Turner v. Shengdatech, Inc. et al

Filing 67

OPINION re: 37 MOTION to Dismiss Consolidated Amended Class Action Complaint, filed by A. Carl Mudd, Sheldon B. Saidman. For the foregoing reasons, the consolidated amended class action complaint is dismissed as to Mudd and Saidman. This opinion will resolve docket item number 37. (Signed by Judge Thomas P. Griesa on 8/22/2013) (ja)

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UNITED STi\TES DISTRICf COURT
SOurHlltN PISTRICf OF NEW YORK
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In re SHl:NGDATECH, INC. SECURITIES
LITIGA'I'ION

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11 Civ. 01918 (TPG)

OPINION

D, ~fendant<; A. Carl Mudd and Sheldon B. Saidman move to dismiss this class
action as :tgaiI1st them. The motion is directed to the consolidated amended class action
complain t.
Tllis case involves a company called Shengdatech, and there are substantial
allegatior s of the issuance of false and misleading financial information by the company.
T] le

complaint names certain individual defendants who were employees and

officers of the Company. It also names A. Carl Mudd and Sheldon B. Saidman as
defendarl ts, who were outside directors rather than employees or officers of the Company.
Tlle complaint alleges no specific wrongdoing by Mudd or Saidman. The only
allegatio[ s ex~ressly naming them are contained in paragraphs 24 and 25 of the complaint,
which sta :e:

2,1.

Defendant A. Carl Mudd ("Mudd") served as a director of the

Company since February 23,2007. Defendant Mudd signed the Company's
,
Fc:,rms :lO-K for the years ending 2006-2009.

25.

Defendant Sheldon B. Saidman ("Saidman") served as a directo of

the Company since February 23, 2007. Defendant Saidman signed th
Company's Forms 10-K for the years ending 2006-2009.
'The actual allegations of wrongdoing in the complaint are against a gro¥p re lerred
to as "individual defendants," which include the employee and officer defendants as well as
Mudd and Saidman.
An undifferentiated grouping of Mudd and Saidman with the other in 'vidt:al

defendants, in the manner pleaded in this complaint, does not constitute a legally s Jfficient
claim of securities fraud against Mudd and Saidman, including the necessary daim of

scienter.
It should be noted that the complaint describes the appointment of as ecial
committee of the Board of Directors of the company to investigate problems boU1 the
finances of the company and financial information issued to the public. Strangely, tlle
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complaint does not specify the names of the members of that committee although. l.1udd
and Saidman were on that committee and, after the resignation of one memb r of hat
committee, they were the sole members of the committee.
For the foregoing reasons, the consolidated amended class action com .lainl is
dismissed as to Mudd and Saidman.
This opinion will resolve docket item number· 37.

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so ORD]:RE~.
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NewYod" New York
August 2~! 20113
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Thomas P. Gnesa
U.S. DistrictJudge