Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

This case arose out of securities issued by a group of Minnesota liability companies (Geneva) and purchased by defendants (Investors) in 2007 and 2008. Plaintiff, a licensed broker-dealer and member of the Financial Industry Regulatory Authority (FINRA), served as managing broker-dealer for the offering. The district court's grant of plaintiffs' motion for a preliminary injunction and denial of defendants' motion to compel arbitration was challenged on appeal. Because the court held that the district court correctly concluded that defendants were not plaintiffs' "customers" under the FINRA Code of Arbitration Procedure for Customer Disputes, the court affirmed the judgment. View "Berthel Fisher & Co., et al v. Larmon, et al" on Justia Law

Defendant was indicted for bank fraud, mail fraud, and wire fraud. The government alleged that Defendant's sale of collateral pledged as security for a loan from a bank and his failure to carry out his disclosure duties under the security agreement amounted to a scheme to defraud for purposes of the bank, mail, and wire fraud statutes. The district court dismissed the indictment, finding (1) a false representation is a required element of a federal fraud offense and the indictment failed to allege any express misrepresentation by Defendant; and (2) absent a statutory, fiduciary, or independent disclosure duty, nondisclosure was insufficient to state a fraud claim under any of the charged offenses. The Eighth Circuit Court of Appeals affirmed, holding that the district court correctly dismissed the indictment for failure to state an offense, as the indictment failed to sufficiently allege a scheme to defraud under the mail, wire, and bank fraud statutes. View "United States v. Steffen" on Justia Law

Two individuals brought suit as individuals and on behalf of a putative class of investors, alleging that Stifel, Nicolaus & Co. (Stifel) and two of its employees, Neil Harrison and Roger Compton, violated federal securities law. Stifel and Compton (Defendants) filed a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6) and the Private Securities Litigation Reform Act of 1995 (PSLRA). The district court concluded that Plaintiffs' allegations failed to satisfy the requirements for class action claims under Fed. R. Civ. P. 23(b)(3) and dismissed Plaintiffs' compliant with prejudice. The Eighth Circuit Court of Appeals (1) reversed the district court's order with respect to Plaintiffs' individual claims, holding the district court erred in dismissing the claims without either staying the claims pending arbitration or undertaking an analysis of the claims under the PSLRA; and (2) affirmed the district court's order as it applied to Plaintiffs' class claims, holding that the court correctly determined that the complained failed to state viable class claims under Rule 23. Remanded. View "McCrary v. Stifel, Nicolaus & Co." on Justia Law

Appellant initiated an arbitration against his former investment advisor, Fisher Investments, Inc. During the arbitration, the arbitrator (1) dismissed Appellant's Missouri statutory claims based on the arbitration agreement's Delaware choice-of-law provision, and (2) sua sponte prohibited Appellant from adding a federal securities law claim. Appellant then filed a civil action against Fisher Investments in federal district court, re-alleging the Missouri statutory and federal securities law claims and seeking a declaration that the arbitration agreement was void. The district court dismissed Appellant's claims without prejudice, concluding that Defendant had to complete arbitration before he could pursue remedies in federal court. The Eighth Circuit Court of Appeals affirmed, holding (1) Appellant was challenging an interim ruling and thus the complete arbitration rule applied, and (2) because the complete arbitration rule applied, the district court did not err in deciding that it did not have jurisdiction to adjudicate Defendant's claims. View "Wootten v. Fisher Invs., Inc." on Justia Law

Platte Valley Bank (PVB), a banking corporation, claimed a perfected security interest in certain equipment owned by Heggem Construction, Inc. In 2008, Heggem sold the equipment in a sale and leaseback transaction to Tetra Financial Group, LLC. Tetra later transferred the equipment to Republic Bank, Inc. (with Tetra, Appellees). PVB sued Appellees, claiming Appellees converted the equipment and the collateral proceeds of the sale. The district court granted summary judgment in favor of Appellees, finding the undisputed facts in the record did not support PVB's conversion claims. The Eighth Circuit affirmed, holding (1) the district court did not err in concluding any interference by Appellees with PVB's right in the equipment was not so serious or important as to constitute conversion; and (2) because PVB failed to articulate any significant harm it suffered as a result of Appellees' action with respect to its deposit account, the district court did not err in concluding no conversion occurred.

Plaintiffs, groups of investors who purchased the securities of KV, brought this class action lawsuit alleging that KV and some of its individual officers committed securities fraud. Plaintiffs alleged that KV made false or misleading statements about its compliance with Food and Drug Administration (FDA) regulations governing the manufacture of pharmaceutical products, and made false or misleading statements about earnings resulting from pharmaceutical products allegedly manufactured in violation of FDA regulations. The court concluded plaintiffs' complaint adequately set forth the reasons why KV's statements about is compliance were false, or at least misleading, at the time they were made; the district court did not err when it determined the investors' complaint did not sufficiently plead that KV made false or misleading statements about earnings tied to the manufacture of generic Metoprolol; the district court correctly dismissed the scheme liability claims against the two individual KV officers; but the district court erred in denying the motion to amend the complaint. Accordingly the court affirmed in part, reversed in part, and remanded for further proceedings.

S&A sued Farms.com alleging that Farms.com violated the Commodity Exchange Act (CEA), 7 U.S.C. 1 et seq., breached its fiduciary duty, committed negligence, and made misrepresentations. The district court granted Farms.com's motion for summary judgment and S&A appealed. The court found that S&A did not sufficiently plead a fraudulent-inducement claim under 7 U.S.C. 6, but only alleged that Farms.com engaged in a fraudulent scheme under 7 U.S.C. 6o(1)(B). The court concluded that the district court did not err by granting Farms.com's motion for summary judgment on S&A's fraud claim where S&A's complaint alleged only a fraudulent scheme, not that Farms.com's failure to register caused it damages. The court also concluded that the district court did not err in granting Farms.com's motion for summary judgment on S&A's breach of fiduciary duty claim where S&A presented no evidence describing a commodity-trading advisor's standard of care or how Farms.com breached that standard of care.

Plaintiffs are shareholders of nine mutual funds that were registered investment companies under the Investment Company Act of 1940 (ICA), 15 U.S.C. 80(a)-35(b). The Funds were managed and distributed by affiliates of the defendants (collectively, Ameriprise). At issue was whether plaintiffs have set forth sufficient evidence to survive summary judgment on their claim that Ameriprise breached its fiduciary duty under section 36(b) of the ICA. In light of the United States Supreme Court's decision in Jones v. Harris Associates L.P., the court concluded that plaintiffs have not met their burden, and thus the court affirmed the district court's grant of summary judgment in favor of defendants.

The SEC commenced this civil enforcement action against appellant, a registered investment adviser (Jamerica), and a private investment (Brawta)(collectively, defendants), alleging that their fraudulent misrepresentations and diversion of Brawta funds violated securities laws. Initially, the district court granted a preliminary injunction, froze defendants' assets, and ordered Brawta to undertake and submit a sworn independent accounting. Then the district court granted the SEC summary judgment, permanently enjoining appellant and Jamerica from future violations of securities laws, and ordering them, jointly and severally, to disgorge misappropriated investor funds. The court held that, having reviewed the record de novo, summary judgment was appropriate for the reasons stated by the district court and that appellant's other challenges to the court's orders were without merit. Accordingly, the court affirmed the judgment of the district court.

This case involved a fallout of a $3.65 billion Ponzi scheme perpetrated by Minnesota businessman Thomas J. Petters. Appellants, investment funds (collectively, Ritchie), incurred substantial losses as a result of participating in Petters' investment scheme. Ritchie subsequently sued two officers of Petters' companies, alleging that they assisted Petters in getting Ritchie to loan over $100 million to Petters' company. Ritchie's five-count complaint alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(a), (c)-(d), common law fraud, and tortious inference with the contract. The court held that the district court erred in concluding that Ritchie's action was barred by a Receivership Order. The court also rejected arguments challenging the sufficiency of Ritchie's pleadings in the common law fraud count and did not to address other arguments related to abstention, lack of causation, and absolute privilege. Accordingly, the court reversed the judgment of the district court and remanded for further proceedings.