUMMARY: $32.453 Billion in damages suffered by Class Members
III TRANSACTION BACKGROUND pg. 6
IV COMPANY BACKGROUND 12g.6
V INDUSTRY ENVIRONMENT IN 2005 pg. 6
VI PROBLEMS WITH THE MANAGEMENT FORECAST AND pg. 7 DR. WILLIAM KENNEDY’S DAMAGES REPORT
VII TRANSACTION BACKGROUND AND ASSUMPTIONS 129- 11
VIII DAMAGES ANALYSIS pg. 12
IX- CONCLUSION: 129- 15
EXHIBIT 1 - BACKGROUND / WORK EXPERIENCE pg. 16
EXHIBIT 2�Chart - Monthly unique visitors MySpace pg. 18
2
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 25 of 41 Page ID #:1907
CASES CITED
Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993
pg. 4
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246
(9th Cir. 1997)
pg. 5
Asplundh Mfg. Div. v. Benton Harbor Eng’g, 57 F.3d 1190, 1196
(3dCir. 1995) pg. 6
In Doft & Co. V. Travelocity pg. 8
Marcel v. See, Inc pg. 10
Henry v. Hess Oil Virgin Islands Corp pg. 10
Rowe v. State Farm Mut. Auto. Ins. Co., pg. 10
United States v. Bighead, 128 F.3d 1329, 1335 (9th Cir. 1997) pg. 10
3
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 26 of 41 Page ID #:1908
DECLARATION OF LAY OPINION UNDER RULE 701 BY BRAD D.
GREENSPAN: CEO, DIRECTOR, FOUNDER PAID SEARCH
DIVISION, HEAD OF M&A THRU OCTOBER 30, 2003. ONLY
EXECUTIVE TO HAVE COMPLETED A GOOGLE VS. YAHOO
SEARCH AUCTION
I INTRODUCTION
I, Brad Greenspan, declare:
1. I submit this declaration in support of the Plaintiff Class
Members.
The following is based on upon my personal knowledge and if called as a
Witness I could and would testify competently thereto.
2. This declaration is made under Rule 701 based on my experience.
3. Rule 701 allows lay witness declarations limited to those
opinions or inferences, which are (a) rationally based on the perception of the
witness, and (b) helpful to a clear understanding of the witness’ testimony or
the determination of a fact in issue, and (D not based on scientific, technical,
or other specialized knowledge within the scope of Rule 701.
4. I am also in a unique position to provide a valuation amount
Under Rule 701. Most courts have permitted the owner or officer of a
business to testify to the value or projected profits of the business, without
the necessity of qualifying the witness as an accountant, appraiser, or similar
expert. See, e.g., Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993)
4
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 27 of 41 Page ID #:1909
(no abuse of discretion in permitting the plaintiffs owner to give lay opinion
testimony as to damages, as it was based on his knowledge and participation
in the day-to-day affairs of the business). Such opinion testimony is admitted
not because of experience, training or specialized knowledge within the
realm of an expert, but because of the particularized knowledge that the
witness has by virtue of his or her position in the business.
5. The amendment does not distinguish between expert and lay
witnesses, but rather between expert and lay testimony. Certainly it is possible for
the same witness to provide both lay and expert testimony in a single case. See, e.g.,
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246 (9th Cir. 1997) (law
enforcement agents could testify that the defendant was acting suspiciously,
without being qualified as experts; however, the rules on experts were applicable
where the agents testified on the basis of extensive experience that the defendant
was using code words to refer to drug quantities and prices). The amendment
makes clear that any part of a witness’ testimony that is based upon scientific,
technical, or other specialized knowledge within the scope of Rule 702 is governed
by the standards of Rule 702 and the corresponding disclosure requirements of the
Civil and Criminal Rules.
The amendment is not intended to affect the "prototypical example(s) of the
type of evidence contemplated by the adoption of Rule 701 relat(ing) to the
appearance of persons or things, identity, the manner of conduct, competency of a
person, degrees of light or darkness, sound, size, weight, distance, and an endless
number of items that cannot be described factually in words apart from
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 28 of 41 Page ID #:1910
inferences." Asplundh Mfg. Div. V. Benton Harbor Eng’g, 57 F.3d 1190, 1196 (3d Cir.
1995).
II OVERVIEW OF ASSIGNMENT
-Updated/revised damages assessment for benefit of Plaintiff Class Members.
SUMMARY: $32453 Billion in damages suffered by Class Members
III TRANSACTION BACKGROUND
i) $12.00 cash out merger with two investment banks providing fairness
valuation reports created
ii) after the $12.00 price was chosen by CEO and accepted by Board of Issuer.
IV COMPANY BACKGROUND
Company was online entertainment and social networking website creator and also
for purposes of report owned 100% of MySpace, Inc. At the time of its sale in 2005
for approximately $649 million dollars, the purchase of the public shareholder’s
equity was reported to be $580 million and there existed a $69 million dollar
obligation to pay the minority shareholders of MySpace, Inc. according to
agreements signed in February 2005 by and between Redpoint, Inc. and Intermix,
Inc, and MSV LLC.
V INDUSTRY ENVIRONMENT IN 2005
i) Unique in that the pace of online advertising was growing much faster
then other industries in the United States.
6.
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ii) Google had just successfully raised $4.4 billion dollars and announced the
sale in August 2005.
iii) According to company documents and testimony of former head of online
search and CEO and founder of MySpace.com and Issuer, Issuer had opportunity to
run a search auction as of at least August 2005 between at least Google, Yahoo,
Microsoft, AskJeeves, and AOL.
iv) Go ogle and AOL set market price for value of search assets on or around
the 3rd and 4th quarters of calander 2005, closing a new Search Partnership in
December 2005.
v) In this transaction, Google invests $1 Billion into AOL, valuing AOL to be
worth $20 billion by virtue of the 5% stake Google takes for its investment.
VI PROBLEMS WITH THE MANAGEMENT FORECAST AND DR. WILLIAM KENNEDY’S DAMAGES REPORT
0 The damage report by Anders Minkler & Piehi LLP is helpful to
confirm the problem areas with management forecasts and the banker fairness
opinions. The expert also cites certain evidence that is useful in triangulating the
valuations we calculate and conclude in this report are more accurate and sound.
ii) Because of both unreliable forecasting historically proven by
management for MySpace, Inc. and because MySpace was an early stage company
experiencing significantly greater then average growth rates, Kennedy should not
have opted to follow banker’s fairness opinion method to use the 2009/20010 DCF
method for a company like Intermix and merely hoped to gain accurate methods for
(
7
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an accurate valuation of MySpace merely by adjusting the underlying financials.
iii) In Doft & Co. V. Travelocity, the Delaware Court made several
precedential determinations when faced with the task of weighing using
management forecasts for a new fast growing company in a fast changing market
environment, stating:
a) ’The court may consider "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court."
b) "Both parties used a DCF approach and a comparable company approach to value the shares.
c) "A DCF analysis is a useful tool for valuing shares and is frequently relied on by this court in appraisal actions."
d) "The utility of a DCF analysis, however, depends on the validity and reasonableness of the data relied upon. As this court has recognized, "methods of valuation, including a discounted cash flow analysis, are only as good as the inputs to the model."
e) "The problem in this case is that the most fundamental input used by the experts�the projections offuture revenues, expenses and cash flows�were not shown to be reasonably reliable."
D "Delaware law clearly prefers valuations based on contemporaneously prepared management projections because management ordinarily has the best first-hand knowledge of a company’s operations."
g) "Here, management prepared the 5-year projections for the period 2002-2005 and gave them to Sabre for use in its routine planning processes."
h) "Often, projections of this sort are shown to be reasonably reliable and are useful in later performing a DCF analysis. In this case, however, the court is persuaded from a review of all the evidence that the Travelocity 5-year plan does not provide a reliable basisfo rfo recasting future cash flows."
i) "Travelocity’s management held the strong view that these projections should not be relied upon because the industry was so new and volatile that
iJ
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reliable projections were impossible."
D "Punwanifurther testified that because of the limited financial history of Travelocity, together with a rapidly evolving marketplace, it was difficult "to forecast the next quarter, let alone five years out."
k) "Id. "We were really not in a position to be able to put any credence on the numbers, both on the revenue and on the cost side. And the only way to get credibility in our numbers would have been to take those models and put them through reasonability checks ... [that] were never done because, when we built these frameworks, I’ll call them, in the year 2000, we were in a period of explosive growth. We were growing at 150 percent per year.... No one really knew what the right number was." Id. at 381-82.
1) "Id. at 383. "It was bad enough before when we did the data, and we had this new variable that got thrown into our lap, which totally destroyed our ability to have any confidence in projections beyond one quarter out." Id.
m) "Although it was aware of the 5-year forecasts, Salomon did not conduct a DCF analysis of Travelocity as part of its work in connection with the merger. The testimony ofAnwarZakkour, Salomon’s managing director, is especially relevant on this issue:
n) "Q. Did Salomon Smith Barney prepare a discounted cash flow analysis of Travelocity in connection with this transaction? A. Absolutely not."
o) "Q. Why was no discounted cash flow, analysis prepared in connection with this transaction?"
"A. Because this was an industry that was influx. And the management team itself, which should have been the team that was most able to put together a set of projections, would have told you it was virtually impossible to predict the performance of this company into any sort of reasonable future term. And they in fact had very little confidence with even, their 2002 forecast numbers because of that."
p) "Q. Is a discounted cash flow methodology a methodology that is commonly used by Salomon Smith Barney in valuing companies?
A. Valuing mature companies, yes."
q) "The court reluctantly concludes that it cannot properly rely on either party’s DCF valuation. The goal of the DCF method of valuation is to value future cash
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 32 of 41 Page ID #:1914
flows. Here, the record clearly shows that, in the absence of reasonably reliable contemporaneous projections, the degree of speculation and uncertainty characterizing the future prospects of Travelo city and the industry in which it operates make a DCF analysis of marginal utility as a valuation technique in this case. If no other method of analysis were available, the court would, reluctantly, undertake a DCF analysis and subject the outcome to an appropriately high level of skepticism. The court, however, now turns to the other method of valuation offered by the parties."
iv) The application of the Daubert standard rests on the level of generality of
the expert’s study. The more removed the expert’s data is from the facts of the
particular case the more unreliable and speculative his testimony becomes. For
example, in both Marcel v. See, Inc., and Henry v. Hess Oil Virgin Islands
Corp., the court excluded the expert’s testimony because the projections of
future earnings were based on general industry studies that failed to take into
consideration the specific circumstances of the plaintiff. In Rowe v. State Farm Mut.
Auto. Ins. Co., by contrast, the court allowed the projections because they were
based on the past billing history of the plaintiff, who as a result of his injuries could
not longer practice Law.
v) Rule 702’s analysis is ordinarily prospective. Expert testimony is helpful
if it "will assist the trier of fact." Fed.R.Evid. 702 (emphasis added). Thus a
District court may not exclude expert testimony simply because the court can,
at the time of summary judgment, determine that the testimony does not result
in a triable issue of fact. Rather the court must determine whether there is "a
link between the expert’s testimony and the matter to be proved." United
States v. Bighead, 128 F.3d 1329, 1335 (9th Cir. 1997)
10
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VII TRANSACTION BACKGROUND AND ASSUMPTIONS
iJ Based on the evidence reviewed, the Intermix Board avoided
using the experienced valuation M&A technology banker, JP Morgan’s Zakkour.
News Corp received the benefit of keeping this banker from representing Issuer.
Namely that News Corp did not have to overcome or pay the up to $1.3+ Billion that
Zakkour estimated MySpace was worth prior to the July 18, 2005 merger
Agreement being signed.
a) Zakkour leads Citibank’s valuation/fairness report and is engaged by Ask
Jeeves Board of Directors along with Allen & Co. in February 2005 and values
AskJeeves worth at least $1.85 million at the time it signs a merger agreement with
IAC Corp. in March 2005.
b) AskJeeves lead director David Carlick engaged Zakkour and Allen & co. to
work for and represent Ask Jeeves in February 2005, while he was at the same time
Director and Chairman of Intermix. In addition Andrew Sheehan, his partner in his
venture capital fund VantagePoint, a control shareholder in Intermix was a director
of both Intermix and MySpace, Inc. Geoff Yang a long time director of AskJeeves was
also a director of MySpace, Inc.
c) The AskJeeves/IAC a stock for stock merger does not close until July 19,
2005.
d) In April 2005, Zakkour joins JPMorgan. JPMorgan served as the investment
bank for IAC in the March 2005 announced merger with Ask Jeeves.
e) One Board member of IAC Corp during this period is also the Chairman of
11
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Investment bank Allen & Co. IAC also discloses it retains and works with Allen & Co.
as their banker in ongoing basis.
f] News Corp Director Stan Schuman in 2005 was and is one of most senior
bankers at Allen & Co. of senior bankers at Allen & Co.
gJ As of July 13, 2005 or earlier, Zakkour and JPMorgan have been retained to
value Intermix, Inc. and on July 16, 2005, Zakkour’s team leading the efforts for JP
Morgan and News Corp, provides a valuation for MySpace, Inc. of $1,040 - $1,367.
Zakkour according to Kennedy, uses "2006 EBITDA Multiples"
h) Defendants further determined they would not allow Deutsche Bank to
write a fairness opinion or be one of the two bankers it ultimately retained.
i) On or around July 13, 2005, Issuer retained both Thomas Weisel and
Montgomery. Both banks had not completed the valuation work or provided a full
valuation report prior to being retained. Unlike Montgomery and Thomas Weisel,
Deutsche Bank had already created and provided to at least Rosenblatt and
Sheehan, a Valuation report as of May 2005.
VIII DAMAGES ANALYSIS
1) Financial Projections for MySpace. Inc. using actual 2005 results known:
a) The most accurate way to ascertain the valuation for MySpace, Inc. is to
build a new set of financial projections more reliable then the management forecast
and then combine this data with the most unconflicted comparable valuation report
that existed at the time.
12
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b) We take the last actual quarter to quarter financial results for MySpace,
Inc. and use these as the base information which we know is accurate and build a
multi year forecast, initially we continue the actual growth rate and over time
reduce such growth rate to be conservative.
c) Last Actual results for MySpace, Inc.: $3.74 million in revenue for the
March 2005 ending quarter which grew to $6.15 million in revenue for June 2005
quarter - 64% growth quarter to quarter.
d) Last actual results for MySpace, Inc: $463,000 in EBITDA for the March
2005 quarter which grew to $1.58 million in EBITDA for the June 2005 quarter.
e) Using these growth rates, we then use Kennedy’s 55% EBITDA margin and
being conservative we reduce this to 45% for 2006. In 2007, we reduce growth rate
from 64% to 32%. In 2008, we reduce the quarterly growth rate to 22%.
Below we summarize the annual forecast.
fJ (CY2 006) Our MySpace, Inc. forecast using most recent actual results
shows $264.21 million in annual revenue for 2006 and EBITDA of $118.89 million
g) (CY2007) Our MySpace Inc. forecast shows $999 million in revenue
and EBITDA of $449.55 million.
h) (CY2008) Our MySpace, Inc. forecast shows $2.43 billion & EBITDA
of $1.09 billion.
2) ITS APPROPRIATE TO CONSIDER AND USE A COMPARABLE COMPANY VALUATION ON A STAND-ALONE BASIS
a) We then determine that the May 2005 Deutsche Bank valuation report
13
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which uses comparable company EBITDA valuations is reasonable and the prudent
work of unconflicted investment bankers trying to demonstrate their good faith and
knowledge of the Internet sector to Intermix in their efforts to be retained by
Intermix to contact potential buyers.
b) Our decision is further confirmed thru review of the recent Delaware case
in Doft & Co. V. Travelocity where the court states as part of its decision to reject
management’s forecast and a valuation using DCF in favor of singularly using
comparable company valuation method.
c) "A comparable company analysis is often used in connection with a DCF analysis. The court, however, may usea corn parable company valuation on a stand-alone basis in an appraisal action when it is the only reliable method of valuation offered by the parties. In Borruso v. Communications Telesystems Intl, the court relied on a comparable company analysis because neither expert was comfortable using a DCF analysis to value the company’s shares due to the limited financial data of the company available as of the merger date. 753 A.2d 451, 455 n.5 (Del. Ch. 1999)."
d) We use the Deutsche report 2008 multiple for MySpace, Inc. of 22.5X
which is the top end of the "Estimated multiple range" as we believe this is
appropriate since based on the Kennedy report, Google stood out as the most
similar growth and profitability rates to MySpace, Inc.
e) Next we plug in the MySpace’s new forecast EBITDA for 2008 which is
multiplied by the 22.5X comparable company EBITDA, resulting in a Valuation of
$24.52 Billion for 100% of MySpace, Inc.
fJ We agree with Kennedy’s takeover premium analysis and the need to
adjust valuation based on this analysis. In addition, we again take heed of the recent
14
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Delaware court decision in Doft & Co. V. Travelocity where the court affirms this
analysis and recommends adding a premium to the buyout value as final step,
stating, "Delaware law recognizes that there is an inherent minority
trading discount in a comparable company analysis because "the [valuation] method depends on comparisons to market multiples derived from trading information for minority blocks of the comparable companies. The equity valuation produced in a comparable company analysis does not accurately reflect the intrinsic worth of a corporation on a going concern basis. Therefore, the court, in appraising the fair value of the equity, "must correct this minority trading discount by adding back a premium designed to correct it."
gJ Therefore, we use Kennedy’s 35% takeover premium and summarize:
control Controlling value Option Value premium Indication Exercise MySpace
2008 EBITDA MULTIPLE 35% $33.10213 ($69M) $33.033 Billion
Indication $32.453B
Based on the alternative guideline public company analysis provided above. MySpace was undervalued by $31453 billion ($33.033B - $580M).
IX- CONCLUSION:
I declare on penalty of perjury under the laws of the United States of America that
the foregoing is true and correct. Executed this April 28, 2014 in Los
Angeles
15 Brad D. Greenspan (SEAL)
15
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 38 of 41 Page ID #:1920
EXHIBIT 1 - BACKGROUND / WORK EXPERIENCE
QUALIFICATIONS OF EXPERT
-I have approximately 12 years of industry experience.
-I was CEO and founder of ellniverse, Inc. from its inception in 1998 as my idea thru October 30, 2003.
-I was the founder of MySpace.com while Chairman and CEO of eUniverse in 2003.
PROFESSIONAL QUALIFICATIONS
-Educational & Professional Certification
i) Two years of Law Society Undergraduate at University of Santa Barbara ii) Bachelors of Political Science, 1996 University of Los Angeles
PROFESSIONAL RECOGNITIONS AND AFFILIATIONS
i) Morgan Stanley’s Internet analyst announced in November 2003 that Issuer eUniverse as of October 2003’s 6 month ending data, was the #1 fastest growing portal on the Internet eclipsing AOL and Yahoo.
ii) Founder of Myspace.com .
iii) Founder of eUniverse
PRESENTATIONS AND PUBLICATIONS
i) Between 1999-October 2003 I co-created and presented Issuer’s financial forecasts and was sole decision maker on all internet strategy and determined allocation of funds if any for any new project.
PROFESSIONAL EXPERIENCE
1996-19980 President of Palisades Capital a merchant investment bank where I raised over $60 million dollars for 4 public companies.
1999- October 30, 2003 - Chairman and CEO of eUniverse, Inc.
16
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 39 of 41 Page ID #:1921
-I was initial and first head of Search for ellniverse, Inc., the issuer and signed first search partnership with Overture acquired and operated as Yahoo in 2003.
2004-2005- Palisades Technology - I was partners with Yahoo and operated a search toolbar division for game companies including leading casual games company Big Fish Games and Browser companies like AvantFind.com
2006-president, President LiveUniverse, Inc. - a network of entertainment websites
2008-present, President of LiveVideo, Inc. - a Los Angeles based network of entertainment websites
2006-present, Chairman of BroadWebAsia, Inc., - operates HupoTV.CN a Chinese video entertainment website
2006-2009, Co-Founder and Board Member, Michigan based Draths Corporation, clean technology leader in renewable green chemistry. Management led by Michigan State University professors and green chemistry award winners Dr. Karen Draths and Dr. John Frost.
2006-present, Board Member, Borba Corporation
2010-present- Managing Director of Social Slingshot Pte Ltd, a Singapore based incubator fund partnered with the Singapore Government’s National Research Foundation (NRF). I was awarded this $5 million dollar fund to encourage me to work with Singapore entrepreneurs and their universities entrepreneur programs.
TESTIMONY IN TRIAL OR DEPOSITION
i) Greenspan V. eUniverse, 2004, Delaware Judge Strine. (See summary of trial where I provided Delaware counsel evidence to uncover backdating fraud against defendants)
ii) Delagado V. Intermix. I was expert witness for LA City and provided fact information and background for the city of Los Angeles prosecutors in their adware consumer case against Intermix that was settled after Intermix’s listing expired.
17
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 40 of 41 Page ID #:1922
EXHIBIT 2- Monthly unique visitors as reported by Comscore for Myspace.com Compared to certain key months where Microsoft and Google offered MySpace or its parent company certain economic offers which provide a value per month these companies are willing to pay or value MySpace search at for the latest traffic/audience statistics that are available during the month a deal is offered up for MySpace.
July 2005 August 2005 September 2005 October 2005 November 2005 December 2005
January 2006
February 2006 March 2006 April 2006 May2006 June 2006 July 2006
August 2006
September 2006
21.21M uniques 21.81M uniques 21.6M uniques 24.25M uniques 24.68M uniques 32.2M uniques
35.5M uniques
37.34M uniques 41.88M uniques 48.03M uniques 51.44M uniques 52.34M uniques 54.52M uniques
55.78M
$14.807
$22.1 Million Value MSFT$800M OFFER
$25.0 Million Value GOOGLE $900 OFFER
jul
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 41 of 41 Page ID #:1923
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 1
JS-6
Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge Deputy Clerk: Court Reporter: Rita Sanchez Not Reported Attorneys Present for Plaintiff: Attorneys Present for Defendant: None Present None Present Proceedings (In Chambers): ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS FOR FORUM NON CONVENIENS [41], DENYING MOTION TO INTERVENE AS MOOT [61], AND DENYING EX PARTE APPLICATION TO CONTINUE MOTION TO INTERVENE AS MOOT [65]
This matter is before the Court on the Motion to Dismiss Under FRCP Rules
12(b)(2), 12(b)(6), and for Forum Non Conveniens (the “Motion”), filed by Defendants News Corporation (“News Corp.”), NI Group Limited f/k/a News International Limited (“NI”), and News Group Newspapers Limited (“NGN”). (Docket No. 41). The Court read and considered the papers filed on this Motion, and held a hearing on February 24, 2014. Following additional briefing, the Court GRANTS the Motion.
The underlying facts here do not seem to be in dispute, at least by these parties. It appears, and certainly is alleged, that Plaintiff Eunice Huthart has suffered a grotesque invasion of her privacy. This harm arose for no reasons other than Huthart’s successfully pursuing a demanding career associated with Los Angeles and having a friend who likewise is at the summit of success in an industry associated with Los Angeles. Nonetheless, for the reasons explained in this Order, the Court concludes that Huthart must obtain her relief from the courts of England and Wales.
Background
Case 2:13-cv-04253-MWF-AJW Document 66 Filed 05/21/14 Page 1 of 22 Page ID #:2069
DEADLINE.co
m
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
______________________________________________________________________________ CIVIL MINUTES—GENERAL 2
JS-6
On June 13, 2013, Huthart initiated this action by filing a Complaint in this Court. (Docket No. 1). The Complaint alleges that Huthart is a citizen of the United Kingdom and resides in Liverpool, England. (Compl. ¶ 4). But between early January 2004 to mid-June 2004, and from mid-March 2005 to mid-May 2005, Huthart lived and worked in Los Angeles, California as a professional stunt double for actress Angelina Jolie. (Compl. ¶ 4). The Complaint alleges that during this time period, various British media companies, primarily agents working for two British newspapers, The Sun and News of the World, unlawfully intercepted her voice-mail messages on cellular telephone systems to obtain information about Jolie. (Compl. ¶¶ 11, 12, 16-21, 45-68). The Complaint alleges that these actions were part of a large-scale hacking scheme (Compl. ¶¶ 11-44), which have received much media attention and will be referred to in this Order as the “Hacking Scheme.”
The Complaint alleges six claims: (1) violation of the Stored Communications Act, 18 U.S.C. §§ 2701, 2707; (2) violation of the Wiretap Act, 18 U.S.C. §§ 2510, 2511, 2520; (3) violation of the California Constitution, art. I, § 1; (4) violation of California Penal Code §§ 630, 631, 632, 632.7, 637(2)(a); (5) violation of California Civil Code §§ 1708.8(b), 1708.8(d), 1708.8(e); and (6) a common law claim for intrusion into private affairs.
On September 20, 2013, Defendants filed this Motion. On December 10, 2013, Huthart filed an Opposition to Defendants’ Motion to Dismiss (the “Opposition”). (Docket No. 49). On January 22, 2014, Defendants filed a Reply in Support of Defendants’ Motion to Dismiss (the “Reply”). (Docket No. 54). The briefs complied with the deadlines and page limits set by this Court. (See Docket Nos. 40, 47).
After the hearing on February 24, 2014, the Court ordered supplemental briefing on two issues: (1) whether England’s managed litigation system set up to deal with claims arising from the Hacking Scheme, the Mobile Telephone Voicemail Interception Litigation (“MTVIL”), would accept Huthart’s claim; and (2) whether Huthart would otherwise be able to bring a lawsuit in the regular civil litigation system in England. (Docket No. 56).
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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On March 17, 2014, Defendants filed a Supplemental Briefing Pursuant to the Court’s February 25, 2014 Order (“Defendants’ Brief”). (Docket No. 57). That same day, Huthart also filed a Supplemental Memorandum of Position and Authorities in Opposition to Defendants’ Motion to Dismiss (“Huthart’s Brief”). (Docket No. 58). Both briefs were timely filed.
Evidentiary Objections
Both sides have submitted numerous evidentiary objections. (See Docket Nos. 50-1, 50-2, 50-3, 50-4, 50-5, 50-6, 54-9, 54-10, 54-11, 54-12). Most of these objections are not aimed at the evidence relevant to the forum non conveniens analysis, on which this Order turns. To the extent that the objections are relevant to the forum non conveniens analysis, they challenge very specific details for lack of foundation. However, the Hacking Scheme and the investigations and legal proceedings related to it are set forth in sufficient detail in the Complaint itself. Moreover, these events have been the subject of significant media attention worldwide. Furthermore, it does not appear that the parties dispute Huthart’s access to the regular civil litigation system of England, as opposed to the specialized venues established to address the Hacking Scheme. Accordingly, the Court’s analysis and conclusion would have not differed, regardless of whether the objections were sustained are overruled.
Therefore, both parties’ objections are OVERRULED as moot.
Requests for Judicial Notice
Pursuant to Federal Rule of Evidence 201, the Court may take judicial notice of “a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b).
Defendants filed two requests for judicial notices: (1) Request for Judicial Notice in Support of Motion to Dismiss (“Defendants’ First Request”) (Docket No. 41-
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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8), and (2) Request for Judicial Notice in Support of Defendants’ Reply in Support of Motion to Dismiss (“Defendants’ Second Request”). (Docket No. 54-1). Of the documents for which Defendants seek judicial notice, only two are relevant to the forum non conveniens analysis.
First, Exhibit 1 of the Declaration of Christa Jane Band (the “Band Declaration”) (Docket No. 41-2) is a court order in the consolidated litigation in England relating to the Hacking Scheme. (Band Decl., Ex. 1). Because that litigation is related to this one, the Court order is appropriate for judicial notice. See United States v. Howard, 381 F.3d 873, 876 n.1 (9th Cir. 2004) (citing United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980)) (stating that a court may take judicial notice of court records in another case).
Second, Exhibit 2 of the Band Declaration is the Terms of Reference of the Leveson Inquiry, which investigated the Hacking Scheme. (Band Decl., Ex. 2). Exhibit 2 was taken from the Leveson Inquiry’s website, and is appropriate for judicial notice. See Matthews v. Nat’l Football Council, 688 F.3d 1107, 1113 & n.5 (9th Cir. 2012) (taking judicial notice of relevant statistics available on the NFL’s website); O’Toole v. Northrop Grumman Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) (“It is not uncommon for courts to take judicial notice of factual information found on the world wide web.”).
Therefore, Defendants First Request is GRANTED as to these two Exhibits. The remainder of Defendants’ First Request and Defendants’ Second Request is DENIED as irrelevant.
On December 10, 2013, Huthart filed a Request for Judicial Notice in Opposition to Motion to Dismiss (“Huthart’s Request”). (Docket No. 49-1). Of the documents for which Huthart seeks judicial notice, items 1-7, 13, and 15 are relevant to the forum non conveniens analysis. These documents consist of relevant public documents found online and documents filed in relevant litigation. For the reasons stated above, both of these categories of documents are appropriate for judicial notice.
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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Therefore, Huthart’s Request is GRANTED as to items 1-7, 13, and 14. The remainder of Huthart’s Request is DENIED as irrelevant.
Motion to Dismiss
The Motion seeks dismissal of this action on four grounds: (1) forum non conveniens; (2) lack of personal jurisdiction, under Federal Rule of Civil Procedure 12(b)(2), as to NI and NGN, which are citizens of the United Kingdom; (3) failure to state a claim, under Rule 12(b)(6), as to News Corp., on the ground that the Complaint fails to establish a basis to pierce the corporate veil; and (4) failure to state a claim, under Rule 12(b)(6), on the grounds that two of the statutes governing Huthart’s claims do not apply to extraterritorial conduct, three of her claims lack sufficient factual allegations, and all claims are time-barred. (Mot. at 6-7).
This Court can examine the merits of the forum non conveniens argument before addressing the jurisdictional issues. The Supreme Court has stated:
We hold that a district court has discretion to respond at once to a defendant’s forum non conveniens plea, and need not take up first any other threshold objection. In particular, a court need not resolve whether it has authority to adjudicate the cause (subject-matter jurisdiction) or personal jurisdiction over the defendant if it determines that, in any event, a foreign tribunal is plainly the more suitable arbiter of the merits of the case.
Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 425, 127 S. Ct. 1184, 167 L. Ed. 2d 15 (2007). Because the proposed alternative forum in this action is England, the appropriate analysis is the forum non conveniens doctrine, as opposed to a motion to transfer pursuant to 28 U.S.C. § 1404. See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. __, 134 S. Ct. 568, 580 (2013) (stating that § 1404 is the appropriate mechanism when “the transferee forum is within the federal court system,”
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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but that courts should apply the doctrine of forum non conveniens in cases seeking transfer to a “nonfederal forum”); Sinochem Int’l, 549 U.S. at 430 (same).
Under the forum non conveniens doctrine, the party moving to dismiss bears the burden of showing that (1) there is an adequate alternative forum for this action, and (2) the balance of private and public interest factors favors dismissal. See Sinochem Int’l, 549 U.S. at 429 (summarizing the legal standard for forum non conveniens).
Adequate Alternative Forum
“The first requirement for a forum non conveniens dismissal is that an adequate alternative forum is available to the plaintiff.” Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th Cir. 2001). “The Supreme Court has held that an alternative forum ordinarily exists when the defendant is amenable to service of process in the foreign forum.” Id. Moreover, “[t]he foreign forum must provide the plaintiff with some remedy for [her] wrong in order for the alternative forum to be adequate.” Id.
Here, England provides an adequate alternative forum.
With regard to jurisdiction and service of process, England would have jurisdiction over NI and NGN because they are incorporated, registered, and headquartered in England. (Declaration of Craig Wyndham Orr QC ¶¶ 22-24 (the “Orr Declaration”) (Docket No. 41-4)). England would also have jurisdiction over News Corp., the only non-English Defendant, because it has agreed to waive any challenge to personal jurisdiction in the English courts. (Orr Decl. ¶¶ 25; see also Mot. at 8). Moreover, it appears that England may have jurisdiction over News Corp., even if it did not submit to personal jurisdiction there. (Orr Decl. ¶¶ 26-27).
With regard to the entity consenting to personal jurisdiction, Defendants explain that on June 28, 2013, News Corp. separated into two independent publicly traded companies. (Declaration of Gerson A. Zweifach ¶ 2 (the “Zweifach Declaration”) (Docket No. 41-7)). The entity named in the Complaint, News Corp., changed its name to 21st Century Fox, Inc. (“21st Century”) and continued to be the parent
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company of most of News Corp.’s entertainment-related entities. (Zweifach Decl. ¶ 2). A new company was also created bearing the name News Corporation (“New News Corp.”) and became the parent company of most of News Corp.’s news media-related entities. (Zweifach Decl. ¶ 2). News Corp.’s successor, 21st Century, agrees to waive any challenge to personal jurisdiction. (Zweifach Decl. ¶ 3).
In the supplemental briefing, Huthart argues for the first time that she cannot bring her claims against all Defendants in England because the real party in interest is not 21st Century, but New News Corp., which did not consent to jurisdiction. (Huthart’s Brief at 2-4). Huthart argues that the print media entities involved in the Hacking Scheme are now attributed to New News Corp., that it can be inferred that the bulk of relevant documentary evidence is maintained by New News Corp., and that Securities and Exchange Commission filings confirm that New News Corp. is liable for civil claims arising out of the hacking scheme. (Huthart’s Brief at 3).
In response, Defendants filed an Objection to Plaintiffs’ Supplemental Memorandum and Request to File Supplemental Declaration (“Defendants’ Objection”) on March 21, 2014, after the deadline for supplemental briefing. (Docket No. 59). Defendants object to Huthart’s insinuation that Defendants misled the Court when they asserted that 21st Century would consent to personal jurisdiction. (Defendants’ Objection at 1). Defendants explain that 21st Century was the entity that consented to personal jurisdiction because News Corp., the defendant named in the Complaint, essentially became 21st Century. (Id.). Defendants also request leave to file the Second Declaration of Gerson A. Zweifach (the “Second Zweifach Declaration”) (Docket No. 59-1), attesting that if Huthart also sues New News Corp. in England, New News Corp. would consent to personal jurisdiction. (Second Zweifach Decl. ¶ 3; see also Defendants’ Objection at 2).
Huthart, in turn, objects to the Defendants’ Objection and the Second Zweifach Declaration because they were filed after the deadline for supplemental briefing. (See Plaintiff’s Objection to Defendant’s March 21, 2014 Filing and Request That It Be Stricken from the Record at 2 (Docket No. 60)).
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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While Huthart is correct that these documents were filed late, the Court refrains from striking them and permits the filing of the Second Zweifach Declaration. Defendants’ Objection responded to a new argument in Huthart’s Brief, which was arguably outside the scope of the supplemental briefing. Moreover, the Court would have likely asked for a response from Defendants to clarify which is the correct entity to consent to personal jurisdiction. The Court also notes that this issue could have been raised in the Opposition because the first Zweifach Declaration was filed with the Motion. However, the Court does not treat the issue as waived. Rather, it is resolved for the reasons stated.
In any event, there appears to be no dispute at this point that both 21st Century and New News Corp. would be willing to submit to personal jurisdiction in England. Therefore, Huthart would be able to sue all Defendants in England. Contrary to Huthart’s contention (see Opp. at 6), the adequate alternative forum requirement “will be satisfied when the defendant is ‘amenable to process’ in the other jurisdiction.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255, n. 22, 102 S. Ct. 252, 70 L. Ed. 2d 419 (1981) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507, 67 S. Ct. 839, 91 L. Ed. 1055 (1947), superseded by statute on other grounds).
It further appears that England can provide some remedy to Huthart. Defendants described two avenues in England specifically created to handle claims related to the Hacking Scheme: (1) a voluntary compensation scheme, and (2) the MTVIL system in the English High Court. (Mot. at 4).
Huthart has submitted the Declaration of Mark Lewis (the “Lewis Declaration”) (Docket No. 49-3), which establishes that the first avenue is now closed. (Lewis Decl. ¶ 7). Therefore, the Court does not consider the voluntary compensation scheme as an available venue.
Huthart also argues that the second avenue, the MTVIL, is unavailable to her. (Huthart’s Brief at 5). The MTVIL is a “managed litigation” system that was instituted in the English courts to deal with claims arising from the Hacking Scheme. (Declaration of Hugh Tomlinson ¶ 7 (the “Tomlinson Declaration”) (Docket No. 58-3);
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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see also Band Decl. ¶¶ 4-8; Third Declaration of Craig Wyndham Orr QC ¶¶ 4-5 (the “Third Orr Declaration”) (Docket No. 57-2)). The MTVIL provides consolidated case management, expedited discovery from the London Metropolitan Police Service and NGN, mechanisms to obtain discovery from third parties, early assessment of claims, and procedures for managing litigation costs. (Band Decl. ¶ 7). All cases filed in the English civil courts that fall within the scope of the MTVIL are automatically referred to the MTVIL. (Id.). Based on the criteria for MTVIL claims (Third Orr Decl. ¶ 5), Huthart’s claims likely fall within the scope of the MTVIL.
The litigation of claims in the MTVIL has proceeded in “tranches.” The current tranche of claims, Tranche 2, closed on January 31, 2014. (Tomlinson Decl. ¶¶ 10-11). Huthart also asserts that the managing judge for the MTVIL is disinclined to further extend the cut-off date for Tranche 2, and no new claims can join Tranche 2. (Huthart’s Brief at 5 (citing Tomlinson Decl. ¶¶ 11-12)). Moreover, the MTVIL has not yet created a Tranche 3. (Tomlinson Decl. ¶ 16). If Huthart were to file claims in the English courts that fell within the scope of the MTVIL, her claims would be stayed pending the resolution of the Tranche 2 claims. (Tomlinson Decl. ¶¶ 13-15; see also Third Orr Decl. ¶¶ 8-9). Defendants assert that Huthart would nonetheless be able to apply to the court to lift the stay and to have her claim included with the Tranche 2 claims set for trial on October 1, 2014. (Third Orr Decl. ¶ 9).
The above facts do not demonstrate that the MTVIL is unavailable to Huthart. They simply indicate that if Huthart’s claims were referred to the MTVIL, their resolution may be delayed because they were filed after Tranche 2 closed. Huthart has cited no legal authority establishing that such a stay or delay of resolution renders a forum inadequate.
Even if the MTVIL is no longer open to Huthart, Defendants have established that “the regular civil litigation processes of the courts of England and Wales” remain open to Huthart. (Reply at 4). Defendants’ expert attests that “[i]f a claim does not qualify for inclusion in the MTVIL, it will be able to be brought in any division of the High Court in the normal way.” (Third Orr Decl. ¶ 7). In fact, Huthart acknowledges that “it is technically correct that if no MTVIL Tranche 3 is established, then [she] can
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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file suit in the English Civil Court Proceedings.” (Huthart’s Brief at 6). However, Huthart objects that proceeding in the regular civil court would be “the litigation equivalent of purgatory” because her claims would be stayed pending the resolution of MTVIL claims. (Huthart’s Brief at 7 & n.4). As noted above, the fact or possibility that Huthart’s claims might be stayed does not render England an unavailable or otherwise inadequate forum. In our court system, for example, claims are routinely stayed to facilitate efficient administration, to avoid duplicative actions, and for other docket management reasons. Such stays do not mean that our courts are closed to those claims.
Therefore, Defendants have established that both the English court system and the MTVIL are available to Huthart to bring her claims. Moreover, England would provide some remedy for Huthart’s claims, as discussed below.
English law recognizes claims for breach of confidence and misuse of private information. (Orr Decl. ¶¶ 11-16). Under English law, remedies for these claims include compensatory damages, account of profits, and injunctive relief. (Orr Decl. ¶ 17). Moreover, England has enacted a number of statutes, which prohibit the interception of communications over telecommunication systems, the unauthorized disclosure of personal data, and the unauthorized accessing of data held on a computer. (Orr Decl. ¶ 18). Therefore, English law provides some remedy for Huthart’s injuries.
Huthart argues that the MTVIL is an inadequate forum because it is structured to address claims against NGN and Glenn Mulcaire (who is the main NGN investigator implicated in the Hacking Scheme), whereas she has also alleged claims against NI and News Corp. (Huthart’s Brief at 8). However, Defendants have established that claims against NI and News Corp. would not be barred from the MTVIL, so long as Huthart’s claims meet the basic criteria. (Third Orr Decl. ¶ 6; see also Third Declaration of Christa Jane Band ¶ 6 (Docket No. 57-3) (noting that other claimants in the MTVIL have named defendants in addition to NGN and Mulcaire)).
Huthart also argues that the MTVIL is inadequate because its system of “paired” settlement offers is designed to favor early settlement and creates a disincentive for
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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claimants to go to trial. (Opp. at 5; Lewis Decl. ¶¶ 16-24). However, the fact that the MTVIL incentivizes early settlement demonstrates that some remedy is available to Huthart, and nothing indicates that this remedy would be so inadequate as to constitute no remedy at all. Moreover, Huthart could simply choose to proceed in the general civil court system, which does not appear to operate under the paired settlement system.
Huthart also argues that English law offers no remedy for a significant portion of her claims. (Huthart’s Brief at 7-8). In particular, she argues that England provides no cause of action to hold NI and News Corp. directly liable because they knew or should have known about NGN’s hacking activity, failed to stop NGN’s hacking, and participated in the cover-up of the hacking. (Huthart’s Brief at 8; Tomlinson Decl. ¶ 20). Again, this argument could have been raised in the Opposition, but was not.
On the merits, this argument appears to be more artful, than substantive. Huthart has not explained what she means, or what claim for relief under American law would hold NI and News Corp. directly liable for such actions. The Complaint does not allege a separate claim for relief specifically asserting that NI and News Corp. are liable for activities that they knew or should have known about, failed to stop, or participated in covering up. Rather, it seems the gravamen of the Complaint is that all Defendants participated in the Hacking Scheme. Each claim is alleged against all Defendants, and many of the claims turn on intentional or willful conduct. (See, e.g., Compl. ¶¶ 75, 76, 78, 81, 83, 100-104, 120). Therefore, based on the allegations in the Complaint, it appears that there would be liability against all Defendants for their actions. Huthart’s expert, Hugh Tomlinson, is certainly well credentialed. (See Tomlinson Decl. ¶¶ 3-4). But he has not opined, nor would the Court find it credible if he did, that if all the allegations in the Complaint were true, NI and News Corp. would escape liability under English law. In light of the Complaint’s allegations that all Defendants committed the alleged acts, it is immaterial that there is no cause of action in England to hold NI and News Corp. liable for activities they knew or should have known about, failed to stop, or participated in covering up.
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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Huthart also argues that England is an inadequate forum for her claims under the Stored Communications Act and the Wiretap Act. (Opp. at 4). In the supplemental briefing, Huthart further explains that the Stored Communications Act permits a claim for unauthorized accessing, obtaining, interfering with, or preventing access to a stored wired communication, without requiring that the person committing such acts actually obtain or listen to the content of the wire communication. (Huthart’s Brief at 9). In contrast, “[n]o cause of action independent of actually listening to the communication or otherwise obtaining the content of the communication exists in England and Wales.” (Tomlinson Decl. ¶ 22). Therefore, Huthart argues that she cannot litigate the subject matter of her claim in England. (Huthart’s Brief at 9).
The Court is likewise not persuaded that Huthart would be unable to litigate the subject matter of her claims in England. The Complaint alleges that Mulcaire and other unidentified investigators working for Defendants reset the pin number and password on the voicemails of their targets, and then “used and exploited the unlawfully-obtained information to note, record and/or transcribe voice-mail messages.” (Compl. ¶ 19). Mulcaire and other unidentified investigators then provided the direct mobile numbers, passwords, and pin numbers to NGN journalists “to enable them to hack and/or listen to, or to read transcripts of voice-mail messages of targets.” (Compl. ¶ 20). Mulcaire and others used the information in these voice-mail messages “in the preparation of articles or stories to be published by the Sun and News of the World.” (Compl. ¶¶ 19, 20). The Complaint then alleges that Mulcaire and other investigators and journalists engaged in the above activities with regard to Huthart’s cellphone, intercepting her voice-mail messages in order to obtain “the private and confidential information” on them. (Compl. ¶ 54).
In other words, the subject matter of Huthart’s claim is not limited to the allegation that Defendants and their agents simply accessed or interfered with her voicemails. Rather, those allegations are part and parcel of a scheme, in which Defendants and their agents are alleged to have intercepted and obtained the information in Huthart’s voicemails to use such information in tabloid stories. Tellingly, the Ninth Circuit has described the offense of accessing a communication under the Stored Communications Act as a “lesser included offense” of the offense of
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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intercepting a communication under the Wiretap Act. United States v. Smith, 155 F.3d 1051, 1058 (9th Cir. 1998). Defendants have established that English law provides a cause of action for the unauthorized interception of communications under the Regulation of Investigatory Powers Act of 2000. (Orr Decl. ¶ 18).
Huthart analogizes this case to Phoenix Canada Oil Co. Limited v. Texaco, Inc., 78 F.R.D. 445, 456 (D. Del. 1978), in which the court found Ecuador to be an inadequate forum, in part, because no remedy existed under Ecuadorian law for two of three legal theories advanced by the complaint. (See Huthart’s Brief at 7-8). However, the Court does not find Phoenix analogous. Here, it appears that England does not recognize only one of six claims for relief in the Complaint. Even so, that one claim is intertwined with and could be considered a lesser included offense of another claim, interception of communications, which is recognized under English law.
Therefore, the fact that Huthart may not have an additional claim against Defendants for accessing her voicemails does not render England inadequate. See Gemini Capital Group, Inc. v. Yap Fishing Corp., 150 F.3d 1088, 1092 (9th Cir. 1998) (“[T]he fact that Plaintiffs could not assert a RICO cause of action under Yap or FSM [Federated States of Micronesia] law ‘does not preclude a forum non conveniens dismissal.’”). It is generally irrelevant that the courts in the other jurisdiction may apply substantive law that is less favorable to Huthart. Piper Aircraft, 454 U.S. at 249 (stating that “dismissal may not be barred solely because of the possibility of an unfavorable change in law”). “The district court [i]s not required to ask whether Plaintif[f] could bring this lawsuit in [the alternate forum], but rather, whether [the alternate forum] offers a remedy for their losses.” Lueck, 236 F.3d at 1143 (finding that New Zealand was an adequate alternative foreign, where New Zealand law did not permit Plaintiffs’ to maintain the exact suit as in the United States, but New Zealand nonetheless provided a remedy for Plaintiffs’ loses). There is simply no evidence that the remedy available in England would be “so clearly inadequate or unsatisfactory, that it is no remedy at all.” Lueck, 236 F.3d at 1143 (quoting Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764, 768 (9th Cir. 1991)).
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CIVIL MINUTES—GENERAL Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014 Title: Eunice Huthart -v- News Corporation, et al.
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Accordingly, Defendants have established that England is an adequate alternative forum for Huthart’s claims.
Private Interest Factors
“Given the existence of an adequate alternative forum, a district court must consider the balance of private and public interest factors to determine whether to dismiss on grounds of forum non conveniens.” Lockman Found., 930 F.2d at 769.
“[U]nless the balance [of private and public interest factors] is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.” Gulf Oil, 330 U.S. at 508. However, “a foreign plaintiff’s choice of forum merits less deference than that of a plaintiff who resides in the selected forum, and the showing required for dismissal is reduced.” Lueck, 236 F.3d at 1145; see also Piper Aircraft, 454 U.S. at 255 (stating that the “presumption in favor of the plaintiff’s choice of forum . . . applies with less force when the plaintiff or real parties in interest are foreign”); Gemini Capital, 150 F.3d at 1091-92 (holding that the plaintiff’s decision to sue in Hawaii was properly accorded less deference than if Hawaii had been his true home forum). Moreover, a “truly ‘foreign’ plaintiff (i.e., someone who is not a United States citizen or resident)” is accorded less deference than “an American citizen suing in a state other than his state of residence.” Boston Telecommc’ns Group, Inc. v. Wood, 588 F.3d 1201, 1207 (9th Cir. 2009). But “even as to such quintessentially foreign plaintiffs, it is clear that ‘less deference is not the same thing as no deference.’” Id.
Huthart is a citizen and resident of the United Kingdom. (Compl. ¶ 4; Declaration of Eunice Huthart ¶ 2 (the “Huthart Declaration”) (Docket No. 49-2)). She, however, “has worked in Los Angeles, California on numerous occasions” and is the sole owner of a California corporation. (Huthart Decl. ¶¶ 3, 4). Accordingly, the Court accords some deference to Huthart’s choice of forum, but it is less deference than would be accorded if Huthart were a United States citizen or a California resident.
Courts consider the following private interest factors: (1) “the residence of the parties and the witnesses”; (2) “the forum’s convenience to the litigants”; (3) “access to
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physical evidence and other sources of proof”; (4) “whether unwilling witnesses can be compelled to testify”; (5) “the cost of bringing witnesses to trial”; (6) “the enforceability of the judgment”; and (7) “‘all other practical problems that make trial of a case easy, expeditious and inexpensive.’” Lueck, 236 F.3d at 1145 (quoting Gulf Oil, 330 U.S. at 508).
First, with regard to the residence of the parties and witnesses, this factor weighs
in favor of England. Huthart herself, her husband, her daughter, and current and former NGN employees involved in the alleged hacking are located in England. (Compl. ¶¶ 45, 50-51; Band Decl. ¶ 18; Mot. at 12). Huthart argues that other potential witnesses, such as Jolie and employees of her California company, are located in California. (Opp. at 8; Huthart Decl. ¶ 14).
“[A] court’s focus should not rest on the number of witnesses or quantity of evidence in each locale. Rather, a court should evaluate ‘the materiality and importance of the anticipated [evidence and] witnesses’ testimony and then determine[] their accessibility and convenience to the forum.” Lueck, 236 F.3d at 1146.
It appears that the most important witnesses are NGN’s current and former employees who were allegedly involved in and/or knew about the hacking because they would be crucial to establishing Defendants’ liability. Similarly, the most important evidence is that collected by the London Metropolitan Police Service since it connects Defendants’ agents to the Hacking Scheme. For example, the Complaint alleges that Huthart’s “name, cellular telephone number, her account number, and/or her PIN number appear on four separate pages” of notes recovered by the London Metropolitan Police Service from the home of an investigator who was working for NGN. (Compl. ¶¶ 16, 17, 52).
While Huthart argues that Jolie and employees of her California company are relevant to establishing how the intercepted voice messages harmed her business relationships (Opp. at 8), it would appear that Huthart could also testify about the harm
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to her business relationships. Therefore, these witnesses appear to be less important than the NGN employees.
Even according some deference to Huthart’s choice of forum, it appears that the first factor weighs in favor of England.
Second, with regard to the forum’s convenience to the litigants, this factor is neutral. While it appears that the two United Kingdom Defendants would be inconvenienced to some degree if forced to litigate here, as opposed to England, Defendants have not addressed this factor head-on. (See Mot. at 12 (stating only that “the UK is clearly the most convenient forum for this litigation”)). Moreover, given Huthart’s residence in England, the Court cannot assume that litigation in this forum would be convenient for her. “When the [plaintiff’s] home forum has been chosen, it is reasonable to assume that this choice is convenient. When the plaintiff is foreign, however, this assumption is much less reasonable.” Piper Aircraft, 454 U.S. at 255-56.
Given the lack of information regarding the forum’s convenience to either party, the second factor provides little help in the analysis.
Third, with regard to access to sources of proof, this factor weighs in favor of England. It appears that most of the relevant documents and physical evidence are located in England, including files recovered by the London Metropolitan Police Service, contracts between private investigators and NGN, and documents relating to British news stories that allegedly published information taken from Huthart’s cellphone. (Compl. ¶¶ 16, 17, 31, 60-65; Band Decl. ¶¶ 15-17).
It is true that the Ninth Circuit has deemphasized the inconvenience of transporting witnesses and documents overseas, due to advances in technology. See Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1336 (9th Cir. 1984) (“[A] district court should keep in mind that ‘the increased speed and ease of travel and communication . . . makes, especially when a key issue is the location of witnesses, no forum “as inconvenient [today] as it was in 1947,”’ when the Supreme Court decided Gilbert.”). However, Defendants have established that they cannot simply scan and upload to a
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database the documents relevant to this action. (Reply at 10). Instead, a number of the documents relevant to this litigation are being held by the London Metropolitan Police Service, and obtaining those documents would require applications to English courts. (Id.). Accordingly, it would appear more burdensome and difficult to obtain these documents for litigation in this forum, when some of those documents are already being used in litigation in England. Moreover, Huthart has not shown that any documents or other key pieces of evidence are located in California. (See Opp. at 9 n.6 (stating only vaguely that “[e]vidence may also exist in the U.S.”)).
Accordingly, this factor weighs in favor of England.
Fourth, with regard to the ability to compel unwilling witnesses, this factor weighs in favor of England. As indicated above, most of the witnesses relevant to this action are located in United Kingdom and appear to be citizens of the United Kingdom. Accordingly, they are outside of this Court’s subpoena power. See Fed. R. Civ. P. 45(b)(2) & (3) (providing for service of a subpoena in the United States, or service of a subpoena on a United States national or resident who is in a foreign country).
Additionally, a party “can carry its burden” in showing that unwilling witnesses exist “by providing circumstantial evidence . . . that an ongoing ‘criminal investigation provid[es] a major disincentive to voluntary testimony.’” Duha v. Agrium, Inc., 448 F.3d 867, 877 (6th Cir. 2006) (quoting First Union Nat’l Bank v. Banque Paribas, 135 F. Supp. 2d 443, 450 (S.D.N.Y. 2001)). Here, it appears that potential witnesses in this action are being criminally prosecuted in England for their involvement in the Hacking Scheme, as alleged in the Complaint and as established by Defendants. (Compl. ¶¶ 16, 27, 29, 37; Second Declaration of Jonathan B. Pitt, Exs. 9 & 10 (Docket No. 54-6)). Conversely, the parties have not identified any unwilling witnesses who are not subject to the compulsory process in England.
Accordingly, this factor weighs in favor of England.
Fifth, with regard to the cost of bringing witnesses to trial, this factor weighs in favor of England. As indicated above, the majority of the witnesses and virtually all of
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the most important witnesses in this action are located in the United Kingdom. While it seems likely that some of those witnesses, including Huthart, her family, and Jolie, can access this forum with relative ease, this forum appears to be less accessible to NGN’s former and current employees, especially those facing criminal charges.
Accordingly, this factor weighs in favor of England.
Sixth, with regard to the enforceability of judgment, this factor appears neutral. Neither side has raised arguments that a judgment in this forum would be more or less enforceable than one in England.
Seventh, with regard to other practical problems that make trial easy, expeditious, and inexpensive, this factor weighs in favor of England. Each case is unique, and thus, the details of Huthart’s specific claims likely differ to some degree from other claims related to the Hacking Scheme. Nonetheless, because the courts in England are experienced in handling other claims related to the Hacking Scheme, and the English courts have the authority to subpoena documents from the London Metropolitan Police Service and to compel unwilling witnesses located there to testify, it appears likely that litigation in England would be more efficient. See Lueck, 236 F.3d at 1147 (“Given the existence of the related proceedings [in New Zealand], it is all the more clear that the private interest factors weigh in favor of dismissal.”); Creative Tech., Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696, 703 (9th Cir. 1995) (affirming the district court’s finding that “all other factors that render trial of the case expeditious and inexpensive” weighed in favor of dismissal because a “parallel action in the High Court of Singapore was further advanced than the United States action”).
Therefore, five factors weigh in favor of England, two factors are neutral, and no factors weigh in favor of this forum. The private factors thus strongly favor of England.
Public Interest Factors
Courts also consider the following public interest factors: (1) “local interest of lawsuit,” (2) “the court’s familiarity with governing law,” (3) “burden on local courts
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and juries,” (4) “congestion in the court,” and (5) “the costs of resolving a dispute unrelated to this forum.” Lueck, 236 F.3d at 1147. The only factor truly at issue is the local interest factor.
First, with regard to local interest, California has some identifiable interest in
this action, but that interest is outweighed by the other factors pointing to England as the appropriate site for litigation.
Both parties agree that England has a strong interest in this action. (Mot. at 15-
16; Opp. at 12). Huthart is a United Kingdom citizen, and two Defendants are United Kingdom entities. (Compl. ¶¶ 4, 6, 7). A number of the potential witnesses are in the United Kingdom. The information obtained through the alleged hacking was published in British newspapers. Accordingly, England has devoted substantial efforts to addressing the Hacking Scheme: the London Metropolitan Police Service has conducted multiple criminal investigations; numerous individuals have been arrested and charged in England; England established the voluntary compensation scheme and the MTVIL system specifically for claims arising from the Hacking Scheme; and the Parliament of the United Kingdom has conducted numerous hearings on the phone hacking. (See Mot. at 15-16).
Although Huthart objects to the manner in which Defendants introduced
evidence regarding the events described above, Huthart does not dispute that the underlying events occurred. In fact, Huthart references the above events in her Complaint. (Compl. ¶¶ 11, 16, 23, 25, 27, 30-32, 36-37, 40, 60, 61).
It is clear from the resources and activity devoted to addressing the Hacking
Scheme that England has a very high interest in this action. See, e.g., Lueck, 236 F.3d at 1141, 1147 (finding that “the interest in New Zealand regarding this suit is extremely high,” where the action related to a crash involving a New Zealand airline carrying New Zealand passengers in New Zealand, and a New Zealand commission investigated the causes and circumstances of the accident).
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Huthart argues that California also has an interest in this litigation because her voicemail messages were hacked not only when she was in England, but also when she was in Los Angeles. (Opp. at 12-13; Compl. ¶ 49). Huthart also argues that while she was in Los Angeles, her voicemails were stored temporarily on facilities in the United States and then transmitted on United States-based networks to the United Kingdom. (Opp. at 37). Defendants dispute that any United States networks or facilities were used in the alleged hacking. (Reply at 12, n. 18). Defendants argue that even while Huthart was in Los Angeles, her “voicemails were stored in servers owned and maintained in the UK by the UK provider Vodafone,” and that her “voicemails were accessed from the UK, by UK citizens working for a UK publication owned by NGN.” (Mot. at 15).
The Court need not resolve this factual dispute to determine this Motion. Even
assuming that Huthart’s messages were stored temporarily in the United States and transmitted using United States-based networks, this activity does not create a sufficiently strong interest to outweigh the private interest factors and England’s strong interest in this action. See Vivendi SA v. T-Mobile USA Inc., 586 F.3d 689, 694 (9th Cir. 2009) (holding that the local interest in the case was “tenuous” where the only asserted connection to the United States was the use of “U.S. wires” in various communications between the parties); see also Piper Aircraft, 454 U.S. at 261 (finding that “[t]he American interest in this accident [was] simply not sufficient to justify the enormous commitment of judicial time and resources that would inevitably be required if the case were to be tried here,” where the action related to an airplane accident in Scotland, the pilot and all decedents’ heirs were Scottish citizens, and British authorities had investigated the accident, even though Defendants were American manufacturers); In re Air Crash Over Mid-Atl. on June 1, 2009, 760 F. Supp. 2d 832, 846 (N.D. Cal. 2010) (finding that “[t]he American interest . . . ensuring the quality of component parts on aircraft and protecting the rights of two American citizens, is real and legitimate but less significant than the French interest,” where “an Air France flight left Brazil for France carrying a plurality of French citizens and just two Americans living abroad at the time of the crash”).
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Accordingly, while California has some minimal interest in this action, that interest does not justify the burden that litigation in this action would impose on this court system and the local jury. Second, with regard to the court’s familiarity with the governing law, this factor is neutral at best. Huthart argues that she has brought claims under federal and California state law, and that this Court is more familiar with those laws, than an English court. (See Opp. at 16). However, Huthart relies on case law that interprets a choice-of-law clause. (See Opp. at 15 (citing Wash. Mutual Bank v. Superior Court, 24 Cal. 4th 906, 919, 103 Cal. Rptr. 2d 320 (2001)). No such choice-of-law agreement is present here. If this action were dismissed and brought in England, it appears that English courts would most likely apply English law under England’s choice-of-law rules. (Second Declaration of Craig Wyndham Orr QC ¶¶ 29-34 (the “Second Orr Declaration”) (Docket No. 54-5)). However, even if the English courts were to find that federal or California state law applied, it appears that the English Courts are accustomed to applying foreign laws, including those of the United States. (Second Orr Decl. ¶ 35).
Third, with regard to court congestion, this factor also does not aid the Court’s analysis. Defendants have provided some data as to the congestion of the Central District of California. (See Mot. at 16). While the MTVIL system in England would appear to provide a more efficient mechanism for resolving Huthart’s claims, her claims could possibly be stayed for some time if filed in the MTVIL. (Tomlinson Decl. ¶¶ 13-15; see also Third Orr Decl. ¶¶ 8-9). The parties have provided no information about the congestion of the general civil litigation system in England. Accordingly, the Court cannot determine the “real issue,” which is “not whether a dismissal will reduce a court’s congestion but whether a trial may be speedier in another court because of its less crowded docket.” Gates Learjet, 743 F.2d at 1337. Moreover, administrative considerations such as docket congestion are given little weight in this Circuit in assessing dismissal under forum non conveniens. See id. (“The forum non conveniens doctrine should not be used as a solution to court
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congestion; other remedies, such as placing reasonable limitations on the amount of time each side may have to present evidence, are more appropriate.”).
Even giving some deference to Huthart’s choice of forum and acknowledging that California has a minimal interest in this action, the private interest factors and England’s interest in this action weigh strongly in favor of dismissal.
The Motion is GRANTED.
The Motion to Intervene (Docket No. 61) filed by Brad Greenspan, and Defendants’ Ex Parte Application to Continue Motion for Intervention of Brad Greenspan Pending the Court’s Determination on Defendants’ Motion to Dismiss (Docket No. 65) are both DENIED as moot.
This Order shall constitute notice of entry of judgment pursuant to Federal Rule of Civil Procedure 58. Pursuant to Local Rule 58-6, the Court ORDERS the Clerk to treat this Order, and its entry on the docket, as an entry of judgment.
IT IS SO ORDERED.
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EX PARTE APPLICATION
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Louis A. Karasik (Cal. Bar # 100672) Alston & Bird LLP 333 South Hope Street, 16th Floor Los Angeles, CA 90071-3004 Telephone: (213) 576-1148 Facsimile: (213) 576-1100 Email: [email protected] Brendan V. Sullivan (Pro Hac Vice) Tobin J. Romero (Pro Hac Vice) Joseph M. Terry (Pro Hac Vice) Jonathan B. Pitt (Pro Hac Vice) Williams & Connolly LLP 725 Twelfth Street, N.W. Washington, DC 20005 Telephone: (202) 434-5000 Facsimile: (202) 434-5029 Email: [email protected] Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, Plaintiff, v. NEWS CORPORATION, NI GROUP LIMITED f/k/a NEWS INTERNATIONAL LIMITED, NEWS GROUP NEWSPAPERS LIMITED, and JOHN and JANE DOES 1-10, Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No. CV 13-4253 MWF (AJWx) Honorable Michael W. Fitzgerald DEFENDANTS’ EX PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION OF BRAD GREENSPAN PENDING THE COURT’S DETERMINATION ON DEFENDANTS’ MOTION TO DISMISS [Filed concurrently with Declaration of Louis A. Karasik and [Proposed] Order] Date: TBD Time: TBD Courtroom: 1600
Complaint Filed: June 13, 2013
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TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE that Defendants News Corporation, NI Group
Limited, and News Group Newspapers Limited (collectively “Defendants”) hereby
apply ex parte to continue the June 30, 2014 hearing on the pro se motion to
intervene filed on May 2, 2014 by Brad Greenspan (“Greenspan”), pending the
Court’s determination on Defendants’ Motion to Dismiss the underlying action. If
the Motion to Dismiss, which presently is under submission after supplemental
briefing filed by the parties on March 17, 2014, is granted, Greenspan’s intervention
motion will be moot.
As set forth more fully in the accompanying Memorandum of Points and
Authorities and the Declaration of Louis A. Karasik filed concurrently herewith, a
continuance of the hearing and the time for filing any opposition papers by
Defendants regarding Greenspan’s pro se motion will promote judicial economy and
avoid potentially unnecessary proceedings to address the many defects apparent on
the face of Greenspan’s rambling and incoherent pleadings. Greenspan seeks to
intervene to air accusations against California State Senators and United States
Congressman for allegedly participating in vague, undefined conspiracies with
companies such as Google, Yahoo, AOL, JP Morgan and many others, including
News Corp., related in some way to News Corp.’s acquisition of MySpace nearly ten
years ago. If Defendants’ pending Motion to Dismiss is granted, Greenspan’s
motion to intervene will be moot because there will be no underlying action, and thus
no proceeding in which Greenspan might seek to intervene. A postponement may
thus avoid the Court having to hear an unnecessary motion and avoid the necessity of
Defendants responding to the pleadings submitted by Greenspan, promoting judicial
economy for all parties and the Court. A continuance of this matter would not
prejudice Greenspan, particularly since he is pursuing substantially similar claims in
a lawsuit filed in the Delaware Court of Chancery. In contrast, if Defendants were
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required to oppose Greenspan’s motion prior to a decision on the Motion to Dismiss,
they would be forced to incur fees and costs to detail the many reasons the pro se
motion fails to state grounds to intervene1—costs that would be unnecessary in the
event that this Court rules that this case should be dismissed under the doctrine of
forum non conveniens.
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This Application is being made pursuant Local Rule 7-19 and this Court’s
courtroom procedures and standing order. Notice of this Application was provided
to Plaintiff’s counsel by telephone call on May 15, 2014, and Plaintiff’s counsel
advises that Plaintiff does not joint the ex parte and intends to oppose the motion to
intervene. (Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 7.) The only
contact information provided in Greenspan’s papers are a mailing address, so
Defendants attempted to provide notice of this Application to Greenspan by
attempting to hand deliver a letter to that address on May 16, 2014. (Karasik Decl., ¶
1 Among other things, Greenspan’s intervention pleadings violate Federal Rule of Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for relief, lack any nexus to the claims pursued by plaintiff Huthart, consist of rambling allegations of conspiracy untethered to any facts or legal theories and are barred by the statute of limitations and the existence of a pending action in Delaware where Greenspan has filed substantially the same disjointed allegations.
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8.) The address provided by Greenspan was a rented mailbox, and we were advised
by the proprietor that it was canceled over a year ago for nonpayment.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Defendants News Corporation, NI Group Limited, and News Group
Newspapers Limited (collectively “Defendants”) make this Ex Parte Application in
order to avoid the premature and potentially unnecessary briefing and consideration
of a frivolous pro se motion to intervene filed by Brad Greenspan. Specifically,
Defendants seek a continuance of the motion to intervene until such time as the
Court rules on Defendants’ Motion to Dismiss the underlying action, which, if
granted, would render moot Greenspan’s motion to intervene and spare the Court
and the parties from the burden of considering and briefing Greenspan’s meritless
and unintelligible motion.
Plaintiff Eunice Huthart (“Huthart” or “Plaintiff”) filed her complaint on June
13, 2013. The suit concerns allegations of voicemail hacking that occurred in the
United Kingdom. Defendants filed a Motion to Dismiss Huthart’s complaint on
September 20, 2013. 2 (See Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 2.)
The Motion to Dismiss came on for hearing on February 24, 2014. (Id.)
Supplemental briefing related to the issue of forum non conveniens—and specifically
whether Huthart could bring her claims in England—was ordered on February 25,
2014 and was concluded in March 2014. (Id.) The matter remains under
submission.
Pro se litigant Greenspan filed a purported motion to intervene and related
papers on May 2, 2014.3 His pleadings were served on counsel for Defendants in
2 Defendants’ Motion to Dismiss refers to the Motion to Dismiss Case Under
FRCP Rules 12(b)(2), 12(b)(6) and for Forum Non Conveniens and supporting papers filed by Defendants on September 20, 2013. See Huthart v. News Corporation et al., Case No. CV 13-4253 MWF (AJWx), Dkt. No. 41.
3 Greenspan’s motion papers consist of a Notice of Motion to Intervene (Dkt. No. 61), a Memorandum in Support (Dkt. No. 62), Declaration of Brad Greenspan in Support (Dkt. No. 63), and a Proof of Service by Mail (Dkt. No. 64), all filed on May 2, 2014. Greenspan additionally served on Defendants’ local counsel a proposed
(cont'd)
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Los Angeles, but not on Defendants’ lead counsel, the Williams & Connolly firm in
Washington, D.C. (Karasik Decl., ¶ 3.) The matter has been set for hearing on June
30, 2014.
Greenspan’s motion to intervene has nothing to do with Huthart’s complaint.
Greenspan does not allege he is the victim of any voicemail hacking or any allegedly
wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik
Decl., ¶ 4.) Rather, Greenspan appears to allege, though the incoherent nature of his
allegations makes it difficult to discern, that he has been harmed by a vast conspiracy
involving everything from allegedly wrongful employment practices by technology
companies like Google, Intel and Yahoo to the bribery of and misconduct by
California State Senators and United States Congressmen. The intervention papers
advance convoluted claims that all of this misconduct is related in some fashion to
News Corp.’s acquisition in 2005 of Intermix Media Inc., which owned and operated
several websites including MySpace. (See Exh. A to Karasik Decl., Greenspan’s
Complaint in Intervention at 3:20-67:24.) This is not the first time Greenspan has
filed claims on that subject: Greenspan was the founder of E-Universe, the
predecessor of Intermix; his claims challenging News Corp.’s acquisition of
MySpace and several other attempts to raise challenges to that transaction have been
dismissed over the years by both state and federal courts. The first dismissal of
Greenspan’s challenges to the MySpace transaction was in 2006. See Greenspan v.
Intermix Media, Inc., Case No. B196434, 2008 WL 4837565 (Cal. App. Nov. 10,
2008)) (affirming 2006 dismissal of individual and shareholder actions brought by
Greenspan challenging the MySpace transaction). The next attempt to challenge the
transaction was rejected in Brown v. Brewer, Case No. 2:06-cv-3731 (C.D. Cal.),
where the federal court in 2010 dismissed Greenspan as a putative class member
________________________ (cont'd from previous page) Complaint in Intervention, attached to the Karasik Declaration, that has not been filed with the Court.
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from a shareholder derivative action challenging the merger, and in 2011 denied
Greenspan’s motion to intervene in that matter. (Karasik Decl., ¶ 5; Exhibits B and
C.) Though Greenspan’s involvement in these matters has been concluded for
several years, Greenspan most recently filed a pro se complaint on April 22, 2014 in
the Delaware Court of Chancery, naming News Corp. and twenty other defendants in
a pleading that advances the same or similar conspiracy claims found in the
intervention papers, all tied to the acquisition of Intermix in 2005. See Greenspan v.
News Corp. et al., Case No. 9567 (Del. Ch. April 22, 2014). (Karasik Decl., ¶ 5;
Exh. D.) The apparent purpose of the proposed intervention is to air Greenspan’s
views that hacking incidents in the UK show that News Corp. has engaged in bad
acts—albeit wholly unrelated to those of which he complains. See Dkt. No. 62,
Greenspan Memorandum in Support of Motion to Intervene at 5:1-18.
As detailed below, if Defendants’ pending Motion to Dismiss is granted,
Greenspan’s intervention will be moot. Ex parte relief to postpone Greenspan’s
further pursuit of his incoherent intervention proceeding will promote the interests of
judicial economy and avoid potentially unnecessary proceedings.
II. JUDICIAL ECONOMY IS ACHIEVED BY CONTINUING THE
INTERVENTION MOTION BECAUSE GREENSPAN’S MOTION
WILL BE MOOT IF THE UNDERLYING ACTION IS DISMISSED
The Court may issue ex parte relief extending the time within which an act is
required or allowed to be done upon a showing of good cause. Fed. R. Civ. P. 6(b).
“Good cause” is broadly construed in a manner that affords the Court broad
discretion to manage its calendar. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253,
1259 (9th Cir. 2010); Danjaq LLC v. Sony Corp., 263 F.3d 942, 961 (9th Cir. 2001)
(noting that a court has broad discretion in granting continuances). “[R]equests for
extensions of time made before the applicable deadline has passed should normally .
. . be granted in the absence of bad faith on the part of the party seeking relief or
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prejudice to the adverse party.” Ahanchian, 624 F.3d at 1259. (internal citations
omitted.) Here, the deadline to oppose Greenspan’s intervention has not passed, the
applying Defendants have not acted in bad faith, and there is no prejudice to
Greenspan. Good cause exists for a continuance of Greenspan’s motion to intervene
because it would promote the most efficient use of the Court’s and the parties’
resources. A postponement of the matter would give the court time to rule on
Defendants’ pending motion to dismiss before the parties are forced to incur the cost
of responding to Greenspan’s convoluted motion. If Defendants’ Motion to Dismiss
is granted, Greenspan’s intervention would be moot because a prerequisite for
intervention is the existence of an underlying action. See Hartley Pen Co. v. Lindy
Pen Co., 16 F.R.D. 141, 146 (S.D. Cal. 1954) (“A pending suit within federal
jurisdiction is by definition prerequisite to intervention.”); see also Arakaki v.
Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (intervention inappropriate where
underlying claim dismissed).
An application for a continuance of a hearing is the type of routine
administrative relief that is particularly appropriate on an ex parte basis. See In re
Intermagnetics Am., Inc., 101 B.R. 191, 193-94 (C.D. Cal. 1989) (noting that
“legitimate ex parte applications . . . may be necessary when a party seeks a routine
order” such as adjusting the hearing date of a motion). This Motion simply seeks to
ensure the proper sequencing of motions. There is no prejudice to Greenspan from a
continuance. See Fuller v. Amerigas Propane, Inc., C 09-2493TEH, 2009 WL
2390358 at*1 (N.D. Cal. Aug. 3, 2009) (no prejudice in connection with a short
delay). Indeed, there is no possible prejudice to Greenspan, because he does not
need to intervene in this matter to raise his assertions: he has already filed a lawsuit
in Delaware advancing these very claims. Defendants, by contrast, would be
significantly prejudiced if forced to respond at this time to Greenspan’s motion,
especially if Defendants’ substantive opposition is mooted by the subsequent
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dismissal of the case on Defendants’ pending Motion to Dismiss. See In re Apple
iPhone 3G Products Liab. Litig., C 09-02045 JW, 2010 WL 9517400 at *2 (N.D.
Cal. Dec. 9, 2010) (holding that prejudice to defendants and to the court of moving
forward with proceedings that could be mooted by other proceedings supported a
stay). And in the event that the Motion to Dismiss is denied, Greenspan’s Motion to
Intervene may be properly addressed at that time.4
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4 As noted in the ex parte application, Plaintiffs intend to oppose Greenspan’s
purported motion, and if opposition is required, Defendants will show that Greenspan’s motion fails to state any grounds to intervene, fails to state a cognizable claim, is rife with rambling and frivolous allegations of vast conspiracies, seeks to re-litigate Greenspan’s oft rejected challenges to News Corp.’s acquisition of MySpace almost a decade ago, and is barred by the statute of limitations and by the existence of a pending action in Delaware where Greenspan is advancing the same claims that are the subject of the proposed intervention.
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III. CONCLUSION
Good cause exists for a continuance because a postponement of the
intervention motion would allow the Court to rule on Defendants’ pending Motion to
Dismiss without requiring the parties or the Court to expend time and effort to
respond to a motion that could be rendered moot. Defendants respectfully request
that this Court postpone any hearing on Greenspan’s motion in order to promote
judicial economy and minimize prejudice to Defendants.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
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CERTIFICATE OF SERVICE
I declare that I am over the age of eighteen (18) and not a party to this action.
My business address is 333 South Hope Street, 16th Floor, Los Angeles, CA 90071-
1410.
On May 19, 2014, I served the following document(s): EX PARTE
APPLICATION on the following parties in case CV 13-4253 MWF (AJWx) via
either Notice of Electronic Filing generated by the Court’s CM/ECF system,
pursuant to the Court’s local rules.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.
/s/ Louis A. Karasik Attorney for Defendant
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PROOF OF SERVICE
I, Louis A. Karasik, declare:
I am employed in the County of Los Angeles, State of California. My business address is Alston + Bird LLP, 333 South Hope Street, Sixteenth Floor, Los Angeles, CA 90071. I am over the age of eighteen years and not a party to the action in which this service is made.
On May 19, 2014, I served the document(s) described as EX PARTE
APPLICATION on the interested parties in this action by enclosing the document(s) in a sealed envelope addressed to the parties as listed as follows:
Brad D. Greenspan
264 South La Cienega Blvd. Unit 1216
Beverly Hills, CA 90211
BY MAIL: I am "readily familiar" with this firm's practice for the collection and the processing of correspondence for mailing with the United States Postal Service. In the ordinary course of business, the correspondence would be deposited with the United States Postal Service at 333 South Hope Street, Los Angeles, California 90071 with postage thereon fully prepaid the same day on which the correspondence was placed for collection and mailing at the firm. Following ordinary business practices, I placed for collection and mailing with the United States Postal Service such envelope at ALSTON + BIRD LLP, 333 South Hope Street, Los Angeles, California 90071.
[Federal] I declare under penalty of perjury that the foregoing is true and correct.
Executed on May 19, 2014, at Los Angeles, California.
/s/ Louis A. Karasik Louis A. Karasik
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 12 of 12 Page ID #:1940
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EX PARTE APPLICATION
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Louis A. Karasik (Cal. Bar # 100672) Alston & Bird LLP 333 South Hope Street, 16th Floor Los Angeles, CA 90071-3004 Telephone: (213) 576-1148 Facsimile: (213) 576-1100 Email: [email protected] Brendan V. Sullivan (Pro Hac Vice) Tobin J. Romero (Pro Hac Vice) Joseph M. Terry (Pro Hac Vice) Jonathan B. Pitt (Pro Hac Vice) Williams & Connolly LLP 725 Twelfth Street, N.W. Washington, DC 20005 Telephone: (202) 434-5000 Facsimile: (202) 434-5029 Email: [email protected] Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, Plaintiff, v. NEWS CORPORATION, NI GROUP LIMITED f/k/a NEWS INTERNATIONAL LIMITED, NEWS GROUP NEWSPAPERS LIMITED, and JOHN and JANE DOES 1-10, Defendants.
) ) ) ) ) ) ) ) ) ) ) ) ) ) )
Case No. CV 13-4253 MWF (AJWx) Honorable Michael W. Fitzgerald DEFENDANTS’ EX PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION OF BRAD GREENSPAN PENDING THE COURT’S DETERMINATION ON DEFENDANTS’ MOTION TO DISMISS [Filed concurrently with Declaration of Louis A. Karasik and [Proposed] Order] Date: TBD Time: TBD Courtroom: 1600
Complaint Filed: June 13, 2013
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 1 of 12 Page ID #:1929
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TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE that Defendants News Corporation, NI Group
Limited, and News Group Newspapers Limited (collectively “Defendants”) hereby
apply ex parte to continue the June 30, 2014 hearing on the pro se motion to
intervene filed on May 2, 2014 by Brad Greenspan (“Greenspan”), pending the
Court’s determination on Defendants’ Motion to Dismiss the underlying action. If
the Motion to Dismiss, which presently is under submission after supplemental
briefing filed by the parties on March 17, 2014, is granted, Greenspan’s intervention
motion will be moot.
As set forth more fully in the accompanying Memorandum of Points and
Authorities and the Declaration of Louis A. Karasik filed concurrently herewith, a
continuance of the hearing and the time for filing any opposition papers by
Defendants regarding Greenspan’s pro se motion will promote judicial economy and
avoid potentially unnecessary proceedings to address the many defects apparent on
the face of Greenspan’s rambling and incoherent pleadings. Greenspan seeks to
intervene to air accusations against California State Senators and United States
Congressman for allegedly participating in vague, undefined conspiracies with
companies such as Google, Yahoo, AOL, JP Morgan and many others, including
News Corp., related in some way to News Corp.’s acquisition of MySpace nearly ten
years ago. If Defendants’ pending Motion to Dismiss is granted, Greenspan’s
motion to intervene will be moot because there will be no underlying action, and thus
no proceeding in which Greenspan might seek to intervene. A postponement may
thus avoid the Court having to hear an unnecessary motion and avoid the necessity of
Defendants responding to the pleadings submitted by Greenspan, promoting judicial
economy for all parties and the Court. A continuance of this matter would not
prejudice Greenspan, particularly since he is pursuing substantially similar claims in
a lawsuit filed in the Delaware Court of Chancery. In contrast, if Defendants were
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required to oppose Greenspan’s motion prior to a decision on the Motion to Dismiss,
they would be forced to incur fees and costs to detail the many reasons the pro se
motion fails to state grounds to intervene1—costs that would be unnecessary in the
event that this Court rules that this case should be dismissed under the doctrine of
forum non conveniens.
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This Application is being made pursuant Local Rule 7-19 and this Court’s
courtroom procedures and standing order. Notice of this Application was provided
to Plaintiff’s counsel by telephone call on May 15, 2014, and Plaintiff’s counsel
advises that Plaintiff does not joint the ex parte and intends to oppose the motion to
intervene. (Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 7.) The only
contact information provided in Greenspan’s papers are a mailing address, so
Defendants attempted to provide notice of this Application to Greenspan by
attempting to hand deliver a letter to that address on May 16, 2014. (Karasik Decl., ¶
1 Among other things, Greenspan’s intervention pleadings violate Federal Rule of Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for relief, lack any nexus to the claims pursued by plaintiff Huthart, consist of rambling allegations of conspiracy untethered to any facts or legal theories and are barred by the statute of limitations and the existence of a pending action in Delaware where Greenspan has filed substantially the same disjointed allegations.
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 3 of 12 Page ID #:1931
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8.) The address provided by Greenspan was a rented mailbox, and we were advised
by the proprietor that it was canceled over a year ago for nonpayment.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 4 of 12 Page ID #:1932
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Defendants News Corporation, NI Group Limited, and News Group
Newspapers Limited (collectively “Defendants”) make this Ex Parte Application in
order to avoid the premature and potentially unnecessary briefing and consideration
of a frivolous pro se motion to intervene filed by Brad Greenspan. Specifically,
Defendants seek a continuance of the motion to intervene until such time as the
Court rules on Defendants’ Motion to Dismiss the underlying action, which, if
granted, would render moot Greenspan’s motion to intervene and spare the Court
and the parties from the burden of considering and briefing Greenspan’s meritless
and unintelligible motion.
Plaintiff Eunice Huthart (“Huthart” or “Plaintiff”) filed her complaint on June
13, 2013. The suit concerns allegations of voicemail hacking that occurred in the
United Kingdom. Defendants filed a Motion to Dismiss Huthart’s complaint on
September 20, 2013. 2 (See Declaration of Louis A. Karasik (“Karasik Decl.”), ¶ 2.)
The Motion to Dismiss came on for hearing on February 24, 2014. (Id.)
Supplemental briefing related to the issue of forum non conveniens—and specifically
whether Huthart could bring her claims in England—was ordered on February 25,
2014 and was concluded in March 2014. (Id.) The matter remains under
submission.
Pro se litigant Greenspan filed a purported motion to intervene and related
papers on May 2, 2014.3 His pleadings were served on counsel for Defendants in
2 Defendants’ Motion to Dismiss refers to the Motion to Dismiss Case Under
FRCP Rules 12(b)(2), 12(b)(6) and for Forum Non Conveniens and supporting papers filed by Defendants on September 20, 2013. See Huthart v. News Corporation et al., Case No. CV 13-4253 MWF (AJWx), Dkt. No. 41.
3 Greenspan’s motion papers consist of a Notice of Motion to Intervene (Dkt. No. 61), a Memorandum in Support (Dkt. No. 62), Declaration of Brad Greenspan in Support (Dkt. No. 63), and a Proof of Service by Mail (Dkt. No. 64), all filed on May 2, 2014. Greenspan additionally served on Defendants’ local counsel a proposed
(cont'd)
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Los Angeles, but not on Defendants’ lead counsel, the Williams & Connolly firm in
Washington, D.C. (Karasik Decl., ¶ 3.) The matter has been set for hearing on June
30, 2014.
Greenspan’s motion to intervene has nothing to do with Huthart’s complaint.
Greenspan does not allege he is the victim of any voicemail hacking or any allegedly
wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik
Decl., ¶ 4.) Rather, Greenspan appears to allege, though the incoherent nature of his
allegations makes it difficult to discern, that he has been harmed by a vast conspiracy
involving everything from allegedly wrongful employment practices by technology
companies like Google, Intel and Yahoo to the bribery of and misconduct by
California State Senators and United States Congressmen. The intervention papers
advance convoluted claims that all of this misconduct is related in some fashion to
News Corp.’s acquisition in 2005 of Intermix Media Inc., which owned and operated
several websites including MySpace. (See Exh. A to Karasik Decl., Greenspan’s
Complaint in Intervention at 3:20-67:24.) This is not the first time Greenspan has
filed claims on that subject: Greenspan was the founder of E-Universe, the
predecessor of Intermix; his claims challenging News Corp.’s acquisition of
MySpace and several other attempts to raise challenges to that transaction have been
dismissed over the years by both state and federal courts. The first dismissal of
Greenspan’s challenges to the MySpace transaction was in 2006. See Greenspan v.
Intermix Media, Inc., Case No. B196434, 2008 WL 4837565 (Cal. App. Nov. 10,
2008)) (affirming 2006 dismissal of individual and shareholder actions brought by
Greenspan challenging the MySpace transaction). The next attempt to challenge the
transaction was rejected in Brown v. Brewer, Case No. 2:06-cv-3731 (C.D. Cal.),
where the federal court in 2010 dismissed Greenspan as a putative class member
________________________ (cont'd from previous page) Complaint in Intervention, attached to the Karasik Declaration, that has not been filed with the Court.
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 6 of 12 Page ID #:1934
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from a shareholder derivative action challenging the merger, and in 2011 denied
Greenspan’s motion to intervene in that matter. (Karasik Decl., ¶ 5; Exhibits B and
C.) Though Greenspan’s involvement in these matters has been concluded for
several years, Greenspan most recently filed a pro se complaint on April 22, 2014 in
the Delaware Court of Chancery, naming News Corp. and twenty other defendants in
a pleading that advances the same or similar conspiracy claims found in the
intervention papers, all tied to the acquisition of Intermix in 2005. See Greenspan v.
News Corp. et al., Case No. 9567 (Del. Ch. April 22, 2014). (Karasik Decl., ¶ 5;
Exh. D.) The apparent purpose of the proposed intervention is to air Greenspan’s
views that hacking incidents in the UK show that News Corp. has engaged in bad
acts—albeit wholly unrelated to those of which he complains. See Dkt. No. 62,
Greenspan Memorandum in Support of Motion to Intervene at 5:1-18.
As detailed below, if Defendants’ pending Motion to Dismiss is granted,
Greenspan’s intervention will be moot. Ex parte relief to postpone Greenspan’s
further pursuit of his incoherent intervention proceeding will promote the interests of
judicial economy and avoid potentially unnecessary proceedings.
II. JUDICIAL ECONOMY IS ACHIEVED BY CONTINUING THE
INTERVENTION MOTION BECAUSE GREENSPAN’S MOTION
WILL BE MOOT IF THE UNDERLYING ACTION IS DISMISSED
The Court may issue ex parte relief extending the time within which an act is
required or allowed to be done upon a showing of good cause. Fed. R. Civ. P. 6(b).
“Good cause” is broadly construed in a manner that affords the Court broad
discretion to manage its calendar. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253,
1259 (9th Cir. 2010); Danjaq LLC v. Sony Corp., 263 F.3d 942, 961 (9th Cir. 2001)
(noting that a court has broad discretion in granting continuances). “[R]equests for
extensions of time made before the applicable deadline has passed should normally .
. . be granted in the absence of bad faith on the part of the party seeking relief or
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prejudice to the adverse party.” Ahanchian, 624 F.3d at 1259. (internal citations
omitted.) Here, the deadline to oppose Greenspan’s intervention has not passed, the
applying Defendants have not acted in bad faith, and there is no prejudice to
Greenspan. Good cause exists for a continuance of Greenspan’s motion to intervene
because it would promote the most efficient use of the Court’s and the parties’
resources. A postponement of the matter would give the court time to rule on
Defendants’ pending motion to dismiss before the parties are forced to incur the cost
of responding to Greenspan’s convoluted motion. If Defendants’ Motion to Dismiss
is granted, Greenspan’s intervention would be moot because a prerequisite for
intervention is the existence of an underlying action. See Hartley Pen Co. v. Lindy
Pen Co., 16 F.R.D. 141, 146 (S.D. Cal. 1954) (“A pending suit within federal
jurisdiction is by definition prerequisite to intervention.”); see also Arakaki v.
Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (intervention inappropriate where
underlying claim dismissed).
An application for a continuance of a hearing is the type of routine
administrative relief that is particularly appropriate on an ex parte basis. See In re
Intermagnetics Am., Inc., 101 B.R. 191, 193-94 (C.D. Cal. 1989) (noting that
“legitimate ex parte applications . . . may be necessary when a party seeks a routine
order” such as adjusting the hearing date of a motion). This Motion simply seeks to
ensure the proper sequencing of motions. There is no prejudice to Greenspan from a
continuance. See Fuller v. Amerigas Propane, Inc., C 09-2493TEH, 2009 WL
2390358 at*1 (N.D. Cal. Aug. 3, 2009) (no prejudice in connection with a short
delay). Indeed, there is no possible prejudice to Greenspan, because he does not
need to intervene in this matter to raise his assertions: he has already filed a lawsuit
in Delaware advancing these very claims. Defendants, by contrast, would be
significantly prejudiced if forced to respond at this time to Greenspan’s motion,
especially if Defendants’ substantive opposition is mooted by the subsequent
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dismissal of the case on Defendants’ pending Motion to Dismiss. See In re Apple
iPhone 3G Products Liab. Litig., C 09-02045 JW, 2010 WL 9517400 at *2 (N.D.
Cal. Dec. 9, 2010) (holding that prejudice to defendants and to the court of moving
forward with proceedings that could be mooted by other proceedings supported a
stay). And in the event that the Motion to Dismiss is denied, Greenspan’s Motion to
Intervene may be properly addressed at that time.4
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4 As noted in the ex parte application, Plaintiffs intend to oppose Greenspan’s
purported motion, and if opposition is required, Defendants will show that Greenspan’s motion fails to state any grounds to intervene, fails to state a cognizable claim, is rife with rambling and frivolous allegations of vast conspiracies, seeks to re-litigate Greenspan’s oft rejected challenges to News Corp.’s acquisition of MySpace almost a decade ago, and is barred by the statute of limitations and by the existence of a pending action in Delaware where Greenspan is advancing the same claims that are the subject of the proposed intervention.
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 9 of 12 Page ID #:1937
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9 EX PARTE APPLICATION
LEGAL02/34840112v1
III. CONCLUSION
Good cause exists for a continuance because a postponement of the
intervention motion would allow the Court to rule on Defendants’ pending Motion to
Dismiss without requiring the parties or the Court to expend time and effort to
respond to a motion that could be rendered moot. Defendants respectfully request
that this Court postpone any hearing on Greenspan’s motion in order to promote
judicial economy and minimize prejudice to Defendants.
Dated: May 19, 2014 ALSTON & BIRD LLP By: /s/Louis A. Karasik Louis A. Karasik (Bar # 100672)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
WILLIAMS & CONNOLLY LLP By: /s/Brendan V. Sullivan Brendan V. Sullivan (pro hac vice) Tobin J. Romero (pro hac vice) Joseph M. Terry (pro hac vice) Jonathan B. Pitt (pro hac vice)
Counsel for Defendants News Corporation, NI Group Limited f/k/a News International Limited, News Group Newspapers Limited
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 10 of 12 Page ID #:1938
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10 EX PARTE APPLICATION
LEGAL02/34840112v1
CERTIFICATE OF SERVICE
I declare that I am over the age of eighteen (18) and not a party to this action.
My business address is 333 South Hope Street, 16th Floor, Los Angeles, CA 90071-
1410.
On May 19, 2014, I served the following document(s): EX PARTE
APPLICATION on the following parties in case CV 13-4253 MWF (AJWx) via
either Notice of Electronic Filing generated by the Court’s CM/ECF system,
pursuant to the Court’s local rules.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.
/s/ Louis A. Karasik Attorney for Defendant
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 11 of 12 Page ID #:1939
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11 EX PARTE APPLICATION
LEGAL02/34840112v1
PROOF OF SERVICE
I, Louis A. Karasik, declare:
I am employed in the County of Los Angeles, State of California. My business address is Alston + Bird LLP, 333 South Hope Street, Sixteenth Floor, Los Angeles, CA 90071. I am over the age of eighteen years and not a party to the action in which this service is made.
On May 19, 2014, I served the document(s) described as EX PARTE
APPLICATION on the interested parties in this action by enclosing the document(s) in a sealed envelope addressed to the parties as listed as follows:
Brad D. Greenspan
264 South La Cienega Blvd. Unit 1216
Beverly Hills, CA 90211
BY MAIL: I am "readily familiar" with this firm's practice for the collection and the processing of correspondence for mailing with the United States Postal Service. In the ordinary course of business, the correspondence would be deposited with the United States Postal Service at 333 South Hope Street, Los Angeles, California 90071 with postage thereon fully prepaid the same day on which the correspondence was placed for collection and mailing at the firm. Following ordinary business practices, I placed for collection and mailing with the United States Postal Service such envelope at ALSTON + BIRD LLP, 333 South Hope Street, Los Angeles, California 90071.
[Federal] I declare under penalty of perjury that the foregoing is true and correct.
Executed on May 19, 2014, at Los Angeles, California.
/s/ Louis A. Karasik Louis A. Karasik
Case 2:13-cv-04253-MWF-AJW Document 65 Filed 05/19/14 Page 12 of 12 Page ID #:1940
FtLED
Brad Greenspan, Pro Se 264 South La Cienega Suite 1216
I
Beverly Hills, CA 90211 u
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
EUNICE HUTHART, ) )
Plaintiff, ) V. )
)
)
)
)
NEWS CORPORATION, NI GROUP )
LIMITED f/k/a NEWS ) INTERNATIONAL LIMITED, ) NEWS GROUP NEWSPAPERS ), LIMITED, and JOHN and JANE ) DOES 1-10 )
)
Defendants. ) )
)
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Case No. CV 13-4253 MWF
Honorable Michael W. Fitzgerald
MEMORANDUM IN SUPPORT AND MOTION FOR INTERVENTION
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 1 of 41 Page ID #:1883
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3 INDEX
4 0- CASE LAW CITED pg. 3
6 I- INTRODUCTION pg. 4
7 11-BACKGROUND ph. 4
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9 III CONCLUSION p. 22
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PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 2 of 41 Page ID #:1884
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I CASE LAW CITED See Luther v. Countrywide Homes Loans Servicing LP, 533 F. 3d 1031, 1033-34 pg. 7(9th
2 Cir. 2008) Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) pg. 10
3 Donnelly v. Glickman, 159 F. 3d 405, 409 (9th Cir. 1998) pg.] 0 Northwest Forest Res. Council v. Glickman, 82 F. 3d 825, 836 (9th Cir. 1996) pg.]]
4 United States v. Washington, 86 F. 3d 1499 (9th Cir. 1996) pg.]] Engra, Inc. v. Gabel, 958 F.2d 643, 644 (5th Cir. 1992). Pg. 12 Northwest Forest Resource Council, 82 F. 3d at 837. Pg. 12
6 Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993) pg. 12 Donnelly, 159 F. 3d at 409; pg. 12
7 U.S. v Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004) pg. 12 California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir. 2006). Pg. 13
8 Forest Conserv. Council v. U.S. Forest Service, 66 F. 3d 1489, 1494 (9th Cir. 1995) pg. 13
9 Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998). Pg.13 Yniguez v. Arizona, 939 F.2d 727, 735 (9th Cir. 1991). Pg.13
10 Southwest Ctr. for Biological Diversity, 268 F. 3d at 822 pg. 13 Sierra Club, 995 F. 2d at 1486 pg. 14
11 California v. Tahoe Reg’l Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)). Pg. 14
12 Crawford v. Equfax Payment Services, 201 F. 3d 877 (7th Cir. 2000). Pg. 15 M & I. Corp. v Von Clemm, and Atlantic Refining Co. v Standard Oil Co., pg. 15
13 both supra; Wolpe v Poretsky, 144 F2d 505 (DC Cir 1944), cert den 323 US 777, 85 L Ed 22, 61 S Ct 115, 132 ALR 741 (1944); pg. 15
14 Ford Motor Co. v Bisanz Bros., 249 F2d 22 (8th Cir 195 7) pg. 15
15
16 Annot 84 ALR2d]4]2 (1962) pg. 15
17 Defenders of Wildlife v. Johanns, No. C 04-4512 PJH, 2005 WL 3260986, at pg. 21 *8 (ND. Cal. Dec. 1, 2005))
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26 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
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28 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 3 of 41 Page ID #:1885
- p
1 MOTION TO INTERVENE
2
INTRODUCTION
3
4 1. Pursuant to Federal Rule of Civil Procedure 24(a), Plaintiffs
5 ("Intervenor") move to intervene. In the alternative, Plaintiffs moves to intervene
6 permissively as defendants pursuant to Rule 24(b).
7 BACKGROUND
8
9 2. Plaintiff seeks permission to join the litigation to protect interests,
10 which may not be adequately protected without involvement of Plaintiff.
11
12 New evidence disclosed for the first time to public May 2013 in the
13 Hitech Class Action Case 5:1102509: specifically document
14 confirms for first time and proves Google had additional undisclosed illegal bilateral
15 16 agreements in place with AskJeeves,TimŁ/Wamer AOL, and other potential corporate
17 entities as of March 6, 2005. Such partners and agreements that existed including
18 between AskJeeves, Inc, its surviving acquiror IAC Corp., and TimeWarner/AOL, and 19 20 Google are uncontested to have existed 6ut were not previously identified by
21 Defendants and HiTech Federal Class Action Plaintiffs had not previously
22 alleged or known to have existed and which violated Federal antitrust statues. All three I 23 24 companies fraudulently concealed the agreements and failed to disclose them in their
25 SEC filings, violating security law and breaching their fiduciary obligations Directors
26 and officersall companies had. 27
28 4
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 4 of 41 Page ID #:1886
I
1 3. Plaintiff was injured in their business or property by reason of
2
A) Defendants, ongoing, systematic and fraudulent scheme to maximize financial
3 4 gain Facilitated by the conduct of Google, and Intel, Objective unlawful scheme was
5 to obtain billions of dollars in proceeds and profits from i. rigging the sales of
6 competing internet assets at below fair market prices ii) benefitting from profits
7 8 generated from illegal phone hacking iii) benefitting and trading confidential
9 information received from the illegal phone hacking iv) covering up the illegal activity
10 using their media properties iv) extorting silence from victims and/or government
11 12 regulators including bribing police, UK Government ministers, United States Senators,
13 California State Senators and California State Cdgressmen and Congresswomen
14 and United States Congressmen and Congress serving women, and several related and 15 16 affiliated lobby qualified law firms, and other agency iritermediators, v) offering ad
17 credits and ad promotion in kind without disclosing such transactions to the public or
18 accounting for them in their SEC GAAP Accounting, and government ministers. 19
20 4. Without intervention, plaintiff will be further harmed. The intervention i 21 22 also necessary to raise additional matters, facts, and Claims while providing to the
23 supporting evidence. The claims were created from a behind the scenes series of
24 meetings and communications since late 2003 thru May 1, 2014 between: i) 25 26 Intermix/MySpace, Inc. ii) News Corp iii) Yahoo iv) Google v) MSN, vi) AskJeeves
27 vii) JP Morgan viii) lac Corp ix) Time Warner, Inc.,x) Aol Inc. xi) Fox Interactive xii)
28
5
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 5 of 41 Page ID #:1887
1 I Fox xiii) Washington Post
2 3 I VICTIM OF SAME "BROAD CONSPIRACY"
4
5. Submitted herein and by reference and thus such facts and findings
5 6 will not be re-litigated in these pleadings unless Defendants disputes the accuracy
7 of the rulings and court orders and estoppel created by such settlements entered into by
8 Defendants. This conspiracy included: (1) agreements allowing AskJeeves Director
9 10 Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below fair market
11 value using His RedPoint fund where he is managing Director; (2) agreements allowing
12 Google, TimeWarner/AOL, News Corporation, AskJeeves, IAC, and other defendants
13 14 to collude to gain economic benefits by i) fabricating prior sale of MySpace stock
15 backdated agreement in November 2004 and ii) delaying closing of a competitive
16 MySpace search engine auction for a new commercial search engine agreement in the
17 18 months leading up to News Corporation acquiring 100% of eUniverse in September
19 2005; (3) agreements allowing Google to ensure its $4.4 Billion dollar August 2005
20 secondary is completed by tying up the fast growing online audience of MySpace, 21 22 significantly growing its share of online search engine advertising while shrinking
23 share of main rival #2 Yahoo; (4) agreements allowing News Corporation to purchase
24 MySpace.com at below fair market value, growing its market valuation and generating 25 26 billions in incremental profits and a massive online audience to seed new online assets
27 for years to come, while preventing a competitive auction with main rival Viacom.
28 6
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 6 of 41 Page ID #:1888
S
1 ii. The intended and actual effect of these agreements was to fix and
2 suppress competition. Defendants conspiracy and agreements restrained trade and are
3 per se unlawful under federal law.
4 Plaintiffs seek injunctive relief and damages for 5
6 6. Pursuant to private right of action under antitrust Federal law, more
7 then 5000 shareholders of MySpace parent company, former publicly traded e
8 Inc. "EIJNI" are entitled to a private cause of action for damages suffered as a result of 9
10 an Antitrust conspiracy among Defendants.
11
7. According to SEC documents, Brad D. Greenspan incorporated
12 Entertainment Universe, Inc. ("EUNI"). On April 14, 1999, eUniverse completed 3 w 13 14 reverse merger arranged by first CEO, main operator and principal control officer
15 under SEC Sarbanes Oxley federal laws, serving as Chairman and CEO thru October
16 30, 2003 when as victim of fraud set in motion by Google, refused to participate in 17 18 Defendants further fraud against and including public shareholders and petitioner
19 Resigned as Officer, and in December from the Board of Directors, which is publicly
20 Stated forth in the eUniverse see SEC Filings including 8k, acquired along with its 21 22 100% owned and controlled Myspace.com website assets that News Corporation
23 acquired after misleading shareholders to vote to approve such transaction at the end
24 of September 2005.
25 8. The credibility of News Corp’s Board including Kleiner Perkins Partner
26 Perkins and Intel Director Thornton has greatly diminished between 2005 and 2012 27
28
’1
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 7 of 41 Page ID #:1889
t )
1 fueled by its involvement in illegal phone hacking in the UK and the incredible effort
2 made to cover up and deny the deeds for years before finally in 2012, admitting indeed
3 the company had misled the public. Most recently CEO Rupert Murdoch personally
4 donated over $1 million dollars to charity as part of a $6 million dollar single settlemeni
5 with the family of a UK 13 year old girl who had gone missing and was murdered whil
6 also falling victim to one of News Corp’s operatives hacking her phone and erasing’
7 voice mail evidence in the process of trying to find fresh angles for new stories.
8 Its been widely reported that the UK MET has over 5000 suspected victim’s of
9 phone hacking from News Corp and while only approximately 200 of the suspected
10 victims have been contacted by police to date, already there are 60 lawsuits in the UK
11 from News Corp phone hacking victims.
12
i. The credibility of Google largest shareholder Doerr Director of Defendant
13 is very poor historically and he was forced to abandon a Director seat at Apple, Inc. in 14 15 2010 after he was threatened with a complaint by the FTC. Doerr employee Reported
16 the following acts he is a current defendant in a Sexual harassment lawsuit pending
17 in San Francisco State Court., 18
19 9. News Corporation, struck an undisclosed bilateral agreement with at
20 least Google, on or around September 30, 2005 before the Myspace and parent
21 corporation eUniverse operating in California (later thru name change operated as 22 23 Intermix, Inc) were acquired and ceased to be publicly traded.
24
10. News Corporation which operates Fox and Fox Interactive among other
25 subsidiaries is also alleged and believed to have struck related arrangements or
26 27 agreements with Ask Jeeves, Inc., IAC Corp, or TimeWarner/AOL, Inc. during
28 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 8 of 41 Page ID #:1890
j
1 such time. 2
11. At least one Officer and/or Director of News Corporation and Go ogle
4 have admitted to a second bilateral agreement existing as of late 2006,which
5 Therefore defendants agreements already in place
6 for not poaching each other’s employees which included Google, AskJeeves, and
7 8 TimeWarner/AOL formed around existing commercial online advertising
9 agreements to provide and promote Google’s online search product. News Corporatio
10 11 was merely telling a fabricated story of its 2005 agreement with Google in
12 the 2006 published story by its own employee it got 3rd party publisher to distribute
13 globally, "Stealing MySpace", which it recounted its deal with Google, Kleiner Perkins
14 15 Partner Doerr on Google Board with Perkins working or representing News
16 12. During this period, Google was in need of new commercial partners
17 to help it grow. Google’s main focus was finding or securing new partner companies
18 19 that had significant number of unique visitors coming to their owned website properties
20 i. Deal #1: Commercial Ad Sense Pilot Partner Ad Buy and Endorsement permission as part of commercial $20,000 purchase made by Google on or around
21 January 2003, became aware that Greenspan was Chairman and CEO or the 22
principal executive officer by or before February 2003. Google negotiated and 23 consummated its first direct agreement with eUniverse February 2003. Google had grea 24 success after target of Deal#1 profits emerged shortly after eUniverse and Greenspan
25 agreed to deal and endorsement.
26 ii. Deal #2: Commercial Search:
27
28 .9
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 9 of 41 Page ID #:1891
1 at least two of Google’s top business development executives thru 2009, Gerber, Morris, worked or contacted petitioner directly via email in
2 attempting to consummate a direct commercial search engine online
3 advertising agreement. Petitioner opted to terminate Google discussions after announcing
4 execution of a Commercial Search agreement with Yahoo in late October
5 2003, and launch of its SirSearch.com consumer facing brand by and for benefit of eUniverse and its 100% owned MySpace division, launched
6 August 2003 but not announced to public until February 2004.
7
8
9 I. Leal Standard for a Motion to Intervene
10 14. Petitioner is entitled to intervention as a matter of right under
11 12 Federal Rule of Civil Procedure 24(a)(2). Rule 24(a)(2) provides that:
13 "Upon timely application anyone shall be permitted to intervene in an action, when the applicant claims an interest relating to
14 the property or transaction which is the subject of the action and the
15 applicant is so situated that the disposition of the action may as a practical matter impair, or impede the applicant’s ability to protect that
16 interest, unless the applicant’s interest is adequately represented by
17 existing parties. Fed R. Civ. P.24(a)"
18 The Ninth Circuit construes Rule 24 liberally in favor of movants for
19 20 intervention. See Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (citing
21 Donnelly v. Glickman, 159 F.3d 405, 409 (9th Cir. 1998)). "Courts are guided primaril)
22 by practical and- equitable considerations." Id. 23 1 When considering a motion to intervene, the court "must accept as true the non-conclusory 24 allegations in the motion." Reich v. ABC/York-Estes Corp., "A motion to intervene as a matte 25 of right, moreover, should not be dismissed unless it appears to a certainty that the
26 intervener is not entitled to relief under any set of facts which could be proved under the
27 complaint." Id. (citing Lake Investors Dcv. Group v. Egidi Dcv. Group,).
28 10
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 10 of 41 Page ID #:1892
1 15. For reasons set forth herein, Intervenor satisfies requirements of
2 F.R.C.P 24(a)(2) to intervene as a matter of right in present action.
4 Intervenor’s Motion to Intervene is Timely.
5 16. In considering the timeliness issue, courts consider three factors: (i) the
6
7 stage of the proceeding at time the applicant seeks to intervene; (ii) prejudice to
8 the existing parties from applicant’s delay in seeking leave to intervene; and (iii) any
9 10 reason for the length of delay in seeking intervention (how long the prospective
intervenor knew or reasonably should have known of her interest in the litigation). See
12 United States v. Washington, 86 F.3d 1499 (9th Cir.1996); Engra, Inc. v. Gabel, 958
13
14 F.2d 643, 644 (5th Cir. 1992).
15 17. Intervention is timely because other Plaintiffs or those who
16 believe they are or should be have recently filed briefs as
17 18 allowed by the court. After these pleadings were reviewed Intervenor came to realize
19 certain facts and discovery exist that allow certain new claims that would greatly
20 benefit all other Plaintiffs. There are also new issues and matters which the 21 22 court has not engaged in yet.
23 18. Defendants will not be prejudiced by the intervention, as they already are
24 on notice as to the claims alleged against them and furthermore, defendants have 25 26 intentionally concealed discovery, documents, and emails from both existing Plaintiff
27
28 11
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 11 of 41 Page ID #:1893
I
and Plaintiff seeking to intervene. Further, Intervenor shares same claims as the currei 2
Federal Plaintiff EH for Intervening Plaintiff to be consolidated to share its recovered
4 pieces of information lost for Existing Plaintiff from result of Defendant’s Fraudulent
5 concealment And newly discovered evidence and facts from the UK criminal trials
6 of 10 News Corporation executives including the CEO’s "surrogate" daughter and
8 Ex-Editor and President of Defendant’s #1 and #2 news publications for CEO
9 To interface with and retain control of such editor run divisions of the GAAP
10 11 Aggregating public issuer, News Corporation, makes this motion to intervene timely.
12 For example, defendants have obstructed justice by eliminating Mr. Greenspan as
13 14 a fact/expert witness after defendants struck an arrangement with class counsel in May
15 2009 to destroy the value of Class’s federal case and upside in Brown V. Brewer.
16 However, by simply toggling in the previously lost Rule 701 Damage Report,
17 18 There is now produced evidence of $32+ billion in earnings and credits that
19 News Corporation received benefit of thru a September 2005 acquisition of 100%
20 Of Intermix, inc. (formerly eUniverse, Inc.) holder of 100% of Myspace.com and its
21 data and user future value.
22
23 Defendant would seek to limit damages to Plaintiff EH and other
24 Victims based on its published and formerly disclosed to be accurate financials.
25 26 This evidence would be sought or required to be seen by future Jury that Plaintiff EH
27 Requested or that Plaintiff would receive benefit of if filing this claim as independent
28 12
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 12 of 41 Page ID #:1894
1 action in Federal Court.
2
3 News Corporation informing Victims and litigants like EH, that is actually earned
4 an additional $32 billion or more from a transaction News Corporation engineered
5 In 2005 at the same time as entering into and facilitating the criminal acts that 3
6 7 employees have admitted were criminal against EH and thousands of other
8 entertainment former employees, consultants, or agents during 2005.
9 10 And that News Corporation had taken special accounting and unlawful accounting
services on and paid for such services to the same service providor, Ernst and Young
12 and Hogan Hartson Law LLC and Hogan Lovell Law 1LC, and such earnings
13 14 previously hidden, could thru Court accepting Intervention of new Plaintiff
15 and allowing (Exhibit #1: Rule 701 Damage Report) represents the fact
16 that News Corporation benefited more then most companies thru digital sales of its
17 18 products between 2005-2014. Its digital products could only be sold by being created
19 with the payments to, hiring, and participation of Actors like Brad Pitt and
20 his wife actress who hired and retained Plaintiff EH during 2005 and 2006 at the very 21 least its uncontested. Because News Corporation sought to maximize profits
22 by creating schemes to bypass the economic limits of the cards he was dealt
23 24 as CEO of News Corporation by late 2004, Rupert Murdoch was scared
25 of losing control and of being ousted by Directors including Perkins and
26 Dinh, later Hurd helped further bully and control the growth of bribery 27
28 13
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 13 of 41 Page ID #:1895
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And hacking as Murdoch began to try to fade out of scene with Acquisition
Of Dow Jones and letting his right hand Les Hinton, the Halderman to Nixon
I FRAUDULENT CONCEALMENT & EMAIL & DISCOVERY SPOILATION
19. Defendants have omitted key discovery previously that caused key
I evidence and facts to be fraudulently concealed. The fraudulent concealment includes
affirmative acts. Therefore, tolling would not take place until the fraudulent
concealment is fully disclosed. 7th Circuit Baker v. F&F Investment, 420 F.2d 1191
(7th Cir. 1970), cert. den., 400 U.S. 821 (1970) (self-concealing conspiracy
demonstrates fraudulent
concealment) (dictum) United National Records, Inc. v. MCA, Inc., 609 F.Supp. 33
(N.D. Ill. 1984) (denial of wrongdoing and false statements regarding price increase
sufficient to establish fraudulent concealment).
Therefore, when comparing the impact of fraudulent concealment by Defendants
And the late period even at the time of Settlement being rejected, the Court has allowed
Intervention for Class Action interventions. 2
Intervenor has a significantly protectable interest in subject matter of the action.
20. Intervenor absolutely can claim "an interest relating to the property or
transaction that is the subject of the action." Fed. R. Civ. Proc. 24(a)(2). Intervenor was
2 (quoting Agretti, 982 F.2d at 247); see also Alümax Mill Prods.v.Congress Fin. Corp., (allowing nonsettling defendant to challenge a partial settlement that dismissed with prejudice its cross-claims and stripped it of Indemnity contribution rights).
14
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 14 of 41 Page ID #:1896
1 the largest common stock shareholder and an officer and Director thru December 10,
2 2003. "It is generally enough that the interest [asserted] is protectable under some law,
3 and that there is a relationship between the legally protected interest and the claims at
4 issue." Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993);
6 The Ninth Circuit has "taken the view that a party has a sufficient interest for
7 8 intervention purposes if it will suffer a practical impairment of its interests as a result of
the pending litigation." California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir.
10 2006).
11
12 21. Intervenor will lose his chance to prove he was harmed by defendant’s
13 newly disclosed illegal bilateral agreements struck with AskJeeves, Inc. in 2005 and/or
14 Google in 2006 that was part of HiTech illegal antitrust conspiracy network of co-
15 16 conspirators and defendants including Intel and Google.
17 22. Plaintiff-Intervenor has a special interest in presenting evidence that will help
18 19 Court and existing Plaintiff. Defendants have also made a significant effort to
20 defame intervenor and continue to this day. Includes lying and misleading the public
21 about the origins of MySpace.com and passing off credit to employees of MySpace.corr 22 23 instead of the management at the time MySpace.com was created in August 2003 which
24 was led by Intervenor. Defendants have and will continue to cause massive damage to
25 intervenor thru Defendant’s false claims spread thru News Corp 26 27 properties and efforts to defame Intervenor. Therefore Intervenor will continue to be
28 15
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 15 of 41 Page ID #:1897
1 damaged unless the new claims, evidence and matters presented in these pleadings are 2
equitably disposed of See Forest Conserv. Council v. U.S. Forest Service, 66 F.3d
4 1489, 1494 (9thCir. 1995)
5 Intervenor’s Interests Would Be Substantially Prejudiced
6 23. To intervene, a movant must show the disposition of the action may "as a
8 practical matter impair or impede" the ability to protect movant’s interest, unless the
9 interest is adequately represented by existing parties. Fed. R. Civ. Proc. 24(a)(2);
10 11 Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998).
12 24. Intervenor Brad Greenspan will lose the ability to protect movant’s interest
13 14 as victim of California Privacy laws and State Constitution.
15 25. Intervention is appropriate where existing parties do not adequately
16 represent the Intervenors’ interests. Donnelly, 159 F.3d at 409 (citation omitted). The
17 18 Ninth Circuit considers three factors in determining the adequacy of representation:
19 "(1) whether the interest of a present party is such that it will undoubtedly make all of a
20 proposed intervenor’s arguments; (2) whether the present party is capable and willing to
21 22 make such arguments; and (3) whether a proposed intervenor would offer any necessary
23 elements to the proceeding that other parties would neglect." Arakaki, 324 F.3d at 1086
24 (citing California v. Tahoe Reg’l Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)). 25
26 EVIDENCE OF DEFENDANTS $32 PLUS BILLION IN BURIED PHONE 27 HACKING PROFITS historical context as Rule 701 lay witness to benefit Class
28 16
PLAINTIFFS’ MOTION TO INTERVENE
I] Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 16 of 41 Page ID #:1898
I Members
2 26. Intervenors will offer perspectives and knowledge that the existing Plaintiff
3 and Defendants are likely to lack, overlook, or undervalue. "The court also may find th
4 a proposed intervenor’s interests are not adequately represented where the intervenor
6 would bring a perspective none of the other parties to the litigation have." Defenders o
7 Wildlife v. Johanns, No. C 04-45 12 PJH, 2005 WL 3260986, at *8 (N.D. Cal. Dec. 1,
8 2005)) (citation omitted); 1994) 3.
10 The Court should grant intervention because "the magnitude of this case is such
11 that intervention will contribute to the equitable resolution of this case." See Kootenai
12 13 Tribe. The early presence of interveners may serve to prevent errors from creeping into
14 the proceedings, clarify some issues, and perhaps contribute to an amicable settlement.
15 16 Postponing intervention in the name of efficiency until after the original parties have
17 forged an agreement or have litigated some issues may, in fact, encourage collateral
18 attack and foster inefficiency. See Kleissler v. U.S. Forest Serv. & also Forest
19 Even if the Court finds Intervenor is not entitled to intervene as a matter of
20 right, the Court should exercise its discretion and permit intervention
21
22 27. A court may grant permissive intervention whenever the movant "has a
23 claim or defense that shares with the main action a common question of law or fact,"
24 and when the intervention would not "unduly delay or prejudice the adjudication of the
25 See Spangler v. Pasadena Board of Education, (the court may consider whether interveners "will
26 significantly contribute to the full development of the underlying factual issues in the Suit and the just
27 and equitable adjudication of the legal questions presented.")
28 17 PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 17 of 41 Page ID #:1899
1 original parties’ rights." Fed. R. Civ. P. 24(b). As explained above, Intervenor meets all
2 of these requirements. Intervenor is in an analogous posture, and like appellants in
4 Smoke v. Norton, has satisfied the requirements for intervention as of Right under Rule
5 24(a)(2) and for permission intervention under Rule 24(b)(2).
6 28. When considering a motion to intervene, the court "must accept as true
8 the non-conclusory allegations in the motion." Reich v. AB6’/York-.Estes Corp., 64 F.3d
9 316,321 (7thCir. 1995).
10 29. Permissive intervention is also justified because Intervenor’s participation
12 will facilitate an equitable result. See Spangler v. Pasadena Board of Education, 28 552
13 14 F.2d 1326, 1329 (9th Cir. 1977) (the court may consider whether intervenors "will
15 significantly contribute to the full development of the underlying factual issues in the
16 suit and the just and equitable adjudication of the legal questions presented.").
17 18 Intervenor is needed to provide the full facts which do not exist in the current pleadings’
19 The Court should grant intervention because "the magnitude of this case is such
20 that intervention will contribute to the equitable resolution of this case." Kootenai Tribe
21 22 313 F.3d at 1111. The early presence of intervenors may serve:
23 i) to prevent errors from creeping into the proceedings, clarify some issues, and
24 ii) perhaps contribute to an amicable’ settlement. 25 26 Postponing intervention, encourages collateral attack and foster inefficiency.
27 (see Kleissler v. U.S. Forest Serv. ,157 F.3d 964, 974 (3d Cir. 1998);
28 18
PLAINTIFFS’ MOTION TO INTERVENE
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1 30. Motion for Leadership
2 Motion for Leadership Memorandum and Memorandum in Support Class Certificate
4 will be submitted to the Court by June 30, 2014.
5 III. 24(b) LEGAL ARGUMENT
6
7 The Court should allow the proposed Intervenor to join as a Co-Plaintiff in the action. Federal Rule of Civil Procedure 24(b) provides that:
8 31. Rule 24(b) allows permissive intervention if three grounds are met: (i) the
10 intervenor shows an independent ground for jurisdiction; (ii) the motion is timely; and
11 (iii) there exists a common question of law and fact between the intervenor’s claim an(
12 13 the main action. See Corner v. Cisneros, 37 F.3d 775, 801 (2d Cir. 1994). See German
14 v. Federal Home Loan Mortgage Corp., 896 F. Supp. 1385, 1391 (S.D.N.Y. 1995) ("Tb
15 16 Rule is to be construed liberally");
17 (1) There Is An Independent Ground For Jurisdiction
18 32. The Proposed Intervenor has claims against one or more same defendants
19 that arise under the federal antitrust laws, these claims are identical in all material
20
21 respects to those alleged in the current Complaint in those actions in which intervention
22 is sought. Claims happen also during same 2003-2006 timeline
23 24 Therefore, pursuant to 28 U.S.C. § 133 1(a), the Court has subject-matter
25 jurisdiction over the claims of the Proposed Intervenor.
26
27 (2) There Exist Common Questions Of Law And Fact Between The Intervenors’
28 19 PLAINTIFFS’ MOTION TO INTERVENE
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1 Claims And The Underlying Actions
2 33. The Proposed Intervenor claims are based upon same
4 violations of federal law as the underlying action. Thus, it is
5 indisputable that the intervenors’ claims and the claims asserted in the underlying
6 actions have many common -- indeed identical -- questions of law and fact.
8 Diduck v. Kaszycki & Sons Contractors, Inc., 149 F.R.D. 55, 59 (S.D.N.Y. 1993)
9 10 (intervention granted where "the intervenor’ s claims raise identical questions of law
and fact to those currently before the Court");
12 34. A court may grant permissive intervention whenever the movant "has a clam
13 or defense that shares with the main action a common question of law or fact," and
14
15 when the intervention would not "unduly delay or prejudice the adjudication
16
17 of the original parties’ rights." Fed. R. Civ. P. 24(b). As explained above, Intervener
18 meets all of these requirements. Intervener is in an analogous posture, and like
19 20 appellants in Smoke v. Norton, has satisfied the requirements for intervention
21 as of Right under Rule 24(a)(2) and for permission intervention under Rule 24(b)(2).
22 Indeed, as Mayfield makes clear, one may challenge a settlement agreement to which h
23 24 is not a party if the agreement will cause him" ’plain legal prejudice,’ as
25 when ’the settlement strips the party of a legal claim or cause of action.’ "Mayfield, 985
26 F.2d at 10933 Under the discretionary standard, Intervener’s burden is far lower than tha
27
28 20
PLAINTIFFS’ MOTION TO INTERVENE
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V
1 required for intervention as a matter of right. See Defenders of Wildlife, see also
2 I Northwest Forest Res. Council.
3
4 (3) Policy Considerations In Class Actions Strongly Favor Granting Intervention
5 I Motions
6
7 35. In class actions, intervention is "highly desirable" "to ensure adequate class
8 representation." Triefv. Dun & Bradstreet Corp., 144 F.R.D. 193, 202 (S.D.N.Y. 1992)
9 (rejecting defendants’ argument that intervention was untimely).
10
11 The decision in Shields v. Washington Bancorporation, Civ. A. No. 90-110 1,
12 1992 WL 88004 (D.D.C. Apr. 7, 1992), is instructive. In Shields, the court denied a
13 motion for class certification because the plaintiff was not an adequate class
14
15 representative. Id. at *1. Subsequently, a new plaintiff moved to intervene as the class
16 plaintiff. Id.
17
18 36. In this case, failing to pursue immediate intervention and insertion of new
19 evidence and matters and testimony would harm existing Plaintiff and thousands of
20 other Absentee Class members substantially.
21
22 It also prevent Intervenor from taking advantage of Federal anti-
23 retaliatory whistleblower statues and protections petitioner is due. The impairment to
24 Intervenor’s interest from the Court’s ruling if intervention is not granted is sufficient
25 26 to qualify for intervention as of right.
27 37. The Intervenor is willing to be represented by counsel f so "undue delay,
28 21
PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 21 of 41 Page ID #:1903
complication, or procedural difficulty remain unlikely." 2
McNeill, 719 F. Supp. at 250; see also German v. Federal Home Loan Mortgage Corp.,
4 899 F. Supp. 1155, 1166-67(S.D.N.Y. 1995)
5 IV. CONCLUSION
6 38. For the reasons described above, Intervenor respectfully requests the Court
7 8 grant The motion to intervene as a matter of right pursuant to Rule 24(a), or, in the
9 alternative, permissively pursuant to Rule 24(b) and approve the order attached herein.
10 39. The Intervenor further respectfully requests the Court grant in such
12 motion, the right to serve the Complaint in Intervention (Exhibit #2) , Motion for
13 Partial Summary Judgment (Exhibit #3) , ,and Motion for Preliminary 17200 Injunction
14 15 and/or Motion of Contempt for Violation 2006 California State Attorney 17200
16 Permanent Injunction entered into consent decree on behalf of Defendant News
17 Corporation with State Attorney (Exhibit #4) related and precedential rulings and
18 19 briefings attached as herein.
20 DATED: May 2, 2014
21 Respectfully submitted,
Brad D. Greenspan, Pro Se 25 264 South La Cienega Blvd. 26 Suite 1216 27 Beverly Hills, CA 90211
28 22
PLAINTIFFS’ MOTION TO INTERVENE
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1
2 EXHIBIT #1 3 Rule 701 Damage Report
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PLAINTIFFS’ MOTION TO INTERVENE
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 23 of 41 Page ID #:1905
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE GREENSPAN,
) C.A. No. 9567-ME Plaintiff, )
V. )
NEWS CORPORATION, et at Defendants
RULE 701 DAMAGE REPORT
1
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 24 of 41 Page ID #:1906
Cases Cited pg.3
I INTRODUCTION pg. 4
II OVERVIEW OF ASSIGNMENT pg. 6
SUMMARY: $32.453 Billion in damages suffered by Class Members
III TRANSACTION BACKGROUND pg. 6
IV COMPANY BACKGROUND 12g.6
V INDUSTRY ENVIRONMENT IN 2005 pg. 6
VI PROBLEMS WITH THE MANAGEMENT FORECAST AND pg. 7 DR. WILLIAM KENNEDY’S DAMAGES REPORT
VII TRANSACTION BACKGROUND AND ASSUMPTIONS 129- 11
VIII DAMAGES ANALYSIS pg. 12
IX- CONCLUSION: 129- 15
EXHIBIT 1 - BACKGROUND / WORK EXPERIENCE pg. 16
EXHIBIT 2�Chart - Monthly unique visitors MySpace pg. 18
2
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 25 of 41 Page ID #:1907
CASES CITED
Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993
pg. 4
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246
(9th Cir. 1997)
pg. 5
Asplundh Mfg. Div. v. Benton Harbor Eng’g, 57 F.3d 1190, 1196
(3dCir. 1995) pg. 6
In Doft & Co. V. Travelocity pg. 8
Marcel v. See, Inc pg. 10
Henry v. Hess Oil Virgin Islands Corp pg. 10
Rowe v. State Farm Mut. Auto. Ins. Co., pg. 10
United States v. Bighead, 128 F.3d 1329, 1335 (9th Cir. 1997) pg. 10
3
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 26 of 41 Page ID #:1908
DECLARATION OF LAY OPINION UNDER RULE 701 BY BRAD D.
GREENSPAN: CEO, DIRECTOR, FOUNDER PAID SEARCH
DIVISION, HEAD OF M&A THRU OCTOBER 30, 2003. ONLY
EXECUTIVE TO HAVE COMPLETED A GOOGLE VS. YAHOO
SEARCH AUCTION
I INTRODUCTION
I, Brad Greenspan, declare:
1. I submit this declaration in support of the Plaintiff Class
Members.
The following is based on upon my personal knowledge and if called as a
Witness I could and would testify competently thereto.
2. This declaration is made under Rule 701 based on my experience.
3. Rule 701 allows lay witness declarations limited to those
opinions or inferences, which are (a) rationally based on the perception of the
witness, and (b) helpful to a clear understanding of the witness’ testimony or
the determination of a fact in issue, and (D not based on scientific, technical,
or other specialized knowledge within the scope of Rule 701.
4. I am also in a unique position to provide a valuation amount
Under Rule 701. Most courts have permitted the owner or officer of a
business to testify to the value or projected profits of the business, without
the necessity of qualifying the witness as an accountant, appraiser, or similar
expert. See, e.g., Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993)
4
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(no abuse of discretion in permitting the plaintiffs owner to give lay opinion
testimony as to damages, as it was based on his knowledge and participation
in the day-to-day affairs of the business). Such opinion testimony is admitted
not because of experience, training or specialized knowledge within the
realm of an expert, but because of the particularized knowledge that the
witness has by virtue of his or her position in the business.
5. The amendment does not distinguish between expert and lay
witnesses, but rather between expert and lay testimony. Certainly it is possible for
the same witness to provide both lay and expert testimony in a single case. See, e.g.,
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246 (9th Cir. 1997) (law
enforcement agents could testify that the defendant was acting suspiciously,
without being qualified as experts; however, the rules on experts were applicable
where the agents testified on the basis of extensive experience that the defendant
was using code words to refer to drug quantities and prices). The amendment
makes clear that any part of a witness’ testimony that is based upon scientific,
technical, or other specialized knowledge within the scope of Rule 702 is governed
by the standards of Rule 702 and the corresponding disclosure requirements of the
Civil and Criminal Rules.
The amendment is not intended to affect the "prototypical example(s) of the
type of evidence contemplated by the adoption of Rule 701 relat(ing) to the
appearance of persons or things, identity, the manner of conduct, competency of a
person, degrees of light or darkness, sound, size, weight, distance, and an endless
number of items that cannot be described factually in words apart from
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 28 of 41 Page ID #:1910
inferences." Asplundh Mfg. Div. V. Benton Harbor Eng’g, 57 F.3d 1190, 1196 (3d Cir.
1995).
II OVERVIEW OF ASSIGNMENT
-Updated/revised damages assessment for benefit of Plaintiff Class Members.
SUMMARY: $32453 Billion in damages suffered by Class Members
III TRANSACTION BACKGROUND
i) $12.00 cash out merger with two investment banks providing fairness
valuation reports created
ii) after the $12.00 price was chosen by CEO and accepted by Board of Issuer.
IV COMPANY BACKGROUND
Company was online entertainment and social networking website creator and also
for purposes of report owned 100% of MySpace, Inc. At the time of its sale in 2005
for approximately $649 million dollars, the purchase of the public shareholder’s
equity was reported to be $580 million and there existed a $69 million dollar
obligation to pay the minority shareholders of MySpace, Inc. according to
agreements signed in February 2005 by and between Redpoint, Inc. and Intermix,
Inc, and MSV LLC.
V INDUSTRY ENVIRONMENT IN 2005
i) Unique in that the pace of online advertising was growing much faster
then other industries in the United States.
6.
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ii) Google had just successfully raised $4.4 billion dollars and announced the
sale in August 2005.
iii) According to company documents and testimony of former head of online
search and CEO and founder of MySpace.com and Issuer, Issuer had opportunity to
run a search auction as of at least August 2005 between at least Google, Yahoo,
Microsoft, AskJeeves, and AOL.
iv) Go ogle and AOL set market price for value of search assets on or around
the 3rd and 4th quarters of calander 2005, closing a new Search Partnership in
December 2005.
v) In this transaction, Google invests $1 Billion into AOL, valuing AOL to be
worth $20 billion by virtue of the 5% stake Google takes for its investment.
VI PROBLEMS WITH THE MANAGEMENT FORECAST AND DR. WILLIAM KENNEDY’S DAMAGES REPORT
0 The damage report by Anders Minkler & Piehi LLP is helpful to
confirm the problem areas with management forecasts and the banker fairness
opinions. The expert also cites certain evidence that is useful in triangulating the
valuations we calculate and conclude in this report are more accurate and sound.
ii) Because of both unreliable forecasting historically proven by
management for MySpace, Inc. and because MySpace was an early stage company
experiencing significantly greater then average growth rates, Kennedy should not
have opted to follow banker’s fairness opinion method to use the 2009/20010 DCF
method for a company like Intermix and merely hoped to gain accurate methods for
(
7
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an accurate valuation of MySpace merely by adjusting the underlying financials.
iii) In Doft & Co. V. Travelocity, the Delaware Court made several
precedential determinations when faced with the task of weighing using
management forecasts for a new fast growing company in a fast changing market
environment, stating:
a) ’The court may consider "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court."
b) "Both parties used a DCF approach and a comparable company approach to value the shares.
c) "A DCF analysis is a useful tool for valuing shares and is frequently relied on by this court in appraisal actions."
d) "The utility of a DCF analysis, however, depends on the validity and reasonableness of the data relied upon. As this court has recognized, "methods of valuation, including a discounted cash flow analysis, are only as good as the inputs to the model."
e) "The problem in this case is that the most fundamental input used by the experts�the projections offuture revenues, expenses and cash flows�were not shown to be reasonably reliable."
D "Delaware law clearly prefers valuations based on contemporaneously prepared management projections because management ordinarily has the best first-hand knowledge of a company’s operations."
g) "Here, management prepared the 5-year projections for the period 2002-2005 and gave them to Sabre for use in its routine planning processes."
h) "Often, projections of this sort are shown to be reasonably reliable and are useful in later performing a DCF analysis. In this case, however, the court is persuaded from a review of all the evidence that the Travelocity 5-year plan does not provide a reliable basisfo rfo recasting future cash flows."
i) "Travelocity’s management held the strong view that these projections should not be relied upon because the industry was so new and volatile that
iJ
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reliable projections were impossible."
D "Punwanifurther testified that because of the limited financial history of Travelocity, together with a rapidly evolving marketplace, it was difficult "to forecast the next quarter, let alone five years out."
k) "Id. "We were really not in a position to be able to put any credence on the numbers, both on the revenue and on the cost side. And the only way to get credibility in our numbers would have been to take those models and put them through reasonability checks ... [that] were never done because, when we built these frameworks, I’ll call them, in the year 2000, we were in a period of explosive growth. We were growing at 150 percent per year.... No one really knew what the right number was." Id. at 381-82.
1) "Id. at 383. "It was bad enough before when we did the data, and we had this new variable that got thrown into our lap, which totally destroyed our ability to have any confidence in projections beyond one quarter out." Id.
m) "Although it was aware of the 5-year forecasts, Salomon did not conduct a DCF analysis of Travelocity as part of its work in connection with the merger. The testimony ofAnwarZakkour, Salomon’s managing director, is especially relevant on this issue:
n) "Q. Did Salomon Smith Barney prepare a discounted cash flow analysis of Travelocity in connection with this transaction? A. Absolutely not."
o) "Q. Why was no discounted cash flow, analysis prepared in connection with this transaction?"
"A. Because this was an industry that was influx. And the management team itself, which should have been the team that was most able to put together a set of projections, would have told you it was virtually impossible to predict the performance of this company into any sort of reasonable future term. And they in fact had very little confidence with even, their 2002 forecast numbers because of that."
p) "Q. Is a discounted cash flow methodology a methodology that is commonly used by Salomon Smith Barney in valuing companies?
A. Valuing mature companies, yes."
q) "The court reluctantly concludes that it cannot properly rely on either party’s DCF valuation. The goal of the DCF method of valuation is to value future cash
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flows. Here, the record clearly shows that, in the absence of reasonably reliable contemporaneous projections, the degree of speculation and uncertainty characterizing the future prospects of Travelo city and the industry in which it operates make a DCF analysis of marginal utility as a valuation technique in this case. If no other method of analysis were available, the court would, reluctantly, undertake a DCF analysis and subject the outcome to an appropriately high level of skepticism. The court, however, now turns to the other method of valuation offered by the parties."
iv) The application of the Daubert standard rests on the level of generality of
the expert’s study. The more removed the expert’s data is from the facts of the
particular case the more unreliable and speculative his testimony becomes. For
example, in both Marcel v. See, Inc., and Henry v. Hess Oil Virgin Islands
Corp., the court excluded the expert’s testimony because the projections of
future earnings were based on general industry studies that failed to take into
consideration the specific circumstances of the plaintiff. In Rowe v. State Farm Mut.
Auto. Ins. Co., by contrast, the court allowed the projections because they were
based on the past billing history of the plaintiff, who as a result of his injuries could
not longer practice Law.
v) Rule 702’s analysis is ordinarily prospective. Expert testimony is helpful
if it "will assist the trier of fact." Fed.R.Evid. 702 (emphasis added). Thus a
District court may not exclude expert testimony simply because the court can,
at the time of summary judgment, determine that the testimony does not result
in a triable issue of fact. Rather the court must determine whether there is "a
link between the expert’s testimony and the matter to be proved." United
States v. Bighead, 128 F.3d 1329, 1335 (9th Cir. 1997)
10
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VII TRANSACTION BACKGROUND AND ASSUMPTIONS
iJ Based on the evidence reviewed, the Intermix Board avoided
using the experienced valuation M&A technology banker, JP Morgan’s Zakkour.
News Corp received the benefit of keeping this banker from representing Issuer.
Namely that News Corp did not have to overcome or pay the up to $1.3+ Billion that
Zakkour estimated MySpace was worth prior to the July 18, 2005 merger
Agreement being signed.
a) Zakkour leads Citibank’s valuation/fairness report and is engaged by Ask
Jeeves Board of Directors along with Allen & Co. in February 2005 and values
AskJeeves worth at least $1.85 million at the time it signs a merger agreement with
IAC Corp. in March 2005.
b) AskJeeves lead director David Carlick engaged Zakkour and Allen & co. to
work for and represent Ask Jeeves in February 2005, while he was at the same time
Director and Chairman of Intermix. In addition Andrew Sheehan, his partner in his
venture capital fund VantagePoint, a control shareholder in Intermix was a director
of both Intermix and MySpace, Inc. Geoff Yang a long time director of AskJeeves was
also a director of MySpace, Inc.
c) The AskJeeves/IAC a stock for stock merger does not close until July 19,
2005.
d) In April 2005, Zakkour joins JPMorgan. JPMorgan served as the investment
bank for IAC in the March 2005 announced merger with Ask Jeeves.
e) One Board member of IAC Corp during this period is also the Chairman of
11
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Investment bank Allen & Co. IAC also discloses it retains and works with Allen & Co.
as their banker in ongoing basis.
f] News Corp Director Stan Schuman in 2005 was and is one of most senior
bankers at Allen & Co. of senior bankers at Allen & Co.
gJ As of July 13, 2005 or earlier, Zakkour and JPMorgan have been retained to
value Intermix, Inc. and on July 16, 2005, Zakkour’s team leading the efforts for JP
Morgan and News Corp, provides a valuation for MySpace, Inc. of $1,040 - $1,367.
Zakkour according to Kennedy, uses "2006 EBITDA Multiples"
h) Defendants further determined they would not allow Deutsche Bank to
write a fairness opinion or be one of the two bankers it ultimately retained.
i) On or around July 13, 2005, Issuer retained both Thomas Weisel and
Montgomery. Both banks had not completed the valuation work or provided a full
valuation report prior to being retained. Unlike Montgomery and Thomas Weisel,
Deutsche Bank had already created and provided to at least Rosenblatt and
Sheehan, a Valuation report as of May 2005.
VIII DAMAGES ANALYSIS
1) Financial Projections for MySpace. Inc. using actual 2005 results known:
a) The most accurate way to ascertain the valuation for MySpace, Inc. is to
build a new set of financial projections more reliable then the management forecast
and then combine this data with the most unconflicted comparable valuation report
that existed at the time.
12
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b) We take the last actual quarter to quarter financial results for MySpace,
Inc. and use these as the base information which we know is accurate and build a
multi year forecast, initially we continue the actual growth rate and over time
reduce such growth rate to be conservative.
c) Last Actual results for MySpace, Inc.: $3.74 million in revenue for the
March 2005 ending quarter which grew to $6.15 million in revenue for June 2005
quarter - 64% growth quarter to quarter.
d) Last actual results for MySpace, Inc: $463,000 in EBITDA for the March
2005 quarter which grew to $1.58 million in EBITDA for the June 2005 quarter.
e) Using these growth rates, we then use Kennedy’s 55% EBITDA margin and
being conservative we reduce this to 45% for 2006. In 2007, we reduce growth rate
from 64% to 32%. In 2008, we reduce the quarterly growth rate to 22%.
Below we summarize the annual forecast.
fJ (CY2 006) Our MySpace, Inc. forecast using most recent actual results
shows $264.21 million in annual revenue for 2006 and EBITDA of $118.89 million
g) (CY2007) Our MySpace Inc. forecast shows $999 million in revenue
and EBITDA of $449.55 million.
h) (CY2008) Our MySpace, Inc. forecast shows $2.43 billion & EBITDA
of $1.09 billion.
2) ITS APPROPRIATE TO CONSIDER AND USE A COMPARABLE COMPANY VALUATION ON A STAND-ALONE BASIS
a) We then determine that the May 2005 Deutsche Bank valuation report
13
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which uses comparable company EBITDA valuations is reasonable and the prudent
work of unconflicted investment bankers trying to demonstrate their good faith and
knowledge of the Internet sector to Intermix in their efforts to be retained by
Intermix to contact potential buyers.
b) Our decision is further confirmed thru review of the recent Delaware case
in Doft & Co. V. Travelocity where the court states as part of its decision to reject
management’s forecast and a valuation using DCF in favor of singularly using
comparable company valuation method.
c) "A comparable company analysis is often used in connection with a DCF analysis. The court, however, may usea corn parable company valuation on a stand-alone basis in an appraisal action when it is the only reliable method of valuation offered by the parties. In Borruso v. Communications Telesystems Intl, the court relied on a comparable company analysis because neither expert was comfortable using a DCF analysis to value the company’s shares due to the limited financial data of the company available as of the merger date. 753 A.2d 451, 455 n.5 (Del. Ch. 1999)."
d) We use the Deutsche report 2008 multiple for MySpace, Inc. of 22.5X
which is the top end of the "Estimated multiple range" as we believe this is
appropriate since based on the Kennedy report, Google stood out as the most
similar growth and profitability rates to MySpace, Inc.
e) Next we plug in the MySpace’s new forecast EBITDA for 2008 which is
multiplied by the 22.5X comparable company EBITDA, resulting in a Valuation of
$24.52 Billion for 100% of MySpace, Inc.
fJ We agree with Kennedy’s takeover premium analysis and the need to
adjust valuation based on this analysis. In addition, we again take heed of the recent
14
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Delaware court decision in Doft & Co. V. Travelocity where the court affirms this
analysis and recommends adding a premium to the buyout value as final step,
stating, "Delaware law recognizes that there is an inherent minority
trading discount in a comparable company analysis because "the [valuation] method depends on comparisons to market multiples derived from trading information for minority blocks of the comparable companies. The equity valuation produced in a comparable company analysis does not accurately reflect the intrinsic worth of a corporation on a going concern basis. Therefore, the court, in appraising the fair value of the equity, "must correct this minority trading discount by adding back a premium designed to correct it."
gJ Therefore, we use Kennedy’s 35% takeover premium and summarize:
control Controlling value Option Value premium Indication Exercise MySpace
2008 EBITDA MULTIPLE 35% $33.10213 ($69M) $33.033 Billion
Indication $32.453B
Based on the alternative guideline public company analysis provided above. MySpace was undervalued by $31453 billion ($33.033B - $580M).
IX- CONCLUSION:
I declare on penalty of perjury under the laws of the United States of America that
the foregoing is true and correct. Executed this April 28, 2014 in Los
Angeles
15 Brad D. Greenspan (SEAL)
15
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 38 of 41 Page ID #:1920
EXHIBIT 1 - BACKGROUND / WORK EXPERIENCE
QUALIFICATIONS OF EXPERT
-I have approximately 12 years of industry experience.
-I was CEO and founder of ellniverse, Inc. from its inception in 1998 as my idea thru October 30, 2003.
-I was the founder of MySpace.com while Chairman and CEO of eUniverse in 2003.
PROFESSIONAL QUALIFICATIONS
-Educational & Professional Certification
i) Two years of Law Society Undergraduate at University of Santa Barbara ii) Bachelors of Political Science, 1996 University of Los Angeles
PROFESSIONAL RECOGNITIONS AND AFFILIATIONS
i) Morgan Stanley’s Internet analyst announced in November 2003 that Issuer eUniverse as of October 2003’s 6 month ending data, was the #1 fastest growing portal on the Internet eclipsing AOL and Yahoo.
ii) Founder of Myspace.com .
iii) Founder of eUniverse
PRESENTATIONS AND PUBLICATIONS
i) Between 1999-October 2003 I co-created and presented Issuer’s financial forecasts and was sole decision maker on all internet strategy and determined allocation of funds if any for any new project.
PROFESSIONAL EXPERIENCE
1996-19980 President of Palisades Capital a merchant investment bank where I raised over $60 million dollars for 4 public companies.
1999- October 30, 2003 - Chairman and CEO of eUniverse, Inc.
16
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 39 of 41 Page ID #:1921
-I was initial and first head of Search for ellniverse, Inc., the issuer and signed first search partnership with Overture acquired and operated as Yahoo in 2003.
2004-2005- Palisades Technology - I was partners with Yahoo and operated a search toolbar division for game companies including leading casual games company Big Fish Games and Browser companies like AvantFind.com
2006-president, President LiveUniverse, Inc. - a network of entertainment websites
2008-present, President of LiveVideo, Inc. - a Los Angeles based network of entertainment websites
2006-present, Chairman of BroadWebAsia, Inc., - operates HupoTV.CN a Chinese video entertainment website
2006-2009, Co-Founder and Board Member, Michigan based Draths Corporation, clean technology leader in renewable green chemistry. Management led by Michigan State University professors and green chemistry award winners Dr. Karen Draths and Dr. John Frost.
2006-present, Board Member, Borba Corporation
2010-present- Managing Director of Social Slingshot Pte Ltd, a Singapore based incubator fund partnered with the Singapore Government’s National Research Foundation (NRF). I was awarded this $5 million dollar fund to encourage me to work with Singapore entrepreneurs and their universities entrepreneur programs.
TESTIMONY IN TRIAL OR DEPOSITION
i) Greenspan V. eUniverse, 2004, Delaware Judge Strine. (See summary of trial where I provided Delaware counsel evidence to uncover backdating fraud against defendants)
ii) Delagado V. Intermix. I was expert witness for LA City and provided fact information and background for the city of Los Angeles prosecutors in their adware consumer case against Intermix that was settled after Intermix’s listing expired.
17
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EXHIBIT 2- Monthly unique visitors as reported by Comscore for Myspace.com Compared to certain key months where Microsoft and Google offered MySpace or its parent company certain economic offers which provide a value per month these companies are willing to pay or value MySpace search at for the latest traffic/audience statistics that are available during the month a deal is offered up for MySpace.
July 2005 August 2005 September 2005 October 2005 November 2005 December 2005
January 2006
February 2006 March 2006 April 2006 May2006 June 2006 July 2006
August 2006
September 2006
21.21M uniques 21.81M uniques 21.6M uniques 24.25M uniques 24.68M uniques 32.2M uniques
35.5M uniques
37.34M uniques 41.88M uniques 48.03M uniques 51.44M uniques 52.34M uniques 54.52M uniques
55.78M
$14.807
$22.1 Million Value MSFT$800M OFFER
$25.0 Million Value GOOGLE $900 OFFER
jul
Case 2:13-cv-04253-MWF-AJW Document 62 Filed 05/02/14 Page 41 of 41 Page ID #:1923
1 Case No.: 11-CV-02509-LHK ORDER DENYING DEFENDANTS’ INDIVIDUAL MOTIONS FOR SUMMARY JUDGMENT
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
IN RE: HIGH-TECH EMPLOYEE ANTITRUST LITIGATION
) ) ) ) ) ) )
Case No.: 11-CV-02509-LHK ORDER DENYING DEFENDANTS’ INDIVIDUAL MOTIONS FOR SUMMARY JUDGMENT
THIS DOCUMENT RELATES TO:
ALL ACTIONS
) ) ) ) )
Summary judgment is appropriate if, viewing the evidence and drawing all reasonable
inferences in the light most favorable to the nonmoving party, there are no genuine disputed issues
of material fact, and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is “material” if it “might affect the
outcome of the suit under the governing law,” and a dispute as to a material fact is “genuine” if
there is sufficient evidence for a reasonable trier of fact to decide in favor of the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). At the summary judgment stage, the
Court “does not assess credibility or weigh the evidence, but simply determines whether there is a
genuine factual issue for trial.” House v. Bell, 547 U.S. 518, 559-60 (2006). The moving party has
the burden of demonstrating the absence of a genuine issue of fact for trial. Celotex, 477 U.S. at
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323. To meet its burden, “the moving party must either produce evidence negating an essential
element of the nonmoving party’s claim or defense or show that the nonmoving party does not
have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.”
Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000)
(citation omitted). Once the moving party has satisfied its initial burden of production, the burden
shifts to the nonmoving party to show that there is a genuine issue of material fact. Id. at 1103.
Importantly, at the summary judgment stage, the Court must view the record “in the light most
favorable to the non-moving party.” Brown v. City of Los Angeles, 521 F.3d 1238, 1240 (9th Cir.
2008).
The critical case for the legal standard to be applied to motions for summary judgment in
antitrust cases is Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986),
a case that challenged Japanese manufacturers’ lowering of prices as anti-competitive. In
Matsushita, the Supreme Court held that “a plaintiff seeking damages for a violation of § 1 [of the
Sherman Act] must present evidence ‘that tends to exclude the possibility’ that the alleged
conspirators acted independently.” Id. at 588. Under Matsushita, if Defendants can show a
plausible and justifiable reason for their conduct that is consistent with proper business practice,
Plaintiffs “must show that the inference of conspiracy is reasonable in light of the competing
inferences of independent action or collusive action that could not have harmed [plaintiffs].” Id.
The Ninth Circuit has interpreted Matsushita to mean that where a defendant has demonstrated a
plausible business reason for its conduct, “a plaintiff who relies solely on circumstantial evidence
of conspiracy . . . must produce evidence tending to exclude the possibility that defendants acted
independently.” In re Citric Acid Litig., 191 F.3d 1090, 1096 (9th Cir. 1999). The Second Circuit,
in 2012, interpreted Matsushita and Citric Acid as follows: “[Matsushita] further holds that the
range of inferences that may be drawn . . . depends on the plausibility of the plaintiff’s theory.
Thus, where a plaintiff’s theory of recovery is implausible, it takes ‘strong direct or circumstantial
evidence’ to satisfy Matsushita’s ‘tends to exclude’ standard. By contrast, broader inferences are
permitted, and the ‘tends to exclude’ standard is more easily satisfied, when the conspiracy is
economically sensible for the alleged conspirators to undertake and ‘the challenged activities could
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not reasonably be perceived as procompetitive.’” In re Publ’n Paper Antitrust Litig., 690 F.3d 51,
63 (2d Cir. 2012) cert. denied, 133 S. Ct. 940 (2013).
The Court finds that in light of the summary judgment standard as viewed through the lens
of Matsushita and its progeny, Plaintiffs have presented sufficient evidence that tends to exclude
the possibility that Defendants acted independently even if Defendants satisfied the first prong of
Matsushita by showing a plausible and justifiable reason for their conduct that is consistent with
proper business practices. The Court need not determine whether Defendants have met their burden
with respect to Matsushita’s first prong, because the Court finds that Plaintiffs have satisfied their
burden of providing “specific evidence tending to show that [Defendants were] not engaging in
permissible competitive behavior.” Citric Acid Litig., 191 F.3d at 1094.
Here, as Edward Catmull (Pixar President) noted, it was economically sensible for the
alleged conspirators to undertake the alleged conspiracy, because solicitation “messes up the pay
structure.” Catmull Depo. at 179. As George Lucas (former Lucasfilm Chairman of the Board and
CEO) stated, “we cannot get into a bidding war with other companies because we don’t have the
margins for that sort of thing.” Lucas Depo. at 44. Further, as Meg Whitman (former CEO of eBay)
said to Eric Schmidt (Google Executive Chairman, Member of the Board of Directors, and former
CEO), “Google is the talk of the Valley because [Google is] driving up salaries across the board.”
Cisneros Decl., Ex. 872.
In light of this backdrop, the Court will now review some of the evidence that tends to
exclude the possibility that Defendants acted independently. Defendants have conceded that there
were a series of six bilateral agreements for the purpose of these motions: Pixar-Lucasfilm, Apple-
Adobe, Apple-Google, Apple-Pixar, Google-Intuit, and Google-Intel. All six of these agreements
contained nearly identical terms, precluding each pair from affirmatively soliciting any of each
other’s employees. ECF No. 531, October 24, 2013 Order Granting Plaintiffs’ Supplemental
Motion for Class Cert. (“October Class Cert. Order”) at 30. Defendants’ experts concede that they
are unaware of these types of long-term, all-employee agreements ever occurring between other
firms. See, e.g., Talley Depo. at 35.
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In addition, there is evidence that Defendants themselves recognized the similarities
between the agreements. For example, in an email, Lori McAdams (Pixar Vice President of Human
Resources and Administration), stated that “effective now, we’ll follow a gentleman’s agreement
with Apple that is similar to our Lucasfilm agreement.” October Class Cert. Order at 26. Moreover,
Google maintained an explicit do-not-cold-call list that grouped Apple, Intel, and Intuit together.
ECF No. 187, Ex. 29. Defendants also recognized that these agreements were not designed for
circulation, and tried to ensure that the agreements were known only to recruiters and executives
who had to enforce them. For example, Eric Schmidt (Google Executive Chairman, Member of the
Board of Directors, and former CEO) instructed one of his executives that Mr. Schmidt preferred
that the do-not-cold-call list be shared “verbally, since I don’t want to create a paper trail over
which we can be sued later.” Id. at 27. Similarly, in response to a question from an Intel recruiter,
Paul Otellini (CEO of Intel and Member of the Google Board of Directors) stated regarding the
Intel-Google agreement “we have a handshake ‘no recruit’ between eric [Schmidt] and myself. I
would not like this broadly known.” Id. at 28.
Furthermore, there is evidence that many of the Defendants knew about each other’s anti-
solicitation agreements. For example, according to Edward Catmull (Pixar President), Steve Jobs
(Co-Founder, Former Chairman, and Former CEO of Apple, Former CEO of Pixar) “knew and
understood” the Lucasfilm-Pixar agreement. Catmull Depo. at 61. Similarly, Eric Schmidt of
Google testified that it would be “fair to extrapolate,” based on Mr. Schmidt’s knowledge of Mr.
Jobs, that Mr. Jobs “would have extended [anti-solicitation agreements] to others.” Schmidt Depo.
at 169. Google recruiters were familiar that Apple and Adobe had an agreement. Flynn Depo. at 65.
Paul Otellini (CEO of Intel and Member of the Google Board of Directors) was told by Eric
Schmidt (Google Executive Chairman, Member of the Board of Directors, and former CEO) and
Sergey Brin (Google Co-Founder) about the Apple-Google agreement. Brin Depo. at 74; Schmidt
Depo. at 126. Intel’s own expert testified that Mr. Otellini was likely aware of Google’s other
bilateral agreements by virtue of Mr. Otellini’s membership on Google’s board. Snyder Depo. at
258. In fact, in its Motion, Intel concedes for the purposes of the instant motions that Mr. Otellini
knew the contents of Google’s do-not-cold-call list, which included Apple and Intel. Intel MSJ at 4.
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Next, these agreements were negotiated by a small group of intertwining high-level
executives at the Defendant firms. For example, Steve Jobs (Co-Founder, Former Chairman, and
Former CEO of Apple, Former CEO of Pixar) was personally involved in Apple’s anti-solicitation
agreements with Adobe, Google, and Pixar. With regard to Apple’s agreement with Google, Mr.
Jobs contacted Sergey Brin (Google Co-Founder) directly, which led Mr. Brin to recognize that
“[b]asically, [Mr. Jobs] said ‘if you hire a single one of these people that means war.’” Cisneros
Decl., Ex. 1871. The next day, Bill Campbell (Chairman of Intuit Board of Directors, Co-Lead
Director of Apple, and advisor to Google), a friend of Mr. Jobs, informed Mr. Jobs that “Eric
Schmidt told me that he got directly involved and firmly stopped all efforts to recruit anyone from
Apple.” Cisneros Decl., Ex. 199. Moreover, it was upon Mr. Campbell’s suggestion that Google
agreed to enter into its anti-solicitation agreement with Intuit, of which Mr. Campbell was Board
Chairman. Cisneros Decl., Ex. 597.
As discussed in some detail in this Court’s October Class Certification Order, the same
small group of intertwining high-level executives were involved in strictly enforcing the
agreements. For example, when a Google recruiter contacted an Apple engineer, Steve Jobs (Co-
Founder, Former Chairman, and Former CEO of Apple, Former CEO of Pixar) forwarded the
message to Eric Schmidt (Google Executive Chairman, Member of the Board of Directors, and
former CEO), who had the recruiter terminated within the hour. Id. at 36. Bill Campbell (Chairman
of Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google) similarly emailed
Sergey Brin (Google Co-Founder), stating that “Steve Jobs called me again and is pissed that we
are still recruiting his browser guy.” Id. at 36. Paul Otellini (CEO of Intel and Member of the
Google Board of Directors) similarly forwarded an email regarding recruitment of an Intel
employee by a Google recruiter to Mr. Schmidt, Google’s CEO, who responded by saying that, “If
we find that a recruiter called into Intel, we will terminate the recruiter.” Id. at 37.1 Edward
Catmull (Pixar President) similarly had direct discussions with Steve Jobs regarding whether Pixar
could communicate with specific individual Apple employees. Id. at 37-38. Bill Campbell
1 In an email to Mr. Campbell, Mr. Schmidt indicated that he directed a for-cause termination of another Google recruiter, who had attempted to recruit an executive of eBay, which was on Google’s do-not-cold-call list. Cisneros Decl., Ex. 872.
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(Chairman of Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google) was
also part of enforcing the Google-Intel agreement, because Mr. Campbell in communication with
Google’s executives agreed that Google should call Paul Otellini (CEO of Intel and Member of the
Google Board of Directors) before making an offer to an Intel employee. October Class Cert. Order
at 28. That the agreements were entered into and enforced by a small group of intertwining high-
level executives bolsters the inference that the agreements were not independent.
Moreover, there is evidence that the Defendants shared confidential compensation
information with each other despite the fact that they considered each other competitors for talent.
For example, Adobe saw itself as in a talent war with Google and Apple and that Adobe was in a
six-horse compensation race against Google, Apple, Intuit, and three others. Id. at 47. Apple also
viewed Google and Intel as peer companies in terms of competition for talent. Id. at 48. Adobe
benchmarked its compensation against Google, Apple, and Intel, while Google compared its
compensation to Apple, Intel, Adobe, and Intuit; and Intel benchmarked against Apple and Google.
Id. at 47-48. The evidence shows that HR personnel at Intuit and at Adobe were communicating
about “confidential” information regarding how much compensation each firm would give and to
which employees that year. Cisneros Decl., Ex. 2812 (emphasis in original). Adobe and Intuit
shared confidential compensation information even though the two companies had no bilateral anti-
solicitation agreement, and Adobe viewed Intuit as a competitor in a six-horse compensation race.
Meanwhile, Google circulated an email that expressly discussed how its “budget is comparable to
other tech companies” and compared the precise percentage of Google’s merit budget increases to
that of Adobe, Apple, and Intel. Cisernos Decl., Ex. 621. Google had Adobe’s precise percentage
of merit budget increases even though Google and Adobe had no bilateral anti-solicitation
agreement. Paul Otellini (CEO of Intel and Member of the Google Board of Directors) similarly
circulated information regarding peer companies’ bonus plans that he “lifted from Google.”
Cisneros Decl., Ex. 463. This Google document discusses bonuses at Apple and Intel. A reasonable
jury could infer that this confidential information could be shared safely by competitors only
because the anti-solicitation agreements squelched true competition.
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Finally, there is evidence that Defendants, through many of the same executives who
negotiated and enforced the agreements at issue in this case, expanded and attempted to expand the
anti-solicitation agreements to non-Defendants, which undermines Defendants’ claim of
independent bilateral agreements. For example, Steve Jobs (Co-Founder, Former Chairman, and
Former CEO of Apple, Former CEO of Pixar) called Edward Colligan (former President and CEO
of Palm) to ask Mr. Colligan to enter into an anti-solicitation agreement and threatened patent
litigation against Palm if Palm refused to do so. Colligan Decl. ¶¶ 6-8. This was similar to Mr.
Jobs’ negotiation of the agreement with Adobe, which resulted from Mr. Jobs’ threat to start
aggressively recruiting Adobe’s employees absent such an agreement. Bill Campbell (Chairman of
Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google), in his capacity as an
advisor to Google, unsuccessfully sought to expand Google’s anti-solicitation agreements to
Facebook by responding to an email about Facebook’s solicitation of Google’s employees with
“Who should contact Sheryl [Sandberg] (or Mark [Zuckerberg]) to get a cease fire? We have to get
a truce.” Mr. Chizen of Adobe, in response to discovering that Apple was recruiting employees of
Macromedia (a separate entity that Adobe would later acquire), helped ensure, through an email to
Mr. Jobs, that Apple would honor Apple’s pre-existing anti-solicitation agreements with both
Adobe and Macromedia after Adobe’s acquisition of Macromedia. Cisneros Decl., Exs. 1808,
1812. These expansions and attempted expansions of the anti-solicitation agreements suggest that
the agreements were not isolated, independent bilateral agreements, but rather were part of a
broader conspiracy.
In sum, the Court does not determine at the summary judgment stage which side should
prevail. Rather, the Court’s task is only to determine whether the Plaintiffs have presented
sufficient evidence to warrant adjudication by a jury. For the reasons stated, the Court answers this
question in the affirmative. The similarities in the various agreements, the small number of
intertwining high-level executives who entered into and enforced the agreements, Defendants’
knowledge about the other agreements, the sharing and benchmarking of confidential
compensation information among Defendants and even between firms that did not have bilateral
anti-solicitation agreements, along with Defendants’ expansion and attempted expansion of the
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anti-solicitation agreements constitutes evidence, viewed in the light most favorable to Plaintiffs,
that tends to exclude the possibility that defendants acted independently, such that the question of
whether there was an overarching conspiracy must be resolved by a jury. Accordingly, each of the
Defendants’ individual motions for summary judgment is DENIED.
IT IS SO ORDERED.
Dated: March 28, 2014 ________________________________ LUCY H. KOH United States District Judge
Case5:11-cv-02509-LHK Document771 Filed03/28/14 Page8 of 8
4/27/14 12:46 AMAbigail LeGrow ’04 appointed to Master in Chancery for Delaware Judiciary | Penn State Law
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Abigail LeGrow ’04 appointed to Master inChancery for Delaware JudiciaryFebruary 22, 2012
Abigail LeGrow ’04 was recently appointed Master in Chancery for the Delaware Judiciary, a court which has beenranked first in the nation since 2002.
“To me, working on this court, and for the Delaware Judiciary in general, is a tremendous honor,” said LeGrow. “TheCourt of Chancery is held in high esteem nationwide, both because of the qualifications and dedication of thechancellor and vice chancellors (past and present), and because of the court’s willingness to consider and decideexpedited cases in a very prompt fashion.
The Court of Chancery’s jurisdiction is primarily limited to cases based in equity. Historically speaking, the Mastersin Chancery have handled the “traditional” equity jurisdiction of the Court, particularly trusts and estates,guardianship, and disputes involving real property.
“I’ve only been here a few months, but so far the thing I most enjoy isbeing in a position to help people and make decisions that (hopefully)resolve stressful problems that have arisen in their lives,” said LeGrow.“There is a human, real-life element to the cases on my docket thatwas sometimes missing in private practice.”
Prior to joining the Delaware Judiciary, LeGrow was an associate in theCorporate Group of Potter Anderson & Corroon LLP. “During my timein private practice, I was able to represent different corporations whichgave me the chance to learn about a variety of fields,” said LeGrow.
“Each corporation is different and in order to represent themeffectively I usually had to learn about their business. I became intimately familiar with orphan drugs, the New Yorkreal estate market, differentiated chemicals, residential mortgage-backed securities, and high speed lasers forcardiac imaging, to name a few. It helped keep each case interesting when I was engaged in some of the moremundane aspects of litigation.” Among the many reasons LeGrow chose to practice in corporate law is its dynamicnature. “It is always changing and evolving as businesses grow and change,” said LeGrow.
Her switch from advocacy to impartiality has been challenging for LeGrow, “but in a good way,” she said. “I thinkadvocacy comes easier to most lawyers (myself included), because we are usually arguers by nature, and it is fun tobe told ‘here is your side, here is where you want to end up, now go do it.’ But so far I’ve enjoyed the role ofimpartial decision-maker. It is nice to consider a case from all sides and all angles, and then try to reach the ‘right’result. In that sense, it is similar to a law school exam, only there is a lot more riding on the outcome.”
4/27/14 12:46 AMAbigail LeGrow ’04 appointed to Master in Chancery for Delaware Judiciary | Penn State Law
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LeGrow enjoys living and working in Delaware. “When I was in practice, I worked in a sophisticated, challenging,high-profile field while enjoying the advantages of life in a relatively small city. As a corporate litigator, I representedmultinational corporations, yet my job was a ten-minute commute from my home in the suburbs. Very few peoplecan have the best of both worlds, in that sense. Now, the commute is the same and I’m part of a court that I’veadmired since my summer associate year. It doesn’t get much better than this.”
Her husband, Brian LeGrow ’04 is an associate with the Law Offices of Vincent B. Mancini & Associates, and focuseshis practice on business litigation, commercial litigation, real estate, civil rights section 1983, property law, federalcivil practice, and landlord-tenant law. They met during law school and are the parents of two children.
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4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 1 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
Dilbert
Genre Comedy
Format Animation
Created by Scott Adams
Developed by Scott Adams
Larry Charles
Directed by Rick Del Carmen
James Hull
Voices of Daniel Stern
Chris Elliott
Larry Miller
Gordon Hunt
Kathy Griffin
Jackie Hoffman
Theme music
composer
Danny Elfman
Opening theme "The Dilbert Zone"
Composer(s) Adam Cohen
Ian Dye
Country of origin United States
Original
language(s)
English
No. of seasons 2
Dilbert (TV series)From Wikipedia, the free encyclopedia
Dilbert is an animated television series adaptation ofthe comic strip of the same name, produced byAdelaide Productions, Idbox, and United Media anddistributed by Columbia TriStar Television. The firstepisode was broadcast on January 25, 1999, and wasUPN's highest-rated comedy series premiere at thatpoint in the network's history; it lasted two seasons onUPN and won a Primetime Emmy before itscancellation.[1]
Contents
1 Synopsis2 History
2.1 Conception2.2 Cancellation
3 Cast3.1 Guest stars
4 Episodes4.1 Season 1 (1999)4.2 Season 2 (1999–2000)
5 Reception5.1 Ratings5.2 Awards
6 Home releases7 See also8 References9 External links
Synopsis
The series follows the adventures of a middle-agedwhite collar office worker, named Dilbert who isextremely intelligent in regards to all things that fallwithin the boundaries of electrical engineering.Although Dilbert’s intelligence greatly surpasses that ofhis incompetent colleagues at work, he is unable toquestion certain processes that he believes to beinefficient, due to his lack of power within the
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No. of episodes 30 (List of episodes)
Production
Executive
producer(s)
Scott Adams
Larry Charles
Producer(s) Jeffrey L. Goldstein
Ron Nelson
Kara Vallow
Editor(s) Mark Scheib
Running time 22 minutes
Production
company(s)
Idbox
United Media
Columbia TriStar
Television
Distributor Sony Pictures Television
Broadcast
Original channel UPN
Picture format 4:3 SDTV
Audio format Dolby Surround
Original run January 25, 1999 – July
25, 2000
inefficient, due to his lack of power within theorganization. Thus, he is consistently found to beunsatisfied with the decisions that are made in hisworkplace, because of the fact that many times he hasmany suggestions to improve the decision, yet isincapable of expressing them. Consequently, he isoften found to show a pessimistic and frustratedattitude, which ultimately lands him in various comedicsituations that revolve around concepts like leadership,teamwork, communication and corporate culture.
History
The first season centers on the creation of a newproduct, the "Gruntmaster 6000". The first threeepisodes involve the idea process ("The Name", "TheCompetition", and "The Prototype" respectively); thefifth ("Testing") involves having it survive a malevolentcompany tester named "Bob Bastard" (who issomewhat like Dilbert before being humiliated anddisfigured), and the sixth ("Elbonian Trip") is aboutproduction in the famine-stricken fourth-world countryof Elbonia. The prototype is delivered to an incrediblystupid family in Squiddler's Patch, Texas, during thethirteenth and final episode of the season,"Infomercial", even though it was not tested in a labbeforehand. The family's misuse of the prototypecreates a black hole that sucks Dilbert in; he instantly wakes up in the meeting seen at the start ofthe episode, then locks his design lab to keep the prototype from being shipped out.[2]
The second season features seventeen episodes, bringing the total number of episodes to thirty.Unlike the first season, the episodes are not part of a larger story arc and have a different storylinefor each of the episodes (with the exception of episodes 26 and 27, "Pregnancy" and "TheDelivery"). Elbonia is revisited once more in "Hunger"; Dogbert still manages to scam people in"Art"; Dilbert is accused of mass murder in "The Trial"; and Wally gets his own disciples (the result ofa complicated misunderstanding, the company launching a rocket for NASA, and a brainwashingseminar) in episode 16, "The Shroud of Wally".[3]
The theme music, "The Dilbert Zone", was written by Danny Elfman, and is a slight rewrite from thetheme of the film Forbidden Zone, originally performed by Elfman's band, The Mystic Knights of theOingo Boingo.
Conception
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Scott Adams, the creator of Dilbert, decided to create the series for UPN because the networkpromised 13 episodes on air, while other networks would only consider the series against otherprogramming options. Adams added to that "If we had gone with NBC, they would have givenDilbert a love interest with sexual tension." UPN was the sixth-ranked network at the time andpicked up the show in hopes of broadening their appeal and to prove they were committed to riskieralternative shows. Adams stated about turning Dilbert into a series "It's a very freeing experiencebecause doing the comic strip limits me to three (picture) panels with four lines or less of dialogueper issue, in the TV series, I have 21 minutes per episode to be funny. I can follow a theme frombeginning to end, which will add lots of richness to the characters." Adams wanted the series to beanimated because the live action version shot previously for FOX didn't translate well. Adams addedto that "If Dilbert's going to be at the top of the Alps, you just draw it that way and you don't have tobuild an Alps scene. You can also violate some laws of physics, and cause and effect. Peopleforgive it very easily. So it's much more freeing creatively."[4][5][6][7]
Cancellation
On November 22, 2006, when Adams was asked why the show was canceled, he stated "It was onUPN, a network that few people watch. And because of some management screw-ups between thefirst and second seasons the time slot kept changing and we lost our viewers. We were alsoscheduled to follow the worst TV show ever made: Shasta McNasty. On TV, your viewership is 75%determined by how many people watched the show before yours. That killed us."[8]
Cast
Daniel Stern – Dilbert[9]
Chris Elliott – DogbertLarry Miller – The Pointy-Haired BossGordon Hunt – WallyKathy Griffin – Alice (uncredited)Jackie Hoffman – DilmomJim Wise – Loud HowardTom Kenny – Ratbert, Asok, additional VoicesGary Kroeger – Additional voicesMaurice LaMarche – The World's Smartest Garbageman, Bob the Dinosaur, additional voicesTress MacNeille – Carol, Lena, additional voicesJason Alexander – Catbert
Guest stars
Stone Cold Steve Austin – HimselfJennifer Bransford – AshleyAndy Dick – Dilbert's Assistant AlfonsoJon Favreau – Holden CallfielderGilbert Gottfried – Accounting Troll
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Tom Green – JerroldChristopher Guest – The DupeyBuck Henry – DadbertHarry Kalas – Baseball AnnouncerWayne Knight – Path-E-Tech Security GuardJay Leno – HimselfEugene Levy – Comp-U-Comp's Plug GuardCamryn Manheim – JulietMr. Moviefone – HimselfChazz Palminteri – Leonardo da VinciJeri Ryan – Seven of Nine Alarm ClockJerry Seinfeld – Comp-U-CompBilly West – Vibrating Chair Salesman, Rioting Engineer (Pilot episode only)
Episodes
Season 1 (1999)
# Title Directed by Written by Original air date Productioncode
1 "The Name" Seth Kearsley Larry Charles & ScottAdams January 25, 1999 101
Dilbert is tasked with naming a product that hasn't even been designed yet, and the stress (broughton by a recurring nightmare) makes Dilbert think he's turning into a chicken.
2 "TheCompetition" Seth Kearsley Ned Goldreyer February 1, 1999 103
Dilbert is fired from his job when he is suspected of being a spy for a rival company (which was arumor cooked up by Dogbert's online newsletter) and gets hired at a company that actually treatstheir workers like people.
3 "ThePrototype" Alfred Gimeno Jeff Kahn February 8, 1999 102
Dilbert and Alice must work together to stop a rival team led by the legendary "Lena" from stealingtheir ideas and presenting them to the Boss as her own.
4 "TheTakeover" Andi Klein
Larry Charles, ScottAdams & Ned
GoldreyerFebruary 15, 1999 106
Dilbert and Wally become majority shareholders of their company after Dogbert manipulates thestock market.
5 "Testing" Chris Dozois David Silverman &Stephen Sustrastic February 22, 1999 104
The Gruntmaster 6000 prototype is put to the test by an evil masked test engineer named Bob
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Bastard (Tom Kenny).
6 "ElbonianTrip" Mike Kim David Silverman &
Stephen Sustrastic March 1, 1999 105
Dilbert, Alice, Wally, Dogbert, and the Pointy-Haired Boss take a business trip to Elbonia. Alice andDilbert attempt to free the Elbonian people (Alice adopts an Elbonian baby while Dilbert introducesthe workers to human rights) while Wally becomes a prophet.
7 "Tower ofBabel" Gloria Jenkins David Silverman &
tephen Sustrastic March 22, 1999 108
The repetitive passing-on of the same cold strain in Dilbert's office causes it to mutate and turnsthe coworkers into monsters. Rather than eliminate the virus, the company decides to start fresh bymoving everyone to a new office, which Dilbert is tasked with designing.
8 "LittlePeople" Barry Vodos
David Silverman,Stephen Sustrastic,
Scott Adams & LarryCharles
April 5, 1999 107
Dilbert discovers that the office is inhabited by a race of former employees who have been"downsized" (literally shrunken down to size after they've been laid off) after finding all of hisbelongings used, the dry-erase markers disappearing, and X-rated websites on his computer.
9 "The Knack" Michael Goguen
Larry Charles, ScottAdams, Andrew
Borakove & RachelPowell
April 26, 1999 110
Dilbert loses "the knack" for technology when he gets management DNA from accidentally drinkingfrom the Boss's cup. His resulting mis-steps send the world back to the Dark Ages.
10 "Y2K" Jennifer Graves, BobHathcock & Andi Tom
Larry Charles, ScottAdams, Andrew
Borakove & RachelPowell
May 3, 1999 109
On the eve of the new millennium, everyone — except Dilbert — is making New Year's plans. Whileassuring everyone that the company is prepared for Y2K, Dilbert discovers that the computermainframe's main processor isn't Y2K-compatible and all the company's systems will crash if itisn't fixed. Dilbert is rewarded for discovering this by being assigned to fix it, and he discovers thatthe system's original programmer was Wally. But have years of drudgework dulled his brain toomuch to be able to tackle this crucial task?
11 "Charity" Chris Dozois
Larry Charles, ScottAdams, David
Silverman & StephenSustrastic
May 10, 1999 111
Dilbert is forced to be a charity coordinator for the "Associated Way" charity drive.
Larry Charles, ScottAdams, David
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12 "Holiday" Andi Klein Silverman, StephenSustrastic & Ned
Goldreyer
May 17, 1999 112
Dilbert thinks there are too many time-wasting holidays; Dogbert concurrently convinces Congressto abandon all holidays in favor of a National Dogbert Day.
13 "TheInfomercial"
Todd Frederiksen,Joe Vaux
Larry Charles, ScottAdams & Ned
GoldreyerMay 24, 1999 113
The pre-production—non-lab-tested—Gruntmaster 6000 is scheduled to be tested by a Texanfamily.
Season 2 (1999–2000)
# Title Directed by Written by Original air date Productioncode
14 "The Gift" Gloria Jenkins Ned Goldreyer November 2, 1999 201
Dilbert's mother's birthday is coming up, and in search of the perfect gift, he returns to the mallwhere he was abandoned by his father (voiced by Buck Henry) years ago.
15 "The Shroudof Wally" Andi Klein Scott Adams November 9, 1999 203
Dilbert has a near-death experience at a gas station, and finds that the afterlife is exactly like theoffice. Meanwhile, a group listening to a multi-level marketing speech become hypnotized, andthrough a bizarre accident create a religion based on Wally.
16 "Art" Linda MillerLarry Charles, Scott
Adams & NedGoldreyer
November 16, 1999 205
Dilbert is assigned to create a digital work of art. The result, the "Blue Duck," ends up appealing tothe lowest common denominator of society and destroys the value and popularity of classicartworks.
17 "The Trial" Chris Dozois Joe Port & JoeWiseman November 23, 1999 202
Dilbert is sent to prison after the boss frames him for a fatal traffic accident. Once inside, he applieshis knowledge of mathematics and engineering to prison life and takes over his cell block.
18 "TheDupey" Michael Goguen Larry Charles & Scott
Adams December 7, 1999 204
Dilbert's attempts to design a Furby-style children's toy go horribly awry when the toys gainsentience and mutate into hideous but benevolent creatures that want independence.
19"TheSecurityGuard"
Rick Del Carmen Scott Adams January 18, 2000 207
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After a heated debate, Dilbert and the building's security guard (voiced by Wayne Knight) tradejobs to see who can do the other's job better. Dilbert quickly finds himself in over his head when hediscovers an illegal casino being run underneath the building.
20 "TheMerger" Jim Hull
Larry Charles, ScottAdams, David
Silverman & StephenSustrastic
January 25, 2000 208
The Boss decides that the company needs to merge with another, and chooses a company ofbrain-sucking extraterrestrials.
21 "Hunger" Craig R. Maras Larry Charles & ScottAdams February 1, 2000 206
Dilbert tries to end world hunger by creating a new, safe, artificial food, but it tastes so bad thateven people dying of starvation refuse to eat it – until his mother gets involved.
22"The Off-SiteMeeting"
Seth Kearsley Mark Steen, RonNelson & Scott Adams February 8, 2000 209
Dilbert's home is chosen as the location for an off-site meeting when a dendrophile sues hiscompany because of their deforestation policies.
23 "TheAssistant"
Gloria Jenkins &Declan M. Moran
Larry Charles, ScottAdams, Ron Nelson &
Mark SteenFebruary 15, 2000 210
Dilbert is unwillingly promoted to management and given an assistant (Andy Dick), sparking ashowdown with the other engineers.
24 "TheReturn" Mike Kuntel
Larry Charles, ScottAdams & Ned
GoldreyerFebruary 22, 2000 213
Dilbert tries to buy a computer online but gets the wrong model, leading to an unpleasant surprisewhen he tries to return it to the company warehouse. Jerry Seinfeld and Eugene Levy guest-star asComp-U-Comp and the plug guard, respectively; Jon Favreau guest-stars as Holden Callfielder.
25 "The VirtualEmployee" Perry Zombalas
Larry Charles & ScottAdams & Ned
GoldreyerMay 30, 2000 212
Dilbert and his co-workers find an empty cubicle and start dumping their obsolete computerequipment into it. To keep the marketing department from claiming the cubicle, they hack into thehuman resources database and create a profile for a fake engineer named Todd. The plan backfireswhen Todd is named project leader and develops a messianic reputation.
26 "Pregnancy" Andi Klein Larry Charles & ScottAdams June 6, 2000 216
Ratbert accidentally sends Dilbert's model rocket into space. When it returns with samples of DNAfrom aliens, cows, hillbillies, engineers, and robots, it rectally impales Dilbert, impregnating him.
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27 "TheDelivery" Craig R. Maras Larry Charles & Scott
Adams June 13, 2000 217
Dilbert fights to keep his baby, a human-alien-cow-robot hybrid whose various "parents" sue forjoint custody. Stone Cold Steve Austin guest-stars as himself.
28 "CompanyPicnic" Chris Dozios
Scott Adams, DavidSilverman & Stephen
SustrasticJuly 11, 2000 211
The annual company picnic comes around and so does the softball game between Marketing andEngineering. This episode is based on Romeo and Juliet.
29 "The Fact" Linda MillerLarry Charles, Scott
Adams, Ron Nelson &Mark Steen
July 18, 2000 215
Dogbert is catapulted into fame and fortune when he posts false information on the Internet abouthis imaginary disease, "Chronic Cubicle Syndrome," and releases a best-selling book about it.Ironically, Dilbert is forced to come up with the cure.
30 "Ethics" Michael Goguen Larry Charles & ScottAdams July 25, 2000 214
The company employees are forced to take ethical training classes, then Dilbert is made projectlead for the National Internet Voting Network. An attractive female employee of a special-interestgroup attempts to seduce Dilbert, putting his ethical limitations to the test.
Reception
Ray Richmond of Variety.com liked the show stating "it’s surely the wittiest thing the netlet has everhad the good fortune to schedule, and based on the opening two installments, it has the potential toscore with the same upscale auds that flocked to “The Simpsons” and transformed Fox from awannabe to a player a decade ago."[10] David Zurawik of The Baltimore Sun gave the show apostivie review stating "sit down tonight in front of the tube with more reasonable expectations, andyou will find yourself smiling, if not laughing out loud at least once or twice."[11] Terry Kelleher ofPeople Magazine picked Dilbert for "Show of the week" and said the show featured "smart, pointedhumor aimed at corporate bureaucracy, mendacity and absurdity."[12]
Ratings
Dilbert's premiere episode received a 7.3 rating, the highest of the 1998-1999 season for UPN.[13]
Awards
Primetime Emmy: Outstanding Main Title Design - 1999[14]
Home releases
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Sony Pictures Home Entertainment released the complete series on DVD in Region 1 for the veryfirst time on January 27, 2004. The set included some special features including trailers and clipcompilations with commentary by Scott Adams, executive producer Larry Charles, and voice actorsChris Elliott, Larry Miller, Kathy Griffin, and Gordon Hunt.[15] The DVDs can be played on some PCsand DVD players with Region 2. This release has been discontinued and is now out of print. Thecomplete series is available for free on Hulu and Crackle.[16][17]
On November 8, 2013, it was announced that Mill Creek Entertainment had acquired the rights tothe series. They will be re-releasing the complete series on January 21, 2014.[18]
See also
New Dilbert Animation
References
1. ^ "Dilbert Debut Sets Record For Upn" (http://articles.chicagotribune.com/1999-02-02/features/9902020332_1_pointy-haired-boss-upn-dilbert). Chicago Tribune. February 2, 1999. Retrieved2010-09-09.
2. ^ "Dilbert: The Complete Series : DVD Talk Review of the DVD Video"(http://www.dvdtalk.com/reviews/9457/dilbert-the-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
3. ^ "Dilbert: Complete Series : DVD Talk Review of the DVD Video"(http://www.dvdtalk.com/reviews/9494/dilbert-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
4. ^ Knutzen, Eirik. "An Animated Cartoon `Dilbert' Comes To The Tube On Upn"(http://articles.mcall.com/1999-01-24/entertainment/3241748_1_dilbert-scott-adams-bank-teller/2). TheMorning Call. Retrieved 10 February 2014.
5. ^ Rubin, Sylvia. "Meeting of the Minds / `Dilbert' creators slogged through corporate mire to bring lovableoffice dweeb to TV" (http://www.sfgate.com/entertainment/article/Meeting-of-the-Minds-Dilbert-creators-slogged-2952018.php#page-1). SFGate. Retrieved 10 February 2014.
6. ^ Rozansky, Michael. "`Dilbert' Is Serious Business From The Cubicle To . . . Practically Everywhere."(http://articles.philly.com/1999-01-03/news/25492959_1_dilbert-fans-4s700r-cubicle). philly.com. Retrieved10 February 2014.
7. ^ Jicha, Tom. "Dilbert To Get A New Cubicle -- On Upn" (http://articles.sun-sentinel.com/1999-01-25/lifestyle/9901250155_1_dilbert-scott-adams-upn). SunSentinel. Retrieved 10 February 2014.
8. ^ Foster, Darren. "Scott Adam’s Interview creator of Dilbert" (http://groundreport.com/Scott-Adams-Interview-creator-of-Dilbert/). ground report. Retrieved 9 February 2014.
9. ^ "Upn hopes ride on dilbert's white shirttails new animated series just doesn't do the job"(https://web.archive.org/web/20140209010821/http://www.nydailynews.com/archives/entertainment/upn-hopes-ride-dilbert-white-shirttails-new-animated-series-doesn-job-article-1.829135). The New York DailyNews. Retrieved 2010-10-26.
10. ^ Richmond, Ray. "Review: ‘Dilbert’" (http://variety.com/1999/tv/reviews/dilbert-1200456408/). Variety.Retrieved 9 February 2014.
11. ^ Zurawik, David. "UPN is counting on `Dilbert' " (http://articles.baltimoresun.com/1999-01-25/features/9901250183_1_dilbert-dogbert-omen). The Baltimore Sun. Retrieved 9 February 2014.
12. ^ Kelleher, Terry. "Picks and Pans Main: Tub"(http://www.people.com/people/archive/article/0,,20127492,00.html). People Magazine. Retrieved 9February 2014.
4/7/14 3:14 PMDilbert (TV series) - Wikipedia, the free encyclopedia
Page 10 of 10http://en.wikipedia.org/wiki/Dilbert_(TV_series)
13. ^ Carter, Bill. "TV NOTES" (http://www.nytimes.com/1999/01/27/arts/tv-notes.html). The New York Times.Retrieved 9 February 2014.
14. ^ "Dilbert" (http://www.emmys.com/shows/dilbert). The Academy of Television Arts & Sciences. Retrieved 9February 2014.
15. ^ "Dilbert - The Complete Series Review" (http://www.tvshowsondvd.com/reviews/Dilbert-Complete-Series/3283). TVShowsOnDVD.com. Retrieved 2013-09-08.
16. ^ "Dilbert" (http://www.hulu.com/dilbert). Hulu. Retrieved 10 February 2014.17. ^ "Dilbert" (http://www.crackle.com/c/dilbert). Crackle.com. Retrieved 10 February 2014.18. ^ Mill Creek to Re-Release 'The Complete Series' on DVD (http://www.tvshowsondvd.com/news/Dilbert-
The-Complete-Series/19158)
External links
Dilbert (http://www.imdb.com/title/tt0118984/) at the Internet Movie DatabaseDilbert (http://www.tv.com/shows/dilbert/) at TV.com
Retrieved from "http://en.wikipedia.org/w/index.php?title=Dilbert_(TV_series)&oldid=601831869"Categories: Dilbert 1990s American animated television series2000s American animated television series Television programs based on comic stripsUPN network shows 1999 American television series debuts2000 American television series endings Comedy Central showsTelevision series by Sony Pictures Television Animated sitcomsTelevision programs featuring anthropomorphic characters Satirical television programmesEnglish-language television programming Lists of television series episodes
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BRAD D. GREENSPAN, Plaintiff Case No: 9567-ML V. NEWS CORPORATION NEWS CORPORATION, 21ST CENTURY FOX CORPORATION, NEWS AMERICA CORPORATION,WASHINGTON POST CORPORATION, SONY CORPORATION, SONY CORPORATION AMERICA, SONY MUSIC ENTERTAINMENT INC., 550 DIGITAL MEDIA VENTURES, INC. SONY BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC NEWS CORPORATION, 21ST CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC, VANTAGEPOINT VENTURE PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP, IAC CORPORATION, MYSPACE, INC., ASKJEEVES, INC., JP MORGAN CHASE CORPORATION, REDPOINT PARTNERS CORPORATION ARENT FOX LAW LLC INC.
Defendants PRAECIPE To: Register In Chancery PLEASE ISSUE Summons and a copy of the Complaint and Motion to Expedite through the Sheriff of New Castle County, 800 N French Street, 5th Floor, Wilmington, Delaware 19801; To be served on the following Defendants in the above listed caption Name: News Corporation & 21st Century Fox Corporation Address: c/o The Corporation Trust Company Corporation Trust Center, 1209 Orange St. Wilmington, Delaware, 19801 Service pursuant to 10 Del. C. 3111 /s/ Brad Greenspan Signature for Pro Se 264 South La Cienega Suite 1216 Beverly Hills, CA 90211 Dated: 4/25/2014
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE BRAD D. GREENSPAN, 264 South La Cienega
Suite 1216 Beverly Hills, CA 90211
Plaintiff,
v.
NEWS CORPORATION, 21ST CENTURY FOX CORPORATION, NEWS AMERICA CORPORATION, WASHINGTON POST CORPORATION,
SONY CORPORATION, SONY CORPORATION AMERICA, SONY MUSIC ENTERTAINMENT INC., 550 DIGITAL MEDIA VENTURES, INC. SONY BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC
NEWS CORPORATION, 21ST CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC, VANTAGEPOINT VENTURE PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP,
IAC CORPORATION, MYSPACE, INC., ASKJEEVES, INC.,
JP MORGAN CHASE CORPORATION, REDPOINT PARTNERS CORPORATION, ARENT FOX LAW LLC INC.
) ) ) ) ) ) ) ) ) ) )
C.A. No. ________
1503 & INDEMNIFICATION COMPLAINT
2
Plaintiff, for his Complaint against the Defendants, alleging as follows: I- PRELIMINARY STATEMENT & SYNOPSIS
1. Plaintiff Brad D. Greenspan (“Plaintiff”), a former Director an Officer of eUniverse, Inc. a Delaware Corporation hereby files this complaint. Petitioner isentitledtoaprivatecauseofactionfordamagessufferedasaresultofDefendantacts,omissions,damages,violations,andotherlossescausedbythelongrunning1503(d)conspiracyamongDefendants.PetitioneralsohascontractualrightsforIndemnificationandAdvancement. II - PARTIES PLAINTIFF 2. Brad Greenspan, former Director, Officer, Shareholder of eUniverse, Inc DEFENDANTS
3. News Corporation, a Delaware Corporation
4. 21st Century Fox Corporation, a Delaware Corporation
5. News America Corporation, Delaware corporations 6. Sony Corporation, incorporated in Japan (herein Sony Corporation
and its subsidiaries listed below will be referred to as “Sony”)
7. Sony Corporation America, a Delaware corporation
8. Sony Music Entertainment Inc., a Delaware Corporation 9. 550 Digital Media Ventures, Inc. (“550 DMV”), a Delaware Corporation
10. SonyBroadbandEntertainment,Inc.,aDelawarecorporation
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11. eUniverseInc.,(namelaterchangedtoIntermix)aDelaware
Corporation(NewsCorpacquiredin2005)12. Myspace,Inc.,aDelawareCorporation(NewsCorpacquiredin2005)13. RGRDLawLLC,aCaliforniaLLC14. VantagePointVenturePartners,aCaliforniaLLC15. OrrickHerringtonLawLLC,aCaliforniaLLC16. EMIMusic,aDelawareCorporation17. WarnerMusicGroup,aDelawareCorporation18. AskJeevesInc.,aDelawarecorporation(IACCorpacquiredin2005)19. IACCorporation,aDelawarecorporation20. JPMorganChase,aDelawarecorporation21. RedPointPartners,aCaliforniaLLC22. WashingtonPostCorporation,aDelawareCorporation23. ArentFoxLaw,aDelawareLLC
III - JURISDICTION AND VENUE
24. The jurisdiction of this Court is conferred and invoked pursuant to eUniverse, Inc., and its buyer, News Corporation being Delaware incorporated
IV- FACT HISTORY The 1503 & 1505 Claims
25. 1503 & 1505 according to Delaware statute §1501 have a purpose:
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“ to guard against and prevent the infiltration and illegal acquisition of legitimate economic enterprises by racketeering practices, and the use and exploitation of both legal and illegal enterprises to further criminal activities.“ “to apply to conduct beyond what is traditionally regarded as "organized crime" or "racketeering."
26. Enterprise under § 1502 is defined:
“(3) "Enterprise" shall include any individual, sole proprietorship, partnership, corporation, trust or other legal entity; and any union, association or group of persons associated in fact, although not a legal entity. The word "enterprise" shall include illicit as well as licit enterprises, and governmental as well as other entities.”
27. Members of the “SearchBriberyHacking” (‘SBH’) Enterprise are an association-in-fact “enterprise that are known as of the date of filing this complaint to include: IAC, AskJeeves, News Corporation, Orrick Herrington, VantagePoint Partners, RedPoint Partners, JPMorgan, Washington Post Corporation, RGRD Law LLC, Sony Corporation, Sony Music Entertainment, Arent Fox, EMI, Warner Brothers Music, MySpace Inc., Intermix Inc., Sony Corporation America, 550 DMV, SonyBroadbandEntertainmentInc.,as well as certain of their Officers, Directors, and employees (“Enterprise”).
28. This Enterprise possessed and continues to possess a common
purpose and goal, a membership, organizational structure, and ongoing relationships with sufficient longevity to permit and enable pursuit of the Enterprise’s purpose and long-term objective through a continuous course of conduct that affected and continues to affect interstate and foreign commerce. Most or all of the members of the Enterprise are also Principals, defined under Delaware statue,
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“(8) "Principal" shall mean a person who engages in conduct constituting a violation, or one who is legally accountable for the unlawful conduct of another person or entity.”
29. The SBH Enterprise, members, and/or Principals engaged, attempted to engage in, or conspired to engage in or to solicit, coerce or intimidate other person to engage in Racketeering violations which under Delaware state law is defined as: “(9) "Racketeering" shall mean to engage in, to attempt to engage in, to conspire to engage in or to solicit, coerce or intimidate another person to engage in:
a. Any activity defined as "racketeering activity" under 18 U.S.C. § 1961(1)(A), (1)(B), (1)(C) or (1)(D); or
b. Any activity constituting any felony which is chargeable under the Delaware Code or any activity constituting a misdemeanor under the following provisions of the Delaware Code:
Chapter 73 of Title 6 relating to the sale of securities; Chapter 5 of Title 11 & Title 6 relating to forgery and counterfeiting; Chapter 5 of Title 11 relating to perjury; Chapter 5 of Title 11 and Title 28 relating to bribery and misuse of public office and improper influence; Chapter 5 of Title 11 relating to tampering with jurors, evidence and witnesses;”
30. SBH Enterprise, members, and Principals that make up the SBH Enterprise initiated a Pattern of racketeering activity between 2003 thru 2013, defined as: “(5) "Pattern of racketeering activity" shall mean 2 or more incidents of conduct:
a. That:
1. Constitute racketeering activity;
2. Are related to the affairs of the enterprise;
3. Are not so closely related to each other and connected in point of time and place that they constitute a single event; and
b. Where:
1. At least 1 of the incidents of conduct occurred after July 9, 1986;
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2. The last incident of conduct occurred within 10 years after a prior occasion of conduct; and
3. As to criminal charges, but not as to civil proceedings, at least 1 of the incidents of conduct constituted a felony under the Delaware Criminal Code, or if committed subject to the jurisdiction of the United States or any state of the United States, would constitute a felony under the Delaware Criminal Code if committed in the State.”
31. SBH Enterprise “racketeering activity” included: 18 U.S.C. § 1341
(relating to mail fraud), 18 U.S.C. § 1512 (relating to tampering with a witness,
victim, or an informant) 18 U.S.C. § 1513 (relating to retaliating against a witness,
victim, or an informant) and 18 U.S.C. § 1519 (relating to destruction, alteration, or
falsification of records in Federal investigation and bankruptcy).
32. The pattern of racketeering activity is based on the following facts:
33. Principals and members of the SBH enterprise desired and wanted
to fraudulently take control of a publicly traded company that was the #1 fastest growing Top 10 Property in the world as of October 2003.
34. Defendants launch series of schemes and frauds to take control of publicly traded MySpace and its parent corporation eUniverse (later renamed Intermix) and oust founder/CEO Brad Greenspan.
35. Defendants also initiate schemes to defame and harass Petitioner, and additionally obstruct justice.
36. Not satisfied with their existing economic gains, defendants embarked on an ever growing series of schemes and misdeeds to loot the public company. 37. Petitioner on January 23, 2004 published press release titled:
“Substantial Conflicts of Interest with Respect to Verisign Nasdaq:VRSN And Ask Jeeves NASDAQ: ASKJ”
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stating: i.“eUniverse’s Future Success in Lucrative Paid Search Space Is
Threatened By Existing Director Conflicts”
ii.“certain of eUniverse’s incumbent Directors have substantial conflicts of interest that could threaten the Company’s success in the paid search industry.”
iii.“Daniel Mosher has conflicts of interest arising from his middle management role
at Verisign, Inc. (NASDAQ: VRSN) which introduced the “sitefinder” redirect service in direct competition with eUniverse’s PerfectNav application. “
iv.“David Carlick has a conflict of interest arising from his membership on the Board of Ask Jeeves (Nasdaq: ASKJ), which is a pure play in the paid search space.
V.“Carlick has the ability to influence management decisions which may adversely affect eUniverse’s Paid Search division.” DEFENDANTS ENTRENCHMENT SCHEME SHIFTS CONTROL
38. Petitioner incorporates by reference Exhibit #1 which includes:
i. January 2, 2014 letter to Chancellor Strine
ii. NOTICE MOTION IN CONTEMPT
iii. MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)
iii. DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT iv. JUDGMENT ENTRY SETTING HEARING
(Note: All above unsigned documents were signed and submitted by courier January 2, 2014 to Brenda at intake with copy of December 2013 proof of service to Defendants )
DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATION 39. July 17, 2005 News Corporation Corporate counsel Lang emailed at 4:13AM
to Defendant eUniverse Director Sheehan and states, by interstate wire or interstate
carrier an email furthering the fraudulent concealment scheme to fabricate and
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fraudulently conceal unlawful acts including contempt of Court to acquiror News
Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal
security fraud class action. “Subject: 'Purchase Agreement”, stating,
"On the issues, let's close on the remaining ones in a fair and reasonable way-- so we can build out relationship.” And
“3. We feel like we have given indemnification on the shares and the purchase agreement itself to do so on any issue we have had no involvement in whatsoever (i.e. Greenspan) - that seems like too much. Andy, I know we are very eager to get this done. Let do it so both sides can feel good and move forward on our longer-term relationship."
Lang’s communication is in violation of 18 U.S.C. § 1341, 18 U.S.C. § 1343, and 18
U.S.C. § 1519 (relating to destruction, alteration, or falsification of records in Federal
investigation and bankruptcy).
2013 HITECH FEDERAL CLASS ACTION EVIDENCE
40. Evidence disclosed for the first time May 2013 in the Hitech Class Action Case 5:1102509, specifically document 198-3, page 37 and 38, proves Google had undisclosed illegal agreements in place with AskJeeves, AOL, Intel, Intuit, IAC Corp. and Apple as of March 6, 2005 or earlier violating Federal antitrust statues. The companies fraudulently concealed the agreements and failed to disclose them in their annual 10K SEC or Proxy filings, violating security law and Director fiduciary duties.
41. The evidence confirms Petitioner and shareholders were victims in
2005 of an bid rigging conspiracy led by Google and enacted in coordination with AskJeeves’s Directors who used their positions on the Boards of both MySpace, Inc. and Parent eUniverse to mislead the other Directors and shareholders while
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facilitating and enjoying the economic benefits of an illegal bid rigging scheme.
42. This conspiracy included: (i) fabricating prior sale of MySpace stock with backdated agreement in November 2004 (ii) agreements allowing AskJeeves Director Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below fair market value using his RedPoint fund where he is managing Director;
a. September 27, 2004 Vantagepoint internal report proves SBH Enterprise,
Carlick, and AskJeeves manipulated Intermix Directors to forgo using less dilutive debt
financing available, instead facilitating sweetheart equity sale to Yang and RedPoint
Partners.
“Myspace w i l l requ ire approx imate ly $1.5 -2 mi l l ion in the next 2 months for s torage arrays , database servers , sw i tches and routers .”
And “The company is in d iscuss ions w i th S i l i con Va l ley Bank regard ing a $4m l ine o f cred i t , wh ich is l i ke ly to be approved.”
b. October 1, 2004, 3:05PM Rosenblatt contacts Sheehan using interstate wire
or interstate carrier to send and deliver the email:
“Just had a tough ta lk w i th Chr is DeWol f . H is lawyer id def in i te ly g iv ing h im concerns about our o f fer . Heart ache about us tak ing the tech, va lue i f we se l l , e tc . He rea l ly th inks he is worth more independent ly…I am to ld h im that is not go ing to happen.”
the disclosed order of events described in the November 2004 10Q is fabricated and this
email is in violation of both 18 U.S.C. § 1341 & 18 U.S.C. § 1343, and is a Key
component and predicate act in fraudulently concealing the false facts in the November
eUniverse 2004 10Q filing related to hiding backdated MySpace stock purchase
agreement by defendants.
c. October 7, 2004 3:45PM Sheehan contacts Rosenblatt & Carlick by interstate
wire or interstate carrier using an email in violation of 18 U.S.C. § 1341 &/or § 1343
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furthering the fraudulent concealment scheme to fabricate and fraudulently conceal the
MySpace Stock purchase documents published in the November 2004 10Q were
fabricated and backdated with Subject: “MS thoughts o f the day”,
“My current thoughts on the MS s i tuat ion:
• We need to get in p lace the rev ised agreement before any meaningfu l negot ia t ions w i th any other th i rd par ty .
* I be l ieve I understand Chr is ’ concerns about be ing locked in to an i l l iqu id subs id iary , but that i ts the i r cho ice – they cou ld have MIX s tock i f they want l iqu id i ty .
* They are minor i ty shareho lders and need to accept th is fact . * We, In terMix , need the r ight to be ab le to se l l a l l o f MS. Inc lud ing
founders shares.
• We, In terMix , need the r ight to buy out the founders at a pr ice or a formula
On Redpoint :
* Why not cont inue ta lk ing to them, i t is too hard to f igure out i f they cou ld present the most at t ract ive dea l or not a t th is t ime”
d. November 4, 2004 11:43PM Carlick emails Sheehan, by interstate wire or
interstate carrier an email in violation 18 U.S.C. § 1341 &/or § 1343 furthering the
fraudulent concealment scheme to fabricate and fraudulently conceal the MySpace Stock
purchase documents published in the November 2004 10Q were fabricated and
backdated Subject: “My ta lk w i th Yang” stating,
“Andrew, Spoke w i th Geof f , who ho lds you in the h ighest regard. I am not in the loop on the i r o f fer , wh ich he descr ibed as 23% Redpoint , 25% Founders and pool and 52% Intermix . H is case for the o f fer was in terest ing and compel l ing , as In termix cou ld s t i l l “ fo ld in” the earn ings, t ra f f i c , e tc . I want to d iscuss w i th you my thoughts on the sub ject tomorrow, God know when, as we
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have no breaks I can count on. In any case, I suggested that Geof f speak w i th you d i rect ly .”
e. November 5, 2004 11:58AM Sheehan contacts Carlick and states, by
interstate wire or interstate carrier an email in violation 18 U.S.C. § 1341 &/or § 1343
furthering the fraudulent concealment scheme to fabricate and fraudulently conceal the
MySpace Stock purchase documents published in the November 2004 10Q were
fabricated and backdated
“what i t comes down to is do we se l l ms now or keep i t . Do ing a dea l where mix keeps 52% doesn’ t make any sense for anyone except Yang. A l l the banks and investors th ink we would be foo l ish to se l l some or a l l o f ms now. We w i l l get much less benef i t to mix i f we own 52% and have g ive a l l sor ts o f r ights to an investor . R ichard wants to keep i t in mix .”
f. November 18, 2004, 3:56PM Orrick’s Richard Harroch contacted Sheehan,
Redpoint & AskJeeves’ Director Yang and RedPoint’s Beasly, by interstate wire or
interstate carrier an email in violation 18 U.S.C. § 1341 &/or § 1343 furthering the
fraudulent concealment scheme to fabricate and fraudulently conceal the MySpace Stock
purchase documents published in the November 2004 10Q were fabricated and
backdated
Subject: ‘MySpace Term Sheet ‘and states,
“Gent leman: As a fo l low up to our conversat ion today, a t tached ia a c lean and red l ined markup of the last vers ion o f the term sheet that was g ive to us in connect ion w i th the Myspace t ransact ion. Let us d iscuss the issues at your conven ience. R ichard Harroch <<MySpace Sa le o f Ser ies A Pre ferred Stock .doc>>”
g. Rosenblatt by interstate wire or interstate carrier uses email in violation 18
U.S.C. § 1341 &/or § 1343 to further the fraudulent concealment scheme forwards an
incoming Orrick email to Chris Lipp and Tom Flahie at 4:28PM to fabricate and
fraudulently conceal the MySpace Stock purchase documents published in the November
2004 10Q, to hide the fact the documents were fabricated and backdated.
The email states: “I have not seen yet”
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Rosenblatt professes to not know the terms that the company has already agreed to sell a
portion of MySpace.com to VantagePoint’s fellow board member on Ask Jeeves, Geoff
Yang and his fund company he is a principal in, Redpoint.
h. November 18, 2004 CFO Flahie emails Rosenblatt, Subject: ‘RE: MySpace
Term Sheet’ and states,
“th is s i tuat ion rea l ly goes beyond anyth ing I want to be a par t o f . I communicated my fee l ings in wr i t ing tw ice now about the lawyer for a large pre ferred stockho lder and one d i rector negot ia t ing a major bus iness t ransact ion on beha l f o f the company w i thout author izat ion o f our board and a l l I rece ived was an admonishment f rom Harroch about my emai l and to ld to shut up in a conference ca l l .”
S ince you have not seen th is yet and I have cer ta in ly not , th is makes a broader s tatement about our Sen ior Management .” “As an o f f icer I wou ld be dere l ic t in my dut ies to our company to a l low th is to cont inue outs ide o f the v iew of the Board w i thout do ing someth ing about i t”
Flahie uses interstate wire or interstate carrier in violation 18 U.S.C. § 1341 &/or § 1343
to deliver email to further the fraudulent concealment scheme to fabricate and
fraudulently conceal the MySpace Stock purchase documents published in the November
2004 10Q, to hide the fact the documents were fabricated and backdated.
i. November 18, 7:20PM Rosenblatt emails Flahie Subject: ‘Re:Myspace Term
Sheet’, stating:
“Tom, I know how th is cou ld look but i t is NOT at-a l l how i t may appear .”
and “Andy NEVER looked at i t as a vantage shareho lder , but as a Board member look ing out for In termix as a whole .”
and
“ I be l ieved (and was r ight) that he was bet ter pos i t ioned than I was to extract terms that would be acceptab le to the Board at large. Over the past week he was, to my surpr ise , ab le to get the
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terms we a l l th ink are BETTER for the company and make the Redpoint dea l a great dea l . “
and
“ In h inds ight , I shou ld have asked h im to g ive those new terms to Chr is and we should have sent the term sheet to Redpoint . I p lan on c lar i fy ing w i th Redpoint tomorrow that Andy was s imply he lp ing us get a dea l done and the Company w i l l take i t f rom here .” i
Rosenblatt uses interstate wire or interstate carrier in violation 18 U.S.C. § 1341 &/or §
1343 to deliver email to further the fraudulent concealment scheme to fabricate and
fraudulently conceal the MySpace Stock purchase documents published in the November
2004 10Q, to hide the fact the documents were fabricated and backdated.
j. November 18, 2004 at 7:51PM, Sheehan forwards the email thread and
CFO’s effective ‘whistleblower notification’ to Orrick’s Harroch who is directly
involved in the incident. Sheehan uses interstate wire or interstate carrier to deliver
email to further the fraudulent concealment scheme to fabricate and fraudulently conceal
the MySpace Stock purchase documents published in the November 2004 10Q, to hide
the fact the documents were fabricated and backdated, to conceal scheme to sell 25% of
Myspace.com to conflicted Interlocking Director violating Clayton Act fellow
AskJeeves Director, Geoff Yang in violationof18U.S.C.§1341,18 U.S.C. § 1343,
andviolationof18U.S.C.§1519(relatingtodestruction,alteration,orfalsification
ofrecordsinFederalinvestigationandbankruptcy).
(iii) agreements allowing Google, TimeWarner/AOL, News Corporation, AskJeeves, IAC, and other defendants to collude to gain economic benefits by delaying closing of a competitive EUNI MySpace search engine auction for a new commercial search engine agreement in the months leading up to News Corporation acquiring 100% of eUniverse in September 2005. This arrangement ensured Google’s $4.4 Billion dollar August 2005 secondary by tying up the fast growing
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online audience of MySpace, significantly growing its share of online search engine advertising while shrinking share of main rival #2 Yahoo; (iv) An arrangement allowing News Corporation to purchase MySpace.com at below fair market value, growing its market valuation and generating billions in incremental profits and a massive online audience to seed new online assets for years to come, while preventing a competitive auction with main rival Viacom.
k. MySpace and eUniverse’s failure to elect 5th MySpace Director was key part of scheme to rig bidding in Search Auction and sale of eUniverse. Failure to disclose Intermix’s majority owned MySpace, Inc. was in breach of this covenant in the August 2005 Proxy was a 14A violation. Defendants breach and non disclosure of such breach are used to effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C. §§ 1341 thru publishing,distributing and mailing the August 2005 Proxy omitting the disclosure of such breach.
l. euniverse’s failure to cure breach of Merger Agreement Sections 6.3 & 6.4 & 6.5. was a key part of scheme to rig bidding in Search Auction and sale of eUniverse. Failure to disclose the breach in the August 2005 Proxy was a 14A violation. Defendants breach and non disclosure of such breach are used to effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C. §§ 1341 thru publishing, distributing and mailing the August 2005 Proxy omitting the disclosure of such breach
m. eUniverse and CEO Rosenblatt by end of June has earmarked $25-30
million in monies the executives are not owed or entitled to which helps float his own
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requests for consideration higher. June 23, 2005 Email from Rosenblatt to
Montgomery on with subject ‘presentation’ and attachment ‘foxmeeting.ppt’ states,
“This deal would need to be a win-win for everybody. I think we could motivate and
energize the Myspace team if we took $25-30mm and put in escrow for 12-24 months.
They would receive that money if they continued to build Myspace and remained at the
Company. Right now, they own 20% and would receive about $20MM (due to the
preference from Redpoint) if we exercised our option. If they could sell for $250mm they
would receive $50mm. While they think Myspace is worth far more than $250mm, the
escrow would clearly be enough incentive to keep them very motivated and want to stay
on board.”
eUniverse and Rosenblatt thru use of such email violate 18U.S.C.§1341&/or§ 1343,
and18U.S.C.§1519(relatingtodestruction,alteration,orfalsificationofrecordsin
Federalinvestigationandbankruptcy). Scheme is designed to bribe certain members
of management to support the below fair market sale of MySpace to News Corporation
while not disclosing such additional payments in the Proxy as required by Federal law.
n. On July 18, 2005 at 8:19PM, eUniverse’s Rosenblatt uses interstate wire to
email News Corporation executive, Levinsohn in violation 18 U.S.C. § 1341 &/or § 1343 to further the fraudulent scheme to sell eUniverse and Myspace below fair market value. The email indicates Rosenblatt is aware the $12.00 per share price he negotiated with News Corporation days earlier is below fair market value and is aware of the correct valuation level for internet assets including the future value Google will use to value AOL in the months ahead,
“Snippet of the press playa. You will be famous…now 20B”
BROWN v. BREWER FEDERAL SECURITY FRAUD CLASS ACTION
42. Petitioner was originally part of a Federal Class Action filed in
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Federal Court as a securities class action, titled Brown v. Brewer. However, the defendants led by News Corporation and Hogan Lovell , engaged in a series of coverups and struck a deal with Class Counsel to remove key evidence and claims including initiating a scheme to blatently obstruct justice by eliminating petitioner before he could submit evidence into the Federal court in 2009 which would have led to adding claims
43. June 17, 2010 Federal Judge King Summary Judgement states:
“ Though Brewer’s failure to recall what everyone had specifically asked back in 2005 would be understandable, a reasonable jury might draw a negative inference from his representation that he could not recall any discussion as to the investment banks’ analyses.
Construing all of the above testimony in the light most favorable to Plaintiff as we must on Defendants’ motion for summary judgment, we conclude that it is at least triable as to whether the remaining six board members consciously disregarded their duties and acted in bad faith. There is evidence in the record suggesting that no one on the board asked any questions about the requested per share price, the treatment of the competing bidders, the fairness valuations, or the relative likelihood of a Viacom bid. A reasonable jury could infer that this evidence demonstrates the other six directors consciously abdicated their roles as corporate fiduciaries required by law to do their utmost to maximize shareholder wealth. “ “Nevertheless, we think a reasonable jury could find that the other six directors exceeded the bounds of negligent conduct, willfully proceeded to their decisions knowing they lacked material information, Gesoff, 902 A.2d at 1165, and thereby consciously disregarded their fiduciary duties. Disney, 906 A.2d at 66”
“2. Self-Interested Transaction In the alternative, Defendants move for summary judgment on the second theory supporting the breach of fiduciary duty claim, arguing that five of the eight Defendants (a majority) were not self interested or controlled by someone who was. “
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“Plaintiff argues that Rosenblatt deliberately misled the other board members regarding the viability of the Viacom bid, steering them into approving the merger without waiting even a couple more days to see if Viacom would top News Corp.’s offer. (Joint Br. 26-27). “This evidence is sufficient to raise an inference that Rosenblatt’s presentation to the board may have been misleading as to Viacom’s seriousness.
According to Mosher’s description of the board meetings, “from the management team estimation standpoint [sic], they were not inclined to make an offer for the company on the time line that we were looking at.” (Id. at 25:18-21). “ there are at least triable issues of fact as to whether Mosher was manipulated by a self interested director, Rosenblatt. Moreover, based on Mosher’s description of the content of Rosenblatt’s presentations to the board, the issue of manipulation is triable with respect to all of the other board members. Accordingly, as a reasonable jury could potentially conclude that a majority of the directors was interested or manipulated by someone who was, we hereby DENY Defendants’ Motion for Summary Judgment on this second basis for Plaintiff’s claim of breach of the duty of loyalty.
A. Alleged Material Omissions
“current revenue and profits” omission, which was so clearly identified in the CSAC (if not so clearly in the interrogatory responses). Accordingly, as this argument was not waived, and Defendants have not made any threshold showing entitling them to summary judgment on this basis, we DENY the Motion for Summary Judgment as to this alleged material omission under Count I
Here, we conclude that there is at least a triable issue as to the materiality of the omission of Intermix’s internal financial projections. Accordingly, Defendants’ Motion for Summary Judgment is DENIED as to this alleged material omission.
Outstanding Derivative Lawsuits
Plaintiff also argues that Defendants failed to disclose one pending
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derivative lawsuit, LeBoyer v. Greenspan, et al., No. CV 03-5603-GHK (JTLx), and the fact that shareholder derivative standing would be extinguished as to both LeBoyer and Greenspan v. Salzman, the two derivative lawsuits pending at the time the Proxy was issued.
Defendants concede that they did not disclose the existence of the pending LeBoyer action. (Joint Br. 56 n.67).
With respect to the disclosed Greenspan v. Salzman action, Defendants argue they had no obligation to further announce the extinguishment of derivative standing.
Here too, the disclosure above is arguably misleading as well, as it did not affirmatively disclose that the Greenspan v. Salzman plaintiffs’ derivative standing would be extinguished under Delaware law. (J.A., Ex. 4, at 332). Instead, it only stated that Fox Interactive Media would seek the dismissal of the action and would do so only if it was not required to pay the plaintiffs or their counsel. (Id.). Accordingly, it is at least triable whether the above language was misleading as to the extinguishment of derivative standing, which was material information. Accordingly, we also hereby DENY Defendants’ Motion for Summary Judgment as to this alleged material omission.”
44. Edell & Defendants in mid-2009 launch another prong of fraudulent
concealment. includes i) publication of a book by employee loyal to News Corp to fabricate the background of Jeff Edell a former Director ii) Using fabricated Edell character to conceal truth that MySpace asset sale documents were not executed until 2004. These schemes create a fraud upon the court and keep petitioner and Class members from getting benefit of fair judicial process.
45. Defendant’s leverage their relationship with acquiror to create defamatory and fabricated lies thru acquiror News Corporation employee Angwin’s published in late 2009 book, ‘Stealing MySpace’ which fraudulently conceals the true background of former Director and Chairman Jeff Edell and his scheme with
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Brewer to forward a fabricated false resume.
46. This creates further ongoing defamatory damages to Plaintiff and
Shareholders because Class Counsel accepts and uses false Edell facts in book instead of Plaintiff’s facts offered to Class Counsel in 2012 Federal Class Action in Los Angeles Central District. Edell’s false facts allow the fraudulent conveyance Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004. Further, Edell’s false facts which become Acquiror News Corporation false facts, obstruct Plaintiff’s true facts from entering the record for the benefit of the Federal Court learning the true damages and claims rightfully owed to shareholders. Plaintiff and shareholders will continue to suffer until the defective disclosure is cured by Defendants. (70B Declaration, pg. 24-27, paragraphs 114-131)
47. Additional act of fraudulent concealment is part of scheme by defendants tied to 2009 Angwin published book that uses fabricated documents to support critical contentions. altering, destroying, mutilating, or concealing a document with the intent to obstruct justice in violation of 18 U.S.C. § 1512(c)(1);
48. Petitioner a fact witness with testimony that was adverse to Defendants was excluded and obstructed from entering evidence into the Brown Brewer case, immediately before Defendants plugged in Angwin’s false facts and testimony while using “Stealing MySpace” as an uncontested source of facts to corrupt the Class’s case And damage/expert reports. 49. News Corporation destroyed Petitioner testimony from ”appearing” which damages Petitioner and violates Section 1512(d) which criminalizes the actions of
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“[w]hoever intentionally harasses another person and thereby hinders, delays, prevents, or dissuades any person from” appearing before an official proceeding, law enforcement officer, or United States judge.
50. Angwin fraudulently conceals evidence of Edell’s true work experience and back ground and his violation of SEC rules in 2003 and 2004. Defendants conceal their knowledge of this scheme thru the March 19, 2012 Approval of the Federal Brown Brewer settlement that Petitioner and 4 other Class members attempted to object to or intervene to remove RGRD and Jim Brown from representing the Federal Class and agreeing to An Inadequate consideration for the settlement and failure to assert more valuable claims and evidence into the Court prior to approving settlement.
51. Angwin, Hinton, News Corporation, Hogan Lovell, RGRD, and eUniverse
Defendants violate 18 U.S.C. § 1512(c)(1) and 18 U.S.C. § 1519 by hiding evidence of Edells two resignations on his bio that were really his last two jobs instead of submitting an accurate bio, defendants stretched the job of Edell that was actually 3 jobs prior, and increased this 3rd job by another 2 years, to the year 2002 (from 2000). Edell both omits to accomplish his end goal of making detection and disclosure of his true track record and financial history as difficult as possible. i. Angwin, News Corporation, Hinton, Murdoch, RGRD, eUniverse and Orrick Conceal the false revised BIO of Edell filed in July 2004 SEC filings:
"Mr. Edell was the Chief Executive Officer of Showorks Entertainment Group. Inc., a Delaware corporation that later changed its name to Media Technology Source of Delaware, Inc. Within two years of the time that Mr. Edell resigned from that company, it filed a petition for relief under the United States Bankruptcy Code."
52. Defendant’s scheme entailed Creating a fictitious Glowing work experience
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for Edell using a fabricated Resume in 2003 that News Corporation, Hinton, Angwin,
and Murdoch determined would be used to harm Petitioner In a book that was published called “Stealing MySpace” and was sent in US Mail to bookstores Across the United States beginning in March 2009, and overseas with the fabricated false facts related to Edell’s true work Experience and his SEC violations in 2003, 2004, 2005 in violation of Rule 401, this violated section 18 U.S.C. § 1341.
53. After the Class won summary judgement in June 2010, petitioner in
2011 tried to bring new evidence to the attention of Class Counsel indicating the true damages were related to the value of MySpace’s search value, the claims and facts which had never been put before the Federal Court. Petitioner’s Rule 701 damage report providing for damages of over $96 billion dollars was ignored by Class Counsel who instead joined with defendants in a brazen scheme to: i) mislead and initiate a fraud upon the Court by changing the definition of the certified class to eliminate upwards of 60% of the eligible shares and shareholders and ii) enter into a sham settlement for pennies on the dollar which was accepted by the Federal Court in March 2012. 54.InSeptember2010,byRGRD,Baron,HoganLovell,Stone,NewsCorporation,OrrickandotherDefendantsfileaJointMotiontobanfactwitnessandPetitionerfromtheFederalClasstodelayandharassPetitionerfromappearingbeforeFederalJudge.DefendantsknewthemotiontobanthepetitionercouldnotbetrueunlessOrrickcouldcontinuetosuppressnewevidenceanddiscoveryfromenteringtheFederalBrownV.Brewerongoingcase.
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55.OtherEvidencedestroyedbyOrrickincludedtheirtiesandbusinesswithMySpaceParentCompanyexecutiveChrisDeWolfe.OrrickandDeWolfeworktogetherin2004and2005todocumentafabricatedsaleofequityofMySpaceatrockbottompricesforDeWolfe.56.In2010,BaronandNewsCorporationandHogan&Lovell,andStone,andRGRDandOrrickviolated18U.S.C.§1341(relatingtomailfraud)bysendingnoticeoftheJointMotiontoBriefthe“MotiontoBanBradGreenspan”forpurported“resjudicata”theyintendedtofileinFederalCourtviaemailtoPetitioner’sthenlawyerMr.Lawrence.
i. AboveDefendantsviolatedfurther18U.S.C.§1512(relatingtotamperingwithawitness,victim,oraninformant)18U.S.C.§1513(relatingtoretaliatingagainstawitness,victim,oraninformant)and18U.S.C.§1519(relatingtodestruction,alteration,orfalsificationofrecordsinFederalinvestigationandbankruptcy)byomittinganddestroyingtheevidencetheypossessedatthetimetheaboveactionsweretakenthatwouldhaveprovidednewfactsandinformationandclaimsnotraisedorinStateproceedingandthatwouldhavetheeffectofvoidingthedefendant’smotion.ii.RGRD,Baron,WissbroeckerviolatedtheirfiduciarydutytoPetitioneraswellasaidingandabettingaboveviolationsofotherDefendants.iii.Baron&RGRDliedandfabricatedbriefings,pleadings,andaffidavitsin2011and2012tofraudulentlyconcealthepriorcriminalactsinFederalCourt.
57. InDecember2010,RGRDwasagaindisloyalbychangingtheClass
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Certificationtoreducethe#ofeligibleshares.
i. 6/8/09 – Judge King approved “Certified Class” with definition: Most clear is position of RGRD Law at the time:
“Plaintiff responds herein to both questions raised by the Court in its Order re: Plaintiff’s Motion for Class Certification: (1) should the class definition be modified to include only holders of Intermix Media, Inc. common stock who held continuously from July 18, 2005 (the date the merger with News Corporation was announced) through the consummation of the merger on September 30, 2005; and (2) should the plaintiffs in the state court actions be carved out of the class definition? As set forth below, the answer to both questions is no.”
ii. 12/23/10 – Certified Class is victim of definitional change by RGRD
Law, inserting ulawfully, word “continuously”. This cuts approximately 60% of total shares that were eligible under “Certified Class” definition.
iii. December 2011 – RGRD challenged by Shareholders objecting1 to Settlement denied the Class Certificate had been switched.
58. Sony Music Corp and Seligmann using its control position on the Board of the RIAA and its relationship with EMI and Warner Music Group, induced Arent Fox to falsify his affidavit and the fact contained which were used to conceal the fact that EMI and Petitioner’s startup LiveUniverse, Inc. had entered into a music text lyric license prior to Warner Music, EMI, RIAA, Sony Music, and PeerMusic filing a federal 1*Included: -Largest shareholder of original Certified Class defined in 2009, Trafelet & Co., a multi billion dollar NY Hedge Fund which retains law firm referred by Brad Greenspan, another injured shareholder and fact witness. Brad was one of named plaintiffs in State Class action which was dismissed in 2006. -Similar to Cut/lost shares, RGRD switched its position unlawfully, allowing Defendants to file uncontested Motion to Ban state court plaintiffs, un defended, default judgment carved out Brad’s 2,900,000 shares. (Brad was the largest single shareholder, owning about 10% commons stock at time of sale.
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copyright infringement complaint that claimed LiveUniverse had never entered into such an agreement in 2009. 59. It was part of the Defendants’ scheme to conspire to interfere with Plaintiff’s livelihood by filing a lawsuit against Plaintiff in 2009 in retaliation for providing truthful information to the SEC, DOJ, and FTC relating to the Defendants’ scheme, in violation of 18 U.S.C. § 1513(e) and (f). 60. It was part of the Defendants’ scheme to interfere with Plaintiff’s livelihood by disseminating defamatory statements about Plaintiff to the public through various media outlets in retaliation for providing truthful information to the SEC, DOJ, FTC, and Federal and State court relating to the RICO Defendants’ scheme, in violation of 18 U.S.C. § 1513(e) and 1513(f), NEWS CORPORATION: CRIMINAL HACKING & BRIBERY
61. In 2012, News Corporation, who indemnified director defendants in Brown v. Brewer and was operating the case’s U.S. legal strategy, was exposed as a criminal enterprise that had hacked the phones of over 1000 UK citizens and employed a massive campaign of bribing police and public officials.
62. News Corporation’s general counsel resigned in 2011 and its CEO appearing under oath at the Leveson Inquiry admitted he was the victim of a “coverup” and all criminal acts exposed had gone on without his knowledge.
63. News Corporation conceded its internal controls were defective as a result of the exposure of years of bribes its UK subsidiaries had paid out and hidden by falsifying its financials.
64. At the current time, the CEO’s most trusted lieutenants and top
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employees are on criminal trial for obstruction of justice, bribery of government and police officials, and criminal phone hacking in the UK. 65. Four employees of News Corporation have already pled guilty.
66. News Corporation, has already conceded it has no defense for the illegal acts charged and admits its internal controls were defective and the CEO didn’t know what was going on and the same “coverup” News Corp claims to be a victim of was operating and responsible for the acts petitioner claims herein. V - CONCLUSION:
67. Chancery Court’s failure to force Defendants to honor their promise to fix the defective Disclosure in 2003 is directly responsible for allowing Defendants to steal upwards of $32 Billion in damages (Rule 701 Damage Report) from thousands of shareholders in 2005 including Petitioner.
68. Defendants have failed to respond to a Motion 70(b) filed with Judge Strine January 2, 2014 seeking relief from the contempt of then Vice Chancellor Strine’s order and ruling January 14, 2004 and the included agreed relief for any “technical violation”. VI. CLAIM COUNTS COUNT # 1 - § 1503 (a) Violation 69. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 70. All Defendants have violated Count #1
COUNT # 2 - § 1503. (b) Violation
71. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 72. All Defendants have violated Count #2 COUNT #3 - § 1503 (c) Violation
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73. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 74. All Defendants have violated § 1503 (c)
COUNT # 4 - § 1503(d) Violations. 75. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 76. All Defendants have violated Count #4 COUNT # 5 –§ 1504 TRIGGERED PETITIONER RIGHT TO CIVIL REMEDY UNDER § 1505(f)
77. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 78. News Corporation 2013 UK CRIMINAL GUILTY PLEAS “UNLAWFUL UNDER” 1504 and 1505(f) COUNT # 6 - (BREACH OF AGREEMENT)
79. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 80. Sony has breached TheJuly2003Optionagreementwhichstated,
iv. “Pursuant to the debt financing agreements, eUniverse and VPVP agreed that in the event that VPVP does not exercise the Option within 120 days of its grant, that VPVP may, within 10 days after the expiration of such 120-day period, transfer the Option to eUniverse in exchange for a warrant (the “Warrant”) to purchase 200,000 shares of the Company’s Series C Convertible Preferred Stock.”
81. Sony and VantagePoint Venture Partners have further breached
“OPTION AGREEMENT, dated as of July 15, 2003, among 550 Digital Media Ventures, Inc. (“Seller”), an affiliate of Sony Broadband Entertainment, Inc., eUniverse, Inc., a Delaware corporation (the “Company”), and VP Alpha Holdings IV, L.L.C. (“Buyer”).”
Sections 6 & 7 & 10 & 14 which state:
“6. Representations and Warranties of Seller. Seller represents, warrants and covenants to Buyer, as of the date hereof and as of the Closing Date, that:
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(e) No Price Stabilization or Manipulation. Seller has not taken and will not take, directly or indirectly, any action designed cause or result in stabilization or manipulation of the price of any of the Shares.
7. Representations and Warranties of Buyer. Buyer represents, warrants and covenants to Seller, as of the date hereof and as of the Closing Date, that:
(c) No Price Stabilization or Manipulation. Buyer has not taken and will not take, directly or indirectly, any action designed to cause or result in stabilization or manipulation of the price of any of the Shares.”
“14. Buyer May Exercise Option For Less Than All Shares. Notwithstanding any
other provision herein to the contrary, Buyer may exercise the Option with respect to
less than all of the Shares, but in no event less than 50% of the Shares.”
10. Certain Transactions. Seller shall vote as a stockholder in favor of an investment
and loan transaction between the Company and Buyer resulting in an additional
investment in the Company by Buyer of no less than $5 million at a price of at least
$1 per share (if an equity transaction), as approved by the Board of Directors of the
Company (the “Transaction”). “
“16. Miscellaneous. This Agreement may not be modified or amended, except by an instrument in writing signed by duly authorized officers of both of the parties hereto.”
82. Proxy notes on page 17. that on “October 31, 2003, the option term
was extended to April 16, 2004 and VantagePoint partially exercised the option and purchased 454,545 shares of our Series B preferred stock from 550 Digital Media Ventures.” The note an exhibit had an original term of 120 days or November 16, 2003 for VantagePoint to purchase the Sony Corp shares under the option.
83. In Intermix 3/31/04 - 10K section 'Certain Relationships’
"On October 31, 2003, the option term was extended to April 16, 2004 and VantagePoint partially exercised the option and purchased 454,545 shares of our Series B preferred stock from 550 Digital Media Ventures. On April 16, 2004, VantagePoint exercised the remainder of the option.”
84. However, The October 31, 2003 ‘extended option’ agreement between
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Sony and VantagePoint was improper and what was not disclosed to shareholders was that thru Orrick and defendants’ actions, shareholders i) were losing the bargain of the deal which called for Issuer to have the right to purchase 100% of the Sony ‘Option Shares’ after January 16, 2004 as part of an agreement that would transfer 200,000 Series B Warrants of Issuer to VantagePoint and ii) The October 31, 2003 ‘extended option’ actually acted as a way that Orrick and defendants sought to avail themselves of the 19.9% nasdaq and other exchange limits that required Issuer to have a shareholder vote prior to approving any issuance of stock of Issuer including an issuance of stock as part of an integrated deal that shifted more then 19.9% of Issuer’s stock to new party. COUNT # 7 - (“inseparable fraud”) VIOLATION 85. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 86. All Defendants have violated Count #7 COUNT #8 –PAREXEL TYPE FRAUD VIOLATION THRU FAILURE TO DISCLOSE “COMPLIANCE FAILURES”
87. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 88. All Defendants have violated Count #8 COUNT #9 – RULING BASED ON DELAWARE STATUE AND CODE 1304 THAT 2004 MYSPACE TRANSFER AND 2005 TRANSACTIONS “FRAUDULENT”
89. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 90. § 1304. Transfers fraudulent as to present and future creditors.
COUNT #10 – VIOLATION OF DODD-FRANK WHISTLEBLOWER STATUTE – SECTION 922) &18 U.S.C. §1513(e))
91. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein.
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92. Petitioner is entitled to a private cause of action for damages suffered Pursuant to the Dodd Frank Whistleblower Statute. Mr. Greenspan is entitled to a private cause of action for whistleblowers alleging retaliatory discharge or other discrimination. Id. § 78u-6(h)(1)(B)(i). Relief includes Right to Jury Trial, reinstatement, double the back pay owed, and costs and fees. Id. § 78u-6(h)(1)(C).
i. Damages including loss of employment and Chairman Director position from Myspace Parent company in 2003 under 15 U.S.C. § 78u-6 ("Section 922") and loss of Director employment under the same statues. Petitioner reported information concerning Defendant’s breach of fiduciary duty, disloyalty, and violation of Section 10(b) of the Exchange Act when he resigned as CEO on October 30, 2003. Petitioner reported information concerning Defendant’s breach of fiduciary duty, disloyalty, and violation of Section 10(b) of the Exchange Act when he resigned as Director in December 2003.
Mr. Greenspan was terminated for two reasons: (i) in retaliation for reporting misconduct of Brewer, Edell, Lipp, and other Defendants; and (ii) to stop the CEO from terminating,demoting or decreasing the compensation of Brewer, Edell, Lipp, Moreau. iii) The CEO’s refusal to sign a Board created settlement agreement during the week of October 30, 2003 which would have prevented Greenspan from contacting other shareholders or regulators and disclosing the breach of fiduciary duty or other security violations the Board and certain executives had committed in the process of consummating the VantagePoint Series C Financing in October 2003. The acts had been committed by Defendants
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while blocking the superior rate Common Stock financing sitting in Issuer outside law firm’s bank account. Endangering the entire Public Corporation PETITIONER ALSO HAS CLAIMS AGAINST SONY
ix. Sony Corp executives, Defendants in this Complaint, abused their fiduciary duty to Issuer by misleading the Public and shareholders as part of assisting Defendant’s scheme to take control of eUniverse, Inc. in 2003 and get approval and entrench Defendants as a result of the January 2004 Annual Meeting and Proxy Battle against Petitioner.
x. Sony Corp Defendant’s possessed a critical Board Seat Nomination legal right the Series B Stock possessed. Sony Corp nominated Edell as the Series B Stockholder in 2004 even after evidence in Delaware Court showed Edell and Defendants had mislead shareholders by Filing multiple defective and false proxy statements to Issuer’s shareholders in 2003 and 2004.
xi. As a Result of the applicable Defendant’s involvement in the above-
described conspiracy and conspiratorial scheme, the Plaintiff has suffered severe emotional, financial, mental, and physical harm and other deleterious effects; been unfairly disadvantaged in multiple civil lawsuits initiated against him by several of the Defendants and other parties; had his freedom of speech severely impinged; been forced to spend hundreds of thousands of dollars on legal fees; been forced to; And had his personal and professional reputation severely and permanently damaged. Based upon information and belief, some of the Defendants are continuing to engage in the above-described conspiracy and conspiratorial scheme
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even though they are well aware of the devastating toll that their prior conspiratorial actions have already taken on Petitioner and Petitioner’s business assets. COUNT # 11 - Blasisus violation 93. Plaintiff incorporates by reference and realleges each allegation set forth above. 94. All Defendants are charged with Count #11 COUNT # 12 - Contempt Violation 95. Plaintiff incorporates by reference and realleges each allegation set forth above. 96. Defendants lied to Court regarding Defendant’s Proxy disclosure related to Edell. Defendant’s Failure to “make this right” as claimed by Defendant Delaware counsel is worthy of Contempt violation. COUNT # 13 - Ruling certain transactions after October 17, 2003 are Void. 97. Plaintiff incorporates by reference and realleges each allegation set forth above. 98. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October 17,2003. Defendants fraudulently concealed such properly noticed slate. Defendant’s have also not legally effected a valid closing or vote on the Series C stock sale or transfer from Sony of their Series B shares, blocking public issuer’s option received in three way agreement between Sony, VantagePoint, and public issuer in 2003. The crooked dealings expand when Orrick uses its insider knowledge to produce a commercial benefit for VantagePoint while having Issuer pay 100% of the cost by paying off Sony debt earlier then due.
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COUNT # 14 - VOID Defendants right to exculpation under 102(b)(7) 99. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein. 100. Defendant Directors right to Exculpation because of Judge King ruling finding “bad faith” and disloyalty must be void. COUNT #15 - Ruling certain transactions after October 17, 2003 are Void. 101. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein.
102. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October 17, Defendants fraudulently concealed such properly noticed slate. Therefore, Defendant’s have also not legally effected a valid closing or vote on the Series C stock sale or transfer from Sony of their Series B shares, blocking public issuer’s option right to rebuy the shares for benefit of common stock shareholders received in three way agreement between Sony, VantagePoint, and public issuer in 2003. 103. voids Blasius Directors compensation post Blasius event 104.voids VantagePoint financing tranche I on October 31, 2003
105.voids VantagePoint financing tranche 2 on January 24, 2003 which was subject to shareholder vote of items in Blasius Proxy created by Blasius Directors. 106.Plaintiff awarded damages to stock owned equal to the dilution caused by Blasius
Directors and Blasius Proxy.
107. Plaintiff awarded Expectency damages as Proxy Slate backer damaged by Blasius Directors and Blasius Proxy. 108. Award to competing Proxy slate compensation as if Slate Directors had not been
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victim of Blasius violation by defendants. COUNT #16 INDEMNIFICATION AND ADVANCEMENT CLAIMS 109. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein 110. PLAINTIFF RIGHT TO INDEMNIFICATION AND ALSO RIGHT TO IDEMNIFICATION FOR ADVANCEMENT LEGAL FEES. INCLUDING ALL MATTERS OR EVENTS OR FACTS CITED � 111. Plaintiff was Director and Officer at Issuer that owes Plaintiff benefit of “contract rights” defined in Section 7 of Issuer Bylaws for Indemnification and Advancement: “The rights conferred upon indemnitees in this ARTICLE VIII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.” (Exhibit 1,Article VIII Section 7. Nature of Rights ) 112. Plaintiff ‘s “Right to Indemnification” is entitled to: i) “indemnification” to “fullest extent authorized by the Delaware General Corporation Law” or “broader indemnification rights”2: 113. Plaintiff is also beneficiary broader protection compared to Del 145 statue limits3 114.Indemnitee in addition to being an Officer, was Director and due benefit of Issuer’s Eighth Bylaw broadening scope of Indemnification and Advancement rights: “EIGHTH: Directors of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve 2“shallbeindemnifiedandheldharmlessbytheCorporationtothefullestextentauthorizedbytheDelawareGeneralCorporationLaw,asthesameexistsormayhereafterbeamended(but,inthecaseofanysuchamendment,onlytotheextentthatsuchamendmentpermitstheCorporationtoprovidebroaderindemnificationrightsthansuchlawpermittedtheCorporationtoprovidepriortosuchamendment),”(ArticleVIIISection1;Exhibit1) 3“anyaction,suitorproceeding,whethercivil,criminal,administrativeorinvestigative(hereinaftera“proceeding”)”(Exhibit1eUniverseArticleVIIISection1.“RighttoIndemnification”)
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intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. “ (Exhibit 2)
INDEMNIFIED FOR “ALL EXPENSE, LIABILITY, AND LOSS” “SUFFERED” 115. Indemnittee “contract” right is Mandatory advancement. Plaintiff is not
limited by standard Delaware 145 Permissive advancement limitations such as allowing “terms and conditions” to be set that a “corporation deems appropriate”. 116. Petitioner seeks to be indemnified for following:
(a1) Damages and impact on Indemnitee from fabricated dividend or fraudulent conveyance of 33% of Myspace.com to insiders initiated in November 2004.
(a2) Damages and impact on Indemnitee from void October 31, 2003 Certificate of Designation of Series C Preferred Stock, void Series C Preferred Stock sale, void Series C Directors, void January 2004 Annual Shareholder meeting, void sale of Skilljam.com,
(a3) Damages and impact on Indemnitee from void February 2005 sale to RedPoint Capital of 25% of Myspace, Inc. stock. (a4) Damages and impact on Indemnitee from void name change by eUniverse, Inc. to Intermix, Inc., and sale of eUniverse, Inc. aka Intermix, Inc. to Defendant in September 2005. (a5) Damages and impact on Indemnitee from void issuances of stock and options to certain Officers and Directors after October 30, 2003. (a6) Damages and impact on Indemnitee from fraudulent concealment by Defendants of valid October 17, 2003 Annual Slate of Directors being validly nominated for Annual Shareholder meeting with a shareholder record date of October 23, 2003. (a7) Damages and impact on Indemnitee from void News Corporation 2005
purchase of eUniverse, Inc. since indemnitee owned 30% of eUniverse, Inc. (a8) Damages and impact on Indemnitee from lost $900 million Google Search Commerciial agreement.
(b1) Damages and impact on Indemnitee’s January 2004 conflicted “search
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engine” conflict and warning notice filed with SEC.
(b2) Damages and impact on Indemnitee’s May 2005 Whistleblower notice to Intermix, Inc. and Intermix’s june 2005 reply and actions.
(b3) Damages and impact to Indemnitee thru Carlick June 2005 fraudulent concealment while Carlick controlled Manatt Law firm misled & manipulated NYAG to investigate Indemnitee
(b4) Damages and impact to Indemnitee and Expectancy Damages from Indemnitee’s $13.50 Counter Offer to Purchase Intermix, Inc. and Myspace Inc (b5) Damages and impact to indemnitee and Expectancy Damages from Indemnitee’s failed online music lyric text community website venture after and as part of Sony facilitated November 30, 2012 Warner Music Group “PeerMusic” lawsuit against Indemnitee.
(b6) Damages and impact to indemnitee and Expectancy Damages from
Indemnitee’s failed buyout of publicly traded Delaware Incorporated Answers.com in 2011.
(b7) Damages and impact to Indemnitee and Expectancy Damages from
Indemnitee’s failed buyout of subsidiary of publicly traded Delaware Corporation, Washington Post Corporation in 2013.
(c1) Damages and impact to Indemitee and Expectancy Damages from
preventing Indemnitee from entering Rule 701 Damage Report into Federal Court in Los Angeles in 2011 and 2012.
(c2) Plaintiff did not receive $2.75 per share despite having qualifying stock
Held of over 2,900,000 shares.
Plaintiff as shareholder was damaged by reason that Plaintiff was Director and Officer of eUniverse, Inc. Plaintiff was obstructed from puttingRule 701 Damage Report into Federal Court before the December 31, 2012 final Disposition.
COMPLAINT FOR DAMAGES Requiring disgorgement and/or imposing a constructive trust upon Defendants’ ill- gotten gains, freezing Defendants’ assets, and/or requiring Defendants to pay restitution to Plaintiff and to all members of the class of all funds acquired by means of any act or
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practice declared by this Court to be an unlawful, unfair, or fraudulent. VIII - RELIEF REQUESTED A. WHERFORE, Plaintiff demands judgment and preliminary and permanent relief,
including injunctive relief, in its favor and in favor of the Class and against the Defendants as follows:
B. Awarding Plaintiff appropriate damages including compensatory damages,
together with pre- and post-judgment interest; C. Awarding Plaintiff the costs, expenses and disbursements of this action, including
any attorneys’ and experts’ fees and, if applicable, pre-judgment and post-judgment interest; and
D. Awarding Plaintiff such other relief as this Court deems just,equitable and proper. Dated: April 16, 2014
_________________________________ Brad D. Greenspan (SEAL)
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EXHIBIT #1
January 2, 2014 Brad D. Greenspan 264 South La Cienega Blvd. Suite 1236 Beverly Hills, CA 90211 Case C.A. No. 106-VCS Greenspan v. Brewer, et. Al. Dear Honorable Chief Chancellor Strine Attached for your consideration under Exhibit A herein is a Motion 60(B)(6) requesting the case be re- opened to allow for the merits of a Motion for Contempt 70(B) to be considered, along with the other relief your ruling explicitly allowed for under the ruling and statements you made during the hearing in January 2004 (A transcript of the hearing is attached as Exhibit #9 of Declaration in support of Motion 70(B) , specifically a Motion to Conform the Evidence, and a Motion for Judgment on the Pleadings. While several years have gone by since the case was closed in 2004, I believe it is meritious for The Chancery Court to accept the Motion 60(B)(6) that attaches as exhibit Motion (70)(B) for filing along with the other documents. First, procedurally, I followed the precedent and sequence for such an action from your decision in C.A. No. 4780-VCS (WIMBLEDON FUND LP – ABSOLUTE ) RETURN FUND SERIES v. SV SPECIAL SITUATIONS FUND, February 2011), in which you stated in the ruling, “the way for a party to obtain relief from a final judgment is for it to file a motion in this court under Court of Chancery Rule 60(b).” Second, because the underlying facts of the Motion for Contempt 70(B) involve fraudulent concealment by the defendants of the scheme that the motion seeks relief from, the amount of time that has passed should not bar this Motion from being accepted by the Court to consider. Specifically, the evidence discovered to pierce the fraudulent concealment scheme only became available after: i) defendants as part of the scheme published a book in 2009 calling “Stealing MySpace” with false facts in an attempt to further the fraudulent concealment which began in Chancery Court after your ruling and findings in 2004. The defendants then induced the Plaintiff Class Counsel RGRD Law to substitute the false facts from the defendant’s published book in place of my evidence I was seeking to submit into the Los Angeles Central District Federal Class Action Security Fraud case (Brown v. Brewer, which consolidated 2005 events and claims surrounding the September 30, 2005 Cash sale of eUniverse, Inc which had changed its name to Intermix to acquiror News Corporation, and certain 2003 claims related to the restatement eUniverse had suffered ). Therefore, I was a member of the Class of Plaintiff shareholders in regards to the 2005 claims, but a potential defendant Director in regards to the 2003 claims from the restatement. A fight broke out as I sought to alert other shareholders of the Class to the fact that Plaintiff Class Counsel had turned into a “renegade” suddenly sprinting to settle the claims for .07 cents on the dollar
after Federal Judge King’s June 2010 Summary Judgment finding in favor of the Plaintiff Class (of which I was a member of such class because of my shareholdings in the underlying public company). Judge King’s Summary Judgment focuses only on the 2005 matters. Both myself and the second largest member of the certified class, an institutional stockholder Trafelet & Co, a NY hedge fund, then attempted to object to the inequitable Settlement fashioned by RGRD Law. Further, I tried to intervene to stop the settlement and get the Federal Court in Los Angeles to review the new evidence covered up by defendant’s fraudulent concealment and fraud on the Chancery Court evidence and matters that I had discovered by March 2012. While I was forced because of monetary constraints (and the breach of a 2007 Common Interests Agreement I signed with RGRD Law) to file pro se, I was not allowed to intervene to inject the newly discovered facts, and the Federal Class Action Security Fraud class action had its final disposition with the December 31, 2012 distribution of $45,000,000 in settlement proceeds to the Class However, my alerting the other Class members led to Trafelet & Co’s retained lawyer being allowed to intervene at which time we discovered that RGRD Law had initiated a scheme to change the definition of the certified class in the settlement documents which effectively removed 60% of the eligible shares for participation in the settlement (RGRDLAW changed the legal definition of the Class in the 2012 settlement documents from the previous May 2009 definition which the federal court certified allowing anyone holding shares as of July 18, 2005 thru September 30, 2005 (date of consummation of the merger) to receive a share of settlement proceeds, to instead a new different legal definition which RGRD Law printed in the 2012 settlement documents which injected the word “Continuously” as a qualifier. RGRD Law had a copy of the 13-F SEC list of institutional holders which they had sent me in 2007, and realized by simply adding this one qualifying word, 60%+ of the eligible shares would be cut out because 80%+ of the institutional shareholders holding shares on July 18, 2005 when the merger was announced, sold their shares before September 30, 2005 when the company announced they would not entertain the competing $13.50 bid I had publicly announced (and in which I was fronting for Viacom, Inc. a rival bidder, who was not given a chance to bid and such scheme discussed by Judge King in his 2010 summary Judgement ruling. Thus the Federal Judge could not consider the facts and evidence including my emails with Viacom, their desire for me to keep their involvement in my bid anonymous unless the Company agreed to delay the September 30, 2005 shareholder meeting to approve the sale to News Corporation). My alerting the other class members resulted in Trafelet & Co. first discovering that they were in fact not eligible to receive any of the award because they had sold all 3 million of their shares before consummation of the merger before September 30, 2005, and working with a boutique law firm in Los Angeles such effort caused the Federal Judge to reject the first Settlement terms. While Judge King noted in his ruling rejecting the first Settlement terms, that it was “odd” that RGRD Law in 2009 had fought to create a certified class that included the type of shares held by Trafelet & Co and that in 2012 RGRD Law was now fighting jointly with the Defendants to claim “continuous” holding of the shares thru the date of the September 30, 2005 consumation was necessary to be a member of the newly defined certified class that RGRD printed in the settlement documents. Judge King appeared exhausted by the proceedings and not desirous to take action on RGRD’s breach of its duty of loyalty, fiduciary duty to the Class members, fraudulent concealment of new evidence, and fraud upon the Court (all of which I sought to be reviewed and considered by the Court in my intervention filings and 60b3 motions which the Court rejected to be heard because more then 12 months since the default judgement banning me as a member of the Class that I sought to vacate had passed) and approved a March 2012 2nd Settlement structure in which RGRD admitted Trafelet & Co.
was a member of the certified class but had shares which were not as valuable as the Continuous shareholder, and a smaller portion per share of the award was given to Non-Continuous shares held that were also members of the 2009 certified class During this time, I became aware of one of the underlying reasons for RGRD Law’s misdeeds. RGRD was sanctioned in 2008 in Chancery Court as part of the findings and rulings of (SS&C TECHNOLOGIES, INC. C.A. No. 1525-VCL). However, RGRD fraudulently concealed this sanction from me and never disclosed it to the Federal Court in Los Angeles. This was because the defendant in the Brown v. Brewer case was represented by Latham Watkins (although Latham directly represented the defendants in the California State Class Action which was dismissed at demurrer stage in 2006 before discovery was reviewed by myself and new findings and claims were created from such discovery that I subsequently shared with RGRD in 2006 which was then filed as part of the Federal Class Action Security fraud claims, Latham wisely allowed Hogan Hartson to sub in for Latham during the Federal Class action), the law firm that was opposite RGRD In SS&C. Thus, RGRD was induced to turn “renegade” against the interests of myself and the other Federal Class members because Latham was willing to pass on launching a new set of claims against RGRD and significant new liability for RGRD (using the findings the Vice Chancellor hints at in the SS&C Sanction ruling) that may have terminated RGRD’s ability to practice law. RGRD also wanted a piece of the $45 million dollar settlement and Latham’s silence on informing the Federal Court that RGRD was fraudulently concealing notice and disclosure of its Sanction from Chancery Court, allowed RGRD to remain as Class Counsel. Noting that I was unaware initially of the SS&C Sanction matter when I began in 2009, sending emails to RGRD indicating I was seeking to have them removed as Class Counsel after they did a joint motion to ban me as a Witness and not use my evidence (May 2009) after I informed them I would submit new evidence into the record I had discovered and had agreed to be subpoened by Defendant’s counsel Hogan Lovell and submit such new evidence imminently) ii) The additional critical evidence that caused me to purchase and review the 2009 “Stealing Myspace” book that RGRD used as the false facts injected into the Federal Court Summary Judgment, as well as the impetus for a below fair market settlement of the case in 2012, was the ongoing Federal Class action HiTech Employees v. Google, Apple, et. Al I discovered existed in 2012 (the class action had been filed in San Jose Federal Court in late 2011). After purchase of the “Stealing Myspace” book I discovered references to interviews with Jeff Edell at the back of the 300 page book (after seeing reference to use of “Stealing Myspace” by RGRD Law in the post 2010 Summary Judgement underlying summary of facts documents I reviewed after being forced to stop my internet business (my full time job at the time) and become “Active” as a class member that became aware RGRD had gone “renegade” and the entire Shareholder Class’s rights and claims were exposed and likely to be lost or severly diminished unless I personally became “active”. Only after launching a new investigation of “Jeff Edell” because the “Stealing Myspace” book underpinned its facts from the interviews with Edell, did I get access to an original D&O Questionaire that Edell had filled out in 2003 and submitted to the Nominating Committee of the eUniverse Board (of which I was not a member). It was this evidence of fraud that is at the heart of the 70(B) motion and is part of the Exhibits that proves clearly a new crime of Fraud Upon the Chancery Court (along with other equitable claims). Additionally new evidence disclosed in discovery in Hitech Employees v. Google only became available in May 2013 (when disclosed in that case’s attempt to Certify its Class), and such new evidence connects Director Carlick with being a party to secret bilateral agreements that Defendants in
that case admitted were formed in 2004 and 2005. As Carlick was a Director of AskJeeves Inc. which was one of the co-bilateral agreement parties that entered the admitted unlawful and illegal agreements With Google (and Google had signed a Settlement admitting as such with the Department of Justice in late 2011). Carlick was simultaneously a Director of eUniverse and his firm was control shareholder after using Edell to help take control and win the 2004 Proxy vs. my competing Proxy bid.). Thus Edell’s continuation of the fraud started in Chancery Court, discovered by Chancery Court, and then doubled up on by defendants, was also the key scheme of the fraudulent concealment that the 2009 “Stealing Myspace” book accelerated, and underpinned RGRD Law’s claims to the Federal Court in Their 2012 joint bid telling the Federal Court that my claims I sought to inject into the Court were lacking in credibility. Therefore, unless the Chancery Court provides the relief I am seeking, I can never recover my credibility versus the fabricated Director Edell scheme that the Motion 70(B) seeks to lance. Further, unless the Chancery Court re-opens the matter under its right to do so via 60(B)(6), then The Chancery Court will be allowing Defendants including Delaware defense counsel to lie to the Court and completely disregard the Court’s rulings when they are made. Therefore, I urge your consideration of the facts included in the attached Motions and appeal to your sense of equitableness in allowing these Motions to be filed in the Chancery Court despite the time since the matter was closed. I also note that because my Slate of Directors was nominated rightfully October 17, 2003 before I resigned as Chairman and CEO, and the Defendants fraudulently concealed this fact from the Chancery Court and the public, doesn’t provide a cure for the VOID actions defendants took after such date, nor does it provide a cure for the VOID actions the defendants took after thumbing their nose at the Chancery Court ruling in January 2004 (and fraudulently concealing from the Chancery Court in July 2004 at which time the Court entertained an award of legal fees but only granted in part because defendants were fraudulently concealing the aforementioned matters which are detailed fully in the underlying Motions). Sincerely,
Brad D. Greenspan
EXHIBIT A
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
BRAD D. GREENSPAN,
Plaintiff,
v.
BRETT BREWER, et al.
Defendants
) ) ) ) ) ) ) ) ) ) )
C.A. No. 106-VCS
MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)
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I INTRODUCTION……………………………………………………………………………….pg.3 II SUMMARY OF ALLEGATIONS……………………………………………………………..pg. 4 III ARGUMENT……………………………………………………………………………………pg. 5 A. DEFENDANTS WILLFULLY IGNORED WARNINGS AND MULTIPLE NOTICES……………………………………………………….…..pg. 6 B. COURT PROVIDES RECOMMENDATION THAT DEFENDANTS OPTED TO IGNORE………………………………………………………....pg. 6 C. BOTH DELAWARE COUNSEL AND DEFENDANT BROKE PROMISE TO COURT……………………………………………………….pg. 7 D. DEFENDANTS IGNORED FIDUCIARY DUTY TO HONOR OCTOBER 17, 2003 DULY ELECTED PROXY SLATE……………………………….pg. 8 E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATION……………………pg. 8 F. SONY IS CONFLICTED AND HAS INFLICTED MULTIPLE PREDICATE ACTS……………………………………………………………………….pg. 9 G. FRAUDULENT CONCEALMENT USED TO DISCREDIT PLAINTIFF IN 2009 NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEME………………pg. 9 H. DEFENDANT’S “BAD FAITH” & “DISLOYAL” FINDINGS AND ACTS DAMAGING SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED BY FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004 DEFECTIVE DISCLOSURE…………………………………………………………………………pg. 10 IV CONCLUSION………………………………………………………………………………..pg. 10 I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION…………………….pg. 10
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MEMORANDUM OF POINTS AND AUTHORITIES COMES NOW the Plaintiff acting on his own behalf, hereby moves this Honorable Court to enter Judgment on the Pleadings in Plaintiff’s favor and offers in support the following: I - INTRODUCTION
1. The Plaintiff moves the Court to find Defendants in contempt under 70(B),
42(B) and/or 60(B)(3). Additionally, Plaintiff requests Court to sanction Defendants $25,000 per day since Chancery Court January 2004 hearing that “corrective disclosure” ordered by then Vice Chancellor Strine was not undertaken by Defendants and such per day sanction to continue until Defendants provide proof to the Chancery Court that “corrective disclosure” has been made to the public.1
2. During January 2004 trial, then Vice Chancellor finds Defendants guilty of Proxy Disclosure Violations.
i. “clearly, Mr. Edell was not validly elected to a Series B slot on October 6th. He just wasn't He could not have been appointed by the Board to a Series B slot.”(70B Declaration, Exhibit# 9, pg.63)
ii. “It's even odder when it's supposed to be retroactive to October 6th, especially when as of
October 6th, as I understand it, Mr. Edell hasn't even agreed to be on the board.”( 70B Declaration, Exhibit# 9, pg.63)
iii. “As of October 6th, I have got to say, I really -- I think Mr. Lipp basically said the board had
no idea that it was slotting him in a Series B. I think there is a great deal of record evidence-- it's not a big record, but what record evidence there is suggests that the board wasn't really thinking about putting him in as a Series B director but thought Sony was simply waiving its right.”( 70B Declaration, Exhibit# 9, pg.63)
iv. “It's a very strange -- I mean, I have got to say--I will say this on the record. I'm very
dubious about the validity of this election, and there is a certain formality that has to be done around electing people. And I mean, is this a proxy?” (70B Declaration, Exhibit# 9, pg.63)
v. “It's not really, I guess, my job to be Director of Hygiene for eUniverse, but now that very
competent Delaware counsel has been engaged to assist the company, I mean, it's pretty common knowledge that the board of directors has to approve the actual certificate of
1In Gallagher v. Long, the Delaware Supreme Court stated, “[a] trial judge has broad discretion to impose sanctions for failure to abide by its orders,” so long as the sanctions are “just and reasonable.”
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designation amendment that's being proposed. And you know-- and this isn't the first dot come kind of company that's tried to be a bit innovative.” (70B Declaration, Exhibit# 9, pg.63)
v. “There is a certain elegant order in things. You have to -- the board has to approve it. And
they have to approve it in the form they are proposing. Then the stockholders have to do it.” (70B Declaration, Exhibit# 9, pg.63)
vi. “The Court: “I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)
II – SUMMARY OF ALLEGATIONS
3. Defendants, VantagePoint, and Orrick are guilty of Fraud upon the Chancery Court thru first trying to mislead then Vice Chancellor Strine that Proxy disclosure is factual. Next caught in multiple lies before the court, defendants agree to fix defective disclosure and fail to do so.
4. Vice Chancellor Strine further discovered the certificate of designation amendment was
never approved by Board: “THE COURT: Has the board actually voted upon, Mr. Teklits, a final copy of the certificate of designation amendment? MR. TEKLITS: There was some confusion. We had done it with Mr. Lipp, Your Honor. Sony would not consent to an amendment that didn't require Vantage to exercise over 50 percent. They didn't want Vantage to exercise one share and they would lose their right to the seats. I'm not sure what was attached to what. THE COURT: It's not really, I guess, my job to be Director of Hygiene for eUniverse, but now that very competent Delaware counsel has been engaged to assist the company, I mean, it's pretty common knowledge that the board of directors has to approve the actual certificate of designation amendment that's being proposed. And you know-- and this isn't the first dot com kind of company that’s tried to be a bit innovative.” (70B Declaration, Exhibit# 9, pg.63)
5. Omission of Edell’s bankruptcy in Proxy statements is violation of: Rule S-K Item 401 and
Rule S-K Item 401 (f). (70B Declaration, pg.19-21, paragraph #s 94-103)
6. Defendants aware the January 2004 Proxy was defective, fraudulently concealing Edell’s work experience, ignore then Vice Chancellor Strine ruling, don’t cure the defects and make more
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disclosure violations in order to mislead shareholders and shift control of publicly traded eUniverse, Inc.
7. Sony Corp is guilty of aiding & abetting Edell and defendants to violate Rule SK Item 401 and defame Plaintiff and Plaintiff’s competing slate of Directors in January 2004 Proxy contest.
8. Defendants & their Counsel are guilty of Fraudulently concealing Edell’s background in 2003, 2004, 2005, 2009, 2010, and 2012, resulting in damages to Plaintiff and shareholders, as well as fraud upon the Chancery Court in Delaware and the Federal Court in Los Angeles Central District because Defendants induce Shareholder Class Counsel to substitute fabricated facts from fabricated Director Edell instead of Plaintiff’s true facts.
III – ARGUMENT
9. Under Court of Chancery Rule 70(b), this Court may find a party in contempt when it fails to obey a Court order of which it had knowledge. 2
10. The moving party is not required to show that the violation was willful or intentional, but the intentional or willful nature of a contemnor’s acts may be considered in determining the appropriate sanction.3 i. Scienter of Defendants is supported by (70B Declaration, pg.4-22, paragraph #s 20-103)
11. A party moving for a finding of contempt bears the burden of establishing by clear and convincing evidence that a court order was violated. If the movant makes that showing, the burden then shifts to the contemnor to show why it was impossible to comply with the order or why.4
2Court of Chancery Rule 70(b) supplies this court with the power — and broad latitude — to remedy violations of its orders. 327 Mother African Union First Colored Methodist Protestant Church v. The Conference of African Union First Colored Methodist Protestant Church, 1998 WL 892642, at *6 (Dec. 11, 1998). 4State ex rel. Oberly v. Atlas Sanitation Co. Inc., 1988 WL 88494, at *2 (Del. Ch. Aug. 17, 1988) (“[O]nce the party with the burden of proof has introduced evidence from which a fact finder could conclude that he has established a prima facie case, then the burden of going forward with the evidence shifts to the alleged contemnor to . . . [show] it was impossible to comply with the court order.”); see Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir. 1996); F.T.C. v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999); see also AM. JUR. 2D Injunctions § 321.
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12. Defendants based on precedential Delaware rulings, should be sanctioned and fined.5 13. January, July 2004, & August 2005 Proxies omit key facts rendering them defective and void. A. DEFENDANTS WILLFULLY IGNORED WARNINGS AND MULTIPLE NOTICES
14. Warnings by then Vice Chancellor Strine included: i. "But you can get this stuff fixed out or you put me in a position where I have got some sort
of -- this is low hanging fruit” (70B Declaration, Exhibit# 9, pg.63)
ii. “I don't have to say these words and you don't have to go fix them or call your client.” (70B Declaration, Exhibit# 9, pg.63)
iii. “the way the board purported to fill it was invalid.”(70B Declaration, Exhibit# 9, pg.63)
iv. “You may need to do corrective disclosure to begin with, because of this”( 70B Declaration,
Exhibit# 9, pg.63)
v. “Then I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)
vi. “real problem that I may have to take some notice of” (70B Declaration, Exhibit# 9, pg.64) vii. "could I plead with the Delaware lawyers for the company that if we are going to get -- if
you are going to get a consent from Sony, craft it. I mean, it's one thing Mr. Shannon and Mr. Walsh -- it's one thing if they want to do a Blasius thing. You know, you don't want to walk in here again with some sort of technical problem," (70B Declaration, Exhibit# 9, pg.64)
viii. “You know you probably have to amend your proxy statement, then.” (70B Declaration,
Exhibit# 9, pg.64) ix. “make sure you get it done right” (70B Declaration, Exhibit# 9, pg.64) x. “the company amends its proxy statement” (70B Declaration, Exhibit# 9, pg.64) xi. “You clean that up” (70B Declaration, Exhibit# 9, pg.64)
B. COURT PROVIDES RECOMMENDATION THAT DEFENDANTS OPTED TO IGNORE 15. Then Vice Chancellor Strine tips to avoid Blasius and Disclosure violations ignored:
i. "I can't help but observe the other thing, which is if this -- if the company --if the
5(GEORGELITTERSTv.ZENPHSOUNDINNOVATIONS,INC.,C.A.No.7700‐ML,2013)Because First State and CAMI failed to comply with paragraphs 3 and 5 of the PI Order, IDB is entitled to an order holding First State and CAMI in contempt and imposing an appropriate sanction. This Court has broad discretion in formulating a remedy for violations of its orders.6 As part of its broad remedial powers, the Court may impose a fine, for example, to coerce a non-complying party to cease improper conduct.
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incumbent board is really fine with a fair fight and doesn't mind the common and the preferred voting together to elect a majority even now, which I don't know to be the case -- but if it were and you said, "Let's have a showdown. We have a large stockholder. We have a disagreement. Vantage is in here. Let's have the showdown in the OK Corral. We want Mr. Edell to be on the board." Well, there is an obvious way to do that. Right? And if you don't want to have a legal fight, then you know, you figure out who your four are. You know who the Vantage two are If Edell is one of the fighting four, you make sure the certificate of designation has been approved. You clean that up. You know you probably have to amend your proxy statement, then. Then maybe you change your sale and put Edell on it. And the four that is currently in there, make a decision as to being on the board or not.. You have a fight about the majority. That is the judge trying to be practical in a situation where I have seen both sides,” "I'm saying if it's fair fight time and you are ultimately going to have a majority up, that is a real clean way to do it. I don't know how Blasius comes into that at all. (70B Declaration, Exhibit# 9, pg.64)
ii. "I'm saying if it's fair fight time and you are ultimately going to have a majority up, that is a real clean way to do it. I don't know how Blasius comes into that at all.” (70B Declaration, Exhibit# 9, pg.64)
iii. "So to the extent that Sony -- for example, if Mr. Edell were to resign today, to say, "I am not longer on the board," one of his other colleagues would resign -- and you do it in however elegant fashion to make sure you get it done right. Mr. Edell is immediately reelected to the vacancy a common vacancy, and the company amends its proxy statement and puts him as one of the four.” (70B Declaration, Exhibit# 9, pg.64)
C. BOTH DELAWARE COUNSEL AND DEFENDANTS BROKE PROMISE TO COURT 16. Delaware Counsel Teklits and Defendants plus Sony break promise to Court:
“MR. TEKLITS: We will make sure this is right, Your Honor. I think everybody wants this amendment approved.” (70B Declaration, Exhibit# 9, pg.63)
17. Defendants fail to make Court ordered “corrective disclosure” of:
i. False December 30, 2003 Proxy: (70B Declaration, pg.19-21, paragraph #s 94-103) ii. False October 31, 2003 Press release (70B Declaration, Exhibit #4, pg. 38-39) iii. False Defamatory December 11, 2003 8k: (70B Declaration, Exhibit #6, pg. 44) 18. Defendants opt instead to initiate multiple new “Edell” disclosure violations thumbing nose at Chancery Court and promise made to then Vice Chancellor Strine:
i. Thru “ISS Report” Defamatory attack on Petitioner: (70B Declaration, pg.22, paragraph #s 104-108)
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ii. Thru “Los Angeles Times” Defamatory attack on Petitioner: (70B Declaration, pg. 23, paragraph # 109)
iii. Thru false and defective July 2004 Proxy (70B Declaration, pg. 24, paragraph #s 110-113 &
Exhibit #7, pg.48-49)
iv. False and defamatory January 26, 2004 Proxy Disclosure (70B Declaration, Exhibit #6, pages 45-46)
iv. Misleading investment bankers in 2005 Bidding Contest by failing to correct
previous Proxy statements and disclosures, ensuring Plaintiff status would be “Does not have significant credibility” so that Plaintiff would not have equitable opportunity to participate with $13.50 counter bid announced in September 2005 before Defendants consummated $12.00 per share sale to News Corporation. (70B Declaration, Exhibit #8, page 51)
D. DEFENDANTS IGNORED FIDUCIARY DUTY TO HONOR OCTOBER 17, 2003 DULY ELECTED PROXY SLATE 19. After January 2004 Chancery Court hearing, it was unlawful for Defendants to fraudulently conceal and to not honor Plaintiff’s October 17, 2003 approved Director slate nominated at validly called Board Meeting. (70B Declaration, pg.13, paragraph #48)
20. Voided Edell Director, voids Edell vote during Plaintiff and eUniverse’s October 16, 2003 Vote to Nominate Director slate proposed by Plaintiff before Plaintiff resigned as Chairman and CEO. This effects 3-1-1 win by Plaintiff vs. previous “No pass” Defendants purport existed from 3-1-2 vote before Chancery Court ruled Edell was never validly elected as Director in October 2003. E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATION
21. Defendants pass on fraudulently concealed unlawful acts including contempt of Court to
acquiror News Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal security fraud class action. Such email on July 17, 2005 from Corporate counsel Lang emailed at 4:13AM to Defendant Director Sheehan, “Subject: 'Purchase Agreement”, stating,
"On the issues, let's close on the remaining ones in a fair and reasonable way-- so we can build out relationship.” And
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“3. We feel like we have given indemnification on the shares and the purchase agreement itself to do so on any issue we have had no involvement in whatsoever (i.e. Greenspan) - that seems like too much. Andy, I know we are very eager to get this done. Let do it so both sides can feel good and move forward on our longer-term relationship."
F. SONY IS CONFLICTED AND HAS INFLICTED MULTIPLE PREDICATE ACTS:
22. Sony was an insider shareholder in eUniverse (Intermix, and Myspace by ownership level prior
to Sale of VantagePoint VC firm in July 2003;October30, 2003;April 2004 (SEC disclosure) and had a Director and Series B Nominee Edell in January 2004 Proxy.
23. Sony Corp’s general counsel Seligman is married to Joel Klein who began working for
News Corp in 2009. Sony has fraudulently concealed the defective Edell background & both violations of Rule SK Item 401 in January and July 2004 Proxy and Annual meetings respectively. Sony and/or Seligman are aiding and abetting News Corp for the benefit of Joel Klein who is an executive and Director earning $1m+ per year from News Corp. G. FRAUDULENT CONCEALMENT USED TO DISCREDIT PLAINTIFF IN 2009 NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEME 24. Defendant’s leverage their relationship with acquiror to create defamatory and fabricated lies thru acquiror News Corporation employee Angwin’s published in late 2009 book, ‘Stealing MySpace’ which fraudulently conceals the true background of former Director and Chairman Jeff Edell and his scheme with Brewer to forward a fabricated false resume, misleading CEO to get Edell onto the Board. This creates further ongoing defamatory damages to Plaintiff and Shareholders because Class Counsel accepts and uses false Edell facts in book instead of Plaintiff’s facts offered to Class Counsel in 2012 Federal Class Action in Los Angeles Central District. Edell’s false facts allow the fraudulent conveyance Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004. Further, Edell’s false facts which become Acquiror News Corporation false facts, obstruct Plaintiff’s true facts from entering the record for the benefit of the Federal Court learning the true damages and claims rightfully owed to shareholders. Plaintiff and shareholders will continue to suffer until the defective disclosure is cured by
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Defendants. (70B Declaration, pg. 24-27, paragraphs 114-131)
25. Defendants use ongoing Edell defective disclosure scheme to defame Plaintiff and impugn reputation in book Falsely claiming, “violent mood swings were part of Greenspan’s character”. (70B Declaration, pg. 26, paragraphs 127) H. DEFENDANT’S “BAD FAITH” & “DISLOYAL” FINDINGS AND ACTS DAMAGING SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED BY FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004 DEFECTIVE DISCLOSURE
26. Chancery Court’s failure to force Defendants to honor their promise to fix the defective Disclosure in 2003 is directly responsible for allowing Defendants to steal a minimum of $670 million in damages (Federal Judge King 2010 approved damage report) and upwards of $32 Billion in damages (Rule 701 Damage Report not used by Class Counsel because of ongoing Edell fraud) from thousands of shareholders in 2005. (Exhibit #1, page 12, June 2010 Federal Central District, Judge King, Summary Judgment Ruling) IV- CONCLUSION I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION
27. Rule S-K Item 401 (f) states the requirement for information disclosed in Intermix’s
January 2004 & July 2004 Proxy filings for Director’s “Involvement in certain legal proceedings” stating,
“Describe any of the following events that occurred during the past ten years and that are material an evaluation of the ability or integrity of any director, person nominated to become a director or executive officer of the registrant:
“A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;”
28. To make Proxy not defective under 14a or Delaware security laws, issuer would have to
disclose that,
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“Our former Chairman who resigned effective December 2003 was replaced by Jeffrey S. Edell. Edell was most recently President and CEO of Showorks Entertainment Group, Inc. from January 2001 thru April 2002. Sometime in 2002, Showorks Entertainment Group, Inc. underwent a name change to MTS, Inc. Sometime in September of 2002 Edell learned that MTS, Inc. had filed for bankruptcy under Chapter 7. Edell was not there at the time of filing. Edell has informed the company Edell was never personally named or contacted as part of the bankruptcy under Chapter 7 or subsequent proceedings. Edell was from 1995 thru December 31, 2000,President and CEO of Soundelux Entertainment Group., Inc.”
29. Defendants also fail to fix disclosure related to fraudulent “Amended” October 31, 2003
Note. Defendants cannot lawfully or validly backdate the October 31, 2003 $2.5 million dollar
note by simply creating a new Note disclosed in December 2003 with a date of October 31, 2003. (70B Declaration, pg.19, paragraph #91) 30. Plaintiff requests Court to sanction Defendants $25,000 per day since Chancery Court January 2004 hearing that “corrective disclosure” ordered by then Vice Chancellor Strine was not undertaken by Defendants and such per day sanction to continue until Defendants provide proof to the Chancery Court that “corrective disclosure” has been made to the public.
31. The interests of justice are properly served by the grant of this Motion.
Respectfully submitted Brad Greenspan, Pro Se
12
EXHIBIT #1 June 2010 Federal Central District, Judge King, Summary Judgment Ruling
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
BRAD D. GREENSPAN,
Plaintiff,
v.
BRETT BREWER et al.
Defendants.
) ) ) ) ) ) ) ) ) ) )
C.A. No. 106-VCS
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
2
1. I submit this declaration in order to provide the Court and the parties to the above captioned litigation with information regarding this matter as. 2. I am over 21 years of age and I have personal knowledge of the facts set forth herein and, if called as a witness, could and would testify competently thereto. 3. I was founder of Issuer eUniverse, Inc. (‘eUniverse’) which later changed its named to Intermix, Inc. and was the largest common stock holder from Issuer’s creation and public listing in April 1999, thru the September 30, 2005 merger consummation at issue in this case. 4. On April 14, 1999, eUniverse began publicly trading under the symbol EUNI. The initial Directors and executive officers of eUniverse were Brad D. Greenspan, age 26, Chairman of the Board, Leland W. Silvas, age 44, President Chief Executive Officer and Director, Charles Beilman, Age 39, Chief Operating Officer and Director, and William R. Wagner, age 52, Vice President, Chief Financial Officer. 5. According to the SEC filing in 1999, Chairman and Director BG owned 57.2%.of the company and was a control shareholder of the public corporation as it began public trading. 6. eUniverse closed its first day of trading at $12.50 per share on April 14. 1999, at this time, eUniverse had less then 1 million unique users coming to its network of owned websites. None of the defendants were officers or senior executives of eUniverse at the time of the public listing or by the end of 1999. 7. In December of 1999, eUniverse launched its first social network platform, LivePlace.com, with proprietary technology acquired thru the Big Network Acquisition. Unfortunately, a year later, eUniverse exited the LivePlace business when it determined the technology at the time was not sufficient to prevent websites from slowing down for users after installing the LivePlace technology. However, LivePlace’s launch by eUniverse cements the fact that eUniverse was a pioneer in the social network space. LivePlace was described as: “a proprietary technology that turns a website into a public place where users can meet and interact through chat, instant messaging, and co-browsing.”
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8. On July 31, 2001, eUniverse announces that for its March 31, 2001 quarter, it has generated its first net profit and third consecutive ebitda positive quarter. Becoming profitable was critical for eUniverse because as of its 7/31/2001 SEC filing the company only had $218,000 in cash vs. $2.3 million in cash as of the year before. 9. By October 2001, eUniverse had 31.3 million unique U.S. users and had the 8th largest online audience in United States for the period. By comparison, Ebay was ranked #9 with 31.29 million users and Google was ranked #14 with 26.9 million users. 10. On December 17, 2001, the NY Times features a story on eUniverse titled, “For Some Dot-Coms there Are Real Profits”, stating
“Meet Brad D. Greenspan and at first it seems like he’s a visitor from another era-- the Internet bubble of 1999. He's a 28-year-old chief executive of a public Internet company, eUniverse, with tens of millions of users and big backers like Sony."
11. eUniverse has $33.19 million revenue for 12 months ended March 2002 & $6.64 million EBITDA. 12. eUniverse by the end of 2002 had over 250 employees working in Los Angeles amongst this group, the company had developed highly skilled technology and internet Strategy executives. eUniverse also developed significant technology resources and assets gathered over its many years of operations. 13. Mr. Greenspan resigned as CEO on October 30, 2003 and on November 21, 2003, Morgan Stanley issued its annual internet report ranking eUniverse as the #1 fastest growing Portal based on data from the prior 90 days, ahead of AOL and Yahoo and ‘Excite Network’ which AskJeeves acquired in 2003. 14. The eUniverse board during week ending October 31, 2003 reneged on a common stock financing arranged by ThinkEquity and Greenspan which the same board had approved on October 16, 2003. 15. Instead the Board manipulated by defendants, changed course and determined to sell effective control of eUniverse, Inc. to San Francisco based private equity fund VantagePoint Ventures LLC, issuing below market price preferred stock and simultaneously breaching the 19.9% shareholder vote threshold which the company had also specifically promised it would not do in any financing weeks earlier to the Nasdaq listing panel. 16. VantagePoint had been told the week before by the Chairman and CEO of eUniverse that the
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company had determined not to proceed with their highly dilutive $8 million preferred stock proposal which offered to buy shares at below $1.35 and effect a change of control of the $80 million market capitalized eUniverse without a shareholder vote, which violated the Nasdaq 19.9% threshold rule. 17. VantagePoint was informed that their proposed financing was economically inferior and that because Vantagepoint was still negotiating both terms and documentation and had not finished their diligence, the company had opted to close a $1.85 common stock financing from existing and new institutional investors. However, Chairman and CEO Greenspan invited VantagePoint’s David Carlick and their counsel, Orrick’s Richard Harroch to participate on the same terms as the institutional investors which was a significant discount already to the then approximate $2.25 - $2.40 per share public trading price range of eUniverse. 18. VantagePoint determined to not only reject the offer from eUniverse’s chairman and CEO to invest at $1.85, but embarked on and facilitated a brazen scheme to manipulate and defraud eUniverse’s Board and shareholders that put defendants Carlick, Sheehan, and Harroch in control of eUniverse’s board by October 31, 2003 and allowed defendants to recognize an almost sure windfall on their below market Series C preferred stock financing. 19. Not satisfied with their existing economic gains, defendants then Embarked between late 2003 thru September 30, 2005 on an ever growing series of schemes and misdeeds to loot the public company and effect transactions that benefitted themselves and related parties at the expense of the common stock shareholders who had held the majority of eUniverse. DEFENDANTS SCHEME TO ENTRENCH THEMSELVES AND SHIFT CONTROL 20. Mr. Greenspan was on the verge of terminating the general counsel and Chris Lipp, and the President of eUniverse, Inc. Brett Brewer, for their roles or poor performance in the restatement the company had suffered between October 2002 and May 2003, and ultimately a new controller and CFO were hired and eUniverse refiled via its 10k in August of 2003. Defendants General Counsel Chris Lipp was told the company would transition to a new general counsel after closing the next round of financing and President Brett Brewer was informed in the summer of 2003 he would be demoted.
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21. Mr. Greenspan instead was faced with a scheme by Brewer to take control of the Board and shift control of
company over to VantagePoint and Defendants. The scheme is admitted in a letter from Edell to certain of the
defendants on the night of October 27, 2003, 3 days before Chairman, CEO, founder Brad Greenspan resigns:
“Brett is always on the side of Brad's removal when not around Brad, but has no backbone when in front of him. He is looking for us to do the dirty work but will not stand tall himself. “
i. The first fraud was Brewer recommending and endorsing a friend of his Jeffrey Edell to
come onto the Board of Directors in mid-October 2003. Edell, Brewer, and the Chief Financial Officer Flahie who had worked for Edell at a previous company all misled Mr. Greenspan and the other Directors as to the qualifications of Mr. Edell. Brewer distributed a 3 page resume/background prior to Mr. Greenspan determining to support Edell as a new board member, but such 3 pages did not disclose the truth that Jeffrey Edell had just bankrupted the last company he worked for. Nor did Edell’s public filings or Proxy background or press release made by Edell disclose this pertinent and critical information. Instead, Edell, Brewer, and Flahie knowingly omitted this information in order to get Edell onto the Board where Edell quickly damaged the franchise value of eUniverse, Inc. by several disloyal acts and breaches of fiduciary duty. (EXHIBIT #1, pg. 29. & EXHIBIT #2, pg. 31)
ii. Defendants key strategy that enabled them to take control of the board of eUniverse was by
fabricating or aiding and abetting the fabrication of information to mislead independent directors and CEO about
background of Jeffrey Edell. Instead, defendants artificially branded Edell with false credentials and set him loose to
engage recklessly with the corporate assets and the important financing the CEO had closed with common
stockholders clearly on better terms the the lower priced preferred stock peddled by venture capital firm. Defendants
cover up a recent bankruptcy under his stewardship. Brewer, Flahie, Edell, Lipp, Moreau, Carlick, Harroch, and
Sheehan do not correct the defective proxy that they all approve multiple times between November 2003 and
September 2005. The defect is caused by the omission of Edell’s recent bankruptcy a violation Item 401 Rule-SK
related to Director & Officer work experience background.
iii. Defendants recognized the already locked in profits and upside that existed
for them if they could force eUniverse to accept VantagePoint’s inferior more costly financing.
iv. Defendants use the fabricated Edell resume in a series of Shareholder letters and press releases in an
attempt to cover the unexpected news that the CEO has been forced to resign as part of defendant’s scheme to cause eUniverse shareholders to be diluted and pay for more expensive financing so that the Directors
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led by Brewer could keep their jobs and receive significant upside from the incoming directors from VantagePoint and Orrick’s Harrosh. (Exhibit #4,pg.38-39) is November 2003 press release omitting Edell’s CEO role in the MTS 2002 Chapter 7 bankruptcy and also another turnaround company he ran in 2003 more recently that also failed according to Edell’s accurate D&O submitted to the Nominating Committee. However, Edell continues his sleight of hand and now promotes only the Soundelux CEO role without disclosing end of tenure in 2000 when it was sold and creates Impression he was most recently working as CEO of eLabor, Inc., stating “Additionally, Edell served as Founder, Director and CEO of eLabor, Inc., which was sold to ADP in February of 2003.” In fact, Edell was only a director of eLabor since at least 1995. HIDING ONE BANKRUPTCY AND ONE FAILED TURNAROUND IN PUBLIC DISCLOSURES 22. Edells two resignations on his bio that were really his last two jobs instead of submitting an accurate bio, defendants stretched the job of Edell that was actually 3 jobs prior, and increased this 3rd job by another 2 years, to the year 2002 (from 2000). Edell both omits to accomplish his end goal of making detection and disclosure of his true track record. (EXHIBIT #1, pg. 29, EXHIBIT #2, pg. 31, EXHIBIT #3 pg. 33-36, EXHIBIT #5, pg.41-42) FLAHIE THE NEW CFO 23. Brewer, also a Director, took advantage of his position leading the interviews and recruitment of the company’s new CFO during the summer of 2003 to recommend final candidate, Tom Flahie,
i. Flahie had previously worked as CFO at eLabor, America, Inc. under Brewer’s close friend and
fellow YPO member Jeffrey Edell ‘s brother. Edell was Director of eLabor where Edell’s brother served as CEO Based on Brewer’s recommendation, the CEO met with the candidate, and in August 2003, Tom Flahie was approved and offered a position as the new Chief Financial Officer of eUniverse. EDELL THE NEW DIRECTOR CANDIDATE 24. After current board member Thomas Gewecke, a senior business development executive of Sony Music, informed the board in the summer of 2003 of his desire not to serve as director for another annual term, Chairman/CEO Brad Greenspan agrees to review resume of candidate Jeffrey Edell. 25. In or around August 2003, eUniverse had need to recruit a new independent Board Member who was also qualified to sit on the audit committee. Brewer and Flahie initiated a scheme to promote their associate
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Jeffrey Edell as a candidate for the board slot so that they could be assured job security and benefit in the clear upside that existed to be a senior officer or top employee of Issuer as of October 2003.
i. Based on information and belief, Brewer had been in a Southern California Chapter of the Young
Presidents Organization (YPO) with Edell and they would meet regularly to discuss each other’s business challenges and prospects for three years prior to Edell joining the eUniverse board.
ii. New CFO Flahie had pre existing business relationship with Edell, working for a company
where Jeff Edell served as Director and Edell’s brother served as CEO managing Flahie immediately prior to coming to work for eUniverse in August 2003.
ii. Brewer and Flahie were challenged to get the Chairman/CEO to nominate Edell to the board based on Edell’s actual work experience which would call into question his fitness to serve on the board of a publicly traded company.
iii. The plan to nominate Edell to the eUniverse board based on his real work experience became more challenging when the most recently nominated Director, Lawrence Moreau, who had joined eUniverse’s board in May of 2003, admitted to being less then candid About his track record after a Los Angeles Business Journal article in August of 2003 brought such facts to the attention of the other eUniverse directors.
iv. Based on Information and belief, Brewer, Flahie, and Edell realized that to get the support of the Chairman/CEO to back nomination of Edell to the Board, they would have to inflate and falsify Edell’s track record to make it appear flawless. 26. Defendants thru this fraudulent scheme and omissions of Edell’s true work experience, created a fake Director candidate misleading shareholders and Petitioner with what appeared to be a perfect track record with no negative recent work experience disclosed.
i. Defendants determine to accomplish the deed by omitting Edell’s two most recent work experiences which were both failures and falsifying the time frame he worked as CEO of an, earlier successful venture, ‘Soundelux’.
ii. Defendants accomplished this thru falsifying the Soundelux timeframe Edell worked as CEO by two years while omitting the actual prior two jobs, both negative tenures where Edell had failed to improve the
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
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Companys where he was principal executive officer.
iii. Defendants fraudulent concealment of Edell’s true work experience allowed Edell to apply to be on eUniverse Board in 2003 and become supported by fellow Board Member, founder, and largest shareholder, CEO Brad Greenspan. 27. Defendants fraudulently conceal the true background of former Director and Chairman Jeff Edell and forward a fabricated false resume, misleading CEO to get Edell onto the Board.
i. Edell benefitted from fraud of fabricating his work experience by gaining access to the public issuer’s board. 28. Edell had not come off a successful business endeavor as his fabricated resume stated but really had failed in his last two ventures including one of two failures resulting in a Chapter 7 Bankruptcy filing. 29. Brewer moved scheme forward with aid of new CFO Flahie whose disloyalty in not reporting to the CEO or public that Edell resume was fabricated demonstrates Scienter intent to defraud & mislead shareholders. 30. Jeff Edell’s omission to trick CEO of Issuer via omission of his immediate two prior employment jobs. A
Director’s last two jobs and such director candidate’s performance or the company’s performance being the most
critical bit of information for Issuer or CEO to parse or review to do his duty.
31. Edell scheme results in eUniverse shareholders being diluted via more expensive VantagePoint financing.
32. On August 26, 2003 at 5:39PM Brewer forwards via email a fabricated three page (EXHIBIT #1. Pg. 29) resume for ‘Jeffrey S. Edell’ to the CEO with CFO Flahie cc’d and states,
“looks strong… again jeff will be here tomorrow to have lunch with tom and i. brad, I’ll set something up for you later this week or next depending on your schedule.”
i. Brewer lies, misleading the CEO further, asserting Edell’s resume “looks strong”, even as
Brewer and Flahie are aware that Edell’s prior two actual jobs are being intentionally omitted from the document sent to Greenspan. Edell, Brewer, and Flahie have destroyed the actual true work experience information prior to sending the fabricated Edell resume, this is a violation of 18 U.S.C. § 1512(c)(1), which prohibits the destruction of records.
ii. Defendants omitted a portion of the true documents and information in the Resume sent to Petitioner, with the intent to obstruct justice in violation of 18 U.S.C. § 1512(c)(1) and also since the false
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document was sent via email, Edell, Brewer, Flahie, and Lipp violate 18 U.S.C. § 1341 (relating to mail fraud), 33. On August 27, 2003, the CEO is deceived by the fabricated resume of Edell and responds to Brewer and Flahie after being misled and reviewing the fabricated resume of Edell, “Great resume!’. Since the CEO is misled via email, this is a violation of 18 U.S.C. § 1341 (relating to mail fraud). 34. On the first page of the fabricated Edell resume Brewer forwards, in the section labeled ‘Professional Experience’. Edell lists first: ‘Soundelux Entertainment Group, Inc. Hollywood, CA, from 1995-2002’ and the next line purports that during this period, Edell was “President/CEO/Director”. Edell & Defendants violate 18 U.S.C. § 1519 (relating to destruction, alteration, or falsification of records in Federal investigation and bankruptcy) and defendants are destroying Edell’s true work experience and put in its place the fake Fabricated work experience purporting that 2000-2002 Edell worked still for Soundelux.
i. Edell’s resume forwarded by Brewer, falsely creates the appearance and assumption that ‘Soundelux Entertainment Group’ has been the sole Professional Experience of Edell’s as a full time Executive since ‘2002’.
ii. Edell’s fabricated ‘Professional Experience’ section creates the appearance that
Edell, “Successfully initiated, negotiated and closed sale of the Hollywood postproduction division of SEG (Soundelux) to the Liberty Media Group” and Edell lists he was President/CEO/Director of Soundelux Entertainment Group from 1995-2002, then the reader of the fabricated document would assume Edell departed as CEO after Soundelux was sold in 2002. Brewer, Edell, Orrick, VantagePoint, Harroch, Carlick, Rosenblatt, Sheehan, DeWolfe, Latham, and Sony Corp violate 18 U.S.C. § 1519 because they have altered records of a Board candidate during the SEC restatement inquiry that ended October 2004.
iii. Defendants specifically violated Section 1512© and U.S.C. § 1519 by destroying and altering
Edell’s true background and work experience which should have truthfully disclosed: “i) ShoWorks, where Edell was CEO starting April 2001 thru 2002 (name changed immediately prior to bankruptcy in September 2002)”
and “ii) Enterprise Entertainment Group LLP at which Edell was President/CEO/Director for less then a year before he resigned from company citing his resignation came after “working on severe turnaround situation” in May of 2003. “ (EXHIBIT #3,. Pg. 33-36)
35. Director Lawrence Moreau on September 30, 2003 at 10:15AM emails Brewer, Mosher, and Lipp,
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Subject: ‘RE: Potential EUNI Board Member’, stating ,
“Also we need to have both he and Jeff Edell complete the company’s D&O questionnaire so we can review it for any problems prior to the Board vote.”
The false and defective October 3, 2003 Nominating Committee Recommendation 36. Larry Moreau, Director and Nominating Committee member tasked with review of Edell, Sends email stating, ‘Jeff Edell – Completed D&O Questionnaire’ to Director Brewer, Director Greenspan, Director Mosher, General Counsel Lipp, and Sony’s sole series B Director Gewecke and states,
i. Moreau and Defendants lie in his email about what is contained in the D&O questionnaire,
failing to disclose Edell’s disclosed recent bankruptcy and declaring:
“Based on my review, there are no negatives for the Nominating Committee to report to the Board.
ii. This false statement is distributed thru email to Petitioner and other Directors misleading them
and causing them to be unaware that Edell’s Proxy disclosure is false. This is a violation of 18 U.S.C. § 1341 (relating to mail fraud). Moreau, heading the nominating committee, concealed his knowledge that Edell does have “negatives” that should be brought to the Board’s attention like fact that Edell has a mandatory disclosable SEC event under Rule S-K Item 401 (f), requiring specific disclosure on Edell’s recent federal bankruptcy.
iii. Furthermore the destruction or altering of the true information by omission which Edell, Brewer,
and Moreau are guilty of in violation of of 18 U.S.C. §1512(c)(1) and violation of 18 U.S.C. § 1519.
iv. Moreau and Defendants further misleads the board by stating: “the Nominating Committee’s previous legal and financial background checks did not disclose any negatives. “Based on the results of the Nominating Committee’s due diligence procedures including meeting and various discussions with Jeff, I think he is an outstanding candidate and hereby recommend that the Board approval his appointment. “
37. An attached D&O questionnaire is distributed in October 3, 2003 email with false claims used to coverup underlying facts, in violation of of 18 U.S.C. § 1341 (relating to mail fraud). 38. In late 2011, Petitioner discovered a D&O questionnaire Edell submitted to eUniverse’s Nominating Committee headed by Director Larry Moreau. Edell’s true work experiences consists of:
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i. On the first page, in the first paragraph, there is information to read for the
questionnaire submission. The third line from the bottom states,
“Accordingly, great care should be exercised in completing this questionnaire. You should be aware that if the Proxy Statement contains any false or misleading statements, the Company and those in control of the Company could be subject to liability under federal securities laws.”
ii. The factual D&O Questionnaire of Edell from Exhibit XX reveals:
a. On the second page of the document titled,
“EUNIVERSE, INC. QUESTIONNAIRE FOR DIRECTORS AND OFFICERS”,
the first section is labeled: “I. Employment, Occupation, and Business Experience.” And it lists information submitted by “Jeffrey S. Edell, 11/10/57”.
b. Under section ©, document states, “Please Indicate all positions and offices which you hold or have held during the past five(5)years”
c. Edell’s ‘Questionnaire For Directors And Officers’ lists 3 submissions under ‘Positions/Office’:
“President/CEO & Director Showorks Entertainment Group, Inc.”
from “January 2001- April 2002” and notes he “resigned April 2002”.
“President/CEO/Director, Soundelux Entertainment Grp., Inc.” from “November 1995- 12/31/2000”.
“President/CEO/Director, Enterprise Entertainment Grp, LLC”. From “November 2002-May2003” and the next line in parenthesis immediately below states, “resigned May 2003, after working on severe turnaround situation.”
d. On page 14 of Edell’s ‘Questionnaire For Directors And Officers’, Edell checks ‘YES’ for section (a) when asked if “any of the following events has occurred since April 1, 1998, please provide a brief description of the event”.
e. Section (a) states:
“A petition under the Federal bankruptcy laws or any states insolvency law was filed by or against you, or any corporation or business association of which you were an executive officer at or within two years before the time of such filing.”
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f. Edell discloses under “Description:”:
“Showorks Entertainment Group, Inc. underwent a name change in 2002 to MTS, Inc. I resigned as President and CEO of this company in April of 2002. Subsequent to my leaving, sometime in September of 2002, I learned that they had filed bankruptcy under Chapter 7.”
39. Therefore, Edell’s scheme to defraud the eUniverse Directors is effected by changing the time frame and term of his Soundelux employment from the factual end of 12/31/2000, to the fabricated and false claim that Edell’s end of his work tenure being thru 2002. This allows Edell to effectively cover up or disguise his true historical work performance and mislead Petitioner & shareholders that need accurate and true professional experience to determine if someone is qualified to be a Director of a public company.
i. As part of scheme, Edell omits his January 2001-April 2002 true employment where he was
“President/CEO & Director Showorks Entertainment Group, Inc.” that he had disclosed in a prior D&O Questionaire.
ii. Edell also omits his November 2002-May 2003 professional experience as
“President/CEO/Director, Enterprise Entertainment Grp, LLC”, resigning after just five months, blaming a “severe turnaround”. (EXHIBIT #3, pg. 33-36)
Predicate Acts related to 2003 press release announcing Edell
40. On October 9, 2003, Brewer furthers the fraudulent concealment scheme by forwarding eUniverse’s PR firm the fabricated resume which incorrectly shows Edell worked at Soundelux Entertainment until 2002 and omits both the Showorks/MTS bankruptcy and working most recently at troubled Enterprise Entertainment Grp, LLC. Brewer also misleads PR firm by sending fabricated work experience and bankruptcy omission from their PR firm.Laurie Eisner,
“laurie-we need a very basic- Thomas Gewecke has resigned from the euniverse board. And jeff edell (bio attached) has been appointed-“
41. October 10, 2003 at 2:05PM, PR firm emails Brewer and Greenspan draft of Edell press release stating,
“Prior to his Board appointment at eUniverse, Edell served as President and CEO of Soundelux Entertainment Group, Inc., a provider of entertainment content technologies, with revenues exceeding $110 million”
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42. October 11, 2003 at 2:43PM, Edell emails Greenspan requesting puffery to be added to the draft press release
about his background, stating,
“Brad, Comments on Release- It says nothing of the record sale to Liberty Media and John Malone for apprx. $100m, the sale of the software company elabor, Inc. that I served as CEO and founder for 10 years, and sold to ADP, the sitting on the Public board of IVC industries and sale of it to Inverness Medical. Also the winner of Entertainment Entrepreneur of the YEAR by NASDAQ and Ernst and Young in 2000, and member of both TV and Film Academies..member of Young Presidents Organization.. Get some bang out of it!! That should all be somewhere in it..please have them take another shot”
43. October 11, 2003 at 4:43PM Edell emails Greenspan and Brewer:
Subject: ‘RE: Press Release: Jeffrey Edell’ and states,
“Your PR dept can do a better job extracting what I have on my bio related to the subjects that are pertinent to eUNI,,, but please do not ease this until we finalize our deal…”
44. October 11, 2003, at 6:15PM Greenspan emails Lipp and Brewer forwarding above Edell
Email and states, “call me to discuss So we can finalize.”’ 45. The October 11, 2003 draft PR submission Defendants Edell and Brewer are hiding and have destroyed the evidence of Edell’s True work experience in the press release draft being distributed as well as the final release in violation of of 18 U.S.C. §1512(c)(1) and violation of 18 U.S.C. § 1519. 46. Also Defendants violate Section 1341 by using email to send false fact draft press release to PR firm
47. Brewer enlists Highland Partners and Jim Quandt to provide background checks for the eUniverse nominating
committee for Director candidate Edell and Ward. As evidence of this scheme, Brewer emails Mosher on October 16,
at 3:56PM and states,
“dan- have you received the background check from highland partners for bradley ward?” 48. BOARD MEETING- October 17, 2003 there is Board meeting where Brad Greenspan attempt to elect the annual board slate and his slate leaves off Lawrence Moreau and Dan Mosher. General counsel Chris Lipp deems Greenspan's slate did not pass even though 3 Directors approved the new slate, 1 disapproved, and 2 Directors Abstained. Lipps Board minutes indicate, "The motion failed with a vote of 3 for, 1 against and 2 abstentions, constituting less then the requisite majority of directors present." 49. On October 30, 2003 at 4:57PM, Flahies emails Lipp, Subject: ‘Bio for New Directors For proxy Draft’
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and provides a bio for Edell which states
“Jeffrey S. Edell has served as a Director since October 14, 2003. Mr. Edell was employed as President and Chief Executive Officer and a director of Showorks Entertainment Group, Inc. (previously known as Soundelux Entertainment Group, Inc.) a provider or entertainment content and technologies, from 1995 until 2002.”
50. On Friday, October 31, 2003 Defendants cause the company to put out a press release with false information:
"eUniverse announces eUniverse Announce CEO Departure and Board of Director Changes Brad Greenspan
Steps Down as Chief Executive Officer Jeffrey Edell eLabor Founder and Former CEO/President of
Soundelux Entertainment Group, and Bradley Ward, CEO of The Game Tree, Join eUniverse Board.”
51. Significant puffery created by Edell and put into press release but omits mention of his true work experience
such as his recent fraudulently concealed MTS Bankruptcy and other employment information provided in the original
D&O Questionnaire Edell provided to eUniverse. Defendants also violate Section 1343 as the defendants cause the
false information to be distributed via news wire to the public. (EXHIBIT #4, pg. 38-39)
52. Sony in fact specifically made it known that it would not allow VantagePoint to take over or transfer the
rights to vote Series B until VantagePoint bought all the stock held by Sony Corp of public issuer.
53. November 7, 2003 at 3:59M- Intermix CFO Tom Flahie sends a draft Proxy to Chris Lipp, Subject: ‘Proxy’
which states,
54. On November 17, 2003, Chris Lipp sends Consents to Sony Corp to sign.
LIPP KNEW SONY DID NOT SIGN THE CONSENT ON NOVEMBER 17th
55. Sony’s Mark Eisenberg only signs the consent to change the Certificate of Designation of the Series B
provided by Lipp.
56. Sony’s Eisenberg executes the consent on November 18, 2003 according to his testimony read in court. i
57. On November 18, 2003 at 12:50PM, Lipp emails Vantagepoint’s Carlick and Sheehan a new draft Series C
consent that appears to have some backdated element of optimizing the prior Notes to the detriment of the
shareholders.
58. Orrick’s Harroch active in the planning of the Proxy and Edell frauds emails Lipp stating,
“I don’t understand the background of this, and it will take some time to review. Chris are you working on the proxy statement language to implement the things required by the Option Agreement?”
59. On November 18, 2003, at 4:09PM, Lipp asks PR company run by Jonathan Heit to put out ‘Annual Meeting
Release’. The release falsely states Issuer’s
“annual meeting of stockholders has been rescheduled for January 21, 2004 so that certain aspects of the Company’s recently announced financing transaction with VantagePoint Venture
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Partners, among other items, may be submitted to the Company’s stockholders for approval. A new record date for the meeting of December 1, 2003 has also been set.”
60. November 20, 2003- Flahie emails Board Members including Edell, Subject 'Director Bios for Proxy' and
states,
"In preparation for filing of the proxy, I have updated the director bio information from the Form 10-K. David, Andy, Jeff and Bradley, I took a first pass to put a bio together for you. Since this information is personal, please make edits to your bio and return the word doc to me. I will make your edits in the actual proxy. Thanks, Tom"ii
DEFENDANTS FALSIFY PROXY HOPING SONY WILL SIGN OFF ON NOMINATING EDELL AS
SERIES B DIRECTOR
61. November 21, 2003- Intermix CFO Tom Flahie sends an email, Subject: 'Proxy', stating,
i. "I completed the first draft of the 2003 proxy."
ii. “Given the major changes to the Board,”
iii. “the proxy needs a close look this year”,
iv. “We intend to file with the SEC on Wednesday.",
62. Flahie attaches a draft of proxy which falsely states, "550 DMV notified the Company that Lawrence Moreau
and Jeffrey Edell have been nominated by the Series B preferred stockholders.”iii
63. Issuer announces on November 21, 2003 that it has raised $2.5 million in Common stock financing selling
1,643,000 shares at $1.50 instead of the $1.85 previously agreed price with the same investors, or a loss of $575,050
for shareholders in the bargain made by management to mitigate one of the agreived parties from defendant’s actions
around the 2004 proxy.
64. At 5:46PM on Saturday November 22, 2003, eUniverse Sr. VP Legal, Chris Lipp emails Orrick’s Harroch and
VantagePoint’s Harroch and internal general counsel Guidero with Subject: Series C Consent re Bylaw Amendment
and attached, ‘Series C Written Consent to Amend Bylaws’ and states,
“Rich, Please find attached the Series C consent with the changes we discussed. Thanks, -Chris”iv
65. On November 24, 2003 at 12:05PM, Flahie emails outside general counsel Cartmell, Subject ‘RE: Proxy’ and
states, “I need to file on Wednesday. I hope that your comments do not impact the schedule”
66. Defendants in November 2003 press release omit Edell’s CEO role in the MTS 2002 Chapter 7 bankruptcy and
failure of another turnaround company he ran in 2003. Edell continues his sleight of hand and promotes only the
Soundelux CEO role without disclosing end of tenure in 2000 when it was sold, creating impression he was most
recently working as CEO of eLabor, Inc., stating, “Additionally, Edell served as Founder, Director and CEO of
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
16
eLabor, Inc., which was sold to ADP in February of 2003.” In fact, Edell was only a director of eLabor since at least
1995.v
NOVEMBER 2003- SONY SERIES B SHAM CONSENT SCHEME
67. November 25, 2003 at 5:33AM, Moreau emails Flahie, Carlick, Mosher, Subject: ‘RE: Nomating Committee-
Dropped nominations’, and states, “Tom, Did you mean to drop David Carlick, Andy Sheehan, Jeff Edell and I from
the Board? Also, when is the proxy deadline?”vi
68. Flahie responds at 8:27AM on November 25th, falsly stating:
“Only three directors are up from election at the January 24 stockholders’ meeting. The Series B stockholders (Sony) have elected Larry Moreau and Jeff Edell. The Series C stockholders have selected Andry Sheehan and David Carlick. The only directors that up for election are Dan Mosher, Brett Brewer and Bradley Ward.” And
“The proxy deadline is driven by the timing of Chris Liupp’s vacation. Chris has put off
a European vacation several times due to the issues we are working through. He will be out all next week. I will prepare the proxy in his absence. “
69. On November 25, 2003, at 10:11PM, Lipp emails Flahie, Subject ‘Proxy Excerpt’ with attached files including
one called ‘By-Laws’ and states,
“Attached is the language I would suggest for Proposal 2 and the Other Business
sections. Also attached is the newly added Section 10 of the Article I of the Bylaws.”
70. On November 25, 2003, Chris Lipp emails Sony's Melissa Cole and Mark Eisenberg, Subject: 'One More Series B Consent' and attaches a draft of Series B consent form re: election of directors, and states, “Melissa- Please find attached what should be the final Series B consent we will need in connection with getting the director issues sorted out"
71. Director Ward is puzzled at the Flahie claim that a new Board slate has been elected which includes Edell and
Moreau as Series B Directors Ward who had just voted with the rest of the Directors to elect the slate on November
20, 2003, states in a November 26, 2003 9:28AM
“Quick question….”The role of the Nominating and Corporate Governance Committee
(“NCGC”) shall be to determine the slate of director nominees for election to the Company’s Board of Directors (the “Board”) to be included in the Company’s annual proxy statement,…” And
“Will this committee solely determine the nominees on the slate and no longer require a full Board vote like we just had last week? In the absence of any specification for a full Board vote, that’s how I read that.”
72. November 26, 2003 at 11:26AM, Outside eUniverse counsel Nate Cartmell emails Chris Lipp, Subject:
'Series B Written Consent re Election of Directors 11-26-03.DOC' and states,
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
17
"Chris, I have modified the consent slightly to deal with the fact that the right belongs to the Series B but that Sony can exercise that right as majority holder. Redline to follow in PDF format'
attaching a document titled:
'ACTION BY WRITTEN CONSENT OF MAJORITY SERIES B STOCKHOLDER OF EUNIVERSE, INC.'
NOVEMBER 26, 2003 - CFO FLAHIE INSTRUCTS STAFF TO FILE PROXY
73. November 26, 2003, 1:41PM, Flahie emails Samina Merchant, Subject: 'Proxy', and states,
"Please send the proxy over to Donnelley for Edgar formatting".
74. As of November 26, Sony had not given its consent to nominate Moreau or Edell as Series B nominees.
DECEMBER 1. 2003 PROXY IS FILED
75. The December 1, 2003 Proxy lists Edell & Moreau as Series B Preferred Nominated Directors stating:
"the majority holder of our Series B preferred stock, has the exclusive right, voting separately
as a single class, to elect two directors" and "550 DMV has notified the Company that it intends to elect Lawrence Moreau and Jeffrey Edell to the Board.”
PROXY CONTEST DECEMBER 2003- JANUARY 2004
76. According to former Director Greenspan, his email sent on December 5, 2003, at 3:17PM, to Lipp, Brewer,
Edell, Fojut, Subject: ‘Need immediate documents’ and states, “Chris/Matt- As both a director and shareholders, I
demand to see the following documents.” did not result in the company sending him the Myspace Asset Sale
agreement that was purported to have been signed on December 17, 2003. This is further key evidence that supports
such agreement not having really existed at such time and prior to November 2004 when defendants first publicly
disclose the claim that the MySpace Asset Agreement selling 33% to DeWolfe’s MSV LLC really occurred on
December 17, 2003.
77. Email evidence shows the chilling effect of defendants fabricating proxy to make it appear Sony had
nominated Edell and originally also, Moreau as Series B Directors. Showing initial response from an informed
investor can be seen thru email on December 4, 2003, at 3:30pm, current board member, former CEO and 20%
stockholder of Issuer emails proxy information to his outside counsel, Subject: ‘Darn’ and states,
“Tougher Road to fight. It looks like these guys got Sony to PURPOSELY elect directors so there are only 3 slots open and 4 forced seats. Only three directors are up for nomination.”
And
“Sony owns the Series B which VantagePoint has a right to purchase and the Series B has rights to elect 2 Board Members, but Vantagepoint had specifically agreed to cancel such rights as part of their acquisition of Sony’s Series B just for the reason of not doubling up on forced directors.” And “Sneaky sneaky…They got Sony to nominate 2 of the existing directors to ‘BulletProof’ these guys….”
78. Edell emails Flahie and states on December 4, 2003,
“Only comment, is please make sure from Nate that this info is clearly necessary of a press release…I am sure you checked already but let me know? Thanks jeff”vii
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18
79. CFO Flahie a few minutes later replies via email and states,
“Yes, all three lawyers agreed. They also want me to Form 8-k the press release.”viii
80. Lipp emails Harroch on December 8, 2003 at 4:01PM and states,
“Richard, Last time we discussed this, I thought we agreed that it was neither party’s intent to have the shares purchased under the option be anything other than the Series C shares”
81. Ultimately, Lipp capitulates to the dominant Orrick firm and agrees to issue C-1 shares which are worth $2.00
in extra preferred liquidation vs. $1.50. A loss of .50 cents per share for shareholders and additional corporate waste
by defendants, using shareholder money to effect a change of control.
82. December 8, 2003- 2:16PM, from Harroch of Vantage/Orrick to Chris Lipp and other Carlick and Sheehan and
Rodi Guidero;, Subject: Option.
"Chris, we still need to deal with the Sony option, Series B issue. As I see it, the proxy statement should also seek approval for amending the Series B Certificate of Designation to encompass the matters set forth in Exhibit B of the Option Agreement (PIK/dividend for VPVP Shares elimination of company Election concepts, authorized # of shares, etc :) " and,
"If we had a chance to review the proxy statement before you filed it, I would have
pointed this out to you. So let us figure out how we implement this now. Thanks!"
83. December 9, 2003, at 11:29AM, Edell emails Chris Lipp, Sheehan, Carlick, Moreau, Brewer, and states,
“Chris, The meeting took place this morning and the board is in the dark about its results.” and
“Please see to it that Nate reports on the Nasdaq meeting ASAP. I heard that there were some problematic issues, such as dilution that we should have known about with the VP deal, that I would love to sort out.”
84. Lipp sends a revised Note to VantagePoint and the January Proxy confirms that indeed, the ‘Accelerator’ was
part of the January 2004 proxy material and shareholders were forced to vote or be victims the ‘accelerated’ Note
scheme.
85. On December 17, 2003 at 10:46PM, Brewer emails Edell. Lipp, Sheehan, Flahie, Carlick, Moreau, Ward,
Mosher and states,
“Gentlemen- We will be having our board call tomorrow as scheduled at 4 PM sharp.” And
“Also, after speaking with some of the board and management, we think it would be useful to have an in person board meeting next Tuesday in LA.
The meeting will be from 10-4pm and will include Mike Kennedy from WS as well as other lawyers if needed. We have several ratifications of chartes, reports on litigation, proxy contest issues, and other house keeping matters to take care of.”ix
86. December 18, 2003- Greeenspan emails Carlick, Edell, Mosher, Subject: 'Info-' and states,
"Guys- I have lots of additional information on the performance of Brett Brewer, Chris Lipp, and Adam Goldenberg before, during, and after the restatement" and "It sheds a very negative light on all of these gentlemen's performance."x
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19
87. After getting sent an email sent by former CEO to non-management board members critical of certain
managers and offering to provide information to help Board best evaluate executives at company, Director Edell sends
such email on to principal executive Brewer. Brewer then passes that email onto Lipp and Goldenberg to influence
them to be disloyal with adware and other transgressions against former CEO of Issuer. In Brewer’s email on this date
to Lipp and Goldenberg he states,
“this guy is one of the biggest assholes that ever lived…there is no other way to say it.” xi
88. On Thursday December 18, 2003, at 1:46AM, Brewer emails board and states, “Gentlemen- We will be having
our board call tomorrow as scheduled at 4pm sharp.” xii
89. There is no evidence that the Myspace asset sale agreement was disclosed or voted on by the board at the
December 19, 2003 board meeting. While there is significant evidence there was a focus according to Brewer on,
“modifications of charters, reports on litigation, proxy contest issues”xiii
90. Annual Meeting date rescheduled on December 19, 2003 at 4:14PM, Flahie emails Lipp, Sheehan, Carlick, Moreau, Mosher, Ward, Brewer, Edell, Subject: ‘Filings’ and states,
“The attached proxy amendment was filed today and the attached press release announcing the new meeting date was issued.”xiv
THE 2003 DEFECTIVE ‘AMENDED NOTE’
91. On December 27, 2003, Lipp emails Harroch and Sheehan of VantagePoint with Subject ‘Amended VPVP
Note’ and states, “As discussed, please find attached for your review an amended note.” and attaches a revised $2.5
million note that now has been amended under Section (1) ‘Repayment’ to change the original due date of March 2005
to now be due February 8, 2004 a few days after the planned Shareholder meeting unless ‘stockholders of the
Borrower, provide approvals necessary”.
92. The December 30, 2003 Proxy falsely states:
"Pursuant to the Certificate of Designation of Series B Preferred Stock, 550 Digital Media Ventures, Inc. ("550 DMV"), an indirect subsidiary of Sony Corporation of America, the majority holder of our Series B preferred stock, has the exclusive right voting separately as a single class, to elect two directors in the event the Board consists of six to eight members, 550 DMV has notified the Company that it intends to elect Jeffrey Edell to the Board and leave one Series B Board seat vacant at this time”
93. Sony had not notified the company it intended to elect Edell as of and thru the date of the Chancery Court trial
in January 2004.
The false and defective January 2004 Proxy AND PUFFERY OF EDELL (EXHIBIT #6 pg 44-46) 94. In January 2004, Vantage sealed control over eUniverse thru one of three Proxy frauds perpetuated on common stockholders by Carlick, Sheehan, Brewer, Lipp, Rosenblatt and associates. 2003-2005 Flahie who is disloyal along with Brewer in not revealing Edell’s fabricated resume then colludes with General
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
20
Counsel Lipp to knowingly falsify January 2004, July 2004, August 2005 Proxies, violating Item 102 Rule SK. 95. Defendants decide to make detection of the fraudulently concealed Edell true professional experience more difficult, and on the December 30, 2003 DEF14A Proxy, on page 4, the company states,
“Jeffrey Edell has served as a Director since October 14, 2003 and as Chairman of the Board since November 14, 2003. Mr. Edell is currently a member of eUniverse’s Compensation and Audit Committees. Mr. Edell was employed as President and Chief Executive Officer and a director of Soundelux Entertainment Group, Inc., a provider of entertainment content and technologies, from 1995 until 2002”
96. It was part of the Defendants’ scheme to use the United States Postal Service to deliver fraudulent SEC Proxy to the eUniverse (Intermix) Inc. MySpace Parent Company Shareholders in December 2003, January 2004, July 2004, August 2005, and September 2005 and to conceal the errors contained in the Proxy Disclosure statements on each occasion regarding Edell and Petitioner in violation of 18 U.S.C. § 1341. FRAUD UPON THE CHANCERY COURT (Exhibit #9, pg. 52-64) 97. After adverse ruling that caused general counsel Chris Lipp to admit he had taken several actions without ever getting the critical consents needed as required by law to be first approved by the company’s board of directors and/or by Series B Preferred stockholder Sony Corp. These were also shown to be consents that the general counsel knew were in fact required prior to general counsel taking such actions. These actions were to claim consents and waivers were given and then to include these in Issuer’s proxy and describe they had occurred when in fact such events had never taken place and such waivers or consents had not been given. This behavior and activity was in court and in Judge Strine’s cross examination, shown to have occurred multiple times on multiple dates and thru insertion of such fabricate events into multiple versions of Proxies distributed to shareholders leading up to the 2004 Shareholder Annual meeting thru proxy. 98. Judge Strine was adamant about going on record multiple times during the trial to notify all parties of his views that the testimony of general counsel Lipp was not believable as to Mr. Lipp’s rationales for certain disclosures and statements in the company’s Proxy. SONY’S SECURITIES FRAUD AND AIDING AND ABETTING BLASIUS VIOLATION AND AIDING AND ABETTING FRAUDULENT CONVEYANCE
99. Sony Music Corp in 2004, transacted after a still uncured Federal Securities Violation and these
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
21
transactions damaged and fraudulently conveyed assets to the detriment of Issuer shareholders. 100. Edell’s securities violation makes the Proxy and subsequent 10Qs and 10Ks and next Proxy statement defective, all caused by Sony Music Corp aiding and abetting this securities fraud thru multiple acts in 2003 and 2004. Most directly by opting after Judge Strine’s January 14, adverse ruling to manipulations of defendants and Sony Corp’s interactions relating to upcoming 2004 Proxy Disclosures. 101. After adverse ruling that caused general counsel Chris Lipp to admit he had taken several actions without ever getting the critical consents needed as required by law to be first approved by the company’s board of directors and/or by Series B Preferred stockholder Sony Corp. These were also shown to be consents that the general counsel knew were in fact required prior to general counsel taking such actions. These actions were to claim consents and waivers were given and then to include these in Issuer’s proxy and describe they had occurred when in fact such events had never taken place and such waivers or consents had not been given. This behavior and activity was in court and in Judge Strine’s cross examination, shown to have occurred multiple times on multiple dates and thru insertion of such fabricate events into multiple versions of Proxies distributed to shareholders leading up to the 2004 Shareholder Annual meeting thru proxy. Shockingly with evidence of Defendant’s improprieties laid bare in court and significant red flags raised, Sony then agrees to nominate Edell to serve as Series B Director. Sony’s aid eliminates shareholders ability to keep Edell off Board & further conspiring with Defendants in late 2004 to complete a sweetheart deal to sell almost half of MySpace. Defendants also breach pledge made with Judge Strine & Petitioner, failing to make corrective disclosure in January 2004 Proxy. 102. Defendant’s have also not legally effected a valid closing or vote on the Series C stock sale or transfer from Sony of their Series B shares, blocking public issuer’s option received in three way agreement between Sony, VantagePoint, and public issuer in 2003. The crooked dealings expand when Orrick uses its insider knowledge to produce a commercial benefit for VantagePoint while having Issuer pay 100% of the cost by paying off Sony debt earlier then due. 103. Defendants were aware and admitted the proxy statement was defective in January 2004. Defendants willfully ignore Judge Strine’s ruling and continue to allow A defective proxy to be the final proxy for the annual shareholder
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
22
meeting that occurred in January 2004. Defendants fraudulently conceal Edell’s work experience and omit disclosure of Edell’s bankruptcy of MTS, Inc. Defendants aid and abet Edell in violating Rule SK Item 401. ISS REPORT DEFAMATION
104. Part of the Defendants’ scheme to conspire to interfere with Plaintiff’s livelihood by disseminating defamatory statements about Plaintiff to the public through media outlets in retaliation for providing truthful information to SEC, FTC, DOJ and Chancery Court relating to the Defendants’ scheme, in violation of § 1513(f).
105. Defendants press release titled ““eUniverse Wins ISS Support for Its Director Nominees; ISS Rejects Greenspan's Hand-Picked Director Nominees.”is published January 23, 2004:
“eUniverse, Inc. today announced that Institutional Shareholder Services, Inc. (ISS) has
recommended that eUniverse stockholders vote FOR eUniverse's four director nominees -- Brett Brewer, Daniel Mosher, Lawrence Moreau and Bradley Ward -- and vote FOR the Board's other proposals at the Company's annual meeting on January 29, 2004.
“ISS is widely recognized as the leading independent proxy advisory firm in the nation. Its
recommendations are relied upon by hundreds of major institutional investment firms, mutual funds, and other fiduciaries throughout the country.”
“In recommending that eUniverse stockholders re-elect eUniverse's Board nominees, ISS stated
in its January 22, 2004 report that:”
"[T]he dissident slate does not offer a clear plan to operate the business that distinguishes themselves from the path of the current board of directors.”
“Further, we question the independence of the dissident slate as they were proposed by Mr.
Greenspan and Mr. Greenspan's record as CEO eUniverse is blemished with financial difficulties. “
“ISS also stated that:
"[T]he company's board has independent directors for six out of seven board seats, setup independent board committees as of Nov. 14, 2003, and two new directors added after the company announced its accounting problems.”
“Further, the board has taken steps to improve management of the company by removing Mr.
Greenspan and initiating the process of hiring a new CEO."
“In conclusion, ISS believes that "the [eUniverse] nominees should have an opportunity to implement plans to grow the business, shore up the company's finances, and find new management leadership."
“Jeffrey Edell, Chairman of the eUniverse Board of Directors, said, "We are very pleased that
ISS recognizes that the current Board is best suited to successfully guide eUniverse. We look forward to moving beyond Mr. Greenspan's costly and counterproductive proxy contest and to continuing the progress we have made to build a stronger future for eUniverse and all its stockholders."
DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT
23
106. However, ISS is basing its report on the fabricated Edell bio and work experience that was created thru emailing and mailing the fraudulent Proxy prior to the ISS report, in violation of Statue 1341. 107. ISS was not able to write an accurate report or reach an equitable conclusion because Defendants destroyed the evidence of Edell’s true background violating 18 U.S.C. §1512(c)(1) and 18 U.S.C. § 1519. 108. January 23, 2004 press release is defamatory attack on Petitioner and misleads all shareholders, and is distributed via wire service in violation of 18 U.S.C. §1343. Los Angeles Times Defamation 109 Defendants scheme to use fabricated and false Director Edell continued in a January 29, 2004 article titled, “Battle of EUniverse Is Up in the Air” that continues to harm Plaintiff and is located at public web link: http://articles.latimes.com/2004/jan/29/business/fi-golden29 stating:
“Battle of EUniverse Is Up in the Air Michael Hiltzik / GOLDEN STATE/January 29, 2004|
There's an old joke about how university campus politics are so vicious because there's so little at stake. From that, we might conclude that the proxy fight over the Internet company EUniverse Inc. would have been more dignified had it concerned an operation that actually turned a profit over the last year and didn't spend several months in the doghouse of a Nasdaq trading suspension.
Instead, the battle pitting EUniverse's founder and ex-chairman, Brad D. Greenspan, against a management team that he had largely appointed himself has reached new standards in backbiting and vituperation.
Over the last few weeks, the existing board has been issuing letters to shareholders with lurid headlines such as: "BRAD GREENSPAN -- THE THREAT TO YOUR COMPANY'S SUCCESS," and "GREENSPAN'S SOUR GRAPES."
Even the Democrats in New Hampshire backed away from this sort of campaigning.
The board accuses the 30-year-old Greenspan of employing "empty rhetoric" and "petty personal attacks" in order to seize control of the Los Angeles-based company for personal financial gain and self-aggrandizement. It notes that the trading suspension and a huge restatement of financial results going back to 2002 occurred on his watch.
The incumbents further charge that he tried to torpedo an $8-million private equity deal that they deem crucial to the survival of the company, which runs a collection of game and entertainment websites, earning revenue from advertising and memberships.
Greenspan has fired back in kind. His shareholder letters accuse the officers and directors of conflicts of interest, self-dealing and mudslinging. ("THERE THEY GO AGAIN! DO NOT BE MISLED BY INCUMBENT MANAGEMENT'S CONTINUING MISSTATEMENTS, OMISSIONS AND
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24
MANIPULATION OF THE FACTS IN THEIR EFFORTS TO DIVERT YOUR ATTENTION FROM THE REAL ISSUES.")
Greenspan's core charge is that the board colluded with a private venture firm to seize control of EUniverse from the holders of its common shares, of which he owns the largest block. As for its financial problems in the last year, he acknowledges that he was chairman and chief executive during much of that period. But he says he had left day-to-day operations in the hands of some of the same people now sniping at him from the opposite trench, including President Brett Brewer, 31, a board member and his former UCLA classmate.
Under the circumstances, one can only sympathize with the 4,000 shareholders being importuned to vote for one or another slate of four directors (out of seven) at the company's annual meeting, scheduled for today. Both sides say their first order of business will be to hire a professional CEO for EUniverse, obviously an admission that no one in place now is up to the job. Both also claim to possess the strategic key to restoring EUniverse's former luster as one of the rare, pure Internet plays that worked.”
The false and defective July 2004 Proxy (EXHIBIT #7, pg. 48-49) 110. Edell’s July 2004 Proxy disclosure totally omits any notion of bankruptcy. Edell and defendants later after using the fabricated Edell to win the January 2004 Proxy contest, attempt thru a footnote, in second Proxy distributed in July 2004, to avail themselves of the disclosure requirements they know exists by concealing Edell’s true background by disclosing:
"Mr. Edell was the Chief Executive Officer of Showorks Entertainment Group. Inc., a
Delaware corporation that later changed its name to Media Technology Source of Delaware, Inc. Within two years of the time that Mr. Edell resigned from that company, it filed a petition for relief under the United States Bankruptcy Code."
111. However, even with this disclosure of a bankruptcy Edell does not disclose the year that he works for Showorks in his main bio area. Combined with fabricating the year Edell concluded his job at Soundelux to 2002, An informed investor would not be able to deduce that Edell worked for Showorks as CEO in 2001 before its bankruptcy in 2001. Edell misled investors, omitting fact that in 2001 & 2002 he was Showorks CEO. 112. Defendants are guilty of the destruction or altering of the true Edell background information and work experience and bankruptcy by omission violating 18 U.S.C. §1512(c)(1) and 18 U.S.C. § 1519.
113. Defendants violate . § 1341 using email to send fabricated draft Proxy for review furthering scheme. 2009 FRAUD 114. Edell & Defendants in mid-2009 launch another prong of fraudulent concealment. 115. New evidence includes i) publication of a book by employee loyal to News Corp to fabricate the background of Jeff Edell a former Director ii) Using fabricated Edell character to conceal truth that
E-Filed UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
1 In our June 22, 2009 Order, we certified the following class: “All holders of Intermix Media,Inc. (‘Intermix’ or the ‘Company’) common stock, from July 18, 2005 through the consummation of thesale of Intermix to News Corporation (‘News Corp’) at the price of $12.00 per share on September 30,2005 (the ‘Acquisition’), who were harmed by defendants’ improper conduct at issue in the litigation. Excluded from the Class are defendants and any person, firm, trust, corporation or other entity related toor affiliated with any defendant.” (Dkt. No. 197).
2 In our July 14, 2008 Order on the Motion to Dismiss, we dismissed with prejudice DefendantsMontgomery & Co. LLC (“Montgomery”), and Thomas Weisel Partners Group, Inc. and ThomasWeisel Partners LLC (“TWP”), the investment banks which advised the Intermix board during the 2005transaction and completed fairness analyses on the $12 per share price offered by News Corp. in theconsummated merger transaction. (Dkt. No. 110, at 4-5). In that same Order, we also dismissed withprejudice Count I for violation of Section 14(a) of the 1934 Act and SEC Rule 14a-9, which was statedagainst the 2003 Individual Defendants, which included Brewer, Mosher, Moreau, Jeffrey Scott Edell,Bradley Ward, Carlick, Sheehan, and Lipp, and VantagePoint. (Id. at 1-3). Accordingly, Count III forCV-90 (06/04) CIVIL MINUTES - GENERAL Page 1 of 39
Presiding: The Honorable GEORGE H. KING, U. S. DISTRICT JUDGE
Beatrice Herrera N/A N/ADeputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
None None
Proceedings: (In Chambers) Order re: Cross-Motions for Summary Judgment; [213, 218,244, 251, and 261]
This shareholder class action arises out of News Corporation’s (“News Corp.”) 2005 acquisitionof Intermix Media, Inc. (“Intermix”), formerly known as eUniverse Inc. (Brewer Decl. ¶ 3), a companywhich owned, among other internet businesses, the social networking website MySpace. Plaintiff JimBrown (“Plaintiff”), individually and on behalf of all members of the certified class of former Intermixshareholders,1 claims that Defendants Brett Brewer (“Brewer”), Daniel Mosher (“Mosher”), LawrenceMoreau (“Moreau”), David Carlick (“Carlick”), Andrew Sheehan (“Sheehan”), Richard Rosenblatt(“Rosenblatt”), James Quandt (“Quandt”), and William Woodward (“Woodward”) (collectively,“Defendants”), the eight Intermix directors at the time of the company’s sale, breached their fiduciaryduties under state law and violated Section 14(a) of the Securities and Exchange Act of 1934 and SECRule 14a-9 (Counts IV and II, respectively).2 (Consolidated Second Amended Complaint [“CSAC”] ¶¶
Case 2:06-cv-03731-GHK-SH Document 278 Filed 06/17/10 Page 1 of 39
E-Filed UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
“control person” liability was dismissed as to Edell and Ward, as it was premised on the only otherclaim against them, the dismissed Count I. (Id. at 7-8). The Parties stipulated to dismiss certainDefendants. (Dkt. Nos. 190, 204). On June 10, 2009, pursuant to the Parties’ stipulation, we dismissedwithout prejudice Defendants VantagePoint Venture Partners, VP Alpha Holdings IV L.L.C.,VantagePoint Venture Partners IV (Q) L.P., VantagePoint Venture Partners IV L.P., and VantagePointVenture Partners IV Principals Fund L.P. (Dkt. No. 194). On August 28, 2009, pursuant to the Parties’stipulation, we dismissed without prejudice Defendant Christopher Lipp, Intermix’s General Counsel. (Dkt. No. 205). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 2 of 39
168-74, 179-87; Brewer Decl. ¶ 5). The only other remaining claim is Count III for “control person”liability under Section 20(a) of the 1934 Act against Defendants involved in the 2005 acquisition ofIntermix. (CSAC ¶¶ 175-78). This matter is before us on the Parties’ Cross-Motions for SummaryJudgment. We have considered the papers filed and all of the admissible evidence, and deem this matterappropriate for resolution without oral argument. L.R. 7-15. As the Parties are familiar with the facts inthis case, we will repeat them only as necessary. Accordingly, we rule as follows.
I. Motion for Summary Judgment Standard
Summary judgment should be granted “if the pleadings, the discovery and disclosure materialson file, and any affidavits show that there is no genuine issue as to any material fact and that the movantis entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c)(2); see also Celotex Corp. v. Catrett,477 U.S. 317, 322-23 (1986). “As to materiality, the substantive law will identify which facts arematerial. Only disputes over facts that might affect the outcome of the suit under the governing law willproperly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248(1986). On a motion for summary judgment, our “function is not . . . to weigh the evidence anddetermine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249.
The moving party bears the initial responsibility to point to the absence of evidence of anygenuine issue of material fact. Celotex Corp., 477 U.S. at 323. “When the party moving for summaryjudgment would bear the burden of proof at trial, it must come forward with evidence which wouldentitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the movingparty has the initial burden of establishing the absence of a genuine issue of fact on each issue materialto its case.” Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006) (citation andquotation marks omitted). By contrast, where the non-moving party “bears the burden of proof at trial,summary judgment is warranted if the nonmovant fails to ‘make a showing sufficient to establish theexistence of an element essential to [its] case.’” Nebraska v. Wyoming, 507 U.S. 584, 590 (1993)(quoting Celotex Corp., 477 U.S. at 322) (alteration in original). “[T]he moving party can meet itsburden by pointing out the absence of evidence from the non-moving party,” and it “need not disprovethe other party’s case.” Miller, 454 F.3d at 987 (citation omitted). Accordingly, “[t]he nonmovingparty must come forward with specific facts showing there is a genuine issue for trial.” MatsushitaElec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks and citations
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3 Under Delaware law, the business judgment rule creates “a presumption that in making abusiness decision, the directors of a corporation act on an informed basis, in good faith and in the honestbelief that the action taken was in the best interests of the company.” Aronson v. Lewis, 473 A.2d 805,812 (Del. 1984). “A plaintiff challenging a board decision bears the burden to rebut the rule’spresumption by providing evidence that the directors breached their fiduciary duties.” Goodwin v. LiveEntm’t, Inc., No. Civ. A. 15765, 1999 WL 64265, at *24 (Del. Ch. Jan. 25, 1999) (citing Cede & Co. v.Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993), modified by, 636 A.2d 956 (Del. 1994) (“Cede II”);Citron v. Fairchild Camera and Instrument Corp., 569 A.2d 53, 64 (Del. 1989)). “In order to overcomethat presumption, a plaintiff must prove an act of bad faith by a preponderance of the evidence.” In reCV-90 (06/04) CIVIL MINUTES - GENERAL Page 3 of 39
omitted). However, “[i]f the opposing party does not so respond, summary judgment should, ifappropriate, be entered against that party.” FED. R. CIV. P. 56(e)(2); see also Celotex Corp., 477 U.S. at322 (“[T]he plain language of Rule 56(c) mandates the entry of summary judgment . . . against a partywho fails to make a showing sufficient to establish the existence of an element essential to that party’scase, and on which that party will bear the burden of proof at trial.”). The “opposing party may not relymerely on allegations or denials in its own pleading[.]” FED. R. CIV. P. 56(e)(2). “The evidence of thenon-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477U.S. at 255; see also In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (“The court must view all theevidence in the light most favorable to the nonmoving party.”) (citations omitted).
“Only admissible evidence may be considered in deciding a motion for summary judgment.” Miller, 454 F.3d at 988. Under Federal Rule of Civil Procedure 56(e)(1), “[a] supporting or opposingaffidavit must be made on personal knowledge, set out facts that would be admissible in evidence, andshow that the affiant is competent to testify on the matters stated.” See also Block v. City of LosAngeles, 253 F.3d 410, 418-19 (9th Cir. 2001). Conclusory and speculative affidavits that fail to setforth specific facts are insufficient to raise a genuine issue of material fact. Thornhill Publ’g Co., Inc. v.Gen. Tel. & Elecs. Corp., 594 F.2d 730, 738 (9th Cir. 1979). Absent a proper exception, hearsaystatements are inadmissible. See Japan Telecom, Inc. v. Japan Telecom Am., Inc., 287 F.3d 866, 875n.1 (9th Cir. 2002). Furthermore, neither an unverified complaint nor unsworn statements made in theparties’ briefs can be considered as evidence at this stage. See Moran v. Selig, 447 F.3d 748, 759 &n.16 (9th Cir. 2006) (noting that unverified complaint cannot be considered as evidence on motion forsummary judgment); British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978) (“[L]egalmemoranda . . . are not evidence[.]”).
II. Count IV: Breach of Fiduciary Duty Claim
A. Delaware Law on Corporate Fiduciary Duties Generally
Delaware law governs Plaintiff’s state law claim of breach of fiduciary duty. Under Delawarelaw, all directors and officers of a corporation owe their shareholders fiduciary duties of loyalty andcare. Gantler v. Stephens, 965 A.2d 695, 708-09 (Del. 2009).3
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Walt Disney Co. Derivative Litig., 907 A.2d 693 (Del. Ch. 2005). “If the plaintiff fails to rebut thepresumption, the business judgment rule protects the decision made.” Goodwin, 1999 WL 64265, at *4(citation omitted). “If the rule is rebutted, the burden shifts to the defendants . . . to prove that thetransaction was entirely fair to the plaintiff shareholder.” Id. (citation omitted). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 4 of 39
1. Duty of Care
“Director liability for breaching the duty of care ‘is predicated upon concepts of grossnegligence.’” Binks v. DSL.net, Inc., C.A. No. 2823-VCN, 2010 WL 1713629, at *8 (Del. Ch. Apr. 29,2010) (quoting McMullin v. Beran, 705 A.2d 910, 921 (Del. 2000)). The Delaware GeneralCorporation Law permits a corporation to include a provision in its charter “eliminating or limiting thepersonal liability of a director to the corporation or its stockholders for monetary damages for breach offiduciary duty as a director.” DEL. CODE ANN. tit. 8, § 102(b)(7). While such an exculpatory provisionmay eliminate any liability for breaches of the duty of care, it “shall not eliminate or limit the liability ofa director: (i) For any breach of the director’s duty of loyalty to the corporation or its stockholders; (ii)for acts or omissions not in good faith or which involve intentional misconduct or a knowing violationof law; . . . or (iv) for any transaction from which the director derived an improper personal benefit.” Id. Intermix’s charter exculpates Defendants from any duty of care claims. (J.A., Ex. 38, Certificate ofIncorporation). Accordingly, Defendants assert this provision as their fifth affirmative defense: “Thebreach of fiduciary duty claim is barred, in whole or in part, by the exculpatory provision contained inIntermix’s Certificate of Incorporation.” (Dkt. No. 111, Aug. 4, 2008). In light of this provision, weconclude that the director Defendants cannot be liable for any purported breach of fiduciary duty basedsolely on their duty of care. Plaintiff does not argue otherwise.
Defendants also move for summary judgment on the question of whether Brewer and Rosenblatt,who doubled as officers for Intermix, may be held liable for any breaches of the duty of care, sinceSection 102(b)(7) only permits exculpation of duty of care claims for directors. It is undisputed thatboth Brewer and Rosenblatt served as directors and officers of Intermix, Brewer as President andRosenblatt as CEO. (Brewer Decl. ¶ 1; Rosenblatt Decl. ¶ 1). The law is clear that where it isimpossible to separate actions taken in fulfillment of a defendant’s directorial duties from actions takenin fulfillment of that defendant’s duties as a corporate officer, then any duty of care claim stated againstthat individual is exculpated. In Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270 (Del.1994), the Delaware Supreme Court held that since the plaintiff “failed to highlight any specific actions[the defendant] undertook as an officer (as distinct from actions as a director) that fall within the twopertinent exceptions to Section 102(b)(7)[,]” any duty of care claim was precluded under theexculpatory clause. Id. at 1288 (citing R. Franklin Balotti & Jesse A. Finkelstein, Delaware Law ofCorp. & Business Org. § 4.19, at 4-335 (Supp. 1992) (where a defendant is a director and officer, onlythose actions taken solely in the defendant’s capacity as an officer are outside the purview of Section
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102(b)(7))). Plaintiffs have not identified any actions taken by Rosenblatt or Brewer solely in theircapacity as officers. Accordingly, to the extent any claim for breach of the duty of care is embodied inCount IV, we GRANT summary judgment on that specific basis as to all director defendants, includingBrewer and Rosenblatt who also served as officers.
2. Duty of Loyalty
To hold a director liable for breach of the duty of loyalty, the plaintiff must establish that “amajority of the Director Defendants either [1] stood on both sides of the merger or were dominated andcontrolled by someone who did; or [2] failed to act in good faith, i.e., where a fiduciary intentionallyfails to act in the face of a known duty to act, demonstrating a conscious disregard for his duties.” In reNYMEX S’holder Litig., C.A. Nos. 3621-VCN, 3835-VCN, 2009 WL 3206051, at *6 (Del. Ch. Sept. 30,2009) (internal citations and quotation marks omitted); Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 239-40 (Del. 2009) (“Lyondell”) (“Because the trial court determined that the board was independent andwas not motivated by self-interest or ill will, the sole issue is whether the directors are entitled tosummary judgment on the claim that they breached their duty of loyalty by failing to act in goodfaith.”).
With respect to the first basis for demonstrating breach of the duty of loyalty, Delaware lawprovides that “[w]hen directors . . . are on both sides of a transaction, they are required to demonstratetheir utmost good faith and the most scrupulous inherent fairness of the bargain.” Weinberger v. UOP,Inc., 457 A.2d 701, 710 (Del. 1983). “Classic examples [of this type of breach] are when a directorappears on both sides of a transaction or receives a personal benefit not received by the shareholders,generally.” Oliver v. Boston Univ., No. Civ. A. 16570-NC, 2006 WL 1064169, at *18 (Del. Ch. Apr.14, 2006) (citing Cede II, 634 A.2d at 362 (citing Nixon v. Blackwell, 626 A.2d 1366, 1375 (Del.1993))) (internal quotation marks and alterations omitted). “If corporate fiduciaries stand on both sidesof a challenged transaction, an instance where the directors’ loyalty has been called into question, theburden shifts to the fiduciaries to demonstrate the ‘entire fairness’ of the transaction.” Id. (citationsomitted). A showing of “entire fairness” requires proof that the transaction is “the product of both fairdealing and fair price.” Cede II, 634 A.2d at 361 (emphasis in original and citations omitted).
With respect to the second basis for demonstrating breach of the duty of loyalty, Delawarecourts have noted that “the requirement to act in good faith is a subsidiary element, i.e., a condition, ofthe fundamental duty of loyalty.” Stone v. Ritter, 911 A.2d 362, 369-70 (Del. 2006) (citation, alteration,and internal quotation marks omitted) (“[T]he fiduciary duty of loyalty is not limited to cases involvinga financial or other cognizable fiduciary conflict of interest. It also encompasses cases where thefiduciary fails to act in good faith.”). In Stone, the Delaware Supreme Court explained that “althoughgood faith may be described colloquially as part of a ‘triad’ of fiduciary duties that includes the dutiesof care and loyalty, the obligation to act in good faith does not establish an independent fiduciary dutythat stands on the same footing as the duties of care and loyalty.” Id. at 370.
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The Delaware Supreme Court has explained what constitutes bad faith by way of a spectrum ofdirectorial conduct. “At one end of the spectrum, [there is] a category of acts involving non-exculpable,so-called ‘subjective bad faith,’ that is, fiduciary conduct motivated by an actual intent to do harm.” Ryan v. Lyondell Chem. Co., C.A. No. 3176-VCN, 2008 WL 4174038, at *3 (Del. Ch. Aug. 29, 2008)(“Ryan”) (quoting In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 64 (Del. 2006) (“Disney”))(internal quotation marks omitted). “The second category of conduct, which is at the opposite end ofthe spectrum, involves lack of due care—that is, fiduciary action taken solely by reason of grossnegligence and without any malevolent intent.” Disney, 906 A.2d at 64. The court observed that“grossly negligent conduct, without more, does not and cannot constitute a breach of the fiduciary dutyto act in good faith.” Id. at 65. The third category identified by the Delaware Supreme Court is the oneat issue in this case: “intentional dereliction of duty or a conscious disregard for one’s responsibilities.” Id. at 66. “Such misconduct, according to the Court, is ‘properly treated as a non-exculpable,non-indemnifiable violation of the fiduciary duty to act in good faith.’” Ryan, 2008 WL 4174038, at *3(quoting Disney, 906 A.2d at 66).
Accordingly, “the distinction between gross negligence and non-exculpable ‘bad faith’ (i.e., thatelusive something ‘more’) has important consequences in Delaware’s jurisprudence and corporatestatutory scheme because, for example, director conduct amounting only to a violation of the duty ofcare, but otherwise taken in good faith, is exculpable under 8 Del. C. § 102(b)(7) or indemnifiable under8 Del. C. § 145.” Id. (citing Disney, 906 A.2d at 64-65).
B. Scope of Plaintiff’s Claim of Breach of the Duty of Loyalty
Inasmuch as the director defendants are exculpated from potential breaches of their duty of care,the success of Count IV necessarily depends on “whether any arguable shortcomings on the part of the .. . directors also implicate their duty of loyalty, a breach of which is not exculpated.” Lyondell, 970A.2d at 239. To that end, in order to rule on Defendants’ motion for summary judgment, we mustascertain whether there are any genuine issues of material fact with respect to whether the directorsbreached their duty of loyalty, not merely their duty of care. In keeping with the Parties’ Joint Brief, weaddress the two bases for breach of the duty of loyalty in the reverse order: first, Plaintiff’s assertion ofbad faith conduct by Defendants, and second, Plaintiff’s allegation of a self-interested transaction notshown to be entirely fair.
1. Bad Faith in Revlon Auction Context
The obligation to act in good faith, which is a necessary component of satisfying the duty ofloyalty, requires directors to act for the purpose of advancing corporate well-being. Therefore, any“intentional dereliction of duty, a conscious disregard for one’s responsibilities[,]” constitutes bad faith,or the failure to act in good faith. Disney, 906 A.2d at 66; Stone, 911 A.2d at 370 (“Where directors failto act in the face of a known duty to act, thereby demonstrating a conscious disregard for theirresponsibilities, they breach their duty of loyalty by failing to discharge that fiduciary obligation ingood faith.”). In this case, Plaintiff and the shareholder class which he represents argue Defendants
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consciously disregarded their responsibilities in selling Intermix to News Corp. for $12 per share, when,so they contend, a likely topping bid from Viacom was imminent.
The seminal case of Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.1986), regulates directorial conduct during a sale or change of control of a publicly held corporation. Revlon holds that directors satisfy their fiduciary duties when their conduct is geared towards “themaximization of the company’s value at a sale for the stockholders’ benefit.” Id. at 182. Revlon istriggered in the following three scenarios: “(1) when a corporation initiates an active bidding processseeking to sell itself or to effect a business reorganization involving a clear break-up of the company;(2) where, in response to a bidder’s offer, a target abandons its long-term strategy and seeks analternative transaction involving the break-up of the company; or (3) when approval of a transactionresults in a sale or change of control.” Arnold v. Soc’y for Sav. Bancorp., Inc., 650 A.2d 1270, 1289-90(Del. 1994) (internal citations and quotation marks omitted). More recently, the Delaware SupremeCourt has stated that Revlon duties attach “when a company embarks on a transaction–on its owninitiative or in response to an unsolicited offer–that will result in a change of control.” Lyondell, 970A.2d at 242. When the company’s “break-up” became “inevitable,” in Revlon, “[t]he directors’ rolechanged from defenders of the corporate bastion to auctioneers charged with getting the best price forthe stockholders at a sale of the company.” 506 A.2d at 182. In addition to its principal holding thatshareholder wealth maximization must be the directors’ foremost objective, the court also noted that“favoritism for a white knight to the total exclusion of a hostile bidder” was impermissible if divorcedfrom the objective of shareholder value maximization. Id. at 184. “[W]hen bidders make relativelysimilar offers, or dissolution of the company becomes inevitable, the directors cannot fulfill their[fiduciary] duties by playing favorites with the contending factions. Market forces must be allowed tooperate freely to bring the target’s shareholders the best price available for their equity.” Id.
The Delaware Supreme Court has clarified that “Revlon did not create any new fiduciaryduties[,]” but rather “simply held that the ‘board must perform its fiduciary duties in the service of aspecific objective: maximizing the sale price of the enterprise.’” Lyondell, 970 A.2d at 239 (quotingMalpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001)). Additionally, Delaware case law has timeand again reaffirmed the anti-favoritism principle, i.e. that directors may not tilt the playing field infavor of one bidder or otherwise skew the auction unless this conduct is designed to maximizeshareholder wealth. In Barkan v. Amsted Industries, 567 A.2d 1279 (Del. 1989), the court warned that“the board must act in a neutral manner to encourage the highest possible price for shareholders.” Id. at1286. To be sure, “there is no single blueprint that a board must follow to fulfill its duties,” and “thereare no legally prescribed steps that directors must follow to satisfy their Revlon duties.” Id.; Lyondell,970 A.2d at 243. Nevertheless, “[w]hen multiple bidders are competing for control, this concern forfairness forbids directors from using defensive mechanisms to thwart an auction or to favor one bidderover another.” Id. at 1286-87 (citation omitted). More recently, in In re Toys “R” Us, Inc.,Shareholder Litigation, 877 A.2d 975 (Del. Ch. 2005), the Delaware Chancery Court stated that “aselfish or idiosyncratic desire by the board to tilt the playing field towards a particular bidder forreasons unrelated to the stockholders’ ability to get top dollar” is a violation of a director’s fiduciaryobligations. Id. at 1000-01.
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4 Favoritism and deal protection devices, such as a termination fee, are permissible so long asthey are strategically designed to maximize the price paid to shareholders. Macmillan, 559 A.2d at1287 (“[T]he board’s primary objective, and essential purpose, must remain the enhancement of thebidding process for the benefit of the stockholders.”). Macmillan set forth a test which tolerates onlyvalue-enhancing preferential treatment:
In the face of disparate treatment, the trial court must first examine whether the directorsproperly perceived that shareholder interests were enhanced. In any event, the board’s actionmust be reasonable in relation to the advantage sought to be achieved, or conversely, to thethreat which a particular bid allegedly poses to stockholder interests.
559 A.2d at 1288; In re J.P. Stevens & Co., Inc. S’holders Litig., 542 A.2d 770, 782 (Del. Ch. 1988)(“The board may tilt the playing field if, but only if, it is in the shareholders’ interest to do so.”). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 8 of 39
To support his claim that Defendants acted in bad faith, Plaintiff cites Mills Acquisition Co. v.Macmillan, Inc., 559 A.2d 1261 (Del. 1988). In that case, Macmillan, Inc.’s Chairman and ChiefExecutive Officer (“CEO”) and its President and Chief Operating Officer (“COO”) orchestrated aleveraged buyout of their own company, resulting in a lock-up agreement “between Macmillan andKohlberg Kravis Roberts & Co. (‘KKR’), an investment firm specializing in leveraged buyouts.” Id. at1264-65. These directors, “as participants in the leveraged buyout, had a significant self-interest inensuring the success of a KKR bid.” Id. at 1279. Indeed, “Macmillan senior management wouldreceive up to 20% ownership in the newly formed company.” Id. at 1273. So strong was the pull ofthat promised 20 percent ownership stake that even before KKR had communicated a bid price, theseself-interested actors indicated that they would “endorse” the acquisition to the full board of directors. Id. To steer the process in the desired direction, they “clandestinely and impermissibly skewed” theauction in KKR’s favor by, among other things, tipping KKR off as to the amount of a competing bidand then concealing this tip from the board of directors. Id. at 1279-81. On appeal, the DelawareSupreme Court held that “discriminatory treatment of a bidder, without any rational benefit to theshareholders, was unwarranted.” Id. at 1282 (emphasis added).4 The court found that “KKR repeatedlyreceived significant material advantages to the exclusion and detriment of [the competing bidder] tostymie, rather than enhance, the bidding process.” Id. at 1281. Moreover, the court concluded that“[t]he board was torpid, if not supine, in its efforts to establish a truly independent auction . . . .” Id. at1280. The court added: “By placing the entire process in the hands of [the chairman], through his ownchosen financial advisors, with little or no board oversight, the board materially contributed to theunprincipled conduct of those upon whom it looked with a blind eye.” Id.
Defendants contend that Macmillan is distinguishable because the directors in that case were onboth sides of the transaction and therefore engaged in self-dealing. However, Defendants have pointedus to no authority for the proposition that Macmillan is only applicable when a court reviews self-interested transactions for fairness and may not support a finding of bad faith conduct in the Revlonauction context.
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5 Although Viacom did not actually submit a bid, we conclude that there are triable issues of factas to whether Viacom was at least a serious potential bidder which was discouraged from actuallysubmitting a bid by Defendants’ alleged bad faith conduct.
6 The Delaware courts have explained that favoritism, untethered to any strategy to drive up bidprices, is a breach of the fiduciary duties which Revlon focused through the lens of shareholder wealthmaximization:
Critically, in the wake of Revlon, Delaware courts have made clear that the enhanced judicialreview Revlon requires is not a license for law-trained courts to second-guess reasonable, but
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We recognize that Wayne County Employees’ Retirement System v. Corti, Civil Action No.3534-CC, 2009 WL 2219260 (Del. Ch. July 24, 2009), distinguishes Macmillan from the single-biddermerger reviewed in that case on the absence of any conflicted insiders seeking to transfer control of acompany to themselves. Id. at *12-13 (“There is much less cause for concern where managers willcontinue their employment with the combined post-transaction entity, than when the conflictedmanagers are bidders in an auction for control of the company, and are thereby seeking to transfercontrol of the company to themselves personally.”). But that discussion has no bearing on theprohibition on favoring a particular bidder in a multiple-bidder context, which this case arguablypresents.5 Defendants suggest that the directors may tilt the playing field in favor of a particular bidder,without regard to shareholder wealth maximization, so long as they are not on both sides of atransaction. We reject this argument. Simply because Macmillan examined “disparate treatment”through the lens of disloyalty premised on a self-interested transaction does not mean field-tilting ispermissible in other contexts. See Emerson Radio Corp. v. Int’l Jensen Inc., Civ. A. Nos. 15130,14992, 1996 WL 483086, at *11-12 (Del. Ch. Aug. 20, 1996) (describing Macmillan as requiringfiduciaries to “treat all bidders equally and fairly in carrying out their Revlon duties” and identifyingself-interested nature of merger transaction as an “addition[al]” or “alternative” theory for breach ofduty of loyalty); Roberts v. Gen. Instrument Corp., CIV. A. No. 11639, 1990 WL 118356, at *8 (Del.Ch. Aug. 13, 1990) (citing Macmillan, 559 A.2d at 1287-88) (“In each instance where the board is notpredominantly self-interested or under the control or dominating influence of a person with a conflictinginterest, the principal judicial inquiries relate to whether the board was adequately informed and actingin good faith. This court has been pointedly instructed, however, that ‘where issues of corporate controlare at stake’ action of even a disinterested board must meet an enhanced test before they will qualify forthe deference that courts ordinarily accord to good faith business judgments.”).
Whatever a director’s particular motivation, evidence that he skewed an auction in favor of aparticular bidder can support a finding of an “intentional dereliction of duty,” Disney, 906 A.2d at 66,i.e. a violation of the obligation to act in good faith. See Nagy v. Bistricer, 770 A.2d 43, 48, n.2 (Del.Ch. 2000) (observing that the duty of good faith may serve as a “constant reminder . . . that, regardlessof his motive, a director who consciously disregards his duties to the corporation and its stockholdersmay suffer a personal judgment for monetary damages for any harm he causes,” even if for a reason“other than personal pecuniary interest”).6
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debatable, tactical choices that directors have made in good faith. For example, the SupremeCourt has held that the duty to take reasonable steps to secure the highest immediately availableprice does not invariably require a board to conduct an auction process or even a targeted marketcanvass in the first instance, emphasizing that there is “no single blue-print” for fulfilling theduty to maximize value. Nor does a board’s decision to sell a company prevent it from offeringbidders deal protections, so long as its decision to do so was reasonably directed to the objectiveof getting the highest price, and not by a selfish or idiosyncratic desire by the board to tilt theplaying field towards a particular bidder for reasons unrelated to the stockholders’ ability to gettop dollar.
Toys “R” Us, 877 A.2d at 1000-01 (emphasis added; citations omitted). CV-90 (06/04) CIVIL MINUTES - GENERAL Page 10 of 39
Defendants’ principal argument is that recent Delaware Supreme Court case law creates a much
more stringent standard for claims of breaches of the obligation to act in good faith. To this end, theycite language in the Delaware Supreme Court’s decision in Lyondell. In that case, Lyondell’s board ofdirectors approved the sale of their company to Basell AF, a privately held Luxembourg company, afternegotiating several increases in the per share bid price up from $40 to $48, and a set of less stringentdeal protection devices, including a “fiduciary out” clause in the standard no-shop provision and areduced termination fee. 970 A.2d at 237-39. The court found no bad faith and therefore no breach ofthe duty of loyalty. Id. at 242-44. The Supreme Court rested its decision on the following facts:
The Lyondell directors met several times to consider Basell’s premium offer. They weregenerally aware of the value of their company and they knew the chemical company market. The directors solicited and followed the advice of their financial and legal advisors. Theyattempted to negotiate a higher offer even though all the evidence indicates that Basell hadoffered a “blowout” price. Finally, they approved the merger agreement, because “it was simplytoo good not to pass along [to the stockholders] for their consideration.” We assume, as we muston summary judgment, that the Lyondell directors did absolutely nothing to prepare for Basell’soffer, and that they did not even consider conducting a market check before agreeing to themerger. Even so, this record clearly establishes that the Lyondell directors did not breach theirduty of loyalty by failing to act in good faith.
Id. at 244.
Contrary to Defendants’ argument, Lyondell did not work any transformation in Delaware lawon the duty of loyalty. Nothing in this case altered the standard definition of bad faith; indeed, the courtreaffirmed that “bad faith will be found if a ‘fiduciary intentionally fails to act in the face of a knownduty to act, demonstrating a conscious disregard for his duties.’” Id. at 243 (quoting Disney, 906 A.2d at67). The court continued: “there is a vast difference between an inadequate or flawed effort to carry outfiduciary duties and a conscious disregard for those duties.” Id. Despite all the references to the
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“conscious disregard” standard, Defendants nevertheless cherry-pick certain language to argue that amore stringent standard applies, including the following lines: (1) “Only if they knowingly andcompletely failed to undertake their responsibilities would they breach their duty of loyalty”; and (2)“[T]he inquiry should have been whether those directors utterly failed to obtain the best sale price.” Id.at 243-44 (emphasis added); (Joint Br. 5-7, 16). Defendants’ citation of this language is out of contextand misleading. A comprehensive review of the Lyondell opinion reveals that the court intended thatlanguage to be synonymous and coterminous with the “conscious disregard” standard. The court didnot suggest that the “utter failure” standard would supplant the definition of bad faith set forth inDisney. Nor did it suggest any unprecedented diminishment of Revlon duties, as suggested by theminimalist standard Defendants advance. If such a radical departure were intended, we think the courtwould have taken the pains to say as much. Divorced from the surrounding text, the “utter failure”language could be said to require that directors simply do anything in the auction process, no matterhow feckless, ineffectual, or at odds with the goal of maximizing shareholder wealth.
The “utter failure” language derives from the Stone and In re Caremark decisions, which thecourt cited. 911 A.2d 362 (Del. 2006); 698 A.2d 959, 971 (Del. Ch. 1996). Both of those decisionsconcerned claims that directors failed to engage in the necessary oversight to ensure compliance withlaws such as the federal Bank Secrecy Act in Stone. That vital factual context helps explain why In reCaremark defined bad faith as follows: “Generally where a claim of directorial liability for corporateloss is predicated upon ignorance of liability creating activities within the corporation, . . . only asustained or systematic failure of the board to exercise oversight—such as an utter failure to attempt toassure a reasonable information and reporting system exists—will establish the lack of good faith that isa necessary condition to liability.” 698 A.2d at 971 (“Such a test of liability—lack of good faith asevidenced by sustained or systematic failure of a director to exercise reasonable oversight—is quitehigh.”). Nevertheless, the Delaware Supreme Court explained in Stone and reaffirmed in Lyondell that:“the Caremark standard is fully consistent with the Disney definition of bad faith.” Lyondell, 970 A.2dat 240 (citing Stone, 911 A.2d at 370). We cannot second-guess that determination as Defendants wish.
Instead of placing “utter failure” between “subjective bad faith” (i.e. “actual intent to do harm”)and “conscious disregard” on the Disney “bad faith” spectrum, Lyondell equated the “utter failure” and“conscious disregard” standards. 970 A.2d at 240. This reasoning was fully in keeping with theSupreme Court’s prior decision in Stone, where it noted that the duty of loyalty could be breached bytwo specific kinds of conduct rising to the level of bad faith: “(a) the directors utterly failed toimplement any reporting or information system or controls; or (b) having implemented such a system orcontrols, consciously failed to monitor or oversee its operations thus disabling themselves from beinginformed of risks or problems requiring their attention.” 911 A.2d at 370. Crucially, though bad faithcould be demonstrated with either of these alternatives, the court emphasized, citing Disney, 906 A.2d at67, that these were coterminous legal standards:
In either case, imposition of liability requires a showing that the directors knew that they werenot discharging their fiduciary obligations. Where directors fail to act in the face of a known
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7 “A failure to act in good faith may be shown . . . where the fiduciary intentionally acts with apurpose other than that of advancing the best interests of the corporation, where the fiduciary acts withthe intent to violate applicable positive law, or where the fiduciary intentionally fails to act in the face ofa known duty to act, demonstrating a conscious disregard for his duties.” In re Walt Disney Co.Derivative Litig., 907 A.2d at 755. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 12 of 39
duty to act, thereby demonstrating a conscious disregard for their responsibilities, they breachtheir duty of loyalty by failing to discharge that fiduciary obligation in good faith.
911 A.2d at 370 (emphasis added). Delaware courts generally seem to read Lyondell in this way. See,e.g., Robotti & Co., LLC v. Liddell, C.A. No. 3128-VCN, 2010 WL 157474, at *11 (Del. Ch. Jan. 14,2010) (characterizing Lyondell as holding that “[b]ad faith, and thus a breach of the duty of loyalty, canarise only when a fiduciary consciously disregards his or her responsibilities”).7
In addition, we do not read Lyondell as diminishing the prohibition on tilting the playing field infavor of a particular bidder for any reason other than maximizing shareholder wealth. The lack of anactual or even potential second bidder was a key undisputed fact on which that court relied, noting:“[The directors] had reason to believe that no other bidders would emerge, given the price Basell hadoffered and the limited universe of companies that might be interested in acquiring Lyondell’s uniqueassets. . . . Finally, no other acquiror [sic] expressed interest during the four months between the mergerannouncement and the stockholder vote.” 970 A.2d at 241. Other cases have distinguished betweensingle-bidder and multiple-bidder contexts as well. See, e.g., Barkan, 567 A.2d at 1286-87; ContinuingCreditors’ Comm. of Star Telecomms., Inc. v. Edgecomb, 385 F. Supp. 2d 449, 466 n.14 (D. Del. 2004)(“In [Macmillan], the claim was that the directors approved the use of a lock-up that stopped rivalbidders from winning the auction for the company so that fellow directors could purchase the companythrough a leveraged buy-out. Here, however, there were no other bidders for Star, the Company was onthe verge of bankruptcy, and the Gotel financing was, by the Plaintiff’s own admission, the onlyfinancing option presented to the Board.”) (emphasis added and citations omitted). Since Lyondell onlyreviewed a merger with a lone bidder, even if we were to read its “utter failure” language as morelenient on Defendants, it is of severely diminished relevance in the multiple-bidder scenario wearguably confront here.
In short, Revlon and Macmillan are not displaced in any way by Stone or Lyondell. Accordingly, we must ask whether there is a genuine issue of material fact as to whether Defendantsconsciously disregarded their duties, i.e. “fail[ed] to act in the face of a known duty to act.” Stone, 911A.2d at 370. There is nothing in the case law to warrant granting judgment as a matter of law forDefendants, simply because they engaged in some bargaining.
Having considered all of the admissible evidence before us and viewing it in the light mostfavorable to Plaintiff as we must under Rule 56, we conclude that there are genuine, triable issues ofmaterial fact sufficient to defeat Defendants’ Motion for Summary Judgment on this Revlon claim.
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8 Although analytically we are reviewing the evidence on the bad faith prong of the duty ofloyalty component of the breach of fiduciary duty claim at this juncture, we consider Rosenblatt’salleged self-interest to the extent that it bears on whether Plaintiff has raised a triable issue of materialfact as to whether Rosenblatt acted in conscious disregard of his duties by impermissibly tilting the fieldin favor of News Corp.CV-90 (06/04) CIVIL MINUTES - GENERAL Page 13 of 39
These issues fall into three categories: (1) whether Intermix CEO Rosenblatt impermissibly tilted theplaying field in favor of News Corp.; (2) whether the remaining board members consciously disregardedtheir duties; and (3) whether the purported risk of a direct bid for MySpace, which would have frozenthe MySpace Option, precludes a finding that Defendants consciously disregard their duties.
a. Rosenblatt
Plaintiff proffers evidence tending to show that during the crucial week leading up to the July18, 2005 merger, Rosenblatt evaded Viacom’s advances, even though Viacom’s representatives werecommunicating that a competing bid was imminent. Plaintiff raises at least two interrelated triableissues: (1) whether Rosenblatt was self-interested in the merger transaction;8 and (2) whether heimpermissibly steered the auction in News Corp.’s favor.
As to Rosenblatt’s purported self-interest, there is evidence of Rosenblatt’s motivation for thealleged bidder favoritism, namely his anticipation of future employment with News Corp. In oneparticularly revealing email sent on July 15, Rosenblatt excitedly endorses News Corp.’s RossLevinsohn’s vision: “So, we create the Fox Internet group, all our units (myspace, alena, grab) fallunder it, plus all new acquisitions, and you are CEO Fox Internet and I am Fox Internet grand Puba!!!!” (J.A., Ex. 184). Rosenblatt continues: “I would like to discuss my specific role and structure wheneveryou are ready. It is no rush unless Peter and Rupert want me to sign an employment agreement bySunday [July 17, 2005] . . . .” (Id.). In an earlier email in that same chain, Rosenblatt wrote: “[I] amburning some real equity with every major media company by getting [the deal] done. . . . u [sic] haveno idea the pain I will suffer on Monday. U [sic] better have a good job for me cause I ain’t [sic] gonnawork in this town again. . . .” (Id.). On July 13, Rosenblatt wrote: “tell Thom Murdoch and I cut thedeal in 30 mins [sic] and I got 100% of what we wanted. Deal closing by Monday.” (Id., Ex. 154). This evidence at least raises the inference that Rosenblatt had a strong interest in seeing a mergertransaction with News Corp. completed and had made up his mind that Intermix would be sold to NewsCorp. as of July 13.
Moreover, Plaintiff points to several key pieces of documentary evidence and witness testimonywhich tend to support his contention that (1) Rosenblatt, in representing the Intermix board through theTransaction Committee (“TC”), (2) Sheehan, who also sat on the TC, and (3) their agents, deliberatelydodged, if not frustrated, an arguably imminent bid from Viacom:
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Title Jim Brown v. Brett Brewer, et al.
9 Viacom owns MTV Networks.
10 The Parties initially sought to file Freston’s deposition transcript under seal because itcontained information subject to the governing protective order. On November 13, 2009, the Partiesfiled a joint stipulation to withdraw their application to file under seal unredacted versions of the JointBrief, the Joint Statement of Uncontroverted Facts, and Volumes 2-3 and 5-9 of the Joint EvidentiaryAppendix, as well as several full deposition transcripts, including Freston’s testimony. (Dkt. No. 234). In that document, the Parties stated that: “WHEREAS the Parties have contacted all non-parties thatproduced documents and/or gave deposition testimony which was the subject of the application to fileunder seal, and obtained their permission for the documents to be publicly filed, and therefore withdrawthe Application to File Under Seal[.]” (Id. at 3). Our November 17, 2009 Order regarding the jointstipulation was not clear as to whether the deposition transcripts were also being filed in the publicrecord. (Dkt. No. 236). We now clarify that all of the deposition transcripts labeled “ConfidentialPursuant to Protective Order” and submitted to the Court along with the Cross-Motions for SummaryJudgment SHALL also be filed in the public record pursuant to the Parties’ joint stipulation. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 14 of 39
First, on July 6, Montgomery responded to an email announcing “Viacom coming in hard” bytelling Rosenblatt: “You need to dance with [Viacom] . . . slow them down. I know you can doit.” (Id., Ex. 117).
Second, TWP, specifically Robert Kitts (“Kitts”), was aware that Epstein was trying to reachthem to talk about a potential Viacom bid. (Kitts Tr. at 125:4-7, 126:4-13). Epstein noted onJuly 16 that Kitts never called him back as promised. (J.A., Ex. 191 (“We exchangedsubsequent emails and he indicated he would call me, but he never did.”)).
Third, on July 15, Mosher wrote Rosenblatt following one of Rosenblatt’s updates to the fullboard, saying “Viacom sounds like a pipedream.” (Id., Ex. 182).
Fourth, on July 15, Judy McGrath of MTV9 wrote Rosenblatt to inform him that Viacom was“coming with a bid early next week.” (Id., Ex. 183). She added: “We really want to be with youon this, and hope to get in the ring for it . . . .” (Id.). Rosenblatt replied evasively, failing tocorrect her mistaken impression that the auction would still be ongoing after Monday: “I am on acall but thanks so much for the email . . . . I will call you back soon . . . .” (Id.). Rosenblattcould not recall precisely whether he had returned her call: “I may have tried. I think, actually, Ido think I tried and I couldn’t get a hold of her.” (Rosenblatt Tr. at 108:21-24).
Fifth, Viacom’s CEO Thomas Freston (“Freston”), who reiterated Viacom’s interest inpurchasing Intermix to Rosenblatt, has testified that he was only told that the process with thecompeting bidder was “moving quickly.” (Freston Tr. at 17:12-20, 19:8-11, 22:4-14).10 Hetestified that he could not “recall if [Rosenblatt] said that they were going to do a deal bySunday.” (Id. at 22:21-24). When asked whether Rosenblatt had communicated that a dealwould be completed by Sunday, he stated that he did not believe so. (Freston Tr. at 19:8-11).
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11 Rosenblatt, on the other hand, has testified that he actually told Freston that a deal would“likely be over by Sunday,” or (stated with more certainty) that the deal was “going to be done bySunday.” (Rosenblatt Tr. at 64:5-22, 65:22-25, 92:5-8). For purposes of summary judgment, thisconflicting evidence further supports the existence of a triable issue of fact as to Viacom’s relativeawareness of the impending consummation of the merger with News Corp. Moreover, JasonHirschhorn (“Hirschhorn”), Viacom’s top manager for Internet business, wrote in an internal email onSaturday July 16 that News Corp. “will deliver [its bid] anywhere from today-monday.” (J.A., Ex.192). Freston also states that Rosenblatt told him “a specific deal was imminent.” (Freston Tr. at29:11-16). Though the actual meaning of that statement is obscure as to whether a deal or a bid wouldhave been imminent (particularly given Freston’s other testimony), this ambiguity likewise buttressesour conclusion that there are genuine issues for trial.
12 A reasonable jury could infer from this email that Rosenblatt intended to evade an arguablyimminent competing bid, and that the “[h]ave a great weekend” line at the end of the email wasdismissive, given the fact that the email was sent at nearly 6 p.m. on a Sunday night.
13 We do not read the deposition to suggest that these were his actual words; Kitts was merelyparaphrasing what he recalls saying to Viacom. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 15 of 39
Kitts of TWP also confirmed that he failed to give Viacom any hard deadline by which to submita bid. (Kitts Tr. at 88:21-89:16, 90:11-22, 136:11-14).11
Sixth, on July 17, Jason Hirschhorn emailed Chris DeWolfe, MySpace’s CEO, to document hisdifficulties in staying in the auction process: “chris, quick concerns . . . Intermix managementdid not show up on Friday as promised during our time there . . . Intermix legal cancels theirtime with our legal today at the last minute . . . Heard you guys got called off the ad sales callabruptly . . . In short, I have had a team of 20+ people here working for 72 hours straight on asignificant bid, is there anything I need to know?” (J.A., Ex. 200).
Seventh, on July 17, Van Toffler of MTV also emailed Rosenblatt directly to complain politelyabout the perceived run-around: “They are in the office working round [sic] the clock so we canput forth a number to you this week. They mentioned a couple of calls were cancelled at the endof the day Friday, and seemed a bit concerned. Is there anything I can do to help the process forboth of us as this is clearly on the fast track?” (Id., Ex. 202). Again, Rosenblatt replied in sucha way that a reasonable jury could infer an intent to evade an arguably imminent competing bid:“We like you and your guys a ton also. Chris called back or will your GC today. Have a greatweekend[.]” (Id.).12
Eighth, on July 17, Kitts of TWP, pursuant to the Intermix board’s instructions, informedViacom that it would be “in their best interest” to make a bid that evening.13 (Kitts Tr. at 69:13-70:14, 88:21-89:16). Kitts admitted that he did not give Viacom a hard and fast deadline (see id.at 88:21-89:16, 90:11-22; Epstein Tr. at 53:21-55:5), but that he “relied upon the message [he]
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14 Rupert Murdoch is the Chairman and CEO of News Corp. Peter Chernin was the then-President and COO of News Corp. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 16 of 39
delivered as code that [Epstein] should get a bid in this evening.” (Kitts Tr. at 90:20-22). Furthermore, Kitts admitted in the deposition that he had been instructed to ask for a bid on atimetable that he knew was infeasible. (Id. at 144:1-145:7). Kitts testified that he was aware ofan upcoming Viacom board meeting, “at which [a potential bid] was going to be discussed.” (Id.at 69:13-70:14). The Viacom board was not scheduled to meet until the evening of TuesdayJuly 19, 2005. (Rosenblatt Decl. ¶ 42; Brewer Decl. ¶ 29).
On the other hand, Defendants present the following evidence of events leading up to the July18th merger, which they argue demonstrates the board members’ good faith. News Corp. initiallysignaled that it would be willing to purchase Intermix in the $8-10 per share price range. (RosenblattDecl. ¶ 18). During the Tuesday July 12, 2005 meeting between Rosenblatt, Rupert Murdoch, and PeterChernin,14 News Corp. indicated that it would pay $12 per share, as long as the MySpace Option wasexercised and a merger agreement was executed by no later than Sunday, July 17, 2005. (Id. ¶ 24(describing the “handshake deal”)). At the 2 p.m. meeting on July 15, the Intermix board of directorsrejected News Corp.’s proposal to enter exclusive negotiations as premature. (Id. ¶¶ 29-30). At the 8p.m. meeting on July 15, the Intermix board rejected the non-binding term sheet including a variety ofdeal protection provisions as “too strong a deterrent to other potential bidders.” (Id. ¶ 33; J.A., Ex. 14). At the 8 p.m. meeting on July 16, TWP advised the board that it would be reasonable to approve amerger with News Corp. rather than waiting for Viacom to present an offer. (Brewer Decl. ¶ 27;Rosenblatt Decl. ¶ 37). At the 7:30 p.m. TC meeting on July 17, the committee directed TWP to contactViacom and/or its representative, Morgan Stanley, to ascertain whether Viacom would be making anoffer before the opening of the market the next morning. (Rosenblatt Decl. ¶ 41; Sheehan Decl. ¶ 36;J.A., Ex. 18). At the 10 p.m. Intermix board meeting on July 17, TWP advised that Viacom was notprepared to make any offer until its board met on Tuesday July 19 and approved a bid. (RosenblattDecl. ¶ 42; J.A., Ex. 19). At the 3:45 a.m. board meeting on July 18, both Montgomery and TWPpresented their valuation analyses, explaining that $12 per share was a fair price for Intermix, and theBoard voted to approve the merger. (Rosenblatt Decl. ¶ 44). On July 18, Intermix entered into a mergeragreement with News Corp.’s Fox Interactive Media. (Rosenblatt Decl. ¶ 45; J.A., Ex. 4, at 319). Defendants contend, and the record reflects, that throughout this process the board met repeatedly,authorized ongoing discussions with both competing bidders, and consulted legal and financial advisers. (J.A., Exs. 8-12, 14-19).
Viewing the evidence as a whole and in the light most favorable to Plaintiff, we conclude thatthere are at least triable issues of fact as to whether Rosenblatt acted in good faith, whether heimpermissibly skewed the auction in favor of News Corp. for a purpose other than maximizingshareholder value, knowing that a Viacom bid was likely and imminent, and whether this arguablydisparate treatment of Viacom and News Corp. had any effect on Viacom’s appreciation of the arguableneed to make an offer by the evening of July 17, 2005.
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b. The Other Directors
i. Sheehan
In addition to Rosenblatt, there are also triable issues of fact as to whether Sheehan consciouslydisregarded his fiduciary duties. On Friday July 15, Stuart Epstein (“Epstein”), the Morgan Stanleyinvestment banker representing Viacom, tried to reach Sheehan but was unsuccessful. (Sheehan Tr. at83:12-18; J.A. Ex. 175). Sheehan instructed his secretary as follows: “Do not tell [Epstein] anythingabout what I am doing or where I am[.]” (J.A., Ex. 175). In reply to his email, Sheehan’s secretaryinformed him that she told Epstein that he was “unavailable.” (Id.). A reasonable jury could concludethat this email chain evinces Sheehan’s intent to avoid Viacom’s representatives.
ii. The Other Six Directors
In Gesoff v. IIC Industries, Inc., 902 A.2d 1130 (Del. Ch. 2006), the court stated that bad faithmay be found where directors have “acted with conscious disregard or made decisions with knowledgethat they lacked material information.” Id. at 1165 (emphasis added). Few Delaware cases attempt todefine precisely what conduct reaches the level of actionable bad faith, but there is at least agreementthat “adopting a ‘we don’t care about the risks’ attitude concerning a material corporate decision”constitutes bad faith. In re Walt Disney Co. Derivative Litig., 825 A.2d 275, 289 (Del. Ch. 2003)(finding bad faith claim properly alleged where factual allegations, if true, implied that “the defendantdirectors knew that they were making material decisions without adequate information and withoutadequate deliberation, and that they simply did not care if the decisions caused the corporation and itsstockholders to suffer injury or loss”) (emphasis in original).
Having reviewed the record in full, we conclude that there is sufficient admissible evidence tocreate a triable question of fact as to whether the rest of the board, as in Macmillan, “plac[ed] the entireprocess in the hands of” Rosenblatt and to a lesser extent Sheehan and thereby “materially contributedto the [allegedly] unprincipled conduct of those upon whom it looked with a blind eye.” 559 A.2d at1281.
On February 9, 2005, the Intermix board of directors formed a Transaction Committeecomprised of Rosenblatt, Sheehan, and Quandt. (Rosenblatt Decl. ¶ 6). From that point until July 18,2005 when the merger was announced, it is undisputed that the Board received most of its informationabout the negotiations from its self-interested CEO, Rosenblatt. Indeed, it is undisputed that Rosenblattwas the only board member who had some first-hand information as to the circumstances of Viacom’sefforts to put in a bid. (See, e.g., Joint Statement of Uncontroverted Facts P347 (“Rosenblatt was theonly person from the Intermix Board who negotiated with Viacom.”)). Crucially, one of the boardmembers testified that Rosenblatt had led him to believe “[t]hat Viacom was less urgent about the dealand hadn’t taken the time or done the same level of work as Fox Network” and that Viacom was a“pipedream.” (J.A., Ex. 182; Mosher Tr. at 25:24-26:1). This phrase is admittedly not indicative ofconscious wrongdoing. However, there is a triable question as to whether the other board members
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consciously abdicated their responsibilities as corporate fiduciaries in allegedly swallowingRosenblatt’s version of events and utterly failing to assess the situation for themselves.
More generally, a reasonable fact-finder could conclude that the other board members acted inbad faith by making “decisions with knowledge that they lacked material information.” Gesoff, 902A.2d at 1165. With respect to their knowledge of the relative likelihood of a Viacom bid, Mosher statedthat he could not recall if he or any other board member had “asked any questions regarding Viacom orits status.” (Mosher Tr. at 26:14-21). Additionally, he could not recall whether he had “any knowledgeof whether anyone from management was providing equal information to Viacom and Fox News Corpabout the time line” for submitting a bid for Intermix. (Id. at 43:17-21).
With respect to their knowledge of bidder favoritism, though Mosher testified that he could notrecall the board ever instructing Rosenblatt to favor one bidder over another, he also could notdefinitively represent that the board had not so instructed Rosenblatt. (Id. at 41:10-21). Other boardmembers besides Rosenblatt have also testified that they were unaware that any due diligence meetingswith Viacom had been cancelled. (Brewer Tr. at 119:11-15; Sheehan Tr. at 98:1-20). Furthermore,Brewer testified that he was simply unaware that Viacom was conducting due diligence over the July16-17, 2005 weekend. (Brewer Tr. at 26:5-24).
With respect to their knowledge of the fairness of the merger price, Rosenblatt did not informBrewer that he was requesting $12 per share from News Corp. until the day of the “handshake deal”with Rupert Murdoch; it is unclear when the rest of the board learned this information. (Id. at 122:2-9). He also did not explain how that requested price was derived. (Id. at 122:10-14). Brewer testified thatthe board did not ask, and Mosher could not recall whether any board member sought an explanation. (Id.; Mosher Tr. at 53:6-9). Moreover, Brewer testified that the board as a whole never conducted anyindependent analysis to determine what “an appropriate price per share” would be. (Brewer Tr. at122:15-18; see also Mosher Tr. at 49:24-50:4 (testifying that he himself did not perform anyindependent analysis)). Additionally, Mosher confirmed that the board had not “directed themanagement team to go get the specific valuation work done prior to the acquisition.” (Mosher Tr. at52:4-18). Finally, Brewer has testified that he could not even recall whether any of the directors hadasked “any questions about [Montgomery and TWP’s] fairness presentations.” (Brewer Tr. at 104:2-10). Though Brewer’s failure to recall what everyone had specifically asked back in 2005 would beunderstandable, a reasonable jury might draw a negative inference from his representation that he couldnot recall any discussion as to the investment banks’ analyses.
Construing all of the above testimony in the light most favorable to Plaintiff as we must onDefendants’ motion for summary judgment, we conclude that it is at least triable as to whether theremaining six board members consciously disregarded their duties and acted in bad faith. There isevidence in the record suggesting that no one on the board asked any questions about the requested pershare price, the treatment of the competing bidders, the fairness valuations, or the relative likelihood ofa Viacom bid. A reasonable jury could infer that this evidence demonstrates the other six directorsconsciously abdicated their roles as corporate fiduciaries required by law to do their utmost to maximize
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shareholder wealth. Of course, we remain mindful that even gross negligence, premised on “simpleinattention or failure to be informed of all facts material to the decision[,]” violates only the duty of careand is not actionable as bad faith. Disney, 906 A.2d at 66. Nevertheless, we think a reasonable jurycould find that the other six directors exceeded the bounds of negligent conduct, willfully proceeded totheir decisions knowing they lacked material information, Gesoff, 902 A.2d at 1165, and therebyconsciously disregarded their fiduciary duties. Disney, 906 A.2d at 66 (“Cases have arisen wherecorporate directors have no conflicting self-interest in a decision, yet engage in misconduct that is moreculpable than simple inattention or failure to be informed of all facts material to the decision. To protectthe interests of the corporation and its shareholders, fiduciary conduct of this kind, which does notinvolve disloyalty (as traditionally defined) but is qualitatively more culpable than gross negligence,should be proscribed.”).
c. The MySpace Option
The MySpace, Inc. Stockholders Agreement (“MSA”) (J.A., Ex. 2), executed on February 11,2005, was the culmination of negotiations between MySpace, Inc., MySpace Ventures, LLC, RedpointVentures I, L.P., Redpoint Associates I, LLC, Redpoint Ventures II, L.P., Redpoint Associates II, LLC,Redpoint Technology Partners Q-1, L.P., and/or Redpoint Technology Partners A-1, L.P. (collectively,“the Redpoint Entities”). (Brewer Decl. ¶ 6; Rosenblatt Decl. ¶ 7). Under the agreement, the RedpointEntities purchased a 47 percent minority interest in Intermix, and at the same time, the 53 percentmajority stockholders acquired an option (“the MySpace Option”) to buy back that minority interest if athird party made a “bona fide . . . offer” for 50 percent or more of Intermix’s shares:
So long as Intermix (together with its Affiliates) directly or indirectly holds at least 1,000,000shares of Common Stock . . . , in the event Intermix receives a bona fide third-party offer withrespect to a Change of Control of Intermix . . . within the twelve (12) month-period commencingon the date hereof . . . , then, following receipt of such offer (and provided discussions relatingto such offer are then-ongoing), Intermix shall have the right to purchase . . . up to 100% ofCommon Stock and Common Stock Equivalents of the Corporation held by the otherStockholders, whether now owned or hereafter acquired . . . .
(J.A., Ex. 2 § 7.1.1; Brewer Decl. ¶¶ 6-7; Rosenblatt ¶¶ 7-8). Section 7.1.5 of the MSA precluded themajority from exercising the MySpace Option if a third party made a direct bid for MySpace of over$125 million: “Intermix may not exercise the Purchase Option if (a) the Corporation [MySpace, Inc.]has previously received a bona fide third party offer to purchase the Corporation’s capital stock orassets for a purchase price greater than $125.0 million and discussions regarding such acquisitionbetween the Corporation and such third party are ongoing . . . .” (J.A., Ex. 2 § 7.1.5). The twoprovisions are mutually exclusive: (1) a bid for 50 percent or more of Intermix’s shares precludes anysubsequent direct bid for MySpace (while discussions for the Intermix control share are ongoing); and(2) any direct bid for MySpace precludes any subsequent bid for 50 percent or more of Intermix’sshares (while discussions for the acquisition of MySpace are ongoing).
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Defendants contend their conduct was not in bad faith in light of the risk of a direct third-partybid for MySpace, which would have precluded the 53 percent Intermix majority interest from exercisingthe MySpace Option under the MSA to purchase the minority 47 percent interest. Accordingly, wemust consider whether the purported risk of a direct bid for MySpace, which would have frozen theMySpace Option, dictates a conclusion that Defendants did not consciously disregard their duties as amatter of law.
Defendants claim that the risk of such a freezing bid was real and that any delay inconsummating the merger with News Corp. threatened the loss of an opportunity to capture the value ofIntermix’s crown jewel, MySpace, for their shareholders. (Joint Br. 11-15). At the July 15th boardmeeting at 2 p.m., the directors discussed the status of conversations with News Corp. and Viacom andconsidered the possibility that if either company “viewed itself as unlikely to prevail in acquiring[Intermix], it might submit an offer to acquire only MySpace in order to potentially suspend, at leasttemporarily, [Intermix’s] ability to exercise the MySpace option, thereby potentially jeopardizingeconomically attractive transactions involving the Company including the potential News Corp.transaction then under consideration.” (Rosenblatt Decl. ¶ 31; J.A., Ex. 12). Rosenblatt and the otherdirectors have declared that they “believed that the deadline provided by News Corp. by which toexecute the Merger Agreement was firm and that News Corp. was prepared to walk away if the deal wasnot consummated by the opening of the stock market on July 18, 2005.” (Rosenblatt Decl. ¶ 46).
To substantiate their purported concern over a potential freeze-out bid, Defendants suggest that a“bona fide third-party offer” can only mean a fully executed agreement, as in the written mergeragreement executed on July 18, 2005. (Joint Br. 93-97). We reject Defendants’ assertion that thisproposed construction of “bona fide third-party offer” is compelled as a matter of law. Under Sections7.1.1 and 7.1.5 of the MSA, a subsequent bid for MySpace or the Intermix control share, respectively,will only be precluded if discussions regarding the “bona fide third-party offer” are “ongoing.” Thislanguage in the agreement suggests that the term “bona fide offer” does not contemplate the finalexecution of an agreement, at which point discussions would no longer be “ongoing.”
Even though we reject Defendants’ construction of the phrase “bona fide third-party offer” in theMSA, we also reject Plaintiff’s request that we rule as a matter of law on the purely legal question ofwhat constitutes a “bona fide third-party offer” under Sections 7.1.1 and 7.1.5 of the MSA. In our view,Plaintiff’s request misses the point. We are not here to construe the terms of the MSA, as such. Rather,the question is whether there is a triable issue that Defendants, reasonably fearing being frozen out ofthe MySpace Option, tilted the field in News Corp.’s favor for the permissible purpose of maximizingshareholder wealth, or whether Defendants had no such reasonable fear, but merely used the MySpaceOption as a rationalization for a selfish or idiosyncratic desire to favor News Corp. unrelated to securingtop dollar for the shareholders. We think the evidence fairly presents such triable issues as toDefendants’ purported conscious disregard of their duties. In any event, our post hoc legaldetermination cannot dictate the result of the question of the propriety of Defendants’ conduct thatindisputably occurred without the benefit of our construction of the MSA.
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Accordingly, we hereby DENY Plaintiff’s Motion for Summary Judgment on this question ofcontractual interpretation.
In light of all the reasons set forth above, we hereby DENY Defendants’ Motion for SummaryJudgment on the fiduciary duty claim with respect to Plaintiff’s bad faith theory in the Revlon auctioncontext.
2. Self-Interested Transaction
In the alternative, Defendants move for summary judgment on the second theory supporting thebreach of fiduciary duty claim, arguing that five of the eight Defendants (a majority) were not self-interested or controlled by someone who was. The Delaware Supreme Court summarized the governinglaw in Cinerama, Inc. v. Technicolor, Inc.:
A board of which a majority of directors is interested is not a “neutral decision-making body.”See, e.g., Paramount Communications, Inc. v. QVC Network, Inc., Del.Supr., 637 A.2d 34, 42 n.9 (1994) (“[w]here actual self-interest is present and affects a majority of the directors approvinga transaction, a court will apply [the entire fairness test]”); Aronson v. Lewis, Del.Supr., 473A.2d 805, 812 (1984). A majority of disinterested directors is not “independent” if that majoritywas dominated by an interested director. See Heineman v. Datapoint Corp., Del.Supr., 611 A.2d950, 955 (1992). Similarly, the manipulation of the disinterested majority by an interesteddirector vitiates the majority’s ability to act as a neutral decision-making body. See MillsAcquisition Co. v. Macmillan, Inc., Del.Supr., 559 A.2d 1261, 1279 (1989).
663 A.2d 1156, 1170 n.25 (Del. 1995). Accordingly, Plaintiff must make two showings. “First, theplaintiff must proffer evidence showing that those members of the board had a material self-interest inthe challenged transaction[,]” and this must be “evidence of a substantial self-interest suggestingdisloyalty, such as evidence of entrenchment motives, vote selling, or fraud.” Goodwin, 1999 WL64265, at *25 (citing Cede II, 634 A.2d at 362-63; Cinerama, 663 A.2d at 1169). “Second, the plaintiffmust show that those materially self-interested members either: a) constituted a majority of the board; b)controlled and dominated the board as a whole; or c) i) failed to disclose their interests in the transactionto the board; ii) and a reasonable board member would have regarded the existence of their materialinterests as a significant fact in the evaluation of the proposed transaction.” Id. (citing Cinerama, 663A.2d at 1168).
There were eight directors on the Intermix board at the time of the merger: Rosenblatt, Sheehan,Mosher, Quandt, Brewer, Carlick, Moreau, and Woodward. Rosenblatt was conflicted due to hisinterest in becoming the head of Fox Interactive Media. He aimed to “receiv[e] a personal benefit froma transaction not received by the shareholders generally.” Cede II, 634 A.2d at 362; McGowan, 2002WL 77712, at *2 (deeming contracts for post-merger employment in acquiring entity a “disablingconflict of interest”); Goodwin, 1999 WL 64265, at *25 (finding “a triable issue of fact regardingwhether [directors’] expectations constituted a material interest in the merger not shared by the
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stockholders” but granting summary judgment on lack of evidence that any material interest infecteddeliberative process); Oliver, 2006 WL 1064169, at *19 (“[A]s a consequence of their personal interestin the negotiation of the Accord Agreement, in light of its potential impact on their rights under theiremployment agreements, they also were self-interested.”). Rosenblatt did not simply seek to retain hiscurrent position, but sought to secure a coveted position at the top of a division at News Corp. Accordingly, read in conjunction with other admissible evidence we have cited previously, this self-interested motivation is suggestive of disloyalty.
Defendants argue that Rosenblatt’s interests were coterminous with the shareholders’ interestsbecause every additional dollar increase in the price paid per share would yield roughly an additional $2million for Rosenblatt, a significant shareholder in Intermix. (Rosenblatt ¶ 51; Joint Statement ofUncontroverted Facts D89). This argument, however, misses the point that Rosenblatt arguably stoodto gain more money and prestige by becoming the “grand Puba” of Fox Interactive Media. If ChrisDeWolfe, the former CEO of MySpace, stood to make a $30 million salary over two years if retained bythe merged entity (the Parties appear to agree on this point) (see Joint Br. 37 n.42, 41-42), a reasonablejury could infer that Rosenblatt, as head of Fox Interactive Media, would have been offered an evenhigher salary. As such, a per share price of well above $20 would be needed to offset Rosenblatt’sconflicting interest in a $30 million (or higher) salary. (Id. at 41-42). Defendants only reiterate thatRosenblatt stood to gain a greater benefit from each incremental increase in the per share price.
It is undisputed that no director instructed any other director on how to vote or was influencedby how other board members voted. (Joint Statement of Uncontroverted Facts D95-96; Brewer Decl. ¶36; Carlick Decl. ¶ 38; Mosher Decl. ¶ 34; Moreau Decl. ¶ 36; Quandt Decl. ¶ 42; Rosenblatt Decl. ¶49; Sheehan Decl. ¶ 44; Woodward Decl. ¶ 34). The real question is whether each board member actedindependently and free of any manipulation by the interested members, principally Rosenblatt, i.e.whether “[e]ach Board Member exercised his independent judgment and consideration in deciding howto vote.” (Joint Statement of Uncontroverted Facts D97). In virtually identical declarations, thedirectors claim they were not so manipulated. (Brewer Decl. ¶ 36; Carlick Decl. ¶ 38; Mosher Decl. ¶34; Moreau Decl. ¶ 36; Quandt Decl. ¶ 42; Rosenblatt Decl. ¶ 49; Sheehan Decl. ¶ 44; Woodward Decl.¶ 34). On the other hand, Plaintiff argues that Rosenblatt deliberately misled the other board membersregarding the viability of the Viacom bid, steering them into approving the merger without waiting evena couple more days to see if Viacom would top News Corp.’s offer. (Joint Br. 26-27). Plaintiff cites anemail Mosher sent to Rosenblatt after one of the July 15th meetings, stating: “We need to honor ourcommitment to Fox and get this done. Viacom sounds like a pipedream. Fox sounds dead serious andnot screwing around.” (J.A., Ex. 182). When asked about this email during his deposition, Moshertestified that Rosenblatt’s periodic updates to the board had led him to believe “[t]hat Viacom was lessurgent about the deal and hadn’t taken the time or done the same level of work as Fox Network.” (Mosher Tr. at 25:24-26:1, 26:5-13). He also noted that: “The discussion around Viacom that themanagement team had led indicated that Viacom did not seem as willing to come to the table with anoffer for the company.” (Id. at 25:1-4). This evidence is sufficient to raise an inference thatRosenblatt’s presentation to the board may have been misleading as to Viacom’s seriousness. According to Mosher’s description of the board meetings, “from the management team estimation
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15 Van Toffler of MTV emailed Rosenblatt on July 17 to note that his people were “in the officeworking around the clock so [Viacom could] put forth a number to [him that] week.” (J.A., Ex. 202). On the same day, Jason Hirschhorn of Viacom informed Chris DeWolfe that he has “had a team of 20+people . . . working for 72 hours straight on a significant bid[.]” (Id., Ex. 200).CV-90 (06/04) CIVIL MINUTES - GENERAL Page 23 of 39
standpoint [sic], they were not inclined to make an offer for the company on the time line that we werelooking at.” (Id. at 25:18-21). Viewing the evidence as a whole in the light most favorable to Plaintiff,including the contrary evidence that Viacom was indeed very seriously interested in bidding onIntermix,15 there are at least triable issues of fact as to whether Mosher was manipulated by a self-interested director, Rosenblatt.
Moreover, based on Mosher’s description of the content of Rosenblatt’s presentations to theboard, the issue of manipulation is triable with respect to all of the other board members. Accordingly,as a reasonable jury could potentially conclude that a majority of the directors was interested ormanipulated by someone who was, we hereby DENY Defendants’ Motion for Summary Judgment onthis second basis for Plaintiff’s claim of breach of the duty of loyalty.
III. Count II: Violation of Section 14(a) of the Securities and Exchange Act of 1934 and SECRule 14a-9
On August 25, 2005, Intermix issued a proxy statement (“Proxy”) concerning the News Corp.merger. (Rosenblatt Decl. ¶ 53). On September 30, 2005, a majority of Intermix shareholders voted toadopt the Merger Agreement. (Id. ¶ 55). Plaintiff alleges that there were five material omissions in theProxy. (J.A., Ex. 4). To succeed on “a claim under § 14(a) and Rule 14a-9, a plaintiff must establishthat (1) a proxy statement contained a material misrepresentation or omission which (2) caused theplaintiff injury and (3) that the proxy solicitation itself, rather than the particular defect in thesolicitation materials, was an essential link in the accomplishment of the transaction.” New York CityEmployees’ Ret. Sys. v. Jobs, 593 F.3d 1018, 1022 (9th Cir. 2010) (citation and internal quotation marksomitted); 15 U.S.C. § 78j(b); 17 C.F.R. § 240.14a-9(a) (“No solicitation subject to this regulation shallbe made by means of any proxy statement, form of proxy, notice of meeting or other communication,written or oral, containing any statement which, at the time and in the light of the circumstances underwhich it is made, is false or misleading with respect to any material fact, or which omits to state anymaterial fact necessary in order to make the statements therein not false or misleading or necessary tocorrect any statement in any earlier communication with respect to the solicitation of a proxy for thesame meeting or subject matter which has become false or misleading.”).
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A. Alleged Material Omissions
1. MySpace’s Then-Current Revenue and Profits
Defendants first argue that Plaintiff failed to identify the alleged material omission ofMySpace’s then-current revenue and profits as a basis for this Section 14(a) claim in its responses totheir interrogatories, thereby waiving this ground for his Section 14(a) claim. (Joint Br. 45 n.49). Wedisagree. First, the CSAC clearly alleges that Defendants omitted “the current revenues and profitsbeing generated by MySpace.” (CSAC ¶¶ 130-33). Second, our July 14, 2008 Order clearly identifiedthis purported material omission as one of the five surviving bases for the Section 14(a) claim. (Dkt.No. 110, at 5). Third, whether Plaintiff actually identified this alleged material omission in his RevisedObjections and Responses to Defendant VP Alpha Holdings IV, L.L.C.’s First Set of Interrogatories isunclear. (J.A., Ex. 28). Most of the response to Interrogatory No. 1 focused on the conspicuousabsence of internal projections for MySpace’s prospective growth, not the company’s then-currentrevenue and profits. (Id. at 513-15). Plaintiff did not use the phrase “current revenue and profits,” butrather, stated the following:
[S]hareholders . . . were never made aware of MySpace’s true value or its true growth potential,and had no way of comparing the information that was publicly available to management’sprojections and growth assumptions. Thus, even though certain metrics that were used to trackMySpace’s growth were available from some hard to find public sources (and were not madeavailable by the Company directly to its shareholders), shareholders and other members of theinvesting public could not compare this data to the Company’s internal data to determine if theInvestment Banks’ fairness opinions accurately reflected the explosive growth of MySpace.
(Id. at 515 (emphasis added)). Although somewhat opaque, we think the highlighted text above canfairly be read to embrace internal data on MySpace’s then-current financial position. Fourth, during theParties’ Local Rule 7-3 meet and confer, according to Defendants, Plaintiff did not identify this allegedomission. (Joint Br. 45 n.49). Sheehan and Carlick’s counsel has also declared that Plaintiff was askedat the meeting whether they were pursuing “any other misstatements or omissions,” but he does notdeclare that Plaintiff’s counsel answered the question in the negative, thereby waiving this basis. (J.A.,Ex. 30, Knaster Decl. ¶¶ 8-9). Fifth, Plaintiff’s counsel also circulated a letter outlining the issuesdiscussed at the meet and confer, which did not list this purported material omission. (J.A., Ex. 35). However, since this document purports to be an outline of the summary judgment argumentsDefendants identified, we decline to conclude that this document contemplated a waiver of the “currentrevenue and profits” omission, which was so clearly identified in the CSAC (if not so clearly in theinterrogatory responses). Accordingly, as this argument was not waived, and Defendants have not madeany threshold showing entitling them to summary judgment on this basis, we DENY the Motion forSummary Judgment as to this alleged material omission under Count II.
2. Intermix Management’s 2005-2009 Financial Projections
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Plaintiff also alleges that Defendants failed to disclose Intermix management’s internal financialprojections, and that this information was material. The Supreme Court set forth the materialitystandard for Section 14(a) claims in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976): “Anomitted fact is material if there is a substantial likelihood that a reasonable shareholder would considerit important in deciding how to vote.” Id. at 449. The Court added that “there must be a substantiallikelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor ashaving significantly altered the ‘total mix’ of information made available.” Id.
While federal courts generally agree that financial projections, “forward-looking statements,”“puffing,” or other soft financial information need not be disclosed, this case is distinguishable. See,e.g., Walker v. Action Indus., Inc., 802 F.2d 703, 707-08 (4th Cir. 1986); Flynn v. Bass Bros. Enters.,Inc., 744 F.2d 978, 985 (3d Cir. 1984) (noting SEC policy favoring nondisclosure of financialprojections due to their unreliability and potential to mislead voting stockholders). In this case, theProxy disclosed Montgomery and TWP’s fairness analyses but did not disclose the underlying2005-2009 Intermix management projections used in formulating those opinions. In Zemel FamilyTrust v. Philips International Realty Corp., No. 00 CIV. 7438 MGC, 2000 WL 1772608 (S.D.N.Y.Nov. 30, 2000), the court honed in on this distinction:
A company has no duty to include “speculative financial predictions” in a proxy. However, if aProxy discloses valuation information, it must be complete and accurate. Both the proxy and the[financial valuation] opinion address the value of the Third Avenue property and so [thedefendant] has a duty to fully and accurately disclose information related to the valuation.
Id. at *6.
Here, the “total mix” of information before the shareholders did not include any of the projectedgrowth rates. See SEC v. Mozilo, No. CV 09-3994-JFW, 2009 WL 3807124, at *10 (C.D. Cal. Nov. 3,2009) (“[T]he ‘total mix’ of information only includes information that is ‘readily’ or ‘reasonably’available to an investor.”); Koppel v. 4987 Corp., 167 F.3d 125, 132 (2d Cir. 1999) (same). Areasonable shareholder would have wanted to independently evaluate management’s internal financialprojections to see if the company was being fairly valued. “[T]here is a substantial likelihood that areasonable shareholder would consider it important” in making his decision. TSC Indus., Inc., 426 U.S.at 449. As we previously noted in our July 14, 2008 Order, the Ninth Circuit has observed that:“investors are concerned, perhaps above all else, with the future cash flows of the companies in whichthey invest. Surely, the average investor’s interest would be piqued by a company’s internal projections. . . .” United States v. Smith, 155 F.3d 1051, 1064 n.20 (9th Cir. 1998). Delaware courts concur. In acase that also considered a discounted cash flow (“DCF”) analysis in a proxy statement, the sametechnique utilized by Montgomery and TWP, the court held that the underlying projections informing aDCF analysis completed for a fairness opinion were clearly material. See In re Netsmart Techs.S’holders Litig., 924 A.2d 171, 203 (Del. Ch. 2007) (“[P]rojections of this sort are probably among themost highly-prized disclosures by investors. Investors can come up with their own estimates ofdiscount rates or . . . market multiples. What they cannot hope to do is replicate management’s inside
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16 Even though this decision concerned a state law duty of disclosure claim, the materialitystandard is the same as set forth in TSC Industries. In re Netsmart Techs., 924 A.2d at 199-200. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 26 of 39
view of the company’s prospects.”).16 Here, we conclude that there is at least a triable issue as to themateriality of the omission of Intermix’s internal financial projections.
Accordingly, Defendants’ Motion for Summary Judgment is DENIED as to this alleged materialomission.
3. Outstanding Derivative Lawsuits
Plaintiff also argues that Defendants failed to disclose one pending derivative lawsuit, LeBoyerv. Greenspan, et al., No. CV 03-5603-GHK (JTLx), and the fact that shareholder derivative standingwould be extinguished as to both LeBoyer and Greenspan v. Salzman, the two derivative lawsuitspending at the time the Proxy was issued. The Proxy merely stated: “Following the effective time of themerger, Fox Interactive Media will use commercially reasonable efforts to take such actions as arewithin its control so as to obtain the dismissal of Greenspan v. Salzman, et al., LASC No. BC328558;provided that it will not be required to make any payments to any of the plaintiffs (or their counsel) insuch litigation to do so.” (J.A., Ex. 4, at 332).
Defendants concede that they did not disclose the existence of the pending LeBoyer action. (Joint Br. 56 n.67). However, Defendants maintain that this lawsuit had been disclosed in Intermix’sprior public filings (see J.A., Exs. 47 (Form 10-Q), 3 (Form 10-K)), which they argue were incorporatedby reference in the Proxy. A document “may be incorporated into proxy materials by reference, at theleast, in circumstances where ‘no reasonable shareholder can be misled.’” Federated Bond Fund v.Shopko Stores, Inc., No. 05 CV 9923(RO), 2006 WL 3378696, at *2 (S.D.N.Y. Nov. 17, 2006) (quotingKramer v. Time Warner Inc., 937 F.2d 767, 777 (2d Cir. 1991)). We do not think this is a case where“no reasonable shareholder can be misled.” Id. Moreover, “[c]orporate documents that have not beendistributed to the shareholders entitled to vote on the proposal should rarely be considered part of thetotal mix of information reasonably available to those shareholders.” United Paperworkers Int’l Unionv. Int’l Paper Co., 985 F.2d 1190, 1199-1200 (2d Cir. 1993) (rejecting notion that public reports and10-K Report submitted to SEC were part of “total mix”). Accordingly, whether the undisclosedderivative lawsuit constituted material information which was not part of the “total mix” of informationis at the very least a triable question.
With respect to the disclosed Greenspan v. Salzman action, Defendants argue they had noobligation to further announce the extinguishment of derivative standing. In Delaware, with only twoexceptions not applicable here, a cash-out merger extinguishes the standing of shareholder plaintiffs tomaintain a derivative suit. Feldman v. Cutaia, 951 A.2d 727, 731 (Del. 2008) (citing Lewis v.Anderson, 477 A.2d 1040, 1049 (Del. 1984)). This is so because a plaintiff must be a stockholder at thetime of the alleged wrongdoing and throughout the litigation. Lewis, 477 A.2d at 1046. The failure to
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disclose the potential extinguishment of a derivative lawsuit is material. See Lichtenberg v. BesicorpGroup Inc., 43 F. Supp. 2d 376, 387 (S.D.N.Y. 1999). In Lichtenberg, the court noted that the proxystated that the shareholder plaintiffs “may” not be able to maintain their derivative suits following themerger. Id. The court found the word “may” to be “affirmatively misleading,” because it “implie[d] apossibility that the plaintiffs will be able to continue the actions as shareholder derivative suits,” whenthat was in fact foreclosed as a matter of New York law. Id. Here too, the disclosure above is arguablymisleading as well, as it did not affirmatively disclose that the Greenspan v. Salzman plaintiffs’derivative standing would be extinguished under Delaware law. (J.A., Ex. 4, at 332). Instead, it onlystated that Fox Interactive Media would seek the dismissal of the action and would do so only if it wasnot required to pay the plaintiffs or their counsel. (Id.). Accordingly, it is at least triable whether theabove language was misleading as to the extinguishment of derivative standing, which was materialinformation.
Accordingly, we also hereby DENY Defendants’ Motion for Summary Judgment as to thisalleged material omission.
4. Alleged Material Omissions Concerning Viacom and the MySpace Option
Plaintiff has also argued that the directors made two other material omissions concerning: (1)Viacom’s ability to make an offer for Intermix or its ability to conduct due diligence; and (2) thelikelihood of a direct bid for MySpace, which would freeze the MySpace Option. This subpart of theSection 14(a) claim essentially seeks to penalize Defendants for their failure to disclose that Viacomwas allegedly stonewalled or otherwise prevented from making a bid during the auction. It also seeks tohold Defendants liable for purportedly exaggerating the threat of a direct bid for Intermix’s crownjewel, MySpace.
However, these purported material omissions are nothing more than the building blocks ofPlaintiff’s fiduciary duty claim. Mandating the disclosure of the above allegations would compelDefendants to essentially accuse themselves of breaching their fiduciary duties. In Koppel v. 4987Corp., the court dismissed Rule 14a-9 claims based on its conclusion that “these allegations constituteno more than state law breach of fiduciary duty claims under a thin coat of federal paint.” 167 F.3d at133. The court explained:
We have long recognized that no general cause of action lies under § 14(a) to remedy a simplebreach of fiduciary duty. See Field v. Trump, 850 F.2d 938, 947 (2d Cir. 1988) (quotingMaldonado v. Flynn, 597 F.2d 789, 796 (2d Cir. 1979)), cert. denied, 489 U.S. 1012, 109 S.Ct.1122, 103 L.Ed.2d 185 (1989); cf. Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 477, 97 S.Ct.1292, 51 L.Ed.2d 480 (1977) (refusing to construe § 10(b) to prohibit “instances of corporatemismanagement . . . in which the essence of the complaint is that shareholders were treatedunfairly by a fiduciary”). Although the Supreme Court has explained that explicit, conclusorystatements concerning the wisdom of a proposed action are actionable, see generally VirginiaBankshares, 501 U.S. 1083, 111 S.Ct. 2749, there is no § 14(a) violation for merely failing to
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inform shareholders that a proposed action is not subjectively the most beneficial to an entity’sshareholders: “Subjection to liability for misleading others does not raise a duty ofself-accusation; [rather] it enforces a duty to refrain from misleading.” Id. at 1098 n. 7, 111S.Ct. 2749. The securities laws do not “effectively require [an issuer] to accuse [it]sel[f] ofbreach of fiduciary duty.” Id.
Id. at 133-34. The D.C. Circuit has arrived at the same conclusion: “Though Santa Fe does not bar aclaim related to a breach of fiduciary duty if there has been a material misrepresentation or omission, aplaintiff may not ‘bootstrap’ a claim of breach of fiduciary duty into a federal securities claim byalleging that directors failed to disclose that breach of fiduciary duty.” Kas v. Fin. Gen. Bankshares,Inc., 796 F.2d 508, 513 (D.C. Cir. 1986) (citations omitted).
In this case, the Proxy unambiguously disclosed Rosenblatt’s self-interested motivations,anticipated future employment with News Corp., and the immediate vesting of all his unvested options. (J.A., Ex. 4, at 272, 310, 312). The Proxy also disclosed that Viacom (“Company D”) conducted duediligence and remained interested in making a bid for Intermix, but was “not then in a position to makea proposal [prior to] a [Viacom] board meeting later that week . . . .” (Id. at 287, 289). Plaintiff claimsthis disclosure was misleadingly incomplete, because it did not mention Rosenblatt’s alleged evasion ofViacom executives and the alleged deliberate hampering of Viacom’s due diligence efforts. (CSAC ¶¶147-48). Plaintiff claims that these omissions “left shareholders with the false impression that Viacomwas given a full and fair opportunity to bid for the Company.” (Id. ¶ 148). Plaintiff also claims thatDefendants misrepresented Viacom and News Corp.’s ability to block a competing bid by freezing theMySpace Option. (CSAC ¶¶ 149-51 (citing J.A., Ex. 4, at 284, 288)). As there is no duty of self-accusation, these proffered material omissions cannot support a Section 14(a) claim. Indeed, theallegedly omitted details are not necessarily facts, but rather factual allegations, and unless and untiljudgment is granted in Plaintiff’s favor, their omission from the Proxy simply could not have beenmaterial. In Brown v. Perrette, No. CIV.A 13531, 1999 WL 342340 (Del. Ch. May 14, 1999), the courtexplained this distinction:
Although a flawed bidding process would be a material fact, [the plaintiff] must prevail on thesubstantive claim, that the process was flawed, before the alleged flaw becomes material. Once[the plaintiff] prevails on her Revlon claim, the alleged disclosure claim becomes superfluousbecause the defendants’ breach of duty becomes the wrong for which an appropriate remedymust be crafted.
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17 Even though Brown analyzes the relationship between a state law fiduciary duty claim and astate law duty of disclosure claim, brought on the same grounds, the principles articulated are equallyapplicable to a Section 14(a) claim premised on the same allegations supporting a breach of fiduciaryduty claim.
18 Notwithstanding our ruling, nothing in the above discussion precludes Plaintiff fromintroducing evidence of these omissions in the course of his breach of fiduciary duty claim. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 29 of 39
Id. at *10-1117; see also Stroud v. Grace, 606 A.2d 75, 84 n.1 (Del. 1992) (“We recognize thelong-standing principle that to comport with its fiduciary duty to disclose all relevant material facts, aboard is not required to engage in ‘self-flagellation’ and draw legal conclusions implicating itself in abreach of fiduciary duty from surrounding facts and circumstances prior to a formal adjudication of thematter.”) (citation omitted).
Accordingly, since “self-flagellation” omissions are not material, we hereby GRANTDefendants’ Motion for Summary Judgment as to the purported material omissions concerning Viacomand the MySpace Option.18
B. Negligence
In Desaigoudar v. Meyercord, 223 F.3d 1020 (9th Cir. 2000), the Ninth Circuit stated that a“Rule 14a-9 plaintiff must demonstrate that the misstatement or omission was made with the requisitelevel of culpability . . . .” Id. at 1022 (citation omitted). To succeed on a Section 14(a)/Rule 14a-9claim, a plaintiff need only establish that the defendant was negligent in drafting and reviewing theproxy statement. Gerstle v. Gamble-Skogmo, Inc., 478 F.2d 1281, 1300-01 (2d Cir. 1973) (holding thatnegligence suffices for claim based on misleading proxy statement and that plaintiffs “are not requiredto establish any evil motive or even reckless disregard of the facts”). This holding was reaffirmed in theoft-cited case of Wilson v. Great American Industries, Inc., 855 F.2d 987 (2d Cir. 1988): “Liability canbe imposed for negligently drafting a proxy statement.” Id. at 995 (citing Gerstle, 478 F.2d at 1301n.20). “As a matter of law, the preparation of a proxy statement by corporate insiders containingmaterially false or misleading statements or omitting a material fact is sufficient to satisfy the Gerstlenegligence standard.” Id. Accordingly, a director may be found negligent under Section 14(a) for afailure to notice material omissions upon reading a proxy statement. See, e.g., Parsons v. Jefferson-Pilot Corp., 789 F. Supp. 697, 703 (M.D.N.C. 1992) (“Mr. Eagle [a senior in-house lawyer] is not theonly negligent party in this action. Each of the directors who reviewed the proxy statement is equally asnegligent for failing to notice the use of the word ‘restricted’ ten times in the document.”).
Here, each of the Defendants has declared that he was “involved in the process of preparing,reviewing, and disseminating the Proxy Statement to Intermix shareholders.” (Sheehan Decl. ¶ 53(internal citation omitted); Carlick Decl. ¶ 46; Brewer Decl. ¶ 39; Mosher Decl. ¶ 37; Moreau Decl. ¶39; Quandt Decl. ¶ 45; Rosenblatt Decl. ¶ 53; Woodward Decl. ¶ 37). Construing this sworn statementin the light most favorable to Plaintiff, we read it to mean each director personally reviewed the Proxy
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before it was disseminated to the Intermix shareholders. Since we have denied summary judgment withrespect to three of the proffered material omissions in the Proxy, and Defendants have admitted toparticipating in “the process of preparing, reviewing, and disseminating” that Proxy, we must alsoDENY summary judgment with respect to the element of negligence. If Plaintiff can persuade a jury asto both materiality and Defendants’ participation in the preparation and/or review of the Proxy at trial,then a finding of negligence will flow from those findings.
C. Damages
1. Benefit-of-the-Bargain Damages
This theory of damages is wholly inapposite to this case. A request for “benefit-of-the-bargaindamages” seeks the “value that was represented as coming to” the shareholder under a particulartransaction, such as a merger. In re Real Estate Assocs. Ltd. P’ship Litig., 223 F. Supp. 2d 1142, 1152(C.D. Cal. 2002). “[B]enefit-of-the-bargain damages are available in the limited instance where amisrepresentation is made in the proxy solicitations as to the consideration to be forthcoming upon anintended merger.” Id. (citation omitted). As the Ninth Circuit has stated, “[t]he benefit-of-the-bargainmeasure of damages allows a plaintiff to recover ‘the difference between what the plaintiff expected hewould receive . . . and the amount [the plaintiff] actually received . . . .” DCD Programs, Ltd. v.Leighton, 90 F.3d 1442, 1449 (9th Cir. 1996) (quoting Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1426(9th Cir. 1986) (emphasis in original)). Here, the Proxy made no misrepresentation as to the per shareprice offered to and ultimately received by the class members. The Proxy stated the class memberswould receive $12 cash for each common share, and it is undisputed that they received $12 cash foreach common share. (J.A., Ex. 4, at 319; Joint Statement of Uncontroverted Facts D128). Accordingly,this damages theory is not viable. We GRANT summary judgment with respect to this damages theory.
2. Out-of-Pocket Losses
a. Legal Framework
“‘Out-of-pocket’ losses are the standard measure of damages for Rule 10b-5 and Section 14(a)claims.” In re DaimlerChrysler AG Secs. Litig., 294 F. Supp. 2d 616, 626 (D. Del. 2003) (citing Tse v.Ventana Med. Sys., Inc., 123 F. Supp. 2d 213, 222 (D. Del. 2000) (“Tse II”)). Out-of-pocket lossesconstitute “the difference between the fair value of all that the seller received and the fair value of whathe would have received had there been no fraudulent conduct.” Tse II, 123 F. Supp. 2d at 222 (quotingAffiliated Ute Citizens of Utah v. U.S., 406 U.S. 128, 155 (1972)) (quotation marks omitted). The NinthCircuit concurs: “The out-of-pocket rule fixes recoverable damages as ‘the difference between thepurchase price and the value of the stock at the date of purchase.’” Wool v. Tandem Computers Inc.,818 F.2d 1433, 1437 (9th Cir. 1987), impliedly overruled in part on other grounds by Hollinger v. TitanCapital Corp., 914 F.2d 1564, 1577-78 (9th Cir. 1990) (en banc) (citation omitted). “The guidingphilosophy of the out-of-pocket theory of damages . . . is to award not what the plaintiff might have
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gained, but what he has lost by being deceived into the purchase.” Id. at 1437 n.2 (citation and internalquotation marks omitted). Since this theory of damages is premised on an intrinsic valuation of thecompany as it existed at the time of the merger, Plaintiff has produced expert witness testimonyconsisting of two different financial valuations of Intermix/MySpace. Defendants have moved toexclude that testimony as inadmissible.
b. Defendants’ Motion to Exclude; Plaintiff’s Motions to Strike
Defendants move to exclude Plaintiff’s proffered expert testimony by Dr. G. William Kennedyas inadmissible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Plaintiffhas moved to strike both this Motion to Exclude and Defendants’ Motion for Summary Judgment,arguing that this Daubert challenge was not included in the joint brief on the Cross-Motions forSummary Judgment and therefore violates our Order Re: Summary Judgment Motions. (Dkt. No. 123,Oct. 30, 2008). We reject this argument. First, Defendants included virtually the same argumentsattacking Dr. Kennedy’s testimony in the Joint Brief. (Mot. 77-80). Second, the Motion to Exclude is achallenge to the admissibility of evidence crucial to one of Plaintiffs’ damages theories. As we mayonly consider admissible evidence in ruling on the Parties’ Cross-Motions, nothing in the Order Re:Summary Judgment Motions precludes a party from filing a separate motion to exclude certain evidencefrom the Court’s consideration. Third, it is common for litigants to move for the exclusion of certainevidence at the summary judgment stage. See, e.g., In re Hanford Nuclear Reservation Litig., 292 F.3d1124, 1131 (9th Cir. 2002) (“Defendants linked their summary judgment motion to dozens of in liminemotions challenging the admissibility of plaintiffs’ expert witnesses, commonly known as ‘Daubertmotions.’”) (citation omitted); O’Hanlon v. Matrixx Initiatives, No. CV 04-10391-AHM (JTLx), 2007WL 2446496, at *1, 4 (C.D. Cal. Jan. 3, 2007) (considering motions in limine concurrently with motionfor summary judgment). Accordingly, we hereby DENY Plaintiff’s Motions to Strike the Motion toExclude and the Motion for Summary Judgment.
We now consider the merits of the Motion to Exclude. Defendants attack the reliability of Dr.Kennedy’s application of his chosen methodologies for estimating the value of MySpace: (1) discountedcash flow (“DCF”) analysis; and (2) comparable public company analysis. Federal Rule of Evidence702 states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understandthe evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill,experience, training, or education, may testify thereto in the form of an opinion or otherwise, if(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product ofreliable principles and methods, and (3) the witness has applied the principles and methodsreliably to the facts of the case.
In Daubert, the Supreme Court construed Rule 702 to require district courts to “ensur[e] that an expert’stestimony both rests on a reliable foundation and is relevant to the task at hand.” 509 U.S. at 597. TheCourt noted that “[p]ertinent evidence based on scientifically valid principles will satisfy those
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demands” but cautioned that “[t]he focus . . . must be solely on principles and methodology, not on theconclusions that they generate.” Id.; id. at 595. To assist courts in assessing whether the profferedtestimony is scientifically valid, the Supreme Court set forth a non-exhaustive list of factors, including:“whether the theory or technique employed by the expert is generally accepted in the scientificcommunity; whether it's been subjected to peer review and publication; whether it can be and has beentested; and whether the known or potential rate of error is acceptable.” Daubert v. Merrell DowPharms., Inc., 43 F.3d 1311, 1316 (9th Cir. 1995) (“Daubert II”) (citing Daubert, 509 U.S. at 593-94).
The “gatekeeping obligation” Daubert requires us to fulfill “applies not only to testimony basedon ‘scientific’ knowledge, but also to testimony based on ‘technical’ and ‘other specialized’knowledge.” Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999) (quoting Fed. R. Evid.702). “Because there are areas of expertise, such as the social sciences in which the research, theoriesand opinions cannot have the exactness of hard science methodologies, trial judges are given broaddiscretion to determine whether Daubert’s specific factors are, or are not, reasonable measures ofreliability in a particular case.” United States v. Simmons, 470 F.3d 1115, 1123 (5th Cir. 2006) (citingKumho, 526 U.S. at 153) (internal citations and quotation marks omitted). Courts have stated that “[i]nsuch instances, other indicia of reliability are considered under Daubert, including professionalexperience, education, training, and observations.” Id. Though perhaps not to the same degree aspsychology or social psychology, financial valuation is not an exact scientific methodology. Estimations, predictions, and inferences based on professional judgment and experience are keyingredients in any valuation. In a variety of contexts, the circuit courts have noted that economicvaluation is less than an “exact science.” See, e.g., In re Arnold & Baker Farms, 85 F.3d 1415, 1421(9th Cir. 1996) (“Experience has taught us that determining the value of real property at any given timeis not an exact science. Because each parcel of real property is unique, the precise value of land isdifficult, if not impossible, to determine until it is actually sold.”); Metlyn Realty Corp. v. Esmark, Inc.,763 F.2d 826, 830, 835 (7th Cir. 1985) (noting that “[t]he process of valuation is inexact” and that DCFanalyses “are highly sensitive to assumptions about the firm’s costs and rate of growth, and about thediscount rate”).
With respect to the DCF analysis, the principal difference from Montgomery and TWP’s DCFfairness analyses is Dr. Kennedy’s MySpace growth rate projections for 2007-2008 and 2008-2009. (Baron Decl., Ex. 3, Expert Report of Dr. G. William Kennedy [“Kennedy Report”], May 20, 2009). Intermix management projected the following revenue growth rates for the company: 107 percent for2005-2006; 67 percent for 2006-2007; 20 percent for 2007-2008; and 15 percent for 2008-2009. (J.A.,Ex. 242). Montgomery used these projections for its analysis without any modification. (Baron Decl.,Ex. 3, at 39). TWP’s projections differed slightly from management’s projections: 107 percent for2005-2006; 67 percent for 2006-2007; 21 percent for 2007-2008; and 10 percent for 2008-2009. (Id.). Kennedy adopted management’s growth rate projections for 2005-2006 and 2006-2007, derived adeceleration rate of 62.06 percent from those figures, and then used that same deceleration rate tocalculate different revenue growth rates for 2007-2008 and 2008-2009, 41.36 percent and 25.67 percent,respectively. (Id. at 39-40). Based on these new figures, Kennedy calculated new Earnings Before
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Interest, Taxes, Depreciation and Amortization (“EBITDA”) figures for 2008 and 2009 for MySpace. (Id. at 40). Finally, “[u]sing a discount rate of 19% and a terminal EBITDA multiple of 18[,]” Dr.Kennedy calculated “a value of $962.4 million after subtracting the $69 million option exercise pricefrom the present value of MySpace’s Cash Flows.” (Id.). The 19 percent discount rate was chosenbased on the discount rates used in the Montgomery and TWP fairness opinions, which ranged from 17percent up to 25 percent. (Id. at 41).
Defendants make several arguments against the reliability of this procedure. They argue firstthat Dr. Kennedy has insufficiently justified his use of a uniform deceleration rate from 2005 to 2009and the 18x terminal multiple. (Mot. 9-13). Defendants claim that Dr. Kennedy has offered no coherentreason for his rejection of management’s projections for 2007-2008 and 2008-2009. (Id. at 11). Theynote that he has merely declared that Montgomery and TWP’s projections “were unreasonably low andnot consistent with the very rapid rates of growth currently observed at the time of the Proxy andexpected in the social networking sector at the time.” (Id. at 11 (quoting Moriarty Decl., Ex. 7,Kennedy Supplemental Decl. ¶ 6) (emphasis omitted)). Yet, Defendants neglect to mention that Dr.Kennedy explained his use of higher growth rates for 2007-2008 and 2008-2009 by noting that“MySpace revenues consistently outperformed Intermix management’s own projections in each of thefirst four months of 2005.” (Baron Decl., Ex. 3, Kennedy Report, at 35). This is at least one reasonedbasis for his adjustments to what he viewed as demonstrably “conservative” forecasts. (Id.). After all,the entire endeavor is forecasting, not hard science. Projections themselves cannot be tested foraccuracy; they “represent hopes rather than the results of scientific analysis.” Zenith Elecs. Corp. v.WH-TV Broad. Corp., 395 F.3d 416, 420 (7th Cir. 2005); see also In re Orchards Village Invs., LLC,No. 09-30893-rldll, 2010 WL 143706, at *11 (Bankr. D. Or. Jan. 8, 2010) (“[P]rojecting future financialresults from the operations of a business is not an exact science.”).
Additionally, Defendants argue that: “Kennedy provides no theoretical or empirical justificationfor applying this incredibly aggressive 18x terminal multiple, except his statement that it is based onforward EBITDA multiples observed in comparable publicly traded guideline companies” referenced inthe comparable public company analysis below. (Mot. 12-13 (quoting Moriarty Decl., Ex. 1, KennedyReport, at 15) (quotation marks omitted)). They assert that Dr. Kennedy only relied on “the mostprofitable of the 14 comparable companies relied upon by” Montgomery and TWP, including Googleand Yahoo!, and could not summon a single company that had grown at the rate projected with hisrevenue growth rates and terminal value. (Id. at 13 (citing Moriarty Decl., Ex. 1, Kennedy Report, at25; id., Ex. 6, Kennedy Tr. at 123:4-24)).
While these two challenges may be objections to Kennedy’s conclusions on his DCF analysis,they do not render his methodology unreliable. Rather, the deviation from management’s projections,the use of an arguably aggressive terminal multiple, and the alleged selection of the most profitableguideline companies are proper subjects for cross-examination. Defendants do not take issue with the
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19 Lippe v. Bairnco Corp., 288 B.R. 678, 689 (S.D.N.Y. 2003) (“Many authorities recognize thatthe most reliable method for determining the value of a business is the discounted cash flow (‘DCF’)method.”) (citations omitted); see also Children’s Broad. Corp. v. The Walt Disney Co., 245 F.3d 1008,1018 (8th Cir. 2001) (describing DCF analysis as “an uncontroversial accounting method”).CV-90 (06/04) CIVIL MINUTES - GENERAL Page 34 of 39
widely accepted DCF methodology;19 nor do they attack any input that is identical to those used in theMontgomery and TWP projections (for instance, the 2005-2006 and 2006-2007 projections or thediscount rate which fell within the same range in the investment banks’ fairness analyses). Even in lightof Dr. Kennedy’s less than fully reasoned explanations for his choices, given the inherent element ofjudgment in these financial valuation analyses, we cannot say that he failed to identify any “reliableprinciples and methods” or to apply those “principles and methods reliably to the facts of [this] case.” FED. R. EVID. 702. “A court may admit somewhat questionable testimony if it falls within ‘the rangewhere experts might reasonably differ, and where the jury must decide among the conflicting views.’” S.M. v. J.K., 262 F.3d 914, 921 (9th Cir. 2001) (quoting Kumho, 526 U.S. at 153).
Defendants also argue that there is a fundamental flaw in Dr. Kennedy’s DCF analysis, since itallegedly yields an average growth rate into perpetuity above that of the U.S. economy as a whole(12.74 percent versus a historical average of 6.5 percent). (Mot. 13-16; Cornell Decl. in Supp. of Mot.to Exclude ¶ 5). Arguing that this outcome violates a key tenet of financial valuation, Defendants cite toProfessor Aswath Damodaran’s treatise, which states: “The fact that a stable growth rate is sustainedforever, however, puts strong constraints on how high it can be. Since no firm can grow forever at arate higher than the growth rate of the economy in which it operates, the constant growth rate cannot begreater than the overall growth rate of the economy.” (Defs.’ Request for Judicial Notice [“RJN”], Ex.B, ASWATH DAMODARAN, DAMODARAN ON VALUATION: SECURITY ANALYSIS FOR INVESTMENT ANDCORPORATE FINANCE 145 (John Wiley & Sons, Inc. 2d ed. 2006)). We have reviewed Defendants’expert Dr. Bradford Cornell’s declaration in support of this Motion to Exclude, in which he argues that“Dr. Kennedy’s use of an 18x EBITDA forward multiple is unreasonable . . . .” (Cornell Decl. in Supp.of Mot. to Exclude ¶ 5). To cross-check the outcome of Dr. Kennedy’s DCF analysis, Dr. Cornell usedthree hypothetical scenarios, in which MySpace’s revenue growth rate declines by 2 percent, 1 percent,and 0.5 percent, respectively, each year until it reaches 6.5 percent, the average annual growth rate innominal Gross Domestic Product between 1928 and 2008. (Id. ¶¶ 8-10 (citing Defs.’ RJN, Ex. F,Bureau of Economic Analysis News Release, July 31, 2009)). Using Dr. Kennedy’s assumptions andthe Gordon Growth Model (id. ¶¶ 11-13), Dr. Cornell calculated the following total present values as ofJanuary 1, 2010 and implied EBITDA multiples for each scenario: (1) for the 2 percent annualreduction, $549.13 million and a 4.7x multiple; (2) for the 1 percent annual reduction, $606.18 millionand a 5.2x multiple; and (3) for the 0.5 percent annual reduction (what he calls the “most aggressivescenario”), $695.34 million and a 6.0x multiple. (Id. ¶¶ 14-19; see also id., Exs. 5, 6). Applying the 19percent discount rate used by Dr. Kennedy, Dr. Cornell calculates discounted values as of mid-2005 foreach scenario, including: (1) $251.02 million; (2) $277.10 million; and (3) $317.8 million. (CornellDecl. in Supp. of Mot. to Exclude ¶ 20). Finally, Dr. Cornell concludes that “even assuming an instancewhere MySpace’s revenues grow at a rate exceeding that of the economy as a whole for fifteen years
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after 2010, i.e., until 2025, Dr. Kennedy’s implied EBITDA multiple of 18x is three times too highwhen compared with even [Dr. Cornell’s] most aggressive implied EBITDA multiple of 6.0x to give areasonable estimate of MySpace’s value as of mid-2005.” (Id. ¶ 21 (emphasis original)).
Though a jury might conclude at trial that Dr. Kennedy’s selection of an 18x EBITDA multiple
was overzealous, Dr. Cornell’s calculations do not demonstrate that Dr. Kennedy’s methodology isfundamentally unreliable. At base, Dr. Cornell’s challenge to this DCF analysis constitutes an attack onDr. Kennedy’s projections as to MySpace’s annual growth rates and as to how long those growth ratescan be sustained. Since Dr. Cornell is in essence attacking the reasonableness of Dr. Kennedy’sprojections, the generation of which we have already noted is not an exact science, we conclude that hisarguments do not render Dr. Kennedy’s methodology fundamentally unreliable and thereforeinadmissible. Dr. Cornell himself has testified that an adjustment in the terminal multiple based on theexpert’s assessment of the company’s growth potential is appropriate. (Baron Decl., Ex. 2 (Cornell Tr. Iat 167:19-168:3)). Additionally, Dr. Cornell rejected the proposition that “any time that the impliedperpetual growth rate exceeds the growth of the economy, that the terminal value multiple used wouldbe unreliable[.]” (Id., Ex. 1 (Cornell Tr. II at 21:21-22:1)). He further explained that “it’s just aquestion of how much [the implied perpetual growth rate] exceeds [the economy rate,]” and there is nostandardized method to determine whether the difference between the two rates is “unreasonable.” (Id.at 22:3-24:6; id. at 23:12-25 (“Q[:] And then do they use judgment to see whether it’s reasonable tothem or not reasonable to them? . . . . Is there some written scale as to how much variation there can bebefore, in your view, it becomes reasonable or unreasonable; or is that a judgment of the analyst? A[:] Well, there’s not a written scale . . . . And these calculations Dr. Kennedy used struck me as[unreasonable].”)). These statements suggest that Defendants’ Motion turns on a difference ofprofessional opinion, not some fatal methodological flaw.
Based on our review of the papers and evidence submitted, if anything is clear, it is that DCFanalysis is, in not insubstantial measure, an inherently subjective and predictive methodology, whichrelies in part on the expert’s judgment and experience. Indeed, neither Party has presented the Courtwith any accepted, standardized methodology for deriving the required inputs for DCF analysis. Accordingly, we are forced to conclude that DCF analysis is sufficiently pliable so that it mayreasonably lead to a wide breadth of plausible conclusions. Dr. Kennedy’s conclusions and the basestherefor may ultimately be subject to legitimate attacks on cross-examination, but we perceive nofundamental unreliability in his analysis that would counsel in favor of outright exclusion. We agreethat our “gatekeeper role under Daubert is not intended to supplant the adversary system or the role ofthe jury.” DSU Med. Corp. v. JMS Co., Ltd., 296 F. Supp. 2d 1140, 1147 (N.D. Cal. 2003) (citation,quotation marks, and alteration omitted). It is readily apparent that Defendants have thoroughlyresearched the case law on DCF methodology, and in all but one of the several cases they cite, theexpert witness’s DCF analysis was considered at trial and then rejected by the court. Compare In reIridium Operating, LLC, 373 B.R. 283, 350-52 (Bankr. S.D.N.Y. 2007) (rejecting DCF analysesfollowing trial); In re Emerging Commc’ns, Inc. S’holders Litig., No. Civ.A. 16415, 2004 WL 1305745,at *14-15 (Del. Ch. June 4, 2004) (same); Gray v. Cytokine Pharmasciences, Inc., No. Civ.A. 17451,2002 WL 853549, at *8 (Del. Ch. Apr. 25, 2002) (same), with Kipperman v. Onex Corp., 411 B.R. 805,
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844-49 (Bankr. N.D. Ga. 2009) (simultaneously deciding summary judgment and granting motion toexclude an expert’s testimony as unreliable under Rule 702, where the expert rejected management’sprojections and generated his own DCF analysis).
With respect to Dr. Kennedy’s comparable public company analysis, Defendants argue that heonly used the projected MySpace revenue and EBITDA figures for 2006, ignoring the 2005 numberswithout explanation. (Mot. 17-18 (citing Moriarty Decl., Ex. 1, Kennedy Report, at 24)). They argueDr. Kennedy’s explanation for choosing to disregard the 2005 figures was inadequate ipse dixit. Whenasked if 2005 was “an aberrant year for MySpace,” he replied: “No, but it wasn’t who the company wasexpected to be.” (Kennedy Tr. at 129:19-22). Furthermore, Defendants argue that Kennedy cherry-picked only the most profitable guideline companies referenced in Montgomery and TWP’s fairnessanalyses, instead of applying an average of the multiples applicable to several companies. (Mot. 18). Insupport of this latter contention, they cite another treatise, which states: “In employing the guidelinepublicly traded company method, every effort should be made to select as broad a base of comparativecompanies as is reasonably possible, as well as to give full consideration to every possible factor inorder to make the comparison more meaningful.” (Defs.’ RJN, Ex. E, PRATT, REILLY AND SCHWIEHS,THE ANALYSIS AND APPRAISAL OF CLOSELY HELD COMPANIES 233 (2000) (“PRATT, et al.”) (citationand internal quotation marks omitted)). Defendants contend that Dr. Kennedy erred in whittling downthe broader base of comparable public companies identified by Montgomery and TWP to only Googleand Yahoo!, “seasoned” companies with “proven revenue model[s]” that experienced explosive growth. (Mot. 19-20). Though this appears to strike Defendants as litigation-driven, we are instructed toevaluate the methodology, not the ultimate determination reached by the expert. Our “sole purpose is todetermine the reliability of a particular expert opinion through a preliminary assessment of themethodologies underlying the opinion.” DSU Med. Corp., 296 F. Supp. 2d at 1147 (citing Daubert, 509U.S. at 592-93). Of course, we must consider “whether the experts are proposing to testify aboutmatters growing naturally and directly out of research they have conducted independent of the litigation,or whether they have developed their opinions expressly for purposes of testifying.” Daubert II, 43F.3d at 1317. However, there is no evidence in the record that Dr. Kennedy deviated from his standardmethodology for the purposes of testifying in this case.
Dr. Kennedy explained his method as follows. First, he analyzed the companies selected byMontgomery and TWP and restricted his selection to those comparable companies. (Moriarty Decl.,Ex. 1, Kennedy Report, at 18-20). Montgomery had chosen twelve companies (Google, Yahoo!, CNETNetworks, iVillage, Monster Worldwide, Aptimus, ValueClick, Vertrue, Church & Dwight Co.,Herbalife Ltd., Jarden Corp., and Nature’s Sunshine Products) based on the following sectors: onlineadvertising, online content and networking, online direct marketing, and offline direct marketing. (Id. at19). TWP had chosen fourteen guideline companies (Bankrate, CNET, iVillage,1-800-FLOWERS.COM, Blue Nile, Celebrate Express, Netflix, NutriSystem, Overstock.com, ProvideCommerce, Aptimus, Marchex, ValueClick, and Vertrue) based on three sector categories: content,eCommerce, and direct marketing. (Id.). In identifying a narrower set of comparable companies, Dr.Kennedy explained that he considered these to be “the most similar operational, financial, and growth
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guideline publicly traded companies.” (Id. at 20). He justified his deviation from the investment banks,beginning with TWP, as follows:
In implementing the public guideline company method, TWP selected guideline Companiesbased on all of the businesses of Intermix on a combined basis. . . . Montgomery selectedguideline companies based on each business within Intermix because “the three businesses havedifferent economics and peer groups.” As a result, Montgomery selected only “OnlineAdvertising” and “Online Content and Networking” to apply to MySpace. We agree withMontgomery’s approach that each Intermix business segment, and specifically MySpace hasdifferent growth and profit potential and therefore, different multiples would be appropriate toapply to MySpace and the other Intermix business segments. Within TWP’s comparables, onlythe “Content” group is applicable.
(Id. at 20-21). Accordingly, Dr. Kennedy selected the following six comparable companies: Bankrate,CNET, iVillage, Google, Yahoo!, and Monster. (Id. at 21). Then, based on “separate MySpacefinancial performance information,” Dr. Kennedy narrowed the field down to Google and Yahoo!,contending those were the only two companies with comparable revenue and EBITDA growth metrics. (Id. at 21-25). Dr. Kennedy concluded that MySpace “[fell] into the higher profitability tier” of the sixguideline companies, and therefore, he could discount the 2005 figures for MySpace and utilize an“average of the multiples indicated by Google and Yahoo.” (Id. at 24-25).
There is nothing in the record to support the proposition that selecting comparable companiesbased on (1) services provided, (2) revenue metrics, and (3) EBITDA metrics renders a comparablepublic company analysis fundamentally unreliable. We will not exclude this evidence simply becauseDefendants dislike Dr. Kennedy’s conclusion that the only guideline companies left standing in the finalanalysis were Google and Yahoo!. Even Defendants’ cited treatise urges the selection of “as broad abase of comparative companies as is reasonably possible.” (Defs.’ RJN, Ex. E, PRATT, et al., supra, at233 (emphasis added)). Dr. Kennedy concludes, in effect, that the remaining comparable companies areas broad a base of comparable companies as is reasonably possible. Defendants’ disagreement with thisconclusion is properly explored on cross-examination.
Accordingly, we hereby DENY Defendants’ Motion to Exclude Dr. Kennedy’s testimony. AsDr. Kennedy’s testimony is sufficient to at least raise triable issues on damages from out-of-pocketlosses, we also DENY Defendants’ Motion for Summary Judgment on this issue.
3. “Lost Opportunity” Damages
As a final alternative, Plaintiff seeks “lost opportunity” damages based on the allegedlyimpending Viacom bid. “When actual losses cannot be demonstrated,” some circuit courts haverecognized “an alternate theory of establishing damages,” the “lost opportunity” theory. DaimlerChrysler, 294 F. Supp. 2d at 627 (internal quotation marks omitted). Lost opportunity damagesrepresent “loss of a possible profit or benefit, [defined as] an addition to the value of one’s investment,
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unless the loss is wholly speculative.” Tse II, 123 F. Supp. 2d at 223 (internal citations omitted;alteration in original). “Lost opportunity damages are not ‘wholly speculative’ if they are based on‘certain, fixed and demonstrable profits thwarted by a defendant’s alleged fraud.’” DaimlerChrysler,294 F. Supp. 2d at 627 (quoting Rudinger v. Ins. Data Processing, Inc., 778 F. Supp. 1334, 1341 (E.D.Pa. 1991)). “Further, lost opportunities damages ‘are not available where the fact of the loss, i.e.whether there was any lost opportunity at all, is wholly speculative.’” Id. (quoting Tse v. Ventana Med.Sys., Inc., 297 F.3d 210, 220 (3d Cir. 2002) (“Tse III”)). Finally, “‘[t]he risk of uncertainty as to [the]amount of damages is cast on the wrongdoer and it is the duty of the fact finder to determine the amountof the damages as best he can from all the evidence in the case.’” Tse III, 297 F.3d at 220 (quotingGould v. American-Hawaiian S.S. Co., 535 F.2d 761, 781-82 (3d Cir. 1976)).
In support of this theory of damages, Plaintiff argues that Viacom was contemplating a bidabove $750 million, citing a single internal Viacom email, in which Jason Hirschhorn states: “My guessis that News [Corp.] is going to take the $12/share ask from Richard Rosenblatt and add a premium of10-20%. $700-$750 million . . . . Don’t know if offer will be binding from NEWS [Corp.]. But Ibelioeve [sic] they will deliver it anywhere from today-monday.” (J.A., Ex. 192). Viacom never in factput in a bid for Intermix. Therefore, the relevant question on this motion for summary judgment iswhether there is a triable issue of material fact as to whether Viacom would have submitted a bid. Thisquestion must be answered in the negative, since it is undisputed that Viacom’s board simply refused toengage in a public bidding war with its competitor News Corp. Freston, Viacom’s CEO, testified thatthe Viacom board members were adamant on this point: “There already had been an offer and it wasn’tours and it didn’t look like there was an opportunity to counter bid or if there was, we would have to doso in a public way and the board had said on the spot, no, let’s not get involved in that.” (Freston Tr. at35:11-15; see also West Tr. at 123:22-24 (“We had some discussion and we ended up saying that itwasn’t worth pursuing a counterbid strategy.”)). Therefore, given this unwavering refusal to engage ina public bidding war following the July 18th merger announcement, the Proxy, including whateveralleged material omissions, issued in late August had no effect whatsoever on Viacom’s willingness toplace a bid for Intermix. Accordingly, the allegedly defective Proxy cannot support the notion thatIntermix shareholders missed out on an opportunity with Viacom.
While it may be theoretically possible that Viacom would have entered a subsequent bid had theIntermix shareholders not been allegedly deceived by the defective Proxy and had they rejected themerger with News Corp., we conclude that under the totality of the evidence, Plaintiff’s showing is nomore than speculative. Moreover, mere rejection of the News Corp. bid by the shareholders would notnecessarily have eliminated the specter of a public bidding war that Viacom abhorred. Nothingprevented News Corp. from countering any Viacom bid with a counterbid. This is precisely the type ofspeculation and indeterminacy that is insufficient to create a triable issue on the existence of any lostopportunity.
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20 We have no occasion to consider and therefore express no opinion on whether the “lostopportunity” theory of damages premised on a potential Viacom bid would be viable with respect to thebreach of fiduciary duty claim which is based on evidence beyond the alleged material omissions fromthe Proxy. The Parties have not addressed this issue in their Cross-Motions. CV-90 (06/04) CIVIL MINUTES - GENERAL Page 39 of 39
Accordingly, we GRANT Defendants’ Motion for Summary Judgment as to this theory ofdamages.20 On his Section 14(a) claim, Plaintiff may ONLY proceed at trial on his theory of out-of-pocket losses based on an intrinsic valuation of Intermix at the time of the merger.
IV. Count III: Violation of Section 20(a) of the Securities and Exchange Act of 1934
Section 20(a) of the 1934 Act provides that: “Every person who, directly or indirectly, controlsany person liable under any provision of this chapter or of any rule or regulation thereunder shall alsobe liable jointly and severally with and to the same extent as such controlled person to any person towhom such controlled person is liable, unless the controlling person acted in good faith and did notdirectly or indirectly induce the act or acts constituting the violation or cause of action.” 15 U.S.C. §78t(a). The Parties agree that if there is no primary liability under Section 14(a), there can be no controlperson liability. (Joint Br. 87). However, since we have denied summary judgment with respect tothree of the bases for Count II, we likewise DENY the Motion for Summary Judgment with respect toCount III.
V. Conclusion
Plaintiff’s Motion for Summary Judgment is DENIED. Defendants’ Motion for SummaryJudgment is hereby GRANTED in part and DENIED in part as set forth in this Order. Within thirty(30) days hereof, counsel SHALL file a joint status report setting forth their views regarding furthermediation in light of these rulings.
IT IS SO ORDERED.-- : --
Initials of Deputy Clerk Bea
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