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B214056
-i-
TABLE OF AUTHORITIES
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STATE CASES:
STATUTES:
-ii-
TABLE OF AUTHORITIES
(continued)
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OTHER AUTHORITIES:
SAG Constitution
Article V, § 1(J)(4) 1-4, 9-12, 14, 15,22
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I. INTRODUCTION.
complying bylaw. Yet its effort to validate Article V, § l(J)(4) and the
actions it took thereunder relies on assertion, not argument, and the very
Article V, § 1(J)(4).
when and how a corporation's board of directors may take action without a
232491JDOC 1
• Article V, § 1(J)(4) of SAG's Constitution and Bylaws
adopt for its management only such articles or bylaws that do not conflict
contravenes Corporations Code Sections 7150, 7151 and 7211 (b), the
"written assent" is valid because (i) SAG has always conducted business by
majority "written assent," and (ii) the Board subsequently held a "duly-
23249U·DOC 2
II. ARTICLE V, § l(J)(4) OF SAG'S CONSTITUTION AND
BYLAWS VIOLATES CORPORATIONS CODE SECTION
7211(b).
A. SAG Has Failed To Rebut The Argument That
Corporations Code Section 7211(b) - Rather Than Section
7150 - Governs The Validity Of Article V, § l(j)(4).
the "written assent" passed pursuant to Article V, § 1(J)(4) was invalid, and
that all actions taken by SAG pursuant to that "written assent" should be
enjoined.
SAG offered the rejoinder that Section 7150(ai, rather than Section
to Section 7150, SAG argued Section 721 1(b) is not a mandatory provision
232491JDOC 3
As analyzed in Appellants' Opening Brief, however, Section 7l50(a)
the management ofthe corporation. Section 7211 (b), on the other hand,
sets forth the specific manner and method by which a board of directors
may act by "written assent" in lieu of a meeting - the very subject of Article
rules of statutory construction, it matters not that Section 7211 (b) is not
County ofMendocino, 37 Cal. App. 4th 977, 988 (1995) (a specific statute
concedes that the specific "written assent" procedures set forth Section
Appellants submit the only issue remaining before this Court is whether
23249U.DOC 4
bylaws. As confirmed by the very authorities cited by SAG, it is clear that
it may not.
worse.
Changed by Bylaw.
more to support SAG's contention than does Colburn. In point of fact, the
23249U.DOC 5
treatise supports Appellants' contention that Section 7211 (b) may not by
The Respondent's Brief cites and relies upon the treatise, as follows:
"explanation" applies only to Section 721 1(a) governing how and when
board· of directors meetings are called and how such meetings are
Section 721 1(a). That subsection sets forth the "default" provisions to be
meeting of the Board of Directors, how the meeting may be noticed, how a
meeting may be adjourned, where the meeting may be held, and whether
conferencing.
Appellants agree that Section 721 1(a) - and, as noted by the treatise,
23249U·DOC 6
subdivisions of Section 7211(a) (AA, Tab 8, p. 00401, § 405.02[1]) - may
The issue presented here, however, is whether Section 7211 (b) may
terms that, "[a]ny action required or permitted to be taken by the board may
contrast to Section 405.02, in which the authors expressly explain that the
Section 405.03 do the authors remotely suggest that any portion of Section
bylaws. To the contrary, they reiterate the requirement of the statute that
23249U·DOC 7
thus mandatory. People v. Gardeley, 14 Ca1.4 th 605, 621-22 (1996), citing
(1990) ("[w]hen the Legislature has used a term or phrase in one part of a
statute but excluded it from another, courts do not imply the missing term
of phrase in the part of the statute from which the Legislature has excluded
omission ofthat term or provision from another part of the statute indicates
support thereof, SAG points to Section 721 1(a)(8), which states, "[tIhe
articles or bylaws may not provide that a lesser vote than a majority of the
SAG argues that the absence of such "prohibitory" language from Section
subsection (a) affirmatively states that each of the subdivisions set forth
23249tJDOC 8
Corp. Code §72ll(a)(l) ("[u]nless otherwise provided in the articles or in
made clear that the provisions of Section 7211 (b) may not be amended or
SECTION 7150.
23249U·DOC 9
A. Article V, § l(J)(4) Directly Conflicts With Corporations
or bylaws, explicitly provides the manner and method by which such mail
and 7151 only so long as it does not conflict with Section 7211 (b).
Article V, § 1(1)(4) does not conflict with Section 7211(b) because Section
is a procedure for which "a board meeting is not required," SAG contends
Section 72ll(b) does not apply to the bylaw. (1d.; emphasis in original.)
23249U·DOC 10
As an initial matter, SAG misstates the law.
,
Section 7211(b)
.
applies
not only to "acts for which a board meeting is required, but also to acts for
,j
management ofthe corporation. See, e.g., Cal. Corp. Code § 7210 et seq,;
This duty is discharged through decisions made, and matters voted upon, at
conducted. Cal. Corp. Code § 7211 (a). Because the authority to conduct
statute in Section 7211 (b), SAG's power to act by "written assent" without a
granted under Section 7211 (b). But for Section 7211 (b), SAG's Board may
23249U,DOC 11
§ 1(J)(4) is thus in "conflict with the!aw" and runs afoul of Sections 7150
and 7151.
the rights of members as to, inter alia, voting. Cal. Corp. Code § 7l50(a).
unavailing.
232491JDOC 12
A. Public Policy Weighs In Favor Of Invalidating An Illegal
Bylaw.
appeal, of asking this Court to substitute its judgment for that of the SAG
Board. SAG elaborates that the Court "should abstain from wholesale
the "competence of the court does not equal that of the organization." (See
chooses to govern itself in disregard of the law, however, the Court should
and must step in. Appellants neither seek to have the Court "substitute" its
judgment for that of SAG, nor to have this Court interpret any of SAG's
anything other than a legal challenge to the legality and validity of a bylaw
which by its very terms conflicts with the laws of this State, is to illuminate
232491JDOC 13
B. Appellants' Application For Temporary Restraining
maintaining the status quo of the guild and its Board by preventing action
taken under the ostensible authority of the "written assent." See, AA, Tab
4, at pp. 2:7-4: I. Had SAG - rather than resort to its "written assent" -
An Illegal Bylaw.
23249U·DOC 14
declaration of Michelle Bennett submitted in support of SAG's opposition
to the application for temporary restraining order (AA, No.7, at pp. 00342-
majority vote of the Board is required to be filed with SAG (Cal. Corp.
Code § 7211 (b», Ms. Bennett notably fails to attach copies of any of the
alkged ten "written assents" passed since June 2004. Such "written
assents" are, of course, the best evidence of the actions taken by the Board
and the alleged "importance" of such actions. See Cal. Evid. Code §§ 1520
et seq.
attached. As Ms. Bennett clearly states in her declaration, since June 2004,
SAG has conducted "ten separate email/fax polls of the National Board of
1(J)(4) to act on matters with a minimum majority vote, such prior action
cannot serve to make an illegal bylaw legal. "A party to an illegal contract
cannot ratify it, cannot be estopped from relying on the illegality, and
cannot waive his right to urge that defense." City Lincoln-Mercury Co. v.
232491JDOC 15
City ofSan Leandro, 181 Cal. App. 3d 179, 182 (1986)(same); Prime v.
Hyne, 260 Cal. App. 2d 397, 402-403 (1968) (same). Under the same
instrument to enforce an act that is illegal and contrary to laW. See, Berka
v. Woodward, 125 Cal. 119, 127 (1899) ("no court shall lend its aid to a
man who grounds his action upon an ... illegal act"); see also, Columbia
Engineering Co. v. Joiner, 231 Cal. App. 2d 837, 855 (1965) (accord).
election of the board of directors on the ground that some ofthe shares
voted were issued in violation of the law, and thus were void. The trial
court held that because plaintiffs actively participated in the issuance of the
challenged shares and the subsequent conduct of the corporation for more
than one and one-half years, their cause of action was barred under the
the doing of an act, that act is void," and "the defenses oflaches, waiver
554 (1946), too, the voting trustees of a corporation extended its Voting
Delaware held that, because the extension of the Voting Trust Agreement
23249U·DOC 16
violated Delaware's Corporation Law, both the extended Agreement and
any votes taken under it were invalid. Id., at 561-62. The Court also
rejected the trustees' argument that the extension "cannot be attacked by the
appellees for the reasons that it was unanimously approved and that the
irrelevant.
Board held a "noticed meeting" that affirmed the matters passed by the
SAG now renews its motion to dismiss the appeal as moot on the
that, since the filing of its previous Motion, the SAG members voted to
232491JDOC 17
important aspects of this appeal." SAG's renewed motion is substantively
the issues on Appeal. By the improper and illegal "written assent," the
employee or member of the Board of SAG - as the interim NED for SAG;
committee";
Agreement or, because of its interrelated nature, the Live Action Basic
from making any statements about any issue whatsoever on behalf of SAG.
232491JDOC 18
(AA, Vol. I, Ex. 5, p. 00175-176, Rosenberg Decl., "118; AA, Vol. I, Ex. 5, p.
presented to and voted upon by the SAG members was the product ofthe
illegal "written assent" procedure, which contract should never have been
presented to the members in the first place. That the members voted to
approve the procedurally defective contract does not void the appeal. It
simply supports and proves the "irreparable harm" the trial court found
change the fact that, pursuant to the illegal "written assent," Mr. Allen was
terminated as the NED (and still remains terminated), Mr. White was hired
as an interim NED (and still remains in such position), Mr. McGuire was
hired as the Chief Negotiator for all contracts (and still remains in such a
force and effect of a bylaw, was and remains suspended, the TV/Theatrical
Committee was and remains disbanded, and a gag order was issued and
remains in effect.
232491JDOC 19
Second, SAG's renewed motion is simply an ill-disguised motion for
reconsideration ofthe prior order of this Court denying the first Motion to
Dismiss Appeal. SAG has not presented any new argument or law to
SAG's Motion to Dismiss, the appeal is not moot for several separate and
independent reasons:
by the Board's Motion. In other words, the Board carmot make an illegal
assent." Section 2313 provides that, "No unauthorized act can be made
by the January 26 "written assent," as the trial court found that they would
23249lJDOC 20
Motion to validate the "written assent" would prejudice Appellants and is
Appellants' Opening Brief, the February 8 Motion did not and could not
cure the defects in the January 26 "written assent" because the meeting at
which such a motion passed was itself defective in a number of ways (e.g.,
David White did not have the authority to call a special Board meeting
because he had not been validly appointed, the motion violated a number of
because it did not "ratifY" the matters "passed" by way of the "written
not, however, vote on each item set forth in the "written assent" and pass
each such item by the two-thirds vote required under the SAG Constitution
and Bylaws. Indeed, the vote to "affirm" the Board's authority to act by
21
• As a matter of policy, the Court should decide the merits of .
interest, is likely to affect the parties' future rights, and is the type of dispute
Corporations Code Section 7211 (and its counterpart for other types of
appellate court, and will affect the governance of all corporations in this
State.
V. CONCLUSION
Court reverse the order of the Superior Court issued on February 5, 2009,
232491JDOC 22
restraining order and (2) an order to show cause why a preliminary
By: '--~.L-_-==-----""""":"='---.:= _
Eric M. George
23249U·DOC 23
CERTIFICATE OF WORD COUNT
(Cal. Rules of Court, Rules 8.204(c)(1))
By: g~L-=
Eric M. George
23249U·DOC 24
PROOF OF SERVICE
~~@L4V_-
KRISTINE DIANE DE ROSA