The opinion of the court was delivered by: WERKER
This securities action was commenced by the plaintiffs Robert Gluck and Jerome Preston, Jr. as trustees of three litigation trusts against the defendants
for alleged violations of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5.
All of the defendants who have been served with process
move to dismiss the complaint on the grounds (1) that the claims asserted herein are barred by the applicable statute of limitations, and (2) that the plaintiffs are not the real parties in interest. Fed.R.Civ.P. 12(b)(6), 17(a).
For purposes of this motion, the well pleaded allegations of the complaint are taken as being true.
The plaintiffs are not residents of New York. Complaint P 3. The three litigation trusts, Admiralty Fund Growth Series Litigation Trust ("Admiralty Growth"), Admiralty Fund Insurance Series Litigation Trust ("Admiralty Insurance"), and Seaboard Leverage Fund Litigation Trust ("Seaboard Trust"), were established in New York in 1976 in connection with mergers of Oppenheimer A.I.M. Fund, Inc. ("Oppenheimer") with Admiralty Fund and Seaboard Leverage Fund ("Seaboard Fund"). Oppenheimer is a Maryland corporation, and Admiralty Fund and Seaboard Fund are Delaware corporations. Id. PP 4, 5. Admiralty Fund assigned all of its rights to the claims asserted herein to Admiralty Growth and Admiralty Insurance, and Seaboard Fund assigned all of its rights to the claims asserted herein to Seaboard Trust. Id. PP 4, 5.
Between April 29, 1970 and September 4, 1970, Admiralty Fund purchased a total of 70,000 shares of the common stock of Ecological Science Corporation ("ECO"). Admiralty Fund sold this stock in separate transactions in January 1971 and December 1972 at a substantial loss. Complaint P 6. Between April 29, 1969 and May 2, 1969, Seaboard Fund purchased a total of 10,000 shares of ECO's common stock. Seaboard Fund sold this stock at a substantial loss in a series of transactions from July 30, 1969 until August 21, 1969. Id. P 7. At the time these transactions were entered into, Admiralty Fund and Seaboard Fund had their principal places of business in California.
On April 30, 1971, the Securities Exchange Commission filed a complaint against ECO and its then president, Harold P. Koenig, for alleged violations of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5. That same day ECO and Koenig consented to the entry of judgments permanently enjoining them from violating the securities laws in the future and requiring ECO to file a restated Form 10-K for the year 1969. SEC v. Ecological Science Corp., (1970-71 Transfer Binder) CCH Fed.Sec.L.Rep. P 93,025 (S.D.N.Y.1971).
Within a matter of days after the entry of the consent judgments, a number of private damages actions were filed on behalf of purchasers of ECO stock. Sixteen of these actions, all but one of which purported to be class actions, were eventually brought. All of the suits that had not been filed in the Southern District of Florida were transferred to that district, and the sixteen actions were consolidated on March 20, 1972. Named as defendants were ECO, certain of its officers, directors and subsidiaries, and its accountants, Haskins & Sells. A consolidated amended complaint was filed asserting eight claims on behalf of thirty-two named plaintiffs. Five of the claims were alleged on behalf of purchasers of ECO stock during the period November 27, 1967 through approximately May 26, 1971. See Pearson v. Ecological Science Corp., 522 F.2d 171, 172-73 (5th Cir. 1975), cert. denied, 425 U.S. 912, 96 S. Ct. 1508, 47 L. Ed. 2d 762 (1976).
On March 13, 1973, after oral argument and the filing of briefs, the district court for the Southern District of Florida denied the plaintiffs' motion for class certification on a number of grounds. (1973 Transfer Binder) CCH Fed.Sec.L.Rep. P 94,030. In denying the class certification motion, the court expressly invited interested shareholders who were members of the disallowed class to intervene:
(T)hose "nominal' aggrieved shareholders with an interest in maintaining an action against defendants may petition to intervene herein at little expense. Such leave to intervene in this nationally well-publicized action has been accorded previously in this cause, and will continue to be accorded, interested shareholders.
Id. at 94,146. Some sixty-seven individual and institutional shareholders moved for and were granted leave to intervene, but the Admiralty Fund and the Seaboard Fund were not among them. Defendants' Mem. in Supp. of Motion, at 7, citing orders filed in 1972-73.
The Pearson litigation was settled in February of 1974. Several attempts were made to prevent the consummation of the settlement, but these efforts proved unsuccessful as the district court entered an order approving the terms of the stipulation of settlement on March 28, 1974. The litigation was dismissed with prejudice in accordance with the terms of the settlement agreement on April 4, 1974. The district court's orders were upheld by the fifth circuit on appeal in 1975, 522 F.2d 171, and a petition for certiorari was denied in 1976. 425 U.S. 912, 96 S. Ct. 1508, 47 L. Ed. 2d 762.
In 1975, four additional private securities actions were filed on behalf of ECO stockholders, and a fifth such action was instituted in 1977. These five actions were consolidated for pretrial purposes in the Southern District of Florida. Two of the five actions, Frankel v. Adolph, 75 Civ. 1057 (WMH), and Jenny v. Haskins & Sells, 75 Civ. 1144 (WMH), were filed as class actions. On February 22, 1978, the Florida district court denied the plaintiff's motion in Jenny for class certification. On February 16, 1979, the Court denied the motion for certification of the class pleaded in the Frankel complaint, but reserved decision as to the certification of a subclass of purchasers of ECO common stock from April 20, 1970 until April 30, 1971.
On May 17, 1979, the plaintiffs commenced the instant action. They simultaneously moved for leave to intervene in the Jenny and Frankel suits. Those motions are apparently still sub judice.
The defendants herein moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) and (17(a). Since matters outside the complaint have been presented to and not excluded by the Court, the motion to dismiss is being treated as a motion for summary judgment. Fed.R.Civ.P. 12(c). The plaintiffs maintain that they need additional time to conduct discovery relating to the issues raised by the defendants, and argue that the motion cannot be granted at this time. It is evident from the discussion below, however, that additional discovery is unnecessary, for there are no ...