City of Austin Police Retirement System v. Kinross Gold Corp.
957 F. Supp. 2d 277
S.D.N.Y.2013Background
- Kinross allegedly misstated the extent of due diligence before acquiring Red Back and the Tasiast development schedule.
- Kinross announced a rapid Tasiast expansion and a long, multi-year development plan based on six months of diligence and extensive technical work.
- Austin sued Kinross and four Kinross executives under §10(b) and §20(a) for misrepresentation and control liability.
- The class period runs from August 3, 2010 to January 17, 2012, ending with Kinross’ January 16, 2012 disclosure of a revised plan.
- Kinross moved to dismiss for failure to plead scienter and misstatements; Austin moved to strike Exhibits 13, 16–18, 20–27, 29–34.
- The court granted in part Austin’s strike motion and in part Kinross’s motion to dismiss, dismissing pre-August 10 statements but allowing post-August 10 statements and some §20(a) claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| scienter for due diligence statements | Austin asserts Kinross knew diligence was inadequate | Kinross argues lack of strong inference of intent | Dismissed for due diligence, no strong inference of scienter |
| bespeaks caution/ PSLRA safe harbor for pre-August 10 statements | Pre-August 10 statements were misrepresentations | Pre-August 10 statements are protected forward-looking/opinion | Pre-August 10 statements barred; no liability for those periods |
| post-August 10 statements on Tasiast schedule actionable | Defendants knew schedule was no longer viable but kept it | Statements were forward-looking; cautionary language may apply | Post-August 10 statements state a claim; scienter found |
| attribution/primary liability of Barry and Masterman | Scholastic governs liability for insiders | PIMCO casts doubt on attribution for insiders | Not dismissed at this stage; attribution issues to be briefed |
| Janus Capital applicability to Barry/Masterman | Janus controls ultimate authority over statements | Issue waived for reconsideration; may be raised on summary judgment | Waived for reconsideration; may be raised later |
Key Cases Cited
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (U.S. 2007) (requires cogent inference of scienter)
- In re IBM Corp. Sec. Litig., 163 F.3d 102 (2d Cir.1998) (predictions actionable if not sincerely believed)
- Podany v. Robertson Stephens, Inc., 318 F. Supp. 2d 146 (S.D.N.Y.2004) (false opinion must be truly held; subjective belief matters)
- In re Scholastic Corp. Sec. Litig., 252 F.3d 63 (2d Cir.2001) (attribution for corporate insider liability; Scholastic standard)
- PIMCO v. Mayer Brown LLP, 603 F.3d 144 (2d Cir.2010) (sets out attribution considerations for insiders vs. secondary actors)
- In re Wachovia Equity Sec. Litig., 753 F. Supp. 2d 326 (S.D.N.Y.2011) (core operations/ supplementary scienter considerations)
- In re Merrill Lynch & Co., Inc. Research Reports Sec. Litig., 289 F. Supp. 2d 416 (S.D.N.Y.2003) (consideration of public reports and statements in motion practice)
- Kramer v. Time Warner, Inc., 937 F.2d 767 (2d Cir.1991) (publication facts considered, not truth of reports)