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The Supreme Court vacated and remanded, holding that the history and purpose of SLUSA's pre-emption provision included kind of claim Dabit alleged. Delivering the 8-0 opinion of the Court (with Alito taking no part), Justice Stevens reasoned that due to the federal interest in protecting the integrity and efficiency of the national securities market, Congress to adopted legislation to prevent the perceived abuses of class actions. To prevent class actions shifting from circumventing this intent by taking their class actions to state court, Congress enacted SLUSA.
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In a class action suit, a group of Warnaco stock purchasers brought action alleging that Deloitte, Warnaco's outside consultant, concealed the risk of Warnaco's collapse by making misstatements about Warnaco's financial condition. The plaintiffs class was composed of shareholders whose stock holdings lost value when Warnaco filed for bankruptcy. Affirming the District Court decision, the Second Circuit held that Deloitte was not liable for Warnaco's quarterly statements which it did not audit, nor did it have a duty to the class to correct the statements that it made prior to the class period.
The Court found that while the quarterly statements and 1999 10-K statements may have contained misstatements, such misstatements were not sufficient to create a cause of action because either Deloitte was not responsible for auditing them or the statements were made prior to the period during which the shareholders acquired their stock.
The American Federation for State, County, and Municipal Employees ("AFSCME"), through its pension plan, held nearly 27,000 shares of American International Group ("AIG") stock. In December of 2004, AFSCME submitted to AIG a shareholder proposal that would amend AIG's bylaws to require AIG to publish the names of shareholder nominated candidates for director positions in addition to the board of directors' nominated candidates. AFSCME brought suit to compel AIG to include the statement as to shareholder nominated candidates for the Board. The Second Circuit reversed the District Court on the issue as to whether a shareholder proposal requiring a company to include certain shareholder-nominated candidates for the board of directors on the corporate ballot can be excluded from the corporate proxy materials on the basis that the proposal "relates to an election" under Securities Exchange Act Rule 14a-8(i)(8). Reviewing the SEC's two interpretations of Rule14a-8(i)(8) the court selected the SEC's earlier interpretation, reasoning that where the agency interpretation of an ambiguous statute has shifted, the interpretation made at the time of the implementation of the statute should control.
Paul M. Morris, as a vice president of Schroder Capital Management, received a deferred compensation plan containing forfeiture provisions that would trigger if he voluntarily quit during the plan's three year vesting period and sought Page 3 employment with a competitor. Morris argued that he did not voluntarily quit but rather that he was constructively discharged. The district court held that because Morris had failed to state a claim of constructive discharge, the covenant not to compete was valid pursuant to New York's employee choice doctrine, which permits enforcement of restrictive covenants without regard to a covenant's reasonableness. The Second Circuit affirmed the District Court's dismissal, holding that Morris was not constructively discharged for he failed to prove that the working conditions at his previous place of employment were so difficult or unpleasant that he felt compelled to resign. Under the employee choice doctrine, an employer...
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