The opinion of the court was delivered by: SCHEINDLIN
SHIRA A. SCHEINDLIN, U.S.D.J.:
Plaintiff, Horsehead Resource Development Company, Inc. ("Horsehead"), is a publicly-owned environmental services company specializing in inorganic hazardous waste removal. Defendant B.U.S. Berzelius Umwelt-Service AG ("BUS AG") is a German corporation similarly engaged in the business of environmental services. Defendant B.U.S. Environmental Services, Inc. ("BUS") is a wholly-owned subsidiary of BUS AG, apparently formed solely to acquire and hold shares of stock in Horsehead. Defendant Lobbert Holding GmbH ("Lobbert Holding") is a German waste services company. Defendant Rolf Kola ("Kola") is a member of the Board of Directors and Vice President of BUS, as well as a member of the Executive Board of BUS AG. Defendant Jurgen Tietz ("Tietz") is the Secretary of BUS and the Vice President of BUS AG. Defendant Guenter Okon ("Okon") is Chairman of the Board of Directors, President and Treasurer of BUS and Speaker of the Executive Board of BUS AG.
In considering a motion to dismiss, the Court must presume all factual allegations in the complaint to be true. Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994). Moreover, the Court must draw all reasonable inferences in favor of the non-moving party. Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). Only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief" should a court grant a motion to dismiss. Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).
The gravamen of this Complaint is that Defendants filed false and misleading information with the Securities and Exchange Commission ("SEC") regarding the control and background of the foreign owners of a 44.8% block of Horsehead stock. Complaint P 1. On August 3, 1990, BUS AG, BUS and Metallgesellschaft AG ("MG")
filed a Schedule 13D in accordance with § 13(d) of the Securities Exchange Act, 15 U.S.C. § 78m(d). Id. at P 11. On July 8, 1994, Amendment No. 1 to the Schedule 13D was filed with the SEC disclosing that MG owned approximately 53% of BUS AG. Id. at P 12.
At some point between July 8, 1994 and March 3, 1995, MG transferred approximately a 15% interest in BUS AG and thereupon ceased to be its majority shareholder. Id. at P 13. However, MG neglected to file an amendment to Schedule 13D disclosing that it had reduced its controlling interest in BUS AG, nor did it disclose to whom it had transferred a substantial block of its BUS AG stock. Id.
On March 3, 1995, MG sold its remaining 38% interest in BUS AG to Lobbert Holding. Complaint P 14. On April 18, 1995, BUS AG and BUS filed Amendment No. 2 to Schedule 13D ("Amendment # 2") regarding the March 3 transaction. Id. at P 15. Amendment # 2 stated, inter alia, that BUS and BUS AG collectively controlled 44.8% of the total number of shares of Horsehead common stock outstanding on April 17, 1995. Id. While Amendment No. 2 admitted that MG had sold its BUS AG stock to Lobbert Holding, it denied that Lobbert Holding now held a controlling interest in BUS AG. Id., Ex. A at 4.
On August 7, 1995, Plaintiff commenced this suit. Plaintiff asserts that Amendment # 2 "is intentionally or at least recklessly false and misleading in that it makes untrue statements of material fact and fails to state material information." Id. at P 23. Furthermore, Plaintiff alleges that the Defendants' false filing was deliberate and was designed not only to hide Lobbert Holding's controlling interest in BUS AG, but also to deprive Horsehead and the public of critical information regarding Lobbert Holding's interest in BUS AG and Lobbert Holding's business practices. Id. at P 19.
Plaintiff alleges that Amendment # 2 is deficient in at least four material respects. First, the amendment failed to disclose Lobbert Holding's controlling interest in BUS AG. Second, the amendment falsely stated that Lobbert Holding did not hold a controlling interest in BUS AG. Third, Amendment # 2 failed to disclose that Lobbert Holding had recently violated a number of German environmental regulations and/or laws. Fourth, Amendment # 2 failed to disclose information responsive to items 2 - 6 of Schedule 13D as to Lobbert Holding. Id. at P 24.
On September 11, 1995, approximately one month after Horsehead filed its Complaint, BUS and BUS AG filed Amendment No. 3 to Schedule 13D ("Amendment # 3"), intending to "cure" the earlier deficiencies and to thereby moot the present action by disclosing all information regarding Lobbert Holding required under § 13(d). Amendment # 3, for example, admitted that Lobbert Holding owns at least 52% of the common stock of BUS AG, although only 40% of its voting stock. Furthermore, Amendment # 3 specifically disclosed Horsehead's complaint and the allegations made regarding the alleged non-disclosures:
On August 7, 1995, [Horsehead] filed a complaint in the United States District Court for the Southern District of New York against B.U.S., B.U.S. AG, Lobbert, Rolf Kola, Jurgen Tietz and Guenter Okon (the "Complaint") alleging, among other things, that the Schedule 13D is false and misleading. While the reporting persons herein do not believe that there is any merit to the allegations made in the Complaint, this Amendment No. 3 is being filed to remove any possible controversy with respect to such allegations.
In accord with the requirements of Schedule 13D, Amendment # 3 states that neither Lobbert Holding nor any member of the Lobbert family
(a) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities ...