Justices Doubt Stoneridge Arguments

By October 9, 2007Briefly Legal

Justices appear skeptical of the plaintiffs’ arguments. That’s good.


WASHINGTON (Reuters) – The U.S. Supreme Court’s chief justice questioned on Tuesday whether allowing investors to sue third parties in a fraud, such as banks and accountants, would “expand” the law — a move opponents say should be left up to Congress, not the courts.

Dow Jones:

WASHINGTON -(Dow Jones)- A majority of the U.S. Supreme Court, with the support of two key justices, Tuesday appeared skeptical that federal securities laws support private lawsuits against third parties to corporate fraud.

At oral arguments in the closely watched Stoneridge securities appeal, both Chief Justice John Roberts Jr. and Justice Samuel Alito made it clear they don’t believe federal law allows investors to go after vendors, accounting firms or others in private securities lawsuits.


Oct. 9 (Bloomberg) — U.S. Supreme Court justices signaled they will limit lawsuits by defrauded shareholders against a company’s banks, vendors and other business partners.

Hearing arguments today in Washington, the three justices likely to control the case’s outcome — Anthony Kennedy, Samuel Alito and Chief Justice John Roberts — aimed skeptical questions at a lawyer seeking to sue Motorola Inc. and Scientific-Atlanta Inc. for allegedly deceiving shareholders of cable company Charter Communications Inc.

“I see no limitation to your proposal for liability,” Kennedy told the lawyer pressing the lawsuit.

All good signs.

UPDATE (4:15 p.m.): Lyle Denniston at the Scotusblog thinks the court was pretty clear about its intentions:

If some of Wall Street’s major players — the giant invesment houses — were looking nervously toward the Supreme Court on Tuesday morning, as they reportedly were, by midday they were entitled to take a breath and relax. As the Court concluded an hourlong hearing in a vitally important securities case, there seemed hardly a chance — even a remote one — that federal law against stock fraud would be read to give investors a significant new tool to go after stock fraud themselves. With the seeming exception of only Justice Ruth Bader Ginsburg, and the possible added exception of Justice David H. Souter, members of the Court showed little to no sympathy for opening up a broad new category of liability to investors.

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