UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

______________________________________________

 :

 :

IN RE BRISTOL-MYERS SQUIBB CO. : No. 07 Civ. 5867 (PAC)

SECURITIES LITIGATION : 

 : FILED ELECTRONICALLY

 :

 :

 : ______________________________________________:

MEMORANDUM OF LAW IN SUPPORT OF

DEFENDANT ANDREW G. BODNAR S MOTION TO DISMISS

Elkan Abramowitz (EA-3987)

Lawrence S. Bader (LB-5481)

Jerrold L. Steigman (JS-9137)

MORVILLO, ABRAMOWITZ, GRAND,

 IASON, ANELLO & BOHRER, P.C.

565 Fifth Avenue

New York, New York 10017

(212) 856-9600

Attorneys for Defendant Andrew G. Bodnar

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 1 of 16
i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..........................................................................................................ii

PRELIMINARY STATEMENT..................................................................................................... 1

STATEMENT OF FACTS.............................................................................................................. 3

ARGUMENT .................................................................................................................................. 4

I. Plaintiffs Cannot State Any Claim Against Dr. Bodnar Under Section 10(b) 

 of the Exchange Act or SEC Rule 10b-5....................................................................... 4

A. Plaintiffs Have Not Adequately Alleged a Violation of Section 10(b) by 

 Dr. Bodnar........................................................................................................... 5

B. Plaintiffs Have Not Adequately Alleged Reliance .............................................. 6

C. Plaintiffs Have Not Adequately Alleged Loss Causation Against 

 Dr. Bodnar............................................................................................................ 7

D. Plaintiffs Have Not Adequately Alleged That Dr. Bodnar s Conduct

Was In Connection With the Purchase or Sale of Any Securities.................... 8

E. Plaintiffs Do Not Plead Facts Raising a Strong Inference That 

 Dr. Bodnar Acted With Scienter......................................................................... 9

F. Plaintiffs Fail to Allege Deceptive Conduct by Dr. Bodnar............................. 9

II. Plaintiffs Cannot State Any Claim Against Dr. Bodnar Under Section 20(a)

of the Exchange Act.................................................................................................... 10

CONCLUSION............................................................................................................................. 12

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 2 of 16
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TABLE OF AUTHORITIES

Federal Cases 

ATSI Commc ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007)........................................ 10

Basic, Inc. v. Levinson, 485 U.S. 224 (1988).................................................................................. 7

Boguslavsky v. Kaplan, 159 F.3d 715 (2d Cir. 1998) ................................................................... 11

Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994)........................................................................................................ 1, 5, 6, 7

Dinsmore v. Squadron, Ellenoff, Plesent, Sheinfeld & Sorkin, 135 F.3d 837 

(2d Cir. 1998).............................................................................................................................. 5

In re Alstom SA Sec. Litig., 406 F. Supp.2d 433 (S.D.N.Y. 2005) ..................................... 9, 10, 11

In re Charter Commc ns, Inc., 443 F.3d 987 (8th Cir. 2006), cert. granted, Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 127 S. Ct. 1873 (U.S. Mar. 26, 2007) (No. 06-43) .......................................................2, 6, 9, 10

In re Converium Holding AG Sec. Litig., No. 04 Civ. 7987 (DLC), 

2006 WL 3804619 (S.D.N.Y. Dec. 28, 2006)......................................................................... 2, 6

In re Livent, Inc. Noteholders Sec. Litig., 151 F. Supp. 2d 371 (S.D.N.Y. 2001) ........................ 11

In re Parmalat Sec. Litig., 376 F. Supp.2d 472 (S.D.N.Y. 2005)............................................... 6, 9

In re Refco Capital Mkts., Ltd. Brokerage Customer Sec. Litig., No. 06 Civ. 643 (GEL), 2007 WL 2694469 (S.D.N.Y. Sept. 13, 2007)..................................... 9

In re Refco, Inc. Sec. Litig., 503 F. Supp.2d 611 (S.D.N.Y. 2007)............................................... 11

In re Scholastic Corp. Sec. Litig., 252 F.3d 63 (2d Cir. 2001) ....................................................... 6

Lapin v. Goldman Sachs Group, Inc., 506 F. Supp.2d 221 (S.D.N.Y. 2006)............................... 11

Lentell v. Merrill Lynch & Co. Inc., 396 F.3d 161 (2d Cir. 2005).................................................. 8

Regents of the State of California v. Credit Suisse First Boston (USA), 482 F.3d 372 (5th Cir. 2007), petition for cert. filed, 75 U.S.L.W. 3557 

(U.S. Apr. 5, 2007) (No. 06-1341).................................................................................... 6, 9, 10

SEC v. Cedric Kushner Promotions, Inc., 417 F. Supp.2d 326 (S.D.N.Y. 2006)...........................5

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 3 of 16
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SEC v. Zandford, 535 U.S. 813 (2002) ........................................................................................... 8

Sec. Investor Prot. Corp. v. BDO Seidman LLP, 222 F.3d 63 (2d Cir. 2000)................................ 3

Shapiro v. Cantor, 123 F.3d 717 (2d Cir. 1997)............................................................................. 2

Simpson v. AOL Time Warner, Inc., 452 F.3d 1040 (9th Cir. 2006), petition for cert. filed, 75 U.S.L.W. 3236 (U.S. Oct. 19, 2006) (No. 06-560)........................ 6, 9

United States v. O Hagan, 521 U.S. 642 (1997)............................................................................. 8

Wright v. Ernst & Young LLP, 152 F.3d 169 (2d Cir. 1998).................................................. 2, 5, 7

Statutes

Securities Exchange Act of 1934 § 10(b)...............................................................................passim

Securities Exchange Act of 1934 § 20(a)..............................................................................1, 2, 10

SEC Rule 10b-5..................................................................................................................... 4, 7, 10

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 4 of 16
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Defendant Dr. Andrew G. Bodnar submits this memorandum of law and the 

accompanying declaration of Lawrence S. Bader in support of Dr. Bodnar s motion to dismiss

the purported Amended Class Action Complaint ( Am. Complaint or Amended Complaint ).1

Dr. Bodnar joins in the arguments of defendant Bristol-Myers Squibb Co. ( BMS ) in

support of its motion to dismiss. Accordingly, we will not repeat the facts and legal arguments 

set forth in BMS s motion, but incorporate them by reference and assume the Court s familiarity

with them.2If BMS s motion to dismiss is granted as it should be that would also dispose of 

the case against Dr. Bodnar because plaintiffs are seeking to hold Dr. Bodnar liable for the 

statements of BMS.

PRELIMINARY STATEMENT

Dr. Bodnar is a defendant in two claims in the Amended Complaint. Plaintiffs second

claim alleges that Dr. Bodnar violated Section 10(b) of the Exchange Act of 1934 (the 

Exchange Act ). Plaintiffs fourth claim alleges that under Section 20(a) of the Exchange Act, Dr. Bodnar is liable as a control person for the acts of BMS. Both claims are meritless for the 

reasons argued by BMS and for the additional reasons set forth below, which are unique to Dr. 

Bodnar in this case.

Unlike BMS or co-defendant Peter R. Dolan, the former CEO of BMS, Dr. Bodnar is not 

alleged to have made any statements to the public. Given this failure of pleading, as a matter of 

well settled law, the Section 10(b) claim against Dr. Bodnar must be dismissed. Central Bank of 

 1

 A copy of the Amended Complaint is attached to the declaration of Lawrence S. Bader as 

Exhibit 1.

2 Specifically, Dr. Bodnar joins in the arguments of BMS that (i) its public filings provided 

accurate and appropriate disclosure as a matter of law (see BMS Br., Part I), (ii) plaintiffs cannot 

establish loss causation as a matter of law (see BMS Br., Part II), and (iii) the scienter allegations 

in the amended complaint are insufficient under the Tellabs standard (see BMS Br., Part III).

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 5 of 16
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Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 177 (1994); Wright v. Ernst 

& Young LLP, 152 F.3d 169, 179 (2d Cir. 1998); Shapiro v. Cantor, 123 F.3d 717, 720 (2d Cir. 

1997); In re Converium Holding AG Sec. Litig., No. 04 Civ. 7987 (DLC), 2006 WL 3804619 

(S.D.N.Y. Dec. 28, 2006). 

The Section 10(b) claim against Dr. Bodnar also fails as a matter of law because plaintiffs 

have not adequately alleged (i) reliance on Dr. Bodnar s conduct, (ii) that their loss was caused 

by his conduct, (iii) that his conduct was in connection with plaintiffs purchases of BMS 

stock, (iv) that he acted with scienter, or (v) that his conduct was deceptive within the meaning

of Section 10(b). The Supreme Court recently heard argument in Stoneridge Investment 

Partners, LLC v. Scientific-Atlanta, Inc. and Motorola Inc., a private action brought under 

Section 10(b).3 In Stoneridge, the parties (and 31 amici curiae) briefed most of these issues, 

albeit in a different factual setting. Pending the Supreme Court s decision in Stoneridge, we rely 

on current case law to demonstrate that none of these elements has been adequately pleaded 

against Dr. Bodnar.

Plaintiffs only other claim against Dr. Bodnar, a claim for control person liability under 

Section 20(a) of the Exchange Act, must also be dismissed because (i) there was no primary 

violation (see BMS Br., Parts I, II and III) and (ii) it fails to allege facts from which one could 

infer Dr. Bodnar s control over BMS or his culpable participation in the statements by BMS 

that plaintiffs claim are actionable.

 3

Stoneridge is an appeal from the Eighth Circuit s decision in In re Charter Commc ns, Inc., 443 

F.3d 987 (8th Cir. 2006). Certiorari was granted on March 26, 2007, and the case was argued on 

October 9, 2007. 127 S. Ct. 1873 (U.S. Mar. 26, 2007) (No. 06-43). 

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 6 of 16
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STATEMENT OF FACTS4

Dr. Bodnar is both a medical doctor and a lawyer. During the class period, he was 

BMS s Senior Vice President for Strategy and Medical and External Affairs and a member of 

BMS s Executive Committee. Am. Complaint ¶ 18. In March 2002, BMS and Sanofi-Aventis, S.A. sued Apotex, Inc. for patent infringement. 

Id. ¶ 32. Dr. Bodnar participated in negotiations that led to the settlement of that lawsuit (the 

Apotex Settlement ). Id. ¶ 39. After the close of the stock market on March 21, 2006, BMS 

announced the Apotex Settlement. Id. ¶ 58. The Amended Complaint takes issue with the 

completeness of that announcement. Am. Complaint ¶¶ 60-66. However, the Amended 

Complaint does not allege that Dr. Bodnar made the announcement or that the announcement

was in any way attributed to Dr. Bodnar.

The Apotex Settlement required the approval of the Federal Trade Commission ( FTC )

and a consortium of state attorneys general. Id. ¶ 34. On May 5, 2006, the state attorneys 

general first notified BMS that they would not approve the Apotex Settlement. Id. ¶ 4. On May 

12 and 24, 2006, Dr. Bodnar met with Apotex s Chairman, Bernard Sherman, to negotiate a 

revised settlement agreement. Id. ¶¶ 38-39. At one point during the second of those 

negotiations, Dr. Bodnar was joined on the telephone by BMS outside counsel Evan Chesler, 

Esq. Am. Complaint ¶ 42. Plaintiffs allege that at these meetings, BMS and Apotex reached an 

Amended Apotex Settlement and entered into unlawful oral side agreements. 5 Id. ¶¶ 19, 42.

 4 Well-pleaded allegations in the Amended Complaint are assumed to be true only for purposes 

of this motion to dismiss. See Sec. Investor Prot. Corp. v. BDO Seidman LLP, 222 F.3d 63, 68 

(2d Cir. 2000). 

5

 Both Dr. Bodnar and BMS deny that there were unlawful oral side agreements. See BMS Br. 22-23.

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 7 of 16
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On May 31, 2006, Mr. Dolan spoke to securities analysts and made statements about the 

ongoing review by the FTC and state attorneys general. Id. ¶¶ 76-77. Plaintiffs allege that some 

of Mr. Dolan s statements were false and misleading. Id. ¶ 78. It is not alleged that Dr. Bodnar 

had anything to do with Mr. Dolan s statements. On June 25, 2006, BMS issued a press release announcing the Amended Apotex

Settlement. Am. Complaint ¶ 79. Between June 25 and August 8, 2006 (the end of the class 

period), BMS made additional public statements. Id. ¶¶ 82-85, 87, 95. Plaintiffs allege that 

these statements were also false and misleading. Id. ¶¶ 86, 88. However, once again, plaintiffs 

do not allege that Dr. Bodnar made any of these public statements or that the statements were 

attributed to Dr. Bodnar.

ARGUMENT

I. Plaintiffs Cannot State Any Claim Against Dr. Bodnar Under Section 10(b) 

of the Exchange Act or SEC Rule 10b-5

In Claim II, plaintiffs allege that Dr. Bodnar violated Section 10(b) of the Exchange Act 

and SEC Rules 10b-5(a) and (c) by engaging in a scheme to defraud investors.6 Am. Complaint 

¶¶ 145-55. BMS s motion to dismiss Claim I (also a Section 10(b) claim) demonstrates many 

reasons why that claim should be dismissed as against BMS. The same arguments apply to 

Claim II against Dr. Bodnar. However, there are a number of additional independent reasons 

why Claim II must be dismissed as to Dr. Bodnar.

 6 Section 10(b) makes it unlawful, directly or indirectly, [t]o use or employ, in connection with

the purchase or sale of any security []... any manipulative or deceptive device or contrivance in 

contravention of such rules and regulations as the [SEC] may prescribe. 15 U.S.C. § 78j(b). Rules 10b-5(a) and (c) prohibit the use of any device, scheme, or artifice to defraud, or the 

engaging in any act, practice, or course of business that perpetrates a fraud on investors, in

connection with the purchase or sale of a security. 17 C.F.R. § 240.10b-5.

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 8 of 16
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A. Plaintiffs Have Not Adequately Alleged a Violation of Section 10(b) by Dr. 

Bodnar

Under Central Bank and Wright, liability cannot extend to those who do not make 

statements or representations to the public. See Central Bank, 511 U.S. at 177 ( [W]e again 

conclude that the statute prohibits only the making of a material misstatement (or omission) or 

the commission of a manipulative act. . . . The proscription does not include giving aid to a 

person who commits a manipulative or deceptive act. ); Wright, 152 F.3d at 175 ( [I]f Central 

Bank is to have any real meaning, a defendant must actually make a false or misleading 

statement in order to be held liable under Section 10(b). Anything short of such conduct is 

merely aiding and abetting, and no matter how substantial that aid may be, it is not enough to 

trigger liability under Section 10(b). ) (internal quotation marks and citations omitted). See also

SEC v. Cedric Kushner Promotions, Inc., 417 F. Supp.2d 326, 332 (S.D.N.Y. 2006) (director 

defendant could not be held responsible for statements of others where the statements were not 

attributed to the defendant). To avoid the holdings of Central Bank and Wright, plaintiffs have alleged that Dr. 

Bodnar is liable to them under Section 10(b) on the theory that, while he did not make any 

statements to the public, he carried out a plan, scheme and course of conduct which was 

intended to deceive the members of the Class. Am. Complaint ¶ 146. These and other

rhetorical flourishes in the Amended Complaint are attempts to mask the fact that plaintiffs do 

not allege a primary violation by Dr. Bodnar. The allegation that Dr. Bodnar carried out a 

plan that ultimately led to false statements being made by others is the very kind of allegation 

that Central Bank forbids. See Wright, 152 F.3d at 175; Dinsmore v. Squadron, Ellenoff, 

Plesent, Sheinfeld & Sorkin, 135 F.3d 837, 842 (2d Cir. 1998) (Central Bank and Wright

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 9 of 16
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foreclose liability for not only aiding and abetting, but also for assisting or participating in a

Section 10(b) violation and for conspiring with others to violate the statute).7

Section 10(b) liability can attach to a non-speaker who is a corporate insider if he is so 

closely associated with a public statement that investors understood him to have made it. See In 

re Converium, 2006 WL 3804619, at *12 ( the relevant inquiry is whether investors understood

[the defendant] to be speaking through [the public statement] ) (emphasis in original).8 Because 

plaintiffs do not allege that Dr. Bodnar made any public statements or that they understood that it 

was Dr. Bodnar who was speaking through BMS, the Section 10(b) claim against Dr. Bodnar 

must be dismissed under Central Bank and its progeny.

B. Plaintiffs Have Not Adequately Alleged Reliance

Plaintiffs do not allege that they relied on anything Dr. Bodnar said. This also requires 

dismissal of the Section 10(b) claim against Dr. Bodnar.

Central Bank held that a private plaintiff who seeks recovery under Section 10(b) must 

allege that he or she relied upon the alleged misstatements or omissions of a particular defendant. 

 7

See also In re Charter Commc ns, Inc. and Regents of the State of California v. Credit Suisse 

First Boston (USA), 482 F.3d 372 (5th Cir. 2007), petition for cert. filed, 75 U.S.L.W. 3557

(U.S. Apr. 5, 2007) (No. 06-1341). Both cases hold that unless a defendant made misstatements 

or omissions, or directly engaged in manipulative securities trading practices, he cannot be held 

liable for deceptive acts under Section 10(b). In re Charter Commc ns, 443 F.3d at 992; 

Regents v. Credit Suisse, 482 F.3d at 390. But see Simpson v. AOL Time Warner, Inc., 452 F.3d 

1040 (9th Cir. 2006), petition for cert. filed, 75 U.S.L.W. 3236 (U.S. Oct. 19, 2006) (No. 06- 560), and In re Parmalat Sec. Litig., 376 F. Supp.2d 472 (S.D.N.Y. 2005) (recognizing the 

validity of scheme liability, i.e., liability where the defendant did not make a false statement or 

omission, and did not engage in manipulative trading). This issue is now before the Supreme 

Court in Stoneridge. 8 Cf. In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 76 (2d Cir. 2001) (corporation s vice

president for finance and investor relations held liable for unattributed misstatements where he 

was the official responsible for the company s public statements, and was involved in the 

drafting, producing, reviewing and/or disseminating of the false and misleading statements 

issued by Scholastic during the class period ).

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In that case, the plaintiffs alleged that an indenture trustee could be liable as an aider and abettor 

for statements made by a land developer. The Supreme Court ruled that private plaintiffs could 

not sue for aiding and abetting a Section 10(b) violation, and also noted that plaintiffs argument 

would negate the element of reliance:

[R]espondents argument would impose 10b-5 aiding and abetting liability when 

at least one element critical for recovery under 10b-5 is absent: reliance. A 

plaintiff must show reliance on the defendant s misstatement or omission to 

recover under 10b-5. Were we to allow the aiding and abetting action proposed in 

this case, the defendant could be liable without any showing that the plaintif

relied upon the aider and abettor s statements or actions. . . . Allowing plaintiffs 

to circumvent the reliance requirement would disregard the careful limits on 10b- 5 recovery mandated by our earlier cases.

511 U.S. at 180 (emphasis added; citation omitted). See also Wright, 152 F.3d at 175 

( [r]eliance only on representations made by others cannot itself form the basis of liability )

(citations omitted; brackets in original).

Accordingly, Claim II must be dismissed for failure to plead reliance.9 C. Plaintiffs Have Not Adequately Alleged Loss Causation Against Dr. Bodnar

There are two loss causation problems with the Amended Complaint. The first, 

discussed in BMS s motion to dismiss, is that the alleged price declines in BMS stock were 

linked to risks that were fully disclosed. See BMS Brief, Part II. The second problem, unique to 

Dr. Bodnar, is that plaintiffs have alleged that BMS stock was trading at an artificially high price 

because of statements made by BMS, not by Dr. Bodnar. Accordingly, plaintiffs have not 

adequately pleaded loss causation with regard to Dr. Bodnar.

 9 Plaintiffs allege that they are entitled to a fraud-on-the-market presumption of reliance

because the market for BMS s stock is an efficient one. Am. Complaint ¶¶ 115-119. But this 

theory is not available against Dr. Bodnar, because it only applies to publicly disseminated 

information. See Basic, Inc. v. Levinson, 485 U.S. 224, 247 (1988) ( an investor s reliance on

any public material misrepresentations . . . may be presumed for purposes of a Rule 10b-5 

action ) (emphasis added). Dr. Bodnar is not alleged to have made any public statements.

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 11 of 16
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[L]oss causation has to do with the relationship between the plaintiff s investment loss 

and the information misstated or concealed by the defendant. If that relationship is sufficiently 

direct, loss causation is established, but if the connection is attenuated, or if the plaintiff fails to 

demonstrate a causal connection between the content of the alleged misstatements or omissions 

and the harm actually suffered, a fraud claim will not lie. Lentell v. Merrill Lynch & Co. Inc., 396 F.3d 161, 174 (2d Cir. 2005). Here, the connection between Dr. Bodnar s alleged conduct

and the plaintiffs alleged losses is attenuated, as it is the public statements, and only the public 

statements, on which plaintiffs allegedly relied.

Therefore, plaintiffs claim against Dr. Bodnar should be dismissed for failure to 

adequately allege loss causation.

D. Plaintiffs Have Not Adequately Alleged That Dr. Bodnar s Conduct Was In 

Connection With the Purchase or Sale of Any Securities

Plaintiffs have not adequately alleged that Dr. Bodnar s conduct was in connection 

with any securities transactions. In the absence of a false statement by a particular defendant, to 

satisfy the in connection with element of a private 10(b) claim, a plaintiff must allege that the 

defendant s conduct coincided with the 10(b) violation. In SEC v. Zandford, 535 U.S. 813 

(2002), where the defendant stockbroker sold his customer s securities to convert the proceeds

and failed to disclose that to the customer, the non-disclosure satisfied the in connection with

requirement because the non-disclosure coincided with the sales themselves. Id. at 820-21. 

And in United States v. O Hagan, 521 U.S. 642 (1997), where an attorney for a corporation 

misappropriated material non-public information by trading in the corporation s stock, the in 

connection with requirement was satisfied because the securities transaction and the breach of 

duty . . . coincide[d]. Id. at 656. No such allegation has been made in this case with regard to 

Dr. Bodnar. 

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 12 of 16
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For this additional reason, the Section 10(b) claim against him must be dismissed.

E. Plaintiffs Do Not Plead Facts Raising a Strong Inference That Dr. Bodnar

Acted With Scienter

Given the fact that Dr. Bodnar did not make any public statements on which plaintiffs 

relied, it follows that Dr. Bodnar could not have acted with scienter. The concept of scienter 

intent to defraud is not an abstract notion to attach to actions on which the plaintiffs did not and 

could not have relied. Here, as with the other elements discussed above, the Amended 

Complaint fails because it alleges no statement or representation by Dr. Bodnar, and therefore 

does not allege scienter in connection with a public statement on which plaintiffs relied.

F. Plaintiffs Fail to Allege Deceptive Conduct by Dr. Bodnar

Section 10(b) is limited to manipulative or deceptive device[s] or contrivance[s]. The 

case law on what constitutes a deceptive device or contrivance has now evolved to the point

that two federal Courts of Appeal, relying on Supreme Court precedent, have held that the word 

deceptive as used in Section 10(b) is limited to statements (or omissions) made by the

defendants and to manipulative trades. See In re Charter Commc ns, Inc., 443 F.3d 987, 992

(8th Cir. 2006), cert. granted, No. 06-43, 127 S. Ct. 1873, 2007 U.S. LEXIS 3582 (Mar. 26, 

2007); Regents of the State of California v. Credit Suisse First Boston (USA), 482 F.3d 372, 386- 90 (5th Cir. 2007), petition for cert. filed, 75 U.S.L.W. 3557 (U.S. Apr. 5, 2007) (No. 06-1341). Other courts have taken a different view. See, e.g., Simpson v. AOL Time Warner, Inc., 452 F.3d 

1040, 1048 (9th Cir. 2006), petition for cert. filed, 75 U.S.L.W. 3236 (U.S. Oct. 19, 2006) (No. 

06-560); In re Parmalat Sec. Litig., 376 F. Supp.2d 472, 504 (S.D.N.Y. 2005); In re Alstom SA 

Sec. Litig., 406 F. Supp.2d 433, 474-77 (S.D.N.Y. 2005); In re Refco Capital Mkts., Ltd. 

Brokerage Customer Sec. Litig., No. 06 Civ. 643 (GEL), 2007 WL 2694469, *6-*12 (S.D.N.Y. 

Sept. 13, 2007). This is one of the key issues now before the Supreme Court in Stoneridge.

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 13 of 16
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For the reasons set forth in In re Charter Commc ns and Regents of California v. Credit 

Suisse, the Section 10(b) claim against Dr. Bodnar should be dismissed for failure to allege a 

deceptive act by Dr. Bodnar, as that term has been interpreted by the Supreme Court.

II. Plaintiffs Cannot State Any Claim Against Dr. Bodnar Under Section 20(a)

of the Exchange Act

As noted above, Claim IV seeks to hold Dr. Bodnar vicariously liable, under Section 

20(a) of the Exchange Act,10 for BMS s alleged violations of Section 10(b) of the Exchange Act 

and Rule 10b-5. See Am. Complaint ¶¶ 167-75. This claim must be dismissed on a number of 

grounds. 

First, as argued by BMS (and by Dr. Bodnar in this motion to dismiss), there was no 

primary violation of Section 10(b). There cannot be control person liability absent a primary 

violation. See ATSI Commc ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir. 2007). Second, plaintiffs have not alleged facts which, if believed, would demonstrate that Dr. 

Bodnar controlled BMS. See In re Alstom, 406 F. Supp.2d at 487 ( the Section 20(a) defendant

must . . . have actual control over the primary violator . . . ) (internal quotations omitted). All 

that plaintiffs allege against Dr. Bodnar is that he had certain corporate titles at BMS and that he 

participated in negotiating the Apotex Settlement, the Amended Apotex Settlement, and the 

alleged unlawful, secret oral side agreements. Am. Complaint ¶¶ 170-71. These allegations 

 10 Section 20(a) states:

Every person who, directly or indirectly, controls any person liable under any 

provision of this chapter or of any rule or regulation thereunder shall also be liable 

jointly and severally with and to the same extent as such controlled person to any 

person to whom such controlled person is liable, unless the controlling person 

acted in good faith and did not directly or indirectly induce the act or acts 

constituting the violation or cause of action.

15 U.S.C. § 78t(a).

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 14 of 16
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are not sufficient to establish that Dr. Bodnar controlled BMS. See In re Alstom, 406 F. Supp.2d 

at 486 ( [a]ctual control is essential to control person liability ) (internal quotations omitted); In 

re Livent, Inc. Noteholders Sec. Litig., 151 F. Supp. 2d 371, 436 (S.D.N.Y. 2001) ( [o]fficer or

director status alone does not constitute control for purposes of § 20(a) liability ); Lapin v. 

Goldman Sachs Group, Inc., 506 F. Supp.2d 221, 245 (S.D.N.Y. 2006) (courts must undertake 

an individualized determination of a defendant s control of the primary violator . . . ), quoting 

Boguslavsky v. Kaplan, 159 F.3d 715, 720 (2d Cir. 1998). Third, plaintiffs have not alleged facts regarding Dr. Bodnar s culpable participation in

the statements which plaintiffs claim were false. In re Alstom, 406 F. Supp.2d at 486 (for 

Section 20(a) liability, plaintiffs must allege that the alleged controlling person, in some

meaningful sense, was a culpable participant in the fraud committed by the controlled

person); In re Refco, Inc. Sec. Litig., 503 F. Supp.2d 611, 663 (S.D.N.Y. 2007) ( a claim under § 

20(a) requires culpable participation -- that is, actual involvement in the making of the 

fraudulent statements by the putatively controlled entity ) (emphasis in original). Since plaintiffs have not pleaded that Dr. Bodnar actually controlled BMS, or that he 

culpably participated in its alleged fraud, he cannot be held liable on a control person theory.

Case 1:07-cv-05867-PAC Document 35 Filed 11/26/2007 Page 15 of 16
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CONCLUSION

For all of the foregoing reasons, plaintiffs claims against defendant Andrew G. Bodnar

should be dismissed with prejudice. Dated: New York, New York

November 26, 2007 

MORVILLO, ABRAMOWITZ, GRAND,

 IASON, ANELLO & BOHRER, P.C.

By: /s/ Lawrence S. Bader Elkan Abramowitz (EA-3987)

Lawrence S. Bader (LB-5841)

Jerrold L. Steigman (JS-9137)

565 Fifth Avenue

 New York, New York 10017

 (212) 856-9600

 Email: lbader@maglaw.com

Attorneys for Defendant Andrew G. Bodnar

 

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