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/raid1/www/Hosts/bankrupt/CAR_Public/110915.mbx C L A S S A C T I O N R E P O R T E R Thursday, September 15, 2011, Vol. 13, No. 183 Headlines S8 LIMITED: Phoenician Unit Owners Urged to Join Class Action APPLE INC: Faces More Suit Over eBook Conspiracy With Publishers APPLE INC: Defends Bid for Arbitration in iPhone Class Action BLUEPAPA JOHN'S: Hides Delivery Driver Class Action Burden COCHLEAR LTD: Recalls Nucleus CI500 Hearing Implants CONTINUCARE CORP: Signs MOU to Settle Merger-Related Suits CSX TRANSPORTATION: 6th Upholds Summary Judgment in Class Action DISTRICT OF COLUMBIA: Class Action Settlement Gets Initial Okay FOOT LOCKER: Still in Mediation to Resolve Wage and Hour Suits GAP INC: Continues to Defend Class Action Lawsuits GOV'T OF CANADA: Quebec Flood Victims Mull Class Action MEDIA COS: Strikes Deal to Resolve Text Contest Class Action MORGAN KEEGAN: 6th Cir. Upholds Dismissal of Fraud Class Action PHARMERICA CORP: Sued Over Board's Refusal to Sell to Omnicare PROCTER & GAMBLE: Faces Class Action Over Neat Squeeze Dispenser REFINERY TERMINAL: Faces Class Action Over Unpaid Overtime STATE OF IOWA: Trial in Discrimination Class Action Begins TOYOTA MOTORS: Says It Has Right to Due Process in Class Action VAUGHAN FOODS: Settles Class Action Over Proposed Reser's Merger ZIPLOCAL: Breach of Contract Class Action Can Proceed ********* S8 LIMITED: Phoenician Unit Owners Urged to Join Class Action ------------------------------------------------------------- Mark Bode, writing for Sunshine Coast Daily, reports that owners of units on the Sunshine Coast previously managed by S8 Limited are being urged to launch a class action against the company over undisclosed rental charges. Unit Owners Association of Queensland president Wayne Stevens has been contacting owners since receiving legal advice suggesting they may be able to recover a "significant amount of money". It is the latest salvo in Mr. Stevens' eight-year battle to recover what he says is hundreds of millions of dollars in wrongly claimed commissions -- a practice that he claims is rife in Queensland and a major hindrance to investor confidence. In December, the Office of Fair Trading settled almost 3000 charges against S8 subsidiary Driftcove Pty Ltd for double handling holiday bookings. Without admitting liability, Driftcove was forced to pay OFT's costs and pay unit owners at a Gold Coast complex, Phoenician, more than $25,000. The company's director, Christopher Scott, admitted guilt and was fined $130,000. "Having regard to the seriousness and scale of the problem for unit owners, and the corresponding unearned profits retained by Driftcove-S8, they got off very lightly to the obvious convenience of OFT," Mr. Stevens said in a letter to Phoenician units owners in which he urged them to join the class action. Mr. Stevens, past chairman of the Phoenician body corporate, on Sept. 12 called on Sunshine Coast unit owners to sign up to the action. "We want to recover the money that was unlawfully deducted from owners' rental income, and to clarify the conduct that continues to allow letting agents to withhold undisclosed commissions," he said. Coast-based properties that were under S8 management include Sirocco, Seamark and Zanzibar in Mooloolaba, South Pacific Resort in Noosa and Marcoola Beach Resort. OFT executive director Brian Bauer stated publicly that it was illegal to charge booking fees or direct bookings to another company for the purpose of charging a fee. But Mr. Stevens said the practice of deducting undisclosed booking fees of up to 30% of rental income continued unabated. He claimed S8's property management structure allowed it to take an undisclosed commission for bookings before passing the reservations on to Driftcove to subtract a second commission. The total amount of commission taken by S8 and the rent paid by the holidaymaker is not disclosed to the owner. S8 is now part of travel and hospitality company Stella Group, and is now known as Stella Travel Services Group. APPLE INC: Faces More Suit Over eBook Conspiracy With Publishers ---------------------------------------------------------------- Eugenia Ruane-Gonzales, and all others similarly situated v. Apple Inc.; Hachette Book Group, Inc.; HarperCollins Publishers, Inc.; Macmillan Publishers, Inc.; Penguin Group (USA) Inc.; Simon and Schuster, Inc.; and A and Does 1-100, Case No. 4:11-cv-04500 (N.D. Calif. September 9, 2011) alleges violation of federal antitrust laws. The Plaintiff contends that the case involves the artificial inflation of the retail price of electronic books by the Publisher Defendants. In conjunction with Apple, the Publisher Defendants conspired to change the way in which eBooks are sold so that they could maintain and increase their profits, which they feared were being jeopardized by the pricing implemented by Amazon.com, Ms. Ruane- Gonzales alleges. She points out that Apple was integral to the conspiracy because it provided the Publisher Defendants with the leverage necessary to compel Amazon and other eBooks retailers to accept a new pricing model that favored the Publisher Defendants to the detriment of consumers. Ms. Ruane-Gonzales is a resident of San Francisco, California. She purchased numerous eBooks at a price above $9.99 from a Publisher Defendant for use on her Kindle. She contends that she paid more for her eBooks as a direct and foreseeable result of the Defendants' unlawful conduct. The Plaintiff is represented by: Harry Shulman, Esq. SHULMAN LAW 44 Montgomery Street, Suite 3830 San Francisco, CA 94104 Telephone: (415) 901-0505 Facsimile: (866) 422-4859 E-mail: harry@shulmanlawfirm.com - and - William H. London, Esq. Douglas A. Millen, Esq. FREED KANNER LONDON & MILLEN LLC 2201 Waukegan Road, Suite 130 Bannockburn, IL 60015 Telephone: (224) 632-4500 Facsimile: (224) 632-4519 E-mail: blondon@fklmlaw.com dmillen@fklmlaw.com APPLE INC: Defends Bid for Arbitration in iPhone Class Action ------------------------------------------------------------- Nick McCann at Courthouse News Service reports that Apple and AT&T continued to defend arbitration as the best means to sort out whether they illegally restricted the carrier choices of iPhone customers, fighting a proposed class action. Lead plaintiffs Paul Holman and Lucy Rivello filed a federal complaint against Apple and AT&T Mobility (ATTM) in October 2007, claiming the companies illegally controlled consumer choices by limiting iPhone users to AT&T plans. A San Jose federal judge certified their class action last year. AT&T and Apple said last month that the lawsuit should be arbitrated and the class should be decertified because the "entire theory rests on a single, unified course of conduct." "Plaintiffs have wrapped themselves for years in the service contract and in allegations of a single ATTM-Apple conspiracy to survive motions to dismiss and obtain class certification," according to Apple's motion to compel arbitration. "They cannot run from those theories now." Attorneys for both companies filed new motions last week to compel arbitration, decertify the class and stay the proceedings. Apple attorney Daniel Wall said the plaintiffs' case has always been built around their wireless service agreement, and they cannot use that agreement "to prop-up antitrust claims, then use it again to overcome obstacles to class certification, and yet deny they are bound by the arbitration clause found in the [agreement]." Regardless of how the motions to compel arbitration are resolved, Mr. Wall said the class must be decertified because their entire theory was based on the wireless agreement. In their latest brief, the plaintiffs said that agreement was "merely background," Mr. Wall noted. "That means that plaintiffs misled both defendants and the court about their theory of the case, the way that they intended to prove their claims on a class basis, and obtained certification based on false arguments and premises," the brief states. "Decertification is plainly appropriate in such circumstances." Apple also said the iTunes Store's Terms of Service is "irrelevant" to the class claims because that agreement has nothing to do with the iPhone wireless agreement. In another filing supporting the motion to compel arbitration, AT&T's attorney Donald Falk rejected the class's argument that the company waived its right to compel arbitration because it did not appeal to the court's denial of the original motion to compel. "Class-wide procedures are incompatible with arbitration and therefore undermine core purposes of the Federal Arbitration Act," Falk wrote, citing the recent Supreme Court ruling in AT&T Mobility v. Concepcion. "There is no reason for swimming against this tide of authority here." A copy of the Defendant Apple Inc.'s Reply in Support of Motion to Compel Arbitration and for Decertification in In Re Apple & AT&TM Anti-Trust Litigation, Case No. 07-cv-05152 (N.D. Calif.) (Ware, J.), is available at http://is.gd/CaDJi5 Apple Inc. is represented by: Daniel M. Wall, Esq. Alfred C. Pfeiffer, Jr., Esq. Christopher S. Yates, Esq. Sadik Huseny, Esq. LATHAM & WATKINS LLP 505 Montgomery Street, Suite 2000 San Francisco, CA 94111-6538 Telephone: (415) 391-0600 E-mail: dan.wall@lw.com al.pfeiffer@lw.com chris.yates@lw.com sadik.huseny@lw.com BLUEPAPA JOHN'S: Hides Delivery Driver Class Action Burden ---------------------------------------------------------- Janet Sparks, writing for BlueMauMau, reports that BluePapa John's International is defending itself against a lawsuit brought by the purchaser of 84 underperforming franchises, Essential Pizza, Inc. The franchises are a multi-million dollar acquisition between Blackstreet Capital Management and Essential Pizza. Essential Pizza claims the franchisor failed to disclose significant tax expense and liability in the amount of $1.2 million when preparing financial documentation for the sale. The multi-unit franchisee alleges there was also additional liabilities that should have been disclosed including "the crippling burden of fighting extensive class action litigation" by Papa John's delivery drivers. He states, "Papa John's negligently opened itself and its franchisees up to liability for wage violations related to complying with minimum wage laws" with its policy of charging a set "delivery fee" to customers for every delivery. In the amended complaint filed July 7, 2011 in Minnesota District Court, Hennepin County, Essential Pizza also made separate claims against seller Blackstreet Capital, a private equity firm that focuses on controlled buyouts of underperforming "corporate orphans" between $25 and $150 million in revenues. Blue MauMau has since learned that Essential Pizza, through its lead attorneys Zarco Einhorn Salkowski & Brito, filed a joint stipulation for dismissal with prejudice to voluntarily remove the equity firm and two named individuals from its lawsuit. Papa John's takes a different view on the litigation. Vice president and senior counsel Caroline Oyler said the action stems from a dispute between the two franchisees related to the purchase and sale of Papa John's restaurants in Minnesota and Colorado. "Papa John's was not involved in that transaction. While Papa John's introduced the buyer and seller, as is common in the restaurant franchising industry, we did not negotiate the terms of the sale, and we were not parties to the agreement," Ms. Oyler adamantly declared. She explained that the current franchisee, Essential Pizza, has not been able to achieve the success it had hoped for when it made its purchase, and is now far behind on royalties and amounts owed to Papa John's and others. "In our view, they are looking for others to blame, including Papa John's, for their own inability to operate the business," she asserted. Ms. Oyler said she knew nothing about Blackstreet Capital being dismissed from the litigation. Blackstreet Capital Management formed PJCOMN Acquisition Corporation in 2005 to purchase the restaurants in Minnesota and Colorado directly from Papa John's International. The equity firm's intention was to revive the underperforming stores through improved operations. But as it operated the pizza shops in those markets, Blackstreet continued to lose money, and in 2007 it began looking at ways to rid itself of all 84 stores. The complaint states that the litigation evolved after Papa John's president Bill Van Epps approached Brian Mills, principal of Essential Pizza, Inc., in 2007 about forming a venture to purchase the Papa John's stores in Minnesota and Colorado. Mr. Epps sold the acquisition as "an excellent deal and opportunity," repeatedly telling Mills that the Minnesota market was a "diamond in the rough." He said the stores would perform well with an experienced operator like Mr. Mill's company at the helm. When Mr. Mills showed an interest, Papa John's moved forward with the deal, acting as the de facto broker and liaison between Essential Pizza and Blackstreet Capital Management. Because Mr. Mills was not in a financial position to purchase restaurants, Papa John's became involved in the deal, offering Mr. Mill's company supplementary financing through a "franchise assistance agreement." When the acquisition was finalized by means of a stock sale, Essential Pizza became the owners of the 84 Papa John's units, and became indebted to Papa John's, Blackstreet Capital and lender GE Capital Franchise Finance for millions. Documents prepared by the franchisor on behalf of Blackstreet Capital allegedly failed to disclose a significant tax expense and liability in the amount of $1.2 million, as well as additional unrecorded liabilities in the amount of $700,000-plus. In the stock purchase agreement, Blackstreet warranted that its disclosures fairly and accurately presented the assets and liabilities of the company it sold. In 2008 and 2009, Essential Pizza principals became aware of previously undisclosed liabilities as they received unpaid invoices attributable to Blackstreet prior to the sale closing. At a meeting in 2010, Papa John's executives informed Mills and partner Cliff Harris that the company would write off $1 million in deferred royalties that they allegedly owed to the franchisor. In return, Essential Pizza owners, in a show of being a team player and a good corporate citizen, paid out of their own pocket to settle outstanding liabilities to Blackstreet. But according to the lawsuit, Papa John's then changed its position and refused to forgive the royalty payments originally promised. Essential Pizza asserts that Papa John's misrepresentations and lack of disclosure caused the business to be overvalued and the price over-inflated. Additionally, it states that it is likely GE Capital Franchise Finance would not have granted its company a loan if accurate financial expense and liability disclosures had been made. Essential Pizza asserts that one of the biggest disclosure blunders Papa John's made was not informing them of potential liability posed by pizza delivery drivers because of violations of federal and state wage laws. They state that Papa John's kept close watch on litigation against Pizza Hut, alleging it was not complying with minimum wage labor laws when it failed to reimburse drivers for costs incurred on the job. After purchasing the 84 stores in 2007, Essential continued Papa John's practice of charging a set "delivery fee" to customers. Their lawsuit states that typical industry practice is that delivery charges should be retained by the pizza restaurant. The charges should not be used for employee compensation. Papa John's franchise agreements required that royalties be paid to Papa John's on all delivery fees collected by franchisees, and Essential Pizza was no exception. The complaint explains that Minnesota law has ruled for over twenty years that "gratuities" are the property of employees. Employers may not credit employee gratuities toward the payment of employee minimum wage. Because the law clearly states that the nature of delivery charges must be disclosed on Web sites or pizza boxes, Papa John's knew or should have known it was not in compliance with state law. Papa John's system requires that owners retain delivery fees and pay royalties on them, knowing that Essential Pizza was at risk for liability. The sale was conditioned on Essential Pizza obtaining insurance policies for all of the stores only through Risk Services Corporation, an insurance broker that is a wholly owned affiliate of Papa John's, from which it derives substantial revenue. The pizza franchisor represented that this arrangement was advantageous to Essential because Risk Services had a specialized protection program for franchisees that would protect against the "relevant risks incurred in operating a Papa John's store." In July 2009, Shane Bass and other delivery drivers filed a class action complaint in Colorado district court against Essential Pizza seeking damages on a wage violation identical to that alleged in the Pizza Hut case. The franchisee then submitted a claim to Risk Services. The insurer refused to pay that claim. Another delivery driver filed a class action lawsuit against Essential Pizza Hut in Minnesota federal court in September 2010, alleging federal and state wage violations. In particular, he claims that the delivery fee charged by the Minnesota Papa John's stores was legally a driver's gratuity, according to state law. Essential notified Risk Services of the litigation and requested that the insurer indemnify and defend Essential in the lawsuit under its employment practices liability policy. Three months later, Risk Services notified the franchisee that the "specialized" insurance package that Papa John's required it to purchase would not cover the claims. Specifically, those related to the franchisor's failure to have conspicuous disclosures on its Web site and pizza boxes regarding the nature of the delivery fee. Essential Pizza asserts in its lawsuit that in addition to having to pay for substantial undisclosed liabilities and having paid an inflated price for the 84 Papa John's stores, their company is also now faced with the burden of fighting extensive class action litigation. Essential finds itself having to reimburse delivery fees that were expressly authorized by Papa John's, which Papa John's collected and received royalty on. Concerning the delivery drivers class action lawsuits, Ms. Oyler agreed that it was a big issue in the pizza delivery industry today. She said Papa John's had its own lawsuit that is similar to ones brought against PJCOMN and Essential. She added, "I have a hard time making any connection between the lawsuit they have and us. That is a real stretch. Franchisees make their own decisions and choices on how they compensate their drivers." As a result of the franchisee's latest actions, Ms. Olyer said Papa John's filed a federal lawsuit in Kentucky against Essential Pizza for defaulting on payment of more than $1 million they owe Papa John's. The franchisor has also filed a motion to stay and motion to dismiss the action in Minnesota, which they will put before the district judge at the October 7 hearing. In support of its motion, Papa John's argues that in all of its franchise agreements the parties agree to arbitrate any disputes in Louisville, Kentucky. Ms. Oyler expressed that Papa John's never desires to be in litigation with its franchisees. "We have worked with this franchisee throughout the relationship and have gone above and beyond in treating its owners fairly." She said they have given support in many ways including deferring royalties and trying to find a buyer for their markets. She added, "Now that the franchisee has chosen this course, we will aggressively defend our rights and pursue what is owed to us. We have been erroneously and inappropriately named, and we are confident we will prevail." COCHLEAR LTD: Recalls Nucleus CI500 Hearing Implants ---------------------------------------------------- * Cochlear issues voluntary recall of unimplanted hearing implants * Recall triggered by unexplained implant failures * Analysts warn recall could eat into Cochlear's market share Gavin Lower at MarketWatch.com reports that the world's biggest maker of bionic ears, Cochlear Ltd. (COH.AU), on Monday, September 12, 2011, recalled its latest range of hearing implants from shelves after a recent unexplained increase in failures. The voluntary recall of the Nucleus CI500 implants, which Cochlear says are the world's slimmest titanium hearing implant, will affect sales in around 75 countries, including the U.S. and Australia. Cochlear shares plunged as much as 27% after Chief Executive Chris Roberts said the company has stopped manufacture of the range, which in fiscal 2011 made up 70% of the company's sales of implant units and had been hailed for boosting sales by 20% in fiscal 2010. Analysts said the recall could lead to prolonged market share gains for Cochlear's competitors such as the Austria-based Med-El. Cochlear has about 65% of the global hearing implant market. "Reliability is very important," Mr. Roberts told analysts on a conference call. "If there's some things happening that we don't understand, we're far, far better to stop and understand it ... rather than just battle ahead and hope it all works out." Another rival implant company Sonova Holding AG (SOON.VX) was hurt last year by a recall of its HiRes 90K device but Cochlear said the financial impact of its own recall is difficult to predict at this stage. The National Institutes of Health in the U.S. puts the total cost including device, surgery and follow-up care of an implant at US$60,000, but a company spokesman said the cost varies from country to country depending on health subsidy and private health insurance systems. He declined to say how much it cost Cochlear to make an implant. Mr. Roberts said there are about 25,000 registered users of the CI500 range and the company isn't recalling those products that have already been implanted. The company said it identified a recent increase in the number of Nucleus CI512 implants failing in recent weeks, with less than 1% of CI512 implants failing since they were launched in 2009. If failure occurs, the implant safely shuts down without injuring the recipient, the company said in a statement, adding that if it does fail, the patient could be re-implanted with the earlier model Nucleus Freedom implant. Mr. Roberts, who declined to speculate on what had caused the devices to fail, said stocks of the Freedom implant are available with a "good" supply chain available to react to changes in demand. Nomura analysts said potential recipients and surgeons were likely to prefer to use other cochlear implants, rather than Cochlear's implants in the wake of the recall, potentially leading to market share gains for Cochlear's competitors. UBS cut its recommendation on Cochlear from Neutral to Sell and cut its price target from A$76 to A$60. The broker said "longer- term reputational fallout is likely to overhang market willingness to pay a premium for a previously unblemished market leader." The company's shares ended the day 20.3% lower, significantly underperforming the benchmark S&P/ASX 200 which closed 3.7% lower. CONTINUCARE CORP: Signs MOU to Settle Merger-Related Suits ---------------------------------------------------------- Continucare Corporation entered into a memorandum of understanding to settle a consolidated class action lawsuit arising from its proposed merger with a subsidiary of Metropolitan Health Networks, Inc., according to the Company's September 7, 2011, Form 10-K filing with the U.S. Securities and Exchange Commission for the year ended June 30, 2011. On June 26, 2011, Continucare entered into an Agreement and Plan of Merger (the "Merger Agreement") with Metropolitan Health Networks, Inc. ("Metropolitan") and Cab Merger Sub, Inc., a Florida corporation and a wholly owned subsidiary of Metropolitan ("Merger Subsidiary"), providing for the merger of Continucare with Merger Subsidiary. Subject to the terms and conditions of the Merger Agreement, which has been unanimously approved by the boards of directors of the respective parties, Merger Subsidiary will be merged with and into Continucare (the "Merger"), with Continucare surviving the Merger as a wholly owned subsidiary of Metropolitan. On July 1, 2011, a putative class action was filed in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida, by Kathryn Karnell, Trustee and the Aaron and Kathryn Karnell Revocable Trust U/A Dtd 4/9/09 against Continucare, the members of the Continucare Board, individually, Metropolitan, and the merger subsidiary. Also on July 1, 2011, a second putative class action was filed in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida, by Steven L. Fuller against Continucare, the members of the Continucare Board, individually, Metropolitan, and the merger subsidiary. On July 6, 2011, a third putative class action was filed in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida, by Hilary Kramer against Continucare, the members of the Continucare board of directors, individually, Metropolitan, and the merger subsidiary. On July 12, 2011, a fourth putative class action was filed in the Circuit Court of the Eleventh Judicial Circuit in and for Miami- Dade County, Florida, by Jamie Suprina against Continucare, the members of the Continucare board of directors, individually, Metropolitan, and the merger subsidiary. Each of these lawsuits sought to enjoin the proposed transaction between Continucare and Metropolitan, as well as attorneys' fees. The Fuller, Kramer, and Suprina lawsuits also sought rescissory and other money damages. On July 28, 2011, an order was granted by the Court to consolidate these actions and appoint the lead plaintiff and the lead plaintiff's counsel. On August 12, 2011, the defendants entered into a preliminary settlement agreement ("Memorandum of Understanding") with the lead plaintiff regarding the settlement of the actions. In connection with the Memorandum of Understanding, Continucare agreed to make certain additional disclosures to its shareholders, which are contained in Continucare's Form 8-K filed with the SEC on August 12, 2011. Subject to the completion of certain confirmatory discovery by the lead plaintiff's counsel, the parties will enter into a definitive stipulation of settlement. The definitive stipulation of settlement will be subject to customary conditions, including consummation of the merger and court approval following notice to Continucare's shareholders. In the event that the parties enter into a definitive stipulation of settlement, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement which, if finally approved by the court, will resolve all of the claims that were or could have been brought in the actions being settled, including all claims relating to the merger transaction, the merger agreement, and any disclosure made in connection therewith. In addition, in connection with the settlement, the parties contemplate that the lead plaintiff's counsel will petition the court for an award of attorneys' fees and expenses to be paid by Continucare. There can be no assurance that the parties will ultimately enter into a definitive stipulation of settlement or that the court will approve the settlement. In such event, the litigation would resume. Continucare, the director defendants, and Metropolitan vigorously deny all liability with respect to the facts and claims alleged in the lawsuits, and specifically deny that supplemental disclosure was required under any applicable rule, statute, regulation or law. However, solely to avoid the risk of delaying or adversely affecting the merger and the related transactions and to minimize the expense of defending the lawsuits, Continucare, its directors, and Metropolitan agreed to the settlement. On August 22, 2011, at a Special Meeting of Shareholders, the Merger Agreement and the transactions contemplated thereby were approved by Continucare shareholders. Assuming all conditions to closing are met, Continucare and Metropolitan expect to close the acquisition on or about the end of September 2011. There can be no assurance, however, that the acquisition will close. CSX TRANSPORTATION: 6th Upholds Summary Judgment in Class Action ---------------------------------------------------------------- Jessica M. Karmasek, writing for Legal Newsline, reports that the U.S. Court of Appeals for the Sixth Circuit last week upheld a district court's decision to grant summary judgment to CSX Transportation in a medical monitoring class action. Following a train crash that allegedly exposed a small town to cancer-causing agents, plaintiffs Jonathan Hirsch, Jeanne Myers and Christopher Mann sought damages on behalf of a putative class. The U.S. District Court for the Northern District of Ohio, at Cleveland, granted summary judgment for the train company. The district court said the plaintiffs had not established general or specific causation and, as a matter of law, any increased risk of cancer or other diseases was too insignificant to warrant the court's ordering a lengthy period of medical monitoring. The Sixth Circuit affirmed on Sept. 8, agreeing that the plaintiffs presented such a remote risk of disease from exposure to fumes from the fire that medical monitoring expenses would be unreasonable. Judge Danny J. Boggs authored the appeals court's eight-page opinion. "What makes the present claim conceptually unique is that the Plaintiffs -- though no doubt distraught from the stress of a train crash and evacuation -- have, even by their own admission, as of now not suffered any discernable compensable injury. Rather, their alleged injuries consist solely of the increased risk of -- and corresponding cost of screening for -- certain diseases that, according to Plaintiffs, are more likely to occur as a result of the train crash," Judge Boggs wrote. However, not every increased risk of disease warrants increased medical scrutiny, Judge Boggs said. The expenses must be reasonable. "In other words, for the Plaintiffs to prevail, there must be evidence that a reasonable physician would order medical monitoring for them," the judge wrote. The appeals court said the plaintiffs failed to produce evidence creating a genuine issue. Instead, they point only to Dr. James Kornberg's conclusory statement that "a reasonable physician would prescribe for the Plaintiffs and the putative class a monitoring regime." "Although juries are generally free to believe expert witnesses, a plaintiff cannot survive summary judgment with an expert's bare opinion on the ultimate issue," Judge Boggs wrote. For that reason, the appeals court ruled that Kornberg's affidavit is plainly insufficient. "Dr. Kornberg not only accepted the risk of one in a million as the threshold for monitoring, but appears to have halved it," the court said. It continued, "There is little explanation as to why Dr. Kornberg believed that reasonable physicians would order expensive and burdensome testing for such a small risk, but he agreed in his deposition that his proposal for Painesville was 'to err on the side of patient safety.'" The appeals court called the doctor's assessment -- that the residents' risk might, or might not, be about 50% of a one-in-a- million additional risk of developing cancer -- "small." "Indeed, it is proverbially small. If something has a one-in-a- million chance of causing cancer in an individual, then it will not cause cancer in 999,999," it wrote. Compare that to other statistics, the appeals court said. According to the National Safety Council, a person's risk of dying in a motor vehicle accident is 1 in 88. The risk of being killed by lightning is roughly 1 in 84,000. The risk of being killed in a fireworks discharge is about 1 in 386,000. "These risks -- of death, not disease -- are all much smaller than what the Plaintiffs allege in this case: lifetime odds of developing cancer at 50 percent of 1 in 1,000,000," the appeals court said. The National Association of Manufacturers and eight other organizations, including the American Tort Reform Association, the U.S. Chamber of Commerce and the American Insurance Association, had filed an amicus brief arguing that a one-in-a-million risk was too speculative to justify imposing expensive medical monitoring requirements on any defendant. DISTRICT OF COLUMBIA: Class Action Settlement Gets Initial Okay --------------------------------------------------------------- The Associated Press reports that a long-running lawsuit over the way the District of Columbia provides health services to seriously mentally ill residents is coming to a close. A federal judge on Sept. 12 gave preliminary approval to a settlement in a class-action lawsuit from the 1970s that led to changes in the way the city cares for its mentally ill residents. Thirty years ago, public care for the mentally ill in Washington consisted almost exclusively of hospital treatment. Now, most residents remain in their communities while receiving treatment and hospital stays are shorter. The change coincided with a national movement for community-based mental health care. Under the agreement, which ends long-running court oversight of the city's mental health program, the city will increase job services and housing for the mentally ill. In addition, the city will reduce its use of restrictive inpatient facilities for mentally ill youth and increase community-based treatment, letting children live at home and get care at their homes, schools or local clinics. The city has until September 2013 to carry out the agreement. "We'd be the first to tell you there are still many challenges . . . but the District has made incredible progress," said Stephen Baron, the director of the Department of Mental Health since 2006. In a statement, D.C. Mayor Vincent Gray called the agreement a "significant milestone." Patients at the city-run mental health hospital, Saint Elizabeths, originally filed the lawsuit in 1974 seeking treatment alternatives in their communities instead of hospitalization. The case became known as the "Dixon case" after one of the plaintiffs, William Dixon. At the time the lawsuit was filed, some 3,600 people were being treated at Saint Elizabeths and patients often spent a long time hospitalized in dilapidated buildings. Today, the hospitalized population is less than 300 patients, the city said. A new facility opened to house those patients in 2010. Under the settlement agreement, the city will increase the number of mentally ill residents who get housing subsidies from 1,400 to 1,700. In addition, the city will expand services to support mentally ill individuals who want to hold jobs. Currently, about 700 people get job support services. That number would expand by about 200 people under the settlement. The city plans to send out notice of the agreement to some 27,000 people currently enrolled in the public health system. They will have a chance to speak at a hearing Feb. 2 where a judge could grant final approval of the settlement. The city will make quarterly reports on its progress for the next two years. FOOT LOCKER: Still in Mediation to Resolve Wage and Hour Suits -------------------------------------------------------------- Foot Locker, Inc., is still engaged in mediation with plaintiff in the "Pereira" lawsuit to determine whether it will be possible to resolve several wage and hour cases, according to the Company's September 7, 2011, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended July 30, 2011. Legal proceedings pending against the Company or its consolidated subsidiaries consist of ordinary, routine litigation, including administrative proceedings, incidental to the business of the Company or businesses that have been sold or disposed of by the Company in past years. These legal proceedings include commercial, intellectual property, customer, and labor-and- employment-related claims. Certain of the Company's subsidiaries are defendants in a number of lawsuits filed in state and federal courts containing various class action allegations under federal or state wage and hour laws, including allegations concerning unpaid overtime, meal and rest breaks, and uniforms. The Company is a defendant in one such case in which plaintiff alleges that the Company permitted unpaid off-the-clock hours in violation of the Fair Labor Standards Act and state labor laws. The case, Pereira v. Foot Locker, was filed in the U.S. District Court for the Eastern District of Pennsylvania in 2007. In his complaint, in addition to unpaid wage and overtime allegations, plaintiff seeks compensatory and punitive damages, injunctive relief, and attorneys' fees and costs. In September 2009, the Court conditionally certified a nationwide collective action. During the course of 2010, notices were sent to approximately 81,888 current and former employees of the Company offering them the opportunity to participate in the class action, and 5,027 have opted in. The Company was a defendant in an additional seven purported wage and hour class actions that assert claims similar to those asserted in Pereira and seek similar remedies. With the exception of Hill v. Foot Locker filed in state court in Illinois, all of these actions were either commenced in federal district court or the Company has subsequently removed them to federal district court. On February 25, 2011, the Company filed a motion with the United States Judicial Panel on Multidistrict Litigation (the "Panel") to consolidate those cases pending in federal court and any similar case hereafter filed to a single case under the United States district court and otherwise consolidating these actions for coordinated pretrial proceedings. On May 26, 2011, the Panel granted the Company's motion to consolidate those cases with Pereira. During the first quarter, one of these cases was settled for an amount that was not material to the Company; three of them are in the discovery stage; and the remaining four are in preliminary stages of proceedings. In Hill v. Foot Locker, in May 2011, the court granted plaintiffs' motion for certification of an opt-out class covering certain Illinois employees only. The Company is filing a motion for leave to appeal. The Company is currently engaged in mediation with plaintiff in Pereira and his counsel in an attempt to determine whether it will be possible to resolve these cases. Meanwhile, the Company is vigorously defending them. Due to the inherent uncertainties of such matters, including the early stages of certain matters, the Company is currently unable to make an estimate of the range of loss. Management does not believe that the outcome of any such legal proceedings pending against the Company or its consolidated subsidiaries, including Pereira and related cases would have a material adverse effect on the Company's consolidated financial position, liquidity, or results of operations, taken as a whole. GAP INC: Continues to Defend Class Action Lawsuits -------------------------------------------------- As a multinational company, The Gap, Inc., is subject to various proceedings, lawsuits, disputes, and claims ("Actions") arising in the ordinary course of its business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. As of July 30, 2011, actions filed against the Company included commercial, intellectual property, employment, and data privacy claims, including class action lawsuits. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance. As of July 30, 2011, January 29, 2011, and July 31, 2010, the Company recorded a liability for the estimated loss if the outcome of an Action is expected to result in a loss that is considered probable and reasonably estimable. The amount of liability as of July 30, 2011, January 29, 2011, and July 31, 2010, was not material for any individual Action or in total. Subsequent to July 30, 2011, no information has become available that indicates a material change to the Company's estimate is required. The Company says it cannot predict with assurance the outcome of Actions brought against it. Accordingly, adverse developments, settlements, or resolutions may occur and negatively impact income in the quarter of such development, settlement, or resolution. However, the Company does not believe that the outcome of any current Action would have a material adverse effect on its results of operations, cash flows, or financial position taken as a whole. No further updates were reported in the Company's September 7, 2011, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended July 30, 2011. GOV'T OF CANADA: Quebec Flood Victims Mull Class Action ------------------------------------------------------- Jean-Francois Cloutier, writing for QMI Agency, reports that victims of last spring's record flooding in southern Quebec are mulling the idea of launching a class action lawsuit against the federal government. If a 1937 dam project designed to regulate the Richelieu River was completed as planned, the damages suffered by thousands of property owners would have been less severe, said Andre Florent, a southern Quebec campsite owner hit hard by the flooding. Mr. Florent said he has the support of hundreds of other flood victims who agree the federal government acted negligently by not completing the dam. Mr. Florent said he obtained documents relating to a 1937 U.S.- Canadian project designed to regulate the water of the Richelieu River. Construction started in 1938 before it was interrupted by the Second World War. The dam lies unfinished along part of the Richelieu River. The river burst its banks last spring, severely flooding areas south of Montreal down to the New York border. Thousands were forced from their homes. "There has always been flooding in the region and that's why the dam project was initiated," Mr. Florent said, who estimated his 2011 losses at C$1 million. "People are scared to come visit us." Victims want to be compensated for their losses but also want the dam finished. The lawsuit is a tall order, but not impossible, said a lawyer who specializes in class actions. Francois Lebeau said four conditions must be met for a class action suit to get the go-ahead from a judge: A group of people need to be affected; their damages must be related; there needs to be the appearance that a party is seriously at fault; and finally, the person at the head of the suit must be articulate enough to represent the group properly. Mr. Lebeau said that while three conditions have been met, he isn't familiar enough with the case to say how much the federal government can be at fault for the water damage. Moreover, even if the potential class action meets all four criteria, it will be a difficult case to win, particularly if the dam was unfinished for political reasons, he said. Mr. Lebeau explained that the federal government can claim judicial immunity in certain instances if a decision was made by parliament. MEDIA COS: Strikes Deal to Resolve Text Contest Class Action ------------------------------------------------------------ Eriq Gardner, writing for Hollywood Reporter, reports that NBC Universal, Fox Broadcasting Company, and many of the production companies behind some of the most successful reality TV competition shows have agreed to an extraordinary five-year injunction that will prohibit them from operating any contest or sweepstakes where viewers make a submission via text message for the possibility of winning a prize. The agreement by the media companies, which includes a large cash pay-out, comes as part of a proposed settlement to end a class action lawsuit alleging Fox's American Idol and NBC's Deal or No Deal took advantage of viewers by running illegal lotteries. The settlement, announced in a court filing on Sept. 7 in California federal court, comes after four years of hard-fought litigation that went up and down the appeals circuit. The plaintiffs took exception to reality and game shows that gave viewers the opportunity to win prizes via text message. In the "American Idol Challenge," viewers had to answer a trivia question. In the "Lucky Case Game," viewers of Deal or No Deal chose a briefcase corresponding to the winning number. The text-message contests were alleged to violate California Penal Code Sec. 319, defining an illegal lottery as a contest where prizes are distributed based on chance and individuals have paid some valuable consideration to participate. The plaintiffs, who didn't win the contest, argued that their 99 cent text message fee was that consideration. The media companies argued that contestants were given a "free option" to participate in the contest by going to the game show Web site. The district court denied a motion to dismiss. The Ninth Circuit upheld the ruling. And for the past four years, the case has been proceeding at a snail's pace tied up in all sorts of procedural issues. Now, the parties have come to an agreement. The proposed deal will refund the premium text message fee of 99 cents paid by the millions of folks who entered the contests. Yes, every individual who ended up a loser in the "American Idol Challenge" will get a fat check for 99 cents. And the class action lawyers at Milberg, who took their chances by picking up this lawsuit on contingency? According to the agreement, to resolve this litigation, the media companies have agreed to pay them more than $5 million in fees and expenses! Of course, the judge needs to approve the settlement and may not look too kindly on a deal with such disproportionate compensation. Thus, in papers to the judge, the parties are touting "one of the key achievements" as being the consent of many parties, including Fox, NBC, Edemol, Verisign, 19 Entertainment, and Freemantle, to be subject to an injunction that will enjoin them from "creating, sponsoring or operating any contest or sweepstakes, for which entrants are offered the possibility of winning a prize, where people who enter via premium text message do not receive something of comparable value to the premium text message charge in addition to the entry." The settlement memorandum to the judge adds that this will ensure "that one of the primary benefits achieved by these litigations -- the termination of the Lucky Case Game and American Idol Challenge -- will long outlive these Actions." In other words, the plaintiff lawyers claim the grand-prize of millions of dollars and everyone else gets the consolation of no more text message contests on TV. MORGAN KEEGAN: 6th Cir. Upholds Dismissal of Fraud Class Action --------------------------------------------------------------- On September 8, 2011, the U.S. Court of Appeals for the Sixth Circuit ruled in favor of Morgan Keegan & Co., a Memphis, Tennessee-based financial services firm, upholding the dismissal of a class action fraud suit brought by a group of mutual fund investors, who claimed their investments lost value in the wake of the 2007 financial crisis. In a decision that will have a wide-reaching impact on federal/state jurisdictional issues in securities litigation generally and the mutual fund industry in particular, the appellate court agreed that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) barred all state law claims asserted by the investors. "The Sixth Circuit's opinion will make it much more difficult for plaintiffs hoping to avoid federal jurisdiction in class actions alleging securities fraud," said Matthew M. Curley, a partner at Bass, Berry & Sims PLC who represented Morgan Keegan in this matter. The Sixth Circuit upheld the 2009 decision by Judge Samuel H. Mays of the U.S. District Court for the Western District of Tennessee, which dismissed with prejudice all claims in the case, including the investors' claims for fraud, negligence and breach of contract. The plaintiffs argued that SLUSA did not apply based on an exception in the statute called the "Delaware carve-out." The Sixth Circuit disagreed, holding that the exception could not save the plaintiffs' claims from dismissal. Not until this case has any district court or appellate court considered whether claims asserted on behalf of holders of mutual funds fit within the Delaware carve-out exception to SLUSA. "We are certainly pleased with the Sixth Circuit's opinion affirming the dismissal of this action with prejudice," said Bass, Berry & Sims' Mr. Curley. "It provides important guidance on the broad scope of SLUSA's preclusive reach and how narrowly its Delaware carve-out should be interpreted." The appellate court also rejected the plaintiffs' argument that nine of their 13 claims in the suit were not precluded by SLUSA because they were not pleaded as fraud claims. Again, the Sixth Circuit disagreed, finding that "[b]ecause all of plaintiffs' claims include allegations of fraud, SLUSA damns each one." The appeal is styled Atkinson v. Morgan Asset Management Inc., No. 09-6265, in the U.S. Court of Appeals for the Sixth Circuit. Morgan Keegan & Co. was represented by Matthew M. Curley of Bass Berry & Sims PLC. Regions Bank was represented by David Bruce Tulchin of Sullivan & Cromwell LLP, and PricewaterhouseCoopers was represented by Timothy A. Duffy of Kirkland & Ellis LLP. The plaintiffs were represented by Vernon Jay Vander Weide of Head Seifert & Vander Weide PA and Jerome A. Broadhurst of Apperson, Crump & Maxwell, PLC. About Bass, Berry & Sims PLC With more than 200 attorneys representing numerous publicly traded companies and Fortune 500 businesses, Bass, Berry & Sims PLC has been involved in some of the largest and most significant litigation matters and business transactions in the country. PHARMERICA CORP: Sued Over Board's Refusal to Sell to Omnicare -------------------------------------------------------------- Louisiana Municipal Police Employees' Retirement System, on behalf of itself and all other similarly situated shareholders of PharMerica Corporation, v. Frank Collins, W. Robert Dahl, Jr., Marjorie Dorr, Thomas Gerrity, Thomas Mac Mahon, Geoffrey Meyers, Robert Oakley, Gregory Weishar, and PharMerica Corporation, Case No. 6851- (Del. Chancery Ct., September 9, 2011) arises because of the self interested and unreasonable response by the PharMerica Board of Directors to a non-coercive offer to acquire the Company by Omnicare, Inc., at a price well above PharMerica's market price, the Plaintiff argues. The lawsuit says the Board repeatedly refused Omnicare's offer, citing antitrust concerns. The Plaintiff alleges that while the Board cites antitrust concerns, the real motivation underlying the rejection was a desire to maintain their lucrative directorships, industry status, and employment. The Plaintiff notes that if Omnicare is successful in acquiring the smaller PharMerica, the directors' tenures and most, if not all, of the Company's senior management's employment will be terminated. LMPERS is a stockholder of PharMerica. PharMerica is an institutional pharmacy services company, which services healthcare facilities and provides management pharmacy services to hospitals. The Individual Defendants are members of the PharMerica Board. The Plaintiff is represented by: Stuart M. Grant, Esq. Michael J. Barry, Esq. Diane T. Zilka, Esq. GRANT & EISENHOFER P.A. 1201 N. Market Street, Suite 2100 Wilmington, DE 19801 Telephone: (302) 622-7000 E-mail: sgrant@gelaw.com mbarry@gelaw.com dzilka@gelaw.com - and - Mark Lebovitch, Esq. Jeremy Friedman, Esq. BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP 1285 Avenue of the Americas New York, NY 10019 Telephone: (212) 554-1400 E-mail: markl@blbglaw.com JeremyF@blbglaw.com PROCTER & GAMBLE: Faces Class Action Over Neat Squeeze Dispenser ---------------------------------------------------------------- Matt Reynolds at Courthouse News Service reports that an unhappy class of consumers claims Procter & Gamble's "Neat Squeeze" toothpaste dispenser leaves as much as 20% of the Crest in the tube, cheating them of "the full value of their purchase." Lead plaintiff Jonathan Rothstein seeks damages for Procter & Gamble's "unlawful, unfair, and fraudulent business acts and practices and deceptive advertising." In a lament that every tooth-brusher must have felt at some time, Mr. Rothstein states: "The benefit of the Neat Squeeze dispenser, as stated on the product's label, is that there is less mess associated with its use. "The label goes on to describe how the innovative packaging works, but then fails to disclose that, due to its defective design, the consumer will be unable to dispense a significant quantity of toothpaste once the Neat Squeeze fails, as they all inevitably do. On the label's directions, defendant explains how to properly dispense toothpaste, and how to know when it is time to purchase additional toothpaste. It states: "'The Neat Squeeze dispenser has a unique inner bag that empties itself as you squeeze in the middle. When the package gets lighter and is harder to squeeze, it's time to buy more Crest.' "What defendant fails to explain is that the full volume of toothpaste will not be dispensed, no matter how hard the consumer tries to squeeze. Once the dispenser becomes 'lighter' and is 'harder to squeeze,' it will no longer dispense toothpaste. At this point, the only way to access the remaining toothpaste is to cut open the packaging with scissors or a knife. However in doing so, the promise of 'Less Mess,' the slogan associated with the Neat Squeeze dispenser, is lost and the package is not designed or intended to be sliced open." Mr. Rothstein, who bought his toothpaste at a Walgreens in Encino, claims that roughly 20% of the Crest was left in the tube. He calculates that he is owed 20% of the $4.49 retail price, or about 90 cents. Mr. Rothstein says he bought the toothpaste believing that its entire net weight would be "usable, when that is not in fact the case." Mr. Rothstein seeks class damages for money had and received, fraudulent concealment, breach of express warranty, unfair competition, false advertising, negligent misrepresentation and violation of the Consumer Legal Remedies Act. A copy of the Complaint in Rothstein v. The Procter & Gamble Company, Inc., et al., Case No. 11-cv-07403 (C.D. Calif.), is available at: http://www.courthousenews.com/2011/09/12/Squeeze.pdf The Plaintiffs are represented by: Michael Caddell, Esq. Cynthia B. Chapman, Esq. Cory S. Fein, Esq. CADDELL & CHAPMAN 1331 Lamar, Suite 1070 Houston, TX 77010 Telephone: (713) 751-0400 E-mail: mac@caddellchapman.com cbc@caddellchapman.com csf@caddellchapman.com - and - Brian Levine, Esq. Elana R. Levine, Esq. LEVINE LAW GROUP, APC 15760 Ventura Boulevard, Suite 2030 Encino, CA 91436 Telephone: (818) 990-3400 E-mail: brian@llglaw.com lani@llglaw.com REFINERY TERMINAL: Faces Class Action Over Unpaid Overtime ---------------------------------------------------------- Courthouse News Service reports that Refinery Terminal Fire Co., the largest nonprofit industrial firefighting group in the nation, stiffs workers for overtime, according to a federal class action. A copy of Martinez, et al. v. Refinery Terminal Fire Company, Case No. 11-cv-00295 (S.D. Tex.), is available at: http://www.courthousenews.com/2011/09/12/Employ.pdf# The Plaintiffs are represented by: Craig M. Sico, Esq. SICO, WHITE, HOELSCHER & BRAUGH, L.L.P. 802 N. Carancahua, Suite 900 Corpus Christi, TX 78401 Telephone: 361/653-3300 E-mail: csico@swbtrial.com - and - Roger S. Braugh, Jr., Esq. Clif Alexander, Esq. Stuart R. White, Esq. SICO, WHITE, HOELSCHER & BRAUGH, L.L.P. 802 N. Carancahua, Suite 900 Corpus Christi, TX 78401 Telephone: 361/653-3300 E-mail: rbraugh@swbtrial.com calexander@swbtrial.com - and - Jerry Guerra, Esq. HUERTA GUERRA BEAM, PLLC 924 Leopard Street Corpus Christi, TX 78401 Telephone: 361/884-1632 STATE OF IOWA: Trial in Discrimination Class Action Begins ---------------------------------------------------------- Michael J. Crumb, writing for The Associated Press, reports that a trial began on Sept. 12 in a class-action lawsuit claiming the state of Iowa discriminated against thousands of black people in its hiring practices. The trial began in Polk County District Court after a judge last week rejected the state's claims the case was too broad to be legally viable. The lawsuit filed in 2007 was expanded and certified as a class- action case in 2010. It lists 32 plaintiffs who claim they were discriminated against when they applied for a job or sought a promotion in their existing position because they are black. Thomas Newkirk, an attorney for the plaintiffs, said the lawsuit encompasses more than 20,000 employment applications and 6,000 black Iowans who encountered discrimination since 2003. In a statement before trial began, Mr. Newkirk said the goal of the lawsuit is to work with the state so it can better deal with the causes of discrimination responsibly and "open a discussion about race and what it means to be black in this country. "It is also the mission of this class and counsel to see affirmative action administered in the way it was intended -- not as some quota or goal -- but as a serious, methodical process to overcome bias in all forms," Mr. Newkirk said. The state encouraged the certification of the class in 2010 but last week sought to have the case dismissed saying the plaintiffs "could not have brought a less specific case against the (state) departments and their hiring and employment practices." Geoff Greenwood, a spokesman for the Iowa attorney general's office, declined to comment on the case on Sept. 12, but in a document filed with the court last week, attorneys with office argued that each department's hiring and employment practices vary, discrediting the plaintiffs' claims. "Because of the job-specific nature of the employment practices used by Defendants, African Americans' employment successes predictably vary by department, job and step within the hiring practices, contrary to Plaintiffs' unified, albeit nebulous, theory," the document said. The document also said 85% of all merit positions are covered by collective bargaining agreements, "which strictly limits what little discretion exists for the terms and conditions a department may offer a candidate for a particular job." Judge Robert Blink denied the state's request to dismiss the case, saying the state seemed to be "back pedaling from their agreement to the class certification." The trial is expected to last about three weeks. Gov. Terry Branstad said on Sept. 12 that his administration hired new department and agency directors and made it clear people should be treated in a "fair and nondiscriminatory way." "We're trying to get more uniformity and consistency and fairness in terms of the way things are managed in state government, including hiring and accountability in terms of employees that are working for the department and agencies of state government," Gov. Branstad said. TOYOTA MOTORS: Says It Has Right to Due Process in Class Action --------------------------------------------------------------- Cynthia Hsu, writing for FindLaw, reports that Toyota is currently fighting a class action lawsuit that alleges the recent safety recalls lowered the value of the plaintiffs' Toyota cars. In response to the litigation, Toyota's legal team is looking to depose about 250 economic loss plaintiffs through the year 2013. And, the plaintiffs are none-too-pleased with this request. Plaintiffs are saying that Toyota's plan would make for a very inefficient trial. They are seeking to limit Toyota's depositions to about 50 plaintiffs, Reuters reports. In seeking the vast amount of discovery, Toyota's general counsels and outside attorneys are likely only doing what they think is right for the company. After all, evidence -- including information obtained through depositions -- can make or break a case. And, Toyota's attorneys likely have another reason to fight the plaintiffs' request to limit the number of depositions they take. They claim that limiting the number of depositions would be violating a corporate defendant's due process rights, Reuters reports. Specifically, Toyota attorneys point to the Supreme Court's decision in Walmart's sex-discrimination class action suit that emphasized a corporation's right to due process. Toyota's actions may be relevant to general counsels everywhere. Defending a corporation against lawsuits requires strategy. And, ensuring that the company's legal interests are looked after might also mean ensuring the proper amount of discovery. Should Toyota's trial plan be tempered with the desire to maintain good relationships with their customers? For example, drawing out litigation may mean that plaintiffs are more likely to settle. It could also mean that Toyota's attorneys will discover more information through discovery. But, will it also mean that plaintiffs will be less likely to buy a Toyota the next time they decide to purchase a car? VAUGHAN FOODS: Settles Class Action Over Proposed Reser's Merger ---------------------------------------------------------------- Vaughan Foods, Inc. disclosed that it has reached an agreement in principle to settle the purported class action lawsuit challenging the proposed merger of Vaughan and Reser's Fine Foods, Inc. As previously disclosed, Vaughan, Reser's, and Reser's Acquisition, Inc., an Oklahoma corporation and a wholly owned subsidiary of Reser's, entered into an Agreement and Plan of Merger, dated July 6, 2011, pursuant to which Reser's would acquire Vaughan for an aggregate purchase price of $18.25 million payable to the shareholders of Vaughan and certain holders of options and warrants to purchase shares of Vaughan common stock, as a result of a merger of Acquisition with and into Vaughan. In conjunction with the Merger, Vaughan filed proxy material with the Securities Exchange Commission containing detailed information and relevant documents relating to the Merger. Included in the Proxy Statement was a brief description of a putative shareholder lawsuit, styled as Kevin Wolters v. Herbert Grimes et al., filed against the individual members of the Board of Directors of Vaughan, Vaughan, Reser's and Acquisition in the United States District Court, Cleveland County, Oklahoma. Effective as of September 9, 2011, the parties to the Action entered into a Memorandum of Agreement, pursuant to which the Action would be settled in consideration for Vaughan having made certain additional disclosures relating to the Merger, which were included in a Current Report on Form 8-K filed with the SEC on September 9, 2011, which can be accessed at http://is.gd/f4iPMLand the defendants' agreement to pay plaintiff's reasonable legal counsel's fees and disbursements in an amount to be negotiated or, if no agreement can be reached, an amount to be determined by the Court. The settlement is subject to the parties agreeing on, executing and presenting to the Court within 60 days a formal Stipulation of Settlement that will dismiss the Action with prejudice against all the defendants. About Vaughan Foods, Inc. Vaughan Foods is an integrated manufacturer and distributor of value-added, refrigerated foods and is uniquely able to distribute fresh-cut produce items along with a full array of value-added refrigerated prepared foods multiple times per week. Vaughan sells to both food service and retail sectors. Its products consist of fresh-cut vegetables, fresh-cut fruits, salad kits, prepared salads, dips, spreads, soups, sauces and side dishes. ZIPLOCAL: Breach of Contract Class Action Can Proceed ----------------------------------------------------- The Salt Lake Tribune reports that a Utah County judge has allowed a proposed class-action lawsuit against an Orem-based Yellow Pages company called Ziplocal to go forward over allegations it breached its contracts with local advertisers. State court Judge Claudia Laycock dismissed two parts of the proposed class-action lawsuit filed last year but allowed to remain a question of whether it had breached contracts by drastically cutting distribution of its phone books without informing clients. Jones Heating & Air Conditioning of West Valley City sued, claiming that Ziplocal had trimmed its circulation of Yellow Pages books from 444,000 to 200,000 during 2009-10 but charged businesses full price for ads, the cost of which was supposedly partly based on the number of copies distributed. Attorneys for Jones Heating are asking Judge Laycock to certify the class-action suit and allow them to bring in more businesses allegedly harmed by Ziplocal's contact. Ziplocal contends its contract with advertisers allowed it to trim distribution as it saw fit. Judge Laycock said the contract language was ambiguous. A lawsuit with similar allegations is pending in federal court covering the state of Montana. In August, The Salt Lake Tribune reported there were similar allegations in other parts of the country. ********* 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, Joy A. Agravante, 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. 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