Second Circuit – Securities and Exchange Act: Packer v. Raging Capital Management LLC

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United States Court of Appeals for the Second Circuit

Securities and Exchange Act

Constitutional standing

Packer v. Raging Capital Management LLC

23-367-cv

Judges Newman, Cabranes, and Lohier

Background: At issue on appeal is whether Trans Union LLC v. Ramirez, 594 U.S. 413 (2021) abrogated the holding of Donoghue v. Bulldog Investors General Partnership, 696 F.3d 170 (2d Cir. 2012). The Second Circuit held in Donoghue that a violation of Section 16(b) inflicts an injury that confers constitutional standing such that a shareholder may sue the 10% beneficial owner on the company’s behalf.

Ruling: The Second Circuit reversed and remanded. The court held that TransUnion did not abrogate Donoghue noting that to determine whether an intangible injury is sufficiently concrete to confer constitutional standing, Trans Union instructed courts to identify a close historical or common-law analogue for the asserted injury. In Donoghue, the Second Circuit identified such an analogue for a Section 16(b) injury: breach of fiduciary duty.

Glen F. Ostrager, of Ostrager Chong Flaherty & Broitman, for the plaintiff-appellant; Thomas J. Fleming, of Olshan Frome Wolosky, for the defendants-appellees.

Oral argument audio