x cases f five capital versus stranger to the nominal defendant starbuck carriers having served for a number of years as its cochairman as challenge three separate transactions we want to merger with a company called ocean ball carriers in two thousand in june of two thousand and fourteen the second almost immediately thereafter a transaction in august of two thousand and fourteen in which starbuck acquired thirty four ships from  a company called xcel which was at the time in bankruptcy and a third transaction a maritime service contracts intern into between starbuck and its c e o petrus puppets that paid mr papas three times the going rate for those services all three of these transactions are infected by rampant self dealing with basic conflicts of interest that made a demand on the board which was dominated by completely conflicted directors unnecessary the district court dismissed on the basis that demand had not been excused when asked court to reverse that decision last night as it turns out the delaware supreme court issued a case that is somewhat relevant and we will be submitting a copy of the decision to the court today as supplemental authority in a case called santas versus pincus this is the zynga derivative litigation the delaware chancery court had dismissed the complaint for failure to make a priest to dismiss demand just like the district court did here and yesterday the supreme court of delaware reversed that decision applying a very simple very commonsense very human approach to the question of demand asking whether there were relationships alleged in the complaint as there are here that raise a reasonable doubt that a majority of the directors were either conflicted or disinterested so that they could not consider the demos case alter the requirement that previous cases in delaware have said the this must be done individually as to each director with respect to each transaction it does not because of the problem i have with your argument on b suspicion but when you look at what you have been led with you we respect the individuals everything you say as to what individual as two particular transaction is something that in over cases delaware has said is ok here is your and so that's why i'm i mean if if this case changed that then that would be clearly important in dramatic but if it just goes to the notion that see that the requirement of proving disinterested newness raising a reasonable doubt as to this interest is missing or lack of independence must be done on a director by director basis it can't be done on a group  but what the zinger case does is show exactly how little is required for each individual defendant to establish the requisite interest or lack of in the and it's to satisfy the pleading burden of establishing th demand is excused and by way of illustration let me first talk about the facts and zinka and then let me talk about the specific facts that are only here with respect to individual directors firstly there were the board in single was nine members  two of the members were admittedly interested and so the question was whether there were three others who were interested which would make five of nine directors interested and the supreme court says that one of the director who who had nothing other than a personal friendship with parties interested in the transaction and owned an airplane together with that other party nothing to do with any of the allegations in the complaint and no business relationship having anything to do with any of the alleged wrongdoing but simply the fact that they were friends who were on the plane together that was sufficient because the court says human nature being what it is friends have a hard time judging one another the the other two  affected directors who are partners in a venture capital firm that moaned nine point two percent of sanders equity they too had nothing to do with any of the alleged transactions however the court said that because they were members of this venture capital firm that owns nine point two percent of the company zenga that was sufficient for the court to find that there disinterested explained about those three in particular and we're talking about now suri stevens and kemp is that not only were they appointed a but they were also active managers of oak tree for a number of years  well as again as i say in in the sand it's case clearly it is it is our view that these three directors are particularly affected and your honor i would point out that all three of them recused themselves from considering the xcel transaction or chronologically what happened is this the first of these transactions was the merger of starbuck with the ocean bug company at the time those three directors were not on starbucks board so they didn't consider the transaction they were appointed to the board in that merger that merger did a number of things one of which was it raised it raised the but once they acquired control the very next thing they did was they bought thirty four ships from xcel which was a company in bankruptcy its margins shareholder was oak tree oak tree was also one of its largest creditors by then oaktree had appointed those three directors to the board and because of their lack of independence as a result of their affiliation with oak tree they were accused themselves from consideration of xcel transaction once they did that they conceded that they did not have sufficient independence or disinterest to be able to consider the demand the demand obviously was made after they became members of the board but they were on the board when the demand was made if they were sufficiently interested or lack sufficient independence to recuse themselves from considering the xcel transaction two months after they joined the they were equally disabled from considering the demand when a five filed a complaint you know we think those three directors are easily dealt with and if you couple of questions but yes of course of action in this case yes would suppose we agreed with your adversaries that the class claim that's made is really a derivative claim itself so that there really isn't a proper class claim here does that affect our supplemental jurisdiction over the it minutely derivative claims that your honor i know and i'm over my time i'd like to why that's not why and since i thought you were running out of time i don't want to miss the opportunity to raise these questions but let me answer the question about jurisdiction first and then i'd like to turn to the question of direct versus derivative with respect to the question of jurisdiction the court raised this issue under twenty eight u s c thirteen sixty no that's a different issue i'm asking a separate jurisdictional question which is if we were to conclude that the one claim that gives federal jurisdiction under taffeta is not in fact a proper class claim clue last claim in the first place to anchor supplemental jurisdiction does a vat deprive us of jurisdiction over the other claims if we were to does and indeed over that claim if we were to decide that this is not a not in federal court we follow those cases initially in the supreme court of new york state court then we come back to the question of whether a class action claim is actually derivative or not yes and that's not an easy question because the dover court decided that by relying on genteelly of saying that it must be a majority shareholder there is a lower  court delaware case because of andras or something like that it says it must deal with it applies also to situations where it's a dominant or well and shareholder but then it defines vat in terms of the same kind of interest that applies to whether you must make a  a claim to have a court but i am not sure that the lower court is correct in what that means and i'm not sure that even if it were correct  on that the two standards for vat which is substantive should be the same as for standards which go only to whether you should make a request that is you may be asking the same thing but with very different anders do what because after all making a request is an easy thing to do and i must say relatively easy to do being on the merits so i am left with considerable doubt as to what  means now here's my problem if this were a case we came up under delaware directly i would have no doubt that what one should do since genteel is an important case not clarified in delaware to certify to delaware which he loves to accept certification to find out what it means only delaware accept certification from anybody anywhere because a key or a great deal for very long my problem is the certificate cation lie ahead we are asking delaware we would be asking delaware to tell us what delaware law is not for delaware but for and i have no idea whether delaware would accept certificate issued whether certification is it that situation or not and i read this is that i don't know where i am well your honor let me see it may or may not be exactly the same but that's how we briefed it but nonetheless to answer your question about the distinction between derivative in the requiems delaware changed the law a bit in two thousand and four when they decided to me versus donaldson jenrette and what they said in that case was we look now to the nature of the room and where the recovery would go if there's a successful prosecution and if the nature of the wrong is that it harms shareholders even if it harms them all the same it harms the shareholders rather than harming the corporation so that a recovery in the event the shareholders were successful would go to the shareholders rather than the corporation then the claim is direct that was a sea change in the delaware law which before had this special interest test where you had to look to see if some shareholders were damaged in a way that didn't affect all the shareholders in the same fashion now all along comes the gentilly case don't where supreme court two thousand and six and what the court says there is there is this strain ordinarily now under the new law we should be easy it should be easy to to stop to distinguish derivative vs direct coins but there is this strange kind of a claim for that is sometimes derivative and sometimes direct so the court tried to distinguish between the two and i think the distinction here helps understand why these are direct cons the court says that if the nature of the dilution coming is that a company bought an asset paying too much for that asset and receive too little in return and the shareholders economic interests in the company is done looted as a result the primary injuries suffered by the company which after all paid more than it got back and the shareholders dilution if you will in their economic interest is the reduction in the value of the economic value of each and every ship and it doesn't matter whether you are one hundred shares or a thousand shares remarrying shares you suffer sensually the same damage but it's only because you own shares in the company that overpaid in the first post in this case the dilution claim has nothing to do with the reduction in value the economic value of shares but has to do with the fact that if you remember i mentioned before in the ocean both merger that is a  is rather different from what cassandra's ridge indeed is doing and and to the extent that we are bound to follow with the delaware courts or say i find your reading a very interesting one but i don't really know that it is what the delaware courts are doing so i come back to my problem of why shouldn't i ask the delaware courts what it is that they meant might go to the whole thing because it might affect we have a real jurisdiction in the first place but you're on your own or i don't want to discourage you from asking the general or supreme court to consider this because i feel fairly confident how they will rule because in engine two millionaire walk home from the case just still have a problem but i'm not asking the delaware court to rule on delaware law for delaware purposes but i would be asking the court to ask about delaware law for the purposes of telling what the another state now it may be but i should simply ask that of delaware because delaware can always say sorry we don't want to answer in that and that's up to them or because given that delaware has been so aggressive in granting percentage of shares owned by the controlling stockholder or group of stockholders and a corresponding decrease in the percentage of shares owned by the public shareholders that's exactly what happened here the controlling holders went from forty three percent to eighty percent and the un affiliated shareholders saw their percentage increase in the ownership percentage is now not economic value but the ownership percentage is dramatically reduced the point for example on one point four percent one point four percent before the merger and on just half a percent after the merger that that point is that's a direct claim and that's exactly what the don't wear supreme court said in those words if you were to ask widower supreme court how it would apply gentil here i am confident it would say exactly as we applied it in gentilly this is a direct claim i don't want to discourage you from asking the delaware supreme court because your honor says they are certainly easier to accept certification and they are well qualified to say this is not a case we need to accept certification one or it's not a case we are willing to accept certification one given that it is a marshall islands company that is at issue but i respectfully suggest it is not necessary to do so because the language engine to leave the actual language in the case itself so we actually researched this question specifically even though the court did not raise it in the letter that that we received that we're requesting the supplemental  briefing and we believe that the case law clearly shows that if removal was appropriate at the time of remove all then  subsequent event a decision or an amendment to the complaint does not deprive the court of supplemental jurisdiction even either under the underlying claim itself or other claims under which the court has supplemental jurisdiction as long as the action was brought as a class action giving catheters diction if it turns out that it was not properly a class action the jurisdiction remains right and there's actually a second circuit case on that yet slightly different because it deals with the failure to meet rule twenty three requirements as opposed to a conclusion that as a an amendment eliminating the original basis for federal jurisdiction generally does not to feature a section and here we think it's an analogous situation of the court decides and let me let me ask about how about the question that we did ask about  read section thirteen sixty seven a if there were no section subsection b thirteen sixty seven a would pretty much do away with the requirement of complete diversity because it says that if the federal courts have jurisdiction over a claim then it has jurisdiction over all other claims that are part of the same case or controversy and that supplemental jurisdiction jurisdiction over those cases but then that's taken back by subsection v which says if the original cause is based on diversity then the courts shall not have supplemental jurisdiction over claims plaintiffs against persons joined under rule twenty eight which is the general joinder rule now aren't all the non diverse parties in this case joined under rule twenty how else would they be joined that's how you draw in parties because rule twenty lets you join the parties broader way of asking the question that you right well we agree that cafe changes the minimum diversity requirements  allowing jurisdiction where a member of a class of plaintiffs is a foreign state or citizen or subject of a foreign state and any defendant is a citizen of a state so we believe the cafe's clearly satisfied here  jurisdiction under caff the court may still exercise supplemental jurisdiction over the claims because removal was proper at the time of removal and there was a subsequent change  that eliminated the original federal jurisdiction but at the court under you know other cases you can still consider the underlying or the related claims under supplemental jurisdiction and there are cases in other circuits that consider the effect of denial of kaffir certification on a court's subject manager restriction over a calf a claim and there was a recent eleventh circuit decision that surveyed other circuits treatment of the question in the eleventh circuit ruled that jurisdictional facts are assessed at the time of removal and post removal of bands including non certification decertification or severance do not deprive federal courts of subject manager stiction and that eleventh circuit decision went on to note that every circuit to consider this question has agreed it is held not to confer original federal jurisdiction the courts can exercise supplemental jurisdiction over remaining state law claims in the cases so we're happy to brief that that issue if you're here on  five here has not met the requirements that are set forth and in gentilly and the gentilly test has two parts and the first part presents a hurdle that  the plaintiffs here simply cannot get over and gentility says that a claim may be direct where a stockholder having majority or effective control causes the corporation to issue excessive shares of its stock in exchange for assets of the controlling stock holder that have a lesser value and the f five has continually glossed over the requirement of a controlling shareholder and you know if you look at the math here it is clear that there is no controlling share how do you deal with the lo decision if there is a dominant shareholder that has effective control over the company but we do not believe that the plaintive here has pled and any facts in his very long connected in some legally significant way i understood the plaintiff's allegations to p hold forty three point nine percent starbucks voting power that's correct your honor but i have two responses to that the first is we believe that it is not appropriate to group all three of these groups of defendants together the oaktree the monarch and the pappas defendants because the courts have spoken of a requirement that there something equivalent to a blood pact to connect these groups of defendants if you want to aggregate their share percentages for the purpose of concluding that they are acting in concert  question is is the cases which talk that way do they go to the question of futility of asking the court the board or do they go to a complaint is you ought to go to the board which may be harder may be easy but is relatively easy as against the question of whether you have a claim at all which is issue of the individual thing under genteelly so many while the question may seem to be vis a the standard for what is dominance then what is to be aggregated big will be different and that's that's where i have trouble and where i'm not i don't know what my what the answer or you're on to let me let me try to address the question and concern  i don't think that this case that the direct claim is necessarily analyzed under demain futility in the first instance belief first we look at gentil way and we look to see whether there's a controlling shareholder i think five concedes that there is none so then the only question is is there a dominant shareholder who's exercising effective control and i would say they have not pled any facts to support such an inference much less that such an inference would be reasonable that there's simply nothing in their complaint that would show affective control to engage in in this transaction i think it's very important to look at the effect of this transaction because the company to dilute f five and other minority shareholders and to you know increase their shareholding in percentage in the company but if you look at what happen after the oh sorry the ocean both merger oaktree goes from nineteen point six to sixty one point three percent so clearly oaktree increases its shareholding here but monarch which on twenty one percent actually dilutes its interest to seven point four percent so we think it's not reasonable for f five to claim that monarch was acting in concert with oprah to take over this company when monarchs interest is decreased by approximately sixty percent from twenty one to seven point four percent i mean monarch here stands in exactly the same position is as a five its interest is significant simply diluted after this transaction and we believe in unreasonable to say that monarch is somehow acting in concert as some sort of blood pact to take over the company with tree if it started losing its interest that simply does not arc is the biggest of the three because they're the biggest the biggest shareholder before this transaction and let me ask you a question if it's a derivative claim correctly the argument out here man has already conceded today that the group pleading analysis that he presented in all of his appellate papers on doesn't apply because he conceded today that you need transaction by transaction and a director by director analysis and we believe that if you conduct that type of analysis it shows that the directors that eight out of nine of them at the time that the complaint was filed which is when you have to analyze them for the purposes of demand futility that eight out of nine of them were disinterested and independent and they deserve the protection of the business judgment fifteen thousand in restricted shares on the dish that the board approved the merger transaction here is some precedent to suggest that  receipt sure well your honor i believe the case law says that ordinary director compensation alone is not enough to show demand futility absolutely but it's the it's the receipt on the saying gate is the boat that i saw i understand it they are there urging is the circumstantial evidence of interest right well i believe that the decision to give them these fifteen thousand shares of stock was actually made well before the day that they were issued and i think i saw that with respect to the problem is it clear the record with respect to its offline and i believe it is in a relevant securities filing but i'm not sure if that is in the joint appendix i ask that because you know we only deal with the record and if it's not a record  months evaluating the transaction and negotiating it and therefore in this circumstance we believe the reasonable inference is that they got modest additional director compensation because they did extra work for the board and the allegation in f five s complaint and in their papers is that this is a quid pro quo and i think that's what have five would have to show that this is a quid pro and that these grants of stock are somehow contingent on them voting in favor of the merger and there is nothing in the record to suggest that didn't you just tell us that they got the shares because they worked on this transaction well i understand you're saying it's not a bribe to come out a particular way where there's not any direct evidence of that but it sounds like a your own theory of why they got the compensation is that they got the compensation because they worked on the transaction that is being challenged that that in other words is not just like this owed this year were given some extra shares to some of the directors for meritorious service in general but you're agreeing that it had to do with this transaction well that's correct these two directors we the only two directors who received these two amounts of stock grants however i don't think that supports a leap to the conclusion that they would not have gotten these stock grants had if they voted  contract with the company on his beauty serve that made it gave him an interest different from an ordinary shareholder or anyone else like i'm curious as to why that doesn't come within delaware law that suggests that when you have an ongoing relationship that is going to benefit from a positive vote that that could be an interest well  can continue to have a mere consulting contract and i don't think they have alleged any facts relating to how much he got in compensation for those consulting contracts or whether it was enough that it would be considered to sterilise his decision with respect to a demand on the board i think he still deserves the presumption of the business judgment rule that he is going to consider a demand fairly that he's going to make a decision on an informed basis  and if he continued to get it consultancy payments from starbucks the starbucks itself i don't see why that would make him not impartial with make him be interested then how can we say we need to decide on that to allow men because they haven't told us what they would bring man would we are now for the first time saying what he is that they would have to bring let me address the questions in turn other first one is you know if we can see that mr kapil los is receiving some sort of consultancy payments the zat you know i mean that he's interested in  transaction and i believe one of the cases says when we analyze whether directors are interested it's you know interested in what and for what purpose and so if the consultancy payments are from starbucks  opposed to from oak tree or monarch i think that makes a big difference as to how we analyze if he's interested and now you are arguing that it isn't that they haven't told the amount it's own but that this doesn't qualify is interested and we would say no because even if mr capper loss deemed to be interested which we don't think is the case that would still leave seven out of nine disinterested and independent board earhart as i understand the record on that act the merger agreement allegedly provided for starbuck to acquire two shipping vessels from their parts company it's harry ventures exchange for two point one million shares of starbucks common stock and so as i understand the argument that gives him a benefit for the merger not here deeply by other shareholders and that's the basis for complaint and the specific language that is used in f five s appellate and they merely allege that erhard a lead here on ventures and frankly i don't know what that means if they did not say he was a director of here on they didn't say he was an officer of here on they didn't say that he owned stock in here and that he had any sort of ownership in here on where he would have received a personal financial benefit in the sense of self dealing which is the question that needs to be answered under aronsen it merely says he led here on ventures and thus he was on both sides of the deal but i think ventures so i under because there are allegations are so vague with respect to mr erhard i don't think that they have alleged with particularized facts as required under rule twenty three point one the camp sure and stevens the the thrust of fives argument on all of these directors was that they were nominated and designated of the board and we believe the case law is clear that's not not and then is a throwaway they also mentioned that they are employees of oak tree but without additional particularized allegations they haven't met the standard to show that oak trees somehow dominated or controlled them so much that they do not deserve the protections of the business judgment rule you could use count count to find it were of who are the least conflicted most obvious easy cases for you who do you how do you get to five and i ask them the same thing in the other direction and see if we can kind of focus on where who the central people are here  because he serves as a director with mr pop us on to other businesses that are unrelated to starbuck so they're just they just both sit on the same word meaning they knew each other and they have had occasion to work together on something completely separate from this correct and there are you know multiple delaware cases and cases and other contacts that say merely serving you know on overlapping actually and can i address that for a minute because i haven't read that case either i'm apparently mr rifkin learned of it last night but he just showed it to me in the hallway about fifteen minutes before but i quickly read the portion that had to do with one of the directors who was alleged to have a very cozy relationship with a controlling stockholder so as to create reasonable doubt that that director was interested who are not independent and what the the new case says is that the controlling stockholder and the director in question and her husband cohen an unusual asset an airplane which is suggestive of an extremely intimate personal friendship between their families so you had two aspects of that holding you had that they call on an asset which is much more than just both serving on a board of an unrelated company so the co owned you know and since it's an airplane it seems to be a very expensive unique asset core call that unusual and then the court also found what appeared to be a personal friendship and said that this type of ownership of an airplane suggested an intimate personal friendship between the families and also made a big deal about the fact that the director's husband was also on the co ownership of the airplane so i mean if the court would like to see supplemental briefing on this issue we're is is clearly independent and then i would also lump the three tree designees to the board i don't believe that there are any allegations that suggest that there  ehrhardt meets that bill because there are no allegations other than he led another company which was bought in the ocean ball transaction no allegation that he was somehow on both sides of the deal either in an ownership basis or on a people that's correct your honor well they were not on the board at the time of the ocean bought merger so there was no no i'm just asking for the want to be clear that we're talking about the same people you've answered by quick witted but you're saying they were not on the dog he's ok second is the three oak tree directors because they admit they're too beholden to oak tree to have considered the xcel transaction that was the first issue that came to them when they were on the board if they were beholden to oak tree then they were beholden to oak tree on the point to file the complaint at least for purposes of raising a reasonable doubt whether they were sufficiently independent the next one after that by the way that's fine i'm done you know that's  most interested director is schmitz and schmidt's was monarchs appointed to the board by the way i disagree with the suggestion that monarch was the principal shareholder here yes it was the largest shareholder but not concerning these particular talking with now of a different issue the dilution claim in order for there to have been a control group you need to include or do you tell me you don't include i think you did include monarch even though monarch dilutes itself  transactional you're saying in effect that monarch made a blood pact with these other two entities in what had to increase their share of ownership at the expense of monarchs on sharon exactly and the blood pact here was called a voting agreement which was entered into in june two thousand and fourteen obligated monarch to vote in favor of a transaction obligated in the sense of a blood pact that's a bit extreme but ok obligated monarch to vote in favor of the ocean ball transaction they were contractually bound to do that and they entered into that agreement in june of two thousand and fourteen before mr schmitz their designate who by the way created and negotiated the merger in addition to serving on this special committee with mr softened to approve it before mr schmitz went about reviewing the transaction and before the board voted on it they were contractually obligated to support it schmitz was banned he had no choice in the matter so not only did he get one hundred eighty seven thousand dollars in restricted stock but he did exactly what monarch was obligated to do support the transaction we we have no idea we have no idea but but schmidt who is by the way an owner of monarchs not simply in point question of were they working together it's really working together to do loot the interests of your client right well it's it's does the complete allege sufficient facts to create a reasonable doubt that the board could honestly consider a demand i want to i'm suggesting to you not the issue about the control group goes to whether it's a derivative were a direct line on dilution that's a separate issue than the just and yes yes it does i'm also puzzled by why it is a conflict that mr schmitz came up with this idea for it was a good idea from the beginning worked on the committee that evaluated the transaction and voted for it in the end why it might what gives him an interest in this in and of itself it might not be a sufficient disabling conflict but when coupled with the fact that as an owner of monarch h his company affectively was obligated to support the transaction he had no choice in the matter but to vote for the transaction that should have it should have prevented him from serving as a so called independent director to consider and certainly should have disabled him from serving on the special committee to consider it but the fact of the matter remains that the plaintiff from alleges in the complaint that his company money was obligated to support this transaction so how could he possibly be disinterested in it given the fact that he was obligated to do it now we can surmise all we want to bout one miner chose to dilute its own shares but the fact remains they did and we can only assume that they acted economically rationally in their own interest and there for some reason they thought that doing so was in their best interest anything else other than that would be to ignore the allegation in the complaint and it's not that high and in fact it's it's all over the proxy that monarch was contractually bound to support the agreement it's not the point it's theory it's the fact why they chose to do by themselves is something that will await discovery in trial but they were contractually bound and so schmidt who owned at least had no choice but is zynga talks about stepping back and looking at all the relationships in a in a commonsense way and we don't look at any one of these individual relationships and say well that's disabling or that's not the statement but we look back and we saying look can we had expected that these directors could have honestly considered this demand any and the answer so far for the group that i've been through pappas th because there's an appearance and it seems to me that for you to be excused from a demand you're going to have to show actual conflict and to the extent that they are recusal made not i'm not sure that that's going to be enough to get you home so help me out with why they've actually got an actual conflict with respect to the us yes i will and only answer it this way at at the pleading stage which was all we are at now yes all we need to do is raise a reasonable doubt and i suggest to your honor that there's not much difference between that lou standard at least the way the delaware supreme court has interpreted certainly the way to interpret it in saying that there's no real difference between whether the pleading has raised a reasonable doubt on the one hand versus what may be the appearance of impropriety or conflict on the other and so what we say is there is enough here not just that they were appointed by oaktree not just that they were employed by oaktree for a number of years and were beholden to o t for that reason but also in that they told us that they were disabled from considering the xcel transaction where again oak tree was on both sides of the transaction just like o tree was on both sides of the ocean book transaction and so we think that consistent with the reasonable doubt standard that the court needs to consider now do the facts alleged in the complaint create a reasonable doubt that these directors could disinterested in lea and independently considered them in the answer is overwhelmingly not and i will say as well that because the oak tree and pappas we're on both sides of the ocean both merger and because they were on both sides of the xcel transaction and because pappas is obviously on both sides of the of the service contracts these three transactions are protected by the business judgment  owners and under the delaware authority demand is excused under two different venue avenues one is disinterested is or independence what we've been talking about most of the time but the other is if the first time in buffalo when b other side doesn't have a chance to argue against you or i forgive me i did i did believe it that mr brown mentioned business judgment actually i thought it was a response to a question that the court had asked i'm not going to say anything more about it because you're correct it's addressed in our briefs but i do want to say that the business judgment rule is another avenue by which demand would be excused here but i i believe i believe if you look at the opportunity to respond to counsel herring ventures again your honor i think all we need to do is is raise a reasonable doubt but i believe your honor it is my understanding that your heart was a principal in herin ventures and also it yes shares went to her parent parent was the party that sold the ships here and received the shares but and this is important your owners under under don't wear authority it's it's not necessary that they derive any personal financial benefit i handed from the transaction but we don't know what he's in this company he's from what you say i understand i would think that means that he is the chief complaint that you saw the like corporate statements and it said erhard chief executive officer of watch you know i did not see a corporate steal me based on like you know i i would i will answer that i  extent when information was provided to me by the principal of my client who as i told you was not simply an outside investor in this company but was for a number of years it's it's co c e o what do we have under under the errancy test as interpreted for example by the oxford health case from the southern district of new york it is not necessary that mr erhard derive a personal benefit from the particular transaction from the ocean book transaction but even even leaving him apart even leaving him out of the equation i've given you pappas i've given you the three oak tree directors  given you schmitz i've given you a soft one and i can comment on keppra most as well who received the change in control payments which included over a hundred thousand shares of stock as well as as well as this consulting agreement only because the transaction was approved  paragraph one twenty five of the complaint on a sixty nine page sixty nine of the appendix that's what's meant by changing control payments it's it's part of his preexisting employment agreement the defendants argue that it was preexisting and that somehow that means that it didn't taint his interest in the transaction but our point is it's exactly because it was preexisting yet it did say that he meant that if there was a change in control he would get these payments yes and that action affected a change of control prec gave him this benefit one hundred sixty nine thousand shares of starbucks as well as an ongoing consultancy agreement we allege control isn't the whole point to compensate him for the fact that if there had not been a change of control he was still in the o he would have gotten other payments but usually it seems to me than an executive is in a position where he's got a contract and he is continuing to receive benefits and one from vision of the contract is he'll still get benefits or he'll get some compensating benefits if there is a change that deprives him of what he would otherwise have gotten agreed that this is in lieu of what he might have expected had he continued as the c he had as good if not better rights in there not being a general care pleading that shows that he's better off than he would have been without the change of control and your honour's if i could just very briefly or in the question of jurisdiction i won't belabor the derivative in direct point but i do want to address the in touch case there was no change in this case between the time it was filed and the time it was worked exactly like it worked the day was filed until the day it was dismissed i think there's some potential inconsistency between the defendants removing the case on the one hand under cafe based on the claim that was a direct point in the complaint and then turning around and moving to dismiss saying it never was a direct claim it always was a derivative point i think it was a direct point i happen to agree with the defendant so i don't think there was anything particularly wrong with the removal but there was no change in the action such that removal would all of a sudden have been affected if it was removable when it was filed it remained remov