Ramirez v. Gilead Sciences, Inc.
A159428
| Cal. Ct. App. | Jul 2, 2021Background
- Ramirez, a beneficial owner of Gilead stock (shares held in "street name"), sent a broad books-and-records demand seeking board materials, communications, policies, director questionnaires, and related documents under Cal. Corp. Code § 1601.
- Gilead refused, invoking defects in the demand and a mandatory forum-selection clause in its charter naming Delaware (internal affairs) as the sole forum.
- Ramirez filed a petition for writ of mandate in San Mateo County to compel inspection; the trial court denied the petition as governed by Delaware forum-selection language.
- While this appeal was pending, Ramirez pursued and obtained relief in the Delaware Court of Chancery under Del. Gen. Corp. Law § 220; Delaware ordered production of nonprivileged documents responsive to his demand.
- The California Court of Appeal affirmed the superior court’s order on a different ground: Ramirez lacked statutory standing under § 1601 because he was not a holder of record as defined by Cal. Corp. Code § 185.
- The court denied Gilead’s sanctions request (appeal not frivolous) and awarded Gilead costs on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing under Cal. Corp. Code § 1601 | Ramirez: §1601 grants any "shareholder" the right to inspect; beneficial owners should be included. | Gilead: §185 defines "shareholder" as holder of record; Ramirez is a beneficial owner and lacks standing. | Held: §185 controls; §1601 inspection right limited to holders of record; Ramirez lacks standing. |
| Effect of Gilead’s Delaware forum-selection clause | Ramirez: Charter clause covers internal affairs claims, not necessarily inspection demands under §1601. | Gilead: Charter makes Delaware the sole forum for claims governed by internal affairs doctrine, covering this dispute. | Court did not decide (unnecessary): resolved appeal on standing ground. |
| Common-law inspection rights for beneficial owners | Ramirez: Common law historically allowed beneficial owners inspection; §1601 should not displace that right. | Gilead: Statutory scheme supersedes common law; legislature limited inspection to holders of record. | Held: Statute’s clear language supersedes older common-law rights. |
| Sanctions for pursuing appeal | Ramirez: Appeal had arguable grounds (forum clause issue, policy arguments). | Gilead: Appeal was frivolous after Delaware proceeding and should be sanctioned. | Held: Appeal not frivolous; sanctions denied, but costs awarded to Gilead. |
Key Cases Cited
- Abouab v. City and County of San Francisco, 141 Cal.App.4th 643 (2006) (affirmation may rest on any correct legal theory regardless of trial court’s reasoning)
- Kim v. Reins Int’l California, Inc., 9 Cal.5th 73 (2020) (statutory definitions control when Legislature prescribes term meanings)
- Delaney v. Superior Court, 50 Cal.3d 785 (1990) (plain statutory language governs when unambiguous)
- Hagan v. Fairfield, 183 Cal.App.2d 703 (1960) (holder-of-record requirement applied under predecessor statutes)
- Farrington v. Fairfield, 194 Cal.App.2d 237 (1961) (same holding under predecessor law)
- Acosta v. Pacific Enterprises, 950 F.2d 611 (9th Cir. 1991) (noting holder-of-record requirement for inspection rights)
- Schnabel v. Superior Court, 5 Cal.4th 704 (1993) (discovery in dissolution context is narrow and fact-dependent)
- California Assn. of Health Facilities v. Department of Health Services, 16 Cal.4th 284 (1997) (statute can abrogate or modify common law when language indicates intent)
- Copley Press, Inc. v. Superior Court, 39 Cal.4th 1272 (2006) (courts consider common-law practices only where not superseded by statute)