right before you start can you he helen's hymn book said no you are under extreme circumstances will make an exception thank you all right i think since we can hear you and i can i can see a very tiny screen that's what i can see too but let's which was a chinese company which shortly after caterpillar completed the acquisition it announced over five hundred million dollars charge constituting more than eighty five percent of the purchase price and the here we waited till the resolution of the shareholder demand futility action i think you can see in the record that the final dismissed came in september two thousand and sixteen there are some discussion here and it's another reason why the board had to take up the demand earlier because it was a potential issue of the expiration of the statute of limitations and plaintiffs in fact raised this with counsel for the company were also counsel for the defendants and we s two things so so we had to file the complaint but getting back to the issue of let's wait for the outcome of the show but the main futility action it's resolved in the end of september two thousand and sixteen you couldn't possibly i  under even the most liberal interpretation assuming argue window that illinois statue imitation supply and delaware internal affairs doctrine doesn't apply here you couldn't possibly complete investigation doing so you're exposing the company to the claims being still now it happens to be that in this very circumstance and in soon one of the letters attached to the complaint when we write to the company and they on delaware a lot suggests a procedure for dealing with this sort of situation and then it shouldn't be a problem of looking into the issues of race and demand especially when the company is spending especially when there is a serious risk that the limitations period would expire and the company and the defendants refused to enter into a tolling agreement raises a reasonable doubt which is the standard on the delaware lot that  hit on the books but they said they start taking actions immediately and they're right in the middle of things there they do have the demand futility actions pending and if the demand futility actions had had gone forward this case would have looked quite different i think the board would could couldn't responsible you think that it needs that data and i do it maybe you can clarify something for me because  occasions which was three years would apply and their response was just the identity of actions between the demand futility action and the demand made by the shareholders would effectively told the statue limitations and my response t obviously have other arguments or at least three other arguments in this case where we feel demand was wrongfully refused one of which is that were produced to record and there's a lot of support information including three upon the seas are completely redacted and there's constant references even whitey diligence report and other matters and we learn for the first time that simply in austin actually did look into this matter even if they didn't investigate the actual claims and looked into the actual facts of the matter that seemingly parts of the time we made a found they didn't they did not do that so that that that's another issue and we also raised we were so i could go through all the issues i mean we've certainly read your briefs and i think there's going to be some difference of opinion between your reasonable doubt standard and that of your opponents but let me ask you this somewhat related question you didn't ever try a section two twenty proceeding get you not in this case i have in other cases you are ok and i really couldn't in this case because if i went to delaware and i obligation to state that i had the necessary information to be run from them and refuse and i cannot then go to delaware court and say these documents are necessary for me to plead wrongful demand refusal seen oddity of delaware  right that's that's about it in delaware in my experience i mean i can't reference a case which i'm citing the brief but there was one time a case where we filed the motion to intervene another shareholder wrote of action in the defendants try to hold it over  while we were proceeding with something similar to twenty action in delaware involving us that were sexed were trust and it was a tight argument i mean by counsel wester found in our favor that it wasn't actually filing a complaint we were forced to do it but my experience  people at caterpillar saying oh we don't care what happens let's just go in and waste the corporation's money you know and i can't think what they would have said i don't i don't think it's going to ever be anything that they're not that penalizing people and they're not that's not a ripple but it could be a situation it's aren't the same thing as you know a breach in the business judge well mistakes happen what and what corporations are not always liable that's true but there are a lot of issues here in terms of what's been disclosed in the report demand futility action and the board again within the bounds of its business judgment concluded it would not be a good use of the company's resources to conduct an investigation while the issue up to me and utility was going on and that was an issue that was being actively litigated and as your honor indicated that would have significant bearing potentially on what the investigation would look like and how the demand here would be treated and just to be clear here  honor there is no rule in delaware that says the board has to immediately respond to a demand the way in which the board responds to demand is itself committed to the business judgment of the of the board and that's exactly what happened that something we can think about it well your honor again it's not as if the board's doing nothing or the board is very actively monitoring the existing litigation and the board by the way just to step back for a second i've been very involved in the transaction been very involved in the aftermath of the discovery of the fraud i and so it's simply not the case that there are you know waiting to see how all of this turns out they are actively engaged they're taking appropriate remedial steps in the wake of the fraud and that's a separate the client in the starkness based upon injury to the corporation in the form of a financial injury or or the like in and yes i think the ultimate you know resolution from the plaintiff's perspective would be some benefit back to the company so that there's there are certain exceptions to that drive the point is that the board took that into account and i want to just emphasize something that your honor touched on and that is there really are two different business judgment issues in this case there really is in this of interested and independent directors who considers it and so the issues here are very barrow it's only whether or not the board was grossly negligent which is a kind of you know doing no investigation whatsoever a kind of reckless total disregard beyond the bounds of reason or better so so and the ways in which it may have been would have been and not responding to the demand in a timely manner and not agreeing to told the statute of limitations that the board really thought it needed more time then preserver and actually i think that's a little odd because when you finally get to this point or the district court point reasonable response to the demand to say we can see this because there is some legal issue about whether this is so intimately tied up with the cause of action in internal affairs doctrines and whether this happens to be an exception to the normal  klaxon regime well your honor we certainly explained to the plaintiffs here why it was the board was going to defer resolving the demand and again bad behavior here and so there's a kind of narrow sliver of conduct in which you don't have this kind of circular indemnification problem then there's usually some if you're beneficiary somebody else some money somewhere that's right none of which has been that this is these are all issues that jones day looked at you have a very detailed you know single spaced forty six page report that lays out in exhaustive detail all of these factors all of the things that jones they looked and that's exactly right that's what was identified in the demand that's what they've named in this lawsuit as potential defendants we don't believe that there is a adequate act allegation that there is any kind of conflict between jones day and ernst and young it is not alleged with any kind of particularities but the question again to get back to your honor's point the question is the good faith and you know whether or not the board acted with gross negligence with respect to that issue what about this reasonable doubt standard that mr abrahams realigned not pleaded enough to create a reasonable doubt that the board in its response to the demand was not guess the decision unless you have gross negligence or you have bad faith and so the question is reasonable doubt that the board acted with gross negligence a kind of intentional almost you know dereliction of duty the allegations in this complaint do not yield such an inference the allegations again are consistent with the company having discovered the problem the company having engaged in efforts to deal with the problem and when the demands were made retaining it very well respected law firm to conduct a thorough investigation to consider all of the issues are and ultimately to come to a conclusion and by the way just to touch briefly on the document issue we gave a that privileges never properly challenge below but right because mr abraham said there isn't a privilege in this circumstance again it wasn't properly presented to the district court for resolution of that question but the point here is it's a very detailed and comprehensive report which sets forth what was done it's true that there are a couple of pages that summarize the confidential and privileged information about that doesn't detract from the overall scope of the work that was done here and that again is the question the question is was the board grossly negligent in relying upon the jones day work in light of everything that jones state did everything jones being looked at and all of the ultimate recommendations that they made so would it be accurate maybe to rephrase that slightly and ask whether the board was grossly negligent in coming to the conclusion that it didn't want to pursue it didn't want the corporation to pursue litigation against the individuals well you are again the allegedly you know disloyal or character i don't know what you know the people who got them in trouble yeah so you know the jones state report reflects an assessment of the substantive merits of the claims and that you know the merits of the claims as well as other factors business considerations it is up to the board in the normal instance to decide whether or not to commit the company's resources to pursuing litigation and i think that encompasses all kinds of different considerations business considerations pros and cons expenses you know collateral implications and the like all of that is laid out in great detail in the jones state report as part of the and that's not even a question the question is did the board act in good faith on an informed basis in deciding it's not worth at the end of the day bringing these claims against these particular defendants that is something that is protected by the business judgment rule the allegations in the complaint do not set forth the kind of extreme facts that you need my friend to represent the rich decision in delaware that's a very extreme case if you look at that the facts are that short you ought to let me say that first of all discovery was made in the section that was an opportunity to challenge in turn a client privilege we've raised in our papers on the d n o inchoate on the issue of recovery from individuals it comes up in a lot of litigations there actually is require the pleading of evidence and that's asking a bit too much from plaintiffs especially were at no discovery in this case thank you thank you very much thanks to both counsel will take the case under