Chapter 14

• Jurisdiction: United States

Chapter 14 Securities Litigation Issues, Part Two

Motions for Summary Judgment

Summary judgment motions are governed by Rule 56 of the Federal Rules of Civil Procedure. They may be filed at any time until thirty days after the close of all discovery (unless otherwise ordered). The rule provides that the motions "shall be granted if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Under Rule 56(d), the non-movant may show that it cannot present facts essential to justify its opposition. In that case, the court may defer consideration, allow time to get affidavits, or permit the non-movant to take discovery. This is one reason why summary judgment motions come after the close of discovery. Rule 56.1 statements of undisputed facts (required in some local civil rules) are increasingly disfavored. They take a long time to prepare and are rarely helpful. Courts are reluctant to grant summary judgment on scienter unless there is "no rational basis" for concluding that statements were made with scienter. See In re Software Toolworkers Inc. Sec. Lit., 38 F.3d 1078 (9th Cir. 1994).

Unlike motions to dismiss, motions for summary judgment are not routinely made in securities cases because they are so fact intensive. Some say that such motions, even if unsuccessful, are useful to "educate the judge." However, they rarely serve that purpose. Motions for partial summary judgment may be helpful in clearing away extraneous issues. Courts disagree as to whether they can grant summary judgment on one element of a claim. Note that Rule 56(g) permits a court that does not grant all of the relief sought by the motion to enter an order identifying any material fact that is not genuinely in dispute and treating that fact as established.

After Dura, summary judgment on loss causation has become more likely. See, e.g., In re Mercury Interactive Corp., 2007 BL 210140 (N.D. Cal. July 30, 2007) ("failure to establish that the disclosure of the relevant wrongdoing played a significant role in the loss merits entry of summary judgment for failure to show loss causation.")

Orders granting summary judgment are not ordinarily appealable until the claims against all of the parties have been disposed of, but there are some exceptions. See Rule 54(b). An order denying summary judgment is not appealable except under 28 U.S.C. § 1292(b), which requires the consent of both the district court and the court of appeals. That rarely happens.

Trial Preparation in General

You should begin to prepare for trial at the earliest possible moment, even before any discovery has been taken. Confer with your clients, of course, but conduct your own investigation of the facts as well. What should you do with the results of discovery when it begins to come in? Prepare an outline of proof/order of proof, use it to prepare witnesses, use it to understand the issues, and use it to plan your affirmative or defensive cases. The outline will tell you how to prove or defend against each of the necessary facts and where additional work needs to be done. The outline of proof is a living document and should be updated constantly. At a trial, few exhibits are used, although many are discovered. Some use this fact to argue that there is too much irrelevant discovery in securities cases. The new amended Federal Rules of Civil Procedure Rule 26 requires proportionality, but it remains to be seen how that will be enforced.

Bear in mind that juries don't like deposition reading ("boring") but videotapes are slightly better.¹

Motions in limine, which are motions asking the court to receive or exclude certain evidence for a variety of reasons, including relevance and prejudice, are standard. Start thinking about them early in your trial preparation. In limine is a Latin word meaning "on the threshold," which suggests that it should be made before the trial begins, so that the parties will know before trial what the evidence will or will not be.²

Use of jury consultants and mock trials is very common and is quite useful although expensive.

Begin preparing for trial from the first day the complaint is filed. While it is true that most securities cases do not go to trial, if you are not prepared to go to trial, you will be at a serious disadvantage when discussing settlement.

Read the model jury instructions early in the case so you know what you will be facing.³ If the model jury instructions don't help your case, look for actual instructions from other trials. Remember that courts are not limited to using only the model jury instructions.

• Be creative.
• Begin preparing witnesses early.
• Daubert challenges to expert witnesses are commonplace.
• Write out your opening very early and constantly revise it. (But don't read it at trial!)
• In preparing for jury selection, use of a jury questionnaire is increasingly common. Samples are

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