Page:In re Donald J. Trump Casino Securities Litigation.pdf/21

 disclosed the magnitude of the competition that the Taj Mahal would face.

The prospectus so bespoke caution with respect to the Taj Mahal’s prospective competitive obstacles that we deem the challenged omission immaterial as a matter of law. Because the prospectus took substantial pains to convey to the bondholders the considerable competition that the Taj Mahal would face in the Atlantic City casino industry, we fail to see how the inclusion of the prediction that the Taj Mahal would have difficulty in surmounting this obstacle successfully would have materially altered the substance of the information provided by the prospectus. Cf. Craftmatic, 890 F.2d at 641–44 (dismissing complaint’s allegations of material omissions of predictive statements about the likely success of the defendant’s effort to enter new lines of business). We therefore conclude that the prospectus adequately cautioned potential investors that the Taj Mahal would face intense competition. These warnings undermine any claim that the prospectus made material omissions on this issue.

E. Economic Conditions

Finally we turn to the plaintiffs’ allegation that the prospectus “omitted to disclose the likely effect of the already weakened economy in the Northeast and the potential for competition from casinos located in Las Vegas, Nevada.” Complaint at ¶ 39. This allegation also fails to state an actionable claim. As mentioned above, see, the prospectus did in fact divulge that the Taj Mahal would face competition from Las Vegas casinos. In addition, we hold that the defendants did not violate the securities fraud laws merely by failing to alert investors to the obvious implications of the already weakened economic conditions in the Northeast. As the reasonable investor should have known of the economic downturn in the Northeast at that time, the inclusion of this information would not have substantively altered the total mix of information the prospectus provided to investors. The federal securities laws, in a word, do not compel the Partnership to state the obvious.

VI. Conclusion

For the foregoing reasons we will affirm the orders of the district court dismissing the plaintiffs’ complaints under Rule 12(b)(6). In view of our disposition of the plaintiffs’ federal causes of action, we will also affirm the district court’s dismissal without prejudice of the plaintiffs’ state law claims for lack of pendent jurisdiction.