Mann v. Gtcr Golder Rauner, L.L.C., CIV-02-2099-PHX-RCB.

• Citation: 483 F.Supp.2d 884
• Decision Date: 30 March 2007
• Docket Number: No. CIV-02-2099-PHX-RCB.,CIV-02-2099-PHX-RCB.
• Parties: Diane MANN, as Trustee for the Estate of LeapSource, Inc., et al., Plaintiffs, v. GTCR GOLDER RAUNER, L.L.C., a Delaware limited liability company, et al., Defendants.
• Court: U.S. District Court — District of Arizona

483 F.Supp.2d 884

Diane MANN, as Trustee for the Estate of LeapSource, Inc., et al., Plaintiffs, v. GTCR GOLDER RAUNER, L.L.C., a Delaware limited liability company, et al., Defendants.

No. CIV-02-2099-PHX-RCB.

United States District Court, D. Arizona.

March 30, 2007.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Kevin Breger, The Law Offices of Kevin Breger, Leo R. Beus, Scot C. Stirling, Steven Eric Weinberger, Beus Gilbert PLLC, Scottsdale, AZ, Steven Joseph Brown, Steve Brown & Associates LLC, Phoenix, AZ, for Plaintiffs.

Merrick Brian Firestone, Veronica Lynn Manolio, Ronan & Firestone PLC, Scottsdale, AZ, Kevin A. Russell, David S. Foster, Michael J. Faris, Livia M. Kiser, Nicholas B. Gorga, Latham & Watkins LLP, Chicago, IL, Don P. Martin, Edward Alipio Salanga, Quarles & Brady LLP, Daniel P. Jensen, Law Office of Daniel P. Jensen PLLC, James R. Condo, John J. Bouma, Joseph G. Adams, Patricia Lee Refo, Todd Feltus, Snell & Wilmer LLP, Phoenix, AZ, for Defendants.

ORDER

BROOMFIELD, Senior District Judge.

Introduction

LeapSource, Inc. existed as a "business process outsourcing" company for less than two years.¹ LeapSource's demise engendered this litigation which has been ongoing for nearly five years (more than twice as long as the Company existed).² Before the court is a motion directed at 15 counts of the Fourth Amended Complaint ("FAC") (doc. 121), brought by defendants GTCR Golder Rauner, L.L.C., GTCR Fund VI, L.P., GTCR VI Executive Fund, L.P., GTCR Associates VI,³ Joseph P. Nolan, Bruce V. Rauner, Daniel Yih, David A. Donnini and Philip A. Canfield⁴ for summary judgment pursuant to Fed.R.Civ.P. 56 (doc. 347). Finding oral argument unnecessary, the court rules as follows.

Discussion

I. Standard of Review

The court assumes familiarity with what has sometimes been referred to as the Celotex trilogy wherein the Supreme Court, in 1986, clarified and refined the standards for deciding Rule 56 summary judgment motions. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); and Matsushita Elec. Industr. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). There is no need to repeat the entire body of summary judgment case law which has developed since then, but a few principles are worth highlighting.

A motion for summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). It is beyond dispute that "[t]he moving party bears the initial burden to demonstrate the absence of any genuine issue of material fact." Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir.2007) (citation omitted). "Once the moving party meets its initial burden, ..., the burden shifts to the nonmoving party to set forth, by affidavit or as otherwise provided in Rule 56, specific facts showing that there is a genuine issue for trial." Id. (internal quotation marks and citations omitted). This "[e]vidence must be concrete and cannot rely on `mere speculation, conjecture, or fantasy.'" Bates v. Clark County, 2006 WL 3308214, at *2 (D.Nev. Nov.13, 2006) (quoting O.S.C. Corp. v. Apple Computer, Inc., 792 F.2d 1464, 1467 (9th Cir.1986)). Similarly, uncorroborated and self-serving testimony or declarations, without more, will not create a genuine issue of material fact precluding summary judgment. See DuBois v. Ass'n Apart. Owners 2987 Kalakaua, 453 F.3d 1175, 1180 (9th Cir.2006), cert. denied, ____ U.S. ____, 127 S.Ct. 1267, 167 L.Ed.2d 92, 75 USLW 3436 (2007).

Nor will "a mere `scintilla' of evidence" be sufficient "to defeat a properly supported motion for summary judgment; instead, the nonmoving party must introduce some `significant probative evidence tending to support the complaint.'" Fazio v. City & County of San Francisco, 125 F.3d 1328, 1331 (9th Cir.1997) (quoting Anderson, 477 U.S. at 249, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202). Thus, in opposing a summary judgment motion it is not enough to "simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (citations omitted).

By the same token though, when assessing the record to determine whether there is a "genuine issue for trial," the court must "view the evidence in the light most favorable to the nonmoving party, drawing all reasonable inference in his favor." Horphag, 475 F.3d at 1035 (citation omitted). The court may not make credibility determinations; nor may it weigh conflicting evidence. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505. It is with these standards firmly in mind that the court has examined, at length, the record as presently constituted.

Before addressing the merits, the court has a few preliminary observations. Most importantly, plaintiffs' response memorandum is substantially lacking in terms of citations to the record. Their 40 page response includes cites to only 11 paragraphs of plaintiffs' 106 page, 261 paragraph PSOAF. Further, plaintiffs twice designated deposition testimony by page and line, but elected not to correlate that testimony to any specific exhibit in the record. And although plaintiffs incorporate by reference memoranda filed in earlier motions, they did not indicate which pages are relevant to the issues now before the court. These omissions would be problematic in any case, but they are especially so here where the record consists of over 140 exhibits, totaling approximately 2500 pages.⁵ Perhaps these omissions simply indicate that much of the record does not support plaintiffs' position, and they have done the best possible with the facts and law available.

As the Ninth Circuit has acknowledged on more than one occasion though, a court does not have an obligation to "examine the entire file for evidence establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers with adequate references so that it could conveniently be found." See Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir.2001); see also Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir.) (internal quotations and citations omitted) ("[It] is not our task to scour the record in search of a genuine issue of triable fact."); Forsberg v. Pacific N.W. Bell Tel. co., 840 F.2d 1409, 1418 (9th Cir.1988) (A district court is not "required to comb the record to find some reason to deny a motion for summary judgment[.]"). That is so because courts "rely on the nonmoving party to identify with reasonable particularity the evidence that precludes summary judgment." Keenan, 91 F.3d at 1279 (internal quotation marks and citations omitted). Or, as the Ninth Circuit so succinctly put it in Carmen:

A lawyer drafting an opposition to a summary judgment motion may easily show a judge, in the opposition, the evidence that the lawyer wants the judge to read. It is absurdly difficult for a judge to perform a search unassisted by counsel, through the entire record, to look for such evidence.

Carmen, 237 F.3d at 1030; see also Guarino v. Brookfield Township Trustees, 980 F.2d 399, 405 (6th Cir.1992) ("[The nonmoving party's] burden to respond is really an opportunity to assist the court in understanding the facts. But if the nonmoving party fails to discharge that burden — for example, by remaining silent — its opportunity is waived and its case wagered.") In short, nothing in Rule 56 or the case law construing it, requires the court to consider matters not specifically brought to its attention. Accordingly, as is its prerogative, here the court has "`limit[ed] its review to the documents submitted for purposes of summary judgment and those parts of the record specifically referenced therein.'" Hubbard v. 7-Eleven, Inc., 433 F.Supp.2d 1134, 1140 (S.D.Cal. 2006) (quoting Carmen, 237 F.3d at 1030) (emphasis added).

This insufficient identification of those facts which plaintiffs believe defeat defendants' summary judgment motion is compounded by the fact that frequently in their response plaintiffs relied more upon rhetoric than reason. Indeed, in discussing some issues, for example, aiding and abetting of fiduciary breaches, plaintiffs did not cite to any case law at all. When it was difficult to discern the exact nature of plaintiffs' opposition argument, the court did not speculate because to do so would mean that it would be impermissibly taking on the role of advocate, rather than impartial decision-maker. Again, however, the court assumes that plaintiffs provided the court with such citations to the record as were available to them.

II. Fiduciary Duties

For discussion purposes, the remaining counts in the FAC can be divided into two broad categories — those alleging breach of fiduciary duties (and the aiding and abetting of those breaches), as well as six remaining miscellaneous counts. The fiduciary duty claims can be further divided into those brought by plaintiff Dianne Mann, as bankruptcy trustee (counts 2, 4, 5, 6 and 7), and those brought by the eight individual plaintiffs, former LeapSource employees (counts 17-20).

A. Scope

As it did in its September 30, 2003, dismissal order, the court will once again look to Delaware law, the state of Leap-Source's incorporation, to assess the viability of plaintiffs' fiduciary duty claims. See Mann I (doc. 72) at 42 (citing First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 621, 103 S.Ct. 2591, 77 L.Ed.2d 46 (1983)). Delaware law recognizes that not only do directors and officers "stand in a fiduciary relationship to their corporation and stockholders[,]" but "a majority shareholder, or a group of shareholders who...