Legal News

Case Summaries

Securities Law

[03/10] Citigroup Global Markets, Inc. v. VCG Special Opportunities Master Fund Ltd.
In an appeal from a district court's order granting plaintiff's motion for a preliminary injunction and enjoining defendant from proceeding with an arbitration initiated against plaintiff before the Financial Industry Regulatory Authority, the order is affirmed where the "serious questions" standard for assessing a movant's likelihood of success on the merits remains valid in the wake of recent Supreme Court cases, and neither the district court's assessment of the facts nor its application of the law supported a finding of abuse of discretion.

[03/09] In re: Omnicom Group, Inc. Secs. Litig.
In a securities class action alleging that defendants fraudulently accounted for a transaction, summary judgment for defendants is affirmed where: 1) plaintiffs failed to prove loss causation because their expert's testimony did not suffice to draw the requisite causal connection between the information in the article at issue and the fraud alleged in the complaint; and 2) the generalized investor reaction of concern causing a temporary share price decline was far too tenuously connected -- indeed, by a metaphoric thread -- to the transaction to support liability.

[03/02] Ma v. Merrill Lynch, Pierce, Fenner & Smith, Inc.
In an action against Merrill Lynch based on unauthorized transfers from plaintiff's investment account, summary judgment for defendant is affirmed where New York U.C.C. Section 4-A-505, which imposes a one-year statute of repose on certain claims based on electronic funds transfers, bars plaintiffs' common law claims, which had longer limitations periods.

[02/26] D&J Tire Inc. v. Hercules Tire & Rubber Co.
In an action by a minority shareholder for breach of fiduciary duty arising out of defendant-executive's failure to disclose that defendant corporation was in talks to be acquired when the executive served as a mandatary on plaintiff's behalf to redeem his shares, summary judgment for defendant is vacated where: 1) because Louisiana's prescription statute did not bar plaintiff's rescission claim, the district court needs to determine whether plaintiff could prove that defendant's directors failed to disclose a material fact; 2) because defendant's directors were acting in their official capacity when redeeming plaintiff's stock, Connecticut courts would impose a fiduciary duty to disclose material facts in this situation; and 3) there was no reason, under Louisiana law, to apply another prescriptive period merely because defendant was also CFO of the corporation when the claim was based on his duties as mandatary.

[02/23] US v. Brown
Former Chief Legal Counsel for Rite Aid's conviction and sentence for conspiracy to commit accounting fraud, filing false statements with the SEC, and other related crimes, is affirmed in part, reversed in part and remanded where: 1) district court did not abuse its discretion in denying defendant's Rule 33 motion based on newly discovered evidence; 2) defendant's pre-trial suppression motion of the taped conversations was properly denied; 3) district court did not abuse its discretion in its reaction to defendant's plea agreement; and 4) defendant's sentence is vacated and remanded as the district court failed to explain, in the manner now required under Booker, how it considered the section 3553(a) factors in imposing the sentence.

[02/22] Bixler v. Foster
In an action by minority shareholders of a corporation against its directors and lawyers, alleging that defendants violated the civil Racketeer Influenced and Corrupt Organizations Act (RICO), when they arranged to transfer the company's assets to an Australian corporation, dismissal of the complaint is affirmed where: 1) plaintiffs lacked standing under RICO to assert shareholder derivative claims; 2) allegations of securities fraud did not establish predicate acts under RICO; and 3) the "continuity" requirement of RICO was not satisfied by the allegations in the complaint.

[02/22] Raymond James Fin. Servs. Inc. v. Bishop
A decision vacating an arbitration panel's award of compensatory damages in favor of three financial advisors arising from their claims of wrongful discharge, pursuant to the rules of the National Association of Securities Dealers (NASD), is affirmed where: 1) the district court did not abuse its discretion in remanding the award to the arbitration panel for clarification of the bases of the award; 2) the arbitration panel committed no mere error of law, rather, by rendering an award whose underlying legal basis exceeded the bounds of arbitrable employment-related disputes cognizable under NASD Rule 10101 as interpreted in Zandford v. Prudential-Bache Secs., Inc., 112 F.3d 723 (4th Cir. 1997), the panel exceeded its powers under 9 U.S.C. section 10(a)(4).

[02/19] Law Debenture Trust Co. of N.Y. v. Maverick Tube Corp.
In an action for breach of contract, unjust enrichment, and tortious interference with contract based on defendant's refusal to allow certain of its noteholders to convert their notes to cash and stock following the acquisition of defendant, dismissal of the complaint is affirmed where, under the express terms of the indenture agreement, the acquirer was not a "Public Acquirer" because its securities that were traded on the New York Stock Exchange were not its ordinary shares.

[02/17] Gebhart v. SEC
In a petition for review of the SEC's order sustaining a National Association of Securities Dealers disciplinary sanction against petitioners-securities salespersons for making false statements to clients in connection with the sale of promissory notes used to finance the conversion of mobile home parks to resident ownership, the petition is denied where the SEC considered all of the evidence bearing on petitioners' actual state of mind, including their extreme departure from ordinary standards of care, and found that they were consciously aware of the risk that their statements were false.

[02/16] Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC
In a securities fraud action alleging that defendant negotiated a contract for transfer agent services that saddled plaintiffs with excessive, misleadingly disclosed fees, dismissal of the complaint is affirmed in part where plaintiff could not seek damages that inured to its own benefit and not to the funds' benefit under the Investment Company Act. However, the order is vacated in part where: 1) defendants' disclosures concerning the transfer fee arrangements were inadequate and would be material to the average investor; and 2) defendants' misrepresentations proximately resulted in the regular deduction of identifiable amounts that would not have been deducted had defendants conformed their conduct to what the law required.

[02/12] Archdiocese of Milwaukee Supporting Fund, Inc. v. Halliburton Co.
In a securities fraud class action, the district court's denial of class certification is affirmed where, following review of the alleged misrepresentations and corrective disclosures at issue, the circuit court concluded plaintiff failed to meet the court's requirements for proving loss causation at the class certification stage.

[02/12] US v. Lewis
Defendants' convictions and sentences for securities and wire fraud are affirmed in part where: 1) there was sufficient evidence of guilt on a challenged wire fraud count even though the victim did not testify; 2) defendant failed to overcome the presumption of reasonableness of his within-guidelines 330-year sentence; 3) neither defendant pointed to the admission at trial of any inadmissible hearsay; 4) an indictment need not charge aiding and abetting in addition to the substantive offense; and 5) defendant was not entitled to a Franks hearing because he did not allege that an affiant in support of a search warrant lied in the affidavit. However, one defendant's conviction is reversed in part where the government conceded that it had no evidence that defendant knew that his agent's sales pitch was fraudulent, and it failed to point to any evidence supporting the theory that defendant caused the agent to make any of her false statements.

[02/10] Marathon A.G. Holding Ltd. v. CMS Enters. Co.
In an action for breach of contract based on defendant's refusal to indemnify plaintiff for its payments to the Republic of Equatorial Guinea in settlement of tax audits, summary judgment for defendant is affirmed where: 1) the plain language of the parties' agreement, informed by the parties' prior negotiations and the usage evidence, clearly established that defendant was required to indemnify plaintiff only for taxes paid for income that was earned before January 1, 2002; and 2) plaintiff's separate claim for indemnification for payment of withholding taxes was time-barred.

[02/09] Schultz v. US
In an appeal from the district court's denial of appellant's motion to intervene as of right in a securities fraud action, the order is affirmed where appellant was improperly attempting to enforce a restitution order in a parallel criminal action in a manner outside the scope of 18 U.S.C. section 3664(m)(1)(B).

[09/15] A.W. Fin. Servs., S.A. v. Empires Res., Inc.
In response to four certified questions from a district court relating to Delaware's Escheat Statute, the Supreme Court of Delaware finds: 1) the new definition of "period of dormancy" for stocks in 12 Del. C. section 1198(9) does not apply retroactively in civil actions involving stocks that were escheated prior to June 30, 2008; 2) common law or statutory causes of actions against parties that are involved in an escheat transaction (other than the State of Delaware) are not superseded by the Escheat Statute. Causes of action for negligence, conversion, and "failure to register" might be available if adequately pleaded, but the court is unable to opine on the question of whether a claim for breach of fiduciary duty or "some other cause of action" is viable against defendants; 3) only the immunity granted by 12 Del. C. section 1203(b) applies in this case involving escheatment of stock; and 4) "Good faith" under 12 Del. C. section 1203(b) is an affirmative defense, the substantive elements of which must be pleaded and proved by the defendant that claims immunity.

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Criminal Law & Procedure

[03/10] US v. Fisher
Defendant's firearm possession conviction is affirmed where police had probable cause to detain defendant because they were responding to a 911 call late at night, in a high crime area, with every reason to suspect gunplay, and the only vehicle at the scene looked as if it was about to depart.

[03/10] Valdovinos v. McGrath
In a murder prosecution, a denial of petitioner's habeas petition is reversed in part where a reasonable probability existed that the undisclosed Brady material, which included evidence of prior photo lineups, the drugs and gun found in a government witness's possession, and the favorable treatment the witness received for his testimony, could have altered the result of the trial.

[03/10] Clos v. Corrections Corp. of Am.
In an action by a prisoner claiming that he suffered disability discrimination related to his severe hearing loss, plaintiff's appeal from partial summary judgment for defendants is dismissed where the district court's conclusory order provided no basis for a finding that plaintiff would face hardship or injustice by waiting to appeal until his remaining claim against defendants was fully resolved.

[03/10] US v. Wilder
Defendants' drug conspiracy convictions and sentences are affirmed where: 1) the district court did not err in excluding a document as hearsay because a witness was unable to verify that the proffered document was a public record created by the police department; 2) the government established that defendant knowingly and intentionally joined an agreement to distribute controlled substances; 3) the court was not convinced that the trial record presented an obvious case of a defendant with no predisposition to distribute crack cocaine, such that the district court plainly erred by failing to instruct the jury on entrapment; and 4) the district court explained that it had considered all of the 18 U.S.C. section 3553(a) factors, including the nature and circumstances of the offense and defendant's history and characteristics.

[03/10] People v. Arias
Conviction of defendant for first-degree murder and jury's finding, inter alia, that the murder was committed to benefit a criminal street gang, is affirmed for the most part except that the findings as to two attempted murder convictions that the attempted murders were willful, deliberate and premeditated are reversed.

[03/10] US v. Oglesby
In a prosecution for being a felon in possession of a firearm, district court's denial of defendant's motion to suppress is affirmed as, based on the factors on the record and the totality of the circumstances, the officer clearly had articulable facts upon which he could reasonably suspect that defendant was armed or dangerous. Moreover, the pat-down search was extremely limited in scope as the officer's pat-down frisk of defendant was isolated to the right side of his waistband area.

[03/10] US v. Almany
In a prosecution of defendant for drug and firearm related offenses, the case is remanded for resentencing where: 1) the district court committed plain error by failing to probe defendant's understanding of the appellate waiver provision of his plea agreement, and therefore, the waiver is unenforceable against the defendant; and 2) the district court erred by sentencing defendant to both a five-year mandatory minimum sentence under the firearm statute and a ten-year mandatory minimum sentence under the drug statute.

[03/10] Cameron v. N.Y.
In an action for false arrest and malicious prosecution, judgment for defendant-officers is reversed where: 1) prosecutors' opinions as to probable cause and complaining officers' credibility are irrelevant in virtually all cases involving claims of malicious prosecution; and 2) the introduction of such evidence was not harmless because it provided strong external validation for propositions that otherwise would have come in only from the defendants' mouths.

[03/10] US v. Gardner
Defendants' drug and firearm possession convictions are affirmed where, when a defendant acquires a firearm using drugs as payment, he possesses the firearm in furtherance of a drug trafficking crime in violation of 18 U.S.C. section 924(c)(1)(A).

[03/10] US v. Ternus
Defendant's conviction for conspiracy to transport in foreign commerce stolen goods valued at $5,000 or more, knowing the goods to have been stolen, is affirmed where: 1) defendant's guilty plea waived all non-jurisdictional defects in the proceedings against him; and 2) the district court was not required to define "foreign commerce" in order to adequately explain the nature of the charges against him.

[03/09] US v. York
Defendant's conviction and sentence for arson and carrying a destructive device are affirmed where: 1) there was sufficient evidence that the fire at issue was intentionally set; 2) the district court did not abuse its discretion by denying defendant's motion for a mistrial, because defendant failed to show that he was prejudiced by a jury note requesting to hear again defendant's confession; and 3) evidence that defendant had harmed his girlfriend went to issues other than defendant's character because it explained that she withheld information from the police due to her fear of defendant's threats.

[03/09] US v. Banegas
Defendant's drug conspiracy conviction is reversed where the trial court failed to state particularized reasons for requiring defendant to be shackled while defending himself pro se.

[03/09] Zia Trust Co. v. Montoya
In an action for excessive force brought by family members of a man defendant-officer shot and killed while responding to a domestic disturbance, denial of summary judgment based on qualified immunity is affirmed where the court could not say that a van fifteen feet away, which according to the plaintiffs was clearly stuck on a pile of rocks, gave defendant probable cause to believe that there was a threat of serious physical harm to himself or others that would justify his use of force.

[03/09] US v. Wise
Defendant's firearm possession sentence is affirmed where: 1) defendant's prior conviction under Utah law for failure to stop at the command of a police officer was a "crime of violence" under the Sentencing Guidelines; and 2) the district court erred in not assigning criminal history points for one of defendant's prior convictions, but that error did not invalidate defendant's sentence.

[03/09] In re Victor L.
In a conviction of a minor for possession of specified illegal weapons, juvenile court's order placing the defendant on probation with various conditions is affirmed for the most part with the exception of: 1) the restrictions on defendant's right to associate with individuals disapproved of by his probation officer or his parents is unconstitutionally vague and will be modified to include a personal knowledge requirement; 2) restrictions on defendant's presence "where dangerous or deadly weapons or firearms or ammunitions exist" is unconstitutional as due process requires that the probationer be informed in advance whether his conduct comports with or violates a condition of probation; and 3) to the extent the second Internet condition prohibits any "use of" or "access to" an Internet-enabled computer, it conflicts with the other two conditions, thereby making the combination of conditions unconstitutionally vague.

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Sentencing

[03/10] US v. Wilder
Defendants' drug conspiracy convictions and sentences are affirmed where: 1) the district court did not err in excluding a document as hearsay because a witness was unable to verify that the proffered document was a public record created by the police department; 2) the government established that defendant knowingly and intentionally joined an agreement to distribute controlled substances; 3) the court was not convinced that the trial record presented an obvious case of a defendant with no predisposition to distribute crack cocaine, such that the district court plainly erred by failing to instruct the jury on entrapment; and 4) the district court explained that it had considered all of the 18 U.S.C. section 3553(a) factors, including the nature and circumstances of the offense and defendant's history and characteristics.

[03/10] US v. Almany
In a prosecution of defendant for drug and firearm related offenses, the case is remanded for resentencing where: 1) the district court committed plain error by failing to probe defendant's understanding of the appellate waiver provision of his plea agreement, and therefore, the waiver is unenforceable against the defendant; and 2) the district court erred by sentencing defendant to both a five-year mandatory minimum sentence under the firearm statute and a ten-year mandatory minimum sentence under the drug statute.

[03/09] US v. Wise
Defendant's firearm possession sentence is affirmed where: 1) defendant's prior conviction under Utah law for failure to stop at the command of a police officer was a "crime of violence" under the Sentencing Guidelines; and 2) the district court erred in not assigning criminal history points for one of defendant's prior convictions, but that error did not invalidate defendant's sentence.

[03/09] In re Victor L.
In a conviction of a minor for possession of specified illegal weapons, juvenile court's order placing the defendant on probation with various conditions is affirmed for the most part with the exception of: 1) the restrictions on defendant's right to associate with individuals disapproved of by his probation officer or his parents is unconstitutionally vague and will be modified to include a personal knowledge requirement; 2) restrictions on defendant's presence "where dangerous or deadly weapons or firearms or ammunitions exist" is unconstitutional as due process requires that the probationer be informed in advance whether his conduct comports with or violates a condition of probation; and 3) to the extent the second Internet condition prohibits any "use of" or "access to" an Internet-enabled computer, it conflicts with the other two conditions, thereby making the combination of conditions unconstitutionally vague.

[03/09] US v. Salem
In a prosecution of defendants for wire fraud and receiving stolen funds, district court's sentences based on relevant conduct findings are remanded as the district court made findings as to the reasonableness of the co-schemers' acts only, but it made no finding as to the scope of the jointly undertaken criminal activity under U.S.S.G. section 1B1.3(a)(1)(B).

[03/08] US v. Miller
Dismissal of defendant's petition for a writ of audita querela challenging a restitution order, arising from his conviction for conducting a monetary transaction with criminally-derived funds and evading income tax, is affirmed where: 1) if it still exists, the writ of audita querela can only be applied to rectify a judgment which, though correct when rendered, has since become infirm; and 2) since all parties to this case agree that the district court's restitution order was initially correct, and because the statute does not require the order to be modified every time a subsequent payment is made on a restitution obligation, there is no infirmity in defendant's judgment for a writ of audita querela to rectify.

[03/08] US v. Chavez-Suarez
Defendant's sentence for reentering the country following deportation after a conviction for a drug trafficking offense is affirmed where, in light of all of the evidence in the record, including defendant's past illegal reentries and certain aggravating factors in his underlying drug-trafficking conviction, the imposition of a guidelines-range sentence did not manifest a clear error of judgment by the district court.

[03/08] US v. Molina
Defendant's sentence for transporting an illegal alien is affirmed where: 1) because there was no evidence of involuntariness, the district court properly admitted the hearsay evidence at defendant's sentencing hearing pursuant to a signed stipulation; and 2) the conflicting evidence weighed against a finding that defendant accepted responsibility for his actions.

[03/08] Rhoades v. Henry (Haddon)
In a capital habeas matter, denial of the petition is affirmed where: 1) the deposition testimony and affidavits of both counsel supported the district court's finding that petitioner failed to show that defense counsel lacked the information contained in an allegedly withheld report; 2) petitioner pointed to no evidence that the judge was unable to preside over his case in a fair and impartial manner; and 3) petitioner offered insufficient authority to justify the application of a heightened standard of reliability to guilt phase issues.

[03/08] US v. Granados
Defendant's drug conspiracy conviction and sentence are affirmed where: 1) the police were justified in entering defendant's room without a warrant because of their reasonable belief that it was necessary to protect the general public, hotel guests and employees; 2) the mere fact some of the men in a police lineup had facial hair like defendant did not, standing alone, indicate that the lineup was suggestive; and 3) the government gave racially neutral reasons for exercising its peremptory challenges to all three of the potential jurors defendant claimed the government struck in violation of Batson.

[03/08] US v. Bolden
Defendants' drug conspiracy convictions and sentences are affirmed where: 1) the district court did not abuse its discretion in erring on the side of caution by dismissing a juror when the juror had contact with an interested third party whose identity was known to the juror; 2) evidence that a defendant acted as a source and facilitated a transaction was sufficient for a conviction under the distribution statute; 3) given that defendant did not object to the drug quantity findings at sentencing, and that the evidence at trial supported amounts close to those in the presentence investigation report upon which the district court relied, the findings were adequate under the circumstances; and 4) the evidence at trial showed that defendant recruited members of the conspiracy and directed those members to distribute drugs.

[03/08] People v. Cobb
Following defendant's completion of sentence for assault with a deadly weapon and commitment to a state hospital for treatment as a mentally disordered offender (MDO), judgment of the court of appeals finding that defendant was not denied due process in extension of his commitment is affirmed as, without a time waiver or good cause, section 2972 does not permit continued confinement when an extension trial does not begin before the scheduled release date.

[03/08] People v. Lara
Following defendant's prosecution for false imprisonment of a child, a finding of not guilty by reason of insanity, and commitment to a state hospital, judgment of the court of appeal directing that the trial court grant defendant's motion to dismiss the petition for an extension of his commitment is reversed where: 1) the statutory deadline for filing an extension petition is directory, not mandatory, as long as the petition is filed before the expiration of the current commitment; 2) defendant was not entitled to a dismissal of the petition on due process grounds; and 3) upon motion, defendant would have been entitled under due process to release pending trial, subject to possible proceedings under the Lanterman-Petris-Short Act. However, defendant is not now eligible for release because the court retained jurisdiction to try him and he received a fair trial.

[03/08] US v. McNeil
In a conviction of defendant for unlawful possession of a firearm and unlawful possession with intent to distribute crack cocaine, district court's imposition of a sentence as an armed career criminal is affirmed where: 1) defendant's previous felony drug convictions were punishable by a maximum term of imprisonment of at least ten years both at the time he committed the offenses and at the time of his federal sentencing; 2) district court's upward departure was not procedurally or substantively unreasonable; and 3) the sentence was reasonable.

[03/05] US v. White
In defendant's prosecution for distributing crack cocaine, denial of his motion to withdraw his guilty plea on the basis of a "mutual mistake," upon learning that his criminal history made him ineligible for a "safety valve" reduction, thereby negating the practical effect of two other reductions the government had agreed to, is affirmed where: 1) the mistake was not about an essential term of the agreement but rather about the possible sentence, which generally does not support the withdrawal of a guilty plea;and 2) the record contradicts defendant's assertion that he was unaware of the consequences of his plea.

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