2d Civil No. B214056

IN THE COURT OF ApPEAL OF THE STATE OF CALIFORNIASECOND APPELLATE DISTRICT

DIVISION FOUR

Alan Rosenberg, Anne-Marie Johnson, Kent McCord and Diane Ladd,

Appellants and Plaintiffs,

vs.

The Screen Actors Guild,

. Respondent and Defendant.

FROM THE SUPERIOR COURT FOR Los ANGELES COUNTYJAMES C. CHALFANT, JUDGELASC CASE No. BC406900

APPELLANTS' REPLY TO RESPONDENT'S BRIEF

BROWNE WOODS GEORGE LLPEric M. George (State Bar No. 166403)

Sonia Y. Lee (State Bar No. 1JH837)2121 Avenue of the Stars, 24 Floor

Los Angeles, California 90067(310) 274-7100

Attorneys for Plaintiffs/AppellantsALAN ROSENBERG, ANNE-MARIE JOHNSON,

KENT MCCORD and DIANE LADD

2d Civil No. B214056

IN THE COURT OF ApPEAL OF THE STATE OF CALIFORNIASECOND ApPELLATE DISTRICT

DIVISION FOUR

Alan Rosenberg, Anne-Marie Johnson, Kent McCord and Diane Ladd,

Appellants and Plaintiffs,

vs.

The Screen Actors Guild,

Respondent and Defendant.

FROM THE SUPERIOR COURT FOR Los ANGELES COUNTYJAMES C. CHALFANT, JUDGELASC CASE No. BC406900

APPELLANTS' REPLY TO RESPONDENT'S BRIEF

BROWNE WOODS GEORGE LLPEric M. George (State Bar No. 166403)

Sonia Y. Lee (State BarNo. 1~1837)2121 Avenue of the Stars, 241 Floor

Los Angeles, California 90067(310) 274-7100

Attorneys for Plaintiffs/AppellantsALAN ROSENBERG, ANNE-MARIE JOHNSON,

KENT MCCORD and DIANE LADD

TABLE OF CONTENTSPage

I. INTRODUCTION 1

II. ARTICLE V, § I(J)(4) OF SAG'S CONSTITUTION ANDBYLAWS VIOLATES CORPORATIONS CODE SECTION7211(B) 3

A. SAG Has Failed To Rebut The Argument ThatCorporations Code Section 7211(b) - Rather ThanSection 7150 - Governs The Validity OfArticle V, §1(J)(4) 3

B. The Authorities Cited By SAG Demonstrate Section7211(b) May Not Be Amended Or Changed By Bylaw 5

1. The Colburn Case is inapposite 5

2. The Treatise on Corporations Law Cited bySAG Confirms Section 7211(b) May Not beAmended or Changed by Bylaw 5

III. ARTICLE V, § 1(J)(4) VIOLATES CORPORATIONSCODE SECTION 7150 9

A. Article V, § 1(J)(4) Directly Conflicts WithCorporations Code Section 7211(b) 10

B. Article V, § 1(J)(4), As Applied, Materially AndAdversely Affected The Voting Rights Of SAGMembers 12

IV. SAG HAS FAILED TO IDENTIFY ANY GROUND UPONWHICH THE CHALLENGED ORDER MAYBEAFFIRMED 12

A. Public Policy Weighs In Favor OfInvalidating AnIllegal Bylaw 13

B. Appellants' Application For Temporary Restraining. Order Was Proper 14

C. SAG's Alleged Prior "Written Consents" CannotValidate An Illegal Bylaw 14

D. SAG's Second Request For Dismissal Of The AppealIs Without Merit 17

V. CONCLUSION 22

-i-

TABLE OF AUTHORITIES

Page

STATE CASES:

Belle Isle Corp. v. Corcoran,29 Del. Ch. 554 (1946) 16, 17

Berka v. Woodward,125 Cal. 119 (1899) ... d ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 16

City Lincoln-Mercury Co. v. Lindsey,52 Cal.2d 267 (1959) 15

Colburn Biological Inst. v. Shaffer,12 Cal.2d 168 (1938) 5,6

Columbia Engineering Co. v. Joiner,231 Cal. App. 2d 837 (1965) 16

Cornette v. Department ofTransportation,26 Cal.4th 63 (2001) 8

Gomes v. County ofMendocino,37 Cal.AppAth 977 (1995) : .4

International Assn. ofFire Fighters v. City ofSan Leandro,181 Cal.App.3d 179 (1986) 16

I

Pasadena Police Officers Assn. v. City ofPasadena,51 Cal.3d 564 (1990) 8

People v. Gardeley,14 Cal.4th 605 (1996) 8

Prime v. Hyne,260 Cal. App. 2d 397 (1968) 16

STATUTES:

California Civil Code§ 2313 20, 21

California Evidence Code§§ 1520 et seq 15

-ii-

TABLE OF AUTHORITIES(continued)

Page

California Corporations Code§ 7150 , 2,3,9,12§ 7150(a) 3, 4,10,12§ 7150(c) 10§ 7151 2, 3,10,12§ 7151(c)(1) 10§ 7210 11§ 7211 5, 20, 22§ 7211(a) 6-9, 11§ 7211(a)(1) 9§ 7211(a)(8) 8§ 7211(b) 1-11, 15§ 7220 3, 10§ 7224 3, 10§ 7512 : 3, 10§ 7613 3,10§ 7615 3, 10

OTHER AUTHORITIES:SAG Constitution

Article V, § 1(J)(4) 1-4, 9-12, 14, 15,22

-iii-

I. INTRODUCTION.

How does Corporations Code Section 7211(b)1 apply to Article V,

§ I(J)(4) ofRespondent Screen Actors Guild's ("SAG") Constitution and·

SAG contends the unanimity provision of Section 721 I (b) is merely

"permissive," not "mandatory," and thus impotent to police any non-

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

authorities cited by SAG demonstrate the invalidity and unenforceability of

Article V, § 1(J)(4).

The law governing the present dispute is dispositive:

• Corporations Code Section 7211(b) - which governs both

when and how a corporation's board of directors may take action without a

meeting - may not be amended or changed by article or bylaw;

I Section 7211(b) expressly provides:

An action required or permitted to be taken by theboard may be taken WIthout a meeting, ifall memberso/the board shall individually or collectively consentin writing to that action. (Emphasis added.)

2 Article V, § 1(J)(4) states:

Except as provided otherwise in this Constitution, anyacts shall be valid for all purposes with or without ameeting ifapproved by the written assent 0/amajority o/the votes o/the Board o/Directors, orsuch higher percentage of the Board votes as may berequired by this Constitution. (Emphasis added.)

232491JDOC 1

• Article V, § 1(J)(4) of SAG's Constitution and Bylaws

conflicts with Section 7211(b); and

• By contravening Section 72 11(b), SAG's bylaw also violates

Corporations Code Sections 7150 and 7151, which permits a corporation to

adopt for its management only such articles or bylaws that do not conflict

with existing law.

SAG's alternative arguments - that even if Article V, § 1(J)(4)

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

noticed meeting" to affinn the "written assent" passed pursuant to Article

V, § 1(J)(4) - are equally flawed. It is axiomatic that one cannot make an

illegal action legal by sheer repetition of the illegal conduct. Equally

axiomatic, one cannot make an illegal action legal by "ratifying" or

participating or acquiescing in the illegal action.

The trial court's order denying Appellants' application for a

temporary restraining order was in error and should be reversed.

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).

Below, Appellants soughttemporarily to enjoin certain actions

purportedly approved by SAG's Board pursuant to a bare majority's

"written assent." Appellants submitted that Section 7211(b)'s unanimity

requirement for "written assent" actions was mandatory. Noting further

that Article V, § I(J)(4) contravened Section 721 1(b), Appellants submitted

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

7211(b), governed the validity and enforceability ofArticle V, § 1(J)(4).

Contending that Section 7211(b) is not an expressly enumerated exception

to Section 7150, SAG argued Section 721 1(b) is not a mandatory provision

and SAG's Board could permissibly adopt an article or bylaw in conflict

with the provision.

3 Section 7150(a) states, in pertinent part, "[e]xcept as provided insubdivision (c) and Sections 7151, 7220, 7224, 7512, 7613, and 7615,bylaws may be adopted, amended or repealed by the board...."

232491JDOC 3

As analyzed in Appellants' Opening Brief, however, Section 7l50(a)

merely states the general proposition that, subject to certain exceptions, a

board of directors may adopt, amend or repeal articles or bylaws governing

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

V, § 1(J)(4) and the issue presented here. Thus, under well-established

rules of statutory construction, it matters not that Section 7211(b) is not

specifically identified; that section nevertheless constitutes an exception to

Section 7l50(a) and applies to Article V, § 1(J)(4). See, e.g., Gomes v.

County ofMendocino, 37 Cal. App. 4th 977, 988 (1995) (a specific statute

relating to a particular subject will govern as to that subject as against a

more general statute); Appellants' Opening Brief, at pp. 24-26.

SAG's Respondent's Brief speaks volumes in its silence on this

point. SAG has made no effort to address or challenge Appellants'

argument. Having proffered no contrary authority, SAG necessarily

concedes that the specific "written assent" procedures set forth Section

721 1(b) constitute an exception to the general provision of Section 7l50(a)

and control the issues now presented on appeal. Indisputably, then,

Appellants submit the only issue remaining before this Court is whether

Section 7211 (b) may be amended or changed by a corporation's articles or

23249U.DOC 4

bylaws. As confirmed by the very authorities cited by SAG, it is clear that

it may not.

B. The Authorities Cited By SAG Demonstrate Section

72ll(b) May Not Be Amended Or Changed By Bylaw.

1. The Colburn Case is inapposite.

SAG looks to Colburn Biological Inst. v. Shaffer, 12 Ca1.2d 168, 169

(1938) as authority that Section 721 1(b) may be amended or changed by a

corporation's articles or bylaws. This effort fails because Colburn had

nothing whatsoever to do with the validity or effectiveness of an action

taken by less than unanimous "written consent" of a corporation's board of

directors. Decided in 1938, decades before the enactment of Section 7211

(or its for-profit counterpart, Section 307), Colburn necessarily has no

bearing on whether a corporate bylaw can amend the mandatory

requirements set forth in Section 72ll(b). SAG's assertion that Colburn

somehow controls - or even applies - is generous at best, a misstatement at

worse.

2. The Treatise on Corporations Law Cited by SAG

Confirms Section 72ll(b) May Not be Amended or

Changed by Bylaw.

The general "explanations" of corporate law set forth in Ballantine

and Sterling California Corporation Laws, also relied upon by SAG, do no

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

amended or modified by a corporation's bylaws.

The Respondent's Brief cites and relies upon the treatise, as follows:

The Public Benefit Corporations Law and mutualBenefit Corporations Law respectively providerelatively detailed statutory rules respecting theconduct of directors' meetings, but with relatively fewexceptions these can be changed by the articles orbylaws. (Respondent's Brief, at p. 14, citing, AA, Tab.8, p. 00400; emphasis supplied by SAG.)

Scratching below the surface of this quotation, it becomes clear this

"explanation" applies only to Section 721 1(a) governing how and when

board·of directors meetings are called and how such meetings are

conducted. Section 405.02 (from which the quote is taken) is expressly

titled "Directors' Meetings" and the footnote immediately following the

quote - notably omitted by SAG - specifically cites Corporations Code

Section 721 1(a). That subsection sets forth the "default" provisions to be

included in a corporation's bylaws regarding, inter alia, who may call a

meeting of the Board ofDirectors, how the meeting may be noticed, how a

meeting may be adjourned, where the meeting may be held, and whether

members may participate in the meeting through video or telephone

conferencing.

SAG's citation to the treatise is thus entirely unremarkable because

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

be changed by a corporation's articles or bylaws.

The issue presented here, however, is whether Section 7211 (b) may

be amended by a corporation's articles or bylaws: the answer is found in

the very next section of the treatise, which SAG's briefaltogetherfails to

cite or otherwise acknowledge. Section 405.03 of Ballantine and Sterling

California Corporation Laws, which is titled "Actions Without Meetings,"

directly addresses and explains Section 721 I(b), stating, in no uncertain

terms that, "[a]ny action required or permitted to be taken by the board may

be taken without a meeting ifall members ofthe board individually or

collectively consent in writing to the action." (Appendix ofNon-California

Authorities, Tab I,at p. 10-11, § 405.03; emphasis added.) In stark

contrast to Section 405.02, in which the authors expressly explain that the

requirements of Section 7211(a) may be amended or changed, at no point in

Section 405.03 do the authors remotely suggest that any portion of Section

721 1(b) may be amended or changed by the corporation's articles or

bylaws. To the contrary, they reiterate the requirement of the statute that

actions taken without a board meeting must be unanimous. (Id.)

The plain language of Section 721 1(b) permits no other

"explanation." Unlike Section 72ll(a)'s provision that the default

provisions set forth therein applies "{uJnless otherwise provided in the

articles or in the bylaws," subsection (b) contains no such language. It is

23249U·DOC 7

thus mandatory. People v. Gardeley, 14 Ca1.4th 605, 621-22 (1996), citing

Pasadena Police Officers Assn. v. City ofPasadena, 51 Ca1.3d 564, 576

(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

it"); see, also, Cornette v. Department ofTransportation, 26 Cal.4th 63, 73­

74 (2001) (when one part of a statute contains a term or provision, the

omission ofthat term or provision from another part of the statute indicates

the Legislature intended to convey a different meaning).

SAG contends that had the Legislature intended to prohibit

corporations from amending the requirements of Section 721 I(b) through

its articles or bylaws, it would have done so by including specific

"prohibitory" language in the provision. (Respondent's Brief, at p. 18.) In

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

directors present at a meeting is the act of the board." (Emphasis added.)

SAG argues that the absence of such "prohibitory" language from Section

7211(b) evidences an intent to allow corporations to amend or change the

requirements of Section 72ll(b). SAG has it backwards. Such

"prohibitory" language is contained in Section 7211 (a)(8) precisely because

subsection (a) affirmatively states that each ofthe subdivisions set forth

therein may be amended by the articles or the bylaws of the corporation.

23249tJDOC 8

Corp. Code §72ll(a)(l) ("[u]nless otherwise provided in the articles or in

the bylaws, all of the following apply..."). No such prefatory language

permitting amendment or change is included in Section 7211(b). As

analyzed in detail in Appellants' Opening Brief, the absence of such

"permissive" language in Section 72ll(b) - when such language appears in

Section 721 1(a) - manifestly evidences a legislative intent not to permit

amendment or change to the requirements of Section 72ll(b). Having thus

made clear that the provisions of Section 7211 (b) may not be amended or

changed, there would be no reason to include such redundant "prohibitory"

language in the provision.4

The foregoing analysis, Appellants submit, in itself compels

reversal of the trial court's order denying Appellants' application for a

temporary restraining order.

III. ARTICLE V, § 1(J)(4) VIOLATES CORPORATIONS CODE

SECTION 7150.

Even should this Court apply Corporations Code Section 7150 to

this case, Article V, § 1(J)(4) would likewise be invalid.

4 Because subsection (b) is a mandatory provision, SAG's argument thatSection 72ll(b) is simply a "default" provision is equally unsupported.

23249U·DOC 9

A. Article V, § l(J)(4) Directly Conflicts With Corporations

Code Section 72ll(b).

Corporations Code Section 7150(a) states, in pertinent part:

Except as provided in subdivision (c) and Sections 7151,7220,7224,7512,7613, and 7615, bylaws may be adopted,amended or repealed by the board. . .. (Emphasis added.)

Section 7151, in tum, provides, among other things, that:

(c) The bylaws may contain any provision, not in conflictwith law or the articles, for the management of the activitiesand for the conduct of the affairs of the corporation, includingbut not limited to ....

(2) The time, place and manner of calling, conducting andgiving notice of members', directors' and committee meetings,or ofconducting mail ballots. (Cal. Corp. Code§7151(c)(1);emphasis added.)

Section 7211(b), which may not be amended or changed by articles

or bylaws, explicitly provides the manner and method by which such mail

ballots may be conducted in lieu of a meeting. Thus, as argued in

Appellants' Opening Brief, Article V, § 1(J)(4) is valid under Sections 7150

and 7151 only so long as it does not conflict with Section 7211 (b).

Respondent's Brief proffers the novel, albeit circular, argument that

Article V, § 1(1)(4) does not conflict with Section 7211(b) because Section

7211(b) "only applies to acts for which a board meeting is required."

(Respondent's Brief, at p. 16; emphasis added.) Since Article V, § 1(J)(4)

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, ,j but also to acts for

which"a board meeting is permitted."

SAG's argument is also inherently, logically inconsistent. It is

undisputed that a nonprofit corporation - as with all corporations - is

required to have a board of directors, charged with the duty of the

management ofthe corporation. See, e.g., Cal. Corp. Code § 7210 et seq,;

Appendix ofnon-California Authority, Tab I, at p. 02-03, § 405.01[A].

This duty is discharged through decisions made, and matters voted upon, at

meetings of the board. Id. California's Corporations Code sets forth

specific requirements on how such meetings are called, noticed and

conducted. Cal. Corp. Code § 7211(a). Because the authority to conduct

business by way of a "written assent" in lieu of a meeting is provided by

statute in Section 7211 (b), SAG's power to act by "written assent" without a

meeting under Article V, § I(J)(4) is derived directly from the authority

granted under Section 7211(b). But for Section 7211(b), SAG's Board may

not take any action pertaining to the guild's management without a

meeting. To claim that Section 7211(b) is inapplicable to actions taken

under Article V, § I(J)(4) is thus meritless.

In sum, Section 7211(b)'s unanimity requirement for actions taken

by "written assent" stands in direct contravention ofArticle V, § 1(1)(4),

which permits "written assent" by a majority vote of the Board.· Article V,

23249U,DOC 11

§ 1(J)(4) is thus in "conflict with the!aw" and runs afoul of Sections 7150

and 7151.

B. Article V, § 10(4), As Applied, Materially And Adversely

Affected The Voting Rights Of SAG Members.

SAG also concedes - by not addressing the point in its Respondent's

Brief- that Corporations Code Section 7150 prohibits the adoption,

amendment or repeal of bylaws that would materially and adversely affect

the rights of members as to, inter alia, voting. Cal. Corp. Code § 7l50(a).

SAG, its by implementation of Article V, § 1(J)(4), deprived a substantial

segment ofthe SAG membership from exercising their voting rights

through their duly-elected Board members. (Appellants' Opening Brief, at

pp.28-29.) In so doing, it selectively chose Board members who would

vote on issues germane and critical to the management and governance of

the corporation, thereby conceding the impropriety of SAG's

implementation and application of its bylaws.

IV. SAG HAS FAILED TO IDENTIFY ANY GROUND UPON

WHICH THE CHALLENGED ORDER MAY BE AFFIRMED.

SAG's remaining efforts to defend the challenged order are equally

unavailing.

232491JDOC 12

A. Public Policy Weighs In Favor Of Invalidating An Illegal

Bylaw.

SAG accuses Appellants, by their application for injunction and this

appeal, of asking this Court to substitute its judgment for that of the SAG

Board. SAG elaborates that the Court "should abstain from wholesale

interference in a corporation's chosen manner of self-governance" because

the "competence of the court does not equal that of the organization." (See

Respondent's Brief, at p. 15 and 21-24.)

SAG's contentions are dramatically overstated. Ofcourse abstention

is proper, but only where the corporation's "chosen manner of self­

governance" complies with all applicable laws. Where a corporation

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

corporate documents, nor to have this Court determine how to properly

manage the organization. To mischaracterize this appeal as implicating

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

the merits - or lack therof - of SAG's position.

232491JDOC 13

B. Appellants' Application For Temporary Restraining

Order Was Proper.

Absent analysis or support, SAG next contends Appellants'

underlying application for a temporary restraining order, rather than

seeking to preserve the status quo, sought to "restore SAG's former

leadership." (Respondent's Brief, at p. 24.) The contention amounts to

specious namecalling. Appellants' application sought nothing more than

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" ­

secured the requisite number of votes at a duly-noticed and called meeting

(or by unanimous written consent), Appellants would have had no quarrel

with SAG's conduct, no matter the direction in which is took SAG.

C. SAG's Alleged Prior "Written Consents" CannotValidate

An Illegal Bylaw.

SAG's further attempt to validate Article V, § I(J)(4) - on the

ground it has always been utilized to decide matters of "major importance"

by "written assent" of a majority Board vote without a meeting - is bereft

of both factual and legal support.

As an initial matter, there is no competent evidence in the record to

support SAG's contention that matters of "major importance" have ever

been decided by "written assent" of a majority of the Board. The

23249U·DOC 14

declaration ofMichelle Bennett submitted in support of SAG's opposition

to the application for temporary restraining order (AA, No.7, at pp. 00342­

343) is hearsay at best. Although each "written assent" approved by a

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.

Particularly illuminating is the reason no such "written assents" are

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

Directors... ," (AA, No.7, p. 00342:19-20, ~ 4; emphasis added) not

"written assents." A "poll" is not synonymous with "written assent." Nor

can a "poll" remotely be deemed a matter of "major importance," to be

equated with such matters as voting and leadership.

Equally significantly, even had SAG previously utilized Article V, §

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.

Lindsey, 52 Cal.2d 267,274 (1959); International Assn. ofFire Fighters 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

principle, estoppel is never allowed or applied where it would be an

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).

In Columbia Engineering Co., plaintiff shareholders contested the

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

doctrines of waiver and estoppel. Id., at 854-55. The Court of Appeal

reversed, holding that "[w]here a statute prohibits or attaches a penalty to

the doing of an act, that act is void," and "the defenses oflaches, waiver

and estoppel may not be applied." Id., at 855 (cites omitted).

In the analogous case of Belle Isle Corp. v. Corcoran, 29 Del. Ch.

554 (1946), too, the voting trustees of a corporation extended its Voting

Trust Agreement, and subsequently elected a board of directors pursuant to

a vote taken under that extended Agreement. The Supreme Court of

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

parties acted thereunder." Id., at 562.

Appellants' prior action, even if supported by credible evidence, is

irrelevant.

D. SAG's Second Request For Dismissal Of The Appeal Is

Without Merit.

On or about May 20, 2009, SAG Filed a Motion to Dismiss Appeal

as Moot on the ground that, on or about February 8, 2009, following the

deI\ial of Appellants' application for a temporary restraining order, SAG's

Board held a "noticed meeting" that affirmed the matters passed by the

challenged "written assent." On June 5, 2009, Appellants filed their

opposition to the Motion. Upon consideration of the moving and opposing

papers, this Court denied the Motion on June 9, 2009.

SAG now renews its motion to dismiss the appeal as moot on the

same grounds already unsuccessfully asserted and on the additional ground

that, since the filing of its previous Motion, the SAG members voted to

approve a contract with the Association of Motion Picture and Television

Producers ("AMPTP"), and that the approval of such a contract "moot[s]

232491JDOC 17

important aspects of this appeal." SAG's renewed motion is substantively

and procedurally defective.

First, the approval of a contract with the AMPTP in no way moots

the issues on Appeal. By the improper and illegal "written assent," the

Board purported to approve the following actions:

• Terminating Doug Allen as the National Executive

Director ("NED") and ChiefNegotiator for SAG;

• Appointing David White - a non-member, officer,

employee or member of the Board of SAG - as the interim NED for SAG;

• Appointing John T. McGuire as the ChiefNegotiator

for all contracts;

• Suspending Guideline II of the National Committee

Guideline, which specifically provided that "[t]askforces should not be used

to circumvent the committee process or supercede the authority of any

committee";

• "Disbanding" the TV/Theatrical Committee, and

rescinding its authority to "continue negotiations on the TV/Theatrical

Agreement or, because of its interrelated nature, the Live Action Basic

Cable Agreement," and "[i]n its place, [forming] a Taskforce ... to

complete these negotiations on behalf ofthe Board of Directors"; and

• Prohibiting anyone other than White and McGuire

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.

00231-233, January 26, 2009 Written Assent.)

The contract approved by the SAG members was provided to the

members for consideration after negotiation and approval by the

improperly-appointed interim NED, David White, chief negotiator, John T.

McGuire, and the negotiation taskforce. Thus, the AMPTP contract

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

Appellants would suffer if a temporary restraining orderdid not issue.

Moreover, the defective approval of the AMPTP contract does not

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

position), Guideline II ofthe National Committee Guideline, which has the

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

justifY reconsideration. As set forth in detail in Appeallants' Opposition to

SAG's Motion to Dismiss, the appeal is not moot for several separate and

independent reasons:

• The February 8,2009 meeting does not "moot" the Appeal

because it simply purported to "affirm" the Board's authority under SAG's

Constitution and bylaws to act by a less than unanimous "written assent."

The issue of whether California Corporations Code Section 7211 prohibits

a non-profit corporation's board from acting by a less than unanimous

written consent must be determined by the courts, and cannot be "ratified"

by the Board's Motion. In other words, the Board carmot make an illegal

action legal by simply voting to make it legal.

Moreover, California Civil Code Section 2313 specifically precludes

the SAG Board of Directors from retroactively validating the "written

assent." Section 2313 provides that, "No unauthorized act can be made

valid, retroactively, to the prejudice of third persons, without their consent."

Appellants, none ofwhom has so consented, clearly have been prejudiced

by the January 26 "written assent," as the trial court found that they would

be irreparably harmed absent injunctive relief. Using the February 8

23249lJDOC 20

Motion to validate the "written assent" would prejudice Appellants and is

therefore prohibited by Section 2313.

• The Motion to Dismiss is defective and improper in its

entirety because it seeks to have this Court adjudicate the merits of

Appellants' appeal in the guise of a motion to dismiss. As explained in

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 ofways (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

provisions of Robert's Rules, and the President and Secretary-Treasurer

were precluded from presenting their Reports).

• The February 8 Motion does not render the appeal moot

because it did not "ratifY" the matters "passed" by way of the "written

assent." The February 8 Motion simply "affirmed" the Board's alleged

authority to act through "written consent" by a simple majority - versus

unanimous - vote. At the February 8 meeting, the Board ofDirectors did

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

"written assent" passed only by a bare majority.

21

• As a matter of policy, the Court should decide the merits of .

the appeal because it presents an issue ofsubstantial and continuing

interest, is likely to affect the parties' future rights, and is the type of dispute

that is likely to be so short-lived as to evade appellate review.

Corporations Code Section 7211 (and its counterpart for other types of

California corporations) has never been interpretedand applied by an

appellate court, and will affect the governance of all corporations in this

State.

Moreover, unless there is a determination as to the validity and

effectiveness of Article V, § 1(J)(4), there will be a multiplicity oflawsuits

between the parties as to any further or additional actions sought to be

taken by SAG's Board under the bylaw.

V. CONCLUSION

For the foregoing reasons, Appellants respectfully request that this

Court reverse the order of the Superior Court issued on February 5, 2009,

denying the February 5, 2009 ex parte application for (1) a temporary

232491JDOC 22

restraining order and (2) an order to show cause why a preliminary

injunction should not be issued.

Dated: July _, 2009

23249U·DOC

BROWNE WOODS GEORGE LLP

By:'--~.L-_-==-----""""":"='---.:= _Eric M. George

Attorneys for Attorneys forPlaintiffs/Appellants ALAN ROSENBERG,ANNE-MARIE JOHNSON, KENTMCCORD and DIANE LANE

23

CERTIFICATE OF WORD COUNT(Cal. Rules of Court, Rules 8.204(c)(1))

The text of this brief is proportionately spaced, has a typeface of 13

points or more and contains 5,455 words, including footnotes, as counted

by the Microsoft Office Word 2003 word-processing program used to

generate the brief.

Dated: July _, 2009

23249U·DOC

BROWNE WOODS GEORGE LLP

By: g~L-=Eric M. George

Attorneys for Attorneys forPlaintiffs/Appellants ALAN ROSENBERG,ANNE-MARIE JOHNSON, KENTMCCORD and DIANE LANE

24

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

I am employed in the County of Los Angeles, State of California. Iam over the age of 18 and not a party to the within action; my businessaddress is 2121 Avenue of the Stars, Los Angeles, CA 90067.

On July 21,2009, I served the foregoing document described as:APPELLANT'S REPLY TO RESPONDENT'S BRIEF on the parties inthis action by serving:

Roland Tellis, Esq. (SBN 186269)BINGHAM McCUTCHEN LLPFourth F~oor - North Tower1620 26t StreetSanta Monica, CA 90404-4060Telephone: 310.907.1000FaCSImile: 310.907.2000Attorneys for DefendantScreen Actors Guild

Supreme Court of CaliforniaLos Angeles OfficeRonald Reagan Building300 S. Spring StreetLos Angeles, California 90013(4 Copies)

Los Angeles Superior CourtDept. 85 - Judge James C. ChalfantIII North Hill StreetLos Angeles, CA 90012

Il9 By Envelope - by placing 0 the original Il9 a true copy thereofenclosed in sealed envelopes addressed as above and delivering suchenvelopes:

Il9 By Mail: As follows: I am "readily familiar" with this firm'spractice of collection and processing correspondence for mailing. Underthat practice it would be deposited with the U.S. postal service on that sameday with postage thereon fully prepaid at Los Angeles, California in theordinary course of business. I am aware that on motion of the party served,service is presumed invalid if postal cancellation date or postage meter dateis more than one day after date of deposit for mailing in affidavit.

Executed on July 21, 2009, at Los Angeles, California.

Il9 STATE I declare under penalty of perjury under the laws of theState of California that the above is true and correct.

~~@L4V_-KRISTINE DIANE DE ROSA