and we will hear the next audio emotion versus macintosh corney your honour's stephanie bradley for the plaintiff audio in motion the district court in this case dismissed audio questions complaint prematurely and subsequently deny leave to him and despite the fact that it appeared that amendment would cure any defects and that it was still likely that discovery would produce additional evidence showing success or liability in particular most cases that suicide success or liability do so with the benefit of knowing the terms of the asset purchase agreement this document is critical because it defines what liability is assumed by its successor corporation and could include an express assumption of liability in this case it would have made sense for the successor corporation find sounds group to assume the distribution contract both for the asset purchase agreement and also for the evidence of the ownership of these private corporations but you still need to make allegations in the complaint that would give rise to a plausible claim of course business of audio equipment manufacturing it alleges that the management stayed the same before and after the purchase and we also argue that it fairly read the complaint should be should be read to allege continuity of location and personnel given that the true business of these corporations was audio equipment manufacturing which was held in subsidiaries but under new york law you're supposed to in doing this analysis you're supposed to disregard questions of form and look to the substance of the transaction and so the great majority of the manufacturing including personnel and where those those factories were located would have stayed the same before and after n therefore successor company that it's devoid of any detail it doesn't say anything about ownership it doesn't say anything about location or custom it gives no basis for  inferring i think that this is a successor under new york law what am i missing well first i would say that this complaint of course was drafted without the before any discovery took place and without the benefit of any discover complaints are usually to have to before discovery that is but but courts regular way allow this specific issue successor my ability to proceed to have to have discovery eight in order to flesh out these claims and that's what you have to have some basis for alleging success or liability other than there in the same business and they've assumed the assets i mean our discussions in the case law about the possibility of assuming assets without assuming liabilities explains why right but here they allege that i mean i don't know that it's possible to give the details of beyond that all of the assets were transferred which is alleged and that you know that isn't enough we know that isn't nearly enough right for success or liability you have to have continuity of ownership and other factors and also i mean i guess you now know of the liquidation proceedings were started for the prior got a stronger he says fair ok well other courts have held that it's sufficient to say that all of the assets were transferred that the corporation continued with the same in the same with the same name before and after the transfer the same business was  continued and that shortly after the asset transfer the predecessor corporation here fine sounds s b a went out of business and you still have to focus on continuity of ownership right and you just have to ciro point one three percent owned by mr randall as it makes it more likely that he also would have had some ownership interest that's not yet hasn't yet been revealed because again discovery has not proceeded on this issue for instance one of the large the largest shareholder of fine sounds s b a was quadrivium which was an investment vehicle and we don't know who owned quadrivium again discovery is needed to determine that so and the same is true for what we know of the new owners we know from a press release that says that grange and charles ran owners along with two other investment vehicles away as well so without knowing what we don't know the ownership of the great majority of the shares and the predecessor corporation because discovery was not allowed to proceed on that  dismiss have seen the asset purchase agreement again we don't know whether there is an express assumption of liability here yet and it's and it's impossible to know that without allowing for discovery on this issue  information is uniquely in the hands of the defendant it's not required at the pleading stage and that was also what the district court held in ortiz interpretating cargo partners in this course at a precedent that what what you have to show to prove to fact a merger is not the same as what you have to basis for assumption of liability that was never alleged in the motions below it was not raised in opposition just using it as an illustration of the kind of thing that might the discovery in allowing amendment rights would be arguments that were made in opposition to our motion to dismiss were we rely only on the second two factors those were that was the language that was used there was no claim that oh when we get discovery maybe we'll be able to allege that was not it all raised below  also the suggestion that the new entity might have assumed this particular contract even if they assumed any contract this contract was terminated before the new entity was formed this contract was terminated asian if you look at the joint appendix which on page one nineteen shows that mr grange had no shares of stock in the original company so i don't know what further discovery would show because we have a list of all the shareholders but it also shows the shareholders of the new company and liquidation and you have the exact same shareholders in the same percentage so the company is still there with shareholders are still available  and it exists but it is in liquidation it's been in liquidation for several years already i you know i don't know enough about italian law to comment on it but in terms of so the suggestion that zero point one three percent which is the only common ownership here is enough to create success or liability stands the law on its head that's never been the law even if there isn't an exact measurement zero point one three percent it's just negligible it's nonexistent and to now come in speculate that maybe quadri vio is really hiding the assets of somebody else is total speculation and doesn't support any of the allegations in the complaint literally questions thank you  already been proceeding with some discovery on this issue we have again and we don't have i think it makes it more likely that mr grange i'm confused to you we have got discovery discovery was proceeding with a motion to dismiss was pending so we have gotten some it's not complete and the last batch was was produced in july twenty second and the motion to dismiss dismissal order came out on august fifth that's where the evidence of the fact that they were in liquidation came out was in that last production just before the dismissal order came out  also where the evidence that charles rangel was a shareholder appeared in that last discovery that had been produced and my understanding from the trial attorney is that they were ready to proceed to compel further discovery but then the dismissal order came down and and that was that so that was the extent that you highlighted what you found significant in the materials that were produced already with respect to the success or liability claim is that right or is there anything else you want to highlight we could you didn't proceedings immediately after the asset purchase the district court did not identify continuity of ownership as a deficiency in its initial dismissal order and so this new evidence wasn't offered to the district court which is what it we did  mention it here because it came up but again we don't we have not yet been able to find out the ownership interests and in the primary shareholder and we have not seen the ownership interest in the other investment  vehicles and in fine sounds group in the successor corporation so we don't know that again there's a large percentage of ownership there that could own some of the new investment vehicles we don't know that because discovery we don't have discovered that so it's impossible to state the claim without it