Amicus Curiae Brief — Emulex Corporation, et al., Petitioners v. Gary Varjabedian, et al.

No. 18-459

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In The

Supreme Court of the United States

-----------------------------------------------------------------EMULEX CORPORATION, ET AL.,

Petitioners,

v.

GARY VARJABEDIAN AND JERRY MUTZA,

Respondents.

-----------------------------------------------------------------On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

-----------------------------------------------------------------BRIEF AMICUS CURIAE OF

PHILLIP GOLDSTEIN

IN SUPPORT OF PETITIONERS

-----------------------------------------------------------------ALAN E. GOLOMB

Counsel for Amicus Curiae

492 Bardini Drive

Melville, New York 11747

(516) 509-0509

aandp492@aol.com

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COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

i

TABLE OF CONTENTS

Page

INTEREST OF THE AMICUS CURIAE .............

1

INTRODUCTION AND SUMMARY OF THE

ARGUMENT.....................................................

2

ARGUMENT ........................................................

3

I.

Every Federal Court has a Duty to Determine Whether a Plaintiff has Standing ....

3

A. Neither the District Court nor the Circuit Court Determined That Congress

Intended to Create a Private Remedy

for a Violation of Section 14(a) ............

4

B. This Court Should Answer the Threshold Question .........................................

4

There are Good Reasons to Answer the

Threshold Question Now ...........................

5

A. Answering the Threshold Question

Now Promotes Judicial Efficiency .......

5

B. Answering the Threshold Question

Now Will Promote Justice ...................

6

C. This Court Should Reinforce the Obligation of the Lower Courts to Faithfully Apply Sandoval ...........................

6

CONCLUSION.....................................................

8

II.

ii

TABLE OF AUTHORITIES

Page

CASES

Alexander v. Sandoval, 532 U.S. 275, 121 S.Ct.

1511, 149 L.Ed.2d 517 (2001) ........................... 4, 6, 8

FW/PBS, Inc. v. Dallas, 493 U.S. 215 (1990) ................3

Gonzaga Univ. v. Doe, 536 U.S. 273 (2002).................. 6, 7

Hallwood Realty Partners, LP v. Gotham Partners, LP, 286 F.3d 613 (2d Cir. 2002) ........................7

In re Digimarc Corp. Derivative Litigation, 549

F.3d 1223 (2008) ........................................................7

Logan v. U.S. Bank National Association, 722

F.3d 1163 (2013) ........................................................7

Louisville & Nashville R. Co. v. Mottley, 211 U.S.

149 (1908) ..................................................................3

Northstar Financial Advisors, Inc. v. Schwab Investments, 615 F.3d 1106 (2010) ...............................7

Segalman v. Sw. Airlines Co., 895 F.3d 1219 (9th

Cir. 2018) ...................................................................7

Steel Co. v. Citizens for a Better Env’t, 523 U.S.

83 (1998) ................................................................ 4, 5

United States v. Hays, 515 U.S. 737 (1995) ..................3

Warth v. Seldin, 422 U.S. 490 (1975) ............................3

STATUTES

Air Carrier Access Act of 1986 .....................................7

§ 13(a) of the Investment Company Act of 1940 .........7

iii

TABLE OF AUTHORITIES – Continued

Page

§ 13(d) of the Securities and Exchange Act of

1934 ...........................................................................7

§ 14(d)(4) of the Securities Exchange Act of

1934 ...........................................................................4

§ 14(e) of the Securities Exchange Act of

1934 ........................................................... 1, 2, 4, 5, 6

§ 304 of the Sarbanes-Oxley Act ..................................7

§ 702(a) of the Protecting Tenants at Foreclosure Act......................................................................7

1

INTEREST OF THE AMICUS CURIAE1

Amicus curiae is a stockholder of Pershing Square

Holdings, Ltd., (“PSH”), a company that was sued

along with other parties in the U.S. District Court for

the Central District of California by stockholders of Allergan in two class action lawsuits entitled In Re Allergan, Inc. Proxy Violation Securities Litigation, Case No.

8:14-cv-2001-DOC, and In re Allergan, Inc. Proxy Violation Derivatives Litigation, Case No. 2:17-cv-04776DOC, (“the Allergan lawsuits”) alleging violations of,

among other things, Section 14(e) of the Securities Exchange Act of 1934, the same statute that Emulex is

alleged to have violated in this case. After the District

Court declined to dismiss the case on the asserted

ground that there is no private right of action to enforce Section 14(e), the parties settled for a total of

$290 million, of which PSH paid $86.4 million. Amicus

curiae seeks to do away with such lawsuits in the future by persuading this Court to declare categorically

that there is no private right of action to enforce Section 14(e).

------------------------------------------------------------------

1

The parties have consented to the filing of this brief. No

counsel for any party authored this brief in whole or in part, and

no counsel or party made a monetary contribution intended to

fund the preparation or submission of this brief. No person other

than the amicus curiae made a monetary contribution to its preparation or submission.

2

INTRODUCTION AND SUMMARY

OF THE ARGUMENT

The question presented is: “Whether the Ninth

Circuit correctly held, in express disagreement with

five other courts of appeals, that Section 14(e) of the

Securities Exchange Act of 1934 supports an inferred

private right of action based on a negligent misstatement or omission made in connection with a tender offer.” That question can be bifurcated into two

questions:

1.

Whether Section 14(e) of the Securities Exchange Act of 1934 supports an inferred private right of action. (“the Threshold

Question”)

2.

If so, whether the Ninth Circuit correctly held,

in express disagreement with five other courts

of appeals, that such inferred private right of

action may be based on a negligent misstatement or omission made in connection with a

tender offer. (“the Conditional Question”)

I submit that the briefs by (1) the Chamber of

Commerce of the United States as amicus curiae supporting a writ of certiorari, and (2) the petitioners on

the merits demonstrate that there is no basis to infer

that Congress intended to permit private parties to enforce Section 14(e). Although this Court may resolve

this case in favor of the petitioner by a “no” answer to

either question, the purpose of this brief is to persuade

3

it that it should not avoid answering the Threshold

Question.2

------------------------------------------------------------------

ARGUMENT

I.

Every Federal Court has a Duty to Determine Whether a Plaintiff has Standing.

“In essence the question of standing is whether

the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Warth v.

Seldin, 422 U.S. 490, 498 (1975). “The federal courts

are under an independent obligation to examine their

own jurisdiction, and standing is perhaps the most important of [the jurisdictional] doctrines.” United States

v. Hays, 515 U.S. 737, 742 (1995) (quoting FW/PBS, Inc.

v. Dallas, 493 U.S. 215, 230-231 (1990)) (internal quotation marks omitted). This “special obligation [of

every federal court] to ‘satisfy itself not only of its own

jurisdiction, but also that of the lower courts in a cause

under review’ [is not waived] even though the parties

are prepared to concede it.” FW/PBS, supra, at 231 (internal citations omitted). Further, defects in subject

matter jurisdiction require correction regardless of

whether the error was raised in a lower court. Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149 (1908).

2

I take no position on whether this Court should also answer

the Conditional Question.

4

A. Neither the District Court nor the Circuit Court Determined That Congress

Intended to Create a Private Remedy

for a Violation of Section 14(a).

The District Court did not address the Threshold

Question and dismissed the case based upon its finding

that the answer to the Conditional Question is “no.” On

appeal, the Circuit Court reversed that finding after

dispatching the Threshold Question with a single sentence: “It is undisputed that Section 14(e) provides for

a private right of action to challenge alleged misrepresentations or omissions in connection with a tender offer.”3 The Circuit Court did not cite any basis for that

conclusion.

B. This Court Should Answer the Threshold Question.

A vigorous debate occurred in Steel Co. v. Citizens

for a Better Env’t, 523 U.S. 83 (1998) as to whether, as

the majority opinion held, “[t]he requirement that jurisdiction be established as a threshold matter . . . is

3

The Circuit Court did not indicate who would have an opportunity to dispute that conclusion. In addition, by contrast, immediately preceding that sentence, the Circuit Court wrote that

“it would be [incorrect] to imply a remedy under Section 14(d)(4)

[because that would be contrary to the guidance in] Alexander v.

Sandoval, 532 U.S. 275, 289, 121 S.Ct. 1511, 149 L.Ed.2d 517

(2001) (‘Statutes that focus on the person regulated rather than

the individuals protected create no implication of an intent to confer rights on a particular class of persons.’)” It did not explain why

it did not apply the same reasoning to assess whether a private

remedy under Section 14(e) is available.

5

inflexible and without exception.” (Internal citation

omitted.) Justice Breyer took a less absolute stance: “I

[ ] agree [with Justices O’Connor and Kennedy] that

federal courts often, and typically should, decide standing questions at the outset of a case [except] when doing so would cause serious practical problems.” Justice

Stevens, concurring in the judgment (and joined by

Justice Souter on this point), asserted that, when this

Court is faced with the questions of whether constitutional standing (injury in fact, causation, and redressability) and/or statutory standing are lacking, “we

have the power to decide the statutory question first.”

Here, (1) the Threshold Question can be readily answered by a straightforward reading of Section 14(e) in

context and thus causes no practical problems, and (2)

constitutional standing is not at issue. Consequently, it

is reasonable to infer that no justice that participated

in Steel Co. would argue that, regardless of whether an

alleged omission or misstatement must be fraudulent

or merely negligent to constitute a statutory violation,

if there is an easily answered question as to whether

any private party has statutory standing to enforce the

statute, this Court should not do so.

II.

There are Good Reasons to Answer the

Threshold Question Now.

A. Answering the Threshold Question

Now Promotes Judicial Efficiency.

No federal court should waste resources on a suit

seeking a private remedy for a violation of a statute if

there is no evidence that Congress intended to create

6

one. Here, no heavy lifting is required for this Court to

eliminate such wasted resources.

B. Answering the Threshold Question Now

Will Promote Justice.

In the Allergan lawsuits, the District Court, in an

order denying a motion to dismiss, found that “the case

law indicates that § 14(e) contains a private right of

action” based solely upon “the Ninth Circuit’s guidance

on this issue” despite the fact that such “guidance” did

not address Congressional intent. Had it applied the

methodology this Court first set forth in Alexander v.

Sandoval, 532 U.S. 275 (2001) to determine Congressional intent, it would have dismissed the cases. That

flawed ruling cost the defendants $290 million. This

Court should answer the Threshold Question now to

preclude similar injustices in the future.

C. This Court Should Reinforce the Obligation of the Lower Courts to Faithfully Apply Sandoval.

In Sandoval and its progeny, this Court has

made it clear that a federal court should not infer a

private right of action unless it determines that Congress “unambiguously” intended to confer such a right

on an aggrieved person.4 The Ninth Circuit has

properly considered Congressional intent in other

4

Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002)

7

(post-Sandoval) cases.5 Yet, neither the Ninth Circuit

in this case nor the District Court in the Allergan lawsuits applied Sandoval.

Another example of a Circuit Court giving short

shrift to Sandoval is footnote 9 in Hallwood Realty

Partners, LP v. Gotham Partners, LP, 286 F.3d 613, 618

(2d Cir. 2002), a lawsuit brought by a company against

a security holder to enforce § 13(d) of the Securities

and Exchange Act. In relevant part, that footnote

reads:

In declining to hold that issuers may obtain

damages, we in no way intend to cast doubt on

the continued validity of [GAF Corp. v. Milstein, 453 F.2d 709, 720 (2d Cir.1971)] with respect to injunctive relief. Notably, the

Supreme Court has not sought to reconsider

the existence of causes of action, such as the

right to injunctive relief recognized in GAF

Corp., that were implied under the now dubious analysis of [J. I. Case Co. v. Borak, 377 U.S.

426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964)].

5

See, e.g., Northstar Financial Advisors, Inc. v. Schwab Investments, 615 F.3d 1106, (2010) (no private cause of action under

§ 13(a) of the Investment Company Act of 1940); In re Digimarc

Corp. Derivative Litigation, 549 F.3d 1223 (2008) (no private

cause of action under § 304 of the Sarbanes-Oxley Act); Logan v.

U.S. Bank National Association, 722 F.3d 1163 (2013) (no private

cause of action under § 702(a) of the Protecting Tenants at Foreclosure Act); Segalman v. Sw. Airlines Co., 895 F.3d 1219 (9th Cir.

2018) (no private cause of action under the Air Carrier Access Act

of 1986).

8

Sandoval made clear that Borak was wrongly decided and firmly established binding guidance that is

applicable to every federal statute and every federal

court. Since this Court has never considered the analysis in GAF Corp. (which relied solely on Borak), there

is no reason to “reconsider” it. The Second Circuit’s rationalization for clinging to a “now dubious” preSandoval precedent seems disingenuous and specious.

This Court should take this opportunity to remind

lower courts of their obligation to determine in every

instance in which a private party seeks to enforce a

federal statute whether Congress intended to create a

private remedy – and to dismiss such a lawsuit if it

finds that Congressional intent is lacking.

------------------------------------------------------------------

CONCLUSION

For the foregoing reasons, this Court should answer the Threshold Question.

Dated: February 26, 2019

Respectfully submitted,

ALAN E. GOLOMB

Counsel for Amicus Curiae

492 Bardini Drive

Melville, New York 11747

(516) 509-0509

aandp492@aol.com