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Rockwell Medical, Inc. v. Richmond Brothers, Inc.

United States District Court, E.D. Michigan, Southern Division

June 28, 2017

ROCKWELL MEDICAL, INC., Plaintiff,
v.
RICHMOND BROTHERS, INC., et al., Defendants.

          ORDER DENYING DEFENDANTS' MOTION TO DISMISS

          ROBERT H. CLELAND, UNITED STATES DISTRICT JUDGE

         Pending before the court is Defendants' Motion to Dismiss.[1] (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.

         I. BACKGROUND

         Plaintiffs 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.

         For 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.

         Defendant 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.

         II. STANDARD

         Federal 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).

         “To 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.

         “In 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 Cir. 2007).

         Federal 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).

         When 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).

         III. DISCUSSION

         Plaintiffs 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 ...


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