Reply Brief in Support of Motion to Dismiss — Wax v. Cross River Bank (D.N.J.)

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U.S. District Court for the District of New Jersey · No. 2:24-cv-09510-ES-JRA · Doc. 41 · 2025-07-23 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
DISTRICT OF NEW JERSEY 
MITCHELL WAX, Individually and on Behalf of 
All Other Similarly Situated, 
Plaintiff, 
v. 
CROSS RIVER BANK, 
Defendant. 
Case No. 2:24-cv-09510 (ES) (JRA)
Document Electronically Filed 
Oral Argument Requested
REPLY BRIEF IN FURTHER SUPPORT OF MOTION TO DISMISS FOR FAILURE 
TO STATE A CLAIM BY DEFENDANT CROSS RIVER BANK  
Of Counsel: 
John J. Clarke, Jr.* 
john.clarke@us.dlapiper.com
1251 Avenue of the Americas 
New York, New York 10020 
(212) 335-4500 
Richard Zelichov* 
richard.zelichov@us.dlapiper.com  
2000 Avenue of the Stars 
Suite 400 North Tower 
Los Angeles, California 90067 
(310) 595-3000 
*Admitted pro hac vice
Dated:  July 23, 2025
DLA PIPER LLP (US) 
Steven M. Rosato 
steven.rosato@us.dlapiper.com  
1251 Avenue of the Americas 
New York, New York 10020
(212) 335-4500 
Attorneys for Defendant 
  Cross River Bank 
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Table of Contents 
Page 
PRELIMINARY STATEMENT .................................................................................................... 1
ARGUMENT .................................................................................................................................. 2
I.
PLAINTIFF DOES NOT, AND CANNOT, ALLEGE AN ACTIONABLE CLAIM. ...... 2
A.
Plaintiff’s Claim Is Barred by Supreme Court Decisions. ...................................... 2
1.
Central Bank Categorically Bars Aiding and Abetting Claims. ................. 2
2.
Under Stoneridge, Plaintiff Cannot Plead Reliance. ................................... 2
B.
Plaintiff Has Not Pleaded a “Scheme” Claim in Any Event. ................................. 5
1.
The Complaint Does Not Allege “Inherently Deceptive” Conduct 
Distinct from Alleged Sunlight Misstatements. .......................................... 5
2.
Plaintiff Alleges No Facts to Support a “Strong Inference” 
of Scienter. .................................................................................................. 7
3.
Plaintiff Lacks Standing and Fails to Plead Loss Causation....................... 9
II.
THE SUNLIGHT BANKRUPTCY PLAN INJUNCTION AND SECURITIES 
CLASS ACTION RELEASE BAR PLAINTIFF’S CLAIM. ........................................... 10
A.
The Sunlight Bankruptcy Plan Injunction Bars Plaintiff’s Claims. ...................... 10
B.
The Class-Wide Release in the Sunlight Securities Class Applies. ...................... 11
CONCLUSION ............................................................................................................................. 12
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Table of Authorities 
Page(s) 
Cases 
Baer v. Shift4 Payments, Inc., 
2024 WL 3836676 (E.D. Pa. Aug. 14, 2024) ............................................................................8 
In re Bio-Technology Gen. Corp. Sec. Litig., 
380 F. Supp. 2d 574 (D.N.J. 2005) ............................................................................................8 
Born v. Quad/Graphics, Inc., 
521 F. Supp. 3d 469 (S.D.N.Y. 2021)......................................................................................10 
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 
511 U.S. 164 (1994) ...............................................................................................................1, 2 
In re Cognizant Tech. Sols. Corp. Sec. Litig., 
2020 WL 3026564 (D.N.J. June 5, 2020) ..............................................................................4, 8 
Copland v. Grumet, 
88 F. Supp. 2d 326 (D.N.J. 1999) ..............................................................................................2 
In re Dr. Reddy’s Lab. Ltd. Sec. Litig., 
2019 WL 1299673 (D.N.J. Mar. 21, 2019) ................................................................................9 
ECA, Loc. 134 IBEW Joint Pension Tr. of Chicago v. JP Morgan Chase Co., 
553 F.3d 187 (2d Cir. 2009).......................................................................................................9 
In re Eletrobras Sec. Litig., 
245 F. Supp. 3d 450 (S.D.N.Y. 2017)........................................................................................4 
GSC Partners CDO Fund v. Washington, 
368 F.3d 228 (3d Cir. 2004).......................................................................................................7 
In re Hertz Glob. Holdings Inc., 
905 F.3d 106 (3d Cir. 2018).......................................................................................................7 
Janus Cap. Grp., Inc. v. First Deriv. Traders, 
564 U.S. 135 (2011) ...................................................................................................................1 
Kalnit v. Eichler, 
264 F.3d 131 (2d Cir. 2001).......................................................................................................8 
Lewakowski v. Aquestive Therapeutics, Inc., 
2023 WL 2496504 (D.N.J. Mar. 14, 2023) ................................................................................8 
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Page(s) 
McCabe v. Ernst & Young, LLP, 
494 F.3d 418 (3d Cir. 2007).....................................................................................................10 
In re Mindbody, Inc. Sec. Litig., 
489 F. Supp. 3d 188 (S.D.N.Y. 2020)........................................................................................5 
In re Nanthealth, Inc. S’holder Deriv. Litig., 
2021 WL 1909885 (D. Del. May 12, 2021) .............................................................................11 
Nat’l Junior Baseball League v. Pharmanet Dev. Grp. Inc., 
720 F. Supp. 2d 517 (D.N.J. 2010) ......................................................................................7, 10 
Pac. Inv. Mgmt. Co. v. Mayer Brown LLP, 
603 F.3d 144 (2d Cir. 2010)...................................................................................................2, 3 
In re Parmalat Sec. Litig., 
376 F. Supp. 2d 472 (S.D.N.Y. 2005)........................................................................................6 
In re Prudential Ins. Co. of Am. Sales. Prac. Litig., 
261 F.3d 355 (3d Cir. 2001).....................................................................................................11 
Rahman v. Kid Brands, Inc., 
736 F.3d 237 (3d Cir. 2013).......................................................................................................9 
S.E.C. v. Lucent Techs., Inc., 
610 F. Supp. 2d 342 (D.N.J. 2009) ........................................................................................5, 6 
Stichting Pensioenfonds ABP v. Merck & Co., 
2012 WL 3235783 (D.N.J. Aug. 1, 2012) .............................................................................6, 7 
Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 
552 U.S. 148 (2008) ...................................................................................................1, 2, 3, 4, 5 
Takata v. Riot Blockchain, Inc., 
2023 WL 7133219 (D.N.J. Aug. 25, 2023) ...............................................................................5 
Tellabs v. Makor Issues & Rights, Ltd., 
551 U.S. 308 (2007) ...................................................................................................................9 
Trustcash Holdings, Inc. v. Moss, 
668 F. Supp. 2d 650 (D.N.J. 2009) ........................................................................................5, 6 
In re Turquoise Hill Res. Ltd. Sec. Litig., 
625 F. Supp. 3d 164 (S.D.N.Y. 2022)........................................................................................7 
Waterford Twp. Police & Fire Ret. Sys. v. Smithtown Bancorp. Inc., 
2014 WL 3569338 (E.D.N.Y. July 18, 2014) ............................................................................8 
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Page(s) 
Winer Family Tr. v. Queen, 
503 F.3d 319 (3d Cir. 2007).......................................................................................................9 
Statutes and Regulations 
15 U.S.C. § 78j(b) ......................................................................................................................2, 10 
15 U.S.C. § 78u-4(b)(2)(A)..............................................................................................................7 
15 U.S.C. § 78u-4(b)(4) .................................................................................................................10 
17 C.F.R. § 240.10b-5 ..................................................................................................................1, 2 
17 C.F.R. § 240.10b-5(a) .............................................................................................................2, 4 
17 C.F.R. § 240.10b-5(b) .............................................................................................................6, 8 
17 C.F.R. § 240.10b-5(c) .............................................................................................................2, 4 
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PRELIMINARY STATEMENT 
The private right of action implied under Rule 10b-5 “does not include suits against aiders 
and abettors.”  Janus Cap. Grp., Inc. v. First Deriv. Traders, 564 U.S. 135, 144 (2011) (citing 
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 180 (1994)).  
Plaintiff’s opposition brief confirms his securities fraud claims against CRB are predicated entirely 
on public statements made by Sunlight Financial Holdings, Inc. – not by CRB.  Central Bank and 
its progeny require dismissal of those claims. 
Plaintiff is not the first to argue that he can sidestep Central Bank by pleading his claims 
as a “scheme.”  That was what the plaintiffs argued in Stoneridge Inv. Partners, LLC v. Scientific-
Atlanta, Inc., 552 U.S. 148 (2008), where the Court held that allegations about undisclosed conduct 
by a supplier of set-top boxes to an issuer in the cable television business were “too remote to 
satisfy the requirement of reliance.”  Id. at 161.  The opposition’s circular attempt to distinguish 
Stoneridge is unavailing.  Opp. at 18-20.  As in Stoneridge, nothing about CRB’s financial dealings 
with Sunlight made it “necessary or inevitable” for Sunlight to make disclosures about those 
dealings that plaintiff claims were fraudulent.  Id. at 19 (quoting Stoneridge, 552 U.S. at 161). 
Nor did CRB commit any manipulative or deceptive act.  The opposition argues that CRB 
profited by “enabl[ing]” Sunlight to originate loans “of dubious credit quality,” Opp. at 20, but 
plaintiff asserts he was misled only because Sunlight allegedly used the arrangement to make its 
“financial health appear stronger.”  Id.  That is just an impermissible aiding and abetting claim.  
Similarly, allegations that CRB “increased its loan limits and enabled Sunlight to exceed those 
limits,” Opp. at 23, support the inference that CRB was acting to help Sunlight navigate a difficult 
financial situation – the opposite of scienter. 
For these and other reasons addressed below, the opposition further confirms plaintiff’s 
failure to plead any claim against CRB.  The complaint should be dismissed with prejudice. 
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ARGUMENT 
I. 
PLAINTIFF DOES NOT, AND CANNOT, ALLEGE AN ACTIONABLE CLAIM. 
A. 
Plaintiff’s Claim Is Barred by Supreme Court Decisions.  
1. 
Central Bank Categorically Bars Aiding and Abetting Claims. 
The opposition demonstrates that plaintiff’s “scheme” claim against CRB is, in reality, a 
claim for “aiding and abetting” securities fraud by Sunlight.  Section 10(b) and Rule 10b-5 do not 
provide a private right of action for that claim.  Central Bank, 511 U.S. at 185, 191; see Pac. Inv. 
Mgmt. Co. v. Mayer Brown LLP, 603 F.3d 144, 152-53 (2d Cir. 2010) (securities plaintiffs may 
not evade the “prohibitive bar of Central Bank[]” through creative pleading); Copland v. Grumet, 
88 F. Supp. 2d 326, 334 (D.N.J. 1999) (dismissing claims against defendants who allegedly 
“participated in” preparation of “false financial statements”). 
The opposition avoids mentioning Central Bank until page 33, where plaintiff mistakenly 
contends that the decision supports his position.  To the contrary, even if there could be a 
circumstance where a “secondary actor,” such as “a lawyer, accountant, or bank,” could be “liable 
as a primary violator under 10b-5,” that claim still would need to satisfy “all of the requirements 
for primary liability under Rule 10b-5” – including that the plaintiff “relie[d]” on the secondary 
actor’s statements or conduct.  Central Bank, 511 U.S. at 191 (emphasis in original).  The 
complaint against CRB does not meet that test on a number of different grounds, because plaintiff 
only has asserted claims against CRB for “secondary liability” that depend on actions and 
disclosures by Sunlight, as the alleged primary violator. 
2. 
Under Stoneridge, Plaintiff Cannot Plead Reliance.   
Plaintiff agrees that reliance is a required element of any claim under Rule 10b-5, including 
“scheme” claims under Rule 10b-5(a) and (c).  Opp. at 17-20; see Stoneridge, 552 U.S. at 159.  He 
erroneously contends the complaint pleads reliance because CRB’s alleged conduct “made 
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Sunlight’s misstatements and omissions inevitable[.]”  Opp. at 20.  Even if that assertion were not 
transparently false, it would not be enough to avert dismissal. 
The opposition fails to acknowledge, much less explain away, plaintiff’s admission that 
Sunlight investors “were unaware of” the alleged CRB conduct that is the basis for plaintiff’s 
securities fraud claims.  Compl. ¶¶ 3, 93.  Under Stoneridge, that admission is dispositive.  See
CRB Br. at 15-18.  In Stoneridge, the Court held that undisclosed “deceptive acts” by third-party 
business partners of a securities issuer, as CRB was to Sunlight here, were “too remote to satisfy 
the requirement of reliance.”  Stoneridge, 552 U.S. at 160-61; see, e.g., Mayer Brown, 603 F.3d at 
159 (“[T]he mere fact that the ultimate result of a secondary actor’s deceptive course of conduct 
is communicated to the public through a company’s financial statements is insufficient to show 
reliance on the secondary actor’s own deceptive conduct.”) (emphasis in original).   
The similarities between this case and Stoneridge are undeniable.  CRB Br. at 16-17.  
Plaintiff strains, and fails, to distinguish the case.  Opp. at 18-19.  Plaintiff asserts that in 
Stoneridge, the defendants were “suppliers, and later customers, of the issuer[,]” which he 
contrasts with CRB’s role as the “indirect channel provider” for Sunlight’s solar lending business.  
Id. at 18 (internal quotations omitted).  But plaintiff offers no reason to suggest these contrasting 
types of business relationships matter under Stoneridge.  The similarities are what matter.  Just 
like the plaintiff in Stoneridge, plaintiff alleges that: (i) CRB “agreed to arrangements that 
allowed” the issuer to make public misstatements, Stoneridge, 552 U.S. at 152-53; see Compl. ¶¶ 
1, 9, 12, 23; (ii) these arrangements supposedly had “no economic substance,” Stoneridge, 552 
U.S. at 154; see Compl. ¶¶ 23, 48, 75; (iii) CRB made no “public statement” and had no role “in 
preparing or disseminating” Sunlight’s statements, Stoneridge, 552 U.S. at 155; see Compl. ¶ 91; 
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and (iv) CRB’s alleged “deceptive acts” “were not disclosed to the investing public,” Stoneridge, 
552 U.S. at 161; see Compl. ¶¶ 3, 93. 
In both Stoneridge and the complaint here, the plaintiffs asserted claims for “scheme 
liability” under Rule 10b-5(a) and (c) to “answer the objection that [plaintiff] did not rely upon 
[CRB’s] own deceptive conduct.”  Id. at 160.  The Court in Stoneridge was not persuaded – for 
good reason.  Because the defendants were not involved “in preparing or disseminating” the 
issuer’s challenged statements, id. at 155, there was no basis to conclude that their “acts were 
immediate . . . . to the injury.”  Id. at 160.  Nothing about the defendants’ conduct “made it 
necessary or inevitable for [the issuer]” to publicly file misleading financial statements, id. at 161.  
The issuer alone was responsible for them, just as Sunlight was here.  Compl. ¶ 91.  That shows 
plaintiff’s claim is just one for aiding and abetting, which the securities laws do not permit. 
CRB’s lack of involvement in the challenged Sunlight disclosures distinguishes this case 
from In re Cognizant Tech. Sols. Corp. Sec. Litig., 2020 WL 3026564 (D.N.J. June 5, 2020), which 
plaintiff relies on in error, Opp. at 16-18.  In Cognizant, the “scheme” claims were asserted against 
Cognizant’s own chief legal officer – not a third-party business partner – who was accused of 
“devising, advising, and concealing [a] bribery scheme” and also of participating in the 
“dissemination of the financial misstatements” by Cognizant that obscured that misconduct.  
Cognizant, 2020 WL 3026564, at *19.  In contrast with CRB in this case, the “acts” of the insider 
defendant in Cognizant “were immediate . . . to the injury.”  Stoneridge, 552 U.S. at 160.  
Cognizant offers no assistance to plaintiff here.1
1 The same applies for In re Eletrobras Sec. Litig., 245 F. Supp. 3d 450, 472 (S.D.N.Y. 
2017), see Opp. at 17, 26, which also involved allegations that a senior executive of the issuer 
“organized an illegal kickback scheme” that “resulted in misleadingly overstated” financials.   
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Plaintiff admits CRB made no false or misleading statement, Compl. ¶ 91, and he admits 
his claim is premised on the idea that CRB “enable[d] Sunlight to make its financial health appear 
stronger than it was.”  Opp. at 14; see Compl. ¶¶ 10, 73.  That is an aiding and abetting claim.  
Reframing the same allegations as a claim for “scheme liability” cannot save it from dismissal.  
Stoneridge, 552 U.S. at 159-60.   
B. 
Plaintiff Has Not Pleaded a “Scheme” Claim in Any Event.   
1. 
The Complaint Does Not Allege “Inherently Deceptive” Conduct 
Distinct from Alleged Sunlight Misstatements.  
Plaintiff does not dispute that “scheme” claims require allegations of “inherently deceptive 
conduct” specifically “employed to deceive investors.”  Trustcash Holdings, Inc. v. Moss, 
668 F. Supp. 2d 650, 662 (D.N.J. 2009); see Opp. at 25.  Even if such a claim can cover “a wide 
range of conduct[,]” Opp. at 13, a plaintiff cannot assert a scheme claim when the “primary 
purpose and effect” of the alleged “scheme [was] to make a public misrepresentation or 
omission[.]”  Takata v. Riot Blockchain, Inc., 2023 WL 7133219, at *11 (D.N.J. Aug. 25, 2023) 
(quoting In re Mindbody, Inc. Sec. Litig., 489 F. Supp. 3d 188, 216 (S.D.N.Y. 2020)).  As CRB 
previously noted, “inherently deceptive conduct” generally is limited to “sham transactions” or 
“market manipulation.”  CRB Br. at 21-22; see Trustcash, 668 F. Supp. 2d at 663, S.E.C. v. Lucent 
Techs., Inc., 610 F. Supp. 2d 342, 360 (D.N.J. 2009). The opposition offers no response. 
Plaintiff concedes his claim against CRB is based on alleged efforts by Sunlight “to 
conceal” or “hide” “Sunlight’s exposure to [CRB’s] loan portfolio” from investors.  Opp. at 25; 
see also id. at 1, 5 n.2, 14, 17.  That is what the complaint repeatedly alleges.  See Compl. ¶¶ 1, 
9-10, 23, 44-45, 48, 60, 73, 75, 91 (generally alleging CRB enabled Sunlight to “conceal[]” and 
“consistently omit[]” information from Sunlight public filings to “cause[] Sunlight stock to trade 
at artificially inflated levels”).  That amounts to nothing more than a “scheme to withhold the truth 
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about” an issuer’s financial condition, which is an omission claim that “falls under the purview of 
Rule 10b-5(b).”  Stichting Pensioenfonds ABP v. Merck & Co., 2012 WL 3235783, at *10 
(D.N.J. Aug. 1, 2012).  Indeed, if Sunlight had made the disclosures that plaintiff alleges it should 
have made, the entire underlying premise of plaintiff’s complaint necessarily collapses.   
The conduct alleged in the complaint does not come close to qualifying as a “sham.”  It 
alleges that CRB engaged in arm’s-length financing transactions with Sunlight, which were 
facially “legitimate business transactions.”  Lucent, 610 F. Supp. 2d at 360.  Plaintiff’s assertion 
that “[t]here would be no legitimate reason for CRB” to do business with Sunlight on the terms 
alleged is not supported by a single factual allegation.  Opp. at 26.  Plaintiff seems to be asserting 
that CRB should not have loaned additional money to Sunlight over the course of 2022 and 2023, 
as Sunlight worked to overcome the negative effects of rising interest rates.  But that is not 
“deceptive” conduct.  Banks and other lenders regularly waive defaults and restructure loans – 
including by increasing borrowing capacity – as an alternative to forcing their borrower into 
bankruptcy.  When plaintiff’s “bluster is stripped away,” it is clear that “[t]hese transactions were 
not shams.  Nor did they depend on any fictions.”  In re Parmalat Sec. Litig., 376 F. Supp. 2d 472, 
505 (S.D.N.Y. 2005).  There is no allegation “that the transactions were something other than what 
they appeared to be.”  Id. 
Contrary to plaintiff’s contention, the decision in Lucent is on point.  The fact that Lucent
involved allegations against company insiders who agreed to business terms on sale transactions 
that ultimately were not disclosed to the investing public only strengthens the case for dismissal 
here.  As the Lucent court observed, “[t]he sales at issue were legitimate business transactions and 
the customers purchased the product from Lucent with every intention of using it or selling it to 
end customers.”  610 F. Supp. 3d at 360-61.   
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The opposition ignores the decisions in Stichting and In re Turquoise Hill Res. Ltd. Sec. 
Litig., 625 F. Supp. 3d 164 (S.D.N.Y. 2022), which further illustrate the point.  In Stichting, the 
court rejected the contention that “manipulation of data and clinical studies” by company insiders 
constituted the kind of “sham” necessary to support a scheme claim.  2012 WL 3235783, at *8.  In 
Turquoise Hill, the court found allegations of “a sham internal investigation” and “destruction of 
documents” did not plead “an inherently deceptive act.”  625 F. Supp. 3d at 253.  If conduct of 
those types did not rise to the level of a “sham,” it is difficult to see how CRB’s arm’s-length 
commercial arrangements with Sunlight could be one.  
2. 
Plaintiff Alleges No Facts to Support a “Strong Inference” of Scienter.   
To plead a “strong inference” of scienter, plaintiff was required to allege facts supporting 
an inference of fraudulent intent that is “cogent and at least as compelling as any opposing 
inference one could draw from the facts alleged.”  In re Hertz Glob. Holdings Inc., 905 F.3d 106, 
114 (3d Cir. 2018); see 15 U.S.C. § 78u-4(b)(2)(A).  The parties agree that scienter allegations 
must be analyzed “holistically.”  Hertz, 905 F.3d at 114.  CRB previously showed that a holistic 
review of the complaint’s scienter allegations yielded no inference of scienter, much less a strong 
one.  CRB Br. at 19-21.  Plaintiff’s response fares no better.  Opp. at 22-24.   
First, the opposition does not explain plaintiff’s failure to allege that CRB had “motive and 
opportunity” to defraud Sunlight investors.  The allegations that CRB “was earning substantial 
profits as Sunlight’s Bank Partner,” “benefitted financially” from the relationship, and earned 
“substantial fees[,]” Opp. at 24, do not plead a motive to defraud.  Plaintiff asserts his allegations 
go beyond generic “allegations that [CRB] stood to benefit from wrongdoing,” GSC Partners CDO 
Fund v. Washington, 368 F.3d 228, 237 (3d Cir. 2004), but he does not explain how they do.  Nor 
does the opposition show how earning fees and profits could constitute anything other than a 
“legitimate business motive[]” that is insufficient “to establish an inference of scienter.”  Nat’l 
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Junior Baseball League v. Pharmanet Dev. Grp. Inc., 720 F. Supp. 2d 517, 552 (D.N.J. 2010); see, 
e.g., Kalnit v. Eichler, 264 F.3d 131, 140 (2d Cir. 2001) (same). 
The opposition does not meaningfully address plaintiff’s failure to plead even one
transaction in Sunlight securities by CRB in an effort to take advantage of the supposed fraud.  As 
courts have “consistently” held, the absence of any stock sales by a defendant weighs “against an 
inference of scienter.”  Lewakowski v. Aquestive Therapeutics, Inc., 2023 WL 2496504, at *12 
(D.N.J. Mar. 14, 2023) (collecting cases).  Plaintiff offers no citation to support his argument that 
the principle recognized in Lewakowski and many other decisions should be disregarded because 
he is asserting a “scheme” claim.  Scienter is required for “scheme” claims as much as it is for 
claims based on alleged misrepresentations. 
Second, as to conscious misbehavior or recklessness, the opposition merely quotes the 
same conclusory allegations from his complaint that CRB’s opening brief showed were 
insufficient.  Opp. at 23 (quoting Compl. ¶¶ 23, 45, 48, 73); see CRB Br. at 20.  Plaintiff has not 
identified any allegation that CRB was even aware of the challenged Sunlight public statements, 
CRB Br. at 21, and the complaint admits that CRB had no involvement in making them, 
Compl. ¶ 91.  “Conclusory allegations” of knowledge, such as plaintiff’s here, do not support even 
a plausible inference of scienter, much less the required “strong inference.”  In re Bio-Technology 
Gen. Corp. Sec. Litig., 380 F. Supp. 2d 574, 595 (D.N.J. 2005); see, e.g., Baer v. Shift4 Payments, 
Inc., 2024 WL 3836676, at *15 (E.D. Pa. Aug. 14, 2024) (dismissing scheme claim for failure to 
plead scienter “[f]or the same reasons addressed” with respect to Rule 10b-5(b) claim).2
2 The opposition relies heavily on Cognizant.  Opp. at 22, 25.  But the unique facts of that 
case, involving allegations of bribery and corruption against company insiders, are far different 
than the allegations here.  See supra at 4.  Plaintiff’s citation of Waterford Twp. Police & Fire Ret. 
Sys. v. Smithtown Bancorp. Inc., 2014 WL 3569338 (E.D.N.Y. July 18, 2014), is similarly 
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Finally, the opposition does not make any attempt to weigh any inference of scienter 
against “any opposing inference of nonfraudulent intent.”  Rahman v. Kid Brands, Inc., 736 F.3d 
237, 242 (3d Cir. 2013) (quoting Tellabs v. Makor Issues & Rights, Ltd., 551 U.S. 308, 313 (2007)).  
Plaintiff admits his case depends on his belief that CRB should have “let Sunlight fail” instead of 
allegedly making concessions as interest rates increased.  Opp. at 7.  But working with a troubled 
borrower is standard practice – the “inference of nonfraudulent intent” is the only reasonable one 
here.  Rahman, 736 F.3d at 242.  The contrary inference, that CRB was intentionally throwing 
good money after bad to deceive Sunlight investors – without receiving any apparent benefit as 
Sunlight collapsed into bankruptcy – “defies economic reason.”  ECA, Loc. 134 IBEW Joint 
Pension Tr. of Chicago v. JP Morgan Chase Co., 553 F.3d 187, 203 (2d Cir. 2009).   
3. 
Plaintiff Lacks Standing and Fails to Plead Loss Causation. 
Plaintiff does not contest that he “only has standing to assert claims based on activity prior
to the date [he] purchased [his] stock.”  In re Dr. Reddy’s Lab. Ltd. Sec. Litig., 2019 WL 1299673, 
at *13 (D.N.J. Mar. 21, 2019) (quoting Winer Family Tr. v. Queen, 503 F.3d 319, 325 (3d Cir. 
2007)) (emphasis in original).  He admits his last alleged purchase of Sunlight stock was on 
September 29, 2022.  Compl., Sched. A.  The complaint alleges that CRB did not begin to “grant[] 
ever-increasing amounts of credit to Sunlight and its contractors,” “lift[] loan caps, and waive[] 
defaults under its agreements with Sunlight” – the alleged conduct at the heart of plaintiff’s claim 
– until December 2022.  Compl. ¶¶ 48, 54.  Consequently, none of the challenged conduct occurred 
before plaintiff purchased Sunlight stock, requiring dismissal for lack of standing.  Dr. Reddy’s, 
2019 WL 1299673, at *14.   
misplaced.  The claims in that case were asserted against the issuer itself (which happened to be a 
bank) and its officers, not a third-party business partner.  See Opp. at 20, 24. 
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In an effort to escape that conclusion, plaintiff argues that the alleged “fraudulent scheme 
commenced on January 25, 2021[.]”  Opp. at 27.  But the complaint contains no allegations 
concerning any allegedly fraudulent conduct by CRB from that date through December 13, 2022; 
in fact, the only alleged event on January 25, 2021 was the announcement of the business 
combination that would lead to Sunlight’s formation six months later.  Compl. ¶¶ 30-32.  
Even if plaintiff could overcome his lack of standing, his failure to plead loss causation 
also requires dismissal.  McCabe v. Ernst & Young, LLP, 494 F.3d 418, 425 (3d Cir. 2007).  
Contrary to plaintiff’s contention, Opp. at 28, private securities plaintiffs are required to plead loss 
causation for every claim they assert under section 10(b).  15 U.S.C. § 78u-4(b)(4).  Plaintiff does 
not do so.  He purports to describe “a series of partial disclosures through which [p]laintiff . . . 
learned of CRB’s scheme to artificially inflate the price of Sunlight’s shares,” Opp. at 30, but he 
does not explain how any of them coincided with “a market correction of the artificial inflation 
caused by” prior “misrepresentations[.]”  Nat’l Junior Baseball League, 720 F. Supp. 2d at 561.  
For example, an alleged disclosure on September 28, 2022 about a contractor to whom Sunlight 
chose to advance funds said nothing about CRB, Compl. ¶ 49, and plaintiff does not tie it – or any 
other purported corrective disclosure – to any prior alleged misrepresentation.  Id. ¶¶ 50-70.  Even 
under the most lenient pleading standard, these threadbare allegations do not establish loss 
causation.  See, e.g., Born v. Quad/Graphics, Inc., 521 F. Supp. 3d 469, 494 (S.D.N.Y. 2021). 
II. 
THE SUNLIGHT BANKRUPTCY PLAN INJUNCTION AND SECURITIES 
CLASS ACTION RELEASE BAR PLAINTIFF’S CLAIM.   
A. 
The Sunlight Bankruptcy Plan Injunction Bars Plaintiff’s Claims. 
Plaintiff does not dispute that the broad injunction in the Sunlight plan of reorganization 
covers plaintiff’s claims.  Exh. 4, Sunlight Plan § 10.6; see CRB Br. 24.  Nor does plaintiff dispute 
that CRB generally is entitled to indemnification from Sunlight.  See Exh. 5, Loan Program Agmt. 
Case 2:24-cv-09510-ES-JRA     Document 41     Filed 07/25/25     Page 15 of 18 PageID:
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§ 10.1; Exh. 6, Loan & Sec. Agmt. § 11.3.  Instead, plaintiff points to an exception in those broad 
indemnity provisions where it is “determined by a court of competent jurisdiction by final and 
nonappealable judgment” that CRB’s losses resulted from its own “gross negligence, willful 
misconduct or bad faith . . . .”  Opp. at 35-36.  There has been no final and nonappealable judgment 
here.  But more to the point, Sunlight already has publicly acknowledged its indemnification 
obligations to CRB in connection with this matter.  See Exh. 9 at 1, 10.  
B. 
The Class-Wide Release in the Sunlight Securities Class Applies.   
Finally, the Court should reject plaintiff’s effort to circumvent the class-wide release in the 
Sunlight securities class action.  Opp. at 36-39.   
First, CRB is a released party.  The release broadly covers Sunlight’s “shareholders” and 
“partners,” and CRB qualifies as both according to the complaint itself.  See, e.g., Compl. ¶¶ 6, 
35, 61, 71; Exh. 8, Sunlight Settlement ¶¶ 1.6, 1.27, 1.28, 1.35, 5.1.  Plaintiff argues that CRB did 
not become a Sunlight shareholder until after the class period, but the definition of released parties 
includes all “past, present, or future” shareholders and partners.  Exh. 8, Sunlight Settlement ¶ 1.28 
(emphasis added). 
Second, plaintiff also is mistaken in contending that the release somehow does not cover 
the conduct he alleges.  The release is very broad, Exh. 8, Sunlight Settlement ¶¶ 1.6, 1.35, and 
plaintiff’s focus on slight variations between the factual allegations in his complaint and those in 
the Sunlight complaint is misplaced.  Plaintiff’s claims, for the period from January 25, 2021 and 
September 28, 2022, “fall within the release’s terms.  So the release bars them.”  In re Nanthealth, 
Inc. S’holder Deriv. Litig., 2021 WL 1909885, at *2 (D. Del. May 12, 2021) (citing In re 
Prudential Ins. Co. of Am. Sales. Prac. Litig., 261 F.3d 355, 366-67 (3d Cir. 2001)).   
Case 2:24-cv-09510-ES-JRA     Document 41     Filed 07/25/25     Page 16 of 18 PageID:
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CONCLUSION 
For the foregoing reasons and those set forth in CRB’s opening brief, the complaint should 
be dismissed in its entirety and with prejudice. 
Dated: New York, New York  
July 23, 2025 
Of Counsel: 
John J. Clarke, Jr.* 
john.clarke@us.dlapiper.com  
1251 Avenue of the Americas 
New York, New York 10020 
(212) 335-4500 
Richard Zelichov* 
richard.zelichov@us.dlapiper.com  
2000 Avenue of the Stars 
Suite 400 North Tower 
Los Angeles, California 90067 
(310) 595-3000 
*Admitted pro hac vice
DLA PIPER LLP (US) 
By:  /s/ Steven M. Rosato 
 
Steven M. Rosato 
steven.rosato@us.dlapiper.com 
1251 Avenue of the Americas 
New York, New York 10020 
(212) 335-4500 
Attorneys for Defendant 
  Cross River Bank
Case 2:24-cv-09510-ES-JRA     Document 41     Filed 07/25/25     Page 17 of 18 PageID:
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CERTIFICATE OF SERVICE 
I hereby certify that on July 23, 2025, I caused the foregoing document to be served on all 
counsel of record by email, in accordance with the parties’ stipulation permitting email service and 
the Court’s May 23, 2025 text order concerning the briefing schedule on defendant’s motion to 
dismiss [ECF No. 38].   
Dated: New York, New York  
/s/ Steven M. Rosato  
July 23, 2025  
Steven M. Rosato 
Case 2:24-cv-09510-ES-JRA     Document 41     Filed 07/25/25     Page 18 of 18 PageID:
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