City Official Is Not Immune From SEC Enforcement Suit
On September 5th, the Eleventh Circuit affirmed the denial of the motion to dismiss filed by Michael Boudreaux, former Budget Director for the City of Miami. The SEC alleges that Miami made material misstatements and omissions in its financial documents which were reflected in certain bond offerings. Boudreaux was responsible for preparing the overall capital budgets, monitoring fiscal expenditures, and providing the data used in the City’s Comprehensive Annual Financial Reports. He sought dismissal based on the doctrine of qualified immunity because he was acting within the scope of his official duties. Disagreeing, the Eleventh Circuit held that the doctrine of qualified immunity is unavailable to Boudreaux as a defense against the SEC’s civil enforcement action. SEC v. City of Miami (Not Published).
Allergan Shareholders Adequately Alleged Demand Futility
On September 2nd, the Ninth Circuit reinstated a shareholder derivative lawsuit against the board of directors of Allergan. After the company settled suits related to its alleged off-label marketing of Botox, the shareholders filed a derivative suit alleging that the directors violated state and federal law and their fiduciary duties. The district court dismissed the suit, finding that the shareholders failed to adequately plead demand futility. Reviewing for an abuse of discretion and applying Delaware law, the Ninth Circuit reversed, holding that demand was excused here because the plaintiffs pleaded particularized allegations which established a reasonable doubt as to whether the board faced a substantial likelihood of liability and as to whether the board was protected by the business judgment rule. Rosenbloom v. Pyott.