Roth v. CK Amarillo LP
- Laura Swain
- 1:24-cv-00706
- U.S. District Court · Southern District of New York
- 10
In Roth v. CK Amarillo LP, Judge Swain granted defendants’ motion to dismiss Roth’s short-swing-profit claims in full.
Andrew E. Roth’s derivative Section 16(b) claims were dismissed in full. CK Amarillo LP, CK Amarillo GP, LLC, Certares Opportunities LLC, Certares Management LLC, Knighthead Capital Management, LLC, and Hertz Global Holdings, Inc. were affected by the judgment in favor of the defendants and the closure of the case.
What happened
Roth v. CK Amarillo LP concerned a shareholder’s claim that investment entities violated a securities law by selling Hertz stock and then benefiting when Hertz bought back its own shares. Roth sought recovery of alleged profits for Hertz.
Roth alleged that CK Amarillo LP and related entities sold Hertz shares in November 2021, while Hertz repurchased its own shares between January and May 2022. He argued that Hertz’s repurchases could be treated as purchases by the defendants under the short-swing-profit rule.
Judge Laura Swain granted the defendants’ motion to dismiss in its entirety. She ruled that the law does not allow Hertz’s purchases of its own stock to be attributed to the defendants, declined to allow Roth to amend his claims, and directed entry of judgment for the defendants and closure of the case.
The detailed version
- Roth v. CK Amarillo LP · No. 1:24-cv-00706
- Laura Swain
- Mar. 30, 2025
Background
Andrew E. Roth brought a derivative action on behalf of Hertz Global Holdings, Inc. against CK Amarillo LP, CK Amarillo GP, LLC, Certares Opportunities LLC, Certares Management LLC, and Knighthead Capital Management, LLC. Hertz was named as the nominal defendant. Roth alleged claims under Section 16(b) of the Securities Exchange Act of 1934, which requires certain corporate insiders to give the company profits from matching purchases and sales of the company’s securities made within less than six months.
Roth alleged that CK Amarillo LP held approximately 41.75% of Hertz’s outstanding common stock and sold 15,217,635 Hertz shares on November 8, 2021. Hertz later repurchased its own stock between January and May 2022. Roth claimed that matching the sale with Hertz’s repurchases showed at least $126,974,412 in recoverable short-swing profits. After Hertz declined to pursue the potential claim, Roth filed this derivative action.
Motion to Dismiss
The defendants moved to dismiss under Rule 12(b)(6), arguing that the complaint did not state a legally sufficient claim. Roth asserted two versions of the Section 16(b) claim: one against all defendants and one, alternatively, against CK Amarillo LP alone.
The court accepted the complaint’s well-pleaded factual allegations as true for purposes of the motion. It explained that a Section 16(b) claim requires a purchase, a matching sale, a statutory insider, and transactions within six months. The same insider must make both the purchase and the sale.
Court’s Analysis
The court concluded that Roth could not attribute Hertz’s purchases of its own stock to CK Amarillo LP or the other defendants. It relied first on the statute’s text, which distinguishes between a beneficial owner or other insider and the issuer—the company whose securities are involved. Treating Hertz and the alleged insiders as the same participant would not fit the statutory language or purpose.
The court also reasoned that Section 16(b) imposes liability without regard to intent and therefore must be applied narrowly in clear cases. It found that Roth’s interpretation could make every insider liable whenever the company bought or sold its own securities, creating results the statute did not clearly require. The court further relied on the Securities and Exchange Commission’s regulatory history and prior decisions rejecting the same theory.
Disposition
The court granted the defendants’ motion to dismiss in its entirety. Because the problem arose from Roth’s core legal theory, the court declined to grant leave to amend. The order resolves docket entry no. 18, directs the Clerk to enter judgment in favor of the defendants, and closes the case.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.