Court Opinion

ID: 4464736
Source: CourtListenerOpinion
Date Created: 2019-12-17 01:00:22.097719+00
Date Added: 2024-06-11T14:53:36.092984
License: Public Domain

Case: 19-20244      Document: 00515238506         Page: 1    Date Filed: 12/16/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                    United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                    No. 19-20244                   December 16, 2019
                                  Summary Calendar
                                                                      Lyle W. Cayce
                                                                           Clerk

IRON WORKERS BENEFIT AND PENSION FUND – IRON WORKERS
DISTRICT COUNCIL PHILADELPHIA & VICINITY, individually and on
behalf of all other persons similarly situated,

              Plaintiff-Appellant,

v.

ANADARKO PETROLEUM CORPORATION; R. A. WALKER; DAVID J.
MCBRIDE; JOHN M. CHRISTIANSEN,

              Defendants-Appellees.

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:17-CV-1372

Before CLEMENT, ELROD, and OLDHAM, Circuit Judges.
PER CURIAM:*
       The Iron Workers Benefit and Pension Fund – Iron Workers District
Council Philadelphia & Vicinity (“Pension Fund”) appeals from the district
court’s order dismissing its claims under Federal Rule of Civil Procedure

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 19-20244
12(b)(6) for failure to state a claim. The Pension Fund’s second amended
complaint alleges that the individual defendants and Anadarko Petroleum
Corporation (“Anadarko”) made misrepresentations in violation of §§ 10(b) and
20(a) of the Securities Exchange Act and Rule 10b–5. The district court
dismissed the claims against the individual defendants because the complaint
failed to adequately allege scienter. See Ind. Elec. Workers’ Pension Tr. Fund
IBEW v. Shaw Grp., Inc., 537 F.3d 527, 533 (5th Cir. 2008). And it dismissed
the claim against Anadarko because a “defendant corporation is deemed to
have the requisite scienter for fraud only if the individual corporate officer
making the statement has the requisite level of scienter.” Southland Sec. Corp.
v. INSpire Ins. Sols., Inc., 365 F.3d 353, 366 (5th Cir. 2004).
        We review a district court’s grant of a motion to dismiss de novo. See
Whitley v. BP, P.L.C., 838 F.3d 523, 526 (5th Cir. 2016). To withstand a Rule
12(b)(6) motion, a complaint must allege “more than labels and conclusions,”
as “a formulaic recitation of the elements of a cause of action will not do.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). It must instead state a
“plausible claim for relief,” rather than facts “merely consistent with” liability.
Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009) (quoting Twombly, 550 U.S. at
557).
        “Where, as here, the complaint involves an allegation of fraud, Federal
Rule of Civil Procedure 9(b) imposes a higher standard on the complainant,
requiring that he plead with ‘particularity the circumstances constituting
fraud.’ ” Local 731 I.B. of T. Excavators & Pavers Pension Tr. Fund v. Diodes,
Inc., 810 F.3d 951, 956 (5th Cir. 2016) (quoting FED. R. CIV. P. 9(b)).
Furthermore, the Private Securities Litigation Reform Act “has raised the
pleading bar even higher and enhances Rule 9(b)’s particularity requirement
for pleading fraud in two ways.” Id. (citing Shaw Grp., 537 F.3d at 533). “First,
the plaintiff must ‘specify each statement alleged to have been misleading, and
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                                  No. 19-20244
the reason or reasons why the statement is misleading.’ ” Id. (quoting Shaw
Grp., 537 F.3d at 533). Second, “for ‘each act or omission alleged’ to be false or
misleading, plaintiffs must ‘state with particularity facts giving rise to a strong
inference that the defendant acted with the requisite state of mind.’ ” Id.
(quoting Shaw Grp., 537 F.3d at 533).
      The Pension Fund first alleges a misrepresentation by John M.
Christiansen, Anadarko’s Vice President for Corporate Communications,
relating to a factsheet posted to Anadarko’s website on February 8, 2016. The
factsheet states that Anadarko’s operations center in Wattenberg, Colorado,
“[p]rovides real-time remote-monitoring capabilities for 6,800+ wells” and
“[e]nables employees to shut-in wells remotely.” According to the second
amended complaint, this statement was false because “Anadarko could not
remotely monitor or deactivate about 800 of its 6,800 wells.” But these
allegations do not give rise to a strong inference that he had “intent to deceive,
manipulate, or defraud” or acted with “severe recklessness” when he
authorized the factsheet to be posted to Anadarko’s website. Shaw Grp., 537
F.3d at 533 (quoting Rosenzweig v. Azurix Corp., 332 F.3d 854, 866 (5th Cir.
2003)). The allegations are merely consistent with liability and “do not permit
the court to infer more than the mere possibility of misconduct.” Iqbal, 556 U.S.
at 679.
      The Pension Fund next alleges that R. A. Walker, Anadarko’s Chief
Executive Officer, and David J. McBride, Anadarko’s Vice President for
Health, Safety, and Environment, falsely stated that Anadarko was in
compliance with applicable laws and regulations. The second amended
complaint alleges that these statements were false because Anadarko was in
violation of several rules of the Colorado Oil and Gas Conservation
Commission.

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                                 No. 19-20244
      But once again, the Pension Fund inadequately alleged scienter. The
Pension Fund alleges information was presented to Walker and McBride that
could have led them to conclude that Anadarko’s Colorado operations weren’t
in compliance with Commission rules. And it points to the existence of a
remediation budget as another reason they should’ve concluded that Anadarko
wasn’t in compliance. But these allegations do not create a strong inference
that at the time the allegedly false statements were made, Walker and
McBride were aware that Anadarko was, as a matter of law, in violation of
Commission rules. Nor do the allegations create a strong inference of “severe
recklessness,” which caselaw narrowly defines as “limited to those highly
unreasonable omissions or misrepresentations” that “present a danger of
misleading buyers or sellers which is either known to the defendant or is so
obvious that the defendant must have been aware of it.” Shaw Grp., 537 F.3d
at 533 (quoting Rosenzweig, 332 F.3d at 866). The district court was correct to
dismiss the claims against Walker and McBride.
      Because the second amended complaint fails to state a claim against any
of the individual defendants, it also fails to state a claim against Anadarko.
See Southland, 365 F.3d at 366. Similarly, the § 20(a) claim against Walker
fails because control-person liability “is secondary only and cannot exist in the
absence of a primary violation.” See id. at 383.
                                 *     *      *
      The district court’s judgment is AFFIRMED.

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