Jackson v. Fischer
2013 U.S. Dist. LEXIS 36327
N.D. Cal.2013Background
- Plaintiff Suzanne D. Jackson sues numerous entities and individuals alleging a securities fraud scheme centered on Fischer and Upper Orbit.
- SAC asserts 11 causes of action against multiple defendants including SpeciGen, PeerDreams, ILeonardo.com, Notebookz, New Moon, Monvia, Sazani Beach Hotel, and others.
- Defendants move to dismiss SAC for failure to state a claim; Fischer has defaulted and filed Chapter 7, staying proceedings as to him.
- Court previously granted some defenses as to the D&O, Koolasuriya/Monvia, Fernandes, and New Moon, with leave to amend certain claims.
- Court notes the SAC largely targets Fischer, with many defendants allegedly connected through various entities; evidentiary and pleading coherence is lacking.
- Final order grants motions to dismiss SAC with prejudice for certain §10(b) claims and allows limited leave to amend others; numerous state-law claims dismissed or left for amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| §10(b)/10b-5 viability against D&O | Jackson asserts misrepresentations/omissions by SpeciGen via Fischer; relies on PSLRA. | D&O did not make false statements; lack of particularity; no direct culpable speaker. | Dismissed as to D&O for failure to plead falsity with particularity; prejudice. |
| §20 liability against controlling persons | D&O control of primary violators supports §20; respondeat superior as alternative. | No viable primary violation; no adequate control allegations. | Dismissed; leave to amend limited to viable primary liability theories. |
| California Corporations Code §§25401/25501/25504/25501.5 | Defendants violated state securities laws; secondary liability theories alleged. | No privity or direct sale allegations; no viable control-person or secondary liability without primary violation. | GRANTED with leave to amend; numerous claims dismissed with prejudice absent viable primary liability or proper basis to pierce privity. |
| Common law fraud and negligent misrepresentation | SAC alleges time, place, content; extensive factual allegations. | Fraud claims lack specificity and who made statements; no culpable speaker beyond Fischer. | GRANTED with leave to amend; failure to plead with Rule 9(b) specificity. |
| Accounting claim viability | Plaintiff seeks accounting for fiduciary duties. | Accounting is derivative and improper as standalone. | GRANTED; leave to amend only if pleading clear fiduciary basis and proper standing. |
Key Cases Cited
- Stoneridge Investment Partners, LLC v. Scientific-Atlanta, 552 U.S. 148 (U.S. 2008) (requires pleading falsity and scienter for §10(b) claims)
- In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d 694 (9th Cir. 2012) ( PSLRA pleading standards apply to 10(b) claims)
- Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981 (9th Cir. 2009) (requires particularity for falsity and scienter under PSLRA)
- Moss v. Kroner, 197 Cal.App.4th 860 (Cal. Ct. App. 2011) (balances privity vs. secondary liability under §25504/25504.1)
- Viterbi v. Wasserman, 191 Cal.App.4th 927 (Cal. Ct. App. 2011) (relates to standing and potential relation-back/time-bar issues under §25501.5)