Anderson et al v. McGrath, et al

Filing 153

ORDER granting in part and denying in part 138 Motion to Dismiss; granting 139 Motion to Dismiss. Signed by Judge David G Campbell on 3/26/2013.(NVO)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

Carl Anderson, et al.,
Plaintiffs,

10
11

ORDER

v.

12

No. CV-11-01175-PHX-DGC

Gregory K. McGrath, et al.,
Defendants.

13
14
15

Plaintiffs are a group of more than one hundred individuals and entities that

16

purchased securities offered by D8 2010 Inc., f.k.a. Domin-8 Enterprise Solutions, Inc.

17

(“Domin-8”) and its predecessor limited liability company. The Court issued an order on

18

November 1, 2012, granting in part and denying in part Defendants’ motions to dismiss.

19

Doc. 132. The Court instructed Plaintiffs that they would be afforded one additional

20

opportunity to plead their claims.

21

November 16, 2012, re-alleging violations of federal securities laws against former

22

officers and directors of Domin-8. Doc. 133. Collectively, the director and officer

23

Defendants (“D&O Defendants”) filed a motion to dismiss for failure to state a claim and

24

Defendant Gregory K. McGrath filed a similar motion. Docs. 138, 139. The motions are

25

fully briefed. Docs. 142,143,147,148. For the reasons that follow, the Court will grant

26

McGrath’s motion and grant the D&O Defendants’ motion in part.1

Plaintiffs filed a third amended complaint on

27
1

28

The requests for oral argument are denied because the parties have fully briefed
the issues, the Court is very familiar with the case, and oral argument will not aid the
Court’s decision. Fed. R. Civ. P. 78(b).

1

I.

Background.

2

The factual basis surrounding Domin-8’s acquisition strategy, securities offerings,

3

and bankruptcy are laid out in detail in the complaint. Plaintiffs have added additional

4

quotations and factual allegations to the third amended complaint in response to the

5

Court’s finding that the second amended complaint contained impermissible puzzle

6

pleading that made it impossible for Defendants and the Court to sort out which

7

statements were alleged as the basis for Defendants’ liability. Doc. 132.

8

II.

9

Legal Standard.
1.

Pleading Standard.

10

When analyzing a complaint for failure to state a claim to relief under

11

Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light

12

most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th

13

Cir. 2009). To avoid a Rule 12(b)(6) dismissal, the complaint must plead enough facts to

14

state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S.

15

544, 570 (2007). This plausibility standard “is not akin to a ‘probability requirement,’

16

but it asks for more than a sheer possibility that a defendant has acted unlawfully.”

17

Ashcroft v. Iqbal, 556 U.S. 662, 678 (quoting Twombly, 550 U.S. at 556).

18

“In alleging fraud or mistake, a party must state with particularity the

19

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “To allege fraud with

20

particularity, a [claimant] . . . must set forth an explanation as to why the statement or

21

omission complained of was false or misleading.” In re GlenFed, Inc. Sec. Litig., 42 F.3d

22

1541, 1548 (9th Cir. 1994).

23

Securities claims must also meet the heightened pleading requirements of the

24

Private Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u-4(b)(1-2).

25

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 320 (2007). When plaintiffs

26

allege misleading statements or omissions, the PSLRA requires that the complaint

27

“specify each statement alleged to have been misleading” and “the reason or reasons why

28

the statement is misleading.” 15 U.S.C. § 78u-4(b)(1)(B). Plaintiffs must also “state

-2-

See

1

with particularity facts giving rise to a strong inference that the defendant acted with the

2

required state of mind.” 15 U.S.C. § 78u-4(b)(2)(A).

3

2.

4

To state a claim under Section 10(b) and Rule 10b-5, a plaintiff must plead: “(1) a

5

material misrepresentation or omission by the defendant; (2) scienter; (3) a connection

6

between the misrepresentation or omission and the purchase or sale of a security;

7

(4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss

8

causation.” Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296, 2301,

9

n.3 (2011); see also Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 341-42 (2005).

10

III.

Elements of 10b-5 Claim.

Analysis.

11

1.

McGrath.

12

This is not a class action. The claims against Defendant McGrath are brought

13

individually by 117 different Plaintiffs (including husbands and wives and individuals

14

who represent entities) and relate to many different securities offerings made at different

15

times and in different forms. Because this case concerns 117 separate claims, it is the

16

equivalent of 117 separate lawsuits and each Plaintiff must plead all of the elements of a

17

Rule 10b-5 claim and satisfy the exacting standards of the PSLRA and Rule 9(b). One

18

Plaintiff’s pleading of a claim cannot satisfy the pleading requirements for any other

19

claimant.

20

As a result, each Plaintiff must specifically point to a particular misrepresentation

21

or omission made by McGrath and demonstrate how it is connected to his or her purchase

22

of Domin-8’s securities. Dura Phrams., Inc., 544 U.S. at 341-42. He or she must also

23

show reliance on McGrath’s statement or omission.

24

requires that each Plaintiff specifically plead “each statement alleged to have been

25

misleading, [and] the reason or reasons why the statement is misleading.” 15 U.S.C. §

26

78u-4(b)(1)(B) (emphasis added). Plaintiffs’ task is made even more exacting by the

27

Ninth Circuit’s interpretation of Rule 9(b) that “[a]verments of fraud must be

28

accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.”

-3-

Id.

Furthermore, the PSLRA

1

Vess v. Ciba-Giegy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v.

2

Pickett, 137 F.33d 616, 627 (9th Cir. 1997)). “[A] plaintiff must set forth more than the

3

neutral facts necessary to identify the transaction. The Plaintiff must set forth what is

4

misleading about a statement, and why it is false.” In re GlenFed, 42 F.3d at 1548.

5

The third amended complaint spans 181 pages and 1,114 paragraphs. The first

6

part of the complaint contains a list of Plaintiffs and Defendants. Doc. 133 at 3-33.

7

Paragraphs 4-97 contain the names of each of the Plaintiffs, how much money they

8

invested, and which securities they acquired. Id. Although detailed, this section does

9

virtually nothing to plead the core elements of a Rule 10b-5 claim other than assert that

10

Plaintiffs purchased securities issued by Domin-8.

11

The next section of the complaint is labeled “General Allegations.” Id. at 33-136.

12

Covering 103 pages and 762 paragraphs, this section chronicles the financial history and

13

business dealings of Domin-8. Id. It describes various securities offerings upon which

14

Plaintiffs’ claims are based, and recounts many statements allegedly made by McGrath

15

concerning Domin-8’s financial and business prospects in connection with those

16

offerings. Id. This section does mention individual Plaintiffs by their last names, but

17

usually in generalized terms and in groups. For example, it alleges that eight Plaintiffs

18

purchased a specific securities offering “in reliance on McGrath’s prior statements” (id.

19

¶ 470) or that four Plaintiffs “relied on the positive statements that McGrath had been

20

making to them directly about the company for years” (id. ¶ 471). But these allegations

21

do not identify the specific “prior statements” or “positive statements” Plaintiff allegedly

22

heard and relied upon. It is possible that these allegations are referring to statements

23

attributed to McGrath in preceding paragraphs, but that is not clear – the reader is left to

24

guess which “prior statements” or “positive statements” were heard and relied on by

25

specific Plaintiffs.

26

At other times, the General Allegations section names some Plaintiffs and asserts

27

that they “relied on the statements that McGrath had communicated to Turpin about the

28

company’s growth potential,” but again without identifying the statements (id. ¶ 472).

-4-

1

Again, those statements might also be contained in the scores of preceding paragraphs

2

that set forth the narrative about Domin-8, but the reader cannot tell.

3

Sometimes the General Allegations section identifies a particular Plaintiff as

4

having attended a meeting or met with McGrath in his home, usually with no specific

5

date, and sometimes even recounts in general terms what McGrath said – “McGrath said

6

that Glen could expect a return of ten-to-thirty times his investments based on the

7

company’s acquisition strategy” (id. ¶ 474). But the details of the meeting, such as when

8

precisely it occurred, where it occurred, who attended, or what was said, are virtually

9

never provided. Moreover, these paragraphs identifying a specific misrepresentation

10

made to a specific Plaintiff appear haphazardly throughout the General Allegations

11

section of the complaint, with no clear organization and no way of tracking through the

12

section’s 762 paragraphs to see what was said to any particular Plaintiff.

13

Some portions of the General Allegations are a bit more specific. For example,

14

paragraphs 208-220 regarding the 2005 Series C Subordinated Convertible Debentures

15

contain statements from McGrath communicated to particular investors at a particular

16

meeting. Id. ¶¶ 208-220. While this level of detail is closer to meeting the threshold

17

necessary to state a claim, Plaintiffs still fail to adequately demonstrate how and why the

18

statements were false at the time they were made. Paragraph 218 states that the “import”

19

of the statements was that the offering was a “sound investment.” Id. ¶ 218. Future

20

events may have demonstrated that the offering was not a sound investment, but the fact

21

that the company eventually failed is not evidence that McGrath’s statements were false

22

at the time they were made. Despite modest additional detail, this subsection does not

23

remedy the complaint’s failure to plead not only what statements were made, but “the

24

reason or reasons why the statements[s] [are] misleading.” 15 U.S.C. § 78u-4(b)(1)(B).

25

The Plaintiffs’ actual legal claims appear in the complaint after the General

26

Allegations section. Doc. 133 at 136-180. Each claim describes a securities offering and

27

false statements or omissions McGrath allegedly made in connection with that offering,

28

but the claim usually does not say when the statements were made, where they were

-5-

1

made, or specifically to whom they were made, although the claims sometimes will say

2

that McGrath made statements to “Investors and their brokers” or something similarly

3

general (id. ¶ 872). The claim section often avers generally that “Investors relied” on

4

McGrath’s false statements and omissions (id. ¶ 909), but never identifies a specific false

5

statement that was made to a specific plaintiff or describes the context in which the

6

statement was made or how the Plaintiff relied on it in acquiring Domin-8 securities.

7

Investors are tied to specific claims only by a footnote at the beginning of each

8

claim that lists Plaintiffs who purchased the securities at issue in the claim. E.g., id. at

9

136 n. 3. The footnotes do nothing more than list Plaintiffs. Id. They say nothing about

10

when or where particular Plaintiffs purchased the securities at issue in the claim, nor do

11

they identify the misrepresentations or omissions upon which individual Plaintiffs

12

allegedly relied. The claims highlight several statements by McGrath that are allegedly

13

misleading and relate to the offering in question, but do not contain information

14

concerning which Plaintiffs had knowledge of and relied on which statements and how

15

those statements were misleading under the circumstances in which they were made.

16

To make these determinations for an individual Plaintiff, the reader would be

17

required to (1) identify a Plaintiff in the long footnote at the beginning of the claim,

18

(2) identify the specific McGrath misrepresentations alleged in the claim, (3) track back

19

through the 762 paragraphs of the General Allegations to see if the same

20

misrepresentations are mentioned there, and (4) read the many paragraphs surrounding

21

each misrepresentation to see if (5) any mention is made of the individual Plaintiff,

22

(6) when he or she heard the misrepresentation, (7) why the misrepresentation was false

23

or misleading in the context where it was made, (8) how the Plaintiff relied on the

24

misrepresentation, and (9) whether allegations of loss causation have been made with

25

respect to the Plaintiff and the misrepresentation. The same search would be required for

26

any omissions the Plaintiff may be asserting. After many hours of attempting this very

27

exercise in the third amended complaint, the Court has found it largely impossible to

28

determine which Plaintiffs heard which specific misrepresentations, when and how the

-6-

1

misrepresentations were heard, whether they were false in the context made, whether the

2

Plaintiff relied on them, and whether loss causation has been pled.

3

This is precisely the kind of connect-the-dots exercise that should not be required

4

of courts and defense counsel. Such “puzzle-pleading” – where the reader is left to put

5

together an enormously complex jigsaw puzzle – simply does not identify “‘the who,

6

what, when, where, and how’ of the misconduct charged” by each individual Plaintiff.

7

Vess, 317 F.3d at 1106. Nor does it enable the reader to identify, on a Plaintiff-by-

8

Plaintiff basis, “each statement alleged to have been misleading, . . . the reason or reasons

9

why the statement is misleading,” 15 U.S.C. § 78u-4(b)(1)(B), or the Rule 10b-5

10

elements of reliance and loss causation. Janus Capital Group, 131 S. Ct. at 2301, n. 3.

11

Plaintiffs’ second amended complaint was dismissed by the Court for the same reason.

12

Doc. 132 at 14-15.

13

It bears repeating that this is not a class action. This case consists of 117 separate

14

lawsuits that have been joined by Plaintiffs in one omnibus complaint. The fact that

15

Plaintiffs have elected to pursue their claims in a single complaint does not relieve them

16

of the obligation to plead their individual claims sufficiently. Generalized or group

17

allegations do not suffice when they fail to provide the detail required from each Plaintiff.

18

Three illustrations will suffice to demonstrate the pleading flaws in the third amended

19

complaint.

20

Plaintiff V. Jerome Mirkil invested $50,000 in the 2007 Series C Senior

21

Subordinated Convertible Debentures on or about July 15, 2008. Doc. 133 ¶ 63. A

22

search of the complaint reveals that the only other mention of Mirkil’s name (aside from

23

a footnote in the claims section) is in paragraph 711:

24
25
26
27

Plaintiffs Glidden, Hove, Maulhardt, and Mirkil were all
presented with unreasonably optimistic statements about the
company’s performance, the anticipated public offering, and
the safe and ‘lucrative’ nature of the debenture based on the
information that McGrath had communicated to GunnAllen
and relied on the same in purchasing the 2007 Series C Senior
Subordinated Convertible Debentures.

28

-7-

1

Doc. 133 ¶ 711. This paragraph falls far short of meeting the requirements the PSLRA or

2

Rule 9(b). It does not identify the actual statements that are alleged to be misleading or

3

why they are misleading. 15 U.S.C. § 78u-4(b)(1)(B). It does not explain “who, what,

4

when, where, and how” the statements were communicated to Mirkil. Vess, 317 F.3d at

5

1106 (citations omitted). It asserts reliance in an entirely conclusory fashion, without

6

explaining how Mirkil heard or relied on the statements.

7

Plaintiff Stephen Ross invested $150,000 in the 2007 Series C Senior

8

Subordinated Convertible Debentures on or about January 28, 2008. Doc. 133 ¶ 76. The

9

complaint alleges that Ross purchased the 2007 Series C Senior Subordinated

10

Convertible Debentures in March of 2008. Id. ¶ 666. Later, the complaint alleges that

11

Ross was among a group of investors that were “presented with unreasonably optimistic

12

statements about the company’s performance, the anticipated public offering, and the safe

13

and ‘lucrative’ nature of the debenture based on the information McGrath had

14

communicated to GunnAllen.” Id. ¶ 679. The nature, timing, and content of statements

15

made by McGrath to GunnAllen are not identified, nor are the nature, timing, and content

16

of the statements made by GunnAllen to Ross. The body of the complaint contains

17

numerous mentions of statements made to GunnAllen, but none of them is tied to Ross.

18

E.g., id. ¶¶ 453, 461, 476, 488, 522.

19

statements underlie Ross’s claim, why they are alleged to be false, how he relied on them,

20

or how they caused his loss.

The Court simply cannot determine which

21

Plaintiffs Frank W. and Karen L. Sciacca invested $50,000 in the Series A

22

Preferred Stock offering on or about February 2, 2007. Id. ¶ 84. At paragraph 470 the

23

complaint mentions them in a list – along with nine other investors – who “purchased

24

Series A preferred Stock between February and April 27, 2007 in reliance upon

25

McGrath’s prior statements[.]” Id. ¶ 470. Sciacca – presumably Frank – allegedly relied

26

on statements about the “company’s growth potential and projections” that McGrath

27

communicated to GunnAllen.

28

particular statements Sciacca heard, when he heard them, why they were false or

Id. ¶ 476.

But the complaint does not identify the

-8-

1

misleading, or how they caused his loss.

2

As these examples illustrate, even when the Court attempts to track the claims of

3

individual Plaintiffs through the mass pleading – something the Court and Defendants

4

should not be required to do – Plaintiffs have not pled all the elements of a Rule 10b-5

5

claim. Nor have they satisfied the exacting standards of the PSLRA and Rule 9(b). And

6

the Court certainly is not required to undertake this laborious exercise for all 117

7

Plaintiffs to see if the elements of a claim can be found in the complaint for any of them.

8

With respect to the element of reliance, Plaintiffs argue that the difficulties

9

inherent in pleading separate Rule 10b-5 claims for over 100 plaintiffs in a single lawsuit

10

are ameliorated by a presumption of reliance. There are two situations under which

11

courts have recognized a presumption of reliance: fraud-on-the-market, Basic Inc. v.

12

Levinson, 485 U.S. 224, 241-49 (1988), and omission-based claims, Affiliated Ute

13

Citizens of Utah v. U.S., 406 U.S. 128, 153-54 (1972).

14

Plaintiffs have not pled a fraud on the market theory or alleged that the securities

15

were traded on an efficient market. The Court therefore finds the Basic Inc. presumption

16

inapplicable. With respect to claims that primarily allege omissions, Affiliated Ute can

17

relax the reliance requirement, but the Ninth Circuit has held that the “presumption

18

should not be applied to cases that allege both misstatements and omissions unless the

19

case can be characterized as one that primarily alleges omissions.” Binder v. Gillespie,

20

184 F.3d 1059, 1064 (9th Cir. 1999). This case is not based primarily on omissions.

21

Numerous misrepresentations are alleged in the General Allegations portion of the

22

complaint. Additionally, even if the reliance requirements were relaxed, the complaint

23

fails to link specific Plaintiffs with specific omissions or to show why they were material

24

in the context of a particular Plaintiff’s purchases. No presumption of reliance applies,

25

and even if it did, it could not remedy the flaws in the complaint.

26

The Court concludes that Plaintiffs have failed to satisfy the pleading requirements

27

of the PSLRA and Rule 9(b) with respect to their Section 10(b) and Rule 10b-5 claims

28

against McGrath. The Court will grant McGrath’s motion to dismiss. Because Plaintiffs

-9-

1

have been unable to state a claim against McGrath in four different complaints, the

2

claims against him will be dismissed with prejudice.

3

2.

D&O Defendants.

4

In its November order, the Court found that Plaintiffs had adequately alleged that

5

several statements by Officers Buettin and Thisleton were misleading. Doc. 132 at 8-9.

6

The Court also found that Plaintiffs had adequately pled scienter with respect to those

7

officer Defendants.

8

Defendants’ general arguments with respect to reliance and loss causation were

9

unpersuasive and did not address them in detail.

Doc. 132 at 9-10.

At that stage, the Court found that D&O

10

D&O Defendants now argue that this claim (Claim VII in the third amended

11

complaint) is brought by a relatively small group of Plaintiffs and that all but two (Carl

12

and Rosalie Anderson) purchased their stock before the allegedly misleading statements

13

were made. Doc. 138 at 7 (citing Doc. 133 ¶¶ 6, 16, 28, 32, 38, 40, 44, 67, 70; id. at 174

14

n. 13). Plaintiffs argue that those who purchased stock before the statements were made

15

were still misled by Defendants’ failure to disclose, but this does not satisfy the PSLRA’s

16

burden of showing how particular statements became misleading as the result of

17

omissions. Nor does it show that individual Plaintiffs actually relied on those statements.

18

The Plaintiffs who purchased stock before the allegedly misleading statements were

19

made have not adequately pled reliance on those statements.

20

With respect to the Andersons, the complaint states: “Based on the information

21

that Buettin and Thisleton had communicated to Turpin and the supplement, as well as

22

the omitted information about the true state of the company’s financial affairs, Plaintiffs

23

Anderson purchased the 2008 Series D Subordinated Convertible Debentures.”

24

Doc. 133 ¶ 817. Defendants argue that because the allegedly misleading statements were

25

communicated to the Andersons through a third party stock broker – Turpin – Buettin and

26

Thisleton were not the “makers” of the statements upon which the Andersons relied.

27

Defendants’ theory rests on their interpretation of the Supreme Court’s holding in Janus

28

Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296, 2302 (2011). In Janus,

- 10 -

1

the Supreme Court found that “[f]or the purposes of Rule 10b-5, the maker of a statement

2

is the person or entity with ultimate authority over the statement, including its content

3

and whether and how to communicate it.” Id. Consequently, a consulting firm that had

4

participated in drafting portions of a financial disclosure could not be liable for its

5

statements, while the entity that actually signed and issued the statement could be.

6

Defendants argue that because a third-party broker communicated the substance of the

7

statements to the Andersons, the officers who originally issued the statements cannot be

8

liable.

9

Defendants’ reading of Janus conflicts with the Supreme Court’s conclusion in

10

Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, 522 U.S. 148, 172 (2008).

11

Stoneridge held that “[t]he maker of a fraudulent misrepresentation is subject to liability

12

. . . if the misrepresentation, although not made directly to the other, is made to a third

13

person and the maker intends or has reason to expect that its terms will be repeated or its

14

substance communicated to the other.” Id. (quoting The Restatement (Second) of Torts

15

§ 533, pp. 72-73(1977)). Plaintiffs have alleged that Buettin and Thisleton had ultimate

16

control over the statements in the letter they issued and that they intended those

17

statements to be communicated to potential investors. Furthermore, the language of

18

Rule 10b-5 anticipates liability for any person who “directly or indirectly” makes any

19

untrue statement.

20

communicated through a third party may establish that they were indirect, but it does not

21

mean that Buettin and Thisleton cannot be liable. The Court finds that Plaintiffs have

22

adequately alleged that Buettin and Thisleton were makers of allegedly misleading

23

statements and that the Andersons relied upon them.

The fact that the Andersons allege that the statements were

24

Finally, Defendants argue that Plaintiffs have not adequately alleged loss

25

causation. The complaint does seem to allege various theories of loss. It is sufficient that

26

Plaintiffs have pled that Buettin and Thistleton’s misstatements concerned capital

27

problems that drove the company to bankruptcy. Doc. 133 ¶¶ 1097-98. The Court finds

28

that loss causation has been adequately pled with regard to the only remaining claim by

- 11 -

1

the Andersons.

2

3.

3

Plaintiffs also assert claims against the Boards that approved all of the offerings

4

under Section 20(a) for failure to control McGrath, Buettin, and Thisleton. The claim

5

against the Boards for failure to supervise McGrath (claim VI) must be dismissed

6

because Section 20(a) requires a predicate violation of Rule 10b-5 and the Court has

7

ruled above that the 10b-5 claims against McGrath will be dismissed. See Paracor Fin.,

8

Inc. v. GE Capital Corp., 96 F.3d 1151, 1161 (9th Cir. 1996).

Section 20(a) Claims.

9

The claim against the 2009 Board for failure to supervise Buettin and Thisleton

10

(claim VIII) will also be dismissed. Though the Andersons’ predicate Rule 10b-5 claim

11

will survive the motion to dismiss, Plaintiffs have failed to allege sufficient facts to

12

demonstrate that the Board exercised actual control over Buettin and Thisleton.

13

Boilerplate allegations are insufficient to establish that someone is a control person, In re

14

Hansen Natural Corp. Sec. Litig., 527 F. Supp. 2d 1142, 1163 (C.D. Cal. 2007), and

15

“[t]he fact that a person is a CEO or other high ranking officer within a company does not

16

create a presumption that he or she is a ‘controlling person.’” S.E.C. v. Todd, 642 F.3d

17

1207, 1223 (9th Cir. 2011). The only additional allegations are that Board members

18

participated in meetings with Buettin and Thistleton and in the day-to-day operations of

19

the company, but none of the allegations are specific to particular individuals on the

20

Board, nor do they allege any facts or actions beyond titles and meetings that demonstrate

21

control. The Court will dismiss the Section 20(a) claim against the 2009 board.

22

IT IS ORDERED:

23

1.

24

Defendant McGrath’s motion to dismiss (Doc. 139) is granted with

prejudice.

25
26
27
28

- 12 -

1

2.

D&O Defendants’ motion to dismiss (Doc. 138) is granted in part and

2

denied in part. Claim VII is the only count that survives and only with

3

respect to Plaintiffs Carl and Rosalie Anderson. The remaining claims

4

against the D&O Defendants are dismissed with prejudice.

5

Dated this 26th day of March, 2013.

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 13 -