Stoneridge, the Early Returns

By October 9, 2007Briefly Legal

The Wall Street Journal’s Law Blog posts a reaction from Gregg L. Weiner, a litigator at Fried Frank, who was in the audience at this morning’s Stoneridge arguments. The Law Blog post is here, and Weiner’s take:

It was pretty clear that the “scheme liability” theory and plaintiffs’ attempt to get around Central Bank are about to go by the wayside. They really focused on ‘Is this just Central Bank but with a different label?’ What was called aiding and abetting in Central Bank has been recast as scheme liability — there was a lot of skepticism about that.

They asked the respondent’s lawyer [Big Business] what would happen to liability for lawyers, accountants and the like. He said those who make a statement can be liable, but if they’re just facilitating the making of a statement by another, they can’t be held liable. I think it’s clear they’re looking for a bright line test and what the petitioner proposed – that there wouldn’t be primary liability for those who didn’t make the statement but for those who engaged in a deceptive act whose purpose and effect is to deceive the market – is a hopelessly vague test.

I was also at the Tellabs argument and this argument was much less stimulating than in the Tellabs case. The justices in Tellabs were really struggling with what the standard was there and what the test was to measure a strong inference, whereas here you didn’t get a sense that the justices were really struggling with the primary issue of scheme liability. Only Justice Ginsburg was concerned that these wrongs might go to go unremedied. She asked if there was a narrow wedge in which we could find that is more than aiding and abetting but than less than the issuer making the false statement.

The Journal has a nuts-and-bolts story on the arguments here.

UPDATE: (2:25 p.m.) CBS Marketwatch story on the oral arguments cites NAM President John Engler’s op-ed in USA Today.

Leave a Reply