Muriel B. Seymour and David Seymour, Plaintiffs-Appellees-Cross-Appellants v. Summa Vista Cinema, Inc., Defendants-Appellants-Cross-Appellees

Facts

Appellees, Muriel B. Seymour and her son David Seymour, sued a variety of defendants for securities fraud in connection with the purchase of stock in Summa Vista Cinema, Inc. (Summa Vista). Claiming violations of federal securities law and common law fraud, they sought compensatory and punitive damages. The Seymours took a default judgment against J.R. Shestak III, the broker who actually induced the purchase, and entered into a settlement agreement with Summa Vista and related defendants. They then proceeded to trial against Shestak’s employer, appellant J. Alexander Securities, Inc. (Alexander).

Evidence at trial showed that Shestak made several false representations and material omissions in inducing the Seymours to purchase the Summa Vista stock. There was also proof that Alexander failed to properly train and supervise Shestak, failed to adequately control his activities, and ignored problems with Shestak’s behavior when the Seymours complained.

The jury initially returned a verdict in favor of Muriel Seymour for $570,000 compensatory and $180,000 punitive damages. The district court found that the compensatory damage figure far exceeded the amount supported by the…