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Court weighs securities fraud class-action cases
Court Issues |
2014/03/05 21:07
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The Supreme Court is considering whether to abandon a quarter-century of precedent and make it tougher for investors to band together to sue corporations for securities fraud.
The justices hear arguments Wednesday in an appeal by Halliburton Co. that seeks to block a class-action lawsuit claiming the energy services company inflated its stock price.
A group of investors says it lost money when Halliburton's stock price dropped after revelations the company misrepresented revenues, understated its liability in asbestos litigation and overstated the benefits of a merger.
Justices threw out the company's first attempt to block the lawsuit in 2011. But Halliburton is now urging the court to overturn a 25-year-old decision that sparked a tidal wave of securities-related, class-action lawsuits against publicly traded companies and has led to billions in settlements.
The court's 1988 decision in Basic v. Levinson says shareholders who claim they were defrauded by false statements in securities filings don't have to prove they actually relied on the statements. Rather, the court reasoned that any misrepresentation would be reflected in the current stock price. Even if investors are not aware of the misstatements, they are presumed to be aware of them because they affect the stock price.
This presumption, known as the "fraud-on-the-market theory," has become the driving force for modern class-action securities cases. But some economists have questioned whether this theory makes sense anymore, saying it doesn't account for the sometimes random and arbitrary nature of stock trading. |
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State high court assigns liability in liquor cases
Court Issues |
2014/02/28 21:50
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California's high court has ruled that hosts who charge admission to parties may be held legally responsible if a drunken underage guest is hurt or injures someone else.
The state Supreme Court said in the unanimous ruling Monday that a cover charge amounts to a sale of alcohol, and state law creates liability for those who sell alcohol to obviously intoxicated minors.
The case stems from a 2007 party organized by then-20-year-old Jessica Manosa at a rental home owned by her parents. Nineteen-year-old Andrew Ennabe died after being hit outside the home by a car driven by another man who had been asked to leave the gathering.
Ennabe's family sought to hold Manosa liable for his death, through her parents and their homeowners insurance.
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High court climate case looks at EPA's power
Law Firm News |
2014/02/28 21:50
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Industry groups and Republican-led states are heading an attack at the Supreme Court against the Obama administration's sole means of trying to limit power-plant and factory emissions of gases blamed for global warming.
As President Barack Obama pledges to act on environmental and other matters when Congress doesn't, or won't, opponents of regulating carbon dioxide and other heat-trapping gases cast the rule as a power grab of historic proportions.
The court is hearing arguments Monday about a small but important piece of the Environmental Protection Agency's plans to cut the emissions — a requirement that companies expanding industrial facilities or building new ones that would increase overall pollution must also evaluate ways to reduce the carbon they release.
Environmental groups and even some of their opponents say that whatever the court decides, EPA still will be able to move forward with broader plans to set emission standards for greenhouse gases for new and existing power plants. |
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Arizona high court bars cuts to public pensions
Court Issues |
2014/02/24 22:24
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The Arizona Supreme Court ruled Thursday that the Legislature can't cut cost-of-living increases promised to judges and state elected officials.
The court unanimously upheld a Superior Court judge's ruling in favor of retired judges who challenged the Legislature's 2011 decision to cut benefits increases for retirees in the state plan for judges and other elected officials.
The Legislature cut the cost-of-living increases after the judges' retirement system lost money in the Great Recession after gradually becoming underfunded in previous years.
Denying an appeal by state officials, the high court agreed the increases are part of a promised retirement benefit and are protected by the pension clause of the Arizona Constitution. That clause bars "diminishing or impairing" public retirement benefits.
Lawyers for the retired judges had argued that the clause protected both their retirement benefits and the increases to those benefits, while lawyers for the state argued that the protection only applied to benefits with increases calculated by current methods.
Arizona is not alone in grappling with the problem of underfunded public pensions. A proposed ballot initiative in California would allow cities to renegotiate public workers' future pension and retirement benefits. Oregon's Legislature passed a law similar to what Arizona passed in 2011 that cuts future cost-of-living adjustments. |
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