The opinion of the court was delivered by: Marrero, District Judge.
Plaintiff Barbara Schaffer ("Schaffer") brings this action
under Section 16(b) of the Securities Exchange Act of 1934 (the
"Act") for disgorgement of short-swing profits allegedly obtained
by defendants acting as a group in violation of that section of
the Act. Three motions for dismissal pursuant to Federal Rule of
Civil Procedure 12(b)(6) are presently before the Court.
Defendants CC Investments, LDC ("CCI") and Castle Creek
Partners, LLC ("CCP") have argued that CCI was not, either
individually or as member of a group, the beneficial owner of
more than 10% of Lasersight's equity securities and that CCI is
therefore not liable under Section 16(b). Defendant Societe
Generale ("SG") has argued that it was not a member of any group
and that certain restrictions on its ability to convert and sell
shares to which it agreed preclude Section 16(b) liability.
Defendants Shepherd Investments International, Ltd. ("SII"),
Stark International ("SI"), Brian Stark ("Stark") and Michael
Roth ("Roth") (collectively, the "Stark Defendants") have argued,
among other things, that they were not beneficial owners of more
than 10% of Lasersight's stock. For the reasons set forth below,
the Court grants the motions to dismiss in their entirety, but
grants Schaffer leave to replead.
Schaffer is a New York resident and an owner of the common
stock of Lasersight Incorporated ("Lasersight" of the "Company").
Lasersight, a nominal defendant, is a Delaware corporation with
its principal place of business in St. Louis, Missouri.
Defendants are CCI, a limited liability company organized under
the laws of the Cayman Islands engaged in the business of trading
in securities; CCP, an American limited liability company acting
as CCI's investment manager; SG, a division of Societe Generale
Securities Corporation engaged in trading securities; SII, a
corporation organized under the laws of the British Virgin
Islands that trades securities; SI, a Bermuda corporation trading
securities; and Stark and Roth, investment fund managers who
control the investment decisions of SII and SI.
Schaffer alleges that these seven defendants constitute a group
(the "Group") and that SII and SI constitute a separate group
(the "SI Group") for purposes of determining liability under Rule
16a-1(a)(1) and Sections 16(b) and 13(d)(3) of the Act; that the
Group, the SI Group and CCI individually were greater than 10%
beneficial owners of Lasersight's common stock; and that the
Group, the SI Group and CCI engaged in certain transactions over
a six month period, garnering short-swing profits in the amount of
at least $7,091,975.00, all of which are disgorgeable to
Lasersight under Section 16(b).
In considering a Rule 12(b)(6) motion, the Court must accept
Liner's factual allegations as true and draw all reasonable
inferences in his favor. See Hamilton Chapter of Alpha Delta
Phi, Inc. v. Hamilton College, 128 F.3d 59 (2d Cir. 1997). It is
the Court's task to assess the legal sufficiency of the complaint
and not to judge the credibility of the pleadings or to assess
the weight of any evidence offered in support of the action. See
Cooper v. Parsky, 140 F.3d 433 (2d Cir. 1998). A claim may not
be dismissed "unless it appears beyond doubt that the plaintiff
can prove no set of facts in support of his claim which would
entitle him to relief." Morris v. Local 819, Int'l Bhd. of
Teamsters, 169 F.3d 782, 784 (2d Cir. 1999) (quoting Conley v.
Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).
As Schaffer notes, "the only issue before the Court is whether
or not the complaint states a set of facts under which defendants
can be liable to disgorge their profits under Section 16(b) of
the Securities Exchange Act of 1934." Plaintiff's Memorandum in
Opposition, dated Dec. 1, 1999, at 7-8. See Transcript from
Oral Argument, dated June 2, 2000 ("Tr."), at 54-55.
The Corrected Certificate of Designations, Preferences, ...