SCOTUS Report: A Fruitful Term for Free Enterprise, the Rule of Law—and WLF

supreme courtAn economic system based on free enterprise requires an objective, clear, predictable, stable, and uniform body of rules around which commercial enterprises can organize their business affairs. For 40 years, Washington Legal Foundation (WLF) has championed fundamental free-enterprise principles in courts and regulatory agencies, as well as in the court of public opinion.

Because the US Supreme Court has the last word on many laws and regulations that affect free enterprise, WLF focuses a significant portion of its litigation activities each year on convincing the justices to decide cases in a manner that promotes legal clarity and uniformity. This past term, which concluded at the end of June, was one of WLF’s most successful in its long history of Supreme Court advocacy. Our view not only prevailed in 8 of the 10 cases in which we filed amicus briefs on the merits, but in 6 of those 10 cases, WLF also successfully supported the Petitioner’s effort to obtain Supreme Court review. Below is a list of those cases with links to press releases and related WLF commentary:

Cases in which WLF filed briefs at the cert. and merits stages

Cases in which WLF filed a brief only at the merits stage

Most of those decisions, and others that impact America’s free-enterprise system, were discussed at WLF’s 28th annual end-of-the-term Supreme Court briefing:

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

“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:

 

 

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

One Loss before ALJ Doesn’t Unmake SEC’s Home-Court Advantage

Corporate Governance/Securities Law

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

Las Vegas odds makers say that having the home field is worth about three points to the average National Football League team, which is helpful but not a guarantee of victory. For some teams, however, the home-field advantage gives them an almost insurmountable edge. Between 2012 and 2015, for example, the Seattle Seahawks won 27 out of 32 home games and all four of their home playoff games. During that period, no other NFL team had a bigger home-field advantage.

Despite the huge advantage playing at home gave the Seahawks, it didn’t make them unbeatable. After all, they did lose five out of those 36 games. All of which is why the press hullaballoo over a Securities and Exchange Commission administrative law judge’s (ALJ) decision in In re Hill1 is much overblown. Continue reading

Outcome of Recently Argued “Kokesh” SCOTUS Case Will Impact SEC’s Use of Potent Disgorgement Authority

Featured Expert Contributor — Corporate Governance/Securities Law

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

Disgorgement of ill-gotten gains long has been a basic tool in the Securities and Exchange Commission’s (SEC) penalty toolkit, despite a paucity of statutory authorization.1 The equitable nature of disgorgement has meant courts have had to resolve many questions without the benefit of statutory guidance. In Kokesh v. SEC,2 the US Supreme Court took up the seemingly technical—but surprisingly important—question of what statute of limitations applies to SEC disgorgement actions.

Appellant Charles Kokesh owned and controlled a pair of investment adviser firms that, in turn, managed four business development corporations (BDCs). Both the investment advisers and the BDCs were registered with SEC. SEC alleged that Kokesh misappropriated almost $35  million from the BDCs for the benefit of himself and the investment adviser firms. After a civil trial, a jury agreed that Kokesh had fraudulently misappropriated the funds. The trial judge ordered Kokesh to disgorge $34.9 million, which it found “reasonably approximates the ill-gotten gains causally connected to Defendant’s violations.” Continue reading