15 U.S.C. § 77aa–Schedule Of Information Required In Registration Statement Under The Securities Act Of 1933

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress set forth the schedule of information required to be contained in registration statements in 15 U.S.C. § 77aa, which provides as follows:

§ 77aa. Schedule of information required in registration statement

SCHEDULE A

(1) The name under which the issuer is doing or intends to do business;

(2) the name of the State or other sovereign power under which the issuer is organized;

(3) the location of the issuer’s principal business office, and if the issuer is a foreign or territorial person, the name and address of its agent in the United States authorized to receive notice;

(4) the names and addresses of the directors or persons performing similar functions, and the chief executive, financial and accounting officers, chosen or to be chosen if the issuer be a corporation, association, trust, or other entity; of all partners, if the issuer be a partnership; and of the issuer, if the issuer be an individual; and of the promoters in the case of a business to be formed, or formed within two years prior to the filing of the registration statement;

(5) the names and addresses of the underwriters;

(6) the names and addresses of all persons, if any, owning of record or beneficially, if known, more than 10 per centum of any class of stock of the issuer, or more than 10 per centum in the aggregate of the outstanding stock of the issuer as of a date within twenty days prior to the filing of the registration statement;

(7) the amount of securities of the issuer held by any person specified in paragraphs (4), (5), and (6) of this schedule, as of a date within twenty days prior to the filing of the registration statement, and, if possible, as of one year prior thereto, and the amount of the securities, for which the registration statement is filed, to which such persons have indicated their intention to subscribe;

(8) the general character of the business actually transacted or to be transacted by the issuer;

(9) a statement of the capitalization of the issuer, including the authorized and outstanding amounts of its capital stock and the proportion thereof paid up, the number and classes of shares in which such capital stock is divided, par value thereof, or if it has no par value, the stated or assigned value thereof, a description of the respective voting rights, preferences, conversion and exchange rights, rights to dividends, profits, or capital of each class, with respect to each other class, including the retirement and liquidation rights or values thereof;

Statutes & Rules Uncategorized

15 U.S.C. § 77z-3–Commission’s General Exemptive Authority Under The Securities Act Of 1933

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress described the general exemptive authority of the Commission in 15 U.S.C. § 77z-3, which provides: § 77z-3. General exemptive authority The Commission, by rule or regulation, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this subchapter or of any rule or regulation issued under subchapter, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

Statutes & Rules Uncategorized

15 U.S.C. § 77z-2–Application Of Safe Harbor For Forward-Looking Statements Under The Securities Act Of 1933

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress described the application of safe harbor for forward-looking statements in 15 U.S.C. § 77z-2, which provides:

§ 77z-2. Application of safe harbor for forward-looking statements

(a) Applicability

This section shall apply only to a forward-looking statement made by–

(1) an issuer that, at the time that the statement is made, is subject to the reporting requirements of section 78m(a) or 78o(d) of this title;

(2) a person acting on behalf of such issuer;

(3) an outside reviewer retained by such issuer making a statement on behalf of such issuer; or

(4) an underwriter, with respect to information provided by such issuer or information derived from information provided by the issuer.

(b) Exclusions

Except to the extent otherwise specifically provided by rule, regulation, or order of the Commission, this section shall not apply to a forward-looking statement–

(1) that is made with respect to the business or operations of the issuer, if the issuer–

(A) during the 3-year period preceding the date on which the statement was first made–

(i) was convicted of any felony or misdemeanor described in clauses (i) through (iv) of section 78o(b)(4)(B) of this title; or

(ii) has been made the subject of a judicial or administrative decree or order arising out of a governmental action that–

(I) prohibits future violations of the antifraud provisions of the securities laws;

(II) requires that the issuer cease and desist from violating the antifraud provisions of the securities laws; or

(III) determines that the issuer violated the antifraud provisions of the securities laws;

(B) makes the forward-looking statement in connection with an offering of securities by a blank check company;

(C) issues penny stock;

(D) makes the forward-looking statement in connection with a rollup transaction; or

(E) makes the forward-looking statement in connection with a going private transaction; or

(2) that is–

(A) included in a financial statement prepared in accordance with generally accepted accounting principles;

(B) contained in a registration statement of, or otherwise issued by, an investment company;

(C) made in connection with a tender offer;

(D) made in connection with an initial public offering;

(E) made in connection with an offering by, or relating to the operations of, a partnership, limited liability company, or a direct participation investment program; or

(F) made in a disclosure of beneficial ownership in a report required to be filed with the Commission pursuant to section 78m(d) of this title.

Statutes & Rules Uncategorized

Class Action Antitrust/Unfair Competition Law (UCL) Claims Tie Labor Law Class Action Cases Confronting California Defense Attorneys In Weekly Filings

To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly an unofficial summary of legal categories for class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. This report covers the time period of from December 15 – December 21, 2006. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe.

Class Actions In The News Uncategorized

Brown v. Bank of America Class Action Defense Case: Defense Entitled To Summary Judgment On Electronic Funds Transfer Act (EFTA) And State Consumer Protection Law Class Action Claims Massachusetts Federal Court Holds

Massachusetts Federal Court Agrees with Defense that Class Action Complaint Failed to Prove Damages under EFTA (Electronic Funds Transfer Act) and State Consumer Protection Law Claims Because ATM Users Expressly Consented to Fee Charged and Because Bank of America did not Always Charge Non-Customers the Fee

Plaintiff filed a putative class action in Massachusetts federal court against Bank of America alleging that notices posted by the bank on its ATM machines in California, Maryland, Massachusetts and Rhode Island violated the federal Electronic Funds Transfer Act, 15 U.S.C. § 1693 (EFTA), as well as certain state consumer protection laws. Brown v. Bank of America, N.A., 457 F.Supp.2d 82, 84-85 (D. Mass. 2006). In part, plaintiffs complained that the Bank advised non-customers that it “may” charge them a fee when, in point of fact, it always charged them a fee (and thus should have disclosed that it “will” charge the fee). Defense attorneys moved for summary judgment on the state law claims and for partial summary judgment on the federal law claim. Id. The district court granted the defense motion as to the state law claims, and also agreed with defense attorneys with respect to the “verb choice” argument under the EFTA claim.

The genesis of the class action complaint is that while Bank of America permits its customers to use its ATMs for free “most, but not all, non-customers seeking to withdraw money from a Bank of America ATM must pay a small fee to the bank for the service.” Brown, at 84. The Bank gives notice of the fee in two ways. First, it posts decals on each ATM that states, in part, the Bank “may charge a $1.50 fee for a cash withdrawal from your NON-Bank of America account.” Id., at 84-85. Second, as part of the on-screen “click-through” process, the Bank requires users to affirmatively consent to the fee. Id., at 85. The class action complaint alleged that the Bank’s notice violated federal law because the regulations governing the EFTA require “notice that a fee will be imposed for providing electronic fund transfer services or a balance inquiry” and disclosure of the amount of the fee. Id., at 86 (quoting 12 C.F.R. § 205.16(b) (2005) (Regulation E)). This “improper notice” also underlies the state consumer protection law violations.

Class Action Court Decisions Uncategorized

Williams v. Mohawk Industries Class Action Defense Case: Class Action RICO Claims Cognizable For Allegedly Willful Hiring Of Illegal Workers But That State Law Unjust Enrichment Claims Fail Eleventh Circuit Holds

Eleventh Circuit Joins Sister Circuits in Holding that Knowingly Hiring Illegal Aliens to Lower Labor Costs Satisfies RICO Class Action Claims at Pleading Stage But Agrees with Defense that State Law Unjust Enrichment Claims Must be Dismissed

A class action alleging federal and state RICO (Racketeer Influenced and Corrupt Organizations Act) violations was filed in Georgia federal court by current and former hourly employees against Mohawk Industries – “the second largest carpet and rug manufacturer in the United States . . . [with] over 30,000 employees” – alleging that it knowingly hired and harbored illegal aliens in order to lower labor costs and to discourage workers’ compensation claims. Williams v. Mohawk Industries, Inc., 465 F.3d 1277, 1280, 1282 (11th Cir. 2006). The defense filed a 12(b)(6) motion to dismiss, which the federal court granted in part. Id., at 1280-81. Specifically, the district court denied the defense motion to dismiss the federal and state RICO class action claims, as well as the state law unjust enrichment claim based on the payment of lower wages to legal workers because of the availability of illegal workers willing to work for less money. Id., at 1282. But the court granted the defense motion to dismiss the unjust enrichment class action claim that was based on the alleged discouragement of workers’ compensation filings. Id. The Eleventh Circuit granted plaintiffs’ request for interlocutory review and, after a circuitous route, affirmed in part and reversed in part.

The class action complaint alleged that Mohawk intentionally hired illegal aliens in violation of federal law, transported them to Mohawk’s facilities and provided them with living accommodations “in an effort to keep labor costs as low as possible.” Williams, at 1281-82. The complaint further alleged that Mohawk engaged in affirmative steps to conceal the illegal workers from law enforcement. Id., at 1282. This practice permitted Mohawk to reduce wages paid to legal workers thereby “sav[ing] substantial sums of money,” id. The complaint alleged further, “Mohawk knows that illegal workers are less likely to file worker’s-compensation claims, and, therefore, Mohawk is able to save additional monies.” Id. Defense attorneys filed a motion to dismiss; as noted above, the district court denied the motion as to the RICO claims, and as to the lower wages-unjust enrichment claim, but granted the motion to dismiss as to the workers’ compensation unjust enrichment claim on the grounds that the plaintiffs lacked standing to assert the claim.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re African-American Slave Descendants: Seventh Circuit Affirms Dismissal Of Class Action Alleging Corporate Complicity With Slavery But Reinstates Consumer Protection State Law Class Action Claims

Circuit Court of Appeal Agrees Federal District Court Lacked Jurisdiction Over Section 1982 Class Action Claims But Holds it Should Have Dismissed Claims Without Prejudice and Further Holds that Consumer Protection Class Action Claims Based on State Law – Over Which the Court had Supplemental Jurisdiction – Were Adequately Pleaded for Purposes of Motion to Dismiss

A total of ten (10) class action lawsuits were filed against various corporations “seeking monetary relief under both federal and state law for harms stemming from the enslavement of black people in America.” In re African-American Slave Descendants Litig., ___ F.3d ___, 2006 WL 3615027 (7th Cir. December 13, 2006) [Slip Opn., at 1]. The Judicial Panel for Multidistrict Litigation (MDL) transferred the actions to the Northern District of Illinois for pretrial purposes pursuant to 28 U.S.C. § 1407, , where all plaintiffs but one filed a consolidated class action complaint. _Id._, at 1-2. Defense attorneys moved to dismiss the class action complaints; the district court granted the motion to dismiss based on the political-question doctrine, lack of standing and thus lack of federal jurisdiction, the expiration of the statutes of limitation, and failure to state a claim. _Id._, at 5. Surprisingly, the Seventh Circuit reversed.

The Seventh Circuit summarized that “[t]he suits are a series of mostly identical class actions on behalf of all Americans descended from slaves with whom one or more of the defendants or their corporate predecessors may have been directly or indirectly involved.” Slip Opn., at 3. The Circuit Court further summarized the class action allegations as follows: “The defendants are companies or the successors to companies that provided services, such as transportation, finance, and insurance, to slaveowners. At least two of the defendants were slaveowners; the predecessor of one of the bank defendants once accepted 13,000 slaves as collateral on loans and ended up owning ,1250 of them when the borrowers defaulted, and the predecessor of another defendant ended up owning 346 slaves, also as a consequence of a borrower’s default. Even before the Thirteenth Amendment, slavery was illegal in the northern states, and the complaint charges that the defendants were violating the laws of those states in transacting with slaveowners. It also claims there were occasional enslavements long after the passage of the Thirteenth Amendment and that some of the defendants were complicit in those too. By way of relief, the complaint seeks disgorgement to the class members of the profits that the defendants obtained from their dealings with slaveowners.” Id., at 4.

Class Action Court Decisions Uncategorized

Edwards v. City of Long Beach Class Action Defense Case: California Federal Court Denies Defense Motion To Certify Class Action But Grants Collective Action Status Under § 216(b) of the Federal Fair Labor Standards Act (FLSA)

California Court Rejects Defense Arguments Against Collective Action for Alleged Violations of FLSA (Fair Labor Standards Act) but Agrees with Defense that Class Action is not Superior Device for Litigating State Employment Law Claims and Denies Class Action Status to Claims Based on California Labor Code, Over Which it had Supplemental Jurisdiction, as Inconsistent with “Opt-In” Requirements for FLSA Collective Action

Plaintiff, former Long Beach police officer, filed a putative class action against the City of Long Beach for alleged violations of the federal Fair Labor Standards Act (FLSA) and of California’s Labor Code sections 226.7, 512 and 2802 based on the allegations that he was denied meal and rest breaks and was not properly reimbursed for business expenses while a police officer. Edwards v. City of Long Beach, ___ F.R.D. ___ (C.D. Cal. December 15, 2006) [Slip Opn., at 2-3.] The thrust of the class action complaint asserted that while police officers kept track of, and received pay for, overtime hours worked, no policy or procedure existed for officers to record or report missed meal and rest periods. _Id._, at 2-3. Further, while officers were required to have clean and functional uniforms and equipment, the City did not reimburse class members for the costs incurred in maintaining those items. _Id._, at 3. Plaintiff filed two motions in the district court: one requested certification of the lawsuit as a class action under Rule 23, _id._, at 7, which defense attorneys opposed on the grounds that the numerosity, commonality and typicality requirements are not met, a class action will not benefit the class, and other alternatives exist rather than class action litigation, _id._, at 8; the second sought certification of a collective action under 29 U.S.C. § 216(b), _id._, at 1, which defense attorneys opposed by focusing on the differences in job duties between the plaintiff and other class members, _id._, at 6. The district court refused to certify a class action under Rule 23, but granted the motion to certify a collective “opt-in” action under § 216(b), _id._, at 1.

In granting the motion to certify a collective action (in essence an “opt-in” class action) under § 216(b) of the FLSA, the federal court explained that “employees wishing to join the suit must ‘opt-in’ by filing a written consent with the court” or else they are not bound by any judgment or settlement. Edwards, at 4. In a majority of jurisdictions, certifying such a collective action requires a two-step process: “the first step is for the court to decide, ‘based primarily on the pleadings and any affidavits submitted by the parties, whether the potential class should be given notice of the action,'” id., at 5 (citations omitted); the court found that the “lenient standard” required to overcome this hurdle had been met. Id., at 5-7. The second step in the process is a motion by defense attorneys to decertify the class action, id., at 7; but the district court explained that it does not address that issue until after the opt-in time period has passed, id. The court rejected defense arguments that a collective action was inappropriate because of the differences in job duties between the plaintiff and other class members, id., at 6, explaining that – even though the defense had presented a “detailed analysis” of those differences, together with a “detailed discussion” of the differences in claims that potential class members may assert – the defense arguments were “better suited for motion to decertify the § 216(b) collective action,” id., at 7.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

California Defense Attorneys Confront Spike In Class Action Antitrust/Unfair Competition Law (UCL) Claims As New Employment Law Class Action Cases Fall To Second Place In Weekly Filings

To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly an unofficial summary of legal categories for class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. This report covers the time period of from December 8 – December 14, 2006. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe.

Class Actions In The News Uncategorized

Class Action Defense Cases-Smith v. Illinois Central Railroad: Illinois Supreme Court Agrees With Defense That Class Action Status Should Not Have Granted In Lawsuit Arising From Train Derailment

Factual and Legal Issues Arising from Train Derailment Would Require Individual Minitrials Thereby Rendering Class Action Treatment Inappropriate Illinois Supreme Court Holds

Plaintiffs filed a class action in Illinois state court against Illinois Central Railroad seeking damages allegedly caused by the derailment of a train in Tamaroa, Illinois. Smith v. Illinois Central RR Co., ___ N.E.2d ___, 2006 WL 3491683 (Ill. November 30, 2006) [Slip Opn., at 1.]. The trial court granted plaintiffs’ request to certify the lawsuit as a class action; the appellate court rejected defense arguments and affirmed. _Id._ The Illinois Supreme Court, however, granted the defense leave to appeal and reversed the lower courts. _Id._, at 1-2. The High Court agreed with defense attorneys that common issues of law and fact do not predominate, thus rendering the lawsuit unsuitable for class action treatment. “Proof of proximate causation and damages will be highly individualized and will consume the bulk of the time at trial.” _Id._, at 14.

In February 2003, the derailment in Southern Illinois of a train carrying various chemicals led to the mandatory evacuation of at least 1000 people. Slip Opn., at 2. Shortly thereafter, the railroad instituted a claims process through which it compensated individuals and businesses for alleged losses caused by the derailment and evacuation; in return, the railroad received written releases of liability from all known claims. Id. In June 2003, plaintiffs initiated a class action seeking (as detailed in the Note below) damages for injuries resulting from the derailment and evacuation. Id., at 2-3. The circuit court rejected defense arguments against certification of the lawsuit as a class action, and granted plaintiffs’ motion. Id., at 3. Before the appellate court, defense attorneys advanced several arguments including, (a) mass tort actions are not proper for class action treatment “because such actions would trigger an unworkable array of fact-intensive, claimant-specific questions that would inevitably result in numerous minitrials that defy class treatment”; (b) commonality does not exist as common questions of fact and law do not predominate; (c) the class definition was overly broad and would require individualized analyses to determine membership. Id., at 4-5. The appellate court, over a dissent, rejected each argument and affirmed the judgment authorizing class certification.

Certification of Class Actions Class Action Court Decisions Uncategorized