The opinion of the court was delivered by: WORTENDYKE
This purports to be an action brought under the Securities Act of 1933 and the Securities Exchange Act of 1934. The Complaint, filed October 5, 1965, has been subjected to three amendments, and yet it cannot be said, with any degree of certainty what cause or causes of action have been alleged, or indeed whether any cause of action has been alleged. The Complaint and all the amendments thereto leave much to be desired.
The Amended and Supplemental Motion, addressed to this Third Amended Complaint, seeks, inter alia, a dismissal of that Amended Complaint. Such relief will be granted for the reasons hereinafter stated.
After the filing of the Complaint on October 5, 1965, a dismissal was granted by the Honorable Thomas F. Meaney, a Judge of this Court, on October 25, 1966, pursuant to a motion duly filed on January 26, 1966, with leave to amend.
A First Amended Complaint was filed on April 26, 1966 and, upon defendants' motion filed May 2, 1966, I granted a dismissal of that First Amended Complaint, with leave to amend; such Order of Dismissal being filed on June 3, 1966.
A Second Amended Complaint was filed on June 13, 1966. Defendants filed a Notice of Motion on July 8, 1966 seeking, inter alia, a dismissal of this Second Amended Complaint.
While the Notice of Motion in regard to the Second Amended Complaint was pending, and before the return date thereof, plaintiff, without leave of Court, filed a Third Amended Complaint on August 23, 1966. Against this Third Amended Complaint, defendants filed, on October 24, 1966, an Amended and Supplemental Motion in lieu of the pending motion, seeking, inter alia, a dismissal of the Third Amended Complaint.
Upon oral argument addressed to this Amended and Supplemental Motion, I orally disposed of certain aspects of the motion in open court. The Order upon that oral disposition was filed on November 29, 1966. During that oral argument, I expressly reserved decision on such aspects of the motion as would not be disposed of orally. The remaining dispositions of the motion are embodied in this Opinion.
The Third Amended Complaint is inartistically drawn, fails to sufficiently apprise the defendants of the cause or causes of action so that a proper defense may be prepared, and is fatally defective for the following reasons:
1. Charles G. Samaha and Albert L. Axel are no longer plaintiffs in this case. The action as to them was dismissed by Order of this Court, filed November 29, 1966. There is some considerable question, adduced from evidence of record, as to whether these two alleged plaintiffs ever gave their consent and authorization for suit to be brought in their behalf.
3. There is no indication that recovery is sought on behalf of the corporation.
4. It appears that the alleged Rule X-10B-5 violation arose out of a purportedly false and misleading proxy statement. It appears to be an open question as to whether a violation resulting from a false and misleading proxy statement is actionable under Rule X-10B-5. See Borak v. J.I. Case Company, 317 F.2d 838, 846-847 (7th Cir. 1963) aff'd on other grounds 377 U.S. 426, 12 L. Ed. 2d 423, 84 S. Ct. 1555 (1964); Barnett v. Anaconda Company, 238 F. Supp. 766, 776 (S.D.N.Y. 14(a) of the 1934 Act 15 ...