Justia Class Action Opinion Summaries

This appeal stemmed from a putative securities fraud class action brought by lead plaintiff Nitesh Banker on behalf of all persons who purchased common stock in Gold Resource Corporation (GRC) during the class period between January 30, 2012, and November 8, 2012. GRC, a Colorado corporation, was a publicly traded mining company engaged in Mexico in the exploration and production of precious metals, including gold and silver. GRC’s aggressive business plan called for a dramatic increase in mining production during its initial years. Plaintiff alleged the "El Aguila" project experienced severe production problems during the class period, and that defendants knew about these problems but concealed them from investors. Plaintiff alleged GRC and four of its officers and directors committed securities fraud in violation of federal securities laws. He also asserted claims against individual defendants as "control persons." The district court dismissed the complaint with prejudice pursuant to Fed. R. Civ. P. 12(b)(6), holding that plaintiff failed to meet the heightened pleading standard for scienter required by the Private Securities Litigation Reform Act of 1995. Plaintiff appealed. But finding no reversible error, the Tenth Circuit affirmed. View "In re: Gold Resource Corp." on Justia Law

In July 2012, plaintiff-respondent Ernesto Ruiz filed a putative class action complaint alleging defendant-appellant Moss Bros. Auto Group, Inc. failed to pay Ruiz and other employees overtime and other wages for all hours worked, provide required meal and rest breaks, provide accurate and complete wage statements, reimburse business expenses, and pay final wages in a timely manner. Moss Bros. appealed an order denying its petition to compel arbitration of the employment-related and putative class action, representative, and Ruiz's individual claims. The trial court denied the petition on the ground Moss Bros. did not meet its burden of proving the parties had an agreement to arbitrate the controversy. No statement of decision was requested or issued, but the court implicitly found Moss Bros. did not present sufficient evidence to support a finding that an electronic signature on its proffered arbitration agreement was "the act of Ruiz." After its review, the Court of Appeal concluded Moss Bros. did not present sufficient evidence to support a finding that Ruiz electronically signed the 2011 agreement. Accordingly, the Court affirmed the order denying the petition. View "Ruiz v. Moss Bros. Auto" on Justia Law

Appellants Sikora Nelson and Paul Dorsey challenged the district court’s order requiring them to post an appeal bond of $1,007,294 in order to pursue their appeals objecting to a class action settlement. Plaintiffs initiated the underlying class action suit against Defendants Western Union Company and Western Union Financial Services, Inc. (collectively, “Western Union”), based on the fact that, at any given time, Western Union maintains between $130 and $180 million in wire transfers sent by Western Union customers that fail for some reason. These funds belong to Western Union’s customers, but Western Union returns this money (minus administrative fees) only when a customer requests a refund. Frequently, however, the customer is unaware that the wire transfer failed and thus does not know to ask Western Union to return his money. And Western Union, although possessing the customer’s contact information, does not notify the customer that his wire transfer failed, but instead holds the unclaimed money and earns interest on it. Eventually, after several years, the law of the state where the customer initiated the wire transfer requires Western Union to notify the customer that his unclaimed funds will soon escheat to the state. At that time, Western Union uses the contact information it had on record to give the customer this required notice. If the customer still fails to claim his money, those funds (minus the administrative fees) escheat to the relevant state, which then holds the funds until the customer claims them. Finding no reversible error in the district court's decision to impose the appeal bond, the Tenth Circuit affirmed, but reduced the amount of that bond. View "Tennille v. Western Union Co." on Justia Law

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

Plaintiff was a Ralston Purina Company shareholder when Ralston and Nestle Holdings, Inc. entered into a merger agreement providing that, at the time of the merger, Ralston stock would be converted and Ralson shareholders would receive payments. Plaintiff was not paid until four days after the stock was converted. Ten years later, Plaintiff filed a class action petition alleging that Nestle breached the agreement by failing to timely pay shareholders. The trial court dismissed the petition as barred by the five-year statute of limitations in Mo. Rev. Stat. 516.120(1), which applies to all actions upon contracts except those mentioned in Mo. Rev. Stat. 516.110. Plaintiff appealed, arguing that the trial court erred by not applying the ten-year statute of limitations in section 516.110, which applies to all actions “upon any writing…for the payment of money.” The Supreme Court affirmed, holding (1) the five-year statute applied in this case; and (2) Plaintiff’s argument that his petition was timely because the five-year limitations period was tolled by a pending class action against Nestle in another state was without merit.View "Rolwing v. Nestle Holdings, Inc." on Justia Law

Defendants–Appellants Abercrombie & Fitch Co., Abercrombie & Fitch Stores, Inc., and J.M. Hollister LLC, d/b/a Hollister Co. (collectively, Abercrombie) appealed several district court orders holding that Hollister clothing stores violated the Americans with Disabilities Act (ADA). Plaintiff–Appellee Colorado Cross-Disability Coalition (CCDC) is a disability advocacy organization in Colorado. In 2009, CCDC notified Abercrombie that Hollister stores at two malls in Colorado violated the ADA. Initial attempts to settle the matter were unsuccessful, and this litigation followed. Abercrombie took it upon itself to correct some barriers plaintiff complained of: it modified Hollister stores by lowering sales counters, rearranging merchandise to ensure an unimpeded path of travel for customers in wheelchairs, adding additional buttons to open the adjacent side doors, and ensuring that the side doors were not blocked or locked. However, one thing remained unchanged: a stepped, porch-like structure served as the center entrance at many Hollister stores which gave the stores the look and feel of a Southern California surf shack. The Tenth Circuit affirmed in part and reversed in part the district court's judgment: affirming the court's denial of Abercrombie's summary judgment motion and certification of a class. However, the Court reversed the district court's partial grant, and later full grant of summary judgment to plaintiffs, and vacated the court's permanent injunction: "each of the district court’s grounds for awarding the Plaintiffs summary judgment [were] unsupportable. It was error to impose liability on the design of Hollister stores based on 'overarching aims' of the ADA. It was also error to impose liability based on the holding that the porch as a 'space' must be accessible. Finally, it was error to hold that the porch must be accessible because it is the entrance used by a 'majority of people.'" View "CO Cross-Disability Coalition, et al v. Abercrombie & Fitch, et al" on Justia Law

The issue before the Supreme Court in this case was whether the Court of Chancery erred in dismissing a derivative and class action complaint against the general partner and other managers of a limited partnership. The governing limited partnership agreement provided that appellees had no liability for money damages as long as they acted in good faith. The Court of Chancery dismissed the complaint because it failed to allege facts that would support a finding of bad faith. After remand, the Court of Chancery held that appellants waived their alternative claims for reformation or rescission. Upon review of the matter, the Supreme Court affirmed.View "Brinckerhoff v. Enbridge Energy Company, Inc." on Justia Law

Appellant BVF Partners L.P. ("BVF") appealed a Chancery Court certification of Appellee New Orleans Employees' Retirement System ("NOERS") as class representative in this action challenging the acquisition of Celera Corporation ("Celera") by Quest Diagnostics, Inc. ("Quest"). BVF also appealed the Court of Chancery's approval of a class action settlement without an opt out right for BVF between NOERS and Defendants-Appellees Richard H. Ayers, Jean-Luc Belingard, William G. Green, Peter Barton Hutt, Gail M. Naughton, Kathy Ordonez, Wayne I. Roe, Bennett M. Shapiro, Celera Corporation, Quest Diagnostics Incorporated, and Spark Acquisition Corporation ("Spark"). BVF contended that the Court of Chancery erred in certifying NOERS as the class representative, because NOERS lacked standing to represent the class. BVF argued that when NOERS sold its stock in Celera on the public market (before the merger was actually consummated and nearly a year before the Court of Chancery certified the class) NOERS no longer had a legally cognizable stake in the outcome of the litigation. BVF raised multiple other grounds for why the Court of Chancery erred in certifying NOERS as class representative, including that NOERS was uniquely susceptible to equitable defenses and was therefore an improper class representative. Even if that certification was proper, BVF argued that the Court of Chancery should have exercised its discretionary powers to allow BVF to opt out of the class in order to pursue its individual claims for monetary damages against the defendants. Upon review, the Supreme Court agreed with the Court of Chancery that NOERS had standing to represent the class. The Court declined to adopt a rule of law that a shareholder class representative in a breach of fiduciary duty action must own stock in the corporation continuously through the final class certification. With regard to BVF's other arguments regarding NOERS' certification as class representative, the Court found them "unconvincing." The Court concluded that the Court of Chancery did not abuse its discretion in certifying the class, however, there was merit to BVF's claim that the Court of Chancery should have exercised its discretion to allow BVF to opt out of the shareholder class under the circumstances of this case. Accordingly, the Court affirmed in part and reversed in part. View "In Re Celera Corporation Shareholder Litigation, et al. v. New Orleans Employees' Retirement System, et al." on Justia Law

In 2002 and 2003, appellee American Home Services, Inc. (AHS), a siding, window, and gutter installation company, contracted with Sunbelt Communications, Inc. (Sunbelt), for Sunbelt to send a total of 318,000 unsolicited advertisements to various facsimile machines operating in metropolitan Atlanta. In October 2003, appellant A Fast Sign Company, Inc. d/b/a Fastsigns (Fastsigns), one of the recipients of these unsolicited advertisements, brought a class-action lawsuit against AHS, asserting violations of the Telephone Consumer Protection Act of 1991 (TCPA) (47 U.S.C. sec. 227). At the conclusion of a bench trial, the trial court found that AHS violated the TCPA because it admitted in judicio that it had sent 306,000 unsolicited facsimile advertisements. Finding that violation of the TCPA was wilful and knowing, the trial court awarded the class $459 million in damages, or the amount of $1,500 for each fax sent. The trial court declined to award punitive damages and attorney's fees. AHS appealed the ruling to the Court of Appeals. The Court of Appeals vacated the trial court's judgment and remanded the case, finding that the trial court erroneously applied the TCPA by basing liability and damages on the number of unsolicited advertisements sent rather than the number of unsolicited advertisements received by class members. The issue before the Supreme court was whether the Court of Appeals erred when it determined that only the receipt of an unsolicited fax created an actionable violation of the TCPA. Upon review, the Supreme Court reversed the appellate court's judgment and remanded the case for further proceedings. View "A Fast Sign Company, Inc. v. American Home Services, Inc." on Justia Law

Respondent, First Derivative Traders, representing a class of stockholders in petitioner Janus Capital Group, Inc. ("JCG"), filed a private action under the Securities and Exchange Commission ("SEC") Rule 10b-5, alleging that JCG and its wholly owned subsidiary, petitioner Janus Capital Management LLC ("JCM"), made false statements in mutual funds prospectuses filed by Janus Investment Fund, for which JCM was the investment adviser and administrator, and that those statements affected the price of JCG's stock. Although JCG created Janus Investment Fund, it was a separate legal entity owned entirely by mutual fund investors. At issue was whether JCM, a mutual fund investment adviser, could be held liable in a private action under Rule 10b-5 for false statements included in its client mutual funds' prospectuses. The Court held that, because the false statements included in the prospectuses were made by Janus Investment Fund, not by JCM, JCM and JCG could not be held liable in a private action under Rule 10b-5. The Court found that, although JCM could have been significantly involved in preparing the prospectuses, it did not itself "make" the statements at issue for Rule 10b-5 purposes where its assistance in crafting what was said was subject to Janus Investment Fund's ultimate control. Accordingly, respondent had not stated a claim against JCM under Rule 10b-5 and the judgment of the Fourth Circuit was reversed.View "Janus Capital Group, Inc. v. First Derivative Traders" on Justia Law