Pacific Investment Management Co. v. Mayer Brown LLP ( 2010 )

B.D. PARKER, JR., Circuit Judge,

concurring.

The panel’s opinion does an admirable job with a formidable task — distilling a theory of Rule 10(b) liability for secondary actors from our precedents. Therefore, I concur in Judge Cabranes’s careful and comprehensive opinion. Nonetheless, even after this opinion, I fear that our Circuit’s law in this area is far from a model of clarity. Our decisions in Wright v. Ernst & Young LLP, 152 F.3d 169, 175 (2d Cir.1998), and Lattanzio v. Deloitte & Touche LLP, 476 F.3d 147, 155-56 (2d Cir.2007), both hold that secondary actors are not liable to investors where the allegedly misleading statements were not attributed to the defendants. However, after Wright, we issued In Re Scholastic Corp. Securities Litigation, 252 F.3d 63, 75-76 (2d Cir.2001), where we concluded that a corporate vice president could be liable for being “involved” in disseminating misleading statements, without requiring public attribution of the statements to him. It is true that the defendant in Scholastic Corp. was a corporate insider, rather than an outside accountant or lawyer. However, the court did not distinguish Wright on that basis; indeed, it did not cite Wright at all. At least one district court in this Circuit interpreted Scholastic Corp. to say that we had relaxed Wright’s attribution requirement. See In re Global Crossing, Ltd. Sec. Lit., 322 F.Supp.2d 319, 331-33 (S.D.N.Y.2004) (Lynch, J.). Subsequently, we reaffirmed a strict attribution requirement in Lattanzio, without mentioning Scholastic Corp. Finally, in United States v. Finnerty, we interpreted Wright to mean that a defendant “cannot incur primary liability for a statement neither made by him nor attributed to him at the time of its dissemination,” language which one could interpret to suggest that strict attribution is not necessary. 533 F.3d 143, 150 (2d Cir.2008) (quotation marks omitted).

While our own precedent appears to be not invariably consistent, our sibling circuits have debated sharply whether an attribution requirement is necessary under Central Bank of Denver, N.A., v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994). Compare Anixter v. Home-Stake Prod. Co., 77 F.3d 1215, 1226 (10th Cir.1996) and SEC v. Wolfson, 539 F.3d 1249, 1258-60 (10th Cir.2008) (rejecting an attribution requirement) with Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194, 1205 (11th Cir.2001) (adopting an attribution requirement). In an amicus brief submitted in this case, the SEC takes the position that a creator standard is fully consistent with Central Bank of Denver. Moreover, it argues that an attribution requirement would prevent the securities laws from deterring individuals who make false statements anonymously or through proxies. The SEC also observes that private plaintiffs who bring securities claims already face significant hurdles — they must prove that the defendants knew the falsity of their statements, and as a result of the Private Securities Litigation Reform Act, must “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2). The Appellants in our case argue with some force against a result that shields Mayer Brown from damages in a circumstance where the partner responsible for the misleading statements was criminally convicted and received a prison term of seven years. See Amended Judgment, United States of America v. Collins, No. 1:07-cr-01170 (S.D.N.Y. Mar. 24, 2010).

In light of the importance of the existence, vel non, of an attribution requirement to the securities laws, the bar, and the securities industry, this case could provide our full Court, as well as, perhaps, the Supreme Court, with an opportunity to clarify the law in this area.