Justia Class Action Opinion Summaries

A substantial portion of Boston Scientific's sales in 2008-2009 were of cardiac rhythm management devices handled by a group within the company devoted to such products. In August 2009, Boston Scientific began an audit of CRM sales expense reports from recent trips of sales representatives who accompanied physician customers on tours of Boston Scientific manufacturing facilities; in September Boston Scientific received a subpoena from the U.S. Department of Health and Human Services, requesting information about contributions made by CRM to charities with ties to physicians or their families. Neither the audit nor the subpoena were initially disclosed to the public. After stock prices dropped, a purported class of shareholders sued for securities fraud, Securities Exchange Act, 15 U.S.C. 78j(b), 78t(a)), and associated regulations, 17 C.F.R. 240.10b-5, alleging that statements made by the company were materially false or misleading. The district court dismissed. The First Circuit affirmed, noting other possible causes of loss and finding that plaintiffs did not establish scienter.View "In re: Boston Scientific Corp. Sec. Litigation" on Justia Law

Plaintiffs, groups of investors who purchased the securities of KV, brought this class action lawsuit alleging that KV and some of its individual officers committed securities fraud. Plaintiffs alleged that KV made false or misleading statements about its compliance with Food and Drug Administration (FDA) regulations governing the manufacture of pharmaceutical products, and made false or misleading statements about earnings resulting from pharmaceutical products allegedly manufactured in violation of FDA regulations. The court concluded plaintiffs' complaint adequately set forth the reasons why KV's statements about is compliance were false, or at least misleading, at the time they were made; the district court did not err when it determined the investors' complaint did not sufficiently plead that KV made false or misleading statements about earnings tied to the manufacture of generic Metoprolol; the district court correctly dismissed the scheme liability claims against the two individual KV officers; but the district court erred in denying the motion to amend the complaint. Accordingly the court affirmed in part, reversed in part, and remanded for further proceedings. View "Public Pension Fund Group, et al. v. KV Pharmaceutical Co., et al." on Justia Law

Plaintiffs sued on behalf of a class of similarly-situated participants and beneficiaries of the Keycorp 401(k) Savings Plan, under the Employee Retirement Income Security Act, 29 U.S.C. 1109, 1132, alleging that defendants breached their duties by failing to prudently manage the Plan’s investment in KeyCorp securities; that defendants failed to adequately inform participants about the true risk of investing in KeyCorp stock; that certain defendants breached fiduciary duties by failing to adequately monitor the management and administration of Plan assets; that certain defendants failed to avoid impermissible conflicts of interest; and that certain defendants are liable for the breaches of fiduciary duty committed by their co-fiduciaries. The district court dismissed one plaintiff because she had benefited from the alleged breaches of fiduciary duty, which allowed her to sell the majority of her holdings at an inflated price. The court denied a motion to allow another to intervene as named plaintiff. The Sixth Circuit affirmed. View "Taylor v. KeyCorp" on Justia Law

This consolidated appeal arose out of an alleged multi-billion dollar Ponzi scheme perpetrated by R. Allen Stanford through his various corporate entities. These three cases dealt with the scope of the preclusion provision of the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1)(A). All three cases sought to use state class-action devices to attempt to recover damages for losses resulting from the Ponzi scheme. Because the court found that the purchase or sale of securities (or representations about the purchase or sale of securities), was only tangentially related to the fraudulent scheme alleged by appellants, the court held that SLUSA did not preclude appellants from using state class actions to pursue their recovery and reversed the judgment. View "Roland, et al. v. Green, et al.; Troice, et al. v. Proskauer Rose, LLP, et al.; Troice, et al. v. Willis of Colorado Inc., et al." on Justia Law

The brokerage entered into agreements with customers that set a fee for handling, postage, and insurance for mailing confirmation slips after each securities trade. Plaintiff filed claims of breach of contract and unjust enrichment, seeking class certification and recovery of fees charged since 1998. The brokerage removed to federal court under the Class Action Fairness Act, 28 U.S.C. 1332(d), or the Securities Litigation Uniform Standards Act 15 U.S.C. 78p(b) and (c) and 78bb(f), and obtained dismissal. The Seventh Circuit affirmed, first holding that SLUSA did not apply because any alleged misrepresentation was not material to decisions to buy or sell securities, but CAFA's general jurisdictional requirements were met. The agreement did not suggest that the fee represents actual costs, and it was not reasonable to read this into the agreement. Nor did the brokerage have an implied duty under New York law to charge a fee reasonably proportionate to actual costs where it notified customers in advance and they were free to decide whether to continue their accounts. View "Appert v. Morgan Stanley Dean Witter, Inc." on Justia Law

The Bank of New York Mellon, acting in its capacity as trustee of trusts established to hold residential mortgage-backed securities, settled claims that the originator and servicer breached obligations owed to the trusts. Then, as a condition precedent to the settlement, the Bank initiated an Article 77 proceeding in New York Supreme Court to confirm that it had the authority to enter into the settlement under the governing trust documents and that entry into the settlement did not violate its duties under the governing trust agreements. On appeal from an order of the district court denying petitioners' motion to remand the proceeding to New York Supreme Court, the court considered the application of 28 U.S.C. 1453(d)(3) and 1332(d)(9)(C), exceptions to the federal jurisdiction conferred by the Class Action Fairness Act of 2005 (CAFA), Pub.L. No. 109-2, 119 Stat. 4. The court held that the case fell within CAFA's securities exception as one that solely involved a claim that "related to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to" a security. Accordingly, the court dismissed the petition for lack of jurisdiction, reversed the order of the district court, and instructed it to vacate its decision and order and remanded the matter to state court. View "The Bank of New York Mellon v. Walnut Place LLC" on Justia Law

Plaintiffs, and other owners of Dell Inc. common stock, alleged that defendants violated the securities laws between by fraudulently inflating reported revenues, engaging in erroneous accounting, and disseminating false information to the public. The district court granted defendant's motion to dismiss with prejudice and plaintiffs appealed. While the appeal was pending, plaintiffs moved in the district court for class certification and approval of a proposed settlement agreement. The district court certified a class and approved the class-action settlement. Two groups of objectors to the settlement subsequently appealed, claiming numerous deficiencies in the proceedings. The court held that appellants have demonstrated their membership in a class and have standing to bring their objections; the district court did not abuse its discretion when it systematically analyzed the proposed settlement under each of the Reed factors and found that none counseled against approving the settlement; the district court did not abuse its discretion in certifying the class as defined; the district court did not abuse its discretion in approving the settlement's claims-making process; the district court did not abuse its discretion in approving the elimination of the de minimus provision in the original plan of allocation; the district court's decision not to reissue notice or reopen the filing period was not an abuse of discretion; objectors presented no reason to conclude that the judgment was an abuse of discretion; and there was no basis for concluding that the district court abused its discretion in setting the amount of attorney's fees and in awarding interest in the fee award. Accordingly, the court affirmed the judgment of the district court. View "In Re: Dell Inc, et al." on Justia Law

Plaintiffs filed this lawsuit on behalf of a class of stockholders of Occam. Defendants moved for sanctions against all plaintiffs other than Derek Sheeler for trading on the basis of confidential information obtained in this litigation. With respect to Michael Steinhardt and the funds, the motion was granted. Consistent with prior rulings by this court when confronted with representative plaintiffs who have traded while serving in a fiduciary capacity, Steinhardt and the funds were dismissed from the case with prejudice, barred from receiving any recovery from the litigation, required to self-report to the SEC, directed to disclose their improper trading in any future application to serve as lead plaintiff, and ordered to disgorge profits. With respect to Herbert Chen, the motion was denied. View "Steinhardt, et al. v. Howard-Anderson, et al." on Justia Law

Former customers of RCM, a subsidiary of the now-bankrupt Refco, appealed from a dismissal of their securities fraud claims against former corporate officers of Refco and Refco's former auditor. RCM operated as a securities and foreign exchange broker that traded in over-the-counter derivatives and other financial products on behalf of its clients. Appellants, investment companies and members of the putative class, claimed that appellees, former officers and directors of Refco, breached the agreements with the RCM customers when they rehypothecated or otherwise used securities and other property held in customer brokerage accounts. The district court dismissed the claims for lack of standing and failure to allege deceptive conduct. The court held that appellants have no remedy under the securities laws because, even assuming they have standing, they failed to make sufficient allegations that their agreements with RCM misled them or that RCM did not intend to comply with those agreements at the time of contracting. View "Capital Mgmt Select Fund Ltd., et al. v. Bennett et al." on Justia Law

Plaintiff brought this securities fraud action against defendant, a biotechnology company and several of its officers, alleging that, by misstating and failing to disclose safety information about two of the company's products used to treat anemia, they violated the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), 78t(a), and Rule 10b-5, 17 C.F.R. 240.10b-5. At issue was what a plaintiff must do to invoke a fraud-on-the-market presumption in aid of class certification. The court joined the Third and Seventh Circuits in holding that plaintiff must (1) show that the security in question was traded in an efficient market, and (2) show that the alleged misrepresentation were public. As for the element of materiality, plaintiff must plausibly allege that the claimed misrepresentations were material. In this case, plaintiff plausibly alleged that several of defendants' public statements about its pharmaceutical products were false and material. Coupled with the concession that the company's stock traded in an efficient market, this was sufficient to invoke the fraud-on-the-market presumption of reliance. Therefore, the district court did not abuse its discretion in certifying the class. View "Connecticut Retirement Plans and Trust Funds v. Amgen Inc., et al." on Justia Law