United States District Court, Southern District of New York
July 31, 2003
IN RE NTL INC. SECURITIES LITIGATION;
The opinion of the court was delivered by: Lewis Kaplan, District Judge
These cases generally involve claims for violation of the federal securities laws with respect to NTL Inc. Presently pending before the Court are motions to dismiss the consolidated amended class action complaint in 02 Civ. 3013 and the amended complaint in 02 Civ. 7377, which is brought on behalf of three named plaintiffs solely in their own right. This order disposes of the second of those motions.
The individual defendants in 02 Civ. 7377 seek dismissal on the ground that the amended complaint fails to plead fraud with the particularity require by the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4(b), and Fed.R.Civ.P. 9(b). More specifically, they contend that these plaintiffs have not adequately pled either (a) facts giving rise to a strong inference of scienter, see 15 U.S.C. § 78u-4(b)(2), or (b) facts identifying each alleged misstatement or omission and why each is said to have been false or misleading, see id. § 78u-4(b)(1). Surprisingly, however, plaintiffs' memorandum makes no serious effort to deal with the Section 78u-4(b)(1) argument, confining itself largely to the scienter issue.
The Court has reviewed carefully plaintiffs' 62-page amended complaint. While it contains a superabundance of detail and lengthy summaries of various alleged press releases and other public statements by defendants, it is far from clear which of these pronouncements are said to have been false or misleading, which parts of them are said to have been so, and exactly why plaintiffs claim they are is so. The only effort to deal with this requirement is paragraph 147, which broadly alleges that "[d]efendants' statements during the Applicable Period . . . were each materially false and misleading because they failed to disclose . . . material adverse facts" set out in 15 subsequent subparagraphs. Thus, the Court is left to guess whether every statement made in the Applicable Period is said to have been false and misleading and, if so, what supposedly was wrong with each. Quite clearly, plaintiffs do not maintain that every statement referred to in the first 146 paragraphs of the complaint was misleading for failure to disclose each fact set forth in paragraph 147. For example, paragraph 63 of the complaint refers to an alleged statement by defendant Knapp in March 2000 that it was possible for the company to earn money while offering free Internet service. Yet paragraph 147(d), if read literally, would allege that this was misleading because the [ Page 2]
company in 2001 was in violation of loan covenants — the year following that in which the alleged statement was made.
This sort of scattershot pleading is unacceptable and fails to comply either with 15 U.S.C. § 78u-4(b)(1) or Rule 9(b). Accordingly, the motion of the individual defendants in 02 Civ. 7377 (LAK) to dismiss the amended complaint in that action is granted with leave to replead provided that any amended complaint is filed on or before August 22, 2003. This order does not affect the pending motion to dismiss the consolidated class action complaint in 02 Civ. 3013.
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