Court Opinion

ID: 2810220
Source: CourtListenerOpinion
Date Created: 2015-06-19 20:01:58.314807+00
Date Added: 2024-06-11T12:45:57.140141
License: Public Domain

FILED
                           NOT FOR PUBLICATION                               JUN 19 2015

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

PATRICIA STOCKMAN-SANN,                          No. 13-55892
Derivatively on Behalf of Quiksilver, Inc.,
                                                 D.C. No. 8:12-cv-01882-AG-JPR
              Plaintiff - Appellant,

 v.                                              MEMORANDUM*

ROBERT B. MCKNIGHT, Jr.; et al.,

              Defendants - Appellees.

                   Appeal from the United States District Court
                      for the Central District of California
                   Andrew J. Guilford, District Judge, Presiding

                        Argued and Submitted May 6, 2015
                              Pasadena, California

Before: NOONAN, WARDLAW, and MURGUIA, Circuit Judges.

      Patricia Stockman-Sann appeals the district court’s order dismissing her

shareholder derivative suit against Quiksilver, Inc., and the individual members of

Quiksilver’s Board of Directors. Stockman-Sann contends the district court erred

by finding her failure to make a pre-suit demand on the Board, as required by Rule

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
23.1(b) of the Federal Rules of Civil Procedure, was not excused on the basis of

demand futility. The district court found demand was not excused for Stockman-

Sann’s challenge to the Quiksilver Compensation Committee’s 2011 grant to

Robert B. McKnight, Jr., of 1.2 million Reserve Stock Units (“RSUs”) allegedly in

violation of Quiksilver’s incentive compensation plan (“2000 Plan”). The district

court found demand was not excused for Stockman-Sann’s claims that the Board

impermissibly amended the 2000 Plan (“2012 Amendment”) without ratification

by the Quiksilver stockholders and distributed a proxy containing false or

misleading information (“2012 Proxy”). We dismiss this appeal for lack of

jurisdiction.

      Federal courts lack jurisdiction “[i]f an event occurs during the pendency of

the appeal that renders the case moot.” Ctr. for Biological Diversity v. Lohn, 511
F.3d 960, 963 (9th Cir. 2007). “A case becomes moot when there no longer exists

‘a present controversy as to which effective relief can be granted.’” United States

v. Able Time, Inc., 545 F.3d 824, 828 (9th Cir. 2008) (quoting Vill. of Gambell v.

Babbitt, 999 F.2d 403, 406 (9th Cir. 1993)).

      Stockman-Sann’s claims arising from the RSU award to McKnight are moot

because McKnight returned all 1.2 million challenged RSU awards in 2012.

Stockman-Sann conceded such claims were moot before the district court. The

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Compensation Committee then granted McKnight a new award of 1.2 million

RSUs, which Stockman-Sann alleges exceeded the limit under the 2000 Plan by

400,000 units. McKnight filed a Form 4 with the Securities and Exchange

Commission on January 22, 2013, in which he stated he had returned 400,000

RSUs. Stockman-Sann does not dispute that McKnight returned the 400,000 units.

Because it is not disputed that McKnight returned all of the RSUs awarded

allegedly in violation of the 2000 Plan, no further relief can be fashioned.

      Stockman-Sann’s claims arising from the 2012 Amendment are moot.

Stockman-Sann argues the Board of Directors impermissibly adopted the 2012

Amendment without stockholder approval. The 2012 Amendment allowed the

Board to make unlimited RSU awards provided the awards were not classified as

tax exempt under 26 U.S.C. § 162(m). Stockman-Sann maintains the new incentive

compensation plan adopted in 2013 (“2013 Plan”) left the allegedly impermissible

2012 Amendment in place. However, the Quiksilver stockholders approved the

2013 Plan. Even if the Board’s adoption of the 2012 Amendment were ultra vires,

any awards made under the 2013 Plan have been made with stockholder approval.

This issue is therefore moot.

      Stockman-Sann’s claims arising from the 2012 Proxy are moot. Stockman-

Sann argues the 2012 Proxy contained false and misleading information. The

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purpose of the Proxy was to solicit authority to vote on Quiksilver stockholders’

behalf at the 2012 Stockholders’ Meeting, at which the only question to be voted

on was the reelection of the Quiksilver Board. Since the 2012 board election,

Quiksilver has held Board elections annually. Stockman-Sann’s challenge to the

validity of the 2012 election based on an allegedly false proxy statement is moot.

Lee v. Schmidt-Wenzel, 766 F.2d 1387, 1389-90 (9th Cir. 1985) (subsequent board

elections render a challenge to the validity of an earlier election moot “because

even a favorable decision by the district court would not have entitled the appellees

to relief”).

       In her briefs to this court and at oral argument, Stockman-Sann argued the

district court could fashion a wide variety of relief. However, Stockman-Sann

failed to identify any specific harm such relief could remedy.

       DISMISSED AS MOOT.

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