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Thursday, March 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Securities Spat Given High Court ‘Return to Sender’

The Supreme Court punted Tuesday on a securities case it just considered a week earlier at oral arguments.

WASHINGTON (CN) - The Supreme Court punted Tuesday on a securities case it just considered a week earlier at oral arguments.

Gary Varjabedian and Jerry Mutza, two shareholders of the manufacturing company Emulex, filed the suit to prevent a merger with Avago Technologies Wireless (USA) Manufacturing Inc.

Though a federal judge dismissed the case, the Ninth Circuit reversed with instructions for it to be reviewed under the negligence standard. 

Earlier this year, however, the case took a detour to Washington where the Supreme Court said it would decide whether the law “supports an inferred private right of action based on a negligent misstatement or omission made in connection with a tender offer.”

On Tuesday, the court dismissed the writ of certiorari as improvidently granted. The justices had just heard argument in the case on April 15, with Dallas-based attorney Daniel Geyser arguing for the shareholders.

“A DIG is never really a grand slam, but this a pretty solid ground-rule double,” Geyser said in an email Tuesday, using an abbreviation for a Dallas-based attorney for the term dismissed as improvidently granted. “We argued three times (in our brief in opposition, in our merits brief, and at last week's argument) that this case was the wrong vehicle for deciding these issues. As usual, all the justices were deeply engaged, and we're thrilled the court ultimately saw it our way.

“Today's decision simply leaves in place the same private right that has existed now for half a century,” Geyser continued. “While I'm sure future litigants will lodge the same challenge, I think they'll find that this is the exceptionally rare statute that satisfies the court's demanding standard for recognizing implied rights of action.”

After oral arguments last week, Ronald Mann reported for SCOTUSblog that "several justices were troubled that the broad argument against a private right of action was not raised properly in the lower courts."

The Washington firm Latham & Watkins represents Emulex. An attorney there has not returned an email seeking comment.

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Categories / Appeals, Securities

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