agree on in answering the questions before you is what are the finish what law governs the producer relationship between the parties the district court judge expressly recognize this if you look at the of relationships between shareholders but only in the context of the majority that cases is roughly thirty five years old and during the time since a case and that opinion was first issued despite having many against two parties i'm sorry lynch was a thirty seven percent shareholder he brought suit against two other shareholders franklin charles cook franklin cook was a four percent shareholder lynched in that case tried to make an argument that the respective shares held by both coasts should be viewed together so that and under ahmanson you could in essence argue that they were constituted a majority of shares the california court of appeal sufficiently clear certainly if the court wanted to entertain certification of the question to the california supreme court we think that the california supreme court would answer the question in the negative that a minority shareholder does not owe a fiduciary duty to the majority in this circumstance or under any circumstances but i think actually where that where the district court erred was in its analysis of ches on and hunt as sort of the two cases dealing with this specific set of facts but when you step back and look at at the question i think it was proper to decide the question within the framework of those cases but you have even under those circumstances the the donahue court and footnote seventeen said that only in certain circumstances may and minority shareholder of fiduciary duty so i think the important consideration is is that you have to look at the fiduciary duties in the context of california law we believe that the california courts have already answered the question and that certification would be necessary but if if this court believes that there's an unanswered question when you do look at chesterton that distinguish it from this case in chesterton he was actually not a true minority shareholder in that he held twenty percent of the outstanding shares of the corporation so really in chester ten you had a minority dispute the california court said we're not willing to impose a fiduciary duty in that setting the question here is a minority versus majority side i think if you look at it at cook there's no way that you can say that a majority would both reduce your duty to the majority when cook answered the minority versus minority question in the negative i think another important consideration in chesterton is that  terms of of the s corporation and election and want to curb prior to the time of the parties may that there was an actual discussion of the ups and downs of making the selection including the fact that there would be a restriction on the transfer ability of shares that was something that chesterton himself participated in in fact he spearheaded the discussions on that issue prior to the time with the parties made their shares there are a line on to one page preprinted state and federal election forms which in no way advise peter have any real scripture insist that the majority sought to impose on the transferability of his  shares if in fact that was something that the majority had contemplated at the time it presented peter with the u s election and should've there should have been a discussion about it and should have put that in the shareholder agreement and the articles are in the under the california corporation's code section two forty eight three any restrictions on the transfer ability of shares actually have to be noted both in the articles and the spirit certificate which you know was not the case here i think another important fact which distinguishes chesterton from this case is the the fact that the two corporations to which chesterton's to transfer his interest were to sell corporations that were wholly owned by him that had been created solely for the purpose of transferring his interest so as to defeat status in this situation here we have a bona fide transaction with a third party with real economic substance we're not talking about any sort of champ transaction as there was in chesterton i think the most important thing that you take away from chesterton is its reliance on massachusetts law for shares just as in this case there's no restrictions in the bylaws the articles or any shareholder agreement the places where you might typically expect to see restrictions imposing any restrictions on the on the transfer ability of shares and  by that i think you need to bear in mind that peter's act of signing the two one page preprinted forms that did not advise him in any way of restrictions on transferring shares i don't think under any circumstances  agree with you and reverse the summary judgment there's a lot of issues left for the district court to to resolve it seems to me implied contract is one of them i would agree with that your honor i would agree without it i think my point is to summary judgment and vacate the injunction this would have to go back for not only determination to work california lawyers but to develop some of these other issues such as whether or not it was implied contemplated by the parties at the time and there's really no evidence in the record to support that either similarly i think the argument that they've made that somehow peter should be viewed as a controlling shareholder or that he has a controlling interest by virtue of the consequences of actions that he might take likewise fails if you look at the california corporation's code and what they speak of in terms of controlling shareholder you look at the shareholder objective we within the corporation peter's a one point one percent shareholder he's not an officer a director he doesn't participate in the day to day management of the corporation i think under any measure of control  cannot be said that he has a controlling interest in the corporation under under those circumstances they're really looking at the consequences of an act that he might take which under both and where the court used essentially the term controlling shareholder interchangeably with majority shareholder or the california corporations code i think under either measure they can't be said that he's a controlling shareholder  duties when you see that it's clear that those duties do not exist for the minority that really is the n of the question in terms of the analysis you can go through chesterton and hunt and distinguish th there's a number of commentators who we cite to in our brief who criticized the chesterton decision and say that courts should not be in the business of restricting their protecting corporations tax status for the b that a majority shareholders simply because of poor planning by the majority we take the position that the district court's order essentially creates a shareholder agreement for the benefit of the majority which the parties never agreed to  the majority in this case was free to protect his own interests by placing an appropriate restriction in the bylaws articles orange jerald or agreement as it's typically done when the majority wants to restrict the minorities ability to transfer shares that didn't happen here and i don't think that the court can read it into the parties agreement under the circumstances and with that i'd like to reserve my digital time for a bottle thank you thank you i think the court should not lose sight of this case is whole about what we feel the case is about i believe the judge wilkin understood was this if somebody agrees to do something do well judge wilkins equated consent with agreement because she said that by virtue of peter signing the subchapter s election he implied that he was doing a do nothing to harm the corporation and by court to find out what california supreme court would do for a california supreme court has been specifically said so we asked to determine what the supreme court of california would do i have persuasive and then she said hunt would lead to substantial entrance and then finally on thirty four because there is no binding authority to the contrary the holding of chesterton is the most analogous and persuasive authority presented to the court it seems to me the judge loken was saying this is a mess use rules a better rule and i'm going to apply that because the better rule but she skipping a step isn't whether she thinks it's a better role it's whether the supreme court would think it's a better rule and i i don't see in her opinion that she's made that i think she skipped that an that's true then we have to send it back to her to say no no you don't make this decision based on what you think is the bones persuasive rule you have to decide what the supreme court would decide the california supreme court w imply what she was trying to say clearly there is no california case directly on point i believe that that is fair to say that she looked at heart and looked at chesterton and concluded that  better role now certainly she did not she did not in her decision say i believe that that if this question were before the california supreme court the california supreme court would rule the churches and applies but without having that in the decision i don't think it's necessary to conclude that she missed the step i think one can reasonably conclude that she she looked at it as if she would she was interpreted what the hell the supreme court w likely do in the similar situation but i do concede that that's death as is missing in the decision i have no problem with it there's no analysis of the california cases now as i read the california cases they don't decide it relationship with the majority i think that's misplaced because the difference in in lynch is a lynch was a situation where the parties were were disputing about a tender offer it was not a situation where the minority had a clear of dylan to destroy a benefit to the corporation that that minority shareholder consented to have exist that may be true california corporations law and in march it was not i don't i don't i think there's some cases i found there were at least interesting in the california law and i would like to have her opinion on and let you talk about those pieces and why the opposition is wrong that these cases don't lead to a determination that the california supreme court would determine there's no minority  cases in which is a mention involvement of the minority does not mean did not have the kind of control i'm not talking about controlled in terms of majority shareholder i'm in control with respect to taking an act that will have have contracted around it but simply in the absence of a shareholder agreement does not therefore mean that peter can do anything to destroy the same chapter of selection peter had and he couldn't nobody was restricting peter the jordie right and there and the court said that it's going to treat him just like a public corporation when a public corporation minorities don't have a right so if if the supreme court is going district court now and that argument has just been made by your adversary how should the district court handle that argument the disproportion handled the argument by saying that simply because you have a california close corporation or a closely held corporation or land is that if you're going to engraft the rules and the notion of a board of directors of a public corporation its obligations to creditors in the typical situation if the board of directors has no obligations to creditors but as a corporation gets closer to the bankruptcy the boards of directors have to do surely obligation to creditors not to do anything to jeopardize your creditors claims in bankruptcy likewise here we have a situation where peter has this no i think the difference is that a public corporation that the shares are more freely traded in a closely held corporation is of course always have we have the supreme court saying that they're going to apply public corporation a lot to the majority in stevens and why no why would the supreme court then decide we're going to have a different rule than a public corporation alone in dealing with the minority because i think because the distinction judge wallace is that even if the court were to apply law would dictate that that would be stuff that you simply can't take whatever act you one wants to do as a minority for example to destroy a corporate asset in a public corporation you can in a public corporation there is no to my knowledge there's no duty that the minority has for play and i you know we're looking in a crystal ball this is like going to las vegas but we're trying to determine what would the supreme california supreme court do they've gone this far applying public cooperation a lot of sixty's and i'm just wondering what your argument would be that they wouldn't apply public corporation law not only to majority but to minority  believe the court would say that because it is unique its structure is unique the shares are not freely marketable although we are going to impose the public corporation rules there would be a distinction  if the man nor he was going to do something that was going to jeopardize the very very significant aspect of the closely held corporation because other than the standard other than its status as closely held a closely held courts has had suggested or have held that the the public corporation laws would apply to a closely held corporation think there would be an exception when the minority was going to do something that would destroy the subchapter s or something akin to that is any language in any of the california courts either the supreme court of the california court of appeal or any of the districts of the california court of appeal would help us with that analysis that they make a distinction district court level to have the temporary restraining order lifted but judge welcome concluded that there is the potential there was nothing to prevent peter from simply doing this again and so she kept the injunction and permanent injunction catamount is ready willing and able to go forward with the transaction if permitted to do so and peter stands ready willing and able to sell his shares to them so the the only argument they can is an indication of how the court would rule on that issue in terms of all these cases i don't really think that you can distinguish them by simply saying that they didn't involve the precise factual situation as you correctly point out i just wanted to refer back to the record in a pollens an excerpt of record page thirty four which is page five of the district court stay order the court expressly states that  it is not looking at california law on this issue which in our opinion is where the error was made that you can use the framework of of chesterton or hunt for the analysis but you have to plug in  your duty to answer the question which we believe is clear one other point that there's been reference to some fact finding that was made by the district court and i think it's important to bear in mind the district court issued no findings of fact in fact she essentially just took the order from the initial request for injunctive relief and turned that into the permanent order on summary judgment so there was no real fact finding in terms of informed consent or implied contract or the question of whether by simply agreeing to the us election and signing the preprinted form that peter actually entered into an agreement not to sell his shares or to abide by some restriction on transferring share his shares that factual record is simply not part of the record and not something that the district court did in this in this