dismiss on the affirmative defense of statue of limitations was improper for reasons st under the whitten rule knowledge is irrelevant and since control is an disputed the bright line rule was applied in correctly and the between two shareholders with knowledge but that if some shareholder had knowledge then there is a complete bar to all claims going forward and wonder when that is wrong i've thought whitten could be read although you'd have to read between the lines of a bit to suggest that obviously if the knowledge that the st shareholder had was unique to that person only available to that person that would be one thing but if instead the knowledge that that st shareholder had was actually sort of available on the public record and therefore any shareholder could have known it i guess i saw would maybe be open to the reading that well then it might be different and that nd shareholder might well be barred even if that person can't you know isn't is not conclusive proof that they had actual subjective knowledge they nonetheless would be deemed to have constructive knowledge of the same thing that was on the public record for everybody else to know i take it you don't read the case that way but that's kind of where i get stuck yes you are well st before i go into the more detailed explanation of the reading of witness just because something is on the public record that doesn't mean there is a fact issue still at the motion for summary the motion to dismiss stage as to who had knowledge of the fact issues here the the issues here that that it is assumed in the answer in brief that all shareholders had knowledge was a report by short seller and then some certain report certain southern diskin new york cases but there's no record that all shareholders had knowledge and there's no record that ser are so well known in the financial community the question is on the your view that you just expressed you knew virtually have to get every shareholder to submit an affidavit as to whether he knew or he didn't even though there was widespread knowledge in the in the community in the investment community about these various fronts but it doesn't seem to me to make a lot of sense in fact there were lawsuits brought by shareholders one was i believe one was a derivative and one was a class but much amounts and i believe that i would correct your honor that there was a will there was widespread knowledge there is no record of what the knowledge was as to these frauds le knowledge witness says that if one shareholder is in control of the corporation that if it is impossible to discover the end wrongdoing and the corporation is on the table to seek the redress then you can get out of it but it seems a little bit unusual that it would be impossible when there were flat filed class actions naming in fact these same defendants there were filed derivative actions against directors and there was a sit tron report it seems to me that it is very unusual i i can't find  reason why it would be impossible to discover and that's what i think witten says you can have the guy wrongdoer in control you can have the wrongdoer what not doing what he asked to do and as long as it is not possible given that he's in control to discover this wrongdoing and guess what you're going to be out but in this situation it was totally different than that everybody seems to be filing class actions and derivative actions and there was a suit drawn report i want to get back to the word of the possibility of on the fact issues again i don't want to concede to the court that everyone knew i think it's a false seems and i don't think it's a matter of whether anyone everyone knew i think it's a matter of should they have known let's put it even that much should they have known i put it in possibility because new or should have known and in this particular instance it seems and should have known is pretty clear not at the motion i don't believe it is and not at the motion to dismiss so we do this all the time on a motion to dismiss their statute of limitations questions on know or should've known and then we go and say was there a time they should have known and it isn't a matter of doing any more than saying what is the evidence here we've got a secret one report which is damning we've got filed class actions naming everybody and the defendants and then we've got a derivative action against the directors yes or no now how one could knew or should have known is impossible for me to understand i would like to contrast this this factual scenario that you just described the southern  suits and the citronella poor which is a short seller pour with with the enron case this is not the enron case where every night shareholders coming home to two headlines about the enron scandal and the wall street journal was process through all the different variations of the scandal this is a china china valve technology inquiry few cases were filed and s e c dispute was had and a short seller report came out i think that that that to take the factual things too far would be an air should have known i think there's a factual issue here but back to your honor's st question that and possibility that language is not in a way well i know because i was trying to figure out what did i when i read when what did it really stand for it seems to me that it should stand for if you can no you should've known th and that's why i drafted it impossible because i was thinking how would it have not been possible to know here so i would give you a better chance i thought your honor  we believe in stands for the issue of control so when it does about the role but it isn't a matter of simple control it's a matter of even though that shareholder is done in control does the other shareholders to the other shareholders have the knowledge or the opportunity to have the knowledge of what's going wrong if they don't well i think you're in that you're in the pig but if they do and in this situation it seems obvious they would have been i'm having a tough time with your argument and i don't believe so your honor because the garny and lied language that is used in a way and is interesting the guardian ad litum language goes to the issue of the it lends to the  clearest issue here is control because the guardian of light is and this is language from when is in a representative fashion they serve in a representative fashion and then if a guardian ad litum is able to wipe away corporate rights then we have an anomalous and absurd condition that someone with knowledge is able to wipe away whites in essence i don't think we can quite goes there but what came up because we do receivershi quite a bit is you have the issue of imputed knowledge here in essence what you're doing if you take that strike i'm positive that strike that strict in possibility language and when that's not the happen when says that with the garny end of the issue the right and duty of the court is to protect the interests of the incompetent the court must be satisfied that the incompetent has had a full opportunity to have his day in court in the answering brief it is said that at some point a receiver and a shareholder could have a scheme to then revive statue of limitations i think that is denigrating to the courts that appoint receivers and to the importance of the receiver plays in these contexts but what could happen if the shareholders and knowledge is imputed to the corporation a wrongdoer or even here a rd party could have their cousin go buy shares that cousin does then have knowledge and then corporate rights are reversed rated that can't be the standard we believe that witten is focused on control and that that is the clearest we think that if there is is any issue to a more narrow reading it is that knowledge shareholder can be considered but would not even cerate the the corporate rights and then thirdly your honor but really your argument there takes take away from the clause on page three hundred and fifteen thousand three hundred and sixteen when the corporation is if you will under disability in this powerless to act but if you read the total clause it doesn't say that the total clause starts out about the individual shareholder may be put on notice that his corporation been defrauded and you go all the way through what you're really talking about is the end of that clause which is why i came to the idea that what we have here is as long as the bad actor is in control and the other corporate shareholder has emphasized the last part of that about the infant but you don't talk about the st part of the phrase or does maybe you sit down and talk about that when you come back go on with receiver are i'm glad to le i'm just saying i read that and read that and i couldn't get there this is an important point your honor i think eleven dollars helpful thing would possibly be to read whitten in light of most the scene which is a th circuit case on here and even a most e c n there is a statement that the test is that once the facts given rise to possible liability are known the plaintiffs most effectively negate the possibility that an informed stock holder or director could have induced the corporation to sue we don't think that's a direct application of women but even there there is not this in possibility language and in fact the should have known  quickly we think that there is also a fact issue as to the issue of ability what with the ability be to bring a claim and the shareholders would have been in a derivative suit with impaired to look to applied against it without an exception that  melanie as to receivers and the answering brief sensually of public policy argument against her believed and asking for an extension of that exceptions to receivers to shareholders which wrongdoing or should have had knowledge of the wrongdoing therefore written as a california supreme court case does not control here because it's factually distinct and different  several california court of appeals cases as well as th circuit cases hold that when shareholders had knowledge or should have had knowledge or on or an inquiry notice of the alleged wrongdoing by the bad actors that the adverse domination doctrine does not told the statute of limitations in this case we have as was mentioned earlier not only the central report and multiple class action lawsuits and shareholders derivative lawsuit but also in its in the record c investigations against both the main company and actually the fraser county company so at at that point the shareholders and certainly knew or should know of the wrongdoing and witten it's just not on point is your theory that because these actions were against as it were filed on the public record they're available to anyone who wanted to go to the courthouse to find them is that why every single shareholder of the company should have known because pay the information was out there somebody could have tracked it down if they wanted to yes they knew or should have know they were an increase notice i mean if you were investing in your you're paying attention and there are these class action lawsuits it would be an impossibility as was mentioned earlier to get an affidavit from every single shareholder but i think the showing has been made and now the burden falls on the appellant's to refute it that during the normal course someone's invested theirs is the situation report multiple f c c investigations class actions where the class attorneys will be reaching out that the shareholders knew or should have known and i think this is the record here is really an extreme case and in the other cases where cheryl is dorset when you don't have that same level of just trying to figure out is it they should have known because they should have been able to should have been monitoring i guess this company more closely and tracking the dockets of courts all over the country to see if the company had been sued or is it rather that the underlying information of wrongdoing they should have known about that because hey look these other shareholders somehow figured out if there were so many the information was out there it was public knowledge which is if that's what i'm asking what it was those are two different theories so i should have no i would really say both theories but particularly the public knowledge that they are the record shows that with all these lawsuits with reports in the phone financial investment in the press that the shareholders would have known it in there's nothing in the evidence to to to refute that and the standard to try to prove that every shareholder knew about it i think the burden at  point with the mass of the record that we have will shift can you address the last point that your opponent made for sitting down about the ability so yes fine let's assume that you're right that the knowledge was out there of this wrongdoing but what the hell they were dismissed but i don't think it allows the shareholders to sit on their rights with respect to in perry deliberate i think it would be overly speculative and there's nothing in the record to suggest read the quote for he says the question i have for you and he's speaking to a palace council is the wrongful conduct is of the people in charge and if a derivative case is bought on behalf of the company because the people in charge are the alleged crooks i don't see how that doctrine gets applied to the plaintive because i have these cases all the time and if i am understanding what you're saying is the wrongful conduct of the defendants will prevent a shareholder who is truly disinterested and independent from prevailing and i'm not following why is that and there was no answer as i recall in the record for that there's no imperative lichter defense here where the the the shareholders  i believe rosenfeld in which in perry delectable was addressed and raised as a defense in a shareholder derivative action but rosenfeld is factually distinguishable and irrelevant to the instant case in rows in rosenfeld it's a closely held corporation the shareholders bringing the derivative action were part of the alleged wrongdoing to defraud either a bank or insurance carrier oh so here clearly the allegations in the complaint do not state and can't state that the shareholders were part part of this fraud the allegation is that the directors controlled it and kept them from was voluntarily withdraw oh i see it without prejudice court that's the derivative action i can't speak to why they did that but i know that the shareholders had rights and they they chose not to pursue it perhaps to pursue the class actions the class actions were the curfew securities fraud actions and were dismissed at least as to fraser into the record it may have been to china valve's well i'm not sure it's in the record they were dismissed for failure to properly allege fraud and inability to prove fraud under the securities laws so it's been been litigated but the shareholders could have acted and they sat on their rights for whatever reasons as the policy argument we have here against shareholders who knew or should have known they were on inquiry notice  they chose not to act their rights expired then receivers appointed there's no basis to allow a receiver to have a do over after the rights of the shareholders have expired it would be one thing if the receivers appointed the claims are still viable then of course the receiver could bring the claim and i don't believe any laws been cited to support a case where retroactive y statue of limitations has expired because the shareholders had notice and the receivers allowed to revive it because of my understanding with  adverse domination inquiry regarding whether an informed shareholder director as the ability to sue on the other hand the existence of the potential barrier to sue does not to gate the ability to enforce the the cause of action and the discord says the question is that whether someone could have discovered the wrongdoing and sought redress and that's why the district court said there was no  however on a date over review even if that argument were not accepted as correct i think it should be the record shows in what may have been partially behind judge car in his mind many addressed that is there is no possibility of an impaired alecto defense here because as he said i see this all the time and i don't see how you go you know how how you can hold how you you would have been able to hold shareholders responsible for the wrongdoing of the directors if they bought a derivative case it's in the argument and i think that reasoning was was correct even if not articulated in honor before i go back to knowledge i would like to talk about impaired alecto for a few for a few seconds the rosenfield case is significant because it stands for the shareholder stand in the shoes of the company and that was my response to to the court when you stand in the shoes of the company then you have all the defenses and all the rights the shareholder has and it is common that when one bad actor brings a direct claim against another bad actor here in where you as i understand it the concept involves attributing to the corporation wrongdoing of its officials correct your honor and i don't see how that applies but every one of the everyone has i understand that of the directors was guilty of wrongdoing do you attribute tribute and control the company and you would tribute their wrongdoing to the company is that what you're saying yes and actually gets distance from another area of law from impaired a little impaired a little being a defense between two wrongdoers what your honour's are referring to is the adverse interest exception and there are some exceptions to that adverse interest exception but they actions of the wrong doers are imputed in the knowledge of the wrongdoers are imputed to the corporation and the shareholders step into that even if the shareholders separate if they if they decide to bring a shareholder derivative savings never and even if they're innocent and the corporation was run by a bunch of crooks and they are suing to redress the wrong  duty to sue he gives consideration to time trouble and expense of the litigation that's the problem of the impossibile the reading and witten giving too much power to the shareholders who are in a representative fashion where when as we read it says you just look at so long as the corporation remains under disability and is powerless to act the statue of limitations does not run so when so under your theory when with a statute run against receiver it seems to me under your theory as long as you are point a receiver in these particular situations you're going to have a chance for an action even if all the shareholders well knew what the problem was as long as they're not a part of those who are doing the wrong in the corp if they knew what was going on if they knew all about it they've got no reason to work no reason to do anything with it no reason to bring the action all they've got to do is sit on their rights until one day all of a sudden they decide to appoint you and then all of a sudden you have no statute of limitations that would be your theory with a new statute just point a receiver every time you'll have a new statute every time we believe we went under that and we believe we went under the narrow reading but under that strict reading yes the language that was used in appropriately earlier was being the statute and i think that's what you're getting to your honor we're not reviving a statute this is equitable tolling this is the statute does not begin to run to the bad actors or removed the bad actors came very removed by you know reorganization  company by good board members by insolvency or trustee or by receiver and once these good twenty bad actors are removed the shoals cases in this by judge posner reminds me of he says when when the zombie corporation tries to put their clutches onto the receiver that does not work the receiver has certain exceptions incomes and full so yes we believe that not revived but they stole until and that's balancing equities otherwise bad actors and rd parties can hold these companies in in abeyance for until statue of limitations run out and those company claims though our number no those same good actors those same not bad actors file lawsuits get a secret report say you got a bad thing go and here they file a lawsuit against the very same people you want to file a lawsuit against plus they file  another lawsuit and yet because they point the receiver they get the new statute that your argument a handful of shareholders brought certain lies doesn't matter other shareholders later brought receiver coke and i think