We all know that the Supreme Court is responsible for interpreting and clarifying the law. When a dispute between two or more parties reaches the Supreme Court, the Court’s decision in that case has the potential to influence American laws for decades to come. Sometimes, the rulings made by the Supreme Court influence not just the laws, but how those laws are enforced, including when a decision can be appealed to a higher court.
Appealing a Consolidated Lawsuit
For example, in a recent dispute that the Supreme Court will hear this term, multiple lawsuits that have been filed alleging manipulation of the London Interbank Offered Rate (LIBOR). A number of those lawsuits have been consolidated into one complaint. Courts will sometimes do this when one plaintiff is facing multiple lawsuits in which the complaints are all the same or similar. By combining them into one large lawsuit, the courts can deal with the case more efficiently and avoid repeating itself by dealing with the same issues again and again.
Many times, when dealing with a lawsuit that has multiple complaints, a court will dismiss some of the complaints while allowing others to continue through the court system. The question then becomes whether plaintiffs can appeal the court’s dismissal to a higher court. When plaintiffs tried to do this in the recent case involving alleged manipulation of the LIBOR, the Second Circuit Court declined to hear the case, claiming that, because the lower court had only dismissed some of the complaints, the Second Circuit Court lacked the jurisdiction for an appeal. The plaintiffs then appealed the decision to the Supreme Court, which will hear the case this term. The Supreme Court’s decision will determine whether such cases can move up the appellate courts piece by piece, or as one consolidated case.
The Defendant’s Burden in Moving a Class Action Lawsuit to Federal Court
The Supreme Court will also rule on the application of the 2005 Class Action Fairness Act (CAFA). This act gave defendants the power to have a class action lawsuit moved to federal court, if the case fit certain requirements, in order to prevent plaintiffs from filing the lawsuit in the court that would be most likely to rule in their favor, also known as “forum shopping”. In order to move a case to federal court, the class of plaintiffs must consist of members from more than one state and the amount in dispute must be more than $5 million.
In Dart Cherokee Basin Operating Company, LLC v. Owens, the district court and the Tenth Circuit Court both remanded the case back to state court because the defendant did not provide sufficient evidence that the amount in dispute is more than $5 million. The defendant argues that the courts should not need evidence of the amount in dispute until the plaintiff denies the amount. The Supreme Court’s ruling in this case will determine the amount of evidence a defendant needs to provide in order to have a case moved to federal court.
Exceptions to Anti-Trust Laws
Setting up a regulatory agency that consists of participants of the market that the agency is supposed to regulate, can lead to a significant conflict of interest for those participants. For example, when a board that regulates dentists is comprised mostly of practicing dentists, it is easy to see how the members of that board might be tempted to use their state powers against their competitors. There are anti-trust laws in place to prevent this from happening, but there is also a state-action doctrine that provides an exception to the anti-trust laws. According to the doctrine, a particular market can be regulated by a board of its own members, so long as the state regulates the actions of the board.
The Federal Fair Trade Commission recently issued an injunction against certain actions performed by a board that consisted mostly of dentists and regulates dental practices in North Carolina. The board argued that it does not need to be under the state’s active supervision in order to qualify for the state-action exemption to anti-trust laws. The Fourth Circuit Court disagreed with this argument and the board of dentists appealed the decision to the Supreme Court. The Court’s decision will either extend or limit the immunity of such boards from anti-trust laws.
Protecting Purchasers of Securities
When purchasing securities, the buyer frequently relies on information provided by the people from whom she is buying the security. Because there is often much money at stake, the Securities Act of 1933 has strict regulations that allow someone buying a security to sue the issuer, directors, or underwriters if “any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein”.
The Act does not specify whether the buyer of a security can file a lawsuit over a statement of opinion contained in the registration statement. In Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, the plaintiffs filed the lawsuit, alleging that a statement of opinion contained in their registration statement can be proven to be objectively false. The Sixth Circuit Court ruled in favor of the plaintiffs, deciding that the proof of objective falsehood was sufficient. The defendants appealed the decision to the Supreme Court, whose decision could have far-reaching implications for securities lawsuits all over the country.
Super Lawyers named Illinois business trial attorney Peter Lubin a Super Lawyer in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Super Lawyers also named our associates, Patrick Austermuehle and Andrew Murphy Rising Stars. Lubin Austermuehle’s Chicago business trial lawyers have well over a quarter of a century of experience in litigating complex shareholder disputes for closely held family and other closely held businesses. Our Oak Brook and Naperville business law lawyers handle emergency business law suits involving injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact one of our business attorneys by calling our toll free number at 630-333-0333 or online here.