In a little noticed-development last week, the U.S. Supreme Court denied the petition for a writ of certiorari in Hagan v. Khoja, in which former officials of a bankrupt pharmaceutical company sought to have the Court review a decision by the Ninth Circuit to revive a securities class action lawsuit against them. Had the petition been granted, the Court would have been called upon to consider the controversial question of whether public companies have a duty to update prior disclosures that were accurate when made. The Court’s cert denial leaves the Ninth Circuit’s ruling standing and the questions surrounding the existence and requirements of a duty to update remain unsettled. The Court’s May 20, 2019 order can be found here.  
Continue Reading Supreme Court Denies Cert Petition in Duty to Update Case

On January 4, 2019, the U.S. Supreme Court granted cert in a case that will determine what a plaintiff must plead in order to state a claim for false statements or omissions in connection with a tender offer under Section 14(e) of the Securities Exchange Act of 1934. The Ninth Circuit held in the case at issue that a plaintiff needs only plead negligence, differing on the issue from at least five different federal circuit courts that had previously held that in order to establish a claim a plaintiff must plead that the defendants acted with scienter. The U.S. Supreme Court’s ruling in the case could have a significant impact on merger objection lawsuits filed in connection with tender offers. The Supreme Court’s January 4, 2019 order in Emulex Corporation v. Varjabedien can be found here.
Continue Reading Supreme Court to Consider Whether Negligence Sufficient to State Section 14(e) Tender Offer Claims

Noelle Reed
Austin Winniford
Caroline Van Zile

As I noted at the time, in December 2017, the U.S. Supreme Court granted cert in China Agritech Inc. v. Resh to take up the question of whether the prior filing of a class action lawsuit tolls statutes of limitation to permit previously absent class members to bring a subsequent class action outside the applicable limitations period. Oral argument in the case took place on Monday, October 26, 2018. In the following guest post, Noelle Reed, Austin Winniford,  and Caroline Van Zile of the Skadden Arps law firm provide their analysis of the oral argument. I would like to thank the authors for allowing 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’ guest post.

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Continue Reading Guest Post: Supreme Court Weighs Whether To Extend American Pipe Tolling

I have had this perception for several years now that the U.S. Supreme Court recently has been particularly keen to take up securities cases. It turns out that this perception has a basis in objective fact. A recent paper by University of Toledo law school Professor Eric Chafee confirms that since John Roberts became Chief Justice in 2005, the Court has averaged two securities opinions per court term, twice the number of the prior Rehnquist Court. Indeed, as the number of cases overall on which the Court has granted cert has continued to shrink, the securities cases have become an increasingly significant component of the Court’s docket. The current term is no exception; the Court began the term with three securities cases on its docket (although a recent settlement in one of the cases reduced the number to two).

The Court is showing its securities law proclivities once again. On Friday, December 8, 2017, the Court granted cert in yet another securities law case. The Court’s December 8, 2017 Order granting the petition for a writ of certiorari in China Agritech Inc. v. Resh can be found here. As Professor Chafee notes in his recent paper, many of the securities cases the Roberts court has taken up in recent years have involved issues “at the periphery of securities laws.” The new case the Court has taken up arguably is no exception to this generalization. The China Agritech case is in fact the second case the Court has taken up in successive terms involving statute of limitations tolling issues under the Court’s American Pipe tolling doctrine.
Continue Reading U.S. Supreme Court Grants Cert in Yet Another Case Securities Law Case

As I noted at the beginning of the U.S. Supreme Court’s current term in my summary of securities cases on the Court’s docket, one of the three key securities cases the court was to consider this term was Leidos, Inc. v. Indiana Public Retirement Systems. As discussed in greater detail here, this case, which was to be argued on November 6, 2017, was to address the recurring question of whether the failure to make disclosure required by Item 303 of Reg. S-K is an actionable omission under Section 10(b) and Rule 10b-5. However, as a result of developments in the case, the case is now in “abeyance,” oral argument in the case has taken off the calendar, and the case ultimately may be removed from the court’s docket altogether.
Continue Reading Item 303 Disclosure Duty Case Off Supreme Court’s Docket Due to Reported Settlement

For almost the entire time that there have even been federal securities laws, the U.S. Supreme Court only rarely and infrequently agreed to take up cases arising securities cases. Until recently, years would pass between the times that securities cases appeared on the Supreme Court’s docket. For some reason, beginning around the middle of the last decade, the Court has become increasingly willing to take up securities cases. The U.S. Supreme Court’s 2017-2018 term, which commences on Monday, is no exception to this recent trend. There are three important securities cases on the Court’s docket for the upcoming term, and these cases could have, both individually and collectively, a significant impact on many securities law cases and on securities litigation in general.
Continue Reading Three Key Securities Law Cases on Supreme Court’s Docket as Term Begins

paul-weiss-large-300x53President Trump’s nomination of Tenth Circuit Justice Neil Gorsuch to fill the Supreme Court seat vacated by the late Justice Antonin Scalia has attracted a great deal of commentary and raised a host of questions about the proposed new Justice’s views on a variety of different subjects. In the following guest post, attorneys from the Paul Weiss law firm take a look at the proposed Justice’s past writings and opinions on securities litigation and agency deference questions. I would like to thank the Paul Weiss attorneys for allowing me to publish their guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the Paul Weiss attorneys’ guest post.
Continue Reading Guest Post: Supreme Court Nominee’s Skeptical View of Securities Litigation, Agency Deference

paul-weiss-large-300x53Last Friday, the U.S. Supreme Court granted cert in two cases involving the limitations periods under the federal securities laws. One case, as I noted in a post earlier this week, will address the question of whether or not the filing of a securities class action tolls the Securities Act’s statue of repose. The second case, Kokesh v. Securities and Exchange Commission (about which refer here), involves the question of whether or not the five-year statute of limitations applicable to SEC enforcement actions seeking civil penalties applies to disgorgement claims. In the following guest post, attorneys from the Paul Weiss law firm take a look at the case and the issues it presents, as well as its potential implications. I would like to thank the Paul Weiss attorneys for their willingness to publish their 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 Paul Weiss attorneys’ guest post.

Continue Reading Guest Post: Supreme Court to Review Whether Statute of Limitations Applies to SEC Disgorgement Claims

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Justice Samuel Alito

In one of the most watched business cases on the U.S. Supreme Court’s docket this term, the Court on December 6, 2016 unanimously affirmed the Ninth Circuit’s ruling upholding the insider trading conviction of Bassam Salman. Salman had traded on tips he received from the brother of a former Citigroup investment banker; Salman himself was married to the sister of the Citigroup banker. The case raised the question of whether or not the “personal benefit” that the tipper received from passing along the trading information must be pecuniary in nature in order to support an insider trading conviction for the tippee.

The Supreme Court, in an opinion written by Justice Samuel Alito, held that a jury could infer that the tipper personally benefited from making a gift of confidential information to a trading relative. The Court rejected the Second Circuit’s suggestion in its 2014 opinion in U.S. v. Newman that the tipper must also have received something of a “pecuniary or similarly valuable nature.” The Supreme Court’s December 6, 2016 opinion in the Salman case can be found here.
Continue Reading Supreme Court: Gift of Insider Information to Friends and Family Supports Insider Trading Conviction

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Noelle Reed
Mayerfeld_Daniel
Daniel Mayerfeld

On March 22, 2016, the U.S. Supreme Court held in Tyson Foods, Inc. v. Bouaphakeo (here) that claimants asserting Fair Labor Standards Act claims on half of a class of Tyson Foods employees could rely on statistical evidence to support their assertion that common issues of fact or law predominated among class members. In the following guest post, Noelle Reed and Daniel Mayerfeld of the Skadden Arps law firm take a closer look at the Supreme Court’s opinion and suggest that the decision may be a reflection of distinct circumstances involved in the Tyson Foods case, that the circumstances are highly unlikely to arise in securities cases, and therefore that the decision is unlikely to have a significant impact on securities cases. I would like to thank Noelle and Daniel for their willingness to publish their article 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 Noelle’s and Daniel’s guest post.
Continue Reading Guest Post: Supreme Court Upholds Class Certification in Tyson Foods