Case Comments


Securities Law—Second Circuit Accepts Rule 10b-5 Pleading of Economic Loss After Share-Price Recovery—Acticon AG v. China North East Petroleum Holdings Ltd., 692 F.3d 34 (2d Cir. 2012)

PdfPDF by James M. Alexander · December-26-2013 · Categories: Case Comments, Number 4, Print Edition, Volume 46

Securities and Exchange Commission (SEC) Rule 10b-5 provides the principal remedy for private investors ensnared in fraudulent securities transactions. A successful pleading of a fraud-on-the-market claim under Rule 10b-5 requires a showing of actual economic loss caused by a fraudulently inflated price of a security purchased by the plaintiff. In Acticon AG v. China North East Petroleum Holdings Ltd., the Court of Appeals for the Second Circuit considered whether a defrauded investor’s unrealized opportunity to sell securities at a profit precludes the ability to prove economic loss under Rule 10b-5’s fraud-on-the-market theory. The Second Circuit held that a recovery in share price after the fraud was disclosed to the purchasers does not automatically defeat an inference of economic loss at [...]

Cyber Law—Dismissing Employer’s Claim Under the CFAA Against Former Employees Who Allegedly Misappropriated Trade Secrets—WEC Carolina Energy Solutions LLC v. Miller, 687 F.3d 199 (4th Cir. 2012), cert. dismissed, 133 S. Ct. 831 (2013)

PdfPDF by Abbey P. Coffin · December-26-2013 · Categories: Case Comments, Number 4, Print Edition, Volume 46

Among other things, the Computer Fraud and Abuse Act (CFAA) provides for civil and criminal penalties when a person, “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains information from any protected computer.” Employers have increasingly sought relief under the CFAA against errant employees who download confidential and proprietary information from the employer’s network files for their own benefit or for the benefit of a competitor. In WEC Carolina Energy Solutions LLC v. Miller, the Fourth Circuit Court of Appeals determined whether WEC Carolina Energy Solutions LLC (WEC) could maintain a CFAA claim against former employees and a competitor who allegedly misappropriated WEC’s proprietary information. The Fourth Circuit affirmed the district court’s dismissal of the CFAA [...]

Copyright Law—Southern District of Texas Still Has Dial-Up and Holds Uploaded Webpages Not Published or Accessible—Rogers v. Better Business Bureau of Metropolitan Houston, Inc., 887 F. Supp. 2d 722 (S.D. Tex. 2012)

PdfPDF by R. Brice Turner · December-26-2013 · Categories: Case Comments, Print Edition, Volume 46

In order to bring a copyright infringement suit before a court, the work must first have been registered with the United States Copyright Office (Copyright Office). In addition to permitting copyright infringement actions, a copyright’s registration “constitute[s] prima facie evidence of the validity of the copyright.” The certificate of registration is usually held valid unless a defendant can prove that the claimant presented inaccurate information to the Copyright Office with the intent to commit fraud. In Rogers v. Better Business Bureau of Metropolitan Houston, Inc., the United States District Court for the Southern District of Texas analyzed whether uploading webpages to the internet constituted “publication” under copyright law, an act that would invalidate a certificate of copyright registration covering an [...]

Constitutional Law—State-Funded Use of Religious Facilities for Public High School Ceremonies Violates the Establishment Clause—Doe ex rel. Doe v. Elmbrook School District, 687 F.3d 840 (7th Cir.), petition for cert. filed, 81 U.S.L.W. 3371 (U.S. Dec. 20, 2012) (No. 12-755)

PdfPDF by Kristen Salvaggio · May-15-2013 · Categories: Case Comments, Number 2, Print Edition, Volume 46

The First Amendment to the United States Constitution embodies one of the country’s founding principles—separation of church and state—by prohibiting Congress from enacting laws that either respect a religious establishment or prohibit the people’s free exercise of religion.  Analysis of issues arising under violation of the Establishment Clause consists of numerous, competing tests presented by the Supreme Court.  In Doe ex rel. Doe v. Elmbrook School District, the Seventh Circuit considered two such tests and held that an unacceptable amount of religious endorsement and coercion occurred when high school graduation ceremonies were held inside a church. . .  

Antitrust Law—Rejecting the “Scope of the Patent” Test in Analysis of Reverse Payments in Pharmaceutical Industry—In re K-Dur Antitrust Litigation, 686 F.3d 197 (3d Cir.), petition for cert. filed, 81 U.S.L.W. 3090 (U.S. Aug. 29, 2012) (No. 12-265); 81 U.S.L.W. 3090 (U.S. Aug. 24, 2012) (No. 12-245)

PdfPDF by Abbey P. Coffin · May-15-2013 · Categories: Case Comments, Number 2, Print Edition, Volume 46

The Sherman Antitrust Act (Sherman Act) prohibits businesses from contracting, combining, and conspiring to restrain trade or commerce.  Reverse-payment-patent-settlement agreements between brand-name and generic pharmaceutical companies—whereby a brand-name-patent holder pays its generic competitor to drop a pending patent suit and refrain from producing its generic drug for a definite period of time—are generally subject to antitrust review under the Sherman Act.  In In re K-Dur Antitrust Litigation, the Court of Appeals for the Third Circuit considered whether reverse-payment agreements between Schering-Plough Corporation (Schering) and its generic competitors Upsher-Smith Laboratories (Upsher) and ESI Lederle (ESI) amounted to an unreasonable restraint on trade.  Parting with other circuits that more recently addressed the issue, the court expressly rejected the common scope-of-the-patent test and held that reverse-payment agreements [...]

Evidence—Withholding Original Documents and Producing Copies for Trial Constitutes Spoliation Warranting Adverse Inference—Bull v. United Parcel Service, Inc., 665 F.3d 68 (3d Cir. 2012)

PdfPDF by Jane T. Haviland · May-15-2013 · Categories: Case Comments, Number 2, Print Edition, Volume 46

When a party to litigation destroys relevant evidence, the judge may issue sanctions under the court’s inherent and statutory authority to punish spoliation of evidence.  The adverse inference sanction permits or compels the jury to conclude the destroyed evidence would have harmed the party responsible for its loss.  In Bull v. United Parcel Service, Inc., the Court of Appeals for the Third Circuit confronted the issue of whether the production of copies in lieu of original documents constitutes spoliation of evidence, and whether such action warrants the harsh sanction of dismissal, or a lesser sanction such as an adverse inference.  The Third Circuit held that Bull spoliated evidence by producing copies in place of originals because the authenticity of such documents cannot [...]

Admiralty & Maritime Law—Ninth Circuit Relocates “High Seas” Under Death on the High Seas Act—Helman v. Alcoa Global Fasteners, Inc., 637 F.3d 986 (9th Cir. 2011)

PdfPDF by Andrew J. Burke · May-15-2013 · Categories: Case Comments, Number 2, Print Edition, Volume 46

Article III of the United States Constitution extends federal judicial power to all cases arising under admiralty and maritime jurisdiction.  The Death on the High Seas Act (DOHSA) in turn provides the exclusive, albeit monetarily limited, maritime remedy for wrongful deaths that take place on the “high seas beyond 3 nautical miles from the shore of the United States.”  In Helman v. Alcoa Global Fasteners, Inc., the Court of Appeals for the Ninth Circuit considered, as a matter of first impression, whether DOHSA applied to, and thus preempted other available claims arising from, a fatal helicopter accident that occurred approximately nine and a half nautical miles off the California coastline.  Finding little interpretive significance in the term “high seas,” the Ninth [...]

Criminal Law—First Circuit Upholds Restitution Order Without Requiring Evidence of Defendant’s Causal Contribution to Victim’s Losses—United States v. Kearney, 672 F.3d 81 (1st Cir. 2012)

PdfPDF by Evan M. O’Roark · February-24-2013 · Categories: Case Comments, Number 1, Print Edition, Volume 46

In criminal cases, restitution for victims is typically limited to the losses that the defendant caused in the commission of the crime.1 Title 18, section 2259 of the United States Code requires courts to order restitution for victims of sexual crimes against children in “the full amount of the victim’s losses.” In United States v. Kearney, a case of first impression, the United States Court of Appeals for the First Circuit considered whether a person depicted in child pornography was entitled to restitution under § 2259 from someone who had criminally possessed, distributed, and transported that pornography. The First Circuit concluded that the victim’s injuries were proximately caused by the defendant’s use of the pornography, and upheld the district court’s restitution order[...]

Constitutional Law—Maryland District Court Finds Government’s Acquisition of Historical Cell Site Data Immune from Fourth Amendment—United States v. Graham, 846 F. Supp. 2d 384 (D. Md. 2012)

PdfPDF by Jeremy Derman · February-24-2013 · Categories: Case Comments, Number 1, Print Edition, Volume 46

A criminal defendant’s motion to suppress often implicates the Fourth Amendment’s protections against “unreasonable searches and seizures.” Nevertheless, the extent to which government surveillance activities associated with wireless communication and location tracking technology fall within the ambit of the Fourth Amendment is unclear. In United States v. Graham, the United States District Court for the District of Maryland considered whether defendants’ Fourth Amendment rights were violated when the government acquired historical cell site location information (CSLI) without a search warrant. The court found that the defendants’ Fourth Amendment rights were not violated because they did not have a legitimate expectation of privacy—a requisite condition precedent to an unconstitutional search determination—in the CSLI at issue[...]

Constitutional Law—Massachusetts Supreme Judicial Court Distinguishes Thompkins’s Unambiguous Invocation Requirement of Right to Remain Silent—Commonwealth v. Clarke, 960 N.E.2d 306 (Mass. 2012)

PdfPDF by David C. Soutter · February-24-2013 · Categories: Case Comments, Number 1, Print Edition, Volume 46

The United States Supreme Court famously held in Miranda v. Arizona that the Fifth Amendment privilege against self-incrimination granted a series of required safeguards, and outlined a way a suspect can invoke his rights.  In 2010, the Court revisited this issue in Berghuis v. Thompkins, holding that a suspect simply remaining silent was not enough, but he must “unambiguously” announce his intention to invoke the right to remain silent.  In Commonwealth v. Clarke,  the Supreme Judicial Court of Massachusetts (SJC) considered Thompkins in determining whether a suspect’s head shaking constituted an unambiguous invocation of the right to remain silent.  The SJC held that the defendant’s shaking of his head met the heightened Thompkins standard and also distinguished Thompkins because article XII of the Massachusetts Declaration of Rights did not require “utmost clarity” to invoke the right to remain silent[...]