Securities And Exchange Commission v. Ehrenkrantz King Nussbaum, Inc. et al

Filing 87

MEMORANDUM & ORDER: The Court finds that Count Seven was properly dismissed. The Court refers Plaintiff's 84 Motion for Remedies to Magistrate Judge Brown for a report and recommendation. Magistrate Judge Brown will rule on Defendant Murray's request for a hearing. SO ORDERED by Judge Margo K. Brodie, on 9/26/2012. C/mailed. (Latka-Mucha, Wieslawa)

Download PDF
FILf,D IN CLERK'S OFFIC! UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------}C SECURITIES AND EXCHANGE COMMISSION, U.S. D/STRurtCOURT E.O.N.Y * SEP2 6 2012 * BROOKLYN OFFICE Plaintiff, v. MEMORANDUM & ORDER OS-CV-4643 (MKB) (GRB) ENRENKRANTZ KING NUSSBAUM, INC., ANTHONY OTTIMO and BRENDAN E. MURRAY, Defendants. ----------------------------------------------------------------}C MARGO K. BRODIE, United States District Judge: On March IS, 2012, Judge Hurley granted Plaintiffs motion for summary judgment as to its claims that Defendant Brendan E. Murray, the only remaining defendant, l violated Section 17(a) of the Securities Act, Section 10(b) of the E}Cchange Act and Rule 10b-S and that Defendant Murray aided and abetted Enrenkrantz King Nussbaum, Inc. ("EKZ") in violating Section lS(c)(1) of the E}Cchange Act. (Docket No. 73, Mar. IS, 2012 Memorandum & Order at 2S-27.) Judge Hurley denied Plaintiffs motion for summary judgment with regard to Count Seven, which alleged that Defendant Murray aided and abetted EKZ in violating Section lS(b)(7) of the E}Cchange Act and Rule lSb7-1. Id at 27-29. Judge Hurley found that a question of fact e}Cisted as to whether Defendant Murray had actual knowledge ofEKZ's alleged primary violation. Id Judge Hurley deferred the calculation of damages and determination as to disgorgement and injunctive relief, pending the resolution of Defendant Murray's liability on Count Seven. Id at 30. 1 Plaintiff s claims against Enrenkrantz King Nussbaum, Inc. ("EKZ") and Anthony Ottimo were dismissed with prejudice pursuant to a settlement on June 9, 2008. ,. On May 14,2012, Plaintiff moved to dismiss Count Seven with prejudice, noting that Defendant Murray had not consented to its dismissal. (Docket No. 79.) The Court granted Plaintiffs motion on May 16,2012. (Docket No. 80.) Defendant Murray then filed objections to the Court's dismissal of Count 7. (Docket Nos. 82,83.) Having reviewed Defendant Murray's submissions, the Court finds that Count Seven was properly dismissed and the Court refers Plaintiffs Motion for Remedies, (Docket No. 84), to Magistrate Judge Brown for a report and recommendation. Under Rule 15 of the Federal Rules of Civil Procedure, a party may amend its pleadings with the opposing party's written consent or the court's leave. Fed. R. Civ. P. 15(a)(2). "The court should freely give leave when justice so requires." Id. The Second Circuit has held that a court may "permit a withdrawal of a claim under Rule 15 ... subject to the same standard of review as a withdrawal under Rule 41(a)." Wakefield v. Northern Telecom, Inc., 769 F.2d 109, 114 nA (2d Cir. 1985) (internal citation omitted); see also Coultrip v. Pfizer, Inc., 06 Civ. 9952, 2011 WL 1219365, at *6 (S.D.N.Y. Mar. 24, 2011) ("The standard for permitting an amendment withdrawing a claim is the same as for voluntarily dismissing an action under Rule 41(a) of the Federal Rules of Civil Procedure."). Under Rule 41, the court should allow a voluntary dismissal "if the defendant will not be prejudiced thereby." Cantanzano v. Wing, 277 F.3d 99, 109 (2d Cir. 2001) (quoting Wakefield, 769 F.2d at 114). The Second Circuit has identified factors to be considered in deciding whether to grant a motion to dismiss a claim without prejudice: "(1) the plaintiffs diligence in bringing the motion, (2) any undue vexatiousness on the plaintiffs part, (3) the extent to which the suit has progressed, including the defendant's efforts and expense in preparation for trial, (4) the duplicative expense ofrelitigation, and (5) the adequacy of the 2 i' plaintiffs explanation for the need to dismiss." Kwan v. Schlein, 634 F.3d 224, 230 (2d Cir. 2011) (quoting Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990)). Here, Plaintiff has moved to dismiss the claim with prejudice, and, thus, there is no risk that Defendant Murray will be forced to defend himself again. Furthermore, Plaintiff timely filed its motion to dismiss Count Seven following Judge Hurley's March 15,2012 Memorandum & Order. Defendant Murray has failed to demonstrate any prejudice he will suffer based on the dismissal of Count Seven, or any bad faith on Plaintiffs part in prosecuting its claim under Count Seven. Rather, Defendant Murray appears to want to use the trial on Count Seven to relitigate issues previously decided by Judge Hurley. (Docket No. 83, Def. Aff. Opp'n Mot. Dismiss ~ 10 ("In its march [sic] 2012 decision the Court states that 'Here, the undisputed evidence demonstrated that the mutual fund families did not approve of market timing and actively sought to detect and stop it.' Clearly nothing could be further from the truth.")). Even if the parties were to proceed to trial on Count Seven, and the jury rendered a verdict in favor of Defendant Murray, that judgment would have no effect on Judge Hurley's determination that Plaintiff violated Section 17(a) of the Securities Act, Section lOeb) of the Exchange Act and Rule 10b-5 and that Defendant Murray aided and abetted EKN's violation of Section 15(c)(1) of the Exchange Act. For the foregoing reasons, the Court finds that Count Seven was properly dismissed. The Court refers Plaintiffs Motion for Remedies, (Docket No. 84), to Magistrate Judge Brown for a 3 report and recommendation. Magistrate Judge Brown will rule on Defendant Murray's request for a hearing. SO cIJoERED: S/Judge Brodie ODIE istrict Judge Dated: September 26,2012 Brooklyn, New York 4

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?