Abromson

Leslie Abromson, Ronald Angelo, Louis Camardella, Eh Bailan, Elie de Comminges, and Sandra Kolker (collectively “Abromson”), acting on their own behalf and on behalf of a court-certified class and sub-class, appeal the district court’s judgment in favor of defendants American Pacific Corporation, Fred Gibson, Jr., C. Keith Rooker, David Keys, John R. Gibson, W. Carroll, Thomas War, Thomas Turner, Norval Pohl, and Victor Rosenzweig (collectively “AmPac”) in Abromson’s action against AmPac for securities fraud under 15 U.S.C. §§ 77k, 77o (Securities Act of 1933, as amended, §§ 11, 15) and 15 U.S.C. §§ 78j(b), 78t (Securities Exchange Act of 1934, as amended, §§ 10(b), 20) and 17 C.F.R. § 240 .10b-5 (Rule 10b-5). Abromson alleged misrepresentations or omissions regarding AmPac’s relationship with Thiokol Corporation, its largest customer, and regarding the business prospects of the fire suppression agent Halotron. The district court certified a class of plaintiffs comprising any person who purchased AmPac stock between April 15, 1992 and June 11, 1993, the “class period,” and a sub-class of persons who purchased stock in AmPac’s public offering of April 15, 1992. The…

Concurring in Part and Dissenting in Part:

I concur in Parts II (Halotron) and III (Cross-Appeal) of the majority, but regret that I cannot embrace the affirmance of the grant of summary judgment to AmPac on the Thiokol claim.

While officials of AmPac were telling the investing public that the company was “insulated from competition” because of Thiokol’s obligation to purchase its product, AmPac insiders sold off approximately $11 million worth of stock. When the investing public learned what the insiders already knew— that Thiokol believed it would be free of the obligation upon AmPac’s prepayment of the Security Pacific obligation — AmPac’s stock plummeted in value. There may be a perfectly reasonable explanation for these events, but no jury ever heard it. The materiality of such actions, so closely related to the integrity of AmPac’s omissions, is simply inappropriate for resolution by summary judgment.

To succeed on the Thiokol claim, the plaintiff needed to demonstrate a “material” omission or misrepresentation. Gray v. First Winthrop Corp., 82 F.3d 877, 884 (9th Cir. 1996) (elements of Rule 10b-5 claim); Kaplan v. Rose, 49 F.3d 1363, 1371 (9th Cir.1994) (elements of §…