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taking notice of several news articles for the purpose of finding that they put a party on notice of a fraudulent scheme, not for the truth of that scheme
Summary of this case from United States v. BychakOpinion
No. 08-56034.
Argued and Submitted October 9, 2009.
Filed September 17, 2010.
Michael Reese, Reese Richman LLP, New York, NY, for Plaintiff/Plaintiffs-Appellants.
James Nelson Benedict, Esquire, Christopher Neil Gray, Esquire, Sean Miles Murphy, Esquire, Milbank, Tweed, Hadley McCloy LLP, New York, NY, Gareth T. Evans, Esquire, Gibson Dunn Crutcher, LLP, Los Angeles, CA, for Defendants-Appellees.
Appeal from the United States District Court for the Central District of California, Gary A. Feess, District Judge, Presiding. D.C. No. 2:06-cv-07815-GAF-RNB.
This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
Plaintiff Sabrina A. Chin ("Chin") brought an action against Capital Group Companies, Inc., Capital Research and Management Co., and American Funds Distributors, Inc. (collectively "American Funds"), alleging violations of §§ 12(a)(2) and 15 of the 1933 Securities Act ( 15 U.S.C. §§ 77Z (a)(2), 77o) and §§ 10(b) and 20(a) of the 1934 Securities Exchange Act ( 15 U.S.C. §§ 78j(b) and 78t(a)). American Funds filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), on the bases that: (1) the complaint failed to meet the heightened pleading requirements of the Private Securities Litigation Reform Act of 1995 and Federal Rule of Civil Procedure 9(b); and (2) Plaintiffs' claims were barred by the applicable statutes of limitation, i.e., 15 U.S.C. § 77m (one-year limitation on 1933 Securities Act claims) and 28 U.S.C. § 1658(b)(1) (two-year limitation on 1934 Securities Exchange Act claims). The district court granted the motion to dismiss, finding that Plaintiffs were on inquiry notice more than two years before the action was filed. The district court did not address the alternate ground, failure to plead a cause of action.
The district court had jurisdiction under 28 U.S.C. § 1331 and 15 U.S.C. § 78aa. We have jurisdiction under 28 U.S.C. § 1291. We review de novo the grant of a motion to dismiss under Rule 12(b)(6). Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009).
The facts of this case are set forth in detail in the written decision of the district court and are well known to the parties.
Subsequent to the decision in the district court and the completion of briefing in this court, the United States Supreme Court decided Merck Co., Inc. v. Reynolds, 559 U.S. ___, 130 S.Ct. 1784, 176 L.Ed.2d 582 (2010). On remand, we applied Merck to a factually similar case in Betz v. Trainer Wortham Co., Inc., 610 F.3d 1169 (9th Cir. 2010) (remanding for further consideration in light of Merck.)
We requested and received further briefing from the parties. We agree with the decision in Betz that the best course is to remand to the district court for further proceedings. In Betz, the court outlined a number of reasons why this should be the preferred procedure. See Betz, 610 F.3d 1169.
We therefore vacate the district court's prior judgment and remand to the district court for further proceedings consistent with Merck and Betz. VACATED AND REMANDED.