Opinion
D067365
12-28-2016
JOSEPH MARINO, et al., Plaintiffs and Respondents, v. JOHN D. HARKEY, JR. et al., Defendants and Respondents; ANAND L. DANIELL Objector and Appellant.
Anand L. Daniell, in pro. per., for Objector and Appellant. Robbins Geller Rudman & Dowd, Randall J. Baron, A. Rick Atwood, Jr., David T. Wissbroecker, Eun Jin Lee and Maxwell R. Huffman, for Plaintiffs and Respondents Joseph Marino, John Kim, Wesley Decker and Roxane Andrews. Sullivan & Cromwell, Robert A. Sacks and Adam S. Paris, for Defendants and Respondents, AT&T, Inc. and Mariner Acquisition Sub, Inc. Cooley, Koji F. Fukumura, Peter M. Adams and Nicolas J. Eschevestre, for Defendants and Respondents John D. Harkey, Jr., S. Douglas Hutcheson, Ronald J. Kramer, Mark A. Leavitt, Robert V. LaPenta, Mark H. Rachesky, Richard R. Roscitt, Robert E. Switz, Michael B. Targoff and Leap Wireless International, Inc.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2013-00058491-CU-BT-CTL) APPEAL from a judgment of the Superior Court of San Diego County, Joel R. Wohlfeil, Judge. Affirmed. Anand L. Daniell, in pro. per., for Objector and Appellant. Robbins Geller Rudman & Dowd, Randall J. Baron, A. Rick Atwood, Jr., David T. Wissbroecker, Eun Jin Lee and Maxwell R. Huffman, for Plaintiffs and Respondents Joseph Marino, John Kim, Wesley Decker and Roxane Andrews. Sullivan & Cromwell, Robert A. Sacks and Adam S. Paris, for Defendants and Respondents, AT&T, Inc. and Mariner Acquisition Sub, Inc. Cooley, Koji F. Fukumura, Peter M. Adams and Nicolas J. Eschevestre, for Defendants and Respondents John D. Harkey, Jr., S. Douglas Hutcheson, Ronald J. Kramer, Mark A. Leavitt, Robert V. LaPenta, Mark H. Rachesky, Richard R. Roscitt, Robert E. Switz, Michael B. Targoff and Leap Wireless International, Inc.
I
INTRODUCTION
Anand L. Daniell appeals from a judgment granting final approval to the settlement of a shareholder class action lawsuit arising from the merger of Leap Wireless International, Inc. (Leap) with AT&T Inc. (AT&T). Daniell contends the court abused its discretion in approving the settlement and in certifying a non-opt-out, or mandatory, class. In a separate motion, he additionally requests we sanction class plaintiffs and lead class counsel for making knowingly false statements in court documents regarding the benefits of the settlement to the class. We are unpersuaded by these contentions and, consequently, we deny the motion for sanctions and affirm the judgment.
II
BACKGROUND
A
In 2013, Leap entered into a collection of agreements, which allowed AT&T to merge with Leap by paying Leap shareholders $15 per share plus a small unspecified amount contingent upon the sale of Leap's license to operate certain wireless spectrum in Chicago. For purposes of this opinion, we separately refer to two of the agreements as the merger agreement and the voting agreement.
We grant Daniell's unopposed motion for judicial notice of two Securities and Exchange Commission filings containing the documents memorializing and effectuating the agreements. (Evid. Code, §§ 452, subd. (h), 459, subdivision (a); Cal. Rules of Court, rule 8.252; StorMedia, Inc. v. Superior Court (1999) 20 Cal.4th 449, 456, fn. 9; Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 752-755.)
Among their terms, the merger agreement and the voting agreement contained a number of deal protection provisions. At issue in this appeal, the merger agreement limited the circumstances under which Leap's board of directors (Board) could change its position from recommending shareholder approval of the merger to recommending shareholder disapproval of it. More particularly, the merger agreement precluded the Board from changing its recommendation due to "developments or changes in the industries" in which Leap operated, "changes in the market price or trading volume" of Leap's common stock, changes in the "timing" of any required regulatory approval, or if Leap "exceed[ed] internal or published projections" for its operating results. Furthermore, even if the Board were to change its recommendation, the voting agreement effectively required certain of Leap's major shareholders to vote in favor of the transaction notwithstanding the change.
B
After Leap and AT&T announced the merger, representative shareholders (class plaintiffs) sued Leap, the Board, AT&T and others for breach of fiduciary duties and aiding and abetting the breach of fiduciary duties. The complaint generally alleged the consideration to be paid to Leap's shareholders for the merger was the inadequate product of a flawed sales process.
Of more specific concern to the class plaintiffs, the complaint alleged the Board failed to solicit competing bids, AT&T's bid undervalued Leap, and the Board failed to take steps to preserve the value of the Chicago spectrum license. The complaint also alleged AT&T's bid included onerous deal protection provisions, including a large termination fee, designed to prevent unsolicited proposals even though Leap's wireless spectrum portfolio, including the Chicago spectrum license, had the potential to generate a bidding war.
The complaint further challenged the adequacy of the proxy statement Leap filed with the Securities and Exchange Commission. The class plaintiffs believed the proxy statement's disclosures about the merger were misleading and incomplete because the disclosures omitted material information about Leap's negotiations with AT&T, the process for selling the Chicago spectrum license, the engagement and financial interests of the Board's financial advisor, and the assumptions underlying the financial advisor's presentation to the Board about the financial fairness of the merger.
The complaint sought an injunction prohibiting Leap and the Board from entering into any agreements which would inhibit their ability to maximize shareholder value. The complaint also sought an injunction preventing the consummation of the merger until Leap and the Board had fully complied with their duties to maximize shareholder value and disclose all material information about the merger.
C
Approximately two months later, the parties agreed in principle to settle the litigation and signed a memorandum of understanding setting forth the key terms of the settlement. Among these terms, the settlement required AT&T to forbear its right to enforce the deal protection provisions related to the Board's ability to change its recommendation. However, the settlement did not require AT&T to forbear enforcing its right to receive a large termination fee ($71,245,000) if the merger was not consummated because of a change of recommendation.
The settlement also required Leap to file three supplemental disclosures with the Securities and Exchanges Commission in advance of the shareholder vote on the merger. The first supplemental disclosure informed shareholders the Board's financial advisor's various analyses of the fairness of AT&T's offer attributed no value to Leap's large net operating loss carry forwards ($2.6 billion in federal and $2 billion in state), which could be used to offset taxes in profitable years. The second supplemental disclosure provided shareholders with additional data underlying the financial advisor's analysis of six comparable transactions in which AT&T was the buyer. The third supplemental disclosure provided shareholders with additional financial forecasts prepared by Leap and relied on by the Board and the Board's financial advisor to evaluate AT&T's offer.
The settlement agreement further required Leap to pay class counsel up to $990,000 in attorney fees and expenses, subject to court approval. Daniell is not directly challenging this aspect of the settlement.
Three months after completion of the merger, class plaintiffs filed a motion for preliminary approval of the settlement and for certification of a mandatory settlement class. The court granted the motion and certified a mandatory class "consisting of all record holders and beneficial owners of the common stock of Leap (excluding Defendants, and any entity related to or affiliated with any Defendant) who held stock at any time during the period from and including July 12, 2013 through and including March 13, 2014 (i.e., the date of consummation of the [merger]), including any and all of their respective successors-in-interest, predecessors, representatives, trustees, executors, administrators, heirs, assigns, or transferees, immediate and remote, and any person or entity acting for or on behalf of, or claiming under any of them, and each of them (the 'Class')."
D
1
Approximately two months later, class plaintiffs filed a motion for final approval of the settlement. Among the documents supporting the motion were declarations from lead class counsel and from a financial transaction valuation expert. The declaration of lead class counsel summarized the history of the litigation and the parties' settlement negotiations. It also summarized how, in lead class counsel's view, the litigation and settlement substantially benefited the shareholders and why the settlement was fair, reasonable, and adequate.
The declaration of the financial transaction valuation expert explained how the information in the supplemental disclosures was important in financially evaluating Leap, the merger, and the work performed by the Board's financial advisor. Regarding the financial advisor's treatment of Leap's net operating loss carryforwards, the expert explained the supplemental disclosures showed the financial advisor's valuation analyses ignored the tax benefits of the net operating loss carryforwards and consideration of the tax benefits resulted in a total per share value of $16.78, or $1.78 per share more than the amount offered by AT&T.
Regarding the financial advisor's analysis of comparable transactions, the expert explained the supplemental disclosures showed AT&T was pursuing acquisitions as a growth strategy, potentially making AT&T willing to pay more for Leap. The supplemental disclosures also showed that, in the comparable transactions involving AT&T, AT&T did not pay, and therefore Leap should not accept, less than seven times earnings before interest, taxes, depreciation and amortization.
Regarding the financial forecasts relied upon by the financial advisor, the expert explained the supplemental disclosures provided shareholders with information about Leap's management's expectations for future financial performance. This information allowed shareholders to better evaluate the assumptions and inputs underlying the financial advisor's analyses, including the impact of the net operating loss carryforwards on Leap's value. The information also showed the financial advisor's analyses mistreated Leap's stock-based compensation expense as a cash expense. Adjusting the analyses based on the information in the supplemental disclosures resulted in an approximate $1 increase in the indicated value of range of each Leap share.
2
Putative class member Daniell objected to the settlement on two grounds: the settlement was not fair, reasonable, and adequate; and the court was not authorized to certify a mandatory class. As to the first ground, Daniell asserted the supplemental disclosures required by the settlement had no value to the shareholders because they did not contain material information. They also did nothing to ensure the shareholders received an adequate share price. At most, they explained why the Board agreed to accept an inadequate share price from AT&T.
As to the second ground, Daniell asserted that, at the time the court certified the class, the merger had been consummated, obviating the viability of any equitable claims for injunctive or declaratory relief. Instead, the only potentially viable postmerger claims were for monetary damages for already completed misconduct and certification of a mandatory class is not permissible when the only available relief is monetary.
3
The court overruled Daniell's objections and approved the settlement. The court found the supplemental disclosures were intrinsically valuable because they enabled an informed shareholder vote. The court also found the modification to the deal protection provisions of the merger and voting agreements allowed the Board to potentially entertain more valuable options. Finally, the court found certification of a mandatory class was appropriate because there was a risk separate actions would be brought absent a class action and the complaint sought injunctive relief on grounds generally applicable to the entire class.
III
DISCUSSION
A
"In general, questions whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court's broad discretion. [Citation.] Our review is therefore limited to a determination whether the record shows 'a clear abuse of discretion.' [Citation.] Our task is not to determine in the first instance whether the settlement was reasonable or whether certification was appropriate. We determine only whether the trial court acted within its discretion in making the rulings that it did." (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235 (Wershba); Cho v. Seagate Technology Holdings, Inc. (2009) 177 Cal.App.4th 734, 743.) However, "[t]o the extent that it appears the trial court's decision was based on improper criteria or rests upon erroneous legal assumptions, these are questions of law warranting our independent review." (Wershba, supra, at p. 235.)
"In determining whether a class settlement is fair, adequate and reasonable, the trial court should consider relevant factors, such as 'the strength of plaintiffs' case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.' [Citations.] The list of factors is not exclusive and the court is free to engage in a balancing and weighing of factors depending on the circumstances of each case. [Citation.] Consistent with our standard of review on appeal, we do not reweigh these factors or substitute our notions of fairness for those of the trial court." (Wershba, supra, 91 Cal.App.4th at pp. 244-245.)
"The burden is on the proponent of the settlement to show that it is fair and reasonable. [Citation.] However, there is a presumption of fairness when (1) the settlement is reached through arm's-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the trial court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small." (Reed v. United Teachers Los Angeles (2012) 208 Cal.App.4th 322, 337.)
The presumption of fairness applies in this case because the record, including the supporting declarations of lead class counsel and the financial transaction valuation expert, show the settlement was reached through arm's length bargaining; class counsel has the requisite experience in similar litigation; and the percentage of objectors was small—just Daniell. The record also shows there was sufficient investigation and discovery to allow counsel and the court to act intelligently. Notwithstanding the presumption of fairness, Daniell contends the settlement was inadequate because the supplemental disclosures and modifications to the deal protection provisions had no practical value to Leap's shareholders. We disagree.
The supplemental disclosures provided shareholders with additional information relevant to their assessment of the sufficiency of AT&T's offer before they were required to vote on whether to approve it. (See In re Netsmart Techs., Inc. S'holders Litig. (Del.Ch. 2007) 924 A.2d 171, 203-204 ["[W]hen a banker's endorsement of the fairness of a transaction is touted to shareholders, the valuation methods used to arrive at that opinion as well as the key inputs and range of ultimate values generated by those analyses must also be fairly disclosed]; In re Pure Res. S'Holders Litig. (Del.Ch. 2002) 808 A.2d 421, 449 [stockholders are entitled to "a fair summary of the substantive work performed by the investment bankers upon whose advice the recommendations of their board as to how to vote on a merger or tender rely," including a description of the valuation exercises underlying the fairness opinion, the "key assumptions" used in performing those exercises, and the range of values thereby generated].)
In addition, AT&T's forbearance of its right to enforce some of the deal protection provisions of the merger agreement improved Leap's chances of receiving a more favorable bid. (See In re Compellent Techs., Inc. (Ch. Dec. 9, 2011) 2011 Del. Ch. LEXIS 190, pp. *3-*4 ["Deal protections provide a degree of transaction certainty for merging parties by setting up impediments to the making and accepting of a topping bid. Relaxing deal protections facilitates a topping bid. Here, the settlement resulted in the rescission of ... a series of material changes to the suite of defensive measures. The principal benefit conferred by the settlement was therefore to increase the likelihood of a topping bid"].) The shareholders received this benefit even though the relaxation of the deal protection provisions did not assure a more favorable bid and one never materialized. (See In re Del Monte Foods Co. S'holders Litig. (Ch. June 27, 2011) 2011 Del. Ch. LEXIS 94, pp. *44-*45.)
In re Trulia, Inc. Stockholder Litig. (Del.Ch. 2016) 129 A.3d 884 (Trulia), upon which Daniell relies, does not compel a different conclusion. The Trulia case disapproved what it referred to as disclosure settlements unless, among other circumstances not at issue here, the supplemental disclosures required by the settlement "address a plainly material misrepresentation or omission." (Id. at p. 898.) In this context, "[i]nformation is material 'if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.' In other words, information is material if, from the perspective of a reasonable stockholder, there is a substantial likelihood that it 'significantly alter[s] the "total mix" of information made available.' " (Id. at p. 899, fn. omitted.)
The supplemental disclosures required by the parties' settlement provided shareholders with additional information about key inputs and assumptions underlying the valuation analyses conducted by the Board's financial advisor. The additional information showed AT&T's per share offer price may have been modestly less than the shares were actually worth. As there is a substantial likelihood a reasonable shareholder would consider this information important in deciding how to vote, the supplemental disclosures satisfied the Trulia case's materiality requirement for approving disclosure settlements.
After the parties had fully briefed this appeal, Daniell directed us to In re Walgreen Co. Stockholder Litig. (7th Cir. 2016) 832 F.3d 718 (Walgreen). Walgreen endorsed the Trulia case and disapproved a disclosure settlement because the subject disclosures "contained no new information that a reasonable investor would have found significant." (Id. at pp. 724-725.) Walgreen is factually distinguishable because, unlike in this case, the subject disclosures did not involve share price valuation and they were not supported by expert evidence of their materiality. In addition, the settlement in Walgreen did not include any forbearance of the right to enforce any deal protection provisions. (Id.at pp. 721-724.) Accordingly, Walgreen provides no helpful guidance for resolving this appeal.
B
Daniell alternatively contends the court abused its discretion by certifying a mandatory class. Again, we disagree.
1
"Under section 382 of the Code of Civil Procedure, a class action is authorized 'when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court.' 'Drawing on the language of Code of Civil Procedure section 382 and federal precedent,' our Supreme Court has 'articulated clear requirements for the certification of a class. The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives.' " (Carter v. City of Los Angeles (2014) 224 Cal.App.4th 808, 817.)
"Trial courts have broad discretion in granting or denying motions for class certification because they are ideally situated to evaluate the efficiencies and practicalities of permitting a class action. [Citation.] We will affirm an order granting class certification if any of the trial court's stated reasons is valid and sufficient to justify the order and is supported by substantial evidence." (Carter v. City of Los Angeles, supra, 224 Cal.App.4th at p. 819.)
2
"California law does not address when a trial court should afford class members a right to opt out. [Citation.] We therefore look to federal law for guidance." (Carter v. City of Los Angeles, supra, 224 Cal.App.4th at p. 823.)
"Rule 23 of the Federal Rules of Civil Procedure (28 U.S.C.) establishes three types of class actions, under subdivisions (b)(1), (b)(2), and (b)(3). [Citation.] The ability of a class member to exclude himself or herself from the judgment by opting out of the class generally depends on which subdivision applies. [Citation.] The federal courts have determined that when classes are certified under rule 23(b)(1) or (b)(2), there is no right to opt out. [Citations]. California follows the same rule." (Bell v. Am. Title Ins. Co. (1991) 226 Cal.App.3d 1589, 1603 (Bell), fn. omitted.)
All rule references are to the Federal Rules of Civil Procedure.
a
A case may be certified as a class action under rule 23(b)(1) if "prosecuting separate actions by or against individual class members would create a risk of: [¶] (A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or [¶] (B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests." (Rule 23(b)(1); Bell, supra, 226 Cal.App.3d at p. 1604.)
"To fall within rule 23(b)(1)(A) there 'must be a risk that separate actions will in fact be brought if a class action is not permitted.' " (Bell, supra, 226 Cal.App.3d at p. 1604.) This factor is met in this case because four separate class actions challenging the merger were initially filed and later consolidated in the court below. In addition, another similar class action was filed in the Delaware Court of Chancery, which was stayed pending the outcome of this case. Daniell's attempt to opt out of the class also suggests the likelihood of another action. (Ibid.)
"The remaining factor indicating rule 23(b)(1)(A) status is that allowing separate actions to proceed would expose the party opposing the class 'to a serious risk of being put into a "conflicted position" ' where 'different results in separate actions would impair the opposing party's ability to pursue a uniform continuing course of conduct.' " (Bell, supra, 226 Cal.App.3d at p. 1604.) Here, the class action complaint sought an injunction (1) prohibiting Leap and the Board from entering into any agreements which would inhibit their ability to maximize shareholder value, and (2) preventing the consummation of the merger until Leap and the Board fully complied with their duties to maximize shareholder value and disclose all material information about the sale. Because the requested injunctive relief " 'easily could create potential conflicts for [the Board] if it were awarded or denied in individual actions,' " the court did not abuse its discretion by finding this case met the requirements of rule 23(b)(1)(A). (Bell, at p. 1604.)
b
The court also did not abuse its discretion by finding this case met the requirements of rule 23(b)(2). A case may be certified as a class action under rule 23(b)(2) when "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole." It must be alleged that " 'the party opposing the class either has acted in a consistent manner toward members of the class so that his actions may be viewed as part of a pattern of activity, or has established or acted pursuant to a regulatory scheme common to all class members.' " (Bell, supra, 226 Cal.App.3d at pp. 1604-1605.) This requirement is satisfied because class plaintiffs alleged the Board breached its fiduciary duties and AT&T aided and abetted the breach by undervaluing Leap, failing to solicit competing bids, and failing to take steps to preserve the value of the Chicago spectrum license. (See In re Cox Radio, Inc. S'holders Litig. (Ch. May 6, 2010, No. 4461-VCP) 2010 Del. Ch. LEXIS 102, p. *28 [actions challenging the propriety of director conduct in carrying out corporate transactions may be properly certified as non-opt-out class actions].)
" 'The second prerequisite to bringing an action under rule 23(b)(2) is that final injunctive or declaratory relief must be requested against the party opposing the class.' " (Bell, supra, 226 Cal.App.3d at p. 1605.) As class plaintiffs requested precisely such relief, this requirement has been met as well.
In re Celera Corp. S'holders Litig. (Del. 2012) 59 A.3d 418 (Celera), upon which Daniell relies, is readily distinguishable. In Celera, the Delaware Supreme Court concluded the lower court abused its discretion by failing to allow the objector to opt out of an otherwise mandatory settlement class because, at the time of class certification, the only class claims realistically remaining were for monetary damages and the objector was a significant shareholder who was prepared to independently "prosecute a clearly identified and supportable claim for substantial money damages." (Id. at p. 436; see Newberg on Class Actions (5th ed. 2016) § 4.36 ["[T]he fact that notice and opt out rights are generally not required in [rule 23](b)(2) class actions has created concern when such class actions involve money damages—the concern arises because the [United States] Supreme Court has held that the Constitution's Due Process Clause requires such rights in cases primarily about money damages, yet Rule 23 makes them optional. Courts had developed essentially two means of dealing with this dilemma—first, permit some notice and opt out rights in [rule] 23(b)(2) cases involving money damages although the Rule does not require it or, second, do not permit money damages in [rule 23](b)(2) class actions because of the absence of notice and opt out rights" (fns. omitted)].)
In this case, the complaint did not include any claims for monetary damages. However, even if we were to agree the only class claims realistically remaining at the time of class certification were for monetary damages, Daniell has not established he was a significant Leap shareholder and was prepared to independently prosecute a clearly identified and supportable claim for substantial monetary damages. Accordingly, Daniell has not established the court abused its discretion by failing to exercise whatever equitable power it may have had to allow him to opt out of the class.
C
Lastly, Daniell filed a motion requesting we exercise our authority under rule 8.276 of the California Rules of Court (CRC 8.276) to issue an order to show cause why class plaintiffs and lead class counsel should not be sanctioned on the ground lead class counsel violated rule 5-200 of the Rules of Professional Conduct and section 6068 of the Business and Professions Code by making knowingly false statements in court documents regarding the benefits of the settlement to the class. Specifically, Daniell contends lead class counsel falsely stated the settlement resulted in the disclosure of new, material financial information as well as AT&T's forbearance of certain deal protection provisions in the merger and voting agreements.
Rule 5-200 of the Rules of Professional Conduct provides in relevant part: "In presenting a matter to a tribunal, a member: [¶] (A) Shall employ, for the purpose of maintaining the causes confided to the member such means only as are consistent with truth; [¶] (B) Shall not seek to mislead the judge, judicial officer, or jury by an artifice or false statement of fact or law."
Business and Professions Code section 6068 provides in relevant part: "It is the duty of an attorney to do all of the following: [¶] . . . [¶] (b) To maintain the respect due to the courts of justice and judicial officers. [¶] . . . [¶] (d) To employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law."
We decline Daniell's request for two reasons. First, CRC 8.276(a) authorizes an appellate court to sanction a party or an attorney for "(1) Taking a frivolous appeal or appealing solely to cause delay; [¶] (2) Including in the record any matter not reasonably material to the appeal's determination; [¶] (3) Filing a frivolous motion; or [¶] (4) Committing any other unreasonable violation of these rules." As neither class plaintiffs nor lead class counsel filed an appeal, supplied the appellate record, or filed a motion, the only potentially applicable ground for which we could sanction them is the latter ground: committing an unreasonable violation of "these rules."
The phrase "these rules" refers to the rules found in Title 8 of the California Rules of Court (Appellate Rules). (Cal. Rules of Court, rule 8.1.) Daniell has not identified any Appellate Rules violated by class plaintiffs or lead class counsel. Rather, Daniell's request is premised on class plaintiffs' and lead class counsel's alleged violation of provisions in the Rules of Professional Conduct and the Business and Professions Code. As neither the Rules of Professional Conduct nor the Business and Professions Code is part of the Appellate Rules, we may not impose a sanction under CRC 8.276 for a violation of them. (See In re Marriage of Bianco (2013) 221 Cal.App.4th 826, 829.)
We express no view as to what other means may be available to redress such a violation.
Second, even if we had the authority to impose a sanction under CRC 8.276, we would not do so in this instance. As described more fully above, the record shows the settlement provided shareholders with supplemental disclosures containing new information material to their assessment of the fairness of AT&T's offer. The record also shows the settlement required AT&T to forbear enforcement of some of the deal protection provisions in the merger and voting agreements, which improved Leap's chances of receiving a more favorable competing offer even though such an offer was not assured and did not materialize. Accordingly, we cannot conclude lead class counsel made any knowingly false statements about the benefits of the settlement to the class.
IV
DISPOSITION
Daniell's opposed motion for sanctions is denied. The judgment is affirmed. Respondents are awarded their costs on appeal.
McCONNELL, P. J. WE CONCUR: BENKE, J. O'ROURKE, J.