Legal News

Case Summaries

Securities Law

[01/06] US v. Skilling
Former Enron CEO's conviction for conspiracy, securities fraud, and related charges is affirmed, but his sentence is vacated and remanded where the court incorrectly applied an enhancement for substantially jeopardizing a "financial institution." Enron's Retirement Plans are not "financial institutions" as that phrase is used in U.S.S.G. section 2F1.1.

[01/06] In re: Fannie Mae Sec. Litig.
In failing to produce all documents subpoenaed by senior executives at Fannie Mae, the Office of Federal Housing Enterprise Oversight failed to comply with discovery deadlines to which it agreed, and was properly held in contempt and sanctioned. The stipulated order's reference to "appropriate search terms" obligated the Office to process the search terms the individual defendants specified, even though this resulted in the retrieval of roughly 80 percent of the Office's emails.

[01/05] Gerardi v. Katz
Securities class actions covered by the Class Action Fairness Act of 2005 are removable to Federal court, subject to the exceptions in sections 1332(d)(9) and 1453(d). Section 22(a) of the Securities Act of 1933 does not insulate all Securities Act claims from removal under the 2005 Act.

[01/05] Stark Trading v. Falconbridge Ltd.
Securities fraud class action suit was properly dismissed for failure to state a claim where: 1) plaintiffs are sophisticated investors whose complaint, along with judicially-noticeable facts, reveals that they were not induced by a mining company's misrepresentations to tender their shares, and therefore they cannot show reliance under SEC Rule 10b-5; and 2) failure to allege that they sold any shares at a loss eviscerates their claim under section 11 of the Securities Exchange Act.

[01/05] Pub. Employees' Ret. Assoc. of Colorado v. Deloitte & Touche LLP
District court correctly dismissed securities class action against public company's accountants where Plaintiffs failed to allege facts showing the accountants' scienter. The allegations showed that company went to considerable lengths to conceal its fraud from the accountants, and the stronger and more plausible inference to be drawn from the facts alleged in the complaint is that the accountants did not know that the company was defrauding its investors, and therefore lacked scienter.

[01/05] US v. Kelley
A conviction for securities fraud and wire fraud is affirmed where: 1) although the use of bogus account statements to lull defrauded investors is not in and of itself sufficient to establish a securities law violation, the use of such statements is relevant as evidence to prove, inter alia, a defendant's intent to defraud and the extent of the scheme employed; and 2) thus, there was no error in admitting such evidence in this case.

[12/29] Abbotts v. Campbell
Participants in a Common Stock Purchase Agreement failed to show that the nondisclosure of a waiver of certain provisions of that Agreement was a proximate cause of their investment losses. The investors also failed to show that they exercised reasonable diligence warranting equitable tolling of the six-year statute of limitations specified by Minnesota Statute section 541.05.

[12/29] Hemispherx Biopharma, Inc. v. Johannesburg Consolidated Investments
In a lawsuit arising out of an alleged hostile takeover attempt of a publicly traded company, dismissal of complaint is reversed and remanded in part and affirmed in part where: 1) the district court erred in dismissing the claim against co-defendant for insufficient service of process when co-defendant had already waived that defense; 2) the district court's dismissal of one count is affirmed as plaintiff did not allege that defendants were beneficial owners of plaintiff's stock, thus such defendants were not part of a section 13(d)(3) group required to file a Schedule 13D form; 3) a fraud claim was not within the scope of an arbitration clause because the conduct of the South African defendants giving rise to the claim was not "reasonably foreseeable" in 1994 when the licensing agreement and arbitration provision were executed, and thus the dispute did not "arise" out of the agreement; and 4) even in light of the general federal policy in favor of private commercial dispute resolution, the parties' licensing agreement arbitration clause did not cover not cover the fraud claim.

[12/17] US v. Elgindy
In a case where racketeering conspiracists ran a subscription website recommending stock short-sales on the basis of misappropriated information: 1) venue was proper where seven site subscribers resided in the Eastern District of New York; 2) the misappropriated law enforcement reports were not public in any practical sense, even if some of the sources from which they were compiled could be accessed by the public; and 3) the district court properly included the subscribers' stock trades when calculating the forfeiture amount and the appropriate offense level.

[12/12] Cozzarelli v. Inspire Pharm.
Dismissal of complaint alleging securities fraud is affirmed where Appellants failed to raise the requisite "strong inference" of scienter and failed to allege that defendant-company's prospectuses were false with the particularity required by FRCP 9(b). The facts suggest that Defendants withheld information from the market with the lawful intent to protect the company's competitive interests, not to deceive investors as to the prospects for its experimental dry-eye drug.

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Workers' Comp

[12/30] Bullock v. AIU Ins. Co.
In a lawsuit alleging bad-faith failure to timely pay workers' compensation benefits, summary judgment for defendants is reversed and remanded in light of a Mississippi Supreme Court determination that the suit was timely filed.

[12/19] Southwestern Bell Tel. Co., L.P. v. Mitchell
In a worker's compensation claim, grant of summary judgment in favor of respondent-decedent is reversed where: 1) the rule announced in Continental Casualty Co. v. Downs was in effect for only about one year; and 2) it was wrongly decided.

[12/18] Ioerger v. Halverson Const. Co., Inc.
The immunity afforded to an employer by the exclusive remedy provisions of the Workers' Compensation Act (820 ILCS 305/5(a), 11 (West 2000)) extends to the employer's co-venturer in a joint venture and to the joint venture itself.

[12/16] Hertz v. Workers' Compensation Appeals Bd.
In a worker's compensation claim, an award determined by respondent-Board is reversed and remanded where: 1) victim-employee's permanent disability should have been rated using the 1997 rating schedule rather than the 2005 rating schedule; 2) a finding of permanent total disability was not appropriate in this case; 3) under the revised worker's compensation system an employer is liable for only the portion of an injured worker's permanent disability that is directly caused by the industrial injury; 4) a finding of permanent total disability in employee's case was based in part on a finding that vocational rehabilitation was not feasible due in part to pre-existing nonindustrial factors; and thus, 5) company was not liable for that portion of victim-employee's permanent disability that was caused by pre-existing nonindustrial factors.

[12/11] Protocols, LLC v. Leavitt
In a declaratory-judgment action brought by a company and law firm that provide consulting services for the settlement of workers' compensation claims, claiming that a government memorandum issued in 2005 misinterprets the Medicare statute and regulations and exposes plaintiffs to unexpected liabilities, summary judgment for defendants is reversed where the district court erred in finding plaintiffs lacked standing for their suit as their potential liability presents a sufficient injury to confer standing under Article III of the U.S. Constitution.

[09/25] Sanders v. City of Orlando
In a workers' compensation case, reversal of vacatur of a prior settlement agreement by a Judge of Compensation Claims (JCC) is quashed where a 2001 statutory change did not strip JCCs of jurisdiction to set aside workers' compensation agreements. (Revised opinion)

[06/13] Johnson v. Comm'r of Soc. Sec.
Denial of a claim for disability insurance benefits under Title II of the Social Security Act is affirmed where: 1) the ALJ conducted an exhaustive evaluation of evidence adduced in the case; and 2) the ALJ's final conclusion in finding claimant not disabled was supported by substantial evidence.

[06/12] Berg v. Albany Ladder Co., Inc.
The protections of Labor Law section 240(1) do not apply to every worker who falls and is injured at a construction site. In a case involving a "fall-related accident" wherein a plaintiff was injured after climbing into a bundle of steel trusses to avoid being crushed by another bundle rolling atop of him, dismissal of plaintiff's Labor Law section 240(1) cause of action is affirmed where, although plaintiff asserted that the height at which he worked created an elevation-related risk, he failed to adduce proof sufficient to create a question of fact regarding whether his fall resulted from the lack of a safety device.

[06/10] Preserver Ins. Co. v. Ryba
In a coverage dispute over a jobsite injury allegedly sustained by a construction worker presenting the question of whether an employer's liability insurance coverage is unlimited or limited to $100,000 as specified in a standard form workers' compensation and employers' liability contract policy, the court of appeals finds that employer's liability is limited under the circumstances of this case where: 1) from a contractual interpretation standpoint, nothing in the underlying policy suggested unlimited liability; and 2) from a legal perspective, none of the applicable state laws provided for an unlimited employers' liability insurance.

[06/10] Liberty Mut. Fire Ins. Co. v. LCL Administrators, INC.
In a breach of contract action to recover workers' compensation insurance premiums, wherein defendant repeatedly provided vacuous, meaningless responses to simple and straightforward interrogatories propounded by plaintiff, grant of plaintiff's motion for terminating sanctions is affirmed where: 1) there was substantial evidence to support a finding that defendant "willfully" failed to comply with discovery; 2) defendant's claims that these derelictions did not prejudice plaintiff's ability to try the case were misguided as prejudice is inherent in stalling tactics which prevent a party from defending its case; 3) terminating sanctions were not excessive and considerably appropriate in light of defendant's repeated misconduct.

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