NOT FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`
`FOR THE NINTH CIRCUIT
`
`
`FILED
`
`
`JUN 15 2020
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
`
`
`
`No. 19-15544
`
`
`D.C. No. 3:15-cv-02281-WHA
`
`
`
`MEMORANDUM*
`
`
`
`
`
`
`
` Plaintiff-Appellant,
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`TOTAL RECALL TECHNOLOGIES,
`
`
`
` v.
`
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`PALMER LUCKEY; OCULUS VR, LLC,
`
`
`
`
`
`
`
`
`
` Defendants-Appellees.
`
`
`
`Appeal from the United States District Court
`for the Northern District of California
`William Alsup, District Judge, Presiding
`
`Argued and Submitted April 21, 2020
`San Francisco, California
`
`Before: WALLACE and BERZON, Circuit Judges, and BERG,** District Judge.
`
`
`
`This case comes to us from the district court’s summary judgment in favor of
`
`Palmer Luckey and Oculus VR, LLC (collectively, Defendants). In the first appeal,
`
`we remanded to the district court to address three questions: (1) whether federal
`
`procedural law, including Federal Rule of Civil Procedure 9(a)(1)(A) or 9(a)(1)(B),
`
`
`*
` This disposition is not appropriate for publication and is not precedent
`
`
`except as provided by Ninth Circuit Rule 36-3.
`
`** The Honorable Terrence Berg, United States District Judge for the
`
`
`Eastern District of Michigan, sitting by designation.
`
`
`
`
`
`
`
`
`
`UNITED STATES COURT OF APPEALS
`
`FOR THE NINTH CIRCUIT
`
`
`FILED
`
`
`JUN 15 2020
`
`MOLLY C. DWYER, CLERK
`U.S. COURT OF APPEALS
`
`
`
`
`No. 19-15544
`
`
`D.C. No. 3:15-cv-02281-WHA
`
`
`
`MEMORANDUM*
`
`
`
`
`
`
`
` Plaintiff-Appellant,
`
`TOTAL RECALL TECHNOLOGIES,
`
`
`
` v.
`
`
`PALMER LUCKEY; OCULUS VR, LLC,
`
`
`
`
`
`
`
`
`
` Defendants-Appellees.
`
`
`
`Appeal from the United States District Court
`for the Northern District of California
`William Alsup, District Judge, Presiding
`
`Argued and Submitted April 21, 2020
`San Francisco, California
`
`Before: WALLACE and BERZON, Circuit Judges, and BERG,** District Judge.
`
`
`
`This case comes to us from the district court’s summary judgment in favor of
`
`Palmer Luckey and Oculus VR, LLC (collectively, Defendants). In the first appeal,
`
`we remanded to the district court to address three questions: (1) whether federal
`
`procedural law, including Federal Rule of Civil Procedure 9(a)(1)(A) or 9(a)(1)(B),
`
`
`*
` This disposition is not appropriate for publication and is not precedent
`
`
`except as provided by Ninth Circuit Rule 36-3.
`
`** The Honorable Terrence Berg, United States District Judge for the
`
`
`Eastern District of Michigan, sitting by designation.
`
`
`
`
`
`
`
`
`
`enables Defendants to challenge the internal management authority of Total Recall
`
`Technologies (Total Recall) to sue; (2) if federal procedural law permits Defendants
`
`to make their challenge, whether Total Recall provided sufficient evidence of Ron
`
`Igra’s authority and/or Total Recall’s capacity to proceed; and (3) if Defendants can
`
`challenge Total Recall’s authority or capacity, and if Total Recall ratified its
`
`previous action; whether the statute of limitations expired. The district court agreed
`
`with Defendants on all three points and entered summary judgment in their favor.
`
`This appeal followed.
`
`Even assuming that Defendants could challenge Total Recall’s capacity or
`
`Igra’s authority to sue on Total Recall’s behalf under Rule 9(a)—a question which
`
`may be debated—and that the action was defective as filed, we conclude that Total
`
`Recall retroactively cured any defect and that the cure was not time-barred. We
`
`therefore reverse the district court’s summary judgment and remand for further
`
`proceedings.
`
`The district court abused its discretion by requiring Thomas Seidl to consent
`
`to the action as a condition of ratification. By imposing that condition, the district
`
`court compelled Total Recall to keep its same structure and ownership to continue
`
`prosecuting the action. Hawaii partnership law, which governs the construction of
`
`Total Recall’s partnership agreement, did not tie Igra’s hands in that way; any
`
`
`
`2
`
`
`
`
`
`conditions of ratification needed only to account for the makeup of the partnership
`
`under state law.
`
`Igra filed a declaration memorializing that after a Hawaii state court
`
`mediation, (1) Seidl had withdrawn from the partnership; (2) the partnership (now
`
`in wind-down mode) had retained its interest in this action and Seidl would receive
`
`30% of any recovery; (3) Igra was the sole partner; and (4) Igra would indemnify
`
`Seidl’s costs arising from this action. By removing Seidl as a partner, Igra had
`
`unilateral authority to control Total Recall’s participation in this litigation, which he
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`exercised by submitting a declaration consenting to the action and ratifying its filing.
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`No more was required.
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`We disagree with Defendants that ratification of the lawsuit required Seidl’s
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`affirmative consent when he was still a partner of Total Recall. Any prejudice
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`Defendants suffered because “all prior proceedings—including the complaint,
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`briefing, and the entirety of fact discovery—were conducted without a legally
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`cognizable plaintiff” was purely academic. Nothing would have precluded Igra and
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`Seidl from entering into a similar withdrawal and consent agreement before the
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`action was filed. We therefore reject Defendants’ contention that Igra’s chosen
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`mode of ratification was inadequate. See CLD Constr., Inc. v. City of San Ramon,
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`16 Cal. Rptr. 3d 555, 562 (Ct. App. 2004); Cal. Sav. & Loan Soc. v. Harris, 43 P.
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`525, 526 (Cal. 1896).
`
`
`
`3
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`
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`
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`In addition, the district court erred in concluding that Total Recall’s
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`ratification happened too late. As a general rule, a statute of limitation is tolled when
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`a complaint is filed as to matters arising out of the action. See Cal. Civ. Proc. Code
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`§ 350.1 The district court applied a statutory exception providing that the limitations
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`period will not be tolled for corporations which are suspended for non-payment of
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`taxes and for that reason lack legal capacity to sue and be sued in California. Under
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`the revivor statutes, once delinquent taxes are paid for the suspended corporation,
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`the corporation’s powers are restored, thus reviving its capacity to sue. See Cal. Rev.
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`& Tax. Code. §§ 23305, 23305(a). Under these provisions, a suspended
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`corporation’s lack of capacity “does not operate to toll the running of the statute of
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`limitations.” V&P Trading Co., Inc. v. United Charter, LLC, 151 Cal. Rptr. 3d 146,
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`150 (Ct. App. 2012).
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`Under California law, this exception does not vitiate ordinary tolling
`
`principles as to any defect in Total Recall’s capacity or authority to sue. American
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`Alternative Energy Partners II v. Windridge, Inc., 49 Cal. Rptr. 2d 686 (Ct. App.
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`1996), is especially persuasive on this point. There, the plaintiff had not filed a
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`certificate of partnership with the Secretary of State when it filed its action. Id. at
`
`
`1 In this diversity case, California law governs the question of statute of limitations
`and applicable tolling rules. See G & G Prods. LLC v. Rusic, 902 F.3d 940, 947 (9th
`Cir. 2018).
`
`
`
`
`4
`
`
`
`
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`691. Under California law at the time, a limited partnership could not “maintain” an
`
`action in California court until a certificate of partnership was filed. See id. In
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`arguing that the action was barred by the statute of limitations, the defendant urged
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`the court to conclude that the plaintiff’s “situation [was] analogous to a corporation
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`whose powers have been suspended for nonpayment of the corporate franchise tax.”
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`Id. at 693.
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`The court rejected the argument. First, the court observed that the plaintiff
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`was not a suspended corporation but a general partnership with capacity to sue in the
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`name it had assumed. See id. Second, the court explained that the “legislative policy
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`behind the tax code provisions is to enhance tax collections rather than to assure
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`enforceability of judgments, as with other rules on party capacity.” Id. (citations
`
`omitted; emphasis added). The California court accordingly concluded that the
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`statute of limitations rules under the corporate revivor statutes did not apply.
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`Id. at 693–94.
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`All of the published California intermediate appellate decisions on which
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`Defendants rely applied the statutory exception to suspended corporations and are
`
`therefore inapposite. See V&P Trading Co., 151 Cal. Rptr. 3d at 152; Friends of
`
`Shingle Springs Interchange, Inc. v. Cty. of El Dorado, 133 Cal. Rptr. 3d 626, 644
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`(Ct. App. 2011); Ctr. for Self-Improvement & Cmty. Dev. v. Lennar Corp., 94 Cal.
`
`
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`5
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`
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`
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`Rptr. 3d 74, 81 (Ct. App. 2009); Leasequip, Inc. v. Dapeer, 126 Cal. Rptr. 2d 782,
`
`788 (Ct. App. 2002).
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`Because Total Recall is not a tax-delinquent corporation, or a suspended
`
`corporation for any other reason, the statute of limitations rules under California’s
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`corporate revivor statutes do not apply. Accordingly, the filing of the Complaint
`
`tolled the applicable statute of limitations, and Igra’s ratification of the action was
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`timely.
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`For these reasons, the district court’s summary judgment is
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`REVERSED AND REMANDED.
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`6
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