RK CO. v. SEE (September 22, 2010)
Dr. Jackie See founded Harvard Scientific Corporation (HSC) and was very active in its efforts to develop and market a product to treat sexual dysfunction. In 1997, the FDA discovered that HSC had falsified some findings in its new drug application. The FDA began an audit and instructed HSC to cease its clinical studies. Throughout 1997 and 1998, however, HSC continued to make public statements claiming that it was moving forward with its product and that the FDA had approved further clinical trials, when it had not. In mid-1998, RK Co. purchased $500,000 worth of HSC stock. By mid-1999, HSC was bankrupt and RK’s stock was worthless. RK sued HSC, Dr. See, and other HSC employees. After lengthy litigation, Dr. See (the last remaining defendant) and RK consented to a bench trial before a magistrate judge. Magistrate Judge Keys (N.D. Ill.) found for RK on each of the claims. See appeals.
In their opinion, Judges Bauer, Rovner, and Williams affirmed. The Court first rejected See's argument that RK was not the "real party in interest" because it was not a true legal entity for several reasons: a Rule 17 (a) "real party in interest" objection may be waived, See waived it by not bringing it up until midway through the trial, the fact that he may not have known until trial is not excused since over seven years had elapsed since the complaint's filing, and the only consequence of a more timely objection would have been a substitution of parties. The Court also rejected See's standing arguments. It concluded that RK easily met the minimum requirements for constitutional standing (injury in fact, causation, and redressability) and that See waived the prudential standing argument. Next, the Court held that the magistrate judge did not err in finding that the evidence was sufficient to support the claims. See challenged the lower court's decision to admit certain deposition testimony but failed to include in the record the transcript of the proceedings below. The Court dismissed his challenge, being unable to meaningfully review the court's reasoning. Finally, the Court found no abuse of discretion in the lower court's award of prejudgment interest and attorney's fees. Prejudgment interest is presumptively available and See failed to specify any particular objections to the fees.