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Canopy Files Motion to Dismiss Yarro From Board of Canopy
Saturday, February 19 2005 @ 02:10 PM EST

Here's Canopy Group and the Noordas' (the current Canopy management, as in Mr. Mustard) Motion to Remove Ralph J. Yarro III as Director and their Memorandum in Support.

Yarro has already been terminated for cause as Canopy's President and Chief Executive Officer, although he disputes the legality of the action, but this motion is to remove him from the Board of Directors. Because of Ray Noorda's health issues, there is a question as to whether he can act as a Director, and there is also an allegation that Yarro took advantage of Mr. Noorda's trust and exercised undue influence over to Noordas to get them to agree to things like the Equity Plan, and so I gather Canopy has decided to deal with all that by trying to remove Mr. Yarro by means of this motion.

The alternative, to try to do it by means of a corporate action, like on December 17th, would likely only result in Yarro litigating the action anyway, so it makes sense to just bring the motion, and let the Court decide, under its authority under the Utah Revised Business Corporation Act, Utah Code Ann. 16-10a-809. Statutes come into play when the corporate players can't get matters resolved among themselves. The court would in the end be drawn into it, in all likelihood anyway, due to questions about Mr. Noorda's mental capacity. There is another method in the bylaws, I believe, for choosing a new Director in the event of incapacity, but I wouldn't think the Canopy side wishes to follow that procedure, and incapacity has yet to be proven, and there may well be issues about the bylaws, for all I know. It's a mighty complex story, and we've just begun. The poor judge. It's going to be, for him, like trying to untie a knot in a shoe lace. You look at it and think, where do I begin?

The standard will be what is in the best interests of Canopy. Mr. Yarro will present his record, highlighting any successes he can claim; the opposition lists here what they claim is a record of fraud, self-dealing and wrongful self-enrichment, "gross abuses" of his position as a director, wasteful transactions, and "improper and dishonest conduct" to the detriment of the company and the majority shareholder, the Noorda Family Trust. Yarro is also accused of improperly acquiring an option by which he "may allegedly acquire forty percent of the company's non-voting shares." The memo in support alleges that in between 1999 and 2004, "Yarro took a total of at least $19,535,602 pursuant to the Incentive Plan and exercises of resale rights purportedly acquired pursuant to the Equity Plan. This amount does not include the value of options and stock improperly acquired by Yarro, generous amounts paid to Yarro as base compensation and annual bonuses, or compensation received by Yarro directly from Portfolio Companies."

The allegations are similar to those found in the original complaint, but highlight Mr. Yarro's role without the additional allegations against Darcy Mott and Brent Christensen, although they are mentioned in passing as aiding and abetting. The document goes on to say that the figure also does not include "excessive and wasteful" compensation paid to other Canopy employees.

You can get a glimpse of just how much money Yarro received from one portfolio company, SCO Group, in the figures in this earlier Groklaw article. In that article, a bio for Yarro listed approximately 20 companies where Yarro was Chairman of the Board at one time.

The motion mentions that there is an evidenciary hearing on March 8, so unless the court changes the date, I hope some of you can attend on that day. It would be held in Provo, at the Fourth District Court, 125 North 100 West, Provo UT 84601, 801-429-1000. It's always wise to call the court first, though, as there are often last-minute changes in scheduling. The motion also gives us more news:

"Concurrentlly with the filing of this Motion, Plaintiffs are filing a Motion requesting the Court to consolidate this action with the Yarro Action. Pursuant to Rule 42 of the Utah Rules of Civil Procedure, the Motion to Consolidate has been filed in the earlier-filed Yarro Action. An evidentiary hearing has been set in the Yarro Action commencing on March 8, 2005, to consider the Motion for Preliminary Injunction filed by Ralph J. Yarro, Darcy G. Mott, and Brent D. Christensen in that case. Canopy and the Noordas respectfully request that the Court set this Motion for an evidentiary hearing to be held concurrently with the evidenciary hearing presently scheduled for March 8-11, 2005, in the Yarro Action."

This means they are asking that both litigations be merged into one, which actually makes a lot of sense, since they are pretty obviously almost mirror images of the other, as far as facts and parties. However, it's up to the judge. We have the other filings mentioned, and I'll get them up on Groklaw as fast as I can.

We also have an important SCO v. Novell hearing too on the 8th, at 3 PM before Judge Kimball, so if any of you were planning to attend that one, please stick with those plans, and let us know what happens there. I'm thinking that if everyone planning to attend either hearing could let me know in advance, it would help me ensure we are covered for both. Thanks.


Canopy Files Motion to Dismiss Yarro From Board of Canopy | 217 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please
Authored by: Anonymous on Saturday, February 19 2005 @ 02:24 PM EST
if any....

[ Reply to This | # ]

OT here
Authored by: Anonymous on Saturday, February 19 2005 @ 02:26 PM EST
Including anything about Mean Mister Mustard......

[ Reply to This | # ]

Canopy Files Motion to Dismiss Yarro From Board of Canopy
Authored by: blacklight on Saturday, February 19 2005 @ 03:26 PM EST
With Ralph Yarro off the Board of Directors, Darl the Snarl's continued
employment is definitely vulnerable - And NASDAQ's delisting notice to SCO
hardly enhances Darl the Snarl's prospects.

[ Reply to This | # ]

follow the angel
Authored by: jig on Saturday, February 19 2005 @ 03:34 PM EST

follow the angel partners non-profit (yeah right) corp.

if yarro's been siphoning off assests from canopy, where things are overseen by
the sec, imagine what he's been doing at angel.

[ Reply to This | # ]

And this is important because...?
Authored by: Anonymous on Saturday, February 19 2005 @ 04:51 PM EST
<p>Sorry if I'm being dense, but how is this relevant to FOSS? SCO, as I
understand it, is an independent entity. Even if Canopy devours itself
completely, will that have any effect on anything that we care about, i.e. SCO,
Sun, IBM, Microsoft, Linux, the FSF, OSI and/or software patents?

<p>Are we just <em>gossiping</em> here?

[ Reply to This | # ]

Doctine of unjust enrichment
Authored by: Anonymous on Saturday, February 19 2005 @ 04:52 PM EST
This was mentioned on a nearlier post so here are a few details


Outline of the doctrine


Supreme Court ruling (North Dakota)

Five elements must be established to prove unjust enrichment:

1. An enrichment;
2. An impoverishment;
3. A connection between the enrichment and the impoverishment;
4. Absence of a justification for the enrichment and impoverishment; and
5. An absence of a remedy provided by law.


Supreme Court Illinois

1. Defendant receives a benefit
2. to the plaintiff's detriment, and
3. the defendant's retention of that benefit violates the principles of justice,
equity, and good conscience.


Alabamha Supreme Court


California Supreme Court


Iowa Appeals court


Utah Supreme Court


This should be enough to get a flavour of what lies ahead here.



[ Reply to This | # ]

Why use the court system?
Authored by: cmc on Saturday, February 19 2005 @ 05:06 PM EST
I don't understand the policies and practices of company boards, so perhaps
someone could help me here. Why would Canopy ask the court system to remove
Yarro as Director? Can't they just have a board meeting and vote on it? I
would assume (I know, stupid to do) that the rest of the board would want to get
rid of him considering the pending litigation. I don't understand why the court
system should waste it's time on this internal company matter.


[ Reply to This | # ]

Legal docs sections for Yarro/Noorda
Authored by: Khym Chanur on Saturday, February 19 2005 @ 09:38 PM EST
There should be a section on the Legal Docs page for articles like this.

Give a man a match, and he'll be warm for a minute, but set him on fire, and
he'll be warm for the rest of his life. (Paraphrased from Terry Pratchett)

[ Reply to This | # ]

Oh what a tangled web we weave...
Authored by: gotan on Saturday, February 19 2005 @ 10:11 PM EST
...When first we practice to deceive.
Could it be that the documentation that made Yarrow the head of Angel Partners
was the catalyst? I assume you canot make these changes over night? you need
people to sign off etc. Maybee this was what tipped Yarrows hand, he was putting
in a backup policy in casa the main play failed.

[ Reply to This | # ]

Canopy Files Motion to Dismiss Yarro From Board of Canopy
Authored by: Anonymous on Saturday, February 19 2005 @ 11:10 PM EST
Dear PJ, I am truly grateful for your Groklaw work. I have been able to follow
much of the IBM/Novell/RedHat/DCC/Autozone and Board of Regeants cases. I have
learned much about the law. It is an education in law
unequaled by anything short of college courses and then some.

I am able to entertain a failed buyout bid, extortion, hubris, MicroSoft
meddling, alternative interpretations of documents, federal and state
jurisdictions and wholesale obfuscations. That is a great achievement that I
credit to your remarkable skills and energy.

However I am failing to get the picture of family dynamics, the Noorda legacy,
fights for control of the Noorda Family Trust, Canopy, SCO, The Angel
Foundation, untimely death, death awaited and the interests of the Mormon

I would appreciate anything you could do to help me and, what I can only assume
is many others, understand these more recent revalations.


[ Reply to This | # ]

PJ - please!!!!
Authored by: Anonymous on Sunday, February 20 2005 @ 03:44 AM EST
As an insider at a portfolio company, and close to all the action I have
faithfully read groklaw but have now become sorely disappointed by the blind (or
at least closed eyed) hatred present here. SCO vs. Linux is one thing, Canopy
vs. Yarro is another. Let's try and be respectful of the innocent bystanders.
For example, all, but our CEO, in our company, a portfolio company, have never
met, nor talked to Ray, Ralph, Bill or Daryl. There are hundreds that Canopy
have helped under a more strict, business like way than suggested has been done
at SCO. For the record, many of the Canopy companies use and have a strong
affinity to FOSS. Before you ask, we can't influence the Canopy/SCO issue any
more than you can convince a horse to drink from a stagnant pond. -
"Mountain Cowboy"

[ Reply to This | # ]

stupid question
Authored by: mojotoad on Sunday, February 20 2005 @ 04:14 AM EST
but what does this '' sigil actually indicate?

.../me chagrinicious

[ Reply to This | # ]

Canopy Files Motion to Dismiss Yarro From Board of Canopy
Authored by: jim Reiter on Sunday, February 20 2005 @ 05:36 PM EST

The Yarro connection is too much of a coincidence to be
easily dismissed.

IF Yarro has engineered a take over of canopy, cheating an
eighty year old couple, who befriended him, and two
charities out of millions of dollars, why wouldn't he
behind the hi-jacking of Unix/Linux and the billions of
dollars in revenues and fees that that would bring to SCO,
where he is Chairman of the Board and Canopy is the chief

P.J. Here is the book I would want to write. Maybe you
could get with Bob Mims?

That is "IF" mind you. Nothing has yet been proven either

[ Reply to This | # ]

Authored by: jim Reiter on Sunday, February 20 2005 @ 09:37 PM EST

I just reread the "Memorandum in Support". If there was a reason for
Rob Penrose to commit suicide, it would be in the stock transactions and bonuses
at Canopy. The number of people involved spells RICO.

[ Reply to This | # ]

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