Court Opinion

ID: 3513
Source: CourtListenerOpinion
Date Created: 2010-04-24 19:31:13+00
Date Added: 2024-06-11T16:42:21.911430
License: Public Domain

09-3487-cv
         Vladimir v. Bioenvision, Inc.

                                   UNITED STATES COURT OF APPEALS
                                       FOR THE SECOND CIRCUIT

                                                 SUMMARY ORDER

R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT . C ITATION TO A SUMMARY ORDER FILED ON OR AFTER J ANUARY 1,
2007, IS PERMITTED AND IS GOVERNED BY F EDERAL R ULE OF A PPELLATE P ROCEDURE 32.1 AND THIS COURT ’ S L OCAL R ULE 32.1.1.
W HEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT , A PARTY MUST CITE EITHER THE F EDERAL A PPENDIX OR AN
ELECTRONIC DATABASE ( WITH THE NOTATION “ SUMMARY ORDER ”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL .

 1            At a stated term of the United States Court of                                      Appeals
 2       for the Second Circuit, held at the Daniel Patrick                                      Moynihan
 3       United States Courthouse, 500 Pearl Street, in the                                      City of
 4       New York, on the 7 th day of April, two thousand and                                    ten.
 5
 6       PRESENT: PIERRE N. LEVAL,
 7                ROBERT D. SACK,
 8                RICHARD C. WESLEY,
 9                         Circuit Judges.
10
11
12       GARY THESLING and DONALD JOHNSON,
13
14                                       Plaintiffs,
15
16       BERT VLADIMIR, individually and on behalf
17       of all others similarly situated,
18
19                                       Plaintiff-Appellant,
20
21                       -v.-                                                   09-3487-cv
22
23       BIOENVISION, INC., CHRISTOPHER B. WOOD,
24       JAMES S. SCIBETTA, JOSEPH P. COOPER,
25       STEVEN A. ELMS, MICHAEL G. KAUFFMAN, and
26       ANDREW SCHIFF,
27
28                                       Defendants-Appellees,
29
30       PERSEUS-SOROS BIOPHARMACEUTICAL FUND, LP,
31
32                                       Defendant.
33
 1   FOR APPELLANT:           LEE SQUITIERI, Squitieri & Fearon,
 2                            LLP, New York, NY.
 3
 4   FOR APPELLEES:           JOHN D. DONOVAN, JR. (Christopher G.
 5                            Green, C. Thomas Brown, and Amy D.
 6                            Roy, on the brief), Ropes & Gray
 7                            LLP, Boston MA.
 8
 9        Appeal from the United States District Court for the
10   Southern District of New York (Stein, J.).
11
12        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED

13   AND DECREED that the judgment of the United States District

14   Court for the Southern District of New York be AFFIRMED.

15        Plaintiff-appellant Bert Vladimir (“plaintiff”), lead

16   plaintiff in this securities fraud class action, appeals

17   from the dismissal of his claims against defendants-

18   appellees pursuant to sections 10(b) and 20(a) of the

19   Securities Exchange Act of 1934.    15 U.S.C. §§ 78j(b),

20   78t(a). 1   We assume the parties’ familiarity with the facts,

21   procedural history, and issues on appeal.

22        In the Supplemental Amended Class Action Complaint,

23   plaintiff alleged that one or more defendants made seven

24   statements between February and May 2007 that were rendered

25   materially misleading by defendants’ failure to disclose

          1
           Plaintiff also brought claims against Perseus-Soros
     Biopharmaceutical Fund, LP (“Perseus-Soros”) pursuant to
     sections 10(b), 13(d), and 20(a) of the Securities Exchange
     Act of 1934. 15 U.S.C. §§ 78j(b), 78m(d), 78t(a). The
     district court dismissed these claims as well, plaintiff
     does not challenge those decisions, and Perseus-Soros is not
     a party to this appeal.
1    that defendant Bioenvision, Inc. was engaged in merger

2    negotiations with non-party Genzyme Corporation. 2   The

3    district court examined each of the challenged statements

4    individually and concluded that the allegations were

5    deficient for at least one — and sometimes both — of two

6    reasons.   First, with respect to several of the statements,

7    the court concluded that plaintiff had not identified any

8    legal duty that required defendants to disclose the omitted

9    information relating to the merger negotiations.     Second,

10   the court also concluded that certain of plaintiff’s

11   allegations failed to meet the particularity requirements of

12   the Private Securities Litigation Reform Act of 1995, 15

13   U.S.C. § 78u-4(b), and Rule 9(b) of the Federal Rules of

14   Civil Procedure.   For the reasons set forth below, we find

15   the first basis relied on by the district court to be

16   sufficient to sustain the dismissal of the claims against

17   defendants-appellees that are at issue in this appeal.

18       In order to state claims pursuant to section 10(b) of

         2
           Relying on allegations from a separate state court
     action, plaintiff also alleged that defendants unlawfully
     failed to disclose a January 2007 “secret[]” merger
     agreement between Genzyme Corporation and agents of Perseus-
     Soros, the controlling shareholder of Bioenvision. The
     district court dismissed plaintiff’s claims based on this
     allegation, and plaintiff has not challenged that conclusion
     in this appeal. Therefore, we deem this aspect of the
     claims in the Supplemental Class Action Complaint to have
     been abandoned. See Norton v. Sam’s Club, 145 F.3d 114, 117
     (2d Cir. 1998).
1    the Exchange Act and Rule 10b-5 promulgated thereunder, a

2    plaintiff must allege, inter alia, that the defendant

3    engaged in a material misrepresentation or omission.

4    Operating Local 649 Annuity Trust Fund v. Smith Barney Fund

5    Mgmt. LLC, 595 F.3d 86, 92 (2d Cir. 2010).     In this case,

6    plaintiff’s legal theory is based on alleged omissions

7    rather than misrepresentations.     “For an omission to be

8    actionable, the securities laws must impose a duty to

9    disclose the omitted information.”     Resnik v. Swartz, 303

10   F.3d 147, 154 (2d Cir. 2002).     With respect to defendants-

11   appellees, who are not alleged to have traded in

12   Bioenvision’s securities, such a duty may arise either:        (1)

13   expressly pursuant to an independent statute or regulation;

14   or (2) as a result of the ongoing duty to avoid rendering

15   existing statements misleading by failing to disclose

16   material facts, see 17 C.F.R. § 240.10b-5(b).

17       Thus, it is by now axiomatic that “a corporation is not

18   required to disclose a fact merely because a reasonable

19   investor would very much like to know that fact.”     In re

20   Time Warner Inc. Sec. Litig., 9 F.3d 259, 267 (2d Cir.

21   1993).   As the district court correctly observed, however,

22   no express duty requires the disclosure of merger

23   negotiations, as opposed to a definitive merger agreement.

24   Moreover, “[s]ilence, absent a duty to disclose, is not
1    misleading . . . .”     Basic Inc. v. Levinson, 485 U.S. 224,

2    239 n.17 (1988).    For substantially similar reasons to those

3    stated by the district court, we hold that plaintiff has not

4    identified any part of the seven challenged statements that

5    were rendered materially misleading by the alleged omissions

6    relating to Bioenvision’s merger negotiations. 3    This

7    pleading deficiency is sufficient to warrant the affirmance

8    of the entire portion of the district court’s decision that

9    is challenged in this appeal, including the dismissal of

10   plaintiff’s claims against defendants-appellees for control-

11   person liability.     See ATSI Commc’ns, Inc. v. Shaar Fund,

12   Ltd., 493 F.3d 87, 108 (2d Cir. 2007).

13       We have considered each of plaintiff’s arguments and

14   find them to be without merit.      Accordingly, the judgment of

15   the district court is hereby AFFIRMED.

16
17                                 FOR THE COURT:
18                                 Catherine O’Hagan Wolfe, Clerk
19
20
21

         3
           Although the district court did not reach this
     conclusion with respect to each of the seven statements
     relied on by plaintiff, we may affirm on any basis supported
     by the record. E.g., Thyroff v. Nationwide Mut. Ins. Co.,
     460 F.3d 400, 405 (2d Cir. 2006). We find that to be the
     appropriate course here and, in light of our holding, do not
     reach the merits of the district court’s particularity
     analysis.

                                     5