explaining, among other things, their power source, operation, and mechanics.
Accordingly, disclosure of the differences between the 1993 and 1995 CO detectors could not have significantly altered the information available to potential investors, and thus the omission was immaterial as a matter of law.
B. Statements Made at the "Road Shows"
Plaintiffs also claim that the Underwriter defendants made material misrepresentations during the "road shows" when they estimated the Company's earnings per share for the fiscal year ending June 30, 1996.
Plaintiffs concede, however, that the projections at the road shows were merely estimates of future performance made 18 months in advance. Accordingly, such estimates were not guarantees and therefore cannot be considered materially misleading. Kowal v. MCI Communications Corp., 305 U.S. App. D.C. 60, 16 F.3d 1271, 1276-77 (D.C. Cir. 1994); Krim v. BancTexas Group, Inc., 989 F.2d 1435, 1446 (5th Cir. 1993); Friedman v. Mohasco Corp., 929 F.2d 77, 78-79 (2d Cir. 1991) (finding that documents projecting market value represented opinions, not guarantees).
Additionally, plaintiffs cannot now complain about road shows statements that were subsequently contradicted by specific disclosures in the Prospectus -- which any plaintiff, regardless of his or her level of sophistication, could have read. See Olkey, 98 F.3d at 9 (finding that representations made at road shows were immaterial "since they are contradicted by plain and prominently displayed language in the prospectuses.").
Accordingly, defendants' statements at the road shows cannot constitute securities laws violations.
IV. RULE 9(b)
Even if plaintiffs had stated claims upon which relief could be granted under §§ 11 or 12(2), this Court would dismiss the Complaint, pursuant to Federal Rule of Civil Procedure 9(b), for failure to plead fraud or mistake with particularity. Fed.R.Civ.P. 9(b); accord Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1127 (2d Cir. 1994).
While fraud is not an element of §§ 11 or Section 12(2) claims, plaintiffs nonetheless have alleged fraudulent intent. They now ask the Court not to apply Rule 9(b) to their claims.
To the contrary, it seems only fair that if plaintiffs have plead fraud, they must comply with the requirements of Rule 9(b). See Fed.R.Civ.P. 9(b) (applying to "all" averments of fraud); Melder v. Morris, 27 F.3d 1097, 1100 n.6 (5th Cir. 1994) (holding that Rule 9(b) applies when §§ 11 and 12(2) claims are grounded in fraud rather then in negligence); Geiger v. Solomon-Page Group, 933 F. Supp. 1180, 1189 (S.D.N.Y. 1996) (same).
Applying Rule 9(b), the Court finds that the Complaint fails to comply with its heightened pleading requirements. With regard to the challenged statements made at the "road shows," for example, plaintiffs fail to provide fundamental details of the presentations; the Complaint does not even allege who made the challenged statements. Nor does the Complaint contain any facts averring that the Underwriter defendants knew, could, or should have known that the allegedly fraudulent statements in the Prospectus were misleading when made. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1421 (Rule 9(b) requires plaintiff to plead knowledge of falsity by person who made allegedly false representation).
Accordingly, the Court finds that the Complaint does not comply with the requirements of Rule 9(b). See McLaughlin v. Anderson, 962 F.2d 187, 191 (2d Cir. 1992); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989).
V. PLAINTIFFS' APPLICATION TO REPLEAD
Although plaintiffs have sought leave to replead and it is the "usual practice upon granting a motion to dismiss to allow leave to replead," Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991) (citations omitted), plaintiffs have not indicated what amendments they would make in order to sufficiently allege facts to state a claim upon which relief can be granted.
Accordingly, the Court reserves ruling on plaintiffs' application to replead and grants plaintiffs one month from the date of this Memorandum & Order to submit a "Proposed Amended Consolidated and Supplemental Class Action Complaint."
For the foregoing reasons, defendants motion to dismiss plaintiffs' Complaint is granted.
If plaintiffs submit a "Proposed Amended Consolidated and Supplemental Class Action Complaint" within one month from the date of this Memorandum & Order, plaintiffs shall also submit a brief of not more than 10 pages in length supporting their request to amend. Opposition papers, no longer than 10 pages each, shall be due two weeks later. Plaintiffs may submit reply papers, limited to five pages, within five days.
BARBARA S. JONES
UNITED STATES DISTRICT JUDGE
White Plains, New York