Opinion
Civil Action No. 02-7191.
January 20, 2004
MEMORANDUM AND ORDER
Plaintiff Barbara K. Martin brings this action against Defendant PNC Financial Services Group, Inc. ("PNC"), alleging violations of federal securities law and common law misrepresentation. Plaintiff's initial Complaint was dismissed without prejudice because it failed to meet the stringent pleading requirements for federal securities claims. Now before the Court is Defendant's Motion to Dismiss the Amended Complaint for failure to state a claim. For the reasons stated below, the Motion will be granted.
Plaintiff has voluntarily withdrawn her third claim, styled "Exemplary or Punitive Damages and Counsel Fees." See Praecipe to Withdraw Count III, filed August 19, 2003.
I. Background
Viewed in the light most favorable to Plaintiff, the relevant facts are as follows. On June 1, 2001, Plaintiff purchased ninety shares of the common stock of PNC. (Am. Compl. at ¶ 11). Beginning on July 19, 2001, PNC issued a series of press releases and SEC filings that overstated the company's profits and minimized its losses. (Am. Compl. at ¶¶ 16, 21, 25, 28). Plaintiff "continued to own" her PNC stock based in part upon these misrepresentations. (Am. Compl. at ¶¶ 14, 19, 24). On July 18, 2002, the Securities and Exchange Commission announced that it had charged PNC with exaggerating its profits, hiding troubled investments, and filing false financial reports, all of which caused inflation of the market value of its common stock. (Am. Compl. at ¶ 29). That same day, the value of PNC common stock plunged. (Am. Compl. at ¶ 31). The next day, Plaintiff sold her shares at a loss. (Am. Compl. at ¶ 32).
II. Legal Standard
When deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). The Court must accept as true all well-pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985). A Rule 12(b)(6) motion will be granted only when it is certain that no relief could be granted under any set of facts that could be proved by the plaintiff. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).
III. Analysis
A. Federal Securities Claim
It is evident from the face of the Amended Complaint that Plaintiff has not stated a cause of action against Defendant. Plaintiff alleges that Defendant violated Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) ("the Act"), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5(b) ("the Rule"), because she refrained from selling her shares in reliance on PNC's misrepresentations. Such claims cannot form a basis for liability under federal securities law. Plaintiff "cannot predicate liability on any activities of [PNC], no matter how fraudulent or deceptive they may have been, that induced [her] to `retain' [PNC] stock. Both the Act and the Rule authorize liability only for conduct occurring `in connection with the purchase or sale of any security.'" Walck v. Am. Stock Exchange, Inc., 687 F.2d 778, 790 (3d Cir. 1982) (citing Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975). See also Klein v. Opp, 944 F. Supp. 396, 398 (E.D. Pa. 1996). Plaintiff states that she purchased PNC stock on June 1, 2001, well before the earliest alleged misstatement on July 19, 2001. Since Plaintiff cannot be awarded relief under any set of circumstances, her federal securities claim must be dismissed.
B. Common Law Misrepresentation Claim
Under a federal court's supplemental jurisdiction, it may entertain state law claims when they are so related to federal claims within the court's original jurisdiction that they form part of the same case or controversy. 28 U.S.C. § 1367. However, if all federal claims are dismissed before trial, the court ordinarily should dismiss the state claims as well. United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966). Accordingly, this Court will not exercise supplemental jurisdiction over the state law claim.
IV. Conclusion
All of Plaintiff's claims against Defendant will be dismissed with prejudice. An appropriate Order follows.