# Opposition Brief — Shoen v. Shoen > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1250%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1998 - **Citation:** 525 U.S. 923 ## Text Supreme Court, U.S. No. 98-86 FILED In The Supreme Court of the An oe October Term, 1997 EDWARD J. SHOEN, Petitioner. SAMUEL W. SHOEN, CECILIA M. SHOEN-HANLON, THERESA SHOEN-ROMERO, KATRINA M. SHOEN- CARLSON, MICHAEL L. SHOEN, LEONARD S. SHOEN, SAMWILL, INC., CEMAR, INC., KATTYDID, INC., THERMAR, INC., MICKL, INC. and L.S.S., INC., Respondents. On Petition for Writ of Certiorari to the Arizona Court of Appeals RESPONDENTS’ BRIEF IN OPPOSITION WALTER GILMORE “GIL” SHAW KATHLEEN COUGHENOUR ANGELO PATANE Counsel of Record SHAW & PATANE KATHLEEN COUGHENOUR 1432 North Seventh Street LAW OFFICE Phoenix, Arizona 85006 4220 West Northern Avenue (602) 257-0058 Suite 115 Phoenix, Arizona 85051-5757 (602) 934-6563 Attorneys for Respondents 148027 (800) 274-3321 * (800) 359-6859 COUNSEL PRESS QUESTIONS PRESENTED 1. Does imposition of punitive damages on one member of a board of directors who acted with particular malice, and who caused other directors to take actions that constituted breaches of fiduciary duty by the entire board, comply with the Due Process Clause of the Fourteenth Amendment to the United States Constitution? 2. Does imposition of punitive damages against defendant based upon the motives underlying conduct, when proven by clear and convincing evidence, comply with the Due Process Clause of the Fourteenth Amendment to the United States Constitution? 3. Has petitioner waived his right to bring a challenge to the punitive damage award under the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, by failing to raise that challenge in the trial court or before the Arizona Court of Appeals? 4. If petitioner has not waived his right to bring an equal protection challenge, does the award of punitive damages imposed on him, based on tortious conduct motivated by malice and a particular motive to injure respondents, comply with the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. il PARTIES TO THE PROCEEDING AND RULE 29.6 STAT®MENT Petitioner Edward J. (“Joe”) Shoen was petitioner/cross- respondent before the Arizona Supreme Court, appellant/cross- appellee before the Arizona Court of Appeals, and defendant before the Arizona Superior Court in Maricopa County. Respondents Samuel W. Shoen, Cecilia M. Shoen-Hanlon, Theresa Shoen-Romero, Katrina M. Shoen-Carlson, Michael L. Shoen, Leonard S. Shoen, Samwill, Inc., Cemar, Inc., Kattydid, Inc., Thermar, Inc., Mickl, Inc., and L.S.S., Inc., were respondents/cross-petitioners before the Arizona Supreme Court, appellees/cross-appellants before the Arizona Court of Appeals, and plaintiffs before the Arizona Superior Court in Maricopa County. Each corporation named above has no parent companies, nor does any corporation named above have any ownership interest in any nonwholly owned subsidiary. ili TABLE OF CONTENTS EE er ee Parties to the Proceeding and Rule 29.6 Statement ... a eS sae be ken eeen ieee aenee essen wie bash aoe ks Reasons for Denying the Writ ............seceeees I. The Decisions Of The Arizona Courts, And Their Application Of Nevada Law, Are Completely Consistent With This Court’s Rulings On Punitive Damages, And Do Not Require Review. ...... A. The Law Applied by the Trial Court Provided Adequate Protection for the Due Process ge ae ee l. The award in this case is not constitutionally infirm as a deprivation OEE MOORS, oc cee css cesses Nothing in Nevada law prohibits holding one joint tortfeasor liable for punitive damages even when others are not similarly liable, when such liability is justified by the facts of a particular Page il ill 1] 13 iv Table of Cited Authorities 3. The evidence before the trial court established a causal nexus between Joe’s malicious conduct and the harm suffered by the respondents. ........ Joe Shoen Did Not Adequately Raise an Equal Protection Argument Below, and Is Barred from First Raising Such an Argument ae ee mere! Sag Cpe ee Even If the Equal Protection Challenge Had Been Timely Raised, the Award in this Case Did Not Deprive Joe Shoen of the Equal Protection of the Laws Applied. ........ BRE eer rer, were Age eaaperd Si nostn tener ay TABLE OF CITED AUTHORITIES Cases Cited: Bankers Life & Casualty Co. v. Crenshaw, 486 U.S. 7i (1988) ee er ee Oe ee ee ee a ee ee ee ee ee ee ee oe ee ee eo a ee ee BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) .. Coughlin v. Tailhook Ass'n, 112 F.3d 1052 (9" Cir. 1997) oe ee i es a em ee oe ee ee ee ee oe kr ee ee ee ee bee Granite Constr. Co. v. Rhyne, 817 P.2d 711 (Nev. 1991) 26:60 9 Ce. 68 £42 8S Oe 6.264 2 6S Oo . OS: Oe 6'8 6.0 2S 4:51) 30 Page 18 19 19 15 Table of Cited Authorities Page Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415 (1994) ; She's se xa Ae COP RES RAR DOG REED ee ewe eet 13 Hotel Riviera, Inc. v. Short, 396 P.2d 855 (Nev. 1964) Eee w kb AOC RAG ee a ee ke 16, 17 Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1 SPOR es i dee 8 Rone PASE a 12, 13 TXO Production Corp. v. Alliance Resources Corp., 509 Rea SG LOE: 5-05 ws Al wa oe ee es Beene 13 Statutes Cited: Pe Se a Se EE hey caves es ke eee eau xs 15 Pee Bec es ae EES 0 16 kao adobe crests 14 United States Constitution Cited: POTOSONE AATMONOINOR cook i koa ee dawn Winns eee A, 12, 13 Rule Cited: United States Supreme Court Rule 10 .............. 4 Other Authority Cited: Annot., Apportionment of Punitive or Exemplary Damages as Between Joint Tortfeasors, 20 A.L.R.3d Se RRO Wirthdin co 4 sh a BAA ea ess 15, 16 vi APPENDIX Page Appendix A — Transcript Of Proceedings .......... la Appendix B — Defendant Edward J. Shoen’s Motion For Judgment Notwithstanding The Verdict Or, Alternatively, For Remittitur Of Punitive Damages Dated Octolet: 2ay Te ice yeaa chika e eens 164a Appendix C — Appellant’s Opening Brief Dated November 20, SFRO svikis teak ev chee eaenenaiws 183a ] Respondents Samuel W. Shoen, Cecilia M. Shoen-Hanlon, Theresa Shoen-Romero, Katrina M. Shoen-Carlson, Michael L. Shoen, Leonard S. Shoen, Sarwill, Inc., Cemar, Inc. Kattydid, Inc., Thermar, Inc., Mickl, Inc., and L.S.S., Inc. respond in opposition to the Petition for a Writ of Certiorari submitted by Petitioner Edward J. (“Joe” Shoen), and request that the court deny certiorari. STATEMENT OF THE CASE Introduction. In his Petition for a Writ of Certiorari, Petitioner Edward Joseph (“Joe”) Shoen repeats the same tactics he has already found unsuccessful before the Arizona courts — to rely on a 1988 opinion dealing with an appeal of a very limited four-day preliminary injunction hearing, rather than acknowledging the substantial and significant additional evidence presented during a seven-week trial some six years later. According to Joe, his liability in this case is premised on certain limited collective actions of the Board of Directors and, as a result, an award of punitive damages against him alone cannot be justified under the law of Nevada, which all parties concede applies in this case. Joe disregards the facts that were the basis for the jury's finding that he breached his fiduciary duty to Respondents. The only issue appealed in this case was the punitive damage award. Joe Shoen’s breach of fiduciary duty, and the amount of compensatory damages, thus were conclusively established in the trial court. The trial court, and the Arizona Court of Appeals, properly applied the law of Nevada to all the facts presented, including those facts discovered by the plaintiffs after the 1988 - preliminary injunction application. They correctly concluded that those facts more than adequately justify an award of punitive damages against Joe Shoen. Nothing in Joe’s Petition compels a contrary conclusion, or justifies a grant of review by this Court. 2 Facts. The facts set out by Petitioner are incomplete, at best. The events of July 24, 1988, while a substantial factor in the suit against the AMERCO Board of Directors, were not the only bases for plaintiffs’ claims against the Board, or against Joe Shoen. Those events began years earlier, and continued for years thereafter, as discussed in the opinion of the Arizona Court of Appeals (Appendix A to Petition, at 2a-9a). The events of July 24 and 25, 1988 followed a shareholders’ advisory meeting at which liquidity options for family members were discussed. At that meeting, Joe Shoen physically assaulted his brother Sam, who became one of the plaintiffs who brought the suit against the Board. This assault effectively broke up the meeting. Reporter’s Transcript of Proceedings, September 1, 1994, 1:30 p.m., pages 59-60 (hereinafter, e.g., 9/1/94 p.m. 59-60) (cited portions of the trial transcript are included in Appendix A to this Brief). A week later, while respondents were in New York exploring liquidity options for their AMERCO stock, Joe hastily called a Board of Directors’ meeting for 9:00 p.m. on Sunday, July 24, 1988. 8/31/94 p.m. 52. Testimony from other directors made it clear they relied almost exclusively on information provided by Joe Shoen regarding the activities of the dissident family members — information that Joe characterized as fact, but for which he never revealed his “confidential” source. 9/29/94 p.m. 33-34; 10/4/94 p.m. 82-85; 9/15/94 a.m. 32-33, ats At trial six years later, Joe finally revealed his purported source for this “privileged” and “confidential” information. According to Joe, his information that the dissenting family members were engaged in an imminent sale of the company to a corporate raider came from a tape recording delivered to him at his office, after business hours, by a mystery woman he had never seen before or since. According to Joe, this purported SS ee 3 tape contained a conversation between his brother, Sam, and Sam’s attorney, David Victor, discussing plans regarding AMERCO. Joe claimed he listened to the tape, allegedly played it for his brother Mark (who did not testify at trial), and then destroyed it. At trial, Joe acknowledged that, until a few days before his testimony, he had never revealed the existence of this purported tape, even to his own attorneys. He had not told the other directors the alleged source of itis information, but had told them he knew for a fact that the information he had given them was true. 9/28/94 a.m. 10-23; see also 9/27/94 p.m. 52, 66-71. Joe thus convinced the Board that the “dissident” family members (who became the plaintiffs in the suit against the AMERCO Board members) were bent on breaking up the company and selling it off. Paul Bilzerian, a notorious corporate takeover advisor in the 1980’s, was consistently placed at the center of Joe’s scenario of what was in store for AMERCO. 9/29/94 p.m. 33-34. At trial, however, Joe admitted that the only basis for this claim was his knowledge that Sam had once had lunch with Bilzerian, and that Sam and Bilzerian had graduated from Harvard Business School the same year. 10/4/94 p.m. 8-9. Joe also withheld from Jock Patton, the Board’s attorney, the fact that on June 24, just before the Sunday night Board meeting, Joe had formed a voting trust with three brothers and a sister, which would effectively control 45.8% of the company. 9/20/94 a.m. 98, 100, 105-106. He also did not tell non-family- member directors about the voting trust. 9/26/94 a.m. 95, 10/4/94 p.m. 105-106. At approximately midnight on Sunday, July 24, 1988, the Board took the action Joe contends was the sole basis for his liability: it voted to issue AMERCO’s 8,099 authorized but 4 unissued shares to five employees. 8/31/94 p.m. 52. These employees thereupon gave their votes to the Board, which in turn gave the votes to Joe. 9/26/94 p.m. 34-35. Unbeknownst to the Board’s attorney or the non-family-member directors, those shares bootstrapped Joe and his secret voting trust into absolute control of AMERCO, with a bare majority of the voting stock. 8/31/94 p.m. 52-53. Each of the five employees was required by Nevada statute to make a down payment of $162,000. The balance of the $4.3 million purchase price required of each was “secured” by non-recourse promissory notes. 9/20/94 a.m. 77-79; 9/26/94 a.m. 91-93. Because the employees lacked the resources to pay even the down payment, Joe Shoen personally “financed” the down payments from his children’s conservatorship accounts. 8/31/94 p.m. 77, 9/28/94 a.m. 44, Although the July 1988 share issuance began the breaches of fiduciary duty that were the subject of plaintiffs’ claims against the Directors, it was only the foundation of the damages awarded against the Board and Joe Shoen. Further breaches of fiduciary duty continued virtually unabated until the 1994 trial. The wrongs alleged at trial by the plaintiffs included: * Issuing the 8,099 shares to dilute plaintiffs’ then majority so as to give conirol to defendants (8/31/94 p.m. 51-54); * Authorizing dilution stock to retain a future majority (9/7/94 a.m, 89-90): creating an executive stock option program, which could be used to create a new majority (10/3/94 p.m. 20-23): tolling interest on director Dodds’ Stock purchase note to retain a majority (9/7/94 p.m. 42-43); authorizing issuance of new special voting preferred stock, and giving power to determine the amount issued, as well as contro! of the votes of any 5 such stock issued, to Joe Shoen and his employee, Charlie Bayer (9/7/94 p.m. 13-16, 10/4/94 a.m. 32- 33); allowing three family members (Joe, Mark, and Jim Shoen) to exchange common stock for Common Series A, to which can be attached special voting rights (10/3/94 p.m. 15-18); but refusing to adopt a fair price provision recommended by attorney Jock Patton (10/3/94 p.m. 62-64). * Holding shareholders’ meetings in remote locations so as to discourage attendance (9/14/94 a.m. 69-71); conducting a ten-minute shareholder meeting in a remote location, then refusing to accept plaintiffs’ ballots, and instead requiring them to drive at least four hours to locate the nearest open post office before midnight (9/ 12/894 a.m. 48-49); changing procedures to make nominations more difficult (9/7/94 a.m. 86-87); prohibiting electronic or stenographic recording at shareholder meetings (9/7/94 a.m. 84-85, 9/13/94 p.m. 84-85); eliminating voting by written consent (9/7/94 a.m. 87-88); prohibiting write-in ballots when their opponents held a majority, but allowing write-in voting when their opponents were in a minority (9/13/94 p.m. 65-84); misleading a non-family-member shareholder aligned with the plaintiffs that a nomination had been properly made, then declaring the nomination invalid (9/13/94 p.m. 92-97); and pre-electing directors before an annual shareholder meeting (9/26/94 p.m. 39-40, 9/13/94 a.m. 59-60, 9/6/94 p.m. 27-31, 9/13/94 p.m. 65-69, 9/12/94 a.m. 48-49), ¢ Passing oppressive Bylaw provisions, then requiring a “super-majority to amend them (9/7/94 a.m. 89); creating a “poison pill” with a one-way “super-majority” requirement (8/31/94 p.m. 55-57); creating “golden ea 6 parachutes” with the same effect as the “poison pill” (10/3/94 p.m. 31-32); amending the bylaws to require 50% of the shareholders to call a shareholder meeting (Trial Ex. 329) and to require a two-thirds “super- majority” to approve any sale or merger not recommended by the Board (10/3/94 p.m. 22-23); Staggering the terms of the AMERCO Board to delay by three years any transfer of control (9/7/94 a.m. 90- 91), and creating staggered terms for the boards of AMERCO’s three largest subsidiaries, thereby further delaying the time required for a new shareholder majority to obtain actual control of the AMERCO system (10/3/94 p.m. 5-15); amending the Bylaws to give the Chairman (Joe Shoen) two votes (9/7/94 p.m. 10-11); amending the Bylaws so directors could appoint their own replacements and thus bypass a shareholder election (10/3/94 p.m. 30); and reducing the annual meeting quorum requirements to compensate for the loss of two members of Joe’s voting trust (9/7/94 p.m. 11-12); - Establishing an employee stock ownership plan with non-pass-through voting (9/7/94 a.m. 56): appointing defendants and their employees as ESOP trustees (10/3/94 a.m. 38-42, 11-17); causing the ESOP to join Joe Shoen’s voting trust (9/7/94 a.m. 91-93); breaching a federal court settlement by placing the dilution shares into the ESOP, and thereby removing those shares from the state court’s jurisdiction (8/31/94 p.m. 83-86). Taking away plaintiffs’ employment and their life and health insurance (8/31/94 p.m. 67-68, 9/13/94 a.m. 57-58); selectively withholding dividends from plaintiff Sam Shoen, forcing him to sue for payment (8/31/94 p.m. 4-5); invoking the corporation’s right of first 7 refusal to bar plaintiff Michael Shoen from gifting stock (9/7/94 a.m. 93-94), but waiving that right of first refusal for members of Joe Shoen’s voting trust (9/14/94 p.m. (2) 7); accelerating pre-payment of a non- delinquent mortgage owed by Michael Shoen to an AMERCO subsidiary (9/7/94 p.m. 5-6); causing AMERCO to fund Joe Shoen’s personal lawsuits against the plaintiffs (9/7/94 p.m. 12); and causing the corporation to retain and compensate as consultants shareholders who joined defendants’ voting trust (10/3/94 p.m. 23). These acts stood against a backdrop of Joe Shoen’s unique and malicious acts, which were not shared with the other defendants. Joe himself personally terminated his own father’s employment contract, and admitted at trial his father had not breached the contract. L.S.’s health insurance was also terminated, but Joe commented that he wasn’t worried about this, because he understood his father would be eligible for Medicaid. 9/28/94 a.m. 44, 47-54; 8/25/94 p.m. 100-102. At the age of 73, the founding father of AMERCO, having given all but two percent of his stock to his children, thus found himself, as a direct result of Joe’s actions, without a job, without medical insurance, and with minimal financial resources. He was forced to sell his home, buy a modest tract house, and begin several new business to provide himself with income. 8/25/94 p.m. 105-106. Joe, who had assaulted his brother Sam at the June 16 shareholder advisory meeting, assaulted his brother Mike at a subsequent annual shareholder meeting. 9/7/94 a.m. 79-82; 8/31/94 p.m. 93-96, 9/13/94 a.m. 59. Joe alone, of all the directors, testified he was angry with his brother Sam, and believed Sam was out to personally destroy him. 9/27/94 p.m. 45; 9/28/94 p.m. 51-53, 8/25/94 p.m. 29. Joe admitted that his separate personal litigation against his father and his brother 8 Mike was funded by AMERCO. 9/7/94 p.m. 12. In 1989, Joe told attorney Steve Case that he wanted to make life as difficult as possible “under any pretext” for Mike, L.S., Sam, and Mary Anna, in connection with stock reorganization of their holding companies, through which they owned the AMERCO stock, and which companies were also plaintiffs in the litigation. 9/14/94 p.m. (1) 42-45. Joe’s sister Katrina testified about how Joe coddled her over a period of time, frightened her with stories that “Sam wanted to sell the company . . . out from under us,” and provided her such goodies as a free Corvette. 9/1/94 p.m. 31-32, 54. Katrina told the jury about a shareholder meeting Joe enticed her and Theresa to attend, under the guise that their opinions were valuable and needed. As it turned out, Joe only wanted them there to make up a quorum so the shareholders could approve an ESOP. She testified that, after the meeting, Joe celebrated like someone “who just won a major league basebali championship,” and she felt she had been used. At that point, Katrina began to have serious doubts that Joe’s actions in running the company were objective. 9/1/94 p.m. 42-47. Theresa testified about the same event, in essentially the same manner, stating the meeting was called to order as soon as she walked in. She felt she had been “railroaded” to enable Joe and his cronies to pass an ESOP that had been turned down by the majority of the shareholders less than six months before. 9/13/94 a.m. 45-48. Only months before the 1994 trial began, Joe offered Theresa an opportunity to join his voting trust in exchange for liquidity for her stock, but told her he would never allow L.S., Mike, or Sam to achieve any liquidity for their stock. 10/5/94 a.m. 88-90. During his trial testimony, Joe Shoen testified about the value of AMERCO stock (9/28/94 p.m.(1) 6). A trial exhibit ee eee 9 revealed to the jury the number of shares he owned; a simple mathematical calculation would have set the value of his AMERCO stock, based on his own testimony and on evidence presented to the court, at more than $70 million. 9/28/94 p.m. (1) 6-7; Trial Ex. 534. Joe also told the jury that his salary for fiscal year 1994 had been $207,798, and that he had received a bonus of $2,101,490. 9/29/94 a.m. 38-40. On October 6, 1994, at the end of a seven-week trial, Judge Thomas Dunevant III instructed the jury regarding the claims they would need to decide. 10/6/94 a.m. 4-20. The court instructed the jury that plaintiffs were asserting claims against all the defendants for tortious breach of fiduciary duty (10/6/94 a.m. 10-11), and that plaintiffs also claimed punitive damages should be assessed against Joe Shoen in connection with the breach of fiduciary duty claim (10/6/94 a.m. 17). The jury was clearly instructed on the standard to apply to determine these claims: Some of the claims in this case require proof by clear and convincing evidence. A party who has the burden of proof by clear and convincing evidence must persuade you by the evidence that the claim is highly probable. This standard is more exacting than the standard of more probably true than not true, but it is less exacting than the standard of proof beyond a reasonable doubt. If you find the director defendant Edward J. Shoen liable to plaintiffs for plaintiffs’ breach of fiduciary duty claim, you may consider whether 10 additional damages called exemplary or punitive damages should be awarded to plaintiffs and assessed against defendant Edward J. Shoen. The purpose of punitive damages is to punish the wrongdoer and to deter similar conduct by others. However, such damages cannot be awarded on the basis of plaintiffs’ breach of contract claim. To recover such damages, plaintiffs have the burden of proving by clear and convincing evidence that Edward J. Shoen has been guilty of oppression, fraud, or malice, express or implied. In order to prove oppression, fraud, or malice, express or implied, plaintiffs must prove conduct, which forms the basis of plaintiffs’ breach of fiduciary duty claim, motivated by hatred and ill-will and the deliberate and evil intent to injure plaintiffs. To prove such guilt by clear and convincing evidence, plaintiffs must persuade you that the punitive damages claim is highly probable. This burden of proof is more exacting than the standard of more probably true than not true, which applies to all other claims in this case, but is less exacting than the standard of proof beyond a reasonable doubt. 10/6/94 a.m. 9-10, 17-18. The jury deliberated, and concluded that the Board had breached a fiduciary duty to the plaintiffs, and awarded nearly $1.5 billion in damages. The jury also concluded that defendant Edward J. Shoen had been guilty of oppression, fraud or malice through conduct, which forms the basis of a breach of fiduciary duty owed SER etre nett Mere eee ner eee ere ee 1] to the plaintiffs, motivated by hatred and ill-will and the deliberate and evil intent to injure plaintiffs, and imposed $70 million in punitive damages against Joe Shoen. 10/7/94 p.m. 3-4. Post-trial motions ensued, including Joe Shoen’s Motion for Judgment Notwithstanding the Verdict or, Alternatively, for Remittitur of Punitive Damages (Appendix B.) Judge Dunevant reduced those sums following post-trial motions, to $461 million and $7 million, respectively. Joe Shoen then appealed only the grant of punitive damages (see Appellant’s Opening Brief, Appendix C). In his post-trial motions and his brief in the Arizona Court of Appeals, Joe challenged the punitive damage award as violative of due process, but did not raise an equal protection issue. REASONS FOR DENYING THE WRIT I. THE DECISIONS OF THE ARIZONA COURTS, AND THEIR APPLICATION OF NEVADA LAW, ARE COMPLETELY CONSISTENT WITH THIS COURT’S RULINGS ON PUNITIVE DAMAGES, AND DO NOT REQUIRE REVIEW. Review on certiorari “is not a matter of right, but of judicial discretion.” Rule 10, Rules of the Supreme Court of the United States. Such review of a state court decision is granted in two limited circumstances: (b) When a state court of last resort has decided an important federal question in a way the conflicts with the decision of another state court of last 12 resort or of a United States court of appeals. lor] (c) When astate court... has decided an important question of federal law which has not been, but should be, settled by the Supreme Court, or has decided a federal question in a way that conflicts with applicable decisions of the Supreme Court. Id. In this case, review is not appropriate. The conduct of Joe Shoen was not “indistinguishable from that of every other member of the board,” as alleged in the Petition. Instead, Joe Shoen’s conduct clearly demonstrated the malice underlying his calculated orchestration of the actions that literally destroyed the value of the plaintiffs’ stock in AMERCO. The decision of the Arizona Court of Appeals correctly applied the applicable law to the facts of this case, and this Court need not review that decision. A. The Law Applied by the Trial Court Provided Adequate Protection for the Due Process Right of Joe Shoen. Petitioner first argues that the punitive damage award against him violates due process. That assertion cannot be supported. Repeated constitutional challenges to punitive damage awards imposed by state courts have been raised before the United States Supreme Court, particularly since 1988. See, e.g., Bankers Life & Casualty Co. v. Crenshaw, 486 U.S. 71 (1988) (challenging constitutionality of punitive damage award pursuant to Eighth Amendment prohibition against excessive fines); Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1 (1991) (challenging constitutionality of punitive damage award as violative of the Due Process Clause of the Fourteenth 13 Amendment); TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993) (challenging constitutionality of punitive damage award as violative of substantive due process). The rule developed in these cases has been that punitive damage awards survive constitutional challenges based on due process if state law provides certain procedural safeguards, and do not if those safeguards are not present. See, e.g., Honda Motor Co., Ltd. v. Oberg, 512 U.S. 415 (1994) (reversing award of punitive damages because Oregon law does not provide for judicial review for excessiveness). 1. The award in this case is not constitutionally infirm as a deprivation of due process. Haslip sets out in detail the kinds of procedures necessary to protect against abuses of punitive damages that might lead to constitutional violations. Haslip, 499 U.S. at 19-23. These include: (1) instructions that enable the jury to determine the nature and purpose of punitive damages and to enable them reasonably to determine whether to impose such damages and in what amount, id. at 19-20; (2) post-trial procedures at the trial court level for scrutinizing punitive damage awards, id. at 20; (3) appellate review of punitive damage awards, id. at 20- 21. All the procedural protections approved by the Supreme Court not only are present in this case, but also have been utilized by Joe Shoen. All parties agreed that Nevada law applied in this case, and punitive damages under Nevada law are strictly limited by statute: Except as otherwise provided in NRS 42.007, in an action for the breach of an obligation not arising from contract, where it is proven by clear and ee 14 convincing evidence that the defendant has been guilty of oppression, fraud or malice, express or implied, the plaintiff, in addition to the compensatory damages, may recover damages for the sake of example and by way of punishing the defendant. Except as otherwise provided in this section or by specific statute, an award of exemplary Or punitive damages made pursuant to this section may not exceed: (a) Three times the amount of compensatory damages awarded to the plaintiff if the amount of compensatory damages is $100,000 or more: or (b) Three hundred thousand dollars if the amount of compensatory damages awarded to the plaintiff is less than $100,000. Nev. Rev. Stat. § 42.005(1) (emphasis added).' The jury was 1. The states of mind supporting punitive damages were codified by the Nevada Legislature in 1995: 1. “Conscious disregard” means the knowledge of the probable harmful consequences of a wrongful act and a willful and deliberate failure to act to avoid those consequences. 2. “Fraud” means an intentional misrepresentation, deception or concealment of a material fact known to the person with the intent to deprive another person of his rights or property or to otherwise injure another person. 3. “Malice, express or implied” means conduct which is intended to injure a person or despicable conduct which is engaged in with a conscious disregard of the rights or safety of others. (Cont'd) ae a a 15 fully instructed on that standard for imposing punitive damages — a standard that required the jury to find that it was “highly probable” that Joe’s conduct justified imposition of such damages. Joe filed a post-verdict motion seeking relief from the award; indeed, Joe himself admits that the jury’s original award was reduced from $70 million to $7 million as a result of the post- trial procedures in this case. Finally, Joe Shoen already has had full access to Arizona’s appellate courts. This Court need not provide further review. 2. Nothing in Nevada law prohibits holding one joint tortfeasor liable for punitive damages even when others are not similarly liable, when such liability is justified by the facts of a particular case. Not all jurisdictions agree on whether punitive damages may be imposed on a single defendant and not on others if the defendants are jointly and severally liable for the underlying wrong. See generally Annot., Apportionment of Punitive or Exemplary Damages as Between Joint Tortfeasors, 20 A.L.R.3d 666 (1968). That annotation recognized the majority rule, with which Nevada courts agree, that (Cont'd) 4. “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship with conscious disregard of the rights of the pérson. Nev. Rev. Stat. § 42.001. Although these definitions were not included in the Nevada statutes at the time this case was decided, they were adopted from Nevada case law that was controlling at the time this case was tried. Coughlin v. Tailhook Ass'n, 112 F.3d 1052, 1055-56 (9" Cir. 1997), citing Granite Constr. Co. v. Rhyne, 817 P.2d 711 (Nev. 1991). OE 16 [Jn an action against joint tortfeasors punitive or exemplary damages may be awarded in different amounts against the several defendants or they may be awarded against one or more of the defendants and not others, depending upon the differing degree of culpability or the existence or nonexistence of actual malice on the part of the defendants. Id. at 668-69. That annotation cites, among other cases, Hotel Riviera, Inc. y. Short, 396 P.2d 855 (Nev. 1964), a case defendant vainly attempted to distinguish from this one in the Arizona courts. The court in that case did hold defendants had waived their right to assert error in a form of verdict that permitted the jury to assess punitive damages against two defendants but nct against a third. Hotel Riviera, 396 P.2d at 863. It did not stop there, however, but made its position on this issue quite clear: The proper rule, . . . appears to be: * * * that the jury, in an action against joint tort- feasors, may make awards for exemplary damages in different amounts, depending upon what the evidence shows and the jury finds to be the differing degree of culpability among the several defendants. seems to be in accord with the majority of cases which have passed on this point. In Thomson v. Catalina, 205 Cal. 402, 405, 271 P. 198, 200, 62 A.L.R. 235, the court Said: “ * * * juries should be allowed so to admeasure and apportion such exemplary damages as to make the example as well as the punishment fit the offense.” Other authorities are cited by the parties on this point but we forego further discussion of it. We find no merit in the error assigned. Id. (citations omitted in part). ee 17 Nothing in the Petition gives rise even to an inference that the Nevada Supreme Court has changed its mind since it decided Hotel Riviera. Nevada stands with the majority of jurisdictions that allow a jury to impose punitive damages against one joint tortfeasor and not against others when the facts of a given case justify such a result. The facts in this case did justify such a result. Despite Joe’s attempts to justify his actions, despite his argument that “everybody else was doing it,” the Arizona Court of Appeals saw the truth — everybody else wasn’t doing it! Joe Shoen’s conduct stands in sharp contrast to the conduct of the other defendants. Joe’s independent and unique conduct more than justifies an award of punitive damages against Joe alone. Joe participated with the other defendants in nearly 50 acts of entrenchment and t ies of fiduciary duty, but only Joe committed distinct and unique acts of deceit, vengeance, and outright physical violence. Joe was one of only three family- member directors, but only Joe was both the Chairman of the Board and the President of AMERCO. Joe was the only family member who became an ESOP trustee. Only Joe had the proxies of the “key employees.” Only Joe had the voting rights to the preferred stock. Only Joe attempted subtle bribery of his sister Katrina in an attempt to lure her swing vote into his voting trust. Only Joe stated he wanted to make the lives of his family members as difficult as possible. Only Joe eavesdropped on privileged communication between his brother Sam and Sam’s attorney, destroyed a tape of that communication, and then not only failed to disclose that tape as the basis for his “fears” of what his siblings were doing in July of 1988, but also somehow neglected to disclose the purported tape to his own attorneys until shortly before his testimony during the 1994 trial. Only Joe personally terminated the employment contract of the company’s founder, his own father, on the feeblest of pretexts. Only Joe cut off the health insurance of his epileptic sister. Only Joe turned shareholder meetings into shareholder beatings. 18 The picture is clear: Joe Shoen alone acted with the kind of malice that deserves punishment by way of punitive damages. The Arizona Court of Appeals correctly affirmed the trial court’s award of punitive damages against Joe Shoen alone, and this Court need not review that holding. 3. The evidence before the trial court established a causal nexus between Joe’s malicious conduct and the harm suffered by the respondents. Joe Shoen also raises a substantive due process argument, contending the evidence did not show that his malicious actions caused the harm suffered by respondents. That contention also fails when the evidence is carefully examined. At the end of the trial, the jury was instructed to “consider the character of [Joe] Shoen’s conduct or motive and the extent of harm to plaintiffs that Edward J. Shoen caused ....” 10/6/94 a.m. 18, 160a. (Emphasis added). By that time, the jury had heard how Joe almost single-handedly orchestrated the issuance of the dilution Shares, by feeding half-truths and outright misinformation to other members of the Board, and by holding back from other board members and the board’s attorneys information about a secret voting trust. They had heard testimony about a shareholders’ meeting to which Joe lured his Sisters solely to make up a quorum so Joe could pass an Employee Stock Ownership Plan into which the board, at Joe’s direction, promptly placed the dilution stock, in direct violation of a federal court settlement agreement. The testimony presented went on and on, and plainly established that Joe Was not in the same position as any other director. In fact, he was ina unique Position, as Chairman of the Board, President of the company, and the head of a shareholders’ voting trust. And not only was he in a unique position, he had unique motivations in seeking to injure the respondents. 19 The members of the jury examined Joe’s actions, and the motivation behind them; they had the opportunity to see all of the witnesses and to evaluate their testimony, their body language, and their demeanor. At the end of the trial, the court properly instructed the jury that, before imposing punitive damages against Joe, they must find that his conduct was a cause of the harm suffered by the respondents. Sufficient evidence was presented from which the jury could have, and did, find that Joe’s conduct was a unique factor in causing respondents’ harm. That conclusion, and the imposition of punitive damages against Joe Shoen, did not deprive him of due process. B. Joe Shoen Did Not Adequately Raise an Equal Protection Argument Below, and Is Barred from First Raising Such an Argument Here. This Court will not review a challenge to punitive damages that was not raised at the trial court level. E.g., Bankers Life & Cas. Co. v. Crenshaw, 486 U.S. 71, 76 (1988). Joe Shoen’s post-trial motion and his opening brief in the Arizona Court of Appeals challenged the award of punitive damages against him on due process grounds. Appendices B and C. Joe did not, however, challenge the award on equal protection grounds in those courts. /d. As a result, this Court must reject Joe Shoen’s challenge to the punitive damage award as a deprivation of equal protection. C. Even If the Equal Protection Challenge Had Been Timely Raised, the Award in this Case Did Not Deprive Joe Shoen of the Equal Protection of the Laws Applied. The Court thus far has come close to an equal protection analysis in only one case. See BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (holding that lawful conduct of auto eee 20 manufacturer outside Alabama could not be considered by an Alabama court in determining appropriate level of punitive damages to be imposed). Nevertheless, Joe Shoen contends, without any real support in existing case law, that imposition of punitive damages on one director when the entire Board was sued violates equal protection principles as arbitrary and irrational discrimination. That argument also must fail. The injury to the stock of the dissenting shareholders was not a result of a single act, but of a succession of acts, and Joe was the driving force behind those acts. His argument that his malice did not cause respondents’ injuries is disingenuous at best. Joe Shoen was not singled out in this case in an arbitrary or irrational manner. His conduct, like the conduct of every other defendant, was closely examined. The jury had the opportunity to observe Joe’s demeanor as he testified, to view his body language and listen to his tone and inflection, and to determine whether Joe had a personal vendetta against the family members who opposed him. Substantial evidence was presented to the court and the jury that distinguished Joe’s conduct, and Joe’s motives underlying that conduct, from that of any other Board member. Joe Shoen alone took actions with the motive to injure the plaintiffs and to destroy the value of their stock, to keep them “under his thumb” while denying them any opportunity to escape. Only Joe, as the motivating factor behind the secret voting trust, had access to information that made it plain that Board actions designed to create a “level playing field” would instead have the effect of permanently entrenching Joe and his secret voting trust cronies in power and destroying the value of the stock of his siblings and his father. There is nothing arbitrary or irrational about imposing punitive damages on one whose behavior so merits punishment. 21 Indeed, it would be arbitrary and irrational to refuse to do so! Joe Shoen’s constitutional challenge to the punitive damage award must fail, as it has already, and this Court need not further review that conclusion. CONCLUSION Petitioner has presented this Court with no reason to accept review of the punitive damages assessed against him in this case. This Court need not grant review in this case for any alleged constitutional infirmity in the imposition of punitive damages, because no such infirmity exists. The process for imposing punitive damages against Joe Shoen complied with every procedural safeguard discussed by the United States Supreme Court in applicable cases, and the award thus was not imposed in violation of Joe Shoen’s due process rights. Nothing in Nevada law prevents assessing punitive damages against one joint tortfeasor and refusing to assess them against another, so long as the culpability of the tortfeasor against whom such damages are assessed justifies the award. That rule is followed in most jurisdictions. The award of punitive damages against Joe Shoen likewise is not constitutionally defective based on lack of causation; the jury heard substantial evidence that enabled them to conclude that Joe Shoen’s conduct did cause the harm suffered by respondents, and that his motive in causing that harm was so malicious as to subject him to puntive damages. In this case, Joe Shoen’s culpability differed in both degree and motivation from the culpability of his fellow directors, and punitive damages were properly imposed. Joe Shoen did not properly preserve an equal protection challenge to the punitive damage award, since he did not raise that challenge before either the trial court or the Arizona Court of Appeals. This Court therefore should decline review of this case on equal protection grounds. In any case, the punitive 22 damage award was not imposed in an arbitrary and irrational fashion, but was directly related to Joe’s particular culpability; the award thus does not violate any principles of equal protection. For all of the foregoing reasons, Respondents request the Court to deny the Petition for Certiorari in this matter. Respectfully submitted, KATHLEEN COUGHENOUR Counsel of Record KATHLEEN COUGHENOUR LAW OFFICE 4220 West Northern Avenue Suite 115 Phoenix, Arizona 85051-5757 (602) 934-6563 WALTER GILMORE “GIL” SHAW ANGELO PATANE SHAW & PATANE SHAW & PATANE 1432 North Seventh Street Phoenix, Arizona 85006 (602) 257-0058 Attorneys for Respondents 4 APPENDIX A la APPENDIX A — TRANSCRIPT OF PROCEEDINGS IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA No. CV 88-20139 LEONARD S. SHOEN, et al., Plaintiffs, VS. EDWARD J. SHOEN AND PAUL J. SHOEN, et al., Defendants. BEFORE THE HONORABLE THOMAS DUNEVANT, III Phoenix, Arizona REPORTER’S TRANSCRIPT OF PROCEEDINGS August 25, 1994, 1:30 p.m. (29) * * * Q What did Joe say to you? A [PLAINTIFF L. S. SHOEN] My first conversation with Joe was that he was very aggressive, angry, and specifically angry with Sam. 2a Appendix A Q_ Did Joe — stop you for a second. Did Joe convey his intentions about the Board of Directors to you? A Yes. Q Okay. A He told me that he had enough votes and that they were going to, to go up and elect a board. Q. Did he — excuse me, L.S. A He didn’t tell me he was going to take — specifically knock me off the board. He told me Sam would not be on the board. (100) * * * Q BY MR. SHAW: Mr. Shoen. now prior to the shareholders’ meeting in March of 1989, beginning of 1989, you were still being compensated under your consulting agreement? A Yes, until early in 1989. Q Okay. I am going to hand you what’s been marked as Exhibit 211 first and ask if you could justify that by date and who authored that particular letter to you. A This is dated February 20, 1989, and its often — and it's written to me by my son Edward Joe as president and chairman of the board of Amerco. De tes a aa al 3a Appendix A Q Okay. Does that letter indicate to you that you had been compensated under a particular clause of your contract? A es. Q What particular clause was that? A Disability clause. Q Had you ever informed Joe that you were, in fact, disabled? A No. {101} Q Has he ever communicated to you the fact that you were disabled, I mean, pursuant to your, pursuant to your retirement, or consulting agreement? A No. Q Okay. Does that letter, in fact, terminate your consulting agreement with Amerco? A With a condition, yes. Q And the condition is what? A. The condition that I testified under oath that I was not manic depressive. I had testified at an IRS trial that Joe was involved in. Q And you then subsequently, or Joe wrote to you specifically about — 4a Appendix A A I told, I testified that I — Q No, no, I am not concerned about what you testified about, Mr. Shoen. He indicated that you testified under oath about a particular disorder? A Yes. Q_ Okay. You did not suffer from a particular disorder? A He said I said under oath that I did not suffer from this disorder. Q And, in fact, you then — he offered you a condition, right? [102] A Yes. Q_ What was that condition? A If your testimony is controverted by a physician — Q_ Well, just, just — A If I'd get a psychiatrist to certify that I was disabled and I had this specific mental abnormality, which I wasn’t basically responsible for my actions, but he would — that they would reconsider continuing my compensation under the disability clause. Sa Appendix A A) Seadllialeactiieg Q_ I think you mentioned earlier in your testimony that you had, that you had some income at this time [the time of his termination] from fleet ownerships? a A Yes. Q Okay. But outside of the fleet ownership program or income stream, was this your only other source of compensation? A That was the only thing I had as compensation. I still had some money in the profit-sharing trust. Q. And, in fact, by this time you had actually received a dividend, hadn’t you, in, in the spring of 1989? [106] A I probably had, I can’t recall now — yes, yes, I think it was the fall of 1987 that the first dividend — Q But you had no other regular source of income? A No, no, no. August 31, 1994, 1:30 p.m. [4] * * * Q All right. Sam, in early 1988 was, was a dividend declared? A [PLAINTIFF SAMUEL W. SHOEN] It was issued in early *88 I believe, yes. 6a Appendix A Q_ And were you entitled to such a dividend? A All shareholders were, and I was. also. Q Did you receive — do you recall receiving a dividend, personally? A No, sir, it was withheld by the company. Q What do you mean withheld by the company? A They issued that dividend to every shareholder but to me. Q Was there a reason provided to you why your dividend was withheld? [S}JA No Q_ Did you eventually receive your dividend? A_ Thad to go to court te get it. Q BY MR. BISBEE: With your 51 percent of share, or pardon me, 51 percent majority ownership in the company that you believed you had on July 25th after the issuance of those 8,099 shares, how much ownership did your group represent in the company? A Roughly, the plaintiffs group represented roughly 47 and some odd percent. 7a Appendix A Q_ Was that less than the new numbers from the issuance of the 8,099 shares? A Iam sorry, I don’t understand that question. Q Well, did you have less ownership position now than, than the defendant’s group? A Yes, they had the 8,099 shares. Q What do you know now occurred on, on July 24th and subsequent that affected your shareholders’ rights in Amerco? A The first thing they did was take all the shares of stock that the company owned, that they had repurchased over the years and some shares of stock that they owned that they had actually never sold, and they sold those shares to five so-called key employees. Q Do you know who those five key employees were? A Yes. They were Gary Horton, who is the treasurer, Gary Klinefelter, who was the general counsel, John Dodds, who was an executive vice president, and a director, Hank Martin, who was president of the insurance companies, and a man by the name of Harry DeShong, who was in charge of the marketing department. ~ a rT le ee ee ee ee Sa Appendix A Q Okay. A Is that five, or did I miss somebody? QI believe that was five. A Okay Q Do you understand now what the effect of [53] issuing those shares to those five individuals had upon your stock? A Yes, I do. Q What was that? A They diluted us from a majority to a minority and set ‘Cup so that they controlled the votes of those Shares so that - they stuffed the ballot box, is what they did. Q Well, your group representing 40 some percent, 48. 49 percent of the stock, ] believe, was in New York. Was anyone in that group represented here by the plaintiffs? Was anyone in that group notified of the July 24th meeting? A No, we were not. [S54] * * + Q What was the total amount or total number of authorized Shares in 1988 on July 24th to, that could have been issued or were authorized, pardon me. by Amerco? 9a me Appendix A A The number, the total number that were authorized by the company were 100,000. Q Did this board subsequently attempt to increase that authorization? A Yes, they did. {55} Q Do you know how much they tried to increase it by? A They added 7,500 more shares of authorized but, but unissued stock that they could keep in the treasury. They reloaded the gun, is what they did. Q_ Did they amend the articles of incorporation to affect the number of shareholders required to call special meetings? Q BY MR. BISBEE: What other actions are you aware of or have become aware of, Sam, that affected your interest in the corporation? A Well, I will try to go through them in basically the sequence that they occurred, but I am sure I will get some of them out of sequence. [56] First thing they did was they sold this stock for — to these so-called five key employees. They then took back from those five key employees the right to vote that stock. The chairman of the board, Joe Shoen, teok that back, so that while the stock was sold to these employees, the employees didn’t get to vote it. een ee 10a Appendix A Once they had the votes, they then authorized the 7,500 additional shares. They restocked the treasury. They authorized the issuance of, I believe, 100,000 shares of preferred stock. They later, within a few days, I believe, authorized that stock, that preferred stock to be made voting. They then authorized the creation of what’s called a poison pill. The poison — should |] explain that? Q_ Well, let me ask you a question about that. What do you understand the meaning of “poison pill” to be? A The way this poison pill works is if any combination of existing shareholders gets together, that comprises over 50 percent of the stock in the company. The directors have the right to give stock to those shareholders who are not a member of that 51 percent group at half the price. [57] Q And this is done for what purpose? A This is done for the same purpose as the original issuance of the 8,099 shares. This is done so that were any group of existing shareholders to get together that could potentially throw these people off the Board of Directors. they could then issue additional shares of Stock at a heavily discounted price to themselves and their shareholder allies to Once again dilute this majority back out. Q Do you recall any other changes to the articles of incorporation or the corporate bylaws that affected your position within the company as a stock owner? lla Appendix A A Yes, I do. Q And what would that be? A They passed what is called a 66 and two-thirds super majority requirement. In other words, once they had amended the bylaws to their satisfaction in the articles, they passed a requirement that would take 66 and two-thirds percent of the shareholders to change them back the way they were. In other words, they used the existing bylaws and the 50 percent majority that they required to entrench themselves with these devices. Once they had successfully entrenched themselves, they destroyed the [58] weapon they used to entrench themselves. Q What was your understanding of the rationale for entering into these, the Board of Directors entering these actions’ ‘YT A Do you mean their stated reason or, or why they really did it? Q Your opinion. A The reason they did it was to entrench themselves tn power, to freeze us out of the company, and to, and to perpetuate in these deals, to perpetuate themselves on the Board of Directors, and to perpetuate their power, and in the case of myself and my father, to attempt to punish us for something that they didn’t like we did. SS ea ee cee a eS eee eee l2a Appendix A [67)* * Q Did you have health and life insurance through the company, even though you were no longer an active manager? A Yes, I did Q. Did you maintain that health and life insurance, or did the company maintain it for you, even though you were no longer on the board as of July of ’88” A As of — yes, as of July of '88, I had [68] health imsurance with the company. Q Was that health and life insurance at some time discontinued? A Yes. Q When was it discontinued? A The health insurance was discontinued the day after ve filed our written consent with the company, which I think was the 29th of July, 1988. Q. And the life insurance? A The life insurance was discontinued sometime later. | don't recall when that was discontinued. Q_ Was any reason given to you for the discontinuing the health and life insurance that you had been provided through Amerco? —— l3a Appendix A A No, sir. (77)* * * Q The money from, that went from Joe Shoen’s conservatorship accounts to pay for those, or loan, pardon me, loan to the five key employees stock, five key employees for their 8,099 shares on July 24th, that was from a conservatorship account? A Yes, sir, it was from two conservatorships from my brother Joe's two children. [83] * + * Q_ In order to resolve that issue, there was a settlement entered into in the Federal District Court, is that correct? A Yes, sir. Q Do you recall the, the essence of that settlement agreement, what it was intended to do? A Yes, I do. Q Could you briefly describe it? A The agreement was that none of the 8,099 shares that had been issued to these five key employees would be transferred into the employee stock ownership plan. Q For the reasons you have previously [84] described, that was still a concern of yours, even at that time? 1 i] j 4 : l4a Appendix A A It was even more of a concern at that time. Q Do you remember the approximate date of the settlement agreement? A It was sometime in the mid to late fall of 1988. Q. And this current action was filed when? A This lawsuit was filed in, on, I be lieve, August 3rd, 1988. Q Now, the intention, what was — strike that. That Federal settlement agreement, did you fe el it provided you with a degree of protection? A Yes, I felt — yes, I felt it provide protection. d us pretty darn good Q Protection insofar as the 8,099 shares? A Yes. Do you want me to explain it or no? A Q If you can keep it brief, sure. A_ We knew that none of these so-called ke could pay the interest payments on the stock. We would force the company to repossess the when the stock went back into the com couldn’t vote it. We knew if they couldn would have our majority back. y employees knew that it stock. We knew that pany’s treasury, they ‘t vote that stock, we 15a Appendix A [85] Q So you felt that this was an opportunity to get out of some of the mess that you had seen? A Yes. As soon as the first interest payment came up for these key employees, we would be out of the woods. Q_ Well, if this stock was put into an ESOP, why was that a concern to you? A Well, I can speak for myself. Q Exactly. A One of the, one of the departments that reported to me when I was president of U-Haul International was the human resource personnel department, and I knew from our 401-K plan and from our profit-sharing plan that, that the Federal government regulations on plans which are intended to provide employees with benefits, such as profit-sharing, are pretty darn strict, and that I believed, and I actually tried to understand the law in the law library, but I believed that if that stock ever got into the ESOP, it would be impossible to get out of it because it would be there for the benefit of employees. The government protects those kinds of things. Q So you felt that with the Federal settlement agreement, that you could avoid that problem, perhaps get some of that voting power back to your stock, if you [86] will? A Yes, very definitely. Q. Did, in fact, some of those 8,099 shares get put into the ESOP? a — a l6a Appendix A A Yes, sir, they did. Q. Did, in fact, that violate the Federal settlement agreement? A Yes, it did. Q And that has been deemed a fact, has it not, by this Court? A Yes. (93]* * * Q_ Well, can we characterize the general tenor of the meeting as shareholders’ business then? A Well, not really, no. Q_ Well, why wouldn’t you characterize it in that fashion? A Well, the way it started out was my brother Mike and |] had both brought with us little pocket tape recorders, and the, my brother, Joe, announced at the beginning of the meeting that everybody would have to give up their tape recorders, so |] gave mine up. One of the guards came and collected it. My brother, Mike, said that he wasn't going to give his up. He had a right to tape record the meeting if he liked. and after some pretty nasty discussion, he was allowed to keep his tape recorder. I requested mine back. but they wouldn’t give it to me. 17a Appendix A Q And then did the meeting progress in, in the shareholders’ meeting fashion? A Well, it wasn’t like any shareholders’ meeting should be, what people normally think of. Q_ Well, what made it different? A Well, it was extremely hostile, extremely [94] tense. A shareholder by the name of Bert Miller, who I hadn’t seen in years, showed up, and he spoke of his concerns about this issuance of the 8,099 shares. He was on the receiving end of a barrage of obscenities from my brother Mark. Q_ As the meeting progressed, did something memorable occur to you? A Yes, as the meeting broke up, it did. Q What happened? A Well, we had elected the directors, or I should say they had elected themselves again. I was, I was about to pick up my briefcase off this chair, and my brother, Mark, started shouting at my brother, Mike, that his father was a Jew killer, or his father-in-law was a Jew killer. Mike held up his tape recorder and he says, go ahead, Mark, keep talking, I can’t quite hear you, or something like that. 18a Appendix A The next thing that I noticed was Mark was to my right at that point and Mike was to my left, and Mark came lunging across in front of me throwing a punch, which I initially thought was aimed at me, but it was actually aimed at Mike. The next thing I noticed was that Mike was, was standing about five or eight feet away from me. His [95] arms were pinned to his side from behind by my brother, Joe, and my brother, Mark, was pounding him with his fists. Q_ What did you do when you saw that? A Well, I looked at the guards, and they are just Standing there watching all of this, and no one was doing anything, so | went over and I grabbed Joe from behind and pulled him off Mike. Q Did that seem to stop the scuffle? A Well, I thought it had, and I went back to to get my briefcase. On the way back to get my briefcase. my brother Mark hit me with a punch. Q_ Did you respond? A Well, actually it was such a melee, I didn’t really notice it, but he started yelling at me how he had sucker punched me, and at that point, at that point one of the guards came over and grabbed Mark and was about to escort him out of the shareholders’ meeting. Q_ The guard was about to escort Mark? 19a Appendix A A Mark out of the shareholders’ meeting because he was creating quite a ruckus. Q. All right. And what happened? A Mark shouted at the guard, not me, you blank, I have got a green sticker, get him, and pointed at me. [96] Q Well, did the guard come after you? A Yeah, two guards came and got me and hauled me out. Q Did that effectively end that year’s shareholders’ meeting? A Yes. September 1, 1994, 1:30 p.m. [31)* * * Q Okay. Did he talk with you at all about, or did you have any conversations with him about the overall management philosophy that Joe was wishing to use? [32] A [PLAINTIFF KATRINA (SHOEN) CARLSON] Joe said that this company has been run too emotionally over the past years with the tamily and that he was very unemotional in terms of, that he is a very professional businessman in terms of being involved with this company, that he did not take into any consideration, except for the fact that he wanted this company to be run well and profitably. 20a Appendix A Q And at the time. prior to the 1987. May 1987 shareholders’ meeting, had you made up your mind at all about how you were going to vote on any — A No. Q — directors or anything like that? A No, I was very conflicted. Q Did you talk with Joe about any — about Mike and Sam and L.S. being on the board? A Yes. Q_ Do you recall what the nature of those discussions were. what you talked about? A Joe said absolutely L.S. and Sam should not be on the board. He did not Say anything about Mike. that ] recall, but that they weren’t — all I can Say is that. [42] * + * Q BY MR. SHAW: When you walked in at this meeting and you decided to Stay, Katrina, what began to happen? Can you describe briefly what you observed, what you heard? A It was very rushed. We were barely sitting down before it was called to order. We just came in, and it was very fast. Q Do you recall the first thing that was discussed or was on the agenda for discussion? 2la Appendix A A Well, there was a discussion about special shareholders’ meetings. This was a special shareholders’ meeting, and I understood that certain shareholders present did not want such a small percentage to be able to call their own meetings, so they wanted to increase the percentage to, I don’t know, 35, 40 percent, or something. I don’t really recall exactly. Q_ What was ultimately passed, do you recall? A A 20 percent, it was increased to 20 percent, 20 percent of stock to call a shareholders’ meeting, special shareholders’ meeting. Q_ Do you recall the next thing that was discussed? [43] A Yes. It wasn’t — there was really, to even classify this as normal discussion, is stretching it. It was very cuick. It was a discussion about an ESOP. Q_ Had you been aware of previous discussions about an ESOP prior to this meeting in 1988 amongst the shareholders? A Yes. Q Could you describe what you were aware of as you sat there at that meeting that morning? A_ I was aware that there was lots of ways to, to give employees benefits. This was a way that we had voted against in September. I was aware that there was a concern, and I did not understand the complete concern, but there was concern in my family about using it as a device to entrench management, to dilute other ownership of shares, and I understood that that ee MT 22a Appendix A was not a possibility that I felt was necessary to risk, and so when it came up again, I was very surprised. Q_ If 1 can stop for you a second. A I'm sorry. Q In September of 1987 it was discussed at a shareholders’ meeting, is that what you are testifying to? A Oh, I, I — yes. Q And when it came up on the agenda here, were [44] you surprised that it was even being brought up for discussion? A Absolutely. Q Why were you surprised? A_ It was voted down at the °87 meeting. I voted against it, as well. Q_ And was a vote taken on the ESOP? A Yes. Q_ And did you vote for it at that time? A I voted against it. Q_ Do you recall what your sister Teresa did with her vote? 23a Appendix A A She voted against it. Q Did it pass, though, with the people that were there? A Yes, it did. Q So there was a discussion about the special shareholders’ meeting, the number of people, number of people to call a special shareholders’ meeting, discussion of the ESOP. In your review of the minutes, is there anything else that you recall that was discussed? A Yes. I know that I was elected to the Board of Directors at that meeting. Q Okay. Did you — what happened when you [45] were elected? What did you do? A_ I voted against it. I did not want to be on the Board of Directors. I believe I voted against it. Of course, you know, I don’t — Q Why didn’t you want to be on the board? A It was my senior year. I was writing a senior honor’s thesis. It was a paper that was going to be over, you know, it was hundreds and hundreds of pages, and I had been working on it for the first semester and was going to have to complete it by the end, by May, which I was graduating that year, so it was, I believe, very clear to them that I did not have the time. Q Okay. You didn’t have the time. Did you have any other concerns, other than just time? : EE 24a Appendix A A_ I was very concerned then. It was not a pleasant environment. Q. At that particular meeting you are talking about? A Yes, because I felt that I was being railroaded. Q What gave you that impression? A The way that things were going so fast, and with. without any regard to discussion, very little regard to discussion. Q Is there anything else that was discussed at [46] that meeting that you can recall today? A Not that I can recall. Q About how long was the meeting? A 10 to 15 minutes. Q After the meeting adjourned, could you tell the jury what you observed or what you saw? A It was like, like kids who just won a major league baseball championship. I felt like there was such this feeling that they just won something. | basically voted against everything that was there, and it was, it was like now leave. kind of feeling, like I was used. I feit very used, right then and there. I mean, it was clear, and I didn’t quite know what had happened, in terms of how, but I knew that they did not — whatever. I was not wanted any more, and the meeting was Over. sip ci ma eh a a 25a Appendix A Q_ Did it end rather abruptly? A Yes. Q After this meeting, did you become — did you begin to have any more concerns about Amerco and what was happening at the company? _ A I was very concerned at this point. Q_ What were you becoming concerned about, Katrina? A Well, I had specific concerns about how I was informed about what Joe was informing, how he was — [47] the things that I based my decisions on before seemed to not be true any more. Q_ Like what? Can you identify a few instances or specifics? A This concept of Joe as this independent businessman who had this nonfamily feeling, that he was very objective about running this company and that he wasn’t going to try a fast one, that he was working within everybody’s, you know, what everybody wanted, now, of course, dad is going to get on Sam’s side, kind of thing, but don’t worry about it, don’t pay attention to that. [54] + * * Q BY MR. SHAW: You mentioned you didn’t have a car. You were getting ready to go to Aspen. Did Joe offer anything to you at that time? 26a Appendix A A Yes =. Q BY MR. SHAW: Did Joe Shoen offer a vehicle? A Yes, he did. Q What kind of vehicle was it? A It was a Corvette. Q. And did it wind up in Aspen with you? A Yes, it did. [59] Q Could you explain to the jury what you observed? A Yes. We had just broken for a break. We had, you know. an afternoon break. People went to the restroom. I believe | did. I came back, and Joe was looking at Sam’s notes. and I, I think I was in there a while while he was, but I didn’t See that. Then Sam came in and Said Joe, you are, you are looking at my notes. Please don’t. I want my notes. Q Excuse me, you were in the room when Sam came back in? A Yeah, I was in the room when Sam came back in. Q All right. 27a Appendix A A And Joe wouldn’t give them to him, so Sam tried to take them from him, just tried to hold onto the binder, and Joe pulled it away, and, and started screaming things at Sam. Q_ Do you recall some of the things he said? A Things like, you know, in other words, you know, exactly what he said, some of it I don’t think I should say, but some of it — Q_ Excuse me, Katrina, let me ask you a specific question. Did he talk about the company or did he [60] express any, anything to Sam about the company? A_ In the words he was saying at that point? Q Yeah. A Maybe — well — Q Only if you can recall. A I really don’t recall specifically. He said he had the right to look at those notes, though. Q Okay. How did this all, how did this altercation end? What did you recall observing? A lobserved a very clear situation where Sam was being nonviolent and Joe went after him, and then Paul joined it, then Paul joined in on Sam with Joe, and then Mike hugged Paul and tried to take him away and said I love you, I love you, I love you. 28a Appendix A Q_ And did this break up the meeting? A Yes, and I just have to Say that it was very — Q_ Let me, let me — broke up the meeting, correct? A Yes, it did. Q_ As you observed this. Katrina, what were you thinking? A I was thinking Joe is not the objective businessman he Says he is, and — Q What caused you to reach that conclusion at [61] that point? A The look in his eyes and his behavior. September 6, 1994 (afternoon session) i247}, * 2% 6 Q Shortly after the consent was presented, your group then entered into the lawsuit and things progressed. Do you recall in March 1989 a shareholder meeting being held in Reno. Nevada? A [PLAINTIFF MARY ANNA SHOEN EATON] Yes. Q_ I think you stated before you attended a number of shareholder meetings prior to this? A Yes. 29a Appendix A [28] Q Overall, Mary Anna, could you describe the general climate or the feel of that meeting when you literally walked into the room compared to the ones you attended before? THE WITNESS: Well it-felt very confrontational even oppressive. Q BY MR. SHAW: What do you mean oppressive? A_ I noticed I didn’t have on a green sticker. Q_ Did you observe other people wearing green stickers? A_ I observed a security guard in the room. Q_ Who were the people wearing the green stickers? A Board of Directors were wearing green stickers. Q_ Anything else you recall about the meeting that made it intimidating or confrontational? A The way in which it was conducted. [29] Q Could you describe that briefly? A Well, there were a set of rules and regulations read right away. Excluded any kind of recording devices and it went on from there. There would be no note taking, no stenographers or no note taking by stenographers and no recording devices. i, ies aa oe ene ; 30a Appendix A Q At the conclusion of the me conclusion of the meeting break out? eting or the ordinary did you see a physical altercation Yes. Q Can you describe just generally what you observed? A Generally what I observed was Mike bent over clutching his tape recorder to his chest and Mark trying to rip it away from him, and I could see very quickly there was a crowd of men around, and I could see through the cracks of Mike's clothes being ripped at. Q Now the 1989. the next me this was the first meeting he meeting? eting in September of 1989, ld in Tonopah. Did you attend that A No. Q Did you attend the September 1990 me eting that was also held in Tonopah? Did you go to that meeting? A Yes. Q Were you in Florida at the time? [30] A Yes. Q How did you get to the Tonopah meeting? A Florida is kind [of] inacce you go to Dallas or Atlanta. Spe ssible. Can’t get here unless nt a day before in Vegas, spent 3la Appendix A the night at dad’s house and then in the morning had like a caravan between my dad’s house and Tonopah, which took better part of a day drive. I think for an early morning meeting we left well before lunch. I can’t remember. Q_ Did you stop for lunch along the way? How many hours do you think the drive actually is? A Five, maybe six. Q When you got up at the meeting, what occurred? A Well, there was a — we signed in. We sat down some management and Board members came onto a little stage area, Joe gave a prepared speech. They passed out the ballots and they left. Q Now, how long do you think the meeting ultimately took? A Ten minutes. Q What were you left to do at the end of the meeting? Did you have a chance to actually give your ballots to the company? A They took off without so much of a good-bye. Leaving, ran out the back door through the back stage [31] entrance into acar. Personally, I didn’t notice they were gone for five minutes. I still had my ballot in my hand. There had been a collection of the ballots. There would be mention of a post part by midnight. In Tonopah in the early evening and already we had ——————————— i Oi Sead ek a gn a ete 32a Appendix A Q Could you find a post office? A_ We made a little fun of it. Actually we found a post office. Got there about 15 minutes before midnight. Put a newspaper — thankfully there was a person still working there behind the window. Took her picture at the window that she postmarked it. Found an envelope and addressed it and gave it to her and got it done just under the wire. We had a little fun looking at a map and trying to get it all put together. Q Did you have to drive back to Las Vegas? A Yes. Q_ Was this the last Shareholder meeting you attended? A Yes. September 7, 1994, 9:35 am. [56] Q Okay. And did you have conversations with other people about, about, about the effect Or, or possible effects of the ESOPS? A [PLAINTIFF MICHAEL L. SHOEN] Yes, I sure did. Q. And as a shareholder sitting there in the company, Mike, in the spring of 1988, what was your concern about what an ESOP would, would or would not do to your position as a shareholder? A It would — the ESOP. | felt, was simply what I called a control mechanism. It Was a device that I, that | understood 33a Appendix A was commonly used by, by, by, often by management, but in situations where shareholders were also management. It was used to, to basically give them a free vote. It is as if essentially, would take the place of Katrina’s vote. They could manufacture the vote, make it as large as they wanted. They could, because they were the directors, and if they had control of the directorship, they could appoint the trustee who voted the ESOP. They could construct the ESOP in such a way with nonpass-through voting so that essentially the directors controlled its vote through the selection of the trustee. I had absolutely no doubt in my mind as to the purpose of [79] ” x ” Q Okay. Could you describe that one, please? A Well, what happened was I got up, I got up and there were a lot of people around me, ov there were people around me in the immediate proximity. There was a security guard who was a lady who was fairly short and had dark, fairly short hair, and she started to lead me out, but she didn’t lead me out by the closest door, which I was fairly close to an exit door, but there were a lot of people there. She led me out through this other anteroom, and she took me by the arm and started to lead me a couple steps. After I got a couple steps, my brother Joe appeared, and | was somewhat stunned by this point, and I was kind of — it was — I had a quizzical reaction like, what’s he doing. : a 34a Appendix A [80] He motioned to her. He replaced her and took my, my elbow as she had to, to appear to escort me out. What he did was he increased the pressure on the elbow. He then moved the elbow in his hand to sort of control me, and he started to wind up this way. At that point I knew that I was going to get hit in the stomach, and at that point I had my, this little silver tape recorder that I had borrowed. It wasn’t really a real big thing. It was about yo big, so I felt well, if I can pull that tape recorder down to my stomach, I am going to deflect that blow. I can remember thinking — he caught a piece of it, but I really didn’t deflect it. He got me a good hit in the stomach, and I thought well, I know what to do now, I am going down because I have done that before. | am going to fall down forward, and so I proceeded to do that. I fell down forward. Thereupon came the blows that I received. At that point they were, were far greater in intensity than the first set in the first incident. They weren't separated by, you know, ten seconds or, or fifteen or five or whatever or twenty, I don’t know. Q At the conclusion of this assault, did you get up and leave the meeting? [81] A | Well, when the blows stopped, I didn’t put my head up right away because at this point I was concerned about my health, I mean, I was concerned, the blows were hard enough. So I figured, I waited, you know, a second or a split second and I looked up, and there was my brother, Joe, and Harry DeShong, sort of wrestling like two big bears, like wrestling off into a corner, Standing by Harry wrestling Joe into a corner. 35a Appendix A As soon as I stood up, there was a security guard right in my face, a gentleman with red hair and a mustache, fairly young man, I mean, 25 or something, right in my face and said, get out of here, and you are getting out of here. By then I was starting to go shake a little bit, and, and I said — | thought, at that point I thought, I looked down and I thought, I still have this tape recorder, which amazed me, and I thought well, maybe I have got tapes back in the meeting room, which by, you know, there was this adjacent room right next to us, so I said, I have got to get my, I think I said my jacket or something, I have got to get something from that room. He said no, you are not, you are not going to get anything, but he wasn’t going to touch me, either, I could tell that. I said, I want my stuff, and I was concerned [82] that somebody would be taking my stuff in the next room.Then this security guard with, with, the lady with the short black hair came in, and she said, I will take you in there. The gentleman with red hair wouldn’t take me. It was my impression that he was afraid to take me into the next room, and I said I need somebody to take me into the next room and get my stuff. [84] * * * Q_ If you could turn your attention to the September '90 meeting procedures, and let me ask you: Do you recall whether or not the 1990 meeting procedures [85] allowed recording of any recording devices of any kind in the meeting room? A Well, the, there was a prohibition on recording devices of all kinds. 36a Appendix A Q_ And how was that interpreted at the meeting? A At the meeting — well, at the meeting they allowed the stenographer. I had written them previously and requested them to bring a stenographer, but they allowed my stenographer. Q_ This is at the ’89 meeting? A_ No, this is at the ’90 meeting. Q Okay. So you had Stenographers at the °89 and °90 meeting both? A That’s correct. Q_ The last several meetings have also been held in Tonopah, Michael. Have you attended those meetings? A Ihave not attended since the 1990 meeting. Q Let me show you what’s been marked as Exhibit 257. Would you identify that, please? A This is a, a compilation of a number of ballots for an annual shareholder meeting of September 28, 1990. | think that there is probably 15 ballots here or more. Q_ Okay. The first page of that document, does [86] it contain a number of Proposals that were put forth to the Shareholders at that annual meeting? A Yes, it does. 37a Appendix A Q One of the proposals there, I believe, deals with nominating procedures for directors? A I don’t think that was a matter that was voted on by the shareholders. I think that was a bylaw amendment. I don’t think it is in here. Q Forgive me. I got a little off track here, a little bit confused. Let me back up a minute. As the 1990 meeting approached, Michael, did you attempt to nominate anybody for positions as directors within the company or anybody that you are aware of within your plaintiff’s group? A You mean in, in a write-in ballot? Q_ Correct. A No, did not. Q_ Did you learn of anything that occurred regarding the nominating procedures prior to this September meeting? A Yes, I did. Q_ What did you learn? A Well, what had happened was that on May | of 1990 the Board of Directors amended the bylaws to change [87] the ~ nominating procedures, and what that did was that they said that you have — any nominations have to be 120 days in advance of the meeting date and that the nominations have to 38a Appendix A be done according to certain sections of the securities and exchange laws, which were very, very complicated and required a lot of work. What happened was that the, the directors didn’t tell any of the shareholders that the 120-day requirement existed, so what they did was they, they amended the bylaws to, to include this 120-day requirement. They then filed it with the, with the Nevada Secretary of State, and then four days later the 120-day time period ended. So for practical purposes, that prevented any shareholder that year from nominating any director and being in compliance with their stated nominating procedures. Q During this four-day window, you did not receive notification from this company that this occurred? A _ No, I didn’t. I received it about 20 days before the September meeting, or about 100 days too late. Q When you look at the proposals that were placed there by the directors for approval of the shareholders there on Exhibit 257, that ballot, Michael, [88] as you look at those, could you identify a few of those Proposals that caused you very specific concerns as a shareholder in this company? A Well, all of them except for six, number six. The last One caused me plenty of concern or I guess more concern. Q Could you identify which proposal you are talking about? 39a Appendix A A Well, starting with number five, amended the articles of incorporation, prohibit stockholder action by written consent. Q_ Why did that cause you concern from your perspective? A Because it just insured that it was, it was one more device that insured that that, the existing directors or, or the directors who, who would be in the future elected by the voting trust in which Jim Shoen, Paul Shoen, and Joe Shoen held a controlling interest, that, that there would really be — that that would be one more thing that would keep them in power because you couldn’t get a group — you couldn’t have a bunch of shareholders, couldn’t get 66 percent of the shareholders together and say, we don’t want these guys and let’s take a written consent and put in new directors. You couldn’t do that any more. [89] Q Anything else at that 1990 shareholders’ meeting that came up that troubled you as a shareholder? A Sure. The number four that now required that, that number four said that, that, that to amend in the future the company’s articles of incorporation, you had to have a 66 and two-thirds majority of the shareholders to do it. Well, in the worst case scenario, Joe and Jim and Paul and Mark, other voting trusts, would always have more than one- third so that no one could ever, could ever make any changes to the articles of incorporation without them, no one could make any changes. Q_ As you go on up the listing there, what’s the next item that caused you concern? 54 40a Appendix A A Well, the number three, the, to increase the amount of authorized preferred stock. Part of that was to, to, to do a split, which just made it more confusing, but that was a fairly minor concern. The real concern was the amount of increased authorized but unissued stock. Q_ Why did that concern you? A Because you could delight anyone with it. You could, you could — they had it sitting there, and if they ever got challenged, they then authorized and had enough stock sitting here so that they could issue it to [90] their friend and, and by this time as we understood, they could then simply — they could literally issue it to their child and have their child put it in an ESOP, and according to what I understood the situation to be, they would dilute out any other new majority. Q_ What’s the last item on the, on the list there? You are going from bottom to top. What’s item No. 1? A Well, really two more. Q Excuse me? A Improve amend — there is the classified Board of Directors, which was, which was, you know, I mean, in the Situation that we were in, it was something that I didn’t agree with. Q Could you define what you mean by classify Board of Directors? . { 4 ; atin te 28 Sas. 4la Appendix A A. That is called a staggered board where you are really electing people for four-year terms, but because you have to start out, you say well, here’s two of the eight directors, will first have a one-year term, and another two will have a two- year and another two will have a three-year and another two will have four years. Then when the first group comes up for re-election that had one year, then the first time they are re-elected, they then get a four-year term. So you [91] have got all these four-year terms essentially ending up with a whole_ bunch of four-year terms, so you could come in and have by some, by some situation you could get a group of shareholders that has a 67 percent and enough to come in here and maybe do something and get a change in, in the control of the board, but you could only do it two people at a time, and it would give the remaining board six of the eight, a year’s time to take further to, to figure out further ways to protect their jobs and protect their interests. * * * Q In January of 1991, Michael, did you learn of an event that, that, in your mind, justified some of your fears about what the ESOP was going to be used for involving £ voting trust? [92] A Well, what happened ultimately, I know it happened by January of 1991, I can’t say specifically, what happened was the voting trust or voting agreement that my brothers, Jim and Paul and Joe had, and my sister, Sophia, and my brother, Mark, they then broadened that to include the ESOP so that the ESOP trustee then became a signatory to their voting trust. 42a Appendix A By this time the voting trust that had I just referred to had lost two of its members. Paul and Sophia refused to resign by January of 1991, so then the remaining people, which were, which were Jim Shoen, Joe, and Mark, they then added the ESOP, and they added it until 1999, I believe. So what happened was that, that the ESOP. something, something — there was a secondary effect because at that point in time Joe Shoen — there were three individuals who together comprised what was called the trustee, singular, of the ESOP. Well, Joe Shoen was one. They were appointed by the board, and two gentlemen who worked for Joe were the other two, Gary Horton and Don Mumey. Well, once the ESOP was a signatory to the voting trust, even if Joe Shoen was removed and even if there were people who were what I would consider to be independent trustees in the ESOP. the ESOP had essentially given up its vote to the majority of this voting trust because the [93] voting trust was voted by the majority, so there was sort of a double effect of assuring, in my mind, that the ESOP would then always be voted with Joe Shoen, Jim Shoen, and Mark Shoen. Q_ In September of 1991 did you attempt to deal with your stock in any way? A_ Yes, I did. Q What did you attempt to do with that stock? A Well, I took a small amount and I was going to give one share — this is after the 400 to 1. I wanted to give one 43a Appendix A share to a whole bunch of former employees, and I started off with people whom I knew, and it was just sort of random, and I called them up and_ said, would you like one share of Amerco stock? These were former employees who had worked with me. They were all quite pleased, so I got all the paperwork and all the — I got the right paperwork, and I don’t recall specifically what it was. I sent it into the secretary and general counsel of Amerco so that they could issue the new stock certificates and send out the new stock certificates to people who were, you know, friends of mine or former long-term employees. Well, they were all former long-term employees, and some of their family. Q Was this an attempt to [gift] this stock [94] successful? A No. Q Why not? A Because the secretary of the corporation contacted me and wrote me back and told me that they are not going to allow me to give this stock away, that they will consider, they are considering that my gift is, in fact, a sale, and that they are then exercising their right of first refusal and they are going to purchase the shares that I am trying to give away. So they sent me a check for those shares, and I never cashed it. I put it in a drawer. I would not cash that. ) ————————————— - 44a Appendix A September 7, 1994, 1:35 p.m. [5]Q Did you also lose your insurance benefits with this company? A [PLAINTIFF MICHAEL L. SHOEN] Yes, I did. Q Do you recall when that exactly occurred? A It was just after we filed the lawsuit. Q. Okay. A No, it was just after we filed the consent. Q~ The consent was filed on June 29, or July 28, 1988. On or about June 29 you lost your benefits with the company? A That’s correct. Q Has the company taken some other actions against you individually — A Yes. Q That cause you concern that you feel is relevant to your position as a shareholder in this company? . A Yes. Q Could you cite a few examples? 45a Appendix A A Well, the first thing I can remember in 1989, it was against — with respect to a mortgage of my children, that my children held, and I was affected because I had ended up paying. Q What did the company do in relationship to a mortgage that you held? [6]A Well, a subsidiary of a subsidiary of the company called Nationwide Commercial Credit held a mortgage on the, a note that my kids, my minor kids owed tc them. Q Excuse me, is Nationwide Commercial Credit a subsidiary of an Amerco subsidiary? A Yes. QI didn’t know if that was correct or not. They held the note on this mortgage? A Right. Q_ And what happened in 1989? A They, at the end of 1989 they wrote me a letter saying that my kids were behind on the mortgage and were going to foreclose. Q Were you, in fact — was there a delinquency at all on this mortgage? A No, there never was. Q_ Did they attempt to pursue foreclosure? | 46a Appendix A A No. I contacted the law firm. I retained an attorney in town. I ended up negotiating personally, directly with someone in U-Haul in the Amerco legal department who I knew. Q_ As a result of these negotiations, what happened? A I paid off the mortgage. (10) * * * Q BY MR. SHAW: Well, let’s move onto a different area, Michael, let’s just skip that. In addition to some of these things we_talked about that the Board of Directors did at the 1990 meeting, we went through that, that, through that number of items, six items on the list. Were there some other things that the board did that perhaps didn’t quite make it out to the shareholders in terms of the shareholder ratification that you became concerned about? A Yes. Q What about the way voting within the Board of Directors is done, did you understand a change was made there? A Yes. Q_ And what was that change? A Well, in approximately 1991 — | may be incorrect, maybe it was ’92, I think it was ’91, the board voted to give the chairman of the board essentially two votes. They gave him before this — before this time the chairman only voted when i wae el 47a Appendix A there was a tie, and, and the board then made a change in about 1991 wherein, wherein the chairman from that time on would have a vote, his regular vote plus his, his tie-breaking vote, so, so [11] in certain instances he would have two votes. Q You had been on the Board of Directors of Amerco from approximately 1975 through 1984, is that your recollection? AI think so. Q Now, while you were on the board during that time period, did the chairman have these two votes? A_ No, he did not. Q Did you learn of anything else that the board did dealing with perhaps a number of shareholders required to conduct certain business? A Well, yes, I did. Q What was that? A In 19 — well, what they did was they reduced the quorum requirements for shareholders’ meetings to one-third. This was done in 1991. Q Okay. And by one-third, you mean a third of the shareholders, only a third of the shareholders had to show up to conduct business? A That’s correct, had formally been at a half, and what had happened was that the, the, that the voting trust that I talked 48a Appendix A about earlier lost temporarily two members at that time period, so they didn’t have a 50 percent quorum with the loss of those two members. So, at that point then the board reduced the [12] quorum so, and the effect was that that voting trust of, of Joe Shoen, Mark Shoen, Jim Shoen, and the ESOP would then always be able to have a quorum at a shareholders’ meeting. Q_ They would always have that 33 and a third percent? A Yes. Q Now, Mr. Shoen, are you a party in other litigation that’s been brought by your brother against you and your father? A Yes, I am. Q_ Do you understand how that litigation was funded? A Yes. Q_ How did you obtain that understanding? A Through sworn testimony at which I was present. Q_ What is your understanding of how that litigation was funded? A Funded by Amerco. * * * 49a Appendix A [13] * * * Do you have any other concerns about anything the board has done with, with preferred stock? A Yes, I do. Q What kind of concerns do you have, Mike? A Well, in 1993, they created — well, they have some preferred stock out there, first of all, that I want to differentiate that is, that is essentially debt, most preferred stock that people think of is debt. In 1993 they also created or authorized what they call preferred stock B voting. Q Is this a different type of stock? A Yes. Q BY MR. SHAW: Mr. Shoen, how did you arrive at your understanding of what preferred stock is? A By reading SEC filings, by reading the Amerco file, by reading the 10-Ks and 10-Qs, by, by reading deposition testimony, by reading affidavits of the treasurer of Amerco. [14] I also, I have got, I have taken courses, you know, in business, and I know what it is from there. I know what it is based upon my experience working in Amerco. 50a Appendix A Q You are not purporting to give us a legal definition here today, are you? A No. Q With the Court’s permission, I would again ask Mr. Shoen to tell us what his definition of preferred stock is. THE COURT: You may answer. THE WITNESS: Well, general definition? Q BY MR. SHAW: As you understand it. A Well, my general understanding is that most preferred stock, and certainly most preferred stock that is listed say in the paper, the stock prices, is another form of debt. It is called preferred stock. it is generally not voted, has no voting rights, and generally there is a fixed rate. It pays at like 8 and a half percent, and it’s really — it can be a better form of debt than say going to a bank, depending upon what their rates are. That’s most preferred stock. Q_ Well, is your concern primarily over the debt, the debt aspect of this stock or is it over something else? [15] A Well, no, the series B, what I mentioned, is first of all, itis only authorized, it’s never been issued, but it is a voting preferred stock. Q_ Has voting rights attached that could be voted by the holder — a Sla Appendix A A Yes, yes. And the, and the unusual thing about this stock is that, is that along with the authorization of the stock, which is valued at $20 million, was also created the so-called special committee, which the Board of Directors created in 1993, and the special committee is composed of two members, Joe Shoen and his employee, Charlie Bayer. They have a number of characteristics. They are empowered by the board to attach any voting characteristics they choose for attaching to this stock any time that they want. Furthermore, the board also indemnified them in advance of any act they might take, including the attachment of any voting rights they might decide to attach. So, what this stock, it is very similar in my understanding — in effect it is very similar to a poison pill. It is sitting — Q You are sitting there as a shareholder today and you see this series B stock, what does that mean to [16] you in your position in the company? What do you feel is the effect of that series B preferred stock? A Itmeans that they can create votes whenever they want to and as many as they want, and they have got the preapproval of the board and the authority to do that. September 12, 1994, 9:30 a.m. [48] * * * Q Anything about that last meeting that you recall that caused you particular concern as a shareholder? j — 52a Appendix A A [PLAINTIFF CECILIA SHOEN-HANLON] Oh, a few things, but, but one was that we went all the way, all of us, a good majority of shareholders went out there and went into the shareholders’ meeting, and there was a lot of signing and things like this, but we sat down, and I can’t be sure who came in. It could have been Joe, but I can’t remember. I haven’t talked about this in a long time. Anyhow, the gist of it was that they had all the shares they needed to pass what they wanted to pass. Was this 1990 we are talking about? Q My question was the 1990 meeting, yes. A And they had all of these on the agenda, all of which I had opposed, written to the Board of Directors and opposed, which I got no, no, no response from the Board of Directors. They said they had enough votes. The meeting was over, and that we will have to bring our ballots, mail them in by that day, by that night, postmarked by that date, and this was about, the meeting [49] maybe adjourned around, I don’t know, I know it was dusk, and I think it was 5:00, or maybe a little after that. The post office, if there was one in Tonopah, was closed. We had to drive back into Las Vegas and find the large post office there to mail our votes in. Q Have you attended any more shareholders’ meetings since the September of 1990 meeting in Tonopah? A Not personally, no. 53a Appendix A Q As you sit here today, Cecilia, what is your position, or what is your current situation as a shareholder from your perspective? A I’ve been put into a permanent minority position. I cannot get — I cannot sell my stock for fair market value. I would have to go to the Board of Directors, which has been extremely hostile and has not even, has never shown that they would be helpful in any way. September 13, 1994, 9:05 a.m. [45] * * * Q BY MR. SHAW: Now, on the morning of the meeting that you actually wound up attending, Theresa, did you receive a phone call? A [PLAINTIFF THERESA SHOEN ROMERO] Yes, I received a phone call from the Towers. Q Okay. And in essence the phone call said, Katrina has already testified, in essence, just come on down, we are waiting for you. Is that your general [46] recollection of the phone call? A Yes, it is. Q And you went down to the Towers? A Yes, we did. 3 > 54a Appendix A Q What, what happened when you went down to the Towers. Briefly if you could describe when you walked into the room, who did you see there? A When we walked into the room, it appeared to me as if we had walked into the middle of the meeting. There was a buffet, was already eaten, and most of it was gone anyway, and everybody was sitting in there waiting for us. We didn’t get there until the afternoon. I know it couidn’t -— it had to be sometime after 12:00, and it just appeared that we were walking in the middle of a meeting. Q So when you walked into the meeting and you got these impressions, what began to take place? What happened next? A Well, I looked around and I saw that nobody from the, from the plaintiff’s side was there. They were all — it was my brother, Joe, Mark, Jim, Paul, Sophy was there, Katrina and me, several of the peopie that work for U-Haul, and various other people who I don’t recall. The meeting — I’m sorry. Q No, go ahead and describe, did the meeting [47] essentially convene? Someone call it to order? A The meeting was immediately called to order once we arrived. Q_ Who was presiding? A Joe was presiding. Q. As the meeting unfolded, what took place? What’s: your recollection of what happened in this meeting? 55a Appendix A A My main recollection is when they passed the ESOP, the ESOP had just been turned down less than six months previously, and Joe got up there — well, I am not too sure if it was Joe, but somebody got up there and read the motion, barely stopped to breathe, as far as I was concerned, no discussion took place, the motion was voted on, and it passed. I couldn’t even believe it. I was so shocked I didn’t know what to do. Q Did you have — did you vote for or against — A_ I voted against the motion. Q What shocked you about it? Why were you shocked? A I was shocked because I felt like I had been trapped, like they had completely railroaded me. They, they had gotten me to come down to this meeting to make a [48] quorum to get this ESOP passed, and that was the whole intention of it, and they were taking advantage of what I considered a very young, naive girl, both Katrina and I, the two youngest girls in the family, they took advantage of it. [57] * * * Q Now, after the lawsuit had been going on for some time, did the company take any action directed towards you, specifically? A They took me off payroll in 1989, around February or March, and they cut off my insurance. i rt 56a Appendix A Q_ Now, did you reinstate your insurance in any way with the company? A I was on COBRA for 18 months. Q_ Let me just — by COBRA, do you mean — tell the jury for those that may not know what COBRA is, what you had to do to keep your insurance intact. A That meant that I had to pay full price for my insurance, but — Q Who did you pay? A_ I paid Oxford. Q The company? A Yeah, the company. Q_ Now, did your COBRA benefits run out at some point? A After 18 months my COBRA benefits ran out. Q_ Did you try to get insurance? A_ Yes, I tried several places, but — [58] * * * Q BY MR. SHAW: Were you — three more questions. Were you able to get insurance? 57a Appendix A A No, I was not. Q What for, I mean, why not? A Because I have a pre-existing condition. Q Do you mind telling the jury what that is? A. I have epilepsy. Is that common knowledge within your family? > # Yes, that 1s. [59] om ” « Q Now, after this situation with the lawsuit beginning, did you attend the March 1989 shareholders’ meeting in Reno, Nevada? A Yes, I did. Q Did you see the assault on your brother, Mike? A Yes, I did. Q Did you attend the next meeting in Tonopah in September of 1989? A Yes, I did. Q Now, how many more meetings did you attend in Tonopah, Theresa? 58a Appendix A A_ I know IJ attended the 1990 shareholders’ meeting, and I can’t recall if I attended the 1991 because the 1990 was so devastating. Q What do you mean it was so devastating? What sticks in your mind about the 1990 meeting? A Well, after having flown from Phoenix to Las [60] Vegas, taking a cab to my father’s house, driving four and a half, maybe five and a half hours to, to Tonopah, got into the meeting room, Joe walked onto the stage and gave about a 5 to 15-minute speech, said that he had enough votes to elect his board and pass his motions, and he said if we wanted to have our votes counted, that we would have to get them postmarked that day. This was after 5:00. There were no post offices open in Tonopah. There was not another city, except for Las Vegas. We would have to drive back after having gotten out of the car probably not even 45 minutes. We had to get back in the car and drive another four and a half, five hours back to, to Las Vegas and get them postmarked before midnight, which we were able to do. September 13, 1994, 1:40 p.m. (65) * * * Q. What was the next shareholder meeting that you attended for the Amerco system? 59a Appendix A A. [WITNESS RON BELLEC] In 1989. Q. Now there’s been testimony that — was that the September meeting in Tonopah? [66] A. Yes, it was. Q. And at that meeting, did you — do you recall whether or not you cast your votes in any way? A. Yes, I did. Q. What was the vehicle through which you cast your votes? I mean, was there a ballot that you wrote something on? A. Yes. Q. And what did you do with the ballot when you were finished voting? A. In 1989, I gave it to the tallier of votes, which at that time was Mr. Klinefelter, I believe. Q. No directing your attention to 1990, did you attend the Amerco shareholders meeting in 1990, in Tonopah? A. Yes, I did. Q. Do you recall when you attended, the manner — did you vote at that meeting? A. Yes, I did. 60a Appendix A Q. Do you recall the manner in which you voted at that meeting? A. Through a write-in ballot. [69] * * * Q. BY MR. MICHAEL SHOEN: Mr. Bellec, after the meeting was over, did — were the ballots — was your ballot accepted by any representative of the company at that 1990 meeting? A. No, it was not. Q. And were any other write-in ballots accepted, to your knowledge? A. No, they were not. Q. And what happened to the write-in ballots that were — that were present at that meeting? A. After the company management left, the group that was going to vote by write-in ballot got together and selected one of our number to drive to Las Vegas, which was about four and a half to five hours away, to mail the ballots. We had to meet a midnight deadline. [74] Q. Directing your attention to page 20, to the last — last full paragraph of that page, I’d like to ask you if this Amerco public document form 10-Q, a portion of Exhibit 383, dated September 30, 1990, formed a portion of the basis for your believing that, in fact, the write-in votes of the 1990 shareholder meeting had been counied by Amerco. Le a ea 6la Appendix A A. Yes, it did. Q. And what in this document gave you that reason to come to that belief? A. In the four items that were before the shareholders to vote on, it indicates both pro and con. 49,362 for, and 46,435 against. And I have numbers in the other three categories. Q. And does this, the number of negative votes cast that is mentioned in this public document, correspond to your calculations of the number of votes cast in write-in ballots by [75] what you have characterized as the outside group? A. Approximately, yes. Q. Thank you. How did — were there any statements made by anyone representing the company at that meeting, as to whether or not write-in ballots were a proper form of voting? A. That’s correct, there was. Q. And who made a statement in that regard? A. Mr. Joe Shoen. Q. And what did Mr. Joe Shoen say? A. Ican’t tell you exactly what he said, but I can paraphrase it. Jt was something to the effect: At this time, you can vote, and the ballots have been distributed. And you can put an X by the person that you choose, or write in the person’s name that you choose below in the appropriate space. And then turn the ballots in to the secretary. 62a Appendix A * * * Q. And did you write in someone? A. I did. Q. And I take it it would be someone other than a person that was on the management slate? A. I did. [77] * * * Q. BY MR. MICHAEL SHOEN: Now Mr. Bellec, did you have occasion to attend the shareholder meeting in Tonopah in 1991? A. I did. Q. And how did you vote? What was the mechanism through which you voted at that shareholder meeting in 1991? A. By write-in ballot that I had prepared the day before. * * * [738)}* * * Q. Now Mr. Bellec, were you presented with a ballot at the 1991 meeting in Tonopah from Amerco? 63a Appendix A A. Yes, I was. Q. Now did that document, Exhibit — identification 264 — did that differ than the ballot that was provided you by the company the previous year, in any significant respect? [79] A. Substantially. Q. What differences was there, sir? A. Major differences that do not provide any avenue for dissenting votes or other — or write-in candidates. * * * Q. BY MR. MICHAEL SHOEN: Mr. Bellec, did you have occasion to meet with L. S. Shoen the night prior to this 1991 shareholder meeting, and with him analyze the votes that you expected would be voted at this 1991 meeting? A. I did. Q. And can you tell us a little bit about that analysis that you made? A. I determined that we could win the election. Q. And why did you — what did you base that on? A. It had been reported to me, and I believed it to be true, that Paul Shoen and Sophie Shoen had not signed up on the 64a Appendix A voting trust agreement from the then inside group, and would not be attending the 1991 shareholders’ meeting, and would not be supplying the proxy to anybody. If either one of those two did not vote, then that meant that the then outside group would have a plurality of the votes present at the meeting and, therefore, could win the [80] election for directors. [81] * * * Q. And did you play any role in the transportation of those ballots to Tonopah? A. I personally carried the envelope that contained those ballots, in the car to Tonopah. Q. Now Mr. Bellec, do you recall approximately how many votes L. S. Shoen was voting at that meeting, either by himself or in proxy, in his ballot? A. Don’t have the exact number in mind. However, I do know that it was 57 percent of the outstanding shares present at the meeting. \ [82] Q. Now, how did you, in 1991 at that meeting, transmit these write-in ballots to the company? A. We personally handed them to Gary Klinefelter, the secretary. 65a Appendix A * * * Q. So then you are telling me that you sent a duplicate set of the ballots through the mail, and you aleo hand-delivered a set to Mr. Klinefelter? A. That’s correct. Q. Now Mr. Bellec, did you have occasion, subsequent to this 1991 September meeting, to learn whether or not the ballots that you and |. S. Shoen submitted at that meeting, the write-in ballots, were accepted or counted? A. Yes, I did. Q. And when, approximately, did you learn that, whether or not they were counted? A. I don’t know. But within a matter of weeks or [83] months I had determined — Q. And what did you learn as to whether or not they had been counted? A. I determined that — I learned that our write-in ballots had not been accepted in 1991. Q. And what did you base that determination on? A. The company reported to the SEC via their 10-Q or 10-K, that the management-nominated nominees for director had been elected without opposition, by 30 percent of the outstanding shares of the company. 66a Appendix A Q. Now going back to your comment about — now did you have occasion to correspond with Mr. Gary Klinefelter, the secretary of Amerco, on this subject? A. I did. Q. Based upon that correspondence, did you — did that further your determination as to whether or not — as to whether or not the company considered the write-in ballots to be valid? A. Yes. Q. And what was your understanding, based upon your correspondence with Mr. Klinefelter? A. That the company had determined that because we had not nominated according to the nomination procedures, that write-in ballots were not legal. Q. Well, now did the company — in between the 1990 and [84] the 1991 balloting, did anyone from the company communicate to you that write-in ballots would not be acceptable in 1991, as they were in 1990? A. No, they did not. Q. Did you make any search of the company’s bylaws or articles of incorporation, to ascertain whether or not there had occurred, since the 1991 meeting, a prohibition on write-in ballots? A. I did. 67a Appendix A Q. And what did you find? A. I discovered that there was no prohibition against write- in ballots, nor had there been any change in the bylaws or articles of incorporation that referred to write-in ballots. * * * [94] * * * Q. Now Mr. Bellec, was there a process with all these exhibits and other letters that you have testified, that we haven't marked as exhibits here — was there a process going on between you and Mr. Klinefelter with respect to your changes in your nomination document? A. Yes, there were. Q. Could you explain that, please. A. I had read what I thought to be the requirements for nomination for directors for Amerco. And in it, it had a clasue that talked about the Schedule 14A from the SEC. And we had to answer all the questions. And I misread that and did not understand that was what was required. I asked Mr. Klinefelter to tell me specifically and exactly what questions he wanted me to answer with regards to nominees for directorships. And over — through all this correspondence, he finally did answer most of my questions. * * * 68a Appendix A [95] * * * Q. Mr. Bellec, did you have further correspondence from Mr. Klinefelter? Did you at any time learn that — did you at any time come to believe that in fact you had finally authored an acceptable nomination? A. Yes, I did. [96] Q. And approximately when did you come to believe that? A. Subsequent to all of this correspondence, I have additional correspondence prior to the deadline, which was sometime in April or May, that indicated to me that I had substantially complied with all the requirements. And he said in one of his letters that my nominations would appear and be presented at the next annual meeting. Q. Who made that statement? A. Mr. Klinefelter. Q. Now Mr. Bellec, were, in fact, your nominations [97] accepted at the 1993 annual shareholder meeting? A. No, they were not. 69a Appendix A Q. BY MR. MICHAEL SHOEN: Did you come to learn why your nominations were not accepted at the 1993 annual shareholder meeting? A. Yes, I did. Q. What was your understanding of the reason they were not accepted? A. There is a clause in by bylaws that says that at the discretion of the chairman of the meeting, anything that he or she considers to be out of order will not be accepted. Q. Now that’s the restated bylaws of Amerco? A. That’s correct. Q. Now based upon that experience, do you feel that there is any way that you are going to be able to nominate any candidate, whether write-in ballot or the conventional process, that Amerco had required for any future — future shareholder meeting, and have that nomination accepted or have the vote accepted? A. I don’t see any way possible that a majority of the shareholders can effect a change in management through the election process. September 14, 1994, 9:40 a.m. [69] * * * In, in September of 1990 the board decided to, to start holding meetings in Tonopah, Tonopah, [70] Nevada, correct? 70a Appendix A A [DEFENDANT PAUL F. SHOEN] I am not sure on the date, but there was a decision made to start holding the meetings there, yes. Q_ Do you recall how the decision was made? A Notprecisely. I remember that, that I believe Jim Shoen opened the road atlas and started pointing out places in Nevada, I believe, at the time he was living there, and since we were, we were a Nevada Corp., that was generally agreed to hold the meetings in Nevada. Q_ Really, is it your opinion, Mr. Shoen, that the board has made it extremely difficult for shareholders to attend annual meetings by placing them in Tonopah? A Iam not sure. Q_ Well, let me ask you, there is no commercial airlines flying into Tonopah, are there? A Not that I am aware of. Q_ And the shareholders either drive some distance from some point, either, either probably there is air service into Reno and Las Vegas, they probably drive from Reno or Las Vegas? A Yes. Q Unless they want to charter an aircraft, correct? [71] A. Yes. Tila Appendix A Q And your knowledge in the past is Amerco, in fact, would use its own jet to go to these meetings? A. As far as I know they would. I don’t know precisely how they — I don’t know for a fact how they get to the meetings. They have had company aircraft. September 14, 1994, Afternoon Session [42] Q Well did you represent — let me name some of the Shoen family members, and I'll ask if you can recall whether or not you did represent these specific individuals. Somewhere around May of 1989, Samuel Shoen, L.S. Shoen, Theresa Shoen, Mary Anna Shoen-Eaton, Cecilia Shoen- Hanlon, Katrina Shoen, and Michael Shoen? A [WITNESS STEPHEN CASE] I represented all those people. I think your date is correct. Q It’s fair to say you also represented at various times Edward Shoen and Paul Shoen? A I represented all of you. Q Thank you. Mr. Case, I’m going to hand you what has been marked for identification purposes as Exhibit No. 221 and ask you if you can identity that document? A Yes, I can. Q And what is it? 72a Appendix A A This is a letter that 1 wrote on May 12 of 1989 to Samuel Shoen, L.S. Shoen, Theresa Shoen, Mary Anna Shoen-Eaton, Cecilia Shoen-Hanlon, Katrina Shoen, and to yourself, Michael. Q Thank you. Have you had an opportunity to review this letter, Exhibit 221, within the past two weeks outside of the courtroom? A Yes, I have. Q_ And looking at that Exhibit 221, this letter of May 12, 1989, is there anything in there that you see today [43] that was untrue when you wrote it on Mary 12" of 1989? A_ No, to the best of my knowledge it was accurate. Q And I am going to direct your attention, Mr. Case, to the first paragraph of that letter only, and am only going to ask you some questions with respect to the basis for — or rather any experiences you might have had that led you to make certain statements in this letter. Did you have an occasion in the preparation of this letter, or immediately prior to your authorship of this letter, did you have occasion to have a conversation with Joe Shoen? A Yes, I did. Q And during that conversation did you come to an understanding that Joe Shoen expressed any bitterness about anything? A_ Yes, he did. 73a Appendix A Q_ And what did he express bitterness about? A He was bitter about attacks on his family, and about process servers waiting and serving his children, minor children. Q First of all, when approximately was this conversation, or do you recall when the conversation was that you had with Mr. Joe Shoen prior to your authorship of this letter? A Idon’t really specifically recall the date, but it would have been immediately prior to my writing the letter. Q And do you recall where you were when the conversation [44] occurred, or where Mr. Joe Shoen was when the conversation occurred? A Ido. I was in my office in Scottsdale, and Joe was at the offices of Amerco. Q_ And did Joe Shoen during that conversation make any statement with respect to making life as difficult as possible under any pretext for any members of the Shoen family? A Yes, with regard to some stock certificate registration, he said he would make it as difficult as he could. * * * Q BY MR. SHOEN: Mr. Case, what statement did he make to the best of your recollection as to — what’s your best recollection as to the statement he made with respect to as difficult as possible? 74a Appendix A A That he would make the transactions, the registration of s [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1250%3A2. Public record. Not legal advice.