Case Law Vallejo Sanitation & Flood Control Dist. v. Fuld (In re Lehman Bros. Sec. & Erisa Litig.)

Vallejo Sanitation & Flood Control Dist. v. Fuld (In re Lehman Bros. Sec. & Erisa Litig.)

Document Cited Authorities (45) Cited in (19) Related

903 F.Supp.2d 152

In re LEHMAN BROTHERS SECURITIES AND ERISA LITIGATION. This Document Applies to: Vallejo Sanitation and Flood Control District v. Fuld, et al., 09 Civ. 6040(LAK) Monterey County Treasurer, on Behalf of the Monterey County Investment Pool v. Fuld, et al., 09 Civ.1944(LAK) Contra Costa Water District v. Fuld, 09 Civ. 6652(LAK) City of Burbank v. Fuld, 09 Civ. 3475(LAK) City of San Buenaventura v. Fuld, 09 Civ. 3476(LAK) City of Auburn v. Fuld, 09 Civ. 3474(LAK) The San Mateo County Investment Pool v. Fuld, 09 Civ. 1239(LAK) Zenith Insurance Co. v. Fuld, 09 Civ. 1238(LAK).

No. 09 MD 2017(LAK).

United States District Court, S.D. New York.

Oct. 15, 2012.

OPINION TEXT STARTS HERE

Joseph W. Cotchett, Jordanna G. Thigpen, Mark C. Molumphy, Nanci E. Nishimura, Imiatz A. Siddiqui, Cotchett, Pitre & McCarthy, for Plaintiffs.

Martin J. Auerbach, Law Offices of Martin J. Auerbach, Esq., James G. Kreissman, for Defendant Ian Lowitt.

Mitchell A. Lowenthal, Cleary Gottlieb Steen & Hamilton LLP, for Underwriter Defendants Except HVB Capital Markets, Inc. and M.R. Beal & Co.

Mark P. Ressler, Kasowitz, Benson, Torres & Friedman, LLP, for Defendant HVB Capital Markets, Inc.

Simpson Thatcher & Bartlett LLP, for Defendants Richard S. Fuld, Jr., Joseph M. Gregory, Erin Callan, Ian Lowitt, John F. Akers, Roger S. Berlind, Marsha Johnson Evans, Roland A. Hernandez, and Henry Kaufman.

Andrew J. Levander, Kathleen N. Massey, Adam J. Wasserman, Dechert LLP, for Defendants John F. Akers, Roger S. Berlind, Marsha Johnson Evans, Roland A. Hernandez, and Henry Kaufman.

Jamie L. Wine, Latham & Watkins LLP, for Defendant Ernst & Young LLP.

Joseph A. Mendola, M.R. Beal & Company, for Defendant M.R. Beal & Co.

Guy Petrillo, Joshua Klein, Petrillo Klein & Boxer LLP, for Defendant Christopher M. O'Meara.

Joshua J. Pollack, Proskauer Rose LLP, Alfred U. Pavlis, Finn Dixon & Herling LLP, for Defendant Erin Callan.

MEMORANDUM OPINION

LEWIS A. KAPLAN, District Judge.

+-----------------+
¦Table of Contents¦
+-----------------¦
¦                 ¦
+-----------------+

+----------------------------------+
¦Background                    ¦164¦
+------------------------------+---¦
¦                              ¦   ¦
+----------------------------------+

+------------------------------------+
¦  ¦I.¦Parties                   ¦164¦
+------------------------------------+

+------------------------------------------+
¦  ¦  ¦A.¦Plaintiffs                  ¦164 ¦
+--+--+--+----------------------------+----¦
¦  ¦  ¦B.¦Defendants                  ¦164 ¦
+------------------------------------------+

+--------------------------------------------------------------------+
¦   ¦    ¦                                                    ¦      ¦
+---+----+----------------------------------------------------+------¦
¦   ¦II. ¦The CFAC                                            ¦166   ¦
+---+----+----------------------------------------------------+------¦
¦   ¦    ¦                                                    ¦      ¦
+---+----+----------------------------------------------------+------¦
¦   ¦III.¦Motions to Dismiss                                  ¦166   ¦
+--------------------------------------------------------------------+

+----------------------------------+
¦                              ¦   ¦
+------------------------------+---¦
¦Discussion                    ¦167¦
+----------------------------------+

+----------------------------------------------------+
¦   ¦   ¦                                       ¦    ¦
+---+---+---------------------------------------+----¦
¦   ¦I. ¦Legal Standard                         ¦167 ¦
+---+---+---------------------------------------+----¦
¦   ¦   ¦                                       ¦    ¦
+---+---+---------------------------------------+----¦
¦   ¦II.¦Securities Act Claims                  ¦170 ¦
+----------------------------------------------------+

+-----------------------------------------------------------------------+
¦   ¦    ¦A.  ¦Timeliness                                        ¦170   ¦
+---+----+----+--------------------------------------------------+------¦
¦   ¦    ¦B.  ¦The Sufficiency of the Remaining Section 11 Claims¦172   ¦
+-----------------------------------------------------------------------+

+------------------------------------------------------+
¦   ¦   ¦   ¦1.¦Legal Standards                   ¦172 ¦
+---+---+---+--+----------------------------------+----¦
¦   ¦   ¦   ¦2.¦The Present Case                  ¦172 ¦
+------------------------------------------------------+

+---------------------------------------------------------------------------+
¦    ¦    ¦    ¦   ¦a. ¦Alleged Misstatements and Omissions Dismissed¦172   ¦
¦    ¦    ¦    ¦   ¦   ¦in the E/D Class Action                      ¦      ¦
+----+----+----+---+---+---------------------------------------------+------¦
¦    ¦    ¦    ¦   ¦   ¦Viability in this Case of Alleged            ¦      ¦
¦    ¦    ¦    ¦   ¦b. ¦Misstatements and Omissions Upheld as        ¦177   ¦
¦    ¦    ¦    ¦   ¦   ¦Sufficient in the E/D Class Action           ¦      ¦
+----+----+----+---+---+---------------------------------------------+------¦
¦    ¦    ¦    ¦   ¦c. ¦Section 11 Claims against Callan             ¦180   ¦
+----+----+----+---+---+---------------------------------------------+------¦
¦    ¦    ¦    ¦   ¦d. ¦Section 11 Claims against Ernst & Young      ¦180   ¦
+---------------------------------------------------------------------------+

+------------------------------------------+
¦  ¦  ¦C.¦Section 15 Claims           ¦183 ¦
+------------------------------------------+

+--------------------------------------------------------------------+
¦   ¦    ¦                                                    ¦      ¦
+---+----+----------------------------------------------------+------¦
¦   ¦III.¦Exchange Act Claims                                 ¦183   ¦
+--------------------------------------------------------------------+

+----------------------------------------------------------+
¦   ¦   ¦A. ¦10b–5 Claim as to the Officer Defendants¦183  ¦
+----------------------------------------------------------+

+----------------------------------------------------------------------------+
¦    ¦    ¦    ¦1. ¦Existence of Materially False and Misleading      ¦183   ¦
¦    ¦    ¦    ¦   ¦Statements or Omissions                           ¦      ¦
+----+----+----+---+--------------------------------------------------+------¦
¦    ¦    ¦    ¦2. ¦Scienter                                          ¦184   ¦
+----------------------------------------------------------------------------+

+---------------------------------------------------------------------------+
¦    ¦    ¦    ¦   ¦a. ¦Motive and Opportunity                       ¦184   ¦
+----+----+----+---+---+---------------------------------------------+------¦
¦    ¦    ¦    ¦   ¦b. ¦Circumstantial Evidence of Conscious         ¦184   ¦
¦    ¦    ¦    ¦   ¦   ¦Misbehavior or Recklessness                  ¦      ¦
+---------------------------------------------------------------------------+

+------------------------------------------+
¦  ¦  ¦B.¦Section 20(a) Claims        ¦189 ¦
+------------------------------------------+

+----------------------------------------------------+
¦   ¦   ¦                                       ¦    ¦
+---+---+---------------------------------------+----¦
¦   ¦IV.¦Common Law Claims                      ¦189 ¦
+----------------------------------------------------+

+------------------------------------------+
¦  ¦  ¦A.¦Governing Law               ¦189 ¦
+--+--+--+----------------------------+----¦
¦  ¦  ¦B.¦Fraud                       ¦190 ¦
+--+--+--+----------------------------+----¦
¦  ¦  ¦C.¦Aiding and Abetting Fraud   ¦191 ¦
+--+--+--+----------------------------+----¦
¦  ¦  ¦D.¦Negligent Misrepresentation ¦192 ¦
+------------------------------------------+

+----------------------------------------------------+
¦   ¦   ¦                                       ¦    ¦
+---+---+---------------------------------------+----¦
¦   ¦V. ¦The Fraudulent Conveyance Claim        ¦192 ¦
+---+---+---------------------------------------+----¦
¦   ¦   ¦                                       ¦    ¦
+---+---+---------------------------------------+----¦
¦   ¦VI.¦California Corporations Code Claims    ¦193 ¦
+----------------------------------------------------+

+------------------------------------------+
¦  ¦  ¦A.¦Sections 25400 and 25500    ¦193 ¦
+------------------------------------------+

+-------------------------------------------------------+
¦   ¦   ¦   ¦1.¦Type of Securities Bought and Sold¦194  ¦
+---+---+---+--+----------------------------------+-----¦
¦   ¦   ¦   ¦2.¦Willful Intent                    ¦194  ¦
+-------------------------------------------------------+

+-------------------------------------------------------------+
¦   ¦    ¦B. ¦Sections 25504 and 25504.1                ¦195  ¦
+---+----+---+------------------------------------------+-----¦
¦   ¦    ¦D. ¦Section 25504.2 Claims as to Ernst & Young¦197  ¦
+-------------------------------------------------------------+

+----------------------------------+
¦                              ¦   ¦
+------------------------------+---¦
¦Conclusion                    ¦197¦
+----------------------------------+

The September 2008 collapse of Lehman Brothers Holdings Inc. (“Lehman”) spawned litigation across the country. The Lehman bankruptcy is pending in the bankruptcy court for this district. All of the securities and most of the other cases brought in or removed to federal courts have been consolidated before this Court for pretrial purposes. The cases that are the subject of this opinion are eight consolidated securities actions brought by seven California public entities and a California-based insurance company. They assert claims against Lehman's former officers, directors and auditors under the Securities Act of 1933 (the “...

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Document | U.S. District Court — Southern District of New York – 2015
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"... ... give the Securities and Exchange Commission ("SEC") authority to issue rules that would stitch the ... 11 (6th Dist.2014) (similar). Thus, "where a party [to a ... claim for fraudulent concealment); In re Lehman Bros. Sec. & ERISA Litig., 903 F.Supp.2d 152, ... "
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"... ... (SAC ¶ 27.) According to Fairway's SEC filings, Santoro, Ruetsch and Arditte were "'key ... 2007, Sterling assumed full operational control and placed its representatives on the Fairway ... Holdings Corp. Sec. Litig. , 14 Civ. 950, 2015 WL 249508 (S.D.N.Y. Jan. 20, ... v. Laborers Dist. Council Constr. Indus. Pension Fund , 135 S. Ct ... 2013) (Peck, M.J.); In re Lehman Bros. Sec. & ERISA Litig. , 903 F. Supp. 2d 152, ... "
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"... ... App'x 63, 65 (2d Cir. 2005); Ramey v. Dist. 141, Int'l Ass'n of Machinists & Aerospace ... 1038, 113 S. Ct. 825 (1992); Small v. Sec'y of Health & Human Servs. , 892 F.2d 15, 16 (2d ... July 22, 2013) (Peck, M.J.); In re Lehman Bros. Sec. & ERISA Litig. , 903 F. Supp. 2d 152, ... "
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"... ... City Sch. Dist. of Yonkers , 16 Civ. 9101 (VB), 2017 WL 4236565 ... (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC , 797 F.3d 160, 171 (2d Cir. 2015) ; see , ... Litig. , 851 F.Supp.2d 512, 533 (S.D.N.Y. 2012) ... Mar. 29, 2013) (Daniels, D.J.); In re Lehman Bros. Secs. & ERISA Litig. , 903 F.Supp.2d 152, ... "
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In re Gentiva Sec. Litig.
"... ... Sec., Derivative, and ERISA Litig., 763 F.Supp.2d 423, 459 ... knew of th[ese] email [s].’ ” In re Lehman Bros. Secs. and ERISA Litig., 903 F.Supp.2d 152, ... about the sufficiency of Doral's internal control] were discussed,” as “so vague as to be ... "

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