Jackson v. Fischer et al

Filing 309

ORDER by Judge Hamilton denying 304 Motion for Reconsideration (pjhlc1, COURT STAFF) (Filed on 10/7/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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Case No. 11-cv-2753-PJH
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SUZANNE D. JACKSON,
Plaintiff,

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United States District Court
Northern District of California

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v.

ORDER DENYING MOTION FOR
LEAVE TO FILE MOTION FOR
RECONSIDERATION

WILLIAM FISCHER, et al.,
Defendants.

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The motion of defendants Jon Sabes, Steven Sabes, and Marvin Siegel for leave

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to file a motion for reconsideration of the court’s September 21, 2015 order is DENIED.

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Defendants have not shown that a material difference in fact or law exists from that which

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was presented to the court before entry of the September 21, 2015 order, or that new

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material facts have emerged or that the law has changed since entry of the order. See

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Civ. L.R. 7-9(b)(1), (2). They appear to be attempting to assert that reconsideration is

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warranted because the court failed to consider dispositive legal arguments that were

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presented before entry of the order, see Civ. L.R. 7-9(b)(3), but that argument fails.

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Defendants claim that the court erred in considering “the evidentiary effect” of the

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stipulated judgment, because the parties did not brief that issue, and briefed only the

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“offensive preclusive effect” of the stipulated judgment. They contend that the court

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improperly concluded that, even though plaintiff failed to meet the heightened pleading

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requirements of Rule 9(b) and the PSLRA, the stipulated judgment in the adversary

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proceeding created a factual dispute precluding dismissal. Defendants assert that the

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court “should reconsider its September 2015 order based on the controlling law holding

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that stipulated judgments are not sufficient to meet the pleading requirements of the

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PSLRA, have no evidentiary effect, and are ultimately just inadmissible hearsay.”

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Defendants have misconstrued the court’s order. In their motion to dismiss,

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defendants argued that the § 10(b) claims against Fischer should be dismissed for failure

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to state a claim. Plaintiff’s response was that “the issue” of primary liability against

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Fischer “has been settled” by virtue of Fischer’s admission in the stipulated judgment that

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he defrauded plaintiff in the sale of securities in the defendant companies, and that

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defendants are barred from challenging the § 10(b) primary liability claims against

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United States District Court
Northern District of California

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Fischer under the doctrines of collateral estoppel and res judicata.
The court denied the motion to dismiss the § 10(b) claims against Fischer for

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failure to state a claim, but also found that “the judgment in the adversary proceeding

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does not have a preclusive effect on the § 10(b) claim or on any issue relating to the

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§ 10(b) claim.” Clearly, the court did not find – as defendants claim – that the stipulated

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judgment “meets the pleading requirements of the PSLRA.”

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The court did find that the stipulated judgment was sufficient to create an issue of

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fact as to whether plaintiff can proceed with this claim against Fischer. However, the

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defendants were not seeking summary judgment. They were challenging the pleadings.

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The court’s order was issued in relation to a motion to dismiss for failure to state a claim.

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In that context, to say that there are factual issues that preclude dismissal does not

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compel a decision with regard to evidentiary proof of the elements of a cause of action. It

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means that there appear to be factual issues that must be resolved by means of a

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dispositive motion or a trial, at which time evidence will be presented. Thus, defendants’

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argument that the stipulated judgment is “inadmissible hearsay” and has “no evidentiary

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value” is meaningless in the present context.

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The court also explained that having issued four lengthy orders on the adequacy

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of the pleadings, it was unwilling to continue the process, and had determined that the

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case should go forward with discovery and dispositive motions. Part of what factored into
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the court’s decision was Fischer’s agreement in the adversary proceeding that he had

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defrauded plaintiff. While plaintiff’s allegation of the fact of that agreement is not

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sufficient to state a claim of primary liability under the PSLRA, the court is not amenable

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at this point to dismissing the § 10(b) claim against Fischer with prejudice as defendants

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apparently would prefer.

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IT IS SO ORDERED.

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Dated: October 7, 2015

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__________________________________
PHYLLIS J. HAMILTON
United States District Judge

United States District Court
Northern District of California

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