Louis G. Navellier, an Individual and Trustee and Shareholder of the Navellier Series Fund (Recently Renamed the Mfs Series Trust) Rosemary J. McLachlan Martin Billett William Rautenberg Faith C. Rautenberg Mark Schulz Gail Sullivan Thomas Sullivan v. Kenneth Sletten, an Individual and Trustee of the Navellier Series Fund (Recently Renamed the Mfs Series Trust) Donald Simon, Louis G. Navellier, an Individual and Trustee and Shareholder of the Navellier Series Fund (Recently Renamed the Mfs Series Trust) Rosemary J. McLachlan Martin Billett William Rautenberg Faith C. Rautenberg Mark Schulz Gail Sullivan Thomas Sullivan v. Kenneth Sletten, an Individual and Trustee of the Navellier Series Fund (Recently Renamed the Mfs Series Trust) Donald Simon, and Arnold Scott Roy Adams Massachusetts Financial Services, Rosemary J. McLachlan Louis G. Navellier, an Individual and Trustee and Shareholder of the Navellier Series Fund (Recently Renamed the Mfs Series Trust) Martin Billett William Rautenberg Faith C. Rautenberg Mark Schulz Gail Sullivan Thomas Sullivan v. Kenneth Sletten, an Individual and Trustee of the Navellier Series Fund (Recently Renamed the Mfs Series Trust), and Donald Simon

This appeal follows an Investment Company Act of 1940 ("ICA") action seeking to impose personal liability on the independent trustees of a mutual fund for the non-renewal of an investment advisory contract. After a fourteen-day trial, the jury determined that the independent trustees acted within their discretion under the business judgment rule in replacing the investment adviser.

Plaintiffs-Appellants are: (1) shareholders and former shareholders of the Navellier Series Fund ("Fund"); (2) the original investment adviser of the Fund, Navellier Management, Inc. ("NMI"); and (3) Louis Navellier, an interested trustee of the Fund (collectively, "appellants"). Defendants-Appellees are: (1) three former independent trustees of the Fund -Donald Simon, Kenneth Sletten, and Lawrence Bianchi (collectively, "independent trustees"); (2) Roy Adams, counsel for the independent trustees; (3) Massachusetts Financial Services ("MFS"), former investment adviser of the Fund; and (4) Arnold Scott, former trustee of the MFS Series Trust (collectively, "appellees").

Appellants challenge the district court proceedings on numerous grounds, complaining about pre-trial, trial, and post-trial rulings. Sletten cross-appeals both an imposition of sanctions against him and his counsel, and the dismissal of his counterclaim for breach of contract. We reject all of appellants' many claims, uphold the jury verdict exonerating the independent trustees, and affirm the judgment of the district court against appellants. On Sletten's cross-appeal, we affirm dismissal of his counterclaim but grant limited relief, holding that the district court abused its discretion in affirming the imposition of sanctions against cross-appellant Sletten and his counsel.

On May 15, 1993, Navellier organized the Fund as a Delaware business trust that would invest in an open-ended investment company or mutual fund. Navellier and one of his employees, Jack Drinkwater,1 served as interested trustees, while Simon, Sletten, and Bianchi served as independent trustees.2 Sam Kornhauser, Navellier's attorney, was hired as Fund counsel.3

On the day the Fund was organized, the Fund entered into an investment advisory agreement with NMI. Under this agreement, NMI provided investment advice and managed the Fund's assets. The initial term of the investment advisory contract was two years, annually renewable if approved by a majority of the independent trustees.

In January 1995, the independent trustees sought independent counsel. In October 1995, they hired Adams, an experienced mutual fund attorney, as independent counsel. Adams advised the independent trustees that, to fulfill their fiduciary obligations to the shareholders of the Fund, it was necessary to obtain certain financial information about NMI in order to conduct their annual review of the investment advisory agreement. Adams also told the independent trustees that he had concern about Kornhauser's abilities. Adams expressed the opinion that Kornhauser should not continue as counsel for the Fund while he remained counsel for NMI, Navellier, and Navellier's other businesses.

At a board of trustees' meeting on April 26, 1996, Navellier presented a motion to the trustees of the Fund to merge the Fund into the Navellier Performance Funds. This merger would have been a tax-free reorganization. The assets of the Fund would have been transferred to a portfolio of the Navellier Performance Funds in exchange for the shares of the Navellier Performance Funds. The merger would have terminated the independent trustees' positions.

The independent trustees deferred consideration of Navellier's merger proposal because they concluded that"further consideration would be premature given that the disinterested Trustees did not have any advance notice or information as to the relative merits of the proposal." The next order of business for the meeting was the annual review of the investment advisory agreement. The independent trustees expressed frustration at being asked to review and approve the investment advisory agreement without having received requested information from Kornhauser or NMI. The independent trustees then voiced their concern as to whether Kornhauser should continue as counsel to the Fund. A contentious discussion ensued, after which Navellier threatened to terminate his relationship with the Fund and left the meeting. The independent trustees then voted to remove Kornhauser as counsel to the Fund.

The independent trustees conditioned their future consideration of the merger proposal on review of certain information concerning the finances of Navellier and his companies. After Navellier refused to provide this information, the independent trustees contacted the Securities and Exchange Commission ("SEC") in an effort to compel Navellier to produce the information. This effort to obtain the SEC's assistance in compelling this information did not succeed. Thereafter, the independent trustees decided to put Navellier's proposed merger to a shareholder vote by way of a proxy prepared by NMI.

Pending resolution of the merger proposal, the independent trustees held a board of trustees meeting on March 13, 1997, and voted not to renew NMI's investment advisory contract, which was scheduled to expire by its terms on March 15, 1997. The independent trustees also voted to hire MFS as the Fund's investment adviser. MFS conditioned its agreement to become investment administrator on assurances that the current trustees would not continue as trustees after the vote of the Fund's shareholders.

Navellier and Alpers filed a complaint on April 9, 1997, seeking to enjoin the independent trustees from removing them as interested trustees. Navellier also requested injunctive relief to block the investment advisory agreement with MFS so NMI could regain its former position as investment adviser.

On April 10, 1997, the independent trustees voted to remove Navellier and Alpers from their positions as interested trustees. According to appellants, the independent trustees undertook this allegedly wrongful act to entrench themselves more completely, to neutralize opposition to their upcoming proxy, and to ratify their decision to hire MFS. The independent trustees then eliminated the two positions formerly held by Navellier and Alpers, reducing the trustees of the Fund.

On May 23, 1997, after the reorganization of the board of trustees, a shareholder vote was held to determine whether MFS should continue as investment adviser to the Fund. The proposal to retain MFS failed, receiving less than the required two-thirds vote of shareholders. Navellier refused to return to the Fund unless the independent trustees released him from liability and agreed to resign as trustees. The independent trustees signed a release, returned management of the Fund to NMI, and resigned.

On February 24, 1998, appellants filed a first amended class action complaint. The amended complaint alleged the following claims: (1) breach of fiduciary duty under the ICA and Delaware law against the independent trustees, MFS, and Scott; (2) breach of fiduciary duty and negligence under California law against Adams; and (3) waste and intentional interference with prospective economic advantage against all defendants. The independent trustees answered and filed a counterclaim for indemnity. Sletten also filed a separate counterclaim for breach of contract and bad faith. The district court made several pre-trial rulings, which left for trial only appellants' claims for breach of fiduciary duty and waste against the independent trustees and the independent trustees' counterclaims for indemnification. The district court later dismissed appellees' indemnity counterclaims without prejudice on appellees' motion.

Jury trial commenced on June 21, 1999. After a fourteenday trial, the jury returned a unanimous verdict for the independent trustees on all claims. The district court entered judgment on August 24, 1999. On September 8, 1999, appellants filed motions for judgment as a matter of law and for a new trial. The district court denied both motions. This appeal and cross-appeal followed.

Appellants contend that the district court erroneously dismissed the claims against Adams for breach of fiduciary duty and negligence pursuant to Federal Rule of Civil Procedure 12(b)(6). We disagree.

We review de novo a district court's dismissal of a complaint for failure to state a claim upon which relief can be granted. Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). "A key element of any action for professional malpractice is the establishment of a duty by the professional to the claimant. Absent duty there can be no breach and no negligence." Goldberg v. Frye , 217 Cal. App. 3d 1258, 1267 (1990). See also Skarbrevik v. Cohen, England & Whitfield, 231 Cal. App. 3d. 692, 701 (1991) ("An attorney generally will not be held liable to a third person not in privity of contract with him since he owes no duty to anyone other than his client.").

Applying California law, which the parties agree is controlling here, the California Supreme Court has explained that the determination of whether the duty undertaken by an attorney extends to a third person not in privity involves the balancing of various factors. These factors include: (1) "the extent to which the transaction was intended to affect the plaintiff," (2) "the foreseeability of harm to him," (3) "the degree of certainty that the plaintiff suffered injury," (4)"the closeness of the connection between the defendant's conduct and the injury suffered," (5) "the moral blame attached to the defendant's conduct," and (6) "the policy of preventing future harm." Goodman v. Kennedy, 556 P.2d 737, 742 (Cal. 1976) (internal quotation marks and citation omitted).

Applying these factors here, the district court correctly held that Adams, by advising the independent trustees, did not assume a duty of care to the Fund's shareholders. The district court reasoned that the shareholders were not the intended beneficiaries of Adams' counsel to the independent trustees; the harm alleged by the appellants (i.e., capital gains taxes) was not a foreseeable result of Adams' conduct; the connection between Adams' advice to the independent trustees and the alleged injury was remote and tenuous; no moral blame could be attached to Adams' conduct in advising the independent trustees of their obligations under the law; and strong public policy reasons militated against finding any duty owed by Adams to the shareholders.

We see no sound basis for disagreement with this analysis. Adams was representing the independent trustees. Nothing in that relationship suggested that he owed a duty to the shareholders of the Fund. To imply such a duty would be contrary to the sound policy requiring his undivided loyalty to his clients. We hold that the district court properly dismissed appellants' claims against Adams for breach of fiduciary duty and negligence.

B. Dismissal of ICA claims against MFS and Scott

Appellants contend that the district court erroneously dismissed their claims against MFS and Scott for breach of fiduciary duty under the ICA pursuant to Federal Rule of Civil Procedure 12(b)(6). The district court addressed three theories in dismissing appellants' claims against MFS and Scott for breach of fiduciary duty under the ICA. We address each theory in turn.

The ICA expressly provides that decisions regarding the renewal of investment advisory contracts are within the sole discretion of a fund's independent trustees.

[I]t shall be unlawful for any registered investment company having a board of directors to . . . renew . . . any contract or agreement . . . whereby a person undertakes regularly to serve or act as investment adviser . . . for such company, unless the terms of such contract or agreement and any renewal thereof have been approved by the vote of a majority of directors, who are not parties to such contract or agreement or interested persons of any such party . . .

15 U.S.C. §§ 80a-15(c) (emphasis added).

MFS is not alleged to have been, and never was, a trustee of the Fund. In fact, MFS did not become the Fund's investment adviser until March 15, 1997, two days after the independent trustees decided not to renew NMI's contract. Further, according to the Declaration of Trust, a trustee must be a natural person. Similarly, the independent trustees did not appoint Scott as a trustee of the Fund until April 13, 1997, nearly one month after the independent trustees voted not to renew NMI's contract. Additionally, because Scott was an officer and director of MFS, he served as an interested trustee of the Fund. By the plain terms of the ICA, interested persons are prohibited from participating in the vote to retain or replace an investment adviser. See 15 U.S.C.§§ 80a-15(c).

The district court properly concluded that neither MFS nor Scott were trustees to the Fund -and therefore did not owe a fiduciary duty to the shareholders -when the independent trustees decided to change investment advisers.

Appellants argue that MFS and Scott owed a fiduciary duty because they "were, in substance, acting as Trustee and Investment Adviser prior to March 15, 1997, irrespective of a formal agreement." The contention that MFS and Scott were "de facto" investment advisers has no basis in law and is contrary to the plain language of the ICA.

Appellants rely on Lutz v. Boas, 171 A.2d 381 (Del. Ch. 1961). Lutz, however, does not support the argument that a party becomes a trustee or investment adviser to fund shareholders simply by advocating its investment advisory services to the trustees. Rather, Lutz provides that where the agent of an investment advisory company enters into an explicit agreement with and receives compensation from a fund for advisory services, with the knowledge of the investment advisory company, the company cannot avoid ICA regulation by refusing to enter into a formal Investment Advisory Services agreement. Id. at 389-90.

Here, appellants failed to allege that MFS or Scott entered into any agreements -even informal ones -or that they received compensation for any purported advisory services. Lutz does not support appellants' theory that MFS and Scott were de facto trustees or investment advisers under the ICA.

Appellants also contend that they are helped by the terms "Advisory Board" and "Director" under the ICA, arguing that MFS became an "Advisory Board" and Scott a"Director" because they urged the independent trustees to replace NMI. This argument fails under the plain language of the ICA.

The ICA defines "Advisory Board" as an " elected or appointed" board with "advisory functions as to investments." 15 U.S.C. §§ 80a-2(a)(1) (emphasis added)."Director" is defined as "any director of a corporation or any person performing similar functions with respect to any organization." 15 U.S.C. §§ 80a-2(a)(12). Appellants have not alleged that MFS was elected or appointed in any capacity prior to the independent trustees' non-renewal of NMI's contract. Nor have appellants alleged that Scott was performing the functions of a director before the non-renewal of NMI's contract.

The district court properly concluded that MFS and Scott were not "de facto" investment advisers owing a fiduciary duty to the shareholders of the Fund.

The district court also properly concluded that MFS and Scott cannot be held liable for breach of fiduciary duty under the ICA on the theory that they "controlled" the independent trustees.

The ICA defines "control" as "the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company." 15 U.S.C. §§ 80a-2(a)(9). MFS and Scott could not have been "control persons " under the ICA, however, because the independent trustees do not fall within the definition of "controlled persons" under the ICA. "A natural person shall be presumed not to be a controlled person within the meaning of this subchapter." 15 U.S.C. §§ 80a-2(a)(9). This presumption can only be overcome by "a determination to the contrary made by the Commission." Id. No such determination has been made by the SEC here. MFS and Scott cannot be held liable for breach of fiduciary duty under a theory of control.

We hold that the district court properly dismissed appellants' claims against MFS and Scott for breach of fiduciary duty under the ICA.4

C. Dismissal of Delaware claims against MFS and Scott

Appellants also contend that the district court erroneously dismissed its claims against MFS and Scott for breach of fiduciary duty under Delaware common law. The district court addressed two theories in dismissing appellants' claims against MFS and Scott for breach of fiduciary duty under Delaware law.

As discussed above, neither MFS nor Scott owed a fiduciary duty to the Fund when the independent trustees decided not to renew NMI's contract to provide investment advisory services. Appellants cite no authority for the proposition that a third party with no contractual or legal relationship to the Fund can become subject to a fiduciary duty merely because it provided information about its services to the independent trustees. Delaware law is to the contrary. See Gilbert v. El Paso Co. 490 A.2d 1050, 1056 (Del. Ch. 1984) ("State law claims of . . . breach of fiduciary relationship must subsist on the actuality of a specific legal relationship, not in its potential.").

The district court properly determined that because neither MFS nor Scott owed a fiduciary duty to the shareholders of the Fund when the independent trustees decided not to renew NMI's contract, neither can be liable for breach of fiduciary duty under Delaware law.

The district court also correctly held that neither MFS nor Scott "controlled" the independent trustees under Delaware law. See Harriman v. E.I. DuPont De Nemours & Co., 372 F. Supp. 101, 106 (D. Del. 1974) ("[i]t is only when a person affirmatively undertakes to dictate the destiny of the corporation that he assumes such a fiduciary duty"); Gilbert, 490 A.2d at 1055 (outsiders do not become fiduciaries simply because they have a "superior bargaining position " with management; there must be "domination . . . through actual exercise of direction over corporate conduct").

Here, appellants failed to offer -and do not offer on appeal -any facts to establish that MFS and Scott affirmatively dictated the destiny of the Fund or dominated through actual exercise of direction over the independent trustees.

We hold that the district court properly dismissed appellants' claims against MFS and Scott for breach of fiduciary duty under Delaware common law.5

D. Dismissal of waste and interference with prospective economic advantage claims against MFS and Scott

Appellants contend that the district court erroneously dismissed Navellier's claims against MFS and Scott for waste and for intentional interference with prospective economic advantage pursuant to Federal Rule of Civil Procedure 12(b)(6). Appellants' arguments are without merit.

The parties agree that Delaware law is controlling on this issue. Delaware courts have explained that the legal test for waste is "severe." Glazer v. Zapata Corp. , 658 A.2d 176, 183 (Del. Ch. 1993). "Directors are guilty of corporate waste, only when they authorize an exchange that is so one sided that no business person of ordinary, sound judgment could conclude that the corporation has received adequate consideration." Id.

We hold that the district court properly dismissed the waste claims asserted against MFS and Scott. Under Delaware law, there is no basis for a waste claim against these parties who were not directors. Moreover, appellants' first amended complaint itself established that a shareholder proxy vote was legally required pursuant to Rule 15a-4 of the ICA, which also shows there could have been no waste.

2. Interference with prospective economic advantage

California recognizes a "competition privilege," which protects one from liability for inducing a third person not to enter into a prospective contractual relation with a business competitor.

The privilege applies where (a) the relation [between the competitor and third person] concerns a matter involved in the competition between the actor and the competitor, and (b) the actor does not employ improper means, and (c) the actor does not intend thereby to create or continue an illegal restraint of competition, and (d) the actor's purpose is at least in part to advance his interest in his competition with the other.

Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Vill. Square Venture Partners, 52 Cal. App. 4th. 867, 880 (1997) (internal quotation marks and citations omitted). See also Penna v. Toyota Motor Sales, U.S.A., Inc., 902 P.2d 740, 751 (Cal. 1995) (holding that plaintiff who seeks to recover for an alleged interference with prospective economic relations must prove that the defendant "engaged in conduct that was wrongful by some legal measure other than the fact of interference itself."). The competition privilege clearly applies to MFS' and Scotts' actions as alleged in the amended complaint, and nothing about their competitive conduct was wrongful.

We hold that the district court properly dismissed the claims against MFS and Scott for intentional interference with a prospective economic advantage.

E. Dismissal of counterclaims without prejudice

Appellants allege -in one paragraph without citation to the record or authority -that the district court abused its discretion in dismissing appellees' indemnity counterclaims without prejudice. Appellants contend that "[t]he jury should have been informed that those claims had not merely vanished but that Defendants might refile and seek $3.5 million in attorneys fees . . . ."

Appellants' argument is frivolous. The decision to grant a voluntary dismissal under Federal Rule of Civil Procedure 41(a)(2) is addressed to the sound discretion of the district court. Sams v. Beech Aircraft Corp., 625 F.2d 273, 277 (9th Cir. 1980). A dismissal without prejudice pursuant to Rule 41(a)(2) leaves the parties where they would have stood had the lawsuit never been brought. In re Corey, 892 F.2d 829, 835 (9th Cir. 1989) (citation omitted).

Appellants' bare allegation of error does not demonstrate that the district court abused its discretion in dismissing appellees' indemnity counterclaims without prejudice. See Hamilton v. Firestone Tire & Rubber Co., 679 F.2d 143, 145 (9th Cir. 1982) (possibility of later suit does not rise to the level of legal prejudice that would allow the court to deny a dismissal without prejudice).

F. Summary judgment on intentional interference with prospective economic advantage claim

Appellants allege that the district court erroneously granted summary judgment on NMI's claim against the independent trustees for intentional interference with prospective economic advantage. The district court correctly held that there were no triable issues of fact as to two essential elements of this claim.

We review de novo the district court's order granting summary judgment. Covey v. Hollydale Mobilehome Estates, 116 F.3d 830, 834 (9th Cir. 1997). Viewing the evidence in the light most favorable to appellants, we must determine whether there are genuine issues of material fact and whether the district court properly applied the law. Forsyth v. Humana, Inc., 114 F.3d 1467, 1474 (9th Cir. 1997).

To state a claim for intentional interference with prospective economic advantage, a plaintiff must prove: (1)"the reasonable probability of a business opportunity," (2) "the intentional interference by defendant with that opportunity," (3) "proximate causation," and (4) "damages, all of which must be considered in light of a defendant's privilege to compete or protect his business interests in a fair and lawful manner." DeBonaventura v. Nationwide Mut. Ins. Co., 419 A.2d 942, 947 (Del. Ch. 1980) (internal citations omitted). See also Crosstalk Prods., Inc., v. Jacobson, 65 Cal. App. 4th 631, 646 (1998) (stating elements of tort of intentional interference with prospective economic advantage under California law).

First, appellants failed to present evidence demonstrating a reasonable probability that NMI would continue as the investment adviser to the Fund. Appellants point to no evidence in the record which, when viewed in a light most favorable to their position, demonstrates that NMI had a reasonable expectation of continuing as the Fund's investment adviser. Rather, appellants simply assert that "a Board that was acting with proper motives" would have renewed NMI's contract. This is not, however, evidence of a "reasonable" expectation of a continuing business relationship. The district court properly concluded that NMI did not have a reasonable expectation of continuing as the Fund's investment adviser.6

Appellants also failed to point to evidence demonstrating damages. As the district court noted, "the claim must still fail because the damages flowing from defendants' interference with this prospective business relationship are too speculative. `It is black-letter law that damages which are speculative, remote, imaginary, contingent or merely possible cannot serve as a legal basis for recovery.' " (Quoting Mozzetti v. City of Brisbane, 67 Cal. App. 3d 565, 577 (1977)).

Because appellants failed to present evidence demonstrating that NMI had a reasonable expectation of continuing as the Fund's investment adviser and did not establish actual damages, we hold that the district court properly granted summary judgment on NMI's claim for intentional interference with prospective economic advantage.

G. Summary judgment on Sletten's counterclaims

On cross-appeal, Sletten contends that the district court erroneously granted summary judgment on the breach of contract counterclaims that he asserted against Navellier and NMI. We disagree.

Before returning the Fund to Navellier, Sletten and the independent trustees executed the following release:

In consideration of the covenants, promises and agreements contained herein, Donald Simon, Kenneth Sletten and Lawrence Bianchi (collectively "Trustees") . . . release and fully discharge Louis Navellier, Navellier Management, Inc., and their predecessors, successors and related entities . . . from all rights, claims and causes of action of any kind or any nature whatsoever, known or unknown, in law or at equity, which the Trustees have or may have against them except for any claim for contribution or indemnity in the event that any third party asserts claims and recovers against the Trustees.

Sletten concedes that, if valid and enforceable, this release bars his counterclaims. Sletten contends, however, that there are genuine issues of fact as to whether the release is unenforceable on grounds of unconscionability or duress.

Under California law,7 a court may refuse to enforce a facially valid contract that is unconscionable. See Graham v. Scissor-Tail, Inc., 623 P.2d 165, 173-74 (Cal. 1981). Unconscionability has both a "procedural" and a"substantive" aspect. The procedural aspect is manifested by (1)"oppression," which refers to an inequality of bargaining power resulting in no meaningful choice for the weaker party, or (2) "surprise," which occurs when the supposedly agreed-upon terms are hidden in a document. A & M Produce Co. v. FMC Corp., 135 Cal. App. 3d 473, 486 (1982). Substantive unconscionability, on the other hand, refers to an overly harsh allocation of risks or costs which is not justified by the circumstances under which the contract was made. Id. at 487; see also Stirlen v. Supercuts, Inc., 51 Cal. App. 4th 1519, 1532 (1997) (substantive unconscionability is indicated by contract terms so one-sided as to "shock the conscience"). Both procedural and substantive unconscionability must be present before a contract or clause will be held unenforceable. Carboni v. Arrospide, 2 Cal. App. 4th 76, 83 (1991).

Here, the record indicates that there are no genuine issues of material fact indicating that the challenged release was either procedurally or substantively unconscionable. As the district court noted, Sletten freely chose to waive his legal rights in order to preserve the stability of the Fund, he was well-represented by counsel, and he had adequate time to pursue other alternatives. And, as the district court properly found, the release "is also not unconscionable because it was `one-sided,' nor does it shock the conscience."

A release may be invalidated on the ground of economic duress when a party is subject to a wrongful act such as a threat and must succumb to the wrongdoers or face financial ruin. Sheehan v. Atlanta Int'l Ins. Co., 812 F.2d 465, 469 (9th Cir. 1987). The wrongful act must be " `sufficiently coercive to cause a reasonably prudent person faced with no reasonable alternative to succumb to the perpetrator's pressure.' " Id. (quoting Rich & Whillock, Inc. v. Ashton Dev., Inc., 157 Cal. App. 3d 1154, 1158 (1984)).

There are no genuine issues of material fact indicating that the challenged release was procured though economic duress. Sletten had more than one alternative to signing the release and accepting NMI's return as investment adviser. Sletten might have hired a company named Neuberger and Berman as investment adviser, liquidated the Fund, appointed a receiver, or found another investment adviser. While Sletten may have found these choices unattractive, the district court properly found that "there was no economic duress, as none of these choices would have caused Sletten . . . to face economic ruin."Because there were no material issues of fact as to the validity or enforceability of the release, we hold that the district court properly granted summary judgment on Sletten's counterclaims.

Appellants contend that the district court abused its discretion by denying class certification pursuant to Federal Rule of Civil Procedure 23(b)(3). We review the denial of class certification for abuse of discretion, Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001), and must determine whether the district court applied the proper legal criteria. "While the trial court has broad discretion to certify a class, its discretion must be exercised within the framework of Rule 23." Id.

The district court gave five grounds for denying class certification pursuant to Rule 23(b)(3), each of which sustains the denial. The district court held that: (1) individual questions predominate over common questions; (2) intra-class conflicts preclude certification; (3) Kornhauser, as class counsel, "cannot adequately represent the class;" (4) Navellier was neither a typical nor adequate class representative and was subject to unique defenses; and (5) the remaining class members were not appropriate class representatives.

Appellants' challenge to the district court's denial of class certification is supported by virtually no citations to authority and no citations to the record. For example, as to three of the district court's independent grounds justifying denial of certification, appellants simply argue: "[T]here are no intra or interclass conflicts, there are no unique defenses as to Mr. Navellier which would preclude him or any of the other Plaintiffs from acting as class representatives." These bald assertions do not establish that the district court abused its discretion in denying class certification.

The district court correctly applied Rule 23 and each ground advanced is independently sufficient to support the denial of certification. See, e.g., Valentino v. Carter-Wallace, 97 F.3d 1227, 1230 (9th Cir. 1996) (failure to show predominance of individual questions); Georgine v. Amchem Prods., Inc., 83 F.3d 610, 630 (9th Cir. 1997) (intra-class conflicts); Hatch v. Reliance Ins. Co., 758 F.2d 409, 416 (9th Cir. 1985) (class counsel's inadequacy); Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 480 (9th Cir. 1983) (inadequate class representative).

We hold that the district court did not abuse its discretion in denying class certification.

Appell