Articles Posted in U.S. 9th Circuit Court of Appeals

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In these consolidated cases, plaintiffs filed shareholder derivative suits in California state court alleging that PICO's compensation policies violated state law. Defendants removed the cases to federal court, arguing that the Dodd-Frank Wall Street Reform and Consumer Protection Act, 15 U.S.C. 78n-1(a)(1), barred the suits. The court concluded that Section 27 of the Securities Exchange Act, 15 U.S.C. 78aa(a), did not confer federal jurisdiction; defendants identified no significant federal issue that would confer jurisdiction; and the doctrine of complete preemption did not apply. Therefore, removal was improper and the district court lacked jurisdiction to do anything other than remand them to state court. Accordingly, the court vacated with instructions to remand the cases to state court. The court dismissed defendants' cross appeals for lack of jurisdiction. View "Dennis v. Hart" on Justia Law

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Plaintiffs, former employees of brokerage firms, filed four class actions challenging California's forced-patronage statute, section 450(a) of the California Labor Code. At issue was whether federal securities law preempted the enforcement of California's forced-patronage statute against brokerage houses that forbid their employees from opening outside trading accounts. The court affirmed the judgment and concluded that the district court correctly determined that the Securities Exchange Act of 1934, 15 U.S.C. 78o(g), and related self-regulatory organizations (SROs) rules preempted plaintiffs' forced-patronage suits. View "McDaniel, et al v. Wells Fargo Investments, LLC, et al" on Justia Law

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Plaintiffs, investors in Bernard Madoff's Ponzi scheme, brought a Federal Tort Claims Act (FTCA), 28 U.S.C. 2674 et seq., action against the SEC and the Government. On appeal, the court held that the district court correctly concluded that it lacked jurisdiction within the "discretionary function" exception to the United State's waiver of sovereign immunity in section 2680(a) of the FTCA. Accordingly, the court affirmed the district court's judgment of dismissal for lack of subject matter jurisdiction and adopted parts of the district court's opinion as its own. The court also held that the additional allegations made in the Second Amended Complaint were insufficient to overcome the discretionary function exception to the FTCA's waiver of sovereign immunity. Finally, the court held that the district court did not abuse its discretion in denying plaintiffs' request for additional discovery. Accordingly, the court affirmed the judgment. View "Dichter-Mad Family Partners, et al v. USA" on Justia Law

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Plaintiffs purchased variable universal life insurance policies from defendant. Plaintiffs subsequently filed a class action suit against defendant under the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1), for levying excessive cost of insurance charges. The court concluded that claims of breach of contract and breach of the duty of good faith and fair dealing were not precluded by SLUSA, even if such claims related to the purchase or sale of a covered security. The court reversed the district court's dismissal of the two contract claims, on the condition that plaintiffs amend their complaint to remove any reference to deliberate concealment or fraudulent omission. The court affirmed the dismissal of the class claim for unfair competition in violation of California law. View "Freeman Investments, L.P., et al v. Pacific Life Ins. Co." on Justia Law

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Plaintiffs alleged that the shares they purchased in Century Aluminum Company were issued under a materially false and misleading prospectus supplement which was treated as part of the company's registration statement for purposes of section 11 of the Securities Act of 1933, 15 U.S.C. 77k. The court concluded that plaintiffs' failure to plead the traceability of their shares meant that they lacked statutory standing under section 11, but failure to allege statutory standing resulted in failure to state a claim on which relief could be granted, not the absence of subject matter jurisdiction. The district court should therefore have addressed the company's motion to dismiss under Rule 12(b)(6), not Rule 12(b)(1). Notwithstanding this error, the court affirmed the dismissal under Rule 12(b)(6). View "Petzschke, et al v. Century Aluminum Co., et al" on Justia Law

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National Elevator, lead plaintiff on behalf of investors who purchased VeriFone stock, appealed the dismissal of its securities fraud class action. National Elevator alleged that VeriFone, the CEO and former Chairman of the Board of Directors, and the company's former CFO and Executive Vice President, violated sections 10(b), 20(a), and 20A of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), 78t-1(a), and 78t(a), and Securities and Exchange Commission Rule 10-b, 17 C.F.R. 240.10b-5(b), in connection with a December 2007 restatement of financial results. The court held that National Elevator adequately pleaded violations of section 10B and Rule 10b as to all defendants; its section 20A claim against the individual defendants was sufficiently pled; but the section 20(a) claim was properly dismissed. Accordingly, the court affirmed in part and dismissed in part. View "National Elevator Industry Pension Fund v. VeriFone Holdings, Inc., et al" on Justia Law

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Plaintiff brought a securities fraud action individually and on behalf of all other persons who purchased or otherwise acquired the common stock of Rigel between certain dates, pursuant to sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b) and 78t(a), and the rules and regulations promulgated thereunder. Plaintiff also brought claims on behalf of itself and persons who purchased Rigel stock traceable to the registration statement and prospectus issued in connection with Rigel's February 2008 stock offering. The court affirmed the district court's order granting defendants' motion to dismiss the complaint where plaintiff failed to meet the pleading requirements. View "Inter-Local Pension Fund GCC/IBT v. Rigel Pharmaceuticals, Inc., et al." on Justia Law

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The SEC instituted this civil enforcement action against defendant, former CFO of a publicly-traded semiconductor company, alleging that he violated various provisions of the securities laws. Defendant subsequently appealed the district court's judgment on three grounds: (1) the district court made several evidentiary errors that required reversal; (2) the SEC's lawyers committed misconduct during the trial that required reversal; and (3) the reimbursement order pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (SOX 304), 15 U.S.C. 7243, violated his Seventh Amendment right to a jury trial in civil cases. The court found that, on appeal, defendant did not challenge his involvement in the scheme at issue in any way. He objected only to the procedures by which he was tried. Defendant, no less than anyone else, was of course entitled to be tried fairly. But, on reviewing the record, the court concluded that defendant received a full and fair civil trial in this enforcement action. A jury of his peers found against him on most counts and the district court entered judgment against him. The court affirmed. View "SEC v. Jasper" on Justia Law

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This appeal concerned the maintenance of a suit for rescission under section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. 78a et seq., by plaintiffs Kenneth Weiss and his wholly-owned corporation. The district court granted summary judgment to defendants on all claims and awarded defendants attorneys' fees. The court held that a plaintiff suing under section 10(b) seeking rescission must demonstrate economic loss and that the misrepresentation or fraud conduct caused the loss. The court found that the record revealed that rescission was not feasible in the instant case. Yet employing a rescissionary measure of damages, Weiss would be able to convince the finder of fact that he was entitled to relief. On that basis, the court reversed the district court's grant of summary judgment of Weiss's federal and state securities claims and remanded for consideration under a rescissionary measure of damages. With respect to the statue of limitations issue, the court remanded for consideration in light of Merck & Co., Inc. v. Reynolds. The court affirmed the district court's judgment on Weiss's state law claims of common law fraud, negligent misrepresentation, mutual mistake, and unjust enrichment. The court vacated the district court's attorneys' fee award and dismissed the appeal of this award as moot. View "Strategic Diversity, Inc., et al. v. Alchemix Corp., et al." on Justia Law

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This appeal concerned the maintenance of a suit for rescission under section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. 78a et seq., by plaintiffs. The district court granted summary judgments to defendants on all claims and awarded defendants attorneys' fees. The court held that a plaintiff suing under section 10(b) seeking rescission must demonstrate economic loss and that the misrepresentation of fraudulent conduct caused the loss. In this case, the court found that the record revealed the rescission was not feasible. Yet employing a rescissionary measure of damages, plaintiffs could be able to convince the finder of fact that plaintiffs were entitled to relief. On that basis, the court reversed the district court's grant of summary judgment on plaintiffs' federal and state securities claims and remanded for consideration under rescissionary measure of damages. With respect to the statute of limitations issue, the court remanded for consideration in light of Merck & Co. The court affirmed the district court's judgment on plaintiffs' state law claims of common law fraud, negligent misrepresentation, mutual mistake, failure of a condition precedent, and unjust enrichment. The court vacated the district court's attorneys' fee award and dismissed the appeal of the award as moot. View "Strategic Diversity, Inc., et al. v. Alchemix Corp., et al." on Justia Law