11th Circuit oral argument en banc -- a securities case

An alert BME intern was down at the 11th Circuit today for en banc arguments, and had the following report:

The Eleventh Circuit heard oral argument en banc today in Steven I. Weissman v. National Association of Securities Dealers, Inc. et al.  The issue before the court was whether NASDAQ enjoyed absolute immunity as a self-regulatory organization (SRO) for the advertisements described in Weissman’s complaint. The complaint contained the allegation that:

NASDAQ published numerous print and television advertisements in endorsing WorldCom as a great company and a good investment . . . . Though not purporting to offer WorldCom stock for sale, NASDAQ undertook said advertising and promotion for a consideration received or to be received directly or indirectly from WorldCom, market markers and/or stock dealers without disclosing the receipt, whether past or prospective, of such consideration . . . .

Affirming the district court’s denial of a motion to dismiss, a panel of the court concluded that NASDAQ was not absolutely immune from suit for the advertising alleged in the complaint. Judge Barkett authored the panel opinion, which was reported at 468 F.3d 1306. Judge Tjoflat concurred in part and dissented in part, arguing that NASDAQ was entitled to absolute immunity from suit based on the allegations pled in the complaint. Following a poll of the active judges in the circuit, in March, the court vacated the panel opinion and set the case for rehearing en banc.

Mr. Weissman appeared and argued for himself; Douglas R. Cox, a partner in Gibson, Dunn & Crutcher's D.C. office, argued for NASDAQ. Oral argument was lively, with questions from almost every member of the court. The court questioned Mr. Weissman and Mr. Cox extensively over scope of NASDAQ’s immunity, the specific allegations contained in the complaint, and whether NASDAQ should be immune from suit where the conduct in question is calculated to generate a profit, and not to perform quasi-governmental regulatory functions.

The outcome of this case could bring the Eleventh Circuit into harmony with other circuits which have held that SROs like NASDAQ possess absolute immunity, or this case could create a circuit split, setting this issue up for Supreme Court review. The questions asked at oral argument also suggest that some members of the court are considering a narrower result tied to the specific facts of this case. We will continue to follow this case and will report on the release of the court’s en banc opinion.