In re Merrill Lynch & Co.

218 F.R.D. 76, 2003 WL 22405448
CourtDistrict Court, S.D. New York
DecidedOctober 22, 2003
DocketNo. 02 MDL 1484
StatusPublished
Cited by47 cases

This text of 218 F.R.D. 76 (In re Merrill Lynch & Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Merrill Lynch & Co., 218 F.R.D. 76, 2003 WL 22405448 (S.D.N.Y. 2003).

Opinion

ON MOTIONS TO STRIKE AND TO DISMISS

POLLACK, Senior District Judge.

DECISION AND ORDER

This is one of the many class actions brought against brokerage firms under the securities laws following unrestrained speculation in volatile and highly untested common stocks. The internet bubble which was created thereby burst with a spectacular crash in the prices of common stocks in the Spring of 2000. The events and participants at issue herein are the same as those that this Court has recounted in its decisions in the companion class actions to date (made a part hereof). See In re Merrill Lynch & Co., Inc., 273 F.Supp.2d 351 (S.D.N.Y.2003)(Pollack, J.) (the “24/7 and Interliant Action”)(dismissing 24/7 and Interliant complaints); In re Merrill Lynch & Co., Inc. Research Reports Sec. Litig., 272 F.Supp.2d 243 (S.D.N.Y.2003)(Pollack, J.)(the “Global Technology Fund Action”)(dismissing Global Technology complaint). The present case, a suit against a proprietary mutual fund, most resembles the Global Technology Fund Action. Plaintiffs, shareholders in the Merrill Lynch Focus Twenty Fund (“the Fund”), even share the same counsel as their counterparts in the earlier Fund Action, and sue virtually the same entities: the Fund, its manager, Fund Asset Management, L.P. (“FAM”), its underwriters, Princeton Funds Distributor, Inc. and FAM Distributors, Inc., the manager’s controlling persons, Merrill Lynch & Co., Inc. (“ML & Co.”) and Princeton Services, Inc., and ML & Co.’s principal operating subsidiary, the broker-dealer and investment bank Merrill, Lynch, Pierce, Fenner & Smith, Inc. (“MLPF & S”).

Plaintiffs and their counsel have so far been unable to formulate an adequate statement of their present claim devoid of improprieties. The Consolidated Amended Complaint dated August 15, 2003 (“the Amended Complaint”) hardly measures up to the standards and requirements of the applicable statutes and the Federal Rules of Civil Procedure. Hence, the instant Amended Complaint is dismissed with leave to replead properly pursuant to Rules 8(a)(2) and (e) of the Federal Rules of Civil Procedure and to the applicable statutory requirements. Moreover, those paragraphs in the instant Amended Complaint that refer to or rely on the SEC’s complaints against Merrill Lynch and Henry Blodget, on the NASD’s complaint against Phua Young, on the 309 complaints in the ongoing IPO Securities Litigation, 21 MC 92(SAS), on the complaint and appendices in the ongoing IPO Antitrust Litigation, 01 Civ. 2014(WHP), and on the Affidavit of April 8, 2002 sworn to by one Eric Dinallo in Support of an Application for an Order Pursuant to New York’s Martin Act, are hereby stricken under Fed.R.Civ.P. 12(f) and may not be repeated in any further amended pleading hereafter.

DISCUSSION

A. Rule 8, Fed.R.Civ.P.

Notice pleading asks little of the pleader. A complaint need only provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Likewise, “each specific averment of a pleading shall be simple, concise and direct.” Fed.R.Civ.P. 8(e)(1). The purpose of these rules is relatively straightforward. “The statement [of the claim] should be plain in that it should state facts, not conclusions of fact.” Lasky v. Shearson Lehman Brothers Inc., 139 F.R.D. 597, 598-99 (S.D.N.Y.1991) (Patterson, J.)(citing Salahuddin v. Cuomo, 861 F.2d 40, [78]*7842 (2d Cir.1988)). Otherwise the court cannot determine whether the opposing party must respond. “The statement should be short because unnecessary prolixity places an unjustified burden on the court and the responding party.” Id. at 598. Each averment should be direct because a complaint’s factual allegations should be relevant to the cause of action brought. See Walter Reade’s Theatres, Inc. v. Loew’s Inc., 20 F.R.D. 579 (S.D.N.Y.1957)(Levet, J.). When a complaint is not short and plain, or its averments are not concise and direct, “the district court has the power, on motion or sua sponte, to dismiss the complaint or to strike such parts as are redundant or immaterial.” Simmons v. Abruzzo, 49 F.3d 83, 86 (2d Cir.1995).

The Amended Complaint in the present case spans 98 pages and 367 separate paragraphs. The prolix, discursive, redundant, argumentative, and disjointed assertions contained therein are improper. Many of the allegations merely state the conclusions necessary to prevail on the merits and are unsupported by facts. What facts the Amended Complaint does include are irrelevant to Plaintiffs’ claim that the Focus Twenty Fund bought certain stocks in order to enhance Merrill Lynch’s investment banking business. Conflicts of interest and litigation concerning stocks that the Fund never held have no place in a complaint that would be too long even without such tangents.1 Such irrelevancies are contrary to Rule 8(a), which “serves to sharpen the issues to be litigated and to confine discovery ... within reasonable bounds.” Chodos v. F.B.I., 559 F.Supp. 69, 71 (S.D.N.Y.1982) (Motley, C.J.), aff'd, 697 F.2d 289 (2d Cir.1982), cert. denied, 459 U.S. 1111, 103 S.Ct. 741, 74 L.Ed.2d 962(1983). In sum, this Amended Complaint is in need of revision.

The present pleading is so steeped with impertinent and verbose material that the Court is compelled to reinforce Rule 8 with Rule 12(f). For the latter Rule is not only the appropriate remedy for the striking of “any redundant, immaterial, impertinent, or scandalous matter,” but “also is designed to reinforce the requirement in Rule 8(e) that pleadings be simple, concise, and direct.” 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1380 (2d. ed.1990).

B. Rule 12(f), Fed.R.Civ.P.

Generally, motions to strike are viewed with disfavor and infrequently granted. See Eskofot A/S v. E.I. Du Pont De Nemours & Company, 872 F.Supp. 81, 93 (S.D.N.Y.1995) (Leisure, J.) (citing Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir.1976)). A motion to strike on grounds of impertinence and immateriality should be denied unless “it can be shown that no evidence in support of the allegation would be admissible.” Lipsky, 551 F.2d at 893; see Eskofot, 872 F.Supp. at 94.

However, Second Circuit case law makes it clear that references to preliminary steps in litigations and administrative proceedings that did not result in an adjudication on the merits or legal or permissible findings of fact are, as a matter of law, immaterial under Rule 12(f) of the Federal Rules of Civil Procedure. See Lipsky,

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218 F.R.D. 76, 2003 WL 22405448, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-merrill-lynch-co-nysd-2003.