Filed 4/16/18
                           CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             SIXTH APPELLATE DISTRICT

THE POLICE RETIREMENT SYSTEM                       H043220
OF ST. LOUIS et al.,                              (Santa Clara County
                                                   Super. Ct. No. 1-14-CV-261485)
        Plaintiffs and Appellants,

        v.

LARRY PAGE et al.,

        Defendants and Respondents.



        In this derivative action, shareholders of Google, Inc. allege the corporation was
harmed by executives who agreed to refrain from actively recruiting employees working
for competitors. The trial court granted the defendants’ summary judgment motion,
finding the action barred by the applicable statute of limitations. We will affirm.
                                     I.   BACKGROUND
        Plaintiffs are three Google shareholders who brought separate derivative suits that
were later consolidated. Defendants are officers and directors of Google, with the
corporation itself included as a nominal defendant. 1 The lawsuit stems from agreements
Google executives made with competitors regarding the recruitment of employees. The
nature of the agreements was that Google would not “cold call” (meaning initiate contact




        1
       Defendants move for an order correcting the name of the corporate defendant to
read “Google, LLC” instead of “Google, Inc.,” because after the lawsuit was filed the
company changed its name. Since the docket correctly reflects the parties named in the
complaint, we deny that motion.
for the purpose of recruiting) employees of certain competitors, such as Apple. The
competitors similarly agreed to not cold call Google employees.
       In September 2010, the United States Department of Justice filed a civil antitrust
action against Google and several other companies that participated in the no cold call
agreements. The complaint alleged that the agreements illegally diminished competition
for high tech employees, denying them job opportunities and ultimately suppressing
wages. The Department of Justice sought an injunction prohibiting the companies from
engaging in such conduct in the future. The action was resolved the same day it was
filed: Google, along with the other companies, entered into a stipulated judgment in
which they admitted no liability but agreed to be bound by an injunction prohibiting the
no cold call arrangements.
       Google posted a statement online announcing the settlement of the antitrust action,
denying any wrongdoing, and indicating that to resolve the matter it had agreed to cease
the no cold call practice. The statement included a link to a press release from the
Department of Justice that described the settlement terms. There was widespread media
coverage of the antitrust action. Articles about the Department of Justice investigation
into Google’s hiring practices and the settlement of the enforcement action appeared in
The Wall Street Journal, The New York Times, and the San Francisco Chronicle, among
many other publications. The matter was also reported on in at least 30 television news
broadcasts.
       In mid-2011, several class action lawsuits were filed against Google and the other
companies named in the Department of Justice action. The class action suits were
brought by employees who alleged that the cold calling restrictions were illegal and had
caused them wage losses. The cases were removed to federal court and consolidated, and
the consolidated action sought over $3 billion in damages on behalf of more than 100,000
employees.


                                             2
       This suit was filed in February 2014. Plaintiff shareholders sued to recover
damages caused to Google by defendants’ decision to enter into the anti-competitive
agreements. The complaint asserted several causes of action, all based on the theory that
the company had been harmed because it suffered financial losses resulting from the
Department of Justice antitrust action and the employee class action suits. It also alleged
the agreements made by defendants harmed the company’s reputation and stifled
innovation. Defendants moved for summary judgment on the ground that the entire
action was barred by the applicable three-year statute of limitations. The trial court
granted the motion and entered judgment in favor of defendants, finding the action
untimely because plaintiffs should have been aware of the facts giving rise to their claims
by at least the time of the Department of Justice antitrust action in 2010.
                                    II.    DISCUSSION
   A. STANDARD OF REVIEW
       We review a trial court’s decision granting summary judgment de novo, and
liberally construe the evidence in favor of the party opposing the motion. (Lonicki v.
Sutter Health Central (2008) 43 Cal.4th 201, 206.) To decide whether summary
judgment was properly granted, we engage in the same analysis that was required of the
trial court. (Hamburg v. Wal-Mart Stores, Inc. (2004) 116 Cal.App.4th 497, 503.) Since
defendants moved for summary judgment based on the affirmative defense of the statute
of limitations, they have the “burden of persuasion” on that point, meaning they must
convince the court that no reasonable trier of fact could find in plaintiffs’ favor on the
statute of limitations issue. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849
[In moving for summary judgment, a defendant may meet the burden of establishing that
a cause of action has no merit by showing there is a complete defense to that cause of
action.].) To accomplish that, defendants must first present evidence establishing that
plaintiffs’ claims are time barred. It then falls to plaintiffs to counter with evidence
creating a dispute about a fact relevant to that defense. (Id. at p. 850.) If defendants
                                              3
presented evidence establishing the defense and plaintiffs did not effectively dispute any
of the relevant facts, summary judgment was properly granted. (Code Civ. Proc., § 437c,
subd. (p)(2).)
   B. CHOICE OF LAW
       The parties agree that we must apply the law of the state of Delaware in analyzing
the limitations issue here. Because only one state should have the authority to regulate
the affairs of a corporation, the “internal affairs doctrine” generally requires application
of the law of the state of incorporation to any dispute regarding relations between the
corporation and its shareholders or officers and directors. (Grosset v. Wenaas (2008)
42 Cal.4th 1100, 1106, fn. 2, citing Edgar v. MITE Corp. (1982) 457 U.S. 624, 645.)
Since Google was incorporated in Delaware, we will apply Delaware law to determine
whether plaintiffs’ claims are time barred. (See Hambrecht & Quist Venture Partners v.
American Medical Internat., Inc. (1995) 38 Cal.App.4th 1532, 1544 [applying Delaware
statute of limitations to a dispute governed by Delaware law].) 2
   C. SUMMARY JUDGMENT WAS PROPERLY GRANTED
       The statute of limitations for plaintiffs’ claims is three years. (10 Del. C., § 8106
[providing for a three-year statute of limitations for non-personal injury claims].) The
causes of action alleged in the complaint are all based on harm flowing from the no cold
call agreements made by defendants, conduct that predated the September 2010
Department of Justice antitrust action. Plaintiffs did not file this action until
February 2014, more than three years after the events giving rise to their claims, so they
cannot––and do not––argue defendants’ conduct occurred within the limitations period.


       2
        Our citations to Delaware authorities include unpublished opinions because
“unreported Delaware court opinions are frequently cited by Delaware courts,” and in
Delaware an opinion need not be reported to have persuasive value. (Nationwide
General Ins. Co. v. Thomas (Del. 1995) 1995 Del. Super. Lexis 129, p. 11; see also
Aprahamian v. HBO & Co. (Del. 1987) 531 A.2d 1204, 1207 [unpublished opinions are
not necessarily stare decisis but are entitled to great deference].)
                                               4
Rather, plaintiffs contend that the operative facts were not known to them until much
later, within three years of when they filed the lawsuit.
       Delaware law allows for a limitations period to be tolled during the time the facts
underlying a claim were “so hidden that a reasonable plaintiff could not timely discover
them,” including when the operative facts were fraudulently concealed or where the
plaintiff relied in good faith on a fiduciary who prevented plaintiff from gaining a full
understanding of the circumstances. (In re Dean Witter Partnership Litig. (Del. 1998)
1998 Del. Ch. Lexis 133, p. 19.) But the statute of limitations will be tolled only until a
plaintiff has inquiry notice of the facts giving rise to the cause of action, meaning there is
enough information available to prompt a reasonable person to commence an
investigation that, if pursued, would lead to discovery of the harm. (Pomeranz v.
Museum Partners, L.P. (Del. 2005) 2005 Del. Ch. Lexis 10, p. 11.) To determine
whether summary judgment was proper here, we must decide if defendants have
established beyond dispute that plaintiffs were on inquiry notice of their claims more than
three years before the complaint was filed.
       “Inquiry notice does not require actual discovery of the reason for the injury. Nor
does it require plaintiffs’ awareness of all of the aspects of the alleged wrongful
conduct.” (In re Dean Witter Partnership Litig., supra, 1998 Del. Ch. Lexis 133, at
p. 31.) Having all the facts necessary to articulate the wrong is not required; plaintiffs
“may not simply wait until the details of the harm are provided to them before the statute
begins to run.” (Pomeranz v. Museum Partners, L.P., supra, 2005 Del. Ch. Lexis 10 at
p. 44.) We agree with the trial court that plaintiffs were on inquiry notice of potential
harm from defendants’ anti-competitive agreements no later than the time the Department
of Justice antitrust action was publicized in September 2010. The publicly available
complaint in that action alleged that “[b]eginning no later than 2006, Apple and Google
agreed not to cold call each other’s employees. Senior executives at Apple and Google
reached an express no cold call agreement through direct and explicit communications.
                                              5
The executives actively managed and enforced the agreement through direct
communication.” The complaint went on to allege that Google entered into similar
agreements with other companies, and that the agreements restrained trade in violation of
federal antitrust laws. Google publicly announced that it had resolved the antitrust
action, and included a link to the Department of Justice press release detailing the terms
of the settlement. The Department of Justice investigation and resulting enforcement
action were widely reported by the media. Given those undisputed facts, no reasonable
trier of fact could conclude that as of September 2010 plaintiffs did not have enough
information to at least make them suspicious that the corporate officers and directors
named as defendants were involved in anti-competitive recruiting agreements.
Defendants have therefore established their statute of limitations defense as a matter of
law and are entitled to summary judgment.
       Relying on In re Primedia, Inc. Shareholders Litigation (Del. 2013) 2013 Del. Ch.
Lexis 306 (Primedia), plaintiffs argue that even if there were enough information to
suspect that Google officers and directors had participated in wrongdoing, inquiry notice
requires a showing that an investigation would have yielded the facts necessary to “plead
a viable claim.” Primedia describes inquiry notice in a derivative action as a two-step
process: “First, sufficient information must be available to arouse a reasonable
stockholder’s suspicions. Second, the reasonable stockholder must be able to commence
an investigation and discover the facts necessary to plead the claim and survive the
motion to dismiss.” (Id. at pp. 39–40.) Plaintiffs contend an investigation at the time of
the Department of Justice antitrust action would not have provided facts sufficient to
plead an action that would survive a motion to dismiss (as required under Primedia),
because it would not have revealed any misconduct by the officer and director defendants
named in the complaint.
       Unlike plaintiffs, we do not read Primedia’s “viable claim” language as imposing
any new or different criteria for the inquiry notice analysis. The standards for a
                                             6
complaint to survive a motion to dismiss in Delaware are not especially onerous. The
complaint’s allegations are accepted as true, and the court must give the plaintiff the
benefit of all reasonable inferences that can be drawn from the pleading. (Solomon v.
Pathe Communications Corp. (Del. 1996) 672 A.2d 35, 38.) A motion to dismiss will be
granted only if the court determines that “a plaintiff could prevail on no set of facts that
can be inferred from the pleadings.” (Ibid.) Primedia does not say that an initial
investigation would have to yield the facts needed to prove the plaintiff’s case––only
facts giving rise to an inference suggesting plaintiff will prevail. (Desimone v. Barrows
(Del. 2007) 924 A.2d 908, 929 [Under Delaware pleading standards, “a complaint must
plead enough facts to plausibly suggest that plaintiff will ultimately be entitled to the
relief she seeks.”].) In this case, the inference necessary for plaintiffs to prevail under the
theory of liability alleged in their complaint is that the officer and director defendants
were involved in the anti-competitive agreements to the detriment of Google
shareholders. By the year 2010, even without conducting any further investigation,
plaintiffs had facts to support that inference: the Department of Justice had filed an
antitrust action alleging that senior executives at Google agreed not to actively recruit
certain competitors’ employees, in violation of federal law. Although neither the
allegations made by the Department of Justice nor Google’s immediate settlement of the
antitrust action necessarily mean that the company’s directors and officers were involved
with the no cold call agreements, those facts give rise to a reasonable inference that they
were. Plaintiffs accordingly had sufficient information in 2010 to plead the claims
alleged in this action.
       In plaintiffs’ view, they did not have enough information to put them on notice of
their claims until 2012, when e-mails produced in discovery in the employee class action
suit relating to the no cold call agreements first became publicly available. The e-mails
include messages sent and received by the CEO of Google discussing the agreements,
and plaintiffs characterize the e-mail disclosure as the first indication that high level
                                               7
executives were aware of and participated in the agreements. “The difficulty for the
plaintiffs is that their argument depends on the premise that inquiry notice only exists
once they were aware of all material facts relevant to their claims. That is not the case.”
(Pomeranz v. Museum Partners, L.P., supra, 2005 Del. Ch. Lexis 10, at pp. 46–47.)
Plaintiffs conflate the concept of proving a claim with that of being aware of a claim.
Certainly, the e-mails would be useful in proving the claims they have alleged. But as
already discussed, the facts available almost two years earlier would have caused a
reasonable shareholder to suspect officers and directors at Google were involved in the
wrongdoing. So plaintiffs should have been aware of their claims by then, even if they
did not yet have all the evidence to prove them. It is not necessary that a plaintiff find the
smoking gun before being charged with inquiry notice. (Id. at p. 44 [A plaintiff need not
have all the details regarding the alleged harm before the statute begins to run.].)
       Plaintiffs point to an inability to compel the corporation to produce documents
before filing suit as a reason they were not on inquiry notice in 2010. Citing La. Mun.
Police Employees’ Ret. Sys. v. Lennar Corp. (Del. 2012) 2012 Del. Ch. Lexis 230, p. 8,
they argue that settlement of a lawsuit without admitting wrongdoing and media reports
regarding possible corporate misconduct are insufficient grounds to support a shareholder
demand for inspection of corporate books and records. But the issue is not whether
plaintiffs could have compelled the company to submit to a shareholder inspection
demand in 2010, as the facts already publicly known at that time put them on inquiry
notice. Further, plaintiffs do not identify any specific information they were prevented
from learning by not being able to inspect records––to the contrary, they concede that an
inspection demand would not have yielded any evidence of the no cold call agreements
because there was no information about the agreements in corporate minutes or related
records. If there was no evidence to be obtained from a records inspection, the inability
of plaintiffs to conduct one has no bearing on whether they had inquiry notice.


                                              8
       Plaintiffs argue that the information related to the Department of Justice
enforcement action cannot be viewed in isolation but rather must be viewed in context
with everything else that was known at the time. They assert that a reasonable
shareholder would not have suspected Google executives were involved with the no cold
call agreements––despite the antitrust action alleging just that––because the “total mix”
of information made it appear that Google had not engaged in any misconduct. The total
mix of information as described by plaintiffs includes the facts that Google’s
announcement of the settlement with the Department of Justice was crafted to minimize
its import; that Google paid no fine nor was it subjected to any other penalty; that Google
did not disclose anything about the settlement in its regulatory filings; and that certain
news articles described the hiring process at Google as being intensely competitive.
Plaintiffs argue one could not reasonably suspect the harm that had been caused to the
corporation based on the available information as a whole. But even considering the
additional information plaintiffs offer, the fact that the Department of Justice brought an
enforcement action alleging that a practice engaged in by Google executives violated
federal law would warrant further investigation by a prudent shareholder. (See Pomeranz
v. Museum Partners, L.P., supra, 2005 Del. Ch. Lexis 10 at p. 39 [“The plaintiffs, as
rational investors, should have begun asking questions.”].) Plaintiffs cite Neubauer v.
Goldfarb (2003) 108 Cal.App.4th 47, 64, for the proposition that under Delaware law,
whether a reasonable shareholder would consider a piece of information important given
its context is a question of fact precluding summary judgment. Neubauer is inapposite.
In that case, the issue was whether a misrepresentation by a corporate officer was
sufficiently material such that the plaintiff could avoid summary judgment on a cause of
action for breach of fiduciary duty. There was no statute of limitations issue, so the court
did not decide whether the facts were sufficient to place a shareholder on inquiry notice.
       Plaintiffs also rely heavily on In re Tyson Foods, Inc. Consol. S’holder Litig.
(Del. 2007) 919 A.2d 563, 591, in which shareholders were not on inquiry notice “simply
                                              9
because some relevant information was in the public domain.” But the nature of the
wrong in Tyson Foods was far more latent than what plaintiffs allege here. It involved
spring loading stock options, meaning granting options to executives just before the
announcement of an event that would cause the stock price to increase. Though the
information needed to prove that claim––the dates of the option grants and the various
public announcements––was readily available, the court declined to find that reasonable
diligence requires a plaintiff to sift through records disclosing the option grants, compare
them with media reports of the public announcements, and then identify the pattern from
which spring loading could be inferred. (Ibid.) In that case, even though the underlying
information was available, the conclusion giving rise to the claims was not apparent on
the face of that information. The situation here is reversed––plaintiffs did not need to
piece together any facts to reach the conclusion giving rise to their claims. The wrong
that formed the basis of plaintiffs’ claims had already been discovered by the Department
of Justice; plaintiffs only needed to seek out further supporting evidence.
       Plaintiffs urge us to find that the statute of limitations was tolled on the theory that
Google concealed facts about the settlement with the Department of Justice and made
misleading statements about it. In plaintiffs’ view, Google’s announcement of the
settlement sanitized it to such a degree that it appeared to be a routine event, and the
failure to report the settlement in any regulatory filings reinforced that idea.
       A limitations period will be tolled while a defendant “engaged in fraudulent
concealment of the facts necessary to put a plaintiff on notice of the truth.” (In re Dean
Witter Partnership Litigation, supra, 1998 Del. Ch. Lexis 133, at pp. 20–21.) And
“[u]nder the theory of equitable tolling, the statute of limitations is tolled for claims of
wrongful self-dealing, even in the absence of actual fraudulent concealment, where a
plaintiff reasonably relies on the competence and good faith of a fiduciary.” (Weiss v.
Swanson (Del. 2008) 948 A.2d 433, 451.) “But any possible tolling exception to the
strict application of the statute of limitations tolls the statute ‘only until the plaintiff
                                                10
discovers (or [by] exercising reasonable diligence should have discovered) [the] injury.’
When plaintiffs are on inquiry notice the statute of limitations begins to run.” (Pomeranz
v. Museum Partners, L.P., supra, 2005 Del. Ch. Lexis 10, at p. 11.) “[E]ven where
defendant is a fiduciary, a plaintiff is on inquiry notice when the information underlying
plaintiff’s claim is readily available.” (In re Dean Witter Partnership Litigation, supra,
1998 Del. Ch. Lexis 133, at p. 36.) We have already determined that the information
giving rise to plaintiffs’ claims was readily available as of the time of the Department of
Justice antitrust action in 2010. The theories of fraudulent concealment and equitable
tolling therefore do not assist plaintiffs.
       Plaintiffs point to a lack of response from the public as evidence that a reasonable
shareholder would not have considered the settlement of the antitrust action to be an
important event. According to plaintiffs, “the public did not react to the DOJ settlement
as material news.” Of course, that argument is greatly undermined by the fact that within
a year several employee class action lawsuits seeking billions of dollars in damages were
filed based on the conduct alleged in the Department of Justice action. Plaintiffs
acknowledge the class action suits were premised on the same general facts, but argue
that the employee claims in those suits did not require proof the directors of the
corporation lacked independence––an element that is required in this shareholder
derivative action. Plaintiffs assert that even if the employees had enough facts to be on
notice of their wage loss claims against the company, there were no facts at the time to
suggest the individual directors were involved in the wrongdoing. Plaintiffs cite several
Delaware cases where actions were dismissed for failure to plead specific facts to support
an inference of director misconduct. But here, the facts available in 2010 did support an
inference of director misconduct. The Department of Justice concluded after an
investigation that senior executives at Google reached express no cold call agreements
with competitors and actively managed those agreements. The fact that Google does not
use the term “senior executives,” makes no difference: the description is still sufficient to
                                              11
put a reasonable shareholder on inquiry notice that corporate directors were involved in
the conduct.
       We acknowledge that certain facts relevant to plaintiffs’ claims were unavailable
to them until well after September 2010. But the facts that were available at that time are
sufficient to provide inquiry notice of the claims. The trial court therefore properly
granted summary judgment to defendants based on the statute of limitations. 3
                                  III.   DISPOSITION
       The judgment is affirmed. Respondents shall be awarded costs on appeal.




       3
         Plaintiffs also argue in their opening brief that the trial court erred in summarily
adjudicating their causes of action for indemnification and contribution because those
causes of action accrued later than the others. As defendants correctly point out,
plaintiffs never raised that argument in the trial court, so it is forfeited. (Brandwein v.
Butler (2013) 218 Cal.App.4th 1485, 1519 [“ ‘Appellate courts are loath to reverse a
judgment on grounds that the opposing party did not have an opportunity to argue and the
trial court did not have an opportunity to consider ... . Bait and switch on appeal not only
subjects the parties to avoidable expense, but also wreaks havoc on a judicial system too
burdened to retry cases on theories that could have been raised earlier.’ ”].) As plaintiffs
did not address the forfeiture argument in their reply brief, we assume they abandoned
the issue. (Overstock.com, Inc. v. Goldman Sachs & Co. (2014) 231 Cal.App.4th 513,
530, fn. 11.)
                                             12
                                           ____________________________________
                                           Grover, J.




WE CONCUR:




____________________________
Elia, Acting P. J.




____________________________
Premo, J.




H043220-The Police Retirement System of St. Louis et al. v. Page et al.
Trial Court:                                   Santa Clara County Superior Court
                                               Superior Court No. 1-14-CV-261485

Trial Judge:                                   Hon. Peter H. Kirwin

Counsel for Plaintiffs/Appellants: The         Brian J. Robbins
Police Retirement System of St.                Kevin A. Seely
Louis, Marilyn Clark and Pradeep               Gina Stassi
Shah                                           Michael J. Nicoud
                                               ROBBINS ARROYO LLP

                                               Joseph W. Cotchett
                                               Nancy L. Fineman
                                               Mark C. Molumphy
                                               COTCHETT, PITRE & McCARTHY
Counsel for Defendants/Respondents             Boris Feldman
Larry Page, Sergey Brin, Eric E.               Elizabeth C. Peterson
Schmidt, Robert Alan Eustace, Paul             Cheryl W. Foung
S. Otellini, L. John Doerr, Ann                Stephen B. Strain
Mather, John L. Hennessy, K. Ram               WILSON, SONSINI, GOODRICH &
Shriram, Shirley M. Tilghman, Omid             ROSATI
Kordestani, Jonathan J. Rosenberg,
Shona L. Brown, Michael Moritz,
Arthur D. Levinson, Arnnon Geshuri,
and Nominal Defendant Goolgle, Inc.




H043220-The Police Retirement System of St. Louis et al. v. Page et al.
