Camcorp Interests Ltd. v. Bank of Am. Corp.

13-4422-cv
Camcorp Interests Ltd. v. Bank of Am. Corp.

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
19th day of May, two thousand fourteen.

Present: ROSEMARY S. POOLER,
REENA RAGGI,
RICHARD C. WESLEY,
Circuit Judges.
_____________________________________________________

IN RE BANK OF AMERICA AIG DISCLOSURE SECURITIES LITIGATION
_____________________________________________________

DAVID LAWRENCE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS
SIMILARLY SITUATED,

Plaintiff,

CAMCORP INTERESTS LIMITED,

Plaintiff-Appellant,

ALASKA ELECTRICAL PENSION FUND, NORTHERN IRELAND LOCAL
GOVERNMENT OFFICERS’ SUPERANNUATION COMMITTEE,

Movants-Appellants,

-v- 13-4422-cv

BANK OF AMERICA CORPORATION, BRIAN T. MOYNIHAN,
CHARLES H. NOSKI, NEIL A. COTTY, BRUCE R. THOMPSON,

Defendants-Appellees.
_____________________________________________________
Appearing for Appellants: Jason Zweig, Hagens Berman Sobol Shapiro LLP (Steve W.
Berman, Reed Katherine, on the brief), Seattle, WA.

Appearing for Appellees: George M. Garvey, Munger Tolles & Olson LLP, Los Angeles,
CA (Marc T.G. Dworsky, Joshua Patashnik, Munger Tolles &
Olson LLP, Los Angeles, CA; Luke A. Connelly, Winston &
Strawn LLP, New York, NY, on the brief).

Appeal from the United States District Court for the Southern District of New York
(Koeltl, J.).

ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED.

Plaintiff Camcorp Interests Limited and movants Alaska Electrical Pension Fund and
Northern Ireland Local Government Officers’ Superannuation Committee (collectively,
“Camcorp”), appeal the November 7, 2013 judgment, entered pursuant to the November 4, 2013
opinion and order of the United States District Court for the Southern District of New York
(Koeltl, J.), granting the motion to dismiss brought by defendants Bank of America Corporation,
Brian T. Moynihan, Charles H. Noski, Neil A. Cotty, and Bruce R. Thompson (collectively,
“Bank of America”). On appeal, Camcorp principally asserts that the district court erred in
determining, inter alia, that Camcorp’s Second Amended Complaint (the “SAC”) failed to
plausibly allege materially false statements made by Bank of America based on Accounting
Standards Codification (“ASC”) 450. Camcorp also argues that the district court erred in
determining that the SAC failed to adequately allege that Bank of America acted with the
requisite scienter in making these misleading statements. We assume the parties’ familiarity with
the underlying facts, procedural history, and specification of issues for review.

We review the dismissal of a complaint pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure de novo. Steginsky v. Xcelera Inc., 741 F.3d 365, 368 (2d Cir. 2014). Section
10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, make it
“unlawful for any person . . . [t]o make any untrue statement of a material fact or to omit to state
a material fact necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.” 17 C.F.R. § 240.10b-5(b). Furthermore, the
Private Securities Litigation Reform Act requires that the complaint “state with particularity
facts giving rise to a strong inference that the defendant[s] acted with the required state of mind.”
15 U.S.C. § 78u-4(b)(2). As relevant to the scienter requirement here, Camcorp must allege facts
that constitute “strong circumstantial evidence of conscious misbehavior or recklessness.” ATSI
Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 99 (2d Cir. 2007). Furthermore, reckless
conduct must be, “at the least, conduct which is highly unreasonable and which represents an
extreme departure from the standards of ordinary care.” Chill v. Gen. Elec. Co., 101 F.3d 263,
269 (2d Cir. 1996) (internal quotation marks omitted).

Even assuming, arguendo, that Camcorp pleaded a colorable allegation that ASC 450
required Bank of America to disclose with particularity the existence of a potential lawsuit
against it by American International Group we conclude, like the district court, that the SAC
does not plausibly allege circumstantial evidence of conscious misbehavior. Like the district

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court, we note that Camcorp must adequately allege conduct that was “highly unreasonable.” Id.
(internal quotation marks omitted). And on this point, we agree with the district court’s
following conclusion.

[T]he allegations in the [SAC] do not support a cogent inference that defendants’
conduct was highly unreasonable and violative of a known or obvious duty. The
much more compelling conclusion is that the defendants did not think there was
any need for public disclosure in view of the information already in the
marketplace, the aggregate disclosure of [Bank of America]’s findings, and the
lack of any definitive regulatory requirement requiring the disclosure of a possible
lawsuit of indeterminate amount.

In re Bank of America AIG Disclosure Sec. Litig., — F. Supp. 2d —, No. 11-cv-6678 (JGK),
2013 WL 5878814, at *18 (S.D.N.Y. Nov. 1, 2013) (emphasis added). Because Camcorp failed
to adequately plead scienter, a necessary element of a claim under Section 10(b) and Rule 10b-5,
we affirm the district court’s grant of Bank of America’s motion to dismiss.

We have considered the remainder of Camcorp’s arguments, and find them to be without
merit. Accordingly, the judgment of the district court hereby is AFFIRMED.

FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk

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