POPE INVESTMENTS II, LLC v. DEHENG LAW FIRM
POPE INVESTMENTS II, LLC, JAYHAWK PRIVATE EQUITY FUND, L.P., GUERILLA PARTNERS, L.P., ALDER OFFSHORE MASTER FUND, L.P., PARAGON CAPITAL, L.P., DAYBREAK SPECIAL SOLUTIONS MASTER FUND, LTD., AAMAXIN TRANSPORT GROUP, INC., ASIA BUSINESS MANAGEMENT GROUP, LTD., and SHANGHAI ANHANTE (BEIJING) MEDICAL TECHNOLOGY CO., LTD., Plaintiffs,
DEHENG LAW FIRM and HELEN LV, Defendants.
No. 10 Civ. 6608 (LLS).
United States District Court, S.D. New York.
August 15, 2012.
OPINION AND ORDER
LOUIS L. STANTON, District Judge.
Plaintiffs' first amended complaint in this action did not allege with particularity that these and other defendants acted with scienter in committing the alleged securities fraud. The Court dismissed that claim under Fed. R. Civ. P. 9(b) and the Private Securities Litigation Reform Act ("PSLRA") of 1995, 15 U.S.C. § 78u-4(b)(3)(A), declined to exercise supplemental jurisdiction over plaintiffs' state law claims, and granted plaintiffs leave to replead. See Pope Invs. II LLC v. Deheng Law Firm, 10 Civ. 6608 (LLS), 2011 WL 5837818 (S.D.N.Y. Nov. 21, 2011).
Plaintiffs now bring a second amended complaint; however, it lies against only Deheng Law Firm and Helen Lv, a former partner at Deheng.
Deheng moves to dismiss the second amended complaint, arguing that its additional allegations do not sufficiently allege Deheng's scienter and thus do not cure the first amended complaint's defects. Deheng incorporates by reference its arguments asserted in its motion to dismiss the amended complaint — that Deheng is not subject to personal jurisdiction in New York, that Deheng was never served with process in this action, and that plaintiffs fail to state a claim upon which relief can be granted — which were unnecessary for the Court to reach in its prior opinion. And, for the first time, Deheng invokes the Supreme Court's recent decision in Morrison v. National Australia Bank Ltd., 130 S.Ct. 2869 (2010), and argues that since the securities transaction giving rise to the alleged fraud did not take place in the United States but in China, plaintiffs cannot obtain relief under section 10(b) of the Securities and Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder.1BackgroundThe SMT Transactions