Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

Defendants, alleged victims of a Ponzi scheme perpetrated by John Woods, sought to bring claims against Woods's employer, Oppenheimer & Co. Inc., in a FINRA arbitration forum. Defendants claimed they were customers of Oppenheimer because they transacted with Woods, an associated person of Oppenheimer. Oppenheimer filed a federal action seeking a declaration that Defendants were not its customers and a permanent injunction to prevent arbitration.The United States District Court for the Western District of Washington granted summary judgment in favor of Oppenheimer, concluding that Defendants were not customers of Oppenheimer or Woods. The court found that Defendants had no direct relationship with Oppenheimer and that their investments were facilitated by Michael Mooney, not Woods. The court also issued a permanent injunction prohibiting Defendants from arbitrating their claims.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court's decision. The Ninth Circuit held that a "customer" under FINRA Rule 12200 includes any non-broker and non-dealer who purchases commodities or services from a FINRA member or its associated person. However, the court agreed with the district court that Defendants did not transact with Woods, as their investments were facilitated by Mooney. The court also rejected Defendants' "alter ego" theory, which suggested that their investments in an entity controlled by Woods made them Woods's customers.The Ninth Circuit concluded that Defendants were not entitled to arbitrate their claims against Oppenheimer under FINRA Rule 12200 and upheld the permanent injunction. The court found no errors in the district court's analysis or factual findings and affirmed the decision in full. View "OPPENHEIMER & CO. INC. V. MITCHELL" on Justia Law

Bigfoot Ventures Limited brought a shareholder derivative action on behalf of NextEngine, Inc. against Mark S. Knighton, ShapeTools, LLC, and NextEngine. Bigfoot alleged that the agreement between NextEngine and ShapeTools was not intended to benefit NextEngine or its shareholders. Bigfoot had a history of litigation against NextEngine, including disputes over loans and intellectual property (IP) rights.The United States District Court for the Central District of California dismissed Bigfoot’s suit, finding that Bigfoot could not fairly or adequately represent the interests of NextEngine’s shareholders as required by Federal Rule of Civil Procedure 23.1. The court considered the ongoing litigation between Bigfoot and NextEngine, which suggested that the derivative action was being used as leverage in other lawsuits. The court also found that Bigfoot’s personal interest in gaining control of NextEngine’s IP outweighed its interest in asserting rights on behalf of NextEngine.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The Ninth Circuit clarified that courts are not required to assess each of the eight factors from Larson v. Dumke when determining plaintiff adequacy in a shareholder derivative action. The court held that the district court did not err in considering the ongoing litigation as an outside entanglement and found that the record supported the district court’s conclusion that Bigfoot was an inadequate plaintiff. The Ninth Circuit also held that the district court did not abuse its discretion by vacating the trial to hear the motion to dismiss, as it raised significant issues that needed to be resolved before trial. View "BIGFOOT VENTURES LIMITED V. KNIGHTON" on Justia Law

Plaintiffs sued Qualcomm Inc., alleging that its business practices violated state and federal antitrust laws. These practices included Qualcomm’s “no license, no chips” policy, which required cellular manufacturers to license Qualcomm’s patents to purchase its modem chips, and alleged exclusive dealing agreements with Apple and Samsung. The Federal Trade Commission (FTC) had previously challenged these practices, but the Ninth Circuit reversed the district court’s ruling in favor of the FTC, holding that Qualcomm did not violate the Sherman Act.The district court in the current case certified a nationwide class, but the Ninth Circuit vacated the class certification order and remanded to consider the viability of plaintiffs’ claims post-FTC v. Qualcomm. On remand, plaintiffs proceeded with state-law claims under California’s Cartwright Act and Unfair Competition Law (UCL). The district court dismissed the tying claims and granted summary judgment on the exclusive dealing claims. The court found that the Cartwright Act did not depart from the Sherman Act and that plaintiffs failed to show market foreclosure or anticompetitive impact in the tied product market. The court also rejected the UCL claims, finding no fraudulent practices and determining that plaintiffs could not seek equitable relief.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of the tying claims and the summary judgment on the exclusive dealing claims under the Cartwright Act. The court held that Qualcomm’s “no license, no chips” policy was not anticompetitive and that plaintiffs failed to show substantial market foreclosure or antitrust injury. The court also affirmed the rejection of the UCL claims but vacated the summary judgment on the UCL unfairness claim related to exclusive dealing, remanding with instructions to dismiss that claim without prejudice for refiling in state court. View "KEY V. QUALCOMM INCORPORATED" on Justia Law

A Texas attorney, Robert M. Roach, claimed to have an oral agreement with Fred Schrader, the former owner of Schrader Cellars, LLC, regarding the creation of another company, RBS LLC, which Roach asserted had an ownership interest in Schrader Cellars. After Fred Schrader sold Schrader Cellars to Constellation Brands, Roach sued Fred and Constellation in Texas state court, claiming the sale was improper. Schrader Cellars then filed the current action, seeking declaratory relief that Roach had no ownership interest in Schrader Cellars, and Roach counterclaimed.The United States District Court for the Northern District of California granted summary judgment in favor of Schrader Cellars on its claim for declaratory relief and dismissed Roach’s counterclaims. The court concluded that the oral agreement violated California Rule of Professional Responsibility 3-300 and that Roach did not rebut the presumption of undue influence. The case proceeded to trial on Schrader Cellars’s claim for breach of fiduciary duty, where the jury found that Roach’s breach caused harm but did not award damages due to the litigation privilege defense.The United States Court of Appeals for the Ninth Circuit reversed the district court’s summary judgment in favor of Schrader Cellars on its claim for declaratory relief and Roach’s counterclaims, finding triable issues of fact regarding whether Roach rebutted the presumption of undue influence. The appellate court also held that the district court erred in concluding and instructing the jury that Roach breached his fiduciary duties. However, the Ninth Circuit affirmed the district court’s judgment after trial, concluding that the erroneous jury instruction had no effect on the outcome because the jury found that the gravamen of the breach of fiduciary duty claim was based on Roach’s filing of the Texas lawsuit, which was barred by the California litigation privilege. View "SCHRADER CELLARS, LLC V. ROACH" on Justia Law

Gina Champion-Cain operated a Ponzi scheme through her company ANI Development, LLC, defrauding over 400 investors of approximately $389 million. The SEC initiated a civil enforcement action, freezing Cain’s and ANI’s assets, appointing a receiver for ANI, and temporarily staying litigation against ANI. Defrauded investors then sued third parties, including Chicago Title Company and the Nossaman law firm, alleging their involvement in the scheme.The United States District Court for the Southern District of California approved a global settlement between the Receiver and Chicago Title, which included a bar order preventing further litigation against Chicago Title and Nossaman related to the Ponzi scheme. Kim Peterson and Ovation Fund Management II, LLC, whose state-court claims against Chicago Title and Nossaman were extinguished by the bar orders, challenged these orders.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the district court had the authority to enter the bar orders because the claims by Peterson and Ovation substantially overlapped with the Receiver’s claims, seeking recovery for the same losses stemming from the Ponzi scheme. The bar orders were deemed necessary to protect the ANI receivership estate, as allowing the claims to proceed would interfere with the Receiver’s efforts and deplete the receivership’s assets.The Ninth Circuit also concluded that the Anti-Injunction Act did not preclude the bar orders, as they were necessary in aid of the district court’s jurisdiction over the receivership estate. The court rejected Peterson’s argument that the bar order was inequitable, noting that Peterson had the opportunity to file claims through the receivership estate but was determined to be a net winner from the Ponzi scheme. Consequently, the Ninth Circuit affirmed the district court’s bar orders. View "USSEC V. CHICAGO TITLE COMPANY" on Justia Law

A plaintiff purchased shares of a company that went public through a direct listing, which involved listing already-issued shares rather than issuing new ones. Following the listing, the company's stock price fell, and the plaintiff filed a class action lawsuit alleging that the registration statement was misleading, thus violating sections 11 and 12(a)(2) of the Securities Act of 1933. These sections impose strict liability for any untrue statement or omission of a material fact in a registration statement or prospectus.The district court denied the defendants' motion to dismiss, despite the plaintiff's concession that he could not trace his shares to the registration statement. The court held that it was sufficient for the plaintiff to allege that the shares were of the same nature as those issued under the registration statement. The Ninth Circuit initially affirmed this decision.The United States Supreme Court vacated the Ninth Circuit's decision, holding that section 11 requires plaintiffs to show that the securities they purchased were traceable to the particular registration statement alleged to be false or misleading. On remand, the Ninth Circuit concluded that section 12(a)(2) also requires such traceability. Given the plaintiff's concession that he could not make the required showing, the Ninth Circuit reversed the district court's decision and remanded with instructions to dismiss the complaint in full and with prejudice. View "PIRANI V. SLACK TECHNOLOGIES" on Justia Law

Aquarian Foundation, Inc., a non-profit religious organization, alleged that Bruce Lowndes infringed on its copyrights by uploading spiritual teachings of its late founder, Keith Milton Rhinehart, to various websites. Lowndes claimed he had a license from Rhinehart, granted in 1985, to use the materials. Rhinehart passed away in 1999, bequeathing his estate, including the copyrights, to Aquarian.The United States District Court for the Western District of Washington granted partial summary judgment, confirming that Rhinehart's copyrights were properly transferred to Aquarian via his will. After a bench trial, the court ruled against Aquarian on its claims of copyright infringement, trademark infringement, and false designation of origin. The court found that Rhinehart created the works as his own, not as works for hire, and that he had validly licensed them to Lowndes. The court also determined that Lowndes did not breach the licensing agreement and that Aquarian could not terminate the license under 17 U.S.C. § 203(a). The court denied attorneys’ fees to both parties.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s findings that Rhinehart’s works were not created as works for hire, that he validly licensed the works to Lowndes, and that Lowndes did not breach the licensing agreement. The court also affirmed the decision not to award Lowndes attorneys’ fees under the Lanham Act. However, the Ninth Circuit reversed the district court’s determination regarding the termination of the license, holding that Aquarian’s termination letter in May 2021 was effective. The case was remanded for further proceedings to address any infringement that may have occurred after the license termination, as well as the denial of injunctive relief and attorneys’ fees under the Copyright Act. View "AQUARIAN FOUNDATION, INC. V. LOWNDES" on Justia Law

A nonprofit corporation, Moving Oxnard Forward (MOF), challenged campaign finance limitations in the Oxnard City Code, alleging they violated the First Amendment. The limitations, adopted by the City of Oxnard, California, primarily affected Aaron Starr, MOF's President, who had a history of receiving large contributions and challenging the City Council's policies. Starr had previously led recall efforts against the City Council and ran for Mayor, relying on larger-dollar contributions.The United States District Court for the Central District of California granted summary judgment in favor of the City, upholding the campaign finance limitations. MOF appealed the decision, arguing that the limitations were designed to target and suppress Starr's political activities rather than to prevent corruption.The United States Court of Appeals for the Ninth Circuit reviewed the case and found significant "danger signs" of invidious discrimination against Starr. The court noted that the legislative record and the practical impact of the limitations disproportionately affected Starr, who had been a vocal critic of the City Council. The court also found that the City's justification for the limitations, based on a 2010 corruption scandal, was tenuous and unrelated to campaign contributions.The Ninth Circuit concluded that the contribution limits were not narrowly tailored to the City's interest in preventing quid pro quo corruption. Instead, the limits appeared to be more closely drawn to suppress Starr's political activities. As a result, the court reversed the district court's decision and remanded with instructions to grant summary judgment in favor of MOF, holding that the per-candidate aggregate contribution limitations in the Oxnard City Code violated the First Amendment. View "MOVING OXNARD FORWARD, INC. V. ASCENSION" on Justia Law

Teradata Corporation sued SAP SE, alleging that SAP illegally conditioned sales of its business-management software (S/4HANA) on the purchase of its back-end database engine (HANA) in violation of Section 1 of the Sherman Act and misappropriated Teradata’s trade secrets under the California Uniform Trade Secrets Act. Teradata claimed that SAP’s tying arrangement forced customers to buy HANA, harming competition in the enterprise data warehousing (EDW) market. Teradata also alleged that SAP used its confidential batched merge method, a technique for efficient data aggregation, without authorization.The United States District Court for the Northern District of California granted summary judgment in favor of SAP. The court excluded Teradata’s expert testimony on market definition and market power, finding the methodology unreliable. Without this testimony, the court concluded that Teradata failed to create a material dispute on its tying claim. The court also ruled against Teradata on the trade secret claim, stating that Teradata did not properly designate the batched merge method as confidential and that the agreements between the parties gave SAP the right to use the method.The United States Court of Appeals for the Ninth Circuit reversed the district court’s summary judgment. The appellate court held that the district court abused its discretion by excluding the expert’s testimony, which was based on reasonable methodologies. The court found that Teradata raised a triable issue regarding SAP’s market power in the tying market and the anticompetitive effects in the tied market. The court also determined that there were material factual disputes regarding whether Teradata properly designated the batched merge method as confidential and whether the agreements allowed SAP to use the method. The case was remanded for further proceedings. View "TERADATA CORPORATION V. SAP SE" on Justia Law

Andrew Hackett, a stock promoter, was convicted of conspiracy to commit securities fraud and securities fraud related to the manipulative trading of a public company's stock. Hackett engaged in a pump-and-dump scheme, promoting the stock of First Harvest (later renamed Arias Intel) and recruiting others to do the same. He used call rooms to solicit investors and artificially inflate the stock price before selling his shares. The scheme was exposed by an FBI informant, leading to Hackett's conviction.The United States District Court for the Southern District of California sentenced Hackett to forty-six months of imprisonment, applying a sixteen-level sentencing enhancement under U.S.S.G. § 2B1.1(b)(1)(I) for a loss exceeding $1.5 million. The court calculated an intended loss of $2.2 million based on Hackett's ownership of 550,000 shares and his intent to sell them at four dollars per share. Hackett's counsel objected to the loss calculation but did not argue that intended loss was an improper measure of loss.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court's judgment. The Ninth Circuit held that the district court did not plainly err in relying on the guideline commentary defining "loss" as the greater of actual loss or intended loss. The court noted that any error was not clear or obvious given the precedent recognizing both actual and intended loss and the lack of consensus among circuit courts on this issue. The court applied plain error review because Hackett's objection to the loss calculation was not sufficiently specific to preserve de novo review. View "USA V. HACKETT" on Justia Law