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The tempestuous family saga surrounding Redwood Meat Co. continued this morning in Courtroom Four of the Humboldt County Courthouse as a trio of attorneys argued about the legality of a recent stock transaction that gave a controlling interest in the company to notorious Arcata rancher Ray Christie. 

Cyndy Day-Wilson, representing minority shareholders Stephanie, Rachel and Russel Nylander, accused the defendants, John (their father) and Ryan Nylander (their cousin) of violating a temporary restraining order when they sold their majority stake in the company to Christie earlier this month.

“The court’s order was that there was to be a maintenance of the status quo pending the resolution of this lawsuit,” Day-Wilson said, referring to a directive from Judge Timothy Canning two weeks ago. “The defendants intentionally went out and sold the corporation in violation of the [order]. … They sold control of the corporation.” 

Defense attorney Dustin Owens, representing Redwood Meat Co., argued that the language of that restraining order was so “over-broad” that it effectively prohibits the company from conducting any business activities. He suggested modifications to the order “so that the business can potentially reopen and sell products or engage in business.”

Meanwhile, attorney Heather Burke, a partner at the Harland Law Firm, appeared for the first time on behalf of John and Ryan Nylander. Standing between Day-Wilson and Owens at the attorneys’ table, Burke told Judge Canning that she’d been retained by the defendants just yesterday.

The three lawyers stood shoulder-to-shoulder as they made their arguments to the judge.

Day-Wilson elaborated on an argument she submitted to the court on Tuesday, contending that Owens has a conflict of interest in the case in that he appears to be making arguments on behalf of defendants John and Ryan Nylander, rather than siding with what’s best for the company.

She said her clients received no notice before their dad and cousin sold their shares in the business, and they’ve been left powerless with a new majority owner at the helm. (She never mentioned Christie by name, though his attorney, Sacramento-based Stuart L. Smith, sat in the gallery behind her.)

“He [Christie] is going to take control of the corporation,” Day-Wilson said. “He’s going to take certain steps. He’s going to hire people, fire people, he’s going to go in and take control of property, potentially sell property. I mean, there’s lots of issues here. We don’t even know what the assets are of the corporation. We don’t even know what it is, exactly, that the shareholders allegedly sold to defendants.”

Day-Wilson, who is seeking a preliminary injunction to prevent the company from falling apart or being sold for parts without her clients’ input or involvement, said she’d been led to believe that John and Ryan Nylander needed to sell Redwood Meat Co. quickly due to the status of a conditional use permit. However, when she researched the matter, she discovered that there was no such permit — so the rush to get a deal done was based on a pure fiction.

“There was no reason this [stock sale] had to be done at this juncture,” she said. “They could have waited until the preliminary injunction hearing. Instead, they ignored the court’s order. … They went ahead and sold the stock. They sold the company. 

Here, Judge Canning voiced some skepticism. He noted that she was talking about the sale of corporate assets. “But it sounds as though what was sold was the shares. That’s not a corporate asset,” he said.

“But aren’t the shares the corporate asset?” she asked.

Canning was in the midst of saying, “I don’t believe so” when a voice called out from the gallery, saying, “No.” It was Smith, the attorney representing Ray Christie.

“Excuse me!” Day-Wilson interjected, spinning around to glare at Smith. She turned back to Judge Canning. “Your Honor, you and I are having a conversation. And I don’t need, you know … .”

Canning agreed and admonished the gallery to “keep your comments to yourself.” (Smith, chastened, apologized to the court.)

From there, the attorneys argued about various other matters, including whether or not the defendants had been properly served notifications of the proceedings. Pointing out the fact that John and Ryan Nylander were in attendance, Day-Wilson said they’d clearly gotten the message.

Owens insisted that he is, in fact, looking out for the best interests of Redwood Meat Co., saying the business “needs to oppose [the restraining order] so it can operate and start making money.” He also argued that the sale of company stock did not violate that order: “Common stock is not a corporate asset.”

Burke questioned whether Day-Wilson’s clients actually own any stock, since nobody seemed to be aware of their alleged stake until recently, and she argued that a preliminary injunction is too drastic a measure in this case. 

Day-Wilson assured the court that her clients are indeed shareholders and offered to supply Burke with documentation of that fact. And she stuck to her guns in asserting that the temporary restraining order has been violated.

“[I]f a preliminary injunction is not put in place, my clients are not going to have any remedy in terms of making sure the property is not sold [and the] value of the company is maintained.” While still not mentioning Christie by name, she said there is “great concern with the proposed buyer.” 

Canning eventually concluded that certain factual issues need to be presented before he can rule on the preliminary injunction request. He kept the temporary restraining order in place, though he sided with Owens by making the language of that order a bit narrower. Rather than simply maintaining the status quo, the order now specifies that no actions should be taken “outside the ordinary course of business without shareholder approval at a properly noticed meeting.”

The next hearing on the preliminary injunction matter was scheduled for Wednesday, Sept. 18 at 9:15 a.m.