IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION. Plaintiffs, Civil Action No CV-159 v.

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION Lane McNamara, et al., Plaintiffs, Civil Action No CV-159 v. (Jury) Bre-X Minerals Ltd., et al., Defendants. PLAINTIFFS RESPONSE TO MOTIONS TO DISMISS SECOND AMENDED COMPLAINT Plaintiffs respectfully submit this memorandum in opposition to the motions to dismiss the Second Amended Class Action Complaint (Dkt. # 207) filed by defendants Bresea Resources, Ltd., Lehman Brothers Inc., J.P. Morgan & Co., Inc., Hugh Lyons, Paul Kavanagh, Kilborn Engineering Pacific Ltd., SNC-Lavalin Inc., John Thorpe, and Nesbitt Burns, Inc. (Dkt. ## 202, 228, 233, 235, 236, 238, 240, 241). As the Court is aware, the Second Amended Complaint does not allege new facts or causes of action as to these defendants. Its only substantive change is the addition of Barrick Gold Corp. as a defendant. For that reason, defendants moving to dismiss the Second Amended Complaint have not advanced any new arguments, but have instead adopted and re-asserted their arguments challenging the Amended Class Action Complaint (Dkt. # 3). Plaintiffs have previously shown that the objections to the Amended Complaint are without merit. Accordingly, because defendants advance nothing new, the relief sought with respect to the Second Amended Complaint should be denied for the same reasons: Plaintiffs have pleaded a valid claim under the federal securities laws and Fed. R. Civ. P. 9(b), including the element of scienter, the

2 existence of primary violations, and the particulars of defendants fraud. Plaintiffs have pleaded valid claims for common law fraud and negligent misrepresentation, including the element of reliance under Texas common law. The Court has subject matter jurisdiction over the claims of non-u.s. purchasers of Bre-X and Bresea stock who bought on foreign exchanges, under the conduct and effects tests. Venue is proper in this District, as acts or transactions violating the securities laws occurred here. The Court should not transfer venue to either Delaware or New York because six Lead Plaintiffs reside in Texas, close to a thousand class members have chosen this forum to litigate their claims, and both New York nor Delaware suffer congested dockets. The Court has personal jurisdiction over all defendants, as a result of their extensive and purposeful contacts with the U.S., including making false statements directed to investors here, approving and disseminating in the U.S. numerous press releases and regulatory filings, and participating in the listing of Bre-X on the NASDAQ. Dismissal on grounds of comity or forum non conveniens is inappropriate, given the U.S. s strong interest in the Bre-X/Bresea fraud as well as the absence of adequate remedies for defrauded shareholders under Canadian law. Each of these responses was made in opposition to defendants earlier motions to dismiss the Amended Complaint. The responses are set forth in these briefs and affidavits: 1) Plaintiffs Opposition to Motions to Dismiss or Transfer, filed December 19, 1997 (Dkt. # 77), including Affidavit of Paul Miller, Affidavit of Richard Y. Roberts (former SEC Commissioner), Affidavit of Lloyd William Houlden (former Justice of Ontario appellate court); 2) Plaintiffs Opposition to Additional Motions to Dismiss or Transfer, filed January 30, 1998 (Dkt. # 115), including [Supplemental] Affidavit of Lloyd William Houlden,

3 Affidavit of Michael A. Marek (economics expert); 3) Plaintiffs Response to Defendant McAnulty s Motion to Dismiss, filed March 23, 1998 (Dkt. # 158); 4) Plaintiffs Supplemental Brief on Personal Jurisdiction Motions, filed March 26, 1998 (Dkt. # 161), including Affidavit of Robert McBey (class member residing in E.D. Tex.); 5) Plaintiffs Affidavits in Opposition to Motions to Dismiss, filed March 26, 1998 (Dkt. # 163), including [Supplemental] Affidavit of Michael A. Marek, [Second Supplemental] Affidavit of Lloyd William Houlden, Affidavit of Michael J. Lawrence (mining expert), Affidavit of James Wyly; 6) Plaintiffs Summary of Arguments, filed March 26, 1998 (Dkt. # 165); 7) Plaintiffs Corrected Affidavits in Opposition to Motions to Dismiss, filed April 3, 1998 (Dkt. # 174), including [Supplemental] Affidavit of Michael A. Marek, [Second Supplemental] Affidavit of Lloyd William Houlden, Affidavit of Michael J. Lawrence, Affidavit of James Wyly; 8) Supplemental Affidavit of Paul Miller, filed April 24, 1998 (Dkt. # 200); 9) Affidavit of Michael Chan (class member residing in Edmonton, Alberta), filed May 8, 1998 (Dkt. # 213); 10) Affidavit of John MacDonald (class member residing in Toronto, Ontario), filed May 8, 1998 (Dkt. # 214); -3-

4 11) Plaintiffs Opposition to Defendant Jeannette Walsh s Motion to Dismiss for Lack of Personal Jurisdiction, filed May 13, 1998 (Dkt. # 218); 12) Second Supplemental Affidavit of Paul Miller, filed May 29, 1998 (Dkt. # 237); and 13) Plaintiffs Opposition to Defendant David Walsh s Motion to Dismiss for Lack of Personal Jurisdiction, filed June 2, 1998 (Dkt. # 242). For the reasons and evidence set forth in the above briefs and affidavits, the motions to dismiss filed by defendants Bresea, Lehman, J.P. Morgan, Lyons, Kavanagh, Kilborn, SNC- Lavalin, Thorpe, and Nesbitt Burns, directed to the Second Amended Class Action Complaint, should be denied and plaintiffs granted all other appropriate relief. Dated: June 9, 1998 Respectfully submitted, Damon Young State Bar No John M. Pickett Young & Pickett 4122 Texas Boulevard Texarkana, Texas (903) R. Paul Yetter State Bar No Autry W. Ross Yetter & Warden, L.L.P. 600 Travis, Suite 3800 Houston, Texas (713) Attorney-in-Charge for Plaintiffs -4-

5 Charles Edward Miller State Bar No A. Paul Miller State Bar No Miller, James, Miller, Wyly & Hornsby 1012 Olive Texarkana, Texas (903) H. Lee Godfrey State Bar No Charles R. Eskridge, III James T. Southwick Susman Godfrey L.L.P Louisiana, Suite 5100 Houston, Texas (713) Lead Counsel for PlaintiffsOf Counsel: Michael C. Spencer U. Seth Ottensoser Milberg Weiss Bershad Hynes & Lerach LLP One Pennsylvania Plaza, 49th Floor New York, New York (212) Certificate of Service I hereby certify that on this 9th day of June, 1998, a copy of the foregoing was served on all counsel of record by facsimile, hand-delivery, and/or certified mail, return receipt requested. Damon Young 20.DOC -5-