Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Securities and Exchange Commission v. Pcs Edventures!.Com

January 27, 2011

SECURITIES AND EXCHANGE COMMISSION,
PLAINTIFF,
v.
PCS EDVENTURES!.COM, INC., AND IDAHO CORPORATION,
ANTHONY A. MAHER, AN INDIVIDUAL, AND SHANNON M. STITH, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it Defendants' Motion to Strike the SEC's Amended Complaint Submitted by Defendant PCS Edventures!.Com, Inc. And Anthony A. Maher (Dkt. 15) and Defendants' Motion to Dismiss the SEC's Amended Complaint (And/Or for Summary Judgment) By Defendants PCS Edventures!.Com, Inc. and Anthony A. Maher (Dkt. 16). The Court heard oral argument on the motions on January 27, 2011, where the Court orally denied the motion to dismiss. The motion to strike was taken under advisement. The Court now issues a written decision further explaining its reason to deny the motion to dismiss, and ruling on the motion to strike.

LEGAL STANDARD

Defendants filed a document entitled "Motion to Dismiss the SEC's Amended Complaint (And/Or for Summary Judgment) By Defendants PCS Edventures!.Com, Inc. And Anthony A. Maher." Rule 12(b)(6) gives district courts discretion to accept and consider extrinsic materials offered in connection with motions to dismiss. In such circumstances, the court can convert the motion to one for summary judgment when the parties have notice that the court may look beyond the pleadings. Hamilton Materials, Inc. v. Dow Chemical Corp., 494 F.3d 1203, 1207 (9th Cir. 2007).

In this case, although both parties submitted some extrinsic evidence, both parties focused their briefs on the motion to dismiss legal standard. Moreover, much of the extrinsic evidence, including emails, was not properly authenticated. The Ninth Circuit "has repeatedly held that documents which have not had a proper foundation laid to authenticate them cannot support a motion for summary judgment." Beyene v. Coleman Sec. Services, Inc., 854 F.2d 1179, 1182 (9th Cir.1988). Authentication, required by Federal Rule of Evidence 901(a) is not satisfied simply by attaching a document to an affidavit. Id. Similarly, Rule 901(a) is not satisfied simply by attaching a document to a party's statement of facts. The parties must submit affidavits containing testimony of a witness with personal knowledge of the facts who attests to the identity and due execution of documents. Id. Accordingly, the Court will treat Defendants' motion as a motion to dismiss.*fn1

Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964 (2007). While a complaint attacked by a Rule 12(b)(6) motion to dismiss "does not need detailed factual allegations," it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Id. at 570. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.' " Id. at 557.

In a more recent case, the Supreme Court identified two "working principles" that underlie Twombly. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Id. "Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 1950. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.

Providing too much in the complaint may also be fatal to a plaintiff. Dismissal may be appropriate when the plaintiff has included sufficient allegations disclosing some absolute defense or bar to recovery. See Weisbuch v. County of L.A., 119 F.3d 778, 783, n. 1 (9th Cir. 1997) (stating that "[i]f the pleadings establish facts compelling a decision one way, that is as good as if depositions and other . . . evidence on summary judgment establishes the identical facts").

A dismissal without leave to amend is improper unless it is beyond doubt that the complaint "could not be saved by any amendment." Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir. 2009)(issued 2 months after Iqbal).*fn2 The Ninth Circuit has held that "in dismissals for failure to state a claim, a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss and Liehe, Inc. v. Northern California Collection Service, Inc., 911 F.2d 242, 247 (9th Cir. 1990). The issue is not whether plaintiff will prevail but whether he "is entitled to offer evidence to support the claims." Diaz v. Int'l Longshore and Warehouse Union, Local 13, 474 F.3d 1202, 1205 (9th Cir. 2007)(citations omitted).

Under Rule 12(b)(6), the Court may consider matters that are subject to judicial notice. Mullis v. United States Bank, 828 F.2d 1385, 1388 (9th Cir. 1987). The Court may take judicial notice "of the records of state agencies and other undisputed matters of public record" without transforming the motions to dismiss into motions for summary judgment. Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 (9th Cir. 2004). The Court may also examine documents referred to in the complaint, although not attached thereto, without transforming the motion to dismiss into a motion for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).

ANALYSIS

1. Defendants' Motion to Dismiss

Defendants ask the Court to dismiss all three claims against them. The first is a Rule 10(b) fraud cause of action. "To establish a violation of section 10(b) and Rule 10b-5, the Commission is required to show that there has been a misstatement or omission of material fact, made with scienter." Gebhart v. S.E.C., 595 F.3d 1034, 1040 (9th Cir. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.