15 U.S.C. § 77d–Transactions Exempted 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. While Congress set forth those securities that are exempt under the Act in 15 U.S.C. § 77c, section 77d addresses those transactions that are exempt and provides:

§ 77d. Exempted transactions

The provisions of section 77e of this title shall not apply to–

(1) transactions by any person other than an issuer, underwriter, or dealer.

(2) transactions by an issuer not involving any public offering.

(3) transactions by a dealer (including an underwriter no longer acting as an underwriter in respect of the security involved in such transaction), except–

(A) transactions taking place prior to the expiration of forty days after the first date upon which the security was bona fide offered to the public by the issuer or by or through an underwriter,

(B) transactions in a security as to which a registration statement has been filed taking place prior to the expiration of forty days after the effective date of such registration statement or prior to the expiration of forty days after the first date upon which the security was bona fide offered to the public by the issuer or by or through an underwriter after such effective date, whichever is later (excluding in the computation of such forty days any time during which a stop order issued under section 77h of this title is in effect as to the security), or such shorter period as the Commission may specify by rules and regulations or order, and

PSLRA/SLUSA Class Actions Statutes & Rules Uncategorized

Frustration Over Terms Of Class Action Settlements And Defense Practice Of Refusing To Admit Wrongdoing

Reporter Shines Light on Concerns Arising from Standard Defense Provision in Class Action Settlement Agreements that Defendant is not Admitting Liability David Lazarus of the San Francisco Chronicle questions the standard defense provision in class action settlement agreements that the settlement does not constitute an admission of liability. He focuses on the recent settlement by Wells Fargo Bank in which he reports “it agreed to pay $12.8 million to settle a lawsuit claiming the bank unlawfully exempted as many as 4,500 workers from overtime pay by classifying them as analysts or consultants” but denied any wrongdoing.

Class Actions In The News Uncategorized

15 U.S.C. § 77c–Securities Exempt 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 those securities that are exempt under the Act in 15 U.S.C. § 77c, which provides:

§ 77c. Classes of securities under this subchapter

(a) Exempted securities

Except as hereinafter expressly provided, the provisions of this subchapter shall not apply to any of the following classes of securities:

(1) Reserved.

(2) Any security issued or guaranteed by the United States or any territory thereof, or by the District of Columbia, or by any State of the United States, or by any political subdivision of a State or territory, or by any public instrumentality of one or more States or territories, or by any person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing; or any security issued or guaranteed by any bank; or any security issued by or representing an interest in or a direct obligation of a Federal Reserve bank; or any interest or participation in any common trust fund or similar fund that is excluded from the definition of the term “investment company” under section 80a-3(c)(3) of this title; or any security which is an industrial development bond (as defined in section 103(c)(2) of Title 26) the interest on which is excludable from gross income under section 103(a)(1) of Title 26 if, by reason of the application of paragraph (4) or (6) of section 103(c) of Title 26 (determined as if paragraphs (4)(A), (5), and (7) were not included in such section 103(c) ), paragraph (1) of such section 103(c) does not apply to such security; or any interest or participation in a single trust fund, or in a collective trust fund maintained by a bank, or any security arising out of a contract issued by an insurance company, which interest, participation, or security is issued in connection with (A) a stock bonus, pension, or profit-sharing plan which meets the requirements for qualification under section 401 of Title 26, (B) an annuity plan which meets the requirements for the deduction of the employer’s contributions under section 404(a)(2) of Title 26, (C) a governmental plan as defined in section 414(d) of Title 26 which has been established by an employer for the exclusive benefit of its employees or their beneficiaries for the purpose of distributing to such employees or their beneficiaries the corpus and income of the funds accumulated under such plan, if under such plan it is impossible, prior to the satisfaction of all liabilities with respect to such employees and their beneficiaries, for any part of the corpus or income to be used for, or diverted to, purposes other than the exclusive benefit of such employees or their beneficiaries, or (D) a church plan, company, or account that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 [15 U.S.C.A. § 80a-3(c)(14)], other than any plan described in subparagraph (A), (B), (C), or (D) of this paragraph (i) the contributions under which are held in a single trust fund or in a separate account maintained by an insurance company for a single employer and under which an amount in excess of the employer’s contribution is allocated to the purchase of securities (other than interests or participations in the trust or separate account itself) issued by the employer or any company directly or indirectly controlling, controlled by, or under common control with the employer, (ii) which covers employees some or all of whom are employees within the meaning of section 401(c)(1) of Title 26, or (iii) which is a plan funded by an annuity contract described in section 403(b) of Title 26. The Commission, by rules and regulations or order, shall exempt from the provisions of section 77e of this title any interest or participation issued in connection with a stock bonus, pension, profit-sharing, or annuity plan which covers employees some or all of whom are employees within the meaning of section 401(c)(1) of Title 26, if and to the extent that the Commission determines this to be necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of this subchapter. For purposes of this paragraph, a security issued or guaranteed by a bank shall not include any interest or participation in any collective trust fund maintained by a bank; and the term “bank” means any national bank, or banking institution organized under the laws of any State, territory, or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official; except that in the case of a common trust fund or similar fund, or a collective trust fund, the term “bank” has the same meaning as in the Investment Company Act of 1940 [15 U.S.C.A. § 80a-1 et seq.];

PSLRA/SLUSA Class Actions Statutes & Rules Uncategorized

California Defense Attorneys Find That Public Accommodation/ADA Cases Bounce Back Above Employment Law Class Action Cases 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 October 6 – October 12, 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

Cingular Class Action Defense Case-Stern v. Cingular Wireless: Arbitration Provision Waiving Class Action Remedy Unenforceable California Federal Court Holds

California Federal District Court Holds Arbitration Clause Requiring Arbitration at Customers’ Expense and Waiving Right to Class Action Device to be Unconscionable and Unenforceable

In November 2004, plaintiff signed a service agreement with AT&T Wireless, and received a booklet entitled “Important Information and Service Agreement” that contained in part an arbitration clause governed by the Federal Arbitration Act (FAA) and a class action waiver. Cingular Wireless thereafter acquired AT&T Wireless; its customers also signed service agreements that contained arbitration clauses, but Cingular’s agreement provided that the company would pay the cost of the arbitration unless the customer’s action is frivolous, and that the company would pay the customer’s attorney fees if the arbitrator awarded the amount the customer demanded or more. In December 2005, plaintiff filed a class action lawsuit in California federal court against AT&T and Cingular for violations of the Federal Communications Act, declaratory relief, breach of contract, violations of California’s unfair competition law (UCL), and violations of California’s Consumers Legal Remedies Act (CLRA), based on the allegation that defendants charged customers for services that the customers had not authorized, totaling approximately $9 per month. Stern v. Cingular Wireless Corp., 453 F.Supp.2d 1138, 1141-43 and 1149 (C.D. Cal. July 28, 2006). Defense attorneys moved to compel arbitration and stay the litigation; plaintiff’s lawyer argued that the arbitration clause was unconscionable and unenforceable. The district court denied the defense motion, concluding that the class action waiver was unconscionable.

Arbitration Class Action Court Decisions Uncategorized

Exxon Mobil Class Action Defense Case-Steering Committee v. Exxon Mobil: District Court Properly Refused To Certify Class Action Based On Personal Injuries Arising From Chemical Fire Fifth Circuit Holds

Louisiana Federal Court did not Abuse its Discretion in Refusing to Certify Class Action Against Exxon Because Individual Issues Predominated over Common Issues and Superiority Requirement was not Met

In 1994, smoke from an oil fire at an Exxon Mobil chemical plant drifted into neighboring communities: “Hundreds of suits were filed against Exxon Mobil, alleging various causes of action including personal injury, personal discomfort and annoyance, emotional distress resulting from knowledge of exposure to hazardous substances, fear of future unauthorized exposures, and economic harm including damage to business and property, among others.” Steering Committee v. Exxon Mobil Corp., 461 F.3d 598, 600 (5th Cir. 2006). The lawsuits were consolidated in a Louisiana federal court, and plaintiffs proposed that the action proceed as a class action and moved for class certification. Defense attorneys opposed the motion, and filed summary judgment motions as to certain categories of claims against Exxon. Id. The district court first decided the summary judgment motions, granting summary judgment “on all claims for physical injuries and non-intentional emotional distress brought by individual plaintiffs who were located outside the geographic area that the air modeling experts agreed was affected by the [smoke] plume,” and “on all claims for intentional infliction of emotional distress.” Id., at 600-01. The court then denied the motion to proceed as a class action, concluding that plaintiffs failed to establish typicality or adequacy of representation under Rule 23(a), and predominance and superiority under Rule 23(b)(3). Id., at 601. The Fifth Circuit affirmed.

Certification of Class Actions Class Action Court Decisions Uncategorized

White v. DaimlerChrysler-Class Action Defense Cases: Defense Motion To Dismiss Consumer Fraud Class Action Granted Because Plaintiff Failed To Plead Fraud Or Damages With Requisite Specificity Illinois Court Holds

Illinois Court Affirms Dismissal of Consumer Fraud Class Action Because Fraud Allegations were Conclusory and Complaint Failed to Allege Actual Damages

A car buyer filed a putative class action in Illinois state court against DaimlerChrysler Corporation for alleged violations of the Consumer Fraud Act and the federal Magnuson-Moss Act, 15 U.S.C. §§ 2301 et seq., claiming that defendant concealed a “material defect” in its Jeeps; specifically, plaintiff claimed the exhaust manifold was “substandard and defective” because it was made of tubular steel rather than the more expensive (and allegedly “standard”) cast iron. White v. DaimlerChrysler Corp., ___ N.E.2d ___, 2006 WL 2739009 (Ill.App. September 26, 2006) [Slip Opn., at 1-2]. Defense attorneys moved to dismiss the class action complaint on several grounds; the trial court granted the defense motion, and plaintiff appealed only the dismissal of the Consumer Fraud Act claims. _Id._, at 1. The appellate court affirmed.

Class Action Court Decisions Uncategorized

Cingular Class Action Defense Case-Kinkel v. Cingular: Illinois Rejects Defense Efforts To Enforce Arbitration Clause Barring Class Action Device And Refuses To Apply Arbitration Terms Effective After Class Action Plaintiff Terminated Service Contract

Court Holds that Arbitration Clause in Effect at Time Class Action Plaintiff Terminated her Service Agreement Governed in Motion to Compel Arbitration, and Class Action Waiver in Wireless Service Provider’s Arbitration Clause Held Unenforceable by Illinois Supreme Court

Plaintiff filed a class action in Illinois state court against her cellular telephone service provider, Cingular Wireless, for alleged violations of the state’s Consumer Fraud and Deceptive Business Practice Act on the ground that the early termination fee is an unlawful penalty. Defense attorneys moved to compel arbitration pursuant to an arbitration clause that provided that “‘no arbitrator has the authority’ to resolve class claims.” Kinkel v. Cingular Wireless LLC, ___ N.E.2d ___, 2006 WL 2828664 (Ill. October 5, 2006) [Slip Opn., at 1]. The trial court refused to compel arbitration. The appellate court held that the arbitration clause was enforceable, but that the prohibition against class action arbitrations was not; accordingly, it reversed the trial court’s ruling. _Id._ The Illinois Supreme Court rejected defense arguments that the class action bar was enforceable and affirmed the decision of the appellate court.

Plaintiff signed a two-year service contract with Cingular in July 2001, but terminated her service in April 2002. Cingular charged her a $150 early-termination fee, in accordance with the terms of the service agreement plaintiff signed when she became a customer. Slip Opn., at 2. Plaintiff filed a class action against Cingular, arguing that the early-termination fee was an illegal penalty and that the class action waiver in the arbitration clause “prevents her and others from ‘effectively vindicating their statutory and common law causes of action and facilitates rather than remedies Cingular’s fraudulent and unlawful conduct.’” Id. The trial court denied a defense motion to compel arbitration; the appellate court found the class-action waiver provision to be unenforceable but severable from the balance of the arbitration clause, and so reversed. Id.

Arbitration Class Action Court Decisions Uncategorized

Koehl v. Verio-Class Action Defense Cases: Class Representatives Hit With Damages And Half-Million Dollar Attorney Fee Award By California Court After Losing Labor Law Class Action Against Former Employer

California Court Holds that Compensation Scheme Permitting Chargebacks Against Monies Advanced Against Unearned Commissions did not Violate State Labor Laws Because Such Commissions were not Wages

Four former employees filed a class action in California state court against internet service provider Verio for violations of California’s labor laws on the grounds that Verio’s compensation scheme – which provided for a base salary, plus commissions that were subject to charge backs under certain conditions – violated California Labor Code § 221 because the commissions were wages. Koehl v. Verio, Inc., ___ Cal.App.4th ___, 48 Cal.Rptr.3d 749, 751 (Cal.App. 2006). “The complaint alleged three causes of action: (1) commission chargebacks in violation of Labor Code sections 221, 223, 225 and 400-410; (2) waiting penalties pursuant to section 203; and (3) unfair competition under Business and Professions Code section 17200 _et seq._” _Id._, at 759 (footnote omitted). Verio cross-complained against the class representatives for commissions recoverable as charge-backs under the compensation scheme, _id._ The trial court agreed that the commissions were not wages, awarded the employer compensatory damages (for overpayment of unearned commissions) and prejudgment interest totaling more than $250,000, and awarded the employer more than $548,000 in attorney fees. _Id._, at 759-60. The Court of Appeal affirmed.

Class Action Court Decisions Employment Law Class Actions Uncategorized

15 U.S.C. § 77b-1–Swap Agreements 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 defined “swap agreements” in 15 U.S.C. § 77b-1: § 77b-1. Swap agreements (a) Non-security-based swap agreements The definition of “security” in section 77b(a)(1) of this title does not include any non-security-based swap agreement (as defined in section 206C of the Gramm-Leach-Bliley Act). (b) Security-based swap agreements

PSLRA/SLUSA Class Actions Statutes & Rules Uncategorized