Milbank LLP represented Primero Mining Corp. Faruqi & Faruqi LLP represented Royal Wulff Ventures LLC.
Milbank LLP has achieved a significant victory before the United States Court of Appeals for the Ninth Circuit on behalf of Primero Mining Corp. in a putative securities class action brought by investors related to the Canadian company’s disclosures regarding its Mexican subsidiary Primero Empresa Minera, S.A. de C.V. (“PEM”).
The Ninth Circuit affirmed the decision of the US District Court of the Central District of California in Royal Wulff Ventures LLC v. Primero Mining Corp. in which it granted Milbank’s motion to dismiss the investors’ Complaint based on the act of state doctrine and failure to state a claim.
In February 2016, the investors filed suit alleging that Primero made false and/or misleading disclosures regarding PEM’s recording of revenue and taxes from sales to Silver Wheaton Corp. The Complaint cited to disclosures regarding Primero’s request for and receipt of an Advance Pricing Agreement (“APA”) ruling by the Mexican Servicio de Administración Tributaria (the “SAT”), providing that PEM appropriately recorded revenue and taxes from sales under the silver purchase agreement at realized prices rather than spot prices. The investors further alleged that the shareholders were harmed by the drop in the company’s share price when Primero announced that the SAT filed a legal claim in Mexico seeking to nullify the APA.
Milbank successfully moved to dismiss the Complaint with prejudice based on the act of state doctrine and failure to state a claim. The District Court dismissed the class action on July 14, 2017 as barred by the act of state doctrine because the investors’ claims under the Securities Exchange Act of 1934 would require a US Court to pass judgment on the validity of a 2012 ruling by the Mexican tax authority. In the alternative, the District Court ruled that the investors had failed to adequately plead any materially false or misleading statements.
The investors appealed the decision, and the Ninth Circuit affirmed the dismissal on September 17, 2019.
Faruqi & Faruqi LLP team was led by Katherine M. Lenahan, Benjamin Heikali, Richard W. Gonnello and Megan M. Sullivan.
Milbank team was led by Daniel M. Perry (Picture) and James D. Whooley.
Law Firms: Milbank;