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Houston Harbaugh Blog

November 2013 Archives

District Court Rejects Challenge to Loss Causation and Damages Expert in Federal Securities Case, Invites Supplemental Briefing on Burden of Proving Proportionality of Loss Causation and Damages among Multiple Defendants

Third Circuit in Rahman v. Kid Brands, Inc., Affirms Dismissal of Federal Securities Class Action Suit, Declines Opportunity to Decide Viability of "Corporate Scienter" Doctrine

In Rahman v. Kid Brands, Inc., No. 12-4257, 2013 U.S. App. LEXIS 23084 (3d Cir. Nov. 15, 2013), the Third Circuit issued a precedential opinion affirming dismissal of a federal securities class action suit alleging violations of Sections 10(b)(5) and 20 of the Securities Exchange Act of 1934. Specifically at issue on appeal was whether the district court had properly dismissed the plaintiff's second amended complaint ("SAC") under the Private Securities Litigation Reform Act ("PSLRA") due to insufficient allegations of scienter, which is one of the elements of a claim under Section 10(b)(5) (and without which a claim under Section 20 similarly fails since Section 20 liability is derivative of a primary violation under Section 10(b)(5) or another securities law). The court agreed with the district court and the defendants that the allegations in the SAC fell short of the PSLRA's heightened pleading requirements

Pennsylvania Supreme Court Elaborates upon Notice-Prejudice Requirement in Phantom Motorist Case

In Vanderhoff v. Harleysville Ins. Co., 2013 Pa. LEXIS 2581 (Pa. Oct. 30, 2013), the Pennsylvania Supreme Court was called upon to consider what constitutes a showing of prejudice for purposes of an insured denying an uninsured motorist claim involving a phantom vehicle under the Motor Vehicle Financial Responsibility LAW ("MVFRL"). The case, which was on appeal for a second time following an earlier decision by the same court holding that the notice-prejudice requirement articulated in Brakeman v. Potomac Insurance Company, 472 Pa. 66, 371 A.2d 193 (Pa. 1977), applied to uninsured motorist claims involving a phantom vehicle, involved an insured who had failed to provide his insurer with timely notice of a phantom vehicle under 75 Pa.C.S. ยง 1702. The insured argued that the insurer had to demonstrate "actual prejudice" before it could deny the claim based on the insured's untimely notice, while the insurer contended that impairment of its ability to conduct an investigation was sufficient. (AUTHOR'S NOTE: The court expressly rejected the insured's use of the term "actual prejudice," finding that the term has no basis in Pennsylvania caselaw. Instead, the court framed its analysis in terms of what constitutes "prejudice" to the insurer.). The Pennsylvania Supreme Court agreed with the insurer, holding that the insurer was not required to prove that the results of its investigation would have been different had timely notice been provided.

Unfair Competition Claims Lacking Evidence that Insured Disparaged Another's Product Were Not Covered as Advertising Injury Under Primary and Umbrella Insurance Policies

Insurance Company to Reimburse Insured for Redesign Costs Where Policy Fails to Define Land Use Ordinance and Environmental Regulation But Not Where Policy Expressly Excluded Costs Relating to Sinkholes