the reasons that follow, defendants' motion will be denied.
The factual and procedural history of this case is contained in this court's Order of October 7, 1988. See document 11 of record. Briefly, plaintiffs contend that defendants failed to properly explain and disclose all of the risks inherent in securities trading, opened a margin account without proper authorization and "suitability," and used manipulative and deceptive devices to conceal the different transactions that had taken place in plaintiffs' accounts. See generally document 1 of record; see also document 9 of record, at p. 1.
By its Order of October 7, the court directed the parties to file supplemental briefs regarding the application of the United States Supreme Court's recent decision in Pinter v. Dahl, 486 U.S. 622, 108 S. Ct. 2063, 100 L. Ed. 2d 658 (1988) to an action under section 12(2) in general and to the instant factual situation in particular. See document 11 of record, at p. 4. Defendants filed their supplemental memorandum on October 17, 1988. See document 12 of record. On November 1, 1988, plaintiffs filed a supplemental memorandum in opposition to the motion to dismiss. See document 14 of record. Defendants' reply time having elapsed without further submission to the court, their motion to dismiss is now ripe for disposition.
On a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), the burden of proof lies with the moving party. Johnsrud v. Carter, 620 F.2d 29, 33 (3rd Cir. 1980). In ruling upon a motion to dismiss, all of the well-pleaded allegations of the complaint must be accepted as true and construed in the light most favorable to the party opposing the motion. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974); Truhe v. Rupell, 641 F. Supp. 57, 58 (M.D. Pa. 1985) (Rambo, J.). The motion should be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 746, 96 S. Ct. 1848, 1853, 48 L. Ed. 2d 338 (1976); see also Kuchka v. Kile, 634 F. Supp. 502, 506 (M.D. Pa. 1985) (Nealon, C.J.).
Defendants first argue that, because they are not "sellers" within the meaning of section 12(2), plaintiffs' count based on section 12(2) must be dismissed. Defendants rely on Collins v. Signetics Corp., 605 F.2d 110, 113 (3d Cir. 1979), which held that, in the absence of some special relationship between the issuer and the actual seller of securities, a purchaser not in privity with the issuer has no claim under section 12(2) against the issuer. See id. at 113-114. The court believes, however, that defendants' argument must be rejected based on the Supreme Court's subsequent decision in Pinter v. Dahl.
In Pinter, the Supreme Court held that section 12 "at the very least . . . contemplates a buyer-seller relationship not unlike traditional contractual privity," 108 S. Ct. at 2076, but its scope was not limited to persons who pass title. Id. Instead, since "solicitation is the stage at which an investor is most likely to be injured," id. at 2078, the Court concluded that the term "seller" must include the person "who successfully solicits the purchase, motivated at least in part by a desire to serve his own financial interests or those of the securities owner." Id. at 2079.
Pinter was decided in the context of a section 12(1) action. While the court did not expressly "take a position on . . . the scope of a statutory seller for purposes of § 12(2)," it did state as follows:
The "offers or sells" and the "purchasing such security from him" language that governs § 12(1) also governs § 12(2), which provides a securities purchaser with a similar rescissionary cause of action for misrepresentations . . . . Most courts and commentators have not defined the defendant class differently for purposes of the two provisions . . . . The question whether anyone beyond the transferor of title, or immediate vendor, may be deemed a seller for purposes of § 12 has been litigated in actions under both § 12(1) and § 12(2). Decisions under § 12(2) addressing the "seller" question are thus relevant to the issue presented to us in this case, and, to the extent, we discuss them here.