Citations
- 381 F. Supp. 2d 192
Full opinion text
OPINION AND ORDER
KRAM, District Judge.
TABLE OF CONTENTS
I. INTRODUCTION .201
II. PROCEDURAL HISTORY OF THIS ACTION.202
III. THE PARTIES.203
IV. THE COMPLAINT.204
Y. PLAINTIFF’S SUBSTANTIVE CLAIMS.205
A. Section 11.205
B. Section 12(a)(2).205
C. Section 15.205
D. Section 13.205
E. Section 10(b).206
F. Section 14.206
G. Section 20 .206
H. 28 U.S.C. § 1658 (“Sarbanes-Oxley”).206
VI. LEGAL STANDARD FOR MOTION TO DISMISS.206
VII. APPLICABLE STATUTE(S) OF LIMITATIONS.207
A. This Action Was Filed on September 16, 2002 .207
B. Sarbanes-Oxley Applies to MSBI’s 10(b) Claims.208
VIII.AN AOL INVESTOR OF “ORDINARY INTELLIGENCE” WOULD NOT HAVE BEEN AWARE OF THE PROBABILITY THAT SHE HAD BEEN DEFRAUDED PRIOR TO JULY 18, 2002 .209
A. The Sun, Hughes and Gateway Transactions Are Insufficient To Trigger Plaintiffs Duty to Inquire.210
B. The Vendor Advertising and Equity Deals Are Also Insufficient to Trigger Plaintiffs Duty to Inquire.210
IX. THE CLAIMS AGAINST THE NEWLY-NAMED DEFENDANTS ARE TIMELY .212
X. BECAUSE THE AMENDED COMPLAINT IS TIMELY, ALLEGATIONS OF TOLLING ARE UNNECESSARY.212
XI.MSB I HAS PROPERLY PLED COMPLIANCE WITH THE STATUTE OF LIMITATIONS.212
XII. THE AMENDED COMPLAINT PLEADS ALLEGED MISSTATEMENTS WITH PARTICULARITY. DO t — i CO
Overstated A & C Revenue. DO i — i
B. The Sections 11 and 12(a)(2) Claims Based on the Merger Registration Statement Are Pled With Particularity.216
XIII. WITH THE EXCEPTIONS NOTED BELOW, THE SECTION 10(B) CLAIMS ARE NOT DISMISSED. ^ 03
A. MSBI May Proceed Under Rules 10b-5(a) & (c). CN
B. It is Axiomatic That a Claim Under Section 10(b) Must Allege Facts Giving Rise To a Strong Inference of Fraudulent Intent CC\!
1. MSBI Has Not Adequately Pled Motive And Opportunity. GO (NJ
2. MSBI Has Satisfactorily Pled Conscious Misbehavior or Recklessness With Respect to Some, But Not All of the Defendants.219
3. MSBI Has Adequately Alleged Scienter With Respect to Corporate Defendants AOLTW and AOL .219
4. MSBI Has Adequately Alleged Conscious Misbehavior or Recklessness With Respect to Defendants Pittman, Kelly, Pace, Keller and Colburn, But Not With Respect to Defendants Schuler, Novack, Levin, Parsons, Ripp, Rindner, Berlow or Case. to CO
a. Robert W. Pittman. CO CO
b. J. Michael Kelly. to CO
i. Kelly’s Statements Do Not Qualify for Protection Under Either the “Bespeaks Caution” Doctrine or the PSLRA Safe Harbor.222
c. Barry Schuler.223
d. Kenneth J. Novack.224
e. Gerald Levin.224
f. Wayne H. Pace.225
g. Richard Parsons.225
h. Joseph Ripp .225
i. Eric Keller.226
i. Keller Is Not Subject to Section 11 Liability227
ii. The 10(b) Claim is Timely.227
j. Steven Rindner .227
k. Myer Berlow.228
l. David Colburn.229
m. Stephen M. Case.230
XIV. THE SECTIONS 10(B) AND 14(A) CLAIMS ADEQUATELY PLEAD LOSS CAUSATION.231
XV.AOLTW’S ARGUMENTS IN SUPPORT OF DISMISSAL OF THE SECTION 14(A) CLAIMS ARE UNPERSUASIVE.232
XVI.MSBI’S CLAIMS UNDER SECTION 12(A)(2) BASED ON THE BOND OFFERINGS ARE DISMISSED AS TO AOLTW AND THE INDIVIDUAL DEFENDANTS .232
XVII.MSBI’S SECTION 11 CLAIMS BASED ON THE BOND REGISTRATION STATEMENT (COUNTS FIVE AND SIX) ARE DISMISSED AS TO AOLTW AND THE INDIVIDUAL DEFENDANTS.233
XVIII. MSBI’S SECTIONS 15 AND 20 CLAIMS FOR CONTROL PERSON LIABILITY ARE DISMISSED WITH RESPECT TO SOME, BUT NOT ALL OF THE INDIVIDUAL DEFENDANTS.233
XIX. ERNST & YOUNG’S MOTION TO DISMISS IS GRANTED IN PART AND DENIED IN PART.235
A. The Section 11 Claim Based on the Bond Registration Statement (Count 7) Is Dismissed With Prejudice.236
B. The Section 11 Claim Based on the Merger Registration Statement (Count 3) Is Timely.236
1. The Section 11 Merger Registration Claim Is Pled With Particularity.237
C. MSBI’s Section 10(b) Claim Against E & Y Properly Pleads
No Class Member Who Purchased Shares Prior to August 13, 1999 Has a 10(b) Claim Against Ernst & Young. rH DO CO
The 10(b) Claims Are Pled with Particularity. C