17-843-cv Morrison v. Eminence Partners II, L.P. UNITED STATES COURT OF APPEALS FOR THE SECO ND CIRCUIT SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DA TABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. At a stated term of the United States Cour t of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courth ouse, 40 Foley Square, in the City of New York, on the 19 th day of October, two thousand seventeen. PRESENT: REENA RAGGI, PETER W. HALL, SUSAN L. CARNEY, Circuit Judges

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---------------------------- ---------------------------- -------------- LARRY MORRISON, Plaintiff-Appellant , v. No. 17-843-cv EMINENCE PARTNERS II, L.P., EMINENCE PARTNERS LEVERAGED, L.P., EMINENCE EAGLEWOOD MASTER, L.P., EMINENCE PARTNERS LONG, L.P., EMINENCE FUND MASTER, LTD., EMINENCE FUND LEVERAGED MASTER, LTD., EMINENCE FUND LONG, LTD., TAILORED BRANDS, INC., EMINENCE CAPITAL, LLC, EMINENCE GP, LLC, EMIN ENCE PARTNERS, L.P., RICKY C SANDLER, Defendants-Appellees , JOHN DOE, EMINENCE CAPITAL, L.P., EMINENCE CAPITAL GP, LLC, Defendants.

---------------------------- ---------------------------- --------------2 APPEARING FOR APPELLANT: JEFFREY S. ABRAHAM, Abraham, Fruchter & Twersky, LLP, New York, New York.
APPEARING FOR APPELLEES: MICHAEL E. SWARTZ (Randall T. Adams, Minji Reem, on the brief ), Schulte Roth & Zabel LLP, New York, New York, for Eminence Partners II, L. P., Eminence Partners Leveraged, L.P., Eminen ce Eaglewood Master, L.P., Eminence Partners Long, L.P., Eminence Fund Master, Ltd., Emin ence Fund Leveraged Master, Ltd., Eminence Fund Long, Ltd., Eminence Capital, LLC, Eminence GP, LLC, Eminence Partners, L.P., Ricky C Sandler

. Appeal from a judgment of the United St ates District Court for the Southern District of New York (Ronnie Abrams, Judge ). UPON DUE CONSIDERATION, IT IS HEREBY ORDERE D, ADJUDGED, AND DECREED that the judgment entered on Ju ly 31, 2017, 1 is AFFIRMED. Plaintiff Larry Morrison brings this ac tion under Sec tion 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), see 15 U.S.C. § 78p(b), seeking disgorgement of alleged shor t-swing profits realized by Defendants (collectively, “Eminence”) in connection with their sales of common stock in Th e Men’s Wearhouse, Inc. (“Men’s Wearhouse”), now a wholly ow ned subsidiary of Tailored Brands, Inc.

1 Although the district court issued its opi nion and order granting Eminence’s motion to dismiss on March 1, 2017, no accompanying judgment was entered, as required by Fed. R. Civ. P. 58(a). By opera tion of law, judgment was deemed entered on Monday, July 31, 2017: 150 days afte r entry of the order, see Fed. R. Civ. P. 58(c)(2)(B), plus two days because that date fell on a Saturday, see Fed. R. Civ. P. 6(a)(1)(C). Absent apparent prejudice to Eminence, we possess appellate jurisdiction notwithstanding the premature filing of the notice of appeal. See Smith v. Half Hollow Hills Cent. Sch. Dist. , 298 F.3d 168, 172 (2d Cir. 2002).3 (“Tailored Brands”). The district court dism issed the complaint fo r lack of statutory standing, holding that, due to a pre-suit reorganization in wh ich Men’s Wearhouse shareholders exchanged stock for shares in holding company Tailored Brands, Morrison no longer held stock in the “issuer” to whom the short-swing trades pertained at the time he filed his complaint. We review the challenged dismissal de novo , accepting the complaint’s plausible factual allegations as tr ue and drawing all reas onable inferences in Morrison’s favor. See Lowinger v. Morgan Stanley & Co. LLC , 841 F.3d 122, 129 (2d Cir. 2016). In so doing, we assume the partie s’ familiarity with th e facts and record of prior proceedings, which we reference only as necessary to explain our decision to affirm the dismissal for lack of statutory standing . We, therefore, do not reach Eminence’s alternative arguments on appeal. “Section 16(b) of the Secu rities Exchange Act of 1934 . . . aims to prevent corporate insiders, who are presumed to possess material information about the corporation, from earning short-swing prof its by buying a nd selling securities within a six-month period.” Olagues v. Icahn , 866 F.3d 70, 71 (2d Cir. 2017). An action seeking disgorgement of such profits on behalf of the secu rities’ issuer may be filed either by “the issuer, or by the owner of any se curity of the issuer.” 15 U.S.C. § 78p(b). Although Section 16(b) “places no significant re striction on the type of security adequate to confer standing,” the Supreme Court has made clear that the secur ity must be held in the “issuer” to whom the shor t-swing profits would accrue. Gollust v. Mendell , 501 U.S. 115, 123-24 (1991). As specifically pe rtinent here, the Court ruled that “issuer” is4 “defined under § 3(a)(8) of the 1 934 Act as the corporation that actually issued the security, 15 U.S.C. § 78c(a)(8), and does not include parent or subsidiary corporations .” Id. at 123 (emphasis added). Because the plai ntiff is required to own securities of the “issuer” only at “the time the § 16(b) action is ‘instituted,’” th e action may continue if the plaintiff is deprived of those securitie s by a post-suit corporat e reorganization. Id. at 124 (quoting 15 U. S.C. § 78p(b)). In this case, however, the district court properly dismissed Morrison’s complaint because, by the time it was filed, he no longer owned securities in the issuer, Men’s Wearhouse, but only in the issue r’s parent, Tailored Brands. Such a “parent” is “not include[d]” in the cl ass of entities sufficient to authorize the plaintiff to bring su it on the actual issuer’s behalf. Id. at 123. In urging otherwise, Morri son contends that the above-highlighted statements from Gollust are dicta , as the plaintiff was there depriv ed of his shares only after filing his complaint. The argument merits little discussion, as the force of the Court’s quoted

statements turns not on the facts that were before it, but on the necessity of the statements to the decision rendered. See United States v. Bohannon , 824 F.3d 242, 253 n.12 (2d Cir. 2016) (“[W]hat distinguishes holding from dictum is whether resolution of the question is necessary for the decision of the ca se.” (internal quotation marks omitted)). “The distinction between holding and dictum requires recognition of . . . how (and by what reasoning) the court resolved the ques tion, and what role, if any, the proposition played in the reasoning th at led to the judgment.” Iqbal v. Hasty , 490 F.3d 143, 157 (2d Cir. 2007) (quoting Pierre N. Leval, Judging Under the Constitu tion: Dicta about Dicta5 [“Leval”], 81 N.Y.U. L. Re v. 1249, 1257 (2006) (int ernal alterations omitted)), abrogated on other ground s by Ashcroft v. Iqbal , 556 U.S. 662 (2009). Here, Gollust ’s conclusion that a plaintiff must own stock in the actual issuer at the time of filing was “integral to the rationale” of the Court’s deci sion that a post-filing de privation of stock in the actual issuer does not ba r maintenance of the suit. Id. 2 Had the Court instead held, as Morrison urges us to do, th at a Section 16(b) “issuer” ca n include parent companies, the remainder of the Court’s decision w ould have been unnecessary. Rather, a conclusion that possession of pa rent-company stock sufficed to confer statutory standing would have resolved the issue presented in Gollust without further discussion. Because “turn[ing] the questio ned proposition around to assert its opposite” would “require a change in either the court’s ju dgment or the reasoning that supports it,” the cited portions of Gollust are necessarily part of its holding, not dictum . Leval, 81 N.Y.U. L. Rev. at 1257. No different conclusion is warranted by Morrison’s argumen t that the Section 16(b) cause of action was an “asset” tran sferred from Men’s Wearhouse to Tailored Brands. Morrison’s citation to Exchange Act Rule 414(b) for this proposition is unavailing. That Rule has no relationship to Section 16(b), and prov ides only that an

2 Indeed, the cited statements from Gollust amount to a rejection of the decision there under review, which relied on a district court case authorizing the filing of Section 16(b) actions by holders of the stoc k of the parent company of a subsidiary into which the issuer, later-defunct, merged. See Mendell in Behalf of Viacom, Inc. v. Gollust , 909 F.2d 724, 729 (2d Cir. 1990) (citing Blau v. Oppenheim , 250 F. Supp. 881 (S.D.N.Y. 1996)), aff’d on other grounds sub nom. Gollust v. Mendell , 501 U.S. 115 (1991).6 issuer succeeding to another corporation’s Exchange Act filing ob ligations succeeds to registration statements that the predecessor entity has filed. See 17 C.F.R. § 230.414. The SEC had proposed other ru les that would have authoriz ed Section 16(b) suits by holders of the securities of a successor issuer, but su ch rules were withdrawn after a writ of certiorari was granted in Gollust

. See Ownership Reports and Trading by Officers, Directors and Principal Security Holders, 56 Fed. Reg. 7242 -01 (proposed Feb. 21, 1991) (to be codified at 17 C.F.R. pts. 229, 240, 249, 270, a nd 274). Nor is the proposition that a Section 16(b) claim may be transferred supported by iXL Enters., Inc. v. GE Capital Corp. , 167 F. App’x 824 (2d Cir. 2006). Th at non-precedential decision did not conclude that Section 16(b) cl aims could be transferred unde r the Exchange Act, but only that a bankruptcy estate could be substituted for a Section 16(b) plaintiff under the Bankruptcy Code. See id. at 826 (citing 11 U.S.C. § 541). Nor do the other cases that Morrison cites in support of his appeal bind us, as they were all issued prior to Gollust , and most are non-precedential. See, e.g. , Mendell in Behalf of Viacom, Inc. v. Gollust , 909 F.2d 724 (2d Cir. 1990), aff’d on other grounds sub nom. Gollust v. Mendell , 501 U.S. 115 (1991); Untermeyer v. Valhi, Inc. , 665 F. Supp. 297 (S.D.N.Y. 1987), aff’d without opinion , 841 F.2d 1117 (2d Ci r. Jan. 15, 1988), aff’d on reh’g , 841 F.2d 25 (2d Cir. 1988); American Standard, Inc. v. Crane Co. , 510 F.2d 1043 (2d Cir. 1974); Blau v. Oppenheim , 250 F. Supp. 881 (S.D.N.Y. 1966). Indeed, in Untermeyer , this court specifically limited the Blau successor-issuer exception to circumstances where the issu er was “merged out of existence” before a plaintiff could7 file a Section 16(b) action. 84 1 F.2d at 25. That is not th is case. There is no dispute that Men’s Wearhouse is a viable corpor ate entity and that Men’s Wearhouse and Tailored Brands have standing to pursue a Section 16(b) claim premised on short-swing profits earned from purchases and sales of Me n’s Wearhouse’s securities. Therefore, Morrison cannot rely on the successor-issu er exception to establish standing. Finally, Morrison suggests that Men’s Wearhouse’s corporate reorganization may have been an effort to “deprive [him] of standing” before expiration of the “sixty-day waiting period” mandated after sending a Section 16(b) demand to the issuer’s board. Appellant’s Br. 18; see 15 U.S.C. § 78p(b). We need not address whether such a “fraud” exception survives Gollust because Morrison provides no factual support for it in this case. Morrison’s complaint states nothi ng more than that the reorganization “was a fraudulent effort to deprive Plaintiff of [statutory] standing.” App’x 14. This “[t]hreadbare,” conclusory asse rtion, unaccompanied by any fact ual support, fails to meet the requisite standard for Rule 8 pleading, see Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009), much less the heighten ed standard necessary for pleading fraud or mistake, see id. at 686 (citing Fed. R. Civ. P. 9(b)). Indeed, to the extent that the allegation of fraud is premised on the January 31, 2 016 reorganization of Men’s We arhouse prior to the filing of Morrison’s complaint, the allegation is rendered implausible by Men’s Wearhouse’s announcement of that reorganization in a public filing on December 9, 2015, which8 occurred before Morrison’s Section 16(b) demand. 3 Moreover, even looking to the latest trade allegedly subject to Se ction 16(b) liability, on June 5, 2015, there can be no dispute that several months remained in wh ich Morrison possessed statutory standing to file his Section 16(b) claim. We have considered Morrison’s other ar guments and conclude that they are without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court

3 Although this document was not attached to Morrison’s co mplaint, we may consider statements made in “legally required public disclosure doc uments filed with the SEC,” Parkcentral Global Hub Ltd. v. Porsche Auto. Holdings SE , 763 F.3d 198, 202 (2d Cir. 2014) (internal quotation mark s omitted), which we consider only for the fact that they were made, not for their truth, see Roth v. Jennings , 489 F.3d 499, 509 (2d Cir. 2007).