Securities And Exchange Commission v. Sells et al

Filing 75

ORDER by Judge Claudia Wilken DENYING DEFENDANTS 72 MOTION FOR CERTIFICATION OF ORDER FOR APPEAL. (ndr, COURT STAFF) (Filed on 10/15/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SECURITIES AND EXCHANGE
COMMISSION,

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v.
CHRISTOPHER SELLS and TIMOTHY
MURAWSKI,

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United States District Court
For the Northern District of California

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ORDER DENYING
DEFENDANTS’ MOTION
FOR CERTIFICATION
OF ORDER FOR
APPEAL

Plaintiff,

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No. C 11-4941 CW

Defendants.
________________________________/

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Defendant Christopher Sells moves for an order certifying an

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interlocutory appeal of the August 10, 2012, order denying

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Defendants’ motion to dismiss.

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in the motion for certification.

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for appeal of two issues:

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1.

Defendant Timothy Murawski joins
Defendants seek certification

Where a defendant did not “make” an alleged misstatement

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under Janus Capital Group, Inc. v. First Derivative

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Traders, 131 S.Ct. 2296 (2011), may the SEC nonetheless

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bring scheme liability claims under Rule 10b-5(a) and

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(c) premised on such a misstatement?

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2.

Does the holding of Janus apply to claims under Section
17(a) of the Securities Act?

Having reviewed Defendants’ moving papers, the Court

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determines that the matter is suitable for decision without

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further briefing or oral argument, and DENIES the motion for the

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reasons set forth below.

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15, 2012 is hereby VACATED.

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The motion hearing noticed for November

LEGAL STANDARD
Pursuant to 28 U.S.C. § 1292(b), a district court may certify

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an appeal of an interlocutory order only if three factors are

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present.

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“controlling question of law.”

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that a question of law is controlling requires a showing that the

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“resolution of the issue on appeal could materially affect the

First, the issue to be certified must involve a
28 U.S.C. § 1292(b).

Establishing

United States District Court
For the Northern District of California

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outcome of litigation in the district court.”

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Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982) (citing U.S.

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Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966)).

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In re Cement

Second, there must be “substantial ground for difference of

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opinion” on the issue.

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ground for difference of opinion exists where reasonable jurists

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might disagree on an issue’s resolution, not merely where they

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have already disagreed.”

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643 F.3d 681, 688 (9th Cir. 2011).

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28 U.S.C. § 1292(b).

“A substantial

Reese v. BP Exploration (Alaska) Inc.,

Third, it must be likely that an interlocutory appeal will

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“materially advance the ultimate termination of the litigation.”

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28 U.S.C. § 1292(b); In re Cement, 673 F.2d at 1026.

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the legislative policy underlying § 1292 that the statute be used

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only in exceptional situations, an interlocutory appeal should be

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certified only when doing so “would avoid protracted and expensive

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litigation.”

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interlocutory appeal would delay resolution of the litigation, it

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should not be certified.

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Inc., 839 F.2d 1347, 1348 (9th Cir. 1988).

In re Cement, 673 F.2d at 1026.

In light of

If, by contrast, an

See Shurance v. Planning Control Int’l,

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“Section 1292(b) is a departure from the normal rule that

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only final judgments are appealable, and therefore must be

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construed narrowly.”

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1064, 1068 n.6 (9th Cir. 2002).

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statute’s requirements strictly, and should grant a motion for

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certification only when exceptional circumstances warrant it.

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Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978).

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seeking certification of an interlocutory order has the burden of

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establishing the existence of such exceptional circumstances.

James v. Price Stern Sloan, Inc., 283 F.3d
Thus, the court should apply the

The party

Id.

United States District Court
For the Northern District of California

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A court has substantial discretion in deciding whether to grant a

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party’s motion for certification.

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176, 180 (N.D.N.Y. 1996), rev’d in part on other grounds, 106 F.3d

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1125 (2nd Cir. 1997).

Brown v. Oneonta, 916 F. Supp.

DISCUSSION

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Defendants do not meet their burden under § 1292 to show that
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it is likely that an appeal will materially advance the ultimate
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termination of this litigation.

On the contrary, an immediate

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appeal is likely to delay, rather than advance, the end of this
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case.

The complaint initiating this action was filed on October

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6, 2011, and after the Court issued its decision denying
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Defendants’ motion to dismiss, Defendants filed their answers to
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the complaint on August 24, 2012.

The parties have engaged in

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discovery, and the Court will hold a case management conference on
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October 24, 2012, to set deadlines and pretrial and trial dates in
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this action.

To certify an interlocutory appeal at this juncture

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would certainly delay the litigation, whereas an interlocutory
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appeal could only materially advance the ultimate termination of
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this litigation if the Ninth Circuit accepts the appeal and rules

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in favor of Defendants on all the above-mentioned issues.

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Furthermore, as Defendants acknowledge, resolution of the

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issues on which they seek appeal would not address all claims

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asserted against either Defendant.

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Sells urges, the SEC’s First Claim for Relief under Rule 10b-5(a)

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and (c) and its Third Claim for Relief under Section 17(a) must be

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dismissed, then . . . [t]he primary focus of the SEC’s remaining

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claims against Mr. Sells would [ ] be aiding-and-abetting.”).

See Mot. at 7 (“If, as Mr.

United States District Court
For the Northern District of California

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Thus, even if the Ninth Circuit were to rule favorably for

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Defendants on interlocutory appeal, the parties would nevertheless

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continue to litigate this action.

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meet their burden to show the likelihood that immediate appeal

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would materially advance the ultimate termination of the

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litigation.

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Defendants therefore fail to

CONCLUSION

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For the foregoing reasons, the Court DENIES Defendants’

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motion for certification of an interlocutory appeal.

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72.)

(Docket No.

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IT IS SO ORDERED.

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Dated: 10/15/2012
CLAUDIA WILKEN
United States District Judge

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