Alison Frankel

SEC stands by ad hoc rulemaking in State Street appeals brief

July 20, 2015

Securities defense lawyers were surprised, and not in a good way, by a ruling last December in which the U.S. Securities and Exchange Commission, in a 3-to-2 decision, found two former State Street executives liable for deceiving investors, even though the two had been cleared by an SEC in-house judge. That fact alone was disquieting for defendants, but even more so was that the commissioners used the State Street case as a vehicle to reinterpret antifraud provisions of the securities laws – and then to hold one of the executives, John Flannery, liable under the reinterpretation.

SCOTUS history backs 2nd Circuit insider trading opinion in Newman: law prof

July 17, 2015

The first day of August is the Justice Department’s deadline for asking the U.S. Supreme Court to review the most consequential ruling on insider trading in recent memory, the 2nd U.S. Circuit Court of Appeal’s decision in U.S. v. Newman. You might think that seeking certiorari would be an easy decision for the government, since both federal prosecutors and the Securities and Exchange Commission have said the 2nd Circuit’s Newman ruling will cost them cases because it restricts the definition of what constitutes a “personal benefit” for corporate insiders who pass along confidential information.

No one wins when plaintiffs lawyers fight over fees

July 16, 2015

The multidistrict litigation accusing Bayer of tainting the U.S. long-grain rice crop with its genetically modified product should be a shining example of how consolidated litigation can deliver justice to thousands of injured people. In 2011, after losing several bellwether trials, Bayer agreed to pay as much as $750 million to about 11,000 rice farmers in Texas, Louisiana, Missouri, Arkansas and Mississippi. In 2012, the judge overseeing the consolidated federal-court litigation against Bayer, U.S District Judge Catherine Perry of St. Louis, said the outcome entitled the lawyers who led the case to as much as $72 million from a common benefit fund. That award was more, as a percentage, than lead lawyers usually receive for work that supposedly benefits all of the plaintiffs in consolidated litigation, but the judge said the award was justified by the time lead counsel sank into the case and the excellent results they obtained.

Media, tech companies ask SCOTUS to restrict class actions in Spokeo

July 15, 2015

It would have been shocking if big business hadn’t turned out in force to back the search engine Spokeo at the U.S. Supreme Court, in a case with potentially huge consequences for class action defendants. And since the business lobby isn’t one to ignore an opportunity like Spokeo, the questions last week at the filing deadline were how many amicus briefs would come in and whether new industries would add to the chorus urging the justices to restrict class actions claiming statutory damages for violations of federal laws. The answers: More than three dozen companies, trade groups and state attorneys general spoke up for Spokeo in 17 amicus briefs, including filings from media, banking and retail businesses that hadn’t previously been involved in the case. It looks like corporate defendants do indeed regard Spokeo as a potential blockbuster.

Law prof objects to Dela. M&A settlement, could be first of many

July 14, 2015

(Reuters) – If Fordham law professor Sean Griffith wanted his newly-filed objection to the settlement of shareholder litigation over Thoma Bravo’s $3.6 billion acquisition of Riverbed Technologies to provoke debate on the dubious benefit to shareholders from disclosure-only settlements of M&A class actions, his timing could not have been better.

The beginning of the end of ‘deal tax’ litigation boom?

July 10, 2015

(Reuters) – If it had just been Vice Chancellor Travis Laster of Delaware Chancery Court sounding off about the blight of so-called deal tax M&A suits, the Delaware bar might have been able to chalk up this week’s developments to the judge’s occasional tendency to rile the complacent. But it isn’t just Laster. Something is afoot in Delaware Chancery Court.

Turtles move to block $210 million Sirius deal with record labels

July 9, 2015

(Reuters) – On the night of June 15, Harvey Geller and Henry Gradstein of Gradstein & Marzano had dinner in New York City with lawyers representing five major record labels and the Recording Industry Association of America. Based on a declaration Gradstein filed Wednesday, it didn’t go well.

In 9th Circ. insider trading case, Rakoff rejects broad read of 2nd Circ. precedent

July 8, 2015

(Reuters) – Running one of the busiest dockets in Manhattan federal court, sitting from time to time at the 2nd U.S. Circuit Court of Appeals and stirring up controversy in speeches and essays is apparently not enough to keep U.S. District Judge Jed Rakoff busy. On Monday, the 9th Circuit issued an important interpretation of insider trading law in its opinion in U.S. v. Salman. The author of this ruling was none other than Judge Rakoff, who sat on the 9th Circuit by designation when the appeal was argued last month in San Francisco.

Sony data breach case: boundaries on liability becoming clearer

July 2, 2015

At the beginning of 2015, I asked whether defendants should start reassessing their risk in data breach class actions. I pointed out that plaintiffs had learned from a string of dismissals in which federal judges said they didn’t have constitutional standing to sue under the U.S. Supreme Court’s 2013 decision in Clapper v. Amnesty International. Consumers suing Target, for instance, managed to keep their case alive by claiming they’d suffered the actual harm of unlawful charges on their accounts or restricted access to their funds. Similarly, financial institutions staved off the dismissal of their class action against Target with assertions based on their costs to replace customers’ compromised cards.

En banc 2nd Circuit to clarify when computer seizures are unconstitutional

July 1, 2015

(Reuters) – The 2nd U.S. Circuit Court of Appeals seems to be eager to decide when, if ever, the federal government has the right to retain and search computer records seized in one investigation but later found to be relevant in another.