BIV-NY, Michael A. Passidomo, Doctor, Michael Puder, Trustee of the MP Trust, Plaintiffs-Appellants, v. Smith BARNEY, Citigroup Global Markets Inc., Citigroup Inc., Citi Smith Barney, Citigroup Global Capital Markets, Inc., Defendants-Appellees.
No. 11-1270-cv.
United States Court of Appeals, Second Circuit.
March 27, 2012.
Because Covington cannot demonstrate that equitable tolling is justified in this case, his false arrest claim is time-barred and the district court properly dismissed it. Accordingly, it is hereby ORDERED that the judgment of the district court is AFFIRMED.
To the extent that Covington moves to petition for panel rehearing of this court‘s 1998 order denying reinstatement of all of Covington‘s claims other than his claim for false arrest, that motion is hereby DENIED. A petition for panel rehearing must be filed within 14 days after entry of the challenged order. See
John FINN, Paragon Reserve Company, Texas PGI, Inc., American Eagle Outfitters, Inc., AEO Management Co., Plaintiffs,
Charles E. Davidow (Brad S. Karp, Susanna M. Buergel, on the brief), Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, N.Y., for Defendants-Appellees.
Present: ROBERT A. KATZMANN, REENA RAGGI, Circuit Judges, JED S. RAKOFF, District Judge.*
SUMMARY ORDER
Plaintiffs-Appellants (“plaintiffs“) appeal from a final judgment entered on March 2, 2011 by the United States District Court for the Southern District of New York (Swain, J.), in favor of Defendants-Appellees (“defendants” or “Citigroup“), based on a March 1, 2011 Memorandum Opinion and Order dismissing the Fourth Consolidated Amended Complaint (the “complaint“) with prejudice. The complaint asserts (1) a market manipulation claim pursuant to Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act“),
We first turn to plaintiffs’ contention that the district court improperly took judicial notice of various documents, including (i) the 2006 SEC Order disclosing the auction practices of certain ARS broker-dealers, including Citigroup; (ii) news articles respecting the 2006 SEC Order; (iii) ARS prospectuses that explained Citigroup‘s auction bidding practices and disclosed the risk of auction failures; (iv) a section of the Smith Barney website disclosing information respecting Citigroup‘s auction practices; and (v) confirmation documents provided to the two plaintiffs with Citigroup accounts directing them to the Smith Barney website. We review a district court‘s determination whether to take judicial notice of documents under an abuse-of-discretion standard. Staehr v. Hartford Fin. Servs. Grp., Inc., 547 F.3d 406, 424 (2d Cir. 2008). The district court may take judicial notice of documents where the documents “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.”
Here, we cannot conclude that the district court abused its discretion in taking judicial notice of the above-listed documents. These documents were publicly available both prior to and during the class period, and, contrary to plaintiffs’ assertion, the district court took judicial notice of the documents for the purpose of establishing that the information was publicly available; it did not consider the documents for their truth.1 See Staehr, 547 F.3d at 425 (“[T]he District Court did not abuse its discretion in denying Appellants’ motion to strike the materials submitted by Appellees for judicial notice purposes [because] [t]he materials ... were offered to show that certain things were said in the press, and that assertions were made in lawsuits and regulatory filings....“). Indeed, other courts in this Circuit have taken judicial notice of substantially similar documents (including the 2006 SEC Order, ARS prospectuses, website disclosures, and media reports) when considering motions to dismiss for alleged violations of the securities laws in connection with the sale of ARS. See In re UBS Auction Rate Sec. Litig., 2010 WL 2541166, at *7 & n. 6, *10, *13 (S.D.N.Y. June 10, 2010); In re Merrill Lynch Auction Rate Sec. Litig., 704 F. Supp. 2d 378, 386 n. 5, 396 n. 11 (S.D.N.Y. 2010), aff‘d, Wilson v. Merrill Lynch & Co., Inc., 671 F.3d 120 (2d Cir. 2011). Accordingly, we conclude that the district court did not abuse its discretion in taking judicial notice of these documents.
We next turn to plaintiffs’ argument that the district court erred in dismissing its market manipulation claim for failure to state a claim upon which relief can be granted. We review de novo a district court‘s dismissal of a complaint for failure to state a claim upon which relief
Section 10(b) of the Exchange Act makes it unlawful “[t]o use or employ, in connection with the purchase or sale of any security ..., any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
In the context of the securities laws, the term “manipulation” refers to “intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 199, 96 S. Ct. 1375, 47 L. Ed. 2d 668 (1976); see also Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 476, 97 S. Ct. 1292, 51 L. Ed. 2d 480 (1977) (“Manipulation is virtually a term of art when used in connection with securities markets. The term refers generally to practices, such as wash sales, matched orders, or rigged prices, that are intended to mislead investors by artificially affecting market activity.” (internal quotation marks and citations omitted)). “Market manipulation requires a plaintiff to allege (1) manipulative acts; (2) damage (3) caused by reliance on an assumption of an efficient market free of manipulation; (4) scienter; (5) in connection with the purchase or sale of securities; (6) furthered by the defendant‘s use of the mails or any facility of a national securities exchange.” ATSI Commc‘ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 101 (2d Cir. 2007). “In order for market activity to be manipulative, that conduct must involve misrepresentation or nondisclosure.” Wilson, 671 F.3d at 130. The “market is not misled when a transaction‘s terms are fully disclosed.” Id. (internal quotation marks omitted). “In this regard, the prohibition of manipulative practices in Section 10(b) is fully consistent with the fundamental purpose of the Exchange Act to substitute a philosophy of full disclosure for the philosophy of caveat emptor.” Id. (internal quotation marks and alterations omitted).
In this case, we conclude that defendants’ disclosures preclude plaintiffs’ claim that the defendants’ conduct was manipu-
Plaintiffs argue that notwithstanding the disclosures defendants’ conduct was misleading due to the increasing frequency with which Citigroup placed support bids. However, unlike in Wilson, the plaintiffs in this case do not allege that Citigroup placed support bids in every auction and, even assuming that there was such an allegation, “we do not see how that allegation can be actionable given [defendants‘] disclosure that it ‘may routinely’ place [support] bids.” Id. at 133. Accordingly, we affirm the district court‘s dismissal of plaintiffs’ market manipulation claim for failing to allege manipulative conduct. Having concluded that the complaint fails to state a claim for any primary violation of the securities laws, we also affirm the district court‘s dismissal of plaintiffs’ Section 20(a) claim alleging that Citigroup Inc. is liable as a controlling person. See id. at 139-40.
We have considered plaintiffs-appellants’ remaining arguments and find them to be without merit. For the reasons stated herein, the judgment of the district court is AFFIRMED.
Kenneth ZAHL, individually and on behalf of his child A.Z., Plaintiff-Appellant, v. Karen KOSOVSKY, Harry Kosovsky, Gertrude Kosovsky, Kevin McKeown, AKA Kevin McNamara, AKA John Sweeny, Robert Dobrish, Esq., Dobr-