Case 3:08 Cv 01036 Gag Bjm

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

Hunter Wylie, derivatively on behalf of W. Holding Company, Inc., Case No. 08-01036-GAG Plaintiff, v. THE SPECIAL LITGATION COMMITTEE Frank C. Stipes, et al, OF W HOLDING CO., INC.’S MOTION TO DISMISS AND INCORPOATED Defendants. MEMORANDUM OF LAW _________________________________/

Pursuant to Fed. R. Civ. P. 23.1, the Special Litigation Committee (the "SLC") of

nominal defendant W Holding Company, Inc. ("WHI" or the "Company") moves to dismiss the

claims (counts II through V) asserted in the Verified Amended Shareholder Derivative

Complaint (the "Amended Complaint”). In support of this motion, WHI submits the below

memorandum of law.

MEMORANDUM OF LAW

I. PRELIMINARY STATEMENT

By resolution dated March 24, 2009, the Board of Directors of WHI (the "Board")

formed the SLC in response to the filing of a derivative complaint on January 11, 2008, in

federal court in Puerto Rico. On June 9, 2008, plaintiff Hunter Wylie (“Plaintiff”) filed the

Amended Complaint, which alleges claims on behalf of WHI for different forms of breach of

fiduciary duty, violations of Sarbanes-Oxley, waste, unjust enrichment, and violations of Puerto

Rico laws against 11 current and former WHI and Westernbank (the “Bank”) officers and

directors.

Case 3:08-cv-01036-GAG-BJM Document 96 Filed 12/15/2009 Page 1 of 29

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The claims in the Amended Complaint arise principally as a result of WHI’s restatement

of its financial statements for the periods between October, 2005 and December, 2007. The

restatement was necessary due to a structured fraud perpetrated by a significant loan client of the

Westernbank Business Credit Division, namely Inyx, Inc (the “Inxy Fraud”). The Inyx Fraud

caused a significant loan impairment of the Bank’s financial statements, and resulted in massive

losses to the Bank.

In its March 24, 2009 resolution, as permitted under Puerto Rico law, the Board

authorized the SLC to investigate the claims made in the Amended Complaint and to determine

the Company's response to those claims. The SLC conducted an extensive and independent

investigation of the facts underlying the claims made in the Amended Complaint. The purpose

of the SLC's investigation was to determine the role and relative culpability, if any, of each of the

defendants in the events that form the basis of the claims alleged in the Amended Complaint.

The SLC's investigation is now complete. The SLC has filed under seal contemporaneously

herewith a detailed written report (the "SLC Report") of the SLC's investigation, its findings, and

its determination as to whether the claims alleged in the Amended Complaint should be pursued,

dismissed, or otherwise resolved.

In the Report, the SLC, which is comprised of two members,1 has concluded that the

Amended Complaint should be dismissed in its entirety. Accordingly, the SLC respectfully

submits that dismissal is appropriate because all of the standards set forth under Delaware law

that govern this motion have been met.2 First, the independence of the two members of the SLC,

1 The members of the SLC are Enrique Gonzalez and Alberto Baco. 2 WHI is incorporated in the State of Puerto Rico. As a result, under Puerto Rican law, the fiduciary obligations owed by WHI’s officers and directors are analyzed under Delaware substantive law, as Puerto Rican courts seek guidance from Delaware courts, which are the nation’s preeminent courts in analyzing and interpreting corporate law. In the absence of controlling law in Puerto Rico, Delaware corporate law acts as the guidepost. Marquis Theatre Corp. v Condado Mini Cinema, 846 F.2d 86 (1st Cir. 1988) (The court noted that “An examination of the case law of Puerto Rico reveal[ed] no controlling cases. However, the law of corporations in this jurisdiction is


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each prominent in his respective field and who joined the Board after the Inyx Fraud had

occurred, cannot reasonably be questioned. Second, the scope and extent of the SLC's

investigation demonstrates that the SLC investigated the claims alleged in the Amended

Complaint in good faith and with due care. The SLC's investigation was thorough and

comprehensive. Among other things, the SLC and its counsel conducted approximately 39

interviews of 33 individuals and reviewed over 750,000 pages of documents. Third, the factual

record, set forth at length in the SLC Report, demonstrates that the SLC's conclusions are

reasonable, as required by Delaware law.

The SLC seeks dismissal of the Amended Complaint in its entirety because it has

determined that, in the exercise of its business judgment under Delaware law, this course of

action is in the Company's best interests. In reaching this conclusion, as set forth in detail in the

SLC Report, the SLC has considered: (i) the factual and legal merits of each claim, including

possible defenses to those claims, and (ii) additional factors relevant to determining whether

litigation should be brought on behalf of the Company. Accordingly, the SLC respectfully

requests that the Court grant its motion to dismiss, as it is in the manifest best interests of WHI

and all of its shareholders.

II. STATEMENT OF FACTS

The SLC respectfully refers this Court to the SLC Report for a full and complete

statement of the facts relating to the Inyx Fraud, and other relevant factual and legal issues, as

well as the SLC's findings and determinations. The SLC Report is incorporated herein by

reference, and the findings described in this motion are cross-referenced with the SLC Report for

the Court's convenience, as appropriate. closely patterned after Delaware corporate law, and the applicable principles are well established in Delaware jurisprudence…”); Gonzalez Turul v. Rogatol Distributors, Inc., 951 F.2d 1 (1st Cir. 1991) (“As both parties have conceded, Puerto Rican corporate law was modeled after Delaware corporate law).


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III. ARGUMENT

A. Applicable Legal Standard

Under Delaware law, upon the filing of a derivative complaint that purports to be brought

on behalf of a Delaware corporation, the board of directors may empower a special litigation

committee of disinterested directors to determine whether pursuit of the claims is in the best

interests of the Company. Under Delaware law, it is well-settled that "an independent committee

possesses the corporate power to seek the termination of a derivative suit." Zapata Corp. v.

Maldonado, 430 A. 2d 779, 785 (Del. 1981).3 An SLC comprised of independent members has

the authority to seek dismissal of a derivative complaint even where a majority of the board that

appointed the SLC is "tainted by self-interest." Id., 430 A.2d at 786. That is because "a

stockholder cannot be permitted… to invade the discretionary field committed to the judgment of

the directors and sue in the corporation's behalf when the managing body refuses." Id. at 783

(quotation omitted).4

In Zapata, the Delaware Supreme Court set forth the process by which an SLC may seek

dismissal of claims asserted in a derivative complaint if it determines that pursuit of those claims

would be contrary to the best interests of the corporation. The Court held:

After an objective and thorough investigation of a derivative suit, an independent committee may cause its corporation to file a pretrial motion to dismiss ... The basis of the motion is the best interests of the corporation, as determined by the committee. The motion should include· a thorough written record of the investigation and its findings and recommendations.

3 See also id. at 786. ("The committee can properly act for the corporation to move to dismiss derivative litigation that is believed to be detrimental to the corporation's best interest"); see also Agostino v. Hicks, 845 A,2d 1110, 1116 (Del. Ch. 2004) (The "board may appoint a special litigation committee of disinterested directors that may recommend dismissal of the derivative action after a reasonable investigation"). 4 See also Johnson v. Glassman, 950 A.2d 215, 219 (N.J. Super. Ct. App. Div. 2008) (recognizing the "cardinal precept" that "directors, rather than shareholders, manage the business and affairs of a corporation"); Spiegel v. Buntrock, 571 A.2d 767, 773 (Del. 1990) (the "decision to bring a law suit or to refrain from litigating a claim on behalf of a corporation ... are part of the responsibility of the board of directors") (citations omitted).


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430 A.2d at 788.

Delaware law empowers a committee of independent directors to investigate the

allegations in a derivative lawsuit and to take whatever action the committee deems appropriate

in its considered business judgment, including pursuing the action, negotiating a settlement of

the action or moving to terminate the action. See 8 Del. C. § 141(c); Zapata, 430 A.2d at 786

(“The committee can properly act for the corporation to move to dismiss derivative litigation that

is believed to be detrimental to the corporation's best interest.”).5 The authority to appoint a

special litigation committee to investigate derivative claims arises from the fundamental

principle of Delaware law that directors, not stockholders, “manage the business and affairs of

the corporation”. Spiegel v. Buntrock, 571 A.2d 767, 772-73 (Del. 1990). The decision to

pursue, or not pursue, litigation on behalf of the corporation is a decision concerning the

management of corporate business and affairs that is committed to the board of directors. Id. at

773.

Delaware courts review a motion to terminate a derivative suit based on the

determination of a special litigation committee under the two-step analysis established by the

Delaware Supreme Court in Zapata. See 439 A.2d at 788-89. First, the Court must examine the

independence of the committee's members and the process by which the special litigation

committee reached its conclusion. See id. Specifically, the Court must determine whether the

special litigation committee: (i) functioned independently of the parties to the action, (ii) acted in

good faith and conducted a thorough investigation, and (iii) had reasonable bases for its

conclusions. Id. at 788, See also Kindt v. Lund, C.A. No. 17751, Chandler, C., slip op. at 2-3

5 Carlton Invs v. TLC Beatrice Intl. Holdings, Inc.,1997 WL 305829 (Del. Ch. May 30, 1997) (approving settlement of derivative action based on report of special litigation committee); Katell v. Morgan Stanley Group, Inc., C.A. No. 12343, Chandler, V.C. slip op. at 27 (Del. Ch. June 15, 1995) (dismissing derivative action based on report of special litigation committee); Kaplan v. Wyatt, 484 A.2d 501, 519 (Del. Ch. 1984) (same), aff'd, 499 A.2d 1184 (Del. 1985).


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(Del. Ch. Dec. 14, 2001). In making these determinations, the Court employs a standard “akin”

to a motion for summary judgment. Katell, slip op. at 12.

The second step in the Zapata analysis, which is discretionary, permits the Court to apply

its own independent business judgment to decide whether the motion to dismiss the action should

be granted. 430 A.2d at 789. In applying its business judgment, the Court may consider whether

the results of the special litigation committee's investigation satisfy the “spirit” of step one of the

Zapata analysis, as well as matters of law, public policy or good corporate governance. Id. The

second, discretionary step of the Zapata framework is “designed to offer protection for cases in

which, while the court could not consciously determine on the first leg of the analysis that there

was no want of independence or good faith, it nevertheless ‘felt’ that the result reached was

‘irrational' or ‘egregious' or some other such extreme word”. Carlton Invs.,1997 WL 305829 at *2.

The motion should be based on the best interests of the corporation. Kaplan v. Wyatt, 484

A.2d 501, 505 (Del. Ch. 1984) (“The basis of the motion is the best interests of the corporation,

as determined by the committee”). The reviewing court should not be passing on the evidentiary

merits of the plaintiff’s allegations. Kaplan, 484 A.2d at 509.

Where the reviewing court finds that an SLC has shown independence, good faith and

due care in its investigation, and the reasonableness of its conclusions, the motion to dismiss

should be granted. Kaplan v. Wyatt, 499 A.2d 1184, 1191-92 (Del. 1985) (affirming dismissal of

suit on motion of SLC); St. Clair Shore Gen. Emples. Ret. Sys. v. Eibeler, 2008 WL 2941174, at

*7 (S.D.N.Y. July 30, 2008) (dismissing derivative claims where "the SLC has carried its burden

of showing the absence of a triable issue regarding the Committee's independence and good

faith, and the reasonableness of its conclusions").


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A. The WHI SLC Is Independent and Conducted A Good Faith Investigation.

1. The SLC Is Wholly Disinterested and Independent

As set forth in detail in SLC Report at IV (D), SLC members Enrique Gonzalez and

Alberto Baco are disinterested in the claims alleged in the Amended Complaint and independent

of all of the defendants. Gonzalez, who joined the Board on February 25, 2008, is a partner at

Gonzalez & Roig, a certified public accounting firm. Baco, who joined the Board on March 27,

2009, is the President and Chief Executive Officer of Marvel International, Inc. and Bohio

International Corporation. Both companies are middle market manufacturing and distribution

operations, which specialize in branded products. Mr. Baco is also a venture capitalist and real

estate developer. Mr. Baco previously served as the President of Economic Development Bank

of Puerto Rico. Baco and Gonzalez are independent, non-management directors, and did not

serve on the Board during the period when the Company was involved in the Inyx fraud (the

“Inyx Fraud”) that are at issue in the Amended Complaint.

The SLC is Independent: Whether an SLC member is independent is a question of

"impartiality and objectivity" (In re Oracle Corp. Deriv. Litig., 824 A.2d 917,920 (Del. Ch.

2003), and requires a determination whether any of the members are, "for any substantial reason,

incapable of making a decision with only the best interests of the corporation in mind." Id.

(emphasis in original). A special litigation committee is independent if it is in a position to base

its decision on “the merits of the issue rather than being governed by extraneous considerations

or influences”. Kaplan, 499 A.2d at 1189 (citing Aronson v. Lewis, 473 A.2d 805 (Del. 1985);

Katell, slip op. at 13. “[I]t is the care, attention and sense of individual responsibility to the

performance of one's duties that touch on [the] independence” of a special litigation committee.

Kaplan, 499 A.2d at 1189. At bottom, the question of independence turns on whether a director

is, for any substantial reason, incapable of making a decision with only the best interests of the


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corporation in mind. That is, the Supreme Court cases ultimately focus on impartiality and

objectivity. Parfi Holding AB v. Mirror Image Internet, Inc., 794 A.2d 1211, 1232 (Del. Ch.

2001) (footnotes omitted) (emphasis in original), rev'd in part on other grounds, 817 A.2d 149

(Del. 2002), cert. denied, 538 U.S. 1032, 123 S. Ct. 2076, 155 L.Ed.2d 1061 (2003).

Here, there can be no genuine dispute that Mr. Baco and Mr. Gonzalez are independent: 1. The SLC members were appointed to the Board after: (i) the alleged wrongdoing;

(ii) and the commencement of the Derivative Action.

2. Neither of the SLC members has worked for or with any of the individual defendants in the past, with the exception of Mr. Gonzalez’ limited relationship with Mr. Tamboer and Del Rio, as described further below.

3. Neither of the SLC members is dependent upon any of the defendants for employment, or other pecuniary gain, except as indicated in the case of Mr. González’s limited relationship with Mr. Del Rio and Mr. Tamboer.

4. Neither of the SLC members has served on corporate, charitable, or other boards of directors (except for WHI) with any of the defendants.

5. Neither of the SLC members has been involved with charitable or educational institutions to which any of the defendants contribute funds of which they are aware.

6. Neither of the SLC members has a prior personal or social relationship with any of the defendants.

7. Neither of the SLC members made any prior judgments regarding the merits of the Derivative Action.

For these reasons, both Messrs. Baco and Gonzalez, in consultation with counsel, have

concluded that they are independent and financially disinterested from the defendants named in

the Derivative Action, and their conclusions are the product of an unbiased review of the facts

and circumstances alleged in the Derivative Complaint. The SLC members: (i) have no personal

financial stake in the disposition of those claims and (ii) face no personal liability as a result of

those claims because they were not on the Board at the time of the conduct at issue.


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As set forth in detail in the SLC Report IV(D), the members of the SLC are independent.

Before beginning its investigation, the SLC and its counsel considered any and all factors that

would "weigh on the mind of a reasonable special litigation committee member ... in “a way that

generates an unacceptable risk of bias." Oracle, 824 A.2d at 947; id. at 938-39 ("[A] director

'may be compromised if he is beholden to an interested person. Beholden in this sense does not

mean just owing in the financial sense, it can also flow out of ‘personal or other relationships' to

the interested party"); Katell, 1995 WL 376952, at *8 (“When a special committee's members

have no personal interest in the disputed transactions, this Court scrutinizes the members'

relationship with the interested directors"). No such matters exist here. The SLC members had

no relationship or personal contacts with the defendants prior to joining the Board, and the

Amended Complaint alleges none.

The SLC and its counsel have identified only two ties, both commercial, between the

named defendants and the SLC members, as follow (and as outlined in the SLC Report at IV(D):

1. Enrique Gonzalez: Among other clients, Mr. González’s firm provides audit and tax services to Prota Construction, and Tamrio, Inc. These two companies were owned and operated by Cornelius Tamboer and Hector del Rio, respectively, who are both independent members of the WHI Board of Directors and are defendants in the derivative lawsuit. Presently, Tamrio, Inc. is no longer affiliated with Mr. Tamboer, as he sold all of his remaining shares in Tamrio Inc., to Mr. del Rio.

2. Alberto Baco: Mr. Bacó has a 40% ownership interest in Desarrollos Car y Al 2004, Inc. (“Desarrollos”) and is its President and Secretary. Mr. Bacó and Desarrollos are customers of, and have had transactions with, the Bank, in the ordinary course of the Bank’s business and the Bank expects to have banking transactions with each in the future. These transactions include a line of credit of $6,655,000 extended by the Bank to Desarrollos. Since the beginning of the Company’s 2008 fiscal year, the largest aggregate amount of principal outstanding at any time on the line of credit was $6,451,238. As of December 31, 2008 and September 30, 2009, $2,962,818 and $2,350,052, respectively, was outstanding on this line of credit. Desarrollos paid $3,614,481 and $292,271 in principal and interest payments, respectively, during the Company’s 2008 fiscal year, and $697,918 and $96,569 in principal and interest payments, respectively, since the beginning of 2009 fiscal year. The interest rate payable on monies borrowed under the line of credit is 5.50%. All loans and commitments to lend


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pursuant to the aforementioned line of credit were made in the ordinary course of business and on substantially the same terms, including interest rates, collateral and repayment schedules, as those prevailing for comparable transactions with other persons of similar creditworthiness and did not involve more than a normal risk of collectability nor contain terms unfavorable to the Bank.

SLC Report at IV(B)(1)(a-b)

Delaware is very clear in holding that professional or business relationships with

defendants will not automatically disqualify special litigation members as lacking independence.

In Katell v. Morgan Stanley Group, Inc., 1995 WL 376952 (Del. Ch. June 15, 1995), Morgan

Stanley and Cigna Corporation had created a limited partnership to identify and invest in

business opportunities. After the partnership soured and litigation commenced, CIGNA LCF, a

wholly owned subsidiary of CIGNA and a general partner in the venture (and named defendant),

was named the sole member of the special litigation committee. Id. at *5. As the special

committee, CIGNA LCF investigated plaintiffs’ claims and determined that they should be

dismissed. Id. Plaintiffs challenged the independence of CIGNA LCF principally on grounds

that CIGNA, its parent, had long-standing business ties to Morgan Stanley, also a named

defendant. Id. at *7. In analyzing independence, the Delaware court concluded that the business

relationship between CIGNA and Morgan Stanley consisted of arms-length trading relationships.

Id. at *8. In a lengthy factual analysis of that relationship, the court concluded that the special

committee had provided “sufficient evidence of CIGNA LCF’s independence” and that the

“procedure created in Zapata [was] very fact specific. Id. The court ultimately held that,

notwithstanding their long business relationships, CIGNA LCF was indeed independent and

could serve on the special committee. Id. at *8-9. See also Kaplan v. Wyatt, 484 A.2d 501 (Del.

Ch. 1984).

To render a credible decision about the shareholder litigation, however, the Committee

must meet rigorous independence criteria in both appearance and fact. After discussions with


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counsel regarding recent judicial interpretations on independence, Mr. Gonzalez decided to

recuse himself from any question regarding the appearance of his independence in order not to

compromise the Committee’s important work with respect to Mr. Tamboer and Mr. Del Rio.

However, Mr. González is clearly independent with respect to all other defendants, and will

continue to provide his services to the SLC with respect to evaluating claims on all other named

defendants. The other SLC member, Mr. Baco, who is clearly independent with respect to the

named defendants in their entirety, will evaluate all claims with respect to Mr. del Rio and Mr.

Tamboer, as well as the rest of the named defendants.

It is clear from the applicable case law, that what is needed is more than mere conjecture,

but sufficient, competent evidence of the inability of the WHI Special Committee’s members to

independently serve on the committee. Both Mr. Baco’s relationship with Westernbank and Mr.

Gonzalez’ audit relationship with companies owned by named Defendants are completely arms-

length and non-personal in nature. The record is devoid of any facts suggesting otherwise.

Because none of the SLC members have, or had, any personal, professional or other relationship

to any interested party that would compromise their independence, there can be no credible

challenge to the SLC's independence.

2. The SLC Acted in Good Faith and Conducted a Reasonable Investigation

Under Delaware law, the SLC must also demonstrate that (1) its members were

independent; (2) that they acted in good faith; and (3) that they had reasonable bases for their

recommendations. In re Oracle Corp. Derivative Litigation, 824 A.2d 917 (Del. Ch. 2003)

citing Zapata, 430 A.2d at 788-89; Katell v. Morgan Stanley Group, 1995 WL 376952, at *5

(Del. Ch. June 15, 1995).


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Delaware’s test for good faith and reasonableness of the Investigation is clearly

articulated by Kaplan, 484 A.2d at 519:

[W]hat the committee did or did not do, and the actual existence of the documents and persons purportedly examined by it, should constitute the factual record on which the decision as to the independence and good faith of the Committee, and the adequacy of its investigation in light of the derivative charges, must be based…[I]t is the conduct and activity of the Special Litigation Committee in making its evaluation of the factual allegations and contentions contained in the plaintiff’s complaint which provide the measure for the Committee’s independence, good faith, and investigatory thoroughness. This is because it is the Special Litigation Committee which is under examination at this first-step stage of the proceedings, and not the merits of the plaintiff’s cause of action.

Here, the SLC's investigation far exceeds the standard set forth by Delaware. With the

assistance of counsel, the SLC conducted a detailed and thorough factual and legal investigation

to determine whether it is in the best interests of the Company to pursue the claims asserted in

the Amended Complaint.

The SLC and its counsel reviewed over 750,000 pages of documents and conducted 39

interviews of 33 witnesses, including interviews of (i) every named defendant except Jose

Biaggi, (ii) other current and former WHI and Westernbank officers and employees; and (iii)

other interested parties. Nor do any other factors that have been found to disable SLCs, such as

prejudgment of the issue, exist here. See, e.g., Biondi v. Scrushy, 820 A.2d 1148, 1166 (Del. Ch.

2003) (rejecting independence where the HealthSouth: SLC Chairman "publicly and prematurely

issued statements exculpating one of the key company insiders whose conduct [was] supposed to

be impartially investigated by the SLC"), aff'd, 847 A.2d 1121 (Del. 2004);

Even though it is perfectly appropriate for the SLC members to rely on counsel to lead

the investigation, the SLC members (i) personally participated in many interviews of current and

former Westernbank and WHI directors, officers, employees, and advisors, (ii) reviewed key


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documents, (iii) participated in 33 in-person meetings and teleconferences, including 2 days of

deliberations concerning the claims, and (iv) reviewed and revised the more than 230, mostly

single-spaced pages of the SLC Report. Carlton Invs v. TLC Beatrice Intl. Holdings, Inc., 1997

WL 305829, at *12 (Del. Ch. May 30, 1997) ("While the directors bear ultimate responsibility

for making informed judgments, good faith reliance by a SLC on independent, competent

counsel to assist thee SLC in investigating claims is legally acceptable, practical and often

necessary"). The SLC members directed the scope and depth of the investigation in all respects.

See SLC Report at V.

The SLC investigated every claim set forth in the Amended Complaint and directed the

interviews of all available witnesses that it concluded were appropriate.6 The good faith of the

SLC is further demonstrated by the thoroughness of its investigation, which explored facts and

claims far beyond those alleged in the Amended Complaint, and by the SLC Report itself. 7

Finally, during the course of its investigation, the SLC made a good faith effort to consult

with Lead Counsel. SLC counsel and an SLC member, Enrique Gonzalez, met with Lead

Counsel on one occasion, an all-day conference on Miami, Florida on September 16, 2009.

Additionally, the SLC held numerous telephone conferences with Lead Counsel throughout the

6 See Kindt, 2003 WL 21453879 at *3 (good faith and thorough investigation found on the basis of five month investigation by SLC during which "twenty-six persons were interviewed and 50,000 pages of documents were reviewed”); St. Clair, 2008, WL 2941174, at *14-15 (finding good faith where SLC conducted "extensive interviews of key witnesses" and "thoroughly evaluate[d] [plaintiffs] substantive claims"); Strougo v. Bassini, 112 F. Supp. 2d 355, 366 (S.D.N.Y. 2000) (finding "SLC pursued its investigation in a thorough and diligent manner. From June through December 1998, the SLC interviewed 11 witnesses and conducted a comprehensive review of approximately 36,000 pages of documents"). 7 See Kaplan, 484 A.2d at 519-20 (finding that the SLC "acted in good faith" where "report of the Committee appears to be comprehensive and well documented and gives indication of a reasonable and thorough investigation of plaintiffs allegations"), aff’d, 499 A.2d 1184 (Del. 1985); Kindt, 2003 WL 21453879, at *4 (good faith demonstrated where SLC's investigation was "thoughtful and thorough" and "rooted out additional facts not even alleged by plaintiff'); Kaplan, 499 A.2d at 1191 ("a detailed report which was over 150 pages in length" and "examined all of the allegations set forth in [the derivative] complaint" constituted an ample basis to grant the motion to dismiss).


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investigation and SLC members also met directly with Lead Counsel. The SLC sought Lead

Counsel's views on the scope of the inquiry conducted by the SLC at both the in-person meeting

and at the telephonic conferences. The wide-ranging and thorough investigation conducted by

the SLC is more than reasonable under Delaware law. See PSE&G, 801 A.2d at 316-318

(affirming dismissal in demand refused case where law firm employed by Board reviewed "over

43,000 pages of documentation" and "interviewed dozens of witnesses"). Accordingly, there can

be no credible challenge to the scope, depth, and reasonableness of the SLC's investigation.

3. The SLC’s Conclusions are Reasonable

Finally, the SLC must demonstrate that its conclusions are reasonable, and Delaware law

clearly articulates the requirements:

The motion must be supported by a thorough written record. The written record must speak to three separate elements, namely, 1) the investigation made by the Committee; 2) the findings of the Committee, and 3) the recommendation of the Committee…[and will be accepted by the court when] the report of the Committee appears to be comprehensive and well documented and gives indication of a reasonable and thorough investigation of the plaintiff’s allegations.

Kaplan, 484 A. 2d at 519.

Other courts have noted that an SLC must demonstrate that its conclusions are

reasonable, taking into account “all relevant justifications for…[the] determination, including the

seriousness and weight of the plaintiff[s]’ allegations.” In re PSE&G Shareholder Litig., 801

A.2d 295, 318 (N.J. 2002). Those justifications include not only the relative factual and legal

merits of the claims asserted, but also whether pursuing litigation is in the best interests of the

Company, taking into account, among other things, "the possible financial burden on the

corporation compared with the litigation costs ... the extent to which dismissal will permit the

defendants to retain improper benefits and . . . the effect continuing the litigation will have on the

corporation's business reputation and good will." In re PSE & G Shareholder Litig., 718 A.2d


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254, 258 (N.J. Super. Ct. Ch. Div. 1998) (quoting Lewis v. Boyd, 838 S.W.2d 215, 224 (Tenn.

Ct. App. 1992) and citing Houle v. Low, 556 N.E.2d 51, 58 (Mass. 1990). 8 The SLC respectfully

submits that its conclusions are reasonable and should be affirmed.

Overview of Claims: As described at length in the SLC Report, the claims alleged in the

Amended Complaint arise principally as a result of WHI’s restatement of its financial statements

for the periods between October 2005 and December 2007. The restatement was necessary due

to a structured fraud perpetrated by a significant loan client of the Westernbank Business Credit

division, namely Inyx, Inc. The restatement, caused by a massive structured fraud perpetrated

by Inyx, caused a significant impairment of the loan, requiring the restatement of the Bank’s

financials, starting from the fourth quarter of 2005 through December 31, 2007.

At its core, the Amended Complaint alleges that the defendants breached their fiduciary

duties of loyalty and care by failing to properly oversee and monitor the Inyx loan. In addition,

the Amended Complaint sets forth several ancillary claims, which allege that the defendants

violated Sarbanes Oxley, committed waste of corporate assets, were unjustly enriched and

violated Puerto Rico law regarding the publication of false financial statements. See Am. Compl.

¶¶ 88-111.

As discussed above, the SLC vigorously and exhaustively investigated these claims.

Because there is no adequate way, in this Memorandum, to convey the range of conduct it

examined, the SLC respectfully refers the Court to the factual findings and analysis found in its

Report (see SLC Report IV-VIII). However, the SLC provides here a brief overview of the most

salient facts and conclusions supporting the SLC's determination, in the exercise of its business

judgment, to seek dismissal of the Amended Complaint in its entirety.

8 See also Houle, 556 N .E.2d at 59 (citing the following factors: ( 1) the likelihood of a judgment in plaintiffs favor; (2) the expected recovery as compared to out-of-pocket costs; (3) whether the corporation itself took corrective action; (4) whether the balance of corporate interests warrants dismissal; and (5) whether dismissal would allow any defendant who has control of the corporation to retain a significant improper benefit") (citation omitted).


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Breach of Fiduciary Duty: The SLC concluded that the Defendants did not breach their

fiduciary duties of care, loyalty, reasonable inquiry, oversight, good faith and supervision by

approving and disbursing asset-based loans to Inyx. In support of this claim (Count II), the

Amended Complaint alleges that the Defendants ignored numerous red flags that indicated the

lack of oversight at WHI and that this failure caused serious damage to the Company.

However, Plaintiff does not identify any of the “red flags” in spite of allegations that the Board

and its officers knew of these flags. Plaintiff further asserts – again without any supporting

factual allegations – that the Director Defendants and officers failed to have in place sufficient

internal controls and procedures to monitor WBC’s practices. As is discussed below, the SLC

has determined that the Board of Directors and officers of WHI exercised legally sufficient

oversight, and as such, did not breach their duty under Delaware law during the periods in

question.

To establish a failure of oversight, a plaintiff must show “either (1) that the directors

knew or (2) should have known that violations of law were occurring and, in either event, (3)

that the directors took no steps in a good faith effort to prevent or remedy that situation, and (4)

that such failure proximately resulted in the losses complained of.” Caremark, 698 A.2d at 971

(emphasis added); see also Saito v. McCall, 2004 WL 3029876, at *6 (Del. Ch. Dec. 20, 2004).

This test can be satisfied by showing either that: (i) “the directors utterly failed to

implement any reporting or information system or controls,” or “having implemented such a

system or controls, consciously failed to monitor or oversee its operations thus disabling

themselves from being informed of risks or problems requiring their attention”; or (ii) that the

directors “had notice of serious misconduct and simply failed to investigate,” i.e., intentionally

ignored “red flags.” Stone II, 911 A.2d at 370; Shaev, 2006 WL 391931, at *5 (“a Caremark


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plaintiff can plead that ‘the directors were conscious of the fact that they were not doing their

jobs,’ and that they ignored ‘red flags’ indicating misconduct in defiance of their duties”).

The duty of oversight does not require directors and officers to possess detailed

information about all operational aspects of a business. See Caremark, 698 A.2d at 971. Rather,

directors must “attempt in good faith to assure that corporate information and reporting system,

which the board concludes is adequate, exists, and that failure to do so under some circumstances

may, in theory at least, render a director liable for losses caused by non-compliance with

applicable legal standards.” Id. at 970; see also Shaev, 2006 WL 391931, at *5. However, “only

a sustained or systematic failure of the board to exercise oversight – such as an utter failure to

attempt to assure a reasonable information and reporting system exists – will establish the lack of

good faith that is a necessary condition to liability.” Caremark, 698 A.2d at 971 (emphasis

added); see also Halpert, 2007 WL 486561, at *5 (citation omitted); Stone II, 911 A.2d at 369

(affirming the standard for oversight liability articulated in Caremark).

As noted above, to render directors and officers liable for a failure to implement

adequate information systems and controls, the directors’ failure must amount to bad faith,

meaning that the failure to act was intentional. See Stone II, 911 A.2d at 370 (“a showing of bad

faith conduct, in the sense described in Disney and Caremark, is essential to establish director

oversight liability”); Disney IV, 907 A.2d at 755 (“Upon long and careful consideration, I am of

the opinion that the concept of intentional dereliction of duty, a conscious disregard for one’s

responsibilities, is an appropriate (although not the only) standard for determining whether

fiduciaries have acted in good faith”) (emphasis in original). There is no legal formula

prescribing the steps directors must take to ensure that a company has in place reasonable

information and reporting systems

Whether the reporting systems actually worked is not the test. Indeed, in a recent


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decision, the Delaware Supreme Court explicitly rejected an attempt to “equate a bad outcome

with bad faith” in the oversight context. Stone II, 911 A.2d at 373. In that case, certain

employees of AmSouth Bancorporation failed to file Suspicious Activity Reports (“SARs”), as

required under federal law, in connection with a customer’s establishment of custodial accounts

that were then used by the customer in a criminal scheme. See id. at 365. AmSouth ultimately

became the subject of a federal criminal investigation because of the failure of its employees to

file SARs. See id. at 366. In addition, the Federal Reserve and Alabama Banking Department

issued an order requiring AmSouth to, among other things, engage an independent consultant to

review its compliance programs and make recommendations “for new policies and procedures to

be implemented by the Bank”.

To determine whether adequate internal controls (and oversight) existed related to WBC,

the SLC reviewed: a) whether internal control procedures related to the issuance of new loans at

WBC existed, b) whether internal controls related to loan impairment and monitoring at WHI

and WBC existed, and c) whether committee approval of loans and overall board review at both

WHI and WBC existed. The SLC has determined that such controls did exist, but were

subverted and undermined through collusion and organized fraud from the members of the WBC

division, namely, its President, Mr. Mike Vazquez. See SLC Report at IX (2).

The SLC also found that WHI Audit Committee approval of loans and Board Review

existed. The WHI Board established a duly-constituted Audit Committee, which met at regular

intervals throughout the fiscal year. In preparation for such meetings, WHI management

typically provided the Audit Committee members with written materials regarding WHI’s

financial results. Specifically, the WHI Audit Committee held 5 meetings in 2005, 6 in 2007,

and 11 in 2007.

The Audit Committee consisted of 4 Directors: Hector Del Rio, Cornelius Tamboer,


19

Cesar Ruiz and Juan Carlos Frontera. At its meetings, the Audit Committee met independently

with WHI’s outside auditors, without the presence of management. The Audit Committee also

received and reviewed annual management letters from WHI’s outside auditors presenting the

results of their audit for each year. The head of Internal Audit attended each Audit Committee

meeting and reported to the Audit Committee on the scope and results of its work. In connection

with its receipt of management letters from its auditors, the Audit Committee received the

credentials of, and a description of audit responsibilities for, each of the employees who worked

in the Internal Audit department.

In addition, there were information and reporting systems in place to ensure that the

entire Board received an appropriate level of information. Specifically, the Board held the 12

meetings in each year, 200 through 2007.

In preparation for such meetings, WHI management typically provided Board members

with written materials, on a monthly and quarterly basis, regarding WHI’s financial results. The

Board also received memoranda from Mr. Aurelio Emanuelli, WHI’s General Counsel,

informing the Board of, or updating the Board on, certain material legal events at the Company.

The Board often reviewed additional materials, such as PowerPoint presentations regarding

WHI’s quarterly results and draft press releases announcing those results. Generally, WHI’s

CFO, General Counsel, and outside corporate counsel attended these meetings in order to present

to the Board and answer any questions that arose.

Because WHI’s Board had these reporting mechanisms in place, to both the Audit

Committee and full Board, the SLC has concluded that the Director Defendants exercised legally

sufficient oversight at WHI, and, as such, did not breach their duty of oversight9 under Delaware

9 The SLC concluded that the SCC and Board did not have correct and timely information regarding the status of the Inyx loans when they approved additional advances, and, therefore, these approvals, based on the information reasonably known or available to the officers and directors, are protected by the Business Judgment Rule. See


20

law10. An “unintended adverse outcome” is not a sufficient basis for a claim (Shaev, 2006 WL

391931, at *5), and, therefore, the SLC seeks to dismiss this claim.

The SLC found that the Inyx loan failure was a direct result of WBC’s executives’ and

officers’ subversion of the internal controls and processes. Mr. Vazquez directed the subversion

of these controls at virtually every turn, and was able to exercise complete authority over WBC,

even after the Inyx loans had been exposed to senior WHI officers and directors.

The first element of Stone II’s director oversight test is whether “the directors utterly

failed to implement any reporting or information system or controls,” or “having implemented

such a system or controls, consciously failed to monitor or oversee its operations thus disabling

themselves from being informed of risks or problems requiring their attention”. Stone II, 911

A.2d at 370. The First Circuit has, notably, already provided guidance regarding this element in

In re Sonus Networks, Inc., 499 F.3d 47 (1st CA 2007) to which this Court has cited to in its

Opinion on Defendant’s Motion to Dismiss. The legal test is not whether the controls worked. In

re Sonus Networks, Inc., 499 F.3d at 70-71.

The SLC believes that the conclusions reached in In Re Sonus Networks, Inc., regarding

director and officer oversight apply equally to this case. The SLC has concluded that extensive

internal controls existed over: 1) loan initiation and monitoring at WBC; 2) loan impairment and

valuation at both WBC and WHI; 3) and board, committee and officer supervision of WBC. As

demonstrated above, the Inyx loan failures were caused by a structured and sophisticated fraud

Brehm v. Eisner, 746 A.2d 244, 259 (Del. 2000) (“in making business decisions, directors must consider all material information reasonably available”); Aronson, 473 A.2d at 812 (“directors have a duty to inform themselves, prior to making a business decision, of all material information reasonably available to them”). 10 See Shaev, 2006 WL 391931, at *5 (dismissing a Caremark claim where there is merely a “bald allegation that directors bear liability where a concededly well constituted oversight mechanism, having received no specific indications of misconduct, failed to discover fraud”); Guttman, 823 A.2d at 498 (dismissing complaint where it failed to address “whether the company had an audit committee during [the contested period], how often and how long it met, who advised the committee, and whether the committee discussed and approved any of the allegedly improper accounting practices”).


21

perpetrated by high-level officers of Inyx, and subversion of WHI’s and WBC’s internal controls

by Mike Vazquez, an officer of WBC. The SLC, therefore, believes that officer and director

oversight was adequate and substantial.

For a “failure to investigate” claim to succeed, there must be “specific red-or even

yellow-flags” that put the Board on notice of potential misconduct. See Guttman, 823 A.2d at

507. As the Delaware courts have observed, such flags “are only useful when they are either

waved in one’s face or displayed so that they are visible to the careful observer.” In re Citigroup

Inc. Shareholders Litig., 2003 WL 21384599, at *2 (Del. Ch. June 5, 2003); see also Guttman,

823 A.2d at 507 (“the complaint does not plead a single fact suggesting specific red or even

yellow flags were waved at the outside directors”); Rattner, 2003 WL 22284323 at *13 (same).

Under Delaware law, “absent grounds to suspect deception, neither corporate boards nor

senior officers can be charged with wrongdoing simply for assuming the integrity of employees

and the honesty of their dealings on the company’s behalf.” Caremark, 698 A.2d at 969.

Further, once a red flag is “waved” to the Board, for the Board to be liable, the Board must

willfully and intentionally ignore that flag. See Stone I, 2006 WL 302558 at *2 (“[n]or do

plaintiffs point to facts suggesting a conscious decision to take no action in response to red flags.

Without these well-pled allegations, there is no possibility the defendants faced a substantial

likelihood of liability”).

For example, in Stone II, discussed above, the Delaware Supreme Court defined “red

flags” as “facts showing that the board was aware that AmSouth’s internal controls were

inadequate, [and] that these inadequacies would result in illegal activity.” 911 A.2d at 370

(emphasis added). The SLC has concluded that none of the internal control failures highlighted

above were red flags to the Defendants because the officers and board members had no

knowledge of these failures, as highlighted in SLC Report IX(3)(b).


22

Although the SLC has concluded that one flag may have been overlooked (See SLC

Report at IX(3)(c)), under Delaware law, “absent grounds to suspect deception, neither corporate

boards nor senior officers can be charged with wrongdoing simply for assuming the integrity of

employees and the honesty of their dealings on the company’s behalf.” Caremark, 698 A.2d at

969. Further, once a red flag is “waved” to the Board, for the Board to be liable, the Board must

willfully and intentionally ignore that flag. See Stone I, 2006 WL 302558 at *2 (“[n]or do

plaintiffs point to facts suggesting a conscious decision to take no action in response to red flags.

Without these well-pled allegations, there is no possibility the defendants faced a substantial

likelihood of liability”). Given that there was no purposeful disregard of any red flag, the SLC’s

analysis of the additional warnings remains the same: Delaware law requires dismissal of this

claim.

Corporate Waste: Count III of the Amended Complaint alleges that the Defendants are

liable to WHI for corporate waste (i) “by failing to properly consider the interests of the

Company and its public shareholders”; (ii) “by failing to conduct proper supervision, the

Individual Defendants wasted corporate assets by recklessly loaning funds which were not

adequately secured by collateral”, and (iii) “by paying bonuses to certain of its executive officers

and incurring potentially billions of dollars of legal liability and/or legal costs to defend

defendant’s unlawful actions.” See Amended Compl. ¶ 99.

The test for waste under Delaware law is “severe,” and gives officers and directors wide

latitude to exercise business judgment without facing liability for unwise decisions. See, e.g.,

Glazer v. Zapata Corp., 658 A.2d 176, 183 (Del. Ch. 1993) (finding that plaintiff is unlikely to

prove waste under “severe” test, and denying injunction for failure to show probability of

success on the merits). As the Delaware Supreme Court recently reiterated, “[t]o recover on a

claim of corporate waste, the plaintiffs must shoulder the burden of proving that the exchange


23

was ‘so one sided that no business person of ordinary, sound judgment could conclude that the

corporation has received adequate consideration.’” Disney V, 906 A.2d at 74 (quoting Brehm v.

Eisner, 746 A.2d 244, 263 (Del. 2000). The Disney V decision is the legal framework under

which the waste claims alleged in the Amended Complaint must be analyzed. For the reasons

discussed below, including (i) the broad discretion afforded directors in making business

decisions, (ii) the undisputed lack of knowledge of the board of directors and officers concerning

the ongoing conditions of the Inyx loan, and (iii) the lack of evidence suggesting that those

directors acted contrary to WHI’s best interests, the SLC has concluded that there is no corporate

waste and, therefore, seek dismissal of this claim.

Unjust Enrichment: Count IV of the Amended Complaint alleges that all the Defendants

improperly received compensation and benefits from WHI. See Amended Compl. ¶ 102-104.

Plaintiffs allege that these defendants earned benefits and compensation as a result of their

wrongful omissions. Plaintiffs seek disgorgement for the amounts paid as a result of their breach

of their fiduciary duties. See id. ¶ 104. “In determining whether to award a remedy based on

unjust enrichment, courts look for proof of the following elements: (1) an enrichment, (2) an

impoverishment, (3) a relation between the enrichment and impoverishment, (4) the absence of

justification, and (5) the absence of a remedy provided by law.” Triton Construction Company,

Inc., v. Eastern Shore Electrical Services, Inc., 2009 WL 1387115 (Del. Ch. 2009) citing

Fitzgerald, L.P. v. Cantor, 1998 WL 326686 (Del. Ch. 1998).

The SLC has concluded that Plaintiff’s claim for unjust enrichment fails for many

reasons. Chief among these is the failure of most of Triton’s elements. Plaintiff fails to

demonstrate how an enrichment occurred to Defendants or how an impoverishment has occurred

to Plaintiff. Compensation paid was for work performed, and although the Board had inaccurate

information upon which to base its compensation decisions, no impoverishment to WHI


24

occurred, as WHI derived benefit from Defendants material work efforts of Defendants as

executive officers and directors at WHI did, in fact, benefit it. Additionally, Plaintiffs cannot

meet Triton’s “absence of justification” element: Justification for the challenged benefits

occurred nearly every day, when Defendants showed up for work. Lastly, Triton’s test requires

that Plaintiffs demonstrate that they have no adequate remedy at law, a test which Plaintiff also

fails. Plaintiff has an adequate remedy at law: money damages.

Violation of Puerto Rico General Corporation Law: Count V of the Amended

Complaint alleges a claim pursuant to Laws of Puerto Rico, General Corporations Law of 1996,

Chapter 204 Sec. 2727, which reads:

If the directors or officers of any corporation organized in accordance with the laws of the Commonwealth of Puerto Rico knowingly caused the publication of or furnish any false written statement or report with respect to any important matter regarding the condition or business of the corporation, such directors or officers who shall have caused the publication or shall have furnished or approved such report or statement shall each be jointly liable for any loss or damage resulting therefrom.

Count V of the Amended Complaint also alleges that the Defendants caused the

publication of false SEC filings. In reviewing this claim, the SLC found Wadsworth, Inc. v.

Schwarz-Nin, 951 F.Supp. 314 (D. P.R. 1996) to be persuasive. The Plaintiff has not pled facts

that demonstrate that the Defendants knowingly published false financial reports. The SLC has

not been able to find any instance where any Defendant was informed or had knowledge of the

Inyx fraud. The SLC also noted that the Company and the Defendants relied on Deloitte &

Touche for its general and specialized audits. The SLC, therefore, seeks to dismiss this claim.

B. If The Court Determines To Exercise Its Discretion To Apply The Second Step Of Zapata, This Action Should Nonetheless Be Dismissed.

Under Zapata, the Court has discretion to apply its own independent business judgment

to decide whether a motion to dismiss derivative litigation should be granted. In applying this


25

discretionary, second step, the Court may consider the merits of Plaintiff’s claims, as well as

various ethical, commercial, promotional, public relations, employee relations and other

considerations. See Zapata, 430 A.2d at 788. The purpose of this discretionary, second step is to

prevent abuse where the “technical requirements” have been satisfied, but a dismissal

nonetheless appears “irrational” or “egregious.” Katell, slip op. at 26; Carlton Invs., slip op. at 4.

Given the clear and undisputed record of independence and the good faith and reasonableness of

the SLC's investigation and conclusions, there is no reason for this Court to apply the second step

of Zapata. See, e.g., Katell, slip op. at 27.

Nonetheless, if the Court opts to apply the second step of Zapata, the SLC respectfully

submits that the Court should concur with the conclusions set forth in the SLC's Report. The

Special Committee based its determination on the absence of any factual support for many of

Plaintiff's allegations, and its conclusion that the claims asserted in the Complaint lack merit.

While the absence of merit to the claims asserted by Plaintiff alone provides a sufficient basis for

the SLC to determine in the exercise of its business judgment that continued prosecution of

meritless claims is not in the best interests of WHI, or its stockholders, the SLC considered other

factors that also counsel in favor of dismissal. Among the other factors the SLC considered were

the potential for indemnification claims by the individual defendants, the diversion of

management time and resources associated with continuing prosecution of meritless claims, and

a variety of direct and indirect uninsured costs that would be borne by WHI, including the effect

of continuing litigation on the Company's reputation with its distributors and clientele. See

Report 141-42. This action, accordingly, should be dismissed.

IV. CONCLUSION

Throughout its exhaustive and independent investigation of the allegations in the

Amended Complaint, the SLC was mindful that its mandate was to determine what courses of


26

action are in the best interests of the Company. The SLC believes, after weighing all the

available information that it has reached conclusions that are truly in the best interests of the

Company and its shareholders, and that dismissal of all the claims is appropriate.

Respectfully Submitted,

/s J. Ramón Rivera Morales J. Ramón Rivera Morales

USDC-PR Bar No.:200701 Jiménez, Graffam & Lausell P.O. Box 366104 San Juan, PR 00936-6104 Tel. 787-767-1030 / Fax 787-751-4068 E-Mail: [email protected]

and

Carlos F. Concepcion Florida Bar No.: 386730

Scott A. Burr Florida Bar No.: 099325

Manuel Rodriguez Florida Bar No.: 0598240

CONCEPCIÓN SEXTON & MARTINEZ 355 Alhambra Circle, Suite 1250 Coral Gables, Florida 33134 Tel.: 305-444-6669 / Fax.: 305-446-3665 E mail: [email protected]

Counsel for Special Litigation Committee of the Board of W Holding Company, Inc.


27

CERTIFICATE OF SERVICE

I hereby certify that on December 15, 2009, I electronically filed the foregoing document

with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being

served this day on all counsel of record identified on the attached Service List via transmission of

Notices of Electronic Filing generated by CM/ECF or in some other authorized manner for those

counsel or parties who are not authorized to receive electronically Notices of Electronic Filing.

Respectfully Submitted,

s/ J. Ramón Rivera Morales

J. RAMON RIVERA MORALES


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SERVICE LIST ORLANDO CABRERA-RODRIGUEZ, ESQ. [email protected] P.O. Box 195386 San Juan, PR 00917-5386 Telephone: (787) 296-1958 Facsimile: (787) 772-4605 PHV JULIA M. WILLIAMS, ESQ. [email protected] PHV MARC M. UMEDA, ESQ. [email protected] PHV STEVEN J. SIMERLEIN, ESQ. [email protected] PHV DAVID L. MARTIN dmartin@ robbinsumeda.com PHV GEORGE C. AGUILAR [email protected] Robbins Umeda & Fink, LLP 600 B Street, Suite 1900 San Diego , CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 Attorneys for Plaintiff Hunter Wylie, Derivatively on Behalf of W Holding Company, Inc.

ANNETTE CORTES-ARCELAY, ESQ. [email protected] ERIC PEREZ-OCHOA, ESQ. [email protected] Adsuar Muniz Goyco Seda & Perez Ochoa PSC P.O. Box 70294 San Juan, PR 00936-8294 Telephone: (787) 447-0632 Telephone: (787) 756-9000 Facsimile: (787) 756-9010 EDELMIRO ANTONIO SALAS-GONZALEZ, ESQ. [email protected] Urb. Villa Nevarez 1072 Calle 17 San Juan , PR 00927 Telephone: (787) 376-4659 Facsimile: (787) 622-6230


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PHV ANDRES RIVERO, ESQ. [email protected] PHV MARIA PAULA AGUILA, ESQ. [email protected] Rivero Mestre & Castro 2525 Ponce de Leon, Blvd. Ste. 1000 Coral Gables , FL 33134 Telephone: (305) 446-2500 Facsimile: (305) 445-2505 PHV GEORGE H. MERNICK, III, ESQ. [email protected] Hogan & Hartson, LLP 555 Thirteen Street, N.W. Washington, DE 20004 Telephone: (202) 637-5600 Facsimile (202)637-5910 PHV JON M. TALOTTA, ESQ. [email protected] PHV N. THOMAS CONNALLY, ESQ. [email protected] Hogan & Hartson, LLP 8300 Greensboro Drive, Suite 1100 McLean, VA 22102 Telephone: (703) 610-6100 Facsimile: (703) 610-6200 PEDRO E. RUIZ-MELENDEZ, ESQ. [email protected] Pedro E. Ruiz Law Office, PSC PO Box 190879 San Juan , PR 00919-0879 Telephone: (787) 622-6232 Facsimile: (787) 622-6230 Attorneys for Defendants Frank C. Stipes, Pedro R. Dominguez, Freddy Perez-Maldonado, Norberto Rivera, Ramon Rosado, Cesar A. Ruiz, Cornelius Tamboer, Hector L. Del-Rio, Juan C. Frontera, Ricardo Hernandez


Case 3:08 Cv 01036 Gag Bjm

Documents

amended complaint

slc report

delaware law

case law of puerto rico

puerto rican law

law of corporations

delaware substantive

incorpoated memorandum