Last weekend was the 91st Academy Awards. In honor of the Oscars, I thought I would take a look at some of the movies about financial and securities fraud that have won or been nominated for Oscars, and what we can learn from them. Warning, some of the movie clips linked in this post may contain profanity (or actors who have allegedly engaged in illegal conduct).
In Geismann v. ZocDoc, Inc., the Second Circuit extended the Supreme Court’s decision in Campbell-Ewald Co. v. Gomez, No. 14-857 (2016) to protect plaintiffs from defendants who seek to dodge class litigation. Defendants cannot force plaintiffs to accept money that they deposit into an account with the Court and then claim that this satisfies all of the demands of the proposed class.
In a recent decision, Mayberry v. KKR & Co., L.P., No. 17-CI-01348 (Ky. Cir. Ct., Nov. 30, 2018), a Kentucky state court sustained claims brought by several government employees who sued derivatively on behalf of the Kentucky Retirement Systems. The suit alleges that the retirement systems over-invested their pension assets in risky and expensive hedge fund-managed accounts, resulting in billions of dollars of financial losses. The decision highlights several issues related to trustees’ roles in overseeing public retirement funds, and the litigation may eventually publicize the relationships between hedge funds and retirement plans.
Sometimes the value of a company’s securities decreases because corporate misconduct or fraud is revealed. For example, news may come out that a company lied in its financial statements about its revenue or profits, or a company hid significant negative events impacting its manufacturing facilities. Because the U.S. securities laws apply depends on whether the stock was purchased on a U.S. exchange, not the residency or location of the investor, investors who live outside the U.S. may be able to recover damages under the U.S. securities laws. The recent scandal at Petrobras Brasileiro S.A. (“Petrobras”) provides a perfect example of this.
Federal courts are courts of limited jurisdiction; they cannot hear every case. A dispute must fall within the federal court’s specific “subject matter jurisdiction” in order for the federal court to hear and decide the dispute. One element of subject matter jurisdiction is Article III or constitutional standing. The Seventh Circuit recently rejected one argument as a “dubious strategy,” holding that state court defendants cannot remove a case to federal court and then move to dismiss for lack of standing under the Supreme Court’s decision in Spokeo, Inc. v. Robins.
The United States Court of Appeals for Veterans Claims recently ruled that veterans seeking benefits from the Department of Veterans Affairs may pursue class actions. As one of the judges explained, “[t]his holding is a seismic shift in our precedent, departing from nearly 30 years of this Court’s case law.”
More than two years ago, a group of faith-based institutions purchased shares in Sturm, Ruger and American Outdoor. Then the Parkland, Florida tragedy occurred on February 14, 2018. A few weeks later, these faith-based investors submitted two nearly identical shareholder proposals to Sturm Ruger and American Outdoor, “requesting reports detailing the companies’ efforts to make their products safer.”
Class actions suits enable individuals with relatively small claims to band together and force change where corporate wrongdoing is widespread. Here we present 5 examples of the power of class action lawsuits to make people’s lives better.