“U.S. v. Martoma”: Second Circuit’s Latest, but Perhaps not Last, Word on Insider-Trading Tippee Liability

Featured Expert Contributor, Corporate Governance/Securities Law

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

Matthew Martoma was a portfolio manager at S.A.C. Capital Advisors, LLC, a hedge fund owned and managed by Steven A. Cohen, which had been the subject of numerous insider trading investigations. One of those investigations resulted in Martoma being charged with insider trading on the stocks of a pair of drug companies developing a new Alzheimer’s disease drug treatment. Martoma had received tips of material nonpublic information about the treatment from two drug company employees. Martoma was convicted and appealed.

In a 2-1 opinion by Chief Judge Katzmann, the Second Circuit affirmed Martoma’s conviction. Its decision in United States v. Martoma is the first major interpretation of the Supreme Court’s decision in Salman v. United States, and the first effort to determine the remaining scope, if any, of the Second Circuit’s 2014 decision in United States v. Newman. Continue reading

Rejection of Subway “Footlong” Settlement Highlights Absurd Incentives of Class Actions

1ftIn early 2013, when Australian teenager Matt Corby took to social media to share a photo of his recently purchased Subway “foot long” sandwich next to a tape measure revealing that the sandwich measured only 11 inches in length, he never could have anticipated the “viral” chain of events that he had just set into motion.

Other Subway customers and media outlets soon descended on Subway franchises to undertake their own sandwich measurements, prompting the New York Post to announce that “Some Subway ‘Footlong’ Subs Don’t Measure Up.”   According to the Post, four out of seven footlong sandwiches randomly purchased at Subway restaurants in Manhattan, Brooklyn, and Queens measured less than 12 inches in length (ranging from 11 to 11.5 inches). Continue reading

Seventh Circuit Judge Posner Rides into the Summer Sunset

posnerWe begin Fall 2017 blogging with an appreciative farewell.

This past Friday, September 1, US Court of Appeals for the Seventh Circuit Judge Richard Posner announced his retirement, effective immediately. He served on the circuit for 36 years, having been appointed by President Ronald Reagan in 1981.

Judge Posner was a principled skeptic of lawyer-driven litigation which, not surprisingly, led us to discuss a number of his opinions here at the WLF Legal Pulse.

Most recently, in Eye Drops, Water Fountains for Cats, and the Demise of a No-Injury Class Action, we recounted the unusual analogy Judge Posner used in his majority opinion to support the court’s dismissal of an especially officious no-injury class action filed against the makers of eye drops. Continue reading

California Supreme Court Expands Scope of Discovery in Representative Actions under Private Attorneys General Act

JohnQuieroLE - resized [45] 170504_0034_1a_square2Guest Commentary

By John F. Querio, a Partner, and Lacey L. Estudillo, an Appellate Fellow, with Horvitz & Levy LLP.

On July 13, 2017, the California Supreme Court decided Williams v. Superior Court, which expanded a plaintiff’s discovery rights in actions brought pursuant to California’s Private Attorneys General Act (PAGA).  PAGA permits an employee to bring a representative action “‘on behalf of himself or herself and other current or former employees’ to recover civil penalties” for wage-related violations of California’s Labor Code—penalties that were previously recoverable solely by the state’s labor-law enforcement agencies.  Amalgamated Transit Union, Local 1756 v. Superior Court, 46 Cal. 4th 993, 1003 (2009). Continue reading

FTC Takes a Commendable First Step Toward Reducing the Burden of Consumer-Protection Investigations

Featured Expert Column:
Antitrust & Competition Policy — Federal Trade Commission

06633 - Royall, M. Sean ( Dallas )By M. Sean Royall, a Partner with Gibson, Dunn & Crutcher LLP, with Richard H. Cunningham, Of Counsel in the firm’s Denver, CO office, and Ashley M. Rogers, an Associate Attorney in the firm’s Dallas, TX office.

On July 17, 2017, Federal Trade Commission (FTC) Acting Chairman Maureen K. Ohlhausen announced internal process reforms that aim to “streamline information requests and improve transparency” in the agency’s consumer-protection investigations.  According to the announcement, going forward the Bureau of Consumer Protection will:

  • provide “plain language” descriptions of the civil investigative demand (CID) process the agency uses as its primary tool for gathering information during investigations on a compulsory basis;
  • provide “more detailed” descriptions of the scope and purpose of investigations;
  • limit the relevant time periods covered by CID informational requests;
  • “significantly” reduce the length and complexity of CID instructions for providing electronically stored data; and
  • increase the time available to respondents to respond to agency CIDs.

Continue reading

Pokèmon, Go Get a Permit: Free-Speech Suit Ropes in Reactionary County Ordinance

pokemongo2It’s October 2016, and Milwaukee County, Wisconsin residents are massing on sidewalks, around town landmarks, and in public parks, eyes glued to their smartphones as they chase virtual Pokèmon Go characters.

Meanwhile, in the halls of county government, elected officials mull over the implications of this craze.

Some delight at the game’s ability to bring people together and inspire normally sedentary younger residents to get outside. Others, however, wring their hands over complaints of traffic disruptions and unruly teenagers and scheme over how to quell game-creature hunting, or at least how to make money off of it for the county.

One supervisor, deciding that something needs to be done, devises an ordinance. Rather than target the bad behavior of individuals playing the games, the measure imposes a permitting process and fees on augmented-reality-app developers. After several months of debate, the Board of Supervisors passes Resolution 16-637 by a 13-4 vote on February 2, 2017. Continue reading

US-Based Tech Companies Subject to Worldwide Jurisdiction as Judicial Comity Takes a Back Seat

Guest Commentary

moinBy Moin A. Yahya, Vice Dean and Professor of Law at the University of Alberta’s Faculty of Law.

The Supreme Court of Canada’s (SCC) recent decision in Google Inc. v. Equustek Solutions Inc. is the latest in non-American courts asserting their jurisdiction over American companies’ global operations using the pretext of the Internet.  The case arose as a dispute between two companies—one a manufacturer of networking devices and the other its distributor.  The distributor was accused of passing off its own competing products as the manufacturer’s, which led the manufacturer to sue the distributor.  It obtained an order requiring the distributor to cease distributing the manufacturer’s products.  The distributor did not comply, left Canada, and did not appear in subsequent proceedings.  The distributor, however, continued to advertise itself as a seller of the manufacturer’s products on several non-Canadian websites.  Continue reading