Nevada Appellate Lawyer & Attorney : Tami D. Cowden : Nevada Supreme Court, Ninth Circuit Court of Appeals

In Betz v. Trainer Wortham, the Ninth Circuit made small amendments to the previous opinion, in which the three panel court had held that a jury must decide whether a securities fraud plaintiff was put on inquiry notice of fraud long enough before she filed suit for the statute of limitations to have run. With such amendments, the motion for en banc rehearing is denied. Judge Kozinski writes a stinging dissent from that denial, noting that the Court places itself in “left field again”—that is, alone among all the appellate circuits—by requiring a jury to determine whether the investor was placed on inquiry notice where the facts are undisputed.  Noting here that the investor claims she had been promised zero risk on her investment, yet understood statements showing a decrease in her principal, Kozinski argues that as a matter of law, she was placed on sufficient inquiry notice to start the running of the statute.

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In Betz v Trainer Wortham & Co, Inc.,  the Ninth Circuit reversed the district court’s finding that the federal securities fraud claims were time barred. The district court had granted summary judgment because the plaintiff was aware of the depleting value of her portfolio, contrary to promises she had been made, more than two years before the filing of her complaint. The Court held that because the plaintiff was promised she would be taken care, she could not be aware of the scienter element of securities fraud until the defendants admitted to her that they would do nothing to recover her losses.  

The Court also adopted the Tenth Circuit’s “inquiry-plus-reasonable-diligence” standard to determine when a security fraud claim accrues for purposes of the statute of limitations. Under this standard, the statute begins running when the plaintiff had sufficient suspicion of fraud to investigate further, and with such investigation, should have discovered the facts constituting fraud. Here, because the, concerns of the plaintiff, a naïve investor, were lulled by the defendants’ assurances, the Court rejected the argument that plaintiff’s declining account balances should have put her on inquiry notice. Because a reasonable jury could conclude that the plaintiff’s delay was not unreasonable, summary judgment should not have been granted. 

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In Cantella v. Van De Kamp, the Ninth Circuit  affirmed the dismissal of civil rights claims against the State Bar of California and several of its officers on statute of limitations grounds. The appellant, who conceded in pleadings that he had been investigated by disciplinary authorities forty-seven times and sanctioned 26 times in the period between 1989 and 1998, entered into an agreement in 1999 in which an eighteen month suspension was stayed, and a thirty day suspension was stayed. An account of the sanction was published in the bar’s print and online journals in February 2000. After 2003, the attorney search function of the state bar’s web site allowed an attorney’s public disciplinary record to be displayed. In 2004, opposing counsel in one of appellant’s cases discovered the disciplinary account through the search function, and cited it in a motion in that case.  In July, 2005, appellant sued both opposing counsel and the bar defendants, claims various constitutional violations. The Court reiterated that a single publication can give rise to only one cause of action.

The Court, citing Oja v. Army Corps of Engineers, 440 F.3d 1128 (9^th Cir. 2006),  held that the claims against the state bar arose upon the initial publication of the disciplinary account; the purported subsequent republication was located at the same website as the initial website publication, albeit, at a different section of that website. Because California’s then-existing one year statute of limitations for personal injury claims applied to this action, the appellant’s claims were time barred.

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