Opinion
Case No. 99-CV-862-K (J)
May 8, 2002
Max K. Naegler, Glenpool, OK for Plaintiffs.
David Spears, Lucinda O. McConathy, Lynda Imes, Lauren E. Fischer and Richards Spears, New York, NY, for Plaintiffs.
Pamela Helana Goldberg, James M. Reed, Richard Mark Petrich and Hall Estill, Tulsa, OK, for Defendants.
ORDER
Before the Court are the objections of certain defendants to the Report and Recommendation of the United States Magistrate Judge. Because this is a potentially dispositive matter, the Court's review is de novo.
The Court hereby incorporates by reference, as pertinent, the Order filed March 28, 2002 in MPF Limited v. Bartmann, 99-CV-829-K. The Court elected to treat the case at bar and three other cases separately, to address unique issues. The plaintiffs in these cases are represented by different counsel than are the plaintiffs in the other CFS litigation before this Court, and have filed their own response to defendants' objections to the Report and Recommendation.
The above-styled case presents an issue not implicated in the majority of the CFS cases: plaintiffs' standing to sue. It appears plaintiff AIG sues, in part, as transferee of Beacon Hill, an alleged purchaser, Plaintiff AIG contends it became a transferee prior to knowledge or notice of any alleged fraudulent overvaluation of CFS securities, Certain defendants moved for dismissal of these claims based on lack of standing.
Magistrate Judge Joyner did not accept this ground based upon "the following rule. . . : When a party sells a security before the basis for a Rule 10b-5 claim with regard to that security has been publicly disclosed, an intent to assign the 10b-5 claim can be inferred from the transfer of the security itself. When a patty sells a security after the basis for a Rule 10b-5 claim . . . has been publicly disclosed . . . an express assignment is needed." R R at 19-20). In the present objections, defendants have demonstrated that Magistrate Judge Joyner's position appears to be against the weight of extant authority.
However, it is not clear that the opposing authority states an absolute rule, and Magistrate Judge Joyner's attempt to distinguish these cases is not implausible. Most significantly, the Tenth Circuit has not squarely addressed the issue. Each side has cited a footnote from two different Tenth Circuit opinions, but the Court declines to elevate either footnote to the level of binding precedent. "Surely it is not a coincidence that courts frequently categorize as dicta language that is relegated to footnotes." Oxy USA, Inc. v. Babbitt, 230 F.3d 1178, 1186 (10th Cir. 2000), vacated on other grounds, 268 F.3d 1001 (10th Cir. 2001). The Magistrate Judge is affirmed.
It is the Order of the Court that the Report and Recommendation of the United States Magistrate Judge (#307) is hereby adopted and affirmed in its result.
The motion of defendant Temple to dismiss (#42) is hereby GRANTED as to claims under § 12(a)(2) of the 1933 Securities Act and claims under § 15 of the 1933 Securities Act and is otherwise DENIED.
The motions of defendant Brady to dismiss (##44 56) are hereby GRANTED as to claims under § 12(a)(2) of the 1933 Securities Act and claims under § 15 of the 1933 Securities Act and is otherwise DENIED.
The motion of defendant Arthur Andersen LLP to dismiss (#91) is hereby DENIED.
The motion of defendant Benediktson to dismiss (#47) is hereby GRANTED as to claims under § 15 of the 1933 Securities Act and is DENIED in other respects.
The motion of defendant Hadden to dismiss (#45) is hereby DENIED.
The motion of defendant Mayer Brown to dismiss (#89) is hereby DENIED.
The motion of defendant Sill to dismiss (#250) is hereby DENIED.