Miesen v. Hawley Troxell Ennis & Hawley LLP
| Decision Date | 05 May 2022 |
| Docket Number | 1:10-cv-00404-DCN |
| Court | U.S. District Court — District of Idaho |
| Parties | DALE L. MIESEN, an individual who is a shareholder and who is also bringing this action on behalf of and/or in the right of AIA Services Corporations and its wholly owned subsidiary AIA Insurance, Inc., Plaintiff, v. HAWLEY TROXELL ENNIS & HAWLEY LLP, et al., Defendants. |
Pending before the court are the Hawley Troxell Defendants'[1] Motion to Dismiss (Dkt. 1067) and Plaintiff Dale Miesen's Motion to Certify (Dkt. 1148) and Amended Request for Judicial Notice[2] (Dkt. 1153). The Motion to Dismiss is joined by Defendants James Beck, Michael Cashman Connie Henderson, and R. John Taylor (the “Individual Defendants” or the “Controlling Defendants”), [3] and by Crop USA Insurance Agency, Inc., and Crop USA Insurance Services, LLC (collectively, “CropUSA”). Dkt. 1090.
The Court held a hearing on these matters on March 9, 2022, and took the motions under advisement. Now, for the reasons stated below, the Court GRANTS the Motion to Dismiss, DENIES the Motion to Certify, and DENIES the Amended Request for Judicial Notice.
This case began in 2010 as a shareholder derivative lawsuit on behalf of AIA Services Corp. and AIA Insurance, Inc. (the “AIA Entities”). Now, the Hawley Troxell Defendants, joined by the Individual Defendants and CropUSA, move to dismiss Miesen's shareholder derivative claims on the grounds that Miesen failed to satisfy the demand requirements.
The Motion to Dismiss centers on the demand requirements for shareholder derivative litigation. Miesen relies on a series of five demand letters that began in 2008 and concluded in 2016. Interspersed between these letters are various amended complaints. Because shareholder demands must be given 90 days before a complaint is filed, Idaho Code § 30-29-742, the Court first reviews the timeline of the five demand letters and the complaints in this action.
The first demand letter is dated July 21, 2008 (the “July 2008 Demand”).
Dkt. 23-9.[4] It is from Michael Bissel, an attorney, on behalf of Donna Taylor (a shareholder of the AIA Entities) and Reed Taylor (who was not a shareholder) and was addressed to the AIA Entities' board of directors.
After the July 2008 Demand, Donna Taylor and Miesen filed the original Complaint in this case on August 11, 2010. Dkt. 1. A few months later, Donna Taylor filed the First Amended Complaint on November 22, 2010. Dkt. 23. Miesen was not a plaintiff in the First Amended Complaint.
Then on April 3, 2012, attorney Rod Bond emailed the attorneys representing the AIA Entities. Dkt. 67-33. This is the second demand letter (the “April 2012 Demand”). That same year, various shareholders, including Miesen, made a demand at a shareholder meeting on July 16, 2012 (the “July 2012 Demand”). Dkt. 67-42.
On June 13, 2016, Bond sent a demand letter (the June 2016 Demand”) on behalf of Miesen to the board of directors of the AIA Entities. Dkt. 148-2. A week later, on June 20, 2016, the Second Amended Complaint was filed. Dkt. 137. Miesen rejoined as a plaintiff in the Second Amended Complaint.
Two months later, on August 23, 2016, Bond sent another demand letter (the “August 2016 Demand”) on behalf of Miesen to the AIA Entities' board of directors. Dkt. 186-2. Finally, the Third Amended Complaint, which is the operative complaint, was filed on April 24, 2017. Dkt. 211. Donna Taylor was dropped as a plaintiff in the Third Amended Complaint.
For convenience, the following table outlines each of the demands and the various complaints in order:
Description
Docket
July 2008 Demand
July 21, 2008
Letter from attorney Michael Bissel on behalf of
Donna Taylor and Reed Taylor addressed to the
AIA Entities' board of directors.
November 22, 2010
Dale Miesen dropped as a plaintiff
April 2012
Demand
April 3, 2012
Email from attorney Rod Bond to attorneys
representing the AIA Entities
July 2012 Demand
July 16, 2012
Demand made at shareholders' meeting
June 2016
Demand
June 13, 2016
Letter from attorney Rod Bond on behalf of Dale
Miesen addressed to the AIA Entities' board of
directors
Second Amended
June 20, 2016
Miesen rejoins as a plaintiff
August 2016
Demand
August 23, 2016
Letter from attorney Rod Bond on behalf of Dale
Miesen addressed to the AIA Entities' board of
directors
Third Amended
April 24, 2017
Donna Taylor dropped as a plaintiff
This is not the only derivative lawsuit Miesen has brought on behalf of the AIA Entities. Importantly, on June 30, 2020, the Ninth Circuit ruled in a parallel case, Miesen v. Munding, that the June 2016 Demand was legally insufficient. 822 Fed. App'x 546 (2020).
To be clear, this is the same demand letter referenced in this action, but the Ninth Circuit was ruling on a different case-case number 2:18-cv-00270-RMP, filed in 2018 in the Eastern District of Washington. The parties dispute the effect of the Ninth Circuit's Munding ruling on the present case, and that dispute is, unsurprisingly, the central issue in the Motion to Dismiss.
After the Hawley Troxell Defendants filed their Motion to Dismiss, Miesen filed a Motion to Certify and an Amended Request for Judicial Notice. Both of those filings involve issues raised by the Motion to Dismiss. Because of the relationship between the three motions, the Court addresses all of them in this Order.
Before the Court reviews the Motion to Dismiss, it must first review the Motion to Certify as the resolution of that matter must precede the Court's review of the broader questions at issue. See All. for Prop. Rights & Fiscal Resp. v. City of Idaho Falls, 742 F.3d 1100, 1108 (9th Cir. 2013) (citing Thompson v. Paul, 547 F.3d 1055 (9th Cir. 2008)) (“There is a presumption against certifying a question to a state supreme court after the federal district court has issued a decision.”). The Court will then review the Amended Request for Judicial Notice since that request asks the Court to take judicial notice of certain facts related to the Motion to Dismiss. After the Court resolves both of those preliminary motions, the Court will address the Motion to Dismiss.
In the Motion to Certify, Miesen asks that this Court certify five questions to the Idaho Supreme Court. Four of those questions relate to the Motion to Dismiss, and the fifth question relates to a pending motion for summary judgement. Those questions are quoted below:
For the following reasons, the Court DENIES the Motion to Certify with respect to all five questions.
Idaho Appellate Rule 12.3 provides that a United States District Court may certify a question of law to the Idaho Supreme Court if two conditions are met: (1) the question certified is a controlling question of law in the pending action as to which there is no controlling precedent in the decisions of the Idaho Supreme Court; and (2) the immediate determination of Idaho law with regard to the certified question would materially advance the orderly resolution of the litigation in the United States Court. Idaho App. R. 12.3(a); see also White v. Valley Cnty., 2012 WL 13018504, at *1 (D. Idaho Aug. 10, 2012).
Certification is generally beneficial to assure that state law will be applied uniformly and in accordance with the interpretations given by each state's high court, state courts will have the benefit of having the final say on a matter of state law, and the federal courts can avoid the difficult task of attempting to divine how a state court would rule on a matter of state law. See Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974) ().
“Use of the certification procedure in any given case rests in the sound discretion of the federal court.” Micomonaco v. Washington, 45 F.3d 316, 322 (9th Cir. 1995).
The Court in its discretion does not find that Miesen meets either of the requirements for certification. For clarity, the Court reviews each question separately.
Both parties agree that the governing statutes for demand here are Idaho Code Sections 30-1-742 and 30-29-742.[5] They also both agree that Idaho has expressly done away with the futility exception to the demand requirement. Despite that, Miesen argues that the Idaho Supreme Court would excuse the demand requirement where there is not a duly elected, fully seated, and lawfully functioning board of...
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