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JAROSLAWICZ v. ENGELHARD CORP.

June 19, 1989

MOSES JAROSLAWICZ, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
ENGELHARD CORPORATION, et al., Defendants



The opinion of the court was delivered by: FISHER

 Before the court are several motions by Engelhard Corporation and the other defendants. *fn1" First, defendants seek the dismissal of the plaintiff's claims under New Jersey law. Second, defendants ask that I exclude evidence relating to a request for information made by the Securities Exchange Commission ("SEC"). Third, defendants want to reserve the award of damages to the proof-of-claim phase of this class action suit. I have considered the parties' written submissions and oral argument. For the reasons discussed below, Engelhard's first and second motions are denied, and its third motion is granted.

 As to Engelhard's first motion, plaintiff's complaint alleges state-law counts for negligent misrepresentation and fraud. See generally Rosenblum v. Adler, 93 N.J. 324, 334, 461 A.2d 138 (1983) (discussing negligent misrepresentation); Enright v. Lubow, 202 N.J. Super. 58, 72, 493 A.2d 1288 (App. Div. 1985), cert. denied, 104 N.J. 376, 517 A.2d 386 (1986) (discussing fraud). Jaroslawicz's sole actionable purchase of Engelhard stock occurred in January, 1984. At a deposition, Jaroslawicz testified that Engelhard's 1981 and 1982 annual reports did not influence his 1984 purchase. *fn2" He testified:

 
A: I purchased [Engelhard securities] because it was a solid company and I wanted to be sure the principal is granted.
 
Q: What did you base your view it was a solid company on?
 
A: Since I had success with them.
 
Q: The price had gone up for the stock; is that not right?
 
A: Yes.
 
Q: That is what you based your view it was a solid company on?
 
A: Right, correct.

 Defendants' Brief in Support, p. 3 (quoting Deposition of Jaroslawicz, pp. 64-65). Engelhard observes that reliance is an element of both negligent misrepresentation and fraud, see Rosenblum, 93 N.J. at 334; Enright, 202 N.J. Super. at 72, and that the fraud-on-the-market theory of reliance is unavailable to Jaroslawicz. See Peil v. Speiser, 806 F.2d 1154, 1163 & n. 17 (3d Cir. 1986) (noting that no state has adopted the theory). Because plaintiff testified that he did not rely on Engelhard's statements, defendants conclude that both state-law claims should be dismissed.

 In opposition, plaintiff has submitted other deposition testimony which supports direct reliance. In these selections, Jaroslawicz was asked whether he received:

 
[Q]: Any documents at all which led you to purchase the Engelhard stock in 1984?
 
A: No.
 
Mr. SEDRAN: Documents from Seabert.
 
BY MR. SLOANE:
 
Q: Any documents?
 
A: No. Only the reports. I depended on the reports from the company.
 
Q: Apart from the reports from the company, did you receive or review any documents which led you to make the decision to purchase the Engelhard stock in 1984?
 
A: No.
 
Q: Just the reports from the ...

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