Court Opinion

ID: 9465615
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:51:24.642464+00
Date Added: 2024-06-11T17:39:16.751172
License: Public Domain

ELY, Circuit Judge
(Dissenting):
I respectfully dissent. I agree that causation and reliance may, in certain circum*1272stances, be inferred from materiality. Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 153-54, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972). But it is also clear that “affirmative evidence of non-reliance may defeat this inference.” Crocker-Citizens National Bank v. Control Metals Corp., 566 F.2d 631, 636 n. 3 (9th Cir. 1977). The record plainly shows that the appellants’ decision to acquire ASI stock, embodied in the merger agreement between ASI and RGC, predated the publication of Campbell’s column by several months. Thus, it is, as I see it, impossible that a causal relationship could exist between Campbell’s wrongful conduct and the appellants’ decision to invest. There was not even the possibility of reliance upon Campbell’s column in connection with the execution of the merger agreement by the appellants. In these circumstances, we surely have compelling “affirmative evidence of nonreliance”, evidence that should thoroughly negate any inference of causation and reliance.
While I agree that Campbell’s alleged conduct was reprehensible, the District Court rightly concluded that he was not liable to the appellants in this case. The majority effectively removes the substantive content in the requirement of “in connection with” when it holds that Campbell may be liable in damages under Rule 10b — 5 to individuals who decided to acquire stock and executed a merger agreement months before the wrongful conduct occurred. Cf. Raschio v. Sinclair, 486 F.2d 1029, 1030 (9th Cir. 1973) (purchase of stock approximately two months before alleged Rule 10b-5 violation). Sincerely believing that my Brothers stretch section 10(b) and Rule 10b-5 beyond their breaking point, I would affirm.