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Daily Journal Podcast: Close and Rogers Analyze SCOTUS Dismissal of High-Profile Securities Case

April 26, 2019

In Daily Journal’s April 26 podcast focusing on recent US Supreme Court actions, O’Melveny partner Matt Close and counsel Brittany Rogers offered their analysis of Emulex v. Varjabedian, a high-profile securities case “dismissed as improvidently granted” by the court.

The case centered around the issue of whether a company can be penalized for negligent omissions made to its shareholders recommending that they accept an acquiring company’s tender offer, or whether a more culpable or fraudulent state of mind is required.

“The acronym for a ‘dismissal as improvidently granted’ is a ‘DIG,’ and DIGs really are not very common. Historically, there’s data that over the last 50-60 years the average is… one-three per term,” said Rogers. “There’s speculation about why the Supreme Court might have done this, but obviously we don’t know because we have just the one line order,” she continued.

Rogers said the DIG for Emulex v. Varjabedian leaves the case with the lower court’s ruling intact.

Close said several similar cases have been stayed pending the Emulex decision, and he predicted the filing of additional similar suits.

“I expect a continued high rate of filing, and I do expect a strong effort by the defense bar to properly position the case to get back to the Supreme Court,” said Close.

“This relates to a recurring issue. Tender offers are part of commerce and the business of this country and the structure of our capital markets,” he said. “It’s an important part of our economy… It’s bad for business to leave the law in this state,” concluded Close.

You can listen to the full podcast here.