Panel NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DAVID HAMILTON,

Plaintiff

- Appellant,

v.
W. MICHAEL BARNES; et al.,

Defendants

- Appellees. No. 18

- 16953

D.C. No. 4:15

- cv
- 01890

- YGR

MEMORANDUM *

JAKE HA, derivatively and on behalf of himself and all others similarly situated,

Plaintiff

- Appellant,

v.
JOHN E. CALDWELL; et al.,

Defendants

- Appellees. No. 18

- 17005

D.C. No. 4:15

- cv
- 04485

- YGR

Appeal from the United States District Court for the Northern District of California Yvonne Gonzalez Rogers, District Judge, Presiding
Argued and Submitted February 7, 2020 San Francisco, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3. 

# FILED

MAR 16 2020

MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS2

Before: PAEZ and BEA, Circuit Judges, and ADELMAN, * * District Judge. David Hamilton (18

- 16953) and Jake Ha (18

- 17005) appeal the district

court’s dismissal of their Delaware

- law shareholder derivative actions against
Advanced Micro Devices, Inc. (“AMD”) as a nominal party and certain of its
directors and officers (“Defendants”). We assume familiarity with the facts and
procedural history and discuss them only as necessary to explain our decision. 1
“As required by precedent, we review for abuse of discre tion the district
court’s ruling dismissing this shareholder derivative suit on the ground of failure to
show demand futility.” Rosenbloom v. Pyott , 765 F.3d 1137, 1147 (9th Cir. 2014)
(citing Potter v. Hughes , 546 F.3d 1051, 1056 (9th Cir. 2008) and In r e Silicon
Graphics Inc. Sec. Litig. , 183 F.3d 970, 983 (9th Cir. 1999)). 2 The district court’s
interpretation of stipulations and contracts are issues of law which we review de

** The Honorable Lynn S. Adelman, United States District Judge for the Eastern District of Wisconsin, sitting by designation.

1 We grant Hamilton’s unopposed motions to take judicial notice (Dkt. Nos. 33 and 56 ), which seek notice of court filings in related lawsuits

. See United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992)

. 2 Recent Ninth Circuit panels, including Rosenbloom , have questioned whether abuse of discretion (rather than de novo) review for dismissals of sharehol der derivative suits is appropriate, but declined to take up the issue where it would not change the case’s outcome. Id. at 1159

– 60; see also Israni v. Bittman , 473 Fed. App’x. 548, 550 n.1 (9th Cir. 2012); Laborers Int’l Union of N. Am. v. Bailey , 310 Fed . App’x. 128, 130 n.1 (9th Cir. 2009). Because we would reach the same conclusion s under either standard, we likewise decline to address th is issue

.3

novo. United States v. Lawton , 193 F.3d 1087, 1094 (9th Cir. 1999).

T he district court err ed when it refused to consider twenty

- five paragraphs in
Hamilton’s complaint on the basis that the Hatamian Protective Order prohibited

the use of such material other than in connection with the Hatamian litigation

. Reviewing de novo, w e do not see a basis for the Hatamian Protective Order to
express a limitation on Hamilton’s use of the discovery materials. By its own
terms, the Hatamian Protective Order’s restrictions appl y only to a “Receiving
Party,” a definition for w hich Hamilton does not qualify because he is not a “party

to this action.” 3 To the extent the Hatamian Protective Order relate s to Hamilton,
the only proper way to interpret “this case” or “this litigation” is in reference to

Hamilton’s lawsuit

. See In re Dual

- Deck Video Cassette Recorder Antitrust Litig. , 10 F.3d 693, 695 (9th Cir. 1993) (“ For the protective order to comply with
common sense, a reasonable reading must connect its prohibitions to its purpose .”).
That being so, it was an error of law for the district court to refuse to consider the
allegations in Hamilton’s complaint that were based on information received in the

Hatamian discovery materials. We thus reverse and remand for the district court

to c onsider the motion to dismiss in light of all of the allegations in Hamilton’s
complaint.

3 The Hatamian Protective Order defines “Receiving Party” as “a Party that receives Disclosure or Discover y Material from a Producing Party.” In turn, a “Party” is defined as “any party to this action.”4

The district court correctly dismissed Ha’s complaint for failure to plead
demand futility with sufficient particularity. See Fed. R. Civ. P. 23.1(b)(3)(B);

Wood v. Baum , 953 A.2d 136, 140 (Del. 2008)

. Ha’s complaint contains almost no
particularized factual allegations related to the directors’ independence, and those

that it does include are either irrelevant or insufficient on their own. It is true that

the directors’ status as non

- independent on a company’s proxy statement may be
probative of a demand futility analysis . However, when the plaintiff fails to
“specif[y] the reason for” why the directors “lack independence under [the
applicable stock exchange] rules,” “plaintiffs are [not] entitled to an inference that
[such directors] lack independence for purposes of the fact

- specific demand futility

determination.” Sandys v. Pincus , 152 A.3d 124, 136 (Del. 2016) (Valihura, J.,
dissenting)

. Further, it is not sufficient merely to allege various relationships or
memberships of the Defendants

— such as membership on the AMD audit
committee, employment at AMD, or directorships at an AMD subsidiary or joint

venture

— without providing an explanation as to why such relationships or
memberships create a reasonable doubt of independence for the purposes of
demand futility. See, e.g., Rales v. Blasband , 634 A.2d 927, 934 (Del. 1993) (“ [ A]
court must determine whether or not the particularized factual allegations of a
derivative stockholder complaint create a reasonable doubt that, as of the time the5

complaint is filed, the board of directors could have properly exercised its
independent and disinterested business judgment in responding to a demand.”) ;

Wood , 953 A.2d at 14 2 (holding “that membership on the Audit Committee is a
sufficient basis to infer the requisite scienter . . . is contrary to well

- settled

Delaware law.” )

. A ccordingly, Ha has not sufficiently pleaded demand futility

—
even on a de novo standard of review. We therefore affirm the district court’s
dismissal of Ha’s complaint.
The district court’s dismissal of Hamilton’s complaint is REVERSED and

REMANDED . The d istrict court’s dismissal of Ha’s complaint is AFFIRMED

.