Deciding a question of first impression, the Ninth Circuit today held that plaintiffs may pursue an insider trading claim, under section 20A of the Securities Exchange Act, even though limitations barred action on the predicate securities law "violation", under section 10(b) of the Act.  The court reasoned that "violation" doesn’t equal "actionable violation".  Blawgletter says check it out.  Johnson v. Aljian, No. 04-56997 (9th Cir. June 20, 2007).

Barry Barnett

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Joepesci
Joe Pesci in Goodfellas (1990).

Legal Antics today unveiled the nominees for "Funniest Law Blog".  See the list here.

Blawgletter felt awesome until we realized that a single nomination, by anyone, would earn a spot on the Funniest list.  Then we felt sad.  But next we remembered that we hadn’t nominated ourselves.  So we turned giddy again.

Thank you, sincerely, to the anonymous person (or — dare we hope! — persons) who put us on the chart.  I love you, mom!

Barry Barnett

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The WSJ celebrated the decision of a federal judge to request a U.S. Attorney to prosecute Mississippi lawyer Dickie Scruggs for criminal contempt. The crime? Providing the Mississippi Attorney General with a copy of documents that may establish fraudulent handling of Katrina claims by insurance companies.

The judge opined that the conduct violated his injunction against disclosure of the documents — a ruling that the Eleventh Circuit will review in due course.

Compare the Journal’s Scruggsian glee with its Scooterian outrage.

Blawgletter holds no brief for Mr. Scruggs, by the way, but we do marvel that the judge seems remarkably relentless in his pursuit of Mr. Scruggs. His opinion says, for example, that he will appoint a special prosecutor if the U.S. Attorney doesn’t act — taking judicial control over prosecutorial discretion.  Zowie.

Barry Barnett

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Blawgletter has a question:

Who has the lawful right to govern the Gaza Strip?

Leave to one side, please, the sheer hypotheticality of the notion that anybody actually does govern the Gaza Strip.  Who’s got the right to do it?

Some of the salient facts, as we understand them:

  • The United States, Canada, Israel, Japan, and the European Union designate Hamas a terrorist organization because it, among other things, kills and maims innocent people in the name of Islamist hegemony.
  • In 2005, Mahmoud Abbas, the leader of Fatah, wins election as President of the Palestinian Authority, which governs the Palestinian Territories on the Gaza Strip and the West Bank.
  • In early 2006, Hamas wins a majority of seats in parliamentary elections and thus entitlement to name the prime minister.  The United States and Israel refuse to accept Hamas’s role in the Palestinian Authority government.
  • In spring 2007, Fatah and Hamas join in a "unity" government with Saudi support.
  • During June 2007, Hamas militarily defeats Fatah and takes over de facto control of the Gaza Strip.
  • President Abbas dissolves the unity government and forms a new one that excludes Hamas.
  • Hamas denounces the new government.
  • The United States, Israel, and — to a lesser extent — the European Union recognize President Abbas as the legitimate leader of the Palestinian Authority and his government as the rightful ruler of the Palestinian areas in the Gaza Strip and the West Bank.

Does Hamas now have any legimate claim to the right to govern?  In particular, has its military conquest of the Gaza Strip forfeited its democratic election in 2006 and made it a complete renegade under international law?

Any help out there?

Barry Barnett

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Applying Illinois law, the Seventh Circuit today affirmed a summary judgment against a land purchaser on the ground that it failed to present evidence of damages in support of its negligent misrepresentation claim.  The plaintiff, Kemper/Prime, alleged that the predecessor of Montgomery Watson should have discovered and reported chemical contamination of 120 acres that Kemper/Prime bought in 1990 and later sold at a profit.  The court considered whether Kemper/Prime raised a fact question as to "remediation" costs and concluded that it hadn’t.  Kemper/Prime Indus. Partners v. Montgomery Watson Americas, Inc., No. 05-1144 (7th Cir. June 19, 2007).

Blawgletter wonders why the court bothered to publish an opinion in a case with such an obvious outcome.  More, the court’s discussion of Illinois law on damages for negligent misrepresentation doesn’t even resolve the question of the proper measure.  And, finally, why on earth go spend 13 pages about "remediation" costs that — we learn only at the end — the plaintiff never spent and would never have to shell out, having disposed of the land for more than it paid!

Barry Barnett

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Blawgletter reported yesterday that the U.S. Supreme Court granted review of a Fourth Circuit decision involving sections 502(a)(2) and 502(a)(3) of the Employee Retirement Income Security Act in LaRue v. DeWolff, Boberg & Assoc., Inc., No. 06-856 (U.S. June 18, 2007).  The court of appeals held against the plaintiffs under both sections. 

A reversal will brighten the prospects of unhappy participants in "defined contribution" 401(k) plans.  That seems especially so with the section 502(a)(2) issue, which allows recovery of losses on behalf of the plan itself.  Defendants have argued that all or substantially all plan participants must suffer the same loss before someone can sue for the plan to recover plan losses.  Also that individual losses must flow directly to partipants’ accounts. 

Blawgletter hopes that the Court will rule that injury to the plan triggers the right to sue and that the plan fiduciary may allocate the plan recovery among participants and beneficiaries as appropriate.

Barry Barnett

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Thomas J. DeBenedictis alleged that Merrill Lynch and affiliates violated federal securities law by selling Class B shares of mutual funds without disclosing that they carried higher expenses and produced lower yields than other classes of shares.  But the district court dismissed his complaint, holding that he filed suit too late.  The Third Circuit affirmed.  It concluded that "storm warnings" put Mr. DeBenedictis on "inquiry notice" more than two years before he sued.  DeBenedictis v. Merrill Lynch & Co., Inc., No. 06-1867 (9th Cir. June 18, 2007).

Barry Barnett

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The Federal Circuit today upheld a judgment of invalidity because the patent specification didn’t disclose a structure capable of performing a "control" function.  Biomedino, LLC v. Waters Technologies Corp., No. 06-130 (Fed. Cir. June 18, 2007).

The court pointed to paragraph 6 of 35 U.S.C. 112 as allowing a "means" element in patent claims — as in a "control means" for accomplishing a step or function.  But paragraph 6 also requires, as quid pro quo for imprecision in the patent claim, that the means element covers only the "structure, material, or acts described in the specification or equivalents thereof."  The specification in Biomedino included no structure that corresponded to the "control means".  The patent therefore failed for indefiniteness.

Barry Barnett

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The U.S. Supreme Court today held, 7-1, that investors can’t sue investment banks under antitrust law for conspiring to restrict competition in public sales of securities.  Credit Suisse Securities LLC v. Billing, No. 05-1157 (June 18, 2007).  WSJ story here; NYT here.

The Court also granted review of a Fourth Circuit decision involving section 502(a)(2) of the Employee Retirement Income Security Act in LaRue v. DeWolff, Boberg & Assoc., Inc., No. 06-856 (U.S. June 18, 2007).  Order List here.

Barry Barnett

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