Justia Civil Procedure Opinion Summaries

The case involves David Moeller, who was convicted of securities fraud after deceiving an acquaintance into investing $9,500 in a non-existent business. Moeller appealed his conviction, but died during the appeal process. The Court of Appeals, applying the precedent set in State v. Hollister, ruled that Moeller's death did not render his appeal moot and affirmed his conviction and sentence. Moeller's defense counsel petitioned for review, arguing that the court should overrule Hollister and that the panel erred in concluding his conviction was supported by sufficient evidence.The Supreme Court of the State of Kansas affirmed the judgment of the Court of Appeals and the district court. The court held that under the doctrine of stare decisis, it would continue to adhere to Hollister, which establishes that the death of a criminal defendant during the appeal of his or her conviction does not automatically abate the appeal but may render some issues moot. The court found that Hollister was not originally erroneous and that more good than harm would come from adhering to it. The court also held that the State presented sufficient evidence to support Moeller's conviction for securities fraud. The court concluded that Moeller's conduct constituted fraud or deceit and that the transaction between Moeller and the victim involved the sale of a security in the form of an investment contract. View "State v. Moeller" on Justia Law

The case involves Tammy O’Connor and Michael Stewart (the Sellers) who sold their company, Red River Solutions, LLC, to Atherio, Inc., a company led by Jason Cory, Greg Furst, and Thomas Farb (the Executives). The agreement stipulated that the Sellers would receive nearly half of their compensation upfront, with the rest—around $3.5 million—coming in the form of ownership units and future payments. However, Atherio went bankrupt and the Sellers received none of the promised $3.5 million. The Sellers sued the Executives, alleging fraud under federal securities law, Delaware common law, and the Texas Securities Act.The district court granted summary judgment to the Executives on all claims. The Sellers appealed the decision, arguing that the district court erred in applying the summary-judgment standard to the federal securities law and Delaware common law claims.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision on the extracontractual and Texas Securities Act fraud claims, but reversed the summary judgment grants on the federal securities law and Delaware common law claims. The court found that there was a genuine dispute as to whether the Executives' misrepresentation of Farb's role as CFO was a substantial factor in the Sellers' loss. The case was remanded for further proceedings. View "Cory v. Stewart" on Justia Law

The case revolves around Justin Keener, who operated under the name JMJ Financial. Keener's business model involved purchasing convertible notes from microcap issuers, converting those notes into common stock, and selling that stock in the public market at a profit. This practice, known as "toxic" or "death spiral" financing, can harm microcap companies and existing investors by causing the stock price to drop significantly. Keener made over $7.7 million in profits from this practice. However, he never registered as a dealer with the Securities and Exchange Commission (SEC).The SEC filed a civil enforcement action against Keener, alleging that he operated as an unregistered dealer in violation of the Securities Exchange Act of 1934. The United States District Court for the Southern District of Florida granted summary judgment for the SEC, enjoining Keener from future securities transactions as an unregistered dealer and ordering him to disgorge the profits from his convertible-note business.In the United States Court of Appeals for the Eleventh Circuit, Keener appealed the district court's decision. He argued that he did not violate the Securities Exchange Act because he never effectuated securities orders for customers. He also claimed that the SEC violated his rights to due process and equal protection.The Court of Appeals affirmed the district court's decision. It held that Keener operated as an unregistered dealer in violation of the Securities Exchange Act. The court rejected Keener's argument that he could not have been a dealer because he never effectuated securities orders for customers. It also dismissed Keener's claims that the SEC violated his rights to due process and equal protection. The court upheld the district court's imposition of a permanent injunction and its order for Keener to disgorge his profits. View "Securities and Exchange Commission v. Keener" on Justia Law

A group of retirement and pension funds filed a consolidated putative securities class action against PG&E Corporation and Pacific Gas & Electric Co. (collectively, PG&E) and some of its current and former officers, directors, and bond underwriters (collectively, Individual Defendants). The plaintiffs alleged that all the defendants made false or misleading statements related to PG&E’s wildfire-safety policies and regulatory compliance. Shortly after the plaintiffs filed the operative complaint, PG&E filed for Chapter 11 bankruptcy, automatically staying this action as against PG&E but not the Individual Defendants. The district court then sua sponte stayed these proceedings as against the Individual Defendants, pending completion of PG&E’s bankruptcy case.The district court for the Northern District of California issued a stay of the securities fraud action against the Individual Defendants, pending the completion of PG&E's Chapter 11 bankruptcy case. The court reasoned that the stay would promote judicial efficiency and economy, as well as avoid the potential for inconsistent judgments. The plaintiffs appealed this decision, arguing that the district court abused its discretion by entering the stay.The United States Court of Appeals for the Ninth Circuit held that it had jurisdiction over this interlocutory appeal under the Moses H. Cone doctrine because the stay was both indefinite and likely to be lengthy. The appellate court found that the district court abused its discretion in ordering the stay as to the Individual Defendants. The court held that when deciding to issue a docket management stay, the district court must weigh three non-exclusive factors: the possible damage that may result from the granting of a stay, the hardship or inequity that a party may suffer in being required to go forward, and judicial efficiency. The appellate court vacated the stay and remanded for the district court to weigh all the relevant interests in determining whether a stay was appropriate. View "PUBLIC EMPLOYEES RETIREMENT ASS'N OF NEW MEXICO V. EARLEY" on Justia Law

This case involves Commerzbank AG, a German bank, and U.S. Bank, N.A., an American bank. Commerzbank sued U.S. Bank, alleging that it had failed to fulfill its duties as a trustee for residential mortgage-backed securities (RMBS) that Commerzbank had purchased. The case revolved around three main issues: whether Commerzbank could bring claims related to trusts with "No Action Clauses"; whether Commerzbank's claims related to certificates held through German entities were timely; and whether Commerzbank could bring claims related to certificates it had sold to third parties.The district court had previously dismissed Commerzbank's claims related to trusts with No Action Clauses, granted judgment in favor of U.S. Bank on the timeliness of Commerzbank's claims related to the German certificates, and denied Commerzbank's claims related to the sold certificates. Commerzbank appealed these decisions.The United States Court of Appeals for the Second Circuit affirmed the district court's decisions on the timeliness of the German certificate claims and the denial of the sold certificate claims. However, it vacated the district court's dismissal of Commerzbank's claims related to trusts with No Action Clauses and remanded the case for further proceedings. The court found that Commerzbank's failure to make pre-suit demands on parties other than trustees could be excused in certain circumstances where these parties are sufficiently conflicted. View "Commerzbank AG v. U.S. Bank, N.A." on Justia Law

A class of stock purchasers alleged that Anadarko Petroleum Corporation fraudulently misrepresented the potential value of its Shenandoah oil field project in the Gulf of Mexico, violating federal securities law. The plaintiffs claimed that a decline in Anadarko’s stock price resulted from the company's disclosure that the Shenandoah project was dry and that Anadarko was taking a significant write-off for the project. The plaintiffs invoked the Basic presumption, a legal principle that allows courts to presume an investor's reliance on any public material misrepresentations if certain requirements are met.The District Court for the Southern District of Texas certified the class, relying on new evidence presented by the plaintiffs in their reply brief. Anadarko argued that it was not given a fair opportunity to respond to this new evidence and appealed the decision.The United States Court of Appeals for the Fifth Circuit agreed with Anadarko, stating that the district court should have allowed a sur-reply when the plaintiffs presented new evidence in their reply brief. The court held that when a party raises new arguments or evidence for the first time in a reply, the district court must either give the other party an opportunity to respond or decline to rely on the new arguments and evidence. The court also agreed that the district court failed to perform a full Daubert analysis, a standard for admitting expert scientific testimony. The court vacated the class certification order and remanded the case for further proceedings. View "Georgia Firefighters' Pension Fund v. Anadarko Petroleum Corp." on Justia Law

In 2015, Christopher Novinger and ICAN Investment Group, L.L.C. were sued by the Securities and Exchange Commission (SEC) for fraudulently offering and selling life settlement interests in violation of the Securities and Exchange Acts. As part of the settlement, Novinger and ICAN were prohibited from casting doubt on the validity of the SEC’s investigation or enforcement against them or proclaiming their innocence unless they also indicated their lack of innocence.Later, Novinger sought judicial review of the decree, claiming it violated his First Amendment rights. His motion for relief was denied by the district court, and this decision was affirmed by the United States Court of Appeals for the Fifth Circuit. Novinger then moved for a declaratory judgment under the Declaratory Judgment Act (DJA) and Federal Rule of Civil Procedure 57, essentially raising the same claims as in his initial motion. The district court again denied his motion, ruling that it was procedurally improper and that there was no change in the law or facts that called for a modification of the decrees.Novinger appealed this decision, but the Fifth Circuit ruled that it did not have jurisdiction to review a procedurally improper motion that was denied as such. The court stated that the district court's order did not change the status quo or resolve any substantive issues, and thus, it was not a final decision that could be appealed. The court also rejected the assertion that the motion for declaratory judgment could be construed as an appropriate pleading under the DJA, maintaining the distinction between a pleading as an initial filing in a case and a motion as a subsequent filing. The appeal was dismissed for lack of jurisdiction. View "SEC v. Novinger" on Justia Law

In this case before the United States Court of Appeals for the Second Circuit, the plaintiffs were U.S. investors who purchased Mexican government bonds. They alleged that the defendants, Mexican branches of several multinational banks, conspired to fix the prices of the bonds. The defendants sold the bonds to the plaintiffs through non-party broker-dealers. The defendants moved to dismiss the case for lack of personal jurisdiction, and the District Court granted the motion, concluding that it lacked jurisdiction as the alleged misconduct, price-fixing of bonds, occurred solely in Mexico.Upon appeal, the Second Circuit vacated and remanded the case. The court found that the defendants had sufficient minimum contacts with New York as they had solicited and executed bond sales through their agents, the broker-dealers. The plaintiffs' claims arose from or were related to these contacts. The court rejected the defendants' argument that the alleged wrongdoing must occur in the jurisdiction for personal jurisdiction to exist, stating that the defendants' alleged active sales of price-fixed bonds through their agents in New York sufficed to establish personal jurisdiction. The court remanded the case for further proceedings consistent with its opinion. View "In re: Mexican Government Bonds Antitrust Litigation" on Justia Law

The Court of Chancery of the State of Delaware has selected the Friedlander Team as lead counsel and the NYC/Oregon Funds as lead plaintiffs in a derivative lawsuit against Fox Corporation. After the 2020 presidential election, Fox News broadcasted statements accusing two voting machine companies of facilitating election fraud, leading to defamation lawsuits against the network. Fox Corporation paid $787.5 million to settle one lawsuit, with another still pending. As a result, various stockholders filed derivative complaints, seeking to shift the losses from the corporation to the directors and officers allegedly responsible for the harm. The court was required to choose between two competing teams of attorneys to lead the consolidated actions. After evaluating the teams according to recently amended Rule 23.1, which identifies factors for consideration when resolving leadership disputes, the court selected the Friedlander Team and the NYC/Oregon Funds. The court noted the deliberate, client-driven process through which these entities were chosen, their resources and expertise, and the legitimacy conferred by the involvement of public officials. View "In re Fox Corporation Derivative Litigation" on Justia Law

The Securities and Exchange Commission (“SEC”) adopted a rule requiring issuers to report day-to-day share repurchase data once a quarter and to disclose the reason why the issuer repurchased shares of its own stock. Despite Petitioners’ comments, however, the SEC maintained that many of the effects of the daily disclosure requirement could not be quantified. Petitioners filed a petition for review of the final rule.   The Fifth Circuit granted the petition for review and remanded with direction to the SEC to correct the defects in the rule within 30 days of this opinion. The court found that the e SEC’s notice and comment period satisfies the APA’s requirements. However, the court held that the SEC acted arbitrarily and capriciously, in violation of the APA, when it failed to respond to Petitioners’ comments and failed to conduct a proper cost-benefit analysis. The court explained that almost every part of the SEC’s justification and explanation of the rule reflects the agency’s concern about opportunistic or improperly motivated buybacks. That error permeates—and therefore infects—the entire rule. The court explained that short of vacating the rule, it affords the agency limited time to remedy the deficiencies in the rule. View "Chamber of Com of the USA v. SEC" on Justia Law