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HomeMy WebLinkAbout2003-6341 Civil ALAN WEINBERG and STACEY : FEINGLASS MANZO, individually: and for all others similarly situated, Plaintiffs IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW vs. 03-6341 CIVIL RITE AID CORPORATION, a Delaware Corporation, MARTIN L. GRASS, TIMOTHY 1. NOONAN, FRANKLIN C. BROWN, NANCY A. LIEBERMAN, LEONARD STERN, PRESTON R. TISCH, WILLIAM 1. BRATTON, and KPMG LLP, Defendants CLASS ACTION JURY TRIAL DEMANDED IN RE: MOTIONS OF DEFENDANTS FOR mDGMENT ON THE PLEADINGS BEFORE HESS, 1. OPINION AND ORDER This class-action lawsuit1 arose out of events that occurred in 1999. Specifically, on June 1, 1999, Rite Aid reported a restatement of its previously reported fiscal year 1998 and 1999 financial statements. In October of 1999, Rite Aid announced that a further restatement was required. On November 2, 1999, Rite Aid filed a quarterly report with the Security and Exchange Commission reporting that Rite Aid's fiscal years 1997, 1998, and 1999 financial statements had to be restated. (Compl. Para. 43). As a result of the restatements, numerous shareholder class action and derivative lawsuits were filed against Rite Aid. These were consolidated in the United States District Court of the Eastern District of Pennsylvania. These matters were eventually settled. In the meantime, Stacey Feinglass Manzo, a plaintiff in this action, sued Rite Aid in the Delaware Court of Chancery. In the Delaware action, the plaintiff brought suit on behalf of a class of persons who 1 Action on the plaintiffs' motion for class certification has been deferred by agreement of the parties pending resolution of a motion for judgment on the pleadings. 03-6341 CIVIL had held Rite Aid stock from March 1, 1997 to October 18, 1999: specifically, persons who owned Rite Aid stock during that period who neither purchased nor sold shares. The Delaware action asserted claims for breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, equitable fraud and the same common law claims asserted in this case. On December 19, 2002, the Delaware Court of Chancery issued an opinion dismissing the fiduciary duty claims with prejudice, dismissing the class action fraud claim with prejudice, and dismissing the fraud claims without prejudice and with leave to replead. The fraud claim was never repled. Instead, the matter was appealed to the Delaware Supreme Court. On May 29, 2003, the Delaware Supreme Court issued an order affirming the trial court's judgment, incorporating its decision by reference. Approximately six months after the Delaware Supreme Court ruled, Manzo filed the same "holder" fraud claim in this court. Another purported Rite Aid shareholder, Alan Weinberg, joined as a party plaintiff. According to the complaint, both plaintiffs purchased Rite Aid shares in the early 1970s and have consistently held those shares for more than thirty years. The defendants have variously filed, or joined in the filing of, motions for judgment on the pleadings. A motion for judgment on the pleadings should be granted, of course, only "where there are no disputed issues of fact and the moving party is entitled to judgment as a matter oflaw." In determining whether there is a dispute as to the facts, the court is confined to the pleadings and relevant documents. Kelly v. Hazelton General Hosp., 837 A.2d 490 (Pa. Super. 2003). The defendants advance several arguments with respect to why judgment should be granted in their favor. They contend first that the plaintiffs' claims are barred by the statute of limitations or, in the alternative, by res judicata. Second, they assert that Pennsylvania law does not recognize a claim for common law fraud brought by persons who simply hold shares of stock 2 03-6341 CIVIL (i. e. who do not buy or sell those shares) during a time period of alleged misstatements by the corporation. In a related argument, they assert that the plaintiffs' complaint does not meet the requirement of alleging actual and reasonable reliance on the false statements made by the defendants. The defendants also allege that the complaint fails to adequately plead damages. Finally, there is a contention that the plaintiffs' claims are not derivative and are preempted by federal law. Because we believe that this action is clearly barred by the statute of limitations, we will not address the remaining issues. There is no disagreement among the parties that this action, sounding in fraud, is governed by a two-year statute of limitations. This action can survive dismissal only if the plaintiffs are successful in their assertion that their fraud claims are not time-barred because the statute of limitations was tolled during the pendency of the earlier class action filed by plaintiff Manzo in Delaware state court. We agree with the defendants that this argument is foreclosed by Pennsylvania law. The holding in Ravitch v. Price Waterhouse, 793 A.2d 939 (Pa.Super. 2002) could not be more clear. In that case, the plaintiffs had alleged that Price Waterhouse had given bad advice concerning a Revenue Ruling issued by the IRS. In June of 1989, certain plaintiffs brought a national class action against Price Waterhouse and others in federal court in New York. Price Waterhouse was dismissed from that suit in February of 1990. On April 10, 1990, another national class action against Price Waterhouse was instituted in state court in New York. Ravitch, a Pennsylvania resident, was a member of the proposed national class. The trial court denied certification of a class in that case. Denial of certification of the national class was affirmed by the New York Supreme Court on December 1, 1998. On September 3, 1999, Ravitch filed a Pennsylvania action alleging many of the same complaints brought in the federal and state actions in New York. Price Waterhouse filed a motion for judgment on the pleadings 3 03-6341 CIVIL which was granted by the trial court. In Ravitch v. Price Waterhouse, id., the court affirmed. In so doing, the court stated the issue to be "whether a class action filed in another state will toll the statute oflimitations for a subsequent action filed in Pennsylvania." Id. at 941. Following a discussion of the plaintiffs' contentions with regard to tolling, the Superior Court summarized the law as follows: In Pennsylvania, an individual action filed in federal court does not toll the running of the statute of limitations as to an action in state court. Royal- Globe Insurance Companies v. Hauck Manufacturing Company, 233 Pa.Super. 248, 335 A.2d 3460 (1975); Skehan v. Bloomsburg State College, 94 Pa.Cmwlth. 252, 503 A.2d 1000 (1986). Nor does the filing of an action in state court toll the statute of limitations against a subsequent action filed in federal court. Royal Globe, 335 A.2d at 462, citing Falsetti v. Local Union No. 2026, UnitedMine Workers of America, 355 F.2d 658 (3rd Cir. 1966). Furthermore, an action filed in another state does not toll the running of the statute of limitations as to an action in Pennsylvania. Id citing Overfield v. Pennroad Corp. 146 F.2d 889 (3rd Cir. 1944). Of course, all of these cases involved actions that were not class actions but individual actions. Indeed, Pennsylvania is devoid of any case law pertaining to whether a class action in another state's court or in federal court tolls the limitations period for a class action or individual action filed in Pennsylvania's state court. Id. at 942-43. The court went on to observe that, in a class action, the putative members of a class are parties plaintiff upon the filing of the complaint. That status is retained until a decertification occurs, at which time each party may then pursue their actions on an individual basis. The claims are not time-barred by a statute of limitations because the applicable statute of limitations during the interim period from the filing of the complaint until the decertification of the class is suspended. Id. This doctrine, however, extends only to members of a putative class who bring his or her action in the same court after denial of class certification. The Superior 4 03-6341 CIVIL Court then went on to conclude, in Ravitch, that cross-jurisdictional tolling is not recognized in Pennsylvania. Accordingly, the pendency of the action in Delaware did not toll the statute of limitations in this case. Plaintiffs also attempt to apply Pennsylvania's Savings Statute, 42 Pa.C.S.A. 5535(a)(I) to this case. This statute provides, in pertinent part, that "[i]f a civil action or proceeding is timely commenced and is terminated, a party, or his successor in interest, may, notwithstanding any other provision of this subchapter, commence a new action or proceeding upon the same cause of action within one year after the termination." We agree with the defendants that the Savings Statute does not apply to actions that were previously filed and terminated in another state. The Commonwealth Court, in Duquesne Light Co. v. Pennsylvania Utility Comm 'n, 611 A.2d 370, 373 n. 3 (Pa.Cmwlth. 1992), noted specifically that Section 5535 pertains to the termination of civil actions "in Pennsylvania's unified judicial system, which consists solely of courts and district justices in Pennsylvania." This is underscored by the holdings of our appellate courts to the effect that an action filed in federal court, even in Pennsylvania, cannot be used to save an action filed in a state court in Pennsylvania under Section 5535. See Maxwell Downs Inc. v. City of Philadelphia, 638 A.2d 473,476 (Pa.Cmwlth. 1994). Because there has been no tolling in this case of the statute of limitations under either a common law or statutory theory, we will sustain the motion for judgment on the pleadings. ORDER AND NOW, this day of December, 2004, the motion of the defendants for judgment on the pleadings is SUSTAINED and the captioned action is DISMISSED. BY THE COURT, Kevin A. Hess, 1. 5 03-6341 CIVIL Ronald A. Brown, Jr., Esquire Bruce E. Jameson, Esquire F or the Plaintiffs Alan 1. Davis, Esquire Charles 1. Bloom, Esquire Mark D. Bradshaw, Esquire George B. Faller, Jr., Esquire James 1. Rodgers, Esquire Victor P. Stabile, Esquire David M. Howard, Esquire Paul 1. Lockwood, Esquire John W. Frazier, IV, Esquire F or the Defendants 6 ALAN WEINBERG and STACEY : FEINGLASS MANZO, individually: and for all others similarly situated, Plaintiffs vs. RITE AID CORPORATION, a Delaware Corporation, MARTIN L. GRASS, TIMOTHY 1. NOONAN, FRANKLIN C. BROWN, NANCY A. LIEBERMAN, LEONARD STERN, PRESTON R. TISCH, WILLIAM 1. BRATTON, and KPMG LLP, Defendants IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW 03-6341 CIVIL CLASS ACTION JURY TRIAL DEMANDED IN RE: MOTIONS OF DEFENDANTS FOR mDGMENT ON THE PLEADINGS AND NOW, this BEFORE HESS, 1. ORDER day of December, 2004, the motion of the defendants for judgment on the pleadings is SUSTAINED and the captioned action is DISMISSED. Ronald A. Brown, Jr., Esquire Bruce E. Jameson, Esquire F or the Plaintiffs Alan 1. Davis, Esquire Charles 1. Bloom, Esquire Mark D. Bradshaw, Esquire George B. Faller, Jr., Esquire James 1. Rodgers, Esquire Victor P. Stabile, Esquire David M. Howard, Esquire Paul 1. Lockwood, Esquire John W. Frazier, IV, Esquire F or the Defendants BY THE COURT, Kevin A. Hess, 1. 03-6341 CIVIL 8