Plaintiffs' Memorandum of Law in Opposition to Motions to Dismiss ...

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developing projects but that actual project implementation was lagging behind the original projections. Mr. Skilling joined him in answering questions from the Committee regarding EES's capital expenditures and the potential implication of the slowdown in project implementation on future earnings. Present at the meeting were: Winokur, Belfer, Blake, Chan, Meyer, Pereira, Savage, Urquhart, Duncan, Gramm, LeMaistre, Mendelsohn, Skilling, Buy, Causey, Fastow, Glisan, Gorte, Koenig, Murphy, Sutton, Carter. III. Argument A. Plaintiffs Meet the Applicable Pleading Standard A motion to dismiss must be denied unless it appears beyond doubt that the plaintiff can prove no set of facts upon which the court can grant relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982) (citing Wright & Miller, Federal Practice and Procedure: Civil §1357 at 598 (1969), for the proposition that "'the motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted'"); In re Landry's Seafood Restaurants, Inc. Sec. Litig., Civ. No. H-99-1948, slip op. at 4 n.8 (S.D. Tex. Feb. 20, 2001). "In the securities context, Rule 12(b)(6) dismissals are difficult to obtain because the cause of action deals primarily with fact-specific inquiries." Haack v. Max Internet Communs., Inc., No. 3:00-CV-1662-G, 2002 U.S. Dist. LEXIS 5652, at *11 (N.D. Tex. Apr. 2, 2002) (citing Basic Inc. v. Levinson, 485 U.S. 224, 240 (1988)). In determining a motion to dismiss, the court must "accept as true all well-pleaded allegations in the complaint and ... construe those allegations in the light most favorable to the plaintiff." Rubinstein v. Collins, 20 F.3d 160, 166 (5th Cir. 1994); Nathenson v. Zonagen Inc., 267 F.3d 400, 406 (5th Cir. 2001) ("we will accept the facts alleged in the complaint as true and construe the allegations in the light most favorable to the plaintiff"); Scheuer v. Rhodes, 416 U.S. 232 (1974); Landry's, slip op. at 4 n.8 ("In reviewing the sufficiency of a complaint in response to a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b) (6) ... the district court should consider all allegations in favor of the plaintiff and accept as true all well-pleaded facts in the complaint."). Finally, the court should consider the allegations in their entirety. STI Classic Fund v. Bollinger Indus., Inc., No. 3-96-CV-823-R, 1996 U.S. Dist. LEXIS 21553, at *5 (N.D. Tex. Oct. 25, - 35 -
1996) (it is improper to isolate "the circumstances alleged in Plaintiffs' amended complaint rather than to consider them in their totality"). When reviewing a complaint's sufficiency at the motion to dismiss stage, the Fifth Circuit has held a court may take judicial notice of public filings, documents referred to or partially quoted in the complaint, and documents of public record: When deciding a motion to dismiss a claim for securities fraud on the pleadings, a court may consider the contents of relevant public disclosure documents which (1) are required to be filed with the SEC, and (2) are actually filed with the SEC. Such documents should be considered only for the purpose of determining what statements the documents contain, not to prove the truth of the documents' contents. Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017-18 (5th Cir. 1996). Accord In re Sec. Litig. BMC Software, Inc., 183 F. Supp. 2d 860, 881-82 (S.D. Tex. 2001) (same). Documents that have recently become part of the public record, including Congressional testimony and Enron-related documents furnished to Congress, are "'pertinent,' 'central,' or 'integral to [Plaintiffs'] claim,'" BMC Software, 183 F. Supp. 2d at 883, and are thus annexed to and incorporated in plaintiffs' opposition. 14 These documents are minutes of certain meetings of Enron's Board and its committees that pertain to the central allegations in the CC. Defendants are on notice of these documents because the transactions the Board approved at these meetings are described in detail throughout the CC, and the CC alleges that the directors were aware of, approved, and failed to correct these acts of fraud. See, e.g., 60, 395. Moreover, defendants acknowledge notice of these documents in their technical pleading challenge to the CC: "It is telling that under the unique circumstances of this case, with thousands of documents already in the public domain, daily investigative newspaper reports, frequent congressional hearings, testimony from key witnesses, and countless ongoing investigations, all of which were available to Plaintiffs in preparing their complaint, the particularized allegations against the individual Outside Directors are few, superficial, and wholly lacking in any facts showing fraudulent intent on their part." Outside Dir. Br. at 49. Implicit in this argument is the admission that the Outside Directors' motion does not claim that plaintiffs' case is frivolous or lacks merit, but seeks refuge in what it believes to be an 14 Here, as elsewhere, emphasis is added and citations and footnotes omitted unless otherwise noted. - 36 -
Page 1 and 2: UNITED STATES DISTRICT COURT SOUTHE
Page 3 and 4: Page c. The Outside Directors Who S
Page 5 and 6: Page 5. Defendants Claim They Can A
Page 7 and 8: Page Chiarella v. United States, 44
Page 9 and 10: Page In re AST Research Sec. Litig.
Page 11 and 12: Page Krim v. BancTexas Group, 989 F
Page 13 and 14: Page Santa Fe Indus., Inc. v. Green
Page 15 and 16: Page LEGISLATIVE HISTORY H.R. Rep.
Page 17 and 18: in various elements of Enron's sche
Page 19 and 20: to generate 40% of the profits Enro
Page 21 and 22: • No other company offered such i
Page 23 and 24: of dollars to maintain its liquidit
Page 25 and 26: In fact, in mid-8/01, an Enron exec
Page 27 and 28: and course of business, that Enron'
Page 29 and 30: Investigations Subcommittee of the
Page 31 and 32: LJM's interest, Enron had agreed in
Page 33 and 34: fraudulent course of business by ap
Page 35 and 36: As stated above, the Board received
Page 37 and 38: deceptive device, J.P. Morgan and E
Page 39 and 40: e triggered, which would require En
Page 41 and 42: I realize that we have had a lot of
Page 43 and 44: Debt Amount of Understatement Share
Page 45 and 46: 100 90 80 Total Shares Sold By Defe
Page 47 and 48: year and make any recommendations t
Page 49: • Committee receives a document f
Page 53 and 54: defendants' alleged securities frau
Page 55 and 56: The CC specifies precisely what sta
Page 57 and 58: Date Statement Outside Director Sig
Page 59 and 60: Robertson, 32 F. Supp. 2d. 443. The
Page 61 and 62: facts that affect the validity or p
Page 63 and 64: provides: deceptive device or contr
Page 65 and 66: Id. at 363-64. Accord Heller v. Am.
Page 67 and 68: The Court said: "[T]he text of the
Page 69 and 70: 3. The CC Alleges Facts Giving Rise
Page 71 and 72: These actions alone are enough to d
Page 73 and 74: would have resulted in a $0.4 milli
Page 75 and 76: approval of them was necessary, and
Page 77 and 78: These are distinct liability theori
Page 79 and 80: Thus, Enron's Board had continuous
Page 81 and 82: of a mere $13 million (an almost 10
Page 83 and 84: is an issue of fact that is inappro
Page 85 and 86: 100 times those in prior periods. 4
Page 87 and 88: a considerable number of shares aft
Page 89 and 90: (g) Norman Blake Although Blake onl
Page 91 and 92: This inquiry into contemporaneity p
Page 93 and 94: puts and calls); see also Dau v. Ce
Page 95 and 96: unequivocally hold Rule 9(b) does n
Page 97 and 98: offending registration statement. S
Page 99 and 100: arguments are nothing more than a c
Page 101 and 102:
occurred via the LJM2 partnership's
Page 103 and 104:
Enron provides premium broadband de
Page 105 and 106:
actually hedging with itself, not r
Page 107 and 108:
For example, the 00-01 Registration
Page 109 and 110:
illion as of 7/01. And, contrary to
Page 111 and 112:
also incorporated all documents fil
Page 113 and 114:
possession, direct or indirect, of
Page 115 and 116:
Anheuser-Busch Cos. v. Summit Coffe
Page 117 and 118:
made by the primary violator." Id.;
Page 119 and 120:
IV. Conclusion Accordingly, based o
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Plaintiffs' Memorandum of Law in Opposition to Motions to Dismiss ...

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