David Defrees v. John Kirkland

MEMORANDUM

In this consolidated appeal arising from two related shareholder derivative actions brought on behalf of nominal defendant U.S. Aerospace (“USAE”), various directors, outside counsel, and affiliates of USAE (together, “Defendants”) appeal the district court’s denial of their numerous pre-answer motions. We affirm for the most part, and remand in part.

1. Whether a party has derivative standing to bring a shareholder suit is a legal issue reviewed de novo. Quinn v. Anvil Corp., 620 F.3d 1005, 1012 (9th Cir.2010). Defendants maintain that the shareholder plaintiffs lost standing following USAE’s reincorporation merger, dated May 3, 2013, yet offer no evidence of the alleged merger. Except in unusual circumstances, not present here, our review is limited to the record before the district court. See Lowry v. Barnhart, 329 F.3d 1019, 1024-25 (9th Cir.2003) (“It is a basic tenet of appellate jurisprudence ... that parties may not unilaterally supplement the record on appeal with evidence not reviewed by the court below.” (brackets omitted)). Absent evidence to the contrary, the shareholder plaintiffs satisfy the standing requirement of Federal Rule of Civil Procedure 23.1…