Supreme Court Denies Opportunity To Clarify Whether The Federal Securities Laws Carry a Duty to Update
May 22, 2019 | Blog | By Ellen Shapiro
The U.S. Supreme Court denied defendants-appellees’ petition for certiorari in Hagan v. Khoja. As set forth in our prior alert, the executives of the now-defunct biotechnology company, Orexigen, sought review of a Ninth Circuit decision, which not only created a departure from other courts in its narrow-approach to incorporation by reference and judicial notice, but according to the petition, also distinguished itself by being the first Circuit Court of Appeal to find that an issuer owes a duty to update a statement of historical fact that was accurate when made. At issue was whether Orexigen had a duty to disclose data that demonstrated interim results from an obesity drug trial were not as promising as once touted. In opposition to the petition for certiorari, respondent argued, inter alia, that “[e]ven if petitioners were correct . . . that this case implicates whether companies have a duty to update earlier statements of historical fact, the interlocutory posture of this case would make it the worst kind of vehicle for considering that question.”
April 25, 2019 | Blog | By Alain Mathieu, Joel Rothman
In the Traffic Monsoon litigation, the U.S. Court of Appeals for the Tenth Circuit held that the enforcement provisions of the Securities Act and the Exchange Act reach Traffic Monsoon’s sales to customers outside of the United States. The implications of this decision are significant. This is the first Circuit Court decision to interpret Section 929P(b) of Dodd-Frank, and the first to adopt the position that Dodd-Frank limited Morrison’s application to allow for the enforcement provisions of the 1933 and 1934 Acts to apply extraterritorially. As a result, the decision may result in future decisions by the SEC to allow for holders of common shares to be eligible for recovery in connection with fair funds, rather than limiting eligible parties to holders of shares of American Depositary Shares or Receipts (ADR’s), a limitation the SEC imposed in the Fair Fund established for investors in BP. Recently, Traffic Monsoon has requested a stay of the Tenth Circuit's mandate while it prepares a writ of certiorari to the Supreme Court.
Teva Putative Federal Securities Class Member Seeks to Toll Statute of Repose with Motion to Intervene
March 12, 2019 | Blog | By Kevin Mortimer, Ellen Shapiro
The United States District Court of the District of Connecticut will soon decide whether a putative class member may intervene “for the limited purpose of tolling the statute of repose.” Statutes of repose place an outer limit on when a claim can be brought. For example, claims brought under Sections 11 and 12 of the Securities Act of 1933 are subject to a 3-year statute of repose, 15 U.S.C. § 77m, and claims brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 are subject to a 5-year statute of repose. 15 U.S.C. § 1658. Less than two-years ago, the U.S. Supreme Court held that unlike statutes of limitations, which may be tolled by the pendency of a class action, statutes of repose cannot be so equitably tolled. CALPERS v. ANZ Securities. Should the District Court deny the motion, the putative class member, who purchased millions of Teva shares during the proposed class period will be time-barred from opting-out of the securities class action at-issue or asserting its own claims should the action be dismissed.
Petition for Certiorari Asks Supreme Court to Clarify Whether the Federal Securities Laws Carry a Duty to Update
February 14, 2019 | Blog | By Ellen Shapiro
Last week, executives of the now-defunct biotechnology company, Orexigen filed a petition for certiorari before the U.S. Supreme Court, seeking clarification of the duty to update under the federal securities laws. The petition seeks further review of a recent decision by the Ninth Circuit, Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988 (9th Cir. 2018), which not only created a departure from other courts in its narrow-approach to incorporation by reference and judicial notice, but according to Orexigen, also distinguished itself from other Circuit Courts by being the first Circuit Court to find that an issuer owes a duty to update a statement of historical fact that was accurate when made. Specifically, the Ninth Circuit held that “by touting and publishing the ‘surprisingly’ positive 25 percent interim results [of the drug at-issue’s ability to decrease cardiovascular events], Orexigen created its own obligation to report that those results did not pan out after all” as evidenced by the 50 percent interim results.
Delaware Chancery Court Holds Corporations Cannot Enact Federal Forum Provisions To Bypass Cyan and Preclude State Courts from Hearing Securities Act Claims
January 17, 2019 | Blog | By Ellen Shapiro, Joel Rothman
In 2017, courts across this country were split on whether plaintiffs could assert a class action alleging claims under the Securities Act of 1933 (which provides a private right of action against issuers and others for providing false or misleading statements in offering materials) in state court. While California state courts recognized such jurisdiction, in New York, similar suits were routinely removed to federal court. In the midst of this jurisdictional uncertainty and prior to launching their respective initial public offerings, Blue Apron Holdings, Roku Inc., and Stitch Fix, Inc. adopted charter-based Federal Forum Provisions, in an attempt to make federal district courts the exclusive forum for the resolution of any complaint asserting claims arising under the Securities Act.
U.S. District Court Holds that Certain Claims by Opt-Out Plaintiffs Are Barred by the Statute of Repose
October 10, 2018 | Blog | By Joel Rothman, Kevin Mortimer, Ellen Shapiro, Alain Mathieu
In a recent ruling in In re: BP p.l.c. Securities Litigation the United States District Court for the Southern District of Texas dismissed claims asserted by opt-out plaintiffs as time barred by the Exchange Act’s statute of repose pursuant to the U.S. Supreme Court’s ruling in ANZ Securities. This decision underscores that institutional investors should closely monitor the statutes of limitation and repose applicable to securities fraud claims to ensure they are not later barred from recovery.
Court Allows Volkswagen Bondholder Action to Proceed, But Expresses Doubts about the Plaintiff’s Ability to Certify a Class
October 1, 2018 | Blog | By Joel Rothman, Alain Mathieu
As we previously noted in this post, the United States District Court for the Northern District of California dismissed the Volkswagen Bondholder Plaintiff’s first amended complaint, with leave to amend, holding that it could not rely on the Affiliated Ute or Basic presumptions to plead reliance, and that it had not sufficiently pleaded direct reliance. On April 2, 2018, the Plaintiff filed a Second Amended Bondholder’s Class Action complaint (SAC), which added allegations: (1) of direct reliance, (2) that the bonds at issue were priced and traded on an efficient market, (3) that the defendants’ alleged fraud created the market, and (4) that Volkswagen committed fraud on the regulatory process. On September 7, 2018, the court denied the defendants motion to dismiss, and ruled that that the case may proceed to discovery, but also expressed concerns about the Plaintiffs’ ability to certify a class.
September 18, 2018 | Blog | By Ellen Shapiro, Joel Rothman
In Khoja v. Orexigen Therapeutics, Inc., the Ninth Circuit clarified the “rare circumstances” when a court may review documents extraneous to the pleadings in ruling on a motion to dismiss. Given that it has become routine for securities defendants to attach numerous documents to motions to dismiss, this decision has the potential make it easier for plaintiffs to survive a motion to dismiss. Over the next several months, it will be interesting to see whether this decision survives the defendants’ petition for en banc review, and if so, whether courts outside the Ninth Circuit follow this decision to curtail the use of extraneous documents in deciding motions to dismiss.
August 14, 2018 | Blog | By Joel Rothman, Alain Mathieu
The Toshiba Securities Litigation stems from alleged violations of the Exchange Act, as well as the Financial Instruments and Exchange Act of Japan, against Toshiba Corp., in connection with its alleged accounting fraud and accompanying restatements of its financial reports.
July 19, 2018 | Blog | By Kevin Mortimer, Joel Rothman
Former U.S. District Judge Gerald Rosen, the Special Master appointed to investigate alleged improper billing by class plaintiffs’ firms in Arkansas Teacher Retirement System v. State Street Bank and Trust Company, recommended that the firms return up to $10.6 million of the $74.5 million in attorneys’ fees awarded to them after reaching a $300 million settlement in the underlying class action.
Institutional Investors Must Remain Vigilant of Limitations Deadlines in the Wake of the Supreme Court’s Holding in China Agritech v. Resh
June 12, 2018 | Blog | By Joel Rothman
The U.S. Supreme Court granted certiorari in China Agritech Inc. v. Resh, to determine whether “[u]pon denial of class certification, may a putative class member, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew beyond the time allowed by the applicable statute of limitations.”
May 25, 2018 | Blog | By Joel Rothman, Alain Mathieu
This case stems from alleged misstatement made by Volkswagen Group of America Finance (“VWGoAF”) in an Offering Memorandum governing the issuance of three sets of bonds.
March 23, 2018 | Blog | By Joel Rothman
In LBP Holdings Ltd. v Hycroft Mining Corporation, the Ontario Superior Court of Justice denied the plaintiff’s motion to certify a class action in common law negligence and negligent misrepresentation against the underwriters involved in a Canadian public offering.
Petrobras Court’s Denial of Plaintiffs’ Request for Confidential Treatment of Opt-Out Provisions Could Undermine the Settlement Process
February 14, 2018 | Blog | By Kevin Mortimer, Joel Rothman
On Tuesday, February 6, 2018, United States District Judge Jed S. Rakoff denied class counsel’s request to file under seal three supplemental agreements to a $2.95 billion settlement in the Petrobras Securities Litigation, and made the side agreements part of the public record.
Recent Antitrust Settlements Are Providing New Recovery Opportunities, But Filing Claims Is Proving To Be Complicated
February 2, 2018 | Blog | By Joel Rothman
First there was Libor. Next came credit default swaps and foreign exchange. Now, highlighted by the over $2 billion settlement reached in the Foreign Exchange Antitrust Litigation, plaintiffs are pursuing a number of additional antitrust class actions against financial institutions alleging anti-competitive behavior in a number of markets affecting institutional investors.
December 11, 2017 | Blog | By John Nucci
Douglas Greene, one of the United States’ most well-known securities litigators – on either side of the bar – recently wrote a four-part treatise, titled Who is Winning the Securities Class Action War – Plaintiffs or Defendants?, in which he discussed the various ways in which the defense bar is losing the “securities class action war.”
Federal Court Grants Class Certification in the LendingClub Case Over Objections from State Court Plaintiffs, But Denies Federal Court Plaintiff's Motion to Enjoin the State Court Case
November 8, 2017 | Blog | By Joel Rothman
LendingClub is facing two parallel securities litigation cases stemming from alleged false statements it made in connection with its initial public offering ("IPO").
October 5, 2017 | Blog | By John Nucci, Joel Rothman
Recently, in Melbourne City Investments Pty Ltd v. Treasury Wine Estates Limited (“Treasury Wine”), the Full Court of the Federal Court of Australia considered a primary judge’s class closure order which broke new ground in group action practice in Australia.
September 13, 2017 | Blog | By Angela DiIenno, Joel Rothman
The U.S. Supreme Court's 2017 term begins October 2nd and we will be tracking at least three cases relevant to institutional investors.
Phantom Recusal Policy Leads to Partial Summary Judgment for Plaintiffs in the Ocwen Securities Litigation
June 28, 2017 | Blog | By Patrick E. McDonough
In a June 13, 2017, ruling on a motion for partial summary judgment in the Ocwen Financial Corp. Securities Litigation (the “Ocwen Litigation”), the United States District Court for the Southern District of Florida determined Ocwen materially misrepresented in its securities filings and other public statements that its Executive Chairman would recuse himself from Ocwen’s transactions with companies in which the Executive Chairman also served as Chairman.
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