/raid1/www/Hosts/bankrupt/CAR_Public/110519.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, May 19, 2011, Vol. 13, No. 98
Headlines
3M COMPANY: Continues to Defend Suits in Morgan County, Alabama
3M COMPANY: Reaches Settlement of "Whitaker" & "Garcia" Suits
AT&T INC: Class Action Ruling to Impact Consumer Product Markets
AUSTRALIA: May Face Class Action Over Solar Bonus Scheme
BANK OF AMERICA: Continues to Defend "Watson" Suit in Canada
CASCADE BANCORP: "Firkins" Class Action Suit in Idaho Dismissed
CIGNA CORPORATION: Continues to Defend Amara Pension Plan Suit
CIGNA CORPORATION: Defends "Karp" Gender Discrimination Suit
CONTINENTAL RESOURCES: Discovery Commences in Royalty Fee Suit
DEPUY ORTHOPAEDICS: Patients May File Suit Over Hip Implant Recall
EAST WEST BANK: Accused of Violating Los Angeles Rent Ordinance
GREAT SOUTHERN: More Investors Expected to Join Class Action
HEARTLAND BANK: Faces Class Action Over Bait-and-Switch Scheme
JP MORGAN CHASE: Sued for Violations of L.A.'s Rent Control Laws
LAMINATION STATION: Sued for Sending Unsolicited Fax Ads
LEGALZOOM: August 22 Trial Set for Class Action
MYLIFE.COM INC: Accused of Violating False Advertising Law
OKLAHOMA: Spent $4.2 Mil. on Attorneys for DHS Foster Care Suit
PELLA CORP: Suit Over Defective Products Gets Class Certification
PEPSI BEVERAGES: Sued in Pa. Over Failure to Pay Overtime
ROBERT P. BREMNER: Accused of Breach of Fiduciary Duty
SABER SEVEN: D&Os Sued Over Amendment to Corporate Bylaws
SONY COMPUTER: Faces 15th Suit Over Private Data Breach
SOUTH AFRICA: Home Affairs May Face Class Action
STATE STREET: SEC Probes Into Forex Practices Amid Class Actions
SUSQUEHANNA BANCSHARES: Reaches MOU in Merger-Related Class Suit
THE ST. JOE CO: Awaits Ruling on Motion to Dismiss "Meyer" Suit
WAL-MART STORES: Joseph Sellers Discusses Discrimination Suit
WARNER MUSIC: Faces Shareholder Class Action in Delaware
* RATING AGENCIES: 2nd Cir. Junks Securities Fraud Class Actions
*********
3M COMPANY: Continues to Defend Suits in Morgan County, Alabama
---------------------------------------------------------------
3M Company continues to defend itself from class action lawsuits
pending in the Circuit Court of Morgan County, Alabama alleging
property damage from exposure to perfluorochemicals, according to
the Company's May 5, 2011, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarterly period ended
March 31, 2011.
A former employee filed a purported class action lawsuit in 2002
in the Circuit Court of Morgan County, Alabama seeking unstated
damages and alleging that the plaintiffs suffered fear, increased
risk, subclinical injuries, and property damage from exposure to
perfluorochemicals at or near the Company's Decatur, Alabama,
manufacturing facility. The Circuit Court in 2005 granted the
Company's motion to dismiss the named plaintiff's personal injury-
related claims on the basis that such claims are barred by the
exclusivity provisions of the state's Workers Compensation Act.
The plaintiffs' counsel filed an amended complaint in November
2006, limiting the case to property damage claims on behalf of a
purported class of residents and property owners in the vicinity
of the Decatur plant. Also, in 2005, the judge in a second
purported class action lawsuit (filed by three residents of Morgan
County, Alabama, seeking unstated compensatory and punitive
damages involving alleged damage to their property from emissions
of perfluorochemical compounds from the Company's Decatur,
Alabama, manufacturing facility that formerly manufactured those
compounds) granted the Company's motion to abate the case,
effectively putting the case on hold pending the resolution of
class certification issues in the first action filed in the same
court in 2002. Despite the stay, plaintiffs filed an amended
complaint seeking damages for alleged personal injuries and
property damage on behalf of the named plaintiffs and the members
of a purported class. No further action in the case is expected
unless and until the stay is lifted.
In February 2009, a resident of Franklin County, Alabama, filed a
purported class action lawsuit in the Circuit Court of Franklin
County seeking compensatory damages and injunctive relief based on
the application by the Decatur wastewater treatment plant of
wastewater treatment sludge to farmland and grasslands in the
state that allegedly contain PFOA, PFOS and other
perfluorochemicals. The named defendants in the case include 3M,
Dyneon LLC, Daikin America, Inc., Synagro-WWT, Inc., Synagro
South, LLC and Biological Processors of America. The named
plaintiff seeks to represent a class of all persons within the
State of Alabama, Inc., who have had PFOA, PFOS and other
perfluorochemicals released or deposited on their property. In
March 2010, the Alabama Supreme Court ordered the case transferred
from Franklin County to Morgan County. In May 2010, consistent
with its handling of the other matters, the Morgan County Circuit
Court abated this case, putting it on hold pending the resolution
of the class certification issues in the first case filed there.
3M COMPANY: Reaches Settlement of "Whitaker" & "Garcia" Suits
-------------------------------------------------------------
3M Company disclosed in its May 5, 2011, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarterly period
ended March 31, 2011, that in January 2011, 3M reached an
agreement in principle with plaintiffs' counsel to resolve the
Whitaker and Garcia lawsuits.
The Whitaker settlement agreement was signed by all parties in
March 2011. The court granted preliminary approval of the
settlement on April 6, 2011, and provisionally certified a class
for settlement purposes only. The final approval hearing is
scheduled in December 2011. The Garcia settlement agreement is in
the process of being signed by the parties and is not subject to
further court review or approval. 3M is currently in discussions
with the Equal Employment Opportunity Commission to resolve
related charges. If finalized and approved by the court,
administration of the settlement agreements will take several
months to complete. The amount of the proposed settlements is not
material to the Company's consolidated results of operations or
financial condition.
Whitaker Lawsuit
In December, 2004, one current and one former employee of the
Company filed a purported class action in the District Court of
Ramsey County, Minnesota, seeking to represent a class of all
current and certain former salaried employees employed by the
Company in Minnesota below a certain salary grade who were age 46
or older at any time during the applicable period to be determined
by the Court. The complaint alleges the plaintiffs suffered
various forms of employment discrimination on the basis of age in
violation of the Minnesota Human Rights Act and seeks injunctive
relief, unspecified compensatory damages (which they seek to
treble under the statute), including back and front pay, punitive
damages (limited by statute to $8,500 per claimant) and attorneys'
fees. In January 2006, the plaintiffs filed a motion to join four
additional named plaintiffs. This motion was unopposed by the
Company and the four plaintiffs were joined in the case, although
one plaintiff's claim was dismissed following an individual
settlement. On April 11, 2008, the Court granted the plaintiffs'
motion to certify the case as a class action. On April 28, 2009,
the Minnesota Court of Appeals reversed the District Court's class
certification decision, finding that the District Court had not
required plaintiffs to meet the proper legal standards for
certification of a class under Minnesota law and incorrectly had
deferred resolving certain factual disputes that were relevant to
the class certification requirements. The Court of Appeals
remanded the case to the District Court for further proceedings in
line with the evidentiary standards defined in its opinion. The
trial court took expert testimony and held a hearing on the class
certification question and had the matter under advisement when
the parties reached a tentative settlement which rendered the
certification issues moot.
Garcia Lawsuit
The Company was served on May 7, 2009, with a purported class
action/collective action age discrimination lawsuit, which was
filed in United States District Court for the Northern District of
California, San Jose Division. The case was subsequently
transferred to the U.S. District Court for the District of
Minnesota.
In this case, five former and one current employee of the Company
are seeking to represent all current and former salaried employees
employed by the Company in the United States during the liability
period, which plaintiffs define as 2001 to the present. In
addition to the six named plaintiffs, there are approximately 86
other current or former employees who have signed "opt-in" forms,
seeking to join the action. The Garcia lawsuit expressly excludes
those persons encompassed within the proposed class in the
Whitaker lawsuit. The same firm, joined by additional California
counsel and local Minnesota counsel for the Garcia lawsuit,
represents the plaintiffs in both cases.
The allegations of the complaint in the Garcia lawsuit are similar
to those in the Whitaker lawsuit. Plaintiffs claim that they and
other similarly situated employees suffered various forms of
employment discrimination on the basis of age in violation of the
federal Age Discrimination in Employment Act. In regard to these
claims, plaintiffs seek to represent "all persons who were 46 or
older when employed by 3M in the United States in a salaried
position below the level of director, or salary grade 18, during
the liability period." Because federal law protects persons age
40 and older from age discrimination, with respect to their claim
of disparate impact only, plaintiffs also propose an alternative
definition of similarly situated persons that would begin at age
40. On behalf of this group, plaintiffs seek injunctive relief,
unspecified compensatory damages including back and front pay,
benefits, liquidated damages and attorneys' fees.
Certain of the plaintiffs' and putative class members' employment
terminated under circumstances in which they were eligible for
group severance plan benefits and in connection with those plans
they signed waivers of claims, including age discrimination
claims. Plaintiffs claim the waivers of age discrimination claims
were invalid in various respects. This subset of release-signing
plaintiffs seeks a declaration that the waivers of age
discrimination claims are invalid, other injunctive, but non-
monetary, remedies, and attorneys' fees.
AT&T INC: Class Action Ruling to Impact Consumer Product Markets
----------------------------------------------------------------
Sean Wajert, writing for Dechert LLP's MassTortDefense, reports
that in recent years, corporate defendants facing consumer class
actions in California and several other states have been unable to
enforce arbitration agreements prohibiting class actions. Under
the California Supreme Court's ruling in Discover Bank v. Superior
Court, 36 Cal. 4th 148, 162-63 (2005), class action waivers were
unenforceable if the waivers were in "a consumer contract of
adhesion," in disputes that "predictably involve small amounts of
damages," when the "party with superior bargaining power"
allegedly has harmed large numbers of consumers.
Earlier, the U.S. Supreme Court, in a 5-4 decision in AT&T
Mobility LLC v. Concepcion, No. 09-893, held that the Federal
Arbitration Act preempted the Discover Bank rule. Significantly,
the Supreme Court also held that "[r]equiring the availability of
classwide arbitration interferes with fundamental attributes of
arbitration and thus creates a scheme inconsistent with the FAA."
Slip Op. at 9. This decision will significantly enhance corporate
defendants' ability to enforce arbitration provisions in
California and the many other states with similar limitations on
class action waivers.
Some colleagues at the firm have put together a short and sweet
analysis of the case, observing that this decision may have a
substantial impact in consumer product markets, enabling
businesses to enforce contractual individual arbitration
agreements and thereby very significantly narrow the occasions for
certain consumer class actions. Many companies had changed their
standard contracts to take the Discover Bank rule into account,
and they may now want to consider modifying those standard
agreements back to include class action waivers. Although the
California rule was the only state law at issue in the case,
Concepcion likely will impact other similar state law rules that
have rendered class action waivers unenforceable and that
similarly created impermissible "'obstacle[s] to the
accomplishment and execution of the full purposes and objectives
of Congress," in enacting the FAA. Id. at 18 (quoting Hines v.
Davidowitz, 312 U.S. 52, 67 (1941)).
Dechert handles product liability and mass torts defense, for
companies in the pharmaceutical, medical device, consumer product,
chemical and other industries.
AUSTRALIA: May Face Class Action Over Solar Bonus Scheme
--------------------------------------------------------
Matthew Kelly, writing for Newcastle Herald, reports that the
state government faced the prospect of a class action if it
refused to allow the solar bonus scheme to continue as originally
promised, the industry's peak body warned on May 15.
On May 13, the government said it would cut the feed-in tariff
from 60 cents for every kilowatt hour of solar power generated to
40 cents for existing subscribers, and to 20 cents for those
signed up but yet to have solar panels installed.
Australian Solar Energy Society Chief Executive John Grimes
confirmed he would consider legal action on behalf of the 120,000
NSW residents caught out by the decision to ditch the scheme.
"Our first objective is to get this stopped politically," he said.
"If it was brought into law then I certainly think there would be
a legal case to answer and we would look at it [a class action]
very closely.
"This puts at risk commercial contracts that anybody holds with
the NSW government."
The Newcastle Herald's Web site was inundated by angry and
disillusioned Hunter residents who invested heavily in the scheme
on the basis of receiving 60 cents a kilowatt hour generated.
"I understand cutting the program for new entrants but
retrospective legislation after we were guaranteed 60 cents feed-
in for five years is completely unethical," one wrote.
Lambton resident, Justin Davis and his wife Kylie, who spent
AU$6000 last year on 10 solar panels, said they were interested in
taking legal action against the government.
"People like us invested a lot of money only to have the rug
pulled out from under us," he said.
"It's going to take a lot longer to pay the system off.
"The government gave no indication it was going to do this before
the election."
Greens MP John Kaye said the party would use its Upper House
numbers to save the scheme.
"Solar installers have been hung out to dry," he said.
"Many of these small business owners will lose their life's saving
and no one will ever trust even a legislated promise again."
BANK OF AMERICA: Continues to Defend "Watson" Suit in Canada
------------------------------------------------------------
Bank of America Corporation continues to defend itself against a
class action lawsuit over Visa and Mastercard credit cards pending
in Canada, according to the Company's May 5, 2011, Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarterly period ended March 31, 2011.
On March 28, 2011, a class action lawsuit was filed in the Supreme
Court of British Columbia, Canada, under the caption Watson v.
Bank of America Corporation et al., on behalf of a putative class
of merchants that accept Visa and MasterCard credit cards in
Canada. The suit names as defendants Visa, MasterCard and a
number of other banks and bank holding companies, including the
Corporation. The plaintiff alleges that the defendants conspired
to fix the merchant discount fees that merchants pay to acquiring
banks on credit card transactions. The plaintiff also alleges
that the defendants conspired to impose certain rules relating to
merchant acceptance of credit cards at the point of sale. The
action asserts claims under section 45 of the Competition Act and
other common law claims, and seeks unspecified damages and
injunctive relief based on their assertion that merchant discount
fees would be lower absent the challenged conduct.
Pursuant to Visa's publicly-disclosed Retrospective Responsibility
Plan, Visa placed certain proceeds from its initial public
offering into an escrow fund. Under the RRP, funds in the Escrow
may be accessed by Visa and its members, including Bank of
America, to pay for a comprehensive settlement or damages in
Interchange, with the Corporation's payments from the Escrow
capped at 12.81 percent of the funds that Visa places therein.
Subject to that cap, the Corporation may use Escrow funds to cover
73.9 percent of its monetary payment towards a comprehensive
Interchange settlement, 100 percent of its payment for any Visa-
related damages and 73.9 percent of its payment for any
internetwork and unassigned damages.
CASCADE BANCORP: "Firkins" Class Action Suit in Idaho Dismissed
---------------------------------------------------------------
A federal court in Idaho dismissed a purported class action
lawsuit filed by Russell Firkins & Rena Firkins against Cascade
Bancorp, according to the Company's May 4, 2011 Form 10-Q filing
with the U.S. Securities and Exchange Commission for the quarter
ended March 31, 2011.
On August 18, 2010, the Company was sued in an asserted class
action lawsuit, Russell Firkins & Rena Firkins v. Bank of the
Cascades, Case No. 1:10-cv-414-BLW in the United States District
Court for the District of Idaho. The lawsuit alleges that, in
2004, the Company's predecessor (Farmers and Merchants Bank),
acting as trustee under three similar trust indentures,
inappropriately disbursed the proceeds of three bond issuances,
allegedly resulting years later in the bondholders' loss of their
collective investment of approximately $23.5 million. Recovery is
sought on claims of breach of the indentures, breach of fiduciary
duty, and conversion. On November 22, 2010, the lawsuit was
dismissed without prejudice for a lack of subject matter
jurisdiction in federal court. In addition, on November 10, 2010
the DBSI Funding Corporations' bankruptcy trustee filed an
adversary proceeding against the Bank, in re: DBSI INC., et al,
James R. Zazzali, as Trustee v. Bank of the Cascades, Adversary
Proceeding No. 10-55325 (PJW) in the U.S. Bankruptcy Court,
District of Delaware. The trustee claims that the Company
violated the automatic stay by taking control of approximately
$250,000 in the DBSI Funding Corporations' accounts shortly after
the DBSI bankruptcy filing, and, as a result, the Bank owes
sanctions and damages. Under an order of the bankruptcy court,
the adversary proceeding against the Company is stayed, and the
Company need not respond to the bankruptcy trustee's claims and
allegations pending a further court order. The bankruptcy court
has scheduled a status conference in the adversary proceeding for
May 26, 2011. While the outcome of these proceedings cannot be
predicted with certainty, based on management's review, management
believes that the lawsuit and the adversary proceedings are
without merit and plans to vigorously pursue its defenses.
Management also believes that if any liability were to result, it
would not have a material adverse effect on the Company's
consolidated liquidity, financial condition or results of
operations.
About Cascade Bancorp
Bend, Ore.-based Cascade Bancorp (Nasdaq: CACB) through its
wholly owned subsidiary, Bank of the Cascades, offers full-service
community banking through 32 branches in Central Oregon, Southern
Oregon, Portland/Salem Oregon and Boise/Treasure Valley Idaho.
Cascade Bancorp has no significant assets or operations other than
the Bank.
The Company's balance sheet at Dec. 31, 2010, showed $1.71 billion
in total assets, $1.70 billion in total liabilities, and
$10.05 million in total stockholders' equity.
Weiss Ratings has assigned its E- rating to Bend, Ore.-based Bank
of The Cascades. The rating company says that the institution
currently demonstrates what it considers to be significant
weaknesses and has also failed some of the basic tests it uses to
identify fiscal stability. "Even in a favorable economic
environment," Weiss says, "it is our opinion that depositors or
creditors could incur significant risks."
The Company reported a net loss of $13.65 million on
$84.98 million of total interest and dividend income for the year
ended Dec. 31, 2010, compared with a net loss of $114.83 million
on $106.81 million of total interest and dividend income during
the prior year.
CIGNA CORPORATION: Continues to Defend Amara Pension Plan Suit
--------------------------------------------------------------
CIGNA Corporation continues to defend itself against a class
action lawsuit filed by Janice Amara related to its cash balance
pension plan, according to the Company's May 5, 2011, Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarterly period ended March 31, 2011.
On December 18, 2001, Janice Amara filed a class action lawsuit,
captioned Janice C. Amara, Gisela R. Broderick, Annette S. Glanz,
individually and on behalf of all others similarly situated v.
CIGNA Corporation and CIGNA Pension Plan, in the United States
District Court for the District of Connecticut against CIGNA
Corporation and the CIGNA Pension Plan on behalf of herself and
other similarly situated participants in the CIGNA Pension Plan
affected by the 1998 conversion to a cash balance formula. The
plaintiffs allege various ERISA violations including, among other
things, that the Plan's cash balance formula discriminates against
older employees; the conversion resulted in a wear away period
(during which the pre-conversion accrued benefit exceeded the
post-conversion benefit); and these conditions are not adequately
disclosed in the Plan.
In 2008, the court issued a decision finding in favor of CIGNA
Corporation and the CIGNA Pension Plan on the age discrimination
and wear away claims. However, the court found in favor of the
plaintiffs on many aspects of the disclosure claims and ordered an
enhanced level of benefits from the existing cash balance formula
for the majority of the class, requiring class members to receive
their frozen benefits under the pre-conversion CIGNA Pension Plan
and their accrued benefits under the post-conversion CIGNA Pension
Plan. The court also ordered, among other things, pre-judgment
and post-judgment interest. Both parties appealed the court's
decisions to the United States Court of Appeals for the Second
Circuit which issued a decision on October 6, 2009, affirming the
District Court's judgment and order on all issues. On January 4,
2010, the Company and the plaintiffs filed separate petitions for
a writ of certiorari to the United States Supreme Court. CIGNA's
petition was granted on June 28, 2010, and was argued on November
30, 2010. The United States Supreme Court held the plaintiffs'
petition for writ of certiorari and the Company expects it to be
disposed of when an opinion is issued. The implementation of the
judgment is currently stayed. The Company will continue to
vigorously defend itself in this case. As of March 31, 2011, the
Company is carrying a liability of $82 million pre-tax ($53
million after-tax), which principally reflects the Company's best
estimate of the liabilities related to the court order.
CIGNA CORPORATION: Defends "Karp" Gender Discrimination Suit
------------------------------------------------------------
CIGNA Corporation is defending itself against a class action
lawsuit filed by Bretta Karp alleging gender discrimination,
according to the Company's May 5, 2011, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarterly period
ended March 31, 2011.
On March 3, 2011, Bretta Karp filed a class action gender
discrimination lawsuit, captioned Bretta Karp on behalf of herself
individually and others similarly situated v. CIGNA Healthcare,
Inc., in the United States District Court for the District of
Massachusetts. The plaintiff alleges systemic discrimination
against females in compensation, promotions, training, and
performance evaluations in violation of Title VII of the Civil
Rights Act of 1964, as amended, and parallel Massachusetts law.
Plaintiff seeks monetary damages and various other forms of broad
programmatic relief, including injunctive relief, backpay, lost
benefits, and preferential rights to jobs. The Company denies the
allegations asserted in the litigation and will vigorously defend
itself in this case. Due to numerous uncertain and unpredictable
factors presented in this case, including the merits of the case
and the lack of any clear basis to determine the definition of a
class of claimants, it is not possible to estimate a range of loss
(if any) at this time.
CONTINENTAL RESOURCES: Discovery Commences in Royalty Fee Suit
--------------------------------------------------------------
Discovery has commenced in the class action lawsuit against
Continental Resources, Inc., over the Company's alleged improper
deduction of post-production costs from royalties, according to
the Company's May 5, 2011, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarterly period ended
March 31, 2011.
In November 2010, a putative class action was filed against the
Company alleging the Company improperly deducted post-production
costs from royalties paid to plaintiffs and other royalty interest
owners from crude oil and natural gas wells located in Oklahoma.
The plaintiffs seek recovery of compensatory damages, interest,
punitive damages and attorney fees on behalf of the putative
class. The Company has responded to the petition, denied the
allegations and raised a number of affirmative defenses. The
action is in very preliminary stages and discovery has recently
commenced. As such, the Company is not able to estimate what
impact, if any, the action will have on its financial condition,
results of operations or cash flows.
DEPUY ORTHOPAEDICS: Patients May File Suit Over Hip Implant Recall
------------------------------------------------------------------
A DePuy hip lawsuit may be an option for patients who were
implanted with the DePuy ASR XL Acetabular System or the ASR Hip
Resurfacing System, which were taken off the market in an August
2010 DePuy hip implant recall. A DePuy hip lawsuit would allow
patients who were experiencing problems with the devices the
opportunity to pursue compensation for medical bills, pain and
suffering and other damages resulting from their hip implant
complications. To find out if you may be able to participate in a
DePuy hip implant lawsuit, visit http://www.classaction.org/depuy-
asr-hip-implant.html and complete the free case evaluation form on
the right.
A DePuy hip lawsuit may be an option for ASR recipients in light
of the August 2010 DePuy hip recall. In the DePuy hip implant
recall, DePuy Orthopaedics voluntarily withdrew the ASR XL
Acetabular System and the ASR Hip Resurfacing System after data
revealed that more patients than expected experienced pain and
other symptoms which led to a second hip replacement procedure,
also known as a corrective surgery. According to data cited in
the DePuy hip recall, approximately 12% of patients with the ASR
resurfacing device and 13% of patients with the ASR total hip
replacement needed a revision surgery.
Due to the DePuy hip recall, patients who were implanted with the
recalled ASR devices may be able to participate in a DePuy hip
lawsuit. If you or a loved one experienced metal poisoning, hip
implant failure or other DePuy hip problems, visit Class
Action.org to find out if you have legal recourse. Those wishing
to file a DePuy hip lawsuit have a time limit for filing claims,
so do not hesitate in learning your legal rights today.
About Class Action.org
Class Action.org is dedicated to protecting consumers and
investors in class actions and complex litigation throughout the
United States. Class Action.org keeps consumers informed about
product alerts, recalls, and emerging litigation and helps them
take action against the manufacturers of defective products,
drugs, and medical devices. Information about consumer fraud
issues and environmental hazards is also available on the site.
Visit http://www.classaction.orgtoday for a no cost, no
obligation case evaluation and information about your consumer
rights.
EAST WEST BANK: Accused of Violating Los Angeles Rent Ordinance
----------------------------------------------------------------
Juana Rodriguez, individually and on behalf of others similarly
situated v. East West Bank, Case No. BC461405 (Calif. Super. Ct.,
Los Angeles Cty. May 11, 2011), accuses East West Bank of
employing illegal tactics to force tenants off their homes, in
violation the Los Angeles Rent Stabilization Ordinance.
Plaintiff Rodriguez says that East West Bank resorts to high
volume, "eviction mill" attorneys to handle the preparation and
service of eviction notice and the filing of a Judicial Council
form unlawful detainer lawsuit when it cannot force tenants to
vacate the Bank's foreclosed properties. Under general State law,
no reason is required for an eviction as long as the bank provides
the proper notice period.
This "evict and sell" business model, however, is not legal in the
city of Los Angeles, plaintiff alleges. Evictions must be
supported by "good cause," rather than at the owner's whim.
Moreover, landlords are required to pay tenants fixed relocation
assistance when they intend on taking the rental unit off the
market.
Some of the illegal tactics employed by banks, including East West
Bank, include peppering the tenants with illegal notices,
threatening the tenants to force them from their homes,
threatening to pursue eviction actions in order to force tenants
from their homes and employing eviction actions in violation of
LARSO to evict tenants from their homes. To further expedite the
vacating of the units, East West Bank generally refuses to
undertake the necessary repairs or cuts the tenant's utilities.
The plaintiff is represented by:
Daniel J. Bramzon, Esq.
R. Paul Katrinak, Esq.
BASTA, Inc.
2500 Wilshire Blvd., Suite 1111
Los Angeles, CA 90057
Telephone: (213) 736-5050
E-mail: dbramzon@bramzonlegal.com
Basta, Inc., is a California public benefit corporation and
federally registered non-profit organization that advocates for
tenants' rights and fights to eliminate substandard housing.
GREAT SOUTHERN: More Investors Expected to Join Class Action
------------------------------------------------------------
Elise Burgess, writing for Financial Standard, reports that
thousands of investors are anticipated to come forward in the
class action against failed agribusiness, Great Southern Managed
Investment Schemes.
Already some 2,000 investors are part of the case, which returns
to court on May 27 seeking further documents from the defendants.
The action is questioning the reasoning of loans that were issued
by Bendigo and Adelaide Bank, Javelin Asset Management and Great
Southern Finance for investors of Great Southern.
Additionally, investors who invested their own funds are seeking
damages.
Macpherson + Kelley Lawyers (M+K), which are representing
investors in the action, said they expect thousands more investors
to come forward to join the class action now that the case has
been approved to proceed.
Ron Willemsen, Esq., a principal in M+K, said having succeeded
with an "icebreaker" case where the Victorian Supreme Court
allowed the first case to proceed, the "opportunity for investors
to recoup their losses was now ripe."
The case is gaining momentum after, in a hearing held April 4,
former Great Southern directors, Peter Patrikeos and Jeffrey Mews
were asked by M+K to provide documents including internal Great
Southern communications.
HEARTLAND BANK: Faces Class Action Over Bait-and-Switch Scheme
--------------------------------------------------------------
Joe Harris at Courthouse News Service reports that Heartland Bank
lures customers with the promise of low interest rates on
commercial loans, makes them sign deceptive contracts and
ultimately charges more, according to a class action complaint
filed in St. Clair County Circuit Court.
Named plaintiff Westbrooke Properties says Heartland caught it in
a bait-and-switch scheme. The bank used confusing language to
hide the higher interest rates in loan documents.
While the concealed rate was neither usurious nor in excess of any
statutory ceiling, Westbrooke says it was simply was more than it
bargained for.
The company says, for example, that Heartland represented an
initial interest rate of 8.75% per annum, but instead charged an
interest rate of 8.8725% per annum.
"In enticing the plaintiff into consenting to the Bank's
preparation of their loan documents, the Bank concealed from the
plaintiff the material fact that it intended to insert boilerplate
language into the plaintiff's loan documents that the Bank would
later claim deprived the plaintiff of the benefit of their
bargained for annual per annum interest rate by entitling the Bank
to charge interest in excess of the parties' agreed upon fixed or
initial annual interest rate clearly stated in the plaintiff's
notes," the complaint states.
Westbrooke sued Heartland on behalf of all entities that took out
commercial loans with the bank between May 10, 2001, and May 10,
2011, who were charged a higher interest rate than the per annum
rate listed in the loan documents.
The class seeks damages and a ruling requiring Heartland to
recalculate the principal balance on current commercial loans in
which Heartland charged excess interest.
A copy of the Complaint in Westbrooke Properties, LLC v. Heartland
Bank, Case No. 11L235 (Ill. Cir. Ct., St. Clair Cty.), is
available at http://is.gd/sxmmyC
The Plaintiff is represented by:
Bernard Ysursa, Esq.
COOK, YSURSA ET AL.
12 W. Lincoln
Belleville, IL 62220
Telephone: (618) 235-3500
- and -
Pat Ducey, Esq.
LAW OFFICE OF PAT DUCEY
41 Oakbrooke
Troy, IL 62294
Telephone: (618) 514-6998
- and -
Thomas R. Ysursa, Esq.
BECKER, PAULSON ET AL.
511 West Main Street
Belleville, IL 62226
Telephone: (618) 235-0020
JP MORGAN CHASE: Sued for Violations of L.A.'s Rent Control Laws
----------------------------------------------------------------
Sergio Gonzalez, individually and on behalf of others similarly
situated v. JP Morgan Chase Bank, National Association, Case No.
BC461404 (Calif. Super. Ct., Los Angeles Cty. May 11, 2011),
accuses JP Morgan Chase of employing illegal tactics to force
tenants off their homes, in violation the Los Angeles Rent
Stabilization Ordinance.
Mr. Gonzalez says that JP Morgan Chase Bank resorts to high
volume, "eviction mill" attorneys to handle the preparation and
service of eviction notice and the filing of a Judicial Council
form unlawful detainer lawsuit when it cannot force tenants to
vacate the Bank's foreclosed properties. Under general State law,
no reason is required for an eviction as long as the bank provides
the proper notice period.
This "evict and sell" business model, however, is not legal in the
city of Los Angeles, plaintiff alleges. Evictions must be
supported by "good cause," rather than at the owner's whim.
Moreover, landlords are required to pay tenants fixed relocation
assistance when they intend on taking the rental unit off the
market.
Some of the illegal tactics employed by banks, including JP Morgan
Chase Bank, include peppering the tenants with illegal notices,
threatening the tenants to force them from their homes,
threatening to pursue eviction actions in order to force tenants
from their homes and employing eviction actions in violation of
LARSO to evict tenants from their homes. To further expedite the
vacating of the units, East West Bank generally refuses to
undertake the necessary repairs or cuts the tenant's utilities.
The plaintiff is represented by:
Daniel J. Bramzon, Esq.
R. Paul Katrinak, Esq.
BASTA, Inc.
2500 Wilshire Blvd., Suite 1111
Los Angeles, CA 90057
Telephone: (213) 736-5050
E-mail: dbramzon@bramzonlegal.com
Basta, Inc., is a California public benefit corporation and
federally registered non-profit organization that advocates for
tenants' rights and fights to eliminate substandard housing.
LAMINATION STATION: Sued for Sending Unsolicited Fax Ads
--------------------------------------------------------
Rodin Enterprises Inc. d/b/a Minuteman Press, individually and as
a representative of a class of similarly situated persons v.
Lamination Station, Inc., Case No. 2011-CH-17615 (Ill. Cir. Ct.,
Cook Cty. May 13, 2011), accuses Lamination Station of faxing
unsolicited fax advertisements, in violation of the federal
Telephone Consumer Protection Act, 47 USC Section 227.
Plaintiff is an Illinois resident with its principal place of
business located at 544B West Dundee Road, in Wheeling, Illinois.
Defendant Lamination Station is a Florida corporation with its
principal place of business located at 419 NE 3rd Street, Cape
Coral, Florida.
The Plaintiff is represented by:
Mitchell S. Chaban, Esq.
Kristen E. Hengtgen
LEVIN GINSBURG
180 North LaSalle Street, Suite 3200
Chicago, IL 60601-2800
Telephone: (312) 368-0100
Email: mchaban@lgattorneys.com
khengtgen@lgattorneys.com
LEGALZOOM: August 22 Trial Set for Class Action
-----------------------------------------------
Daniel Fisher, writing for Forbes' Full Disclosure, reports that
in 2008, Missouri residents Gerald T. Ardey and Chad M. Ferrell
decided to form a remodeling company. They paid an online service
called LegalZoom $249 to draw up the paperwork. By all accounts,
they have no complaints about the documents.
But Messrs. Ardley and Ferrell want money from LegalZoom anyway.
They have sued the Los Angeles provider of online legal documents
on behalf of themselves and every other LegalZoom customer in
Missouri for triple what they paid, under the theory the service
has engaged in the unauthorized practice of law.
Like most class actions, this is about the money. Specifically,
the treble damages and presumably rich fees available to the
lawyers who are really behind this case. But there's another
wrinkle to the LegalZoom litigation: By suing an automated
document-preparation firm, these lawyers are trying to protect
themselves from competition.
Forbes' Mr. Fisher has written about this before, most recently
after a Connecticut lawyer tried to shut down an online-referral
system that steered customers to competing attorneys. He lost,
but is still pursuing cases in other states.
The lawyers suing LegalZoom have made more headway. Last
December, they convinced U.S. District Judge Nanette K. Laughrey
to certify the case as a class action. It's set for trial on
Aug. 22. According to Timothy Van Ronzelen, Esq., lead attorney
for the plaintiffs, the issue is simple:
"What LegalZoom is doing in our state violates statute and common
law," says Mr. Van Ronzelen, who specializes in consumer class
actions. It doesn't matter whether his clients were harmed, he
says: "The statute says, if you paid money for this, by definition
of the law, you've been injured."
That line of reasoning bothers academics like Gillian Hadfield of
the University of Southern California Law School, who studies the
intersection of technology and the law. All 50 states have some
form of regulation prohibiting the unauthorized practice of law
but none specifies exactly what the term means, she says. Many
use phrases like "commonly understood" and "traditionally
performed" to describe what a lawyer does.
"The rules are impossibly vague," Ms. Hadfield says. Furthermore,
lawyers are in charge of determining who's competing against them
illegally. Remember, the legal profession is almost entirely
self-regulated: State supreme courts oversee their respective bar
associations, which generally enforce the rules through
disciplinary committees.
It's the kind of self-regulatory scheme that would draw the ire of
any consumer advocate as well as the Federal Trade Commission --
and indeed, the FTC sent a threatening letter to the American Bar
Association in 2002, opposing the ABA's proposed model definition
of the unauthorized practice of law. Among other things, it would
prohibit non-lawyers from "giving advice or counsel to persons as
to their legal rights or responsibilities," and "selecting,
drafting or completing legal documents or agreements that affect
the legal rights of a person."
"We urge the ABA not to adopt the current proposed Definition,
which, in our judgment, is overbroad and could restrain
competition between lawyers and nonlawyers to provide similar
services to American consumers. If adopted by state governments,
the proposed Definition is likely to raise costs for consumers and
limit their competitive choices."
Some states require lawyers to prepare real-estate closing
documents, for example. But Ms. Hadfield thinks a computer
program, tuned to identify errors and conflicts with state law,
probably could do a better job of identifying problematic mortgage
contracts than solo practitioners who also work on divorces, wills
and speeding tickets.
"I've got nothing against solo practitioners, but they're going to
make mistakes," says Ms. Hadfield.
The provider of an electronic service would likely be a
corporation with the resources and focus to specialize in certain
types of transactions. It would also be much easier to sue than a
lawyer, Ms. Hadfield says. Attorneys are protected by a unique
body of law that makes it more difficult and expensive to prove
them negligent than, say, a doctor.
The ABA and lawyers like Mr. Van Ronzalen maintain that
unauthorized practice of law rules are there to protect consumers.
But the FTC, in its 2002 letter, said there is "no evidence"
consumers are hurt by competition for legal services in areas such
as real estate transactions, wills and trusts, taxes, labor
regulations and investments.
The U.K. has dispensed with the idea of protecting consumers from
non-lawyers entirely. The nation never had an unauthorized
practice of law rule. In 2007, it took the lawyers out of the
business of regulating themselves, setting up a national
commission controlled by non-lawyers to oversee all entities that
provide legal services. Companies are free to combine with
solicitors to form new entities that automate legal processes or
provide more sophisticated and efficient solutions, Ms. Hadfield
says.
LegalZoom, like other legal-document providers including Intuit
and Lawdepot.com, generally use online forms to collect
information necessary to fill out wills, articles of incorporation
and other forms. In so doing, the software also can perform tasks
a lawyer might construe as being on her turf, such as determining
the proper document to comply with state laws or prompting the
consumer to consider appointing legal guardians for his children.
But LegalZoom's main sin may have been mounting a national
advertising campaign aimed at small-business owners on television
and the Howard Stern Show. No state bar associations have taken
action against LegalZoom. (A committee of the North Carolina bar
wrote a threatening letter to the firm several years ago but
hasn't followed up.) Private lawyers, however, have cost the firm
hundreds of thousands of dollars in legal fees (for tactical
reasons, LegalZoom executives won't disclose how much.)
"Because we're on TV, attorneys assume there are some deep pockets
and they try to find technicalities to go after us. We're
confident they haven't found any, but it doesn't stop them from
trying," said Ken Friedman, Vice President, Legal and Government
Affairs and Senior Counsel at LegalZoom.
Mr. Von Ronzalen doesn't dispute this. He's suing LegalZoom
because "they come on (the radio) and say, 'for $100 LegalZoom
will customize your will for you,'" he said. "I haven't heard
Intuit say that."
Both sides have filed motions to dismiss the case. Judge Laughrey
hasn't showed much sympathy for LegalZoom so far, rejecting the
company's request to prevent the case from becoming a class action
because, among other things, she said that would require thousands
of LegalZoom customers to file lawsuits on their own. Since even
the plaintiffs in this case can't find any errors in their
documents, the idea of a wave of similar litigation seems a little
far-fetched.
Judge Laughrey, a Clinton appointee who once taught at the
University of Missouri law school, isn't a fan of all class
actions. Last year, she rejected a class action on behalf of
drivers who paid $100 fines issued by a traffic-camera system
later found to be illegal. The stakes in this lawsuit over legal
documents that nobody alleges are defective must strike her as
being higher.
MYLIFE.COM INC: Accused of Violating False Advertising Law
-----------------------------------------------------------
Cynthia McCrary, on behalf of herself and others similarly
situated v. MyLife.com, Inc., et al., 11-cv-02353 (N.D. Calif.
May 12, 2011), accuses MyLife of sending false solicitations
telling potential victims that "someone" is searching for them, in
violation of the Unfair Competition Law, the Consumer Legal
Remedies Act, and the False Advertising Law. Consumers are, thus,
duped into paying for a service that ends up being completely
worthless.
Plaintiff Cynthia McCrary is a resident of San Bernardino County,
California. Defendant MyLife operates the website www.mylife.com
and is a Delaware corporation, registered with the California
Secretary of State to conduct business in California. MyLife's
principal place of business is in Los Angeles, California.
In early 2011, Ms. McCrary saw an ad stating that someone could be
looking for her on MyLife.com and she could find out who by
signing up for MyLife's services. She, therefore, signed up for
MyLife's services and paid $13 for one month, but in reality, no
one was looking for her. Plaintiff reasonably relied on MyLife's
advertisements and was harmed in signing up for MyLife.com's
services based on the false advertising that someone was
looking for her, when in fact that was not the case.
The Plaintiff is represented by:
Michael Louis Kelly, Esq.
Behram V. Parekh, Esq.
Heather M. Peterson, Esq.
KIRTLAND & PACKARD LLP
2361 Rosecrans Avenue, Fourth Floor
El Segundo, CA 90245
Telephone: (310) 536-1000
E-mail: mlk@KirtlandPackard.com
bvp@KirtlandPackard.com
hmp@KirtlandPackard.com
OKLAHOMA: Spent $4.2 Mil. on Attorneys for DHS Foster Care Suit
---------------------------------------------------------------
Ginnie Graham, writing for Tulsa World, reports that Oklahoma
taxpayers have spent about $4.2 million on attorneys since
April 2008 for the state Department of Human Services to defend a
class-action lawsuit alleging abusive conditions in the state's
foster-care system, records show.
The suit was filed in February 2008 in federal court in Tulsa by
Children's Rights. The New York-based nonprofit organization
accuses the state of placing foster children in danger because of
systemic deficiencies including too many cases per worker, not
enough home visits, multiple placements and not enough foster
parent training.
DHS is facing a shortfall in the next budget of about $39 million
and is considering cutting staffing levels and changing the
eligibility standard to receive child-care subsidies.
"It's unfortunate that funds have to be spent to defend the state
against unmerited claims," said DHS spokeswoman Sheree Powell in
an e-mailed statement. "As long as Children's Rights continues
making claims that lack merit, we must defend the state against
them."
A contract for outside legal counsel was signed by Director Howard
Hendrick in March 2008. It states DHS will be billed monthly with
attorneys receiving hourly rates ranging from $180 to $200 an
hour.
The DHS commission did not take a formal vote on hiring outside
counsel or seeking bids for the services, although it receives
periodic updates in executive session.
DHS has about three in-house attorneys from its legal division
assisting with the lawsuit, Ms. Powell said. When the lawsuit was
filed, the Oklahoma Attorney General's Office had 15 attorneys in
its litigation division, she said.
The agency cited a "lack of resources" and a need for "resources
available from a large firm with experienced counsel in this type
of major litigation" in a July 2008 application to the Oklahoma
Attorney General's Office for approval to hire outside attorneys.
Attorneys appearing on behalf of DHS in court have primarily been
Bob Nance, Esq., who has served as an assistant attorney general
and argued before the U.S. Supreme Court, and Don Bingham, Esq.,
of Tulsa.
Children's Rights founder and Executive Director Marcia Lowry has
represented her organization with assistance and attorneys also
appearing from about four other listed legal firms in the state
and internationally.
"Contentious litigation"
Invoices from the Tulsa-based Riggs, Abney, Neal, Turpen, Orbison
and Lewis law firm show expenditures for 22,502 hours of work for
about $3.94 million since March 2008. But "professional courtesy
discounts" of about $391,608 are included as a credit.
In addition, about $577,609 is listed as "other" expenses.
Ms. Powell said those costs include processing of more than 750
gigabytes of electronically stored information, producing more
than 5 million pages requested in discovery and retaining expert
consultants.
Two invoices from the Oklahoma City-based firm Crowe & Dunlevy
sent in January and February total about $48,593.
Ms. Powell said Crowe and Dunlevy is providing consultation and
advice and not duplicating services already being provided.
Between July and December 2009, invoices for copy shop services
total about $37,313, which was mostly for processing e-mail
exchanges between DHS workers.
In the past year, invoices have ranged from $68,700 in April 2010,
to $290,700 in February 2011, which is the highest monthly invoice
submitted to DHS so far.
Ms. Powell said DHS has concerns about settling under a consent
decree.
"History has shown that consent decrees entered by Children's
Rights in other states have cost each state hundreds of millions
of dollars and lasted for several decades," Ms. Powell said.
"These decrees simply shifted highly contentious litigation from
issues of liability to issues of compliance, contempt and federal
court receivership.
"Many states have been forced to enter into ill-considered consent
decrees, to the detriment of both taxpayers and the children in
their care, because they did not have the resources to defend
themselves or respond to overwhelming discovery requests."
"Step backward"
Since 2005, more than $47 million has been spent on private
attorneys and law firms performing services for Oklahoma agencies
and boards, according to reports filed with the Attorney General's
Office and in previous news reports.
DHS is among the top spenders, along with the Transportation
Department, Grand River Dam Authority and universities.
This concern led to the proposal of the Legal Services Reform Act,
House Bill 1223, which has passed the House and Senate and is
awaiting approval of amendments.
The bill would require agencies to go through a bidding process
after receiving approval from the attorney general. Also, all
outside attorney contracts would have to be placed on the agency's
Web site within four months.
At the close of each case, the attorneys would have to provide
details such as hours, fees and expenses, and an hourly rate
charge would be capped at $1,000.
Attorney General Scott Pruitt has said he appreciates the effort
to step up transparency but is concerned about exemptions to the
bill. A recently passed amendment would exempt higher education
institutions, which is not provided under current law.
In a press release, Mr. Pruitt said such an exemption would be a
"step backward" in keeping the public informed.
The class-action foster-care trial is expected to begin in
October.
PELLA CORP: Suit Over Defective Products Gets Class Certification
------------------------------------------------------------------
Ameet Sachdev, writing for Chicago Tribune, reports that class-
action lawsuits face stiff head winds in courts and the court of
public opinion.
But that doesn't stop class-action lawyers and judges from finding
creative ways to cut through the currents, as illustrated by a
federal case in Chicago that has survived layers of judicial
scrutiny.
The suit involves allegations of defective products sold by Pella
Corp., an Iowa-based manufacturer of windows and doors. Consumers
should take notice because their ability to challenge corporate
wrongdoing through class-action suits has been diminished by
recent court decisions. A U.S. Supreme Court ruling last month
allows businesses to ban class actions by using mandatory
arbitration clauses that are common in consumer contracts.
Unlike other lawsuits, class actions require a judge to formally
certify them before they can proceed. It is a tall hurdle in
consumer class actions because it's often difficult to find issues
or facts that are common to all buyers. In addition, consumer
cases can become unmanageable because of the vast number of
potential plaintiffs.
Federal appellate judges in Chicago also have rejected class
actions in which consumers have yet to suffer any injuries or
economic damages. The idea of compensating people who have no
loss seems unfair to many, not just judges.
But that is a big part of the Pella case. Dr. Leonard Saltzman
built a home in Lake Forest in 1995 that contained several Pella
ProLine casement windows. Ten years later he began to notice some
of the window frames were rotting. When he contacted Pella,
Dr. Saltzman was told that the windows were no longer under
warranty, he said in an interview.
He called his daughter, who's a lawyer at Chicago-based Freed &
Weiss, a firm that specializes in class actions, which filed a
suit on Dr. Saltzman's behalf in 2006. The complaint alleged that
ProLine windows had a design defect that permits water to seep
behind the aluminum cladding and cause wood to rot sooner than it
should. The suit also charged that Pella committed consumer fraud
by concealing the problem.
Pella denies the allegations. "We believe the ProLine casement
product is strong, has performed well and that this lawsuit is
without merit," said company spokeswoman Kathy Krafka Harkema.
The company said in court papers that only 3.46% of the windows as
old as Dr. Saltzman's have had claims that are potentially related
to wood rot after 10 years in service. Pella sold about 6 million
ProLine windows nationwide between 1991 and 2009, according to its
court documents.
George Lang, Esq., one of Dr. Saltzman's attorneys, said he wants
to protect buyers like Dr. Saltzman who have paid thousands of
dollars to replace rotting window frames, as well as buyers who
might replace windows in the future because of the alleged design
flaw. About 350 consumers contacted the firm complaining of the
same wood rot problems after the suit was filed. That number has
since passed 1,250, Mr. Lang said.
He came up with a novel solution that persuaded U.S. District
Judge James Zagel. He separated the window buyers into two
classes: Consumers like Dr. Saltzman who have suffered economic
loss, and a larger, nationwide group of those who haven't. But
instead of seeking compensation for the latter class, he asked the
judge to void Pella's 10-year warranty, pay for window inspections
and other "declaratory" relief. The latter class would be allowed
to file individual claims with Pella once rot was detected.
"This is an interesting twist in consumer fraud cases," said
Sheila Scheuerman, an associate law professor at the Charleston
School of Law who specializes in class actions. "Courts have been
fairly hostile to classes where there are no injuries. But
litigation always evolves to adapt to restrictions."
Judge Zagel certified the classes to determine a common but narrow
issue: whether the windows had an inherent defect leading to wood
rot. Pella had argued that wood could rot for many reasons, such
as improper installation.
The company appealed the judge's decision to the federal appellate
court in Chicago, betting it would prevail because the court had
previously reversed certification in other consumer fraud cases.
Pella lost.
"While consumer fraud class actions present problems that courts
must carefully consider before granting certification, there is
not and should not be a rule that they never can be certified,"
the three-judge panel wrote in May 2010.
Pella later asked the U.S. Supreme Court to review certification,
but the court declined, allowing the case to proceed to the
evidence-gathering phase.
"There have been very few window cases that have been certified,"
Mr. Lang said. "It's a product that has enjoyed little scrutiny."
PEPSI BEVERAGES: Sued in Pa. Over Failure to Pay Overtime
---------------------------------------------------------
Courthouse News Service reports that Pepsi failed to pay overtime
to current and former merchandisers at the McKees Rocks, Pa.,
plant, according to a federal class action.
A copy of the Complaint in Thieret, et al. v. Pepsi Beverages
Company, Case No. 05-mc-02025 (W.D. Pa.), is available at:
http://www.courthousenews.com/2011/05/16/pepsi.pdf
The Plaintiffs are represented by:
Ernest B. Orsatti, Esq.
JUBELIRER, PASS & INTRIERI, P.C.
219 Fort Pitt Boulevard
Pittsburgh, PA
Telephone: 412-281-3850
E-mail: ebo@jpilaw.com
ROBERT P. BREMNER: Accused of Breach of Fiduciary Duty
------------------------------------------------------
Western Investment Hedged Partners L.P., individually, and on
behalf of others similarly situated v. Robert P. Bremner, et al.,
Case No. 2011-CH-17698 (Ill. Cir. Ct., Cook Cty. May 13, 2011), is
brought on behalf of the former shareholders of four publicly-
traded funds against (1) the nine trustees of all four funds for
breach of fiduciary duty; and (2) the investment adviser to all
four funds, for aiding and abetting the trustees' breach of
fiduciary duty.
Plaintiff relates that when the trustees -- who sit on multiple
boards within the investment adviser's family of funds -- decided
to discontinue the operation of the four funds, they chose to do
so in a manner which deprived fund shareholders of more than
$58 million in order to financially benefit the investment
adviser.
The publicly-traded funds are: (1) Nuveen Insured Florida Premium
Income Municipal Fund (NFL), (2) Nuveen Florida Investment Quality
Municipal Fund (NQF), (3) Nuveen Florida Quality Income Municipal
Fund (NUF), and (4) Nuveen Insured Florida Tax-Free Advantage
Municipal Fund (NWF). At all relevant times prior to the mergers,
each of the four Florida Nuveen Funds was a Massachusetts business
trust and closed-end management investment company managed and
advised by defendant Nuveen Fund Advisers, Inc. (fka Nuveen Asset
Management) (NAM), a registered investment advisor and wholly owed
subsidiary of Nuveen Investments, Inc. The Florida Nuveen Funds
were formed to allow investors to buy mutual fund shares which
reflect the value and tax attributes of a portfolio of Florida
tax-exempt bonds.
One of the principal attractions of the Florida Nuveen Funds was a
mechanism for Florida residents to own investments which would be
exempt form Florida's Intangibles Tax. The Florida Nuveen Funds'
portfolios, therefore, consisted principally of publicly traded
Florida tax-exempt government obligations.
Plaintiff says the Trustees breached their fiduciary duties by
adopting and recommending to stockholders in the Florida Nuveen
Funds that they approve the merger of the four Florida Nuveen
Funds into three Nuveen national municipal bond closed-end funds
(together, the "Nuveen Acquiring Funds"), also managed by NAM, and
for which the nine defendant Trustees also served as directors.
The terms of the merger served NAM's financial interests, but not
the interests of public sharfeholders of the Florida Nuveen Funds
in receiving the highest available value for their shares.
Plaintiff WIHP, a Delaware limited partnership was a shareholder
of each of the Florida Nuveen Funds.
Defendant Robert P. Bremer was from 1996, through the completion
of the Mergers, a Trustee of the Florida Nuveen Funds, the Nuveen
Acquiring Funds and all other Nuveen-sponsored funds. Since 2008,
Mr. Bremner has served as Chairman of the Board of Trustees for
all Nuveen-sponsored funds, including the Florida Nuveen Fund and
the Nuveen Acquiring Funds. Mr. Bremner also serves as a director
of the board of NAM's parent company, Nuveen.
The Plaintiff is represented by:
Elizabeth A. Fegan, Esq.
Timothy P. Mahoney, Esq.
Daniel J. Kurowski, Esq.
HAGENS BERMAN SOBOL SHAPIRO LLP
1144 West Lake Street, Suite 400
Oak Park, IL 60301
Telephone: (708) 628-4949
E-mail: beth@hbsslaw.com
timm@hbsslaw.com
dank@hbsslaw.com
- and -
Richard W. Cohen, Esq.
David C. Harrison, Esq.
LOWEY DANNENBERG COHEN & HART, P.C.
White Plains, NY 10601-2310
Telephone: (914) 997-0500
E-mail: rcohen@lowey.com
dharrison@lowey.com
SABER SEVEN: D&Os Sued Over Amendment to Corporate Bylaws
----------------------------------------------------------
Jonathan Lehmann, on behalf of himself and others similarly
situated v. Saber Seven, Inc., et al., Case No. 105661/2011 (N.Y.
Sup. Ct., New York Cty. May 13, 2011), is a stockholder class
action brought by plaintiff on behalf of the holders of Saber
Seven, Inc. stock against Saber Seven and certain of Saber Seven
officers and directors arising out of defendants' breach of their
fiduciary duties, both collectively and individually.
According to the Complaint, Saber Seven and its directors and
officers intentionally withheld material information from
stockholders, provided misinformation to stockholders in order to
obtain approval to amend the bylaws which otherwise would not have
been approved, and pursued personal interests with money invested
by shareholders.
According to the Complaint, under Section 7(b) of the Stockholders
Agreement, provision is made for removal of directors by the
stockholders (and no one else). On March 16, 2010, defendant Will
Burrington, a Board director, circulated to stockholders an
amendment to the Stockholders Agreement that deleted Section 7 in
its entirety, while replacing it with language giving the Board
(not just stockholders) power to remove a director the company.
The Board falsely claimed the stockholders approved the change,
but no actual confirmed data regarding the vote has ever been
revealed and a legitimate vote seems technically impossible.
Plaintiff Jonathan Pruett Lehmann is a resident of the City,
County, and State of New York. He individually controls the
Equity Trust Custodian FBO Jonathan Lehmann IRA, which holds
shares in Saber Seven, and also is a shareholder of Saber Seven.
Defendant, Saber Seven is a Nevada corporation, incorporated on
Oct. 12, 2007, with its principal place of business at 54 Stone
Street, New York, New York.
Mr. Burrington resides in Fort Lauderdale, Florida, and is a part
of the senior management of Saber Seven and a director on the
Board of Saber Seven.
The Plaintiff is represented by:
Walker G. Harman, Jr., Esq.
THE HARMAN FIRM, P.C.
200 West 57th Street, Suite 900
New York, NY 10019
Telephone: (212) 425-2600
E-mail: wharman@theharmanfirm.com
SONY COMPUTER: Faces 15th Suit Over Private Data Breach
-------------------------------------------------------
James M. Campo, individually and on behalf of others similarly
situated v. Sony Computer Entertainment America LLC, et al., Case
No. 11-cv-02337 (N.D. Calif. May 11, 2011), is brought on behalf
of all persons or entities in the United States that subscribed to
the PlayStation Network or Qriocity service, and suffered a
disruption of service or breach of security beginning on or about
April 17, 2011. Specifically, Mr. Campo accuses Sony of failing
to protect or safeguard the personal, private, non-public,
financial, and sensitive information of the plaintiff and the
class members he seeks to represent.
The plaintiff relates that between April 17 and April 19, 2011,
defendants became aware of a system-wide security breach of the
PSN. However, it was not until April 26, 2011, that defendants
finally began to notify users that their Confidential Information
had been compromised or "hacked." Additionally, on May 3, 2011,
Sony reported "that data including names, addresses, and login and
password details attached to 24.6 million accounts for its Sony
Online Entertainment computer gaming service may have been stolen,
as well as information from an 'outdated' 2007 database --
including 12,700 non-United States credit or debit card numbers
and expiry dates, but not credit-card security codes."
Mr. Campo is a resident of Queens County, State of New York.
Plaintiff subscribed to the PlayStation Network or Qriocity
service, and suffered a disruption of service and a breach of
security beginning on or about April 17, 2011.
Defendant Sony Computer Entertainment America LLC (f/k/a Sony
Computer Entertainment America Inc.) ("SCEA") is a Delaware
limited liability company with its executive offices and principal
place of business and corporate headquarters in Foster City,
California. Founded in 1994, SCEA is a wholly owned subsidiary of
Sony Computer Entertainment Inc.
Defendant Sony Network Entertainment International LLC ("SNEI") is
a Delaware limited liability company with its executive offices
and principal place of business and corporate headquarters in Los
Angeles, California.
The Plaintiff is represented by:
Jennie Lee Anderson, Esq.
ANDRUS ANDERSON LLP
155 Montgomery Street, Suite 900
San Francisco, CA 94104
Telephone: (415) 986-1400
E-mail: jennie@andrusanderson.com
- and -
Jonathan M. Stein, Esq.
LAW OFFICE OF JONATHAN M. STEIN, P.L.
120 East Palmetto Park Road, Suite 420
Boca Raton, FL 33432
Telephone: (561) 961-2244
E-mail: jstein@jonathansteinlaw.com
SOUTH AFRICA: Home Affairs May Face Class Action
------------------------------------------------
Chandre Prince, writing for Times LIVE, reports that wide-scale
bureaucratic bungling and tardy permit processing by Department of
Home Affairs officials could result in another class-action
lawsuit by highly skilled foreign workers.
Barely four months after its first class-action suit against the
department, a Cape Town law firm is again preparing to represent,
among others, a digital media expert, an executive business coach,
a social development and health economist, and a businessman, all
of whom want to work in this country but cannot get a permit.
Highlighting his frustrations at the way in which Home Affairs
dealt with his first class-action suit, attorney Gary Eisenberg,
Esq., last week submitted supplementary affidavits, warning the
department to prepare itself for hundreds more similar litigants.
In February, Mr. Eisenberg made an urgent application to the Cape
Town High Court asking that it order the department to finalize
425 applications for temporary residence permits, some lodged more
than a year before.
Since then, the department had "finalized" only 203 of the 425
applications, Mr. Eisenberg said. But some of the purportedly
finalized applications contain errors. And some of the
applications said to have been approved had in reality been
rejected.
Mr. Eisenberg said his clients could not rely on the department
because it did not honor its promises and some of his clients had
incurred huge losses.
In March, Home Affairs director-general, Mkuseli Apleni, claimed
that the permits backlog had been cleared.
But Mr. Eisenberg said the applicants were "at the end of their
tether and are not going to continue with the never-ending
roundabout of promises and postponements that thus far have
constituted negotiations with Home Affairs".
Mr. Eisenberg said the "kind of arbitrary, negligent and
incompetent organization by Home Affairs violated" his clients'
rights.
Two of his clients from the first class lawsuit -- US professor
Brian Ganson and British billionaire Colin Slessor -- got their
permits only after The Times published their stories in February.
Mr. Slessor spent ZAR4-million on a game farm near Montague, in
Western Cape, in 2009, and a further ZAR600,000 renovating it with
the intention of starting a tourist resort.
At the time, he said: "Not only am I bringing substantial funds
into the country, but my business will employ South Africans and
stimulate the tourism sector".
Mr. Eisenberg said it was "evident" that his clients' applications
had not received adequate attention.
"I am forced to conclude that the promises made to me were
complete and utter lies, made simply in a attempt to get rid of
me. This goes against all the values of our government and of the
constitution."
Home Affairs' director of litigation, Kabelo Mogotsi, said he had
not read Mr. Eisenberg's affidavit but "his allegations have been
noted and we wish to place it on record that all applications
received from Eisenberg have been considered and finalized".
Home Affairs has three weeks to respond to the affidavit in which
Mr. Eisenberg asks the court to compel it to finalize the
remaining cases.
The new list of possible litigants will include 175 foreigners.
STATE STREET: SEC Probes Into Forex Practices Amid Class Actions
----------------------------------------------------------------
Michael Giardina, writing for Mandate Pipeline, reports that in a
recent filing, State Street, the Boston, Mass.-based institutional
investor services firm, revealed that the Securities and Exchange
Commission (SEC) and other federal authorities have inquired about
its past foreign exchange practices.
On May 9, the firm with more than $22.6 trillion in assets under
custody, and more than $2.1 trillion under its management wing,
said in the SEC filing that state Attorney General's office, "the
U.S. Attorney's offices, the SEC and other regulators, have made
inquiries or issued subpoenas concerning our foreign exchange
pricing."
The investment bank stated it was also "responding to information
requests from other clients with respect to our foreign exchange
services" as well.
Also, State Street listed the fact that two clients filed suit in
February in Boston, including a punitive class action that the
firm executed foreign currency trades that "constituted an unfair
and deceptive practice and a breach of the duty of loyalty."
Additionally, three other "shareholder-related class action
complaints" are pending in Boston federal court, the firm said.
The Commonwealth City financial institution referenced a prior
filing from the California Attorney General's office, which is
seeking $56 million in actual damages, as well as additional
penalties, for the period between 2001 and 2007.
Previously, in October 2009, California Attorney General and
present Governor Jerry Brown filed a lawsuit against State Street
Bank and Trust for allegedly overcharging its retirement plans in
similar transactions over an eight-year span.
At the time, Mr. Brown said that the California Public Employees'
Retirement System (CalPERS) and the California State Teachers'
Retirement System (CalSTRS), was seeking to recover more than $200
million from the "secret . . . substantial mark-up" to the price
for interbank foreign currency trades.
Additionally, as of late, the Arkansas Teachers Retirement System
(ATRS) filed its complaint on Feb. 10 seeking that the plaintiff
and the class "be awarded all costs and expenses of this action,
including attorneys' fees" from the bank. ATRS noted that since
2001, State Street has "been responsible for executing the
purchase, sale and pricing of FX contracts for the accounts of
ARTRS" as its custodial bank.
"Until recently, FX trading has been an often ignored and murky
process that lacked the transparency and clarity," Little Rock-
based ATRS said on its Web site. ATRS has instituted litigation
against its custodial bank claiming that ATRS is entitled to money
due to FX trading.
Alternately, Reuters has reported that Massachusetts Secretary of
State William Galvin and his office have pursued an "inquiry" into
State Street's transactions.
While the firm lists that it paid out $12 million in an October
2010 settlement with the State of Washington, which resolved a
"dispute" regarding its foreign pricing over a 10-year period,
further information regarding the other parties was unavailable.
As a response, Alicia Curran, firm spokesperson, said in an e-mail
that State Street "will cooperate fully with the SEC in its
inquiry and we stand behind our business practices and will
continue to defend ourselves against any allegations of wrong
doing."
Also, Ms. Curran added that with regards to the California and
Arkansas complaints, the firm said that it intends to "vigorously
defend the allegations made recently by an Arkansas fund and the
California claims concerning our FX business."
SUSQUEHANNA BANCSHARES: Reaches MOU in Merger-Related Class Suit
----------------------------------------------------------------
Susquehanna Bancshares, Inc., reached a memorandum of
understanding with the plaintiffs of a class action lawsuit over
the Company's plan to acquire Abington Bancorp, Inc., according to
the Company's May 5, 2011, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarterly period ended
March 31, 2011.
On January 26, 2011, Susquehanna announced the signing of a
definitive agreement under which Susquehanna will acquire all
outstanding shares of common stock of Abington Bancorp, Inc., in a
stock-for-stock transaction. The transaction, with an approximate
total value of $268,000, is expected to be completed in the third
quarter of 2011. Under the terms of the agreement, Abington
shareholders will receive 1.32 shares of Susquehanna common stock
for each share of Abington common stock. The locations of
Abington's bank branches provide a natural extension of
Susquehanna's network in the greater Philadelphia area. The
boards of directors of both Susquehanna and Abington have approved
the transaction. Completion of the transaction is subject to
customary closing conditions, including regulatory approvals and
the approval of shareholders of both companies.
On March 17, 2011, a putative class action lawsuit was filed in
the Court of Common Pleas, Montgomery County, Pennsylvania,
against the directors of Abington and Susquehanna, RSD Capital vs.
Robert W. White, et al., C.A. No. 2011-06590. The lawsuit in
Montgomery County alleged that the named Abington directors, in
approving the Merger Agreement, tortiously interfered with a
contractual relationship between Abington and its shareholders and
interfered with a prospective economic advantage of the Abington
shareholders. The Complaint also purported to allege that
Susquehanna also tortiously interfered with the same contract and
alleged prospective economic advantage. Plaintiffs in the
Montgomery County lawsuit, among other things, requested an
unspecified amount of monetary damages as well as a temporary
restraining order with respect to consummation of the merger. The
defendants filed Preliminary Objection seeking the dismissal of
the complaint. On April 13, 2011, the court sustained defendants'
Preliminary Objections to the complaint, and entered an order
dismissing the action against all defendants with prejudice. The
period for Plaintiff to appeal the court's order has not yet
expired.
On March 25, 2011, a putative class action lawsuit was filed by
separate plaintiffs in the Court of Common Pleas, Philadelphia
County, Pennsylvania, against Abington, Abington's directors
(other than Jack J. Sandoski) and Susquehanna, Exum, et al. vs.
Robert W. White, et al., C.A. No. 110302814. These Plaintiffs had
previously made a demand on Abington's Board of Directors to
initiate suit on behalf of Abington and the demand was denied by a
committee of Abington's Board of Directors. The lawsuit in
Philadelphia County, which was also brought as a shareholders'
derivative suit on behalf of Abington, alleged, among other
things, that the Abington Board of Directors breached its
fiduciary duties in connection with its approval of the Merger
Agreement in that the consideration offered to Abington's
shareholders in the Merger was alleged to be inadequate and the
process used to negotiate the Merger Agreement was alleged to be
unfair, and that such breaches of fiduciary duty were exacerbated
by preclusive transaction protection devices. The lawsuit also
alleged that the disclosure provided in the joint proxy
statement/prospectus of Susquehanna and Abington, dated March 18,
2011, and included in the registration statement on Form S-4 filed
by Susquehanna with the Securities and Exchange Commission (File
No. 333-172626), failed to provide required material information
necessary for Abington's shareholders to make a fully informed
decision concerning the Merger Agreement and the transactions
contemplated thereby. The Philadelphia County complaint also
alleged that Susquehanna aided and abetted the Abington Board of
Directors in breaching its fiduciary duties. The plaintiffs in
Philadelphia County requested, among other things, an unspecified
amount of monetary damages and injunctive relief.
On April 12, 2011, the Plaintiffs in the Philadelphia County
lawsuit filed a Stipulation of Dismissal to dismiss Susquehanna
from the action. On April 25, 2011, solely to avoid the costs,
risks and uncertainties inherent in litigation and without
admitting any of the allegations in the Complaint, Abington and
the other named defendants entered into a Memorandum of
Understanding with the plaintiffs in the Philadelphia County
lawsuit. Susquehanna was also a party to the MOU. Under the
terms of the MOU, Abington, the other named defendants,
Susquehanna and the plaintiffs have agreed to settle the lawsuit
subject to court approval. If the court approves the settlement
contemplated in the memorandum, the lawsuit will be dismissed with
prejudice. In connection with the settlement, plaintiffs intend
to seek an award of attorneys' fees and expenses not to exceed
$250,000 subject to court approval, and Abington has agreed not to
oppose plaintiffs' application. The amount of the fee award to
class counsel will ultimately be determined by the Court. This
payment will not affect the amount of merger consideration to be
paid in the merger. If the settlement is finally approved by the
court, it is anticipated that it will resolve and release all
claims in all actions that were or could have been brought
challenging any aspect of the Merger, the Merger Agreement, and
any disclosure made in connection therewith. There can be no
assurance that the parties will ultimately enter into a
stipulation of settlement or that the court will approve the
settlement even if the parties were to enter into such
stipulation. In such event, the proposed settlement as
contemplated by the memorandum of understanding may be terminated.
The Company said "the settlement will not affect the timing of the
Annual Meeting of Shareholders of Susquehanna" that was scheduled
for May 6, 2011, to vote upon, among other things, a proposal to
adopt the Merger Agreement.
THE ST. JOE CO: Awaits Ruling on Motion to Dismiss "Meyer" Suit
---------------------------------------------------------------
The St. Joe Company is awaiting a court ruling on its motion to
dismiss a consolidated securities class action lawsuit pending in
Florida, according to the Company's May 5, 2011, Form 10-Q filing
with the U.S. Securities and Exchange Commission for the quarterly
period ended March 31, 2011.
On November 3, 2010, and December 7, 2010, two securities class
action complaints were filed against the Company and certain of
its current and former officers and directors in the Northern
District of Florida. These cases have been consolidated in the
U.S. District Court for the Northern District of Florida and are
captioned as Meyer v. The St. Joe Company et al. (No. 5:11-cv-
00027). A consolidated class action complaint was filed in the
case on February 24, 2011.
The complaint was filed on behalf of persons who purchased the
Company's securities between February 19, 2008, and October 12,
2010, and alleges that the Company and certain of its current and
former officers and directors, among others, violated the
Securities Act of 1933 and the Securities Exchange Act of 1934 by
making false and/or misleading statements and/or by failing to
disclose that, as the Florida real estate market was in decline,
the Company failed to take adequate and required impairments and
accounting write-downs on many of the Company's Florida-based
properties and as a result, the Company's financial statements
materially overvalued the Company's property developments. The
plaintiff also alleges that the Company's financial statements
were not prepared in accordance with Generally Accepted Accounting
Principles, and that the Company lacked adequate internal and
financial controls, and as a result of the foregoing, the
Company's financial statements were materially false and
misleading. The complaint seeks an unspecified amount in damages.
On April 5, 2011, at the request of the plaintiff, the court
dismissed the claims under the Securities Act of 1933 and
dismissed the current and former director defendants from the
case.
The Company believes that it has meritorious defenses to the
plaintiff's remaining claims and intends to defend the action
vigorously. The Company filed a motion to dismiss the case on
April 6, 2011.
WAL-MART STORES: Joseph Sellers Discusses Discrimination Suit
-------------------------------------------------------------
June Wu, writing for Harvard Law School, reports that Joseph M.
Sellers, Esq., head of the Civil Rights and Employment practice
group at Cohen Milstein, shared his experience working on Dukes v.
Wal-Mart Stores, the largest civil rights class action suit in the
United States.
Mr. Sellers, who is representing a class of more than 1.5 million
female employees at Wal-Mart stores in an ongoing sexual
discrimination lawsuit, detailed the progress of the case and
fielded questions from Harvard Law School students at the talk,
hosted by the Harvard Women's Law Association on April 19, 2011.
The Supreme Court heard oral argument in the case in March, and
Sellers said he believes the justices will need to be convinced
that Wal-Mart's corporate culture is responsible for gender
discrimination in the company's personnel practices.
"There were questions during the argument about how you convey
bias in the workplace, particularly gender bias," Mr. Sellers
said. "They asked, how can you assure us the managers were
influenced in some way by the corporate culture?"
Wal-Mart is alleged to have discriminated against women in
promotions, pay, and job assignments in violation of the Civil
Rights Act of 1964. The case was brought forward in 2000 when a
54-year-old Wal-Mart employee in California named Betty Dukes
filed a sex discrimination claim, alleging that she was denied the
training she needed to advance to a higher paying position despite
six years of employment and excellent performance reviews.
"Gender stereotypes are not unlawful-everybody uses stereotypes,"
Mr. Sellers said. "What makes it unlawful is managers making
decisions based on those stereotypes, and women are consistently
underpaid and promoted more slowly than men with the same
qualifications.
Mr. Sellers said his firm investigated the claims and interviewed
female Wal-Mart employees across the country for about a year
before taking on the case.
"We learned through remarkably similar accounts by many women who
reported that when they asked about pay raises, they were told
such things as men are better managers, women are better off
staying home and taking care of the family, men see their jobs as
a career, and women are here as a hobby," Mr. Sellers said.
The firm found statistically significant disparities between male
and female employee salaries across the country at every level.
Additionally, women took twice as long as men to reach manager
status.
"Our contention is the company expects managers to follow the
corporate culture that includes gender stereotypes, so the
managers often exercise discretion consistent with those
stereotypes, making women worse off than similarly qualified men."
Mr. Sellers joined Cohen Milstein Sellers & Toll PLLC in 1997 and
has represented victims of discrimination and other illegal
employment practices individually and through class actions,
including Beck. v. Boeing Company, which included a class of more
than 28,000 women employees at Boeing facilities in Washington
state alleging sex discrimination in pay and overtime decisions
and Conway, et al. v. Deutsch, which included a class of all
female undercover case officers at the CIA alleging sex
discrimination in promotions and job assignments.
Mr. Sellers has also testified more than 20 times before
committees of the United States Senate and House of
Representatives on various civil rights and employment issues and
worked on the passage of the Civil Rights Act of 1991, the
Americans with Disabilities Act of 1990, and the Lily Ledbetter
Fair Pay Restoration Act of 2009. He served on the Clinton/Gore
Transition Team in 1992 and 1993.
Mr. Sellers received a J.D. from Case Western Reserve School of
Law in 1979 and a B.A. in American History and Literature from
Brown University in 1975.
WARNER MUSIC: Faces Shareholder Class Action in Delaware
--------------------------------------------------------
Courthouse News Service reports that Warner Music Group
undervalued itself in a $3.3 billion sale to Access Industries,
shareholders claim in a federal class action.
A copy of the Complaint in Varipapa v. Warner Music Group Corp.,
et al., Case No. 6478 (Del. Ch. Ct.), is available at:
http://www.courthousenews.com/2011/05/16/wmg.pdf
The Plaintiff is represented by:
Joseph A. Rosenthal, Esq.
ROSENTHAL, MONHAIT & GODDESS, P.A.
919 N. Market Street, Suite 1401
P.O. Box 1070
Wilmington, DE 19899
Telephone: (302) 656-4433
E-mail: rmgg@rmgglaw.com
- and -
Samuel H. Rudman, Esq.
David A. Rosenfeld, Esq.
Mark S. Reich, Esq.
Carolina C. Torres, Esq.
ROBBINS GELLER RUDMAN & DOWD LLP
58 South Service Road, Suite 200
Melville, NY 11747
Telephone: (631) 367-7100
E-mail: SRudman@rgrdlaw.com
DRosenfeld@rgrdlaw.com
mreich@rgrdlaw.com
ctorres@rgrdlaw.com
- and -
Brian Murray, Esq.
MURRAY, FRANK & SAILER LLP
275 Madison Avenue, Suite 801
New York, NY 10016
Telephone: 212/682-1818
E-mail: bmurray@murrayfrank.com
* RATING AGENCIES: 2nd Cir. Junks Securities Fraud Class Actions
----------------------------------------------------------------
Adam Klasfeld at Courthouse News Service reports that the United
States Court of Appeals for the Second Circuit axed three class
action securities fraud complaints against the rating agencies
Moody's Investors Service, Standard & Poor's and Fitch Ratings,
finding that the AAA ratings the agencies assigned to risky
mortgage-backed securities just before the financial crisis were
merely expert opinions, rather than acts of underwriting.
In a unanimous decision, the three-judge panel upheld the
dismissal of class action complaints filed by a group of unions,
the Wyoming Retirement System and a holding company, Vaszurele
Limited, agreeing with District Judge Lewis Kaplan that the rating
agencies were not underwriters and had no actual control over the
ultimate ratings banks assigned to securities.
"Because these three appeals raise common questions of law, we
dispose of them in a single opinion, Circuit Judge Reena Raggi
wrote in a 42-page decision.
The plaintiffs claimed that the agencies served as underwriters,
structuring securities in misleading ways and caving to market
pressure by banks that awarded their business to the rating agency
that issued the highest number of the AAA ratings denoting the
safest investments.
But Judge Raggi wrote that the Securities Exchange Act "limits
liability to persons who participate in the purchase, offer, or
sale of securities for distribution. While such participation may
be indirect as well as direct, the statute does not reach further
to identify as underwriters persons who provide services that
facilitate a securities offering, but who do not themselves
participate in the statutorily specified distribution-related
activities."
The judge said that the Securities Exchange Act excluded "a number
of persons necessary to the creation of securities, such as banks
that originated the underlying loans, traders who structured the
transactions or experts who did not consent to being named."
Expanding liability under the law would "render these narrowly
drawn categories meaningless," Judge Raggi wrote.
The judge also rejected the claim that the agencies acted as
underwriters, writing that the agencies are "classically evaluated
under the 'expert' provision" of the statute.
"The rating issued by a Rating Agency speaks merely to the
Agency's opinion of the creditworthiness of a particular
security," Judge Raggi wrote. "Indeed, each offering document
explained that the assigned credit rating was 'not a
recommendation to buy, sell or hold securities and may be subject
to revision or withdrawal at any time.'"
And Judge Raggi said there was no evidence that the agencies were
in control of the ratings actually assigned to securities.
"Providing advice that the banks chose to follow does not suggest
control," Judge Raggi wrote.
Nor did the agencies have a voice in the banks' policies,
according to the opinion. The classes' claims "do not support any
inference that the rating agencies had the power to direct the
primary violators' policies," Judge Raggi wrote.
The judge maintained that the dismissal will not shield ratings
agencies from all securities fraud allegations.
"Contrary to plaintiffs' assertion, this conclusion will not
absolve rating agencies of all liability for their roles in
fraudulent securities offerings," the decision states. "As
plaintiffs acknowledged at oral argument, they may bring
securities fraud claims against the Rating Agencies pursuant to
Sec. 10(b) of the Securities Exchange Act of 1934."
A copy of the decision in In re Lehman Bros. Mortg.-Backed
Sec. Litig, et. al., Case No. 10-cv-00712; Wyo. State Treasurer v.
Moody's Investors Serv., Inc., Case No. 10-cv-00898; Vaszurele
Ltd. v. Moody's Investors Serv., Inc., Case No. 10-cv-01288; is
available at:
http://www.courthousenews.com/2011/05/16/Moodys.pdf
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Leah
Felisilda, Noemi Irene A. Adala, Rousel Elaine Fernandez, Joy A.
Agravante, Ronald Sy, Julie Anne Lopez, Christopher Patalinghug,
Frauline Abangan and Peter A. Chapman, Editors.
Copyright 2011. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The CAR subscription rate is $575 for six months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
* * * End of Transmission * * *