Justia U.S. 1st Circuit Court of Appeals Opinion SummariesArticles Posted in Securities Law
City of Miami Fire Fighters’ & Police Officers’ Retirement Trust v. CVS Health Corp.
The First Circuit affirmed the judgment of the district court dismissing the complaint brought by two retirement funds in this putative securities fraud class action against CVS Health Corporation and the court's subsequent denial of Plaintiffs' motion to reconsider, holding that there was no error.In this action arising out of difficulties CVS Health experienced in the wake of its acquisition of Omnicare, Inc., Plaintiffs alleged that CVS Health's executives and its newly-acquired subsidiary used false statements and misleading nondisclosures to conceal from investors the disintegration of Omnicare's customer base. The complaint included claims for violations of the Securities Exchange Act and its implementing rule. The district dismissed the complaint after finding that it failed to allege any materially false or misleading statements and denied Plaintiffs' ensuing motion to reconsider. The Supreme Court affirmed, holding that the district court did not abuse its discretion or commit legal error in dismissing Plaintiffs' complaint and denying the motion to reconsider. View "City of Miami Fire Fighters' & Police Officers' Retirement Trust v. CVS Health Corp." on Justia Law
Thant v. Karyopharm Therapeutics Inc.
The First Circuit affirmed the judgment of the district court dismissing this complaint against Karoypharm Therapuetics, Inc. and its corporate officers (collectively, Defendants) alleging securities fraud in violation of sections 10(b) and 20(a) of the Securities Exchange Act, 15 U.S.C. 78j(b) and 78t(a), and Securities and Exchange Commission (SEC) Rule 10-b, 18 C.F.R. 240.10b-5, holding that the district court correctly dismissed the complaint for failure to state a claim.Plaintiff-investors brought this action following a decline in Karyopharm's stock price, alleging that Karyopharm materially misled them as to the safety and efficacy of the company's cancer-fighting drug candidate selinexor. The district court dismissed the complaint for failure to state a claim, concluding that Plaintiffs failed adequately to plead scienter with respect to Defendants' statements about a certain study of the drug as a treatment for pinta-refractory multiple myeloma. The First Circuit affirmed on other grounds, holding that Plaintiffs did not plausibly allege an actionable statement or omission with respect to the trial disclosures, and therefore, dismissal was appropriate. View "Thant v. Karyopharm Therapeutics Inc." on Justia Law
Ponsa-Rabell v. Santander Securities, LLC
The First Circuit affirmed the judgment of the district court dismissing all claims in this dispute between brokerage customers of Defendant, who purchased special Puerto Rico securities during a recession but before the bond market crash, holding that there was no error in the proceedings below.Plaintiffs brought a securities class action against Defendant, asserting claims under federal securities laws and Puerto Rico law. The district court entered judgment dismissing the federal law claims with prejudice and the state law claims without prejudice. The First Circuit affirmed, holding that Plaintiffs' claims that there were allegedly material omissions on the part of Defendant were not actionable. View "Ponsa-Rabell v. Santander Securities, LLC" on Justia Law
Securities & Exchange Commission v. LBRY Foundation Inc.
The First Circuit affirmed the judgment of the district court denying a motion to intervene filed by LBRY Foundation Inc. (Foundation) in a Securities and Exchange Commission (SEC) civil enforcement action against LBRY, Inc. (LBRY), holding that the district court did not abuse its discretion.The SEC brought his complaint alleging that LBRY failed to register as investment contracts under section 5 of the Securities Act, 15 U.S.C. 77e, LBRY Credits (LBC), an offering of digital assets. Foundation, whose assets consisted of grants of LBRY, moved to intervene, seeking to contest the SEC's enforcement action with alternative legal arguments than those given by LBRY. The district court denied the motion. The First Circuit affirmed, holding that Foundation was not entitled to intervene as of right. View "Securities & Exchange Commission v. LBRY Foundation Inc." on Justia Law
EdgePoint Capital Holdings, LLC v. Apothecare Pharmacy, LLC
In this action brought by EdgePoint Capital Holdings, LLC (EPCH) arising out of the sale of Apothecare Pharmacy, LLC, the First Circuit affirmed the district court's grant of summary judgment in Apothecare's favor, holding that EPCH could not recover because Apothecare's securities law defense was valid.This breach of contract suit was based on a provision of the contract stating that if the agreement was terminated by either party, Apothecare was obligated to pay EPCH a fee. In granting summary judgment in favor of Apothecare, the district court (1) rejected Apothecare's federal securities law defense that the contract was void under section 29(b) of the Securities Exchange Act of 1984; but (2) concluded that, as a matter of Massachusetts contract interpretation law, EPCH was not entitled to the fee it sought. The First Circuit affirmed, holding (1) Apothecare's federal securities law defense was valid; and (2) because the contract was unenforceable, EPCH could not recover. View "EdgePoint Capital Holdings, LLC v. Apothecare Pharmacy, LLC" on Justia Law
Karth v. Keryx Biopharmaceuticals, Inc.
The First Circuit affirmed the judgment of the district court in favor of Defendants, denying Plaintiff's motion for class certification, and denying Plaintiff's motion to file a third amended complaint, holding that Defendant sufficiently warned investors about the vulnerability of its manufacturing infrastructure so that Plaintiff knew of the investment risks when he purchased his shares.Plaintiff was an investor who lost money when he bought stock in Keryx Biopharmaceuticals, Inc. and watched the value plummet soon after that purchase. Plaintiff sued Keryx and its executives, alleging that Keryx's inadequate disclosures about its manufacturing defects amounted to securities fraud. The district court allowed Defendants' motion for judgment on the pleadings. The First Circuit affirmed, holding that Plaintiff failed to state a claim under section 10(b) of the Securities Exchange Act. View "Karth v. Keryx Biopharmaceuticals, Inc." on Justia Law
Securities & Exchange Commission v. Morrone
The First Circuit affirmed the judgment of the district court granting, in part, summary judgment in favor of the United States Securities and Exchange Commission (SEC) on its allegation that Appellants Jonathan Morrone and Z. Paul Jurberg solicited investments in Bio Defense Corporation, where they were senior officers, from investors in violation of federal securities law, holding that the district court did not err.On appeal, Appellants asserted (1) the district court erred in applying United States federal securities laws to their solicitation of foreign investors, in light of Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010); and (2) genuine issues of material fact barred summary judgment on some of SEC's claims. The First Circuit affirmed, holding (1) the district court did not err in applying the federal securities laws to Appellants; and (2) the district court did not err in granting partial summary judgment in favor of the SEC. View "Securities & Exchange Commission v. Morrone" on Justia Law
Securities & Exchange Commission v. Johnston
The First Circuit affirmed the district court's denial of Defendant's motion for judgment as a matter of law and for a new trial in this civil enforcement action brought by the Securities and Exchange Commission, holding that the evidence was sufficient to support the verdict.At issue was whether Defendant, the CFO of AVEO Pharmaceuticals, knowingly misled investors by the manner in which he responded to investor inquiries about the substance of AVEO's discussions with the Food and Drug Administration (FDA) about the results of AVEO's clinical trial for tivozanib, a kidney cancer drug candidate. A jury found against Defendant. On appeal, Defendant argued (1) he was entitled to judgment as a matter of law because he had no duty to disclose the substance of the FDA discussions and because the evidence of scienter was insufficient, and (2) he was entitled to a new trial because the district court improperly instructed the jury. The Supreme Judicial Court affirmed, holding (1) the evidence of fraud and scienter was sufficient to support the verdict; and (2) the challenged instructions were not given in error. View "Securities & Exchange Commission v. Johnston" on Justia Law
Porsche Automobile Holding SE v. John Hancock Life Insurance Co.
The First Circuit affirmed the decisions of the district court in these appeals challenging the court's discretionary rulings in connection with a request under 28 U.S.C. 1782 to conduct court-ordered discovery for use in a foreign proceeding, holding that the district court did not err or abuse its discretion.The foreign proceeding at issue was one of approximately 200 separate securities fraud actions brought in 2016 against Porsche Automobile Holding SE in Germany. The actions stemmed from Porsche's alleged malfeasance in connection with "defeat devices" employed to circumvent emissions testing in certain diesel vehicles manufactured by Volkswagen AG. The district court granted in part Porsche's request for discovery in the United States from affiliates of John Hancock funds who were plaintiffs in the German actions. The First Circuit affirmed the district court's orders denying the Hancock plaintiffs' motion to intervene and denying in part the Hancock affiliates' motion to quash, holding that the district court did not abuse its discretion. View "Porsche Automobile Holding SE v. John Hancock Life Insurance Co." on Justia Law
United States v. Chan
The First Circuit affirmed Defendants' convictions for securities fraud and conspiracy to commit securities fraud, holding that Defendants' claims of trial and sentencing error were unavailing.Defendants were two biostaticians employed by two publicly traded biopharmaceutical companies. The jury found Defendants guilty of conspiracy of commit securities fraud and all counts of securities fraud with which they were charged. The First Circuit affirmed, holding that the district court (1) did not err in denying Defendants' motions for judgments of acquittal as to the conspiracy and securities fraud convictions; (2) did not abuse its discretion in denying Defendants' motion to compel production of a letter from the Financial Industry Regulatory Authority; (3) imposed sentences that were without error; and (4) did not err in awarding restitution. View "United States v. Chan" on Justia Law