United States District Court, E.D. Michigan, Southern Division
ORDER DENYING DEFENDANTS' MOTION TO
H. CLELAND, UNITED STATES DISTRICT JUDGE
before the court is Defendants' Motion to
Dismiss. (Dkt. #56.) The motion has been fully
briefed by both sides. After due consideration, the court
concludes that a hearing is unnecessary. For the following
reasons, the court will deny Defendants' motion.
allege that Defendants entered into a shareholder agreement
to consolidate voting power but failed to comply with
securities regulations requiring formal reporting of such
agreements until nearly one year later. Defendants argue that
Plaintiffs have failed to plead with particularity any facts
outlining the details surrounding the alleged agreement. They
also contend that the case is moot because they have since
filed the requisite disclosures.
their part, Plaintiffs respond that their complaint alleges
ample detail as to the communications evincing an agreement
prior to the date Defendants had disclosed. They also contend
that their other claims are not mooted by Defendants'
subsequent Schedule13D filings because Plaintiffs are seeking
a declaratory relief finding that Defendants violated
Sections 13(d) and 13(g) and enjoining them against such
violations going forward.
Jay Joliat offers in reply that Plaintiffs have not pled
facts sufficient to suggest that he was a member of any
agreement, as the emails referenced in the complaint suggest
that his participation in any supposed group diminished as
time went on. The remaining Defendants state that the
heightened pleading standard of Federal Rule 9(b) applies,
and Plaintiffs have not alleged sufficient facts to meet that
standard as to whether a current rather than past violation
of Section 13(d) exists and whether the hypothetical
agreement was one regarding the voting or disposition of
shares so as to trigger the disclosure obligation.
Rule of Civil Procedure 8(a)(2) requires that a complaint
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” To
survive a motion to dismiss, the complaint's
“[f]actual allegations must be enough to raise a right
to relief above the speculative level . . . on the assumption
that all the allegations in the complaint are true.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007). The court views the
complaint in the light most favorable to the plaintiff and
accepts all well-pleaded factual allegations as true.
Tackett v. M & G Polymers, USA, LLC, 561 F.3d
478, 488 (6th Cir. 2009). The court, however, “need not
accept as true legal conclusions or unwarranted factual
inferences.” Directv, Inc. v. Treesh, 487 F.3d
471, 476 (6th Cir. 2007).
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim for relief that is plausible on its face.'
” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129
S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly,
550 U.S. at 570). “[W]here the well-pleaded facts do
not permit the court to infer more than the mere possibility
of misconduct, the complaint has alleged-but it has not
shown-that the pleader is entitled to relief.”
Id. at 679.
determining whether to grant a Rule 12(b)(6) motion, the
court primarily considers the allegations in the complaint,
although matters of public record, orders, items appearing in
the record of the case, and exhibits attached to the
complaint, also may be taken into account.” Amini
v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001)
(quoting Nieman v. NLO, Inc., 108 F.3d 1546, 1554
(6th Cir. 1997)). Furthermore, “when a document is
referred to in the pleadings and is integral to the claims,
it may be considered without converting a motion to dismiss
into one for summary judgment, ” Commercial Money
Ctr. v. Ill. Union Ins. Co., 508 F.3d 327, 335-36 (6th
Rule of Civil Procedure 9(b) states that “[i]n alleging
fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake. Malice, intent,
knowledge, and other conditions of a person's mind may be
alleged generally.” The Sixth Circuit has
“further interpreted Rule 9(b) to require that a
plaintiff allege the time, place, and content of the alleged
misrepresentations on which he or she relied; the fraudulent
scheme; the fraudulent intent of the defendants; and the
injury resulting from the fraud.” Sanderson v.
HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir.
2006) (internal quotations omitted). A state claim of fraud,
once removed to federal court, is “required to comply
with Rule 9(b), ” but is also judged “[u]nder
[state] law.” See, e.g., Bennett v. MIS
Corp., 607 F.3d 1076, 1100 (6th Cir. 2010).
ruling on a Rule 12(c) motion, the court must take as true
“all well-pleaded material allegations of the pleadings
of the opposing party, ” and “the motion may be
granted only if the moving party is nevertheless clearly
entitled to judgment.” JPMorgan Chase Bank, N.A. v.
Winget, 510 F.3d 577, 581 (6th Cir. 2007) (quoting
So. Ohio Bank v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 479 F.2d 478, 480 (6th Cir.1973)). However,
the court “need not accept as true legal conclusions or
unwarranted factual inferences.” Id. at 581-82
(quoting Mixon v. Ohio, 193 F.3d 389, 400 (6th
Cir.1999)). The court is to grant a Rule 12(c) motion
“when no material issue of fact exists and the party
making the motion is entitled to judgment as a matter of
law.” Id. at 582 (quoting Paskvan v. City
of Cleveland Civil Serv. Comm'n, 946 F.2d 1233, 1235
(6th Cir.1991)). “There must be no material issue of
fact that could prevent judgment for the moving party.”
Monroe Retail, Inc. v. RBS Citizens, N.A., No.
074263, 2009 WL 4749352, at *3 (6th Cir. Dec. 14, 2009).
have the better of the arguments concerning mootness. The
court does not necessarily view the request for an
obey-the-law injunction as sufficient redress to sustain a
claim where nothing suggests that Defendants are likely to
engage in any future violations. Perez v. Ohio Bell Tel.
Co., 655 F. App'x 404, 412 (6th Cir. 2016)
(“district courts ‘should limit the scope of an
injunction to the conduct which has been found to have been
pursued or is related to the proven unlawful
conduct.'”) (quoting Howe v. City of
Akron, 801 F.3d 718, 753 (6th Cir. 2015)). “An
injunction that does no more than prohibit any and all
conduct in contravention of already existing law is overbroad
under the terms of Rule 65(d).” Id.
Nonetheless, “[t]here ...