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Binder v. Gillespie

United States Court of Appeals for the Ninth Circuit

October 6, 1998, Argued and Submitted, Seattle, Washington; March 30, 1999, Filed; July 26, 1999, Opinion Withdrawn ; July 26, 1999, Filed

No. 97-35943

Opinion

 [*1061]  ORDER

The majority opinion and dissent, reported at 172 F.3d 649 (9th Cir. 1999), is hereby withdrawn and superseded by the attached majority opinion and dissent.  [*1062]  With the filing of these opinions, Judges Skopil and Farris vote to deny the petition for rehearing; Judge Reinhardt votes to grant rehearing. Accordingly, the petition for rehearing is DENIED.

 [**2]  The new majority opinion and dissent have been circulated to all active judges of the court, along with appellants' petition for rehearing en banc, amicus curiae brief in support of rehearing en banc, and appellees' briefs in opposition to rehearing en banc. No active judge has called for a vote en banc. Accordingly, the petition for rehearing en banc is DENIED.

OPINION

SKOPIL, Circuit Judge:

Albert Binder brought this action against Aqua Vie Beverage Corporation (AVBC), various AVBC officers and directors, and the accounting firm of Deloitte & Touche (Deloitte), asserting, on his own behalf and as a representative for a class of investors, that defendants violated federal and state securities laws. The district court decertified the class and declined to exercise supplemental jurisdiction over the related state law class claims. The court also granted summary judgment in favor of three AVBC officers and directors and for Deloitte on all of Binder's individual claims. Final judgments were entered pursuant to Federal Rule of Civil Procedure 54(b). We affirm.

Tom Gillespie and Marie Mullen Gillespie formed AVBC in 1991 by purchasing a publicly owned shell corporation [**3]  and merging it with their Hawaii-based beverage company, KWC, Inc. They moved their operations to Sun Valley, Idaho. Shortly thereafter, Diane Karban joined the company as Chief Financial Officer and Deloitte was hired as the company's accounting firm. AVBC stock soon began trading publicly on the over-the-counter (OTC) market.

In the summer of 1991, Cottell Bottling agreed to manufacture, and Golden Brands agreed to distribute, AVBC's product - "lightly flavored," noncarbonated spring water. Industry publications touted AVBC as a promising, if speculative, investment, and AVBC stock sold for $ 2.75 per share by August. On September 24, 1991, Binder purchased 3000 shares at $ 4.00 per share. A month later, AVBC's bid price reached its peak at $ 4.50 per share.

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184 F.3d 1059 *; 1999 U.S. App. LEXIS 17033 **; Fed. Sec. L. Rep. (CCH) P90,454; 99 Cal. Daily Op. Service 5879

ALBERT BINDER; ESTELLE BINDER, in their individual capacities and on behalf of one or more classes of persons similarly situated, Plaintiffs-Appellants, v. THOMAS GILLESPIE; MARIE MULLEN GILLESPIE; T. GORDON SIM; DIANE L. KARBAN; JOHN A. GOOD, Defendants, IAN R. WILSON; CARY S. FITCHEY; MARK L. STEVENS; DELOITTE & TOUCHE; MARK STEVENSON, Defendants-Appellees.

Subsequent History:  [**1]  Certiorari Denied February 22, 2000, Reported at: 2000 U.S. LEXIS 1023.

Prior History: Appeal from the United States District Court for the District of Idaho. D.C. No. CV-94-00528-MHW. Mikel H. Williams, Chief Magistrate Judge, Presiding.

This Opinion Substituted on Denial of Rehearing and Rehearing En Banc for Withdrawn Opinion of March 30, 1999, Previously Reported at: 1999 U.S. App. LEXIS 5701.

Disposition: AFFIRMED.

CORE TERMS

misrepresentations, omissions, stock, district court, causation, traded, summary judgment, cases, decertified, magistrate judge, investors, class claim, factors, mixed, speculative, alleges, causation requirement, material omission, en banc, proceedings, purchaser, circuits

Civil Procedure, Appeals, Case Transfers, Judicial Officers, Magistrates, Pretrial Referrals, Standards of Review, Trial by Consent, Appellate Jurisdiction, General Overview, State Court Review, Notice of Appeal, Securities Law, Express Liabilities, Misleading Statements, Civil Liability Considerations, Implied Private Rights of Action, Elements of Proof, Business & Corporate Law, Corporate Finance, Initial Capitalization & Stock Subscriptions, Initial Offerings of Securities, Registration of Securities, Forms, Corporations, Recordkeeping & Reporting Requirements, Issuers of Securities, Torts, Elements, Causation, Blue Sky Laws, Offers & Sales, Postoffering & Secondary Distributions, Securities Exchange Act of 1934 Actions, Causation, Reliance, Jurisdiction, Jurisdictional Sources, Subject Matter Jurisdiction, Jurisdiction Over Actions, Supplemental Jurisdiction, Justiciability, Standing, Standing, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Judgments, Burdens of Proof, Evidentiary Considerations, Scintilla Rule, Evidentiary Considerations, Opposing Materials

Civil Procedure, Appeals, Case Transfers, Judicial Officers, Magistrates, Pretrial Referrals, Standards of Review, Trial by Consent, Appellate Jurisdiction, General Overview, State Court Review, Notice of Appeal, Securities Law, Express Liabilities, Misleading Statements, Civil Liability Considerations, Implied Private Rights of Action, Elements of Proof, Business & Corporate Law, Corporate Finance, Initial Capitalization & Stock Subscriptions, Initial Offerings of Securities, Registration of Securities, Forms, Corporations, Recordkeeping & Reporting Requirements, Issuers of Securities, Torts, Elements, Causation, Blue Sky Laws, Offers & Sales, Postoffering & Secondary Distributions, Securities Exchange Act of 1934 Actions, Causation, Reliance, Jurisdiction, Jurisdictional Sources, Subject Matter Jurisdiction, Jurisdiction Over Actions, Supplemental Jurisdiction, Justiciability, Standing, Standing, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Judgments, Burdens of Proof, Evidentiary Considerations, Scintilla Rule, Evidentiary Considerations, Opposing Materials