Case Summaries

Securities Law

[01/20] Huppe v. WPCS International Inc.
In a shareholder derivative action seeking disgorgement of short-swing profits realized by two limited partnerships that were beneficial owners of more than 10 percent of the shares of the issuer, the district court's grant of summary judgment in favor of the plaintiff is affirmed, where: 1) the stock purchases were not exempt from Section 16(b) of the Securities Exchange Act of 1934 or SEC Rule 16b-3(d) even though they were made at the issuer's request and with the board’s approval; and 2) under the definition of "person" in Section 16(b) and basic principles of agency law, the limited partnerships were beneficial owners for the purposes of determining ten percent holder status under Section 16(b), notwithstanding their delegation of voting and investment control over their securities portfolios to their general partners' agents.

[01/10] Capital Management Select Fund Ltd. v. Bennett
In a securities fraud action stemming from a broker's rehypothecation or other use of securities and other property held in customer brokerage accounts, the district court's dismissal of all claims is affirmed, where the plaintiffs failed to make sufficient allegations that their agreements with the broker misled them or that the broker did not intend to comply with those agreements at the time of contracting.

[01/09] US v. Collins
Judgment of conviction for conspiracy, securities fraud, and wire fraud is vacated, where: 1) the district court failed to disclose the contents of a jury note and engaged in an ex parte colloquy with a juror accused of attempting to barter his vote, thus depriving the defendant of his right to be present at each stage of the trial; and 2) the errors were not harmless, as the court could not say with fair assurance that the judgment was not substantially swayed by the errors.

[12/22] Rivers v. Wachovia Corporation
In an appeal from a judgment of the district court dismissing plaintiff's personal claim for corporate stock losses suffered, judgment is affirmed where plaintiff's complaint stated a claim derivative of injury to the corporation and is therefore barred from a direct or individual cause of action against the defendants.

[12/20] Assured Guaranty (UK) Ltd. v. J.P. Morgan Investment Management Inc.
In an appeal from a judgment of the appellate division reversing the trial court's dismissal of plaintiff's third-party beneficiary complaint for alleged mismanagement of an investment portfolio, judgment is affirmed because the Martin Act does not preempt plaintiff's common-law causes of action for breach of fiduciary duty and gross negligence.

[12/20] Roni LLC v. Arfa
In an appeal from a judgment of the appellate division affirming a denial of defendant's CPLR 3211 motion to dismiss of plaintiffs' causes of action breach of fiduciary duty and constructive fraud in several real estate investment transactions, judgment is affirmed because complaint adequately pleads a fiduciary relationship, and where plaintiffs sufficiently alleged damages by asserting that they suffered actual pecuniary loss in the amount of non-disclosed commissions that inflated the purchase prices of their investments such that their constructive fraud claim survives.

[12/19] US v. Ferguson
Judgments of conviction of insurance company executives for conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission are vacated and cases are remanded for a new trial where the district court abused its discretion by admitting prejudicial stock-price data to prove the materiality of misstatements to a reasonable investor.

[12/02] Strategic Diversity, Inc. v. Alchemix Corp.
In an appeal from an order of the district court dismissing plaintiff's Section 10(b) complaint on summary judgment, order is: 1) affirmed where plaintiff failed to carry its prima facie burden because a plaintiff suing under section 10(b) for rescission must demonstrate economic loss and must also demonstrate that the misrepresentation or fraudulent conduct caused the loss; but 2) reversed where plaintiff could be entitled to relief of a rescissionary measure of damages basis.

[11/23] Sacks v. Dietrich
In an appeal from the dismissal of plaintiff's claims against two arbitrators who disqualified him from representing a client, judgment is affirmed where the claims were barred by arbitral immunity.

[11/08] Connecticut Retirement Plans and Trust Funds v. Amgen, Inc.
In an appeal from a judgment of the district court granting class-certification in a 10b-5 securities fraud action, judgment is affirmed where the correctly refused to consider defendant's truth-on-the-market defense at the class certification stage because in order to invoke the fraud-on-the-market presumption, plaintiff must merely show that the security in question was traded in an efficient market, and that the alleged misrepresentations were public, but need not, at the class-certification stage, prove materiality.

[11/07] Roberts v. McAfee, Inc.
In an appeal from a judgment of the district court granting in part defendant's anti-SLAPP motion in an action alleging defamation and maliciously prosecution to deflect attention from defendant's large-scale backdating of stock options, judgment is: 1) reversed in part because plaintiff failed to demonstrate the requisite degree of merit to survive defendant's motion where defendant had probable cause to believe that plaintiff was guilty of a crime; and 2) affirmed in part because plaintiff's claims for defamation and false light invasion of privacy are time-barred.

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Workers' Comp

[01/11] Pacific Operators Offshore, LLP v. Valladolid
In an appeal from a judgment of the appeals court vacating an administrative dismissal of respondent's Outer Continental Shelf Lands Act (OCSLA) claim for benefits as a surviving spouse, judgment is affirmed where a claimant seeking benefits under the OCSLA must establish a substantial nexus between the injury and extractive operations on the shelf.

[12/13] In the Matter of Elrac, Inc. v. Exum
In an appeal from a judgment of the appellate division permitting arbitration of a claim by plaintiff-employee for uninsured motorist benefits, judgment is affirmed because a self-insured employer whose employee is involved in an automobile accident may be liable to that employee for uninsured motorist benefits, notwithstanding the exclusivity provision of the Workers' Compensation Law.

[10/31] County of Kern v. Workers' Comp. Appeals Bd
In an appeal from a judgment of the trial court affirming an administrative decision in a claim for worker's compensation, judgment is affirmed where a volunteer firefighter with a local nonprofit firefighting organization was a county employee for purposes of workers' compensation coverage under Labor Code section 3361.1.

[09/13] Motheral v. Workers' Compensation Appeals Board
In a petition for review of a judgment of the defendant-Board denying reconsideration of an administrative decision calculating petitioner's disability benefits based solely on his full-time employment at minimum wage, Lab. Code section 4653, judgment is reversed where section 4454 mandates the inclusion of the market value of petitioner's living quarters, utilities, and car allowance.

[08/11] Baker v. Workers' Compensation Appeals Bd.
In dispute involving the proper calculation of cost of living adjustments under Labor Code section 4659(c), judgment of the appeals court is reversed where through the operative language of Section 4659(c), the Legislature intended that such adjustments be calculated and applied prospectively commencing on the January 1 following the date on which the injured worker first becomes entitled to receive, and actually begins receiving, such benefit payments.

[04/20] Edward Carey Const. v. State Comp. Ins. Fund
In an action for breach of contract and the implied covenant of good faith and fair dealing after denial of workers compensation benefits by defendant, summary judgment in favor of defendant is reversed because causes of action claimed by plaintiff are not barred by workers compensation exclusivity.

[04/18] U.S. Fidelity v. Lee Investments
In diversity action by plaintiff-insurance company seeking rescission of a workers compensation policy, judgment of the district court denying motion to dismiss is affirmed because court had subject matter jurisdiction where exclusive jurisdiction was not vested by state law in a compensation agency.

[04/11] Robidoux v. Muholland
In an injury and tort action arising from injuries plaintiff suffered while working at a construction site in Rhode Island, summary judgment in favor of defendant is reversed where Massachusetts Workers Compensation Act applies and does not bar claims.

[03/31] California Shock Trauma Air Rescue v. State Compensation Ins. Fund
In an dispute arising from several state-law claims and involving the issue of whether the expectation of a federal defense, without more, is sufficient to establish federal jurisdiction over state-law claims, dismissal by district court for lack of subject matter jurisdiction is affirmed where causes of action are based entirely on state claims, each of which does not, on its face, turn on a federal issue.

[03/17] Brown v. Desert Christian Center
In a tort and injury action arising out of injuries suffered by plaintiff while doing work at a worksite owned by defendant, denial of award of cost to defendant on the grounds that the court lacked subject matter jurisdiction over action, Labor Code section 3706, is reversed where nothing in the wording of CCP section 1032 limits entitlement to award based on the means by which a party prevails.

[02/24] Angelotti v. The Walt Disney Co.
In a tort action alleging that defendant was liable to plaintiff for injuries suffered while rehearsing a stunt for a film, grant summary judgment in favor of defendant is affirmed where plaintiff was held to be a special employee and thus precluded from recovery under the workers' compensation exclusivity rule since he was hired through a loan-out company.

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