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dismissing case because plaintiff did not identify materially misleading misstatements
Summary of this case from Poptech, L.P. v. Stewardship Investment Advisors, LLCOpinion
No. 09-3487-cv.
April 7, 2010.
Appeal from the United States District Court for the Southern District of New York (Stein, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the judgment of the United States District Court for the Southern District of New York be AFFIRMED.
Lee Squitieri, Squitieri Fearon, LLP, New York, NY, for Appellant.
John D. Donovan, Jr. (Christopher G. Green, C. Thomas Brown, and Amy D. Roy, on the brief), Ropes Gray LLP, Boston, MA, for Appellees.
Present: PIERRE N. LEVAL, ROBERT D. SACK, and RICHARD C. WESLEY, Circuit Judges.
SUMMARY ORDER
Plaintiff-appellant Bert Vladimir ("plaintiff), lead plaintiff in this securities fraud class action, appeals from the dismissal of his claims against defendants-appellees pursuant to sections 10(b) and 20(a) of the Securities Exchange Act of 1934. 15 U.S.C. §§ 78j(b), 78t(a).We assume the parties' familiarity with the facts, procedural history, and issues on appeal.
Plaintiff also brought claims against Perseus-Soros Biopharmaceutical Fund, LP ("Perseus-Soros") pursuant to sections 10(b), 13(d), and 20(a) of the Securities Exchange Act of 1934. 15 U.S.C. §§ 78j(b), 78m (d), 78t (a). The district court dismissed these claims as well, plaintiff does not challenge those decisions, and Perseus-Sorosis not a party to this appeal.
In the Supplemental Amended Class Action Complaint, plaintiff alleged that one or more defendants made seven statements between February and May 2007 that were rendered materially misleading by defendants' failure to disclose that defendant Bioen vision, Inc. was engaged in merger negotiations with non-party Genzyme Corporation. The district court examined each of the challenged statements individually and concluded that the allegations were deficient for at least one — and sometimes both — of two reasons. First, with respect to several of the statements, the court concluded that plaintiff had not identified any legal duty that required defendants to disclose the omitted information relating to the merger negotiations. Second, the court also concluded that certain of plaintiffs allegations failed to meet the particularity requirements of the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4(b), and Rule 9(b) of the Federal Rules of Civil Procedure. For the reasons set forth below, we find the first basis relied on by the district court to be sufficient to sustain the dismissal of the claims against defendants-appellees that are at issue in this appeal.
Relying on allegations from a separate stale court action, plaintiff also alleged that defendants unlawfully failed to disclose a January 2007 "secret[]"merger agreement between Genzyme Corporation and agents of Perseus-Soros, the controlling shareholder of Bioenvision. The district court dismissed plaintiff's claims based on this allegation, and plaintiff has not challenged that conclusion in this appeal. Therefore, we deem this aspect of the claims in the Supplemental Class Action Complaint to have been abandoned. See Norton v. Sam's Club, 145 F.3d 114, 117 (2d Cir. 1998).
In order to state claims pursuant to section 10(b) of the Exchange Act and Rule 10b-5 promulgated there under, a plaintiff must allege, inter alia, that the defendant engaged in a material misrepresentation or omission. Operating Local 6-9 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 92 (2d Cir. 2010). In this case, plaintiffs legal theory is based on alleged omissions rather than misrepresentations. "For an omission to be actionable, the securities laws must impose a duty to disclose the omitted information." Resnik v. Swartz, 303 F.3d 147, 154 (2d Cir. 2002). With respect to defendants-appellees, who are not alleged to have traded in Bioen vision's securities, such a duty may arise either: (1)expressly pursuant to an independent statute or regulation; or (2) as a result of the ongoing duty to avoid rendering existing statements misleading by failing to disclose material facts, see 17C.F.R. § 240.10b-5(b).
Thus, it is by now axiomatic that "a corporation is not required to disclose a fact merely because a reasonable investor would very much like to know that fact." In re Time Warner Inc. Sec. Litig., 9 F.3d 259, 267 (2d Cir. 1993). As the district court correctly observed, however, no express duty requires the disclosure of merger negotiations, as opposed to a definitive merger agreement. Moreover, "[s]ilence, absent a duty to disclose, is not misleading. . . ." Basic Inc. v. Levinson, 485 U.S. 224, 239 n. 17, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). For substantially similar reasons to those stated by the district court, we hold that plaintiff has not identified any part of the seven challenged statements that were rendered materially misleading by the alleged omissions relating to Bioen vision's merger negotiations. This pleading deficiency is sufficient to warrant the affirmance of the entire portion of the district court's decision that is challenged in this appeal, including the dismissal of plaintiffs claims against defendants-appellees for control-personliability. See ATS I Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir. 2007).
Although the district court did not reach this conclusion with respect to each of the seven statements relied on by plaintiff, we may affirm on any basis supported by the record. E.g., Thyroff v. Nationwide Mut.his. Co., 460 F.3d 400, 405 (2d Cir. 2006). We find that to be the appropriate course here and, in light of our holding, do not reach the merits of the district court's particularity analysis.
We have considered each of plaintiffs arguments and find them to be without merit. Accordingly, the judgment of the district court is hereby AFFIRMED.