Académique Documents
Professionnel Documents
Culture Documents
6
Attorneys for Defendants
7 Academy of Motion Picture Arts and Sciences;
Board of Governors of the Academy of Motion
8 Picture Arts and Sciences
26 PLEASE TAKE NOTICE that on May 20, 2021 at 8:30 a.m., or as soon thereafter as counsel
27 may be heard in Department O of the above-entitled court, located at 1725 Main Street, Santa
28 Monica, California 90401, before the Honorable H. Jay Ford III, Defendants Academy of Motion
Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 Picture Arts and Sciences and the Board of Governors of the Academy of Motion Picture Arts and
2 Sciences will, and hereby do, demur to the Second Amended Complaint filed by Plaintiff, Michael
3 Shamberg, individually, and in his derivative capacity as a member of the Academy of Motion
4 Picture Arts and Sciences, pursuant to California Code of Civil Procedure § 430.10.
5 The Academy of Motion Picture Arts and Sciences and the Board of Governors of the
6 Academy of Motion Picture Arts and Sciences base their demurrer on this Notice of Demurrer and
7 Demurrer; the attached Memorandum of Points and Authorities; Plaintiff’s Second Amended
8 Complaint; and any such other evidence and argument as may be presented at or before the hearing.
12
13 By
14 Kristen Bird
15 Attorney for Academy of Motion Picture Arts and
Sciences and the Board of Governors of the
16 Academy of Motion Picture Arts and Sciences
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3 of Governors of the Academy (the “Board”) (collectively, the “Defendants”) hereby demur as
4 follows to the causes of action alleged against them in the Second Amended Complaint filed by
5 Plaintiff Michael Shamberg, individually, and in his derivative capacity as a member of the
6 Academy (“Plaintiff”):
9 1. Defendants generally demur to this cause of action on the grounds that the Second
10 Amended Complaint does not state facts sufficient to constitute a cause of action. Cal. Code Civ.
11 Proc. § 430.10(e).
14 2. Defendants generally demur to this cause of action on the ground that the Second
15 Amended Complaint does not state facts sufficient to constitute a cause of action. Cal. Code Civ.
16 Proc. § 430.10(e).
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PRAYER
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WHEREFORE, Defendants pray that the Court sustain their demurrer to the Second
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Amended Complaint in its entirety with prejudice.
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5 By
6 Kristen Bird
7 Attorney for Academy of Motion Picture Arts and
Sciences and the Board of Governors of the
8 Academy of Motion Picture Arts and Sciences
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5 Argument ............................................................................................................................................5
15 III. THE CAUSES OF ACTION FAIL TO THE EXTENT THEY DEMAND A VOTE
BY MEMBERS OF THE ACADEMY ................................................................................14
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Conclusion ........................................................................................................................................15
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-i- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 TABLE OF AUTHORITIES
2 Page
Cases
3 Am. Ctr. for Educ., Inc. v. Cavnar,
102 Cal. Rptr. 575 (Cal. Ct. App. 1972) .................................................................................. 6, 7
4
Cansino v. Bank of Am.,
5 169 Cal. Rptr. 3d 619 (Cal. Ct. App. 2014) ................................................................................. 5
14 FPI282
Dev., Inc. v. Nakashima,
Cal. Rptr. 508 (Cal. Ct. App. 1991) .................................................................................... 11
15 George v. Auto. Club of S. California,
135 Cal. Rptr. 3d 480 (Cal. Ct. App. 2011) ................................................................................. 9
16 Gutkin v. Univ. of S. California,
125 Cal. Rptr. 2d 115 (Cal. Ct. App. 2002) ................................................................................. 5
17
In re H.W.,
18 436 P.3d 941 (Cal. 2019) ........................................................................................................... 13
19 Hervey v. Mercury Cas. Co.,
110 Cal. Rptr. 3d 890 (Cal. Ct. App. 2010) ................................................................................. 6
20 Heston v. Farmers Ins. Grp.,
206 Cal. Rptr. 585 (Cal. Ct. App. 1984) .................................................................................... 11
21 Hollywood Foreign Press Ass’n v. Red Zone Capital Partners II,
870 F. Supp. 2d 881 (C.D. Cal. 2012) ........................................................................................ 11
22
Lewis v. YouTube, LLC,
23 197 Cal. Rptr. 3d 219 (Cal. Ct. App. 2015) ............................................................................... 10
17 Statutory Authorities
Cal. Code Civ. Proc. § 430.10(e) ...................................................................................................... 5
18 Cal. Civ. Proc. Code § 1647 ............................................................................................................ 11
Cal. Civ. Proc. Code § 1856 ............................................................................................................ 11
19 Cal. Corp. Code § 5056 ..................................................................................................................... 2
Cal. Corp. Code § 5056(a) .............................................................................................................. 13
20 Cal. Corp. Code § 5057 ................................................................................................................... 13
Cal. Corp. Code § 7150 ............................................................................................................... 1, 15
21
Cal. Corp. Code § 7150(a)(1) .......................................................................................................... 13
22
Additional Authorities
23
Black’s Law Dictionary .................................................................................................................. 14
24 Assembly Select Committee, “Report of the Assembly Select Committee on Revision of the
Nonprofit Corporations Code” 10 (1979) ................................................................................... 13
25
General Henry M. Robert, Robert’s Rules of Order, Revised (1915),
26 https://robertsrules.org/robertsrules.pdf (1915)........................................................................ 6, 7
27
28
-iii- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 MEMORANDUM OF POINTS AND AUTHORITIES
2 Defendants Academy of Motion Picture Arts and Sciences (the “Academy”) and the Board
3 of Governors of the Academy (the “Board”) (collectively, the “Defendants”) submit the following
4 in support of their demurrer to the Second Amended Complaint (the “Amended Complaint”) filed
5 by Plaintiff Michael Shamberg, individually, and in his derivative capacity as a member of the
6 Academy (“Plaintiff”):
7 Preliminary Statement
8 At its core, this action is about the proper interpretation of the Academy’s bylaws (the
9 “Bylaws”). Pursuant to the Bylaws, Plaintiff alleges that he is entitled to not only propose
10 amendments to the Bylaws, but to require a vote on any proposed amendments. Am. Compl. ¶ 20.
11 Plaintiff claims that the Board violated the Bylaws by failing to vote on his two proposed
12 amendments regarding social media and the right to make amendment proposals to the Board in
13 person, which he proposed to the Board during a presentation on March 10, 2020. Id. ¶ 10 & Ex. 2
14 at 3. In addition, in his Second Amended Complaint, Plaintiff now claims that later amendments to
15 the Bylaws, adopted on June 28, 2020 (the “June Amendments”),1 have “limit[ed] the members’
16 ability to vote on changes to the Bylaws,” “thereby centralizing power in the . . . Board and its
17 officers” in violation of California Corporations Code § 7150 (“§ 7150”). Id. ¶¶ 17, 29.2
18 Plaintiff is mistaken. The Bylaws do not require a vote on any and all proposed amendments.
19 As Plaintiff concedes, the Bylaws do not state a vote is required. Id.¶ 17, 24-25. The Bylaws only
20 provide the procedures for adopting an amendment by vote, if a vote were to take place. Id. ¶ 8.
21 And as the Bylaws state, the “Robert’s Rules of Order, Revised,” governs all meetings. Under the
22 Robert’s Rules of Order, actions by the Board are generally taken by motion, and any of the present
23
24 1
For purposes of this demurrer, “Bylaws” refer to the state of the Academy bylaws prior to
the June Amendments.
25
2
After the Academy filed a Demurrer, Plaintiff filed a First Amended Complaint, in which he
26 added a claim based on California Corporations Code § 5341. That statute has no application
here. Following a meet and confer on deficiencies in the First Amended Complaint, Plaintiff
27 elected to file a Second Amended Complaint to avoid another demurrer. Plaintiff has now
28 dropped his claim under § 5341 and instead alleged violations of § 7150. This amendment,
however, does not resolve the deficiencies as § 7150 also does not apply to the facts as pled.
-1- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 Board members were afforded the opportunity to move for a motion to put Plaintiff’s proposed
2 amendments to a vote. None of the Board members chose to advance such a motion.
3 The June Amendments also do not violate § 7150. As an initial matter, § 7150 applies to
4 voting on significant corporate matters—the election of directors, disposition of assets, and merger
5 or dissolution of a corporation. See Cal. Corp. Code § 5056. The voting procedure at issue does
6 not involve any such matter. Although the right to vote on changes to bylaws may theoretically be
7 within § 7150’s purview, that right must be specifically provided for in the relevant bylaws, which
8 it is not. The Academy’s Bylaws do not grant any such right to members. Rather than “limit[ing]”
9 members’ rights, the June Amendments only serve to clarify how amendments may be proposed
11 Because the Bylaws on their face do not entitle the Plaintiff to a vote on his proposed
12 amendments and the June Amendments do not violate § 7150, the Academy and the Board
13 respectfully request that the Court sustain their demurrer with prejudice and without leave to amend.
16 Academy]” over the last two years, to update the organization’s “social media presence.” Am.
17 Compl. ¶ 7. These efforts eventually led Plaintiff in January of 2020 to propose amending the
18 Academy Bylaws “to mandate ‘state of the art social media’ and ‘an annual member survey.’” Id.
19 ¶ 8. In February of 2020, Plaintiff met with Dawn Hudson, the Academy’s CEO, and David Rubin,
20 the Academy’s President, to discuss the amendments, and notice of the proposed amendments was
21 provided to the entire Board. Id. ¶ 9. Plaintiff was later invited to attend the March 10, 2020 Board
22 meeting to present his proposed amendments. Id. ¶ 10. Notably, Plaintiff does not allege that the
23 Board was required to invite him to present his proposals at a meeting, which it was not. See
24
25
26
3
This section also includes facts from attached and incorporated materials. See Performance
27 Plastering v. Richmond Am. Homes of California, Inc., 63 Cal. Rptr. 3d 537, 542 (Cal. Ct. App.
28 2007) (holding courts “also consider matters shown in exhibits attached to the complaint and
incorporated by reference” when analyzing demurrers).
-2- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 generally id. The invitation was a courtesy extended by the Board beyond what was required by the
3 Following his presentation, Plaintiff was told that the “Board [had] declined to put his
4 proposed amendments to a vote.” Id. ¶ 12. A “true and correct copy of the minutes” of the meeting
6 “Academy member Michael Shamberg ([of the] Producers Branch) presented two
8 several governors. The meeting was opened to any motions regarding the
9 proposal and none were made. The [B]oard recommended that the Membership
10 and Governance Committee review the process by which members may propose
11 by-laws changes, to clarify that process.4”
13 After being notified of the Board’s decision, Plaintiff demanded that the Board hold a vote
14 on his proposed amendments. Id. ¶ 16. As detailed in Plaintiff’s demand letter, the Board explained
15 that both the Bylaws and the incorporated Robert’s Rules of Order, Revised, do not require a vote
18 Revised,’ shall govern all meetings, provided, however, that any such rule may be
19 suspended by majority vote of the members present or by the Board of Governors.”
21 Plaintiff neither challenges the incorporation of Robert’s Rules of Order in the Bylaws nor
22 the validity of the Bylaws. See generally Am. Compl. Even in his demand letter, Plaintiff merely
23 noted that he was not “conced[ing] that Robert’s Rules are binding on the Organization” while
24 affirming that the Bylaws expressly incorporate Robert’s Rules. Id., Ex. 5 at 4.
25
26
4
The Amended Complaint mistakenly quotes “clarify that process” as “clarify the process.”
27 See also Performance Plastering, 63 Cal. Rptr. 3d at 542 (“[T]o the extent the factual allegations
28 conflict with the content of the exhibits to the complaint, we rely on and accept as true the
contents of the exhibits.” (citation omitted)).
-3- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 Article XI addresses amendments to the Bylaws:
2 “Section 1. Amendments to the bylaws may be proposed by any member of the Academy.
4 (a) The first is by two-thirds vote of the full Board of Governors. Such vote may be taken
5 only at a Board meeting which occurs at least ten (10) days following the notification of
6 the Governors that a particular change has been proposed and will be considered at such
7 meeting. Governors who cannot attend the meeting may submit their votes in writing.
8 (b) The second method is by vote of a majority of the active and life members of the
9 Academy. Voting must be conducted by mail, and/or electronic voting, and the
10 necessary majority based on the number of active and life members on the Academy
12 Section 2. The first method above will be used unless the Academy Board determines that
15 After the parties’ dispute as to the proper interpretation of Article XI, the Board amended
16 the Bylaws on June 28, 2020 (the “June Amendments”). Id. ¶¶ 12-16, 18. Article XI now states in
17 relevant part:
21 Governors.5 Any amendments proposed by the Membership and Governance Committee shall be
22 brought to the Board of Governors and may be adopted by either of two methods.
23 (a) The first, following otherwise regular motion procedures to bring the amendment to a
24 vote . . . .”
25 Id. ¶ 17. Plaintiff alleges that these amendments are evidence of the Bylaws’ ambiguity as to voting
26 requirements, and that they have also “limit[ed]” “members’ ability to vote on changes” to the
27
5
28 Despite Plaintiff’s allegation to the contrary, see Am. Compl. ¶ 18, the Academy Secretary
must bring proposed amendments to the Membership and Governance Committee, see id. ¶ 17.
-4- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 Bylaws while “limit[ing]” “members’ rights to bring proposed amendments” to a vote in violation
3 Argument
4 A demurrer should be sustained if the complaint fails to allege facts sufficient to state a cause
5 of action, considering attached exhibits and matters incorporated by reference. Cal. Code Civ. Proc.
6 § 430.10(e); Performance Plastering v. Richmond Am. Homes of California, Inc., 63 Cal. Rptr. 3d
7 537, 542 (Cal. Ct. App. 2007). To withstand demurrer, plaintiffs must plead “facts sufficient to
8 establish every element of each cause of action.” Price v. Starbucks Corp., 122 Cal. Rptr. 3d 174,
9 178 (Cal. Ct. App. 2011) (citation omitted). If plaintiffs fail to plead or if defendants “negate any
10 essential element of a particular cause of action,” the demurrer should be sustained as to that cause
11 of action. Cantu v. Resolution Tr. Corp., 6 Cal. Rptr. 2d 151, 163 (Cal. Ct. App. 1992) (emphasis
12 in original and citation omitted). And although courts assume the truth of all facts properly pleaded,
13 a party may not avoid demurrer by pleading facts contrary to “judicially noticeable facts,” or “by
14 suppressing facts which prove the pleaded facts false.” Id. at 162. Courts also need not accept the
15 truth of “contentions, deductions or conclusions of fact or law.” Cansino v. Bank of Am., 169 Cal.
17 Where “no liability exists as a matter of law,” a court may sustain a demurrer without leave
18 to amend. Gutkin v. Univ. of S. California, 125 Cal. Rptr. 2d 115, 121 (Cal. Ct. App. 2002).
19 I. THE BYLAWS UNAMBIGUOUSLY DO NOT REQUIRE THE BOARD TO VOTE
ON ALL PROPOSED AMENDMENTS
20
A. The Bylaws are Unambiguous
21
“[C]orporate bylaws are to be construed according to the general rules governing the
22
construction of statutes and contracts.” Singh v. Singh, 9 Cal. Rptr. 3d 4, 27 (Cal. Ct. App. 2004)
23
(citation omitted). Where the language of the bylaws are unambiguous, the text of the instrument
24
controls its interpretation.6 Rather than interpreting each provision of the bylaws separately, the
25
26
6
Although Defendants do not rely on any deference to their interpretation, courts have, in
27
various contexts, afforded deference to the interpretation of bylaws by an organization’s board.
28 See Singh v. Singh, 9 Cal. Rptr. 3d 4, 27–28 (Cal. Ct. App. 2004) (“Bylaws must be given a
-5- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 bylaws should be considered as a whole, and the language construed in context. See PV Little Italy,
2 LLC v. MetroWork Condo. Assn., 148 Cal. Rptr. 3d 168, 179–80 (Cal. Ct. App. 2012); Am. Ctr. for
3 Educ., Inc. v. Cavnar, 102 Cal. Rptr. 575, 580 (Cal. Ct. App. 1972).
4 “When the facts are undisputed, as they are deemed to be on a ruling on a demurrer, the
5 interpretation” of bylaws “is a question of law” appropriate for the court to resolve. See Hervey v.
6 Mercury Cas. Co., 110 Cal. Rptr. 3d 890, 896 (Cal. Ct. App. 2010); see also Sandow Fred Segal,
7 LLC v. Cormackhill, LP, No. 16-CV-6653, 2017 WL 5714542, at *4 (C.D. Cal. Apr. 6, 2017)
8 (collecting cases where courts interpreted a written instrument on a demurrer or motion to dismiss).
9 The Bylaws unambiguously do not require a vote of the Board for every proposed
10 amendment. As Plaintiff concedes, the Bylaws, on their face, do not state—in any section—that a
11 vote is required for proposed amendments. See Am. Compl. ¶¶ 24–25. Rather than interpret the
12 plain language of the Bylaws, Plaintiff improperly asks the court to insert non-existent language.
13 See Edwards v. Arthur Andersen LLP, 189 P.3d 285, 296 (Cal. 2008) (“[W]hen courts construe an
14 instrument, a judge is ‘not to insert what has been omitted.’”); PV Little Italy., 148 Cal. Rptr. 3d at
15 185 (“If the plain language of the instrument is unambiguous, a court may not ‘read into’ the
16 document additional terms in order to conform its meaning to what the court's ‘intuition’ tells it the
18 Article XI, on which Plaintiff relies, further demonstrates that votes on proposed
19 amendments are not required. Section 1(a), which provides the default method of voting, states that
20 a vote by the Board on the adoption of an amendment “may be taken only at a Board meeting.” Am.
21 Compl. ¶ 8. And as Article IX (“Meetings, Committees and Publications”) makes clear, Robert’s
22 Rules of Order, Revised (“Robert’s Rules”) governs all procedures at meetings. Id. Ex. 1 at 11; see
23 also Cleary v. News Corp., 30 F.3d 1255, 1258 (9th Cir. 1994) (“Robert’s Rules of Order is one of
24 the leading sources of parliamentary law in the United States.”). A defining feature of Robert’s
25
reasonable construction and, when reasonably susceptible thereof, they should be given a
26 construction which will sustain their validity” (citation omitted and internal quotation marks
omitted)); Williams v. Inglewood Bd. of Realtors, 33 Cal. Rptr. 289, 293 (Cal. Ct. App. 1963)
27 (“The practical and reasonable construction of the Constitution and by-laws of a voluntary
28 organization by its governing board is binding on the membership and will be recognized by the
courts.” (citation and internal quotation marks omitted)).
-6- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 Rules is that the process of making any decision begins with the making of a motion. See General
4 proposal that the assembly take certain action, or that it express itself as holding certain views”); id.
5 at 110 (explaining that in large boards (more than around a dozen board members) “business is
6 transacted the same as in the society meetings”); see Cent. Coast Baptist Assn. v. First Baptist
7 Church of Las Lomas, 65 Cal. Rptr. 3d 100, 125 (Cal. Ct. App. 2007) (considering a key feature of
8 Robert’s Rules where the bylaws incorporated the rules), dismissed, remanded and ordered
9 published sub nom. Cent. Coast Baptist Ass’n v. First Baptist Church of Las Lomas, 202 P.3d 1089
10 (Cal. 2009). The Bylaws, by expressly incorporating Robert’s Rules, require a motion (then a
11 second to the motion) to bring the proposed amendments to a vote. See Robert’s Rules Revised 43
12 (“As a general rule, . . . every motion should be seconded.”). To hold otherwise would improperly
13 nullify Article IX’s incorporation of Robert’s Rules for all meetings. Cavnar, 102 Cal. Rptr. at 580
14 (interpreting bylaws “so as to give effect to every part, if reasonably practicable, each clause helping
15 to interpret the other” (emphasis added and citation omitted)). Although the Board held a meeting
16 to consider his presentation and proposed amendments, Plaintiff does not and cannot allege that any
18 The wide discretion afforded to the Board in adopting amendments further demonstrates that
19 the Bylaws do not require a vote by the Board on each and every amendment proposed by any
20 member of the Academy.7 Article XI grants the Board the discretion to decide which voting method
21 to apply when a vote is to take place. Section 2 states in relevant part: “The [Board vote method]
22 will be used unless the Academy Board determines that a given issue makes the second method
23 more appropriate.” Am. Compl., Ex. 1 at 12 (emphasis added); id. at 4 (stating that the powers and
24 duties of the Board shall include “[g]enerally to do and perform every act and thing whatsoever not
25 inconsistent . . . with these bylaws that may be necessary or desirable to effectuate the purposes and
26
27 7
The Academy has over 9000 current members and its Board of Governors consists of 54
28 members. See Am. Compl., Ex. 2 at 5 (noting five percent of membership was equivalent to 450
members); id., Ex. 1 at 3.
-7- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 program of the Academy”). Because the Board retains the discretion as to who will vote on any
2 proposed amendment, it would be unreasonable to require a vote on every proposed action, even if
3 such proposal failed to garner the support of even one Board member willing to make a motion.
4 The Bylaws cannot reasonably be interpreted to require such redundant and inefficient procedures.
5 Article XI also makes clear that the drafters of the Bylaws were not only capable but willing
6 to employ mandatory language where it would effectuate the actual intent of the parties. Section
7 1(b) states in relevant part that a member vote “must be conducted by mail. . . .” Id. ¶ 8 (emphasis
8 added). By comparison, Section 1(a) employs permissive language for a Board vote, stating that
9 absent Board members “may submit their votes in writing.” Id.8 This comparison also provides
10 another example of the wide discretion accorded to the Board as to adopting amendments.
11 The Board fulfilled all its obligations and more under the plain language of the Bylaws,
12 undermining Plaintiff’s claim that the Academy refused to consider his concerns. After extending
13 Plaintiff an invitation to the Board meeting, carefully listening to his presentation, asking questions
14 (Am. Compl. ¶ 15), and “deliberat[ing]” on the proposed amendments (id. ¶ 10), all members of the
15 Board were given the opportunity to make a motion to put the amendments to a vote (id. ¶ 15). All
16 members declined to do so, demonstrating that a Board vote would have been futile and unnecessary.
17 While Plaintiff may be frustrated that the Board failed to “show [him] the simple courtesy” by voting
18 on his proposals, that personal disappointment cannot overcome the plain language of the Bylaws
19 or entitle him to injunctive relief mandating that they so do. Id. ¶ 33 (emphasis added).
22 parol evidence may not “add to, detract from, or vary the terms of a written contract.” George v.
23 Auto. Club of S. California, 135 Cal. Rptr. 3d 480, 492 (Cal. Ct. App. 2011) (citation omitted). As
24 a result, when analyzing a demurrer, a court must first “conditionally consider the parol evidence
25
26
8
The Bylaws are replete with mandatory language in various sections. See, e.g., Am.
27 Compl., Ex. 1 at 3 (“The corporate oversight, control and strategic direction of the business and
28 property of the Academy and the general policies of the Academy shall be vested in, and
controlled by, a Board of fifty-one (51) Governors. . . .” (emphasis added)).
-8- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 alleged in the complaint” to “determine if it would be relevant to prove a meaning to which the
2 language of the instrument is reasonably susceptible.” Id. at 485 (emphasis added); see also Wolf
3 v. Walt Disney Pictures & Television, 76 Cal. Rptr. 3d 585, 608 (Cal. Ct. App. 2008), as modified
4 on denial of reh’g (June 4, 2008) (“Absent a conflict in the evidence, the interpretation of the
5 contract remains a matter of law.”). Relevant evidence provides insight into the mutual intent of the
6 parties at the time of contracting and includes “the parties’ discussions at the time” of the contract
7 negotiations and “the circumstances which attended the making of the agreement.” Winet v. Price,
11 support of his claims, Plaintiff first argues that the March 2020 meeting minutes demonstrate that
12 the Bylaws are ambiguous as to the requirement of a vote for proposed amendments. Am. Compl.
13 ¶ 14-15, Ex. 5 at 4. The minutes state in relevant part: “The [B]oard recommended that the
14 Membership and Governance Committee review the process by which members may propose by-
15 laws changes, to clarify that process.” Am. Compl., Ex. 4 at 4 (emphasis added). These minutes
16 are not relevant as they are not “expressions of intent communicated between the persons who
17 adopted the Bylaws.” Smith v. Adventist Health Sys./W., 106 Cal. Rptr. 3d 318, 340 n.18 (Cal. Ct.
18 App. 2010), as modified on denial of reh’g (Apr. 1, 2010). The March 2020 meeting discussions
19 did not take place at the time the language was written, and also fail to provide any information of
20 the circumstances surrounding the adoption of the language in the Bylaws.9 And as the Article IV
21 of the Bylaws states, the “term of office of each Governor shall be for three (3) years” and “[n]o
22 member shall be eligible to serve as a “Governor for more than nine (9) years in consecutive
23 succession.” Am. Compl., Ex. 1 at 3. The Amended Complaint fails to allege how the March 2020
24
9
25 Nor are the meeting minutes the type of subsequent acts or conduct evidence that provide a
“practical interpretation” of the written instrument in dispute. And although “words,” in addition
26 to actions, may provide such evidence, the proffered documents generally discuss how a party
actually understood or interpreted the relevant terms or provisions of the written instrument at
27 issue. See, e.g., S. Cal. Edison Co. v. Superior Court, 44 Cal. Rptr. 2d 227, 233 (Cal. Ct. App.
28 1995), as modified on denial of reh’g (Sept. 7, 1995) (finding relevant statements to investors and
other documents that indicated parties’ understanding of what the term in dispute meant).
-9- Case No. 20SMCV00943
DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 meeting discussion by the now-current Board members provides any insight into the intent of the
2 drafters and adopters of the relevant provisions of the Bylaws. See Lewis v. YouTube, LLC, 197
3 Cal. Rptr. 3d 219, 225 (Cal. Ct. App. 2015) (“We interpret a contract ‘to give effect to the mutual
4 intention of the parties as it existed at the time of contracting.’” (emphasis added and citation
5 omitted)).
6 Plaintiff’s reliance on the March 2020 meeting minutes is misplaced for another fundamental
7 reason: the minutes do not say what Plaintiff argues they do. Based on his demand letter, Plaintiff
8 appears to argue that the March 2020 meeting minutes are evidence that there is “confusion with
9 how proposed amendments are submitted and adopted.” Am. Compl., Ex. 5 at 4. But the minutes
10 do not speak to any “confusion” about the manner in which any proposed amendments are adopted
11 or voted upon. The minutes plainly state that the Board recommended that there be clarification as
12 to the “process by which members may propose by-laws” and to “clarify that process.”10 Am.
13 Compl., Ex. 4 at 4 (emphasis added). And even if the meeting minutes could somehow be inferred
14 to speak on clarifying voting procedures, Plaintiff fails to allege or explain how the minutes support
16 Amended Complaint, for example, does not allege that the necessity of a vote was a matter that was
17 disputed prior to the meeting or discussed at the meeting. As a result, the meeting minutes fail to
18 reveal any latent ambiguity in the Bylaws as to the necessity of votes on proposed amendments. See
19 FPI Dev., Inc. v. Nakashima, 282 Cal. Rptr. 508, 526 (Cal. Ct. App. 1991) (“A claim of extrinsic
23 the Bylaws. Plaintiff argues that the June Amendments were “entirely unnecessary” if the Bylaws
24
25
10
Plaintiff himself alleges in the Amended Complaint that it took several months of informal
26 process for his proposals to reach the Board. See Am. Compl. ¶¶ 8–11. Consistent with the plain
language of the meeting minutes, the June Amendments clarifies how amendments may be
27 proposed. Rather than seeking to “chill” the voice of any of its members, the Academy has sought
28 merely to clarify how various proposals, including those by its members, may be raised and
presented to the Board.
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DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 are unambiguous as to the lack of a requirement of a vote on proposed amendments. Am. Compl.
2 ¶¶ 24-25. This allegation, however, does not fall within the limited categories of extrinsic evidence
3 courts find relevant in interpreting contracts. See Hollywood Foreign Press Ass’n v. Red Zone
4 Capital Partners II, 870 F. Supp. 2d 881, 917 (C.D. Cal. 2012) (listing categories of permissible
5 extrinsic evidence). The June Amendments are not evidence of “the parties’ discussions at the time”
6 of the adoption of the Bylaws or “the circumstances which attended the making of th[at] agreement.”
7 Winet, 6 Cal. Rptr. 2d at 559. Nor are they subsequent conduct evidence akin to course of dealing
8 or course of performance. See U.S. Cellular Inv. Co. v. GTE Mobilnet, Inc., 281 F.3d 929, 937 (9th
9 Cir. 2002) (“Under California law, a court may consider the subsequent acts and conduct of the
10 parties in the execution of the contract in order to determine the intent of those parties.” (emphasis
11 added)). Although unclear,11 Plaintiff appears to be attempting to introduce the June Amendments
12 as a form of subsequent conduct evidence. But even if an amendment to the Bylaws could be
14 evidence is “qualified by [the] restriction that the actions to be considered occur before [the] dispute
15 has arisen.” Heston v. Farmers Ins. Grp., 206 Cal. Rptr. 585, 591 (Cal. Ct. App. 1984) (citation
16 omitted); Warner Constr. Corp. v. City of Los Angeles, 466 P.2d 996, 1003 (Cal. 1970) (“The
17 principle of ‘practical construction’ applies only to acts performed under the contract before any
18 dispute has arisen.”). As Plaintiff concedes, the dispute over the proper interpretation of the Bylaws
19 and the necessity or lack thereof of a vote on proposed amendments occurred prior to the June
20 Amendments (including even prior to the demand letter).12 See Am. Compl. ¶¶ 12-16, 18.
21 Moreover, Plaintiff fails to adequately allege how the June Amendments demonstrate a latent
22 ambiguity in the Bylaws. To support his claims, Plaintiff needed to allege evidence of prior
23 construction of the Bylaws at odds with its plain language. The June Amendments’ addition of the
24
25 11
It is unclear what other exceptions to the exclusion of parol evidence the June Amendment
26 allegations could potentially fall under. See Cal. Civ. Proc. Code §§ 1647, 1856.
12
Plaintiff alleges that the demand letter, which was sent before the June Amendments, was a
27
“final attempt to have the Board do nothing more than simply hold a vote on his Amendments.”
28 Am. Compl. ¶ 16.
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DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 language “following otherwise regular motion procedures to bring the amendments to a vote,”
2 however, is entirely consistent with the plain language of the Bylaws, which incorporates Robert’s
3 Rules of Order for all procedures at meetings. The reinforcement of already existing language of
4 the Bylaws is not evidence of an ambiguity.13 See Wolf, 76 Cal. Rptr. 3d at 609 (relying on other
5 provisions of a contract that “reinforced” the “plain meaning of the actual language used by the
6 parties”).
7 For these reasons, Plaintiff’s attempt to read into the Bylaws ambiguity through the March
8 2020 meeting minutes and June Amendments should not be permitted. Both the substance and
9 context of the meeting minutes and the amendments fail to demonstrate that the Bylaws are
10 reasonably susceptible to an interpretation requiring a vote on proposed amendments. See id. Even
11 after considering the proffered extrinsic evidence, the only reasonable interpretation remains that a
12 vote is not required and that a motion by a Board member, pursuant to Robert’s Rules, is necessary
14 II. THE SECOND AMENDED COMPLAINT DOES NOT STATE A CLAIM UNDER
CALIFORNIA CORPORATIONS CODE § 7150
15
A. Section 7150 Does Not Apply to Plaintiff’s Factual Allegations
16
Section 7150 typically only applies to voting on significant corporate matters not pled in the
17
Second Amended Complaint. Section 7150 was designed to safeguard “membership rights.” Cal.
18
Corp. Code § 7150(a)(1) (allowing amendments by the board unless the action would “[m]aterially
19
and adversely affect the rights of members as to voting, dissolution, redemption, or transfer”).14
20
Under California law, absent additional bylaw provisions, members only have “the right to vote for
21
. . . directors[,] . . . on the disposition of . . . assets[,] . . . on a merger or . . . dissolution” of the
22
corporation. Cal. Corp. Code § 5056(a); Cal. Corp. Code § 5057 (“A ‘membership’ refers to the
23
24
13
Subsequent conduct evidence typically involve comparisons of prior and later-asserted
25 interpretations. By contrast, Plaintiff only argues that the later amendments were unnecessary.
26 See S. Cal. Edison Co., 44 Cal. Rptr. 2d at 234 (“In the litigation that has ensued, one who is
maintaining the same interpretation that is evidenced by the other party’s earlier words, and acts,
27 can introduce them to support his contention.”).
14
28 See also Assembly Select Committee, “Report of the Assembly Select Committee on
Revision of the Nonprofit Corporations Code” 10 (1979).
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DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 rights a member has pursuant to a corporation’s articles, bylaws and this division.”); see also In re
2 H.W., 436 P.3d 941, 944 (Cal. 2019) (“[W]e consider . . . related provisions, terms used in other
3 parts of the statute, and the structure of the statutory scheme.”). A contrary interpretation would
4 also set “voting” significantly apart from the other terms used in § 7150—dissolution, redemption,
5 and transfer all implicate significant corporate changes. People v. Prunty, 355 P.3d 480, 487 (Cal.
6 2015) (applying the noscitur a sociis canon of construction (that a word “‘is known by its
7 associates’”)).
8 More importantly, whether the right to vote on amendments may potentially be within §
9 7150’s purview is irrelevant because that right has not been specifically provided for in the Bylaws
10 as would be required. See Cal. Corp. Code § 5056(a) (defining member to include a person so
12 bylaws, has the right to vote on changes to the articles or bylaws” (emphasis added)). Both prior
13 and subsequent to the June Amendments, the Bylaws conferred discretion upon the Board to
14 determine the method for adoption of any proposed amendment. See Am. Compl., Ex. 1 at 12. Even
15 where a vote on an amendment is to take place, the default method for adoption is a Board vote. As
16 a consequence, absent Board support, members neither have the right to a Board vote nor the right
17 to vote themselves on any proposed amendment. See RIGHT, Black’s Law Dictionary (“Black’s”)
18 (“Something that is due to a person by just claim, legal guarantee, or moral principle”); Wasatch
19 Prop. Mgmt. v. Degrate, 112 P.3d 647, 653 (Cal. 2005), as modified (July 27, 2005)
20 (“When attempting to ascertain the ordinary, usual meaning of a word, courts appropriately refer to
22 Plaintiff himself recognizes that members have no “right” to a member vote. While seeking
23 a court-ordered member vote (as opposed to a Board vote), Plaintiff relies solely upon the negative
24 “history” and relationship between the parties. See Am. Compl. ¶ 20. Rather than demand a member
25 vote as being required under the Bylaws, Plaintiff instead seeks implementation of that method of
26 amendment because it is preferable under the circumstances. See id. Plaintiff’s preference alone,
28
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DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 B. The June Amendments only Clarified Existing Procedures
2 Even if § 7150 were applicable, Plaintiff fails to explain how the June Amendments
3 “materially and adversely” affected any purported member rights.15 Plaintiff vaguely alleges that
4 the amendments “limit[ed] members’ ability to vote on changes to the Bylaws” while also “unfairly
5 and unduly limit[ing]” the members’ rights to bring proposed amendments to the [B]ylaws for a
6 vote.” Am. Compl. ¶¶ 29-30. But prior to the June Amendments, members did not have the right
7 to vote on amendments absent a Board decision in support. And as Plaintiff concedes, the recent
8 amendments did not change that aspect of the Bylaws. See id. ¶¶ 17-18. The Bylaws also previously
9 stated that “Amendments to the [B]ylaws may be proposed by any member of the Academy.” Id. ¶
10 8. And rather than abridging the ability of any member to make such proposals, the June
11 Amendments merely clarified that proposals should be made in writing to the Academy Secretary.
12 Prior to the recent amendments, the Bylaws did not explicitly state to whom proposals should be
13 made, whether proposals needed to be brought to the Board’s attention, or even whether the Board
14 was required to consider proposals. Plaintiff fails to explain how the clarification of the process and
15 the initial consideration of the proposal by the Membership and Governance Committee, composed
16 of Board members, has had a materially adverse impact on members’ rights to propose
17 amendments.16 See Ellis v. Cty. of Calaveras, 199 Cal. Rptr. 3d 368, 371 (Cal. Ct. App. 2016), as
18 modified on denial of reh’g (Mar. 17, 2016) (“[W]e accept well-pleaded facts, but not adjectival
19 descriptions or legal conclusions, to determine whether a cause of action exists.”).
20 III. THE CAUSES OF ACTION FAIL TO THE EXTENT THEY DEMAND A VOTE
BY MEMBERS OF THE ACADEMY
21
Plaintiff’s causes of action also fail to state viable claims to the extent they ask the Court to
22
“compel[] all [Academy members] (not just the Board) to vote on Plaintiff’s Amendments.” Am.
23
Compl. ¶ 20. Although the allegations under the Causes of Action section do not specifically
24
25 15
In other legal contexts, materially adverse action requires more than minor negative
26 outcomes. See, e.g., Mackey v. Bd. of Trustees of California State Univ., 242 Cal. Rptr. 3d 757,
777 (Cal. Ct. App. 2019) (holding a “mere offensive utterance or even a pattern of social slights”
27 cannot constitute a materially adverse action under employment discrimination law).
16
28 As detailed in Section I, there is no right to a vote on proposed amendments.
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DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT
1 demand a member vote, the Amended Complaint does make such a request in the Factual
2 Background section. See id. (“[T]he Court should implement the second method of voting”
3 (member vote)). As noted above, however, the plain language of Article XI, Section 2 of the Bylaws
4 grants the Board discretion to determine which voting method is more appropriate.17 As a result,
5 both claims fail as a matter of law to the extent they seek a declaration or injunction that seeks to
7 Conclusion
8 For the reasons stated herein, Defendants’ demurrer should be sustained with prejudice and
9 without leave to amend. While a vote may have been “courteous,” the Board fully complied with
10 the Bylaws. Plaintiff was invited to present his proposals to the Board and the Board thereafter
11 afforded Plaintiff the only vote he was entitled to—a call for a motion. The later June Amendments
12 also merely clarified the process by which members may propose amendments, and reinforced
13 already existing procedures. The Academy and the Board violated neither the Bylaws nor California
18
19 By
Kristen Bird
20 Attorney for Academy of Motion Picture Arts and
21 Sciences and the Board of Governors of the
Academy of Motion Picture Arts and Sciences
22
23
24
25
26
27 17
There is also no claim in this action that the Board exercised its discretion to choose the
28 voting method in a manner contrary to law. The only dispute is whether the Bylaws require a vote
in the first instance.
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DEFENDANTS’ DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT