In re GLENFED, INC. SECURITIES LITIGATION.
John Paul DECKER; Arnold Cohen; Gary Haskins; Larry
Schwartz; Gary F. Young; Elbridge Ruhl Graef, Trustee u/w
of Charlotte R. Graef on behalf of themselves and all others
similarly situated, Plaintiffs-Appellants,
v.
GLENFED, INC.; Norman M. Coulson; Raymond D. Edwards;
Dann V. Angeloff; Dean R. Bailey; Charles T. Blair;
Douglas A. Clarke; Morris K. Daley; Richard O. Kearns;
Walter A. Ketcham; Jean C. Roeschlaub; Jack D. Steele;
Gilbert R. Vasquez; E. Gex Williams, Jr.; Keith P.
Russell, Jr., Defendants-Appellees.
No. 92-55419.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Aug. 3, 1993.
Memorandum Sept. 15, 1993.
Order and Opinion Nov. 15, 1993.
As Amended Opinion Dec. 22, 1993.
Order Granting Rehearing En Banc Feb. 25, 1994.
En Banc Decision Dec. 9, 1994.
Argued and Submitted April 21, 1994.
Decided July 13, 1995.
Martha A. Evans & John N. Zarian, Greenfield & Chimicles, Los Angeles, CA, Kenneth A. Jacobsen, Christopher T. Reyna & Ira N. Richards, Greenfield & Chimicles, Haverford, PA, Michael S. Glassman & Kathleen L. Clemens, Clemens, Glassman & Clemens, Los Angeles, CA, Warren Rubin, Deborah R. Gross & Ann D. White, Gross & Metzger, P.C., Philadelphia, PA, Lawrence A. Sucharow & Ira Schochet, Goodkind, Labaton & Rudoff, New York City, Alfred G. Yates, Jr., Alfred G. Yates, Jr. & Associates, Pittsburgh, PA, Sherrie R. Savett, Berger & Montague, P.C., Howard Sedran, Levin, Fishbein, Sedran & Berman, Harris J. Sklar, Law Offices of Harris J. Sklar, Philadelphia, PA, for plaintiffs-appellants.
Martin C. Washton, Rory M. Hernandez & Kevin S. Rosen, Gibson, Dunn & Crutcher, Los Angeles, CA, for defendants-appellees.
Before BROWNING, FARRIS and KELLY*, Circuit Judges.
PAUL KELLY, Jr., Circuit Judge.
The en banc court vacated the panel opinion, In re GlenFed, Inc., Sec. Litig.,
A.
The district court's judgment dismissing Plaintiffs' secondary liability claims of "aiding and abetting" and "conspiracy" regarding primary securities law violations against all Defendants is affirmed, but on different grounds. Subsequent to the district court's decision, the Supreme Court held that the language of Sec. 10(b) of the 1934 Act confers no private right of action for "aiding and abetting" liability. Central Bank v. First Interstate Bank, --- U.S. ----, ----,
B.
Plaintiffs have abandoned their arguments concerning their state law claims. The district court's judgment dismissing Plaintiffs' state common law claims against all Defendants is affirmed on the grounds that the Plaintiffs have not alleged actual reliance on the alleged misrepresentations and omissions as required by Mirkin v. Wasserman,
C.
The district court's judgment dismissing the primary liability claims (1933 and 1934 Acts) and "control person" liability claims against the outside directors (the nonemployee directors) is affirmed because the complaint does not satisfy Fed.R.Civ.P. 9(b).
A plaintiff may satisfy Fed.R.Civ.P. 9(b) through reliance upon a presumption that the allegedly false and misleading "group published information" complained of is the collective action of officers and directors. See Blake v. Dierdorff,
In cases of corporate fraud where the false and misleading information is conveyed in prospectuses, registration statements, annual reports, press releases, or other "group-published information," it is reasonable to presume that these are the collective actions of the officers. Under such circumstances, a plaintiff fulfills the particularity requirement of Rule 9(b) by pleading the misrepresentations with particularity and where possible the roles of the individual defendants in the misrepresentations.
Wool,
The parties disagree as to the applicability of the presumption to the outside directors in this case. Defendants do not allege that the outside directors are involved in the day-to-day operations of GlenFed. Instead, the complaint identifies the nonemployee directors of GlenFed, their dates of service, every committee assignment, a general description of the various committees, and then proceeds to treat all of the Defendants, GlenFed, the senior management defendants, and the nonemployee directors, as a unit for pleading purposes.
Plaintiffs contend that "the Wool 'group published information' presumption is applicable to outside directors where the plaintiffs plead that the outside directors hold positions on audit, executive and other committees that are responsible for overseeing the corporation's financial and disclosure activities." We disagree. Merely because the complaint identifies a corporation's outside directors, various committee assignments, and generic responsibilities for every committee does not mean that the presumption of "group published information" is applicable. To hold otherwise would be to ignore Rule 9(b)'s directive that "the circumstances constituting the fraud or mistake shall be stated with particularity." See In re GlenFed, Inc. Sec. Litig.,
As to all other claims against the remaining Defendants, the district court's judgment is reversed in accordance with the en banc court's opinion,
AFFIRMED in part, REVERSED in part, and REMANDED. Each party shall bear its own costs.
Notes
Honorable Paul J. Kelly, Jr., Circuit Judge, United States Court of Appeals for the Tenth Circuit, sitting by designation