Amorosa v. Gen. Elec. Co.

• Docket Number: 21-CV-3137 (JMF)
• Decision Date: 06 June 2023
• Parties: DOMINIC F. AMOROSA et al., Plaintiffs, v. GENERAL ELECTRIC COMPANY et al., Defendants.
• Court: U.S. District Court — Southern District of New York

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DOMINIC F. AMOROSA et al., Plaintiffs, v. GENERAL ELECTRIC COMPANY et al., Defendants.

No. 21-CV-3137 (JMF)

United States District Court, S.D. New York

June 6, 2023

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge

In this case, familiarity with which is presumed, Plaintiffs Dominic F. Amorosa and Dominic F. Amorosa, Esq., Profit Sharing Plan (together, “Amorosa”) bring common-law fraud claims and federal securities-fraud claims, the latter under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a) (the “Exchange Act”) and Securities and Exchange Commission (“SEC”) Rule 10b-5, 17 C.F.R. § 240.10b-5 (“Rule 10b-5”), against General Electric Company (“GE”) and its former Senior Vice President and Chief Financial Officer, Jeffrey Bornstein (“Bornstein”). In a prior Opinion and Order, the Court found that Amorosa sourced every factual allegation in his complaint secondhand and accordingly dismissed his claims under Rule 9(b) of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). See Amorosa v. Gen. Elec. Co. (“Amorosa I”), No. 21-CV-3137 (JMF) 2022 WL 3577838 (S.D.N.Y. Aug. 19, 2022) (ECF No. 28). Thereafter, Amorosa filed the operative Second Amended Complaint (the “SAC”). ECF No. 29 (“SAC”). Defendants now move again, pursuant to Rules 9(b) and 12(b) of the Federal Rules of Civil Procedure to dismiss. ECF No. 30. For the reasons that follow, their motion is granted.

DISCUSSION

Amorosa's claims center on Defendants' alleged misstatements regarding GE's practice of factoring its accounts receivable and whether it was doing so to generate short-term cash flow or to manage its credit risk. See SAC ¶¶ 9-11. Significantly, Amorosa's claims largely mirror claims that the Court has dismissed four times already - in Amorosa I, as well as Sjunde AP-Fonden v. General Electric Co. (“Sjunde I”), 417 F.Supp.3d 379 (S.D.N.Y. 2019); Sjunde AP-Fonden v. General Electric Co. (“Sjunde II”), No. 17-CV-8457 (JMF), 2021 WL 311003 (S.D.N.Y. Jan. 29, 2021); and Touchstone Strategic Trust v. General Electric Co., 19-CV-1876 (JMF), 2022 WL 4536800 (S.D.N.Y. Sept. 28, 2022).^[1] The Court agrees with Defendants that Amorosa's amended claims fare no better and, thus, dismisses the SAC in its entirety.

A. Untimely Statements

For starters, many of Amorosa's claims are time barred. Title 28, United States Code, Section 1658(b)(2) provides that “a claim of fraud . . . concerning the securities laws . . . may be brought not later than . . . 5 years after such violation.” Section 1658(b)(2) is an “unqualified bar” that “giv[es] defendants total repose” once the five-year window closes. Merck & Co. v Reynolds, 559 U.S. 633, 650 (2010); see also SRM Glob. Master Fund Ltd. P'ship v. Bear Stearns Cos. L.L.C., 829 F.3d 173, 176 (2d Cir. 2016) (identifying Section 1658(b)(2) as a statute of repose). Significantly, the clock begins running from the date of each alleged misstatement, see, e.g., Sjunde I, 417 F.Supp.3d at 391; In re Longtop Fin. Techs. Ltd. Sec. Litig., 939 F.Supp.3d 360, 378 (S.D.N.Y. 2013), and is not subject to equitable tolling, see SRM Glob. Master Fund Ltd. P'ship, 829 F.3d at 177. And of particular relevance here, claims based on previously unalleged misstatements cannot “relate back” to the filing of an earlier complaint under Rule 15(c) of the Federal Rules of Civil Procedure if the newly filed claims would otherwise be barred by the statute of repose. See, e.g., Sjunde I, 417 F.Supp.3d at 391-92; In re Longtop Fin. Techs. Ltd. Sec. Litig., 939 F.Supp.3d at 379-80.

In this case, Amorosa filed the initial complaint on April 12, 2021, see ECF No. 1 (“Initial Compl.”), the first amended complaint on July 6, 2021, see ECF No. 17 (“FAC”), and the operative SAC on September 13, 2022, see SAC. Thus, the Court must dismiss claims based on alleged misstatements made prior to September 13, 2017, that are not alleged in either of the first two complaints. That applies to claims based on the following alleged misstatements:

• GE's 2015 Form 10-K, see SAC ¶ 19;

• Bornstein's and then-CEO Jeffrey Immelt's remarks during a July 22, 2016 earnings call, see id. ¶¶ 24-25;

• Bornstein's and Immelt's remarks during an October 21, 2016 earnings call, see Id. ¶¶ 27-28;

• GE's Q3 2016 Form 10-Q, see id. ¶ 30; and

• Immelt's remarks during a January 20, 2017 earnings call, id. ¶ 32.

In arguing otherwise, Amorosa contends that his “initial Complaint asserted that Bornstein falsified all of GE's 10Qs and 10Ks from 2015 through 2017 in respect to [its] factoring programs, and made false statements on January 20, 2017” and that “[t]hese are the very same claims made in the SAC.” ECF No. 35 (“Pls.' Opp'n”), at 22.

That is not so. Amorosa's initial complaint merely alleged that there were misstatements in GE's “annual [SEC] report[s],” “quarterly [SEC] reports,” and “quarterly earnings calls,” without specifying more. Initial Compl. ¶ 34. (Moreover, these allegations were copied verbatim from the consent decree between GE and the SEC. Compare Initial Compl. ¶ 34, with ECF No. 19-13, ¶ 15.) As this Court has already explained, however,

[s]ecurities fraud claims arise from, among other things, specific “statements of a material fact” and specific material omissions, 17 C.F.R. § 240.10b-5(b), 15 U.S.C. § 78u-4(b)(1), not from the documents in which those statements are contained. The statute of repose for such claims begins running from the time that each allegedly fraudulent statement or omission is made. Accordingly, a timely raised claim based on misleading statements made [five years before the filing of the operative complaint] does not somehow preserve other, as-yet-unpleaded claims based on different misleading statements, even if the two sets of misleading statements were made at the same time and in the same document.

Sjunde I, 417 F.Supp.3d at 392 (cleaned up); see also, e.g., Chien v. Skystar Bio Pharm. Co., 566 F.Supp.2d 108, 115 (D. Conn. 2008) (holding that claims were not well pleaded under Rule 9(b) and the PSLRA where the complaint “ma[de] repeated allegations that [the defendant company's SEC] filings were inaccurate and false, without specifying which statements [in those filings the plaintiff] has in mind” (cleaned up)), aff'd, 378 Fed.Appx. 109 (2d Cir. 2010); In re Open Joint Stock Co. “Vimpel-Commc'ns” Sec. Litig., No. 04-CV-9742 (NRB), 2006 WL 647981, at *5 (S.D.N.Y. March 14, 2006) (similar, but where the complaint block-quoted large excerpts from the defendant company's SEC filings and press releases and “fail[ed] to identify which statements in those documents were misleading”).

In short, “there is no principled basis” to accept Amorosa's attempts to avoid the statute of repose as to most of his claims. Sjunde I, 417 F.Supp.3d at 392. Accordingly, his claims based on the above statements must be and are dismissed with prejudice. See id. (dismissing with prejudice similar claims barred by the statute of repose).

B. Timely Statements

That leaves only Amorosa's claims with respect to Bornstein's remarks during an April 21, 2017 conference call, SAC ¶ 62; GE's 2016 Form 10-K, id. ¶ 37; GE's Q3 2017 Form 10-Q, id. ¶ 58; and Bornstein's remarks during a January 20, 2017 earnings call, id. ¶ 36. All of these claims fail as a matter of law for other reasons.

For starters, the Court previously considered, and dismissed claims based on Bornstein's April 21, 2017 statements. See Sjunde I, 417 F.Supp.3d at 412 n.24; Sjunde II, 2021 WL 311003, at *12; Amorosa I, 2022 WL 3577838, at *3. Amorosa alleges no new facts that would alter the Court's prior conclusion. Second, although the Court allowed claims based on GE's 2016 Form 10-K to proceed in Sjunde I, see 417 F.Supp.3d at 413-14, and Sjunde II, see 2021 WL 311003, at *13, those rulings were based on information from confidential witnesses that Amorosa does not - and cannot - rely on here, see Amorosa I, 2022 WL 3577838, at *4 (“[T]he statements of the former employees alleged in the [Sjunde complaints] were critical to the Court's rulings in Sjunde I and Sjunde II and, as discussed[,] . . . Amorosa may not rely on those statements.” (citation omitted)); see also Touchstone Strategic Tr., 2022 WL 4536800, at *4 (dismissing identical claims because the plaintiffs could not rely on the confidential witnesses that carried the claims in Sjunde I and Sjunde II). As in Amorosa I, without the statements of these confidential witnesses, Amorosa is left with nothing to support his claims based on the 2016 Form 10-K. The same is true with respect to the Q3 2017 Form 10-Q, as Amorosa's theory of fraud with respect to that document is the same as his theory as to the 2016 Form 10-K. Compare SAC ¶¶ 37, 40 (alleging the 2016 Form 10-K is misleading because it stated that GE was factoring to manage credit risk, when it was actually doing so to prop up its short-term cash flow), with id. ¶ 58 (alleging the Q3 2017 Form 10-Q is misleading for the same reason).^[2] And finally, Amorosa fails to state a plausible claim with respect to Bornstein's statements during the January 20, 2017 earnings call. Although the Court previously dismissed claims premised on these statements, see Sjunde I, 417 F.Supp.2d at 414; Sjunde II, 2021 WL 311003, at *12; Amorosa I, 2022 WL 3577838, at *3, Amorosa now relies on a new piece of evidence: a slide produced during discovery in Sjunde that Bernstein purportedly relied on to prepare for his January 20, 2017 remarks and that Amorosa argues “establishes . . . [Bornstein's] scienter.” Pls.' Opp'n 1, 18; see SAC ¶ 46. The slide allegedly quantified the extent of GE's factoring over the prior fifteen months and the impact that factoring had on GE's operating...