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Stoyas v. Toshiba Corp.

United States District Court for the Central District of California

January 28, 2020, Decided; January 28, 2020, Filed

Case No. 15-cv-4194 DDP (JCx)

Opinion

ORDER DENYING DEFENDANT'S MOTION TO DISMISS THE SECOND AMENDED COMPLAINT

[Dkt. 79]

Presently before the court is Defendant's Motion to Dismiss the Second Amended Complaint. (Dkt. 79.) Having considered the submissions of the parties and heard oral argument, the court adopts the following order.

I. BACKGROUND

The court has set forth [*2]  the basic facts of the case in its prior order, (Dkt. 65), which it repeats here in relevant part. This case is a putative securities class action lawsuit. Plaintiffs are Automotive Industries Pension Trust Fund ("AIPTF"), a pension fund formed for the benefit of auto industry workers, (Second Amended Complaint ("SAC") ¶ 20); New England Teamsters & Trucking Industry Pension Fund ("NETPF"), a pension fund formed for the benefit of New England trucking industry workers, (id. ¶ 23); and Mark Stoyas, an individual, (id. ¶ 24), (collectively, "Plaintiffs"). Defendant is Toshiba Corporation ("Defendant"), a "worldwide enterprise that engages in the research development, manufacture, construction, and sale of a wide variety of electronic and energy products and services," headquartered in Tokyo, Japan. (Id. ¶ 25.)

Plaintiffs allege that Defendant violated the U.S. Securities Exchange Act of 1934 and Japan's Financial Instruments & Exchange Act ("JFIEA"). (Id. ¶ 1.) The proposed class consists of: "(i) all persons who purchased shares of TOSYY or TOSBF on the [Over-the-Counter Market ("OTC Market")] between May 8, 2012 and November 12, 2015 . . .; and (ii) all citizens of the United States [*3]  who purchased shares of Toshiba common stock ('6502') during the Class period." (Id. ¶ 2; v.) "TOSYY is an American Depositary Receipt ('ADR') reflecting ownership shares of 6502 common stock that have been deposited with or are otherwise controlled by a depositary institution in the United States and held for the benefit of the TOSYY purchaser."1 (Id. ¶ 40.) TOSBF is Toshiba common stock sold in the United States as "F-shares," "a foreign security denominated U.S. currency, and traded on the U.S. OTC Market based in New York." (Id. ¶ 39.)

Lead Plaintiff, AIPTF, "purchased 36,000 shares of TOSYY through transactions on the OTC Market in the United States on March 23, 2015, thereby acquiring an ownership interest in 216,000 shares of 6502 common stock." (Id. ¶ 20.) Plaintiff NETPF made seven different purchases of Toshiba common stock on the Tokyo Stock Exchange during the class period, totaling over 100,000 shares. (Id. ¶ 23.) According to Plaintiffs, "[t]his case arises from Toshiba's deliberate use of improper accounting over a period of at least six years to inflate its pre-tax profits by more than $2.6 billion [ ] and conceal at least $1.3 billion [ ] in impairment losses [*4]  at its U.S. nuclear business, Westinghouse Electric Co." (Id. ¶ 3.) Plaintiffs allege that "[b]etween April 3, 2015, when the internal investigation into Toshiba's accounting practices was first announced, and November 13, 2015, following the issuance of Toshiba's restatement and the revelation of the impaired goodwill at Westinghouse, the price of Toshiba securities declined by more than 40%, resulting in a loss of $7.6 billion [ ] in market capitalization that caused hundreds of millions of dollars in damages to U.S. investors in Toshiba securities." (Id. ¶ 11 (footnote omitted).)

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2020 U.S. Dist. LEXIS 14295 *; Fed. Sec. L. Rep. (CCH) P100,735; __ F. Supp. 3d __; 2020 WL 466629

MARK STOYAS and NEW ENGLAND TEAMSTERS & TRUCKING INDUSTRY PENSION FUND, Plaintiffs, and AUTOMOTIVE INDUSTRIES PENSION TRUST FUND, individual and on behalf of all others similarly situated, Lead Plaintiff v. TOSHIBA CORPORATION, Defendant.

Prior History: Stoyas v. Toshiba Corp., 896 F.3d 933, 2018 U.S. App. LEXIS 19640 (9th Cir. Cal., July 17, 2018)

CORE TERMS

allegations, domestic, comity, shares, common stock, transactions, irrevocable, stock, purchasers, parties, argues, court concludes, Securities Exchange Act, deposited, broker