Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_09-cv-08162/USCOURTS-azd-3_09-cv-08162-27/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

In Re: Allstate Life Insurance Company 

Litigation 

Lead Case No. CV-09-08162-PCT-GMS

Consolidated with: 

No. CV-09-8174-PCT-GMS 

ORDER 

 Pending before the Court is Defendants’ Request for Additional Rulings (Doc. 

960) and the joinders in that motion by co-Defendants (Docs. 962, 963, 967). For the 

reasons set forth below, the Court requests Plaintiffs to respond if they wish to do so on 

two of the issues, denies the remainder of the motion as moot in part, and denies the 

balance of the motion. 

 A. Aiding and Abetting Claims. 

 1. FSG and PVSE 

 FSG and PVSE request that the Court enter judgment in their favor on the aiding 

and abetting claim, because they asked for it in their motion, because aiding and abetting 

requires scienter, and because the Court concluded in disposing of the federal control 

person claim against them that they lacked scienter. Nevertheless, in a case like this in 

which the briefing and associated paper work took thousands of pages, to the extent that 

FSG and PVSE rely on the second half of a footnote on the 15th page of their motion to 

assert that the Court missed an argument that they made, and that they are entitled to a 

ruling on it, the Court declines to consider supplementing its previous rulings. “A 

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footnote is the wrong place for substantive arguments on the merits of a motion, 

particularly where such arguments provide independent bases for dismissing a claim not 

otherwise addressed in the motion.” First Advantage Background Servs. Corp. v. Private 

Eyes, Inc., 569 F. Supp. 2d 929, 935 n. 4 (N.D.Cal. 2008); Cf. Hilao v. Estate of Marcos, 

103 F.3d 767, 778 n.4 (9th Cir. 1996) (“The summary mention of an issue in a footnote, 

without reasoning in support of the appellant’s argument, is insufficient to raise the issue 

on appeal.”). FSG and PVSE’s motion in this respect is denied. 

 2. Kutak 

 Plaintiff has avowed that it no longer asserts aiding and abetting claims. 

Therefore, Cuttack’s motion in this respect is moot. 

 3. Hocking 

 Plaintiffs will respond, if they wish to do so, to Hocking’s request for the Court 

to supplement its aiding and abetting ruling as to them by November 15. 

 B. Negligent Misrepresentation Claims. 

 Plaintiffs will respond, if they wish to do so, to FSG and PVSE’s assertion that the 

Court’s ruling on the negligent misrepresentation claim should apply to all Defendants by 

November 15. 

 C. Allstate’s Secondary Market Purchase. 

 The Underwriters request that the Court explicitly supplement its judgment to note 

that, to the extent that Allstate purchased its bonds in the secondary bond market from a 

third party broker, then it can bring no claim against Defendants for “making, 

participating in or inducing the purchase of a security” within the purview of the Arizona 

Securities Act as to those bonds. The Underwriters correctly note that this Court so held 

in dismissing Nonparty Bondholders who asserted such claims. It is equally true that the 

same reasoning might apply to any bonds purchased by Allstate on the secondary bond 

market from a third-party broker. The Underwriters further point to a footnote on page 

thirteen of their Memorandum to argue that they argued in their motion that this Court 

should dismiss Allstate’s claims to the extent they arise from such secondary purchases. 

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Doc. 704 at 13 n. 11. Nevertheless, in a case like this in which the briefing and 

associated paper work took thousands of pages, to the extent that the Underwriters rely 

on a footnote on the 13th page of their fifty-one page motion to assert that the Court 

missed an argument that they made, and that they are entitled to a supplemental ruling on 

it, the Court declines to consider supplementing its previous rulings. First Advantage 

Background Servs. Corp. v. Private Eyes, Inc., 569 F. Supp. 2d 929, 935 n. 4 (N.D.Cal. 

2008) (“A footnote is the wrong place for substantive arguments on the merits of a 

motion, particularly where such arguments provide independent bases for dismissing a 

claim not otherwise addressed in the motion.”); Cf. Hilao v. Estate of Marcos, 103 F.3d 

767, 778 n.4 (9th Cir. 1996) (“The summary mention of an issue in a footnote, without 

reasoning in support of the appellant’s argument, is insufficient to raise the issue on 

appeal.”). The Underwriter’s motion in this respect is denied. 

D. Underwriter’s Assertion that Available Demographic Information 

That Was Public Information Can’t Be the Basis for Liability Even If 

Concealed. 

 The Underwriters note that in the context of analyzing the Plaintiffs’ ASA claims 

arising from defects in the bond documents the Court held that “the securities laws 

require disclosure only of information that is not otherwise in the public domain.” They 

request that, to the extent that Plaintiffs’ assert that the Defendants’ alleged concealment 

of publicly available demographic information is a basis for their claims pertaining to the 

projections made in the offering statements, such claims be barred. While, it is true that 

the Underwriters, in making the related argument that there is no direct correlation 

between population/affluence and attendance at sporting events, observed that a faulty 

projection cannot be made actionable simply because publicly available knowledge 

would call it into question, the Court never understood the Underwriters memorandum to 

ask for a determination that the Defendants were entitled to summary judgment because 

Plaintiffs’ misrepresentation claims against them were based solely on the concealment 

of publicly available information. After re-reading that section of the Underwriters’ 

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memorandum, it does not now seem to the Court that such was the thrust of the 

Underwriter’s request for relief. While it is true that such law may prevent Plaintiffs 

from surviving a JMOL at trial if they offer no additional evidence of concealment or 

misrepresentation other than the concealment of publicly available information, the 

Court, at this stage, is under no obligation to continually supplement its order to 

accommodate arguments that were less than clear, not made at all in the initial and 

extensive briefing, or that now seem like logical supplementary arguments in light of the 

Court’s rulings. The Defendants’ Motion in this respect is denied. 

 E. Hocking’s Alternative Basis for Judgment on Common Law Fraud. 

 Hocking asserts that the Court should have considered its alternative basis for 

summary judgment on the fraud claim—apparently, a sentence in which Hocking states 

that “as set forth in the other Defendants’ Motions for Summary Judgment, Allstate did 

not justifiably rely, and the alleged fraud was not the cause of Allstate’s loss in any 

event.” Doc. 718 at 12. This is wholly insufficient to constitute an alternative argument 

on which the Court should rule. To the extent that Hocking asserts that he incorporated 

arguments made by other Defendants, he fails to make any demonstration as to how these 

arguments, as originally made, apply to him and the other Defendants. The Defendants’ 

Motion in this respect is, therefore, denied. 

 F. Plaintiff’s Negligent Misrepresentation Claim Against the Town. 

 Plaintiff has dropped any claims against the Town for Negligent 

Misrepresentation. Judgment is therefore entered for the Town on this Claim. 

 G. Additional Rulings on the ASA Claims. 

 1. A.R.S. § 44-1991(A)(3). 

 Cuttack’s motion in this respect is moot. Judgment has already been entered on 

this issue in Cuttack’s favor and, at any rate, Plaintiffs no longer assert such claims. 

 2. A.R.S. § 44-1991(A)(2) Loss Causation. 

 As Defendants note, loss causation is an affirmative defense under the Arizona 

Securities Act. In the context of the Plaintiff’s claim for negligent misrepresentation the 

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Court observed that Plaintiffs had not provided any evidence of loss causation, as even 

their expert had failed to make such a link. While such a failure may have merited 

summary judgment when, as with the negligent representation claim, the burden of proof 

is on the Plaintiffs, Plaintiffs’ failure to establish the linkage is not fatal when the 

Defendants’ bear the burden of proof, unless Defendant first demonstrates facts to 

establish a lack of causation. On a summary judgment motion, the failure of Plaintiff’s 

expert to make the linkage is not necessarily sufficient to meet Defendants burden when 

it bears the burden of proof on an affirmative defense. Again, the Court, at this stage, is 

under no obligation to continually supplement its order to accommodate arguments that 

now seem like logical supplementary arguments in light of the Court’s rulings. Even if 

such arguments may prevail on a JMOL or at trial, the court need not now open up a 

whole additional round of supplementary briefing on such questions. The Defendants’ 

Motion in this respect is denied. 

IT IS THEREFORE ORDERED requesting a response from Plaintiffs to 

Hocking’s request for the Court to supplement its aiding and abetting ruling as to them 

and to FSG and PVSE’s assertion that the Court’s grant to some Defendants on Plaintiffs’ 

Negligent Misrepresentation claims should apply to all Defendants. The Plaintiffs shall 

file a joint response to both issues not to exceed ten pages by November 15, 2013. 

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IT IS FURTHER ORDERED denying Defendants’ Motion (Doc. 960) as moot 

to the extent that the Parties’ in their recent joint statement have agreed that no aiding and 

abetting fraud claim, and no A.R.S. § 44-1991(A)(3) claim remains against Kutak. The 

Parties further acknowledge that they no longer assert a negligent misrepresentation 

claim against the Town. (Doc. 978 at 5 n. 3.) Thus, the motion is also moot in that 

respect and denied in all other respects. 

 Dated this 1st day of November, 2013. 

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