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Next Week at the Court – October 19, 2009

October 16, 2009

The Supreme Court returns on Monday for one last day of oral argument in the month of October.  There is only one civil case on the calendar, involving a certified question from the Second Circuit Court of Appeals.  Otherwise, the Court will be hearing criminal cases and a real property case.  The civil case is set as the second case at the 10:00 am sitting:

S09Q1585. Holmes et al. v. Grubman et al.

This securities fraud case comes to the Supreme Court by an interesting path – from a certified question from a court in New York.  The case was originally filed in the Middle District of Georgia, but was consolidated with the WorldCom Securities Litigation in New York, and presents questions of Georgia law.  Holmes once held more than two million WorldCom shares, and allegedly wanted to sell his shares at near their high, but did not sell those shares based on advice from his brokerage firm.  Holmes sued the firm and his broker for the financial losses that resulted from the alleged fraudulent misrepresentations.

The District Court dismissed the plaintiffs’ claims based on a four different areas of Georgia law, and Holmes appealed.  The Second Circuit Court of Appeals unanimously certified questions of law related to three areas of Georgia law, which it found were unaddressed by the Georgia Supreme Court.  The three certified questions are:

  1. Does Georgia common law recognize fraud claims based on forbearance in the sale of publicly traded securities?
  2. With respect to a tort claim based on misrepresentations or omissions concerning publicly traded securities, is proximate cause adequately pleaded under Georgia law when a plaintiff alleges that his injury was a reasonably foreseeable result of defendant’s false or misleading statements but does not allege that the truth concealed by the defendant entered the market place, thereby precipitating a drop in the price of the security?
  3. Under Georgia law, does a brokerage firm owe a fiduciary duty to the holder of a non-discretionary account?

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