United States District Court, S.D. New York
June 8, 2015
SERGEI CHEPILKO, Plaintiff,
TELLABS, INC., et al., Defendants.
OPINION AND MEMORANDUM
ANDREW L. CARTER, Jr., District Judge.
This action was brought by Plaintiff Sergei Chepilko ("Chepilko"), appearing pro se, against Tellabs, Inc., Marlin Equity Partners, and TD Ameritrade, Inc. (collectively, "Defendants") on December 11, 2013. The Complaint alleges violation of Section 18 of the Securities and Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78r, which concerns injury from reliance on an untrue or misleading statement made in a filing pursuant to the Exchange Act. Chepilko seeks compensatory damages in the amount of $20, 000, along with punitive damages. Tellabs, Inc. and Marlin Equity Partners jointly filed their Motion to Dismiss the Complaint on January 16, 2015, and TD Ameritrade, Inc. filed its Motion to Dismiss the Complaint or, Alternatively, to Compel Arbitration, on that same date. Despite requesting and being granted an extension of the deadline to oppose the aforementioned Motions, Chepilko has failed to oppose the Motions. For the reasons stated herein, the Complaint is DISMISSED in its entirety with prejudice for failure of Chepilko to show that Defendants filed a document required by the Exchange Act containing an untrue or misleading statement, which is essential for a theory under Section 18 to succeed. Due to disposition on this ground, the Court declines to consider the other bases for dismissal offered by Defendants.
Chepilko claims that in November and December 2012, Defendants posted false and misleading information on their websites regarding the record date for the payment of dividends to shareholders of Tellabs, Inc. at a value of one dollar per share. Compl. 3. In reliance on the information indicating that the record date was December 12, 2012, Chepilko sold his 20, 000 shares of Tellabs, Inc. on that date, which he expected to result in a dividend payment of $20, 000. Id. But his sale of the 20, 000 shares did not generate a payment in that amount, and Chepilko suffered a substantial loss. Id. Marlin Equity Partners acquired Tellabs, Inc. on December 4, 2013. Id.
STANDARD OF REVIEW
To withstand a motion to dismiss, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The complaint "need not include detailed factual allegations, but must contain sufficient factual matter... to state a claim to relief that is plausible on its face." Corona Realty Holding, LLC v. Town of N. Hempstead, 382 F.Appx. 70, 71 (2d Cir. 2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (internal quotation marks omitted). Incantation of the elements of a cause of action, "supported by mere conclusory statements, " is not enough to show plausibility. Id. at 72. And yet "[a] document filed pro se is to be liberally construed, and a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citation omitted) (internal quotation marks omitted). In particular, "the pleadings of a pro se plaintiff... should be interpreted to raise the strongest arguments that they suggest." Graham v. Henderson, 89 F.3d 75, 79 (2d Cir. 1996) (internal quotation marks omitted).
To prove liability under Section 18 of the Exchange Act, a plaintiff must show that: "(1) a false or misleading statement was contained in a document filed pursuant to the Exchange Act (or any rule or regulation thereunder); (2) defendant made or caused to be made the false or misleading statement; (3) plaintiff relied on the false statement; and (4) the reliance caused loss to the plaintiff." In re Alstom SA Sec. Litig., 406 F.Supp.2d 433, 478 (S.D.N.Y. 2005). See also Ross v. A. H. Robins Co., Inc., 607 F.2d 545, 556 (2d Cir. 1979) (material misstatement or omission must be in a document filed with the SEC).
It is enough to defeat Chepilko's claim that the websites he refers to as containing false and misleading information are not "document[s] filed pursuant to the Exchange Act (or any rule or regulation thereunder)." See Alstom, 406 F.Supp.2d at 481 (Form F-3 and press releases are not documents filed pursuant to the Exchange Act, and although in some instances Form 6-K is required to be filed, SEC regulations explicitly exempt that document from creating Section 18 liability); Moran v. Kidder Peabody & Co., 609 F.Supp. 661, 667 (S.D.N.Y. 1985) (dismissal because plaintiff "failed to identify any application, report or document filed with the SEC containing untrue statements"); Gross v. Diversified Mortg. Investors, 438 F.Supp. 190, 196 (S.D.N.Y. 1977) (no Section 18 liability where prospectus was filed pursuant to the Securities Act of 1933 and not the Exchange Act).
For the aforementioned reasons, Chepilko's Complaint is DISMISSED in its entirety with prejudice. The Clerk of Court is respectfully directed to terminate ECF Nos. 30 and 33, as well as to close this case.