22 Cal. App. 5th 336
Cal. Ct. App. 5th2018Background
- Shareholder derivative suits filed in Feb 2014 against Google officers/directors alleging harm from executive agreements to refrain from "cold calling" competitors' employees. Cases were consolidated.
- The DOJ filed a widely publicized civil antitrust complaint in Sept 2010 alleging Google and others entered express no-cold-call agreements among senior executives; Google entered a stipulated judgment (no admission of liability) and agreed to injunctive relief.
- Media coverage of the DOJ action and a DOJ press release were publicly available; subsequent employee class actions seeking billions were filed within a year based on similar facts.
- Plaintiffs alleged corporate damages from the agreements (financial loss, reputational harm, stifled innovation) and sought recovery derivatively for Google.
- Defendants moved for summary judgment, arguing the three-year Delaware statute of limitations barred the suit because plaintiffs had inquiry notice by Sept 2010; the trial court granted summary judgment and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the claims are time-barred under Delaware's 3-year statute | Plaintiffs: operative facts were not known until later (e.g., 2012 email disclosures), so suit filed in 2014 is timely | Defendants: DOJ complaint and public reporting in 2010 put plaintiffs on inquiry notice, so limitations expired before 2014 | Held: Claims time-barred; inquiry notice existed no later than Sept 2010; summary judgment affirmed |
| Whether inquiry notice requires facts sufficient to plead a viable claim (Primedia standard) | Plaintiffs: an investigation in 2010 would not have yielded facts to plead a claim that would survive dismissal against directors | Defendants: Primedia does not impose a heightened standard; public DOJ allegations allowed a reasonable inference of director involvement | Held: Court rejects plaintiffs' reading of Primedia; available facts in 2010 permitted inference sufficient to start limitations running |
| Whether equitable tolling or fraudulent concealment saved plaintiffs' claims | Plaintiffs: Google's public statements sanitized the settlement and nondisclosure in filings concealed material facts, so tolling applies | Defendants: Public DOJ complaint and press coverage made information "readily available," precluding tolling | Held: Tolling/fraudulent concealment doctrines do not apply because plaintiffs had inquiry notice from publicly available information |
| Whether inability to compel pre-suit document inspection excuses delay | Plaintiffs: could not force corporate document production before suit, so lacked access to evidence | Defendants: inspection would not have produced the alleged agreements; public DOJ filing sufficed to trigger inquiry notice | Held: Lack of pre-suit inspection ability does not excuse delay where public information put plaintiffs on inquiry notice |
Key Cases Cited
- Lonicki v. Sutter Health Central, 43 Cal.4th 201 (Cal. 2008) (summary judgment review de novo; construe evidence for nonmoving party)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (Cal. 2001) (defendant bears burden to establish complete affirmative defense on summary judgment)
- Weiss v. Swanson, 948 A.2d 433 (Del. 2008) (equitable tolling where plaintiff reasonably relied on fiduciary competence and good faith)
- Solomon v. Pathe Communications Corp., 672 A.2d 35 (Del. 1996) (Delaware motion-to-dismiss pleading standards — accept allegations and reasonable inferences)
- Desimone v. Barrows, 924 A.2d 908 (Del. 2007) (Delaware pleading requires facts plausibly suggesting ultimate entitlement to relief)
- In re Tyson Foods, Inc. Consol. S'holder Litig., 919 A.2d 563 (Del. 2007) (publicly available information may not alone impose inquiry notice when inference of wrongdoing is not apparent)