Securities And Exchange Commission v. Ehrenkrantz King Nussbaum, Inc. et al
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)
IN CLERK'S OFFIC!
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
U.S. D/STRurtCOURT E.O.N.Y
SEP2 6 2012
MEMORANDUM & ORDER
OS-CV-4643 (MKB) (GRB)
ENRENKRANTZ KING NUSSBAUM, INC.,
ANTHONY OTTIMO and BRENDAN E.
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
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
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
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
report and recommendation. Magistrate Judge Brown will rule on Defendant Murray's request
for a hearing.
Dated: September 26,2012
Brooklyn, New York
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?