Binder

Opinion by Judge SKOPIL; Dissent by Judge REINHARDT.

Albert Binder brought this action against Aqua Vie Beverage Corporation (AVBC), various AVBC officers and directors, and the accounting firm of De-loitte & Touche (Deloitte), asserting, on his own behalf and as a representative for a class of investors, that defendants violated federal and state securities laws. The district court decertified the class and declined to exercise supplemental jurisdiction over the related state law class claims. The court also granted summary judgment in favor of three AVBC officers and directors and for Deloitte on all of Binder’s individual claims. Final judgments were entered pursuant to Federal Rule of Civil Procedure 54(b). We affirm.

I.

Tom Gillespie and Marie Mullen Gillespie formed AVBC in 1991 by purchasing a publicly owned shell corporation and merging it with their Hawaii-based beverage company, KWC, Inc. They moved their operations to Sun Valley, Idaho. Shortly thereafter, Diane Karban joined the company as Chief Financial Officer and De-loitte was hired as the company’s accounting firm. AVBC stock soon began trading publicly on the over-the-counter (OTC) market.

In the summer of…

dissenting in part:

Because the plaintiffs are entitled to a presumption of reliance under the doctrine of Affiliated Ute Citizens v. United States, 406 U.S. 128, 153-54 , 92 S.Ct. 1456 , 31 L.Ed.2d 741 (1972), I would reverse the district court’s decision to decertify the class of investors represented by Binder. I therefore respectfully dissent.

In today’s decision, the majority decides that the Affiliated Ute presumption does not apply to cases involving both material misrepresentations and material omissions. In so holding, the majority resolves a question that we have previously, and explicitly, reserved: “whether Affiliated Ute Citizens applies equally to misrepresentations.” Kramas v. Security Gas & Oil, Inc., 672 F.2d 766 , 769 n. 2 (9th Cir.1982). I believe that the logic behind the Affiliated Ute decision and the reasoning contained in our decisions implementing Affiliated Ute make it clear that it does.

As an initial matter, the majority is simply incorrect that the Affiliated Ute presumption does not, as a rule, apply to “mixed cases of alleged misstatements and omissions.” (Opinion at 2879). To understand why, we need look no further than Affiliated Ute itself…