Justia Corporate Compliance Opinion Summaries

At issue in this case was whether a school district is subject to the campaign-finance reporting requirements found in Minn. Stat. 211A and whether the complaint in this matter stated a claim under Minn. Stat. 211B.06, which prohibits the dissemination of false campaign material. The Supreme Court held (1) a school district is a "corporation" under section 211A.01 and therefore can qualify as a "committee" subject to chapter 211A's campaign-finance reporting requirements if it acts "to promote or defeat a ballot question"; (2) because Appellants' complaint, filed with the Office of Administrative Hearings, stated a prima facie claim that the school district here was a "committee" under section 211A.01 that promoted a ballot question, the ALJ assigned to the matter erred in dismissing the complaint without an evidentiary hearing; and (3) the complaint failed to state a prima facie violation of section 211B.06 with respect to two allegedly false statements. Remanded.View "Abrahamson v. St. Louis County Sch. Dist." on Justia Law

Plaintiff appealed the district court's dismissal of his complaint against the Guthrie Defendants. Plaintiff's principal issue on appeal required the court to consider whether the unauthorized disclosure of confidential medical information by a medical corporation's employee gives a plaintiff a right of action for breach of fiduciary duty under New York law that runs directly against the corporation, even when the corporation's employee acted outside the scope of her employment and is not plaintiff's treating physician. Plaintiff's appeal presented a question that has not been resolved by the New York Court of Appeals. Accordingly, the court deferred decision and certified the question to the New York Court of Appeals. The court disposed of plaintiff's remaining claims on appeal in a separate summary order filed simultaneously with this opinion. View "Doe v. Guthrie Clinic, Ltd." on Justia Law

Wiest worked in Tyco’s accounting department for 31 years, until his termination in 2010. Beginning in 2007, Wiest refused to process reimbursement claims that he believed were unlawful or constituted “parties” at resorts. Wiest sued Tyco and its officers and directors under the whistleblower protection provisions in Section 806 of the Sarbanes-Oxley Act, 18 U.S.C. 1514A, and under Pennsylvania law. The district court dismissed the federal whistleblower claims and declined to exercise supplemental jurisdiction. The Third Circuit reversed in part, holding that the court erred in requiring that Wiest allege that his communications to his supervisors “definitively and specifically relate to” an existing violation of a particular anti-fraud law, as opposed to expressing a reasonable belief that corporate managers are taking actions that could run afoul of a particular anti-fraud law. View "Wiest v. Lynch" on Justia Law

At an L.O.M. stockholders’ meeting, stockholders raised concerns about sufficiency of notice, accuracy of proxy materials, and lack of current financial information. In response to a stockholder’s request, the President of L.O.M., Matthews, adjourned the meeting. Matthews and “numerous stockholders” departed. L.O.M.’s counsel then announced that the meeting had not adjourned and that a recess was being taken. A director then purported to preside over a resumed meeting, at which challenged directors were allegedly elected. The challenged directors took a number of actions, including approving L.O.M.’s 2012 stock option plan and firing Matthews. Defendants assert that after the meeting resumed, votes were counted, and challenged directors were elected by about 56% of outstanding shares; after the meeting, the challenged directors sent the stockholders a letter that informed the stockholders of the meeting’s results. In an action to determine the composition of the board, the chancellor denied a motion to dismiss. The chancellor acknowledged sympathy for defendants’ “real argument,” that in attempting to ratify the vote for the challenged directors, a majority of shares outstanding have, in effect, been voted for the challenged directors and that adjournment of the meeting was simply an attempt by Matthews to preserve himself in office.View "Gentili v. L.O.M. Med. Int'l, Inc." on Justia Law

Polar Holding was sole shareholder of PMC, a company engaged in the petroleum-additive business. PMC was in default on a loan for which it had pledged valuable intellectual property as collateral, and Polar Holding was in the midst of an internal dispute between members of its board of directors regarding business strategy for PMC. One of the directors, Socia, formed a competing company, Petroleum, for the purpose of acquiring PMC’s promissory note and collateral from the holder of PMC’s loan. Petroleum brought suit against Woodward, an escrow agent in possession of PMC’s collateral, alleging that PMC was in default on the payment of its promissory note. Polar Holding and PMC intervened and filed counterclaims against Petroleum and a third-party complaint against additional parties, including Socia. Polar Holding and PMC allleged breach of fiduciary duty, civil conspiracy, and tortious interference. After PMC filed for bankruptcy, its claims became the property of the bankruptcy trustee. Polar Holding’s claims were later dismissed. The Sixth Circuit affirmed dismissal of a tortious interference claim as addressed by the district court, but reversed dismissal of a breach-of-fiduciary-duty claim against Socia and a civil-conspiracy claim against individual third-party defendants.View "Petroleum Enhancer, L.L.C. v. Woodward" on Justia Law

Appellants Consipio Holding, BV; Ilan Bunimovitz; Tisbury Services, Inc.; and Claudio Gianascio (collectively, Consipio) are shareholders of Private Media Group, Inc. (PRVT). In August 2010, Consipio filed a complaint in the Nevada district court, seeking injunctive relief and the appointment of a receiver for PRVT. Consipio also asserted derivative claims on behalf of PRVT against PRVT's former CEO and president, Berth H. Milton, Jr., and against officer and director respondents Johan Carlberg (PRVT director), Peter Dixinger (PRVT director), Bo Rodebrant (PRVT director), Johan Gillborg (former PRVT CFO), and Philip Christmas (PRVT subsidiary CFO). The claims focused on respondents' alleged conduct in assisting Milton, Jr., to financially harm PRVT for their personal gain. The complaint alleged that respondents assisted Milton, Jr., in obtaining significant loans for himself and entities he controls. It further stated that respondents failed to demand repayment on these loans and that they helped Milton, Jr. by removing funds from PRVT and concealing the wrongdoing. Given these allegations, Consipio contended that respondents collectively were guilty of misfeasance, malfeasance, and breach of their fiduciary duties. The issue before the Supreme Court was whether Nevada courts could properly exercise personal jurisdiction over nonresident officers and directors who directly harm a Nevada corporation. The Court concluded that they can. In this case, the district court failed to conduct adequate factual analysis to determine whether it could properly exercise personal jurisdiction over the respondents before dismissing the complaint against them. Accordingly, the Supreme Court vacated the dismissal order and remanded this case to the district court for further proceedings.View "Consipio Holding, BV v. Carlberg" on Justia Law

Terex manufactures equipment. Apuzzo was its Chief Financial Officer. URI is an equipment rental company. Nolan was URI’s Chief Financial Officer. URI and Nolan, carried out fraudulent “sale-leaseback” transactions, to allow URI to recognize revenue prematurely and inflate profits. URI sold used equipment to GECC, a financing corporation, and leased it back. To obtain GECC’s participation, URI convinced Terex to agree to resell the equipment after the lease periods. Terex guaranteed that GECC would receive at least 96 percent of the purchase price for the equipment. URI secretly agreed to indemnify Terex for losses from the guarantee and to purchase new equipment from Terex. Apuzzo knew that if the extent of the transactions was transparent, URI would not be able to claim increased revenue under Generally Accepted Accounting Principles. Apuzzo disguised URI’s risks and obligations, and approved inflated invoices to conceal indemnifications. Following transactions under the scheme, the SEC charged that Apuzzo aided and abetted securities laws violations through his role in a fraudulent accounting scheme. The district court dismissed; the complaint plausibly alleged that Apuzzo had actual knowledge of the primary violation, but did not allege “substantial assistance.” The Second Circuit reversed, holding that Apuzzo associated himself with the venture, participated in it as in something that he wished to bring about, sought by his action to make it succeed. . View "Sec. & Exch. Comm'n v. Apuzzo" on Justia Law

Plaintiffs, including a California corporation (Corporation), filed a lawsuit for property damage against Defendants. Before trial, Defendants learned the state had suspended Corporation's corporate powers for nonpayment of taxes. A jury returned a verdict in favor of Defendants. Plaintiffs, including Corporation, appealed. On December 1, 2011, Defendants filed separate motions to dismiss Corporation's appeals because its corporate powers were still suspended. Corporation presented documentation showing its corporate powers had been revived on December 8, 2011 and argued that this revival made its appeal effective. The court of appeals denied the motions. Defendants petitioned for review. At issue was whether a corporation that files notices of appeal while its corporate powers are suspended may proceed with the appeals after those powers have been revived, even if the revival occurs after the time to appeal has expired. Relying on precedent, the Supreme Court affirmed, holding that the appeals may proceed. View "Bourhis v. Lord" on Justia Law

Petitioner Lisa McBride was an accountant who worked as Respondent Peak Wellness Center’s business manager for about nine years. Peak terminated her in 2009, citing job performance and morale issues. Petitioner claimed she was terminated in retaliation for bringing various accounting improprieties to the attention of Peak’s Board of Directors. Petitioner brought several federal and state-law claims against Peak: (1) whistleblower retaliation under the federal False Claims Act (FCA); (2) violations of the federal Fair Labor Standards Act (FLSA); (3) breach of employment contract; (4) breach of implied covenant of good faith and fair dealing; (5) defamation; and (6) a federal sex discrimination claim under Title VII of the Civil Rights Act. After discovery, Peak moved for summary judgment on all claims, and the district court granted the motion. Petitioner appealed, arguing that significant issues of material fact remained unresolved and that her claims should have proceeded to trial. She also appealed district court’s denial of an evidentiary motion. Finding no error in the district court’s decision, the Tenth Circuit affirmed its grant of summary judgment in favor of Peak.View "McBride v. Peak Wellness Center Inc." on Justia Law

Plaintiffs are holders of Savient’s 4.75% convertible senior notes due in 2018, which are unsecured and subject to the terms of an indenture. Collectively, Plaintiffs own a face value of $48,709,000, approximately 40% of the outstanding Notes. Defendants are members of Savient’s board of directors USBNA serves as trustee for the Indenture governing the Notes. Following dismal sales of its new drug, KRYSTEXXA, Savient’s Board approved a financing transaction to exchange some existing unsecured Notes for new senior secured notes with a later maturity date. Through the Exchange, Savient exchanged around $108 million in Notes, raised around $44 million in new capital, and issued additional SSDNs with a face value of approximately $63 million. Like the Notes, the SSDNs are subject to an indenture for which USBNA serves as trustee. Plaintiffs sought a declaration that Savient was insolvent and brought derivative claims alleging waste and breach of fiduciary duty in connection with the Exchange Transaction; alleged breach of fiduciary duty and waste claims in connection with the Board’s approval of retention awards for certain Savient executives. The chancellor dismissed the receivership claim for lack of standing and granted a declaration that an Event of Default has not occurred.View "Tang Capital Partners LP, v. Norton" on Justia Law