From Casetext: Smarter Legal Research

In re Media Vision Technology

United States District Court, N.D. California
Sep 23, 2003
No. C 94-1015 MJJ (N.D. Cal. Sep. 23, 2003)

Opinion

No. C 94-1015 MJJ

September 23, 2003


ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT


INTRODUCTION

Before the Court is Plaintiffs' motion for summary judgment against Defendants Paul Jain and Steven Allan (collectively, "Defendants") with respect to alleged violations of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities and Exchange Commission ("SEC") Rule 10b-5, 17 C.F.R. § 240.10b-5. Allan does not oppose Plaintiffs' motion, and Jain has failed to submit a meaningful opposition. Thus, in order to resolve this motion, the Court must determine if Plaintiffs have established that there are no issues of material fact, and they are entitled to summary judgment. Having considered Plaintiffs' briefing in this matter, the Court GRANTS Plaintiffs' motion.

Section 10(b) of the Exchange Act provides: "It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange . . . [t]o use or employ, in connection with the purchase or sale of any security registered on a national securities exchange . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors."

Exchange Commission Rule 10b-5 provides: "It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security."

In response to the Court's order to show cause, Jain simply submitted a request for additional time for the parties to work out a reasonable agreement. However, Plaintiffs have given no indication that they seek to reach such an agreement.

FACTUAL BACKGROUND

This case involves financial fraud at the now-defunct Fremont, California technology company, Media Vision, Inc. ("Media Vision"). Defendants Jain and Allan were, respectively, Media Vision's chief executive officer ("CEO") and chief financial officer ("CFO").

On August 15, 2002, Allan was convicted of three counts of wire fraud in violation of 18 U.S.C. § 1343 and 2 for arranging a false confirmation of $6 million in phoney inventory to Media Vision's public auditors, Ernst Young ("EY") ("Hotz inventory"), and making false statements during two conference calls with stock analyst and investors. Declaration of Caryn Becker ("Becker Decl."), Exhs. B. H. Allan was also convicted of two counts of making false statements to accountants in violation of 15 U.S.C. § 78j(b)(2) and 78ff(a), 17 C.F.R. § 240.13b2-2, and 18 U.S.C. § 2. Id. Jain pleaded guilty to two violations of § 1343 based on his involvement in confirming the Hotz inventory and making false statements to stock analysts and investors. Id., Exhs. C, D, H.

LEGAL STANDARD

Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. F.R.C.P. 56(c). The moving party bears the initial burden of establishing that there is no genuine issue of material fact. Id.; Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the moving party does not bear the burden of proof at trial, the initial burden of showing that no genuine issue of material fact remains may be discharged by demonstrating that "there is an absence of evidence to support the non-moving party's case." Id. at 325. The moving party is not required to produce evidence showing the absence of genuine issues of material fact. See Lujan v. National Wildlife Fed'n, 497 U.S. 871, 885 (1990). Nor must the moving party support his or her own motion with evidence negating the non-moving party's claim. See id.

After the moving party makes a properly supported motion, the responding party must present specific facts showing that contradiction is possible. British Airways Bd. v. Boeing Co., 585 F.2d 946, 950-52 (9th Cir. 1978). It is not enough for the responding party to point to the mere allegations or denials contained in the pleadings. Instead, it must set forth, by affidavit or other admissible evidence, specific facts demonstrating the existence of an actual issue for trial. The evidence must be more than a mere "scintilla;" the responding party must show that the trier of fact could reasonably find in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). However, in reviewing a motion for summary judgment, the Court does not make credibility determinations with respect to evidence offered, and is required to draw all inferences in the light most favorable to the non-moving party. See T. W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987). Summary judgment is therefore not appropriate "where contradictory inferences may reasonably be drawn from undisputed evidentiary facts. . . . " Hollingsworth Solderless Terminal Co. v. Turley, 622 F.2d 1324, 1335 (9th Cir. 1980).

ANALYSIS

Based on the facts underlying Defendants' wire fraud convictions-facts which Jain admitted to in his plea agreement-there are no issues of material fact as to whether Defendants engaged in fraudulent conduct while at Media Vision. Specifically, Jain admitted his participation in confirming the phoney Hotz inventory and making false statements to stock analysts and investors. Therefore, Plaintiffs are entitled to summary judgment with respect to their claim that Defendants violated Section 10(b) and Rule 10(b)(5), both of which prohibit fraud in connection with the purchase or sale of any security. See Parklane Hosiery v. Shore, 439 U.S. 322, 326-332 (1979) (endorsing the offensive use of collateral estoppel by private securities litigants against defendants who were found to have violated the anti-fraud provisions of federal securities laws in an earlier suit brought by the SEC).

CONCLUSION

Therefore, the Court GRANTS Plaintiffs' motion for summary judgment in the amount of $188,047,938.55. IT IS SO ORDERED.


Summaries of

In re Media Vision Technology

United States District Court, N.D. California
Sep 23, 2003
No. C 94-1015 MJJ (N.D. Cal. Sep. 23, 2003)
Case details for

In re Media Vision Technology

Case Details

Full title:In Re MEDIA VISION TECHNOLOGY, SECURITIES LITIGATION

Court:United States District Court, N.D. California

Date published: Sep 23, 2003

Citations

No. C 94-1015 MJJ (N.D. Cal. Sep. 23, 2003)