Tagged: Pleading Standards

New Jersey Federal Court Holds that Cryptocurrency Allegations Sufficiently Alleged a “Security” Subject to ’33 Act Registration Requirements

New Jersey Federal Court Holds that Cryptocurrency Allegations Sufficiently Alleged a “Security” Subject to ’33 Act Registration Requirements

In Solis v. Latium Network, Inc., Susan D. Wigenton, a United States District Judge in the District of New Jersey, held that a class action plaintiff adequately alleged that a particular cryptocurrency was a “security” subject to the registration requirements of the Securities Act of 1933 and, by extension, the regulatory strictures of the Securities Exchange Act of 1934. Solis alleged that Latium operates a blockchain-based, crowdsource tasking platform, which allows users to create tasks, find people to complete the tasks, and then verify completion of the tasks according to specified standards. Users of the platform pay for the completed tasks using Latium X tokens, Latium’s proprietary cryptocurrency, which can be used only on Latium’s platform. Solis also alleged that, to raise money for the platform, Latium offered its tokens for sale to the public in exchange for U.S. dollars or the cryptocurrency Ether. The sale was conducted in several stages, with the cost of a token increasing with each successive stage. When marketing the tokens, Latium stressed the limited quantity of tokens to be issued and characterized its tasking platform, particularly in tandem with the tokens, as a “unique investment opportunity.” Solis purchased $25,000 in Latium X tokens and...

Third Circuit Relaxes Pleading Requirements for Limited Liability Company Defendants and Urges Supreme Court to Redefine Citizenship Rule 0

Third Circuit Relaxes Pleading Requirements for Limited Liability Company Defendants and Urges Supreme Court to Redefine Citizenship Rule

Should limited liability companies continue to be treated differently than corporations for diversity-of-citizenship purposes? If a limited liability company’s citizenship continues to be determined by the citizenship of each of its members, how can a plaintiff get past the pleading stage if the identity of one or more members is unknown even after a diligent pre-filing investigation? In a recent precedential opinion, the Third Circuit in Lincoln Benefit Life Company v. AEI Life, LLC answered the latter question for the first time, holding that a plaintiff need not affirmatively allege the citizenship of each member of a defendant limited liability company to survive a motion to dismiss for lack of subject-matter jurisdiction. And in a separate concurrence targeted directly at the U.S. Supreme Court, the Third Circuit urged the Supreme Court to consider the former question and adopt a more practical rule for determining the citizenship of limited liability companies.

Opinion Holds That Non-Monetary Reverse Payments Trigger Actavis Antitrust Scrutiny, Creating Split Within D.N.J. 0

Opinion Holds That Non-Monetary Reverse Payments Trigger Actavis Antitrust Scrutiny, Creating Split Within D.N.J.

An opinion issued on October 6, 2014, by Judge Sheridan of the United States District Court for the District of New Jersey further muddied the legal waters as to what type of “reverse payments” made by makers of brand-name pharmaceuticals to their generic competitors to settle patent litigation are subject to antitrust scrutiny under the Supreme Court’s decision in FTC v. Actavis. Judge Sheridan held that Actavis applies to non-monetary payments, such as a promise by the brand-name manufacturer in exchange for which the generic agrees to delay entry. Importantly, however, a non-monetary payment must be capable of being reliably converted to a monetary value so that it can be evaluated against the Actavis factors. Judge Sheridan’s holding runs counter to Judge Walls’s decision earlier this year in In re Lamictal Direct Purchaser Antitrust Litigation, which limited Actavis to reverse payments involving an exchange of cash and was the subject of a prior blog post.

Court Holds Only Reverse Payment of Money Requires Actavis Antitrust Scrutiny 0

Court Holds Only Reverse Payment of Money Requires Actavis Antitrust Scrutiny

Recent years have seen a significant number of antitrust challenges to so-called “reverse payment” pharmaceutical patent litigation settlements between brand name manufacturers and their generic competitors. The Supreme Court’s decision in FTC v. Actavis resolved a split among the courts of appeal, and held that settlements in which “large and unjustified” reverse payments are made are subject to antitrust scrutiny in the form of a traditional “rule of reason” analysis. In the wake of Actavis, the lower courts have begun to grapple with the question of what, if any, application Actavis has to the disposition of antitrust challenges to patent settlements that do not include a large payment of cash by the brand producer to the generic, but may include other forms of non-monetary consideration.

Factual Allegations in Superceded Complaint Not Judicial Admissions, But May Be Used for Rebuttal Purposes 0

Factual Allegations in Superceded Complaint Not Judicial Admissions, But May Be Used for Rebuttal Purposes

In West Run Student Housing Associates., LLC v. Huntington National Bank, the United States Court of Appeals for the Third Circuit ruled that, under the liberal policy of allowing amendment under Rule 15, factual allegations made in a superceded complaint are not binding judicial admissions for purposes of a motion to dismiss, but such allegations may be used in the litigation to rebut the plaintiff’s subsequent factual contentions.

Antitrust Pleading Standards: A(nother) Cautionary Tale 0

Antitrust Pleading Standards: A(nother) Cautionary Tale

A New Jersey federal district court’s March 18th opinion granting defendants’ motions to dismiss an antitrust complaint is yet another reminder of the need to inject precision and factual detail into an antitrust claim in order to meet the strict pleading requirements applicable to such claims. The putative class of indirect purchaser plaintiffs in In re Ductile Iron Pipe Fittings (“DIPF”) Indirect Purchaser Antitrust Litigation brought a total of ten claims, alleging principally that iron pipe fitting manufacturers and distributors conspired to fix prices and monopolized the domestic iron pipe fitting market in violation of Sherman Act Sections 1 and 2. In holding that the pleadings failed to establish antitrust impact with sufficient specificity (but granting plaintiffs leave to amend their complaint), the Court reasoned as follows:

Ford Can’t Halt All Claims in Alleged Defective Fuel Tank Putative Class Action 0

Ford Can’t Halt All Claims in Alleged Defective Fuel Tank Putative Class Action

In an opinion authored by Judge Debevoise, a federal district court in New Jersey denied Ford Motor Company’s attempt to toss out a putative class action regarding an alleged defect in the fuel tanks of various Ford trucks and vans. In Coba v. Ford Motor Co., Judge Debevoise held that the plaintiffs’ claims of breach of express warranty and breach of the implied covenant of good faith and fair dealing were adequately pleaded based on allegations that Ford knowingly replaced defective fuel tanks with other defective tanks. But Judge Debevoise dismissed, with leave to replead, the plaintiffs’ claims of common law fraud and violations of the New Jersey Consumer Fraud Act because there were no allegations that Ford knew the plaintiffs’ tanks were defective when they were sold.

Third Circuit’s Fair Notice Requirement Protects Defendants from Amended Claims Asserted After Expiration of Statute of Limitations 0

Third Circuit’s Fair Notice Requirement Protects Defendants from Amended Claims Asserted After Expiration of Statute of Limitations

Affirming the statute-of-limitations-based dismissal of plaintiff Mary Glover’s claims against defendants Mark Udren and Udren Law Offices, the Third Circuit in Glover v. FDIC spoke clearly on the limits of the notice requirement under the relation-back doctrine, holding that Glover’s original pleading failed to provide fair notice of a subsequent claim in an amended complaint.

Second Circuit Holds That a Post-Disclosure Stock Price Rebound Does Not Per Se Preclude Damages for Alleged Federal Securities Fraud 0

Second Circuit Holds That a Post-Disclosure Stock Price Rebound Does Not Per Se Preclude Damages for Alleged Federal Securities Fraud

Recently, the Second Circuit vacated a District Court’s dismissal of a securities fraud action brought by Acticon AG, shareholder of China North East Petroleum Holdings Ltd. (“NEP”), for failure to plead economic loss—a necessary element to maintain a private damages action under § 10(b) of the Securities Exchange Act of 1934 (“§10(b)”). Acticon had multiple opportunities to, but did not, sell its NEP shares at a profit after NEP’s disclosure of the alleged fraud. The Court held that economic loss is not conclusively negated at the pleadings stage where the price of a security recovers shortly after a disclosure of alleged fraud. Significantly, in drawing all reasonable inferences in favor of the plaintiff under NEP’s 12(b)(6) motion, the Court explained that a rise in the price of a stock following a corrective disclosure requires an inquiry into whether the security rose for “reasons unrelated to [the] initial drop,” and thus introduces factual questions and competing theories of causation that would be inappropriate to resolve on a motion to dismiss.

Third Circuit Affirms Dismissal of Off-Label Marketing Actions Against Schering for Lack of Standing 0

Third Circuit Affirms Dismissal of Off-Label Marketing Actions Against Schering for Lack of Standing

In a consolidated appeal pitting a putative class of third-party payors of drugs prescribed for uses not approved by the Food and Drug Administration, and a putative class of individual patients prescribed such drugs, against Schering-Plough and affiliated entities, the Third Circuit in In re Schering-Plough Corp. Intron/Temodar Consumer Class Action affirmed the district courts’ dismissals of both actions for lack of standing. The Third Circuit held that both plaintiffs, who brought federal and state statutory and common law causes of action, failed to allege a plausible nexus between Schering’s allegedly illegal marketing campaign and the doctors’ decisions to prescribe various drugs for unapproved uses.