Batchelder v. Kawamoto Appellees' Brief - Greines, Martin, Stein ...

plaintiff is not among them.'
Professor Kitazawa, for example, declares that
"ADR holders are not the shareholders of record" under Japanese law and
therefore "are not allowed to make the demand and then institute a derivative
action. "'l (I ER 54: 120 (Kitazawa Decl.) .) According to Professor Kitazawa:
The law on this point is undisputed; I know of no case or scholarly
opinion that argues otherwise.
Id.; see also I ER 52:(!3a,
9-10 (Henderson Decl.).) Indeed, Plaintiff was
unable to present any "case or scholarly opinion that argues otherwise." To the
contrary, his practicing-attorney experts conceded the point (I1 ER 71: 14a
(Hirakawa Decl.); I1 ER 72:(4 (Sakata Decl.)), and his Japanese-law scholar,
Professor Kitagawa, did not opine on the subject.
Upon purchasing ADRs, appellant became subject to the Deposit Agreement,
which governs the respective rights and obligations of Honda Japan, the depositary
(Morgan Guaranty), and the ADR holders. (I ER 57:75, Ex. A (Irino Decl.).)
The agreement grants ADR holders certain rights, but not the right to institute a
derivative action. At least one court has suggested that the only method by which
an ADR holder can pursue derivative litigation is to make a demand upon the
depository institution, which may then, as shareholder of record, pursue the
matter. Rothenberg v. United Brands Co. , [1977-1978 Transfer Binder] Fed. Sec.
L. Rep. (CCH) (1 96,045, at 91,693 (S.D.N.Y. May 11, 1977), aff'd, 573 F.2d
1295 (2d Cir. 1977).
Plaintiff is not, however, without remedies. As plaintiff concedes, he can
become a shareholder simply by exchanging his ADRs for shares of Honda Japan.
I1 SER 19. By choosing to continue to hold ADRs, plaintiff must accept the
limitations accompanying his status.