FILED
NOT FOR PUBLICATION JUN 05 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
GEORGIA ALEXANDER, on behalf of No. 13-55726
herself and all others similarly situated,
D.C. No. 8:12-cv-00813-JVS-AN
Plaintiff - Appellant,
v. MEMORANDUM*
CITIGROUP GLOBAL MARKETS INC.
and MORGAN STANLEY SMITH
BARNEY, LLC,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
James V. Selna, District Judge, Presiding
Submitted June 2, 2015**
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: THOMAS, Chief Judge, CALLAHAN, Circuit Judge and SINGLETON,***
Senior District Judge.
Plaintiff-Appellant Georgia Alexander appeals the dismissal of her claims
for securities fraud under Section 10(b) of the Securities Exchange Act, 15 U.S.C.
§ 78j(b), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5; violation of SEC Rule 10b-
16, 17 C.F.R. § 240.10b-16; and breach of fiduciary duty under California law.
Because the parties are familiar with the facts and procedural history, we do not
restate them except as necessary to explain our decision. We have jurisdiction
under 28 U.S.C. § 1291, and we affirm.
1. Plaintiffs asserting Rule 10b-5 claims must allege that the defendant
made a material false statement or omission, and must also allege a strong
inference of scienter. Rubke v. Capitol Bankcorp. Ltd., 551 F.3d 1156, 1164–65
(9th Cir. 2009). The express terms of Alexander’s client agreements explained that
Morgan Stanley could sell her stock without demand for payment and without
notice in order to meet margin requirements, and that Morgan Stanley could
change the margin requirements without notice. The account conversion materials
also explained that Alexander could see a change in borrowing power and margin
requirements after the conversion. Given these express disclosures, Alexander did
***
The Honorable James K. Singleton, Senior District Judge for the U.S.
District Court for the District of Alaska, sitting by designation.
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not sufficiently allege falsity or scienter. A more compelling explanation is that
Morgan Stanley acted without fraudulent intent.
2. Plaintiffs asserting Rule 10b-16 claims must adequately plead
scienter. Robertson v. Dean Witter Reynolds, 749 F.2d 530, 540 (9th Cir. 1984).
Alexander’s 10b-16 claim fails to adequately plead scienter for the same reasons as
her Rule 10b-5 claims.
3. Under California law, a claim for breach of fiduciary duty must allege
the existence of a fiduciary relationship, a duty imposed by the relationship, breach
of that duty by the defendant, and damages from the breach. City of Atascadero v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 80 Cal. Rptr. 2d 329, 355 (Cal. Ct.
App. 1998). Because the express terms of the client agreements allowed Morgan
Stanley to sell Alexander’s stock without demand for payment and without notice
in order to meet margin requirements, and allowed Morgan Stanley to change the
margin requirements without notice, Morgan Stanley did not breach any duty it
may have owed to Alexander. Moreover, to the extent the breach of fiduciary duty
claim was based on false statements or non-disclosures, it is precluded by the
Securities Litigation Uniform Standards Act of 1998, 15 U.S.C. § 77p(b). See
Madden v. Cowen & Co., 576 F.3d 957, 965 (9th Cir. 2009).
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4. A district court's decision to allow amendment is reviewed for abuse
of discretion, and the district court has broad discretion where the plaintiff has
previously filed an amended complaint. United States ex rel. Cafasso v. Gen.
Dynamics C4 Sys., Inc., 637 F.3d 1047, 1058 (9th Cir. 2011). Leave to amend is
not required where granting leave would be futile. Id. Alexander has already filed
three amended complaints, and she does not explain what further amendments she
might make to cure the pleading deficiencies. The district court did not abuse its
discretion in denying further leave to amend.
AFFIRMED.
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