Full opinion text
OPINION AND ORDER GERRY, Chief Judge. As the trial date of this five-year old class action securities case nears, the court is presented with a flurry of last minute motions for summary judgment. To say that this matter has generated substantial motion practice during its long life would be an understatement: we note that the docket sheet compiled by the clerk of the court on this case runs over 30 pages and currently contains 937 entries. There is little need, therefore, for a lengthy recitation of the factual allegations and procedural history of this litigation. The plaintiff contends, inter alia, that the Preliminary Official Statement (“POS”) and Official Statement (“OS”) issued to prospective bondholders contained misrepresentations and omissions on which they (“the plaintiffs”) relied to them injury when the company which received the bond proceeds, National Smelting of New Jersey (“NSNJ”), became insolvent and its assets virtually worthless. Boiled down, the plaintiffs’ central theory of liability is this: the OS and POS implied that much of the bond proceeds— some $3.9 million of a total $6.6 million— were to be used by NSNJ to purchase a lead smelting and refining plant in Pedricktown, New Jersey. (Prior to the purchase, the plant was owned by defendant N.L. Industries, Inc. (“NL”).) Thus, prospective investors were led to believe that the plant, which was to secure the bonds, was worth at least $3.9 million. In fact, the plaintiffs charge, the plant was worth substantially less than $3.9 million, and the purchase price covered not only the acquisition of the plant but the relinquishing, by NL, of obligations owed NL by NSNJ’s parent company National Smelting & Refining (“NSR”) and by the Standard Metals Corporation (“SMC”), which owned 50% of NSR. The plaintiffs further claim that the OS failed to disclose information which tended to show that the plant was worth less than $3.9 million and additionally failed to describe the “other transactions” which were funded by the $3.9 million. After being pared down by motion practice and other developments, the list of defendants currently include Boris Gresov, CEO and Chairman of the Board of Standard Metals Corporation and Director of NSR; Robert L. Puckett, CEO and Director of NSR and NSNJ; Edward L. Puckett, Vice President and Director of NSR and NSNJ; and Aaron Holman, Treasurer of SMC and Director of NSR. Gresov has filed a third-party complaint against Arthur Young & Company who served as certified public accountants to NSNJ and independent outside auditors to NSR; and Michael Thomas, general partner of Standard Ventures Limited Partnership (“SVLP”), which (according to the OS) acted as an “acquisition advisor” on the Pedricktown deal. In addition, Holman has impleaded the law firm of Windels, Marx, Davies & Ives and James P. Conroy, Esq. (a member of the Windels firm). Windels and Conroy acted as legal counsel to SMC. Presently before us are motions for summary judgment on behalf of defendants Holman and the Pucketts. Also, third-party defendants Arthur Young & Company, Michael Thomas and Windels and Conroy seek summary judgment on the third-party complaints of Gresov and Holman, respectively. Finally, defendant Gresov and third-party defendants Conroy and Windels urge dismissal of Alston and Birds’ claim for contribution against them which, by the terms of settlement between Alston & Bird and the plaintiff class, has been assigned to the plaintiffs. Legal Analysis Summary judgment may be granted only when the record shows that there is no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law. Hersh v. Allen Products Co., 789 F.2d 230, 232 (3d Cir.1986). A genuine issue of material fact is created where the non-moving party adduces sufficient evidence in opposition to a motion against him to support a reasonable jury verdict in his favor. Id. at 248, 211-212. In evaluating whether he has met his burden, the evidence is viewed in the light most favorable to the non-moving party. White v. Westinghouse Electric, 862 F.2d 56, 59 (3d Cir.1988), (rehearing den. Jan. 5, 1989). The allegations of the non-moving party are accepted as true, and any conflicts are resolved in his favor. Id., citing Gans v. Mundy, 762 F.2d 338, 340 (3d Cir.), cert. denied, 474 U.S. 1010, 106 S.Ct. 537, 88 L.Ed.2d 467 (1985). Inferences to be drawn from the evidence must be viewed in the light most favorable to the non-moving party. Id. However, when faced with a properly presented motion for summary judgment, the non-moving party is required “to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’ ” Celo-tex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Similarly, with regard to the motions to dismiss, “the accepted rule [is] that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). With these principles in mind, we discuss the motions before us seriatim. I. Defendant Holman’s Motion for Summary Judgment A. Statute of Limitations Defendant Holman’s first argument in support of his motion for summary judgment is based on the Third Circuit Court of Appeal’s en banc decision in In re Data Access Systems Securities Litigation, 843 F.2d 1537 (3d Cir.) (en banc), cert. denied sub. nom, Vitriella v. I. Kahlowsky, — U.S.-, 109 S.Ct. 131, 102 L.Ed.2d 103 (1988). Abandoning the frustrating and tedious procedure of adopting the most analogous state statute of limitations period and applying it to claims under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), the Third Circuit held that “the proper period of limitations for a complaint charging violation of section 10(b) and Rule 10b-5 is one year after the plaintiff discovers the facts constituting the violation and in no event more than three years after such violation.” Id. at 1550 (the “one-three rule”). Holman contends that the plaintiffs were aware of the facts upon which they based their claim against him at least as early as April 30, 1984, approximately 15 months before plaintiff’s July 19, 1985 complaint naming Holman as a defendant. Therefore, if we apply Data Access retroactively, as Holman insists we must, the plaintiff class’s claims are time-barred. To resolve this issue, we must answer essentially two questions. First, should Data Access apply retroactively in the context of this case? Second, at what point did or should the plaintiff class have possessed such facts about Holman’s potential culpability as to trigger the running of the statute of limitations? Our answer to the first question depends on the application of three factors articulated by the Supreme Court in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). These factors are premised on a general assumption that judicial decisions should apply retroactively. To apply Data Access non-retroactively under the Chevron test: (1) its holding must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed; (2) we must weigh the merits and demerits of this case by looking to the history of the rule in dispute, its purpose and effect, and whether retrospective operation will further or retard the rule’s operation; and (3) retrospective application of Data Access must create the risk of producing substantially inequitable results. Chevron Oil Co., 404 U.S. at 106-107, 92 S.Ct. at 355-56; Hill v. Equitable Trust Co., 851 F.2d 691, 696 (3d Cir.1988), cert. denied, — U.S. —, 109 S.Ct. 791, 102 L.Ed.2d 782. Defendant Holman insists that our task is a simple one in light of the decision of a panel of the Third Circuit in Hill. Holman argues that Hill stands firmly for the proposition that Data Access did not overrule clear precedent upon which § 10(b) plaintiffs could have reasonably relied, and therefore we must find that the first Chevron factor counsels against non-retroactive application of Data Access here. Unfortunately for Holman, we do not read Hill as standing for such a broad proposition. Hill involved an appeal by a group of Maryland resident plaintiffs whose § 10(b) claims were dismissed as time-barred. Referring to Delaware’s borrowing statute, Senior District Judge Latchum had determined that Maryland law provided the applicable statute of limitations to be applied to the Maryland plaintiffs’ claims, and that the Maryland Blue Sky Law was the Maryland state law most analogous to the plaintiff’s § 10(b) claim. Since the Maryland Blue Sky Law contained a 1-3 rule (like that later adopted in Data Access) and the transactions underlying the plaintiffs’ claims occurred more than three years before the plaintiffs filed their action, their lawsuit was barred. On appeal, the Maryland plaintiffs attacked the district court’s application of the Maryland Blue Sky Law’s statute of limitations, arguing that Delaware’s general fraud law’s limitations period should have been applied. The Third Circuit dealt with the appeal as .primarily raising the question of whether in the context of that case, Data Access, which had been decided after the district court’s decision, should be given retrospective application. Applying the three Chevron factors, the court answered affirmatively. The court’s decision turned on its analysis of the first and third Chevron factors, which are closely related. With respect to the first factor, the court noted that the state of the law on two dates was pertinent — the date on which the plaintiffs were aware of the possibility that they had a claim, June 1979, and the date on which they filed their complaint in April of 1982, some two years and ten months later. Hill, 851 F.2d at 697. At each time, the court determined that the law of the circuit was uncertain as to the statute of limitations to be applied to § 10(b) claims. Id. at 697-698. In so ruling, however, the court stressed the differences between various judges on the circuit with regard to whether state general fraud laws or blue sky laws should provide the statute of limitations for particular § 10(b) claims. Id. at 697, discussing Roberts v. Magnetic Metals Co., 611 F.2d 450 (3d Cir.1979) and Biggans v. Bache Halsey Stuart Shields, Inc., 638 F.2d 605 (3d Cir.1980). As Data Access makes clear, the prior approach of looking for the most analogous state law statute of limitations was unwieldy and unpredictable, with various circuit and district judges placing different emphases on furthering states’ policies of repose as opposed to the federal interests underlying § 10(b), and giving varying weight to whether a state’s blue sky law provided a remedy for the behavior complained of by the plaintiff and whether the blue sky law was enacted to supplement rather than supplant existing common law remedies. It was this uncertainty as to which state statute would apply which was relevant to the Hill court’s holding that the Maryland plaintiffs had no clear precedent upon which to rely in waiting to file their lawsuit, since the plaintiffs were complaining that the district court selected the wrong state statute of limitations. The law in this circuit was crystal clear prior to Data Access insofar as it indicated that district courts were bound to apply the state limitations law most analogous to a particular plaintiff’s § 10(b) claim. But this could be of no solace to the Maryland plaintiffs in Hill because a potentially applicable state statute, in fact the one applied by the district court, was identical to the 1-3 rule articulated in Data Access. In fact, the Hill court relied on this identity in finding that there was no inequity in applying Data Access retroactively, the third Chevron inquiry. Hill, 851 F.2d at 698. Indeed, given the existing case law, the court indicated that the district court’s application of Maryland’s Blue Sky Law “should not have been unexpected.” Id. at 698. Coupled with its assumption that resolution of the second Chevron factor — whether retrospective operation would further or retard Data Access’s ruling — was neutral, the court’s analysis of the first and third Chevron factors impelled it to give retroactive effect to Data Access. An application of the Chevron factors here, however, counsels a different outcome. We start with the first factor. Though there perhaps was some uncertainty on April 30, 1984, the date on which the plaintiffs allegedly had the basic facts underlying their complaint against Holman, and July 19, 1985, the date of the amended complaint adding Holman as a defendant, as to whether the New Jersey Blue Sky Law’s statute of limitations, N.J.S.A. 49:3-71(e) (1985), or the six-year limitation applicable to common law fraud actions in New Jersey, N.J.S.A. 2A:14-1, would apply to plaintiff’s § 10(b) claims, there was absolutely no doubt that some state limitations period would be applied. Whatever differences might have existed among the judges of our circuit court, all agreed that their task, prior to Data Access, was to find and apply the most analogous state law statute of limitations. Hill, 851 F.2d at 695 (prior to Data Access, Third Circuit “decisional law required application of the most analogous state limitations statute comporting with the policy behind section 10(b) and Rule 10(b)(5)”). Data Access, 843 F.2d at 1541, 1553 (majority and dissenting opinions, respectively); Sharp v. Coopers & Lybrand, 649 F.2d 175, 191 (3d Cir.1981), cert. denied, 455 U.S. 938, 102 S.Ct. 1427, 71 L.Ed.2d 648 (1982); Biggans, 638 F.2d at 607, 611 (majority and dissenting opinions, respectively); Roberts v. Magnetic Metals Co., 611 F.2d at 452, 456, 461 (concurring opinions of Gibbons, J., Sloviter, J., and dissenting opinion of Seitz, J., respectively). In the case sub judice, it appears that plaintiffs filed their complaint well within either of the two state limitations periods which would have been potentially applicable prior to Data Access. When this is the situation, we believe that Data Access is appropriately seen as overruling clear past precedent upon which plaintiffs could have reasonably relied. By timely filing a complaint which satisfied any potentially applicable state statute, plaintiffs relied on the only universally agreed upon principle prior to Data Access — that the courts would apply the most analogous limitation period referenced by the law of the forum state. Defendant Holman himself seems to have recognized this bottom-line certainty, since this is the first time he has raised a statute of limitations argument by way of motion practice. Moreover, he does not contend that New Jersey would apply the limitations law of another state to this dispute. As this is the record before us, we will not speculate on what other state’s limitations law might be applicable to this class action, especially since none suggests itself. Sharp, 649 F.2d at 192, n. 24. In sum, we believe that the plaintiffs were entitled to rely upon the clear precedent of the circuit that an analogous state limitations period would be applied. As such, the first Chevron factor favors non-retrospective application of Data Access here. In so deciding, we acknowledge the existence of numerous decisions by other district courts in this circuit holding that there was no certain precedent upon which plaintiffs could reasonably rely in waiting to file a § 10(b) claim. To the extent that these cases involve plaintiffs who did not timely file under both of the potentially applicable state statutes of limitations, they are distinguishable on the same ground as Hill. See Prospect Purchasing Co. v. Weber, Lipshie & Co., 694 F.Supp. 1149, 1156 n. 13 (“the issue of uncertainty [does] not concern the question of whether to apply the federal or state statute of limitations, but rather which state statute to apply”); McCarter v. Mitcham, 693 F.Supp. 349, 352 (W.D.Pa.1988). To the extent that the decisions rested on an application of Hill without discussion of whether the uncertainty relevant in Hill was relevant in the case at bar, we respectfully decline to follow their approach. See, e.g., Schwartz v. Philadelphia National Bank, 701 F.Supp. 92 (E.D.Pa.1988); Bradford-White Corp. v. Ernst & Whinney, 1987 WL 16316 rev’d Bradford-White Corp. v. Ernst & Whinney, 872 F.2d 1153 (3d Cir.1989); Adelaar v. Lauxmont Farms, Inc., 695 F.Supp. 821 (M.D.Pa.1988). And, of course, not all district courts have given retroactive effect to Data Access. Gruber v. Price Waterhouse, 697 F.Supp. 859 (E.D.Pa.1988); ITG, Inc. v. Price Waterhouse, 697 F.Supp. 867 (E.D.Pa.1988); Newfield v. Shearson Lehman Bros., 699 F.Supp. 1124, 1126 (E.D.Pa.1988) (refusing to apply Data Access retroactively, not because of an analysis of the Chevron factors, but because to do so would be “unfair”). Turning to the second Chevron factor— whether retroactive application here will further or retard the rule articulated in Data Access — there is no reason to believe that retroactive application would either further or hinder the new rule’s function. Indeed, there is nothing before us to distinguish Hill’s assumption of neutrality as to the second Chevron criteria. Hill, 851 F.2d at 698. The final Chevron factor focuses on whether retrospective application would create the risk of producing substantially inequitable results. “In practice, this consideration overlaps with that of the first factor, in that it would be inequitable to give retrospective application to a shortening of the limitations period that altered established law upon which plaintiff could have reasonably relied.” Fitzgerald v. Larson, 769 F.2d 160, 164 (3d Cir.1985). Given our finding on the first Chevron factor, we can, without saying much more, indicate our belief that it would be inequitable to apply Data Access to bar the plaintiffs’ claims against defendant Holman. This is especially so where defendant Holman moved for summary judgment on this ground over a year after the Third Circuit’s decision in Data Access, and the plaintiffs have litigated this issue for five years at great expense and effort. Therefore, finding that application of Chevron counsels non-retrospectivity, we answer our first question in the negative and deny defendants’ summary judgment motion insofar as it rests on the application of Data Access to the case before us. As to the second question, i.e., what point in time was the statute of limitations triggered with respect to plaintiffs’ claims against Holman, the record before us is such that we cannot hazard an answer. Hence, even were we to give Data Access retrospective effect we would deny Holman’s motion on this ground. Though Holman argues that April 30, 1984 is the date plaintiffs discovered the basis for their claim against Holman, the record evidence cited by Holman does not persuade us that this is so. Nowhere in the exhibits pointed to by Holman is there a discussion of the all important “other transactions.” While there was information available to plaintiffs on April 30, 1984 which suggested that the Pedricktown plant was worth less than $3.9 million, and that the costs of cleaning up the plant site, from an environmental standpoint, were large, we are unable to conclude that, as a matter of law, on April 30, 1984 a reasonably diligent plaintiff would have known there was a basis for a claim against Holman on this inchoate information, though the evidence before us is such that we can perhaps say that the plaintiffs were on “inquiry notice” as of April 30,1984, Gruber, 697 F.Supp. at 864. We will deny Holman’s motion with respect to plaintiffs’ § 20(a) Exchange Act claim and plaintiffs’ § 15 Securities Act claim, since Holman’s attempt is premised on our finding, as a matter of law, that April 30, 1984 has the significance he assigns to it. Defendant Holman, of course, remains free to and should submit proposed jury interrogatories so that the essentially factual determination of when the statute of limitations began to run on plaintiffs’ claims may be made. And plaintiffs are warned that they must be prepared to do more than say that they did not possess the facts upon which their claim was based on a particular date; rather, they will be expected to produce evidence of their efforts at uncovering the alleged fraud and of the date on which they discovered the evidence underlying the complaint. Defendant Gresov’s tag-along statute of limitations argument is denied. B. § 10(b) Primary Liability Defendant Holman also moves for summary judgment on the ground that the plaintiffs have failed to produce evidence sufficient to create a material dispute of fact with respect to whether Holman had the requisite state of mind to trigger § 10(b) liability. Under § 10(b), plaintiffs bear the burden, at trial, of demonstrating that the defendants acted with scienter, “a mental state embracing intent to deceive, manipulate or defraud.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n. 12, 96 S.Ct. 1375, 1381, 47 L.Ed.2d 668 (1976). Within the Third Circuit, the scienter requirement may be satisfied by a showing of recklessness. See e.g., Eisenberg v. Gagnon, 766 F.2d 770, 776 (3d Cir.), cert. denied, Weinstein v. Eisenberg, 474 U.S. 946, 106 S.Ct. 342, 88 L.Ed.2d 290 (1985); Healey v. Catalyst Recovery of Pennsylvania, Inc., 616 F.2d 641, 649 (3d Cir.1980); MacLean v. Alexander, 599 F.2d 1190, 1197-98 (3d Cir.1979); Coleco Industries, Inc. v. Berman, 567 F.2d 569, 574 (3d Cir. 1977), cert. denied, 439 U.S. 998, 99 S.Ct. 601, 58 L.Ed.2d 671 (1978). A jury may find that a defendant in the § 10(b) context has acted recklessly if his conduct constitutes “an extreme departure from the standards of ordinary care, ... which presents a danger of misleading ... that is either known to the defendant or is so obvious that the actor must have been aware of it.” Healey, 616 F.2d at 649, quoting Sundstrand Corp. v. Sun Chemical Corp., 553 F.2d 1033, 1045 (7th Cir.) cert. denied, 434 U.S. 875, 98 S.Ct. 224, 54 L.Ed.2d 155 (1977). This standard’s application is troublesome because in the § 10(b) context negligence, gross negligence and recklessness do not bleed into one another. Rather, recklessness in this context requires conduct “relatively close to intentional conduct.” Healey, 616 F.2d at 649; MacLean, 599 F.2d at 1198 (“negligence — whether gross, grave or inexcusable — cannot serve as a substitute for scienter.”); Sundstrand, 553 F.2d at 1045 (“recklessness should be viewed as the functional equivalent of intent”). As we have previously noted, “summary judgment is generally inappropriate for issues of state of mind, knowledge and intent,” Op., 12/14/87 at 10; however, Holman insists that the record before us is such that summary judgment in his favor is mandated. And as we have recently noted, “recent precedent suggests that summary judgment can be granted if plaintiff fails to present credible evidence of scienter.” Laven v. Flanagan, 695 F.Supp. 800, 812 (D.N.J.1988) (citing cases). “Plaintiffs must do more than simply attack defendants’ affidavits as self-serving and argue that a jury could choose to disbelieve them without offering any evidence that would provide a basis for such belief.” Id. (quotes omitted). Holman primarily relies on his own certification as the factual basis for his motion, and the following is asserted therein. When the bonds were issued on February 22, 1983, Holman was a Director of Standard Metals, NSR and NSNJ. Holman, Cert., ¶ 2. Holman also was in-house counsel to and Secretary-Treasurer of Standard Metals. Id. Holman insists that his role in the purchase of the Pedricktown plant (and the bond issue in particular) was limited. In late 1982 and 1983, Holman knew that NSR was planning to buy the Pedricktown plant, and that it would do so by forming NSNJ, which would be wholly owned by NSR. Id. ¶ 7. Holman did not, however, participate in the negotiations among NSR, NL and Standard Metals leading to the sale. Id. Later, Holman learned that the acquisition of the plant would be financed by a $6,000,000 bond issue but insists that he “did not initiate the concept of the bond financing or participate in any of the negotiations or structuring which led up to the financing.” Id. 118. Holman alleges that he had no knowledge of any misrepresentations and/or omissions in the Official Statement, did not participate in the drafting of the POS or OS, was unaware of any scheme to omit material information from the POS and OS, and at no time was aware of or participated in any wrongdoing. Id. 116, 9. Though he admits he voted as a member of the NSNJ Board to pass the resolutions which authorized the plant purchase and the bond issue, he did so in the belief that the purchase price was fair, that the Pedricktown facility’s operation would generate revenues sufficient to redeem the bonds and that “all necessary and full disclosure had been made in the documents presented to potential bondholders in connection with the issuance of the bonds.” Id. 1110, 12. In coming to this conclusion, Holman says he relied on information about the proposed purchase and the issuance of the bonds given to him by James Conroy and Boris Gresov. Id. 1112. In his certification, Holman addressed three areas in which the plaintiff class alleges the OS and POS were materially misleading. First, with regard to the plaintiffs’ allegations that the OS/POS led the purchasers to believe that the market value of the plant was equal to or greater than $8.9 million, Holman says that he thought this was a fair price for the plant. He based this belief on a Machinery and Equipment Appraisal by Aaron Equipment Company dated February 4 and 5, 1981, and a property appraisal by Carroll-McIlhinney dated January 13, 1982, which he, in good faith, believed “reflected a fair and accurate value for the plant and its equipment.” Id. ¶ 14(a). Holman knew of no plan to mislead potential buyers as to the value of the plant, nor was he aware that NL had failed to locate other potential buyers for the Pedricktown plant. Id. ¶ 14(a), (b). Holman did not know that NSNJ was assuming responsibility for any environmental problems at Pedricktown; he thought that NL would resolve any such problems prior to the purchase and therefore was, presumably, not involved in any attempt to mislead potential bond buyers as to the extent of NSNJ’s assumed responsibilities. Id. ¶ 14(d). In sum, Holman says he was but a bit player in this play who relied on leading men Gresov and Conroy to provide him with information about the transaction and “to structure the transaction and bring it to a successful completion ... in full compliance with applicable laws.” Id. ¶ 15 (emphasis added). The record before us demonstrates the difficulty of resolving issues of state of mind by way of summary judgment practice. For despite Holman’s certification, this court has great difficulty in determining the state of mind with which he acted. Holman insists that he acted in good faith, and that he played a limited role in approving the Standard Metals/NSR/NSNJ-NL deal and had no role in preparing or reviewing the POS/OS. Unfortunately, a review of Holman’s deposition testimony indicates that his certification contains assertions different, in various degrees, from his previous sworn testimony. Since Holman specifically addressed three particular areas of concerns in his certificate, a comparison of his deposition testimony on those subjects usefully illustrates our concern. First, as to valuation, Holman deposed that he never participated in a discussion of the plant price but relied on the Aaron appraisal in deciding that it was a good price. Holman Dep. 8/9/88 at 63. This reliance is somewhat dubious in light of his additional testimony that he was not certain that he saw the appraisal prior to the completion of the Pedricktown purchase. Id. And contrary to his certification which indicates that he relied on a property appraisal by Carroll-Mcllhinney as supporting his belief that the sale price was a fair representation of the plant’s value, at his deposition Holman said that he reviewed no other documents related to the price of the plant and was unaware of any experts other than Aaron who were consulted with respect to the transaction. Id. at 64-65. Second, though Holman denies seeking to conceal the relationship of the other transactions to the plant purchase, he was present at a December 30, 1982 NSNJ Board of Directors meeting where the Board approved the Standard Metals/NSR/NSNJ-NL deal in its entirety, including the side agreements about which he contends he had no detailed knowledge. Rodriguez Certification Exhibit A; Holman Dep. at 46. At his deposition, Holman could not recall who was present at the meeting, if any agreements were signed, or what happened at the meeting. Holman Dep. at 47. And at deposition, Holman’s diary, which he admitted was in his handwriting, was used as an examination aid. Holman was asked about a December 31, 1982 entry in the diary which indicated that Conroy had received a $500,000 check from NL for Standard Metals. Id. at 48. Holman did not know what the check was for and could “only guess” at whether the $500,000 was paid to Standard Metals by NL as part of the Pedricktown purchase. Id. at 49. Other diary entries indicate that Holman was asked on January 12, 1983 to review contracts “in the NL/NSR/Standard matter,” and in February 1983 “to meet with [Gresov] and Conroy ... for final reviewing of contracts and industrial revenue bond.” Id. at 57. As for the environmental issue, Holman now says he was aware of environmental problems at the Pedricktown plant but thought NL would resolve them; at his deposition, Holman denied having knowledge of any environmental problems at the time the plant was acquired. Id. at 71. Finally, though Holman’s deposition testimony is replete with statements that he relied on Gresov and Conroy to structure the deal, nothing in Holman’s testimony indicates that Conroy advised him as to the adequacy of the disclosures made in the POS/OS. Indeed, Holman indicated that he had never seen the OS prior to the deposition, and he was very unclear as to whether he ever received advice from Con-roy, legal or otherwise, other than at one meeting of the Standard Metals Board. Id. at 76-8. In fact, Holman deposed that Conroy did not give advice as to the form of documents but only advised the Board to approve the Standard Metals/NSR/NSNJ-NL transactions. Id. at 78. And whatever presentation Conroy made was, according to Holman, extremely brief. Id. at 68. In addition to Holman’s version of events, the record also contains an affidavit by Conroy in which he denies summarizing the transactions to the NSR or NSNJ Boards or recommending their approval. Conroy Affidavit ¶ 9. Most importantly, Conroy insists that he had no involvement in the drafting of the POS and only a minor involvement with the drafting of the OS, and was never asked to draft nor did he or his firm draft or participate in drafting those parts of the POS/OS “which described the structure of the financial transaction by which the plant was purchased from NL.” Id. ¶ 13. Such averments constitute an implicit denial that Conroy undertook, on behalf of the NSNJ Board, to ensure that the OS was adequate. The record is such that we believe only a jury may appropriately determine whether Holman acted recklessly. His deposition testimony is a virtual litany of such phrases as “I don’t recall” and “I relied on_” Such a complete lack of recall, in our view, makes doubtful Holman’s confident assertions of good faith. The record indicates that Holman voted as a member of the Standard Metals and NSNJ Boards to approve the “other transactions” and therefore knew that the $3.9 million purchase price was contingent upon NL’s excusal of a $1.5 million debt owed by Standard Metals — a debt over one-third of the purported purchase price. The record also suggests that Holman took no steps to make sure that this fact was adequately disclosed to the bond-buying public. This may be because this was not a role he was to play in this transaction since Conroy and Gresov were supposed to be taking care of it. But Conroy’s affidavit makes it impossible for the court to say this is so. In addition, Holman says he never reviewed the OS, he never asked questions about it, and never received legal advice about the adequacy of the disclosures. But his own diary indicates that in February of 1989, he reviewed documents related to the bond issue. Holman Dep. at 57. Given this fact, and Conroy’s denial that he provided legal advice to Holman, a jury could believe that Holman is not being entirely candid about his role. Further, Holman was a director of the company which approved the OS, and in-house counsel and long-time director to the company which was the direct beneficiary of the other transactions. Someone in his position may, by totally abdicating any responsibility to ensure that the Official Statement was materially complete, potentially be liable under § 10(b) and Rule 10(b)(5). That is, even if Holman did not have actual knowledge of any misrepresentations in the OS, he could still have the necessary scien-ter if the plaintiffs establish that “his failure to discover the misrepresentations amounted to a willful, deliberate, or reckless disregard for the truth that is the equivalent of knowledge.” Rochez Bros., Inc. v. Rhoades, 491 F.2d 402 (3d Cir.1974), quoting Lanza v. Drexel & Co., 479 F.2d 1277, 1305 (2d Cir.1973). There is sufficient evidence to support a jury finding that Holman knew that the purchase price of $3.9 million did not of itself represent the real value of the plant in the context of the overall deal and lacked a genuine belief that the disclosures contained in the POS/OS were adequate and not materially misleading, since the jury could find that Holman had nothing upon which to base such a belief. Furthermore, the inconsistencies contained in Holman’s sworn submissions and the Conroy-Holman dispute raise questions of credibility bearing on Holman’s state of mind. These are more appropriately resolved by a carefully instructed jury than by a court upon a paper record. While courts may not merely disbelieve a defendant’s affidavit because the plaintiff wishes it to do so, the vagueness and inconsistency of defendant Holman’s memory could rationally lead a jury to conclude that he is being intentionally evasive about his role with respect to the other transactions and the bond offering. And when a moving party attempts to escape liability by pointing his finger at others, we must allow the jury to determine who played what role rather than choose between two contending affidavits. We cannot, as Holman would have us do, rely on “a reasonable inference” that Conroy’s presence at SMC, NSR and NSNJ Board meetings means “that those Boards were seeking counsel’s advice about the legality of the contemplated action,” Holman’s Reply Brief at 13, especially when Conroy denies playing this role. In sum, we will deny Holman’s motion. In so doing, we wish to reemphasize that we are cognizant of the difficulties and dangers of predicating a finding of scienter solely on inaction. Mr. Holman may rest assured that the jury will be carefully instructed, that he may not be found liable under § 10(b) for merely negligent conduct; i.e., conduct which is objectively unreasonable, but only if his conduct is found to be reckless, i.e., to constitute an extreme departure from standards of ordinary care so extreme that it created a danger of misleading potential bond purchasers so obvious that Holman must have been aware of it. We suggest that both the plaintiff class and defendant Holman focus attention on the legal principles upon which the court will have to charge the jury with respect to Mr. Holman’s state of mind, and especially upon the possibility of grounding a finding of recklessness upon a director’s inaction. C. Controlling Persons Liability Holman also seeks summary judgment on count two of plaintiff’s complaint. These counts allege that Holman violated § 15 of the Securities Act and § 20 of the Securities Exchange Act. Section 15 of the Securities Act of 1933, 15 U.S.C. § 77o, provides that: Every person who, by or through stock ownership, agency or otherwise, or who pursuant to or in connection with an agreement or understanding with one or more other persons by or through stock, ownership, agency or otherwise, controls any person liable under section 11 [15 USCS § 77k] or 12 [15 USCS § 77l], shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person had no knowledge of or reasonable ground to believe in the existence of the facts by reason of which the liability of the controlled person is alleged to exist. Section 20 of the Securities Exchange Act, 15 U.S.C. § 78t, provides: Every person who, directly or indirectly, controls any person liable under any provision of this title or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. Holman makes a three-pronged attack on the plaintiffs’ controlling person claims, arguing (1) that there is no record evidence which could support a jury finding that Holman is a controlling person; (2) that plaintiff has made no showing that Holman was a culpable participant in a securities law violation; and (3) that Holman has established a statutory defense of good faith. We deal with these contentions in the order they were raised by Holman. Holman insists that he was not a controlling person of NSNJ, NSR or Standard Metals since he was merely a director, had no day-to-day management responsibilities, and “was uninvolved in the particular transactions giving rise to the Amended Complaint.” Holman’s Brief in Support of Summary Judgment at 26. This court has recently dealt with the issue of control liability in Laven, wherein we said: The standards to be used in determining whether a defendant is a “controlling person” under section 15 or section 20 are the same. Pharo v. Smith, 621 F.2d 656, 673 (5th Cir.1980). Securities and Exchange Commission v. Management Dynamics, Inc., 515 F.2d 801, 812 (2d Cir.1975). The Securities and Exchange Commission has defined “control” as “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities by contract, or otherwise.” 17 C.F.R. § 240.12b.2 cited in Rochez Brothers, Inc. v. Rhoades, 527 F.2d 880, 890 (3d Cir.1975). The Third Circuit has stated that “[i]n making this determination, the courts have given heavy consideration to the power or potential power to control ... as opposed to the actual exercise thereof.” Rochez at 890-91. 695 F.Supp. at 806-07. Plaintiffs contend that several pieces of record evidence raise an issue of fact as to Holman’s status as a controlling person. First, it is uncontested that Holman served on the Boards of SMC, a 51% shareholder of NSR, NSR, which wholly owned NSNJ, and NSNJ itself. In addition, he was in-house counsel to SMC, as well as its Secretary-Treasurer. Second, Edward Puckett has deposed that Holman was part of a three-person control group (consisting of the NSNJ Board members who sat on NSNJ’s Board) which controlled NSNJ. E. Puckett Deposition of December 18, 1985 at 8-10. Third, plaintiffs have produced record evidence which demonstrates that Holman voted to approve the SMC/NSR/NSNJ-NL transactions. These transactions resulted in a benefit, or so the evidence suggests, of $1.5 million to SMC, a corporation Holman served as counsel, officer and director. In light of his possession and use of a vote with respect to these transactions, his potential role as part of a SMC control group, and his status as one director on a small five member Board, we believe that there is evidence to support a finding that Holman had the “potential power” to control these transactions. As for culpable participation and good faith, we rely primarily on our previous discussion of Holman’s state of mind. We pause only to remind the plaintiffs of the burden they bear at trial. They will have to prove, to achieve relief under count two, that Holman was a “culpable participant” in a fraud committed by NSNJ. Rochez Brothers, Inc. v. Rhoades, 527 F.2d 880, 890 (3d Cir.1975); Laven, 695 F.Supp. at 809. This will require an even greater showing than is necessary to establish scienter for § 10(b) purposes. The plaintiff class has not produced record evidence suggesting that Holman himself drafted the OS or played a key role in shaping its contents. Rather, the plaintiff class has pointed to evidence which indicates that Holman took no steps to ensure that the OS was not deficient or misleading in some material respect with regard to the value of the Pedricktown plant, the “other transactions,” and the extent of the environmental obligations NSNJ would assume upon purchase. We put the plaintiff class on notice that if it intends to premise its controlling persons liability theory on Holman’s inaction or neglect, the class “must prove that the inaction was deliberate and done intentionally to further the fraud.” Sharp, 649 F.2d at 185; Laven, 695 F.Supp. at 809. The record before us leaves us with grave doubts as to the plaintiffs’ ability to sustain this burden at trial. Our refusal to grant summary judgment flows only from our inability to and the impropriety of determining the scienter with which Holman acted from the erratic record we possess. This record also counsels refusal of Holman’s good faith defense. This defense rests on Holman’s asserted good faith belief that all necessary disclosures had been made, that $3.9 million represented a fair value for the Pedricktown plant, and that he had no reason to believe that factual misstatements and/or misleading statements were being made. It may very well be that Holman acted in good faith. But since Holman’s averments of good faith are based on (1) his reliance on Conroy (who avers that he did not provide Holman with advice upon which to be relied); (2) appraisals which Holman may not have read until after the OS was sent to bondholders; and (3) a memory so vague as to be potentially the product of something other than the mere passage of time, we cannot accept the proposition that good faith has been established as a matter of law. We deny Holman’s motion for summary judgment on count two. Holman also seeks summary judgment on the state law claims against him. This attempt was predicated on his prevailing on his motion with respect to the federal law claims, and so must be denied with them. II. The Pucketts’ Motion for Summary Judgment Defendants Robert L. Puckett and Edward L. Puckett have filed a joint motion for summary judgment seeking dismissal of the plaintiffs’ claims against them. The Pucketts contend that the plaintiffs have failed, as a matter of law, to produce record evidence which, even after all reasonable inferences in plaintiffs’ favor are drawn therefrom, could support a jury finding that the Pucketts are liable under § 10(b) and § 20(a) of the Securities Exchange Act. The Pucketts’ present motion raises questions of law and fact nearly identical to those addressed by this court in our opinion of December 14, 1987 denying plaintiffs’ motion for summary judgment against the Pucketts. In the interests of brevity and in the efficient use of scarce judicial resources (the court’s time), we rely implicitly on our previous opinion. First, the Pucketts’ motion for summary judgment on count one, which alleges violations of § 10(b) and Rule 10b-5 promulgated thereunder, will be denied for reasons worthy of only brief articulation. As we have noted, to prevail on a claim that defendants are primary violators of § 10(b), a plaintiff must establish at trial: 1) the existence of a material misrepresentation or non-disclosure “in connection with” the purchase and sale of a security; 2) made with “scienter”; 3) upon which the plaintiff reasonably relies; 4) and which proximately causes damage to him. Opinion 12/14/87 at 6-7. The Pucketts’ attack the plaintiffs’ showing on the first, second and fourth prongs. To support their argument that the OS adequately disclosed all material information, the Pucketts cite parts of it which warned potential bondholders of the risks of their investment. However, this does not provide us with a basis for holding that there is no issue of material fact as to the adequacy of that document. Under § 10(b), an omitted fact is material if there is a “substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available.” Basic, Inc. v. Levinson, 485 U.S. 224, 108 S.Ct. 978, 983, 99 L.Ed.2d 194 (1988) (citations and quotes omitted). The plaintiffs have pointed to evidence supporting their allegations that the OS contained serious misrepresentations and omissions of fact. For example, the OS failed to state that the original proposals made by Edward Puckett and NSR called for NL to sell the Pedricktown plant for $1 million, the July 1, 1982 proposal or $2 million July 16, 1982 and receive a separate payment, upon closing, of SMC’s then existing $1.5 million debt to NL. Appendix to Plaintiffs’ Motion for Summary Judgment Exhibits I and N (hereinafter “Appendix Exhibit_”). Nor did the OS indicate that NL had failed to locate other potential buyers for the plant. Most importantly, the OS did not indicate that the real value placed on the Pedricktown plant in the context of the overall transaction was not $3.9 million but actually something substantially less than this because of the excusal of SMC’s $1.5 million debt to NL. The Pucketts assert that the “other transactions” were disclosed; however, the part of the OS mentioning them does not specify that the sale of the Pedricktown plant was contingent upon the excusal of the SMC debt and vice versa. In fact, NL informed SMC that it would expect “to receive payment from Standard Metals, Inc. for all installments which were due and payable under the terms of the [Atlanta] “Put Agreement ... on February 14,” if the purchase of the Pedricktown plant and the related transactions were not closed during the week of February 7, 1983. Appendix Exhibit X. In response to plaintiffs’ argument that, as a matter of law, the OS’s failure to disclose the intended use of the bond proceeds is material for § 10(b) purposes, the Pucketts assert that [n]o factual basis exists for the premise that the “other transactions” were based on Bond proceeds. In fact, the ‘Atlanta Debt, to which the ‘other transactions’ are alleged to relate, existed prior to and independent of any purchase of the Plant financed by Bond proceeds. Pucketts’ Brief in Support of Summary Judgment at 8-9. How this follows is hard to grasp. That the debt predated the purchase is, of course, correct. But if it had not been extant, who would have made the purchase price of the plant contingent upon its excusal? We are devoid of any doubt about whether the plaintiffs have produced sufficient evidence to allow a reasonable jury to find that the omissions and/or misrepresentations alleged are material — especially when the omissions relate to the value of the collateral securing the bonds. The Pucketts’ next attack is on the sufficiency of the'plaintiffs’ showing with respect to scienter. They insist that they believed $3.9 million to be a fair price for the Pedricktown plant, that they believed it would be a profitable investment, and that the “[disclosures in the Official Statement were in accordance with [their] expectations that the Plant would have to be profitable to pay the Bond issue_” Pucketts’ Brief in Support of Summary Judgment at 11. However, the record also indicates that the Pucketts were deeply involved in these transactions. Robert L. Puckett was Chief Executive Officer of NSR and NSNJ, and Edward L. Puckett was Vice President and Director of NSR and NSNJ. They owned 49% of NSR, and therefore 49% of NSNJ. Each voted to approve the SMC/NSR/NSNJ-NL transactions at a December 30, 1982 meeting of the NSNJ Board. Each was on the distribution list to receive copies of the POS and OS. Appendix Exhibit 8. The OS described the Pucketts as having responsibility for “overall management” of the Pedricktown project. Appendix Exhibit B at 16. The portion of the OS which contains some reference to the “other transactions” was drafted by Arthur Young and “is based on assumptions provided by or reviewed with and approved by the management of [NSNJ],” id. at 55; that is, the Pucketts. The Pucketts were privy to the information the plaintiffs contend should have been disclosed. Their assertions of reliance upon the Aaron appraisal as supportive of the value of the plant do not, as plaintiffs point out, address the issue of whether the Pucketts were reckless, or worse, in failing to disclose the fact that part of the bond proceeds would be used to retire SMC’s debt. We cannot, given the Pucketts’ intimate knowledge of and participation in the bond offering and the OS, say that there is no material question of fact as to their scienter. Plaintiffs have shown that the Pucketts were aware that over one-third of the plant purchase price was a payment for SMC’s debt and aware of the questionable value of the plant as collateral, that the Pucketts received the OS, and Arthur Young indicates that the Pucketts provided information upon which portions of the “financial forecast” are based; and despite their participation and their knowledge of these potentially material facts, the OS did not disclose them. When we refused to grant plaintiffs’ motion for summary judgment, we did so because there was “simply too much evidence that [the Pucketts] prepared the OS with the belief that they were disclosing fully all material information. The plaintiffs may dispute the credibility of this evidence at trial, but dispute is inappropriate for summary judgment.” Op. 12/14/87 at 11. To prove scienter, the plaintiffs need not produce confessions of fraudulent intent or other direct evidence of state of mind since such evidence is often unattainable; indeed, “[circumstantial evidence may often be the principle, if not the only, means of proving bad faith.” McLean, 599 F.2d at 1198. The record before is such that a reasonable jury could certainly find that the Pucketts’ failure to disclose the nature of the other transactions, their relationship to the purchase price, and other information affecting the value of the plant was an extreme departure from the standards of ordinary care which created a danger of misleading so obvious the Pucketts must have been aware of it. As such, the issue of the Pucketts’ scienter, or lack thereof, is properly for a jury. The Pucketts’ final assault on plaintiffs’ § 10(b) claims is directed at the issue of proximate cause. They say that the reasons for the bond default were essentially due to unforeseen problems in the lead market, and thus the plaintiffs cannot show that their losses were due to any fraud by the Pucketts. The plaintiffs’ theory, however, is that if the material facts regarding the “other transactions” and plant valuation had been adequately disclosed, the bonds could not have been sold at all or, if marketable, would have sold for a cheaper price. Amended Complaint ¶ 26. As plaintiffs point out, this theory focuses on the value of the bonds at the time they were issued and not subsequent factors affecting their value. Such a theory is a permissible basis for recovery. Sirota v. Solitron Devices, Inc., 673 F.2d 566, 578 (2d Cir.1982). Given our resolution of the Pucketts’ arguments as to primary liability under § 10(b), we deny their motion on this ground. The Pucketts have made other arguments which are advanced to support their motion for summary judgment on plaintiffs’ secondary liability aiding and abetting allegations and on count two of the amended complaint, which states a claim of controlling person’s liability under § 20(a) of the Exchange Act. These aspects of the Pucketts’ motion are grounded solely on supposed failures by the plaintiffs’ failure to produce evidence of their scienter; i.e., to show culpable participation in a securities fraud. Though the necessary showing for these theories is somewhat different from that required under § 10(b), we believe the evidence we discussed as relevant to the § 10(b) scienter requirement is equally capable of supporting jury verdicts under these distinct theories. Therefore, we deny the Pucketts’ motion for summary judgment in its entirety. III. The Third-Party Defendants’ Motions for Summary Judgment We turn next to the motions of third-party defendants Arthur Young and Company and Michael Thomas for summary judgment on the complaint of defendant/third-party plaintiff Boris Gresov, and the motion of third-party defendant James P. Conroy and Windels, Marx, Davies & Ives (Conroy’s law firm, hereinafter “Windels”) for summary judgment on the complaint of defendant/third-party plaintiff Aaron Holman. Our analysis and disposition of these applications proceed in part through channels cut by this court in our previous opinions of April 29, 1987 and December 14, 1987. On April 29, 1987, we passed on motions to dismiss brought by several third-party defendants, including Conroy and Windels. We held, inter alia, that to the extent any of the third-party complaints sought indemnity for liability that might be incurred by them for violations of Rule 10b-5, such a course was barred by the “well settled” rule that indemnification is not available for violations of the federal securities laws. Op. 4/29/87 at 8, citing Stowell v. Ted S. Finkel Inv. Services, 641 F.2d 328 (5th Cir.1981). We further found that indemnification was not available under New Jersey law, as none of the third-party complaints had established as a predicate either an explicit contract of indemnity or sufficient allegations of the existence of an implied right of indemnity. Id. at 8-9. We thus determined that the third-party plaintiffs in this case could proceed only upon theories of contribution, and, to state a viable contribution claim, these plaintiffs would have to show that the impleaded parties could be liable as joint tortfeasors to the primary plaintiffs. For example, the contribution claims of Gresov against Michael Thomas would have to allege and prove that Thomas was in some way himself liable to the bondholder class for the security violations alleged by that class. We noted that it would not suffice for a third-party plaintiff to simply allege that he had “relied” on the third-party defendant, to the detriment of the primary plaintiffs. Id. at 10. Turning to the motions of Thomas and Arthur Young for summary judgment on defendant/third-party plaintiff Gresov’s complaint, we are puzzled that Gresov’s position on these motions rests entirely on a theory of reliance, a theory that, as mentioned above, has been specifically rejected by this court in this case. Gresov’s briefs in opposition to the motions of Arthur Young and Michael Thomas contain the identical argument that “[a]s a defendant/third-party plaintiff seeking contribution from a potential joint tortfeasor, all that Mr. Gresov must do now is present some evidence indicating that he relied on the expertise of [Young and Thomas] with regard to the claims against him.” Gresov Mem. in Opp. to the Motion by Arthur Young at 10; Gresov Mem. in Opp. to the Motion by Michael Thomas at 7. As our April 29, 1987 opinion makes clear, this is an incomplete and incorrect statement of the law of contribution; Gresov must advance some legal theory and some corresponding evidence to demonstrate Arthur Young’s and Michael Thomas’s liability to the bondholder plaintiffs. Gresov’s opposing papers give no hint as to the theory of liability he is pursuing regarding these third-party defendants. However, his respective third-party complaints indicate that he seeks contribution by virtue of Arthur Young’s position as accountant to NSNJ and Thomas’s position as “acquisition advisor” to NSR, and the respective roles played by them (in these capacities) in the transactions to finance the sale of the Pedricktown plant. In our December 14, 1987 opinion, we set out in some detail the circumstances under which “a non-insider,” i.e., someone other than a corporate officer, director or controlling shareholder, might have a “duty to disclose” under § 10(b) and Rule 10(b)(5). Borrowing the “flexible duty” test from the United States Court of Appeals for the Ninth Circuit, we found four factors of that test relevant to finding such a duty. These included: (1) the relationship of plaintiff to the defendant; (2) defendant’s benefit, if any, derived from that relationship; (3) defendant’s awareness of whether plaintiff was relying upon the relationship in making his investment decisions; and (4) the defendant’s role in initiating the transaction in question. See Op. 12/14/87, at 24-25. The flexible duty test “is not a rigid, mechanical formula.” Stephenson v. Calpine Conifers II, Ltd., 652 F.2d 808, 813 (9th Cir.1981). “Not all factors are necessary to a finding of liability in a given case.” Spectrum Financial Companies v. Marconsult, Inc., 608 F.2d 377, 385 (9th Cir.1979). By the same token, the mere presence of some of the factors does not necessarily indicate the existence of a duty to disclose. See, e.g., Kidwell ex rel. Penfold v. Meikle, 597 F.2d 1273 (9th Cir.1979) (court holding no duty even though three factors favored a duty to disclose). Rather, as the court in Mirotznick v. Sensey, Davis & McCormick, 658 F.Supp. 932 (W.D.Wash.1986) put it, “[n]o one factor in the test is determinative, and the analysis to be engaged in by the court is a qualitative one in which the various factors must be judged in relation to each other.... This means that when allegations are lacking or are very weak as to any of the flexible duty factors, allegations as to the remaining factors accordingly should be stronger.” 658 F.Supp. at 937. In December, 1987, we employed the flexible duty test to the defendants, Reuss, MacIntyre & Weyant, the legal counsel to NSNJ, and determined that the firm lacked a duty to disclose to the plaintiff class. Specifically, we found that the relationship between Reuss and the plaintiffs was “quite limited” because, although the firm edited and reviewed the POS and the OS, the majority of its efforts went toward the drafting sections of these documents which were not at issue in the litigation. Op. 12/14/87 at 25. Second, we found that the Reuss firm had received no “special benefit” from their relationship with the plaintiffs; instead, they simply garnered “regular legal fees from their work on the Pe-dricktown deal and bond offering,” fees which “were not contingent upon the success of either the plant sale or the bond offering.” Id. at 26. Third, we found little evidence that Reuss was aware or should have been aware of any reliance on