Rush v. Walter Energy Inc
MEMORANDUM OPINION AND ORDER DENYING WITHOUT PREJUDICE (41 in 2:12-cv-00281- VEH, 33 in 2:12-cv-00829-VEH) MOTION to Dismiss the Consolidated Amended Class Action Complaint to the rights of Defendants and Plaintiffs as set forth herein. Further, all requests to present oral argument are TERMED as MOOT. Signed by Judge Virginia Emerson Hopkins on 1/29/2013. Associated Cases: 2:12-cv-00281-VEH, 2:12-cv-00829-VEH(JLC)
2013 Jan-29 PM 12:53
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
PETER J. RUSH, Individually and
on Behalf of All Others Similarly
Situated, et al.,
WALTER ENERGY, INC., KEITH
CALDER, WALTER J.
SCHELLER, and NEIL
MICHAEL CARNEY, Individually
and on Behalf of All Others
WALTER ENERGY, INC., et al.
) Case No.: 2:12-CV-281-VEH
) Case No.: 2:12-CV-829-VEH
MEMORANDUM OPINION AND ORDER
Plaintiff Peter Rush (“Mr. Rush”) initiated this securities fraud litigation (the
“Rush Action”) against Defendants on January 27, 2012. (Doc. 1). Pursuant to the
parties’ stipulation, on June 6, 2012, the Government of Bermuda Contributory and
Public Service Superannuation Pension Plans and Stephen C. Beaulieu, as Trustee
of the Stephen C. Beaulieu Revocable Trust (the “Pension Plans and Beaulieu
Revocable Trust”) became the lead plaintiffs in the Rush Action. (Doc. 25). On
August 20, 2012, an amended complaint was filed which consolidated Michael
Carney, et al. v. Walter Energy, Inc., et al., 2-12-CV-829-VEH (the “Carney Action”)
with the Rush Action. (Doc. 35).1
Pending before the court are Defendants’ Motion To Dismiss (Doc. 41) filed
on October 4, 2012, in the lead Rush Action and an identical Motion To Dismiss
(Doc. 33) filed in the member Carney Action on that same date.2 Both Motions To
Dismiss have been fully briefed. (See Docs. 43-46, 50 filed in Rush Action; Docs.
35-38, 42 filed in Carney Action). For the reasons explained below, the Motions To
Dismiss the consolidated amended class action complaint are DENIED WITHOUT
Plaintiffs filed this amended consolidate class action complaint in the Rush Action only.
Also pending in the Rush and Carney Actions are several requests to present oral argument.
(Docs. 42, 47 (filed in the Rush Action); Docs. 34, 39 (filed in the Carney Action)).
A Rule 12(b)(6) motion attacks the legal sufficiency of the complaint. See Fed.
R. Civ. P. 12(b)(6). The Federal Rules of Civil Procedure require only that the
complaint provide “‘a short and plain statement of the claim’ that will give the
defendant fair notice of what the plaintiff’s claim is and the grounds upon which it
rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957), abrogated by Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 545 (2007); see also Fed. R. Civ. P. 8(a).
While a plaintiff must provide the grounds of his entitlement to relief, Rule 8
does not mandate the inclusion of “detailed factual allegations” within a complaint.
Twombly, 550 U.S. at 545 (quoting Conley, 355 U.S. at 47). However at the same
time, “it demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “[O]nce a claim has
been stated adequately, it may be supported by showing any set of facts consistent
with the allegations in the complaint.” Twombly, 550 U.S. at 563.
“[A] court considering a motion to dismiss can choose to begin by identifying
pleadings that, because they are no more than conclusions, are not entitled to the
assumption of truth.” Iqbal, 129 S. Ct. at 1950. “While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Iqbal, 129 S. Ct. at 1950. “When there are well-pleaded factual allegations, a court
should assume their veracity and then determine whether they plausibly give rise to
an entitlement to relief.” Id. (emphasis added). “Under Twombly’s construction of
Rule 8 . . . [a plaintiff’s] complaint [must] ‘nudge [any] claims’ . . . ‘across the line
from conceivable to plausible.’ Ibid.” Iqbal, 129 S. Ct. at 1950-51.
A claim is plausible on its face “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 129 S. Ct. at 1949. “The plausibility standard is not akin
to a ‘probability requirement,’ but it asks for more than a sheer possibility that a
defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).
In their lawsuit, Plaintiffs primarily claim that Defendants have violated §
10(b) the Securities Exchange Act of 1934 (the “Act”). (Doc. 35 at 74-77).3 Such
an implied statutory cause of action typically consists of the following prima facie
(1) a material misrepresentation or omission by the defendant; (2)
scienter; (3) a connection between the misrepresentation or omission and
the purchase or sale of a security; (4) reliance upon the
misrepresentation or omission; (5) economic loss; and (6) loss causation.
Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, 552 U.S. 148, 157, 128 S. Ct.
The referenced page numbers correspond with the court’s electronic numbering system
generated under CM/ECF.
761, 768, 169 L. Ed. 2d 627 (2008) (citing Dura Pharmaceuticals, Inc. v. Broudo,
544 U.S. 336, 341–342, 125 S. Ct. 1627, 161 L. Ed. 2d 577 (2005)); see Edward J.
Goodman Life Income Trust v. Jabil Circuit, 594 F.3d 783, 789 (11th Cir. 2010)
Plaintiffs also assert a violation of § 20(a) of the Act. (Doc. 35 at 77-79).
Defendants maintain that the viability of Plaintiffs’ § 20(a) claim is contingent upon
the actionable nature of their § 10(b) count. (Doc. 43 at 3 (“Plaintiffs’ Section 20(a)
claim fails as a matter of law because it is entirely derivative of their defective
Section 10(b) claim.”)). The gravamen of Defendants’ Motions To Dismiss is that
“[n]one of Plaintiffs’ claims is well-pleaded.” (Doc. 43 at 6).
As a preliminary matter in opposition, Plaintiffs point out that, from a
procedural standpoint, Defendants have relied upon the declaration of Jay M. Ezelle
and the materials attached thereto in challenging the sufficiency of Plaintiffs’
allegations included in their consolidated amended class action complaint. (See, e.g.,
Doc. 44; Docs. 44-1– 44-17).
Pursuant to Rule 12(d):
If, on a motion under Rule 12(b)(6) or 12(c), matters outside the
pleadings are presented to and not excluded by the court, the motion
must be treated as one for summary judgment under Rule 56. All parties
must be given a reasonable opportunity to present all the material that
is pertinent to the motion.
Fed. R. Civ. P. 12(d) (emphasis added). “The court has discretion as to whether to
accept material beyond the pleading that is offered in conjunction with a 12(b)(6)
motion. However, once the court decides to accept matters outside the pleading, it
must convert the motion to dismiss into one for summary judgment.” Property
Management & Investments, Inc. v. Lewis, 752 F.2d 599, 604 (11th Cir. 1985)
Defendants have replied that the court is not obligated to convert their Motions
To Dismiss to ones for summary judgment because the authenticity of the outside
documents that they have included in the record is not genuinely disputed by
Plaintiffs. (See, e.g., Doc. 50 at 6 n.2). In presenting this position, the court observes
that Defendants do not mention, much less address, the other prong of that test, i.e.,
are these extrinsic documents “central” to Plaintiffs’ claims? See Speaker v. U.S.
Dept. of Health and Human Services, 623 F.3d 1371, 1379-80 (11th Cir. 2010)
(“Because the materials relied upon by the district court are not disputed (at least at
this juncture), and because they are central to Plaintiff’s claim, we similarly
incorporate their contents to determine whether Speaker has alleged sufficient facts
to state a claim under the Privacy Act.”) (footnote omitted) (emphasis added).
Additionally, Defendants have not undergone a separate analysis of each
document offered and instead categorically maintain that they all are appropriately
part of a Rule 12(b)(6) record and do not trigger Rule 12(d)’s mandatory conversion
requirement. Defendants’ lack of a detailed and thorough approach to this issue
means that, as the movants, Defendants have not persuaded this court that a Rule
12(d) conversion is unnecessary in this instance.
In opposing the 12(b)(6) dismissal of their consolidated lawsuit, Plaintiffs
similarly have asked the court to examine extrinsic information. (See, e.g., Doc. 46;
Docs. 46-1 – 46-5). Under such circumstances, the court believes that the prudent
course of action is to deny both Motions To Dismiss without prejudice to Defendants’
right to file a preliminary motion for summary judgment in the lead Rush Action
(which will likewise apply in the consolidated Carney Action) that is in compliance
with Appendix II of the court’s uniform initial order (Doc. 3), no later than February
18, 2013. Alternatively, Defendants should answer the consolidated amended class
action complaint no later than February 18, 2013.
If Defendants do elect to file a Rule 56 motion, then the court will allow
Plaintiffs the option to respond (under the time period applicable to filing an
opposition under Appendix II) with Rule 56(f) affidavit(s) regarding any areas of
discovery that they believe are essential to conduct before they may reasonably
respond to the arguments presented on summary judgment. (See Doc. 45 at 7
(suggesting that if the court elects to convert under Rule 12(d), then it should likewise
provide Plaintiffs “with a reasonable opportunity to take discovery”)); see also
Reflectone, Inc. v. Farrand Optical Co., Inc., 862 F.2d 841, 843 (11th Cir. 1989)
(“The party seeking to use [R]ule 56(f) ‘may not simply rely on vague assertions that
additional discovery will produce needed, but unspecified, facts,’ but rather he must
specifically demonstrate ‘how postponement of a ruling on the motion will enable
him, by discovery or other means, to rebut the movant’s showing of the absence of
a genuine issue of fact.’” (citing Wallace v. Brownell Pontiac–GMC Co., 703 F.2d
525, 527 (11th Cir. 1983))). In such affidavit(s), Plaintiffs also should indicate how
long they believe the requested discovery will take to complete.
If the consolidated cases proceed along the Rule 56(f) path, then the court will
separately establish deadlines for Defendants to respond and for Plaintiffs to reply to
the Rule 56(f) issues. If the court permits Plaintiffs to conduct limited discovery
under the Rule 56(f) standard, then it also will establish a time period for that process
to be completed as well as the deadlines for the parties to finish their summary
If the cases proceed without Plaintiffs’ interposing of a Rue 56(f) affidavit,
then the parties should simply adhere to the schedule and other requirements of
Accordingly, the Motions To Dismiss are DENIED WITHOUT PREJUDICE
to the rights of Defendants and Plaintiffs as set forth herein. Further, all requests to
present oral argument are TERMED as MOOT.
DONE and ORDERED this 29th day of January, 2013.
VIRGINIA EMERSON HOPKINS
United States District Judge
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