Jay Dees Inc. v. Defense Technology Systems Inc.
410 F. App'x 355
2d Cir.2010Background
- Plaintiffs Dees, Kevelson, and Marks sued Brady, McPhee, and Defense Tech for securities fraud under Exchange Act §10(b) and Rule 10b-5 and for New York common-law fraud, based on Brady’smisrepresentations about Defense Tech’s capabilities and stock promotional activity.
- Scotto cross-appealed challenging the district court’s dismissal of his federal securities-fraud and common-law-fraud claims for lack of net economic loss, and challenging evidentiary rulings at summary judgment.
- The district court denied Brady’s motions for judgment as a matter of law and denied a new trial; a jury subsequently found Brady and others liable on the asserted claims, and the court awarded damages to Kevelson that were later challenged as excessive.
- The court vacated the portion of the final judgment awarding Kevelson $300,000 in compensatory damages and remanded for remittitur consistent with the evidence of Kevelson’s actual losses.
- The court upheld most of Brady’s evidentiary challenges and ruled that excludable or cumulative loss documents were harmless in light of Scotto’s dismissal, while remanding for PSLRA Rule 11 findings and potential new proceedings on damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there sufficient evidence of securities fraud and NY fraud against Brady? | Brady | Brady | Yes; evidence supports liability on all claims |
| Is the Kevelson damages award proper given the court’s instructions on actual damages? | Kevelson | Defense | Damages vacated; remand for remittitur or new trial |
| Did the district court err in evidentiary rulings, including prior convictions and loss documents? | Scotto/Kevelson | Brady | No reversible error; any error harmless or properly excluded |
| Must the district court make PSLRA Rule 11 findings after dismissal and final judgment? | Brady | Scotto | Remand to enter PSLRA Rule 11 findings |
Key Cases Cited
- Advance Pharmacal, Inc. v. United States, 391 F.3d 377 (2d Cir. 2004) (de novo standard for JMOL; standard of review)
- Tesser v. Bd. of Educ., 370 F.3d 314 (2d Cir. 2004) (abuse-of-discretion review for new trial)
- Medforms, Inc. v. Healthcare Mgmt. Solutions, Inc., 290 F.3d 98 (2d Cir. 2002) (new-trial standards; miscarriage of justice)
- Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363 (2d Cir. 1988) (remittitur and damages considerations)
- Zinman v. Black & Decker (U.S.), Inc., 983 F.2d 431 (2d Cir. 1993) (rule for admissibility of old convictions under Rule 609(b))
- Okin v. Village of Cornwall-on-Hudson Police Dept., 577 F.3d 415 (2d Cir. 2009) (summary-judgment evidentiary standards in appellate review)
- United States v. Dhinsa, 243 F.3d 635 (2d Cir. 2001) (authentication standard for evidence)