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Anderson v. Aon Corp.

December 22, 2008

ROBERT M. ANDERSON, PLAINTIFF,
v.
AON CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Blanche M. Manning United States District Judge

MEMORANDUM AND ORDER

In the latest version of his complaint, plaintiff Robert Anderson contends that Aon Corporation made misrepresentations that induced him to sell a PUT option on his Aon stock in June of 2002. According to Mr. Anderson, as a result of selling his PUT option, he suffered a loss when he subsequently sold the Aon stock that had been subject to the option because he no longer had protection from any drop in the stock's value. Based on these facts, Mr. Anderson alleges that Aon violated federal and state securities laws (Counts I and II, respectively). In its motion to dismiss, Aon contends, among other things, that Mr. Anderson's securities claims are time-barred. For the reasons discussed below, the court agrees that Mr. Anderson's securities claims are untimely. Hence, his complaint is dismissed with prejudice.

I. Background

A. The First Complaint

In September of 2003, Mr. Anderson filed suit against Aon, Patrick Ryan (Aon's principal executive officer), and Harvey Medvin (Aon's principal financial officer) in the California Superior Court for the County of Orange based on federal securities fraud and common law fraud theories. That complaint was a holder's action (i.e., a claim that Aon's public filings and statements contained misrepresentations that caused Mr. Anderson to "hold" onto his Aon stock rather than sell the stock for a profit) and did not include claims for securities fraud arising under federal or state securities laws. The complaint alleged that Mr. Anderson became aware of the purported fraudulent nature of Aon's public filings and statements on or about September 27, 2002. See First Complaint at ¶¶ 22, 25, 31.

The defendants removed the state court action to the United States District Court for the Central District of California on the basis of both diversity and federal question jurisdiction. Next, they filed a motion to dismiss or transfer the case to the Northern District of Illinois, arguing that the California district court lacked personal jurisdiction over Ryan and Medvin (both of whom are Illinois citizens) and that venue was improper. In response, Mr. Anderson filed an amended complaint that dropped Messrs. Ryan and Medvin.

After Aon renewed its motion to transfer or dismiss, the California district court issued a tentative ruling expressing its intention to transfer the case to Illinois. This tentative ruling indicated -- but did not expressly hold -- that Illinois law likely governed the dispute based on California's "governmental interest" choice-of-law test. Before the California court could obtain a draft order from the parties and issue a formal transfer order, Mr. Anderson voluntarily dismissed his case without prejudice.

2. The Second Complaint

a. Proceedings in State and Federal Court in California

On June 15, 2005, Mr. Anderson filed a second complaint in the California Superior Court for the County of Orange. This complaint named Aon, as well as Aon Risk Services, Inc. of Southern California ("ARS"), and Peter Arkley (collectively, "the California defendants"), as defendants. ARS is a California-based Aon subsidiary, and Mr. Arkley is President and Chief Executive Officer of an ARS business unit called Aon Construction Services Group ("CSG"). This complaint repeated Mr. Anderson's contention that he had been defrauded into holding Aon stock. Based on this alleged fraud, Mr. Anderson alleged causes of action for common law fraud, unfair competition, breach of fiduciary duty, RICO, and civil conspiracy. As with the first complaint, Mr. Anderson did not include claims for securities fraud arising under federal or state securities laws, but alleged that he discovered the purported falsity of the public filings and statements on September 27, 2002. See Second Complaint at ¶ 49, 55, 63.

The defendants removed this action to the United States District Court for the Central District of California based on federal question jurisdiction. Their notice of removal also argued that the California defendants had been fraudulently joined and thus raised diversity jurisdiction as an additional basis for removal. In response, Mr. Anderson voluntarily dismissed his RICO claim and filed a motion for remand, claiming that the parties were not diverse and that the court could not exercise federal question jurisdiction.

The California district court denied the motion to remand. In support, and relying on Ninth Circuit law, it held that jurisdiction must be evaluated as of the time of removal and that it had the discretion to retain jurisdiction over the state law claims even after Mr. Anderson's dismissal of his RICO claims. It then decided to retain jurisdiction because it had already invested a considerable amount of time in the first removed case. It also indicated, but did not expressly hold, that Mr. Anderson had fraudulently joined the California defendants since the complaint did not appear to state a colorable claim against them.

After the California district court denied Mr. Anderson's motion to remand, the defendants renewed their motion to transfer or dismiss. The California district court granted the motion to transfer and thus did not reach the merits of the motion to dismiss. In issuing this ruling, the court applied California's ...


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