Jeffers v. Ameriprise Financial Services, Inc. et al

Filing 93

MEMORANDUM Opinion and Order: Defendant Ameriprise's motion to dismiss 88 is granted. This case is dismissed with prejudice. Signed by the Honorable Thomas M. Durkin on 3/31/2015:Mailed notice(srn, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FRANK JEFFERS, ON HIS OWN BEHALF AND
ON BEHALF OF ALL THOSE SIMILARLY
SITUATED,

Plaintiff,
v.
AMERIPRISE FINANCIAL SERVICES, INC.,
Defendant.

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No. 12 C 8522
Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER
Plaintiff Frank Jeffers alleges in a Second Amended Complaint that he
purchased stock in Inland Western Retail Real Estate Investment Trust (“Inland
Western”), a Maryland-incorporated real estate investment trust (“REIT”), on the
recommendation of his financial adviser, defendant Ameriprise Financial Services,
Inc. (“Ameriprise”). 1 On his own behalf, and on behalf of a putative class, Jeffers
alleges that Ameriprise breached its fiduciary duties to its clients by, among other
things, failing to: (1) disclose its financial relationship with Inland Western; and (2)
independently evaluate Inland Western’s statements about the company’s
performance and value. Ameriprise has moved to dismiss Jeffers’s complaint with

Inland Western changed its name to Retail Properties of America, Inc. on March 8,
2012, shortly before the end of the time period relevant to this lawsuit. See Sadler v.
Retail Prop. of Am., Nos. 12 C 5882 et al., 2014 WL 2598804, at *1 n.2 (N.D. Ill.
June 10, 2014). For ease of reference, the Court will refer to the company as “Inland
Western” throughout this opinion.

1

prejudice as untimely and inadequately pled. For the following reasons, the Court
grants Ameriprise’s motion.
BACKGROUND
I.

The Court’s June 10, 2014 Opinion Dismissing Jeffers’s First
Amended Complaint.
Jeffers’s case was originally one of five related putative class actions filed by

plaintiffs seeking compensation for losses they suffered on their Inland Western
investments. See Sadler, 2014 WL 2598804, at *1. All five cases asserted claims
against Inland Western and certain of its directors and officers (“D&Os”); only
Jeffers asserted claims against Ameriprise. Id. On June 10, 2014, the Court held
that the plaintiffs in each case had failed to state a claim for relief against any
defendant. Id. at *24. The Court dismissed with prejudice all claims against Inland
Western and the D&Os on three main grounds: (1) the plaintiffs lacked standing to
assert breaches of fiduciary duty that the D&Os owed to Inland Western, id. at *11;
(2) the plaintiffs’ allegations failed to overcome the presumption that the D&Os had
“acted on an informed basis, in good faith[,], and in the honest belief that” their
actions were in the company’s best interests, id. at *16 (quoting Boland v. Boland,
31 A.3d 529, 548 (Md. 2011) (internal quotation marks omitted); and (3) the parties’
written subscription agreements foreclosed any equitable remedy for unjust
enrichment, id. at *20. Jeffers’s First Amended Complaint (“FAC”) asserted four
counts against Ameriprise: (1) breach of fiduciary duty, id. at *16-19; (2) unjust
enrichment, id. at *21; (3) violation of the Illinois Securities Law of 1953 (“ISL”), id.
at *22-23; and (4) violation of Ameriprise’s duties under Financial Industry

Regulatory Authority (“FINRA”) rules and regulations, id. at *23-24. The Court
dismissed Jeffers’s breach-of-fiduciary-duty claim because he had not adequately
alleged that Ameriprise’s actions proximately caused his losses. Id. at *19.
Alternatively, the Court held that Jeffers’s fraud-based allegations did not satisfy
Rule 9(b)’s heightened pleading requirements. Id. Jeffers’s tag-along unjust
enrichment claim, based on the same allegations, failed for the same reasons. Id. at
*21. The Court held that the ISL’s then-applicable five-year statute of repose barred
Jeffers’s securities-fraud claim. Id. at *22; see also id at *23 (holding in the
alternative that the complaint’s allegations failed to satisfy Rule 9(b)). In doing so,
the Court rejected Jeffers’s attempt to bootstrap his untimely claim to the purported
claims of unidentified “Ameriprise customers”:
The Jeffers complaint alleges that the Plaintiff class purchased shares
through Ameriprise at $10.00 per share between March 2004 and
September 2005. Jeffers, R. 21 ¶ 37. The complaint was not filed until
2012, seven years after the proposed class purchased their shares. To
counter this stark fact, the Plaintiffs argue that their complaint
contains allegations that Ameriprise solicited and sold shares of the
REIT all the way up to 2012, that between 2009 and 2012 Ameriprise
engaged in Account Statement Identifier Deception (ASID), and that
members of the class continued to reinvest their dividends to acquire
additional shares of the REIT. Jeffers, R. 52 at 11. But a careful
reading of the complaint demonstrates that the Plaintiff class does not
allege that anyone in the class purchased stock any time after 2005—
i.e., they do not connect their own personal investing activity to
anything related to Ameriprise after the sales in 2004 and 2005.
Compare Jeffers, R. 21 ¶ 37 (Plaintiff initially purchased 8,460
interests of [RPAI] at $10.00 per share.”), with id. ¶ 82 (“Ameriprise
customers were induced into purchasing . . . shares of the REIT from
2004 to 2012.”) (emphasis added).
See id. at *22 (emphasis in original). Finally, the Court dismissed Jeffers’s FINRA
claim with prejudice because he had not shown that FINRA’s rule and regulations

contain an implied private right of action. Id. at *24. With respect to his other
claims, the Court gave Jeffers leave to file an amended complaint if he believed that
he could correct the deficiencies that the Court had identified. Id.
II.

The Second Amended Complaint
Jeffers’s Second Amended Complaint (“SAC”) is substantially similar to his

FAC. He does not pinpoint a particular purchase date, but the Court again infers
that he and other putative class members purchased Inland Western stock at some
point during the company’s initial offering (March 2004 to September 2005). R. 78 ¶
14; see also Sadler, 2014 WL 2598804, at *22 (construing the identical allegation in
the FAC to mean that Jeffers purchased Inland Western stock at some point
between March 2004 and September 2005). Ameriprise prepared private placement
memoranda (“PPMs”) in connection with that offering and “other selling materials
and pitches” approved by the D&Os. R. 78 ¶¶ 22-23, 75. According to Jeffers, the
PPMs

contained

“inconsistent,”

“misleading,”

and

“inaccurate”

statements

regarding: (1) expected investment returns; (2) interest payments; and (3) the
company’s intended use of the investment proceeds. Id. at ¶¶ 23-24. Jeffers alleges
that an Ameriprise agent, Judy Vicks, told him “shortly before [he] made [his]
investment” that: (1) Inland Western “‘was a fantastic investment’ and that he
‘couldn’t go wrong’ by investing [in the trust] since it was real estate”; and (2) the
company “was yielding ‘10-12% returns.’” Id. at ¶ 95. Ameriprise did not disclose to
investors that Inland Western had paid Ameriprise to solicit investments. Id. at ¶¶
25-26. It also failed to disclose the fees that it charged its clients in connection with

their Inland Western investments, including a 1% “due-diligence fee.” Id. at ¶¶ 7881. Notwithstanding this fee, Jeffers alleges that Ameriprise did not independently
evaluate the investment. Instead, it relied entirely on information that the D&Os
provided. Id.
Jeffers’s investment in Inland Western was essentially illiquid for most of the
time period relevant to this lawsuit. Id. at ¶ 61. After the company suspended its
share repurchase program in November 2008, shareholders who wanted to sell their
stock had “to find a buyer for their shares in a thinly-traded secondary market or
accept a tender offer.” Id. Jeffers alleges that Inland Western’s shareholders
received three such offers from CMG Acquisition Co., LLC (“CMG”). CMG initially
offered to purchase Inland Western shares on December 21, 2009 for $1.50 per
share. Id. at ¶ 63. Inland Western’s Board of Directors (the “Board”) advised
shareholders not to accept the offer based upon the company’s own estimate of the
stock’s value ($6.85 per share as of December 31, 2009). Id. at ¶ 65. On December
10, 2010, Inland Western filed a proxy statement with the SEC announcing that the
company intended to ask its shareholders to approve an initial listing of the
company’s stock and a “recapitalization,” which if approved would entail a 10-to-1
reverse stock split. Id. at ¶ 68. Inland Western told investors that the reverse stock
split would not affect the value of their holdings: they would own fewer shares, but
those shares would be worth more money. See Sadler, 2014 WL 2598804, at *3-4
(citing the company’s SEC disclosures). Several weeks later, the company estimated
that “each share of Inland Western . . . would be valued at approximately $17.125

after the stock split and [r]ecapitalization.” Id. On February 4, 2011, 94.8% of
Inland Western’s shareholders voted in favor of publicly listing the company’s stock
and adopting the recapitalization plan. Id. at ¶ 69. On May 27, 2011, CMG made
another tender offer, this time at $3.00 per share. Id. at ¶ 63. 2 Within a month after
CMG’s renewed offer, Inland Western increased its estimated per-share value from
$6.85 to $6.95. Id. at ¶ 66. CMG made a third tender offer on October 27, 2011, of
$3.50 per share. Id. at ¶ 67. The Board advised shareholders to reject the offer
because it “believe[d] that the value of Inland Western shares exceed[ed] the offer
price.” Id. at ¶ 67.
On March 21, 2012, shortly before Inland Western announced pricing details
for its IPO, Ameriprise participated in a conference call with Inland Western “to
address how the share would be priced after the reverse stock split and stock
dividend in anticipation of” the IPO. Id. at ¶ 69. The SAC alleges that Ameriprise
relayed Inland Western’s statements to its clients, although it is unclear when or
how. Id. According to Jeffers, Ameriprise told investors that Inland Western’s
“management would not confirm the valuation on the call, [but] it did state that
there was no material change in the REIT’s financial condition and essentially
agreed it was reasonable for Ameriprise to use the $17.375 valuation . . . .” Id. 3 On
March 23, 2012, Inland Western filed a registration statement with the SEC stating
that it intended to offer 31,800,000 shares of stock at an anticipated price of
The SAC does not allege whether the Board advised its shareholders to reject
CMG’s $3.00 per-share tender offer.

2

Presumably the increase from $17.125 to $17.375 per share was attributable to the
company’s revised estimate of its pre-split value (from $6.85 to $6.95).

3

“between $10.00 and $12.00 per share.” Id. at ¶ 70. The company issued a revised
estimate of $8.00 per share on April 5, 2012. Id. at ¶ 71. The public offering took
place four days later, on April 9, 2012. Id. at ¶ 3. Jeffers alleges that, post-IPO, the
“split-adjusted value of the stock is less than $3 per share.” Id. at ¶ 73.
Jeffers claims that Ameriprise breached its fiduciary duty to him by: (1)
“allowing [Inland Western] to disseminate materially misleading and inaccurate
information to its customers through, inter alia, SEC filings and other public
statements and disclosures”; (2) “failing to disclose hidden fees it was earning for
selling” Inland Western stock; and (3) “failing to perform the required due diligence
that its clients were paying for.” Id. at ¶ 97. He furthers alleges that “[a]t some
point between 2009 and 2012,” Ameriprise changed the format of its monthly
account statements in order to disguise the stock’s poor performance. Id. at ¶¶ 8589. His unjust enrichment claim is based upon the same allegations underlying his
fiduciary-duty claim. Id. at ¶¶ 101-03.
LEGAL STANDARD
A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See, e.g.,
Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th
Cir. 2009). A complaint must provide “a short and plain statement of the claim
showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), sufficient to
provide defendant with “fair notice” of the claim and the basis for it. Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). This standard “demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009). While “detailed factual allegations” are not required, “labels
and conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Twombly, 550 U.S. at 555. The complaint must “contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “‘A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.’”
Mann v. Vogel, 707 F.3d 872, 877 (7th Cir. 2013) (quoting Iqbal, 556 U.S. at 678). 4
In applying this standard, the Court accepts all well-pleaded facts as true and
draws all reasonable inferences in favor of the non-moving party. Mann, 707 F.3d at
877.
ANALYSIS
Ameriprise argues that the ISL’s five-year statute of repose bars Jeffers’s
common-law claims because the ISL provides relief for the conduct that Jeffers has
alleged. See 815 ILCS 5/13(D). 5 It also argues that the SAC’s allegations—some of

In his response to Ameriprise’s motion to dismiss, Jeffers cites a hodge-podge of
pre- and post-Twombly standards. R. 91 at 2. Contrary to his argument, Ameriprise
is not required to show that “it is impossible for the plaintiff to prevail under any
set of facts that could be proven consistent with the [complaint’s] allegations.” Id.
(citing Forseth v. Vill. of Sussex, 199 F.3d 363, 368 (7th Cir 2000)); see Twombly, 550
U.S. at 562-63 (“retir[ing]” the “no set of facts” formulation of the motion-to-dismiss
standard).
4

On August 5, 2013, the Illinois Legislature amended § 5/13(D) by removing the
five-year statute of repose. See Ill. Legis. Serv. P.A. 98-174 (H.B. 2969) Public Act
98-74. The amendment became effective on August 5, 2013. Id. Jeffers effectively
concedes that the change does not apply retroactively. R. 91 at 2-5.

5

which are identical to allegations that the Court specifically rejected in its prior
opinion—are inadequately pled.
I.

Jeffers Cannot Recover Damages for Ameriprise’s Alleged Conduct
in Connection With His Initial Purchase. 6
The ISL makes it unlawful for any person:
(F) To engage in any transaction, practice or course of business in
connection with the sale or purchase of securities which works or tends
to work a fraud or deceit upon the purchaser or seller thereof.
[. . .]
(G) To obtain money or property through the sale of securities by
means of any untrue statement of a material fact or any omission to
state a material fact necessary in order to make the statements made,
in the light of the circumstances under which they were made, not
misleading.
[. . .]
(I) To employ any device, scheme or artifice to defraud in connection
with the sale or purchase of any security, directly or indirectly.

815 ILCS 5/12(F), (G), and (I). The version of the ISL in effect when Jeffers filed this
lawsuit contained a five-year statute of repose:
No action shall be brought for relief under this Section or upon or
because of any of the matters for which relief is granted by this Section
after 3 years from the date of sale; provided, that if the party bringing
Jeffers argues that Ameriprise cannot assert the ISL’s statute of repose in a Rule
12(b)(6) motion because it is an affirmative defense. R. 91 at 2-3. The Court may
grant a motion to dismiss based upon a statute of limitation where, as here, the
defense is apparent on the face of the complaint. See O'Gorman v. City of Chicago,
777 F.3d 885, 889 (7th Cir. 2015) (“[I]f a plaintiff alleges facts sufficient to establish
a statute of limitations defense, the district court may dismiss the complaint on that
ground.”). The date Jeffers filed this lawsuit, October 23, 2012, is a matter of public
record, and he alleges in the SAC that he purchased Inland Western stock at some
point between March 2004 and September 2005. R. 78 ¶ 14. When Jeffers acquired
“knowledge that he had a cause of action,” R. 91 at 2-3, is irrelevant for purposes of
the ISL’s statute of repose.
6

the action neither knew nor in the exercise of reasonable diligence
should have known of any alleged violation of subsection E, F, G, H, I
or J of Section 12 of this Act which is the basis for the action, the 3
year period provided herein shall begin to run upon the earlier of:
(1) the date upon which the party bringing the action has actual
knowledge of the alleged violation of this Act; or
(2) the date upon which the party bringing the action has notice of
facts which in the exercise of reasonable diligence would lead to actual
knowledge of the alleged violation of this Act; but in no event shall the
period of limitation so extended be more than 2 years beyond the
expiration of the 3 year period otherwise applicable.
815 ILCS 5/13(D) (emphasis added). Courts have interpreted the emphasized
language to extend the statute of repose to “claims that do not directly invoke the
[ISL].” Klein v. George G. Kerasotes Corp., 500 F.3d 669, 671 (7th Cir. 2007) (citing
Tregenza v. Lehman Bros., Inc., 678 N.E.2d 14, 15 (Ill. App. Ct. 1st Dist. 1997)). The
plaintiff in Klein alleged that the defendants improperly forced him to sell his
shares in a closely held corporation at a price that was based on a false valuation of
the company. Id. at 670. He sued the defendants—the corporation and its officers
and directors—for common law fraud, breach of fiduciary duty, and punitive
damages. Id. at 671. The Seventh Circuit held that the ISL applies to claims by
stock sellers. Id. at 673-74 (“To decide that sellers are not included under the [ISL]
would require the court to disregard” language in the statute applicable to “any
person” and “any party in interest.”). Id. at 674. Because the plaintiff could have
filed a claim for relief under §§ 5/12(F) and (I), id. at 672, the ISL’s five-year statute
of repose barred his common-law claims. Id. at 674; see also Tregenza, 678 N.E.2d at
14-15 (holding that the ISL’s statute of repose barred the plaintiffs’ claims for

“breach of fiduciary duty, fraud, and negligent misrepresentation arising out of the
sale of the stock”).
Jeffers acknowledges Klein and Tregenza, but argues that the Court should
instead apply the Illinois Appellate Court’s decision in Carpenter v. Exelon
Enterprises Co., LLC, 927 N.E.2d 768 (Ill. App. Ct. 1st Dist. 2010). The plaintiffs in
that case were minority shareholders in a company controlled by the defendants,
which held a majority of the company’s stock. Id. at 770-71. Using their control over
the company, the defendants approved a series of transactions that required the
minority shareholders to sell their stock on disadvantageous terms. Id. The
plaintiffs sued the defendants for breach of fiduciary duty and civil conspiracy. Id.
The defendants, citing Klein and Tregenza, argued that the claims were untimely
under § 5/13(D). Id. at 773. The Carpenter court held that the ISL’s statute of repose
did not govern the plaintiffs’ common-law claims because the ISL does not provide a
remedy to stock sellers. Id. at 774-77. The point on which Carpenter and Klein
disagree—whether sellers are entitled to relief under §§ 5/12(F) and (G)—is
irrelevant in this case. Jeffers is suing as a purchaser of Inland Western stock, and
the ISL plainly provides relief to purchasers. See Carpenter, 927 N.E.2d at 773
(distinguishing Tregenza on that basis).
The Court once again rejects Jeffers’s attempt to skirt the ISL’s statute of
repose. Jeffers alleges that he purchased Inland Western stock in September 2005,
at the latest—more than seven years before he filed his original complaint. At
another point in his complaint, he alleges that “Ameriprise customers were induced

into purchasing . . . shares of the REIT from 2004 to 2012.” R. 78 ¶ 80 (emphasis
added). Construing the same allegation in the FAC, see R. 21 ¶ 82, the Court held
that the alleged actions of “Ameriprise customers” did not affect the timeliness of
Jeffers’s claims. See Sadler, 2014 WL 2598804, at *22. In his response to
Ameriprise’s motion to dismiss the SAC, Jeffers relies on the same allegation to
support his argument that his claims are timely without even acknowledging the
Court’s contrary ruling. See R. 91 at 3. Some of Jeffers’s allegations are
indistinguishable from allegations in a typical ISL securities-fraud complaint.
Those allegations include: (1) misrepresentations and material omissions in the
PPMs, R. 78 ¶¶ 22-24, 75-76; (2) Vick’s optimistic statements about the company’s
performance and prospects, id. at ¶ 95; (3) Ameriprise’s failure to disclose its
financial relationship with Inland Western, id. at ¶¶ 25-26; and (4) Ameriprise’s
failure to disclose fees that it charged in connection with the sale, id. at ¶¶ 78-79. In
fact, with the exception of Vick’s alleged statements, these same allegations were
the basis of Jeffers’s untimely ISL claim. See R. 23-26, 77-78, 80-81, 120-21; Sadler,
2014 WL 2598804, *22-23. Jeffers cannot avoid the ISL’s statute of repose by
repleading his securities-fraud claim under common-law labels. See Klein, 500 F.3d
at 674; Tregenza, 678 N.E.2d at 14-15. The Court concludes that § 5/13(D) bars
Jeffers’s common-law claims insofar as they are based on Ameriprise’s alleged
conduct in connection with his purchase of Inland Western stock.

II.

The SAC’s Other Allegations Do Not State a Claim for Relief
Jeffers’s complaint alleges some conduct that occurred within the five-year

period before he filed this lawsuit. Specifically, Jeffers alleges that Ameriprise: (1)
changed the format of its monthly account statements “[a]t some point between
2009 and 2012” to disguise Inland Western’s losses, R. 78 ¶¶ 85-89; and (2) failed to
discover Inland Western’s true financial condition before it was revealed to
investors in 2012. 7 Ameriprise argues that these allegations fail to state a claim for
relief. The Court agrees.
A.

“Account Statement Identifier Deception”

Jeffers alleges that at some point between 2009 and 2012 Ameriprise added a
column to its monthly account statements labeled “Beginning Value.” R. 78 ¶ 85.
According to Jeffers, this column is misleading because the term “Beginning Value”
does not refer to the investment’s original value when purchased. Id. at ¶ 86.
Rather, it refers to the value of the asset as of the start of that month. Id. Jeffers’s
allegation that Ameriprise added the column to deceive shareholders is implausible.
The phrase “Beginning Value” in a monthly statement—see, e.g., R. 78-8 (“April 1,
2012 – April 30, 2012”)—plainly indicates the value at the “beginning” of that
month. Jeffers’s argument that it actually suggests original value is idiosyncratic,
Jeffers also argues that “after the initial offering, Plaintiff and other members of
the class continued to invest their dividends to acquire additional shares of the
REIT upon Ameriprise’s advice and recommendation.” R. 91 at 3. He raised this
same argument in defense of his ISL claim in the FAC. R. 52 at 17. As Ameriprise
pointed out in its reply in support of its motion to dismiss the FAC, Jeffers had not
alleged any facts in that complaint that would support a claim against Ameriprise
based on reinvested dividends. R. 60 at 10-11. There are no allegations in the SAC
that would support such a claim, either.
7

at best. Whether or not Jeffers believes that this is useful information, Ameriprise
did not breach its fiduciary duty by reporting it to investors. Even if the account
statements were confusing, the purported harm to investors is far-fetched.
Reasonable investors know what they’ve purchased and at what price. Ameriprise
did not harm investors by failing to remind them of those facts on a monthly basis.
B.

Jeffers’s Due-Diligence Allegations

Jeffers’s allegations that Ameriprise “should have known” that Inland
Western’s shares were overvalued prior to the company’s IPO fare no better. There
is no basis in the complaint to infer that the company’s internal valuations in
December 2009 ($6.85) and June 2011 ($6.95) were false or misleading when they
were announced. With respect to its December 2009 valuation, the company
emphasized that it was an estimate, only:
The estimated value was determined by the use of a combination of
different indicators and an internal assessment of value utilizing a
common means of valuation under the direct capitalization method as
of December 31, 2009. No independent appraisals were obtained. As
there is no established public trading market for our shares of common
stock, this estimated value may not reflect the actual market value of
your shares on any given date; and there can be no assurances that
stockholders would receive $6.85 per share for their shares if any such
market did exist, that the estimated value reflects the price or prices at
which our common stock would or could trade if it were listed on a
national stock exchange or included for quotation on a national system,
or that stockholders will be able to receive such amount for their
shares at any time in the future.
R. 78 at ¶ 65. Inland Western published the June 2011 valuation with similar
caveats:
Because this is only an estimate, we may subsequently revise any
estimated valuation that is provided, and at a minimum, expect to

revisit valuation as of September 30, 2012, unless Inland Western has
completed or is in the midst of completing a liquidity event which may
involve the listing of its current shares on a national stock exchange.
Please note that Inland Western has previously announced that we
intend to pursue the initial listing of our existing common stock on a
national securities exchange. The estimated per-share value is only an
estimate made solely for the purposes noted above and may not reflect
the actual value of our shares or the price that a third party may be
willing to pay to acquire our shares.
See “Frequently Asked Questions Regarding Estimated Value,” dated June 20,
2011, available at http://www.sec.gov/Archives/edgar/data/1222840/00011046591
1035529/a11-15223_1ex99d1.html; 8 see also R. 78 ¶ 66 (quoting a portion of the justcited filing). The company used this same $6.95 valuation to calculate the estimated
per-share value of the company’s stock after the 10-to-1 reverse stock split
($17.375). See Sadler, 2014 WL 2598804, at *3-4. Based upon the $6.95 valuation,
the Board recommended that shareholders reject CMG’s October 2011 tender offer.
Id.

at

¶

67.

The

Court

previously

rejected

Jeffers’s

“Monday-morning

quarterbacking” in connection with his claims against the D&Os. Sadler, 2014 WL
2598804, at *13. Any valuation of an unlisted REIT is inherently imprecise, id., a
fact that Ameriprise disclosed to its investors in their account statements. See R.
78-7 (The issuer-provided REIT valuation “is not intended to reflect the value you
may realize if the issuer liquidates the security or if you sell your interests.”). The
fact that Inland Western’s shares were worth less in the market than anticipated
does not establish that the company’s earlier estimates were unfounded. Sadler,

The Court may consider publicly-filed documents in connection with Ameriprise’s
motion to dismiss without converting it into a motion for summary judgment. See
Sadler, 2014 WL 2598804, at *1 n.4 (collecting cases).

8

2014 WL 2598804, at *13. The Court made these observations in the context of the
D&Os’ business-judgment-rule defense, id., but the same reasoning supports
dismissal here. It would be pure speculation to suppose that Ameriprise would have
valued the company at or below the tender-offer prices if it had “independently”
evaluated the company. The fact that the shares were valued at $3.00 on the open
market six months after the last tender offer does not support a reasonable
inference that Ameriprise breached its fiduciary duty to Jeffers and other putative
class members.
The SAC also fails to adequately allege that Ameriprise’s conduct
proximately caused Jeffers’s loss. In response to the Court’s opinion dismissing his
claim for failing to adequately allege proximate cause, Jeffers added the following
conclusory allegation:
Plaintiff and the proposed class would not have purchased the REIT
but for the conduct of Defendant Ameriprise, thereby incurring actual
loss and damage in the form of each investor’s losses, commissions
paid, and opportunity costs.
R. 78 ¶ 99. It is insufficient to allege that Jeffers would not have purchased the
stock—and thus would have not have lost money when the stock turned out to be
unprofitable—but for Ameriprise’s conduct. See Bastian v. Petren Res. Corp., 892
F.2d 680, 683 (7th Cir. 1990) (rejecting the plaintiffs’ argument that it was “enough
to allege that they would not have invested but for the fraud; for if they had not
invested, they would not have lost their money, and the fraud was therefore the
cause of their loss”). It is apparent that Jeffers has not sufficiently alleged that
Ameriprise’s conduct caused his losses because he cannot. The fact that his response

brief does not even cite, much less analyze, the Court’s prior opinion reinforces this
conclusion. The Court concludes, therefore, that dismissal with prejudice is
warranted.
CONCLUSION
The Court grants Ameriprise’s motion to dismiss, R. 87. This case is
dismissed with prejudice.

ENTERED:

Dated: March 31, 2015

Honorable Thomas M. Durkin
United States District Judge