Source: http://www.nelfonline.org/docket/archives/06-2005
Timestamp: 2019-04-19 14:48:54+00:00

Document:
Asher v. Baxter Int’l Inc.
In this matter, NELF joined with two other amici curiae—the American Society of Corporate Secretaries and the National Investor Relations Group—on a brief in support of the writ for certiorari that Baxter International Incorporated (“Baxter’) filed in the U.S. Supreme Court seeking review of a decision by Judge Easterbrook of the Seventh Circuit. The Seventh Circuit decision effectively guts a major protection afforded to public company issuers of securities. Asher v. Baxter Int’l Inc., 377 F.3d 727 (7th Cir. 2004). That provision, 15 U.S.C. § 77Z-2(c)(1)(A)(i), requires dismissal of a securities lawsuit based on the issuer’s forward-looking business projections, before time-consuming and expensive discovery takes place, if the issuer’s statements were identified as forward looking and were accompanied by “meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statements.” 15 U.S.C. § 77Z-2(c)(1)(A)(i). It is not required that the issuer list all factors that might affect its actual results or even the factors that actually affected the results; all that is required is that the cautionary statements are meaningful statements identifying important factors. Nevertheless in this putative class-action securities Judge Easterbrook refused to dismiss the action, and instead allowed discovery to proceed to determine whether, as plaintiffs alleged, Baxter had omitted actual major risks contained in its internal estimates from the cautionary language that accompanied its projections. It was the amici’s position that, in effect, the Seventh Circuit’s decision erroneously injects an examination of the issuer’s intent into the safe harbor analysis.
On March 21, 2005, the Supreme Court denied Baxter’s petition for a writ of certiorari.
Gator.com Corp. v. L.L. Bean, Inc.
Gator.com Corp. (“Gator.com”), a California-based software company, received a cease-and-desist letter in March, 2001, from L.L. Bean, a Maine corporation, demanding that Gator.com cease using its “pop-up” internet software to cause advertisements offering a coupon for one of L.L. Bean’s competitors to pop up each time one of Gator.com’s users visited the L.L. Bean website. Gator.com then instituted a declaratory judgment action in the federal district court in California, requesting a judgment that its actions did not violate state or federal law. The district court dismissed Gator.com’s complaint on the ground that it did not have personal jurisdiction over L.L. Bean, which has its principal place of business in Maine, has a limited number of retail stores, and has no retail stores in California. L.L. Bean’s only contacts with California are its catalog sales, a toll-free telephone number, and an interactive website which produces about 16% of L.L. Bean’s total sales. Gator.com appealed to the Ninth Circuit, a panel of which found, based on these facts, that L.L. Bean has sufficient contacts with California to permit the court to exercise general personal jurisdiction. See Gator.com Corp. v. L.L. Bean, Inc., 341 F.3d 1072 (9th Cir. 2003).This finding was based on the panel’s view that, in particular, L.L. Bean’s substantial mail-order and internet-based commerce in the state are sufficient to support the assertion of general personal jurisdiction. In addition, the panel noted that, even if L.L. Bean’s only contacts with California had been through its “virtual store,” i.e., its interactive website, a finding of general jurisdiction would be warranted.
On April 29, 2004, the Ninth Circuit granted L.L. Bean’s petition for a rehearing en banc, Gator.com Corp. v. L.L. Bean, 366 F.3d 789 (9th Cir. 2004), and on July 27, 2004, NELF filed an amicus letter in support of L.L. Bean on its own behalf and on behalf of Associated Industries of Massachusetts. The letter sought to apprise the Ninth Circuit of two issues that it should consider. First, the letter discussed the potentially adverse impact of the panel’s decision not only on the business community as a whole but especially on small businesses that use interactive internet sites, who would be devastated by the costs of defending a lawsuit in a distant state. Second, the letter addressed a issue not reached by the panel, arguing that, not only should the panel’s decision on general jurisdiction be reversed, but there should also be no finding of specific personal jurisdiction in California based on L.L. Bean’s cease and desist letter. If Gator.com were to obtain specific personal jurisdiction, based on that single letter, for litigation relating to any internet activities, it would have obtained through the back door of specific jurisdiction what NELF and AIM contend it cannot obtain through general personal jurisdiction. The dispute in this case is whether Gator.com infringed L.L. Bean’s Maine-based trademark rights, which is not an appropriate basis for specific personal jurisdiction in California.
As an anticlimactic conclusion to this closely watched case, in a decision issued on February 15, 2005, the Ninth Circuit en banc panel dismissed the appeal as moot, based on the parties’ settlement of their dispute. Although the parties had sought to structure their settlement so as to keep alive the hotly contested jurisdictional issue, the Ninth Circuit determined that the matter was no longer an actual case or controversy, as required by Article III of the Constitution. The upshot of the dismissal is that the only decision in this matter that remains valid is the District Court’s holding that it did not have personal jurisdiction over L.L. Bean.
Mary Sullivan, an attorney, was employed in Liberty Mutual Insurance Company’s (‘Liberty”) Boston Field Office until she was permanently laid off on June 15, 1999, as part of a reduction in force (“RIF”) implemented by Liberty’s Legal Department. Sullivan sued Liberty in the Massachusetts Superior Court alleging age and gender discrimination. On March 5, 2003, the Superior Court granted Liberty’s motion for summary judgment and dismissed Sullivan’s complaint. Sullivan’s appeal to the Appeals Court was taken sua sponte by the Supreme Juidicial Court for direct appellate review and arguments were heard by the SJC on December 6, 2004. At the argument, it became clear why the SJC had taken the case. In their questioning, the justices focused on the fact that Massachusetts has not adopted a clear standard for the establishment of a prima facie case of discrimination in the context of a discharge caused by a RIF. At the close of the argument, the SJC asked the parties to submit supplementary memoranda of law setting forth what standard they think the Court should adopt to deal with the RIF context.
At Liberty’s request and because whatever standard the SJC adopts will affect employers and employees throughout Massachusetts, NELF decided to file an amicus curiae brief on this question. In its brief, NELF urged the SJC to adopt a standard of proof in such cases that was logically related to the particular circumstances of a RIF, which by definition occurs because of business necessity and might well result in a lay off of the meber of a protected class for justifiable business reasons. NELF argued that, due to the nature of a RIF, it should not be sufficient for a plaintiff to show that other individuals, not in the protected class, remained employed. Rather, NELF supported Liberty’s position, as already presented to the Court in its supplemental filing, that the Court should adopt a standard of proof like the one adopted by the Fifth, Sixth, Eighth, Ninth, Tenth, and Eleventh Federal Circuits. This standard requires that, where the plaintiff’s termination is part of a RIF, the plaintiff has to show as the fourth element of the prima facie case, not simply that others who are not in the plaintiff’s protected class remained employed, but some “direct, circumstantial, or statistical evidence tending to indicate that the employer singled out the plaintiff for discharge for impermissible reasons.” Barnes v. Diversitech GenCorp, Inc., 896 F.2d 1457, 1465 (6th Cir. 1990).

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