About

John F. Harnes is an attorney who has engaged in complex civil litigation for over forty years, on behalf of both plaintiffs and defendants. More specifically, since his admission to the Bar in 1982, he has specialized almost exclusively in securities and corporate litigation at both the trial and appellate level in Federal court and in state courts throughout the country, from Delaware to Hawaii. His experience in these areas encompasses virtually every area of securities litigation and state corporate law. With respect to the former, he has litigated matters arising under the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisors Act of 1940, and the related Commodities Exchange Act of 1936. With respect to the latter, he has litigated matters involving a wide array of corporate (and limited partnership) transactions, including, inter alia, cases involving corporate freeze-outs, cases involving self-dealing transactions between a majority shareholder or director and the corporation, cases involving interference with the corporate franchise and the enactment of improper by-laws, proxy contests, statutory appraisals, and cases involving corporate reorganizations.

His litigation experience is not only broad, but also deep. He has actively participated, as either lead counsel or second chair, in over two dozen lengthy and complex trials involving all of the areas of corporate law described above, and involving virtually all areas of securities law, including cases under the 1934 Act, the 1933 Act, the Investment Company Act, and the Commodities Exchange Act. Mr. Harnes has argued more than a dozen appeals before appellate courts, including the Supreme Court of Delaware, the New York Court of Appeals, and the First, Second, and Eleventh Circuits. In doing so, he has set, or helped to set, several important precedents, particularly in the area of Delaware corporate law.

Mr. Harnes is currently lead counsel in lawsuits involving the tax exemption of federal credit unions. Mr. Harnes is also the author of several articles in the area of securities litigation.

Bar Admissions: States: New York; U.S. District Courts: SDNY, EDNY, AZ, WI; U.S. Courts of Appeals: 1st, 2nd, 3rd, 7th, and 11th Circuits.

Contact

➤ LOCATION

527 Route 22, Suite 2 Pawling, New York 12564

☎ CONTACT

jfharnes@harneslaw.com
(917) 810-8460

Precedents

Kahn v. Lynch Communication Systems, Inc., 638 A.2d 1110 (Del. 1994)

A case, recognized as “seminal” by commentators*, that established that entire fairness was the applicable standard of review for all controlling shareholder freeze-out mergers;

*Knuepfler, 2010 Mergers and Acquisitions Law, 2010 WL 543735; Levy, Freeze-Out Transactions the Pure Way, 106 W.Va. L. Rev. 305 (2004)

Kahn v. Tremont Corp., 694 A.2d 422 (Del. 1997)

A decision that clarified that the entire fairness standard, articulated in Lynch Communication, was the applicable standard in all transactions where a controlling shareholder stands on both sides of the transaction, and articulated the need of special committees to simulate arm’s length bargaining. Lynch Communications and Tremont together were deemed by a leading treatise to be two of the three “most significant” Delaware corporate law decisions concerning the fiduciary duties of controlling shareholders at the time*.

*Block, Barton & Radin, The Business Judgment Rule: Fiduciary Duties of Corporate Directors (5th Ed. 1998), p. 379.

Parnes v. Bally Entertainment, 722 A.2d 1243 (Del. 1999)

Another decision characterized by commentators as “landmark,”* that established the standard for differentiating between a direct and derivative claim in the merger context.

*Donaldson, Mapping Delaware’s Elusive Divide: Clarification and Further Movement Toward a Merits-based Analysis For Distinguishing Derivative and Direct Claims, 30 Del. J. Corp. L 389 (2005)

Kahn v. Seaboard Corp., 625 A.2d 269 (Del. Ch. 1993)

A decision “often cited as the seminal case for the Delaware Chancery Court's treatment of the statute of limitations in shareholder actions,”* that established where wrongful self-dealing is alleged against a fiduciary in a derivative action, the statute of limitations does not run against the plaintiff until he or she knew or had reason to know the facts alleged to give rise to the wrong, even absent any affirmative misrepresentation by the fiduciary.

*Miello, In Re MAXXAM—Putting The Plaintiff And Defendant On Even Ground: Defining Standards For Settlement Review And The Statute Of Limitations In Shareholder Actions, 21 Del. J. Corp. L. 525 (1996). Mr. Harnes was also trial counsel in the MAXXAM case.

While involved in Lynch Communications and Tremont, Mr. Harnes was sole lead counsel for the Seaboard and Parnes decisions. More recently, Mr. Harnes has been focusing primarily on securities litigation, and was the senior attorney on several cases settling for hundreds of millions of dollars in the past several years, including¸ inter alia, In re Diamond Foods, Inc. Securities Litigation, No. 11-cv-05386-WHA (N.D. Cal.) ($130 million recovery), In re ArthroCare Corp. Sec. Litig., No. 08-cv-00574 (W.D. Tex.), ($74 million recovery), and in In re Tycom Ltd. Sec. Litig., No. 03-03540 (D.N.J.) ($79 million recovery).

Articles

Revisiting Affiliated Ute: 4 Lines Of Cases In 3rd Circ.

Last month marked 45 years since the U.S. Supreme Court's ruling in Affiliated Ute Citizens of Utah v. United States, which established a rebuttable presumption of reliance for securities fraud claims based on omissions of material fact. This Expert Analysis special series explores the decision's progeny in the Supreme Court and various circuits (via Law 360).

Applying Comcast To Securities Cases: A Plaintiff's View

In Erica P. John Fund Inc. v. Halliburton Co., 131 S. Ct. 2179 (2011), the U.S. Supreme Court addressed the following question: “[W]hether securities fraud plaintiffs must ... prove loss causation in order to obtain class certification.” 131 S.Ct. at 2183. The court answered in the negative, announcing: “We hold that they need not.” In reversing the Fifth Circuit, the court stated, on at least three separate occasions, that the circuit court “erred by requiring proof of loss causation for class certification" (via Law 360).

How Best Buy Is Directly At Odds With Halliburton II

In a recent decision, IBEW Local 98 Pension Fund v. Best Buy Co. Inc., __ F.3d __, (8th Cir. April 12, 2016), the Eighth Circuit became the first federal appellate court to address the issue of “price impact” on a motion for class certification in light of the U.S. Supreme Court’s decision in Erica P. John Fund Inc. v. Halliburton Co., 134 S. Ct. 2398 (2014) (“Halliburton II”). In Halliburton II, the Supreme Court reaffirmed the principle that a plaintiff seeking class certification may rely on the fraud on the market’s presumption of reliance, but ruled that a defendant may rebut such presumption by presenting evidence that the alleged misrepresentation did not result in any “price impact” with respect to the security at issue (via Law 360).