Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

TOBIAS HOLDINGS, INC. v. BANK UNITED CORP.

August 14, 2001

TOBIAS HOLDINGS, INC., PLAINTIFF,
V.
BANK UNITED CORP. AND GOLDMAN SACHS MORTGAGE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Scheindlin, District Judge.

  MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

Plaintiff has brought a federal securities fraud action alleging violations of section 10(b) of the Securities and Exchange Act of 1934, see 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, see 17 C.F.R. § 240.10b-5. Plaintiff's Amended Complaint ("Am.Cmpl.") also asserts state common law claims for fraud, breach of contract, conspiracy, and tortious interference with contract. Federal jurisdiction over the state claims is based on diversity of citizenship.*fn1 Defendants have moved to dismiss the Amended Complaint. The automatic stay of discovery provisions of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), 15 U.S.C. § 77a et seq., require a stay of discovery in claims arising under that statute until after the motion to dismiss has been decided.*fn2 Here, despite the stay of discovery required by the PSLRA, plaintiff seeks discovery on all state claims except the common law fraud claim.*fn3 The narrow question presented is whether the PSLRA stays discovery with respect to plaintiff's non-fraud state law claims where jurisdiction over such claims is based on diversity of citizenship. For the following reasons, I conclude that it should not.

II. DISCUSSION

A. Statutory Construction

"Where the meaning of a statute is textually ambiguous, [courts] may consult its legislative history." Washington v. Schriver, 240 F.3d 101, 108 (2d Cir. 2001) (citing Oklahoma v. New Mexico, 501 U.S. 221, 235 n. 5, 111 S.Ct. 2281, 115 L.Ed.2d 207 (1991)), superseded on other grounds, 255 F.3d 45 (2d Cir. 2001); see also Lee v. Bankers Trust Co., 166 F.3d 540, 544 (2d Cir. 1999) ("Legislative history and other tools of interpretation may be relied upon only if the terms of the statute are ambiguous.").

[The] first step in interpreting a statute is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case. Our inquiry must cease if the statutory language is unambiguous and the statutory scheme is coherent and consistent.
The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.

Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) (quotation marks and citations omitted). Where there is ambiguity, however, courts may "`focus upon the broader context and primary purpose of the statute.'" Elliott Assocs., L.P. v. Banco de la Nacion, 194 F.3d 363, 371 (2d Cir. 1999) (quoting Castellano v. City of New York, 142 F.3d 58, 67 (2d Cir. 1998)).

Here, the ambiguity arises because the automatic stay provisions apply to "any private action arising under" Chapter 2B of Title 15 of the United States Code and "any private action arising under" Subchapter 1 of Chapter 2A of Title 15 of the United States Code. 15 U.S.C. § 78u-4(b)(3)(B) and § 77z-1(b)(1). It is not clear from the face of the statute whether Congress contemplated the situation where both federal question and diversity jurisdiction are invoked in a single action. Conceptually, the claims can be split into two groups: the federal securities fraud claims which are subject to the automatic stay and the state law claims which are not. Because the statutory language is silent on this issue, resort to legislative history is permitted to determine the scope of the automatic stay provisions.

B. Legislative History

The PSLRA was passed to redress certain perceived abuses in securities litigation including "the abuse of the discovery process to coerce settlement." In re Advanta Corp. Secs. Litig., 180 F.3d 525, 530-31 (3d Cir. 1999).

The purpose of the [PSLRA] was to restrict abuses in securities class action litigation, including: (1) the practice of filing lawsuits against issuers of securities in response to any significant change in stock price, regardless of defendants' culpability; (2) the targeting of "deep pocket" defendants: (3) the abuse of the discovery process to coerce settlement; and (4) manipulation of clients by class action attorneys.

Id. at 531 (citing H.R. Conf. Rep. No. 104-369, 104th Cong. 1st Sess. at 31 (1995), reprinted in 1995 U.S.C.C.A.N. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.