On July 7, in In re Petrobras Securities, the 2nd Circuit declined to adopt an independent “administrative feasibility” requirement for class certification under Rule 23. In so holding, the 2nd Circuit joined the 6th, 7th, 8th and 9th Circuits, and expressly disagreed with the 3rd Circuit, which has taken the lead in holding that class action plaintiffs must satisfy a “heightened ascertainability” requirement by showing that there is an administratively feasible mechanism to determine whether an individual meets the class definition. The 2nd Circuit ruled that class action plaintiffs may satisfy the ascertainability requirement by showing that class membership may be determined using objective criteria.
On June 30, Congress gaveled out for the July 4 recess after postponing a critical vote to begin debate on an Affordable Care Act (ACA) repeal-and-replace bill. Senate Majority Leader Mitch McConnell (R-KY) and the GOP caucus have worked for the last two months in countless hours of behind-the-scenes meetings on what many believe to be a long-shot effort to unite 50 of the 52 Republican senators.
Securities defendants can rest easier after the Supreme Court’s decision to strictly construe certain statutory time limits under the Securities Act of 1933. On June 26, 2017, the Court issued its opinion in California Public Employees’ Retirement System v. ANZ Securities, Inc., holding that claims brought under Section 11 are subject to a three-year statute of repose, which cannot be equitably tolled. The 5-4 decision will likely have major implications, not only for securities litigation, but for any case involving application of a limitations period that may be construed as a statute of repose.
This week we highlight Professor John Coffee Jr.’s article “Hobson’s CHOICE: The Financial CHOICE Act of 2017 and the Future of SEC Administrative Enforcement”, analyzing the Financial CHOICE Act and in particular its impact on SEC enforcement. This post was published in the Columbia law school’s blog on corporations and the capital markets.
On June 19, 2017, the Supreme Court in Matal v. Tam unanimously held that a portion of 15 U.S.C. § 1052(a), the Lanham Act provision that prohibits the registration of trademarks that may “disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute” (the “disparagement clause”), is facially unconstitutional under the First Amendment’s Free Speech Clause.
On June 16, 2017, the Trump administration issued a national security presidential memorandum entitled “Strengthening the Policy of the United States Towards Cuba” (the “Presidential Memorandum”). Related to this announcement, the White House issued a Cuba Fact Sheet, OFAC issued a new set of Frequently Asked Questions (FAQs) and the Department of Transportation also issued a new set of FAQs relating to the President’s announcement.
This week, the Supreme Court in Kokesh v. SEC unanimously held that the Securities and Exchange Commission’s (SEC) equitable disgorgement remedy is subject to a five-year statute of limitations because it is a “penalty” within the meaning of 28 U.S.C. § 2462, which governs “an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture.” Before Kokesh, some circuits had held that the SEC could obtain disgorgement of the entire amount of the ill-gotten gains or losses avoided, even those that extended well beyond the five-year statute of limitations associated with most federal securities laws. Kokesh clarifies that both civil penalties and disgorgement are subject to the same five-year limitations period.
Daily Journal has published the article “Ruling extends heightened securities fraud pleading standard,” written by Neal Marder, a partner in the litigation practice at Akin Gump, and associates Andrew Jick and Kelly Handschumacher. The article discusses a ruling by the U.S. Court of Appeals for the 9th Circuit in City of Dearborn Heights Act 345 Police & Fire Retirement System v. Align Technology Inc., a case that affirmed the dismissal of a pension fund’s securities fraud claims.