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Blackie v. Barrack

United States Court of Appeals for the Ninth Circuit

September 25, 1975

Nos. 74-2141, 74-2341, 74-2167, 74-2466, 74-2648

Opinion

 [*894]  KOELSCH, Circuit Judge:

These are appeals from an order conditionally certifying a class in consolidated actions for violation of Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10(b)-5.

The litigation is a product of the financial troubles of Ampex Corporation. The annual report issued May 2, 1970, for fiscal 1970, reported a profit of $12 million. By January 1972, the company was predicting an estimated $40 million loss for fiscal 1972 (ending April 30, 1972). Two months later the company disclosed the loss would be much larger, in the $80 to $90 million range; finally, in the annual report for fiscal 1972, filed August 3, 1972, the company reported a loss of $90 million, and the company's independent auditors withdrew certification of [**2]  the 1971 financial statements, and declined to certify those for 1972, because of doubts that the loss reported for 1972 was in fact suffered in that year.

Several suits were filed following the 1972 disclosures of Ampex's losses. They were consolidated for pre-trial purposes. The named plaintiffs in the various complaints involved in these appeals 2 [**3]  purchased Ampex securities during the 27 month period between the release of the 1970 and 1972 annual reports, and seek to represent all purchasers of Ampex securities during the period. The corporation, its principal officers during the period, 3 and the company's independent auditor are named as defendants. The gravamen of all the claims is the misrepresentation by reason of annual and interim reports, press releases and SEC filings of the financial condition of Ampex from the date of the 1970 report until the true condition was disclosed by the announcement of losses in August of 1972.

The plaintiffs moved for class certification shortly after filing their complaints in 1972; after extensive briefing and argument the district judge entered an order on April 11, 1974, conditionally certifying as a class all those who purchased Ampex securities during the 27 month period. The defendants filed notices of appeal from the order of certification on May 9 and 10, 1974. 4

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524 F.2d 891 *; 1975 U.S. App. LEXIS 12628 **; Fed. Sec. L. Rep. (CCH) P95,312; 20 Fed. R. Serv. 2d (Callaghan) 1277

WILLIAM BLACKIE, ROBERT E. BROOKER, RICHARD J. ELKUS, ARTHUR H. HAUSMAN, HENRY A. McMICKING, NATHAN W. PEARSON, A. E. PONTING, FREDERICK SEITZ, and IRVING TRUST COMPANY, as Executor of the Estate of H. S. M. BURNS, Deceased, Defendants-Appellants, v. LEONARD BARRACK, SELMA MOLDER and PEARL SINGER, as Co-Executors of the Estate of SYLVIA BARRACK, Deceased, on behalf of herself and all others similarly situated, Plaintiffs-Appellees. WILLIAM E. ROBERTS and JOHN BUCHAN, Defendants-Appellants, v. BENJAMIN L. KUSHNER et al., Plaintiffs-Appellees. AMPEX CORPORATION, Defendant-Appellant, v. BENJAMIN L. KUSHNER, Plaintiff-Appellee. TOUCHE ROSS & Co., Defendant-Appellant, v. LEONARD BARRACK, SELMA MOLDER and PEARL SINGER, as Co-Executors of the Estate of SYLVIA BARRACK, Deceased, on behalf of herself and all others similarly situated, Plaintiffs-Appellees. WILLIAM E. ROBERTS, JOHN P. BUCHAN, WILLIAM BLACKIE, ROBERT E. BROOKER, RICHARD J. ELKUS, ARTHUR H. HAUSMAN, HENRY A. McMICKING, NATHAN W. PEARSON, A. E. PONTING, FREDERICK SEITZ, and IRVING TRUST COMPANY, as Executor of the Estate of H. S. M. BURNS, Deceased, Defendants-Appellants, v. LEONARD BARRACK, SELMA MOLDER and PEARL SINGER, as Co-Executors of the Estate of SYLVIA BARRACK, Deceased, on behalf of herself and all others similarly situated, Plaintiffs-Appellees

Prior History:  [**1]   Appeal from the United States District Court for the Northern District of California.

Disposition: AFFIRMED.

CORE TERMS

inflation, purchaser, class action, class member, appeals, inventory, misrepresentations, class certification, certify, damages, district judge, conflicts, merits, final decision, reserves, stock, class period, causation, orders, cases, costs, certification, defendants', maximize, interlocutory appeal, annual report, circumstances, defeat, death knell, overstating

Civil Procedure, Appeals, Appellate Jurisdiction, Final Judgment Rule, Special Proceedings, Class Actions, Certification of Classes, Collateral Order Doctrine, Interlocutory Orders, Standards of Review, De Novo Review, Prerequisites for Class Action, General Overview, Predominance, Typicality, Voluntary Dismissals, Abuse of Discretion, Appellate Review, Judicial Officers, Judges, Governments, Courts, Judges, Securities Law, Express Liabilities, Misleading Statements, Civil Liability, Fraudulent Interstate Transactions, Numerosity, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Deceptive & Manipulative Devices, Elements of Proof, Causation, Burdens of Proof, Torts, Business Torts, Fraud & Misrepresentation, Civil Liability Considerations, Postoffering & Secondary Distributions, Adequacy of Representation, Constitutional Law, Fundamental Rights, Procedural Due Process, Judgments, Preclusion of Judgments, Res Judicata, Scope of Protection