Pegasus Holdings v. Veterinary Centers of America, Inc.

ORDER GRANTING DEFENDANTS’ MOORE, TAUBER, AND ARTHUR ANTIN’S MOTION TO DISMISS

I.

INTRODUCTION AND FACTUAL BACKGROUND

This cause of action, filed on or about June 19, 1998, arises from an allegedly fraudulent scheme involving securities. In 1996, defendants, who occupied various positions of control at Veterinary Centers of America (“VCA”) , sold large amounts of VCA stock at a comparatively high price while completing three major mergers and acquisitions. Through such activities, defendants were able to make substantial profits and prevent dilution of the stock from occurring. However, once the mergers were complete, plaintiffs allege that defendants issued themselves stock options while the stock price fell, in order to make further profits after it regained part of its former value. As part of the scheme, plaintiffs allege that particular defendants misrepresented the financial condition of Veterinary Centers of America, Inc. (“VCA”), the value of VCA stock, the profitability of VCA’s pet food line, and the potential benefits of the mergers with Pet Practice and Pets RX in telephone conversations and meetings with plaintiffs’ representatives from July to October, 1996.…