[00:00:18] Speaker 00:
Oh, you may proceed.

[00:00:19] Speaker 00:
Good morning, Your Honors, and may it please the Court.

[00:00:21] Speaker 00:
My name is Megan Maitea.

[00:00:23] Speaker 00:
I represent the Plaintiffs and Appellants, Anderson Wittekin and Weird Science LLC, who brought this lawsuit, derivatively, on behalf of Renovaro, Inc.

[00:00:35] Speaker 00:
I request reserving five minutes for rebuttal.

[00:00:41] Speaker 00:
My theme in this argument, and I think the theme and this appeal

[00:00:46] Speaker 00:
is really the tension of when to apply form versus substance.

[00:00:51] Speaker 00:
And the disputes between the parties and the key arguments revolve around when to apply form versus substance and what that actually means.

[00:01:02] Speaker 00:
And my first argument, which feels almost like a shortcut argument to cut to the chase, deals with form.

[00:01:11] Speaker 00:
the form of the standard of review.

[00:01:13] Speaker 00:
And we made an argument encouraging the court to consider changing the standard of review

[00:01:20] Speaker 00:
for dismissals of derivative actions from abuse of discretion to de novo review.

[00:01:25] Speaker 00:
I'm not going to address that here.

[00:01:27] Speaker 00:
I understand that it's a long shot and probably sounds like a big headache to the panel of judges to do that, but the case law warranted my noting that in the briefing.

[00:01:38] Speaker 00:
The current standard of review is abuse of discretion.

[00:01:42] Speaker 00:
And the district court abuses its discretion if it commits legal error by applying the incorrect standard and deciding the issue before it.

[00:01:53] Speaker 00:
Our argument is that the correct legal standard for the district court in deciding whether the demand on the board was wrongfully refused, the only issue on appeal here, required the court to consider if the board acted with gross negligence

[00:02:12] Speaker 00:
or in the disjunctive, bad faith.

[00:02:15] Speaker 00:
Did you allege that in your complaint?

[00:02:18] Speaker 00:
We did allege bad faith in our complaint.

[00:02:20] Speaker 04:
One of the issues- You allege gross negligence?

[00:02:24] Speaker 00:
Gross negligence was not the focus of our allegations or our argument in the briefing on the motion to dismiss or at the hearing on the motion to dismiss.

[00:02:35] Speaker 00:
Our argument always revolved around bad faith.

[00:02:40] Speaker 03:
So I thought your argument was demand futility.

[00:02:44] Speaker 03:
It seemed that there was a

[00:02:48] Speaker 03:
a pre-filing demand and then that you alleged demand futility when you filed suit a few days later.

[00:02:55] Speaker 03:
But now it seems that you're pivoting and arguing it's a wrongful denial case rather than demand futility.

[00:03:02] Speaker 03:
Am I understanding the way the argument has sort of morphed or am I, if I'm wrong here, just please explain what the argument is.

[00:03:11] Speaker 00:
Thank you.

[00:03:12] Speaker 00:
It's our position that the argument hasn't morphed

[00:03:16] Speaker 00:
The issues were always alleged in the first amended complaint and then argued to the district court as alternatives.

[00:03:22] Speaker 00:
When we filed, the case started, it was very chaotic.

[00:03:27] Speaker 00:
There's a lot of baggage with these parties in this case and we filed the initial complaint.

[00:03:33] Speaker 00:
We sought an emergency TRO to stop or to seek corrective action before a corporate special meeting and that was denied.

[00:03:44] Speaker 00:
In response to that we filed an amended complaint.

[00:03:48] Speaker 00:
At the TRO briefing and subsequent briefing before the amended complaint this issue of demand versus demand futility was a hot button issue and the court never decided it before

[00:04:02] Speaker 00:
the first amended complaint was filed.

[00:04:04] Speaker 03:
Well, it seems that there was something a little odd about how this developed procedurally in that the Delaware law seems clear that, as the courts there have said very colorfully, you can't have your cake and litigate it, too, that you couldn't do both.

[00:04:21] Speaker 03:
And you made the demand, and then you filed suit, and you really couldn't do both, and then you alleged demand futility.

[00:04:28] Speaker 03:
What I think the procedure should have been is you file suit and alleged demand futility while you didn't do the pre-filing demand.

[00:04:33] Speaker 03:
But both of those things happened and the district court was saying, well, this isn't permissible.

[00:04:38] Speaker 03:
And then now we're having an argument of wrongful denial.

[00:04:42] Speaker 03:
And I think the district court focused on gross negligence.

[00:04:48] Speaker 03:
And then there's a second prong of bad faith.

[00:04:51] Speaker 03:
But don't we have to consider both of those at the time of any denial?

[00:04:57] Speaker 03:
wrongful denial is what you're arguing, so we need to see if there's gross negligence or bad faith at the time that the Brnovo denied your demand, right?

[00:05:07] Speaker 03:
Am I wrong on that?

[00:05:08] Speaker 03:
I mean, I agree with you.

[00:05:10] Speaker 03:
This has been a little bit chaotic how this has unfolded.

[00:05:14] Speaker 00:
I hear two different questions from the court, so I'm going to answer them one after the other.

[00:05:18] Speaker 00:
The first question as to demand versus demand futility, we alleged

[00:05:27] Speaker 00:
briefed and argued whether a demand was made.

[00:05:31] Speaker 03:
And if it was made... Didn't you concede that a demand was made?

[00:05:35] Speaker 03:
I thought you eventually did concede that you had made a demand.

[00:05:37] Speaker 00:
I mean, for purposes of the argument before the district court, that was a tough issue.

[00:05:50] Speaker 00:
It was a tough issue, and I realized it based on the record.

[00:05:54] Speaker 04:
You've sent a letter meeting all the requirements for a demand letter and attaching the complaint to, let's see, to Renovero Biosciences.

[00:06:11] Speaker 04:
And that why is, are you now arguing that was not a demand?

[00:06:18] Speaker 04:
No.

[00:06:20] Speaker 04:
So the district court correctly found that was a demand, right?

[00:06:23] Speaker 00:
Well, we are not appealing the district court's decision that that was a demand.

[00:06:28] Speaker 00:
So that's step one.

[00:06:29] Speaker 00:
Step two was, was the demand wrongfully refused?

[00:06:33] Speaker 00:
And that's where we get into the disjunctive standard.

[00:06:36] Speaker 04:
The board actually investigated pursuant to the demand, right?

[00:06:42] Speaker 00:
Well, that is an issue in this appeal and are part of our argument for bad faith.

[00:06:49] Speaker 00:
I concede for purposes of this appeal, we are not appealing the court's decision that the January 19th, 2024 letter was a demand.

[00:06:58] Speaker 04:
Okay, did the board refuse to act in response to your demand?

[00:07:03] Speaker 04:
My position is yes.

[00:07:05] Speaker 03:
But when?

[00:07:06] Speaker 03:
Right.

[00:07:08] Speaker 04:
Then you should be arguing a wrongful refusal.

[00:07:14] Speaker 00:
That is what the issue is on this appeal.

[00:07:17] Speaker 02:
I don't see where in the complaint you make a wrongful refusal claim.

[00:07:22] Speaker 02:
I guess it would be helpful for me if you just pointed to some specific paragraphs or portions of the complaint where you make a wrongful refusal claim because it seemed like demand futility to me, which maybe I'm repeating Judge Beatty's question.

[00:07:39] Speaker 00:
The allegations of

[00:07:40] Speaker 00:
bad faith to support.

[00:07:42] Speaker 00:
This was an issue in the briefing of the district court in here.

[00:07:45] Speaker 04:
Please just answer Judge Thomas' question.

[00:07:47] Speaker 00:
Sure.

[00:07:47] Speaker 04:
I have two... What paragraph in the complaint?

[00:07:51] Speaker 00:
I have the second volume of the excerpts of record.

[00:07:55] Speaker 04:
Do you have the complaint?

[00:07:57] Speaker 00:
The operable operative?

[00:07:58] Speaker 00:
The first amended complaint paragraphs 111 through 130.

[00:08:01] Speaker 00:
Okay.

[00:08:02] Speaker 00:
That's second volume.

[00:08:03] Speaker 00:
We are 220 through 229.

[00:08:13] Speaker 00:
There was an argument by the board that our heading in the complaint, the first amended complaint, discussed demand futility and not wrongful refusal.

[00:08:27] Speaker 03:
So, Council, I'm looking at, I think I'm looking at the correct complaint at paragraph 111.

[00:08:33] Speaker 03:
It starts with allegations about inaccurate or inappropriate SEC filings.

[00:08:42] Speaker 03:
Is that the portion you're pointing to in September 2016?

[00:08:48] Speaker 03:
And events that occurred in 2017.

[00:08:57] Speaker 03:
Where I'm struggling a little bit to understand how your theory is that you filed the, you sent them a demand in within days, a few days filed suit and in this complaint alleged demand futility.

[00:09:10] Speaker 03:
And now you're arguing wrongful denial.

[00:09:14] Speaker 03:
But it seemed like you filed suit before there was, it was in a matter of days, right?

[00:09:19] Speaker 03:
So there hadn't been a denial within five days or so.

[00:09:22] Speaker 00:
And that's correct.

[00:09:28] Speaker 00:
The timing, and this is included in the first amended complaint, the timing of the four days between the demand letter and the filing of suit.

[00:09:38] Speaker 00:
Our position is that that was the emergency nature of that was a result of the conduct of the board.

[00:09:46] Speaker 00:
The board was trying to make it.

[00:09:48] Speaker 00:
The parties had been in communication for months and months about these issues.

[00:09:51] Speaker 00:
And the board was trying to make it so that we could not challenge this special meeting, the result of which diluted my client's beneficial ownership by half.

[00:10:03] Speaker 03:
So you sought a TRO to stop the meeting and it was denied?

[00:10:06] Speaker 03:
Correct.

[00:10:07] Speaker 03:
Okay.

[00:10:08] Speaker 03:
And the company, they formed a committee to investigate the allegations in your demand.

[00:10:17] Speaker 00:
Is that correct?

[00:10:18] Speaker 00:
A committee was formed, which we learned about in an SEC filing a few months later with two purported independent directors.

[00:10:28] Speaker 03:
So you filed suit before the conclusion of their investigation, before you even knew about the investigation and the defense?

[00:10:36] Speaker 00:
Correct.

[00:10:37] Speaker 00:
The committee was formed.

[00:10:39] Speaker 00:
I'm cognizant of my time, so I'm going to answer this and hope to reserve the remainder.

[00:10:46] Speaker 00:
The committee was formed in response to our complaint.

[00:10:51] Speaker 03:
So when you make a demand, you are acknowledging that the board has business judgment, they're running the company, they have an opportunity to investigate, to respond, right?

[00:11:05] Speaker 00:
Correct.

[00:11:05] Speaker 03:
So was there a point where they denied you, where they said, look, we've investigated, we're done, we're denying your demand?

[00:11:12] Speaker 03:
Did that happen at some point?

[00:11:14] Speaker 00:
No.

[00:11:14] Speaker 00:
And to date, that has not happened.

[00:11:16] Speaker 00:
And the two independent directors or purported independent directors

[00:11:20] Speaker 00:
who were on the committee, both resigned.

[00:11:23] Speaker 00:
One resigned purportedly for family reasons.

[00:11:27] Speaker 00:
The other resigned because, and this is all in the record because we notified the district court of it after the oral argument, but before the motion to dismiss order came out, he resigned because of pressure

[00:11:43] Speaker 03:
from defendant renais and lab who is the chief adversary in the city you're arguing that's evidence of bad faith correct the filings what you characterizes as inappropriate and proper sec filings are inaccurate filings resignation of board members new board members

[00:11:58] Speaker 03:
But that all happened after you filed suit and before there's a denial.

[00:12:05] Speaker 03:
So I'm having a hard time placing those in the chronology so that they are evidence of bad faith for a wrongful denial.

[00:12:15] Speaker 00:
Well, I'm probably going to run out of time for reservation.

[00:12:20] Speaker 00:
But the bad faith, the case law says this is a holistic review.

[00:12:24] Speaker 00:
It's an iterative process.

[00:12:26] Speaker 00:
Time is passing.

[00:12:28] Speaker 00:
And the district court asked me at the October 3rd, 2024 hearing on the motion to dismiss, have you heard anything?

[00:12:35] Speaker 00:
And I said, no.

[00:12:35] Speaker 00:
I haven't even been acknowledged.

[00:12:37] Speaker 00:
And that was October 2024.

[00:12:39] Speaker 00:
Now an additional 15 months have passed.

[00:12:43] Speaker 00:
The special committee independent directors no longer exist within the company.

[00:12:48] Speaker 00:
Everybody is gone.

[00:12:50] Speaker 00:
Sendlev put his own people in there, and they've abandoned

[00:12:54] Speaker 00:
the investigation from the outside looking in.

[00:12:58] Speaker 00:
That is part of the case law says that abandoning an investigation is indicative of bad faith.

[00:13:08] Speaker 00:
And my last point before I sit down is that we also sought leave to amend.

[00:13:15] Speaker 00:
All of these facts were before the district court for purposes of bad faith, wrongful refusal before the district court

[00:13:23] Speaker 00:
issued the order granting the motion to dismiss.

[00:13:27] Speaker 00:
And that was enough to under the liberal amendment rules of court to allow plaintiffs leave to amend to put before the court the current situation for wrongful refusal.

[00:13:40] Speaker 04:
So at the time that the district court judge issued its ruling, he said that the investigation is by all accounts still ongoing.

[00:13:51] Speaker 04:
So you had not put before him that the investigation had fallen apart because the independent directors were gone?

[00:14:00] Speaker 00:
I did put it before him in a notice between the hearing and the ruling.

[00:14:09] Speaker 00:
We filed a notice.

[00:14:10] Speaker 00:
It's in the record.

[00:14:11] Speaker 00:
And the district court judge put in a footnote that that was not relevant to bad faith.

[00:14:19] Speaker 00:
And we believe that's an abuse of discretion.

[00:14:21] Speaker 00:
I'll reserve the rest of my time.

[00:14:24] Speaker 00:
Thank you.

[00:14:47] Speaker 01:
Good morning.

[00:14:49] Speaker 01:
Good morning.

[00:14:49] Speaker 01:
May it please the court.

[00:14:50] Speaker 01:
Michael Quinn on behalf of the Appellee Renovaro Biosciences Directors.

[00:15:02] Speaker 01:
This case is not a complex case.

[00:15:05] Speaker 01:
This case involves a long settled black letter, Delaware corporate law, that provides simply that if a shareholder

[00:15:16] Speaker 01:
makes a demand upon a company's board of directors to take some action.

[00:15:23] Speaker 01:
It has conceded as a matter of law that the board's ability to do its job and investigate those demands.

[00:15:31] Speaker 01:
And it cannot immediately commence a lawsuit alleging demand futility.

[00:15:40] Speaker 04:
So that's the law.

[00:15:43] Speaker 04:
Your friend on the other side seems to be saying that events were going so quickly that they did both.

[00:15:54] Speaker 04:
And now the events have continued to the point where actually she's alleging gross negligence and bad faith in the investigation.

[00:16:05] Speaker 04:
But she hasn't actually alleged that.

[00:16:08] Speaker 04:
And she wants an opportunity now to amend the complaint, to allege that based on facts that were subsequent to the complaint.

[00:16:18] Speaker 01:
In the words of the case to which Justice Bain referred, the Dalvy-Pope opinion of the Delaware Chancery Court, citing to the Delaware Supreme Court in the Siegel opinion, under Delaware law, Stockholder plaintiff bringing a derivative suit has two options.

[00:16:40] Speaker 01:
make a pre-suit demand on the board, or plead demand futility.

[00:16:45] Speaker 01:
These options are mutually exclusive.

[00:16:49] Speaker 01:
A stockholder is not permitted to have its cake and litigate it to.

[00:16:55] Speaker 01:
And that's precisely

[00:16:57] Speaker 01:
what plaintiffs did in this case, and that is the precise grounds on which the district court properly dismissed the lawsuit.

[00:17:06] Speaker 03:
Period.

[00:17:07] Speaker 03:
I'm sorry to interrupt you.

[00:17:11] Speaker 03:
Is there a procedure by which the plaintiffs could have a remedy?

[00:17:16] Speaker 03:
Yes.

[00:17:17] Speaker 03:
Sent to demand and filed suit and alleged demand futility, district court dismisses that.

[00:17:23] Speaker 03:
Meanwhile, the company has formed a committee, they start an investigation, but plaintiffs are alleging it's a sham, it's in effect abandoned, it's a wrongful termination in effect.

[00:17:36] Speaker 03:
Could they now file suit and allege wrongful termination of their demand or wrongful denial of their demand?

[00:17:43] Speaker 03:
Or I guess it would be a, if it's not an explicit denial, it would be sort of a de facto denial in its wrongful?

[00:17:52] Speaker 01:
That's the key.

[00:17:53] Speaker 01:
There has been no rejection of the demand.

[00:17:57] Speaker 01:
Indeed, the only portion of the record that relates to this issue, and it's referenced by the judge in his order,

[00:18:06] Speaker 01:
Is it that the board appointed a special litigation committee?

[00:18:10] Speaker 01:
Special litigation committee retained counsel.

[00:18:13] Speaker 01:
Counsel began investigating.

[00:18:15] Speaker 01:
But you can't have a... Now, these arguments today presented here and in the brief that say that investigation didn't happen, that investigation is fake, that investigation isn't real,

[00:18:32] Speaker 01:
That is based on the fact that plaintiffs have not received any information about the investigation.

[00:18:37] Speaker 01:
And that's where counsel confuses cause.

[00:18:41] Speaker 02:
I think the argument is that this committee isn't even really in existence in the same way anymore.

[00:18:47] Speaker 01:
There is nothing in the record that supports that.

[00:18:50] Speaker 01:
That's counsel's argument.

[00:18:52] Speaker 01:
And indeed, it's not true.

[00:18:54] Speaker 01:
The Special Investigation Committee existed, hired counsel, conducted investigation, completed the investigation.

[00:19:02] Speaker 01:
The cause and effect here is plaintiffs in their counsel have not received any information concerning that investigation because they are maintaining this litigation.

[00:19:16] Speaker 01:
The Delaware court says they're mutually exclusive options.

[00:19:19] Speaker 01:
You can't do both.

[00:19:20] Speaker 01:
You can't maintain litigation and demand information about the investigation.

[00:19:26] Speaker 01:
The board and the special litigation committee is going to sit on its hands and wait until this litigation is no longer.

[00:19:33] Speaker 01:
And to your point, yes, at that point, when this litigation is dismissed, when the board is able to finish its job,

[00:19:45] Speaker 01:
make recommendations to the full board, take action or not take action, then and only then does a derivative plaintiff have another path forward.

[00:19:57] Speaker 01:
And that path forward is file a lawsuit and try to overcome the presumption of the business judgment rule.

[00:20:04] Speaker 04:
Another way of saying that if she has claims, they're not right.

[00:20:10] Speaker 04:
because she opted for the demand and the process has not been completed.

[00:20:16] Speaker 01:
By violating Delaware law and doing both at the same time, she has prohibited the

[00:20:25] Speaker 01:
the board from doing what the board is obligated to do.

[00:20:29] Speaker 01:
And so the board has done it.

[00:20:30] Speaker 01:
It just hasn't made the information public.

[00:20:33] Speaker 01:
Because it has no obligation to make that information public while it's simultaneously defending these claims.

[00:20:40] Speaker 01:
That's the very underlying purpose of requiring derivative plaintiffs to first make a demand.

[00:20:49] Speaker 01:
It's because the company shouldn't have to investigate it and also defend those claims.

[00:20:55] Speaker 03:
So I appreciate your answer.

[00:20:57] Speaker 03:
That was helpful.

[00:20:59] Speaker 03:
But I was getting at something a little different, which I think I can glean from your answer, which is if there is a company that is conducting a sham investigation or just abandons the demand and doesn't pay attention to it, there is a remedy at some point.

[00:21:15] Speaker 03:
There is a remedy for the shareholders.

[00:21:17] Speaker 03:
They could bring a claim and argue this is an effective wrongful termination because they didn't act on our demand.

[00:21:25] Speaker 01:
They can commence it and they're going to be subject to the business judgment rule, right?

[00:21:30] Speaker 01:
You have to overcome the business judgment rule because if the committee did in fact do an investigation but you don't like the investigation, you don't think it was robust enough, you don't like the conclusions, you don't like the board's decisions as a result, then you can file suit attacking that investigation.

[00:21:46] Speaker 01:
That's a different lawsuit with different claims and a very different legal standard applied to it.

[00:21:53] Speaker 01:
Once the court found that this plaintiff sent a demand to the board, the only path forward is for this litigation to be dismissed.

[00:22:07] Speaker 01:
Let the board do its job, which it did.

[00:22:11] Speaker 01:
The only evidence in the record is the board did exactly that.

[00:22:15] Speaker 01:
But this litigation was filed one business day.

[00:22:19] Speaker 01:
The demand got sent late on a Friday.

[00:22:22] Speaker 01:
and named corporate counsel, thereby creating a conflict with the only lawyers that had any information, and they had to find new counsel.

[00:22:32] Speaker 01:
They tracked me down on vacation in Costa Rica to come in over the weekend, get up to speed on a client I'd never represented before, and oppose this TRO days later.

[00:22:45] Speaker 01:
Plaintiffs put the company in that position, and they did what they were supposed to do.

[00:22:52] Speaker 01:
They appointed a special litigation committee, the special litigation committee retained counsel, a reputable firm who has conducted the investigation.

[00:23:02] Speaker 03:
So is it your position that the district court should not have entertained a wrongful termination argument?

[00:23:11] Speaker 01:
Yes, I think the court, exactly, I think the court had no reason to.

[00:23:17] Speaker 01:
But the court nonetheless did entertain these arguments.

[00:23:21] Speaker 01:
Because as you noted, there is no reference.

[00:23:24] Speaker 01:
The words wrongful refusal do not appear in the First Amendment complaint anywhere.

[00:23:30] Speaker 01:
The words bad faith appear exactly once, and they appear in a section entitled demand on the board would be futile.

[00:23:40] Speaker 01:
In fact, the very sentence in which the words bad faith appear ends with a quote, and therefore,

[00:23:51] Speaker 01:
demand upon the board is excused.

[00:23:54] Speaker 01:
The words ban faith were only used in connection with the demand futility argument, because that's the only argument that was presented there.

[00:24:01] Speaker 01:
And that makes sense, because to do otherwise would be having your cake and litigating it too.

[00:24:08] Speaker 01:
And that's plainly outlawed under Delaware law.

[00:24:13] Speaker 01:
So I think, yes, the judge entertained those arguments because

[00:24:18] Speaker 01:
They had been raised in the briefs.

[00:24:20] Speaker 01:
They had been raised at the hearing.

[00:24:22] Speaker 01:
At the outside of the hearing, the judge identified two hearing issues he wanted to hear about.

[00:24:27] Speaker 01:
One, whether they had violated Delaware law by making a demand to immediately filing suit.

[00:24:32] Speaker 01:
And two, tell me about all this other litigation.

[00:24:36] Speaker 01:
between these parties, which makes, according to our argument, plaintiffs entirely wholly, unproper derivative plaintiffs.

[00:24:47] Speaker 01:
You can't sue a company for millions of dollars and at the same time want to represent that company and say that you're going to act in the best interest of the shareholders.

[00:24:59] Speaker 01:
There's plenty of case law that says that.

[00:25:00] Speaker 01:
And the judge here didn't ultimately listen to all those arguments.

[00:25:03] Speaker 01:
Didn't have to reach that argument on the motion to dismiss.

[00:25:08] Speaker 01:
Because it was black letter law that having made a demand, immediately filing suit,

[00:25:16] Speaker 01:
There was no choice but to dismiss this litigation.

[00:25:19] Speaker 01:
And so he entertained all that.

[00:25:20] Speaker 01:
And he entertained the information that was presented later in the notice of subsequent events.

[00:25:25] Speaker 01:
And he properly concluded none of that changes the required outcome of dismissal based on the fact that you filed a demand.

[00:25:34] Speaker 01:
And you're right.

[00:25:35] Speaker 01:
They couldn't possibly have refused that demand in the two business days after it was

[00:25:42] Speaker 01:
received and the complaint was filed.

[00:25:45] Speaker 01:
They had no opportunity to refuse that demand.

[00:25:48] Speaker 01:
It was not refused.

[00:25:50] Speaker 01:
And they did what they were supposed to do, assuming that this case would be dismissed, particularly after the defeat of the TRO, and particularly after the defeat of the motion to dismiss, so that they could proceed and do their job.

[00:26:04] Speaker 01:
And they've not been able to do that because this litigation is still pending.

[00:26:08] Speaker 03:
So your argument is they made a fatal strategic error at the outset.

[00:26:15] Speaker 03:
And if they had simply filed suit and alleged demand futility, they could have litigated that.

[00:26:23] Speaker 01:
We would have then litigated whether in fact demand was futile or not, yes.

[00:26:29] Speaker 01:
And once they did it, that's a fatal error.

[00:26:33] Speaker 01:
And that's what courses across this country have held.

[00:26:36] Speaker 01:
And courts have held you can't do what plaintiffs have come here now to do and argue in a court of appeal that my complaint actually alleged both as an alternative.

[00:26:51] Speaker 01:
The courts have routinely rejected efforts by plaintiffs who have sought to do it in two different actions.

[00:26:58] Speaker 01:
File one action by a plaintiff alleging demand futility and file another action by another plaintiff alleging wrongful refusal of the demand.

[00:27:08] Speaker 01:
Judges say you can't cover your bases in that respect and the only proper outcome is the dismissal of both of those cases.

[00:27:15] Speaker 01:
You've made a demand and the board gets to do its investigation.

[00:27:19] Speaker 01:
And as far as I could tell, in all of American jurisprudence, no plaintiff has ever alleged, oh, we did it both in the same case.

[00:27:26] Speaker 01:
Because it's illogical.

[00:27:28] Speaker 01:
Did you make a demand or didn't you?

[00:27:29] Speaker 01:
If you're alleging demand futility, that means demand was excused and you didn't make a demand.

[00:27:35] Speaker 01:
And the argument's here that this wasn't a demand, despite the fact that the document was entitled Demand for Corrective Action.

[00:27:40] Speaker 04:
I think she conceded it was a demand.

[00:27:43] Speaker 01:
Here, in the Court of Appeal, yes.

[00:27:45] Speaker 01:
But not in the motion.

[00:27:47] Speaker 04:
We get your point.

[00:27:48] Speaker 04:
We get your point.

[00:27:51] Speaker 01:
If you have other questions for me, I'm happy to rest.

[00:27:56] Speaker 01:
No, thank you.

[00:28:05] Speaker 04:
You have about a minute, Ms.

[00:28:08] Speaker 04:
Misha.

[00:28:12] Speaker 00:
A few points.

[00:28:13] Speaker 00:
I just want to state that there's nothing in the record suggesting that the committee did anything much less complete an investigation and do its job.

[00:28:24] Speaker 00:
And that should not be considered.

[00:28:25] Speaker 00:
There's also no case law cited saying that pending litigation prevents the board or the special litigation committee from acting.

[00:28:36] Speaker 00:
That's not how

[00:28:42] Speaker 00:
Business works if they had an obligation to investigate something and that's what they're hanging their hat on in defending this then there's no authority It says that they get to withhold that information because of pending litigation the first amended complaint paragraphs at 122 through 131 those are under the demand futility heading demand futility

[00:29:07] Speaker 00:
The court ruled against us on that, but that considers bad faith.

[00:29:11] Speaker 00:
Those are our bad faith allegations.

[00:29:14] Speaker 00:
They had not been decided yet at the time we filed the first amended complaint, which really takes us to our request for leave to amend, which gave us 11 months more of data on bad faith and wrongful refusal.

[00:29:29] Speaker 04:
Thank you.

[00:29:30] Speaker 04:
Weird Science versus Sinliv will be submitted and the court will be in recess for approximately five minutes.