Justia Securities Law Opinion Summaries

Plaintiffs – issuers of collateralized debt obligations secured by certificates in residential-mortgage-backed securities trusts – appealed from three separate judgments dismissing actions brought against The Bank of New York Mellon, Deutsche Bank National Trust Company, and Deutsche Bank Trust Company Americas. In each case, the district courts assumed that Plaintiffs had Article III standing but found that Plaintiffs were precluded from relitigating the issue of prudential standing due to a prior case Plaintiffs had brought against U.S. Bank National Association.   The Second Circuit affirmed the district court’s orders. The court explained that it joined the Ninth Circuit in concluding that the district courts permissibly bypassed the question of Article III standing to address issue preclusion, which offered a threshold, non-merits basis for dismissal. The court also concluded that the district courts’ application of issue preclusion was correct. The court wrote that it fully agreed with the district courts that Plaintiffs were not entitled to a second bite at the prudential-standing apple after the U.S. Bank Action. The district courts, therefore, did not err in taking this straightforward, if not “textbook,” path to dismissal. View "Phx. Light SF Ltd. v. Bank of N.Y. Mellon; Phx. Light SF DAC v. Bank of N." on Justia Law

In this civil enforcement action, the First Circuit affirmed the interlocutory order of the district court ruling that a violation of the right to poll each of the jurors individually under Civil Rule 48(c) is per se reversible and that, therefore, Defendant was entitled to a new trial, holding that there was no error.At issue was whether, under this Court's precedent, the district court's denial of Defendant's right to poll each juror individually after the jury had collectively been polled was per se reversible error. The trial court judge ruled that the error was per se reversible. The First Circuit affirmed, holding that the arguments raised by the Securities and Exchange Commission on appeal were unavailing. View "U.S. Securities & Exchange Comm'n v. Sargent" on Justia Law

Lead plaintiff Maryland Electrical Industry Pension Fund alleged that HP and individual Defendants made fraudulent statements about HP’s printing supplies business. The district court concluded that the complaint, filed in 2020, was barred by the two-year statute of limitations, 28 U.S.C. Section 1658(b)(1), because the public statements, loss in profits, and reductions in channel inventory at the heart of Maryland Electrical’s claims had all taken place by 2016.   The Ninth Circuit reversed the district court’s dismissal. The panel held that under the discovery rule discussed in Merck & Co., Inc. v. Reynolds, 559 U.S. 633 (2010), a reasonably diligent plaintiff has not “discovered” one of the facts constituting a securities fraud violation until he can plead that fact with sufficient detail and particularity to survive a motion to dismiss for failure to state a claim. The panel held that a defendant establishes that a complaint is time-barred under Section 1658(b)(1) if it conclusively shows that either (1) the plaintiff could have pleaded an adequate complaint based on facts discovered prior to the critical date two years before the complaint was filed and failed to do so, or (2) the complaint does not include any facts necessary to plead an adequate complaint that was discovered following the critical date.   The panel held that Defendants’ allegedly fraudulent statements, on their own, were insufficient to start the clock on the statute of limitations. Instead, Maryland Electrical could not have discovered the facts necessary to plead its claims, including the “fact” of scienter, until after the publication of a Securities and Exchange Commission order in 2020. View "YORK COUNTY, ET AL V. HP, INC., ET AL" on Justia Law

Following a 29% drop in Federal Home Loan Mortgage Corporation (Freddie Mac) stock prices in 2007, OPERS, a state pension fund, filed a securities fraud case against Freddie Mac. The district court dismissed, concluding that OPERS failed to adequately plead loss causation because the theory OPERS pursued (materialization of the risk) had not been adopted in the circuit. The Sixth Circuit reversed, “join[ing] our fellow circuits in recognizing the viability of alternative theories of loss causation and apply[ing] materialization of the risk.” On remand, the district court denied OPERS’ motion for class certification, granted Freddie Mac’s motion to exclude OPERS’ expert, and denied OPERS’ motion to exclude Freddie Mac’s experts.The Sixth Circuit denied OPERS’s petition for leave to appeal. OPERS asked the district court to enter “sua sponte” summary judgment for Freddie Mac, arguing that the class certification decision prevented OPERS’ case from proceeding, as it doomed OPERS’ ability to prove loss causation. The district court summarily agreed and entered summary judgment for Freddie Mac. The Sixth Circuit reversed and remanded, citing its lack of jurisdiction. The summary judgment decision was manufactured by OPERS in an apparent attempt to circumvent the requirements of Federal Rule 23(f). The decision was not final. View "Ohio Public Employees Retirement System v. Federal Home Loan Mortgage Corp." on Justia Law

The plaintiffs filed suit asserting federal securities claims. The Third Circuit affirmed summary judgment in favor of the defendants The district court subsequently performed a Federal Rule 11 inquiry mandated by the Private Securities Litigation Reform Act of 1995 (PSLRA) and determined that the plaintiffs violated Rule 11 but did not award attorneys’ fees or impose any other sanctions.The Third Circuit held that the plaintiffs violated Rule 11 in bringing their federal securities claims by filing for an improper purpose. The plaintiffs expressly stated that their “strategy was to file these complaints to force a settlement.” In addition, their Unregistered Securities and Misrepresentation Claims lacked factual support in violation of Rule 11(b)(3). The plaintiffs had a reasonable basis for their Rule 10b-5 Securities Fraud Claim. The court vacated in part. The PSLRA creates a presumption in favor of awarding attorneys’ fees when a complaint constitutes a “substantial failure” to comply with Rule 11 but the district court did not err in finding that the Rule 11 violations were not substantial. Nonetheless, the PSLRA makes the imposition of sanctions mandatory after a court determines that a party violated Rule 11, so the court abused its discretion in declining to impose any form of sanctions. View "Scott v. Vantage Corp" on Justia Law

Participating employees can contribute a portion of their salary to their Retirement Plan account and Northwestern makes a matching contribution. Employees participating in the Voluntary Savings Plan also contribute a portion of their salary, but Northwestern does not make a matching contribution. Both plans allow participants to choose the investments for their accounts from options assembled by the plans’ fiduciaries. Northwestern is the administrator and designated fiduciary of both plans. The plaintiffs sued Northwestern under the Employee Retirement Income Security Act, 29 U.S.C. 1001 (ERISA).The Seventh Circuit affirmed the dismissal of the suit in 2020. The Supreme Court rejected the Seventh Circuit's reliance on a “categorical rule” that providing some low-cost options eliminates concerns about other investment options being imprudent. On remand, the Seventh Circuit reinstated claims that Northwestern failed to monitor and incurred excessive recordkeeping fees and failed to swap out retail shares for cheaper but otherwise identical institutional shares. The court again affirmed the dismissal of other claims, including a claim that Northwestern retained duplicative funds. View "Divane v. Northwestern University" on Justia Law

Plaintiffs alleged that during the class period, Defendants made false or misleading statements about Forescout’s past financial performance, presently confirmed sales, and prospects for future sales. They alleged that Defendants misled investors with respect to (1) the strength of Forescout’s sales pipeline, meaning its presently booked sales and prospects for future sales; (2) the experience of Forescout’s sales force; (3) the business Forescout lost with certain business partners, or “channel partners,” when it announced a merger with Advent International, Inc.; and (4) the likelihood that the merger would close.   The Ninth Circuit affirmed in part and reversed in part the district court’s dismissal of a securities fraud class action under Sections 10(b) and 20(a) of the Securities and Exchange Act and Rule 10b-5. The panel held that Plaintiffs adequately pleaded both falsity and scienter as to some of the challenged statements and that the Private Securities Litigation Reform Act’s safe harbor for forward-looking statements did not preclude liability as to some of these statements. The panel affirmed the district court’s dismissal as to certain statements, and it reversed and remanded for further proceedings as to other challenged statements regarding the sales pipeline and the Advent acquisition. View "GLAZER CAPITAL MANAGEMENT, L.P, ET AL V. FORESCOUT TECHNOLOGIES, INC., ET AL" on Justia Law

Plaintiff-appellant Tracey Weinberg (“Weinberg”) was the former Chief Marketing Officer of defendant-appellee Waystar, Inc.(“Waystar”). During her employment, the company granted her options to purchase stock in its co-defendant Derby TopCo, Inc.,(“Derby Inc.”), pursuant to a Derby TopCo 2019 Stock Incentive Plan (the “Plan”). Weinberg was awarded three option grants under the Plan pursuant to three option agreements executed between October 2019 and August 2020. By the time Weinberg was terminated in 2021, 107,318.96 of her options had vested. She timely exercised all of them in November 2021, and the options immediately converted to economically equivalent partnership units in co-defendant Derby TopCo Partnership LP, a Delaware limited partnership (“Derby LP”) (the “Converted Units”). Each Option Agreement contained an identical call right provision providing Appellees the right to repurchase Weinberg’s Converted Units (the “Call Right”), “during the six (6) month period following (x) the (i) [t]ermination of [Weinberg’s] employment with the Service Recipient for any reason . . . and (y) a Restrictive Covenant Breach.” This appeal turned on the meaning of the word “and” in the three option agreements. Specifically, the question presented for the Delaware Supreme Court was whether two separate events (separated by the word “and”) had to both occur in order for the company to exercise a call right, or whether the call right could be exercised if only one event has occurred. Although Weinberg had been terminated within the time frame specified by the Call Right Provision, a Restrictive Covenant Breach had not occurred. The parties disputed whether the Call Right was available in the absence of a Restrictive Covenant Breach. The Court of Chancery decided that it was, and the Delaware Supreme Court concurred, affirming the Court of Chancery. View "Weinberg v. Waystar, Inc." on Justia Law

The Employees’ Retirement System of the City of Baton Rouge and Parish of East Baton Rouge represents the class of persons and entities who acquired shares of common stock in MacroGenics, Inc. (“MacroGenics”) between February 6, 2019, and June 4, 2019 (the “Class Period”). Plaintiffs initiated an action against MacroGenics, its president and CEO, and its senior vice president and CFO (collectively “Defendants”) for alleged violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, Securities and Exchange Commission (“SEC”) Rule 10b–5, and sections 11, 12(a), and 15 of the Securities Act of 1933. In their Amended Complaint, Plaintiffs alleged that after purchasing MacroGenics’ stock, they experienced economic harm proximately caused by Defendants’ material misrepresentations, misleading statements, or omissions concerning MacroGenics’ clinical trial drug, Margetuximab. The district court granted Defendants’ motion to dismiss after concluding that Plaintiffs had failed to sufficiently allege any actionable misrepresentations or omissions that would give rise to Defendants’ duty to disclose and that most of Defendants’ statements were also immunized from suit.   The Fourth Circuit affirmed. The court explained that Plaintiffs have failed to demonstrate any materially false, misleading representations or omissions in Defendants’ statements. Because Plaintiffs’ Sections 11 and 12(a)(2) claims are inextricably intertwined with the alleged misstatements and omissions raised under their Exchange Act claims, their Securities Act claims cannot prevail. Further, because Plaintiffs have failed to plead a primary violation of the Securities Act, they have consequently failed to plead a Section 15 violation View "Employees' Retirement System of the City of Baton v. Macrogenics, Inc." on Justia Law

Plaintiffs are participants in the physical and derivatives markets for platinum and palladium and seek monetary and injunctive relief for violations of the antitrust laws and the Commodities Exchange Act (“CEA”). According to Plaintiffs, Defendants—mostly foreign companies engaged in trading these metals—manipulated the benchmark prices for platinum and palladium by collusively trading on the futures market to depress the price of these metals and by abusing the process for setting the benchmark prices. Defendants allegedly benefited from this conduct via trading in the physical markets and holding short positions in the futures market. The district court held that it had personal jurisdiction over two of the foreign Defendants, but it dismissed Plaintiffs’ antitrust claims for lack of antitrust standing and the Plaintiffs’ CEA claims for being impermissibly extraterritorial. Plaintiffs appealed the dismissal of these claims.   The Second Circuit reversed in part, vacated in part, and affirmed in part. The court reversed the district court’s holding that the “Exchange Plaintiffs” lacked antitrust standing to sue for the manipulation of the New York Mercantile Exchange futures market in platinum and palladium. The court explained that as traders in that market, the Exchange Plaintiffs are the most efficient enforcers of the antitrust laws for that injury. But the court affirmed the district court’s conclusion that KPFF Investment, Inc. did not have antitrust standing. Additionally, the court vacated the district court’s dismissal of Plaintiffs’ CEA claims. View "In re Platinum and Palladium Antitrust Litigation" on Justia Law