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

The Supreme Court’s “Microsoft Corp. v. Baker” Decision Restores Much Needed Sanity to Federal Appellate Procedure

supreme courtMicrosoft Corp. v. Baker is one of those cases that only a lawyer could love. At issue was whether a federal appellate court has jurisdiction to review a class-certification order if the plaintiffs have voluntarily dismissed all of their claims, with prejudice.

Class-action plaintiffs have long sought the right to immediately appeal from orders denying class certification. In the 1960s and 1970s, some federal courts of appeals began allowing such an immediate right of appeal under the so-called death-knell doctrine. Under that judicially created rule, if the plaintiffs could show that the denial of class certification—if left unreviewed—would end the lawsuit for all practical purposes, the appeals court would grant review of that interlocutory order. 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

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

Supreme Court Alters Patent Venue Landscape: Eastern District Texas No Longer the Heartland of Patent Litigation

Kaminski_Jeffri_LRFeatured Expert Contributor – Intellectual Property (Patents)

Jeffri A. Kaminski, Partner, Venable LLP, with William A. Hector, Associate, Venable LLP.

The US Supreme Court issued its decision in TC Heartland LLC v. Kraft Food Group Brands LLC altering the landscape of where patent owners may file patent infringement cases.  Previously, these cases could be filed in essentially any jurisdiction, allowing patent owners to select the forum of their choice.  TC Heartland  now requires that there be some connection between the accused infringer and the jurisdiction where suit is filed.  The Court ruled unanimously that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.”  Continue reading

“Gordon v. CFPB” Provides a Good Vehicle to Rein in Executive Branch Authority

CFPB[Ed. Note: For more on the Gordon cert petition, watch WLF’s May 22 press conference, which featured former Solicitor General Gregory Garre, at our YouTube channel.]

The US Constitution imposes important checks on the exercise of executive power by the federal government.  In particular, Article II specifies that executive power may be exercised only at the behest of properly appointed “officers” of the United States, and it sets forth detailed requirements for the appointment and Senate confirmation of such officers.  However, a recent decision from the US Court of Appeals for the Ninth Circuit threatens to undermine those checks on federal power by permitting the Executive Branch to retroactively ratify actions taken by officials not properly appointed as “officers.”  The Supreme Court should review and overturn the appeals court decision, which is the subject of a pending certiorari petitionGordon v. Consumer Financial Protection Bureau, Case No. 16-673.  Washington Legal Foundation represents Mr. Gordon in the Supreme Court. Continue reading

Briefing Program Assesses WLF’s Supreme Court Cert Petition in “Gordon v. CFPB”

Gordon v. CFPB: Will the High Court Halt an End-Run Around the Appointments Clause?

screen shot Gordon MB

To view this WLF Media Briefing program on our IBM Cloud Video channel click here.
To view the program on our YouTube channel, click here.

The program featured commentary on WLF cert petition on behalf of our client Chance Gordon currently pending before the US Supreme Court. The Court may decide as early as this Thursday, May 25, on our review request. WLF’s petition argues that the Consumer Financial Protection Bureau could not lawfully prosecute a claim against Mr. Gordon at a point when the agency lacked a lawfully appointed director.

Our Gordon v. CFPB page, which contains our briefs and press releases in the case, is available here.