|July 5, 2013|
Previously published on Summer 2013
In the case of Amgen, Inc. v. Connecticut Retirement Plans & Trust Funds (2013) 133 S. Ct. 1184, the United States Supreme Court held that proof of materiality of a misrepresentation is not a prerequisite to certification in a securities fraud class action seeking money damages for alleged violations of the Securities Exchange Act of 1934, section 10(b), and SEC Rule 10(b)(5).
In another case decided by the Supreme Court, Gabelli v. Securities & Exchange Commission (2013) 133 S. Ct. 1216, the court ruled that the five-year period in which the SEC may sue investment advisors who have defrauded clients for civil penalties under the Investment Advisors Act, 15 U.S.C. section 80b-9(d), runs from the occurrence of the fraud, not its discovery. This should be a welcomed decision by investment advisors.
In Clevo Co. v. Hecny Transportation, Inc. (2013) --- F.3d ---, 2013 Westlaw 1777030, the Ninth Circuit affirmed the trial court's granting of summary judgment in a freight forwarder's favor against a manufacturer of computer parts and accessories. The Ninth Circuit ruled that bills of lading the parties had entered into for shipment of the computer parts superseded guarantees between the manufacturer and the freight forwarder, and the so-called "Himalaya clause" in the bills of lading only extended the benefit of a one-year statute of limitations to the freight forwarder which rendered the manufacturer's misdelivery claims untimely.
In the case of Bourhis v. Lord (2013) 56 Cal.4th 320, the California Supreme Court affirmed the trial court's granting a motion for a nonsuit. The issue before the court was whether a corporation that files notices of appeal while its corporate powers are suspended may proceed with appeals after those powers have been revived, even if the revival occurs after the time to appeal has expired. In that case, one of the plaintiffs was a California corporation called "Brown-Eyed Girl, Inc.," which had filed an underlying lawsuit for property damage. Before the trial the defendants learned that the State had suspended Brown-Eyed Girl's corporate power for nonpayment of taxes. The court denied a motion by defendants to preclude the plaintiff from offering any evidence at trial, contingent upon the corporation's reviving its corporate powers. Brown-Eyed Girl purported to file notices of appeal while its corporate powers were suspended and therefore the notices of appeal were invalid when filed. However, Brown-Eyed Girl later received a certificate of revival. The court ruled that the legal rights of a suspended corporation are then revived, as an "unconscious person is revived by artificial respiration." The California Supreme Court said that the crucial inquiry was whether or not the notice of appeal had been timely filed, which it was, not that it had been filed by an active corporation.
In the case of Kurtin v. Elieff (2013) 215 Cal.App.4th 455, the Court of Appeal for the Fourth District affirmed the trial court's judgment holding the defendant liable for misstating his authority to bind a group of real estate businesses known as the "Joint Entities" in the course of agreeing to buy out his former partner. The Fourth District affirmed the trial court's post trial order denying defendant's motion for judgment notwithstanding the verdict and the trial court's order granting a new trial as to the issue of damages. The jury had returned inconsistent verdicts with regard to plaintiff's claim under Civil Code section 2343 for a bad-faith breach of an agent's warranty of authority. The Fourth District pointed out that the proper remedy for inconsistent verdicts is to order a new trial, which it did. The jury's finding of liability was inconsistent with the finding that defendant had a good-faith belief he had authority to bind those parties when he signed the agreement, as well as with evidence that specifically exonerated the defendant of all tort claims against him.