# Lase Guaranty Trust v. Bammann

> District Court, E.D. New York · March 14, 2024

URL: https://www.frixlaw.com/law-library/cases/10311351

## Case

- **Court:** District Court, E.D. New York
- **Decided:** March 14, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------x

LASE GUARANTY TRUST, derivatively on
behalf of JPMORGAN CHASE & CO.,
MEMORANDUM & ORDER
Plaintiff, 22-CV-01331(EK)(JAM)

-against-

LINDA B. BAMMANN, STEPHEN B. BURKE,
TODD ANTHONY COMBS, JAMES SCHINE
CROWN, JAMES DIMON, et al.,

Defendants.

-and-

JPMORGAN CHASE & CO.,

Nominal Defendant.

------------------------------------x
ERIC KOMITEE, United States District Judge:
Federal regulations require securities and commodities
dealers to preserve their employees’ business-related
communications for inspection. In December of 2021, three
JPMorgan Chase subsidiaries admitted that their employees,
including some in management, were conducting firm business in
unapproved communications channels — via personal email
accounts, text message, and WhatsApp — and that these
communications were not preserved. JPM settled books-and-
records charges with the Securities and Exchange Commission and
the Commodity Futures Trading Commission for a total of $200
million in civil penalties.
Lase Guaranty Trust, a JPM shareholder, initiated this

derivative action against certain JPM board members. Lase
alleges that the board members materially misled shareholders
while seeking reelection, in violation of Section 14(a) of the
Securities Exchange Act. The misleading statements and
omissions are alleged to have been made in the company’s 2021
proxy statement. At bottom, Lase complains that the proxy
statement made several optimistic assertions about the
robustness of JPM’s compliance environment, while simultaneously
omitting to disclose the widespread use of unapproved
communications channels. In addition to the Section 14(a)
claim, Lase brought state-law claims alleging, among other
things, that the directors breached their fiduciary duties.

The defendants have now moved to dismiss all claims.
The motion is based on two primary grounds: first, that Lase
failed to comply with the requirement that, prior to filing a
derivative action, the plaintiff first demand that the board of
directors initiate the case. Second, the defendants move to
dismiss all causes of action for failure to state a claim.
For the reasons that follow, the Section 14(a) claim
is dismissed. Having dismissed the only federal claim, the
court declines to entertain supplemental jurisdiction over the
state-law claims.
Background
The following recitation is taken from Lase’s Amended

Verified Stockholder Derivative Complaint (“Am. Compl.”), ECF
No. 16, and certain materials discussed extensively therein: the
SEC and CFTC orders and JPM’s 2021 proxy statement.1
JPM consented to the entry of orders imposing
sanctions with the SEC and the CFTC in December of 2021. See
Am. Compl. ¶ 5. In doing so, the bank admitted that the
recordkeeping violations were “firm-wide,” “involved employees
at all levels of authority,” and were “not hidden within the
firm.” See MTD Ex. B at 4, ECF No. 23-2. The orders spoke to
the bank’s mental state: JPM admitted that the violations were
“willful[].” MTD Ex. A at 6, ECF No. 6. Moreover, “managing
directors and senior supervisors responsible for implementing

JPM’s policies and procedures, and for overseeing employees’
compliance with those policies and procedures, themselves failed

1 On a motion to dismiss, the court may consider a document outside the
complaint where the complaint “relies heavily upon its terms and effect,
which renders the document integral to the complaint.” Chambers v. Time
Warner, Inc., 282 F.3d 147, 152–53 (2d Cir. 2002). The court may also take
judicial notice of documents in the public record, including SEC filings and
orders of administrative agencies, “to establish the fact of such . . .
filings.” In re Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347, 355 n.5
(2d Cir. 2010).
Unless otherwise noted, when quoting judicial decisions this order
accepts all alterations and omits all citations, footnotes, and internal
quotation marks.
to comply.” MTD Ex. B at 4. JPM acknowledged that these
violations had been ongoing for years. See MTD Ex. A at 2.
Months before these settlements, JPM’s board of

directors sought shareholder approval for the directors’
reelection and their compensation package. See Am. Compl.
¶ 102; see also 2021 JPM Proxy Statement (“Proxy”) 1, 87, ECF
No. 32-3.2 The proxy statement asserted that JPM had strong risk
controls and that JPM makes risk management a priority. See Am.
Compl. ¶¶ 103–04, 106–08, 110–17. The proxy statement also
described JPM’s governance practices as “strong,” and “sound.”
See Am. Compl. ¶¶ 115–16; Proxy 13, 30. It represented that
JPM expects “all employee conduct [to] adhere to the highest
ethical standards.” See Am. Compl. ¶ 103; Proxy 64. It
likewise represented that the directors “possess the skills,
experience, personal attributes and tenure” needed to “oversee
the Firm’s risk management.” See Am. Compl. ¶ 105; Proxy 20.

And it stated that JPM has strong clawback provisions “designed
to hold executives accountable, when appropriate.” See Am.
Compl. ¶ 109; Proxy 58–59.
Lase asserts that these statements — and the
concurrent omission to disclose the recordkeeping violations —
were materially misleading, in violation of Section 14(a) of the

2 Page numbers in citations to the 2021 proxy statement refer to ECF
pagination.
Exchange Act. See id. ¶¶ 255–60. That provision prohibits
registrants from soliciting proxy statements in a manner that
violates SEC regulations — including Rule 14a-9, which forbids

material misstatements and omissions in proxies. Lase also
asserts Delaware law claims for breach of fiduciary duties and
waste of corporate assets (JPM is incorporated in Delaware).
See id. ¶¶ 261–70.
The defendants moved to dismiss. See Defs.’ Mem. of
L. Supp. Mot. to Dismiss (“Defs.’ Mem.”) 1–2, ECF No. 22. With
the court’s authorization, the parties initially briefed only
the Fed R. Civ. P. 23.1 issue regarding failure to demand that
JPM’s board of directors initiate this action. Sept. 21, 2022
Order.
Following oral argument on the Rule 23.1 issue, the
court sought supplemental briefing on the Section 14(a) claim,

including whether it should be dismissed for failure to state a
claim under Rule 12(b)(6) rather than pursuant to Rule 23.1.
See Arg. Tr. 51:1–10, 56:11–57:2, ECF No. 29. The defendants
then moved to dismiss all claims for failure to state a claim.
See Suppl. Br. Supp. Mot. to Dismiss (“Defs.’ Suppl.”) 1, ECF
No. 30.
Legal Standards
To overcome a motion to dismiss under Rule 12(b)(6), a
complaint must plead facts sufficient “to state a claim to
relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The court must accept all
factual allegations in the complaint as true and draw all
reasonable inferences in the plaintiff’s favor. See Lundy v.
Cath. Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d

Cir. 2013).
Rule 23.1 outlines requirements that apply when “one
or more shareholders or members of a corporation . . . bring a
derivative action to enforce a right that the corporation or
association may properly assert but has failed to enforce.”
Fed. R. Civ. P. 23.1(a). Among other prerequisites, a
derivative complaint must “state with particularity: (A) any
effort by the plaintiff to obtain the desired action from the
directors or comparable authority, and, if necessary, from the
shareholders or members; and (B) the reasons for not obtaining

the action or not making the effort.” Fed. R. Civ. P.
23.1(b)(3)(A)-(B).
The upshot is that “a shareholder seeking to assert a
claim on behalf of the corporation must first exhaust
intracorporate remedies by making a demand on the directors to
obtain the action desired.” F5 Cap. v. Pappas, 856 F.3d 61, 82
(2d Cir. 2017). “Although Rule 23.1 sets forth the pleading
standard for federal court, the substance of the demand
requirement is a function of state law — here, Delaware law.”
Id. “A shareholder plaintiff who does not make a demand on the
board must allege that demand is excused.” Id. When federal
courts apply Delaware law, “[d]emand futility analysis is
conducted on a claim-by-claim basis.” Lambrecht v. O’Neal, 504
F. App’x 23, 26 (2d Cir. 2012) (citing Beam v. Stewart, 833 A.2d
961, 977 n. 48 (Del. Ch. 2003), aff’d, 845 A.2d 1040 (Del.

2004)).
Discussion
A. Failure to Make a Demand Under Rule 23.1
The defendants seek dismissal based on Rule 23.1:
Lase did not demand that JPM’s board bring this suit, and such
demand was not excused. See Defs.’ Suppl. 1–2. Lase responds
that it has adequately pled that demand should be excused for
all claims.
Under Delaware law, demand is excused when a
corporation’s board cannot “impartially consider a litigation
demand” — in such circumstances, demand is deemed futile. See
Del. Ch. Ct. R. 23.1; United Food & Com. Workers Union &

Participating Food Indus. Emps. Tri-State Pension Fund v.
Zuckerberg, 262 A.3d 1034, 1059, 1064 (Del. 2021). This is the
case when, for example, a majority of the directors who would
consider the demand face a “substantial likelihood of liability”
on the claim. Id. at 1059.
Lase alleges that all defendants — the directors who
would have considered a demand here — face a substantial
likelihood of liability on all claims. See Am. Compl. ¶ 125.

The defendants, in turn, argue that they face no such
substantial likelihood of liability on any claim, and therefore
that demand was not excused. See Defs.’ Mem. 13.
As to the Section 14(a) claim — the sole basis for
federal jurisdiction — the defendants argue that they cannot be
held liable to shareholders because a provision in JPM’s charter
exculpates them from such liability. See Defs.’ Mem. 13–15.
That provision states that “to the fullest extent” that Delaware
law “permits the limitation or elimination of the liability of
directors, no director of [JPM] shall be personally liable to
[JPM] or its stockholders for monetary damages for breach of
fiduciary duty as a director.” JPM Restated Certificate of

Incorporation (the “Charter”) at art. 6(1), ECF No. 23-3. And
Delaware law, in turn, allows charter provisions “eliminating or
limiting the personal liability of a director or officer to the
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director” — except for, most importantly,
breaches of the duty of loyalty and actions involving
intentional misconduct. 8 Del. § 102(b)(7).
If directors are protected by such a charter
provision, a shareholder plaintiff seeking only monetary damages
must plead “a non-exculpated claim for breach of fiduciary
duty,” or else “that director will be entitled to be dismissed
from the suit” at the pleading stage. In re Cornerstone
Therapeutics Inc, S’holder Litig., 115 A.3d 1173, 1179 (Del.
2015); accord KDW Restructuring & Liquidation Servs. LLC v.
Greenfield, 874 F. Supp. 2d 213, 223–24 (S.D.N.Y. 2012)

(applying Delaware law). Because exculpated claims must be
dismissed at the pleading stage, a defendant who is exculpated
does not face a “substantial likelihood of liability,” and can
impartially consider a demand to bring an exculpated claim
against even herself. Zuckerberg, 262 A.3d at 1054.
Following a preliminary reading, it remained unclear
to this court whether the exculpation provision in JPM’s charter
squarely applies to Lase’s Section 14(a) claim. Lase expressly
pleaded that its Section 14(a) claim “is based solely on

negligence.” Am. Compl. ¶ 252. JPM’s charter, however,
exculpates JPM directors from liability for “monetary damages
for breach of fiduciary duty as a director” — obviously a
different cause of action from negligence. See Charter at art.
6(1). It is true that Delaware’s fiduciary duty subsumes a duty
of care, and that certain instances of negligence can be
sufficiently egregious as to violate it. But not all: such a
breach requires directors to act with gross negligence. See
Aronson v. Lewis, 473 A.2d 805, 812 & n.6 (Del. 1984) (liability
under Delaware’s business judgment rule is “predicated upon
concepts of gross negligence”), overruled on other grounds by
Brehm v. Eisner, 746 A.2d 244 (Del. 2000). Thus, while a

negligence action can implicate the duty of care, it may still
be the case that a director can act negligently without
breaching any fiduciary duty.3
Lase does not argue that its Section 14(a) claim is
non-exculpable because it sounds in negligence short of a breach
of Delaware’s fiduciary duty of care. Rather, in its
supplemental brief, Lase argued that its Section 14(a) claim is
premised on conduct so extreme, it violated the directors’ duty
of loyalty (and the subsidiary duty of good faith) — violations
that are non-exculpable. See Pls.’ Suppl. Mem. Opp. Mot. to
Dismiss (“Pls.’ Suppl. Opp.”) 9–10, ECF No. 31. Lase requested
leave to amend its complaint again to conform the complaint to
this theory. See id. at 3. In particular, Lase proposed to

omit the paragraph limiting the Section 14(a) count to

3 In contemplating this point, the court posited at oral argument the
case of an employee who negligently caused a motor-vehicle accident, leading
to respondeat superior liability for his employer. The court asked whether
that employee might remain liable to the employer for contribution despite
the exculpation for breaches of fiduciary duty. See Arg. Tr. 5:7–25.
Counsel for JPM responded that, logically speaking, an exculpation from the
“greater” liability — gross negligence — must logically include exculpation
from the lesser — simple negligence. This view finds meaningful support in
federal district court cases. See, e.g., In re Wells Fargo & Co. S'holder
Derivative Litig., No. 20-CV-08750-MMC, 2022 WL 345066, at *5 (N.D. Cal. Feb.
4, 2022) (collecting cases applying exculpation clauses to Section 14(a)
claims and observing that “there are, to the Court’s knowledge, no cases
holding to the contrary”). In the end, however, I leave this question for
another day.
negligence, rather than “reckless or knowing conduct” by JPM’s
directors. See id. (citing Am. Compl. ¶ 252).
In this case, I do not need to decide whether demand

would have been futile. The parties agree that compliance with
Rule 23.1 is not something the court must address before
assessing whether a plaintiff states a claim. Compliance with
Rule 23.1’s demand requirement is not a matter of jurisdiction.
See Nat’l Credit Union Admin. Bd. v. U.S. Bank Nat’l Ass’n, 898
F.3d 243, 252 n.57 (2d Cir. 2018).4
As discussed below, the plaintiffs have failed to
state a claim under Section 14(a), by a relatively wide margin.
That claim is thus dismissed under Rule 12(b)(6).
B. Failure to State a Viable Section 14(a) Claim
Section 14(a) outlaws the solicitation of any proxy
“in contravention of such rules and regulations as the [SEC] may
prescribe.” 15 U.S.C. § 78n(a)(1). SEC Rule 14a–9(a), in turn,

provides that: “No solicitation subject to this regulation shall
be made by means of any proxy . . . containing any statement”
that “is false or misleading with respect to any material fact,
or which omits to state any material fact necessary in order to
make the statements therein not false or misleading.” 17 C.F.R.
§ 240.14a–9(a).

4 In National Credit Union, the Second Circuit “adhere[d] to the view”
that questions of “derivative standing” should be viewed as Rule 12(b)(6)
issues, not Article III issues. Id.
“A fact is material for purposes of Rule 14a–9 if
there is a substantial likelihood that a reasonable shareholder
would consider it important in deciding how to vote.” Koppel v.
4987 Corp., 167 F.3d 125, 131 (2d Cir. 1999). “Once the proxy

statement purports to disclose” material facts, “there is an
obligation to portray them accurately.” Id.
The Private Securities Litigation Reform Act imposes
heightened pleading requirements on Section 14(a) claims. In
“any private action arising under” the Exchange Act in which the
plaintiff alleges a material misstatement or omission, the
plaintiff must “specify each statement alleged to have been
misleading” and “the reason or reasons why the statement is
misleading.” 15 U.S.C. § 78u-4(b)(1). The plaintiff “must do
more than say that the statements . . . were false and
misleading; [it] must demonstrate with specificity why and how
that is so.” Rombach v. Chang, 355 F.3d 164, 174 (2d Cir.

2004). District courts in this circuit have uniformly applied
these requirements to negligence-based Section 14(a) claims.
See, e.g., Lanigan Grp., Inc. v. Li-Cycle Holdings Corp., No.
22–CV–02222, 2023 WL 6541884, at *3 (E.D.N.Y. Oct. 6, 2023)
(collecting cases).
Here, Lase has failed to plead a material misstatement
or omission in the 2021 proxy statement.
1. Immaterial Statements
Many of the statements at issue concern JPM’s risk
controls — their existence, quality, and importance. See Am.
Compl. ¶¶ 103–04, 106–08, 110–17. Representative examples in

the proxy include:

The board of directors “actively oversees” JPM’s
“business and affairs,” employing “sound governance
practices,” Proxy 19, and reviews its performance
against “regulatory requirements.” See id. at 36.

JPM’s “rigorous” risk, controls & conduct review
process includes an “enterprise-wide framework for
management to oversee and respond to workforce
conduct-related matters that may otherwise expose
[JPM] to financial, reputational, compliance and other
operating risks.” Id. at 50, 59.

Various board committees oversee issues relating to
governance, internal controls, and employee conduct.
See id. at 32–35.

JPM is “focused on managing employee conduct end-to-
end,” and has “performance development and
compensation processes” that are “designed to hold
employees accountable for their conduct, where
appropriate.” Id. at 64.

JPM “[c]ontinued to enhance risk, controls and conduct
information provided to managers to use during
performance reviews and employee conduct inquiry &
investigation processes,” “strengthen [the] risk and
control environment,” and “conduct business in a
responsible way.” Id. at 47, 61.

JPM “strive[s] to clearly and frequently communicate
our expectations that all employee conduct must adhere
to the highest ethical standards . . . including
through town hall meetings and senior leadership
messages and by including culture and conduct related
questions in our employee surveys.” Id. at 64.
 The board sets the cultural “tone at the top.” Id. at
19.
Lase alleges that these statements are false because
the Board “utterly failed” to “implement and maintain effective
internal controls and corporate governance” sufficient to

“ensure” regulatory compliance and “monitor the material risks”
to JPM. Am. Compl. ¶ 118. In support, Lase points to the
recordkeeping violations. See id.
The Second Circuit has held similar statements to be
immaterial in another Section 14(a) case involving a JPM proxy
statement. See ECA, Loc. 134 IBEW Joint Pension Tr. of Chi. v.
JP Morgan Chase Co., 553 F.3d 187, 205–06 (2d Cir. 2009). In
ECA, the plaintiffs alleged that JPM “made numerous
misrepresentations regarding its ‘highly disciplined’ risk
management and its standard-setting reputation for integrity.”
Id. at 205. The panel held that these statements were
immaterial — and, thus, nonactionable — as they were “too
general to cause a reasonable investor to rely upon them.” Id.

at 206. The statements “did not, and could not, amount to a
guarantee that [JPM’s] choices would prevent failures in its
risk management practices.” Id.
More recently, the Circuit wrote (in a substantially
similar, but not identical, posture): “a plaintiff cannot
(a) identify a specific back-end, price-dropping event, (b) find
a front-end disclosure bearing on the same subject, and then
(c) assert securities fraud, unless the front-end disclosure is
sufficiently detailed in the first place.” Ark. Tchr. Ret. Sys.
v. Goldman Sachs Grp., Inc., 77 F.4th 74, 102 (2d Cir. 2023).5
“[A] mismatch in specificity between the two undercuts a

plaintiff’s theory that investors would have expected more from
the front-end disclosure.” Id.
This case presents a paradigmatic example of that
mismatch in specificity. Simply put, the “up-front” disclosures
that Lase relies on are significantly more generic than the
ostensibly corrective disclosures in the SEC and CFTC
settlements. In addition to the statements set out above, Lase
challenges, for example, the proxy’s claim that JPM was
“committed to strong corporate governance practices.” Am.
Compl. ¶ 103. But it is generally “well-established that
general statements about reputation, integrity, and compliance
with ethical norms are inactionable” in securities fraud cases.
City of Pontiac Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752

F.3d 173, 183 (2d Cir. 2014). As in the cases described above,
these kinds of statements are simply “too general to cause a
reasonable investor to rely upon them.” Id. (affirming the
dismissal, on materiality grounds, of a case challenging
“general statements about reputation, integrity, and compliance

5 The Arkansas Teacher case was decided at the class certification stage
— a different analysis from the question of whether materiality has been
adequately pleaded, to be sure; but the court explicitly noted that “the
overlap is substantial” between the two settings. Id.
with ethical norms”); see also IV Louis Loss, Joel Seligman, &
Troy Paredes, Securities Regulation 6.C.5 (6th ed. 2020)
(collecting Section 14(a) cases in which general statements were

held immaterial).
2. Statements That are Not Misleading
Lase challenges certain additional statements in the
proxy, but fails to satisfy Rule 14a-9’s requirement to allege
that the statements were false or misleading, let alone
materially so. See Am. Compl. ¶¶ 105, 109.
Lase challenges the representation that the director
nominees have personal qualities — “skills, experience, personal
attributes and tenure” — that would allow them to “effectively
oversee [JPM’s] risk management and internal control framework,
and management’s execution of its responsibilities.” Proxy 20.
But Lase makes no allegations about the true personal qualities
of the nominees that would demonstrate how or why this statement

is misleading.
Lase also challenges the representation that JPM has
strong clawback provisions “designed to hold executives
accountable, when appropriate.” See Proxy 58–59. Again,
however, Lase never alleges that no such clawback provisions
exist. Instead, Lase asserts that this statement is misleading
because JPM did not elect to invoke the clawback provisions in
this case. See Am. Compl. ¶ 109. But “[i]t is well established
that Section 14 carries with it no formal requirement that
predictions be made as to future behavior, and indeed, they are
discouraged.” Krauth v. Executive Telecard, Ltd., 890 F. Supp.
269, 288-89 (S.D.N.Y. 1995).6

3. Omissions
Lase also alleges liability based on certain
omissions. The proxy statement, for example, claimed that JPM’s
directors frequently met with regulators about expectations for
compliant conduct.7 See Am. Compl. ¶ 76. Given this claim, the
plaintiff contends, it was a material omission to fail to
disclose (1) employees’ widespread use of off-channel
communications at JPM; and (2) the defendants’ own breaches of
fiduciary duty in failing to police those violations. See id.
¶ 255.
These are not actionable omissions. For an omission
to be actionable, the securities laws must impose a duty to
disclose the omitted information. Resnik v. Swartz, 303 F.3d

147, 154 (2d Cir. 2002). “[O]nce a company speaks on an issue
or topic, there is a duty to tell the whole truth.” Meyer v.

6 The defendants, citing a Wall Street Journal article, assert that it
is actually “publicly known that JPMorgan did claw back pay from executives
as a result of conduct related to record keeping violations.” Defs.’ Suppl.
Reply Mem. of L. Supp. Mot. to Dismiss 10 & n.10, ECF No. 33. But I need not
look beyond the complaint to conclude that this statement is inactionable.

7 Plaintiff’s counsel invoked this statement before any other at oral
argument, citing it as an example of why the failure to disclose off-channel
communications was “materially omissive.” Arg. Tr. 32:9–13.
Jinkosolar Holdings Co., 761 F.3d 245, 250 (2d Cir. 2014).
However, “the duty to disclose more is triggered only where that
which is disclosed is sufficiently specific.” Ark. Tchr., 77

F.4th at 102. The disclosure that JPM’s directors speak to
regulators about their agencies’ expectations falls short of the
level of specificity that triggers such a duty.
Generally speaking, “companies do not have a duty to
disclose uncharged, unadjudicated wrongdoing.” Pontiac, 752
F.3d at 184. Nor must directors accuse themselves of a breach
of fiduciary duty. See Koppel, 167 F.3d at 134. Rather, where
“there is simply no misrepresentation or omission of material
facts other than the omission of . . . self-accusation” of
breach of fiduciary duty, then “there is no basis” for a Section
14(a) claim. Id.
In sum, Lase has failed to adequately plead a material

misstatement or omission in the 2021 proxy statement. The
Section 14(a) claim is accordingly dismissed under Rule
12(b)(6).8

8 Lase’s failure to identify a material misstatement or omission is
fatal to the Section 14(a) claims. But even if Lase had identified a
material misstatement or omission, to state a 14(a) claim, Lase would need to
sufficiently plead “both transaction causation, i.e., that but for the
fraudulent statement or omission, the plaintiff would not have entered into
the transaction; and loss causation, i.e., that the subject of the fraudulent
statement or omission was the cause of the actual loss suffered.” Suez
Equity Invs., L.P. v. Toronto-Dominion Bank, 250 F.3d 87, 95 (2d Cir. 2001);
see also Grace v. Rosenstock, 228 F.3d 40, 47 (2d Cir. 2000). The Second
Circuit has recently rejected Section 14(a) claims premised on “defective”
director elections for want of loss causation. See Rubenstein ex rel
C. Delaware Law Claims
As there are no federal claims remaining, I decline
the defendants’ invitation to exercise supplemental jurisdiction
over the state-law claims. See Defs.’ Supp. Mem. 10. This is

the “usual” outcome when all federal claims are dismissed at the
pleading stage. See Pension Ben. Guar. Corp. ex rel. St.
Vincent Cath. Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt.
Inc., 712 F.3d 705, 727 (2d Cir. 2013). No special reason
emerges to justify a deviation from that practice here.
Conclusion
The complaint is dismissed without prejudice. Lase
may file a motion seeking leave to file an amended complaint
within thirty days. Any such motion should include the proposed
amended complaint as an exhibit in accordance with this court’s
individual rules and practices. If Lase does not seek leave to

Jefferies Fin. Grp. Inc. v. Adamany, No. 22-2794, 2023 WL 6119810, at *4 (2d
Cir. Sept. 19, 2023). The Rubenstein panel reasoned that the plaintiff had,
among other things, failed to allege that, absent the purported material
omission he identified in the proxy, “the directors would not have been re-
elected.” Id. I need not decide the issue here.
amend within thirty days, judgment shall enter, and the case
shall be closed.

SO ORDERED.

/s/ Eric Komitee__________
ERIC KOMITEE
United States District Judge

Dated: March 14, 2024
Brooklyn, New York

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10311351. Public record. Not legal advice.