Broker-Dealer Litigation - Greenberg Traurig LLP

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In re Tronox, Inc. Sec. Litig., 769 F. Supp. 2d 202 (S.D.N.Y. 2011).
These federal securities class action suits were brought on behalf of all purchasers of a
corporation’s stock. A wholly-owned subsidiary materially misstated financial results
throughout and following the subsidiary’s initial public offering. Defendants are the original
parent company and the successor in interest to the original parent company. The class sued the
parent company and successor in interest under control person liability arising out of the
misstatements. The successor in interest was also sued under respondeat superior theory for the
original parent company’s primary control person liability. After the class filed their amended
complaint, the defendants (parent and successor company) moved to dismiss certain claims. The
district court noted that an independent corporation may assume the role of a second
corporation’s agent if the facts show such a relationship and found the class alleged sufficient
facts to show the original parent company was acting as the successor’s agent. The court held
that plaintiff’s allegations supported a finding that: (1) the successor consented to the original
parent company’s implementation of the master separation agreement on its behalf; and (2) the
successor controlled and directed the original parent company’s actions. The court found the
successor’s consent in implementing the master separation agreement was plausible based on the
original parent company’s reimbursement obligations and control over the parent company was
shown by alleging the successor’s “deep involvement in implementing the terms of the master
separation agreement.” The original parent company’s motion to dismiss was denied in whole.
The successor in interest’s motion to dismiss was granted in part and denied in part. It was
denied with respect to the respondeat superior claim.
In re Platinum & Palladium Commodities Litig., 2011 U.S. Dist. LEXIS 105040 (S.D.N.Y.
Sept. 13, 2011).
Plaintiffs were a class who sued defendant-advisors for violations of the Commodity
Exchange Act, the Sherman Act, and the Racketeer Influenced and Corrupt Organizations Act.
The class alleged the advisors’ portfolio manager manipulated settlement prices of palladium and
platinum futures contracts. The class sued the advisors for their portfolio manager’s actions on
the basis of respondeat superior. Defendants moved to strike certain allegations in the complaint
and to dismiss the action for failure to state a claim. The court found the respondeat superior
allegation did not fail merely because the class failed to establish advisor’s complete control over
the portfolio manager; it was sufficient that class pleaded that the portfolio manager was “acting
for” the advisors in executing the trades. Defendants’ motion to dismiss the complaint was
granted, with leave to amend.
Puskala v. Koss Corporation, 799 F. Supp.2d 941 (E.D. Wis. July 28, 2011).
Plaintiffs, alleged victims of an embezzlement scheme, brought a claim against the
embezzler, who was the corporation’s Vice President of Finance, as well as the corporation’s
CEO and former accounting firm. Defendants, other than the Vice President of Finance, moved
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