The case was originally filed in Superior Court and removed to the U.S. District Court for the Central District of California by the Notice of Removal dated October 23, 2002.
The complaint charges Thane and certain of its officers and directors with violations of the Securities Act of 1933 alleging the defendants made misrepresentations in connection with a securities offering. Specifically, the case is a merger transaction in which the shareholders of Reliant Interactive Media Corp. received shares of Thane International, Inc. The plaintiffs contend that the prospectus distributed to Reliant shareholders contained a material misstatement of fact because Thane did not list its stock on the NASDAQ National Market System following the merger.
On June 19, 2003, the case was intra-district transferred to the Southern Division of the U.S. Court for the Central District of California and reassigned to Judge James V. Selna by the Order dated June 6, 2003.
According to a press release dated June 8, 2005, Thane International, Inc., has won the verdict in a shareholder suit when U.S. District Judge James Selna of Santa Ana, California ruled in its favor last week. In recent years, few firms have been willing to challenge class action suits brought by shareholders in court, in part because of fears of anti-business hostility in the post-Enron era. Since Congress amended the securities laws at the end of 1995, only six cases nationwide have actually made it all the way to a verdict. The vast majority of such cases settle for millions of dollars. Part of what also makes the Thane case so unusual is that the statute under which the class was suing holds the company strictly liable for even innocent misrepresentations, eliminating the principal defense used in most securities cases.
On July 11, 2005, the plaintiffs filed a notice of appeal from the trial verdict in favor of the defendants. On November 26, 2007, the U.S. Court of Appeals of the Ninth Circuit issued an Opinion reversing and remanding the action back to District Court with instructions to enter judgment in favor of the plaintiffs, to address loss causation, and to conduct further proceedings consistent with this opinion.
On December 5, 2008, the defendants filed a Motion for Judgment On Loss Causation and a Motion for Judgment On Lack Of Control Person Liability And Good Faith Defenses. On March 17, 2009, Judge James V. Selna granted the defendants’ Motion for Judgment On Loss Causation but denied the Motion for Judgment On Lack Of Control Person Liability And Good Faith Defenses. Judgment was entered on March 25, 2009. The next day, the plaintiff filed an appeal of the Judgment in the Ninth Circuit Court of Appeals.
In an article dated August 12, 2010, the Ninth Circuit – in its second crack at the case – affirmed the district court’s dismissal. The Ninth Circuit’s August 9, 2010 opinion in the Thane International securities class action lawsuit affirmed the district court’s entry of judgment for the defendants on the issue of loss causation. [...] In its latest opinion, the Ninth Circuit quickly rejected the plaintiffs’ argument that the appellate court’s prior ruling that the prospectus misrepresentation "foreclosed" the defendants’ reliance on the loss causation defense. The Ninth Circuit found that materiality and loss causation are separate issues, and the question whether investors would find information important (materiality) is different than the question whether a particular misstatement actually resulted in a loss (loss causation). Even if the "two inquiries are related" that "does not mean they are the same."