Court Opinion

ID: 617990
Source: CourtListenerOpinion
Date Created: 2011-11-30 01:01:22+00
Date Added: 2024-06-11T17:50:42.859932
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             NOV 29 2011

                                                                        MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                      U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

NEW YORK STATE TEACHERS’                         No. 10-55635
RETIREMENT SYSTEMS,
                                                 D.C. No. 2:07-cv-05756-JHN-
              Plaintiff - Appellant,             FFM

  and
                                                 MEMORANDUM *
DARRYL LAZAR, Preferred Share
Purchaser,

              Plaintiff,

  v.

FREMONT GENERAL CORPORATION;
LOUIS J. RAMPINO; PATRICK E.
LAMB; WAYNE R. BAILEY; KYLE R.
WALKER; JAMES A. MCINTYRE;
RONALD J. NICOLAS, Jr.,

              Defendants - Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                  Jacqueline H. Nguyen, District Judge, Presiding

                     Argued and Submitted November 10, 2011

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                 Pasadena, California

Before: TALLMAN and MURGUIA, Circuit Judges, and ROSENTHAL, District
Judge.**

      Plaintiffs appeal the dismissal with prejudice of the Third Amended

Consolidated Class Action Securities Complaint.1 We have jurisdiction under 28

U.S.C. § 1291. We review de novo a dismissal for failure to state a claim pursuant

to Federal Rule of Civil Procedure 12(b)(6). Thompson v. Paul, 547 F.3d 1055,

1058 (9th Cir. 2008). We affirm.

      Plaintiffs have failed to allege violations of Section 10(b) of the Securities

and Exchange Act, 15 U.S.C. § 78(j)(b), and SEC Rule 10b-5, 17 C.F.R. §

240.10b-5 with the specificity required by the Private Securities Litigation Reform

Act, 15 U.S.C. § 78u-4(b)(1) and Federal Rule of Civil Procedure 9(b). Viewing

the complaint holistically, plaintiffs’ allegations of scienter fail adequately to show

that each individual defendant possessed contemporaneous knowledge of

undisclosed information that rendered one or more of his public statements

      **
            The Honorable Lee H. Rosenthal, United States District Judge for the
Southern District of Texas, sitting by designation.
      1
               Plaintiffs’ First and Second Amended Complaints were also dismissed
for failure to state a claim. See N.Y. State Teachers’ Ret. Sys. v. Fremont Gen.
Corp., No. 2:07-cv-05756, 2009 WL 3112574 (C.D. Cal. Sept. 25, 2009)
(dismissing SAC); N.Y. State Teachers’ Ret. Sys. v. Fremont Gen. Corp., No. 2:07-
cv-05756, 2008 WL 4812021 (C.D. Cal. Oct. 28, 2008) (dismissing FAC).

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consciously misleading. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.

308, 324 (2007); In re Silicon Graphics Sec. Litig., 183 F.3d 970, 985 (9th Cir.

1999) partially abrogated on other grounds as recognized in South Ferry LP, No.

2 v. Killinger, 542 F.3d 776, 784 (9th Cir. 2008). Without more specific

allegations, the inference of scienter is not cogent nor is it as compelling as any

opposing inference a reasonable person could draw from the facts alleged. Matrixx

Initiatives, Inc. v. Siracusano, 563 U.S. ___, 131 S. Ct. 1309, 1324 (2011).

      This analysis of the complaint’s scienter allegations makes unnecessary any

determination as to the remaining elements of the § 10(b) and Rule 10b-5 claims.

If any one of the five required elements is missing, the claim fails. Paracor Fin.,

Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1157 (9th Cir. 1996).

      The district court correctly dismissed plaintiffs’ § 20(a) claim because

plaintiffs failed to allege an independent securities fraud violation. Paracor Fin.,

Inc., 96 F.3d at 1161 (holding a § 20(a) “controlling person liability” claim

requires a showing that a primary violation was committed).

      The district court did not abuse its discretion by dismissing the Third

Amended Complaint with prejudice. It had previously identified specific

deficiencies and given plaintiffs multiple opportunities to amend the complaint to

correct those deficiencies. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d

                                           3
981, 1007 (9th Cir. 2009). Plaintiffs’ inability to do so is a “strong indication that

plaintiffs have no additional facts to plead.” In re Vantive Corp. Sec. Litig., 283

F.3d 1079, 1098 (9th Cir. 2002) partially abrogated on other grounds as

recognized in South Ferry LP, No. 2 v. Killinger, 542 F.3d 776, 784 (9th Cir. 2008)

      AFFIRMED.

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