DEFENDANTS’ JOINT MOTION TO DISMISS THE SECOND AMENDED 

COMPLAINT

Robert C. Weaver, Jr., OSB #801350 

E-Mail: rweaver@gsblaw.com 

Gary I. Grenley, OSB #751380 

E-Mail: ggrenley@gsblaw.com 

Paul H. Trinchero, OSB #014397 

E-Mail: ptrinchero@gsblaw.com 

Garvey Schubert Barer 

121 SW Morrison Street, Eleventh Floor 

Portland, Oregon 97204-3141 

Telephone: (503) 228-3939 

Facsimile: (503) 226-0259 

Peter A. Wald (admitted pro hac vice) 

E-Mail: peter.wald@lw.com

Gavin M. Masuda (admitted pro hac vice) 

E-Mail: gavin.masuda@lw.com 

Latham & Watkins LLP 

505 Montgomery Street, Suite 2000 

San Francisco, California 94111 

Telephone: (415) 391-0600 

Facsimile: (415) 395-8095 

Attorneys for Defendant Deloitte & Touche LLP 

Additional Counsel of Record Listed on Signature Page 

 

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

PORTLAND DIVISION 

LAWRENCE P. CIUFFITELLI, for himself 

and as Trustee of CIUFFITELLI 

REVOCABLE TRUST, et al., 

Plaintiffs, 

v. 

DELOITTE & TOUCHE LLP; 

EISNERAMPER LLP; SIDLEY AUSTIN

LLP; TONKON TORP LLP; TD

AMERITRADE, INC.; INTEGRITY BANK 

& TRUST; and DUFF & PHELPS LLC, 

Defendants.

Case No. 3:16-cv-00580-AC 

JOINT MOTION TO DISMISS THE 

SECOND AMENDED COMPLAINT 

AND SUPPORTING MEMORANDUM 

FILED BY DEFENDANTS DELOITTE 

& TOUCHE LLP, EISNERAMPER 

LLP, SIDLEY AUSTIN LLP, TONKON 

TORP LLP, TD AMERITRADE, INC., 

INTEGRITY BANK & TRUST, AND 

DUFF & PHELPS, LLC 

Pursuant to Fed. R. Civ. P. 8, 9(b), and 

12(b)(6) 

[Primary Liability Issues] 

Oral Argument Requested 

 

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COMPLAINT

TABLE OF CONTENTS 

Page 

I. INTRODUCTION ...............................................................................................................2

II. STATEMENT OF FACTS ..................................................................................................4

A. The Aequitas Entities And Their Varied Securities .................................................4

B. Plaintiffs And Their Securities Purchases ................................................................7

C. Defendants Deloitte & Touche LLP, EisnerAmper LLP, Sidley Austin 

LLP, Tonkon Torp LLP, TD Ameritrade, Inc., Integrity Bank & Trust, 

And Duff & Phelps, LLC .........................................................................................9

D. Plaintiffs’ Claims And Theories Of Primary Liability ..........................................10

III. LEGAL STANDARD ........................................................................................................11

IV. ARGUMENT .....................................................................................................................12

A. Plaintiffs’ Theory Of Primary Liability Based On The Sale Of 

Unregistered Securities Should Be Dismissed .......................................................12

B. Plaintiffs’ Theory Of Primary Liability Based On The Sale Of Securities 

By Means Of False Or Misleading Statements Should Be Dismissed ..................14

C. Plaintiffs’ Claims Based On Sales Made Before April 4, 2013 Are Barred 

By ORS 59.115(6)’s Three-Year Statute Of Limitations ......................................21

V. CONCLUSION ..................................................................................................................23

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TABLE OF AUTHORITIES 

 Page(s) 

CASES 

Aero Marine Engine, Inc. v. Transporter, Inc., 

No. 05-1469, 2007 WL 3128500 (D. Or. Oct. 23, 2007).........................................................11 

Anderson v. Carden, 

146 Or. App. 675 (1997). .........................................................................................................10 

Ashcroft v. Iqbal, 

556 U.S. 662 (2009) ...........................................................................................................11, 12 

Bell Atl. Corp. v. Twombly, 

550 U.S. 544 (2007) .................................................................................................................11 

Brown et al. v. Price, et al., 

No. 3:17-cv-00869-HZ (D. Or. 2016) ........................................................................................7 

Frohs v. Greene, 

253 Or. 1 (1969) .......................................................................................................................22 

In re Galena Biopharma, Inc. Sec. Litig., 

117 F. Supp. 3d 1145 (D. Or. 2015) ........................................................................................11 

Houston v. Seward & Kissel, LLP, 

No. 07cv6305, 2008 WL 818745 (S.D.N.Y. Mar. 27, 2008) ..................................................14 

Karsun v. Kelley, 

258 Or. 155 (1971) ...................................................................................................................11 

Loewen v. Galligan, 

No. A9005-02822, 1992 WL 12582753 (Or. Cir. Ct. Aug. 19, 1992), aff’d 130 

Or. App. 222 (1994) .................................................................................................................18 

State v. Marsh & McLennan Cos., 

353 Or. 1 (2012) .................................................................................................................19, 20 

Mitchell v. Greenough, 

100 F.2d 184 (9th Cir. 1938) ...................................................................................................22 

Ridge at Red Hawk, L.L.C. v. Schneider, 

493 F.3d 1174 (10th Cir. 2007) ...............................................................................................18 

In re Rigel Pharm., Inc. Sec. Litig., 

697 F.3d 869 (9th Cir. 2012) .......................................................................................11, 13, 18

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Riley v. Brazeau, 

612 F. Supp. 674 (D. Or. 1985) ...............................................................................................14 

Sanders v. John Nuveen & Co., 

463 F.2d 1075 (7th Cir. 1972) .................................................................................................16 

Sanders v. John Nuveen & Co., 

619 F.2d 1222 (7th Cir. 1980) ...........................................................................................16, 17 

TRM Corp. v. Paulsell, 

No. CV-02-215, 2002 WL 31549112 (D. Or. June 4, 2002) .............................................22, 23 

Updike v. Clackamas County, 

No. 3:15-cv-00723-SI, 2015 WL 7722410 (D. Or. Nov. 30, 2015) ..................................17, 20 

STATUTES 

15 U.S.C. § 77d(a)(2) .....................................................................................................................13 

15 U.S.C. § 77r(b) ..........................................................................................................................13 

15 U.S.C. § 77r(b)(4)(F) ................................................................................................................13 

ORS 59.055 ........................................................................................................................10, 12, 21 

ORS 59.115 ............................................................................................................................ passim

ORS 59.115(1)(b) .................................................................................................................. passim

ORS 59.115(3) ...................................................................................................................1, 2, 3, 10 

ORS 59.115(6) .......................................................................................................................1, 3, 21 

ORS 59.135(2) ....................................................................................................................... passim

RULES 

Federal Rules of Civil Procedure Rules 8 ........................................................................................1 

Federal Rules of Civil Procedure Rule 9(b) ........................................................................... passim

Federal Rules of Civil Procedure Rule 12(b)(6) ..............................................................................1

REGULATIONS 

17 C.F.R. § 230.501(a)...................................................................................................................13 

17 C.F.R. § 230.501(e)(1)(iv) ........................................................................................................13 

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17 C.F.R. § 230.506 .......................................................................................................................13 

17 C.F.R. § 230.506(a)...................................................................................................................13 

17 C.F.R. § 230.506(b) ..................................................................................................................13 

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COMPLAINT

LR 7-1 CERTIFICATION 

 In compliance with this Rule, it is certified that the parties made a good faith effort 

through telephonic conferences to resolve the dispute and have been unable to do so.

JOINT MOTION 

 Pursuant to Rules 8, 9(b), and 12(b)(6) of the Federal Rules of Civil Procedure, the Order 

Granting Unopposed Motion Regarding Joint and Individual Motions and Briefing (Dkt. 70), and 

the Scheduling Order (Dkt. 254), Defendants Deloitte & Touche LLP, EisnerAmper LLP, Sidley 

Austin LLP, Tonkon Torp LLP, TD Ameritrade, Inc., Integrity Bank & Trust, and Duff & 

Phelps, LLC (collectively, “Defendants”) jointly move to dismiss the claims brought by 

Plaintiffs under ORS 59.115(3), as follows: 

1. Plaintiffs fail to state a claim under ORS 59.115(3) based on the sale of 

unregistered securities in violation of ORS 59.055 and 59.115(1)(a). 

2. Plaintiffs fail to state a claim under ORS 59.115(3) based on the sale of securities 

“by means of” or “in connection with” false or misleading statements in violation 

of ORS 59.115(1)(b) and 59.135(2). 

3. Plaintiffs’ claims under ORS 59.115(3) are barred by the three-year statute of 

limitations set forth in ORS 59.115(6) as to securities sold before April 4, 2013. 

 In support of this Joint Motion, Defendants rely on the Joint Memorandum of Law that 

follows, the Declaration of Gavin M. Masuda (“Masuda Decl.”), the Second Amended 

Complaint (the “Complaint” or “Compl.”), and the record assembled in this case. 

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JOINT MEMORANDUM OF LAW 

I. INTRODUCTION 

 This Court is familiar with these Plaintiffs and their claims under the Oregon Securities 

Law. They are purchasers of different securities that were issued by different Aequitas-related 

entities over a five-year period. Plaintiffs seek to represent a class of persons who purchased any 

security issued by any Aequitas entity at any time during that period. In its detailed Amended 

Findings & Recommendation (“F&R”), Dkt. 242, adopted and entered, Dkt. 250, this Court gave 

Plaintiffs specific instructions on how they would need to re-plead their claims in accordance 

with the Federal Rules of Civil Procedure and Oregon law. But even with the benefit of the 

Court’s instructions—and several months’ time—Plaintiffs have failed to plead a viable theory 

of Aequitas’s “primary” liability, which necessarily means that they have failed to state a claim 

under ORS 59.115(3). 

First, this Court required Plaintiffs to plead facts supporting their claim that Aequitas’s 

various securities were not “federal covered securities” (and, therefore, were required to be 

registered with the State of Oregon). See F&R at 41 (“Plaintiffs must plead facts showing the 

Disputed Securities were not federal covered securities.”). Moreover, because Plaintiffs allege 

that “Aequitas” misled investors as to the federal covered status of its securities, this Court 

required them to plead particularized facts—sufficient under Rule 9(b) of the Federal Rules of 

Civil Procedure—to support such claims. See id. The Complaint does not meet this pleading 

burden. Instead of pleading particularized facts showing why each security at issue was not a 

federal covered security, Plaintiffs offer blanket assertions purporting to address all securities 

issued during the entire class period. These allegations are clearly insufficient under the F&R. 

Second, this Court required Plaintiffs to “differentiate between the securities sold by 

Aequitas entities” (F&R at 32), and to “plead actionable misrepresentations and omissions 

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connected to a sale or group of sales of a security.” Id. at 48. The requisite “connection,” as this 

Court explained, is established where “the seller made a misleading statement in the offering 

documents or other promotional materials for a security.” Id. at 46 (emphasis added). The 

Complaint fails to meet this threshold requirement. While alleging that “Aequitas” made 

materially false or misleading statements in various PPMs issued throughout the class period, 

Plaintiffs fail to identify which (if any) of the sales made to them were accomplished “by means 

of” specific PPMs containing (identified) false or misleading statements, as required by ORS 

59.115(1)(b) and, equivalently, by ORS 59.135(2). Instead, defying this Court’s unequivocal 

rejection of their “integrated offering theory” as a matter of law (F&R at 25-32), Plaintiffs once 

again assert that all “Aequitas securities sales” across the alleged five-year class period were 

accomplished “by means of” every allegedly misstated PPM or other document identified in the 

Complaint. That is, Plaintiffs simply note the dates on which they purchased securities, but they 

do not identify the offending PPM “by means of” which those securities were sold to them. This 

pleading stratagem, if allowed to stand, would enable Plaintiffs to avoid this Court’s clear 

mandate, and prevent Defendants from understanding—and defending against—the precise 

charges brought against them.1

 See id. at 46. 

Third, Plaintiffs’ claims under ORS 59.115(3) are barred by the three-year statute of 

limitations set forth in ORS 59.115(6) as securities sold before April 4, 2013. Plaintiffs invoke 

 

1

 Indeed, this pleading defect exists not only with respect to Plaintiffs’ “primary liability” 

theories, but with respect to their “secondary liability” claims, too. For example, Plaintiffs allege 

that certain Defendants “participated” or “materially aided” in the transactions through which 

securities were sold to them, because those Defendants were identified in PPMs or other offering 

documents. See, e.g., Compl. ¶ 189(d)-(e). However, no Plaintiff identifies the specific 

document “by means of” which securities were sold to them—making it impossible for those 

Defendants to discern the basis (if any) on which it is alleged to have “materially aided” the 

challenged sale. See Defendant Deloitte & Touche LLP’s Mot. To Dismiss Plaintiffs’ Second 

Am. Compl. And Supporting Mem. Of Law, at Section IV. 

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the discovery rule in an attempt to save those earlier sales, Compl. ¶¶ 214-15, but they have not 

pled facts excusing their delay in bringing suit. The Court should dismiss their claims as to any 

pre-April 4, 2013 sales because the untimeliness of such claims is apparent on the Complaint’s 

face. 

II. STATEMENT OF FACTS 

A. The Aequitas Entities And Their Varied Securities 

 “Aequitas” refers to a group of related entities including Aequitas Capital Management, 

LLC, Aequitas Holdings, LLC, and their affiliates. Compl. ¶ 24; F&R at 4. Each of the 

Aequitas entities served a distinct purpose. For example, Aequitas Capital Management, Inc. 

was a management company that oversaw the operations of various Aequitas entities (Compl. ¶ 

26), while Aequitas Investment Management, LLC was an SEC-registered investment advisor 

that oversaw the investment decisions of various Aequitas funds. Compl. ¶ 27; F&R at 9 

(describing Aequitas Investment Management, LLC’s “capacity as investment advisor and 

manager of multiple Aequitas entities”). The business of the Aequitas entities was diverse. 

Some made non-traditional investments, including in healthcare, student loan, and consumer 

credit receivables. Compl. ¶ 3; F&R at 6 (“The Aequitas group engaged in diverse business 

activities, including purchasing consumer debt from multiple industries.”). Some sold securities. 

Compl. ¶ 28. 

 Plaintiffs stress the related nature of these businesses and allege both that the entities 

themselves were “integrated” (id. ¶ 23), and that “[t]he offerings of the Aequitas securities were 

a single integrated offering for purposes of the securities registration requirements[.]” Id. ¶ 32. 

However, notwithstanding the alleged integration of operations, only certain entities sold 

securities—and, as this Court has ruled, Plaintiffs’ allegations of “integration” fail as a matter of 

law. See F&R at 7; id. at 32 (“Plaintiffs’ integrated offering theory is unsupported by the Oregon 

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Securities Law and does not allow consideration of all the ‘Aequitas Securities’ as a single 

securities offering.”); id. (“Because this theory is not legally viable, all allegations regarding 

‘Aequitas’ or ‘Aequitas securities’ are insufficiently pleaded.”). As alleged here, the six issuing 

entities were: (i) Aequitas Commercial Finance (“ACF”); (ii) Aequitas Capital Opportunities 

Fund (“ACOF”); (iii) MotoLease Financial, LLC (“AMLF”); and (iv) Aequitas Income 

Opportunity Fund (“AIOF”); (v) Aequitas Income Protection Fund (“AIPF”); (vi) Aequitas 

Income Opportunity Fund II, LLC (“AIOF-II”) (collectively, the “Funds”). See Compl. ¶¶ 196-

202.2

 The various securities at issue differed markedly from one another. Plaintiffs concede 

that the challenged sales were accomplished by means of different offering documents, which 

varied in form and content from one security to the next, and changed over time. See, e.g., 

Compl. ¶¶ 136-46; F&R at 7 (“The Funds sold the Securities using Private Placement 

Memoranda, where the seller described to potential investors its business operations, assets, and 

risks.”). Moreover, the securities offered different terms and repayment schedules for investors. 

For example, while many of the securities at issue were debt-based offerings, the ACOF Interests 

were shares in a private investment vehicle consisting of equity interests in various portfolio 

companies. While the debt-based offerings provided for specified rates of return and fixed 

maturity dates, the ACOF Interests offered no set rate of return at all. Compare Masuda Decl. 

Ex. 3 (November 30, 2013 ACF PPM), with id. Ex. 7 (February 2014 ACOF PPM). 

 

2

 Plaintiffs also mention a number of other funds, including Aequitas ETC Founders Fund, LLC 

(“AETC”), Aequitas Enhanced Income Fund (“AEIF”) (see Compl. ¶ 25), and Aequitas Private 

Client Fund, LLC (“APCF”) (id. ¶ 27)—but no Plaintiff claims to have purchased securities 

issued by those funds. See id. ¶¶ 196-202 (summarizing Plaintiffs’ purchases and failing to list 

any securities issued by AETC, AEIF, or APCF). Similarly, no Plaintiff claims to have bought 

securities through the alleged “Note Manufacturing Program.” See id.¶ 63. 

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 Furthermore, the securities issued by a particular entity varied according to the purchaser 

and the timing of sale. ACF, for instance, issued private notes, but each was a unique security. 

They were issued at different face values and carried different interest rates. Even those issued 

close in time were priced differently, depending on the investor. Compare Compl. ¶ 200(b) 

(alleging that Plaintiff Nowak purchased an ACF Note in May 2014 “in the principal amount of 

$1.6 million, with interest at the annual rate of 11 percent and a May 2018 maturity date”), with

id. ¶ 201(c) (alleging that Plaintiff Ramstein purchased an ACF note in March 2014 “with a 

principal amount of $400,000, with interest at the annual rate of 10 percent and a March 2018 

maturity date”). 

 Significantly, Plaintiffs concede that the various securities sales were accomplished by 

means of different offering documents, including individualized PPMs. See, e.g., Compl. ¶¶ 

136-46; F&R at 7 (“The Funds sold the Securities using Private Placement Memoranda, where 

the seller described to potential investors its business operations, assets, and risks.”). For 

example, AIOF issued PPMs that were materially different than those issued by ACF. Compare

Compl. ¶ 136 (a)-(b) (alleging that the ACF PPM dated June 9, 2010 contained statements 

regarding the “Payment Terms” and “Use of Proceeds” applicable to the ACF Notes), with id. ¶ 

147 (alleging that the AIOF PPM dated July 1, 2011 contained statements regarding such things 

as the “Sources of Repayment” and “collateral,” but not the payment terms or use of proceeds 

applicable to AIOF investments). Furthermore, Plaintiffs allege that the representations in the 

PPMs varied over time and by entity. Compare Compl. ¶ 148 (alleging that the March 1, 2012 

AIOF PPM was false and misleading because it failed to disclose the identity of Corinthian) with

Masuda Decl. Ex. 8 (ACF PPM Supplement dated October 16, 2014) (identifying Corinthian by 

name). 

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 Beyond the PPMs, Plaintiffs acknowledge generally that they received other information, 

both in writing and orally from Aequitas personnel and/or Plaintiffs’ own Registered Investment 

Advisors. See Compl. ¶¶ 36, 41, 46, 51, 56, 61, 66 (alleging that the issuers of all securities sold 

to Plaintiffs “engaged in roadshows promoting the [security] to prospective investors and/or their 

investment advisors” and that the issuers “widely disseminated promotion, marketing, offering, 

and sales materials . . . to prospective investors and/or investment advisors”).3

 Here too, 

however, Plaintiffs make no effort to link any particular information with any particular sale or 

offering made over the five-year period. 

 Perhaps the only common feature of these securities is that none was publicly traded; 

instead, each was sold in a private placement transaction to individuals who represented 

themselves to be sophisticated, high net-worth, accredited investors. Those investors were 

warned—and explicitly acknowledged—that the securities were “speculative, illiquid and 

involve[d] a high degree of risk,” and as such “should be purchased only by persons who [could] 

afford to lose their entire investment.” Masuda Decl. Ex. 3 (November 30, 2013 ACF PPM). 

B. Plaintiffs And Their Securities Purchases 

 Collectively, Plaintiffs claim to have purchased securities from the six Aequitas entities 

identified above. See Compl. ¶¶ 196-202. However, while Plaintiffs identify the securities they 

allegedly purchased and the dates of those purchases, none identifies the specific PPMs, offering 

documents, or other written and/or oral representations “by means of” which the challenged 

securities were sold to them. See id. Instead, the Complaint identifies certain PPMs and other 

 

3

 Indeed, other investors in related lawsuits have asserted claims against the registered 

investment advisers who were directly involved in the securities transactions. See Am. Compl. 

at ¶ 31, Brown v. Price, et al., No. 3:17-cv-00869 (D. Or. filed Jun. 2, 2017), Dkt. 59 (Jul. 26, 

2017) (alleging that investment advisers “solicited and sold Aequitas Investments . . . not 

because those were good investment choices for Plaintiffs, but because of the conflicted 

relationship between Aequitas and” the investment advisers.”). 

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documents issued by different Aequitas entities over time, without connecting those materials to 

their particular securities transactions. These documents and their identifying dates are: 

Aequitas Entity Allegedly Misleading Documents 

1. ACF • ACF PPM dated June 9, 2010 (Compl. ¶ 136). 

• ACF PPM dated December 1, 2011 (Compl. ¶ 137). 

• ACF PPM dated November 30, 2012 (Compl. ¶ 138). 

• ACF PPM Supplement dated March 1, 2013 (Compl. ¶ 139). 

• ACF PPM dated November 30, 2013 (Compl. ¶ 140). 

• ACF PPM Supplement dated October 16, 2014 (Compl. ¶ 141). 

• ACF “Consolidated Financial Statements” for 2014 and 2013, 

“disseminated” after May 9, 2015 (Compl. ¶ 142). 

• ACF “Aequitas Capital Investor Update” dated May 11, 2015 

(Compl. ¶ 143). 

• ACF PPM dated September 9, 2015 (Compl. ¶ 144). 

• ACF “Performance Summary” for the quarter ended September 30, 

2015 (Compl. ¶ 145). 

• ACF PPM dated October 27, 2015 (Compl. ¶ 146). 

2. AIOF • AIOF PPM dated July 1, 2011 (Compl. ¶ 147). 

• AIOF PPM dated March 1, 2012 (Compl. ¶ 148). 

• AIOF PPM dated December 21, 2012 (Compl. ¶ 149). 

3. AIOF II • AIOF II PPM dated February 12, 2012 (Compl. ¶ 150). 

• AIOF II PPM dated October 31, 2014 (Compl. ¶ 151). 

4. ACOF • ACOF PPM dated February 2014 (Compl. ¶ 153). 

• ACOF PPM Supplement dated August 2014 (Compl. ¶ 154). 

• ACOF PPM Supplement dated November 2014 (Compl. ¶ 155). 

• ACOF PPM Supplement dated February 2015 (Compl. ¶ 156). 

• “Aequitas Capital Opportunities Fund, LP Confidential Fund 

Summary” dated March 9, 2014 (Compl. ¶ 157). 

5. AIPF • AIPF PPM dated September 30, 2011 (Compl. ¶ 158). 

• AIPF PPM dated December 14, 2011 (Compl. ¶ 159). 

• AIPF PPM dated February 15, 2012 (Compl. ¶ 160). 

• AIPF PPM dated June 1, 2012 (Compl. ¶ 161). 

• AIPF PPM dated December 31, 2012 (Compl. ¶ 162). 

6. AEIF • AEIF PPM dated October 1, 2014 (Compl. ¶ 163). 

• AEIF PPM dated January 1, 2015 (Compl. ¶ 164). 

• AEIF PPM dated December 14, 2015 (Compl. ¶ 165). 

7. APCF • APCF PPM dated July 31, 2015 (Coml. ¶ 166). 

8. AMLF • AMLF “investment documentation” (Comp. ¶ 181-82). 

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 Plaintiffs allege generally that these materials were misleading because they failed to 

disclose details regarding Aequitas’s Corinthian investment, the “interrelated” nature of the 

Aequitas entities, the potential uses of investor funds, and the Aequitas entities’ histories. 

However, because the PPMs varied over time and by entity, each is alleged to have been false or 

misleading for different—and even inconsistent—reasons. Compare Compl. ¶ 148(f) (alleging 

that statements in AIOF’s March 1, 2012 PPM were misleading because, while “the PPM 

describes its student loan receivables portfolio [it] omits and fails to disclose that the ‘publiclyheld educational institution’ was the for-profit Corinthian Colleges”), with id. ¶ 153(c) 

(admitting that the February 2014 ACOF PPM identified Corinthian by name). In short, it is a 

threshold pleading requirement to allege—for purposes of establishing primary liability under 

ORS 59.115—not only what specifically was “false or misleading” about these documents, but 

also the specific PPM, offering document, and/or other written or oral representations “by means 

of” which each security was sold. F&R at 46. Plaintiffs have once again failed to meet this 

fundamental requirement. 

C. Defendants Deloitte & Touche LLP, EisnerAmper LLP, Sidley Austin LLP, 

Tonkon Torp LLP, TD Ameritrade, Inc., Integrity Bank & Trust, And Duff 

& Phelps, LLC 

 Defendants Deloitte & Touche LLP, EisenerAmper LLP, Sidley Austin LLP, Tonkon 

Torp LLP, Integrity Bank & Trust, and Duff & Phelps, LLC were providers of various 

professional services to one or more of the Aequitas entities, at different points in time. TD 

Ameritrade, Inc. provided custodian services for the Aequitas securities to its customers, 

typically on behalf of the RIAs on the AdvisorDirect platform. None of them is alleged to have 

sold Aequitas securities. Instead, Defendants are alleged to have “participated in and materially 

aided unlawful sales of securities.” Compl. ¶ 216. 

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D. Plaintiffs’ Claims And Theories Of Primary Liability 

 Plaintiffs brought suit on April 4, 2016, and filed their Second Amended Class Action 

Complaint on September 8, 2017. Plaintiffs assert a single state law claim against these 

Defendants under ORS 59.115(3). See Compl. ¶ 216. ORS 59.115(3) is a secondary liability 

statute that renders jointly and severally liable “every person who participates or materially aids 

in [a] sale” of securities that otherwise violates ORS 59.115. Accordingly, in order to state a 

claim against Defendants for secondary liability, Plaintiffs must as a threshold matter allege a 

primary violation of ORS 59.115 by a seller of securities. F&R at 52 (holding that Plaintiffs’ 

failure to adequately plead primary liability “eliminates Defendants’ secondary liability, for 

purposes of the FAC”); Anderson v. Carden, 146 Or. App. 675, 683 (1997) (“[T]he liability of 

the non-seller participant under ORS 59.115(3) is predicated on the violation of the seller.”).4

 Plaintiffs assert two theories of primary liability. First, Plaintiffs allege that “Aequitas” 

sold unregistered securities in violation of ORS 59.055 (made actionable by ORS 59.115(1)(a)). 

Compl. ¶ 213. Second, Plaintiffs allege that “Aequitas” sold them securities “by means of” false 

or misleading statements. Id. ¶¶ 214-15. This second theory of primary liability has two 

branches because, according to Plaintiffs, Aequitas’s alleged false and misleading statements 

violated two different statutes. The first is ORS 59.135(2), which prohibits a seller from 

“mak[ing] an untrue statement of a material fact or [ ] omit[ting] to state a material fact 

necessary in order to make the statements made. . . not misleading.” Compl. ¶ 214. The second 

is ORS 59.115(1)(b), which prohibits the sale of securities “by means of an untrue statement of 

 

4

 Individual motions filed by several Defendants address their individual defenses to Plaintiffs’ 

claims of secondary liability under ORS 59.115(3). In addition, as noted above, because 

different Defendants are allegedly connected in different ways to different offering materials, 

Plaintiffs’ failure to identify which sales Aequitas made “by means of” which offering materials 

renders their secondary liability claims fatally uncertain. 

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material fact or an omission to state a material fact necessary in order to make the statements 

made. . . not misleading.” Compl. ¶ 215. 

III. LEGAL STANDARD 

 Rule 12(b)(6) requires dismissal when a complaint lacks sufficient facts to “state a claim 

to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plaintiffs’ 

only claim against Defendants is under ORS 59.115. Oregon courts have long recognized that 

“the primary basis for such an action is fraud.” Karsun v. Kelley, 258 Or. 155, 167 (1971); see 

also Aero Marine Engine, Inc. v. Transporter, Inc., No. 05-1469, 2007 WL 3128500, at *3 n.2 

(D. Or. Oct. 23, 2007) (“Both of the Oregon securities statutes in issue [ORS 59.115 and 

59.135] create statutory ‘fraud’ actions.”). Accordingly, the Complaint must satisfy both the 

requirements of Rule 8 and the heightened pleading standards of Rule 9(b). E.g., F&R at 23 

(“Plaintiffs’ claims alleging Aequitas committed primary violations of the Oregon Securities 

Law through misrepresentation and omission sound in fraud, and must be pleaded with 

particularity.”). 

Under Rule 8, a complaint must contain “enough [factual allegations] to raise a right to 

relief above the speculative level,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), and a 

plaintiff must plead “more than a sheer possibility that a defendant has acted unlawfully,” Iqbal,

556 U.S. at 678. Where a complaint alleges fraud, however, Rule 9(b) additionally requires that 

the circumstances constituting fraud or mistake be stated with particularity. See Fed. R. Civ. P. 

9(b). That is, the complaint must “identify the who, what, when, where, and how of the 

misconduct charged, as well as what is false or misleading about the purportedly fraudulent 

statement, and why it is false.” In re Galena Biopharma, Inc. Sec. Litig., 117 F. Supp. 3d 1145, 

1163 (D. Or. 2015) (quotation, alteration, and citation omitted); see also In re Rigel Pharm., Inc. 

Sec. Litig., 697 F.3d 869, 876 (9th Cir. 2012) (a complaint must “set[] forth what is false or 

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misleading about the statement and why the statements were false or misleading at the time they 

were made”); see also F&R at 23. 

 Although Rule 9(b) provides that a defendant’s state of mind may be generally alleged, 

those allegations must still satisfy Iqbal/Twombly to avoid being impermissibly speculative. 

Indeed, in Iqbal, the United States Supreme Court made clear that the ability to allege state of 

mind generally “does not give [a plaintiff] license to evade the less rigid—though still 

operative—strictures of” Rule 8. Iqbal, 556 U.S. at 686-687. Thus, even as to state of mind, a 

plaintiff may not merely “plead the bare elements of his cause of action, affix the label ‘general 

allegation,’ and expect his complaint to survive a motion to dismiss.” Id. at 687. 

IV. ARGUMENT 

A. Plaintiffs’ Theory Of Primary Liability Based On The Sale Of Unregistered 

Securities Should Be Dismissed 

 Plaintiffs’ first theory of primary liability is that the Aequitas securities were sold without 

proper registration under ORS 59.055. See Compl. ¶ 213. 

 This Court previously dismissed Plaintiffs’ claim based on this theory of primary 

liability, holding that “Plaintiffs must plead facts showing that the Disputed Securities were not 

federal covered securities.” F&R at 41. Under Oregon law a “federal covered security” is 

defined to include, among other things, securities that are sold under an SEC Regulation D 

exemption.5

 A security qualifies for a Regulation D exemption when it is sold only to accredited 

 

5

 Oregon law defines “federal covered security” by reference to 15 U.S.C. § 77r(b). See ORS 

59.015(5). 15 U.S.C. § 77r(b) defines “covered security” as, among other things, an offering 

exempt from registration under SEC “rules or regulations issued under section 77d(2).” 15 

U.S.C. § 77r(b)(4)(F). Section 77d(2) exempts from registration “transactions by an issuer not 

involving any public offering.” 15 U.S.C. § 77d(a)(2). Securities sold pursuant to 17 C.F.R. 

§ 230.506 are “deemed to be transactions not involving any public offering.” 17 C.F.R. § 

230.506(a). A security is sold pursuant to Section 230.506 (Rule 506 of Regulation D) when 

sold only to accredited investors and up to 35 other purchasers who the issuer reasonably 

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investors—e.g., investors whose net worth exceeds $1 million or with income greater than 

$200,0006

—and up to 35 other purchasers who the issuer reasonably believes are able to 

evaluate the investment. 17 C.F.R. § 230.506(b); 17 C.F.R. § 230.501(e)(1)(iv). Plaintiffs have 

failed to plead facts showing that the securities in question were not sold under a Regulation D 

exemption at the time any Aequitas entity asserted that they were. 

 As a threshold matter, in evaluating whether the Complaint has pled such facts, this Court 

must apply Rule 9(b). As before, Plaintiffs have alleged that “Aequitas entities violated ORS 

59.115(1)(b) and 59.135(2) by failing to disclose that the Disputed Securities were required to be 

registered.” F&R at 41. Thus, under Rule 9(b), Plaintiffs were required to plead particularized 

facts showing that statements regarding registration were false when made—in other words, that 

Aequitas represented a security was exempt from registration, when in fact it was not. See In re 

Rigel Pharm., 697 F.3d at 876 (A complaint must “set[] forth what is false or misleading about 

the statement and why the statements were false or misleading at the time they were made.”) 

(citations omitted). 

 Plaintiffs come nowhere close to meeting this pleading burden. Instead, they make 

conclusory allegations that all Aequitas securities failed federal exemptions because certain 

securities: (i) were sold by general solicitations (Compl. ¶¶ 36, 41, 46, 51, 56); (ii) were neither 

“federal covered securities under the Oregon Securities Law, [n]or were [they] covered securities 

under Section 18 of the Securities Act” (id. ¶¶ 37, 42, 47, 52, 57); or (iii) were not actually 

exempt under Rule 506 of Regulation D because they were sold to “unaccredited investors” (e.g., 

 

believes are able to evaluate the investment. 17 C.F.R. § 230.506(b); 17 C.F.R. § 

230.501(e)(1)(iv). 

6 See 17 C.F.R. § 230.501(a) (defining “accredited investor”). 

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id. ¶ 37(c)).7 These blanket assertions lack the specificity required by Rule 9(b), because they 

fail to particularize the “nature of the alleged fraudulent activit[y].” Houston v. Seward & Kissel, 

LLP, No. 07cv6305, 2008 WL 818745, at *3 (S.D.N.Y. Mar. 27, 2008) (citing Riley v. Brazeau, 

612 F. Supp. 674, 677 (D. Or. 1985)). With respect to the allegation that securities were sold via 

general solicitations: When did these solicitations occur? With respect to which securities? To 

whom were the solicitations made? By whom? Similarly, with respect to the allegation that 

securities were sold to unaccredited investors: When were such sales made? Of which security? 

To how many unaccredited investors? Who were those investors and what is the basis for 

Plaintiffs’ assertion that they were unaccredited? Tellingly, Plaintiffs do not allege that any of 

them were unqualified to purchase their respective securities. Nor does the Complaint provide 

any facts from which the Court reasonably could infer that the Aequitas entities improperly sold 

securities to unqualified investors, in numbers rendering the Regulation D exemption 

inapplicable. Without this information, Defendants are left to guess at the factual underpinnings 

of Plaintiffs’ non-registration claims, leaving them unable to understand those claims or prepare 

a defense. 

B. Plaintiffs’ Theory Of Primary Liability Based On The Sale Of Securities By 

Means Of False Or Misleading Statements Should Be Dismissed 

 Plaintiffs’ second theory of primary liability is that Aequitas violated ORS 59.135(2) and 

ORS 59.115(1)(b), both of which prohibit the making of false or misleading statements in 

connection with the sale of securities. ORS 59.135(2); ORS 59.115(1)(b); see also Compl. ¶¶ 

214-15 (asserting Aequitas’s violation of these statutes). Although ORS 59.135(2) and ORS 

59.115(1)(b) are not identical, Plaintiffs’ attempts to plead violations of these statutes suffer from 

 

7

 In addition, as to AETC and APCF, Plaintiffs do not make even these overbroad, boilerplate 

allegations. Accordingly, at a minimum, non-registration claims related to those entities must be 

dismissed. See Compl. ¶¶ 136-66. 

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a common defect: the failure to plead that any false or misleading statements were made “in 

connection with” a specific sale (ORS 59.135(2))8

, or equivalently, that any specific sale was 

made “by means of” false or misleading statements (ORS 59.115(1)(b)).9 

 To adequately plead their claims under ORS 59.115(1)(b) and ORS 59.135(2), Plaintiffs 

must allege facts establishing that each security was sold “by means of” the false or misleading 

statements alleged in the Complaint. See ORS 59.115(1)(b); ORS 59.135(2). The “by means of” 

requirement is significant under Oregon law because ORS 59.115 requires Plaintiffs to “plead 

actionable misrepresentations and omissions connected to a sale or group of sales of a security.” 

F&R at 48 (emphasis added). To establish the requisite connection, each Plaintiff is required—at 

minimum—to allege that “the seller made a misleading statement in the offering documents or 

other promotional materials for a security” that he, she, or it purchased. See F&R, at 46 

(emphasis added).10

 

8

 Defendants believe that Plaintiffs have failed adequately to allege the scienter of the specific 

Aequitas entities involved in the challenged transactions, a necessary element of their claim 

under ORS 59.135(2). This Court previously ruled that Plaintiffs had adequately pled scienter 

(F&R at 51-52), and Defendants do not here ask the Court to reconsider its prior ruling. 

However, Defendants note that, the Complaint’s allegations of “knowledge” are all directed at 

“Aequitas” rather than the issuing entity from which Plaintiffs purchased their securities. See, 

e.g., Compl. ¶¶ 103-07 (describing a letter from “the General Counsel of Aequitas”); Id. ¶ 157 

(alleging that “Aequitas knew that those obligations were not likely to be performed.”). 

9

 ORS 59.115(1)(b) prohibits securities sales “by means of” material false or misleading 

statements, while ORS 59.135(2) prohibits the making of materially false or misleading 

statements “in connection with” the sale of securities. As this Court has recognized, the “by 

means of” and “in connection with” requirements are similar under Oregon law. See F&R at 47 

(“The connecting language between the misleading communication and sale is similar [under 

ORS 59.115(1)(b) and ORS 59.135(2)].”). Accordingly, Defendants use “by means of” 

throughout this brief in reference to both the “by means of” and “in connection with” 

requirements under these statutes. 

10 Under the F&R, Plaintiffs are not required to allege that they “relied upon” or actually 

received any false or misleading statements. F&R at 47-48. 

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 In the F&R, this Court contemplated that Plaintiffs could—in theory—satisfy this 

requirement by identifying “group[s] of sales the Funds effected through the allegedly 

misleading PPMs and other communications.” Id. at 47. This was based on an assumption that 

the Aequitas Funds actually sold “groups” of securities by means of the same PPM or 

communications. See F&R at 44 (citing Sanders v. John Nuveen & Co., 619 F.2d 1222, 1226-27 

(7th Cir. 1980)). Indeed, in Sanders, the defendant issuer publicly offered the same security 

(commercial paper with a nine-month maturity) to many investors, by means of the same 

misleading prospectus. See Sanders v. John Nuveen & Co., 463 F.2d 1075, 1076 (7th Cir. 1972). 

Given those facts, the Seventh Circuit found it appropriate to assume that in a public issuance the 

“dissemination of information to some buyers or sellers can have an impact upon the market 

price and thus affect transactions by people who never saw the documents.” Sanders, 619 F.2d 

at 1226. 

 However, under Sanders, even if Plaintiffs were excused from pleading that they 

personally received any given misstatement, they were not excused from identifying the specific 

document(s) “by means of which” securities were sold to them. Plaintiffs have not met this 

requirement; instead they ask this Court to assume that all sales of all securities—no matter when 

sold, by a specific issuing entity, and pursuant to a specific PPM—were made “by means of” all 

alleged misstatements contained in all identified PPMs. But that assumption plainly cannot be 

made here—where each sale was accomplished in a private placement offering, and each 

investor was sold a different security pursuant to a different PPM. For example (and as 

discussed above), even though ACF sold “Private Notes,” each Note was different: they had 

different face values, maturities, and risk-based rates of return. See, e.g., Compl. ¶¶ 200(b), 

201(c). Moreover, each unique security was sold by means of different information: each Fund 

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used a different PPM, and each Fund’s PPMs changed over time through the issuance of new 

PPMs and/or PPM Supplements. In addition, beyond the PPMs, the Funds used other marketing 

materials (a few of which Plaintiffs identify in the Complaint) (see, e.g., Compl. ¶ 145), and oral 

representations (see, e.g., id. ¶ 36) to sell their securities.11 These PPMs and other materials are 

alleged to have been false or misleading for different—and even inconsistent—reasons. Supra, 

Section II.B. Accordingly, this Court must evaluate the Complaint on a security-by-security 

basis to determine whether Plaintiffs have pled the requisite connection between the 

misstatements alleged and the securities sold to them. F&R at 48; see also Sanders, 619 F.2d at 

1227 n.8. 

 Plaintiffs have failed to meet this burden. To be sure, Plaintiffs allege that “Aequitas” 

made a variety of misstatements in various PPMs and other “offering documents” throughout the 

relevant period. See supra, Section II.B. (summarizing misstatements and omissions alleged). 

But Plaintiffs fail to “connect” these alleged misstatements to any particular sale at issue in the 

Complaint. See F&R at 48. That is, although Plaintiffs purport to identify the securities sold to 

them and the dates of those sales, no Plaintiff identifies the actual PPM (or other communication) 

“by means of” which those sales were effectuated. See Compl. ¶¶ 196-202. Thus, none of the 

seven named Plaintiffs has stated a claim. F&R at 48 (“ORS 59.115(1)(b) requires Plaintiffs to 

plead actionable misrepresentations and omissions connected to a sale or group of sales of a 

security.”).12

 

11 The Sanders court explicitly limited its holding to written statements included in a prospectus. 

Sanders, 619 F.2d at 1227 n.8. As to “oral communication[s] by means of a which a security is 

sold,” the court explained that then-Section 12(2) likely required proof of “a statement made to 

the individual buyer of the security” because “[s]poken words lack continuing vitality and are 

unlikely to affect the general market price of a security.” Id.

12 Plaintiffs must adequately plead their own claims before they can purport to represent the 

class. See Updike v. Clackamas County, No. 3:15-cv-00723-SI, 2015 WL 7722410, at *11 (D. 

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 Plaintiffs Ciuffitelli, RFMC, and the MacDonalds, for example, allege that they 

purchased securities from AMLF. See Compl. ¶¶ 196(c); 198(d); 199(c). But the Complaint 

alleges only that AMLF “investment documentation” contained false and misleading statements; 

it does not identify the specific “investment documentation” by means of which the sales to these 

Plaintiffs were effectuated, or the portions of those documents that contained false or misleading 

statements. See Comp. ¶¶ 181-82. These allegations fail to satisfy this Court’s earlier holding 

that “Plaintiffs must plead facts sufficient to show that allegedly misleading communications 

preceded Plaintiffs’ purchases of the Disputed Securities.” F&R at 48 (citing Loewen v. 

Galligan, No. A9005-02822, 1992 WL 12582753, at *8-9 (Or. Cir. Ct. Aug. 19, 1992), aff’d 130 

Or. App. 222 (1994)). Moreover, vague allegations as to paraphrased material purportedly set 

forth in “investment documentation” clearly fail Rule 9(b)’s requirement to “identify the who, 

what, when, where, and how of the misconduct charged, as well as what is false or misleading 

about the purportedly fraudulent statement, and why it is false.” In re Galena, 117 F. Supp. 3d at 

1163. Finally, as Plaintiffs have not identified when this “investment documentation” was 

provided (Compl. ¶¶ 181-82), they have also failed Rule 9(b)’s requirement that they plead facts 

showing that the alleged misstatements were false when made. In re Rigel Pharm., 697 F.3d at 

876. 

 Similarly, the Juliens allege that they purchased an AIOF Note “[i]n 2012.” Compl. 

¶ 197. But they too fail to identify the AIOF PPM or other communication “by means of” which 

 

Or. Nov. 30, 2015) (collecting Ninth Circuit cases requiring lead plaintiffs to plead all elements 

of stated claims on their own behalf). In other words, they cannot—as they attempt to do—

simply recite false or misleading statements in PPMs by means of which some Aequitas 

securities were sold to some person or entity. See Ridge at Red Hawk, L.L.C. v. Schneider, 493 

F.3d 1174, 1177 (10th Cir. 2007) (“[T]he mere metaphysical possibility that some plaintiff could 

prove some set of facts in support of the pleaded claims is insufficient; the complaint must give 

the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual 

support for these claims.”). 

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their security was sold to them. Was it the July 2011 AIOF PPM (id. ¶ 147)? Or the March 

2012 AIOF PPM (id. ¶148)? Or the December 2012 AIOF PPM (id. ¶ 149)? Or how about the 

2012 Q2 “Aequitas Capital // Quarterly Update Performance Summary” (id. ¶168)? Or all four, 

and other documents besides? The Complaint does not say. Accordingly, this Court cannot even 

begin to ascertain whether the Juliens themselves can state a claim—or what the basis of any 

such claim might be. See F&R at 48. Given their failure to identify the particular offering 

document(s) “by means of” which their security was sold to them, the Juliens have failed to meet 

their pleading obligation; Rule 9(b) requires far more. In re Galena, 117 F. Supp. 3d at 1163. 

 Plaintiff Ramstein claims to have purchased ACF Notes in July 2012, August 2013, 

March 2014, and September 2015. Compl. ¶ 201. However, he too fails to identify which of 

these sales, if any, were made “by means of” an allegedly misleading PPM. This pleading defect 

is fatal because the ACF PPMs changed over time. Plaintiffs collectively allege that statements 

in ACF’s November 30, 2013 PPM were false and misleading because, inter alia, “Aequitas was 

insolvent and unable to make investments.” Id. ¶ 140(a). By contrast, Plaintiffs allege that 

ACF’s September 9, 2015 PPM was misleading because it mischaracterized the investments that 

Aequitas actually did make. Compare Compl. ¶ 140(a), with id. ¶ 144(a). 

 Finally, the Complaint alleges misstatements in PPMs for securities that no Plaintiff 

purchased. Plaintiffs allege that PPMs issued by AEIF (Compl. ¶¶ 163-65) and APCF (id. ¶ 166) 

contained false and misleading statements. But no Plaintiff claims to have purchased securities 

issued by AEIF or APCF. See id. ¶¶ 196-202. Thus, no Plaintiff can state a claim based on 

alleged misstatements in those PPMs. See State v. Marsh & McLennan Cos., 353 Or.1, 12 

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(2012) (holding that ORS 59.115 requires direct privity between seller and purchaser).13 In any 

event, the Complaint also fails to identify which securities offered by AEIF or APCF were sold 

“by means of” specific PPMs or other offering documents containing false or misleading 

statements. 

 In short, the Complaint is pled as if every sale identified—no matter when that sale 

occurred, no matter the Aequitas entity by which it was made, no matter the specific PPM 

pursuant to which it was accomplished, and no matter the specific statements alleged to have 

been false or misleading—was effectuated “by means of” every misstatement alleged in the 

Complaint. That approach is not consonant with Oregon law, and contradicts other facts alleged. 

Each Plaintiff must identify the specific PPM or other communication on which his, her, or its 

claim is based, and the specific language alleged to have been false or misleading. See F&R 46-

48; see also Updike, 2015 WL 7722410, at *11. Plaintiffs who cannot make this identification 

simply are not entitled to pursue damage claims against the Defendants. 

 Unable or unwilling to make this identification, Plaintiffs reassert that the securities at 

issue were “integrated”—apparently hoping to avoid the pleading requirement described above. 

See Compl. ¶ 32 (“The offerings of the Aequitas securities were a single integrated offering for 

purposes of the securities registration requirements under state and federal law.”). But as this 

Court has previously found, the “integrated offering” theory fails as a matter of Oregon law. 

 

13 This privity requirement means that claims based on these alleged misstatements must be 

dismissed because no Plaintiff has standing to assert them. See Marsh, 353 Or. at 12 (“ORS 

59.115 [ ] established a cause of action only for purchasers of stocks damaged by 

misrepresentations made in direct, face-to-face securities transactions.”). It also underscores the 

importance of the requirement that Plaintiffs allege a particular PPM and associated set of 

misstatements/omissions “by means of” which particular securities were sold to them; failing 

this, the Court cannot even determine whether Plaintiffs have standing to assert their claims. 

This Court previously determined to “defer any ruling on standing until its ruling on class 

certification.” F&R at 73. 

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F&R at 32 (“Plaintiffs’ integrated offering theory is unsupported by the Oregon Securities Law, 

and does not allow consideration of all the ‘Aequitas Securities’ as a single securities offering.”). 

It also fails as a matter of fact, because—as the Complaint itself acknowledges (see, e.g., Compl. 

¶¶ 136, 147)—each security at issue was different, and different sales were effectuated “by 

means of” different offering documents containing different, and even conflicting, language. 

Supra, Section II.B.14

C. Plaintiffs’ Claims Based On Sales Made Before April 4, 2013 Are Barred By 

ORS 59.115(6)’s Three-Year Statute Of Limitations 

 The default statute of limitations applicable to any theory of primary liability arising 

under ORS 59.115 is three years. ORS 59.115(6). Plaintiffs appear to concede that ORS 

59.115(6) limits their primary liability claims based on ORS 59.055 (sales of unregistered 

securities) to sales occurring after April 4, 2013. See Compl. ¶ 213 (alleging only that “[w]ithin 

three years before this action was commenced, Aequitas sold unregistered securities in violation 

of ORS 59.055 and 59.115(1)(a)”). 

 Yet Plaintiffs attempt to assert their “false or misleading statements” theories of primary 

liability based on sales dating back to June 9, 2010. See Compl. ¶¶ 214-15. Sales occurring 

between June 9, 2010 through April 3, 2013 fall outside ORS 59.115’s three-year statute of 

limitations, and claims based on such sales are therefore barred. ORS 59.115(6). Nor can 

Plaintiffs avail themselves of ORS 59.115(6)’s “discovery rule,” which allows an action under 

59.115(1)(b) to be commenced within “two years after the person bringing the action discovered 

or should have discovered the facts on which the action is based.” ORS 59.115(6). To trigger 

 

14 Moreover, as this Court has already recognized, the claims against these particular Defendants 

are “contingent upon transactions they participated in or materially aided through working 

relationships with ACF and the Funds. Defendants did not work with ‘Aequitas’—Defendants 

worked with individual Aequitas entities.” F&R at 29 (internal citation omitted). 

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this discovery rule Plaintiffs are required to plead facts justifying their delayed discovery. TRM 

Corp. v. Paulsell, No. CV-02-215, 2002 WL 31549112, at *2 (D. Or. June 4, 2002) (finding that 

where “[t]he face of the Complaint does not reveal why [plaintiff] delayed filing its claims 

beyond the [] statute of limitations . . . [plaintiff] must allege facts justifying that delay” to avoid 

dismissal); see also Mitchell v. Greenough, 100 F.2d 184, 186 (9th Cir. 1938) (holding that 

invocation of the discovery rule must be “fortified by a statement of facts which justifies the 

claim of ignorance, and this requires a statement of the circumstances under which the discovery 

was made as well as the reasons for prior ignorance.”). Indeed, “Oregon law also requires a 

plaintiff to plead facts showing the date of discovery.” F&R at 72 (citing Frohs v. Greene, 253 

Or. 1, 7 (1969)). Plaintiffs have done neither. 

 Plaintiffs assert that they “did not know of the untruths or omissions and, in the exercise 

of reasonable care, could not have known”—but the Complaint pleads no facts supporting this 

assertion. See Compl. ¶ 214. Indeed, the Complaint admits that many of the facts Plaintiffs 

claim to have been “omitted” were, in fact, disclosed. For example, Plaintiffs cite Aequitas’s 

supposed failure to disclose Corinthian’s regulatory difficulties as an actionable misstatement 

(e.g., id. ¶138(j))—but also allege that by June of 2013 there “was widespread criticism of 

Corinthian’s business practices,” and that “[b]y late 2013, the writing was on the wall that 

federal regulators were going to stop Corinthian’s ability to obtain federal student loan financing 

for its students.” Id. ¶ 95. Given this—and other inconsistencies in Plaintiffs’ allegations 

regarding what each of them knew, and when—Plaintiffs’ claim that they “only discovered that 

Aequitas had potentially committed securities law violations when they received a February 2, 

2016 letter that ACF sent to investors,” id. ¶ 184, rings hollow; more to the point, it fails to 

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provide the factual predicate necessary for invocation of the discovery rule.15 To the extent any 

claim is based on securities sales made before April 4, 2013, that claim must be dismissed as 

time-barred. 

V. CONCLUSION 

 For the foregoing reasons, Defendants respectfully request that the Court dismiss the 

Complaint with prejudice. 

October 23, 2017. 

THE FERRANTI FIRM LLC 

By/s/ William P. Ferranti 

William P. Ferranti, OSB No. 160069 

1819 SW 5th Avenue, Suite 403 

Portland, OR 97201 

Telephone: (503) 877-9220 

Email: wpf@ferrantiappeals.com 

-And – 

Linda T. Coberly

Catherine W. Joyce

Joanna Rubin Travalini

WINSTON & STRAWN LLP 

35 West Wacker Drive 

Chicago, IL 60601 

Telephone:(312) 558-5600 

Email: lcoberly@winston.com 

cjoyce@winston.com 

jtravalini@winston.com 

Attorneys for Defendant EisnerAmper LLP

LATHAM & WATKINS LLP 

By: /s/Peter A. Wald 

Peter A. Wald

Gavin M. Masuda

LATHAM & WATKINS LLP 

505 Montgomery Street, Suite 2000 

San Francisco, CA 94111-6538 

Telephone: (415) 391-0600 

Email: peter.wald@lw.com 

gavin.masuda@lw.com 

-AndRobert C. Weaver, Jr., OSB No. 801350 

Gary I. Grenley, OSB No. 75138 

Paul H. Trinchero, OSB No. 014397 

GARVEY SCHUBERT BARER 

121 SW Morrison Street, 11th Floor 

Portland, OR 97204 

Telephone: (503) 228-3939 

Email: rweaver@gsblaw.com 

ggrenley@gsblaw.com 

ptrinchero@gsblaw.com 

Attorneys for Defendant Deloitte & Touche 

LLP

 

15 Furthermore, this conclusory assertion—which is insufficient to meet Plaintiffs’ burden of 

alleging why they were unable to discover their claims earlier, see TRM Corp., 2002 WL 

31549112, at *2—only addresses the alleged timing of “discovery” by purchasers of ACF Notes, 

and says nothing about the other challenged transaction. 

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HARRANG LONG GARY RUDNICK P.C. 

By: /s/William F. Gary 

William F. Gary, OSB No. 770325 

william.f.gary@harrang.com 

Sharon A. Rudnick, OSB No. 830835 

sharon.rudnick@harrang.com 

360 E. 10th Avenue, Suite 300 

Eugene, OR 97401-3273 

 Telephone:(541) 485-0220 

-And – 

Michael S. Pullos, Pro Hac Vice

mpullos@winston.com 

Stephen V. D’Amore, Pro Hac Vice

sdamore@winston.com 

WINSTON & STRAWN LLP 

35 West Wacker Drive 

Chicago, IL 60601 

Telephone: (312) 558-6468 

Attorneys for Defendant Duff & Phelps, 

LLC

HART WAGNER, LLP 

By: /s/ Matthew J. Klamanson 

Matthew J. Kalmanson, OSB No. 041280 

mjk@hartwagner.com 

Lindsay Howk Duncan, OSB No. 120974 

lhd@hartwagner.com 

 1000 SW Broadway, Twentieth Floor 

Portland, OR 97205 

Telephone: (503) 222-4499 

-And – 

Bruce M. Bettigole, Pro Hac Vice 

brucebettigole@eversheds-sutherland.com 

Nicholas Christakos, Pro Hac Vice 

nicholaschristakos@evershedssutherland.com 

EVERSHEDS SUTHERLAND (US), LLP 

700 Sixth Street NW, Suite 700 

Washington, D.C. 20001-3980 

Telephone: (202) 383-0100 

Facsimile: (202) 637-3593 

Attorneys for Defendant TD Ameritrade, 

Inc. 

Case 3:16-cv-00580-AC Document 278 Filed 10/23/17 Page 29 of 30
Page 25 – DEFENDANT’S JOINT MOTION TO DISMISS THE SECOND AMENDED 

COMPLAINT

MARKOWITZ HERBOLD PC 

By: /s/ David B. Markowitz 

David. B Markowitz, OSB No.742046 

DavidMarkowitz@MarkowitzHerbold.com 

Jeffrey M. Edelson, OSB No. 880407 

JeffEdelson@MarkowitzHerbold.com 

Chad M. Colton, OSB No. 065774 

ChadColton@MarkowitzHerbold.com 

 1211 S.W. Fifth Avenue, Suite 3000 

 Portland, OR 97204 

 Telephone: 503-295-3085 

-And – 

Brad D. Brain, Pro Hac Vice

Brad.brian@mto.com 

Bruce A. Abbott, Pro Hac Vice

Bruce.abbott@mto.com 

Kevin L. Brady 

Kevin.Brady@mto.com 

Trevor N. Templeton 

Trevor.templeton@mto.com 

MUNGER, TOLLES & OLSON LLP 

 355 South Grand Avenue, 35th Floor 

 Los Angeles, CA 90071 

 Telephone: 213-683-9100 

Attorneys for Defendant Sidley Austin LLP

K&L GATES LLP 

By: /s/ Philip S. Van Der Wheele 

Philip S. Van Der Wheele, OSB No. 863650 

phil.vanderweele@klgates.com 

1 SW Columbia Street 

Suite 1900 Portland, OR 97258 

Phone: 503-228-3200 

Attorneys for Defendant Tonkon Torp 

LLP 

LANE POWELL PC 

By:/s/ Milo Petranovich 

Milo Petranovich, OSB No. 813376 

Peter D. Hawkes, OSN No. 071986 

SreeVamshi C. Reddy, OSB No. 140560 

Telephone: 503.778.2100 

Attorneys for Defendant Integrity Bank & 

Trust 

Case 3:16-cv-00580-AC Document 278 Filed 10/23/17 Page 30 of 30