Instructions and Background for Your Appellate Advocacy Case I. Background This is a corporate governance case. Corporate governance is: [T]he system of checks and balances meant to prevent abuse by executives. . . In theory, the need for corporate governance rests on the idea that when separation exists between the ownership of a company and its management, self-interested executives have the opportunity to take actions that benefit themselves, with the shareholders and [other] stakeholders bearing the cost of these actions. This scenario is typically referred to as the agency problem, with the costs resulting from this problem described as agency costs. Executives make investment, financing, and operating decisions that better themselves at the expense of other parties related to the firm. To lessen agency costs, some type of control or monitoring system is put in place in the organization. That system of checks and balances is called corporate governance. * * * * Corporate Governance [is] . . . the collection of control mechanisms that an organization adopts to prevent or dissuade potentially self-interested managers from engaging in activities detrimental to the welfare of shareholders. . . At a minimum, the monitoring system consists of a board of directors to oversee management and an external auditor to express an opinion on the reliability of financial statements. [footnoteRef:1] [1: Larcker and Tayan, Corporate Governance Matters (2011). ] In general, shareholders are not involved in the day-to-day operations of a corporation. However, as the United States Court of Appeals for the Third Circuit explained in Trinity Wall Street v. Wal-mart Stores, Inc. (July 6, 2015): Shareholders are permitted to vote on certain matters. Voting is held in connection with the annual shareholders meeting of the corporation. Given the size of most corporations and the wide distribution of shares, it is not practical to require shareholders wishing to vote to appear in person at the Annual Meeting. A shareholder that is unable to attend a company’s annual meeting isn’t disenfranchised. It can vote its shares by . . . empowering an attending shareholder to do so on its behalf. A public company that solicits proxies must distribute a proxy statement to each of its shareholders in advance of the annual shareholder meeting. The statement is an informational package that tells shareholders about items or initiatives on which they are asked to vote, such as proposed bylaw amendments, compensation or pension plans, or the issuance of new securities. The proxy card, on which the shareholder may submit its proxy, and the proxy statement are the “proxy materials. The SEC’s proxy rules are concerned with assuring full disclosure to investors of matters likely to be considered at shareholder meetings. To that end, the SEC adopted Rule 14a-9, which prohibits “false or misleading statements made in any proxy statement, form of proxy, noti.

1. Instructions and Background for Your Appellate Advocacy Case
I. Background
This is a corporate governance case. Corporate governance is:
[T]he system of checks and balances meant to prevent abuse by
executives. . . In theory, the need for corporate governance rests
on the idea that when separation exists between the ownership
of a company and its management, self-interested executives
have the opportunity to take actions that benefit themselves,
with the shareholders and [other] stakeholders bearing the cost
of these actions.
This scenario is typically referred to as the agency problem,
with the costs resulting from this problem described as agency
costs. Executives make investment, financing, and operating
decisions that better themselves at the expense of other parties
related to the firm. To lessen agency costs, some type of
control or monitoring system is put in place in the organization.
That system of checks and balances is called corporate
governance.
* * * *
Corporate Governance [is] . . . the collection of control
mechanisms that an organization adopts to prevent or dissuade
potentially self-interested managers from engaging in activities
detrimental to the welfare of shareholders. . . At a minimum, the
monitoring system consists of a board of directors to oversee
management and an external auditor to express an opinion on
the reliability of financial statements. [footnoteRef:1] [1:
Larcker and Tayan, Corporate Governance Matters (2011). ]
In general, shareholders are not involved in the day-to-day

2. operations of a corporation. However, as the United States
Court of Appeals for the Third Circuit explained in Trinity Wall
Street v. Wal-mart Stores, Inc. (July 6, 2015):
Shareholders are permitted to vote on certain matters. Voting is
held in connection with the annual shareholders meeting of the
corporation. Given the size of most corporations and the wide
distribution of shares, it is not practical to require shareholders
wishing to vote to appear in person at the Annual Meeting.
A shareholder that is unable to attend a company’s annual
meeting isn’t disenfranchised. It can vote its shares by . . .
empowering an attending shareholder to do so on its behalf. A
public company that solicits proxies must distribute a proxy
statement to each of its shareholders in advance of the annual
shareholder meeting.
The statement is an informational package that tells
shareholders about items or initiatives on which they are asked
to vote, such as proposed bylaw amendments, compensation or
pension plans, or the issuance of new securities. The proxy
card, on which the shareholder may submit its proxy, and the
proxy statement are the “proxy materials.
The SEC’s proxy rules are concerned with assuring full
disclosure to investors of matters likely to be considered at
shareholder meetings. To that end, the SEC adopted Rule 14a-
9, which prohibits “false or misleading statements made in any
proxy statement, form of proxy, notice of meeting or other
communication.” It has interpreted the rule to “require
companies to provide shareholders with the opportunity to
submit proposals to management for inclusion in the
corporation’s proxy materials.”
To compliment Rule 14a-9, the Commission promulgated
Rule 14a-8 “to catalyze what many hoped would be a functional

3. corporate democracy.” The rule mandates subsidized
shareholder access [that means that the company has to pay for
the printing and distribution of the proposal] to a company’s
proxy materials, requiring “reporting companies. . . to print and
mail with management’s proxy statement, and to place on
management’s proxy ballot, any proper proposal submitted by a
qualifying shareholder.
The hard part is soliciting votes to pass a proposal—especially
where the motivation is to raise awareness of a policy issue.
A shareholder can garner support in one of two ways. It can
“pay to issue a separate proxy statement, which must satisfy all
of the disclosure requirements applicable to management’s
proxy statement.” Or the shareholder can go the Rule 14a-8
route and have the company include its proposal . . . in the
proxy materials at the company’s expense.
Though the Rule 14a-8 option is financially advantageous, it
does not create an open forum for shareholder communication.”
Rule 14a-8 restricts the company-subsidy to “shareholders who
offer “proper” proposals.” [The Rule] addresses when a
company must include a proposal in its form of proxy. . . A
“proper” proposal is one that doesn’t fit within one of Rule 14a-
8’s exclusionary grounds—which are both substantive and
procedural. . .
The rule’s substantive exclusions. . . include . . . [1] the
“ordinary business” exclusion, which disallows a proposal that
“deals with a matter relating to the company’s ordinary business
operations”; [2] the “false and misleading” exclusion, which
allows companies to bar proposals that are too vague [emphasis
added]
****
There is a significant social policy exception to the default rule

4. of excludability for proposals that relate to a company’s
ordinary business operations. For the SEC staff this means that
when “a proposal’s underlying subject matter transcends the
day-today business matters of the company and raises policy
issues so significant that it would be appropriate for a
shareholder vote, the proposal generally will not be excludable
under Rule 14a-8(i)(7).
[As you will see] the difficulty in this case is divining the line
between proposals that focus on sufficiently significant social
policy issues that transcend a company’s ordinary business (not
excludable) from those that don’t (excludable) and whether the
proposal at issue is impermissibly vague.
The SEC recently provided the following guidance:
whether a proposal focuses on an issue of social policy that is
sufficiently significant is not separate and distinct from whether
the proposal transcends a company’s ordinary business. Rather,
a proposal is sufficiently significant ‘because’ it transcends
day­to­day business matters.”. . . The Commission “treats the
significance and transcendence concepts as interrelated, rather
than independent.”
. . .The Commission has stated that proposals focusing on a
significant policy issue are not excludable under the ordinary
business exception because the proposals would transcend the
day-to-day business matters and raise policy issues so
significant that it would be appropriate for a shareholder vote.
Thus, a proposal may transcend a company’s ordinary business
operations even if the significant policy issue relates to the
“nitty­gritty of its core business.” Therefore, proposals that
focus on a significant policy issue transcend a company’s
ordinary business operations and are not excludable under Rule
14a-8(i)(7). The Division intends to continue to apply Rule

5. 14a-8(i)(7) as articulated by the Commission and consistent
with the Division’s prior application of the exclusion, as
endorsed by the concurring judge, when considering no-action
requests that raise Rule 14a- 8(i)(7) as a basis for exclusion.
Your Case: Trinity v. Cabela’s
II. Procedural History
On December 18, 2015, Trinity Wall Street (the "Trinity")
submitted a shareholder proposal (the "Proposal") to Cabela's
Incorporated ("Cabela's") for inclusion in its proxy materials for
Cabela's 2016 Annual Shareholder's Meeting (the "Proxy
Materials").[footnoteRef:2] [2: The Record on Appeal is an
important Appendix to this assignment as it contains the letters
from counsel for Trinity and Cabela’s to the Securities and
Exchange Commission and the Commission’s response, which is
the subject of this appeal. ]
The Proposal requests that Cabela's Board of Directors adopt
and oversee the implementation of a policy to continue to sell
handguns and rifles discharging up to eight shells without
reloading, and not to sell (other than to police departments and
other military and law enforcement agencies of government)
firearms capable of discharging more than eight shells without
reloading.
The text of the resolution is as follows:
Consistent with the Company’s commitment in its Business
Code of Conduct & Ethics to “make business decisions not
based only on financial risk and reward, but also on the impact
to people, communities and the environment,” and with
Cabela’s being a store for outdoor enthusiasts and their
families,

6. shareholders ask the Board of Directors to adopt and oversee
the implementation of a policy to continue to sell handguns and
rifles discharging up to eight shells without reloading, weapons
connected to the sports of hunting and marksmanship,
and not to sell (other than to police departments and other
military and law enforcement agencies of government) firearms
capable of discharging more than 8 shells without reloading, the
weapons of choice for mass killings and illegal gun violence
(“high-capacity weapons”).
On January 29, 2016, Cabela's filed a request with the
Securities and Exchange Commission (“SEC”) [the government
entity that makes sure that proposed resolutions are appropriate]
asking for permission to ignore the proposal and not submit it
for a vote of shareholders.
On April 7, 2016, the SEC ruled in favor of Cabela’s and said
that it would not impose penalties on Cabela’s if it refused to
include Trinity’s Resolution in its proxy materials or submit the
resolution to a vote of Cabela’s shareholders. However, SEC
opinion letters do not limit Trinity’s ability to ask a court to
require Cabela’s to put the Resolution to a vote. As the SEC’s
Informal Procedures Regarding Shareholder Proposals provide:
It is important to note that the staff’s and Commission’s no-
action responses . . . reflect only informal views. The
determinations reached in these no-action letters do not and
cannot adjudicate the merits of a company’s position with
respect to the proposal. Only a court such as a U.S. District
Court can decide whether a company is obligated to include
shareholders proposals in its proxy materials. Accordingly a
discretionary determination not to recommend or take
Commission enforcement action, does not preclude a proponent,
or any shareholder of a company, from pursuing any rights he or
she may have against the company in court, should the

7. management omit the proposal from the company’s proxy
material.
On September 1, 2016, Trinity Church filed a declaratory
judgment action [that is, an action asking the court to declare
something] against Cabelas in the United States District Court
for the District of Delaware. It sought a declaration that
Trinity’s decision to omit the proposal from its Proxy Materials
was improper.[footnoteRef:3] [3: The procedural history and
facts have been adapted for this assignment and are, to some
extent, hypothetical.
]
III. Your Assignment
This is an appellate advocacy project. You will be placed in
groups of three. Each group will represent one party (Cabela’s
or Trinity). Each group will upload a brief (a five-page paper
making the argument in favor of the party the group represents.
Three people will serve as the judges for all of the arguments.
The role of the lawyers will be to draft a group five-page brief
(in favor of Trinity or Cabela’s) and to present oral argument to
the judges on December 9, 2016 at noon at the Pensylvania
Superior Court located at 6th and Walnut Street in the Reliance
Insurance building 17th floor. The briefs of the parties are due
on November 11, 2016 at 11:59 p.m.
The briefs will be submitted to blackboard. Judges should come
to the appellate argument with questions for counsel and be
prepared to challenge arguments counsel present. The judges
will upload their written five-page opinion by December 12 at
11:59 p.m., but the judges need to come to class on December
12 prepared to tell the class which party won and why.
Deadlines to upload briefs and court opinions for the people

8. who are not able to present in court are the same as those of the
people who are presenting in court. However, if you plan to
argue at Temple, you need to make arrangements with me to
schedule Oral Argument.
Appendix
1. The Record on Appeal
2. SEC Guidance October 22, 2015
3. Trinity v. Walmart (3rd Cir. July 6, 2015) (Introduction and
concurring opinion)
In the
States Court of Appeals for the Third Court
Trinity Wall ST Appellant
V.
Cabella’s
Appellee
BRIEF OF APPELLANT
Nicholas Lazzara
Meiduo Gong
Zhou Yang
Issues on Appeal
1. Whether Cabella’s should exclude Trinity’s proposal from the
shareholders of Trinity.
2. Whether Cabella needs to stop selling high-capacity guns in

9. the public.
Briefs of Trinity Wall Street
STATEMENT OF THE CASE
Case brief:
Trinity Church on Wall Street wants Cabela’s to discontinue its
sale of high-capacity weapons (guns that hold more than 8
bullets), so it submits a proposal to request that the issue be
addressed during Cabela’s upcoming annual shareholder
meeting. Trinity wants this proposal’s voting to opened to
Cabela’s shareholders.
Procedural History:
On December 18, 2015, Trinity Church submitted a shareholder
proposal to Cabela’s for its proxy materials to be included in
Cabela’s 2016 Annual Shareholder’s Meeting.
The Proposal requests that Cabela’s Board of Directors enforce
a policy that does discontinues the sale of firearms capable of
discharging more than eight shells without reloading.
On January 29, 2016, Cabela’s refused Trinity’s request. It
claimed the Proposal related to ordinary business matters and it
should be excluded from the Rule 14a-8(i)(7). Cabelas also
claimed proposal to be too vague. Therefore, Cabela’s filed a

10. request with the SEC, asking for permission to ignore the
proposal and not submit it for a vote of shareholders.
On February 17, 2016, Trinity listed several reasons to prove
Cabela’s has failed to establish that the Proposal may be
excluded pursuant to rule Rule 14a-8(i)(7) or Rule 14a-8(i)(3).
The argument included that: (1) Cabela’s should not only focus
on business reward, but also should consider the impact on
people, communities, and the environment; (2) The Proposal
addresses a policy issue that should not be excluded; (3) The
Rule 14a-8(i)(7) is vague identified that it should not be
excluded as well.
On February 25, 2016, Cabela’s regards the issues as ordinary
business matters and they firmly believed that they have the
same business position as Rite Aid and Home Depot.
Furthermore, the Company may exclude the proposal pursuant
to the Rule 14a-8(i)(7) because it is so vague and indefinite it
could be considered inherently misleading. Therefore, The
Company continues to believe that the Proposal may be
excluded from its 2016 Proxy Materials pursuant to Rule 14a-
8(i)(7) and Rule 14a-8(i)(3 ).
On the March 4, 2016, Trinity made an argument. Trinity
submitted some exhibits to show these types of high capacity
weapons, and it said Cabela’s would continue selling the Ruger
LC9 under the Proposal but would cease selling the Walther
P99.
On September 1, 2016, Trinity Church filed a declaratory
judgment action against Cabelas in the United States District
Court for the District of Delaware. It sought a declaration
stating Trinity’s decision to omit the Proposal from its Proxy
Materials was improper.

11. SUMMARY OF THE ARGUMENT
In this event, we represent Trinity Church in the suing of
Cabelas for excluding the shareholders’ proposal to sell high-
capacity weapons in the market. Cabelas has already violated
the shareholders’ benefits and they are also doing things which
will put our society into dangerous situations.
ARGUMENT
1. It is immoral for Cabela to sell more than 8-bullets weapons
to the public.
Statistics show that mass shootings have increased over the
years and the reason they are able to injure/kill so many people
is because of the size of the magazine. High capacity magazines
also helps aid terrorism. Examples over the last few years
include the shootings in San Bernadino and Orlando. These
shooting took away the lives many citizens of this country. So,

12. if Cabela is allowed to sale high-capacity weapons in the
market,the rate of shooting accidents will be increase to a large
extent. High-capacity magazines allow for greater damage to be
done in these horrific events of mass shootings and terrorsim.
2. Selling the high-capacity weapons in the market will
influence the benefits of shareholders.
Because of the increase in capacity of guns, more and more
people will worry about the shooting accident and terrorism in
the USA, and some of them may against this decision and refuse
to buy more than 8-bullets guns as their products. Also, because
of the guns control is very serious problem in the present
public, shareholders will lose their income in some areas which
will enable shareholders to influence their benefits. Also,
because of high-capacity firearms, these weapons will cause
some public security problems in the USA, and once these
troubles happened, it will decrease the fame of Cabela and
decrease the income of shareholders. Therefore, these are two
factors why selling high-capacity weapons will influence
shareholders’ benefits.
3.Cabela just exclude the shareholders’ proposal which should
not be excluded by the law.
In laws of the USA, there are two situations which make
proposals be excluded. The first is when the proposal includes
ordinary day-to-day business activity. The second situation is
when the proposals are too vague or too difficult to decipher.
However, in this case, we think Cabela is not familiar with the
law. First, Trinity wants Cabela to stop selling firearms that
shoot more than 8 bullets. This proposal is related with the
benefits of shareholders of Trinity and the security of public, so
we think it should be useful to Cabelas. Second, if this proposal
is regarded as useless advice to the company, it also cannot be
excluded because this proposal is related with the important
policy issue from thousands of day to day operations of the
business. This is because selling high capacity weapons is

13. immoral and will cause public security troubles in the society.
Also, it will decrease the fame of Cabelas and attack the
benefits of shareholders. The proposal is about the important
strategy of Cabelas and Trinity, so it can not be useless for
Cabela. Also, this proposal is simple, easy to understand and
has no controversial point in it. So, it is easy to define.
Because of these two reasons, we think Cabela should not
exclude Trinity’s proposal.
CONCLUSION
In conclusion, it is immoral for Cabela to sell high- capacity
weapons to individuals because it would increase the rate of
danger in public security. Also because of the result of more
strict guns control problem and decrease rate of Cabela’s fame,
it should be better for shareholders and company to stop selling
more than 8- bullet guns in the market. Furthermore, as one part
of shareholders, Cabela should not excluded the proposal of
Trinity. Cabelas violates the law by continuing to sell high-
capacity guns to the public and we cannot understand a
company whose managers have ability to ignore the proposal of
shareholders. We cannot imagine a world with full-filled high-
capacity firearms to perform our normal daily lives. The higher
rate of shootings and chaos of the management in the company
will be apparent in the future if the proposal is still excluded
by managers of Cabelas.
The victim list of shooting accident:
http://www.latimes.com/local/lanow/la-me-ln-san-bernardino-
shooting-victims-htmlstory.html
http://www.orlandosentinel.com/news/pulse-orlando-nightclub-
shooting/victims/os-pulse-nightclub-orlando-shooting-victims-
htmlstory.html
Respectfully Submitted
Zhou Yang
Mediuo Gong

14. Nicholas Lazzara
November 18, 2016