California State Teachers Retirement v. Aol Time Warner

This consolidated class action litigation alleges that multiple actors engaged in a scheme to commit securities fraud by overstating the reported revenues of an Internet company, Homestore.com (“Home-store”). Homestore eventually restated its revenues, resulting in a decrease in revenues of more than $170 million and corresponding declines in Homestore’s stock value. The district court dismissed the securities claims against Defendants-Ap-pellees, relying on the Supreme Court’s decision in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N. A., 511 U.S. 164 , 114 S.Ct. 1439 , 128 L.Ed.2d 119 (1994).

In this appeal, the lead plaintiff, California State Teachers’ Retirement System (“CalSTRS” or “Plaintiff’), seeks to reverse the district court’s dismissal with prejudice of its claims under § 10(b) of the Securities Exchange Act of 1934,15 U.S.C. § 78j(b), against six outside defendants (“Defendants”): AOL Time Warner (“AOL”) and two of its officers, Eric Keller and David Colburn; Cendant Corporation and one of its officers, Richard Smith; and L90, Inc. (“L90”). Plaintiff alleges Home-store entered into fraudulent transactions with these Defendants in which Homestore…