                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-6-2005

Ronson Corp v. Steel Partners II
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-1202




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"Ronson Corp v. Steel Partners II" (2005). 2005 Decisions. Paper 1578.
http://digitalcommons.law.villanova.edu/thirdcircuit_2005/1578


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                                                               NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT
                               _______________

                                   No. 04-1202
                                 _______________

               RONSON CORPORATION; LOUIS V. ARONSON, II;
                  ROBERT A. ARONSON; ERWIN M. GANZ;
                   I. LEO MOTIUK; GERARD J. QUINNAN;
                  JUSTIN P. WALDER; SAUL H. WEISMAN

                                           v.

            STEEL PARTNERS II, L.P.; STEEL PARTNERS LLC;
              WARREN G. LICHTENSTEIN; JACK HOWARD;
         HOWARD M. LORBER; RONALD HAYES; TRAVIS BRADFORD
                         JOHN DOES, 1-100

                              Ronson Corporation, Louis V. Aronson,II,
                                Robert A. Aronson, Erwin M. Ganz,
                                Gerard J. Quinnan, Justin P. Walder,
                                                             Appellants
                                _______________

                     Appeal from the United States District Court
                             for the District of New Jersey
                                (D.C. No. 03-cv-02350)
                      District Judge: Hon. Garrett E. Brown, Jr.
                                   _______________

                       Argued: November 29, 2004
          BEFORE: RENDELL, ALDISERT and MAGILL*, Circuit Judges

                               (Filed: January 6, 2005 )
                                   ______________

_______________________
   * Honorable Frank Magill, Senior Judge of the United States Court of Appeals for
      the Eighth Circuit, sitting by designation.
Kenneth B. Falk
Deutch & Falk LLC
843 Rahway Avenue
Woodbridge, NJ 07095
Counsel for Appellant
Ronson Corporation

Andrew T. Berry [ARGUED]
Seth T. Taube
McCarter & English, LLP
100 Mulberry Street
Four Gateway Center
Newark, NJ 07102-0652
Counsel for Appellants
Louis V. Aronson II, Robert A. Aronson,
Erwin M. Ganz, Gerard J. Quinnan, and
Justin P. Walder


Thomas J. Fleming [ARGUED]
Olshan Grundman Frome
Rosenzweig & Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, NY 10022
Counsel for Appellees
Steel Partners II, L.P., Steel Partners, LLC.,
Warren G. Lichtenstein, Jack Howard

Alan Arkin [ARGUED]
Arkin Kaplan LLP
590 Madison Avenue, 35 th Floor
New York, NY 10022

                                     _______________

                               OPINION OF THE COURT
                                  _______________




                                                 2
MAGILL, Senior Circuit Judge.

          Plaintiff-Appellant Ronson Corp. (“Ronson”) appeals the district court’s order

granting Defendant-Appellees Steel Partners II, L.P., Steel Partners, L.L.C., Warren

Lichtenstein, and Jack Howard’s (collectively “Steel Partners”) motion to dismiss and

Howard M. Lorber’s separate motion to dismiss Ronson’s complaint as time-barred. We

have jurisdiction under 28 U.S.C. § 1291. For the reasons stated by the District Court, we

affirm.

                                               I.

          On March 11, 1998, Steel Partners filed a Schedule 13D to report its ownership

interest in Ronson, but it did not check the box to indicate that it was acting as part of a

group in acquiring Ronson stock. Steel Partners has filed several amendments to its

Schedule 13D, none of which disclose group membership. It is clear from the record that

Ronson suspected Steel Partners’ participation in a group as early as 1999. In a letter

from Ronson’s CEO, Louis V. Aronson, II, to Steel Partners’ CEO, Warren Lichtenstein,

Aronson uses phrases such as “[w]hile you may believe that you and your secret investor

group are entitled to special treatment and privileges . . . you and your group have not

demonstrated . . . you have boasted to your investor group . . . .” App. at 159.

          On May 16, 2003, Ronson filed a complaint alleging that Steel Partners’ failure to

disclose its group membership violated section 13(d)(3) of the Securities and Exchange

Act of 1934, 15 U.S.C. § 78m(d)(3). The district court dismissed the complaint as time-



                                               3
barred because Ronson was on inquiry notice of any alleged group activity since 1999,

but it did not file a complaint until May 16, 2003. In doing so, the district court rejected

Ronson’s argument that Steel Partners’ subsequent amendments to its Schedule 13D, two

of which were filed within a year prior to Ronson’s complaint, constitute new violations

and should restart the statute of limitations.

                                                 II.

       We review the district court’s decision de novo. Merle v. United States, 351 F.3d

92, 94 (3d Cir. 2003). A motion to dismiss may be granted only if, accepting all well-

pleaded allegations in the complaint as true and viewing them in the light most favorable

to the plaintiff, the plaintiff is not entitled to relief. Oran v. Stafford, 226 F.3d 275, 279

(3d Cir. 2000).

       Ronson was on inquiry notice, and the statute of limitations period began to run,

when it “‘discovered or in the exercise of reasonable diligence should have discovered the

basis for [its] claim’” against Steel Partners. In re NAHC, Inc. Sec. Litig., 306 F.3d 1314,

1325 (3d Cir. 2002) (quoting Gruber v. Price Waterhouse, 697 F. Supp. 859, 863 (E.D.

Pa. 1988)). “Whether the plaintiffs, in the exercise of reasonable diligence, should have

known of the basis for their claims depends on whether they had ‘sufficient information

of possible wrongdoing to place them on “inquiry notice” or to excite “storm warnings”

of culpable activity.’” Id. (quoting Gruber, 697 F. Supp. at 864).




                                                 4
       The basis for Ronson’s claim is Steel Partners’ nondisclosure of group activity,

and Ronson had information as early as 1999 to provide a “storm warning” that the

defendants were allegedly acting as a group. Steel Partners, by continuously failing to

disclose such group membership, has not committed any new violations. See Green v.

Fund Asset Mgmt., L.P., 19 F. Supp. 2d 227, 233 (D.N.J. 1998). Thus, Ronson’s

complaint is time-barred under both the Securities and Exchange Act’s one-year

limitations period, 15 U.S.C. § 78r(c), and the Sarbanes-Oxley Act’s two-year limitations

period, 28 U.S.C. § 1658(b)(1).

       Because the District Court correctly granted Steel Partners’ motion and Lorber’s

separate motion to dismiss Ronson’s complaint, we will AFFIRM.

_________________




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