Justia Securities Law Opinion Summaries

Plaintiffs filed this complaint on behalf of a class of all persons and entities who purchased or otherwise acquired Chesapeake common stock from 2009 to 2012, and who were damaged from those purchases/acquisitions. The complaint alleged that Defendants materially misled the public through false statements and omissions regarding two different types of financial obligations: (1) Volumetric Production Payment transactions (under which Chesapeake received immediate cash in exchange for the promise to produce and deliver gas over time); and (2) the Founder Well Participation Program (under which Chesapeake CEO Aubrey McClendon was allowed to purchase up to a 2.5% interest in the new gas wells drilled in a given year). With respect to the "VPP program," Plaintiffs alleged Defendants touted the more than $6.3 billion raised through these transactions but failed to disclose that the VPPs would require Chesapeake to incur future production costs totaling approximately $1.4 billion. Plaintiffs contended the failure to disclose these future production costs was a material omission that misled investors into believing there would be no substantial costs associated with Chesapeake’s obligations to produce and deliver gas over time. The district court granted Defendants’ motion to dismiss the complaint, holding that Plaintiffs had failed to plead with particularity facts giving rise to a strong inference of scienter as required by the Private Securities Litigation Reform Act of 1995. Viewing all of the allegations in the complaint collectively, the Tenth Circuit was not persuaded they gave rise to a cogent and compelling inference of scienter. Accordingly, the Court affirmed the district court's dismissal of the case. View "Weinstein, et al v. McClendon, et al" on Justia Law

Lukas owns stock in Miller, a publicly owned corporation engaged in production of oil and natural gas. In 2009, Miller announced that it had acquired the “Alaska assets,” worth $325 million for only $2.25 million. Miller announced several increases in the value of the Alaska assets over the following months, causing increases in its stock price. In 2010, Miller amended its employment agreement with its CEO (Boruff), substantially increasing his compensation and giving him stock options. The Compensation Committee (McPeak, Stivers, and Gettelfinger) recommended the amendment and the Board, composed of those four and five others, approved it. In 2011 a website published a report claiming that the Alaska assets were worth only $25 to $30 million and offset by $40 million in liabilities. In SEC filings, Miller acknowledged “errors in . . . financial statements” and “computational errors.” The stock price decreased., Lukas filed suit against Miller and its Board members, alleging: breach of fiduciary duty and disseminating materially false and misleading information; breach of fiduciary duties for failing to properly manage the company; unjust enrichment; abuse of control; gross mismanagement; and waste of corporate assets. The district court dismissed. The Sixth Circuit affirmed. Lukas brought suit without first making a demand on the Miller Board of Directors to pursue this action, as required by Tennessee law, and did not establish futility.View "Lukas v. McPeak" on Justia Law

The Funds, closed-end investment companies registered under the Investment Company Act of 1940, 15 U.S.C. 80a- 5(a)(1)(2), are organized as Massachusetts business trusts under G.L. c. 182. Plaintiffs are beneficial owners of preferred shares of each of the Funds. The Funds’ declarations of trust state that meetings shall be held “so long as Common Shares are listed for trading on the New York Stock Exchange, on at least an annual basis." After plaintiffs delivered written notice stating an intention to nominate one of their partners for election as a preferred shares trustee of each fund at the 2011 annual meeting, the Funds issued a press release stating that their annual meeting was being rescheduled to July 2012, the last day of the Funds' 2012 fiscal year. Plaintiffs claimed that the bylaws require that an annual shareholders’ meeting be held within 12 months of the last annual shareholder meeting. The Funds argued that the bylaws require only that one meeting be held each fiscal year. The Massachusetts Supreme Court held that "on at least an annual basis" means that a shareholders' meeting for each Fund must be held no later than one year and 30 days after the last annual meeting. View "Brigade Leveraged Capital Structures Fund, Ltd. v. PIMCO, Income Strategy Fund" on Justia Law

Mike Richey sold his interest in Richey Oilfield Construction, Inc. to Nighthawk Oilfield Services, Ltd. Richey remained employed as president of Richey Oil and became a limited partner in Nighthawk. The primary agreements regarding the transaction were a stock purchase agreement, an agreement for the purchase of Richey Oil’s goodwill, and a promissory note. Each of the acquisition agreements contained a forum selection clause naming Tarrant County as the venue for state court actions. When the business did not go as well as the parties had hoped, Richey filed suit in Wise County, where Richey resided, against two Nighthawk executives (together, Relators) for, among other claims, breach of fiduciary duty, common law fraud, statutory fraud, and violations of the Texas Securities Act. Relators responded by unsuccessfully moving the trial court to transfer venue to Tarrant County or dismiss the suit pursuant to the mandatory venue selection clauses in the acquisition agreements. Relators subsequently sought mandamus relief. The Supreme Court conditionally granted relief, holding that the trial court abused its discretion by failing to enforce the forum selection clauses in the acquisition agreements. View "In re Fisher" on Justia Law

Republican Valley Biofuels (RVBF) issued a confidential private placement memorandum seeking investors in a biodiesel production facility. DMK Biodiesel (DMK) and Lanoha RVBF (Lanoha) invested $600,000 and $400,000 respectively in RVBF, which was being promoted by four individuals (Promoters). Renewable Fuels Technology (Renewable Fuels) was the manager of RVBF. DMK and Lanoha entered into and executed separate subscription agreements with RVBF. DMK and Lanoha later filed a complaint against Renewable Fuels and Promoters, alleging that Defendants fraudulently induced them to invest funds in RVBF. Defendants filed a motion to dismiss and a motion to take judicial notice, requesting the district court to take judicial notice of the confidential private placement memorandum for RVBF and the subscription agreements executed between RVBF and DMK and Lanoha. The district court granted the motions. The Supreme Court reversed, holding that because the private placement memorandum and the subscription agreements were properly considered matters outside the pleading, an evidentiary hearing was required. Remanded.View "DMK Biodiesel, LLC v. McCoy" on Justia Law

Plaintiff filed suit against Defendants in California state court for business-related torts. Plaintiff then voluntarily dismissed his complaint and re-filed his action in the federal district court, alleging several federal securities law violations. The federal court exercised supplemental jurisdiction over Plaintiff's state-law claims. Thereafter, Plaintiff voluntarily dismissed his complaint and filed the present action in a Tennessee state court, pleading three of the state-law claims that formed the basis for his two previously dismissed lawsuits. The trial court granted summary judgment for Defendants, concluding that Plaintiff's claims were barred by Plaintiff's second voluntary dismissal in federal court. The court of appeals affirmed. The Supreme Court reversed, holding that a plaintiff's second voluntary dismissal of supplemental state-law claims filed in federal court does not preclude the plaintiff from later re-filing an action based on the same claims in Tennessee state court. Remanded. View "Cooper v. Glasser" on Justia Law

The issue before the Supreme Court in this case was an interlocutory appeal by the Court of Chancery of a preliminary injunction halting consummation of a stock purchase agreement under which Vivendi, S.A. would have divested itself of its controlling interest in Appellee Activision Blizzard, Inc., and an Activision stockholder. Appellees convinced the trial court that the company’s charter required that a majority of the public stockholders vote in favor of the transaction. The relevant provision applied to "any merger, business combination, or similar transaction" involving Vivendi and Activision. The trial court held that Activision's purchase of its own stock would be a business combination because significant value would be transferred to Vivendi in exchange for Activision's acquisition of a newly-formed Vivendi subsidiary that held Vivendi's Activision stock. In October 2013, the Supreme Court reversed, and this opinion set forth the basis for its decision. View "Activision Blizzard, Inc., et al. v. Hayes, et al." on Justia Law

The Board of Supervisors of Fluvanna County filed a complaint against Davenport & Company asserting that Davenport, which served as the financial advisor to the Board, knowingly made false representations and used its fiduciary position to persuade the Board to hire Davenport as an advisor regarding the financing of the construction of a new high school. Davenport filed a demurrer to the complaint, which the circuit court granted on the basis that the separation of powers doctrine prevented the court from resolving the controversy because the court would have to inquire into the motives of the Board's legislative decision making. The Supreme Court reversed, holding that the Board effectively waived its common law legislative immunity from civil liability and the burden of litigation, and therefore the circuit court erred in sustaining Davenport's demurrer on these grounds.View "Bd. of Supervisors of Fluvanna County v. Davenport & Co. LLC" on Justia Law

The issue before the Supreme Court in this matter was whether the Chancery Court was required to dismiss a Delaware derivative complaint after a California federal court entered final judgment dismissing the same complaint brought by different stockholders. The Chancery Court determined it was not required to give preclusive effect to the California judgment. Upon review, the Supreme Court held that the Chancery Court erred in its determination: (1) the lower court held as a matter of Delaware law that the stockholder plaintiffs in the two jurisdictions were not in privity with one another; (2) that the California stockholders were not adequate representatives of the defendant corporation; (3) California law controlled the issue, and derivative stockholders were in privity with one another because they acted on behalf of the corporation; and (4) the Chancery Court adopted a presumption of inadequacy without the record to support it. Accordingly, the Supreme Court reversed and remanded.View "Pyott v. Louisiana Municipal Police Employees' Retirement System" on Justia Law

In 2006, a German bank organized two affiliated entities under Delaware law. One sold a class of securities (Trust Preferred Securities) as part of the bank's effort to raise capital. In 2009, the bank acquired a second German bank by merger, whereby the bank assumed an obligation of the acquired bank to make certain payments with respect to a class of the acquired bank's securities. The bank made those payments in 2009 and 2010. In 2010, Plaintiff, who is the Property Trustee for the holders of the acquiror bank's Trust Preferred Securities sued claiming the 2009 and 2010 payments on the acquired bank's securities (which was a "Parity Security") triggered a contractual obligation by the bank to make comparable payments on the Trust Preferred Securities. The bank argued that it had no such contractual obligation. On cross motions for summary judgment, the Court of Chancery rejected the Trustee's claim on the basis that, because the 2009 and 2010 payments were not made on "Parity Securities," the bank had no obligation to make payments on the Trust Preferred Securities. Because the Supreme Court disagreed and concluded that the Court of Chancery erred, the Court reversed and remanded with instructions to enter final judgment for the Trustee.View "Bank of New York Mellon v. Commerzbank Capital Funding Trust II" on Justia Law