will the attorneys who are going to orally argue please come to the podium introduce your skills to the court equally and i'll begin for applebee's i understand ok appellant you have fifteen minutes they have fifteen minutes you must a portion from your time what you'd like to reserve for o represented a plaintiff that only the three of them were entitled to receive these changes control payments as long term executives we asking this court to reverse the two six fifteen dismissals of the complaints by the trial  in a cash only merger heightened standards both of review and of fiduciary duties apply because it's what's also referred to as a final and a final stage transaction that is and the cash up merger at the end of the day is shareholders left with cash they don't have any more opportunity to receive value from an ongoing entity as would happen in a stock for stock merger where you now have an interest in the new entity that presumably has more assets because it's a quarter of your assets and because of this because of the fact that it's the final stage transaction because you only receive cash the courts have fashioned greater judicial scrutiny and the need for a premium to be paid to the shareholders basically paid for them for the loss failure of future earnings it's clear those cases are political here  the prudential defendants and if we have to go through each of them what we have alleged is that fein gauged in self dealing they gauge the by having the timing of the shares at the bottom of the market and this was their decision to sell everyone everyone shares that they came in at the bottom of the market and they said we're selling you don't have a choice we're selling every once not just ours which was their right to do but all them everyone shares and in doing that they then became fiduciary for the minority but in the deal that they structured they structured in a way which benefited them to the detriment of the minority in several different ways first there was an allocation of assets which favored the real estate assets versus the management assets so that the preferred shares are owned by credential were favored so that credential would get its value out  also been receiving yearly and selection complaint been receiving yearly payments which the minority shareholders didn't do so that bet at the end they got everything that they put in now it's in the minority shareholders perceive substantially less they didn't receive what's called their fair value additionally the but they also did as is when they negotiated they allowed the other defendants the individual defendants to basically extract fourteen point seven million dollars in payments which is money that came off the top which decrease the share value that way it would have gone otherwise to the minority shareholders so this is money which came off the top so in a couple of different ways they've breached their fiduciary duties it's clearly evident that itself dealing because lilly bridge as majority shareholder said we're selling today  forty and as controlling the board majority shareholders under maryland law for since the one nine hundred twenty s have been held to a standard that one day exercise or basically tell the company what they then take on a fiduciary duty to the minority shareholders so they actually have prevention actually has two different fiduciary duties one is as a controlling shareholder telling the company what to do and also as the controlling board i think that there was an a misunderstanding below of what we were seeking because he was focused on the three hundred eighty one million dollars and whether or not we were contending that was enough and that is not a claim that is set forth in either the matter of the second many complaints we are not contesting today the dollar amount of the merger we are not seeking to undo the merger in any way what we're saying is that as a result of the merger defendants who sat at the table and over to do share duties both the prudential and the individuals who own should you share your duties to the minority shareholders ignored those duties and benefited themselves at the expense of the minority p employee investment program which basically took the risk from the preferred shareholder set it out to the common shareholders so the plaintiff now is is basically shifting risk in a way that benefits itself a way that benefited prudential and heard the minority shareholders it failed to obtain a fairness opinion or an independent evaluation which is something which is one of the two methods which since redline has been required in order to show fairness to show that there is no conflict of interest to show that there is no breach of duty they didn't do that and they also appear that is well on his been adopted in maryland law it's it's it's talked about in shaker which is also a cash out deal there is no question and i don't think they have any phrase any issues in the priest or below they at the red line standards don't apply any cash out deal it's they get every maryland case that's talked about a cash out deal is talked about the enhanced level of judicial scrutiny that goes with it if it's outside of the business structure rules an enhanced level of scrutiny so those definitely apply there's no question about that now with respect to the individual the kind of things we've alleged that they've breached their duties and in a different way which is that they came and said you know what we think the three hundred eighty one billion dollars is way too low and unless you pay us some money we're going to compete against you we're going to we're going to take the deal we're going to make your life miserable pay us this money potential went along with it they  so they went in they said we want this additional money and they got the money they at liberty got three million dollars for trademarks which were a corporate asset with no valuation no independent approval no outside indicia of any sort of fairness as to how they came up with it that's a corporate asset additionally we had seven million dollars of restricted stock and three million dollars for non competition payments but those came out of and were allocated to the three rates that were being purchased those came off the top that reduce shareholder value that's appreciative jury duty because they were negotiating for themselves and not negotiating on behalf of the minority shareholders to whom they owed a duty additionally there was the one point four million dollars the potential guarantee which we specifically allege was set up to pay the minority shareholders their premium independent fully empowered committee who has the power to hire lawyers financial advisors make its own decisions and say this is what we would like they didn't do that or there's if you'd like to five minutes promissory estoppel claim judge flynn correctly dismissed both the first observation with respect to the fishery duty claim that judge flynn made that's important here is that the complaint is all over the map in terms of different duties alleged in a conclusory and scattered way paragraph forty four of count two which is the heart of this claim lists in a laundry list seven or eight different types of breach of fishery duty misappropriating corporate assets more of the following acts and it goes on to list all of these different things that's insufficient judge who went further though and in we can go further too because the distinction between direct and derivative claims is critical here it's even more critical given what council just sat as your honour's know a derivative claim is one that says that the corporation's been injured in some way such as a fiduciary taking a corporate asset or corporate opportunity those are claims that are raised on behalf of the corporation misc abo has not bought anything rivet of coins she shoots susan her own capacity as an vidual shareholder and i believe she's all but conceded that she can bring no derivative claims there is a narrow direct claim available under some cases including the shanker case but that is a direct question that goes to the negotiation of the purchase price the shaker case in maryland goes to the negotiation the purchase price in what counsel just said is that there is no contention before this court that there was anything wrong with the three hundred eighty one million dollars purchase price that's a very significant concession your arse of seen the transcript for judge when that was not a concession that was made before judge flynn judge when approached plaintiff's counsel and probed the factual basis for this so called price claim and he found that there was no factual basis alleging what we've heard this morning is a new theory not presented to delaware court of chancery is the leading case as those cases tell us it's a derivative claim to say that someone got a side payment or someone took a corporate asset even in the context of a corporate merger it really becomes a direct point if there's an alleged batu a connection between the alleged side benefit and the dollars actually paid in the transaction the purchase price and here there is no factual connection alleged in fact we're told that the three hundred eighty one million dollars pri is on challenge now there's a new phrase used this morning it's not in the briefs that wasn't before judge flint that the side payments quote came off the top that they somehow came off the top of the three hundred eighty one million dollars i submit to your honor's there is not a factual allegation in the complaint demonstrating that there's any reason to think that that's true or that there's any factual basis for the queen there is a conclusory statement throughout the complaint that the dollars in the transaction came from quote available transaction proceeds that's as far as it goes and after judge brinn asked many questions about this theory and examined the complaint very closely we had a very long argument on the motion to dismiss judge brinn correctly concluded and i'll quote him this is that page one twenty one of the supplemental appendix in the little bridge uncursed in briefing there is no allegation other than this conclusion about available transaction proceeds which would support a finding that if uncursed them the sale price for the transaction overall would have gone up that is to say without a factual connection without any allegation that this company the third party buyer vent os would have paid more than the three hundred eighty one million or that there's a factual connection between the transition payments on the one hand and the three hundred eighty one million dollars on the other hand there's no direct clean pleaded whether as a matter of the illinois pleading standard or as a matter of the distinction between unusual about transition payments when a company buys another company very often wants to bring management long and second of all without a factual connection saying that the executives took something off the table from the shareholders  there is no direct claim here or there is a mere conclusion pleaded that all of the dollars must have been part of the same available transaction proceeds there's nothing further also if we look closely at this off the top theory  articulated this morning it doesn't even make sense under the allegations of the complaint the more than seven million dollars of the amounts challenge in the form of restricted stock from the buyer from v in the three hundred eighty one million dollars the merger amount is alleged to been a cash out merger so we have cash consideration on the one hand three hundred eighty one million dollars and then we have restricted stock on the other hand coming from coach a sir there's no allegation as to how those two things relate and it's a little bit of apples and oranges it's two completely different forms of consideration in to say that seven million dollars in restricted stock came off the top of a three hundred and eighty one million dollar price doesn't make a lot of sense to begin with and there are no factual allegations to make it so it's also important for your honor stu know that the amended complaint paragraph twenty which is a supplemental appendix pa alleges that the free hundred eighty one million dollar price was fixed before there was any discussion of what these gentlemen right receive from their new employer bent taz after the transaction so we have a fixed price three hundred eighty one million dollars fixed and without a factual allegation as to how these gentlemen somehow tampered with those dollars or took things away from those dollars and there is no such allegation in the complaint there is no direct claim of very briefly your honour's on the promise or stop a claim i would submit to you that the complaint itself alleges facts that do not claim they are absolutely inconsistent with a clear and unambiguous promise were with or with any reasonable lacked authority to approve parachute payments should move to mr liberation mr curse them or not the people who could promise or parachute payment at most we're talking about statements about what a committee were a better might do in the future and as we know from many cases prophecies or predictions about what people might contingently do in the future cannot support promissory estoppel quite a few others have no other questions i want to make sure co counsel has her times well thank you unaffiliated bona fide purchaser in june two thousand and ten after extensive consideration and a four hour hearing judge when below correctly ruled that the majority duty was owed in these circumstances now the maryland walk much merriment governs the substantive allegations of the complaint and the maryland supreme court has repeatedly held that unless acting ultra virus illegally or in bad faith a majority shareholder owes no fiduciary duty to a minority majority shareholders are not managers of the company they are not trustees to other shareholders and in every control party transaction a presumption of good faith applies the protections of the business judgment rule apply and it is the plaintiff burden to as stablish and allege specific facts to show that that presumption should not apply as this court held in premier networks versus step behind a complaint will not survive in motion to dismiss if it only contains conclusions of law and conclusory allegations unsupported by specific factual statement now it is worth noting that this is a two thousand and ten scarborough was afforded discovery she had access to the merger documents and over a year after she files a complaint she amends her complains to state a claim for f duty against these majority shareholders nowhere does she'll ledge there is there is no separate county here against the other organ directors who may have been affiliated with the p entities the merger was approved by a disinterested majority board there are no allegations in this complaint of that they acted on an uninformed basis that they acted in bad but they somehow stood to gain from this transaction now counsel will have this court believe that the heightened pleading standards and entire fairness review is always warranted in a cash out merger and that is simply not the case the maryland courts as well as the delaware courts routinely hold that in the entire fairness review this transaction involved some self dealing by the majority now the only disparate benefits alleged in the complaint are that the p g a entities received annual profit distributions and that is soley by virtue of them being preferred shareholders plaintiffs admittedly was not the attachments to plaintiffs complaint reveal that she held only common shares the other allegations of self dealing that the p entities approved transaction payments transition payments to defendants global bridge incurs him well doesn't that reveal what this case is really about plaintiff's realisation of the consequences of her own decision to give up hope right to share in any bonus or any payments that were made to hook co founder and the other executive in the event of a change of control that occurred in two thousand and eight majority shareholders have a property right in their shares they have a right to sell those shares were godless of the consequence to the minority they simply cannot use their voting power in a manner in which they stand to gain in some unfair way that the minority does not and that is simply not alleged in this complaint now there are more assertions of an improper motive first that is improper to raise in a reply brief for the first time allegations which appear nowhere in a complaint and s opportunity to move to repeat her complaint and rather than doing so she sought rule three zero four of a findings and brought this case i'm in a lack of tory appeal this complaint is wholly devoid of any allegations that these and forty one she cites to section two four zero five of the maryland corporate statute that statute specifically governs the duties owed by directors of a corporation  se in sum if the panel does not have any questions i will note with the statement by judge when it is simply not the permissible pleading to assert that a plaintiff things she may have a cause of action but doesn't know that judge quite correctly held that the complaint was utterly devoid of any factual allegations to establish a duty or a breach of that duty on the part of these majority shareholders we respectfully request this court to affirm the trial court's ruling  start with something that was just said at no point below did judge flynn offer the plaintiff the opportunity to replete accounts one in two of the amended complaint the question that  there at the page was whether or not the dismissal was with prejudice or not and he said yes it was with prejudice with respect to counts one two he then clarified with respect to count three which is the leverage arguments shaker is very clear this and that's a maryland supreme court case this is a direct claim she is no longer a shareholder they were she was the night by the defendant when she direct claim to her because the price that she received for her shares was too low p cuz of the defendants x because of their breaches of fiduciary duty it's a very rules so with respect to the monies that went to the individual defendants they end the trilogy says it basically all comes out of the assets of the rate not outside of the merger but it's part of the merger that those monies where they have added to the bottom line to terminate the share value that is going to the minority shareholders doesn't add a penny more they has to come in the pot it's just how the pot was split up so how do the pot went to the defendant the individual defendants are properly because of their breaches in part of the pot which the plaintiff because it made sure it got paid off  taken care of his officers and you the minority shareholders who are represented by well they're supposed to be represented by credential as majority shareholder the whip hand who made the decision to force the individual minority shareholders to sell to represent apply the nationwide case i'm sorry the n s w shareholders case talks about how you get in a cash out deal business judgment rule and they have to do two things you have to have an independent fully empowered committee look over in approve the sale and then you have to have a fully informed vote of a minority a majority of the minority shareholders here we don't have either one none of the minimally the recognise minimal standards w used by the defendants or that was their choice not ours was forced to sell she had no choice credential could have sold it's ninety five percent in that made us sell but they forced us to sell bats why this is different that's why there isn't an hance judicial review whether it's enhanced scrutiny or tire fairness really don't have to distinguish but we're no we're not in the business judgment rule go lamely and kramer in a mix get those cases are all distinguishable and they don't apply because in those cases the side payments were different they didn't come off as were alleged here in the time those weren't cash out mergers going was a stock for stacking richer we have a cash flow merger we have nothing left for which we can try and hopefully make up some of the some of that property improper payments additionally in those cases the indicia of fairness was present you either had a vote of a minority of them a majority of the minority or you had an independent committee looking at first payment saying yes right we don't have that here we have interested people approving their own deals who general saying ok fine i know i got to take care of you so that you don't muck up my deal approving  the individual defendants prudential taking care of itself structural weakness that was found by a judge when doesn't exist and that at a minimum we should be allowed to replace thank you very much