Ronson Corp. v. Steel Partners II, L.P. , 119 F. App'x 392 ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
1-6-2005
Ronson Corp v. Steel Partners II
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-1202
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"Ronson Corp v. Steel Partners II" (2005). 2005 Decisions. Paper 1578.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 04-1202
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RONSON CORPORATION; LOUIS V. ARONSON, II;
ROBERT A. ARONSON; ERWIN M. GANZ;
I. LEO MOTIUK; GERARD J. QUINNAN;
JUSTIN P. WALDER; SAUL H. WEISMAN
v.
STEEL PARTNERS II, L.P.; STEEL PARTNERS LLC;
WARREN G. LICHTENSTEIN; JACK HOWARD;
HOWARD M. LORBER; RONALD HAYES; TRAVIS BRADFORD
JOHN DOES, 1-100
Ronson Corporation, Louis V. Aronson,II,
Robert A. Aronson, Erwin M. Ganz,
Gerard J. Quinnan, Justin P. Walder,
Appellants
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Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 03-cv-02350)
District Judge: Hon. Garrett E. Brown, Jr.
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Argued: November 29, 2004
BEFORE: RENDELL, ALDISERT and MAGILL*, Circuit Judges
(Filed: January 6, 2005 )
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_______________________
* Honorable Frank Magill, Senior Judge of the United States Court of Appeals for
the Eighth Circuit, sitting by designation.
Kenneth B. Falk
Deutch & Falk LLC
843 Rahway Avenue
Woodbridge, NJ 07095
Counsel for Appellant
Ronson Corporation
Andrew T. Berry [ARGUED]
Seth T. Taube
McCarter & English, LLP
100 Mulberry Street
Four Gateway Center
Newark, NJ 07102-0652
Counsel for Appellants
Louis V. Aronson II, Robert A. Aronson,
Erwin M. Ganz, Gerard J. Quinnan, and
Justin P. Walder
Thomas J. Fleming [ARGUED]
Olshan Grundman Frome
Rosenzweig & Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, NY 10022
Counsel for Appellees
Steel Partners II, L.P., Steel Partners, LLC.,
Warren G. Lichtenstein, Jack Howard
Alan Arkin [ARGUED]
Arkin Kaplan LLP
590 Madison Avenue, 35 th Floor
New York, NY 10022
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OPINION OF THE COURT
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MAGILL, Senior Circuit Judge.
Plaintiff-Appellant Ronson Corp. (“Ronson”) appeals the district court’s order
granting Defendant-Appellees Steel Partners II, L.P., Steel Partners, L.L.C., Warren
Lichtenstein, and Jack Howard’s (collectively “Steel Partners”) motion to dismiss and
Howard M. Lorber’s separate motion to dismiss Ronson’s complaint as time-barred. We
have jurisdiction under 28 U.S.C. § 1291. For the reasons stated by the District Court, we
affirm.
I.
On March 11, 1998, Steel Partners filed a Schedule 13D to report its ownership
interest in Ronson, but it did not check the box to indicate that it was acting as part of a
group in acquiring Ronson stock. Steel Partners has filed several amendments to its
Schedule 13D, none of which disclose group membership. It is clear from the record that
Ronson suspected Steel Partners’ participation in a group as early as 1999. In a letter
from Ronson’s CEO, Louis V. Aronson, II, to Steel Partners’ CEO, Warren Lichtenstein,
Aronson uses phrases such as “[w]hile you may believe that you and your secret investor
group are entitled to special treatment and privileges . . . you and your group have not
demonstrated . . . you have boasted to your investor group . . . .” App. at 159.
On May 16, 2003, Ronson filed a complaint alleging that Steel Partners’ failure to
disclose its group membership violated section 13(d)(3) of the Securities and Exchange
Act of 1934, 15 U.S.C. § 78m(d)(3). The district court dismissed the complaint as time-
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barred because Ronson was on inquiry notice of any alleged group activity since 1999,
but it did not file a complaint until May 16, 2003. In doing so, the district court rejected
Ronson’s argument that Steel Partners’ subsequent amendments to its Schedule 13D, two
of which were filed within a year prior to Ronson’s complaint, constitute new violations
and should restart the statute of limitations.
II.
We review the district court’s decision de novo. Merle v. United States, 351 F.3d
92, 94 (3d Cir. 2003). A motion to dismiss may be granted only if, accepting all well-
pleaded allegations in the complaint as true and viewing them in the light most favorable
to the plaintiff, the plaintiff is not entitled to relief. Oran v. Stafford, 226 F.3d 275, 279
(3d Cir. 2000).
Ronson was on inquiry notice, and the statute of limitations period began to run,
when it “‘discovered or in the exercise of reasonable diligence should have discovered the
basis for [its] claim’” against Steel Partners. In re NAHC, Inc. Sec. Litig., 306 F.3d 1314,
1325 (3d Cir. 2002) (quoting Gruber v. Price Waterhouse, 697 F. Supp. 859, 863 (E.D.
Pa. 1988)). “Whether the plaintiffs, in the exercise of reasonable diligence, should have
known of the basis for their claims depends on whether they had ‘sufficient information
of possible wrongdoing to place them on “inquiry notice” or to excite “storm warnings”
of culpable activity.’” Id. (quoting Gruber, 697 F. Supp. at 864).
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The basis for Ronson’s claim is Steel Partners’ nondisclosure of group activity,
and Ronson had information as early as 1999 to provide a “storm warning” that the
defendants were allegedly acting as a group. Steel Partners, by continuously failing to
disclose such group membership, has not committed any new violations. See Green v.
Fund Asset Mgmt., L.P., 19 F. Supp. 2d 227, 233 (D.N.J. 1998). Thus, Ronson’s
complaint is time-barred under both the Securities and Exchange Act’s one-year
limitations period, 15 U.S.C. § 78r(c), and the Sarbanes-Oxley Act’s two-year limitations
period, 28 U.S.C. § 1658(b)(1).
Because the District Court correctly granted Steel Partners’ motion and Lorber’s
separate motion to dismiss Ronson’s complaint, we will AFFIRM.
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