Opinion ID: 780678
Heading Depth: 3
Heading Rank: 2

Heading: American Psychiatric Association

Text: 29 The APA moved to dismiss Vess's first amended complaint for failure to plead with particularity under Rule 9(b) and for failure to state a claim under Rule 12(b)(6). The entirety of Vess's complaint against the APA is comprised of allegations of a unified fraudulent course of conduct. Each of his claims against the APA is therefore grounded in fraud within the meaning of In re Stac, and the complaint as a whole must satisfy the heightened pleading requirements of Rule 9(b). 30 We agree with the district court that Vess's complaint against the APA fails to satisfy Rule 9(b). Rule 9(b) demands that, when averments of fraud are made, the circumstances constituting the alleged fraud be `specific enough to give defendants notice of the particular misconduct ... so that they can defend against the charge and not just deny that they have done anything wrong.' Bly-Magee, 236 F.3d at 1019 (quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir.1993)). Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.1997) (internal quotation marks omitted). [A] plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false. Decker v. GlenFed, Inc. (In re GlenFed, Inc. Sec. Litig.), 42 F.3d 1541, 1548 (9th Cir.1994). 31 Vess alleges a fraudulent conspiracy between the APA and the other defendants, but he does not provide the particulars of when, where, or how the alleged conspiracy occurred. He alleges that the APA received financial contributions from Novartis, but he offers scant specifics as to when or between whom the money changed hands. He further alleges that the APA fraudulently included ADD in the DSM even though ADD failed to meet the manual's own diagnostic criteria, but he fails to indicate which criteria it failed to satisfy and how it failed to satisfy them. He charges that the APA sought to conceal its fraud by improperly clustering testing data for ADD with testing data for other conditions, but the allegation is unsupported by details, such as the names of those conditions. Vess also fails to point to the specific scientific literature that the APA failed to fully address or actually obscured. Finally, he alleges that the APA misrepresented its connection to Novartis, but he does not identify any specific misrepresentations or specify when and where they occurred. These allegations are not particular enough to satisfy Rule 9(b). See, e.g., SmithKline Beecham, 245 F.3d at 1051 (holding that broad allegation that the defendant knowingly ... changed control numbers [on various tests] to wrongfully represent that the laboratory results fell within an acceptable standard of error, where the plaintiff did not specify the types of tests implicated in the alleged fraud, identify the [defendant's] employees who performed the tests, or provide any dates, times, or places the tests were conducted, did not satisfy Rule 9(b)); In re GlenFed, 42 F.3d at 1547-48 (requiring a plaintiff to state the time, place, and content of an alleged misrepresentation and explain why the statement is false or misleading in order to satisfy Rule 9(b)). 32 When an entire complaint, or an entire claim within a complaint, is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint or claim. We recognize that there is no explicit basis in the text of the federal rules for a dismissal of a complaint for failure to satisfy Rule 9(b), but it is established law in this and other circuits that such dismissals are appropriate. See, e.g., Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir.2001) ([T]he complete absence of particularity in Bly-Magee's first amended complaint fails to satisfy Rule 9(b). We therefore affirm the district court's dismissal .... (citation omitted)); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1424 (3d Cir.1997) ([W]hile dismissal on Rule 12(b)(6) alone would not have been proper, the dismissal on Rule 9(b) grounds was.); Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1021 (5th Cir.1996) (Because we find that Plaintiffs have failed to adequately plead scienter under Rule 9(b), we hold that the district court did not err in dismissing Plaintiffs' claims for failure to plead fraud with particularity.); Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677 (7th Cir.1992) (holding that the complaint should have been dismissed for failure to comply with Rule 9(b), but remanding to the district court for consideration of whether plaintiff should be permitted to amend). 33 A motion to dismiss a complaint or claim grounded in fraud under Rule 9(b) for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim. If insufficiently pled averments of fraud are disregarded, as they must be, in a complaint or claim grounded in fraud, there is effectively nothing left of the complaint. In that event, a motion to dismiss under Rule 12(b)(6) would obviously be granted. Because a dismissal of a complaint or claim grounded in fraud for failure to comply with Rule 9(b) has the same consequence as a dismissal under Rule 12(b)(6), dismissals under the two rules are treated in the same manner. See Lovelace, 78 F.3d at 1017 (We treat a dismissal for failure to plead fraud with particularity under Rule 9(b) as a dismissal for failure to state a claim upon which relief can be granted.); Seattle-First Nat'l Bank v. Carlstedt, 800 F.2d 1008, 1011 (10th Cir.1986) (The dismissal of a complaint or counterclaim for failing to satisfy the requirements of Rule 9(b) is treated as a dismissal for failure to state a claim upon which relief can be granted under Fed. [R.] Civ. P. 12(b)(6).). As with Rule 12(b)(6) dismissals, dismissals for failure to comply with Rule 9(b) should ordinarily be without prejudice. [L]eave to amend should be granted if it appears at all possible that the plaintiff can correct the defect. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 701 (9th Cir.1988) (internal quotation marks omitted) (alteration in original). See also Bly-Magee, 236 F.3d at 1019 (when dismissing for failure to comply with Rule 9(b) leave to amend should be granted unless the district court determines that the pleading could not possibly be cured by the allegation of other facts) (internal quotation marks omitted); Caputo v. Pfizer, Inc., 267 F.3d 181, 191 (2d Cir.2001) (where the plaintiff has requested leave to amend in the event the court is inclined to dismiss on Rule 9(b) grounds, the failure to grant leave to amend is an abuse of discretion unless the plaintiff has acted in bad faith or the amendment would be futile). See also Eminence Capital v. Aspeon, Inc., 316 F.3d 1048 (9th Cir.2003). 34 When the APA initially moved to dismiss Vess's complaint for failure to satisfy the heightened pleading requirements of Rule 9(b), the district court did not rule on the motion and allowed Vess to amend his complaint. When the APA renewed its motion as to Vess's first amended complaint, the district court granted the motion without prejudice and with leave to amend. Only after Vess declined to amend his complaint again did the district court dismiss with prejudice under Rule 9(b) for failure to plead with particularity and under Rule 12(b)(6) for failure to state a claim. Given that the claims against the APA in Vess's first amended complaint are grounded in fraud, that Vess has failed to comply with Rule 9(b), and that Vess declined to amend further, we affirm the district court's dismissal with prejudice as to the APA under both Rule 9(b) and Rule 12(b)(6). 35