morning your honour's may please the court my name is steven macand he and i represent eugene towers dribbly on behalf of walt disney corporation we would like to reserve three minutes for a bottle and we are asking that the court reversed the addressing two of what i believe are the most important issues whether the court erred when it found that demand was not futile and whether the corps erred and if used discretion and whether the court erred when it found that pla allegations an aisle in isolation construed the allegations in favor of defend it and it also require that plaintiff plead smoking gun evidence now that's not the evidence and coming to a conclusion i don't think the district court used the phrase smoking gun does not necessarily smoking gun evidence but actual knowledge actual knowledge correct yes and so it didn't discretion is a standard right i don't necessarily agree that the standard right now is abuse of discretion it's a little unclear for example defendants cite to single case for the abuse of discretion standard which is lappers v when in that case with respect counsel we're talking about a shareholder derivative action rosenblum talks about that kind of a case it says the abuse of discretion standard is what we use so i'm asking you is what case other than  rosenblum gives you the authority to tell us that our review should be did no you're right your honor there is no specific a sense of your this is private language on your part right directly you have said so well reviewed would it make a difference i mean there's certainly asking and bank ninth circuit to change the standard it's got to make a difference what judge white reinard said in rows of them is at least there it would make a difference and you could see why it wouldn't make any difference if you're going to argue  what difference would it make here correct i don't think it'll make a difference i feel under either standard de novo or discretionary view you're correct your honor that it wouldn't but if the court does believe that it would make a difference i believe it should follow  proposal that should be your argument as to how it could make a difference well i don't persuade them correct or your honor it would not make a difference in this case so i think under the abuse of discretion standard that the court core realized that was that the that the directors knew that they were committing illegal conduct for example one inference was that off label sales of allergen was important to the company and others that they actively monitor those off label sales of botox another inference is that they reviewed and approved funding for organizations that promoted those off label sales either of those individually does not necessarily show that they should have been aware of this legal cause of the council with respect in this case i think you have a very different situation can you point to any allegations in the amended complaint that actually demonstrate that any member of the board had even knowledge of the alleged conspiracy let alone a majority of the board what part of the complaint sure if i was going to point to it i would have to point to specific specific discussions between november of two thousand and five to november to january of two thousand and six where there's various discussions regarding the pixar act acquisition but first you have to go back  what was going on during that time during that time there were discussions with high level executives at at disney discussing these gentlemen agreements not to push each other's ploys by coming home and remember i want to ask you i'm talking about the board of directors is no question in my mind that there were some officers of disney who knew of and indeed perhaps for the primary instigators of this and certainly steve jobs and pixar was doing this but it is standard here is the board of directors correct and what i'm asking is where in the amended complaint is there or are there one or more allegations that members of the board not officer members of the board had knowledge of the conspiracy establish that is there an allegation that a majority of the board had such knowledge or is that yes i would say it's the board meeting that's where they're discussing issues with labor ok but that's all very general stuff i'm talking about a specific allegation where you say board members x y and z were told on such and such a day that this was going on you don't have anything like that you know crafter on it but that would be requiring a smoking gun of a where the standout work was like it was something you have just general references to the kind of discussions that go on when you acquire a company no i don't think those are those are unremarkable discussions with some specificity of maybe not a smoking gun but you've got to show some crossover between the officers and the board members i searched in vain for anything in the complaint the amended complaint that shows that any director let alone a majority of the directors were told about or knew about this conspiracy where am i wrong what have i missed i'm not saying you missed anything necessarily but i read the complaint to be very similar to rosenblum where they didn't that these directors actually explicitly were told of this conspiracy they allege hey they need to talk about this off label sales of botox they monitor it they approved funding for organizations that did that which is very similar here here were alleging that  competition and restraining increase in labor wages was very important to a company this was referred to and as you see filings you have these high level executives talking in emails all about like this restraining these wages and not recruiting other companies employees but even the f c c in its action permitted in connection with mergers and acquisitions to have discussions about you employee issues and agreements and so on so the running illegal about that right no not necessarily give correct but i believe that doing that the context of viewing all the facts and totality does indicate that they were advised of these illegal agreements i mean if discussed but not reflected in the minutes without any other evidence right sarina can you repeat that you're supposing that it was discussed without any evidence from the from the minutes or direct evidence otherwise and there's this two step analysis for that whether there's facts that would arouse a reasonable suspicion of a shareholder in iraq or whether the second second step is whether they could initiate an investigation in order to uncover pixar is is a subsidiary of disney and even then that doesn't necessarily in pew not impute the fact that disney was involved in any conspiracy at that point a shareholder wasn't recently aware that of this conspiracy intel documents were unveiled in may of two thousand and fourteen and high tech employees antitrust litigation where they revealed documents and at that point there were emails and such referencing disney being a part of that case leaving is sufficient on the basis of this is what you needed to plea correct i disagree with that i believe that we depleted what was necessary we showed the fact that a reasonable shareholder would have been suspicious of the fact that does not i'm just saying i'm sorry something we agreed with you on when they were on i that doesn't make any difference on whether you're running or it was correct you're right your honor but still it would be pap pressin to hold the shareholders this higher standard of having to determine just by the basis of a company being a subsidiary of another company that that parent company must have been involved in the conspiracy as myth and that question it's i can wait if you want to reserve oh sure i would like to reserve the rest of my time think you're on complaint it recites the procedural history of the case it addresses and we didn't hear anything to the contrary it addresses the the allegations that might be the most salient and it explains why in the district court facts alleged do not give rise to a plausible or one might say reasonable inferences along the lines of what suggested here the district court did not require  smoking gun whatever that is in fact that page eight of the district court opinion the district court quoted the language from rosenblum which says you don't need a smoking gun so as i say it's not exactly fair to this person i can i switch over to plausible allegations of breach or for do sherry duty as to pixar or to disney because of the what i think of us of this continuity in the times when you would usually you would agree these these officers certainly the department of justice thought they were involved in something that was illegal right certainly appears so it's ok and in that case they there was some agreements reached there were some lawsuits i guess some of them are still pending against these officers right it is your honor and so from your perspective mr iger of course was not one of the ones i named but since you don't represent any of these folks you have any only but let me say it to you this way if an officer is named as having known of the conspiracy i call it  there is no impediment in terms of pleading in this case right i mean these are they are they are going to go forward with that he claims the officer knew it was an individual thing you don't have to have a board involvement right and i plainly if i understand question correctly your honor yes right if there's a a well pleaded claim against an officer then that is not the rain we're covering in this society so regardless of what we do with the board  claim can still exist against these three people that i named without doing any damage to the board or mr in this case is that correct yes that's correct again if i understand the question correctly we're not asking for it did not ask him a my colleagues here if we don't if we don't get past the notice issues if utility issues we wouldn't get to this question but for a moment let's assume that they had pled adequately do you think it's reasonable to require a shareholder to be suspicious of potential wrongdoing at the company were allegations are made against the subsidiaries alone without mentioning the parent company in this case but i can pixar and disney the d o j is action did not initially name just incorrect well it doesn't use the word disney i have something more to say about that if ok maybe i will but to answer your  by name that's true but but i don't want to interrupt your honor i want to i just want to follow through that it is it fair for purposes of equitable tolling to say that a reasonable agree that we probably oughtn't to get there but i'm not saying we're going to i just explain this aspect if it were mature if the court please the excerpt the record of ninety five embraces  and actually that the proposed appeal asian i think is interesting and germane to what your honour's asking about because it doesn't mention disney by name but it does say that the  release specifically calls out as to pixar that the relief that is ordered by the consent decree by the judgment applies to the parent we're parents and directors the parents so i think of this as you know perhaps disney as a name by name but the question is would a reasonable shareholder objective test as seeing what the consent decree calls for what a reasonable shareholder think maybe better have a look i don't quite work as it's inquiry notice so should i without jumping to conclusions through an inquiry that's directed to the directors the other feature of this is that the  and apple and they can i think the description of a deal that applies to all of the employees which was according to the stipulation put in place by senior executives they have to be pretty senior to reach all of the employees of these or sizable enterprises so in other words it's not possible i think fairly to read this deflation and say that this whatever was going on was limited somehow a division or a department or a manager of the omaha office i mean that pretty clearly what was the justice department was alleging at least respect to the highest levels of the companies and then  a reasonable shareholder i think and that in my opinion but i think given those circumstances it was would not be unreasonable to expect a shareholder to enquire as to well who exactly is involved when we consider what a reasonable shareholder is you eat cake and do it count what would be in the business news at the time in question and other words disney's acquisition pixar was highly highly publicized at that time is that something that in terms of inquiry notice it is fair to put on a reasonable shareholder that that shareholder shareholder is someone who might be expected to pay a reasonable or ordinary attention to events pertaining to his or her financial holdings after all by definition this is someone who has a financial interest in the affairs of pixar and this is a ship is the reasonable shareholder is someone who receives periodic communications from the from the company and the parent or a about the forth with the company from the company in the context of the idea of inquiry notice do we in considering a reasonable shareholder consider the professionals or others who advise the shareholder for example many people buy stock and they have a stock broker others are involved with law firms and so on but it is the reasonable shareholder if you will treat it as having knowledge that his stock broker who handles if he has discretion that the stock roker has on his behalf i don't know that at least in this case i don't know that the definition needs to extend that far frankly i'm not saying it does i'm just not exploring this issue i wonder if a reasonable place to draw the line about what a reasonable shareholder is is the question of whether the information is there is the word again reasonably successful to that shareholder  if information were reasonably were accessible to this hypothetical shareholder only through a specialized adviser well i think then for purposes of inquiry notice we might have a the might have a different opinion might pursue a different route but here we're talking about information which is is certainly available i certainly freely available who owns pixar but who of whom are they a subsidiary who are these officers and directors we're talking about it's really the question the only question is well is it is it unmissable is it impossible for the shareholder really to know that and i don't think that comes into the calculus here unless the court  i would just like to quickly point out that when the court came to its decision regarding plaintiffs plaintiff's claims being barred by the statue of limitations it relied on google which is misplaced first of all google at the  stage was denied on the statute of limitation the motions miss was denied on the statute of limitations allegations then it was allowed to proceed to discovery and at that point on summary judgment is when they granted that motion on the statute of limitations but even then they had a vast array of documents that were unavailable here at the directly reference google and its papers there are various media articles that publicize there's nothing here like that disney wasn't referencing the d o g s articles they only referenced pics the pics are subsidiary and then with the district court found in that regard was that he picks are related allegations worse of fission in this case to put you on inquiry notice and s several liability on makoto for merchants like i t g who sold their options and it's actually disclosed in the options there's a contract statement that disclose that makoto is jointly served several e liable for things such as  sales there's nothing like i hear there is no contract agreement i'm imposing joint several liability on pixar for such a conspiracy in fact we're not relying on julian several liability we're relying on disney's own c