may please the court my name is am voids and i represent the plaintiff appellants in this case with the court's permission i'd like to reserve five minutes of my time for a battle the district court in this case erred in dismissing the complaint it erred in applying delaware law in doing that and it erred in doing so based on its wrong conclusion that there was no conflict over fundamental policy between delaware and california law accordingly this court should reverse and remained the core issue here is whether under which law should apply because there's a conflict when it comes to california law and delaware law california law recognizes an equitable limitation that sems from the fiduciary duty that limits what a majority shareholder can do that limits their exercise o statutory or or contractual rights they may have a right to do something under a contract but they still have to comply with their fiduciary duty oh and the choice of law clause different in this case from the choice of law cause which said was it actually didn't address hong kong law or what the status of the do sherry duty was under that what it dealt with was it said there wasn't a conflict there and said there may also be instances when the chosen state has a materially greater interest in the matter than does california but enforcement of the law of the chosen state would lead to a result contrary to a fundamental policy of california in some such cases enforcement of the law of the chosen state may be appropriate despite california policy to the contrary but careful consideration of california policy in other states interest would be required and he said no such question is present there but here if you look at the language in ahmanson and you contrast it to the language you know i think oh i'm sorry go ahead keep going there's no way i think to square those two cases in john in ahmanson this was civically said a majority shareholder may not use their power to control corporate activities to benefit themselves alone or in a manner that's detrimental to the minority any use to which they put the corporation or their power to control it must benefit all shareholders proportionately and under the allegations of the complaint here mentor did not do that it used its power to delay and stymie a potential acquisition it hired away one of collectives important people  refused to allow calypso to take steps that would've improved its financial situation and it forced calypso into a waiting game so that they could acquire their shares at essentially half price because of the way that the put call option was structured they knew precisely at what point the cut cost would drop and they knew by how much is it you claim the mentor somehow kept the earnings of the corporation down so they could exercise their call option in the completely include the fact that they wouldn't allow them to discount in order to get more cash flow in the fact that they've hired away some of the important people or one of the important people there we also noted the fact that when you were looking at were that one of the things that not they had chosen in their contract to apply hong kong law they had chosen ok and didn't hong kong law and not recognize the rights of minority shareholders so that unsuitable and can't be relied on under california state law but the majority opinion itself sort of posited this world in which there wasn't a fundamental conflict but if you look at california law and what it says about f there's no way to square that with the idea that there isn't a conflict if in fact hong kong law said that there was no fiduciary duty exactly therefore it nationally and was enforcing the choice of law situation in which there wasn't a conflict between california and i'm coming on it right i think we disagree we think that the court's language about the fact that there was no conflict where is the cut and so if  think you read that before didn't you but where they clearly saying there was no conflict on this point so that you're saying they were somehow misled because you're saying there really was a conflict between how minority shareholders can sue  majority share holders but they didn't seem to recognize that or were they talking about a different part of california law such as the right to choose choice of law provisions and contracts i mean that's part of california law too isn't it it is and that's why when ned ludd says that you apply the one eighty seven analysis when you're considering whether in fact the choice of law provision is enforceable and here the crux of our dispute is whether when it comes to the existence of a fundamental conflict whether there is one between delaware and california and we've submitted it this court looks at the language and the mic where they said specifically that based on the claim that the company redeemed the plaintiff shares in a a majority shareholders power to take advantage to act in a way that detrimental to the minority shareholders that's a consistent concern that's animated both california and in so that'll public policy is the protection of minority shareholder rights correct it's and so don't you still have to show that that california would have a materially greater interest than the form that the parties chose yes and i think that's consistent with the interests here just why why does california have a materially greater interest in forcing its public policy than delaware because california has consistently recognize its concern with disproportionate bargaining power and the ability and its concern with its residents i think about and you know is that i don't not understand you to be challenging the original stockholder disproportionate power would come in you would challenge the contract itself as a breach of your sherry judy because of disproportionate power but you're not doing that so one should take the contract as a thrasher a case that cited in our briefing right where they said yes this man had a right to collect his debt but what he couldn't do was to do it in a way that was intended to harm the company to act in a way that was detrimental to the minority shareholders and that is sort of the crux of the footnote ties into the description of the test and second if there's materially greater interest and we will decline to enforce a law contrary to the state's fundamental policy and here both lloyd declined find that there was a material greater interest and did conclude there wasn't in majority opinion they don't address the existence of a natural conflict between hong kong law and california law and i think when this court by contrast here looks that looks at delaware law and then looks at the language of time and certainly happy to answer your questions as for the with respect to whether california has a materially greater interest don't you need to show under the don't you have to apply the internal affairs doctrine and i don't know if you that we think that the gravitational weight of the case pulls it towards california law if i might i'd like to reserve the balance  the tech company like collective which is inherently risky on average about twenty five percent of those yield a profit and mentor graphics here took a chance by making a substantial capital investment in clip which made software that was complimentary to mentors products and mentors interesting call to one beyond not towards financial as well as partnering with them and sharing technology in confidential information and in exchange for mentors contributions to clip t shareholders which included two international venture capital come firms that are the plaintiffs in this case they freely and voluntarily agreed to terms of a stockholders agreement that included  option for a mentor and a put option for the original shareholders and so with that agreement the cabin to the risk that was the agreement that was in place not only did a cabin the wreck you want to call it the facts even though i told her that i think we know the facts ok ok so so anyway that that agreement had a delaware choice of law provision and that is the provision that the opponents are are seeking to avoid delaware law is perfectly fine for them at that point in time but now when they would like to argue that they have a separate fiduciary duty claim they're seeking to apply a different law but  contours of that are neither recognized in delaware nor california law while both states recognize a duty by by majority shareholders to minority shareholders neither state recognizes a duty that's alleged here which is by majority shareholders to ensure that the minority receive a significant or specified profit so this case isn't it isn't that the concern that the majority share holders essentially took action that was disadvantage minority shareholders well essentially their their claim which which they they make clear their damages that they seek is the difference really between what they did receive through the exercise of the col option pursuant to the parties contract and their view of whatever they can they could prove might have been a higher value earlier and so it's a fact that difference  and the parties agreement was very clear in terms of when and how those options could be exercised they were on both ends exercised at the sole discretion of the party exercising it and they could be exercised at any time so claiming that there was an obligation to accept or even to pursue the possible by am by this other company earlier on right california court appeal cases neither is there is a supreme court case they both the barricade has much later essentially all we have to do is just side with california supreme court will do what all this and which emphasizes the importance of and forcing the strong policy that california also has in terms of the agreement of the parties that freely and voluntarily reached and enforcing the choice of law clauses in the and to apply california over delaware law just in terms of the the fiduciary duty claim but also then with with regard to the internal affairs doctrine that not only supports the and decision making by the corporation this isn't that this is a decision making by the majority shareholders he's a fee the minority shareholders with regard to this stockholders agreement i'm not a it is an internal affair within the meaning of that doctrine well it just to the extent that everything relates back to the underlying contract that the parties had with regard to the call option because they are theory is about the manner in which the call option was exercised none has to do thoroughly with the internal affairs of the corporation in the agreement that everyone entered into to be can go as you think that all relationships be with regard to shareholders even if they don't deal with the corporation acting qua corporation are internal affairs in other words when you have a fiduciary duty claim regarding the corporation you're dealing with the internal affairs of the corporation  with the corporation they should have done this for the corporation rather than after the corporation here what we're dealing with is the rights of shareholders right not the rights of anybody running the not directly into any with the running of the corporation in any way are issues about shareholders in trying to affairs i mean it in general are the rights of shareholders the interim affairs of the corporation well they can they can the and i think that in case in this case given the theory th because every time i ask you a question you stare at me as if i'm asking great so i think i'll just stop asking questions thank you i just couldn't hear part of that well that's but this is the fist time ok do you think counsel that minority shareholders could enter into us shareholder agreement where they would effectively waive all of their rights to ever sue for fiduciary duty violations while they're there is the california case that says without is not appropriate a complete waiver of the minority shareholder rights is is is an issue but there is not a complete waiver in this case there is no waiver in well there's someone winch agree that there's somewhat and i wouldn't necessarily call it a waiver but that the nature of the agreement was such that it enabled the majority shareholder to benefit itself at the expense of the minority shareholders didn't well i was waiting until the price had gotten lower and then buying it for the lower price and also argue the argument is they interfered with the purchase by a third party that would have been at a higher price i mean at some point isn't this a situation where the minority shareholders are finding themselves subject to an agreement that waive their right to sue for a violation of the majority's fiduciary duty to them well you know you're talking about  an agreement that the parties free freely reached well before this which provided equal equal cabin ing of risk to both of them there was a put option and a call option and the plaintiffs chose not to exercise the put option which they could have done at that time instead of require you know instead of saying mentor should have exercised it they equally could have exercised it at that point there isn't really clear what they would have gotten out of that if they had done that do you know what they would have gotten as far as whether the price would have been higher if they had exercised the put option it could it it could it was minor signs it would have been higher than it was when mentor exercised the call and which the growth rate didn't go to twenty percent and then exercised its call option and the multiple which was productive of smaller price right now are you telling me that the put option that the minority shareholders had could have been exercised before the date so that the the now appellants could have gotten the higher price but they didn't yes they could have done that they had this equal corollary right to call for mentor to purchase their shares at their discretion and any time yes but the question is what  as judge brack says it's not clear on the record of tall what that would have yielded at during the time period after the failure of the  that yes there's a there's a calculation you could do some calculations utilization is that they could see that the growth rate wasn't going to achieve twenty percent and they could have put the the shares before the end of that year and got the higher price but they decided to roll the dice correct ok to a waiver we're talking about you have to marry that the contract with the fiduciary duty claimant as ned boyd makes clear it needs it needs to be a specific theory not some amorphous fiduciary duty theory has to be a specific theory as to why you should override the party's choice with the contract in this case and we there is no there is no recognized duty that the plaintiffs have have put forth under any of the california cases that would show that that there would be some kind of duty that could even override that if there even exists a duty or jones talks about that but that jones is distinguishable from from this case in that case you're talking about completely shutting out and excluding the minority stock stockholder so joan says hey if you completely cut out one part of the minority stockholder so they can't get any profit or any benefit from their shares that is a breach of the fishery duty but that is not what we have here so taking fifty percent away from them exercise a put call in any way to behave in any way regardless of their fiduciary duties and that's clearly inconsistent with the language of jones jones specifically said that no matter how absolute terms your power is no matter how meticulous you are to satisf technical requirements you cannot use that power to your personal advantage and to the detriment of the chair holder of the minority shareholders in the creditors and that's precisely what happened here we are not our job is just in jail with a contract a question right with a question of whether if there is a contract that gives particular authority the the sherry duty overrides whatever discretion is in the contract possibly does for jones just deal with that right correct me of our deals with a complete waiver jones deals with how you exercise your right to do something as this thrasher where the court recognized that the majority shareholder how to right to collect the with the couldn't do it in a way that was intended to and in fact did harm the minority shareholders but that can deal with a contract between the the shareholders and the minority majority shareholders right no that one agreement that what by the shareholder that the minority majority shareholder could do this particular thing but in this case we think if this course looks at the issues we think that duty they were obligated to follow it they didn't adequately plug in the complaint and for those reasons this court should reverse and remand if the put option had been exercised what would have happened  don't know that this is someone outside the complaint but my understanding is that the value would have been significantly lower the way it was structured it was that if the plaintiffs in this case were to exercise their option they would have made