BBAM Aircraft Management LP and BBAM US LP v. Babcock & Brown LLC, Burnham Sterling & Company LLC, Babcock & Brown Securities, LLC, Babcock & Brown Investment Management LLC

Summary

The United States District Court for the District of Connecticut grants Plaintiffs’ motion to dismiss Defendants’ amended California Unfair Competition Law counterclaim. The court concludes that the allegations do not plausibly show that BBAM acted as an unlicensed broker-dealer in connection with the relevant aircraft sale and lease-back transactions. The counterclaim is dismissed with prejudice, and related motions are denied or denied as moot.

Holdings

1. The Second Amended Counterclaim failed to plausibly allege that BBAM acted as a broker-dealer in securities transactions. BBAM's alleged role was limited principally to procuring and managing aircraft assets, and the sale-and-leaseback arrangements were not transformed into securities transactions merely because the purchasing entities were financial vehicles for investors whose interests were securities.
2. The defendants failed to state a plausible California Unfair Competition Law claim because the alleged broker-dealer violation was inadequately pleaded.
3. Dismissal of the UCL counterclaim was with prejudice because it was defendants' third unsuccessful attempt to state the claim.

Questions Presented

1. Whether the Second Amended Counterclaim plausibly alleged that BBAM acted as an unlicensed broker-dealer in securities transactions so as to support a California Unfair Competition Law claim.
2. Whether BBAM's identification and marketing of potential investors and its role in procuring and managing aircraft assets constituted participation in the chain of distribution of securities.
3. Whether the UCL counterclaim should be dismissed with prejudice after defendants' third unsuccessful attempt to state the claim.

Disposition

dismissed