The plaintiffs alleged that when a real estate investment trust (REIT) disclosed that a financially troubled key tenant was making “partial monthly rent payments” — but omitted to mention that the tenant’s rent payments had been funded by an undisclosed loan from the REIT, not from the tenant’s own revenues — the REIT committed securities fraud. The district court dismissed the plaintiffs’ complaint, concluding that the plaintiffs had failed to plead a strong inference that the REIT had acted with the requisite scienter. However, in an interesting August 3, 2020 opinion (here), the Second Circuit reversed the district court, concluding that the plaintiffs’ allegations were sufficient to satisfy the scienter pleading requirements. The opinion includes an interesting analysis of the scienter pleading requirements in an omission case alleging recklessness.
Continue Reading Second Circuit Reverses District Court, Concludes Plaintiffs Adequately Pled Scienter

As I have documented in prior posts (for example, here), publicly traded life sciences companies are frequent targets of securities class action lawsuits. But life sciences companies’ securities litigation exposure may be well-known, it is not always as appreciated that the securities suits against life sciences companies are often dismissed. Two recent rulings in securities suits against life sciences companies – Antares Pharma and Nabriva Therapeutics – provide recent examples of securities suits in which the courts have granted the companies’ dismissal motions. The rulings illustrate the extent to which life sciences companies often are able to successfully defend themselves against securities suits.
Continue Reading Life Sciences Companies: Frequent Securities Suits Frequently Dismissed

Tim Hoeffner
Paul Ferrillo

In the following guest post, Tim Hoeffner and Paul Ferrillo of the McDermott Will & Emery law firm take a look at Southern District of New York Judge Ronnie Abrams’s April 2, 2020 order granting the defendants’ motion to dismiss in the Adient PLC Securities Litigation. I would like to thank Tim and Paul for allowing me the opportunity to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Tim and Paul’s article.
Continue Reading Guest Post: Scienter “Takes a Seat” Front Row Center in New SDNY Case

Tim Hoeffner
Paul Ferrillo

In the following guest post, Tim Hoeffner and Paul Ferrillo of the McDermott Will & Emery law firm take a look at the Eighth Circuit’s April 10, 2020 decision in the Target Corporation securities class action lawsuit, in which the appellate court affirmed the lower court’s dismissal of the case. I would like to thank Tim and Paul for allowing me the opportunity to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Tim and Paul’s article.
Continue Reading Guest Post: Eighth Circuit on Target on Appeal

In the following guest post, Dan Gold, Thad Behrens, Kit Addleman, Emily Westridge Black, Carrie L. Huff, Timothy Newman, Matt McGee, and Odean L. Volker of the Haynes and Boone, LLP law firm review the key developments during 2019 in securities litigation and enforcement, including significant securities related decisions by the Supreme Court and federal appellate courts, key developments in SEC enforcement, and significant rulings in state law fiduciary litigation against directors and officers of public companies. A version of this article previously was published as a Haynes and Boone client alert. I would like to thank the authors for their willingness to allow me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: 2019 Securities Litigation: Key Takeaways and Trends

In the latest example of a securities class action lawsuit arising out of data breach or other cybersecurity incident, on October 24, 2019, a plaintiff shareholder filed a securities class action lawsuit against California-based software company Zendesk. The lawsuit follows after the company announced disappointing second quarter financial results in July and then announced in early October that customer account information had been accessed. The lawsuit is most recent in a series of lawsuits in which companies experiencing cybersecurity incidents get hit with securities lawsuits.
Continue Reading Zendesk Hit with Data Breach-Related Securities Suit

As I noted when it was filed in 2016, the securities class action lawsuit investors filed against ExxonMobil and certain of its executives represented something of a milestone as it was the first securities class action lawsuit of which I am aware based on climate change-related allegations. In an August 14, 2018 opinion, Northern District of Texas Judge Ed Kinkeade largely denied the defendants motion to dismiss. The opinion contains a number of interesting features, including in particular in its discussion of the plaintiff’s climate change related allegations. Judge Kindeade’s opinion can be found here.
Continue Reading Dismissal Motion Denied in ExxonMobil Climate Change-Related Securities Suit

rocketfuelWe are all used to seeing securities class action lawsuit alleging that the defendants made misrepresentations or omissions in SEC filings, press releases, or in public statements. But how about in a corporate blog post? In a very interesting December 23, 2015 opinion in the Rocket Fuel securities class action lawsuit in which she mostly granted the defendants’ motions to dismiss, Northern District of California Judge Phyllis Hamilton held that certain allegedly misleading statements made in a post on the company’s website were actionable under the federal securities laws. Judge Hamilton’s opinion also includes a number of interesting conclusions about individual and corporate scienter, and loss causation. Her opinion also addresses interesting Securities Act pleading issues in light of the U.S. Supreme Court’s 2015 opinion in the Omnicare case. Judge Hamilton’s opinion can be found here.
Continue Reading Blog Post Statements Held Actionable Under the Federal Securities Laws

ninthcircuitFor purposes of determining the scienter of a corporate entity defendant under the federal securities laws, a company’s executives’ knowledge generally is imputed to company. There is an exception to these general principles – the “adverse interest exception” – which provides that an executive’s knowledge will not be imputed to the company if the executive acted for his or her own purposes and contrary to the interests of the company. There is also an exception to the exception, which provides further that a rogue executive’s knowledge will nevertheless be imputed to the company when an innocent third-party has relied on the executive’s representations made with apparent authority.

In an October 23, 2015 opinion (here), the Ninth Circuit applied these principles to reverse the district court’s dismissal of the ChinaCast Education Corp. securities class action lawsuit, holding that the knowledge of the company’s CEO, who had embezzled funds and mislead investors through omissions and false statements, could be imputed to the company for purposes of innocent third-party investors’ claims.
Continue Reading Ninth Circuit: Embezzler Executive’s Knowledge Can Be Imputed to Company in Innocent Third Party-Filed Securities Suit