Petzschke, et al v. Century Aluminum Co., et al, No. 11-15599 (9th Cir. 2013)
Annotate this CasePlaintiffs alleged that the shares they purchased in Century Aluminum Company were issued under a materially false and misleading prospectus supplement which was treated as part of the company's registration statement for purposes of section 11 of the Securities Act of 1933, 15 U.S.C. 77k. The court concluded that plaintiffs' failure to plead the traceability of their shares meant that they lacked statutory standing under section 11, but failure to allege statutory standing resulted in failure to state a claim on which relief could be granted, not the absence of subject matter jurisdiction. The district court should therefore have addressed the company's motion to dismiss under Rule 12(b)(6), not Rule 12(b)(1). Notwithstanding this error, the court affirmed the dismissal under Rule 12(b)(6).
Court Description: Securities Fraud. The panel affirmed the dismissal for lack of statutory standing of an action under § 11 of the Securities Act of 1933, alleging that a company’s securities were issued under a materially false or misleading registration statement. The panel held that the plaintiffs did not adequately allege that their aftermarket shares were traceable to a secondary offering in connection with which the company issued a prospectus supplement treated as part of the company’s registration statement. The panel held that the plaintiffs’ allegations did not give rise to a reasonable inference that their shares were traceable to the secondary offering because the allegations also were consistent with the shares having come from a previously issued pool. The panel stated that the district court should have addressed defendants’ motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), rather than Rule 12(b)(1), because failure to allege statutory standing results in failure to state a claim on which relief can be granted, not the absence of subject matter jurisdiction. The panel affirmed on the basis that dismissal was proper under Rule 12(b)(6).
The court issued a subsequent related opinion or order on April 17, 2013.
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