Case Summaries

Securities Law

[06/28] Free Enterprise Fund v. Pub. Co. Accounting Oversight Bd.
In an action against the Public Company Accounting Oversight Board and its members, seeking, inter alia, a declaratory judgment that the Board was unconstitutional and an injunction preventing the Board from exercising its powers, the D.C. Circuit's affirmance of summary judgment for defendants is affirmed in part where the Board's appointment was consistent with the Appointments Clause. However, the judgment is reversed in part where: 1) the dual for-cause limitations on the removal of Board members contravene the Constitution's separation of powers; and 2) the unconstitutional tenure provisions were severable from the remainder of the statute.

[06/25] Hershey v. Engy. Transfer Ptnrs., L.P.
In a putative class action under the Commodities Exchange Act (CEA), alleging manipulation of natural gas futures and options prices, the dismissal of the complaint is affirmed where plaintiffs did not allege facts tending to show that defendants had specifically intended to manipulate the cost of natural gas.

[06/25] Lincoln Nat'l Life Ins., Co. v. Bezich
A petition for permission to appeal, arising from the district court's remand of plaintiff's class action lawsuit against an insurer for breach of contract claims on the basis that CAFA's exception to federal jurisdiction for the action applied, is dismissed for lack of jurisdiction as plaintiff's claim "related to the rights, duties,...and obligations relating to or created by or pursuant to...a security," as defined in the Securities Act of 1933.

[06/24] DDJ Mgmt., LLC v. Rhone Group L.L.C.
In an action claiming that defendants presented plaintiffs with corporate financial statements that were false and misleading, the appellate division's modification of the trial court's order dismissing plaintiffs' fraud claim is reversed where: 1) when a plaintiff has taken reasonable steps to protect itself against deception, it should not be denied recovery merely because hindsight suggested that it might have been possible to detect the fraud when it occurred; and 2) plaintiffs in this action for fraud have alleged facts from which a jury could find that they were justified in relying on the representations defendants made to them.

[06/24] Skilling v. US
The Fifth Circuit's affirmance of former Enron CEO Jeffrey Skilling's honest-services fraud conviction is affirmed in part where pretrial publicity and community prejudice did not prevent Skilling from obtaining a fair trial, and he did not establish that a presumption of juror prejudice arose or that actual bias infected the jury that tried him. However, the judgment is vacated in part where 18 U.S.C. section 1346, which proscribes fraudulent deprivations of "the intangible right of honest services," was properly confined to cover only bribery and kickback schemes, and Skilling's alleged misconduct entailed no bribe or kickback.

[06/24] Morrison v. Nat'l Australia Bank Ltd.
In a securities fraud action by Australian citizens claiming that defendant corporation and its officers manipulated financial models to make the company's mortgage-servicing rights appear more valuable than they really were, the Second Circuit's affirmance of the dismissal of the action is affirmed where: 1) the Second Circuit erred in considering Securities and Exchange Act section 10(b)'s extraterritorial reach to raise a question of subject-matter jurisdiction, thus allowing dismissal under Fed. R. Civ. P. 12(b)(1); and 2) section 10(b) does not provide a cause of action to foreign plaintiffs suing foreign and American defendants for misconduct in connection with securities traded on foreign exchanges.

[06/17] Trooien v. Mansour
In an action alleging violations of the Minnesota Securities Act, negligent and fraudulent misrepresentation, and breach of fiduciary duty, summary judgment for defendants is affirmed in part where: 1) plaintiff's misrepresentation claims based on the company at issue's revenue projections were properly dismissed by the district court since they were not false statements of past or existing fact, and were not pled with sufficient particularity; and 2) the injuries alleged in plaintiff's breach of fiduciary duty claims were those to corporate assets, and a claim to recover damages for such injuries must be brought as a derivative action. However, the judgment is reversed in part where claims arising under Minn. Stat. section 80A.01(b) required only a showing of negligence.

[06/15] SEC v. Byers
In nonparties' appeal from the district court's order holding that its jurisdiction in rem and its equitable powers provided it with sufficient authority to issue an injunction barring non-parties from filing involuntary bankruptcy petitions against any of the defendants, the order is affirmed where, while it should be sparsely exercised, district courts possess the authority and discretion to enter anti-litigation orders, including those that bar the filing of involuntary bankruptcy petitions absent the district court's permission.

[06/11] Kruss v. Booth
In a shareholder derivative suit, involving a variation on a pump and dump scheme, the trial court's judgment of dismissal is reversed where: 1) plaintiff must be given leave to amend his second amended complaint so as to allege violations of director fiduciary duty under California law as he had alleged violations of California law in his first amended complaint, but the trial court erroneously thought the case was governed by Nevada law and required plaintiff to plead violations of Nevada law in the second amended complaint; and 2) the trial court erred in dismissing the suit as the second amended complaint alleged self-dealing on the part of the defendant directors that continued into the period when the plaintiff did own stock in the company.

[06/08] US v. Laurienti
Defendants' convictions for securities fraud conspiracy are affirmed where: 1) defendants did not challenge, and overwhelming evidence supported the finding, that the conspiracy existed and that at least one member of it performed an overt act; 2) the district court erred by failing to give a "trust relationship" jury instruction, but defendants intentionally relinquished their right to challenge the jury instruction; and 3) the characterization of the sales practices as unlawful was relevant, because the government sought to prove that, as conducted by defendants (with an intent to defraud and in violation of trust relationship duties), the practices were indeed unlawful. However, defendants' sentences are vacated where the district court erred in calculating loss both for purposes of the Sentencing Guidelines and for purposes of restitution.

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Workers' Comp

[06/24] Bifulco v. Patient Bus. & Fin. Serv., Inc.
In plaintiff's wrongful termination suit against her former employer, Fifth District's reversal of trial court's grant of defendant's motion for summary judgment is affirmed as workers' compensation retaliation claims brought against the state under section 440.205 are not subject to the presuit notice requirements of section 768.28(6)

[06/22] Hawaii Stevedores, Inc. v. Ogawa
In a petition for review of a decision of the Benefits Review Board (BRB) affirming an Administrative Law Judge's (ALJ) grant of disability benefits under the Longshore and Harbor Workers' Compensation Act, the petition is granted in part where: 1) the mere fact that an expert witness talked with a party's lawyer and then altered his or her opinion language, though it might be considered relevant, did not require a factfinder to find that expert witness was other than credible; and 2) the ALJ's finding of the maximum medical improvement date was not supported by substantial evidence. However, the petition is denied in part where: 1) the ALJ's finding that petitioner did not meet its burden of demonstrating prejudice was supported by substantial evidence, and respondent's late notice was properly excused; and 2) respondent's stroke qualified as a compensable injury under the Longshore Act.

[06/11] Zenith Ins. Co. v. Ayala
In a worker's compensation suit, the court of appeals' affirmance of trial court's holding that the insurer waived its right to contest compensability by not timely disputing the claimant's lumbar condition diagnosis is reversed and remanded as the sixty-day period for challenging compensability does not apply to a dispute over extent of injury.

[06/04] Nat'l Union Fire Ins. Co. v. VP Bldg., Inc.
In Chapter 11 proceedings, district court's affirmance of the bankruptcy court's decision disallowing an insurer's petition for administrative expenses, on the ground that the claim was not "actual" and did not benefit the estate, is affirmed as pursuant to In re HNRC Dissolution Co., 371 B.R. 210, (E.D. Ky. 2007), the insurer's request for reimbursement is not an "actual" expense within the meaning of the bankruptcy code.

[05/25] Los Angeles County Fire Dep't v. Workers' Comp. Appeals Bd.
WCAB's denial of a county's petition for reconsideration in its claim that the battalion chief for the county fire department was not entitled to any maintenance allowance from September 8, 2005, to September 26, 2006 for his permanent disability, is affirmed in part, reversed in part, and remanded as the battalion chief's right to pending maintenance allowance ended with repeal of former section 139.5 except for that part of the maintenance allowance that was not included in the county's petition for reconsideration and, therefore, became final before the repeal of former section 139.5.

[05/20] State Comp. Ins. Fund v. Superior Court
In plaintiff's suit to collect unpaid premiums it claimed were owed for workers' compensation insurance policies issued to defendant, plaintiff's petition for a peremptory writ of mandate seeking to set aside superior court's grant of summary judgment in favor of defendant is granted where: 1) plaintiff's filing of an amended complaint rendered defendant's motion for summary judgment moot; and 2) the FAC raised new issues of fact regarding when the statute of limitations began to run on plaintiff's fraud claim.

[05/14] Alvarez v. Workers' Comp. Appeals Bd.
In claimant's petition for worker's compensation death benefits, a decision of the Workers' Compensation Appeals Board (WCAB) denying claimant's petition for a new panel qualified medical evaluator under section 4062.3(f) is annulled and remanded as section 4062.3 expressly prohibits ex parte communications with a panel qualified medical evaluator, with the only exception being for communications by the employee or deceased employee's dependent in connection with an examination, and in the event of unauthorized ex parte communication permits the aggrieved party to obtain a new evaluation from another panel qualified medical evaluator.

[05/13] Valladolid v. Pac. Ops. Offshore, LP
In a petition for review of the denial of workers' compensation benefits under the Outer Continental Shelf Lands Act (OCSLA) and the Longshore and Harbor Workers' Compensation Act (LHWCA) based on an injury on an offshore drilling platform, the petition is granted in part where: 1) the most natural reading of the OCSLA provided coverage for any injury caused by outer continental shelf operations regardless of where the injury occurred; 2) Congress intended to provide LHWCA coverage regardless of the applicability of state law; and 3) the OCSLA claimant must establish a substantial nexus between the injury and extractive operations on the shelf. However, the petition is denied in part where petitioner was not entitled to LHWCA benefits, on the ground that the drilling platform's use as a convenient dumping ground for scrap metal did not convert it into a maritime situs.

[05/13] Loranger v. Jones
In a contractor's suit against homeowners for breach of contract, foreclosure of mechanic's lien, quantum meruit, and fraud, trial court's judgment awarding damages to the contractor and denial of homeowners' motion for section 7031 sanctions is affirmed as contractor's testimony that he had a policy of workers' compensation coverage in effect for his construction employees during the period of construction of the homeowners' home is sufficient to meet his burden of proof to show his license was not suspended for failing to obtain workers' compensation insurance coverage pursuant to section 7125.2.

[05/07] In re Odyssey Healthcare, Inc.
In plaintiff's negligence case against her employer, defendant's petition for writ of mandamus is conditionally granted as, the trial court abused its discretion by refusing to grant the defendant's motion to compel arbitration as the plaintiff failed to prove a valid defense against enforcement of her agreement to arbitrate disputes with her employer.

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