UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

1 1 1 1 1 1 1 0 1 Robert M. Ungar #00 O'LAVERTY & UNGAR 000 Gregory Lane Loomis, California 0 Telephone: (1 0-1 Fax (1 0- Attorneys for: Defendant, Bikram Choudhury OPEN SOURCE YOGA UNITY, a California Corporation, vs. Plaintiff, BIKRAM CHOUDHURY, an Individual, and DOES 1-0, Defendants. - // // // // // UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No.: C 0-1 PJH DEFENDANT, BIKRAM CHOUDHURY S, REPLY MEMORANDUM TO PLAINTIFF S OPPOSITION TO MOTION FOR JUDGMENT ON THE PLEADINGS, OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT OR SUMMARY ADJUDICATION RE STANDING AND JURISDICTIONAL ISSUES. [Filed concurrently with Declaration of Robert M. Ungar; Evidentiary Objections] Date: April 1, 00 Time: :00 A.M. Judge: Hon. Phyllis J. Hamilton Court: Courtroom Date Action Filed: July, 00-1- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 TABLE OF CONTENTS I. INTRODUCTION.....1 II. ARGUMENT. A. The Undisputed Facts And OSYU s Own Admissions Prove That OSYU Had Neither Members Nor The Indicia Of Membership At The Time The Lawsuit Was Filed..... 1. OSYU Bears the Burden of Proof. Relevant California Law Regarding Non-Profit Corporations... The Birth, History, and Organization of OSYU.. As A Matter of Law, OSYU Had No Members On The Date This Lawsuit Was Filed. No Legitimate Authorization for Filing this Lawsuit.. OSYU Lacks The Indicia Of A Traditional Membership Association B. OSYU Should Be Sanctioned For Violating Local Rules of Court.. C. OSYU Has Not Shown Or Even Argued That A Successful Resolution Of This Lawsuit Would Provide Relief For More Than A Single Member.. III. CONCLUSION. -i- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 Cases TABLE OF AUTHORITIES American Legal Foundation v. Federal Communications Commission 0 F.d (D.C. Cir. Federal Election Commission v. GOPAC, Inc., F. Supp. 1 (D.D.C.., Friends of the Earth, Inc. v. Chevron Chem. Co., F.d (th Cir... Group Health Plan, Inc. v. Philip Morris, Inc. F.Supp.d 1 (D. Minn. 000... Hunt v. Washington State Apple Advertising Comm n. U.S., S.Ct., L.Ed.d (, Individuals For Responsible Government v. Washoe County 1 F.d ( th Cir... United States v. Hays 1 U.S., S.Ct. 1, 1 L.Ed.d ( United States v. Wunsch F.d, 1 (th Cir. United States v. Miller Fd 1, 1 (rd Cir. 0.. Statues California Corporations Code 0....,.... (a(.., 1...., (a... -ii- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 TABLE OF AUTHORITIES Court Rules Civil Local Rules Rule -(a(1 Rule -(a( California Rules of Professional Conduct Rule -0(A -iii- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 REPLY MEMORANDUM I. INTRODUCTION When viewed in light of undisputed facts and uncontradicted documentary evidence, the various admissions made by OSYU in its opposition brief and supporting papers conclusively establish that it had no members as a matter of California law on the date suit was filed. This in itself requires this sham organization s lawsuit be dismissed with prejudice. There is, moreover, no longer any room for doubt that OSYU lacked (and continues to lack any of the indicia of a traditional membership organization that provide the rationale for special rules permitting organizations to sue on behalf of members. Indeed, it is now clear that OSYU was formed as and essentially remains a front for a single family and their business the McCauleys, their daughter Vanessa Calder, and their business Yoga Loka to avoid their promises, and finance their personal desire to pirate Mr. Choudhury s name and labor and palm off their own derivations on the public as genuine Bikram Yoga. This is not the kind of goal the doctrine of organizational standing was meant to facilitate. Nor is it a traditional purpose for a membership organization, notwithstanding OSYU s circular argument that this lawsuit itself is the purpose to which the lawsuit is germane. OSYU has also failed to demonstrate that any of its members reasonably feared imminent harm, or that successful resolution of this lawsuit would prevent harm to any of its members, with the possible exception of Vanessa Calder. OSYU concedes that all of the members it has identified other than Ms. Calder would still be liable to be sued for breach of contract even if OSYU were to obtain the declarations it seeks. Again, even assuming that OSYU were a bona-fide membership organization which it was not and is not the fact that even a successful resolution of OSYU s suit would remove the threat of harm to only a single member of a group of allegedly threatened persons suggests that the court should decline to exercise its discretion to entertain a declaratory relief action. For all of these reasons, OSYU cannot meet its burden of demonstrating that it has standing to maintain this lawsuit as a representative action, or that entertaining this action for declaratory relief would be appropriate. The Court should therefore grant Mr. Choudhury s motion and order -1- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 this suit dismissed with prejudice. II. ARGUMENT A. The Undisputed Facts And OSYU s Own Admissions Prove That OSYU Had Neither Members Nor The Indicia Of Membership At The Time The Lawsuit Was Filed. OSYU does not dispute that in order to have standing to maintain this action in a representative capacity, it must have had members on the date that it filed the lawsuit. Individuals For Responsible Government v. Washoe County, 1 F.d, ( th Cir. As much as OSYU twists and turns, it cannot avoid the effect of the undisputed documentary evidence, its own admissions, and governing California law that preclude a conclusion that it had members on the date suit was filed. This alone requires that this sham organization s lawsuit be dismissed with prejudice. 1. OSYU Bears the Burden of Proof As an initial matter, OSYU s brief addresses the wrong standard of proof, as it suggests that it is Bikram s burden to prove that OSYU does not have standing. In fact, it is the would-be litigant who bears the burden of demonstrating that it has standing to sue. United States v. Hays, 1 U.S.,, S.Ct. 1, 1 L.Ed.d (. Moreover, on the distinct issue of whether it is appropriate to entertain an action as one for declaratory relief, it is the proponent of that mechanism who bears the burden of persuasion. Here, undisputed facts and uncontradicted documentary evidence, along with OSYU s own admissions, make this burden an insurmountable one for OSYU.. Relevant California Law Regarding Non-Profit Corporations Under California law, a mutual benefit corporation, like OSYU, has no members unless provided for in the Articles of Incorporation or the By-Laws. Cal. Corp. Code (a provides: A corporation may admit persons to membership, as provided in its articles or bylaws, or may provide in its articles or bylaws that it shall have no members. In the absence of any provision in its articles or bylaws providing for members, a corporation shall have no members. [Emphasis added] California law also provides that a mutual benefit corporation shall transact business, and -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 select it officers, through a board of directors consisting of at least two directors, unless the articles or bylaws authorize a single director. Cal. Corp. Code (a( provides: A majority of the number of directors authorized in the articles or bylaws constitutes a quorum of the board for the transaction of business. The articles or bylaws may not provide that a quorum shall be less than one-fifth the number of directors authorized in the articles or bylaws, or less than two, whichever is larger, unless the number of directors authorized in the articles or bylaws is one, in which case one director constitutes a quorum. Under Cal. Corp. Code 0, "Board" means the board of directors of the corporation. Cal. Corp. Code 1 provides: (a A corporation shall have a chairman of the board or a president or both, a secretary, a chief financial officer and such other officers with such titles and duties as shall be stated in the bylaws or determined by the board and as may be necessary to enable it to sign instruments. (b Except as otherwise provided by the articles or bylaws, officers shall be chosen by the board and serve at the pleasure of the board, subject to the rights, if any, of an officer under any contract of employment. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.. The Birth, History, and Organization of OSYU It is undisputed that OSYU was incorporated by James Harrison, who is also the personal attorney of the McCauley family and their business, Yoga Loka. [Sandy McCauley Dec., 1, 1; :-:; William McCauley Dec.,, ; ] The McCauley s attorney, Mr. Harrison, is also OSYU s resident agent for service of process. [Moving Papers, Ex. G] On February, 00, Mr. Harrison filed Articles of Incorporation for OSYU as a mutual benefit corporation. [Moving Papers, Ex. A] The Articles of Incorporation do not provide for members or the number of authorized directors of OSYU. Mr. Harrison took no steps towards organization of OSYU prior to filing the -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 Complaint on July, 00. On the date the lawsuit was filed, the only person associated with OSYU was its incorporator, James Harrison. OSYU s Articles of Incorporation did not provide for members or directors, and it had no By-Laws. OSYU had no directors, officers or members on the day the Complaint was filed. Vanessa Calder correctly represented to the California Secretary of State that OSYU had no members as of July, 00. [Moving Papers, Ex. D; Opposition Brief. :1- ] Throughout the spring and summer of 00, OSYU had not documented any associate membership [Vanessa Calder Dec., :-1] because OSYU did not know who, if anyone, were willing to be members of OSYU before the lawsuit was filed. 1 [Vanessa Calder Dec., :1-0; Opposition Brief. 1:-] Accordingly, there were no members to identify in OSYU s original complaint. The day after filing the Complaint in this action, James Harrison resigned as Incorporator of OSYU and appointed Vanessa Calder the initial Director of OSYU, a public benefit corporation, effective July, 00. [Moving Papers, Ex. C] On July, 00, OSYU was not a public benefit corporation. OSYU was still a mutual benefit corporation. On July, 00, Vanessa Calder, as President and Secretary, signed a Certificate of Amendment of Articles of Incorporation of OSYU in an attempt to change the purpose of the corporation to a public benefit corporation for charitable purposes. The Certificate of Amendment was filed in the Office of the Secretary of State on July 1, 00. [Moving Papers, Ex. D] However, Vanessa Calder could not legitimately appoint OSYU officers because neither the original nor amended Articles authorized corporate acts by only one director. Cal. Corp. Code 0,, 1. Vanessa Calder could not, as the sole and initial director, appoint herself 1 After November 1, 00, Vanessa Calder circulated membership applications to try to determine who are supporters but preferred to remain anonymous from those who were willing to stand up and be counted as OSYU members. [Vanessa Calder Dec., :1-0] -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 as President and Secretary of OSYU, nor appoint the McCauley s attorney, James Harrison, as OSYU s Chief Financial Officer. [Moving Papers, Ex. F] California law requires a Board of at least two directors. On July, 00, Vanessa Calder as the sole and initial director of OSYU, a public benefit corporation, adopted By-Laws of the corporation. [Moving Papers, Ex. E] Vanessa Calder first circulated membership applications following the Case Management Conference in November 00. At this time, November, 00, OSYU did not know who, if anyone, was willing to be a member. [Vanessa Calder Dec.,, :1-0] OSYU filed an Amended Complaint on December, 00.. As A Matter of Law, OSYU Had No Members On The Date This Lawsuit Was Filed Under California law, OSYU had no members on the date this lawsuit was filed. The Articles of Incorporation did not provide for membership, voting or non-voting, and By-laws did not exist. In the absence of any provision in its articles or bylaws providing for members, a mutual benefit corporation shall have no members. Cal. Corp. Code (a. Vanessa Calder confirmed that fact to the California Secretary of State on July 1, 00 when she stated, under oath, that OSYU had no members. [Moving Papers, Ex. D] OSYU admits in its Opposition papers that, under California law, it had no members on the date the lawsuit was filed [Opposition Brief, :1-] and, did not know until after the Case Management Conference what persons, if any, were willing to be members. [Vanessa Calder Dec., :1-0]. No Legitimate Authorization for Filing this Lawsuit OSYU had no directors on the date this lawsuit was filed. Vanessa Calder was not appointed as the initial director of OSYU until the next day, July, 00. [Moving Papers, Ex. C] California mutual benefit corporations transact business through a lawfully constituted Board of Directors. Cal. Corp. Code provides: Each corporation shall have a board of directors. Subject to the provisions of this part and any limitations in the articles or bylaws relating to action required to be approved by the members -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 (Section 0, or by a majority of all members (Section 0, the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board. The board may delegate the management of the activities of the corporation to any person or persons, management company, or committee however composed, provided that the activities and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board. OSYU disregarded the express statutory requirement of a Board of Directors. OSYU had no directors prior to filing this lawsuit. No legitimate authority existed to transact business or exercise corporate powers --- including filing this lawsuit! Instead, the McCauley family, with no regard for California law and corporate authorization, instructed the McCauley family attorney, James Harrison, to file this lawsuit.. OSYU Lacks The Indicia Of A Traditional Membership Association OSYU argues that even though it had no members on the date the lawsuit was filed (July, 00, OSYU nevertheless had supporters and possessed sufficient indicia of a traditional membership association for associational standing. OSYU relies upon Friends of the Earth, Inc. v. Chevron Chem. Co., F.d (th Cir. in support of the position that OSYU possesses sufficient indicia of membership. OSYU s reliance is misplaced and the argument is without merit. In Friends of the Earth, as here, the organization had no members under state law. The Court then applied the indicia of membership" test in Hunt v. Washington State Apple Advertising Commn., U.S.,, S. Ct., L.Ed.d (. In Hunt, the plaintiff's members were found to have possessed the requisite level of control even though they were not "members" in the traditional trade association sense. Hunt, U.S. at -, S.Ct.. The Supreme Court based its decision, in part, on the following characteristics of the plaintiff's constituency: They alone elect the members of the Commission; they alone may serve on the Commission; they alone finance its activities, including the costs of this OSYU did not have a board of directors until after the Case Management Conference in November 00. [Vanessa Calder Dec.,, :-] -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 lawsuit, through assessments levied upon them. In a very real sense, therefore, the Commission represents the State's growers and dealers and provides the means by which they express their collective views and protect their collective interests. Unlike Hunt, here OSYU bears no resemblance to a traditional voluntary membership organization. At the time the lawsuit was filed: OSYU had no members. OSYU had no organizational means for membership. OSYU never provided any voting rights of membership. OSYU had no By-Laws. OSYU had no Directors. OSYU had no board of directors. OSYU had no corporate officers. OSYU filed a lawsuit without any legitimate corporate authority to do so. OSYU s only purpose was to file a lawsuit against Bikram Choudhury. OSYU had no members to pay dues and dues have never been assessed. [Vanessa Calder Dec., :-] OSYU was financed by supporters who were not members, and some of whose identities were not known to the McCauleys. [Vanessa Calder Dec., :1-0; William McCauley Dec.,, 1:1-] OSYU did not maintain membership records. [Vanessa Calder Dec., :-1] OSYU was incorporated by the McCauley family attorney, who took no steps to organize the corporation. Te McCauley family, and their lawyer, solely attempted to exercise OSYU s corporate power. OSYU argues that its supporters provided some financial assistance prior to filing the lawsuit, and that its supporters bear a sufficient indicia of membership. The argument has no merit. There is no standing for sympathetic contributors who have no privileges of membership. Federal Election Commission v. GOPAC, Inc., F. Supp. 1 (D.D.C. [applying the -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 "indicia of membership" test because plaintiff GOPAC is not a traditional voluntary membership organization such as a trade association, for it has no members at all] But even if supporters of OSYU could be considered constituents, in order to meet the indicia of membership test, the constituents must exercise a certain measure of control over the organization. Hunt, supra; Group Health Plan, Inc. v. Philip Morris, Inc. F.Supp.d 1 (D. Minn. 000 [This requirement assures the substantial nexus between the organization and its members necessary to meet the Article III injury requirement. Absent this element of control, there is simply no assurance that the party seeking judicial review represents that injured Party, and not merely a well-informed point of view]. OSYU supporters had no role in selecting OSYU leadership (as OSYU had no leadership or management at the time the lawsuit was filed; did not guide OSYU s activities (which was being directed only by the McCauleys and their attorney, but not through a board of directors; or, alone finance those activities [James Harrison was advancing costs on behalf of OSYU; William McCauley, who controls the bank account, thinks money came from yoga instructors and/or yoga studios who may, or may not, have been supporters ; Dec.,, 1:1-1]. OSYU had no membership body whose resources, votes and wishes steered OSYU s course. The McCauley s may have had reasons for instructing their attorney to institute this lawsuit on behalf of OSYU... other than to assert rights of supporters and so cannot be described as "but the medium through which individual[s]... seek to make more effective the expression of their own views." American Legal Foundation v. F.C.C., 0 F.d (D.C. Cir.. In addition to lacking all the various indicia discussed above, OSYU lacks a traditional purpose. By its own repeated admissions OSYU was formed to sue a single individual. This does not appear to be a purpose sufficiently analogous to those evinced by more traditional membership associations to implicate the policies underlying associational standing doctrine. Indeed, we were unable to find any reported examples of an organization even attempting to claim litigation against one man or entity as its purpose and attempting to assert associational standing. OSYU is little more than the alter ego of the McCauley family at the time this lawsuit was filed rather than a broad based representative organization. Indeed, members of the McCauley family are the only so called members who submitted declarations in support of its opposition. -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 Reference to undisputed facts, evidence, and admissions by OSYU establish beyond doubt that OSYU possessed virtually none of the traditional indicia of membership on the date it filed suit. B. OSYU Should Be Sanctioned For Violating Local Rules of Court On March 1, 00, OSYU s attorney, Ms. Elizabeth Rader, wrote a letter to Mr. John Marcoux in which she accused him of violating Disciplinary Rules of the Code of Professional Responsibility of the New York Bar. Ms. Rader therein threatened to report Mr. Marcoux to the New York State Bar unless he agreed to withdraw the declaration he filed in support of Bikram s opening brief. [Ungar Reply Dec., ; Ex. P, Rader Letter to Marcoux] Mr. Marcoux apparently consulted New York counsel and confirmed that there was absolutely no basis whatever for Ms. Rader s threats. Mr. Marcoux wrote to Ms. Rader to inform her of the basis for that conclusion and suggested she withdraw her accusations. [Ungar Reply Dec., ; Ex. Q, Marcoux Letter to Rader] As the Court is aware, attempting to influence testimony by offering to refrain from reporting illegal or unethical conduct is directly contrary to California Rules of Professional Conduct, Rule -0(A. [A member shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute] Moreover, such conduct may well constitute witness-tampering. Unfortunately, it appears that the very paradigm of this prohibited conduct occurred here. The language of Ms. Rader s letter leaves no doubt that she was conditioning turning Mr. Marcoux in to the authorities on Mr. Marcoux s willingness to alter his testimony in this case. Every member of the bar of this Court and any attorney permitted to practice in this Court under Civil Local Rule must comply with the standards of professional conduct required of members of the State Bar of California. Civil Local Rule -(a(1. In the event that a Judge has cause to believe that an attorney has engaged in unprofessional conduct, the Judge may, amongst other things, impose appropriate sanctions. Civil Local Rule -(a(. An attorney admitted to the State Bar may be disciplined under the court's inherent power for conduct that violates the State Bar's rules of professional conduct, including conduct that occurs outside court. United States v. Wunsch F.d, 1 (th Cir. One such sanction is disqualification of counsel. A district court's power to disqualify an attorney derives from its inherent authority to supervise the professional conduct of attorneys appearing before it. United -- Case No. C 0-1 PJH

1 1 1 1 1 1 1 0 1 States v. Miller Fd 1, 1 (rd Cir. 0. While the imposition of sanctions in these cases is entrusted to the court s broad discretion, disqualification of Ms. Rader is warranted for such seriously unethical conduct. OSYU is misusing contributed legal resources in an attempt to threaten, harass and intimidate. Surely, this is not conduct that legitimate California non-profit corporations are expected to engage in. No legitimate non-profit membership body would want its resources being used in such an unethical manner. This is the kind of conduct that ruthless individuals engage in --- not legitimate non-profit associations. C. OSYU Has Not Shown Or Even Argued That A Successful Resolution Of This Lawsuit Would Provide Relief For More Than A Single Member Even if OSYU had any members on the date it filed suit and it did not it would still be inappropriate to entertain this action for declaratory relief. OSYU does not deny that its members, excepting Vanessa Calder, have entered into verbal and/or written agreements with Bikram concerning certification to teach Bikram s Basic Yoga System, strict observance of the teaching method for Bikram s Basic Yoga System, and the use of Bikram s name in connection therewith. Some have affiliation agreements with Bikram. Therefore, this lawsuit will not provide complete relief for OSYU members, excepting maybe Vanessa Calder. Those members will still be bound to perform their promises to Bikram. [Moving Papers, Ex. N] Because members will not be afforded complete relief, it is not appropriate to maintain this lawsuit as a representative declaratory relief action. III. CONCLUSION The undisputed facts and documentary evidence, along with OSYU s own admissions, establishes beyond doubt that OSYU did not have standing to file this lawsuit on July, 00. Accordingly, the Court should grant Bikram s motion and dismiss this lawsuit with prejudice. DATED: March 1, 00 By: Respectfully submitted, O LAVERTY & UNGAR /S/ Robert M. Ungar Robert M. Ungar Attorney for Defendant BIKRAM CHOUDHURY -- Case No. C 0-1 PJH