Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
C.A.11 (Fla.),2010.
Edward J. Goodman Life Income Trust v. Jabil Circuit, Inc.
594 F.3d 783, Fed. Sec. L. Rep. P 95,576, 22 Fla. L. Weekly Fed. C 463
v.
JABIL CIRCUIT, INC., Forbes I.J. Alexander, Scott D. Brown, Laurence S. Grafstein, Mel S. Lavitt, et al., Defend-
ants-Appellees.
No. 09-10954.
Jan. 19, 2010.
595 F.Supp.2d 1253, granted motion, and investors appealed.
Holdings: The Court of Appeals, Dubina, Chief Judge, held that:
(1) investors who were allegedly defrauded into purchasing corporate stock as result of purported corporate policy
of issuing backdated options to officers, directors and other key employees and then not recording these backdated
could not deprive corporation and its officers and directors of benefits of “safe harbor” provision of the Private Se-
curities Litigation Reform Act (PSLRA), which they enjoyed by virtue of cautionary language accompanying these
projections, simply by alleging that they had actual knowledge of falsity of projections at time; and
(4) investors failed to state claim under section of the Securities Exchange Act prohibiting use of false statements in
proxy solicitations associated with registered securities.
170B Federal Courts
170BVIII Courts of Appeals
170BVIII(K) Scope, Standards, and Extent
170BVIII(K)1 In General
170Bk776 k. Trial de novo. Most Cited Cases
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
first step for pleading a Rule 10b-5 securities fraud claim, especially given corporation's decision to restate financial
reports that were issued during this time period. Securities Exchange Act of 1934, §§ 10(b), 21D(b), 15 U.S.C.A. §§
78j(b), 78u-4(b); 17 C.F.R. § 240.10b-5; Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A.
[6] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
fendants named in complaint had knowledge of these alleged accounting irregularities and requisite intent to de-
ceive, as needed to satisfy intent requirement for Rule 10b-5 securities fraud claim, based on size of alleged account-
ing error, in amount of $54.3 million, on newspaper article that discussed alleged backdating of options, but not the
subsequent accounting irregularities, on volume of stock sales by corporate insiders, or upon defendants' member-
ship on corporate committee that directed stock option grants and alleged accounting experience of several defend-
[7] Securities Regulation 349B 60.45(1)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
[8] Securities Regulation 349B 60.45(1)
349B Securities Regulation
349BI Federal Regulation
ited to those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusa-
ble negligence, but an extreme departure from standards of ordinary care, and that present danger of misleading
buyers or sellers which is either known to defendant or is so obvious that defendant must have been aware of it. Se-
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.43 Grounds of and Defenses to Liability
349Bk60.45 Scienter, Intent, Knowledge, Negligence or Recklessness
349Bk60.45(1) k. In general. Most Cited Cases
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
[11] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
against corporate insiders who traded in stock during period when corporation was allegedly underreporting its ex-
penses due to its failure to treat backdated options that it had purportedly granted to officers, directors and other key
employees as compensation expense, and when execution problems at corporation allegedly prevented it from mak-
ing its quarterly projections, given lack of any particularized factual assertions indicating that any individual defend-
ant knew about accounting errors at time of trading and dearth of facts indicating any individual defendant's
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
[13] Securities Regulation 349B 60.45(1)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
10(b), 15 U.S.C.A. § 78j(b); 17 C.F.R. § 240.10b-5.
[14] Securities Regulation 349B 60.27(5)
349B Securities Regulation
Investors asserting a class securities fraud claim based on alleged falsity of corporation's quarterly projections could
not deprive corporation and its officers and directors of benefits of “safe harbor” provision of the Private Securities
Litigation Reform Act (PSLRA), which they enjoyed by virtue of cautionary language accompanying these projec-
tions, simply by alleging that corporation and its officers and directors had actual knowledge of falsity of projections
at time they were made. Securities Exchange Act of 1934, § 21E(c)(1), 15 U.S.C.A. § 78u-5(c)(1).
349BI(C)4 Proxies
349Bk49.19 False or Fraudulent Proxies; Accuracy and Completeness
349Bk49.21 k. False or misleading statements; misrepresentation. Most Cited Cases
To successfully pursue claim for use of false statements in proxy solicitations associated with registered securities,
plaintiff must show that proxy solicitation itself, rather than particular defect in solicitation materials, was essential
private right of action to shareholders who contemporaneously trade with “[a]ny person who violates any provision
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)1 In General
349BI(C) Trading and Markets
349BI(C)4 Proxies
349Bk49.28 k. Pleading. Most Cited Cases
Securities Regulation 349B 60.51(2)
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
Shareholders' failure to sufficiently allege scienter required to state section 10(b) or Rule 10b-5 claim and failure to
allege requisite link between alleged fraudulent proxy solicitation and their loss, as required to state claim for viola-
tion another provision of the Securities Exchange Act, prevented them from stating control person liability claim;
McGill, Latham & Watkins, PA, Washington, DC, Stacy D. Blank, Holland & Knight, LLP, Tampa, FL, Peter W.
Deveraux, Latham & Watkins, LLP, Los Angeles, CA, for Defendants-Appellees.
Appeal from the United States District Court for the Middle District of Florida.
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
first step for pleading a Rule 10b-5 securities fraud claim, especially given corporation's decision to restate financial
reports that were issued during this time period. Securities Exchange Act of 1934, §§ 10(b), 21D(b), 15 U.S.C.A. §§
78j(b), 78u-4(b); 17 C.F.R. § 240.10b-5; Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A.
[6] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
fendants named in complaint had knowledge of these alleged accounting irregularities and requisite intent to de-
ceive, as needed to satisfy intent requirement for Rule 10b-5 securities fraud claim, based on size of alleged account-
ing error, in amount of $54.3 million, on newspaper article that discussed alleged backdating of options, but not the
subsequent accounting irregularities, on volume of stock sales by corporate insiders, or upon defendants' member-
ship on corporate committee that directed stock option grants and alleged accounting experience of several defend-
[7] Securities Regulation 349B 60.45(1)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
[8] Securities Regulation 349B 60.45(1)
349B Securities Regulation
349BI Federal Regulation
ited to those highly unreasonable omissions or misrepresentations that involve not merely simple or even inexcusa-
ble negligence, but an extreme departure from standards of ordinary care, and that present danger of misleading
buyers or sellers which is either known to defendant or is so obvious that defendant must have been aware of it. Se-
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.43 Grounds of and Defenses to Liability
349Bk60.45 Scienter, Intent, Knowledge, Negligence or Recklessness
349Bk60.45(1) k. In general. Most Cited Cases
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
349Bk60.50 Pleading
[11] Securities Regulation 349B 60.51(2)
349B Securities Regulation
349BI Federal Regulation
against corporate insiders who traded in stock during period when corporation was allegedly underreporting its ex-
penses due to its failure to treat backdated options that it had purportedly granted to officers, directors and other key
employees as compensation expense, and when execution problems at corporation allegedly prevented it from mak-
ing its quarterly projections, given lack of any particularized factual assertions indicating that any individual defend-
ant knew about accounting errors at time of trading and dearth of facts indicating any individual defendant's
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)7 Fraud and Manipulation
[13] Securities Regulation 349B 60.45(1)
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
10(b), 15 U.S.C.A. § 78j(b); 17 C.F.R. § 240.10b-5.
[14] Securities Regulation 349B 60.27(5)
349B Securities Regulation
Investors asserting a class securities fraud claim based on alleged falsity of corporation's quarterly projections could
not deprive corporation and its officers and directors of benefits of “safe harbor” provision of the Private Securities
Litigation Reform Act (PSLRA), which they enjoyed by virtue of cautionary language accompanying these projec-
tions, simply by alleging that corporation and its officers and directors had actual knowledge of falsity of projections
at time they were made. Securities Exchange Act of 1934, § 21E(c)(1), 15 U.S.C.A. § 78u-5(c)(1).
349BI(C)4 Proxies
349Bk49.19 False or Fraudulent Proxies; Accuracy and Completeness
349Bk49.21 k. False or misleading statements; misrepresentation. Most Cited Cases
To successfully pursue claim for use of false statements in proxy solicitations associated with registered securities,
plaintiff must show that proxy solicitation itself, rather than particular defect in solicitation materials, was essential
private right of action to shareholders who contemporaneously trade with “[a]ny person who violates any provision
349B Securities Regulation
349BI Federal Regulation
349BI(C) Trading and Markets
349BI(C)1 In General
349BI(C) Trading and Markets
349BI(C)4 Proxies
349Bk49.28 k. Pleading. Most Cited Cases
Securities Regulation 349B 60.51(2)
349Bk60.51 In General
349Bk60.51(2) k. Scienter. Most Cited Cases
Shareholders' failure to sufficiently allege scienter required to state section 10(b) or Rule 10b-5 claim and failure to
allege requisite link between alleged fraudulent proxy solicitation and their loss, as required to state claim for viola-
tion another provision of the Securities Exchange Act, prevented them from stating control person liability claim;
McGill, Latham & Watkins, PA, Washington, DC, Stacy D. Blank, Holland & Knight, LLP, Tampa, FL, Peter W.
Deveraux, Latham & Watkins, LLP, Los Angeles, CA, for Defendants-Appellees.
Appeal from the United States District Court for the Middle District of Florida.
