Cross-Office Team Obtains Appellate Victory in Multimillion-Dollar Securities Fraud Lawsuit Involving Brett Favre
Sacramento, Calif. (February 17, 2022) - Sacramento Partners Greg L. Johnson and Timothy J. Nally, along with Sacramento Associate John R. Ternieden, Houston Partner Sean Higgins, and New Orleans Partner Karen M. Dicke recently obtained a significant victory after over four years of hard-fought litigation when the Fifth Circuit Court of Appeals affirmed the granting of two orders dismissing all causes of action against Lewis Brisbois’ clients who had been sued in a multimillion-dollar securities fraud lawsuit. The appellate court victory was yet another cross-office collaboration success in this matter – this time between the Sacramento, New Orleans, and Houston offices – with Mr. Johnson handling the oral argument before the Fifth Circuit and Mr. Higgins serving as lead on the appellate brief.
As reported in Law360 and on Lewis Brisbois’ website, Lewis Brisbois defended the officers and directors (including NFL Hall of Fame Quarterback Brett Favre) of a now-defunct sports-centered social media company against claims levied by a Louisiana-based venture capital firm. The Lewis Brisbois team moved to dismiss the operative first amended complaint for failure to state a claim (Rule 12(b)(6)) and for lack of personal jurisdiction as to one former company director who resided in Germany (Rule 12(b)(2)). The U.S. District Court for the Eastern District of Louisiana granted both motions without leave to amend, concluding that: (1) the plaintiff had failed to meet the heightened pleading standards of the Private Securities Litigation Reform Act (PSLRA) and Rule 9(b), reasoning that the plaintiff had engaged in impermissible group pleading without pleading with specificity who drafted, edited, or approved the corporate documents alleged to contain false statements; and (2) the former company director lacked sufficient contacts with the forum to permit the exercise of either general or specific jurisdiction over him.
The venture capital firm appealed those decisions to the Fifth Circuit, arguing that the district court erred as a matter of law on the Rule 12(b)(6) and 12(b)(2) motions. Specifically, the venture capital firm argued that it had adequately pleaded actionable material misrepresentations under the PSLRA and Rule 9(b), and that the district court had personal jurisdiction over the former board member. In the alternative, the appellant argued that it should have been granted another opportunity to amend its first amended complaint. The Fifth Circuit reviewed the issues on appeal de novo, and held that the district court had properly dismissed the first amended complaint pursuant to Rules 12(b)(6) and 12(b)(2). The Fifth Circuit also determined that the “district court reasonably concluded that leave to amend would be futile because [the venture capital’s] briefing relied on the fruits of extended jurisdictional discovery and [it] had already put forth its strongest arguments” both as to the failure to state a claim and to the absence of personal jurisdiction. Accordingly, the Fifth Circuit affirmed the district court’s decision in its entirety.
You may read the full Law360 article, titled, “Favre-Tied Co. Defeats $17M Securities Fraud Suit At 5th Circ.,” here (subscription may be required).