Horizon Asset Mgmt. Inc. v. H&R Block Inc., No. 08-1593
In a putative consolidated class action against H&R Block, Inc. (Block), and individual corporate officers and directors of Block involving allegations of securities fraud claims under section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, dismissal of the action is affirmed in part and reversed in part where: 1) district court did not err in dismissing plaintiff's claims against the individual defendants with respect to the false statements as plaintiff has not raised a strong inference that the defendants made any of the statements with the requisite scienter; 2) district court did not err in dismissing the consolidated complaint as plaintiff failed to plead scienter adequately with respect to Block or the individual defendants; 3) because the control-person claims under section 20(a) of the Securities Exchange Act of 1934 are predicated on some underlying primary violation, plaintiff also failed to state a claim under section 20(a); and 4) while district court's consolidation of the nine securities and derivative actions against Block under Federal Rules of Civil Procedure 42(a) was not an abuse of discretion, it was error to appoint plaintiff as the sole lead plaintiff to prosecute a single consolidated complaint, and thus, district court's order designating plaintiff as the lead plaintiff for the derivative claims brought by other parties is reversed and the separate complaints filed by those plaintiffs are reinstated on remand.
Submitted: October 16, 2008
Filed: September 9, 2009
Opinion by Colloton, Circuit Judge