Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-04132/USCOURTS-ca10-89-04132-0/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

Nos. 89-4132 and 89-4144 

GLENDA MIERA, et al., ) 

) 

Plaintiffs-Appellants, ) 

) 

V • ) 

) 

FIRST SECURITY BANK OF UTAH, N.A., ) 

a Utah corporation, ) 

) 

Defendant-Appellee. ) 

JAN 7 lS91 

ROBERT L HOECKlUl 

Clerk 

Appeal from the United States District Court 

For the District of Utah, Central Division 

(D.C. No. C-73-126 J) 

Parker M. Nielson (Terrell w. Smith, with him on the brief), Salt 

Lake City, Utah, for Plaintiffs-Appellants. 

James S. Jardine (Anthony B. Quinn of Ray, Quinney & Nebeker with 

him on the brief), Salt Lake City, Utah, for Defendant-Appellee. 

Before TACHA and McWILLIAMS, Circuit Judges, and NOTTINGHAM, 

District Judge.* 

McWILLIAMS, Circuit Judge. 

* Honorable Edward w. Nottingham, United States District Judge for 

the District of Colorado, sitting by designation. 

Appellate Case: 89-4132 Document: 010110012934 Date Filed: 01/07/1991 Page: 1 
( 

Glenda Miera, and others, for themselves anq on behalf of all 

other persons similarly situated, brought the present action 

against the First Security Bank of Utah, N.A., a Utah corporation 

(Bank), charging violations of the Securities Exchange Act of 1934 

arising out of the Bank's handling of their stock interests in the 

Ute Distribution Corporation. 15 U.S.C. § 78j and Rule l0b-5, 17 

C.F.R. § 240.l0b-5. The plaintiffs alleged, inter alia, that they 

were all "terminated" or "mixed-blood" members of the Ute Indian 

Tribe of the Uintah and Ouray Reservations who had sold their 

stock in Ute Distribution Company at a time when the market for 

said stock was affected by the "market-making activities" of the 

defendant Bank and its agents as "defined" by the United States 

Supreme Court in Affiliated Ute Citizens v. United States, 406 

U.S. 128 (1972), and that none of the present plaintiffs were 

plaintiffs asserting similar claims in other actions brought 

against the Bank. A three-day bench trial resulted in a judgment 

in favor of the Bank. We affirm. 

Miera I 

This case has a long history. It was filed in the United 

States District Court for the District of Utah in April, 1973. 

The district judge later entered an order certifying the class. 

He also approved a proposed pretrial order submitted by 

plaintiffs' counsel, apparently entering the approval order before 

the proposed order had been received by defense counsel. Based on 

the pretrial order, the district judge then granted summary judgment in favor of the plaintiffs and against the Bank on the issue 

of liability. The district judge held that the liability issue 

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1, 

was governed by Affiliated Ute Citizens v. United States, 406 U.S. 

128 (1972). 1 The matter was then referred to a Special Master to 

fix the "quantum of recovery" for each individual plaintiff and 

each individual member of the class. The Special Master held 

numerous hearings and some five years later filed his report. 

In the meantime, the judge handling the case died and a successor judge took over. The successor judge approved the Master's 

report and entered final judgment. In his memorandum and order 

approving the Master's report, the district judge noted that the 

Bank had sought reconsideration of a number of the rulings made by 

the deceased judge, including the entry of the pretrial order and 

the partial summary judgment, but stated that he was disinclined 

to reconsider interlocutory orders entered by the deceased judge 

and that in his view the "most appropriate avenue of review is to 

be found in the appellate process." 

On appeal by the Bank, we reversed. Miera v. First Security 

Bank of Utah, N.A., 776 F.2d 902 (10th Cir. 1985). (Miera I) In 

so doing, we observed that the procedure followed by the district 

court in connection with the entry of the pretrial order violated 

1 Affiliated Ute also had its genesis in the United States 

District Court for the District of Utah. That case was filed in 

February, 1965, on behalf of certain terminated Ute Indians who 

had sold their stock in the Ute Distribution Corporation in 1963 

and 1964. The action was initially filed as a class action, but 

the class action was later withdrawn and the case was refiled as a 

joinder action naming eighty-five terminated Ute Indians as 

plaintiffs. After trial, the district court entered judgment for 

the plaintiffs. On appeal, we reversed and remanded for further 

proceedings. Reyos v. First Security Bank, 431 F.2d 1337 (10th 

Cir. 1970). On certiorari, the Supreme Court affirmed in part, 

and reversed in part, and remanded for further proceedings, sub 

nom. Affiliated Ute Citizens v. United States, 406 U.S. 128 

(1972). 

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its local rules, Fed. R. Civ. P. 16, and "fundamental due 

process." We then noted that the partial summary judgment "was 

necessarily based on the pretrial order," and that the final judgment was of course an extension of the partial summary judgment. 

In reversing, we remanded the case with direction that the order 

granting partial summary judgment be vacated as well as the 

pretrial order itself. 

On remand, the district court observed that in light of our 

opinion in Miera I, "[w]e are now writing on a relatively clean if 

somewhat ancient slate." That was our intent. Be that as it may, 

the district judge by his memorandum opinion and ·order filed 

October 31, 1986, ruled on several outstanding motions. 

Specifically, both sides had moved for summary judgme.nt, the 

plaintiffs arguing that Affiliated Ute dictated a holding in their 

favor on the issue of liability, and the Bank arguing, inter alia, 

that the applicable statute of limitations barred recovery. The 

district court denied both motions, holding that there were 

factual issues which had bearing on the legal issues raised by the 

motions for summary judgment. For example, the district court 

noted that in about 1966 Gale and Haslem ceased handling the stock 

sales for the Utes and that the Bank later 

serve as the transfer agent for the stock. 

ceased entirely to 

In this regard the 

district court felt there was conceivably an issue in the present 

case as to when there was a market readjustment such that these 

plaintiffs, unlike the plaintiffs in Affiliated Ute, were "no 

longer affected by the Bank's earlier fraudulent conduct." 

Similarly, the district court felt that evidence was necessary to 

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determine when each of the plaintiffs became aware of the Bank's 

"earlier fraudulent conduct" in order to determine when Utah's 

three-year statute of limitations would commence to run. 

In the same order denying the motions for summary judgment, 

the district court, acting pursuant to Fed. R. Civ. P. 23(c)(l) 

(which authorizes a district court to alter or amend a class 

certification order before decision on the merits), vacated the 

class certification order entered by the previous judge and 

entered an order denying class certification. In connection 

therewith, the district judge held that "the asserted class 

members are no longer similarly situated and that common question 

of law and fact do not predominate over individual issues." 

However, the district court did permit the former class members to 

be joined as parties under Fed. R. Civ. P. 20. 

The case later went to trial, and, as indicated, the district 

court found for the Bank and against the plaintiffs. The district 

court filed its commendably thorough 48-page Memorandum Opinion 

and Order on September 26, 1989. This appeal is from the judgment 

entered thereon. 2 

Background 

In 1954 Congress enacted the Ute Termination Act, 68 Stat. 

868, as amended, 70 Stat. 936 and 76 Stat. 597, 25 u.s.c. §§ 677-

677aa, the purpose of which was to prepare the Ute Tribe for the 

2 The original notice of appeal naming only Glenda Miera was filed 

on October 25, 1989, our No. 89-4132. An amended notice of appeal 

was filed on November 7, 1989, naming all remaining plaintiffs, 

our No. 89-4144. Under these circumstances the Bank agrees that 

this Court's appellate jurisdiction extends to all plaintiffs. We 

too agree. The two appeals have been consolidated for disposition. 

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termination of federal supervision. The Act provided for the 

partition and distribution of assets between the mixed-blood and 

full-blood members of the tribe. The mixed bloods, pursuant to 

the Act, formed the "Affiliated Ute Citizens," which entity, in 

turn, formed the.Ute Distribution Corporation (UDC). The purpose 

of the UDC was to manage jointly, with the Tribal Business 

Committee representing the full-blood members of the Ute Indian 

Tribe, all claims against the United States; all gas, oil and 

mineral rights of every kind, and all other assets not susceptible 

to equitable and practical distribution to which the terminated 

members are or may hereafter become entitled. In January, 1959, 

the UDC issued ten shares of its capital stock in the name of each 

terminated mixed-blood Ute.- The Bank became the transfer agent 

for UDC stock. John Gale and Verl Haslem were assistant managers 

of a facility of the Bank located in an area where a number of the 

terminated Ute Indians lived, and they dealt directly with some of 

the Reyos/Affiliated Ute plaintiffs in the sale or transfer of 

their stock in UDC. 

In February, 1965, a class action was filed against the Bank 

and its employees, Gale and Haslem, on behalf of terminated Utes 

who had sold their UDC stock prior to August 27, 1964. The 

plaintiffs alleged that the Bank and its officers had conspired to 

acquire UDC stock from the plaintiffs in violation of securities 

laws. In June, 1965, the class action was dismissed and in July, 

1965, the complaint was refiled as a joinder action naming eightyfive terminated Ute Indians as plaintiffs. The complaint was 

later amended to include a claim against the United States based 

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on an alleged breach of duty in connection with plaintiffs' 

transfer of shares of stock in UDC. The trial was conducted with 

twelve so-called "bellwether plaintiffs" and on April 18, 1968, 

the district court found the Bank, and Gale and Haslem, liable for 

money damages to each of the twelve plaintiffs. The court found 

defendants Gale and Haslem liable to each of the twelve plaintiffs 

because they had violated their duty to make a fair disclosure and 

had succeeded in acquiring UDC shares for less than the fair 

market value. The court held that the Bank was jointly and severally liable with Gale and Haslem for damages to each of the twelve 

plaintiffs because it was put on notice of the improper actions of 

Gale and Haslem and had knowingly created apparent authority on 

the part of Gale and Haslem to act for the Bank. The United 

States was found liable to certain of the plaintiffs. The court 

also set the fair market value of the UDC stock at $1,500 per 

share. 

On appeal, we reversed .. Reyos -v. United States, 431 F.2d 

1337 (10th Cir.), aff'd in part and rev'd in part sub nom. Affiliated Ute Citizens v. United States, 406 U.S. 128 (1972). As ~ 

to the United States, we held that the United States no longer had 

any duty to the plaintiffs and therefore was not liable to any of 

the plaintiffs. We further held that the Bank itself had breached 

no duty owed the plaintiffs under its contract with UDC. As to 

Gale and Haslem, we held that in connection with their purchase of 

stock from certain of the plaintiffs, which stock was resold a few 

days later at a profit, they had made misrepresentations concerning the market value of the stock, but no evidence was presented 

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that the plaintiffs had relied on those misrepresentations. We 

concluded that there were no l0b-5 violations by either Gale or 

Haslem arising out of their "ministerial acts" in connection with 

plaintiffs' sale of stock to non-Indian purchasers. 

On certiorari, the Supreme Court affirmed in part and 

reversed in part. Affiliated Ute Citizens v. United States, 406 

U.S. 128 (1972). 3 The Supreme Court agreed that the United States 

was not liable. The Supreme Court also agreed that Gale and 

Haslem had violated Rule l0b-5 by making misstatements concerning 

the fair market value of the stock, but that we had "viewed too 

narrowly the activities of Gale and Haslem" when we limited their 

misrepresentations to those transactions where they themselves 

bought stock from certain of the plaintiffs and then immediately 

resold the stock at a profit, and that misrepresentations by Gale 

and Haslem to facilitate stock sales from plaintiffs to non-Indian 

purchasers were also l0b-5 violations. Id. at 151-52. In this 

connection, the Supreme Court stated that- "as the Court of Appeals 

itself observed, the record shows that Gale and Haslem 'were active in encouraging a market for the UDC stock among nonIndians. '" Id. at 152 (quoting Reyos, 431 F.2d at 1345). The 

Supreme Court also stated that we erred in concluding that the 

3 At about the same time Reyos, et al., filed their action, Affiliated Ute Citizens also brought suit against the United States 

in the United States District Court for the District of Utah seeking to have conveyed to its individual members a "pro rata" interest in the oil, gas and other minerals underlying the Uintah and 

Ouray Reservations in Utah. The district court dismissed that 

suit on the ground that it had no jurisdiction to entertain the 

action. On appeal, we affirmed. Affiliated Ute Citizens v. 

United States, 431 F.2d 1349 (10th Cir.), aff'd 406 U.S. 128 

(1972). On certiorari, Affiliated Ute and Reyos were 

consolidated. 

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plaintiffs had not relied on the misrepresentations made by Gale 

and Haslem and in so doing stated that "positive proof of reliance 

is not a prerequisite to recovery." Id. at 153. Finally, the 

Supreme Court held that "[t]he liability of the bank, of course, 

is coextensive with that of Gale and Haslem." Id. at 154. 

Miera II 

In the instant case, the district court, after a bench trial, 

held that Affiliated Ute did not compel a finding that the Bank 

was liable to the present plaintiffs. In so holding, the district 

court was of the view that the essential finding in Affiliated Ute 

was that Gale and Haslem had a duty to disclose to the terminated 

Ute Indians that they were "facilitating" sales by mixed bloods to 

those seeking to profit in the non-Indian market, a market 

developed and encouraged by Gale and Haslem. The district court 

noted, however, that Gale and Haslem "left the market" in 1966 and 

that the "[e]xpert testimony on behalf of the Bank, which suggested that the market adjusted quickly following the departure of 

Gale and Haslem, went unrefuted. 11 The district court further held 

that although the Bank had conceded liability, up to the time Gale 

and Haslem left the market (excepting the statute of limitations 

defense), the Bank was not liable on the basis of "causation" for 

any shares sold after April, 1966, the date when Gale and Haslem 

"left the market." The district court also found that the Bank 

had rebutted the "presumption of reliance" and that the plaintiffs 

would have followed the same course of conduct even if there had 

been full disclosure. The district court also held that Utah's 

three-year statute of limitations barred all claims based on 

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shares of UDC stock sold before April 20, 1970, three years prior 

to the filing of the present case. 

In sum, the district court in Miera II held that those claims 

accruing before April 20, 1970, were barred by Utah's three-year 

statute of limitations, because those plaintiffs either knew or 

had "reasonable cause" to know of Gale and Haslem's misconduct. 

As to those claims arising after April 20, 1970, the district 

court held that the effect of any misconduct "influencing the 

market" by Gale and Haslem, or the Bank, was spent inasmuch as 

Gale and Haslem left the market in 1966 and the Bank ceased being 

the transfer agent in 1968. Furthermore, the Bank's evidence 

indicated that there had been "market readjustment" at the time of 

the stock sales by these plaintiffs. Additionally, the district 

court found that the Bank had rebutted the "presumption of 

reliance" and had shown that these plaintiffs would have followed 

the same course of conduct even if there had been full disclosure. 

The record on appeal does not contain a transcript of the 

evidence adduced at trial. This was a purposeful omission, as 

counsel for the plaintiffs in his reply brief states that the 

plaintiffs are not challenging any factual determination made by 

the district court, and hence a trial transcript was unnecessary. 

On such state of the record, we proceed in our review on the 

premise that all findings of fact made by the district court are 

supported by the record. 

As their first ground for reversal, plaintiffs argue that 

under our mandate the district court acted improperly in retrying 

the case, and that our mandate only permitted the district court 

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to determine whether Affiliated Ute controlled the instant case. 

We disagree. In Miera I, we reversed the judgment and remanded 

with direction that the district court vacate its order granting 

partial summary judgment and its pretrial order. The district 

court complied with our directions and vacated the partial summary 

judgment and pretrial order. Such, in practical effect, did wipe 

the slate clean, and the district court then went forward to 

resolve, in orderly fashion, the case on its merits. We reject 

the suggestion that under our mandate in Miera I the only issue to 

be determined by the district court was whether "Affiliated Ute is 

controlling on the facts." After listening to the "facts" in a 

bench trial, the district court determined that Affiliated Ute did 

not control the instant case and, therefore, the district court 

necessarily had to resolve the other issues between the parties. 

Plaintiffs next argue that it was error for the district 

court to vacate the class certification order entered previously 

by the judge who was then handling the case.- We find no abuse of 

discretion. Fed. R. Civ. P. 23(c)(l) provides that a certification order may be altered or amended at any time before a decision 

on the merits. Moreover, the decertification order in the instant 

case afforded class members an opportunity to join in the present 

action as plaintiffs. The abuse of discretion standard applies 

not only to an initial determination to certify a class, but also 

to a subsequent determination to decertify. Baum v. Great Western 

Cities, Inc., 703 F.2d 1197, 1210 (10th Cir. 1983); Rex v. Owens 

ex rel. State of Oklahoma, 585 F.2d 432, 463 (10th Cir. 1978). 

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Counsel also claims that the "dismissal of claims already 

reduced to judgment and left undisturbed on appeal is in error." 

This argument is based on the erroneous belief that in Miera I we 

left some judgments for some of the plaintiffs undisturbed. Such 

is incorrect. In Miera I, we reversed the entire judgment of the 

district court. See Miera, 776 F.2d at 906-07. 

Certain of the former class members who joined as plaintiffs 

had their pleadings stricken and their claims dismissed because of 

their failure to comply with discovery orders. In the instant 

case the district court had imposed several deadlines for taking 

depositions of certain plaintiffs who did not comply therewith, 

and only after clear warning dismissed their claims. Under the 

circumstances, we find no abuse of discretion. See Willner v. 

University of Kansas, 848 F.2d 1023, 1030 (10th Cir. 1988); Lamb 

v. C.I.R., 733 F.2d 86, 87-88 (10th Cir. 1984); Mertsching v. 

United States, 704 F.2d 505, 506 (10th Cir.), cert. denied, 464 

U.S. 829 (1983). 

Several of the matters raised above are, in a sense, moot, if 

it be determined that the district court's ultimate ruling that 

the Bank is not liable to these plaintiffs is upheld.. On this 

question counsel argues that under our mandate in Miera I and Affiliated Ute plaintiffs were entitled to judgment. Certainly our 

mandate did not require a re-entry of judgment in favor of the 

plaintiffs. On the contrary, we reversed the judgment previously 

entered. 

It is true that in Miera I we specifically stated that, from 

the record then before us, we could not tell whether Affiliated 

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Ute controlled the liability issue in the case. The district 

court determined that Affiliated Ute did not control. We agree. 

There are significant differences between Affiliated Ute and the 

instant case. The plaintiffs in the two cases, of course, are not 

the same. Affiliated Ute was filed in the district court in 1965 

and covered sales of UDC stock made in 1963 and 1964. The instant 

case was filed by different plaintiffs eight years later and 

covered stock sales made from 1964 up to the date of filing. As 

concerns the statute of limitations, certainly the present 

plaintiffs were in a different position than the plaintiffs in 

Affiliated Ute .. The statute of limitations was not raised in Affiliated Ute, and, under the circumstances, could not have been 

raised. In addition, Bank officers Gale and Haslem left the 

market in 1966 and the district court found that such being the 

case, the Bank was not liable for sales made after such departure 

because the evidence showed that no prior or subsequent acts of 

the Bank or its employees caused damage to these plaintiffs. 

Judgment affirmed. 

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