Results matching “stoneridge”

GAO on Stoneridge and secondary liability - PointOfLaw Forum

There was some fear that a Dodd-Frank-required GAO report on Stoneridge and secondary liability would be a Trojan horse for Congress to justify a broad expansion of liability for the benefit of lawyers at the expense of the economy, but the report turned out to be a nothing-burger of the "On the one hand, on the other hand" variety.

Around the web, December 28 - PointOfLaw Forum

  • Ten most significant class action decisions of the year. [Trask]
  • And another one to come: Janus Capital v. 1st Derivative Traders is a replay of Stoneridge. [WSJ ($); SCOTUSblog argument recap; briefing and transcript]
  • The partisan crocodile tears and misleading ethics charges of the Constitutional Accountability Center. [Adler @ Volokh]
  • Trial lawyers in BP case strike back at Ken Feinberg; meanwhile, the Gulf doesn't seem to have suffered long-term damage. [WSJ Law Blog; Weekly Standard via Kir]
  • I imagine it's bad luck when your toxic tort case has Daubert problems and your plaintiff is named "Junk." [Wajert; Junk v. Terminix (8th Cir.)]
  • [Cass] "Sunstein's own mental constitution is one of many minds." [Claremont Institute]
  • Device lag at the FDA—and manufacturers afraid to say anything about it. MR
  • Obama's immigration strategy is in conflict with his anti-inequality strategy. [Kaus]

From Reuters, "(Reuters) - Senators on Wednesday beat back a House measure giving shareholders the power to sue third parties such as banks and accountants not directly involved in securities fraud."

Sen. Chris Dodd (D-CT) instead won support for a GAO study of securities fraud and the effects of the Stoneridge v. Scientific Atlanta ruling. See also Dow-Jones, earlier POL post.

The House-Senate conference committee has been meeting on H.R. 4173, the financial reform bill, and among the points of negotiation is whether the bill should expand the grounds for private civil actions for aiding and abetting in securities fraud -- i.e., overturning the U.S. Supreme Court decision in Stoneridge Investment Partners v. Scientific Atlanta.

Rep. Maxine Waters (D-CA) is offering the amendment on the behalf of the House conferees, even thought the version of the bill that passed the House didn't have the Stoneridge language in it. And neither did the Senate! When the Senate was debating the bill, Sen. Arlen Specter (D-PA) urged the cosponsors to come to floor to support him in his amendment, but no one did. (Specter had sponsored a stand-alone bill, S. 1551, to reverse Stoneridge, as well.)

It's shoddy lawmaking to try to add extraneous amendments via a conference committee without the provision having passed one of the two chambers first. It happens, but it's arrogant and invites disregard for Congress.

My employers, the National Association of Manufacturers, strongly supports the U.S. Supreme Court's 2008 Stoneridge decision, which protects manufacturers from unfairly being held liable in securities litigation solely because they might have deeper pockets than the company that engaged in securities fraud.

Around the web, May 19 - PointOfLaw Forum

  • Though, alas, I don't think his opposition to Stoneridge and Iqbal was what did it, Senator Arlen Specter lost his primary last night. We'll miss Victor Schwartz's impersonations. One hopes that Specter doesn't respond to his lame-duck status with even more efforts on behalf of spiteful and destructive pro-trial-lawyer legislation.
  • New issue briefing page on corporate criminalization. [Searle Institute]
  • Alex Tabarrok refutes Paul Krugman on the legal implications of the BP oil spill. [Marginal Revolution; also, Olson @ Cato]
  • WSJ on the odd en banc blow-up in Comer v. Murphy Oil. [WSJ]
  • WaPo editorializes in favor of preemption in consumer financial protection. [Elsewhere in WaPo]
  • Dentists lose implausible case against insurers at early stage, thanks to Twombly/Iqbal. [NLJ; American Dental Association v. Cigna (11th Cir.)]
  • Bad Ninth Circuit ruling on vouchers before Supreme Court. [Will @ WaPo; Heartland; Winn v. Arizona Christian School Tuition Organization]
  • Heads I win, tails is a do-over: Obama's aunt, Zeituni Onyango, wins asylum on the third try after living illegally on taxpayers' expense for nearly a decade and disregarding a deportation order. Because who could be in more danger of political persecution in her home country than the relative of a wildly popular political figure? This really should be a much bigger scandal: the immigration court decision is inexplicable. NY Times coverage forgets to mention she overstayed her visa. [NYT; Derbyshire @ Corner]

Specter proposes overturning Stoneridge - PointOfLaw Forum

Senator Specter, apparently concerned that Senator Dodd's financial bill wasn't bad enough, has proposed an amendment to reverse the Supreme Court's decision in Stoneridge v. Scientific Atlanta (via BLT). I discussed the perverse results of such a legal rule in the Wall Street Journal in 2007.

My last post showed some of the major legislative efforts that trial lawyers have successfully pushed through Congress in the last 2 years. But as Carter's post last month on the trial lawyers' legislative "agenda" shows, they're hardly slowing down. Trial Lawyers, Inc.: K Street focuses on five of the most significant efforts currently underway to increase the litigation industry's profits: loosening pleading standards, expanding securities litigation, rolling back federal preemption, limiting private arbitration, and cutting taxes on plaintiffs' litigation.

  • Pleading standards. Point of Law readers are already familiar with the Supreme Court's recent decisions to limit the outer boundary of notice pleadings in Ashcroft v. Iqbal (2008) and Bell Atlantic v. Twombly (2006) (see postings for each, here and here, respectively), as well as the Congressional effort to reverse the two decisions. What's most important to keep in mind about the legislation purportedly designed to overturn Twombly and Iqbal (S. 1505, H.R. 4115) is that it would do far more; as the K Street report notes, it "would likely interfere with statutory pleading requirements well beyond the scope of the Court's recent decisions." (See also Michael Dorf's comments here; Gregory Garre's testimony here).
  • Securities litigation. In another bill designed to overturn a Supreme Court decision, Arlen Specter's Liability for Aiding and Abetting Securities Violations Act (S. 1551) would undo the Supreme Court's 2007 decision in Stoneridge v. Scientific-Atlanta. In Stoneridge, as our readers will recall, the Supreme Court considered a class action lawsuit filed by a cable company's shareholders against other companies that had done business with their own and thus, the shareholders alleged, "aided and abetted" the company's accounting frauds. Finding no evidence of Congressional intent to authorize third-party securities through private rights of action, the Court determined that to do so would "expose a new class of defendants," raise "the costs of doing business," deter "[o]verseas firms . . . from doing business here," "raise the cost of being a publicly traded company under our law," and "shift securities offerings away from domestic capital markets." Senator Specter's bill would do just that.
  • Federal preemption. A fourth Supreme Court decision in the trial-lawyer lobby's crosshairs is Riegel v Medtronic (2008), in which the Court, by a vote of 8 to 1, determined that the 1976 Medical Devices Amendments to the Food, Drug & Cosmetic Act expressly preempted state tort lawsuits for Class III medical devices that had gone through the FDA's extensive premarket approval process. (For an extensive discussion of the preemption issues in this and related cases, see this report that I authored with my Manhattan Institute colleage Paul Howard last spring.) As the K Street report notes, the proposed legislation (H.R. 1346, S. 540) would "permit suits to proceed that stem from injuries that originated long before the law's effective date, if otherwise valid under state law."
  • Private arbitration. As I noted in my last post, discussing the Franken amendment, the trial lawyers are doing their best to push federal legislation that broadly bars private arbitration agreements in hosts of contexts. Pro-litigation legislators have introduced bills that would limit or eliminate arbitration clauses in nursing home agreements (The Fairness in Nursing Home Arbitration Act, H.R. 1237, S. 512), for mortgage loans or home-equity lines of credit (The Mortgage Reform and Anti-Predatory Lending Act, H.R. 1728), for payday loans (The Payday Loan Reform Act, H.R. 1214), for tax-refund loans (The Taxpayer Abuse Prevention Act, S. 585), in consumer contracts (The Consumer Fairness Act, H.R. 991), and in all employer, franchise, and consumer contracts (The Arbitration Fairness Act, H.R. 1020, S. 931).

  • Contingent-litigation taxation. Finally, Senator Specter has also introduced a bill (S. 437) that would give contingent-fee lawyers a $1.6 billion tax break. Traditional prohibitions against champerty and maintenance precluded what today is commonplace -- trial lawyers fronting their clients' expenses. As the K Street report explains, "the personal-injury bar's financing structure -- the 'contingent fee,' the share of the proceeds that a winning client pays his attorney, who has fronted the cost of the litigation -- runs afoul of the historical understanding of champerty. Therefore, expenses in contingent-fee cases have been treated by courts not as support of litigation per se but rather as loans to clients, to be repaid upon a winning lawsuit's resolution." Senator Specter's legislation would, for federal taxation purposes, change the status of contingent-fee litigation costs from loans to expenses -- thus allowing plaintiffs' lawyers working on contingency an immediate deduction of all costs against their taxes. Specter argues, in essence, that lawyers should be treated no different than any other business (a telling statement on the evolution of the legal "profession" into an industry). However one views this question as a theoretical matter, there's no question that Specter's legislation would pour lots of new money into the trial bar's coffers -- and lots of new lawsuits onto judges' dockets.

Those keeping count will note that the above legislation includes efforts to overturn four different Supreme Court decisions (Iqbal, Twombly, Stoneridge, and Riegel). A fifth piece of legislation (H.R. 1478), mentioned only briefly in the K Street report, would overturn a 60-year-old Supreme Court decision, Feres v. United States, 340 U.S. 135 (1950) (holding that the United States is immune from liability suits by active duty personnel under sovereign immunity principles). And of course, two of the recent bills already signed into law also reversed recent Supreme Court decisions (The Lilly Ledbetter Act, overturning Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007); and the Fraud Enforcement and Recovery Act, overturning Allison Engine Co. v. United States, 128 S. Ct. 2123 (2008)).

Back to aiding and abetting liability? - PointOfLaw Forum

John Steele at Legal Ethics Forum pulls together links commenting on the possibility that Congress will overturn the landmark securities-law Stoneridge decision.

Around the web, November 14 - PointOfLaw Forum

Specter's bill to overturn Stoneridge - PointOfLaw Forum

Kevin LaCroix on "Why It Could Pass and Why It Matters". (More: Ribstein). He's also got some comments on the horrible Specter bill to overturn the Iqbal/Twombly line of decisions strengthening the pleadings stage of litigation, on which more from Tony Mauro at the NLJ.

On the Hill this week, hearings on arbitration, Stoneridge - PointOfLaw Forum

Several hearings of note on Capital Hill this week.

  • Thursday, September 15, Senate Judiciary Committee, Subcommittee on Crime and Drugs, "Evaluating S. 1551: The Liability for Aiding and Abetting Securities Violations Act of 2009." S. 1551 is Sen. Arlen Specter's bill to amend the SEC Act of 1934 subject to liability in a private civil action any person that knowingly or recklessly provides substantial assistance to another person (aids and abets) in violation of that act. The Senator's goal is to restore the ability to sue third parties in securities fraud lawsuits as freely as you could before the U.S. Supreme Court's ruling in Stoneridge v. Scientific Atlanta (Supreme Court docket). Scheduled witnesses are John C. Coffee, Columbia University School of Law; Patrick J Szymanski, General Counsel, Change to Win (a group of labor unions); Tanya Solov, Director, Illinois Securities Department, of behalf of the North American Securities Administrators Association; Robert J. Giuffra, Jr., a partner in Sullivan & Cromwell LLP, NYC; and Adam C. Pritchard, University of Michigan Law School.

Around the web, September 11 - PointOfLaw Forum

WSJ editorial page vs. Arlen Specter - PointOfLaw Forum

They go after him on Stoneridge and the tax break on client expenses, but seem to have overlooked the one that's truly ghastly, his bill to overturn the Supreme Court on Twombly/Iqbal pleading.

Specter introduces bill to overturn Stoneridge - PointOfLaw Forum

It looks as if shedding his nominal Republican affiliation may be allowing the true, Shanin's-dad Specter to emerge. His latest effort would open up a right to sue accountants, investment banks and others for "aiding and abetting" fraud. Lisa Rickard at the U.S. Chamber reacts. More: Bainbridge; Adler @ Volokh; Alison Frankel, AmLaw Daily (Specter "has apparently decided that the interests of the people of Pennsylvania are very closely aligned with those of the plaintiffs bar").

Oregon's distinctive securities law - PointOfLaw Forum

It's more plaintiff-friendly than prevails elsewhere, which investor lawyers hope will let them get around the Supreme Court's Stoneridge precedent in an aiding-and-abetting case against major law firms over the financial woes of Sunwest, a developer of assisted living centers.

Push by plaintiff's securities bar in new Congress? - PointOfLaw Forum

Lyle Roberts of 10b-5 Daily (Dec. 12) passes along reports that the plaintiff's securities bar may be helping to draft legislation for the new Congress to overturn two key Supreme Court decisions of recent years, Central Bank and Stoneridge, which respectively limited "aiding and abetting" and "secondary actor" liability.

End run around fraud-on-the-market actions, cont'd - PointOfLaw Forum

In an interview with Securities Docket, Michigan lawprof Adam Pritchard sketches out more details about his idea, which has been causing buzz in recent weeks, for corporations to contract around the liberal Basic v. Levinson doctrine on shareholder lawsuits (via Beck & Herrmann; text of proposal, Prof. Pritchard's paper on the subject in Cato Supreme Court Review).

The Senate Judiciary Committee has begun its hearing, "Courting Big Business: The Supreme Court's Recent Decisions on Corporate Misconduct and Laws Regulating Corporations." So far, only Chairman Leahy's statement is online, and it embraces the expected criticisms on cases such as Ledbetter, Stoneridge and especially Exxon Valdez. He also lays into the court for "blind devotion to corporation arbitration schemes." Leahy's statement also includes a political narrative:

The Supreme Court has demonstrated its increasing willingness to overturn juries who received the factual evidence and weighed the arguments. Nothing is more fundamental to the American justice system than our trust in the wisdom and judgment of ordinary Americans who serve on juries.

UPDATE: The prepared testimony is now available. Osa M. Schultz provides the perspective of a very angry Alaskan harmed by the Exxon Valdez spills, and she wants high punitive damages. Patricia Ann Millett, a former attorney in the Office of Solicitor General, gives a dispassionate assessment of the Court's opinions and judicial alliances on preemption, arbitration, employment cases and punitive damages.

The target to come under the heaviest fire today was mandatory pre-dispute arbitration, as Harvard Law Professor Elizabeth Bartholet condemned its transformation into a mechanism biased toward corporate interests. In her lengthy prepared testimony, Bartholet cites her experience as an arbitrator dealing with consumer credit card cases for the National Arbitration Forum.

Judging by the witnesses, testimony and his opening remarks, Chairman Leahy regarded today's hearing as especially useful in building the Congressional case against arbitration. The legislation with the most prospects is S. 2838, attacking arbitration in nursing home contracts; the House version, H.R. 6126, is moving quicker, though, having been reported out of the subcommittee last week.

MORE: RTTNews carries a straightforward account of the hearing here. Mayer Brown had a legislative update last week on the anti-arbitration bills moving through Congress, focusing on the effects on international arbitration.

End of the term wrap-ups - PointOfLaw Forum

The week ended with the usual wrap-up stories about the just-completed term for the U.S. Supreme Court. Dow Jones especially had a good review: "Supreme Court Term Is Mixed For Business, But Wins Were Big": "The U.S. Supreme Court handed the business sector a mix of wins and losses in the 2007-2008 term ending Friday, but when business did win, it won big." The opinions Dow-Jones highlights are Stoneridge, Riegel v. Medtronic and the Exxon Valdez case. More...

Meanwhile, Akin Gump Strauss Hauer & Feld LLP and issued their annual end-of-term statistical summary of the U.S. Supreme Court's decisions. A few highlights:
  • The Justices issued 67 merits opinions after argument this term, the lowest number since the 1953-54 Term
  • The Justices decided 71 cases in total this term, the lowest number of decisions in recent memory.
  • Five-to-four rulings represented 17 percent of the term's opinions; last year's percentage was 33 percent.

Via Roberts and Black, Vanderbilt's Amanda Rose has an interesting working paper on SSRN arguing for an intermediate reform of Rule 10b-5 by requiring private class actions to have the imprimatur of the SEC.

Interesting, but, in my mind, ultimately unpersuasive. First, the best arguments Rose makes in support of her proposal are even better arguments for abolishing (or, at least, permitting publicly-traded corporations to have shareholder votes to amend by-laws to opt out from) private 10b-5 actions, the natural conclusion of her analysis, which she shies away from on the grounds that it is "politically infeasible." Second, adding an additional bureaucratic layer to the 10b-5 process would only reduce social costs if the SEC exercises its veto power frequently: if the SEC rubber-stamps the vast majority of class actions, all that will be accomplished is adding an expensive layer of litigation, perhaps more if the SEC's decision is reviewable. Third, the SEC will be diverting resources away from public enforcement to oversight of private enforcement. Fourth, and perhaps most importantly, it is hard to imagine that the SEC would be an efficient gatekeeper: giving the SEC veto power over the billions of dollars earned by the powerful lobby of the securities plaintiffs' bar would only serve to politicize the SEC further. Witness the Congressional pressure (coordinated in large part by Bill Lerach and the trial bar) put on the SEC to intervene on the wrong side in Stoneridge, and multiply that by every class action filed in a given year when the SEC is a mandatory, rather than occasional, intervenor. Such politicization may compromise the SEC's role in other regulatory activity moreso than it already is.

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