Justia Class Action Opinion Summaries

In 2004, securities fraud class actions were filed against AIG and other corporate and individual defendants, including Gen Re. The district court consolidated the actions and appointed as lead plaintiffs three Ohio public pension funds, for a putative class of investors who purchased AIG’s publicly traded securities between October 28, 1999, and April 1, 2005. The complaint alleged that AIG and Gen Re violated Rule 10b-5(a) and (c), (Securities Exchange Act, 15 U.S.C. 78j(b)), by entering into a sham $500 million reinsurance transaction designed to mislead the market and artificially increase AIG’s share price. After the parties reached a settlement agreement, the district court denied plaintiffs’ motion to certify a settlement class, finding that the class could not satisfy the predominance requirement of FRCP 23(b)(3) because the fraud-on-the-market presumption does not apply to the class’s securities fraud claims. The Second Circuit vacated, holding that, under Amchem Products, Inc. v. Windsor, 521 U.S. 591(1997), a securities fraud class’s failure to satisfy the fraud-on-the-market presumption primarily threatens class certification by creating “intractable management problems” at trial. Because settlement eliminates the need for trial, a settlement class ordinarily need not demonstrate that the fraud-on-the-market presumption applies to its claims to satisfy the predominance requirement. View "In Re: Am. Int'l Grp. Sec. Litigation" on Justia Law

Acticon is the lead plaintiff in a consolidated putative class action suit against China North East Petroleum Holdings Limited (NEP) brought under the Securities Exchange Act of 1934, 15 U.S.C. 78j(b) & 78t(a), and under SEC Rule 10b-5. Acticon alleges that NEP misled investors about its reported earnings, oil reserves, and internal controls. It further alleges that NEP revealed this information through a series of corrective disclosures and that in the trading days after each disclosure was made, NEP’s stock price dropped. NEP argues that these allegations are not sufficient to allege economic loss because its share price rebounded on certain days after the final disclosure to the point that Acticon could have sold its holdings and avoided a loss. The district court held that because Acticon had foregone multiple opportunities to sell its shares at a profit, it had not suffered an economic loss and dismissed. The Second Circuit vacated. Price recovery does not defeat an inference of economic loss. View "Rosado AG v. China North East Petroleum Holdings, Ltd." on Justia Law

Two people who use wheelchairs and organizations that represent persons with disabilities brought a class action against the New York City Taxi and Limousine Commission and the TLC Commissioner for violation of Parts A and B of Title II of the Americans with Disabilities Act, the Rehabilitation Act of 1973, and the New York City Human Rights Law. The district court granted plaintiffs partial summary judgment as to liability on the ADA claim and entered a temporary injunction, requiring that all new taxi medallions and street-hail livery licenses be limited to vehicles that are wheelchair accessible until the TLC proposes and the district court approves a comprehensive plan to provide meaningful access to taxi service for wheelchair-bound passengers. The Second Circuit vacated the temporary injunction as improvidently granted. Although the TLC exercises pervasive control over the taxi industry in New York City, defendants were not required by Title II(A) to deploy their licensing and regulatory authority to mandate that persons who need wheelchairs be afforded meaningful access to taxis. View "Noel v. NY City Taxi & Limousine Comm'n" 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 appealed from the judgment of the district court dismissing as time-barred their putative class action complaint against their former employer and the employer's pension plan for benefits alleged to be due under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. Plaintiffs asserted that the district court erred when it looked past the six-year New York limitations period for contract actions; applied part of the New York regime known as the "borrowing statute," which directed it to Pennsylvania law; and ruled that Pennsylvania's four-year limitations period barred plaintiffs' claims. The court held that in an action for benefits under 29 U.S.C. 1132, the court applied the forums state's statute of limitations, including its borrowing statute. Therefore, the district court was correct in applying New York's borrowing statute and plaintiffs' claims were untimely under Pennsylvania law. View "Muto, et al. v. CBS Corp." 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

Appellants brought various claims before Financial Industry Regulatory Authority (FINRA) arbitrators against Ameriprise, a financial-services company, for, inter alia, breach of fiduciary duty, breach of contract, fraud, and negligent misrepresentation related to the decline in value of various financial assets owned by appellants and managed by Ameriprise. Ameriprise answered appellants' FINRA complaint by asserting, principally, that appellants released their claims by operation of a settlement agreement in a class-action agreement suit that had proceeded between 2004 and 2007 in the United States District Court for the Southern District of New York. After FINRA arbitrators denied Ameriprise's motion to stay appellants' arbitration, Ameriprise moved in the district court, in which the class action had been litigated and settled, for an order to enforce the settlement agreement that would enjoin appellants from pressing any of their claims before FINRA arbitrators. The district court concluded that the class settlement barred all of appellants' arbitration claims and therefore granted Ameriprise's motion and ordered appellants to dismiss their FINRA complaint with prejudice. The court held that the district court had the power to enter such an order and that several of appellants' arbitration claims were barred by the 2007 class-action settlement. Therefore, the court affirmed in part. But because the court concluded that appellants' arbitration complaint plead claims that were not, and could not have been, released by the class settlement, the court vacated in part the district court's judgment, and remanded the case for the entry of an order permitting the non-Released claims to proceed in FINRA arbitration. The court dismissed as moot appellants' appeal from the district court's denial of their motion for reconsideration. View "In Re: American Express Finance Advisors Securities Litigation" on Justia Law

This appeal and cross-appeal concerned the pension benefits owed to plaintiff, a retired carpenter, and members of a class he purported to represent. Plaintiff asserted that the pension fund was guilty of seven violations of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., and sought declaratory and injunctive relief. The court agreed with the district court that defendants' interpretations of certain plan language was arbitrary and capricious and therefore affirmed the district court's award of summary judgment to plaintiff on his individual claims for miscalculation of pension benefits. The court concluded, however, contrary to the district court, that the six-year statute of limitations applicable to plaintiff's and each other putative class member's ERISA claims began to run when each pensioner knew or should have known that defendants had miscalculated the amount of his pension benefits, and that he was being underpaid as a result. Therefore, the court vacated the district court's judgments certifying the plaintiff class, granting summary judgment to the class, and granting prejudgment interest to the class members. The court remanded for further factfinding with regard to when each putative class member became, or should have become, aware of his alleged injury so as to begin the running of the statute of limitations as applied to him.

Plaintiffs appealed from a decision granting defendants' motion to dismiss plaintiffs' complaints for failure to state a claim upon which relief could be granted. Plaintiffs, participants in two retirement plans offered by defendants, brought suit alleging breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiff alleged that defendants acted imprudently by including employer stock as an investment option in the retirement plans and that defendants failed to provide adequate and truthful information to participants regarding the status of employer stock. The court held that the facts alleged by plaintiffs were, even if proven, insufficient to establish that defendants abused their discretion by continuing to offer plan participants the opportunity to invest in McGraw-Hill stock. The court also held that plaintiffs have not alleged facts sufficient to prove that defendants made any statements, while acting in a fiduciary capacity, that they knew to be false. Accordingly, the judgment was affirmed.

Plaintiffs, participants in retirement plans offered by defendants and covered by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., appealed from a judgment dismissing their ERISA class action complaint. Plan documents required that a stock fund consisting primarily of Citigroup common stock be offered among the plan's investment options. Plaintiffs argued that because Citigroup stock became an imprudent investment, defendants should have limited plan participants' ability to invest in it. The court held that plan fiduciaries' decision to continue offering participants the opportunity to invest in Citigroup stock should be reviewed for an abuse of discretion and the court found that they did not abuse their discretion here. The court also held that defendants did not have an affirmative duty to disclose to plan participants nonpublic information regarding the expected performance of Citigroup stock and that the complaint did not sufficiently allege that defendants, in their fiduciary capacities, made any knowing misstatements regarding Citigroup stock. Accordingly, the court affirmed the judgment.