DENVER — A federal district court erred in dismissing shareholder claims in a securities class action against online retailer Overstock.com Inc. and certain of its current and former senior executives who are alleged to have engaged in a scheme to devise a fraudulent short squeeze of the company’s stock and artificially inflate earnings guidance for Overstock’s struggling retail division because the lead plaintiff sufficiently pleaded its market manipulation scheme claims and properly pleaded scienter, the investor argues in a Jan. 28 appellant brief filed in the 10th Circuit U.S. Court of Appeals.
ALEXANDRIA, Va. — A technology company and certain key current and former senior executives violated federal securities laws by failing to disclose to investors that expected revenue growth coming from contracts the company entered into with governmental agencies to provide its digital identity software would be delayed due to a cyberattack scandal and the COVID-19 pandemic, a shareholder alleges in a securities class action complaint filed Feb. 7 in Virginia federal court.
NEW YORK — Dismissal of amended shareholder claims in a securities class action against a Canada-based cannabis company and others stemming from the defendants’ alleged misrepresentations regarding financing arrangements the company made with a lender is unnecessary because the defendants have conceded that the shareholder engaged in domestic transactions as required pursuant to the U.S. Supreme Court’s ruling in Morrison v. National Australia Bank Ltd., the shareholder argues in a Feb. 3 opposition brief filed in New York federal court.
NEW YORK — A federal judge in New York on Feb. 3 certified an investor class in a securities class action alleging that an insurance company and certain of its officers and directors misrepresented to investors that the company’s preferred stocks would not be delisted on the New York Stock Exchange (NYSE) after an acquisition of the company’s outstanding common stock, ruling that the proposed class has met all statutory requirements for approval.
NEW YORK — A Second Circuit U.S. Court of Appeals panel on Feb. 1 dismissed an appeal in a lawsuit alleging that an oil and gas drilling company and its subsidiary violated federal securities law by misrepresenting the company’s alleged default under an indenture governing notes maturing in 2027, ruling that curative action taken by the company prior to a federal district court’s grant of summary judgment mooted the noteholders’ dispute.
By Kirk Pasich, Pamela Woods, Shaun Crosner, Peter A. Halprin and Mikaela Whitman
NEW YORK — A New York justice on Jan. 11 denied a group of defendant insurers’ cross-motion to dismiss claims against them in a lawsuit alleging that they failed to defend and advance defense costs accrued by the insured in underlying actions brought by the U.S. Securities and Exchange Commission and the U.S. Department of Justice.
PHILADELPHIA — A federal district court properly ruled that a shareholder failed to sufficiently plead loss causation in alleging that an oil and gas drilling company and its former board of directors violated federal securities laws by soliciting shareholder votes for a proposed merger deal that materially misrepresented investor benefits of the transaction because the shareholder failed to show that the proxy statement’s alleged misstatements caused shareholders’ to approve a deal for an amount less than the value of their shares, a Third Circuit U.S. Court of Appeals panel ruled in affirming on Jan. 27.
The journalists and staff of Mealey’s Litigation Reports are saddened by the passing of co-founder Michael P. Mealey. He was a respected member of the newsletter community, being named publisher of the year by the National Newsletter Association and president of the National Newsletter Association. Mike and Judy Mealey started Mealey Publications Inc. in 1984. As president, Mike grew the Mealey’s Litigation Report portfolio, introduced email news bulletins and electronic CD formats and launched a continuing legal education conference business. Mealey’s was sold to LexisNexis in 2000. We hope to carry on his journalistic curiosity and integrity in the titles we continue to publish today under his name.
PHILADELPHIA — The Third Circuit U.S. Court of Appeals on Jan. 25 affirmed dismissal of stock-drop lawsuit involving a testosterone replacement therapy drug, finding that the plaintiff’s alleged wrongs against stockholders are “not actionable.”
NEW YORK — A federal judge in New York on Jan. 5 granted the Securities and Exchange Commission’s request to extend the deadline for a proposed schedule in a lawsuit alleging that two individuals “perpetrated multiple schemes to defraud their advisory clients, which were insurance companies and reinsurance trusts” until March 31 unless the SEC is able to fully resolve the case before that date.
LOS ANGELES — A federal judge in California on Jan. 18 granted preliminary approval of a $98 million settlement in a securities class action alleging that toy maker Mattel Inc. and certain of its current and former senior executives and others materially misrepresented the company’s business and financial condition, ruling that the proposed settlement agreement appears to be fair and reasonable and is the product of arms-length negotiations.
WILMINGTON, Del. — A clinical-stage small molecule pharmaceutical company and two of its senior officers violated federal securities laws by misrepresenting the likelihood that the company’s COVID-19 respiratory failure treatment drug would gain approval for use by the U.S. Food and Drug Administration under an emergency use authorization (EUA), a shareholder alleges in a Jan. 18 complaint filed in Delaware federal court.
TRENTON, N.J. — Honeywell International Inc. and stockholders have resolved claims that the company underrepresented Bendix asbestos liabilities by setting an artificial horizon for calculating those claims, with a federal judge in New Jersey granting preliminary approval of a $10 million settlement on Jan. 18.
SAN FRANCISCO — A lead plaintiff in a securities class action against a developer of a “solid-state” electronic vehicle battery for the most part has sufficiently pleaded that the company and certain of its senior executives misrepresented the progress and effectiveness of their batteries in violation of federal securities law, a federal judge in California ruled Jan. 14 in denying the defendants’ motion to dismiss.
FORT LAUDERDALE, Fla. — A federal magistrate judge on Jan. 15 denied without prejudice investors’ motion for order directing a trustee to offer investors an option to keep their interest upon wind-down in a Securities Exchange Commission lawsuit alleging that the defendants fraudulently sold investment interests in life insurance policies, also denying without prejudice an expedited motion for an order directing the trustee to include in the proposed amendments to the trust agreement all policies where 100% of the fractional interests elect to “keep” and survey the investors as to their interest in a “keep” option.
NEW YORK — A New York federal judge on Jan. 14 found that former pharmaceutical executive Martin Shkreli engaged in anticompetitive conduct in his marketing of the antiparasitic drug Daraprim, ordered him barred for life from working in the drug industry and ordered him to disgorge $64 million in net profits from his monopolistic actions.
TRENTON, N.J. — Johnson & Johnson defendants defended their attempt to supplement the class certification record in a case involving a securities action against the company on Jan. 11, arguing in a reply brief that a lawyer’s recent declaration shows that a news article revealed nothing about the presence of asbestos in talc that wasn’t already publicly available.
WASHINGTON, D.C. — U.S. Supreme Court review of a Ninth Circuit U.S. Court of Appeals panel’s ruling that the Securities Litigation Uniform Standards Act (SLUSA) does not bar investors’ state law fiduciary duty claims is not warranted because the panel correctly determined that the statute does not apply to investor claims and, thus, has not helped increase a split among the circuits as to SLUSA’s “in connection with” standard, the investors argue in a Dec. 15 opposition brief filed in the Supreme Court.
WASHINGTON, D.C. — The U.S. Supreme Court on Dec. 1 requested that the Office of the Rhode Island Treasurer on behalf of the Employees’ Retirement System of Rhode Island respond to a petition for writ of certiorari seeking review of a Ninth Circuit U.S. Court of Appeals panel’s ruling substantially overturning a federal district court’s dismissal of shareholder claims in a securities class action against Google LLC, Google parent company Alphabet Inc. and others stemming from alleged misrepresentations the defendants made concealing data security and management integrity issues relating to the Google+ social media network.