New York State Teachers’ Retirement Systems v. Fremont General Corporation

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NEW YORK STATE TEACHERS’
RETIREMENT SYSTEMS,
Plaintiff - Appellant,
and
DARRYL LAZAR, Preferred Share
Purchaser,
Plaintiff,
v.
FREMONT GENERAL CORPORATION;
LOUIS J. RAMPINO; PATRICK E.
LAMB; WAYNE R. BAILEY; KYLE R.
WALKER; JAMES A. MCINTYRE;
RONALD J. NICOLAS, Jr.,
Defendants - Appellees.
No. 10-55635
D.C. No. 2:07-cv-05756-JHN-
FFM
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Jacqueline H. Nguyen, District Judge, Presiding
Argued and Submitted November 10, 2011
FILED
NOV 29 2011
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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The Honorable Lee H. Rosenthal, United States District Judge for the**
Southern District of Texas, sitting by designation.
Plaintiffs’ First and Second Amended Complaints were also dismissed1
for failure to state a claim. See N.Y. State Teachers’ Ret. Sys. v. Fremont Gen.
Corp., No. 2:07-cv-05756, 2009 WL 3112574 (C.D. Cal. Sept. 25, 2009)
(dismissing SAC); N.Y. State Teachers’ Ret. Sys. v. Fremont Gen. Corp., No. 2:07-
cv-05756, 2008 WL 4812021 (C.D. Cal. Oct. 28, 2008) (dismissing FAC).
2
Pasadena, California
Before: TALLMAN and MURGUIA, Circuit Judges, and ROSENTHAL, District
Judge.**
Plaintiffs appeal the dismissal with prejudice of the Third Amended
Consolidated Class Action Securities Complaint. We have jurisdiction under 281
U.S.C. § 1291. We review de novo a dismissal for failure to state a claim pursuant
to Federal Rule of Civil Procedure 12(b)(6). Thompson v. Paul, 547 F.3d 1055,
1058 (9th Cir. 2008). We affirm.
Plaintiffs have failed to allege violations of Section 10(b) of the Securities
and Exchange Act, 15 U.S.C. § 78(j)(b), and SEC Rule 10b-5, 17 C.F.R. §
240.10b-5 with the specificity required by the Private Securities Litigation Reform
Act, 15 U.S.C. § 78u-4(b)(1) and Federal Rule of Civil Procedure 9(b). Viewing
the complaint holistically, plaintiffs’ allegations of scienter fail adequately to show
that each individual defendant possessed contemporaneous knowledge of
undisclosed information that rendered one or more of his public statements

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3
consciously misleading. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.
308, 324 (2007); In re Silicon Graphics Sec. Litig., 183 F.3d 970, 985 (9th Cir.
1999) partially abrogated on other grounds as recognized in South Ferry LP, No.
2 v. Killinger, 542 F.3d 776, 784 (9th Cir. 2008). Without more specific
allegations, the inference of scienter is not cogent nor is it as compelling as any
opposing inference a reasonable person could draw from the facts alleged. Matrixx
Initiatives, Inc. v. Siracusano, 563 U.S. ___, 131 S. Ct. 1309, 1324 (2011).
This analysis of the complaint’s scienter allegations makes unnecessary any
determination as to the remaining elements of the § 10(b) and Rule 10b-5 claims.
If any one of the five required elements is missing, the claim fails. Paracor Fin.,
Inc. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1157 (9th Cir. 1996).
The district court correctly dismissed plaintiffs’ § 20(a) claim because
plaintiffs failed to allege an independent securities fraud violation. Paracor Fin.,
Inc., 96 F.3d at 1161 (holding a § 20(a) “controlling person liability” claim
requires a showing that a primary violation was committed).
The district court did not abuse its discretion by dismissing the Third
Amended Complaint with prejudice. It had previously identified specific
deficiencies and given plaintiffs multiple opportunities to amend the complaint to
correct those deficiencies. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d

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981, 1007 (9th Cir. 2009). Plaintiffs’ inability to do so is a “strong indication that
plaintiffs have no additional facts to plead.” In re Vantive Corp. Sec. Litig., 283
F.3d 1079, 1098 (9th Cir. 2002) partially abrogated on other grounds as
recognized in South Ferry LP, No. 2 v. Killinger, 542 F.3d 776, 784 (9th Cir. 2008)
AFFIRMED.

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