Plaintiffs filed a class action lawsuit in state court against Defendants, alleging violations of state securities laws. Defendants removed the case to federal court under the Securities Litigation Uniform Standards Act (SLUSA), arguing that the case involved covered securities. Plaintiffs amended their complaint to exclude any claims related to covered securities, leading the district court to remand the case to state court. After three years of state court litigation, Defendants removed the case again, citing an expert report that allegedly identified covered securities. The district court remanded the case again and awarded Plaintiffs $63,007.50 in attorneys' fees.The United States District Court for the District of South Carolina initially denied Plaintiffs' motion to remand but later granted it after Plaintiffs amended their complaint. The court found that the amended complaint excluded any claims related to covered securities, thus SLUSA did not apply, and no federal question remained. After Defendants removed the case a second time, the district court remanded it again and awarded attorneys' fees, finding the second removal lacked a reasonable basis.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's award of attorneys' fees. The court held that the second removal was improper because the amended complaint explicitly excluded claims related to covered securities, and thus SLUSA did not apply. Additionally, the court found that the removal was objectively unreasonable, as the district court had already addressed the issues in its first remand order. The Fourth Circuit also denied Plaintiffs' request for additional attorneys' fees for defending the appeal, stating that 28 U.S.C. § 1447(c) does not authorize fee awards on appeal. View "Black v. Mantei & Associates, Ltd." on Justia Law

Michael Hild, the Defendant-Appellant, was convicted by a jury in 2021 of securities fraud, wire fraud, bank fraud, and conspiracy. Hild, as the CEO of Live Well Financial, Inc., engaged in a scheme to inflate the value of a bond portfolio used as collateral for loans. This scheme allowed Live Well to grow its bond portfolio significantly from 2014 to 2016. Hild appealed his conviction, arguing that the evidence was insufficient and that a new trial was warranted due to a Supreme Court decision invalidating one of the fraud theories used in his jury instructions.The United States District Court for the Southern District of New York denied Hild's post-trial motions for acquittal and a new trial. Hild then appealed to the United States Court of Appeals for the Second Circuit, challenging the sufficiency of the evidence and the jury instructions.The Second Circuit reviewed the case and found that sufficient evidence supported Hild's conviction. The court noted that Hild misrepresented the value of the bonds to secure loans and acted with fraudulent intent. The court also addressed Hild's argument regarding the jury instructions, acknowledging that the instructions included an invalid right-to-control theory of fraud as per the Supreme Court's decision in Ciminelli v. United States. However, the court concluded that this error did not affect Hild's substantial rights because the jury would have convicted him based on a valid theory of fraud.Ultimately, the Second Circuit affirmed the judgment of the district court, upholding Hild's conviction on all counts. View "United States v. Hild" on Justia Law

In this case, the defendant, a radio talk show host and church founder, began selling bitcoin in 2014. The government investigated his bitcoin sales and charged him with conspiracy to operate an unlicensed money transmitting business, operation of an unlicensed money transmitting business, conspiracy to commit money laundering, money laundering, and tax evasion. After a jury convicted him on all counts, the district court acquitted him of the substantive money laundering count due to insufficient evidence but upheld the other convictions.The defendant appealed, arguing that the district court should not have allowed the money-transmitting-business charges to proceed to trial, citing the "major questions doctrine" which he claimed should exempt virtual currencies like bitcoin from regulatory statutes. He also contended that the evidence was insufficient to support his tax evasion conviction and that he should be granted a new trial on the money laundering conspiracy count due to prejudicial evidentiary spillover. Additionally, he argued that his 96-month sentence was substantively unreasonable.The United States Court of Appeals for the First Circuit reviewed the case. The court rejected the defendant's major questions doctrine argument, holding that the statutory definition of "money transmitting business" under 31 U.S.C. § 5330 includes businesses dealing in virtual currencies like bitcoin. The court found that the plain meaning of "funds" encompasses virtual currencies and that the legislative history and subsequent congressional actions supported this interpretation.The court also found sufficient evidence to support the tax evasion conviction, noting that the defendant had substantial unreported income and engaged in conduct suggesting willful evasion of taxes. The court rejected the claim of prejudicial spillover, concluding that the evidence related to the money laundering conspiracy was admissible and relevant.Finally, the court upheld the 96-month sentence, finding it substantively reasonable given the defendant's conduct and the factors considered by the district court. The court affirmed the district court's rulings and the defendant's convictions and sentence. View "United States v. Freeman" on Justia Law

The case involves a dispute between John B. Clinton, a former member and manager of CCP Equity Partners, LLC (CCP), and three other members and managers of CCP, Michael E. Aspinwall, Steven F. Piaker, and David W. Young. Clinton alleged that the defendants breached their contractual duties under CCP’s operating agreement by amending the agreement in 2008, removing him as a member in 2013, and maintaining an unnecessary $3 million capital reserve fund.The trial court, after a jury trial, found in favor of Clinton on his breach of contract claim, awarding him damages. The defendants appealed, arguing that the trial court incorrectly interpreted the second sentence of the duty of care provision in the operating agreement as imposing affirmative duties on them and improperly instructed the jury based on that interpretation. They also contended that the trial court abused its discretion by admitting the testimony of Clinton’s expert witness regarding the capital reserve fund.The Connecticut Supreme Court reviewed the case and agreed with the defendants that the trial court misinterpreted the second sentence of the duty of care provision, which is an exculpatory clause under Delaware law that limits liability rather than creating duties. The court found that the trial court’s jury instructions were incorrect and harmful, as they allowed the jury to find the defendants liable for acting in bad faith or with gross negligence or willful misconduct, which are not duties imposed by the agreement. The court also noted that the trial court improperly delegated the task of determining whether the contract provisions were ambiguous to the jury.The Connecticut Supreme Court reversed the trial court’s judgment and remanded the case for a new trial. The court also vacated the trial court’s awards of attorney’s fees, costs, and interest to Clinton. However, the court found no abuse of discretion in the trial court’s admission of the expert witness’s testimony regarding the capital reserve fund. View "Clinton v. Aspinwall" on Justia Law

Rhode Island Truck Center, LLC (RITC) filed a protest against Daimler Trucks North America, LLC (DTNA) for allegedly violating Rhode Island General Laws § 31-5.1-4.2(a). DTNA had granted a franchise to Advantage Truck Raynham, LLC (ATG Raynham) in Raynham, Massachusetts, which RITC claimed was within its "relevant market area" as defined in their franchise agreement. RITC argued that DTNA failed to provide the required statutory notice before establishing the new dealership.The Dealers' Hearing Board determined it lacked jurisdiction over RITC's protest, citing the dormant Commerce Clause of the United States Constitution. RITC then filed an administrative appeal in the Superior Court, which DTNA removed to the United States District Court for the District of Rhode Island. The District Court concluded that the Dealer Law could not be applied extraterritorially without violating the Commerce Clause. The United States Court of Appeals for the First Circuit certified a question to the Rhode Island Supreme Court to determine whether a "relevant market area" under § 31-5.1-4.2(a) could extend beyond Rhode Island's borders.The Rhode Island Supreme Court reviewed the certified question de novo and concluded that the statute's plain language and legislative intent allowed a "relevant market area" to extend beyond state borders. The Court noted that the statute's definition of "relevant market area" includes a 20-mile radius or the area defined in the franchise agreement, whichever is greater, without limiting it to within Rhode Island. The Court emphasized that the legislature's intent was to provide dealers with a protective area that could extend beyond state lines, especially given Rhode Island's small geographic size. Thus, the Court answered the certified question in the affirmative, allowing the "relevant market area" to extend beyond Rhode Island's borders. View "Rhode Island Truck Center, LLC v. Daimler Trucks North America, LLC" on Justia Law

The New Jersey Coalition of Automotive Retailers (NJCAR), a trade association representing franchised new car and truck retailers in New Jersey, sued Ford Motor Company. NJCAR alleged that Ford's Lincoln Commitment Program (LCP) violated the Franchise Practices Act (FPA) by creating price differentials among franchisees. NJCAR is not a franchisee itself but represents franchisee members, including Lincoln dealerships.The trial court granted summary judgment in favor of Ford, ruling that NJCAR lacked statutory standing to sue under the FPA because the statute limits the right to sue to franchisees. NJCAR appealed, arguing that it had associational standing to represent its members. The Appellate Division reversed the trial court's decision, holding that NJCAR had associational standing and that New Jersey's liberal standing doctrine did not preclude NJCAR from bringing the suit.The Supreme Court of New Jersey reviewed the case and reversed the Appellate Division's decision. The Court held that the FPA explicitly limits the right to bring a lawsuit to franchisees, as indicated by the statute's language stating that "any franchisee may bring an action against its franchisor." The Court emphasized that the Legislature's intent was clear in restricting the right to sue to franchisees only, and NJCAR, not being a franchisee, lacked statutory standing to bring the suit under the FPA. The Court did not address whether NJCAR would have associational standing under a different cause of action, limiting its holding solely to the FPA. View "New Jersey Coalition of Automotive Retailers, Inc. v. Ford Motor Company" on Justia Law

A stockholder of Amazon.com, Inc. sent a letter to the company demanding to inspect its books and records under Section 220 of the Delaware General Corporation Law. The stockholder aimed to investigate potential wrongdoing and mismanagement by Amazon, believing the company engaged in anticompetitive activities in the U.S. and Europe. When the stockholder and Amazon could not agree on certain conditions for producing the records, the stockholder filed an action in the Court of Chancery.A Magistrate in Chancery conducted a one-day trial and concluded that the stockholder did not meet its burden to prove a "credible basis" for inferring possible wrongdoing by Amazon. The stockholder took exceptions to the final report. A Vice Chancellor adopted the final report's conclusion but did not reach its credible basis analysis, instead finding the scope of the stockholder's stated purpose to be "facially improper" and not "lucid."On appeal, the Supreme Court of the State of Delaware found that the Vice Chancellor erred in interpreting the scope of the stockholder's purpose and was required to engage with the evidence presented. The court determined that the evidence, including a complaint filed by the Federal Trade Commission against Amazon for alleged antitrust violations that largely survived a motion to dismiss, established a credible basis from which a court could infer possible wrongdoing by Amazon. The Supreme Court reversed the judgment of the Court of Chancery and remanded for further proceedings to determine the scope and conditions of production consistent with its decision. View "Roberta Ann K.W. Wong Leung Revocable Trust v. Amazon.com, Inc." on Justia Law

The case involves a challenge to the U.S. Securities and Exchange Commission's (SEC) 2023 Funding Order, which amended the funding structure for the Consolidated Audit Trail (CAT). The CAT was established to create a single electronic system for gathering and maintaining data on stock trades. Initially, the SEC estimated the cost of building and operating the CAT to be significantly lower than the actual costs incurred. The 2023 Funding Order allowed self-regulatory organizations (SROs) to pass all CAT costs to their broker-dealer members, a shift from the original plan that required both SROs and broker-dealers to share the costs.The American Securities Association and Citadel Securities, LLC challenged the 2023 Funding Order, arguing that it was arbitrary and capricious. They contended that the SEC failed to justify the decision to allow SROs to pass all CAT costs to broker-dealers and did not update its economic analysis to reflect the actual costs of the CAT, which had significantly increased since the original estimates.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court found that the SEC's 2023 Funding Order was internally inconsistent and represented an unexplained policy change from previous rules that required both SROs and broker-dealers to share CAT costs. The court also determined that the SEC failed to consider the effects of allowing SROs to pass all CAT costs to broker-dealers, creating a potential free-rider problem. Additionally, the court held that the SEC's reliance on outdated economic analysis was unreasonable given the significant increase in CAT costs.The Eleventh Circuit vacated the 2023 Funding Order, stayed its decision for sixty days to allow the SEC to address the issues, and remanded the matter to the SEC for further proceedings consistent with the court's opinion. View "American Securities Association v. Securities and Exchange Commission" on Justia Law

Keith Berman, the appellant, pleaded guilty to securities fraud, wire fraud, and obstruction of proceedings related to a scheme to fraudulently increase the share price of his company, Decision Diagnostics Corp. (DECN). Berman issued false press releases claiming DECN had developed a blood test for coronavirus, which led to a significant increase in the company's stock price. The Securities and Exchange Commission (SEC) investigated and suspended trading of DECN's stock, revealing that Berman's claims were false. Despite this, Berman continued to issue misleading statements and used aliases to discredit the SEC's investigation.The United States District Court for the District of Columbia sentenced Berman to 84 months' imprisonment. The court calculated the loss caused by Berman's fraud using the modified rescissory method, determining a loss amount of $27.8 million. This calculation was based on the difference in DECN's stock price before and after the fraud was disclosed, multiplied by the number of outstanding shares. The court also applied enhancements for sophisticated means and substantial financial hardship to five or more individuals, resulting in a Guidelines range of 168 to 210 months, but ultimately imposed a downward variance.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. Berman challenged the district court's calculation of the loss amount, arguing that the fraud was disclosed earlier and that the loss was not solely attributable to his fraudulent statements. The appellate court found that the district court did not commit clear error in determining the disclosure date or in its loss causation analysis. The court also upheld the enhancements for sophisticated means and substantial financial hardship, finding sufficient evidence to support these determinations. Consequently, the appellate court affirmed the district court's judgment. View "United States v. Berman" on Justia Law

Safehouse, a Pennsylvania nonprofit corporation, was established in 2018 to address opioid abuse in Philadelphia by providing overdose prevention services, including supervised illegal drug use. Safehouse argues that its activities are motivated by a religious belief in the value of human life and that government intervention substantially burdens its religious exercise.The United States District Court for the Eastern District of Pennsylvania initially determined that Safehouse’s proposed activities did not violate 21 U.S.C. § 856(a)(2). However, the Third Circuit Court of Appeals reversed this decision, holding that Safehouse’s activities would indeed violate the statute. On remand, the District Court dismissed Safehouse’s Religious Freedom Restoration Act (RFRA) and Free Exercise counterclaims, reasoning that non-religious entities are not protected by these provisions. Safehouse appealed this dismissal.The United States Court of Appeals for the Third Circuit reviewed the case and held that the District Court erred in its interpretation. The Third Circuit determined that RFRA and the Free Exercise Clause extend protections to non-natural persons, including non-religious entities like Safehouse. The court emphasized that RFRA’s plain text and Free Exercise doctrine protect any “person” exercising religion, which includes corporations and associations. The court reversed the District Court’s dismissal of Safehouse’s RFRA and Free Exercise counterclaims and remanded the case for further consideration of whether Safehouse has plausibly pleaded these claims. The appeal by José Benitez, President of Safehouse, was dismissed due to lack of appellate standing. View "United States v. Safehouse" on Justia Law