Sanjay ISRANI, Plaintiff-Appellant, v. Robert A. BITTMAN; et al., Defendants-Appellees.
No. 10-16726.
United States Court of Appeals, Ninth Circuit.
April 2, 2012.
Argued and Submitted Oct. 13, 2011.
2. The reprimand letter
On August 26, 2004, after the thirty reports of contact had been filed, Dr. Brian Kawahara issued a letter titled “Notice of Proposed Reprimand” to Uche-Uwakwe.3 The letter discussed several specific incidents in which Uche-Uwakwe was alleged to have acted unprofessionally or disrespectfully. Dr. Kawahara met with Uche-Uwakwe, read the letter to her, gave her two copies, let her read the letter, and asked her to sign and date it.4 They did not discuss the matter, and the meeting was adjourned.
Uche-Uwakwe has not presented any evidence that this reprimand letter affected the compensation, terms, conditions, or privileges of her employment, see Davis, 520 F.3d at 1089, or that the letter was disseminated or undeserved, see Brooks, 229 F.3d at 928-29. Accordingly, the reprimand letter does not qualify as an adverse employment action.
B. Retaliation
To establish a prima facie case of retaliation, the employee must show (1) that she engaged in a protected activity, (2) that she was subsequently subjected to an adverse employment action, and (3) that a causal link exists between the two events. Dawson v. Entek Int‘l, 630 F.3d 928, 936 (9th Cir. 2011).
The majority again determines that the reports of contact and the reprimand letter qualify as adverse employment actions. For the reasons stated above, I do not agree that those actions are adverse employment actions.
I respectfully dissent and would affirm summary judgment on all claims.
Jeffrey Ciarlanto, Robert B. Weiser, The Weiser Law Firm PC, Wayne, PA, William B. Federman, Federman & Sherwood, Oklahoma City, OK, Jonathan Whitehead, Whitehead & Whitehead, Reno, NV, for Plaintiff-Appellant.
Richard G. Campbell, Jr., Armstrong Teasdale, LLP, Reno, NV, Boris Feldman, David S. Steuer, Esquire, Jacob Thayer
Before: HUG, KLEINFELD, and W. FLETCHER, Circuit Judges.
MEMORANDUM*
Appellant Sanjay Israni, stockholder of International Game Technology (IGT), appeals the dismissal of his derivative complaint for failure to allege particularized facts establishing demand futility. We affirm.
As a preliminary matter, we address Appellees’ motion to strike Appellant‘s Additional Excerpts of Record. The motion to strike is granted because Appellant never filed or submitted the relevant documents to the court below. See
A shareholder bringing a derivative action to enforce a right of the corporation must either make a demand on the corporation‘s directors to take corrective action, or state with particularity reasons why demand would be futile.
Under Delaware law, demand futility is established when the complaint pleads particularized facts demonstrating “(1) in those cases in which the directors approved the challenged transactions, a reasonable doubt that the directors were disinterested or that the business judgment rule otherwise protects the challenged decisions; or (2) in those cases in which the challenged transactions did not involve board action or the board of directors has changed since the transactions, a reasonable doubt that the board can impartially consider a demand.” Shoen, 137 P.3d at 1184. The nine members of IGT‘s board of directors at the time the underlying lawsuit was filed, who therefore would have been charged with considering a demand, were directors Bittman, Burt, Hart, Mathewson, Matthews, Miller, Rentschler, Roberson, and Satre. Here, the complaint pleaded director interest based on: (1) director approval of a revised employment agreement for Mr. Matthews, IGT‘s former CEO and chairman of IGT‘s board of directors; (2) high director compensation; (3) director membership on IGT‘s Audit and Governance Committees; (4) director employment with IGT; and (5) alleged insider trading by three IGT directors.
Appellant argues that certain directors were incapable of objectively evaluating a demand because they approved Mr. Matthews’ employment contract. Appellant‘s theory is that these directors were advancing Mr. Matthews’ interests in an effort to have their own compensation increased. Appellant‘s conclusory argument is insufficient to raise a reasonable doubt that the directors were disinterested because the complaint does not include facts to explain how approval of Mr. Matthews’ salary would influence the compensation of other directors. Brehm v. Eisner, 746 A.2d 244, 257 (Del. 2000). Additionally, Appellant did not raise a reasonable doubt that the directors’ actions were the valid exercise of business judgment because “[i]t is the essence of business judgment for a board to determine if a particular individual warrants large amounts of money.” Id. at 263 (quotation and brackets omitted). Thus, the district court properly found that the allegations relating to Mr. Matthews’ revised employment agreement do not establish demand futility.
The district court also properly found that demand is not excused based on the directors’ fees. A director‘s receipt of compensation alone does not excuse demand, and the complaint did not provide sufficient factual allegations to show the fees here were unusual or uncustomary. Orman v. Cullman, 794 A.2d 5, 29 n. 62 (Del. Ch. 2002). Appellant alleges that four IGT directors each received total compensation between $384,498 to $419,498 for 2008. Appellant alleges IGT directors’ total compensation is larger than IGT offi
The district court properly found demand is not excused based on committee membership because the complaint failed to plead facts regarding what information the committee members saw and failed to act on.2 In re Caremark Intern. Inc. Derivative Litig., 698 A.2d 959, 971 (Del. Ch. 1996). Additionally, the complaint does not contain particularized facts showing that the committee members engaged in “intentional misconduct, fraud or a knowing violation of the law,” as required under Nevada law.
Finally, the complaint alleged that directors Burt, Bittman, and Matthews engaged in insider trading of IGT stock, and therefore a demand on them regarding these activities would have been futile. The district court declined to address the sufficiency of this allegation because it had denied all other demand futility grounds alleged and therefore the plaintiffs could not show that a majority of the IGT board was not impartial even if demand were excused with respect to these three defendants. For the same reason, it is unnecessary for us to consider this allegation.
AFFIRMED.
* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.