Category Archives: Courts and ADR

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Delaware Court of Chancery Rejects Indemnification Sleight of Hand

In Branin v. Stein Roe Inv. Counsel, LLC, C.A. 8481-VCN, 2014 WL 2961084 (Del. Ch. June 30, 2014), the Delaware Court of Chancery held that a vested right to indemnification may not be rescinded by a subsequent amendment to the governing corporate document. Francis S. Branin Jr. (“Branin”) owned and managed the investment management firm … Continue Reading

Second Circuit Overturns District Court’s Rejection of SEC-Citigroup Fraud Settlement

In a closely-watched decision involving judicial review of agency settlements, the Unites States Court of Appeals for the Second Circuit vacated United States District Court Judge Jed Rakoff’s 2011 order rejecting a proposed $285 million settlement between the Securities and Exchange Commission (“SEC”) and Citigroup Global Markets Inc., finding that the judge applied an incorrect … Continue Reading

First Circuit Affirms District Court’s Exclusion of Event Study as Unreliable Under Daubert

In Bricklayers & Trowel Trades Int’l Pension Fund v. Credit Suisse Sec. (USA) LLC, No. 12-1750, 2014 U.S. App. LEXIS 8994 (1st Cir. May 14, 2014), the United States Court of Appeals for the First Circuit affirmed a district court’s exclusion of an event study as unreliable under Daubert v. Merrell Dow Pharm., Inc., 509 … Continue Reading

Second Circuit Applies Morrison v. National Australia Bank to Allow Certain Extraterritorial Application of RICO

In European Community v. RJR Nabisco, Inc., Case No. 11-CV-2475 (2d Cir. Apr. 23, 2014), the United States Court of Appeals for the Second Circuit held that the Racketeer Influenced and Corrupt Organizations (“RICO”) statute, 18 U.S.C. § 1961, et seq., could apply to conduct outside the territory of the United States.  In doing so, the … Continue Reading

Appellate Court Issues Opinion on SEC’s Conflict Minerals Rule

Yesterday, the Court of Appeals for the D.C. Circuit issued its opinion in the challenge to the SEC’s Conflict Minerals Rule.  We have reviewed the D.C. Court of Appeals decision and find that it leaves much of the SEC’s rule intact.  It is specifically the requirement that companies describe products as not “DRC conflict free” … Continue Reading

United States Supreme Court Holds That Section 806 of the Sarbanes-Oxley Act Extends to Employees of Private Companies Who Are Contractors or Subcontractors for Covered Public Companies

In Lawson v. FMR, LLC, No. 12-3, 2014 WL 813701 (U.S. Mar. 4, 2014), the Supreme Court of the United States, in a 6-3 decision reversing the United States Court of Appeals for the First Circuit, held that the whistleblower protection provision in Section 806 of Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”), protects … Continue Reading

United States Supreme Court Resolves Circuit Split and Narrows Scope of SLUSA

In Chadbourne & Parke LLP v. Troice, Nos. 12-79, 12-86 and 12-88, 2014 U.S. LEXIS 1644 (U.S. Feb. 26, 2014), the Supreme Court of the United States resolved a split in the circuits regarding whether alleged misrepresentations were made “in connection with the purchase or sale of a covered security” for purposes of the Securities … Continue Reading

United States Supreme Court Holds That Non-U.S. Corporations Are Subject to General Personal Jurisdiction in U.S. States Only in States Where They Are “At Home”

In Daimler AG v. Bauman, No. 11-965, 2014 U.S. LEXIS 644 (U.S. Jan. 14, 2014) (Ginsburg, J.), the Supreme Court of the United States held that a court may not exercise general personal jurisdiction over a non-U.S. corporation unless that corporation’s contacts with the forum state are so continuous and systematic as to render the … Continue Reading

United States Supreme Court Holds that Contractual Forum-Selection Clauses Deserve Near Absolute Deference In Considering Changes of Venue Under 28 U.S.C. § 1404(a)

In Atlantic Marine Construction Co., Inc. v. United States Dist. Ct. for W.D. Tex., No. 12-929, 2013 U.S. LEXIS 8775 (U.S. Dec. 3, 2013), the Supreme Court of the United States held unanimously that when parties have agreed contractually to a valid forum-selection clause, the analysis for a motion to transfer venue under 28 U.S.C. … Continue Reading

California Court of Appeal Holds That Challenges to Corporate Elections Under Corporations Code Section 709 May be Predicated Upon Breach of Fiduciary Duty and Conflict of Interest Allegations

In Morrical v. Rogers, No. A137011, 2013 Cal. App. LEXIS 811 (Cal. App. Oct. 10, 2013), the California Court of Appeal, First District, held that the summary procedures set forth in California Corporations Code § 709 may be used to contest corporate elections predicated upon complex and substantive allegations of corporate or directorial misconduct, such as … Continue Reading

Second Circuit Rejects the Application of American Pipe‘s Tolling Rule and Rule 15(c)’s “Relation Back” Doctrine to the Three-Year Statute of Repose for Section 11 and 12(a) Claims

In In re IndyMac Mortgage-Backed Securities Litigation, No. 11-2998-CV, 2013 WL 3214588 (2d Cir. June 27, 2013), the United States Court of Appeals for the Second Circuit held that the tolling rule established by the United States Supreme Court in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), which suspends the applicable … Continue Reading

Fifth Circuit Holds That Securities Fraud Defendants May Not Rebut the Fraud-on-the-Market Presumption at the Class Certification Stage Through Evidence of No Price Impact

In Erica P. John Fund, Inc. v. Halliburton Co., No. 12-10544, 2013 WL 1809760 (5th Cir. Apr. 30, 2013), the United States Court of Appeals for the Fifth Circuit held that a defendant in a securities fraud class action is not entitled to rebut the fraud-on-the-market presumption of reliance at the class certification stage by … Continue Reading

Delaware Supreme Court Affirms Preclusive Effect of Non-Delaware Dismissals and Rejects Irrebuttable Presumption That a Derivative Plaintiff Who Fails to Conduct a Section 220 Inspection Is an Inadequate Representative

In Pyott v. Louisiana Municipal Police Employees’ Retirement System, No. 380, 2012, 2013 WL 1364695 (Del. Apr. 4, 2013), the Delaware Supreme Court held the Delaware Court of Chancery erred in refusing to dismiss a derivative complaint nearly identical to one brought by different stockholders in federal court in California, which the federal court had … Continue Reading

Seventh Circuit Affirms Dismissal of Securities Fraud Class Action, Remanding Question of Sanctions Against Plaintiffs’ Counsel

In City of Livonia Employee Retirement System v. Boeing Co., Nos. 12-1899, 12-2009 2013 WL 1197791 (7th Cir. Mar. 26, 2013), the United States Court of Appeals for the Seventh Circuit (Posner, J.) affirmed the dismissal of a securities fraud class action against the Boeing Company (“Boeing”) and remanded the question of whether sanctions under … Continue Reading

Second Circuit Reverses Class Certification Order, Holding That a Clearing Broker’s Alleged Knowledge of Fraud Against Shareholders, Absence Direct Involvement, Is Insufficient to Create a Duty of Disclosure

In Levitt v. J.P. Morgan Securities, Inc., No. 10-4596, 2013 WL 1007678 (2d Cir. Mar. 15, 2013), theUnited States Court of Appeals for the Second Circuit reversed a district court order certifying a class of shareholder fraud plaintiffs in a lawsuit against J.P. Morgan Securities, Inc. and J.P. Morgan Clearing Corporation (“J.P. Morgan”). The decision reaffirms that … Continue Reading

California Supreme Court Resolves Court of Appeal Split, Holding that Section 2010 of the California Corporations Code — California’s “Survival Statute” — Does Not Apply to Foreign Corporations

In Greb v. Diamond Int’l Corp., 2013 WL 628328 (Cal. Feb. 21, 2013), the California Supreme Court unequivocally and unanimously laid to rest the assertion that dissolved foreign corporations may be sued in California after the time of the statute of limitations provided by the laws under which the foreign corporations were incorporated. In so … Continue Reading

First Circuit Holds That Section 806 of the Sarbanes-Oxley Act Extends Only to Employees of Public Companies, Not Employees of Private Companies Who Are Contractors or Subcontractors for Covered Public Companies

In Lawson v. FMR LLC, No. 10-2240, 2012 U.S. App. LEXIS 2085 (1st Cir. Feb. 3, 2012), the United States Court of Appeals for the First Circuit, in a case of first impression, held that the whistleblower provision in Section 806 of Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”), applies only to employees … Continue Reading

District of Columbia and Seventh Circuits Allow for Corporate Liability Under The Alien Tort Statute, Splitting With Second Circuit

In two recent decisions, the United States Courts of Appeals for the District of Columbia Circuit and the Seventh Circuit each split with the Second Circuit’s 2010 decision in Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111 (2d Cir. 2010), that corporations cannot be liable under the Alien Tort Statute (“ATS”), 28 U.S.C. § 1350. As … Continue Reading
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