Walter Energy, Inc.
Audley Capital Advisors LLP et al.
Appeal from Jefferson Circuit Court (CV-13-425)
Walter Energy, Inc., appeals the order of the Jefferson Circuit Court dismissing claims it had asserted against investor Julian A. Treger, his firm Audley Capital Advisors LLP, and other associated investment entities (hereinafter referred to collectively as "the Audley defendants") stemming from their alleged involvement in a scheme to improperly manipulate the share price of Walter Energy stock. We affirm.
In late 2010, Birmingham-based Walter Energy agreed to purchase Western Coal Corporation, a Canadian energy company in which the Audley defendants held a significant minority stake. Between then and April 1, 2011, when the acquisition closed, the Audley defendants exchanged millions of shares of Western Coal stock for approximately $770 million in cash and Walter Energy stock. Walter Energy asserts that the Audley defendants thereafter conspired to execute a "pump and dump" scheme to drive up the price of Walter Energy stock and to further profit from Walter Energy's purchase of Western Coal.
Walter Energy alleges that the Audley defendants initiated their scheme on July 17, 2011, when Treger sent a letter to Walter Energy stating that Audley Capital Advisors had directed an investment bank to gauge various third parties' interest in acquiring Walter Energy and intimating that Walter Energy could be sold at double its then current share price. The letter also advised that other large institutional shareholders in Walter Energy had been contacted and that they would support an acquisition of the company at the appropriate price. The letter, marked "private & confidential, " requested a response from Walter Energy by August 5, 2011; however, Audley Capital Advisors publicly released the letter on July 18, 2011, before receiving any response from Walter Energy.
The share price of Walter Energy stock, which trades publicly on the New York Stock Exchange, thereafter spiked, and, in the days and weeks that followed, the Audley defendants sold approximately 900, 000 shares of Walter Energy stock. In September 2011, The Times, a London newspaper, reported that another mining company was considering making an offer to purchase Walter Energy and that it had in fact already arranged financing to do so. Shares of Walter Energy again spiked, and the Audley defendants sold approximately 300, 000 more shares of Walter Energy stock that month. In October 2011, there were more media reports that various mining and energy companies were targeting Walter Energy for a takeover, and the Audley defendants sold approximately 200, 000 shares of Walter Energy stock that month. Finally, in December 2012, the Daily Mail in London reported that an Australian mining company was poised to make an offer to acquire Walter Energy.
To date, however, no company has made a formal bid to acquire Walter Energy or has attempted any other sort of a takeover. Walter Energy now asserts that all the media reports indicating that an acquisition of Walter Energy was imminent were false and that they were generated by the Audley defendants in an attempt to create interest in Walter Energy stock so the share price would rise and the Audley defendants could sell their shares of Walter Energy stock at the new artificially high price.
Walter Energy further argues that the Audley defendants perpetuated the idea that the board of directors of Walter Energy was declining merger opportunities based on the directors' own self interest. On March 22, 2013, the Audley defendants gave notice that they would present their own slate of directors at the April 25, 2013, annual meeting of Walter Energy shareholders by filing the required information with the Securities and Exchange Commission and distributing a letter to all Walter Energy shareholders seeking support for their proposed slate of directors. However, Walter Energy alleges that, in fact, the intent of the March 22 letter was to hinder Walter Energy's attempt to raise $350 million by way of a debt offering. Although neither the Audley defendants' proposed slate of candidates nor the attempt to stop the debt offering was ultimately successful, Walter Energy alleges that both efforts were part of a continued effort to manipulate the share price of Walter Energy stock.
In May 28, 2013, Walter Energy sued the Audley defendants in the Jefferson Circuit Court seeking damages based upon their alleged improper manipulation of the share price of Walter Energy stock, as well as an injunction barring any further attempts to do so. As eventually amended, Walter Energy's complaint alleged violations of the Alabama Securities Act, § 8-6-1 et seq., Ala. Code 1975; various species of fraud; felonious injury; conspiracy; intentional interference with contractual or business relations; negligent misrepresentation; and unjust enrichment. Following the filing of Walter Energy's initial complaint, and again following the filing of three amended complaints, the Audley defendants moved the trial court to dismiss all the claims asserted against them on Rule 12(b)(6), Ala. R. Civ. P., grounds. On May 20, 2014, the trial court granted the Audley defendants' motion to dismiss and dismissed with prejudice all the claims asserted against them by Walter Energy. On June 30, 2014, Walter Energy filed its notice of appeal to this Court.
We explained the standard of review applicable to an appeal of a trial court's order granting a motion to dismiss in Crosslin v. Health Care Authority of Huntsville, 5 So.3d 1193, 1195 (Ala. 2008):
"In considering whether a complaint is sufficient to withstand a motion to dismiss under Rule 12(b)(6), Ala. R. Civ. P., a court 'must accept the allegations of the complaint as true.' Creola Land Dev., Inc. v. Bentbrooke Housing, L.L.C., 828 So.2d 285, 288 (Ala. 2002) (emphasis omitted). '"The appropriate standard of review under Rule 12(b)(6)[, Ala. R. Civ. P., ] is whether, when the allegations of the complaint are viewed most strongly in the pleader's favor, it appears that the pleader could prove any set of circumstances that would entitle [it] to relief."' Smith v. National Sec. Ins. Co., 860 So.2d 343, 345 (Ala. 2003) (quoting Nance v. Matthews, 622 So.2d 297, 299 (Ala. 1993)). In determining whether this is true, a court considers only whether the plaintiff may possibly prevail, not whether the plaintiff will ultimately prevail. Id. Put another way, '"a Rule 12(b)(6) dismissal is proper only when it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief."' Id. (emphasis added)."
Thus, we afford the trial court's order of dismissal no presumption of correctness, and we review the sufficiency of Walter Energy's complaint de novo. See also DGB, LLC v.Hinds, 55 So.3d 218, 223 (Ala. 2010) (quoting Nance v. Matthews, 622 So.2d 297, 299 (Ala. 1993)) ("'On ...