In re Acceptance Ins. Cos. Securities Litigation
| Decision Date | 31 March 2004 |
| Docket Number | No. 8:99-CV-547.,8:99-CV-547. |
| Citation | 352 F.Supp.2d 940 |
| Parties | In re ACCEPTANCE INSURANCE COMPANIES, INC., SECURITIES LITIGATION. |
| Court | U.S. District Court — District of Nebraska |
Frederick S. Cassman, Abrahams, Kaslow Law Firm, John K. Green, Pickens, Green Law Firm, Omaha, NE, Gregory M. Castaldo, Schiffrin, Barroway Law Firm, Bala Cynwyd, PA, Jonathan M. Stein, Paul J. Geller, Cauley, Geller Law Firm, Boca Raton, FL, Joseph V. McBride, Rabin, Peckel Law Firm, Justin C. Frankel, Michael A. Swick, Robert A. Wallner, Steven G. Schulman, Milberg, Weiss Law Firm, Marvin L. Frank, Rabin, Murray Law Firm, New York, NY, for Plaintiffs.
David H. Kistenbroker, Joni S. Jacobsen, Laura M. Vasey, Leah J. Domitrovic, Matthew J. Cannon, Michael S. Weisman, Pamela G. Smith, Theresa L. Davis, Katten, Muchin Law Firm, Alan N. Salpeter, Brian J. Massengill, Daniel J. Delaney, Mayer, Brown Law Firm, Chicago, IL, J. Michael Gottschalk, Joseph K. Meusey, Mark C. Laughlin, Fraser, Stryker Law Firm, Omaha, NE, for Defendants.
Edward G. Warin, McGrath, North Law Firm, Omaha, NE, pro se.
Gregory A. Horowitz, Kramer, Levin Law Firm, New York, NY, pro se.
Marc A. Topaz, Schiffrin, Barroway Law Firm, Bala Cynwyd, PA, pro se.
Gregory M. Castaldo, Schiffrin, Barroway Law Firm, Bala Cynwyd, PA, pro se.
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
The background of this case has been summarized on previous occasions. In admittedly simplistic terms, Acceptance Insurance Company and other related entities, and three of its corporate officers, have been sued in this securities fraud action by individuals and entities that invested money in the corporations. The claims initially were presented in three separate actions that have been consolidated and certified as a class action in this one master file. On June 16, 2000, Plaintiffs filed a Consolidated Class Action Complaint asserting claims under the Securities Act and the Exchange Act (Filing No. 40), , Sections 10(b) and 20(a) of the Exchange Act of 1934, 15 U.S.C. § 78j and 78t(a) (the "Exchange Act") and Rule 10(b)-5, 17 C.F.R. § 240.10b-5. Following motions under Fed.R.Civ.P. 12, the remaining defendants are Acceptance Insurance Companies, Inc. ("Acceptance"), Kenneth Coon, Georgia Mace, and John Nelson.
At issue is whether the corporations, through their officers, were possessed of material information that was required by law to be disclosed to the investing public and was not disclosed. The gravamen of Plaintiffs' Amended Consolidated Class Action Complaint is that the Defendants failed to disclose material information regarding the increasing number of California contractors' claims covered by Acceptance and the attendant risk that Acceptance faced in being under-reserved for losses in the wake of the 1995 California Supreme Court decision, Montrose Chem. Corp. v. Admiral Ins. Co., 10 Cal.4th 645, 42 Cal.Rptr.2d 324, 913 P.2d 878 (1995).1
Acceptance was a holding company that, through subsidiaries, underwrote specialty property and casualty insurance coverage throughout the United States. Kenneth Coon was Acceptance's Chief Executive Officer and Chairman of the Board of Directors. Georgia Mace was the Chief Financial Officer and Treasurer. John Nelson was the President and Chief Operating Officer. Following consolidation, the lead plaintiffs are Lawrence I. Batt, P.C. Profit Sharing Plan; Barbara Winer Revocable Trust; Diana L. Kinder; and Jerome S. Richman, Co-Trustee of the Joe Sonken Trust, all of whom invested in the Acceptance during the relevant class action period.
Before the Court is the Defendants' Motion for Summary Judgment (Filing No. 241). That motion has ignited additional motion practice between the parties, most significant being the parties' cross-motions to strike evidence that has been offered in connection with the motion for summary judgment (Filing Nos. 254 and 258). The Defendants ask the Court to strike Plaintiffs' Exhibits 22 and 23, which are the Plaintiffs' expert witness affidavits, and to strike Exhibits 1, 5, 6, 8, 9, 10, 11, 17, 20, and 21. Defendants also seek to sanction the Plaintiffs pursuant to Fed.R.Civ.P. 56(g), for offering in opposition to the Defendants' Motion for Summary Judgment some of the evidence that Defendants seek to strike. (Filing No. 254). The arguments offered in support of the Defendants' Motion to Strike are set forth in the Defendants' Reply Brief Offered in Support of the Motion for Summary Judgment and in the Defendants' Brief in Support of the Motion to Strike, Filing Nos. 252, 254.
Plaintiffs oppose the Defendants' motion for summary judgment, in part by seeking to strike Defendants' Exhibits 3 and 7. In addition, Plaintiffs seek sanctions against the Defendants for seeking sanctions against them (Filing No. 258). Plaintiffs' arguments are set forth in their briefs in opposition to the Defendants' motion for summary judgment and in support of their motion to strike (Filing Nos. 249 and 259).
Lest there be insufficient motion practice in this case, Plaintiffs have also filed a Motion to Strike (Filing No. 261) aimed at the Defendants' brief that was offered in opposition to the Plaintiffs' Motion to Strike because, Plaintiffs contend, the Defendants' brief is essentially a reply brief that was filed without leave of the Court. The Defendants have filed a brief in opposition to that motion (Filing No. 262). To the extent that the Defendants' brief at Filing No. 260 offers argument in opposition to the Plaintiffs' Motion to Strike, it has been considered, but no other argument contained in the brief will be considered.
In another preliminary matter, though I find that the motion practice is certainly zealous and arguably overdone, I do not find that there is anything in the parties' submissions to the Court relative to the motions for summary judgment and the attendant motion practice that was submitted frivolously or in bad faith. The cross-motions for sanctions (which are contained within Filing Nos. 254 and 258) are denied.
Summary judgment is proper if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Philip v. Ford Motor Co., 328 F.3d 1020, 1023 (8th Cir.2003). The proponent of a motion for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). "Importantly, `a party moving for summary judgment is not entitled to a judgment merely because the facts he offers appear more plausible than those tendered in opposition, or because it appears that the adversary is unlikely to prevail at trial.'" Handeen v. Lemaire, 112 F.3d 1339, 1354 (8th Cir.1997) (). The proponent need not, however, negate the opponent's claims or defenses. Celotex, 477 U.S. at 324-25, 106 S.Ct. 2548.
In response to the proponent's showing, the opponent's burden is to "come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)). A "genuine" issue of material fact is more than "some metaphysical doubt as to the material facts." Id. at 586, 106 S.Ct. 1348.
Summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327, 106 S.Ct. 2548. Nevertheless, the Court's function is not to weigh the credibility and persuasiveness of evidence in the context of a motion for summary judgment. Kampouris v. St. Louis Symphony Soc'y, 210 F.3d 845, 847 (8th Cir.2000).
The Court must consider the cross-motions to strike evidence before taking up the merits of the summary judgment motion. The Court must decide which exhibits are properly part of the record on summary judgment and which exhibits do not satisfy the requirements of Fed.R.Civ.P. 56(e). I must determine whether the Defendants are entitled to summary judgment, based on evidence that satisfies the requirements of Rule 56, because the Plaintiffs' evidence proves "nothing more than differences in judgments and criticism by hindsight," or whether the Plaintiffs are entitled to proceed to trial because there are genuine issues of material fact that remain to be resolved. See Mathews v. Centex Telemgmt., Inc., 1994 WL 269734, *2 (N.D.Cal.1994). Because the Defendants bear the initial burden of coming forward with evidence demonstrating the basis of their motion and the absence of a genuine issue of material fact, I will take up the Plaintiff's Motion to Strike the Defendants' evidence, and in turn, the Defendants' Motion to Strike.
Plaintiffs seek to strike all or parts of Defendants' exhibits 3, 5, and 7, as "rank hearsay" that is not admissible under any exception to the hearsay rule. Exhibit 3 contains PricewaterhouseCoopers' (hereafter "PwC") 1996-1999 Actuarial Opinions; Exhibit 5 contains Deloitte & Touche's (hereafter "D & T") independent auditors' reports that are included in Acceptances 1996-1999 Forms 10-K; and Exhibit 7 is PwC's Actuarial Reports...
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