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In re Advanced Battery Techs., Inc.

United States Court of Appeals, Second Circuit

March 25, 2015

In re ADVANCED BATTERY TECHNOLOGIES, INCORPORATED; RUBLE SANDERSON, individually and on behalf of all others similarly situated, Plaintiff-Appellant,
v.
BAGELL, JOSEPHS, LEVINE & CO., LLC, FRIEDMAN LLP, EFP ROTENBERG, LLP, Defendants-Appellees. [*]

Argued October 21, 2014

Page 639

[Copyrighted Material Omitted]

Page 640

Lead Plaintiff Ruble Sanderson appeals from an order of the United States District Court for the Southern District of New York (McMahon, J.) denying plaintiffs' motion for leave to file an amended complaint. Sanderson claims that certain auditor defendants committed securities fraud by recklessly making false statements in their audit reports relating to the financial statements of Advanced Battery Technologies, Inc. After dismissing the initial complaint because it failed adequately to plead that the auditor defendants acted with the requisite scienter, the District Court denied as futile Sanderson's motion to amend. We AFFIRM.

MURIELLE J. STEVEN WALSH, Pomerantz LLP, New York, N.Y. (Marc I. Gross, Star M. Tyner, Pomerantz LLP, New York, NY; William B. Federman, Federman & Sherwood, Oklahoma City, OK; Laurence Mathew Rosen, The Rosen Law Firm, P.A., New York, NY, on the brief), for Plaintiff-Appellant.

WILLIAM J. KELLY (Peter J. Larkin, on the brief), Wilson, Elser, Moskowitz, Edelman & Dicker LLP, White Plains, NY, for Defendants-Appellees Bagell, Josephs, Levine & Co., LLC, and Friedman LLP.

GABRIEL MARK NUGENT (Paul Andrew Sanders, on the brief), Hiscock & Barclay, LLP, Syracuse, NY, for Defendant-Appellee EFP Rotenberg, LLP.

Before: WALKER, CABRANES, and LOHIER, Circuit Judges.

OPINION

Page 641

LOHIER, Circuit Judge

Lead Plaintiff Ruble Sanderson, individually and on behalf of all others similarly situated, appeals from an order of the United States District Court for the Southern District of New York (McMahon, J.) denying the plaintiffs' motion for leave to file a second amended complaint (the " Proposed Complaint" ). As relevant here, the District Court dismissed the previous complaint against defendants Bagell, Josephs, Levine & Co., Friedman LLP, and EFP Rotenberg, LLP (collectively, the " Auditor Defendants" ) because it failed adequately to plead scienter as required by the Private Securities Litigation Reform Act of 1995 (" PSLRA" ), 15 U.S.C. § 78u-4. Sanderson sought to correct these deficiencies by moving to file the Proposed Complaint. That complaint claims that the Auditor Defendants committed securities fraud by falsely representing that they performed their audits of Advanced Battery Technologies, Inc. (" ABAT" ) in accordance with professional standards and that ABAT's filings accurately reflected its financial condition from the 2007 through the 2010 fiscal years. Concluding that the Proposed Complaint failed to remedy the deficiencies identified in the initial complaint, the District Court denied the motion to amend as futile. We affirm.

BACKGROUND

I. The Allegations in the Proposed Complaint

We accept as true the facts alleged in the Proposed Complaint ...


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