News Flash! Jelly Beans Contain Sugar—The Continuing Saga of Evaporated Cane Juice Litigation

mckenziy_printGuest Commentary

By Yvonne M. McKenzie, a Partner with Pepper Hamilton LLP in the firm’s Philadelphia, PA office, and Colleen Kelly, an Associate with the firm.

In February, plaintiffs filed a class-action lawsuit in California against candy maker Jelly Belly on behalf of consumers who purchased jelly beans marketed as “Sport Beans.” They claimed that Jelly Belly used the phrase “evaporated cane juice” (ECJ) in its ingredient labeling to mislead consumers about the amount of sugar in Sport Beans.

Jelly Belly markets the product to athletes seeking a jolt of “quick energy,” which is usually accomplished through ingesting sugar and carbohydrates. Far from masking its ingredients, the product labeling clearly states that Sport Beans contain 19 grams of sugar per serving. Despite this, the plaintiffs claimed that the term ECJ misled them into thinking that the product contained juice, not sugar. Never mind that juice itself typically contains sugar. Continue reading

From Sea to Shining Sea: The Ninth Circuit Aligns with the Second Circuit in Affirming “Omnicare” Decision’s Benefits for Securities-Suit Targets

greenedFinkelsteinGuest Commentary

By Doug Greene and Bret Finkelstein, a Partner and an Associate, respectively, with Lane Powell PC in the firm’s Seattle, WA office.

In a matter of first impression in the Ninth Circuit, the court applied the Supreme Court’s Omnicare standard for pleading the falsity of a statement of opinion in City of Dearborn Heights Act 345 Police & Fire Retirement System v. Align Technology, Inc., — F.3d —, 2017 WL 1753276 (9th Cir. May 5, 2017). The Ninth Circuit decision builds on the momentum for the defense bar following the 2016 Second Circuit opinion in Tongue v. Sanofi, 816 F.3d 199 (2d Cir. 2016), correctly applies the rationale of Omnicare to Section 10(b) cases, and applies the Omnicare falsity analysis to an important category of statements of opinion: accounting reserves.

The Supreme Court’s landmark 2015 decision, Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318 (2015), was originally met with mixed reviews by securities litigators of all stripes. Some commentators—including members of the defense bar—raised alarm following Omnicare, worrying that the decision was a win for plaintiffs because they felt it created a new area of potential liability for statements of opinion that were honestly held, but nonetheless misleading. Continue reading

Preserved Shark Repellent: Pennsylvania’s Abuse-of-Process Law Withstands a Constitutional Challenge

Shark_as_part_of_a_law_office_sign

Source: WikiMedia Commons

By Hillary Hunter, a 2017 Judge K.K. Legett Fellow at Washington Legal Foundation who will be entering her third year at Texas Tech University School of Law in the fall.

Suppose while swimming through life, innocently enough you draw the attention of an aggressive lawyer. You did nothing wrong, but still find yourself being circled by a predator. Now, like a shark sensing blood in the water, suppose the lawyer goes in for a bite. He files a baseless lawsuit, one aimed at wearing down your resources and patience to the point where you will surrender and settle. As you do your best to keep your head above water, you consider your options. Is there any shark repellent around?

Victims of lawsuit abuse in some states, in fact, do have legislatively crafted tools at their disposal to fight back. For example, Pennsylvania’s Dragonetti Act recently survived a state constitutional separation–of–powers challenge. The Pennsylvania Supreme Court’s decision to uphold the law in Villani v. Seibert reflects the shared responsibility of the legislative and judicial branches to direct a state’s legal system and govern attorney conduct. Continue reading

“Kokesh v. SEC”: Its Wide-Ranging (and Mostly Good) Implications for Disgorgement Actions

MorrisGuest Commentary

By Andrew J. Morris, a Partner with Morvillo LLP. Mr. Morris authored a March 10, 2017 WLF Legal BackgrounderIs the Clock Running out on SEC’s Unchecked Pursuit of Disgorgement Penalties?

In Kokesh v. Securities and Exchange Commission, the US Supreme Court ruled that SEC actions for disgorgement are governed by the five-year statute of limitations for penalties. This decision is a real blow to the SEC: It ends the practice of using disgorgement actions to obtain massive sanctions for conduct that took place many years in the past, outside the limitations period for penalties and forfeitures. The decision also invites defendants to make further challenges to SEC enforcement actions by litigating several related issues.

Implications for Enforcement Proceedings

The Court’s opinion, written by Justice Sotomayor, is summarized in a WLF Legal Pulse post authored last week by UCLA School of Law Professor Stephen Bainbridge. The gist of the decision is that disgorgement is a form of penalty because it involves a defendant who has violated a public law and must pay money to the United States Treasury; this contrasts with non-penalty cases, where the defendant has injured a particular victim and must pay compensation to that victim. And because disgorgement is a penalty, the Supreme Court held, disgorgement actions are covered by 28 U.S.C. § 2462, the five-year statute of limitations for penalties. Continue reading

WLF Garners Fifth Consecutive US Supreme Court Victory with “Baker v. Microsoft”

supreme courtOn June 12 in Microsoft v. Baker, the US Supreme Court unanimously rejected a class-action litigation tactic that created an unfair advantage for plaintiffs in such suits. Both Justice Ginsburg in her majority opinion and Justice Thomas in his concurrence in judgment embraced arguments made in Washington Legal Foundation’s victorious amicus brief. WLF had also filed an amicus brief in support of Microsoft before an en banc panel of the US Court of Appeals for the Ninth Circuit, and further filed in support of the company’s cert petition to the Supreme Court after its loss in the appeals court.

The Baker decision is the fifth consecutive Supreme Court victory for WLF. The other four cases are:

The Court has not yet released opinions in four additional cases in which WLF filed amicus briefs (CalPERS v. ANZ Securities, Inc.; Jennings v. Rodriguez; Ziglar v. Abbasi; and Bristol-Myers Squibb Co. v. Superior Court), and we are also awaiting a decision on the cert petition WLF filed on behalf of its client, Chance Gordon, in Gordon v. Consumer Financial Protection Bureau.

On Tuesday, June 27, 1:00-2:00 pm EST, WLF will be holding its 28th annual US Supreme Court end-of-the-Term briefing, which will focus on the cases noted above as well as other decisions that affect the free-enterprise system and economic liberties. Details appear below:

The U.S. Supreme Court: October 2016 Term Review
>RSVP to attend in person or live online to glammi@wlf.org
>Speakers:

 

 

See Spot Sue?: Eleventh Circuit’s Bar on Dog Defendants Exemplifies Problems with Allowing Animal Plaintiffs

By Jordan FowlerDraco, a 2017 Judge K.K. Legett Fellow at Washington Legal Foundation who will be entering her third year at Texas Tech University School of Law in the fall.

You can sue your grocer, you can sue your policeman, you can even sue your neighbor John, but can you sue neighbor John’s dog? In May, the US Court of Appeals for the Eleventh Circuit firmly answered that question: no.  In Jones v. Fransen it held that a plaintiff could not sue a police dog for excessive force due to constraints in statutory language and practical problems. This holding is notable beyond its unusual facts: it demonstrates that although many plaintiffs’ attorneys creatively seek new clients, the impracticalities of suing a dog demonstrate why an attorney also cannot represent a dog—or any other animal—as a plaintiff in an animal rights lawsuit.   Continue reading

Supreme Court Observations: Kokesh v. Securities & Exchange Commission

Featured Expert Contributor – Corporate Governance/Securities Law

bainbridgeStephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law.

The Securities and Exchange Commission (SEC) can seek a wide range of sanctions against those who violate the federal securities laws, including various monetary penalties. Most of these causes of action are subject to the 5 year statutes of limitations under 28 U.S.C. § 2462. Section 2462 applies to any “action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture.” In Gabelli v. SEC, 568 U. S. 442 (2013), the US Supreme Court held that suits in which SEC seeks monetary civil penalties are subject to § 2462. Until recently, however, SEC claimed—and some lower courts agreed—that actions for disgorgement were not subject to § 2462 or, for that matter, any other statute of limitations.

In a unanimous June 5, 2017, opinion by Justice Sotomayor, however, the Supreme Court held that disgorgement imposed in SEC actions constitutes a penalty and, accordingly, that such suits are subject to the § 2462 limitations period. Kokesh v. SEC, 581 U.S. ___ (2017). [Editor’s Note: Washington Legal Foundation filed an amicus brief in the Court in support of the Petitioner]. Continue reading