Geffon v. Micrion Corp., 96-11596-REK.
| Decision Date | 06 December 1999 |
| Docket Number | No. 96-11596-REK.,96-11596-REK. |
| Citation | 76 F.Supp.2d 134 |
| Parties | Joshua GEFFON, Edward R. Laslow, Irving Berger, and Richard Anthony Phillipon, individually and on behalf of all others similarly situated, Plaintiffs. v. MICRION CORPORATION, Nicholas P. Economou, Robert K. McMenamin, and David M. Hunter, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Thomas V. Urmy, Jr., Shapiro, Grace & Haber, Boston, MA, Kenneth J. Vianale, Milberg, Weiss, Bershad, Specthrie & Lerach New York City, Aaron W. Tandy, Milberg, Weiss, Bershad, Hynes & Lerach, New York City, for plaintiffs.
Mitchell H. Kaplan, Choate, Hall & Stewart, Boston, MA, for defendants.
Pending for decision is Defendants' Renewed Motion for Summary Judgment (Docket No. 91, filed October 7, 1999) with Memorandum of Law in Support (Docket No. 92, filed October 7, 1999) and Affidavits of John R. Baraniak in Support (Docket Nos. 93 and 100, filed October 7, 1999 and November 17, 1999, respectively). Plaintiffs have filed an Opposition (Docket No. 96, filed November 5, 1999) with a Statement of Material Facts (Docket No. 94, filed November 5, 1999) and an Appendix to Plaintiff's Supplemental Local Rule 56.1 Statement of Material Facts (Docket No. 97, filed November 3, 1999). Defendants filed a Reply Memorandum (Docket No. 98, November 17, 1999) and an Affidavit of Ronald Opel in Support (Docket No. 99, November 17, 1999).
Both Defendants and Plaintiffs incorporate in their current Motion and Opposition their previous Rule 56.1 Statements and supporting memoranda (Docket Nos. 51, 50, 59 for Defendants and Docket Nos. 56 and 57 for Plaintiffs).
The court heard oral argument on Defendants' Renewed Motion for Summary Judgment (Docket No. 91) on November 23, 1999.
For the reasons explained in this Opinion, I conclude that summary judgment for Defendants is appropriate.
Plaintiffs brought this securities fraud action for themselves and as representatives of all persons who purchased stock in the Micrion Corporation (Micrion) during the class period of April 26, 1996 through June 24, 1996 against Defendants Micrion and three of its officers: Nicholas Economou (Economou), Robert McMenamin (McMenamin) and David Hunter (Hunter). Plaintiffs allege that defendants made or were responsible for the making of statements that violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5 (1996). After discovery by both sides, defendants filed a Motion for Summary Judgment (Docket No. 48) that was denied by Order of September 24, 1998 (Docket No. 62). In denying defendants' motion, I made the following order:
Defendants' Motion for Summary Judgment (Docket No. 48, filed June 1, 1998) is DENIED. This is a ruling based on defendants' failure to meet their procedural burden of showing that without doubt they are entitled to judgment as a matter of law. I have reached this determination without making any decision on any particular issue of law or fact that may be material to the terms of the final judgment to be ordered in this case.
Docket No. 62. This order was accompanied by a memorandum that contained the following "Notice to Parties":
This Memorandum and Order places plaintiffs on notice that, even though the court has concluded that the present record does not support summary judgment against plaintiffs, the court will not allow this case to proceed to a jury trial until plaintiffs have identified factual issues for submission to the jury and have presented for the court's consideration a draft of each special question proposed by plaintiffs, suitably fashioned for inclusion in a verdict form for use in submitting the case to the jury on special questions only.
If plaintiffs are unable to craft an appropriate factual question for the jury that the court is persuaded, on the record before the court, is genuinely in dispute and at least potentially material to the outcome, the court will again consider whether it should order summary judgment for the defendants.
After two intervening Case Management Conferences in which little progress was made in obtaining from plaintiffs' counsel a clarification of claims and legal and factual theories that would enable the court to determine whether plaintiffs could show a factually and legally supportable basis for submission of one or more issues to jury trial, defendants filed a renewed Motion for Partial Summary Judgment (Dockets Nos. 76 and 77).
In a Memorandum and Order issued September 21, 1999 (Docket No.89), I deferred ruling on Defendants' Motion for Partial Summary Judgment because of an apparent misunderstanding on the part of plaintiffs' counsel as to the effect of my previous ruling denying Defendant's Motion for Summary Judgment. At a pretrial conference on September 22, 1999, I gave a further explanation of my position, stated in the Memorandum of September 21, 1999, with regard to the burden plaintiffs had yet to meet in response to Defendants' Motion for Summary Judgment. See Docket No. 89 at 5-9. At that pretrial conference, I invited the defendants to refile their Motion for Summary Judgment so plaintiffs could then respond properly, taking into account my more thorough explanation of plaintiffs' burden in responding to a motion for summary judgment asserting grounds other than insufficiency of pleadings.
The remainder of this Opinion focuses on Defendants' Renewed Motion for Summary Judgment, which is based on a more amply developed factual record and added evidentiary proffers of the defendants and the plaintiffs.
Micrion designs, manufactures and markets focused-ion-beam (FIB) systems, which are machines designed to extract ions from a liquid metal gallium source and then accelerate and focus the ions into a beam. Although Micrion had principally sold FIB systems in small quantities (only one machine per order, or sometimes two), in early 1996 Micrion was negotiating a large-scale sale of FIB systems to the Read-Rite Corporation (Read-Rite) for use in manufacturing the magnetic heads that record data on or retrieve data from disk drives in computers.
This potential deal involved inherent uncertainties and risks for both Micrion and Read-Rite. For example, a tremendous amount of money was at stake, both in Read-Rite's committing to purchase the FIB systems and in Micrion's committing to manufacture them. Each FIB system costs approximately one million dollars. Also, the application of the FIB system to this manufacturing process was new and Micrion had never manufactured its FIB systems in the quantities that Micrion and Read-Rite were contemplating in their negotiations. Risks of loss and possibilities of gain were magnitudes higher for both Read-Rite and Micrion than in any potential deal either had negotiated before.
In preparing for this deal and trying to minimize the risks involved, Micrion "ramped-up" its manufacturing capabilities by hiring new employees and equipping new manufacturing facilities.
Read-Rite, also contemplating the risks involved, suggested that it might pursue alternative technology to Micrion's FIB systems. It is disputed when and even if Read-Rite told this fact to Micrion. Also disputed is what Read-Rite meant by this comment: whether (i) Read-Rite was actually pursuing alternative technology or (ii) Read-Rite was not actually pursuing alternative technology but meant, instead, to make Micrion think it was pursuing alternative technology in order to encourage Micrion to work faster in fear of viable competition.
Plaintiffs' showing this genuine dispute of fact does not entitle them to a jury trial unless I conclude that this dispute of fact is material to the outcome. Plaintiffs have not called attention to any applicable law under which this genuine dispute of fact would be material, and I know of none.
When I insistently asked at oral argument on November 23, 1999 under what legal theory what evidence before me would support inferences favorable to plaintiffs, plaintiffs' counsel responded only with generalized references to all the evidence and all the arguments of law submitted. A possible inference to be drawn is that plaintiffs assert a fundamental right to go to a jury verdict on their class-action securities fraud claims on a generalized form of submission to the jury that would leave the parties, attorneys, trial judge, and appellate tribunals unable to determine precisely what findings the jury had made and what legal theory or theories the jury had applied if the jury returned a verdict for plaintiffs. For reasons explained in Parts IV-VIII of this Opinion, I reject that contention as well as each of the alternative arguments addressed by plaintiffs in their opposition to defendants' renewed motion for summary judgment.
Micrion and Read-Rite signed an Equipment Purchase Agreement (a redacted version of which is filed with Docket No. 58, filed August 20, 1998), dated February 9, 1996 but executed in March, 1996 (the Agreement). The Agreement involved 75 FIB systems but only committed Read-Rite to a "firm order" of 25 systems. See Agreement at ¶ 4a, Docket No. 100, Exhibit D at 3 (hereinafter "The Agreement at ¶ ___"). The Agreement states that
This Agreement shall constitute Buyer's written release for the first twenty-five (25) units of Equipment as listed on Exhibit A. Delivery dates for the remaining fifty (50) potential units shall be as described in written releases from Buyer, when and if issued.
The Agreement at ¶ 4a. The Agreement further provides:
c. Acceptance by Seller. Seller shall acknowledge in writing all purchase orders submitted by Buyer within three (3) business days after receipt. All purchase orders shall...
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Geffon v. Micron Corp
...to whether the statements in question were misleading or fraudulent, and granted summary judgment to defendants. Geffon v. Micrion Corp., 76 F. Supp. 2d 134, 148 (D. Mass. 1999). This appeal followed. For the reasons explained herein, we affirm the grant of summary judgment, albeit based on......