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Rubenstein v. Live Nation Entertainment

United States District Court, S.D. New York

June 20, 2017

AARON RUBENSTEIN, Plaintiff,
v.
LIVE NATION ENTERTAINMENT, Nominal Defendant, -and- LIBERTY MEDIA CORP., Defendant.

          Attorneys for Plaintiff MIRIAM TAUBER LAW PLLC, Miriam Tauber, Esq. LAW OFFICES OF DAVID LOPEZ David Lopez, Esq.

          Attorneys for Defendant Liberty Media Corp. BAKER BOTTS LLP Douglas W. Henkin, Esq. Richard B. Harper, Esq. Thomas E. O'Brien Mysha Lubke, Esq.

          Attorneys for Nominal Defendant Live Nation Entertainment LATHAM & WATKINS, LLP Hilary H. Mattis, Robert A. Koenig, Esq., Jason C. Hegt, Esq.

          OPINION

          ROBERT W. SWEET U.S.D.J.

         Defendant Liberty Media Corporation ("Liberty" or the "Defendant") has moved pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint of plaintiff Aaron Rubenstein ("Rubenstein" or the "Plaintiff") (the "Complaint") seeking recovery for short swing profits under Section 16(b) of the Securities Exchange Act of 1934. Upon the conclusions set forth below, the motion is granted and the complaint against Liberty and the nominal defendant Live Nation Entertainment ("Live Nation") is dismissed.

         I. Facts

         The facts as set forth in the Complaint are not disputed unless otherwise noted.

         Live Nation is a publicly held company, with common stock registered under Section 12(b) of the Act. Compl. ¶ 6, 10. Rubenstein is a shareholder of Live Nation. Id. ¶ 7. Liberty, a corporation, is a more than 10% owner of Live Nation. Id. ¶ 11.

         On September 4, 2014, Liberty entered into a forward purchase contract (the "Forward Contract") with an unaffiliated bank counterparty (the "Bank"). Id. ¶ 15. The relevant terms of the contract were summarized in a Form 4s that Liberty filed with the SEC. Mot. to Dismiss, Ex. A (Liberty's September 30, 2015 Form 4 - Statement of Changes in Beneficial Ownership); Ex. B (Liberty's December 1, 2015 Form 4 - Statement of Changes in Beneficial Ownership).

         Under the terms of the Forward Contract, Liberty agreed to purchase from the Bank on the settlement date the number of shares purchased by the Bank during its "initial hedging period" - capped at 15.9 million shares - at a "forward price" to be determined at the conclusion of the initial hedging period in accordance with a formula set forth in the Forward Contract. Compl. ¶ 15. The initial hedging period concluded on September 28, 2015, and the Forward Contract settlement date was November 27, 2015. Mot. to Dismiss, Ex. A.

         The final number of shares covered by the Forward Contract was 15.9 million shares, and the final forward price was $24.9345 per share. Mot. to Dismiss, Ex. B. The Forward Contract was physically settled on December 2, 2015. Id.

         II. Prior Proceedings

         On September 19, 2016, Plaintiff filed the Complaint, alleging that, pursuant to the Forward Contract, Liberty profited from the purchase and sale of Live Nation securities within a period of less than six months. Compl. ¶¶ 1-4. The instant motion to dismiss the Complaint was heard and marked fully submitted on February 23, 2017.

         III. The Applicable Standard

         The Rule 12(b)(6) standard requires that a complaint plead sufficient facts to state a claim upon which relief can be granted. Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In considering a Fed.R.Civ.P. 12(b)(6) motion to dismiss, a court accepts the complaint's factual allegations as true and draws all reasonable inferences in the plaintiff's favor. See Littlejohn v. City of N.Y., 795 F.3d 297, 306 (2d Cir. 2015); Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002); Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993). A court need not accept as true, however, "[l]egal conclusions, deductions or opinions couched as factual allegations." In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007). "[A] plaintiff s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions." Twombly, 550 U.S. at 555 (quotation marks omitted). A complaint must contain "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 663 (quoting Twombly, 550 U.S. at 570) .

         A claim is facially plausible when "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (quoting Twombly, 550 U.S. at 556). In other words, the factual allegations must "possess enough heft to show that the pleader is entitled to relief." Twombly, 550 U.S. at 557 (internal quotation marks omitted). In determining the sufficiency of a complaint, the Court may consider "the factual allegations in [the] . . . complaint, . . . documents attached to the complaint as an exhibit or incorporated in it by reference, [] matters of which judicial notice may be taken, [and] documents . . . which the plaintiff[] . . . relied on in bringing suit." Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993); see also Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) ("[A] plaintiff's reliance on the terms and effect of a document in drafting the complaint is a necessary prerequisite to the court's consideration of the document on a dismissal motion.") (emphasis in original); Cosmas v. Hassett, 886 F.2d 8, 13 (2d Cir. 1989) (an extraneous document is not incorporated by reference into the complaint where "[t]he amended complaint merely discussed these documents and presented short quotations from them").

         Additionally, while "a plaintiff may plead facts alleged upon information and belief 'where the belief is based on factual information that makes the inference of culpability plausible, ' such allegations must be 'accompanied by a statement of the facts upon which the belief is founded.'" Munoz-Nagel v. Guess, Inc., No. 12-1312, 2013 WL 1809772, at *3 (S.D.N.Y. Apr. 30, 2013) (quoting Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010)) and Prince v. Madison Square Garden, 427 F.Supp.2d 372, 384 (S.D.N.Y. 2006); see also Williams v. Calderoni, No. 11-3020, 2012 WL 691832, *7 (S.D.N.Y. Mar. 1, 2012). The pleadings, however, "must contain something more than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action." Twombly, 550 U.S. At 555 (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004)).

         IV. Section 16(b) Liability Has ...


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