Mark G. Epstein Samuel C. Arsers, on Behalf of Themselves & All Others Similarly Situated v. Washington Energy Co. James A. Thorpe

OVERVIEW

Plaintiffs Mark Epstein and Samuel Ar-sers, purchasers of Washington Energy Company’s common stock, appeal from the district court’s order dismissing their securities fraud class action suit. In their Amended Complaint, Plaintiffs allege that Washington Energy Company and two of its senior officers violated §§ 10(b) & 20 of the Securities Exchange Act of 1934 and various state laws by stating the potential benefits of a rate increase for its subsidiary Washington Natural Gas, a regulated public utility, without disclosing: 1) that the Washington State Utilities and Transportation Commission had previously disapproved of Defendants’ wrongful allocation of costs and attempts to subsidize unregulated operations, and 2) that the 1992 rate increase request was predicated on the same condemned practices. In the vernacular, Plaintiffs alleged that they were the victims of a “fraud on the market.” The district court granted Defendants’ motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. Affirmed.

I

FACTS AND PRIOR PROCEEDINGS

Plaintiffs brought this class action suit against Washington Energy Company (WEC) and two of its senior officers, defining…