Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-02142/USCOURTS-cand-4_05-cv-02142-13/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 7:6(b) Federal Commodity Exchange Regulation

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

NOT FOR CITATION

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

COMMODITY FUTURES TRADING 

COMMISSION,

Plaintiff, No. C 05-2142 PJH

v. ORDER DENYING MOTION

TO DISMISS AND MOTION 

ROBERT JOSEPH BEASLEY, et al., TO STRIKE

Defendants.

_______________________________/

Defendants’ motion to dismiss and motion to strike plaintiff’s complaint came on for

hearing before this court on January 25, 2006. Plaintiff Commodity Futures Trading

Commission appeared through its counsel, Allison Lurton. Defendants Robert Joseph

Beasley and Longboat Global Funds Management, LLC (collectively “defendants”)

appeared through their counsel, Robert S. Lawrence and David W. Porteous. Having read

the papers filed in conjunction with the motion and carefully considered the arguments and

the relevant legal authority, and good cause appearing, the court hereby DENIES

defendants’ motions, for the reasons stated at the hearing and summarized as follows. 

1. The court finds that plaintiff’s complaint properly alleges a claim pursuant to

the anti-fraud provisions of the Commodity Exchange Act. See 7 U.S.C.A. §

60. Defendants attempt to analogize the Commodity Exchange Act to section

10(b) of the Securities Exchange Act, and challenge plaintiff’s allegations on

grounds that they do not identify a specific independent duty that applied to

defendants, and amount to no more than an impermissible claim for breach of

fiduciary duty. The court, however, finds the two Acts distinguishable from

each other, and holds that plaintiff need not allege an independently

Case 4:05-cv-02142-PJH Document 68 Filed 02/21/06 Page 1 of 2
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

actionable duty to state a claim, and that plaintiff does not allege an

uncovered claim for breach of fiduciary duty. See, e.g., Commodity Futures

Trading Comm’n v. Savage et al., 611 F.2d 270, 285 (9th Cir. 1980) (finding

relevant provision of the Commodity Exchange Act to contain “much broader

language” than the Securities Exchange Act that more generally prohibits any

conduct that “operates as a fraud or deceit upon any client...”).

2. To the extent that defendants seek to argue the truth or falsity of the

allegations recited in plaintiff’s complaint, or that the alleged

misrepresentations and/or omissions alleged by plaintiff are immaterial as a

matter of law, these arguments are improper on a 12(b)(6) motion to dismiss. 

Rather, they can and should be dealt with on a motion for summary judgment. 

Accordingly, defendants’ motion to dismiss, and in the alternative, defendants’

motion to strike plaintiff’s complaint, is DENIED.

IT IS SO ORDERED.

Dated: February 21, 2006 ______________________________

PHYLLIS J. HAMILTON

United States District Judge

Case 4:05-cv-02142-PJH Document 68 Filed 02/21/06 Page 2 of 2