# Opposition Brief — Thane International, Inc. v. Milkowski (No. 07-1577)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2008

## Text

(Q FILED

No. 07-1577 JUL 18 2008

OFFICE OF THE CLERK
SUPREME COURT, U.S.

IN THE

Supreme Court of the United States

THANE INTERNATIONAL, INC., et al.,
Petitioners,
v.
JOSEPH J. MILKOWSKI, et al.,
Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES Court OF APPEALS
FOR THE NINTH CIRCUIT

BRIEF IN OPPOSITION

LIONEL Z. GLANCY JOEL C. FEFFER

PETER A. BINKOW Counsel of Record

GLANCY Binkow & GOLDBERG LLP DANIELLA QUITT
1801 Avenue of the Stars PETER W. OVERS, JR.
Suite 311] Harwood FEFFER LLP
Los Angeles, CA 90067 488 Madison Avenue
(310) 201-9150 New York, NY 10022

(212) 935-7400

Counsel for Respondents

217044 g

COUNSEL PRESS
(800) 274-3321 * (800) 359-6859

1

QUESTIONS PRESENTED

1. Whether petitioners have presented compelling
reasons to grant the petition, where the Ninth Circuit’s
opinion reversing the district court and remanding this
action for further proceedings is not a final order and
petitioners failed even to suggest any argument
supporting interlocutory review.

2. Whether petitioners have presented compelling
reasons to grant the petition on the basis that the Ninth
Circuit exceeded its authority under Fed. R. Civ. P 52(a)
where it simply applied the applicable rule of law to
uncontested facts.

3. Whether petitioners have presented compelling
reasons to grant the petition where the Ninth Circuit’s
holding that the misrepresentations were material does
not conflict with a decision of this Court, involve a split
in the circuits, or implicate a Federal question that has
not been settled by this Court.

il

TABLE OF CONTENTS

QUESTIONS PRESENTED ................

PTET APE SAPINE EINES cine escwecsvercctess

TABLE OF CITED AUTHORITIES .........

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STATEMENT OF THE CASE ...............

eB a ee

REASONS FOR DENYING THE PETITION ...

I.

IT.

IIT.

THE PETITION IS PREMATURE ....

THE RELEVANT FACTS WERE NOT
IN DISPUTE AND THE NINTH
CIRCUIT APPLIED THE
APPROPRIATE CLEAR ERROR
STANDARD UNDER FED. R. CIV. P
ea a ae a eee a

THE NINTH CIRCUIT APPLIED
WELL-ESTABLISHED PRECEDENT
REGARDING MARKET EFFI-
PURER. $0s5 ava sk eweon eeevencere tees

A. The Circuit Precedents Are Uniform

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Page

14

14

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Contents

Page

B. There Is No Split Between The

Second and Ninth Circuits Regarding

The Use Of Price In Cases Where
The Stock Is Inefficient ........... 26

C. The Ninth Circuit’s Decision
Followed This Court’s Precedents .. 27

D. The Ninth Circuit’s Opinion Is Well
ee ee anes 29

E. The Ninth Circuit’s Opinion Will Not

Likely Have Any Effect On The
Legitimacy Of Bench Trials ........ 32

eID 84 6 os a deg owen Vrere es thee ea eae 33

iv

TABLE OF CITED AUTHORITIES

Page
CASES

Affiliated Ute Citizens v. United States,

Ee ans Sic oeew ee nese cues 28
Akerman v. Oryx Comme'ns, Inc.,

609 F. Supp. 363 (S.D.N.Y. 1984),

aff ’d, 810 F.2d 336 (2d Cir. 1987) ........... 26, 27
Akerman v. Oryx Comme’ns, Inc.,

S10 F.a0 S06 (2a Cir. 1967) ..........2.2205- 27
Alexander Proudfoot Co. World

Headquarters v. Thayer,

OTe Bee See Ch bee Gir. 1GGD) . onc cvcccesesss 20
Am. Constr. Co. v. Jacksonville T&K. W. Ry. Co.,

ue es ee 15
Basic Inc. v. Levinson,

ee AE ED «5 viv cevevavcwesees 21-22, 25, 28
Bhd. of Locomotive Firemen & Enginemen v.

Bangor & Aroostook R.R. Co.,

| ee 15
Binder v. Gillespie,

184 F.3d 1059 (9th Cir. 1999) ........... 22, 24, 26

Bose Corp. v. Consumers Union of U.S., Inc.,
ee ee CED. ko daca padas vd ees en mens 18

Vv

Cited Authorities
Page

Cammer v. Bloom,

711 F. Supp. 1264 (D.N.J. 1989) .......... passim
Easley.v. Cromartie,

SP ED oc ccc cen eens 7, 17, 18, 20
Eckstein v. Balcor Film Invs.,

| 29
Freeman v. Laventhol & Horwath,

915 F-2a 193 (Gth Cir. 1990) ................ 27
Gillespie v. United States Steel Corp.,

I ceca e es cccccscecese 15, 16
Hall v. Nat'l Gypsum Co.,

BGe bee oe Coen Cir. 1907) ... 2.2... eee. 19
Hamilten-Brown Shoe Co. v. Wolf Bros. & Co.,

csc een seccecscccees 14
In re Burlington Coat Factory Sec. Litig.,

114 F:3d 1410 (8d Cir. 1997) ................ 30
In re Initial Public Offerings Sec. Litig.,

Eee eee 27

In re NAHC, Inc. Sec. Litig.,
Soe wae tole Goo Cir. BGs) ..............-. 30

vi

Cited Authorities

Page

In re PolyMedica Corp. Sec. Litig.,

224 E-R.D. 27 (D. Mass. 2004) .............. 25
In re PolyMedica Corp. Sec. Litig.,

ee ee BF GIG Gls Be woes vcccccence 23, 24, 31
In re SCOR Holding (Switzerland) AG Litig.,

587 F. Supp. 2d 556 (S.D.N.Y. 2008) ......... 27
In re Xcelera.com Sec. Litig.,

4350 Fae 568 (ist Cir. 2006) ..............0.. 24
Land v. Dollar,

Ee ee 16
Larson v. Domestic & Foreign

Commerce Corp.,

EIT uv ecesvcccceccesesees 16
McFarland v. T.E. Mercer Trucking Co.,

Tal Fd 12346 Gth Cir. 1986) ............... 19
Nathenson v. Zonagen, Inc.,

267 F.3d 400 (5th Cir. 2001) ............ ee
Office of Senator Mark Dayton v. Hanson,

oe Ee 14

Padilla-Manqual v. Pavia Hosp.,
LS 20

vil

Cited Authorities

Page

TSC Indus., Inc. v. Northway, Ince.,

ee i iv densckseeue as 27-28
Unger v. Amedisys Inc.,

401 F8d 316 (5th Cir. 2005) ............ 23, 24, 26
United States v. Gen. Motors Corp.,

823 U.S. 373 (1945) ........6> rn ee 15, 16
Virginia Military Inst..v. United States,

508 U.S. 946 (1993) ..... gn a ee eee 14

STATUTES AND RULES

See oo ec nena sé ave dwes > 3
RE ares al hy bana eae aad 3
ee eS ls ener re 21
Ree fe ere ere passim
a ee ee SP ae en rns ones 1

vill

Cited Authorities

Page
MISCELLANEOUS
Marc Galanter, A World Without Trials?,
S006 J. Tem. OOS kis cn toi sc ene sos 32
Kevin M. Clermont & Theodore Eisenberg,
Anti-Plaintiff Bias in Federal Appellate
Courts, 84 Judicature 128 (2000) ........... 32

Theodore Eisenberg & Michael Heise,
Plaintiphobia in State Courts? An Empirical
Study of State Court Trials on Appeal,
Cornell Legal Studies Research Paper No.
OTR CR, PE 0 woo xs cine bis 450 tases 32

]

INTRODUCTION

Petitioners have not presented any compelling
reasons for their petition for a writ of certiorari to be
granted. See Sup. Ct. R. 10. Although the Ninth Circuit
directed judgment in favor of respondents, it also
remanded the action for further proceedings, including
a determination of loss causation. There is no mention,
much less discussion, in the petition of the lack of finality
of the Ninth Circuit’s decision. ‘The petition should be
denied as premature.

There are no compelling or extraordinary legal
issues raised in the petition. Petitioners’ argument that
the Ninth Circuit’s opinion conflicts with prior holdings
of this Court regarding the application of Fed. R. Civ. P
52(a) is premised on petitioners’ contention that the
Ninth Circuit dissembled when it articulated the
standard of review it employed. Petitioners’
disparagement of the Ninth Circuit is gratuitous, as the
Ninth Circuit merely applied the correct legal standard
to undisputed facts.

Petitioners contest the Ninth Circuit’s
determination that the district court should first have
determined that the stock traded in an efficient market
before relying on reported stock prices to find lack of
materiality in an action brought under the securities
laws. The Ninth Circuit simply corrected the district
court’s failure to apply controlling precedent to
uncontroverted facts. Specifically, there is no dispute
where, when, and by whom the misstatements at issue
were made or that Thane’s stock did not trade in an
efficient market. After trial, the district court itself

2

concluded that the stock did not trade efficiently. The
issue faced by the Ninth Circuit turned on whether it
was appropriate for the district court to disregard
uniform precedent as to when reported trading prices
are determinative. There is no split between the Second
and Ninth Circuits or any other Court of Appeals on
the applicability of the efficient market theory in
determining the materiality of a misstatement.

The Ninth Circuit’s materiality holding is consistent
with numerous decisions across the country which have
analyzed the issue of market efficiency in the context of
determining the propriety of utilizing the fraud-on-the-
market presumption of reliance. Given that the Ninth
Circuit’s opinion corrected what the district court
perceived was a foray into “unchartered waters,”
petitioners’ contention that there is a circuit split strains
credulity.

As neither the district court nor Ninth Circuit found
that the stock at issue traded in an efficient market,
petitioners’ arguments with respect to an alleged circuit
split with respect to the relationship between price and
materiality in an efficient market is a non sequitur and
should be disregarded. (See Petition at 34-39.) The issue
before the Ninth Circuit was not the appropriate time
within which a particular stock should react to news in
an efficient market, z.e., the degree of market efficiency,
but whether one could look at reported trading prices
in the absence of an initial finding of market efficiency.

3
STATEMENT OF THE CASE

Respondents (plaintiffs below) are former
stockholders of Reliant Interactive Media Corp.
(“Reliant”). Reliant was acquired by defendant Thane
International, Inc. (“Thane”) in a stock-for-stock
merger. Petitioners — Thane and Thane’s four principal
executive officers, three of whom were also directors of
Thane — are defendants below.

Respondents allege in their complaint that the
combined proxy statement- prospectus used by
petitioners (a) to induce a favorable vote by Reliant
stockholders on the proposal to merge with Thane, and
(b) to register the shares of Thane stock to be exchanged
for Reliant stock in the event of a favorable vote,
contains numerous materially misleading statements
with respect to the market in which the newly-issued
Thane stock would trade following the merger.
Respondents allege that the proxy statement-
prospectus represented that Thane’s stock would trade
on the National Association of Securities Dealers’
National Market System (“NMS”) but, despite the stock
qualifying for listing on the NMS, defendants caused
Thane’s stock to trade on the over-the-counter market’s
bulletin board (the “OTCBB”). The complaint sets forth
a claim for violation of Section 12(a)(2) of the Securities
Act of 1933, as amended, 15 U.S.C. § 771(a)(2), against
all defendants, and a control person liability claim
pursuant to Section 15 of the same Act, 15 U.S.C. § 770,

4

against each of the four individual defendants.
Respondents seek rescissory damages pursuant to
Section 12(a)(2).!

Procedural History

Respondents filed their complaint in the Superior
Court, Riverside County, on September 23, 2002. On
October 28, 2002, petitioners removed this action to the
United States District Court for the Central District of
California. Petitioners’ motion to dismiss was denied by
order entered June 26, 2003, respondents’ motion for
class certification was granted by order entered
November 3, 2004, and cross-motions for summary
judgment were granted in part and denied in part by
order entered March 4, 2005.

A bench trial was held on April 12 and 13, 2005 and
closing arguments made on April 14, 2005. By decision
entered June 2, 2005, the district court ruled in favor of
petitioners. The district court held for petitioners
because it found that (a) the alleged misrepresentations
were technically truthful, and (b) even if the statements
in question were actionable, they were not material. The
district court, despite concluding that Thane’s stock did
not trade in an efficient market,” went on to hold that

1. Accordingly, this is not “an action for money damages”
as characterized by petitioners in their second of two Questions
Presented. Petition at i. The equitable nature of this action
underlied petitioners’ motion “to strike plaintiffs’ request for a
jury trial.” Petition at 10.

2. The district court found that “{tjhere is little doubt that

Thane stock would not meet the tests for an efficient market
(Cont’d)

5

“(iJf the Court factors in the price effect, the Court
believes that listing on the NMS was not a material fact.”
Pet. App. at 87a. The sole basis of the district court’s
finding a lack of materiality was its reliance on the
reported trading prices of Thane’s stock on the OTCBB
immediately after the merger. Such reliance on reported
trading prices in the absence of first finding that
Thane’s stock traded in an efficient market was
unprecedented and contrary to uniform analogous
precedent. The district court candidly acknowledged
that by relying solely on reported prices on the OTCBB
to support a finding of materiality, it was “proceed[ing]
into unchartered waters.” Pet. App. at 89a. The district
court also candidly acknowledged that it was not
applying the reasoning of a seminal decision with regard
to efficient markets, Cammer v. Bloom, supra, as it held
that “[t]here is little doubt that Thane stock would not
meet the tests for an efficient market under Cammer.”
Id. at 90a n.11. The district court further acknowledged
that the Ninth Circuit follows Cammer. Pet. App. at 89a.

The district court framed the issue thus: “can one
even assess the price effect in Thane given that it did
not trade in an efficient market?” Pet. App. at 88a. This
is purely an issue of law. The district court answered

(Cont'd)

under Cammer [v. Bloom, 711 F. Supp. 1264, 1286-87 (D.N.J.
1989)]. Volume was relatively modest after the merger. For
nearly a month, Thane had only one or two market makers.
Thane was not followed by any analysts. Thane did not qualify
for using SEC Form S-3. The only Cammer factor present to
any Significant degree is the empirical fact that the stock
reacted to some events, such as earnings reports.” Pet. App. at
90a n.11.

6

the question in the affirmative without citing any
authority in support of its decision to rely on Thane’s
reported market price. All analogous authority,
including that of the Ninth Circuit, is to the contrary.

Final judgment was entered on June 10, 2005 and
respondents timely filed a notice of appeal on July 11,
2005. None of the issues raised on the appeal involve
disputed issues of fact. The district court noted “the
substantial factual stipulations which the parties made
in the Pretrial Conference Order.” Pet. App. at 63a.

The Ninth Circuit reversed, directed judgment in
favor of respondents, and remanded for further
proceedings on loss causation and other matters.
Petitioners sought a rehearing and suggestion of
rehearing en banc in which they stated, among other
things, that “an appellate court [should] not reverse a
factual determination unless it comes away with a
‘definite and firm conviction’ that an error has been
made.” Petition For Rehearing and Suggestion of
Rehearing En Banc at 16. The petition for rehearing
and suggestion of rehearing en banc was presented to
the entire Ninth Circuit and, as no active judge
requested a vote on whether to rehear the matter, the
petition was denied.

At the same time, the Ninth Circuit issued an
amended opinion. After analyzing the language at issue,
the Ninth Circuit found, based largely on
uncontroverted documentary evidence, that petitioners

7

misrepresented where Thane’s stock would trade.*®
The Ninth Circuit then restated, verbatim, its original
express finding that it had a “‘definite and firm
conviction that a mistake has been committed.’”
Pet. App. at 19a and 48a (quoting Easley v. Cromartie,
532 U.S. 234, 242 (2001)). The Ninth Circuit also found
that the misrepresentations were material. Specifically,
the Ninth Circuit found that the district court’s
consideration of “the movement in share price of a stock
that did not trade on an efficient market to determine
materiality under the circumstances of this case” was
clear error. Pet. App. at 20a. Here, as well, all of the
evidence upon which the Ninth Circuit relied was
undisputed. In rendering its decision, the Ninth Circuit
even “accept[ed] as true all of [petitioners’ expert’s]
testimony” on the materiality issue thereby conclusively
demonstrating the absence of any disputed factual
issues. Pet. App. at 25a. On the issue of materiality, as
well, the Ninth Circuit applied Fed. R. Civ. P 52(a)’s
“clear error” standard. Pet. App. at 20a.

Background Facts

Thane and Reliant executed a merger agreement
on November 21, 2001, which agreement was amended
in December 2001. Section 7.2(a) of the merger
agreement made Reliant stockholder approval a
condition precedent to the merger, while Section 2.8
provided that, upon consummation of the merger,

3. Oral testimony could not be of any use to petitioners as
they also believed that they were representing that Thane’s
stock would be listed on the NMS. This is evident as petitioners
required Reliant and Reliant’s principal stockholders to waive,
in writing, the requirement to list on the NMS. Pet. App. 87a
n.10.

8

Reliant stock would be converted into Thane stock ata
specified exchange ratio.

In order to satisfy Federal and state law implicated
by the proposed merger, Thane filed a registration
statement with the Securities and Exchange
Commission (“SEC”) on January 3, 2002, and filed
amendments thereto on February 21, 2002, March 29,
2002, April 23, 2002, and finally on April 26, 2002, when
the registration statement was declared effective by the
SEC. The proxy statement-prospectus, which is part of
the registration statement, was distributed to Reliant
stockholders. The registration statement served a dual
purpose: the proxy statement portion of the registration
statement was required in order to provide information
to Reliant’s stockholders concerning the proposed
merger sufficient to enable them to cast an informed
vote; the prospectus portion of the registration
statement was necessary in order to register the shares
of Thane to be exchanged for Reliant stock upon
approval of the merger by Reliant’s stockholders.

Prior to the merger, Thane’s stock was not publicly
traded. The proxy statement-prospectus was replete
with various representations concerning where Thane’s
stock would be listed following the merger.‘ For example,

4. Contrary to the assurances made by petitioners to this
Court, the single representation reprinted in the petition is not
“illustrative” of all of the representations and which
representations are not “substantially similar” to one another.
Petition at 7 and 7 n.2. Particularly significant is the failure of
petitioners to discuss the representations concerning liquidity,
quoted below, especially as these were of obvious importance to
the Ninth Circuit in finding clear error. See Pet. App. at 28a-
29a.

9

the proxy statement-prospectus stated as follows,
beginning with its cover page:

The shares of Thane common stock to be
received by the stockholders of Reliant in
connection with the merger have been
approved for quotation and trading on the
NASDAQ National Market upon completion
of the merger, subject to Thane’s compliance
with the minimum bid price requirements of
$5.00 per share.

“Similar statements appear elsewhere.” Pet. App. at 67a
n.2.

In the section entitled “Summary of Proposed
Merger,” which appears at the beginning of the proxy
statement-prospectus, petitioners made the following
representations:

The combined company is expected to meet
the initial listing requirements of the
NASDAQ National Market, which would
provide the Reliant stockholders with greater
liquidity than they have with Reliant common
stock trading on the over-the-counter market.

The Thane common stock to be issued in
connection with the merger has been
approved for quotation and trading on the
NASDAQ National Market upon the
completion of the merger, subject to Thane’s

10

compliance with the minimum bid price
requirements of $5.00 per share.

Pet. App. at 67a.

The “Questions And Answers About The Merger”
section of the proxy statement-prospectus, the purpose
of which is to distill the most important aspects of the
transaction and present them in plain English, also
focused on NMS listing:

Q: Will Reliant continue as a public company
if the merger agreement is approved?

A: No. Reliant will become a wholly-owned
subsidiary of Thane upon the completion
of the merger, and Reliant stockholders
will become holders of Thane common
stock. Thane has received approval for
quotation and trading of its common stock
on the NASDAQ National Market upon
completion of the merger, subject to
Thane’s compliance with the minimum bid
price requirements of $5.00 per share.

Pet. App. at 67a-68a.

Reliant stockholders were told the following under
the heading “Reliant’s Reasons for the Merger”:

The combined company is expected to meet
the initial listing requirements of the
NASDAQ National Market, which would
provide the Reliant stockholders with greater

11

liquidity than they have with Reliant common
stock trading on the over-the-counter market.

Pet. App. at 68a.

Under the heading “Per Share Market Price
Information,” petitioners represented as follows:

The Thane common stock to be issued in
connection with the merger has been
approved for quotation and trading on the
NASDAQ National Market upon the
completion of the merger, subject to Thane’s
compliance with the minimum bid price
requirements of $5.00 per share.

Pet. App. at 5a.

Reliant stockholders were also provided a copy of

the merger agreement as part of the proxy statement-
prospectus. Section 6.5(b) of the merger agreement

discusses listing under “Covenants of Thane”:

Thane shall use commercially reasonable
efferts to cause its outstanding Thane
Common Stock immediately after the Merger
to be approved for quotation on the NASDAQ
National Market System or, in Thane’s
reasonable discretion. another national
securities exchange, subject to official notice
of issuance, as promptly as practicable after
the date hereof, and in any event prior to the
Effective Time.

12

Pet. App. at 68a-69a. Thane was required, as a condition
precedent to Reliant’s obligation to consummate the
merger, to have “‘complied in all material respects with
all covenants.” Pet. App. at 69a. By letter dated April 9,
2002, prior to the merger closing, Thane was notified
that its application to list its securities on the NMS was
approved. In addition, Thane’s stock also met the
minimum $5.00 per share bid requirement, the only
remaining condition precedent to listing. Nevertheless,
“Thane’s stock was never listed for trading on the
NASDAQ National Market System.” Pet. App. at 105a.
There is nothing in the proxy statement-prospectus that
even suggests that Thane reserved the right voluntarily
to list on the OTCBB rather than the NMS.

Notwithstanding the representations set forth in the
proxy statement-prospectus and quoted above, Thane’s
decision not to list on the NMS was concealed from
Reliant’s public stockholders prior to its merger with
Thane. The decision not to list, however, was not
concealed from Reliant’s principal stockholders. Rather,
that the parties (including the petitioners) attached
great importance to the requirement to list on the NMS
is evident by the fact that petitioners required Reliant
and Reliant’s principal stockholders to execute a written
waiver of Thane’s contractual obligation to list its shares
on the NMS. Pet. App. at 87a n.10.

The Thane-Reliant merger was consummated on
May 24, 2002, at which time Thane’s stock began trading
on the OTCBB. Pet. App. at 69a. Thane did not publicly
explain the reason for its stock trading on the OTCBB,
rather than the NMS, for approximately ten weeks
thereafter. As described by the Ninth Circuit, Thane

13

stockholders “experienced a wild ride.” Pet. App. at 7a.
Finally, on August 14, 2002, Thane filed its Quarterly
Report on SEC Form 10-Q for its quarter ended June
30, 2002, which, for the first time, publicly disclosed that
petitioners intentionally opted not to list Thane’s stock
for trading on the NMS:

In May and June of this year, we met with our
investment bankers to discuss. an
underwritten public offering of our common
stock. Our investment bankers advised us
that we could potentially obtain more
favorable pricing for the public offering if we
implemented our move to the NASDAQ
National Market in conjunction with the
underwritten public offering. Over the course
of June and July we have been preparing for
the public offering, but we have recently
concluded that present market conditions are
no longer favorable for an underwritten public
offering of common stock. As such, we are
currently evaluating the listing of our common
stock on a national! market.

Pet. App. at 70a-7la. Remarkably, this more or less
contemporaneous statement fails to even mention a
pivotal April meeting which the district court found is
the time when the decision not to list was made.
Pet. App. at 65a-66a.

After Thane’s stock’s reported price quickly plunged
from a high of $8.50 per share, petitioners took
advantage of the bargain price of Thane’s stock they

14

created by squeezing out the former Reliant public
stockholders in a going-private transaction at $0.35 per
share. Pet. App. at 7la.

REASONS FOR DENYING THE PETITION
I. THE PETITION IS PREMATURE

Inexplicably, petitioners are silent concerning the
fact that they are asking this Court to exercise
jurisdiction over a non-final order.® Petitioners can
neither demonstrate extraordinary inconvenience nor
present a fundamental issue worthy of review prior to
the conclusion of these proceedings that would warrant
this Court to depart from its long-standing policy of
declining consideration of non-final orders.
See Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240
U.S. 251, 258 (1916)(Lack of finality “itself alone
furnished sufficient ground for the denial of the
application.”); Office of Senator Mark Dayton v.
Hanson, 127 S. Ct. 2018, 2021 (2007) (Denying petition
for certiorari where there are, inter alia, no “special
circumstances that justify the exercise of ...
discretionary certiorari jurisdiction” of an interlocutory
order.).

This Court has long declined the invitation to review
interlocutory decisions. See, e.g., Virginia Military Inst.
v. United States, 508 U.S. 946, 946 (1993) (“We generally

5. Petitioners’ description of the Ninth Circuit’s decision
(Petition at 13) refers only to the reversal of the judgment in
favor of petitioners and ignores the remand to address loss
causation and other issues.

15

await final judgment in the lower courts before
exercising our certiorari jurisdiction.”) (Scalia, J.,
concurring); Bhd. of Locomotive Firemen & Enginemen
v. Bangor & Aroostook R.R. Co., 389 U.S. 327, 328
(1967)(“[B]Jecause the Court of Appeals remanded the
case, it is not yet ripe for review by this Court.”).

This Court is mindful that review of non-final orders
can result in unnecessary delay, costs, and inconvenience.
Gillespie v. United States Steel Corp., 379 U.S. 148, 152-
53 (1964). Petitioners have failed to demonstrate either
“extraordinary inconvenience and embarrassment in the
conduct of the cause,” Am. Constr. Co. v. Jacksonville
T&K. W. Ry. Co., 148 U.S. 372, 384 (1893), or presented
an issue that is “fundamental to the further conduct of
the case,” United States v. Gen. Motors Corp. , 323 U.S.
373, 377 (1945).

The Ninth Circuit’s opinion reversing the district
court’s decision also remanded this action to the district
court. The district court has yet to rule on damage issues
or whether petitioners have met their burden of proving
their affirmative defense of lack of loss causation. Any
further delay only prejudices the respondents.
Petitioners have already availed themselves of en banc
consideration by the Ninth Circuit.

The Ninth Circuit’s ruling on materiality cannot be
said to constitute a ruling “fundamental to the further
conduct of the case” insofar as the trial has been
completed and the record closed. Only in circumstances
where the issue sought to be reviewed by writ of
certiorari affects the further conduct of the trial of
issues necessary to the resolution of the merits of the

16

claims asserted in an action will the exercise of certiorari
be warranted. See Gillespie, 379 U.S. at 153-54
(discussing cases granting writs cf certiorari “where,
as here, the case had not yet been fully tried”); Gen.
Motors, 323 US. at 377 (granting certiorari where issue
concerning offer of proof required clarification prior to
further conduct of trial); Larson v. Domestic & Foreign
Commerce Corp., 337 U.S. 682, 685 (1949) (granting
certiorari where issue would affect further trial
proceedings); Land v. Dollar, 330 U.S. 731, 734 (1947)
(granting certiorari where Court of Appeals reversed
and remanded for trial).

As discussed herein, while respondents do not
believe that the petition presents any compelling
interests that would warrant consideration by this
Court, the petition, in any event, is premature.
Respondents submit that petitioners’ failure to even
attempt to substantiate the extraordinary relief of
review of a non-final order should in and of itself be
grounds for denial of the petition.

Il. THE RELEVANT FACTS WERE NOT IN
DISPUTE AND THE NINTH CIRCUIT APPLIED
THE APPROPRIATE CLEAR ERROR
STANDARD UNDER FED. R. CIV. P. 52(a)

Petitioners’ contention that the Ninth Circuit failed
to follow the requirements of Fed. R. Civ. PR 52(a) is
premised on their suggestion that the Ninth Circuit
dissembled when it articulated its standard of review.
Petition at 5 and 25-26. Petitioners even advance a
“sotcha moment.” Petitioners think it telling that the
Ninth Circuit’s holding on materiality refers to

17

“the circumstances of this case.” Petition at 26. As is
clear from the district court’s opinion, however, “the
circumstances of this case” consist of undisputed
evidence and the district court’s error was not in its fact
finding but in its application of the law to the undisputed
facts.

Initially, the Ninth Circuit, relying on Kasley, 532
U.S. at 242, held that after examining the documentary
record, we have a “‘definite and firm conviction that a
mistake has been committed,’” and held that the
statements in question were false and misleading.® The
Ninth Circuit, on the issue of materiality, then held that
the district court “erred when it considered the
movement in share price of a stock that did not trade
on an efficient market to determine materiality under
the circumstances of this case.” Pet. App. at 20a. It went
on to hold that “[t]herefore, its conclusion that Thane
International’s misrepresentations were immaterial is
clear error.” Jd. Stated another way, the Ninth Circuit
corrected the district court’s mistake of law and then
discussed the undisputed evidence contained largely in
SEC filings and written trial declarations that were
submitted in advance of the bench trial and that
supported its conclusion.

The district court’s decision itself, makes it clear
that the Ninth Circuit’s reversal of the materiality prong

6. The petition does not seriously challenge this prong of
the Ninth Circuit’s holding. As set forth supra, the oral
testimony could not have been of any aid to petitioners as
petitioners required Reliant and its principal stockholders to
waive NMS listing, thereby demonstrating their own belief that
they had represented that Thane would list on the NMS. See
Pet. App. at 87a n.10.

18

of the district court’s decision was based on the
application of correct legal principles to uncontested
facts. The district court candidly stated that “without
regard to price effects,” it “would find that listing on
the NMS is marginally material.” Pet. App. at 86a. The
district court went on to acknowledge that in
considering the reported trading prices of a stock which
clearly did not trade in an efficient market, “the Court
admittedly proceeds into unchartered waters.” Pet. App.
at 89a. The Ninth Circuit emphasized the lack of factual
issues by noting that “[e]ven accepting as true all of
[petitioners’ expert’s] testimony, there is no factual
dispute between the experts that [NMS] listing carries
objective benefits that directly and positively affect
corporate earnings, investor returns, and a stock’s pool
of potential shareholders.” Pet. App. 25a.

While petitioners take issue with the Ninth Circuit’s
citation to Bose Corp. v. Consumers Union of U.S., Inc.,
466 U.S. 485 (1984), they do not (and cannot) point to
any disputed evidence that forms the basis of the Ninth
Circuit’s holding. Instead, petitioners’ entire argument
on the perceived error under Fed. R. Civ. P. 52(a) is
nothing more than a narration of cases that preceded
and followed this Court’s decision in Kasley. See Petition
at. 16-22. The Ninth Circuit held unequivocally that the
“clearly erroneous” standard applies to all factual
findings and applied the most recent pronouncements
of this Court. Pet. App. at lla, 18a-19a, 20a, and 29a.

Petitioners’ attempt to create disputed factual
findings by the Ninth Circuit is unavailing. The Ninth
Circuit’s holding turned on the applicability of the
efficient market theory in determining materiality, the

19

case law on which subject the district court consciously
disregarded. It is not, as petitioners suggest, that the
Ninth Circuit suddenly “favored” one expert over the
other (Petition at 27) but rather that petitioners’ expert,
at petitioners’ direction, disregarded binding legal
precedent without presenting any contrary factual
arguments. To the extent the Ninth Circuit credited
plaintiffs’ expert, that testimony, as well as the facts
underlying it, were unrefuted. See, e.g., Pet. App. at 27a
(“Preston’s uncontested testimony”). Again, it was the
application of law to the uncontroverted facts which
triggered the reversal of the district court. To support
their argument that the Ninth Circuit’s opinion conflicts
with decisions of this Court and other Circuits,
petitioners disregard the Ninth Circuit’s unequivocal
statement that it applied the Rule 52(a) “clear error”
standard and do nothing short of accusing the Ninth
Circuit of misrepresenting the nature of its own opinion.
Petition at 16.

The supposed intra-circuit split in the Fifth Circuit
is based on a strained reading of McFarland v. TE.
Mercer Trucking Co., 781 F.2d 1146, 1148 (5th Cir. 1986).
McFarland concluded that the district court’s review
of testimony (deposition) should be upheld unless
clearly erroneous. Jd. Hall v. Nat'l Gypsum Co., 105 F.3d
225, 228 (5th Cir. 1997) also applied the clearly erroneous
standard. So did the Ninth Circuit in Thane.

The litany of decisions cited by petitioners from the
First, Fourth, and Ninth Circuits, concededly occurred
in a variety of inapposite procedural contexts, and all

20

utilized the “clearly erroneous” standard.’ Petition at
18-20. Petitioners’ argument that there is some
confusion in the application of Fed. R. Civ. P 52(a) is
based almost verbatim on the 1985 Advisory Committee
Notes while at the same time giving short shrift to this
Court’s opinion in Kasley, supra, decided long after the
1985 amendment to Rule 52(a). An examination of the
underlying facts of these cases suggests that Kasley,
which was followed by the Ninth Circuit (Pet. App. at
19a), like the case at bar, involved primarily
documentary and expert evidence, and credibility played
a “minor role” (532 U.S. at 243). Petitioners attempt to
distinguish Hasley by claiming that it involved a
“constitutional” issue, notwithstanding that Fasley and
the Ninth Circuit’s decisions are consistent with Rule
52(a).

Il. THE NINTH CIRCUIT APPLIED WELL-
ESTABLISHED PRECEDENT REGARDING
MARKET EFFICIENCY
A. The Circuit Precedents Are Uniform

The district court held that, “without regard to price
effects,” the representations concerning listing on the

7. For example, petitioners’ reliance on Alexander
Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912, 916
(11th Cir. 1989) is baffling as the issue there was the propriety
of a granting of a dismissal motion based on personal
jurisdiction involving a de novo review of the complaint and
affidavits. In Padilla-Manqual v. Pavia Hosp., 516 F.3d 29 (1st
Cir. 2008), the court reversed the dismissal for lack of
jurisdiction and remanded for an evidentiary hearing to hear
testimony to insure that a complaint was not dismissed without
the opportunity to be heard. /d. at 34.

21

NMS would be “marginally material.” Pet. App. at 86a.
The district court candidly acknowledged that by relying
solely on reported prices in an inefficient market to
support a finding of immateriality, it was proceeding
“into unchartered waters.” Pet. App. at 89a. The district
court also candidly acknowledged that it was not
applying the reasoning of the seminal decision with
regard to efficient markets, Cammer, supra, as it held
that “[t]here is little doubt that Thane stock would not
meet the tests for an efficient market under Cammer.”
Pet. App. at 90a n.11.

The district court asked: “can one even assess the
price effect in Thane given that it did not trade in an
efficient market?” Pet. App. at 88a. This is purely an
issue of law. The district court answered the question in
the affirmative without citing any authority in support
of its decision to rely on Thane’s reported market price
exclusively. All analogous authority is to the contrary.

The issue of market efficiency typically arises in the
context of a putative class seeking to avail itself of the
“fraud-on-the-market” presumption ‘of reliance in
connection with class certification. In order to eliminate
reliance as an individual issue in securities fraud actions,
a putative class usually seeks to establish reliance based
upon a security’s reported trading prices, 7.e., the
“market,” contending that the conduct in question
constitutes a fraud-on-the-market. A determination that
reliance is an individual issue would preclude the
necessary Fed. R. Civ. P 23(b)(3) finding “that questions
of law or fact common to the members of the class
predominate over any questions affecting only individual
members. ...” See Basic Inc. v. Levinson, 485 U.S. 224,

22

242 (1988) (“Requiring proof of individualized reliance
from each member of the proposed plaintiff class
effectively would have prevented respondents from
proceeding with a class action, since individual issues
then would have overwhelmed the common ones.”).

Quoting from a Third Circuit decision, this Court in
Basic Inc. defined the fraud-on-the-market
presumption as being “‘based on the hypothesis that,
in an open and developed securities market, the price
of a company’s stock is determined by the available
material information regarding the company and its
business. .. .” 485 U.S. at 241. The most widely accepted
test for determining whether there is 2% “open and
developed” (1.e., “efficient”) securities market, is that
articulated in Cammer. The Cammer court enumerated
five factors as particularly relevant to determining
whether the market for a particular stock is efficient:
(1) the stock’s average weekly trading volume; (2) the
number of security analysts who follow the stock;
(3) the existence of market makers and arbitrageurs
active in the stock; (4) eligibility to file an SEC Form S-
3 registration statement (eligibility for which is limited
to large, well-known, and seasoned issuers); and (5) facts
demonstrating a cause-and-effect relationship between
unexpected corporate developments and an immediate
stock price response. 711 F. Supp. at 1286-87. The Ninth
Circuit, in Binder v. Gillespie, 184 F.3d 1059 (9th Cir.
1999), endorsed reliance on the Cammer factors, noting
that they “are designed to help make the central
determination of efficiency in a particular market.”
Id. at 1065.

23

Particularly relevant to this action is Unger v.
Amedisys Inc., 401 F.3d 316 (5th Cir. 2005), in which
the Fifth Circuit analyzed, in considerable depth, the
issue of market efficiency in the context of a stock which
traded on the OTCBB and where plaintiffs were seeking
the benefit of the fraud-on-the-market presumption of
reliance. The Fifth Circuit held that “[w]Jithout an initial
demonstration of market efficiency, there is no assurance
that the available material information concerning the
stock translates into an effect on the market price and
supports a classwide presumption of reliance.” 401 F.3d
at 322. Here, not only was there no “initial
demonstration of market efficiency,” there never was
any demonstration of market efficiency as respondents’
expert opined that the market was inefficient and
petitioners’ expert avoided making any assumption on
whether Thane’s stock traded in an efficient market in
either of his two reports.

In performing its market efficiency analysis, the
court below did not use the correct standard of market
efficiency. The First Circuit’s decision in /n re
PolyMedica Corp. Sec. Litig., 482 F.3d 1 (1st Cir. 2005),
contains a comprehensive analysis of the concept of
market efficiency. The First Circuit defined an efficient
market as “one in which the market price [of the stock]
fully reflects all publicly available information.” Jd. at
12. (Emphasis in original). It rejected the lower court’s
definition which focused “on the general consideration
by market professionals of most publicly announced
material statements about companies.” Jd. (Emphasis
in original.) Here, tiie district court did not even consider
whether the price of Thane’s stock reflected “most
publicly announced material statements” (2d. at 14;

24

emphasis in original); its analysis was limited to whether
Thane’s stock’s price reflected one fact and one fact only
— that it was not trading on the NMS.

On the same day as it issued its PolyMedica decision,
the First Circuit applied the standard of market
efficiency adopted in its decision in PolyMedica to its
decision in Jn re Xcelera.com Sec. Litig., 4380 F.3d 503
(1st Cir. 2005). In affirming the district court, the First
Circuit endorsed “the district court’s reliance upon
Cammer to determine whether the Xcelera market was
efficient.” Jd. at 508.

The district court here acknowledged that “[t]here
is little doubt that Thane stock could not meet the tests
for an efficient market under Cammer.” Pet. App. at 90a
n.11. Nevertheless, the district court concluded “that
Thane had the ability to impound the fact of non-listing
fairly promptly.” Jd. Without reference to any authority,
the district court “perceived” its duty in analyzing
market efficiency at the trial stage to be less rigorous
than a court examining market efficiency at the class
certification stage. Pet. App. at 89a. The only explanation
the district court gave was a reference to “sweeping due
process consequences” of class certification. Jd. It is
counterintuitive to presume that the standard used by
the trier of fact to determine materiality would be
weaker than the standard used by a court determining
whether a class should be certified at the initial stages
of the litigation. Although the reason for ascertaining
market efficiency here is different than in Cammer,
Binder, Unger, PolyMedica, and Xcelera, the district
court was dealing with the same market having the same
mechanism for converting information into price. If the

25

market mechanism is found deficient in the context of a
plaintiff seeking class certification, the same deficiencies
should prevent a defendant from escaping the
consequences of its misrepresentations because the
reported prices in an inefficient market did not
immediately drop.

The district court’s approach to the issue of the
relevance of the reported prices of Thane’s stock is not
typical. “When legal precedent is available, I follow it,
not economic or academic literature.” In re PolyMedica
Corp. Sec. Litig., 224 FE R.D. 27, 41 (D. Mass. 2004). The
PolyMedica approach has the benefit of support in the
precedent from this Court: .

We need not determine by adjudication what
economists and social scientists have debated
through the use of sophisticated statistical
analysis and the application of economic
theory. For purposes of accepting the
presumption of reliance in this case, we need
only believe that market professionals
generally consider most publicly announced
material statements about companies, thereby
affecting stock market prices.

Basic Inc., 485 U.S. at 247 n.24. Here, there is no dispute
that “market professionals” had little, if any, interest in
Thane’s stock. Thane’s stock was not followed by any
analysts or arbitrageurs, and there were few market
makers. Pet. App. at 90a n.11. Although it may have
been known that Thane was trading on the OTCBB
shortly after the merger, there is no evidence that there
were sufficient market mechanisms available to translate

26

that knowledge into price. The focus of Cammer and
Unger is to identify such mechanisms (e.g., volume,
analyst following, multiple market makers, market
capitalization, etc.) and verify their existence prior to
relying on reported market prices. The district court
chose to ignore the absence of these market mechanisms
and thereby committed clear error by relying on the
reported OTCBB prices generated in a demonstrably
inefficient market.

B. There Is No Split Between The Second and
Ninth Circuits Regarding The Use Of Price
In Cases Where The Stock Is Inefficient

Petitioners’ sole authority in support of its theory
that a court could look to price in determining
materiality in the absence of a finding of an efficient
market for a stock is Akerman v. Oryx Comme'ns, Inc.,
609 F. Supp. 363 (S.D.N.Y. 1984), aff’d, 810 F.2d 336 (2d
Cir. 1987), a case which was decided before the “efficient
market theory” was explicated in Cammer, supra. The
efficient market analysis of Cammer was endorsed by
the Ninth Circuit in Binder, 184 F.3d at 1065, and
explicitly rejected by the district court in its opinion
resulting in the reversal. The district court candidly
acknowledged by not following Cammer and Binder, it
“proceeds into unchartered waters.” Pet. App. at 89a.
Inexplicably, petitioners do no bother to cite to Cammer
or Binder in their petition.

The efficient market theory explicated in Cammer
is likewise the standard in the Second Circuit as
evidenced by numerous decisions decided after
Akerman. Any alleged split in the Circuits is thus

27

illusory. In Jn re Initial Public Offerings Sec. Litig.,
471 F.3d 24, 42 (2d Cir. 2006), the Second Circuit relied
on the Sixth Circuit’s analysis of market efficiency in
Freeman v. Laventhol & Horwath, 915 F.2d 193, 199
(6th Cir. 1990), which is premised on Cammer. See also
In re SCOR Holding (Switzerland) AG Litig., 5387 F.
Supp. 2d 556, 574 n.24 (S.D.N.Y. 2008) (relying on the
Cammer factors to determine whether the market for
shares was efficient).

Significantly, in Akerman, there is no discussion of
the efficient market hypothesis and materiality and
efficiency essentially were presumed.’ 810 F.2d at 341.
Implicit in the Second Circuit’s acknowledgment that
the price of the stock rose in reaction to the disclosure
of the misstatement was the reliance on the propriety
of the stock price. Akerman, 810 F.2d at 343. In
Akerman, both plaintiffs and defendants relied on the
price of the stock and the district court noted that the
case was “far from one of monumental significance.”
609 F. Supp. at 366. The only relevance Akerman has to
the case at bar is the Second Circuit’s refusal to
take jurisdiction over interlocutory issues. 810 F.2d at
339-40.

C. The Ninth Circuit’s Decision Followed This
Court’s Precedents

The Ninth Circuit’s decision is also consistent with
this Court’s holdings in TSC Indus., Inc. v. Northway,

8.. There is a stray reference by plaintiffs to “the thin
market” for the subject stock which reference was found to be
“internal[ly] inconsisten[t]” with other positions of plaintiffs.
810 F.2d at 343.

28

Inc., 426 U.S. 438, 449 (1976), Basic, and Affilzated Ute
Citizens v. United States, 406 U.S. 128 (1973). T'SC, sets
forth an objective standard for materiality of omissions
or misstatements for all Federal securities law purposes:
“An omitted fact is material if there is a substantial
likelihood that a reasonable shareholder would consider
it important in deciding how to vote.” TSC, 426 U.S. at
449. The standard contemplates:

a showing of a substantial likelihood that,
under all circumstances, the omitted fact
would have assumed actual significance in the
deliberations of the reasonable shareholder.
Put another way, there must be a substantial
likelihood that the disclosure of the omitted
fact would have been viewed by the
reasonable investor as having significantly
altered the “total mix” of information made
available.

Id. Accord Basic, 485 U.S. at 231-32.

The Ninth Circuit’s analysis of materiality took into
account undisputed facts, accepted as true all of
petitioners’ expert’s testimony (Pet. App. at 25a), and
only disagreed with the district court on the issue of
the legal consequences of the lack of an efficient market.
In Affiliated Ute, 406 U.S. at 152-53, this Court ignored
the share price holding that the district court “is not
restricted to actual sales prices in a market so isolated
and so thin as this one.” Jd. at 155. This is precisely what
the market for Thane was — isolated and thin.

29

D. The Ninth Circuit’s Opinion Is Well Reasoned

The Ninth Circuit’s opinion also is consistent with
both modern finance theory and common sense.
Petitioners represented that listing on the NMS would
increase the liquidity of Thane’s stock.’ One of the main
reasons for this is that most institutional investors
cannot trade in stocks listed only. on the OTCBB. Pet.
App. at 27a. It is Economics 101 that a decrease in
demand — 48.3% of all equities were owned by
institutional investors in 2001 (id.) — 2.e., lowering the
demand curve, results in a lower price.

The concept of different degrees of efficiency
presumes the existence of an efficient market that meets
the threshold standards of Cammer. The very case cited
by petitioners supports this proposition. Petitioners cite
Eckstein v. Balcor Film Invs., 8 F.3d 1121, 1130 (7th
Cir. 1993), for the proposition that “‘(e]fficiency’ is not
an all-or-nothing phenomenon.” Yet, the issue in
Eckstein was whether the market for the partnership
units at issue was “efficient.” Jd. The court considered,
inter alia, that there were no market makers and the
units were thinly traded. The Eckstein court in effect
rejected the “fraud-created-the-market theory” as a
substitute for reliance based on the specific
circumstances of that case. /d.

In order to entice this Court to exercise jurisdiction
over the petition, petitioners claim an alleged split in

9. As the Ninth Circuit pointedly noted, mere “approval
[of listing) alone would do absolutely nothing to increase a
stock’s liquidity.” Pet. App. at 15a.

30

the Circuits concerning the relationship between price
and materiality in efficient markets. Petition at 34-35.
Again, petitioners simply disregard “the undisputed fact
that the newly merged Thane International never did
trade on an efficient market.” Pet. App. at 29a. Any
argument relating to consideration of movements in
price in an efficient stock is irrelevant here and not
appropriate for review as it is uncontroverted that
Thane stock did not trade in an efficient market. Further,
petitioners fail to articulate any error committed by the
Ninth Circuit in this regard and simply provide a
narrative of other circuits’ analysis of price in
determining materiality.

Seemingly, the issue raised by petitioners is one of
timing, 27.e., what is the appropriate time within which a
stock price must move in reaction to news for it to impact
materiality. Implicit in each of the decisions cited by
petitioners is the existence or presumption of an efficient
market. Interestingly, if one looks beyond the snippets
of quoted material and delves into the facts in Jn re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1425
(3d Cir. 1997), there was no real issue on how long it
took the stock price to react to the disclosure of negative
news; it never reacted. The Burlington plaintiffs
asserted that the stock was efficient and the disclosures
at issue had no effect on the company’s stock price. In
decisions following Burlington, the Third Circuit has
made it clear that lack of materiality based on price is
predicated on an “efficient market.” See, e.g., In re
NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1330 (3d Cir.
2002).

31

The distinction noted by petitioners regarding the
Fifth Circuit limiting the effect of price in an efficient
market to determine reliance and not materiality is
irrelevant here as reliance is not an issue. See Nathenson
v. Zonagen, Inc., 267 F.3d 400, 415 (5th Cir. 2001).

Finally, the First Circuit’s decision in PolyMedica,
432 F.3d at 7, defines “efficiency” as the “flow of
information in the relevant market and effect of that
information on the price of the stock.” PolyMedica held
that an efficient market is “one in which the market
price of the stock fully reflects all publicly available
information.” 432 F.3d at 14 (emphasis in original). It
has never been alleged even by respondents that the
market for Thane stock could reflect “all public
information.”

Ironically, the Ninth Circuit’s view of the efficient
market theory is fully consistent with that of petitioners’
expert, albeit in testimony in another case. In a
Delaware action in which petitioners’ expert acted as a
trial expert, he ignored the reported trading price of a
stock trading on the New York Stock Exchange, which
otherwise lacked indicia of efficiency, and opined that it
was fair for the expert’s client to force a public company
that such client controlled to pay $17.75 per share for a
stock the reported trading price of which was only $3.70
per share. The district court characterized this testimony
as opining that the trading price reported on the New
York Stock Exchange “is irrelevant” but failed to apply
the same logic to this case. Pet. App. at 86a n.8.

32

E. The Ninth Circuit’s Opinion Will Not Likely

Have Any Effect On The Legitimacy Of Bench
Trials

Petitioners’ argument that the Ninth Circuit’s
opinion would adversely affect bench trials is both
irrelevant and not based on sound legal or empirical
data. It is doubtful whether any of the statistical data
available would be applicable to securities cases where
in recent years there have been only a handful of cases
that went to trial. Here, it was petitioners who
demanded the commonly believed more defendant-
friendly bench trial. Petition at 10. Recent studies have
noted the overall decline of civil trials'’® as well as the
possible existence of an anti-plaintiff bias at the federal
appellate level.'! In addition, studies have shown higher
reversal rates for verdicts reached by juries. See, e.g.,
Theodore Eisenberg & Michael Heise, Plaintiphobia
in State Courts? An Empirical Study of State Court
Trials on Appeal, Cornell Legal Studies Research Paper
No. 07-006, at 3 (Sept. 2007). Suffice it to say, the data
offered by petitioners is selective.

10. Mare Galanter, A World Without Trials?, 2006 J. Disp.
Resol. 7, at 2.

11. Kevin M. Clermont & Theodore Eisenberg, Anti-
Plaintiff Bias in Federal Appellate Courts, 84 Judicature 128
(2000).

33
CONCLUSION

For all the foregoing reasons, respondents
respectfully request that the petition be denied.

Respectfully submitted,

JOEL C. FEFFER
Counsel of Record
DANIELLA QUITT

PETER W. OVERS, JR.
Harwoop FEFFER LLP
488 Madison Avenue
New York, NY 10022
(212) 935-7400

LIONEL Z. GLANCY

PreTER A. BINKOW

GLANCY BiInkow & GoLDBERG LLP
1801 Avenue of the Stars

Suite 311

Los Angeles, CA 90067

(310) 201-9150

Counsel for Respondents

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386020_1028%3A2. Public record. Not legal advice.