Masel v. Villarreal, No. 18-40499 (5th Cir. 2019)Annotate this Case
Plaintiffs filed suit alleging that defendants induced them to join a business enterprise with material misrepresentations and omissions in violation of the Securities Exchange Act of 1934. Defendants proposed to plaintiffs that if they will set up businesses that provide intraoperative neuromonitoring procedures, defendants would manage them, and through signature billing practices, make plaintiffs a substantial profit. The district court granted defendants' motion to dismiss.
The Fifth Circuit held that the limited partnership interests in this case were securities and thus plaintiffs have adequately pleaded the existence of a security; Statements 1, 6, and 7, as well as all three omissions, were properly dismissed; but plaintiffs adequately stated a 10b-5 claim with regard to Villarreal and the defendant entities for Statements 2–5. However, plaintiffs' case against Casarez failed with regard to these statements. Accordingly, the court reversed and remanded in part and affirmed in part.
The court issued a subsequent related opinion or order on June 6, 2019.