Gibbons Law Alert

Gibbons Law Alert

Tagged: Motions to Dismiss

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

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Posted in General Litigation

On September 16, 2015

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.

Don’t Get Hacked By Your Cyber-Insurer

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Posted in Insurance

On July 13, 2015

The risks inherent in the maintenance and storage of confidential information present an ongoing challenge to daily operations. Cyber insurance may be an appropriate mechanism to mitigate those risks. But – BUYER BEWARE – broad exclusions and other conditions in a cyber policy can hack into coverage and leave your company uninsured and exposed to significant liability for defense costs, liability payments, and regulatory damages.

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

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Posted in Antitrust

On November 12, 2014

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.

Recent D.N.J. Opinion Offers Roadmap to Practitioners Defending Antitrust Claims

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Posted in Antitrust

On June 30, 2014

A recent opinion from the District of New Jersey illustrates the breadth of defenses available to an entity accused of violating the antitrust laws. World Phone Internet Services, Pvt. Ltd., a provider of VoIP services in India, and its majority shareholder, TI Investment Services, LLC, sued Microsoft (owner of Skype), alleging that Microsoft’s intentional failure to abide by the requirements of India’s licensing regime for VoIP service providers allowed it to undercut World Phone’s pricing, which advantage Microsoft supposedly used to quash its competitors. In granting Microsoft’s motion to dismiss the complaint in TI Investment Services, LLC v. Microsoft Corp., the Court relied on four independent grounds to decide that plaintiffs’ claims of monopolization and collusion did not pass muster under the Sherman Act.

The Foreign Trade Antitrust Improvements Act: A Recent Take in the S.D.N.Y.

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Posted in Antitrust

On June 3, 2013

The Foreign Trade Antitrust Improvements Act (“FTAIA”) removes from the ambit of the Sherman Antitrust Act otherwise actionable anti-competitive conduct abroad that does not have a “direct, substantial, and reasonably foreseeable” effect on domestic commerce. Questions persist as to what effects qualify as being sufficiently “direct” and also whether the FTAIA is jurisdictional in nature or goes to the substantive merits of a claim. A recent decision out of the Southern District of New York addressed both questions in dismissing an antitrust suit brought by one Chinese corporation against its Chinese competitors.

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

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Posted in General Litigation

On April 26, 2013

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

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Posted in Antitrust

On April 8, 2013

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:

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

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Posted in General Litigation

On October 5, 2012

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

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Posted in Appellate / Securities

On September 6, 2012

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.

Second Circuit Finds No Anti-Competitive Conduct in Eatoni v. RIM, Applies “Manifest Disregard of the Law,” Post-Hall Street

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Posted in Antitrust / Appellate

On June 28, 2012

In a summary order issued on June 21, 2012, the Second Circuit in Eatoni Ergonomics, Inc. v. Research in Motion Corp., affirmed the Rule 12(b)(6) dismissal of Eatoni’s monopolization complaint against BlackBerry maker RIM for failure adequately to plead anti-competitive conduct. Significantly, the Court held that individual instances of alleged misconduct that are not anti-competitive on their own do not state a claim under Section 2 of the Sherman Act when considered together.

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