Justia Class Action Opinion Summaries

The case revolves around Frequency Therapeutics, a biotech startup that was developing a treatment for severe sensorineural hearing loss called "FX-322". Initial trials were positive, but subsequent testing yielded disappointing results, causing a sharp drop in Frequency's stock price. Three stockholders filed a class action lawsuit alleging violations of sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, and Securities and Exchange Commission Rule 10b-5. They claimed that Frequency's CEO, David Lucchino, and its Chief Development Officer, Carl LeBel, knew of problems with the study before the results were announced, yet gave investors assurances to the contrary.The United States District Court for the District of Massachusetts dismissed the complaint, finding that the plaintiffs failed to allege sufficient facts to support a finding of scienter under the Private Securities Litigation Reform Act. The plaintiffs appealed to the United States Court of Appeals for the First Circuit.The Court of Appeals affirmed the dismissal. The court found that the plaintiffs failed to demonstrate that the defendants had made the false statements with the degree of scienter required to state a Securities and Exchange Act claim. The court noted that the complaint did not provide specific facts about when the defendants learned of the adverse events, which was a glaring omission. The court also found that the increase in stock sales by the CEO was not sufficient to establish an inference of scienter on its own. The court concluded that the plaintiffs' allegations, taken collectively, did not give rise to a strong inference of scienter. View "Quinones v. Frequency Therapeutics, Inc." on Justia Law

A class of individuals and businesses in Northern California, who paid health insurance premiums to certain health plans, sued Sutter Health, a healthcare system operator in the region. They alleged that Sutter abused its market power to charge supracompetitive rates to these health plans, which were then passed on to the class in the form of higher premiums. The case went to trial on claims under California’s Cartwright Act for tying and unreasonable course of conduct. The jury returned a verdict in favor of Sutter.The plaintiffs appealed, arguing that the district court erred by failing to instruct the jury to consider Sutter’s anticompetitive purpose and by excluding evidence of Sutter’s conduct before 2006. The United States Court of Appeals for the Ninth Circuit agreed with the plaintiffs. It held that the district court contravened California law by removing “purpose” from the jury instructions, and that the legal error was not harmless. The court also held that the district court abused its discretion under Federal Rule of Evidence 403 in excluding as minimally relevant all evidence of Sutter’s conduct before 2006. The court concluded that these errors were prejudicial and reversed the district court’s judgment, remanding the case for a new trial. View "SIDIBE V. SUTTER HEALTH" on Justia Law

The case involves Gerald Forsythe, who filed a class action lawsuit against Teva Pharmaceuticals Industries Ltd. and several of its officers. Forsythe claimed that he and others who purchased or acquired Teva securities between October 29, 2015, and August 18, 2020, suffered damages due to misstatements and omissions by Teva and its officers related to Copaxone, a drug used to treat multiple sclerosis. Teva's shares are dual listed on the New York Stock Exchange and the Tel Aviv Stock Exchange.The District Court granted Forsythe's motion for class certification, rejecting Teva's assertion that the class definition should exclude purchasers of ordinary shares. The Court also rejected Teva's argument that Forsythe could not satisfy Rule 23(b)(3)’s predominance requirement.Teva sought permission to appeal the District Court’s Order granting class certification, arguing that interlocutory review is proper under Federal Rule of Civil Procedure 23(f). Teva contended that the Petition presents a novel legal issue and that the District Court erred in its predominance analysis with respect to Forsythe’s proposed class-wide damages methodology.The United States Court of Appeals for the Third Circuit denied Teva's petition for permission to appeal. The court found that the securities issue did not directly relate to the requirements for class certification, and agreed with the District Court’s predominance analysis. The court also clarified that permission to appeal should be granted where the certification decision itself under Rule 23(a) and (b) turns on a novel or unsettled question of law, not simply where the merits of a particular case may turn on such a question. View "Forsythe v. Teva Pharmaceutical Industries Ltd" 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

This case involves a dispute between plaintiffs Michelle Beverage and Joseph Mejia, and defendant Apple, Inc. The plaintiffs filed a class action complaint alleging that Apple's restrictive contractual terms and coercive conduct towards software developers on its App Store constituted unlawful and unfair practices that violated the Cartwright Act and the Unfair Competition Law (UCL). The plaintiffs specifically focused on Apple's treatment of one developer, Epic Games, Inc., and its gaming application, Fortnite. The trial court sustained a demurrer brought by Apple without leave to amend, applying the Colgate doctrine and the holding of Chavez v. Whirlpool Corporation. The court determined that the plaintiffs did not and could not state causes of action under either legal regime as a matter of law.The trial court's decision was based on the application of the Colgate doctrine and the holding of Chavez v. Whirlpool Corporation. The court found that the plaintiffs did not and could not state causes of action under either the Cartwright Act or the UCL as a matter of law. The plaintiffs appealed only one aspect of the trial court's ruling, arguing that the court erred by relying on Chavez to sustain the demurrer to their UCL cause of action alleging unfair practices by Apple towards Epic Games.The Court of Appeal of the State of California Sixth Appellate District affirmed the trial court's judgment. The appellate court disagreed with the plaintiffs' argument that Chavez was inconsistent with the California Supreme Court’s decision in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Company. The court found that the trial court correctly relied on Chavez to sustain the demurrer without leave to amend. The court held that the plaintiffs did not state a claim as a matter of law under the "unfair" prong of the UCL, considering the trial court's ruling that Apple's practices constituted permissible unilateral conduct. View "Beverage v. Apple, Inc." on Justia Law

The case involved a lawsuit against Meta Platforms, Inc. (formerly known as Facebook) by a class of advertisers who claimed that Meta misrepresented the "Potential Reach" of advertisements on its platforms. The plaintiffs alleged that Meta falsely claimed that Potential Reach was an estimate of people, when in fact, it was an estimate of accounts.The United States Court of Appeals for the Ninth Circuit affirmed the district court's order certifying one class of advertisers (the damages class) who sought compensation for fraudulent misrepresentation and concealment. The court stated that the misrepresentation was a common issue for the class and that the district court properly determined that the element of justifiable reliance was capable of classwide resolution.However, the court vacated the district court's order certifying another class of advertisers (the injunction class) who sought injunctive relief. The court asked the lower court to reconsider whether the named plaintiff, Cain Maxwell, had Article III standing to seek an injunction. The case was remanded for further proceedings. View "DZ Reserve v. Meta Platforms, Inc." on Justia Law

In this case, five former customers of Peregrine Financial Group, Inc., a defunct futures commission merchant, filed a class action lawsuit against various defendants, including JPMorgan Chase Bank and National Futures Association. They claimed that their investments were wiped out due to fraudulent activities by Peregrine's CEO. The United States District Court for the Southern District of New York dismissed the federal claims as time-barred and declined to exercise supplemental jurisdiction over the state-law claims.On appeal, the United States Court of Appeals for the Second Circuit affirmed the lower court's decision. The main issue addressed by the Second Circuit was whether a party could compel a district court to exercise subject-matter jurisdiction on a theory of jurisdiction that the party raised untimely.The Court held that a party may not do so. The Court distinguished between objecting to a federal court's exercise of jurisdiction, which a party could do at any stage in the litigation, and invoking the district court’s jurisdiction, which can be forfeited if not raised timely. Therefore, although federal courts must ensure they have jurisdiction, there is no corresponding obligation to find and exercise jurisdiction on a basis not raised by the parties. The Court concluded that the district court was within its discretion to decline to consider the untimely raised theory of jurisdiction. View "Behrens v. JPMorgan Chase Bank, N.A." on Justia Law

In a complex and long-running series of legal disputes over attorney fees, two law firms, Shields Law Group and Paul Byrd Law Firm, and another firm, Hossley-Embry LLP, (collectively referred to as the "Objecting Firms") challenged the district court's approval of a settlement agreement among other firms involved in the litigation. The dispute arose from a class action lawsuit against Syngenta, an agricultural company, which was settled for $1.51 billion in 2018. One-third of the settlement was allocated for attorneys' fees, but the distribution of these fees among the numerous law firms involved in the case led to additional litigation.The district court approved a settlement agreement in which a group of firms (the Appellee Parties) agreed to pay $7 million to another firm, Watts Guerra. The Objecting Firms challenged this decision, arguing that it effectively reallocated money among the various pools of attorney fees. However, the Appellate Court concluded that the Objecting Firms lacked standing to challenge the district court's approval of the settlement agreement because they were not affected by it. The court also found that the Objecting Firms' challenges to the disbursement orders were moot. As a result, the court dismissed the appeals. View "SHIELDS LAW GROUP, LLC v. STUEVE SIEGEL HANSON LLP" on Justia Law

A massage parlor, Elegant Massage LLC, filed a class action lawsuit against State Farm Mutual Automobile Insurance Company, asserting claims of breach of contract and other related claims. The suit stemmed from State Farm's denial of insurance coverage to businesses that had to shut down partially or fully due to Virginia executive orders during the COVID-19 pandemic. Elegant Massage claimed that the forced closure constituted a "direct physical loss" under its insurance policy. The district court certified the class and denied State Farm’s motion to dismiss. State Farm appealed.The United States Court of Appeals for the Fourth Circuit used its pendent appellate jurisdiction to review the district court's denial of State Farm’s motion to dismiss in conjunction with the appealable class certification order. The appellate court referred to the precedent set in Uncork & Create LLC v. Cincinnati Insurance Co., which held that a similar business closure during the pandemic did not constitute a "direct physical loss" requiring material destruction or harm to the property. The court found that this precedent was directly applicable to the case at hand.Consequently, the court of appeals held that the district court had erred in denying State Farm's motion to dismiss. It ruled that the temporary closures ordered by the executive did not result in a "direct physical loss" under the policy terms. As a result, the court also found no basis for class certification. The court reversed the district court’s decisions and instructed it to dismiss the entire case. View "Elegant Massage, LLC v. State Farm Mutual Automobile Insurance Co." on Justia Law

Cobalt International Energy partnered with three Angolan companies to explore and produce oil and gas off the coast of West Africa. Later, the federal Securities and Exchange Commission announced it was investigating Cobalt for allegations of illegal payments to Angolan government officials and misrepresentation of the oil content of two of its exploratory wells. This led to a significant drop in Cobalt’s stock price and prompted a class action lawsuit from Cobalt's investors, led by GAMCO, a collection of investment funds that held Cobalt shares. Prior to these events, Cobalt had purchased multiple layers of liability insurance from a number of insurance companies, collectively referred to as the Insurers in this case. When the allegations surfaced, Cobalt notified the Insurers, who denied coverage on the grounds that Cobalt's notice was untimely and certain policy provisions excluded the claims from coverage.In 2017, Cobalt filed for bankruptcy and began settlement negotiations with GAMCO. Eventually, a settlement agreement was reached, which stipulated that Cobalt would pay a settlement amount of $220 million to GAMCO, but only from any insurance proceeds that might be recovered. Cobalt and GAMCO then jointly sought approval of the settlement from the federal court and the bankruptcy court, both of which granted approval.The Insurers then filed a petition for a writ of mandamus, arguing that the settlement agreement was not binding or admissible in the coverage litigation, that Cobalt had not suffered a "loss" under the policies, and that GAMCO could not sue the Insurers directly.The Supreme Court of Texas held that (1) Cobalt had suffered a “loss” under the policies because it was legally obligated to pay any recoverable insurance benefits to GAMCO, (2) GAMCO could assert claims directly against the Insurers, and (3) the settlement agreement was not binding or admissible in the coverage litigation to establish coverage or the amount of Cobalt’s loss. The court reasoned that the settlement was not the result of a "fully adversarial proceeding," as Cobalt bore no actual risk of liability for the damages agreed upon in the settlement. The court conditionally granted the Insurers' petition for a writ of mandamus in part, ordering the trial court to vacate its previous orders to the extent they relied on the holding that the settlement agreement was admissible and binding to establish coverage under the policies and the amount of any covered loss. View "IN RE ILLINOIS NATIONAL INSURANCE COMPANY" on Justia Law