Takiguchi et al v. MRI International, Inc. et al

Filing 141

ORDER that Plaintiffs shall have until 5/27/2014 to file a Third Amended Complaint. IT IS FURTHER ORDERED that the Court DEFERS consideration of 133 Plaintiffs' Motion for Preliminary Injunction until the filing of the Third Amended Complaint. Signed by Judge Howard D. McKibben on 05/06/2014. (Copies have been distributed pursuant to the NEF - AC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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SHIGE TAKIGUCHI, FUMI NONAKA,
)
MITSUAKI TAKITA, KAORUKO KOIZUMI, )
TATSURO SAKAI, SHIZUKO ISHIMORI, )
YOKO HATANO, YUKO NAKAMURA,
)
HIDEHITO MIURA, YOSHIKO TAZAKI, )
MASAAKI MORIYA, HATSUNE HATANO, )
SATORU MORIYA, HIDENAO TAKAMA,
)
SHIGERU KURISU, SAKA ONO,
)
KAZUHIRO MATSUMOTO, KAYA
)
HATANAKA, HIROKA YAMAJIRI,
)
KIYOHARU YAMAMOTO, JUNKO
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YAMAMOTO, KOICHI INOUE, AKIKO
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NARUSE, TOSHIMASA NOMURA, and
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RITSU YURIKUSA, Individually and )
on Behalf of All Others Similarly )
Situated,
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Plaintiffs,
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vs.
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MRI INTERNATIONAL, INC., EDWIN J. )
FUJINAGA, JUNZO SUZUKI, PAUL
)
MUSASHI SUZUKI, LVT, INC., dba
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STERLING ESCROW, and DOES 1-500, )
)
Defendants.
)
_________________________________ )

2:13-cv-01183-JAD-VCF
ORDER

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Before the court are the defendants’ motions to dismiss for
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failure to state a claim pursuant to Federal Rule of Civil
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Procedure 12(b)(6) (#102, #105).

Plaintiffs have responded (#110,

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#117), and defendants have replied (#113, #122).
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Defendants Junzo

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Suzuki, Paul Musashi Suzuki, and Edwin Fujinaga move to dismiss all

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of plaintiffs’ claims against them, and defendant MRI moves to

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dismiss the securities and intentional fraud claims asserted

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against it.

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plaintiffs’ fraud claims – both securities and state –

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complaint fails to satisfy the heightened pleading standards of

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Federal Rule of Civil Procedure 9(b) and the Private Securities

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Litigation Reform Act (“PSLRA”).

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that the complaint fails to establish that the purchases and sales

All moving defendants argue that with respect to
the

All moving defendants also argue

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at issue were transactions in domestic securities or domestic

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transactions in other securities and as such plaintiffs’ securities

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claims must be dismissed.

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argue that plaintiffs have not complied with the PSLRA’s procedural

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requirements for pursuing a class action with respect to the

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securities claims.

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leave to amend their complaint to the extent the court finds it

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deficiently plead.

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Additionally, the Suzuki defendants

Plaintiffs oppose the motions but also seek

In considering a motion to dismiss under Rule 12(b)(6), the

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court must accept as true all material allegations in the complaint

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as well as all reasonable inferences that may be drawn from such

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allegations.

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2000).

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the light most favorable to the nonmoving party.

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States, 234 F.3d 428, 435 (9th Cir. 2000).

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conclusions are not entitled to the presumption of truth.

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v. Iqbal, 556 U.S. 662, 679 (2009).

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LSO, Ltd. v. Stroh, 205 F.3d 1146, 1150 n.2 (9th Cir.

The allegations of the complaint also must be construed in
Shwarz v. United

However, legal
Ashcroft

A complaint “must contain sufficient factual matter . . . to
state a claim to relief that is plausible on its face.”
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Iqbal, 556

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U.S. at 678 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

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555 (2007)).

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pleads factual content that allows the court to draw the reasonable

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inference that the defendant is liable for the misconduct alleged.”

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Id.

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conclusions, a formulaic recitation of the elements of a cause of

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action, or “naked assertions devoid of further factual

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enhancement.”

A claim is plausible on its face “when the plaintiff

A pleading is insufficient if it offers only labels and

Id. (internal punctuation omitted).

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

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circumstances constituting fraud. . . . Malice, intent, knowledge,

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and other conditions of a person’s mind may be alleged generally.”

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Fed. R. Civ. P. 9(b).

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state with particularity the circumstances constituting the fraud,

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including an account of the “time, place, and specific content of

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the false representations as well as the identities of the parties

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to the misrepresentation.”

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1058, 1066 (9th Cir. 2004).

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‘specific enough to give defendants notice of the particular

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misconduct which is alleged to constitute the fraud charged so that

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they can defend against the charge and not just deny that they have

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done anything wrong.’”

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1019 (9th Cir. 2001) (internal punctuation omitted).

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satisfied if the plaintiff pleads “(i) some of the specific

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customers defrauded, (ii) the type of conduct at issue, (iii) the

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general time frame in which the conduct occurred, and (iv) why the

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conduct was fraudulent.”

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Clinical Labs., 245 F.3d 1048, 1051 (9th Cir. 2001).

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defendants are alleged to be part of the fraud, “Rule 9(b)‘does not

To comply with Rule 9(b), the complaint must

Edwards v. Marin Park, Inc., 356 F.3d
“[A]llegations of fraud must be

Bly-Magee v. California, 236 F.3d 1014,
Rule 9(b) is

United States v. Smithkline Beecham

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Where several

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allow a complaint to ... lump multiple defendants together but

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require[s] plaintiffs to differentiate their allegations” as to

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each defendant.

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2011).

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Destfino v. Reiswig, 630 F.3d 952, 958 (9th Cir.

Plaintiffs’ section 10(b) and Rule 10b-5 claim must satisfy

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not only the Rule 9(b) standard but also the pleading requirements

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of the PSLRA.

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694, 701 (9th Cir. 2012).

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plead with particularity both falsity and scienter.”

In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d
The PSLRA requires “that the complaint
Reese v.

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Malone, – F.3d –, 2014 WL 555911, at *5 (9th Cir. Feb. 13, 2014).

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To plead falsity, “the complaint shall specify each statement

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alleged to have been misleading, the reason or reasons why the

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statement is misleading, and, if an allegation regarding the

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statement or omission is made on information and belief, the

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complaint shall state with particularity all facts on which that

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belief is formed.”

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as ‘a mental state embracing intent to deceive, manipulate, or

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defraud.’”

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to each act or omission alleged to violate this chapter, stat[ing]

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with particularity facts giving rise to a strong inference that the

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defendant acted with the required state of mind.” 15 U.S.C. §

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78u-4(b)(2)(A).

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merely plausible or reasonable–it must be cogent and at least as

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compelling as any opposing inference of nonfraudulent intent.’”

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Reese, 2014 WL 555911, at *6.

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defendant[ ] made false or misleading statements either

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intentionally or with deliberate recklessness.’ . . . Facts showing

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mere recklessness or a motive to commit fraud and opportunity to do

15 U.S.C. § 78u-4(b)(1).

Id. at *6.

“Scienter is defined

Pleading scienter requires, “with respect

“A strong inference of scienter ‘must be more than

“The inference must be that ‘the

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so provide some reasonable inference of intent, but are not

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independently sufficient.”

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all the allegations holistically when determining whether scienter

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has been sufficiently pled.”

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Id. at *6-7.

The court must “review

Id. at *7.

The court has considered the parties’ pleadings and the second

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amended complaint filed in this matter and concludes that

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plaintiffs’ complaint lacks the particularity required to support

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the claims of fraud and securities violations, and lacks sufficient

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factual allegations with respect to their claims of breach of

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fiduciary duty, constructive trust, and any theory of alter ego

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liability.

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to amend.

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which to file a third amended complaint to allege:

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Therefore, plaintiffs should be afforded an opportunity
Plaintiffs shall have to and including May 27, 2014, in

1. Facts that allow a plausible inference that the purchases

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and sales at issue were “domestic transactions in other

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securities.”1

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247, 130 S. Ct. 2869, 2884 (2010).

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sufficient facts to support a reasonable inference that the

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plaintiffs incurred irrevocable liability to take and pay for the

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securities in the United States, that the seller(s) incurred

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irrevocable liability to deliver the securities in the United

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States, and/or that title to the securities was transferred within

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the United States.

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Ficeto, 677 F.3d 60, 67-68 (2d Cir. 2012);

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Morrison v. National Australia Bank Ltd., 561 U.S.
The complaint should allege

See Absolute Activist Value Master Fund Ltd. v.

2. Any additional facts showing that the plaintiffs’
securities claims are not barred by the relevant statutes of

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Plaintiffs appear to admit that
securities listed on a domestic exchange.

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the

transactions were not in

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repose;
3. As to each defendant, the who, what, when, where, and how

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of plaintiffs’ state law fraud and federal securities claims,

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specifically: each defendants’ knowledge of, involvement in, and/or

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role in the alleged fraud, what specific misstatements, if any,

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were made by each defendant, the general time period in which the

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alleged misrepresentations were made, where the alleged

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misrepresentations were made, and the manner in which each

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defendant made alleged misrepresentations to the plaintiffs.

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Plaintiffs are not, however, required to assert in detail the time,

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place, and manner in which each of them individually received the

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alleged misrepresentations;

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4. Facts showing the statements were false when made, the

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reasons why they were false, and facts supporting a strong

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inference that each defendant acted with the requisite scienter;

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5. Factual allegations supporting a reasonable inference that
the Suzuki defendants offered or sold securities to the plaintiffs;
6. More than conclusory assertions regarding the Suzuki
defendants’ ability to control MRI;
7. Sufficient factual allegations to support a reasonable

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inference that there existed either a fiduciary and/or a

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relationship of special trust between the plaintiffs and the Suzuki

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defendants; and

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8. To the extent plaintiffs intend to pursue a theory of alter

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ego against defendant Fujinaga, sufficient facts to support a

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reasonable inference that Fujinaga “influenced and governed” MRI,

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that “[t]here is such unity of interest and ownership that” MRI and

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Fujinaga “are inseparable from each other,” and that “[a]dherence
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to the corporate fiction of a separate entity would sanction fraud

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or promote a manifest injustice.” Nev. Rev. Stat. § 78.747.

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Finally, to the extent plaintiffs intend to pursue their

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complaint as a securities class action, plaintiffs shall fully

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comply with the procedural requirements for doing so set forth in

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15 U.S.C. §§ 78u-4(a)(2)(A) and 78u-4(a)(3)(A).

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The court defers consideration of the plaintiffs’ motion for

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preliminary injunction (#133) until the filing of the third amended

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complaint and any responses thereto.

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IT IS SO ORDERED.

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DATED: This 6h day of May, 2014.

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____________________________
UNITED STATES DISTRICT JUDGE

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