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Cehula v. Janus Distributors

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


February 19, 2008

STEPHEN E. CEHULA, ET AL., PLAINTIFFS,
v.
JANUS DISTRIBUTORS, LLC, DEFENDANT.

The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM ORDER

This matter is before the Court on a Motion to Dismiss Second Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) [DE 33], filed by Defendant Janus Distributors, LLC on December 24, 2007, in which Defendant moves to dismiss all claims for failure to plead with particularity in compliance with Federal Rule of Civil Procedure 9(b), or in the alternative, moves to dismiss Plaintiffs' fraud and breach of contract claims because they are time barred by the statute of limitations.

While the Court recognizes that Plaintiffs' Second Amended Complaint is hardly a paradigm of detail, the Court is " 'sensitive' to the fact that application of [] Rule [9(b)] prior to discovery 'may permit sophisticated defrauders to successfully conceal the details of their fraud.' " Shapiro v. ULB Fin. Corp., 964 F.2d 272, 284 (3d Cir. 1992) (citing Christidis v. First Pa. Mortgage Trust, 717 F.2d 96, 99 (3rd Cir. 1983)). "Accordingly, the normally rigorous particularity rule has been relaxed somewhat where the factual information is peculiarly within the defendant's knowledge or control." In re Burlington Coat Factory Securities Litigation, 114 F.3d 1410, 1418 (3d Cir. 1997) (citing Shapiro, 964 F.2d at 285)). Here, the Court finds that because of the nature of Plaintiffs' claims, i.e., allegations of corporate fraud and misconduct as to investors, much of the relevant information is in the hands of Defendant. Accordingly, the Court concludes that the instant matter should proceed to discovery (at least in some form) in order to shed light on the specifics of Plaintiffs' claims.*fn1

With the above in mind and considering the standard at the pleading stage, particularly in light of the Supreme Court's recent ruling in Bell Atlantic Corporation v. Twombly, --- U.S. ---, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) as well as the Third Circuit's interpretation of Bell Atlantic in Phillips v. Count of Allegheny, --- F.3d ---, 2008 WL 305025, at *6 (3d Cir. Feb. 5, 2008), the Court DENIES Defendant's Motion to Dismiss Second Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) [DE 33].

Defendant shall have until March 10, 2008, within which to file a responsive pleading to Plaintiffs' Second Amended Complaint.

Nora Barry Fischer United States District Judge


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