/raid1/www/Hosts/bankrupt/CAR_Public/120417.mbx
C L A S S A C T I O N R E P O R T E R
Tuesday, April 17, 2012, Vol. 14, No. 75
Headlines
ACCESS CAPITAL: 8th Cir. Remands "Hargis" Class Suit for Dismissal
AT&T INC: Sued in California for Reactivating Stolen Phones
BAJA MOTORSPORTS: Recalls 4,300 Dirt Bikes Due to Fire Incidents
BANKWEST: Engages in Predator Lending, Customer Claims
CANADA ELECTROLYTIC ZINC: Court Authorizes C$900MM Class Action
CAPITAL ONE: Bid to Remand in West Virginia Suit Remains Pending
CAPITAL ONE: Final Hearing on HSBC Settlement Set for Oct. 1
CAPITAL ONE: HSBC Card in Mediation to Resolve New York MDL
CAPITAL ONE: ING Bank Expects Class Cert. Hearing in 2Q or 3Q
CARBO CERAMICS: Faruqi & Faruqi Files Class Action in New York
CASTLEROCK FARMING: Faces Class Action Over Unpaid Wages
CENTRAL VERMONT: Merger-Related Suits in State Court Dismissed
COLDWELL BANKER: Judge Certifies Investors' Class Action
DEL MONTE: Class Certification Denial in Monopoly Suit Upheld
DELTA AIR: Plan Did Not Violate ERISA by Pension Benefit Cut Backs
DREW INDUSTRIES: Awaits Decision on "Gonzalez" Suit Appeal
DUPONT: Judge Dismisses Personal Injury Suit
ENTERPRISE FIN'L: Glancy Binkow & Goldberg Files Class Action
GAMESTOP CORP: Class Action Settlement Gets Preliminary Court OK
GATE CITY: Faces Class Action Over Improper Overdraft Fees
GNC HOLDINGS: Former Store Managers Seek Overtime Pay Class Action
HAPPINESS IS PETS: Files Motion to Dismiss Class Action
J.C. PENNEY: Recalls 16,700 Drop-Side Cribs Due to Fall Hazard
KINROSS GOLD: Holzer Holzer & Fistel Files Class Action in N.Y.
LEVY PREMIUM: 11th Circuit Affirms Class Action Dismissal
MERCK & CO: Va. Statute of Limitations Don't Toll Over Other Suits
MERRILL LYNCH: 7th Cir. Reverses Class Denial in "McReynolds" Suit
MORGAN STANLEY: 7th Cir. Upholds "Appert" HPI Fees Suit Dismissal
NBC UNIVERSAL: Class Action Over Channel Bundling Dismissed
OBERON MEDIA: 9th Cir. Upholds Class Denial in Gamesaver Fees Suit
PARK RIDGE, IL: Lacks Authority to Conduct Proceeding, Suit Says
PERSHING LLC: 1st Cir. Upholds Dismissal of "Katz" Consumer Suit
PERFUMANIA HOLDINGS: Motion to Stay "Dias" Del. Action Denied
PIONEER ENERGY: Siskinds Launches Gas Price Fixing Class Action
SR SUNTOUR: Recalls 17,000 GT, Giant and Trek Bicycles
STATE OF ARIZONA: Amnesty Int'l. Unveils Cruel Prison Conditions
TITLE LENDERS: Missouri Supreme Court Remands "Robinson" Suit
VITRAN EXPRESS: 9th Cir. Reverses Remand Order in "Campbell" Suit
* Federal Securities Class Actions Up 10% in 2011, PwC US Says
*********
ACCESS CAPITAL: 8th Cir. Remands "Hargis" Class Suit for Dismissal
------------------------------------------------------------------
In the appellate case Bonnie Hargis v. Access Capital Funding,
LLC, Case No. 11-1027, the U.S. Court of Appeals for the Eighth
Circuit affirmed in part and vacated in part Ms. Hargis' appeal of
the district court's denial of her motion to remand the class
action complaint against Access Capital to state court. The case
is remanded with instructions that the action be dismissed for
lack of jurisdiction.
Ms. Hargis, on behalf of a putative class of similarly situated
borrowers, sued Webster Bank and Access Capital in a Missouri
state court, alleging that the defendants engaged in the
unauthorized practice of law when they charged certain fees in the
course of refinancing her mortgage. Ms. Hargis refinanced her
home with a loan from Webster Bank that was brokered by Access
Capital.
Circuit Judge Roger Leland Wollman, who penned the appellate court
decision, opined that Ms. Hargis failed to show that she was
charged any fees, directly or indirectly, for legal work performed
by non-lawyers. Thus, she has not shown injury and does not have
standing to bring her claim, the circuit judge said. In light of
Ms. Hargis' lack of standing, the district court should have
dismissed for lack of jurisdiction rather than reaching the merits
of a summary judgment motion filed by the defendants, the circuit
judge further said.
The other members of the appellate panel are Michael Joseph Melloy
and Steven M. Colloton.
A copy of the Eighth Circuit's decision dated March 5, 2012, is
available at http://is.gd/1MPxRffrom Leagle.com.
AT&T INC: Sued in California for Reactivating Stolen Phones
-----------------------------------------------------------
Courthouse News Service reports that AT&T has aided and abetted
cellphone thieves for years by reactivating stolen phones,
particularly iPhones, and fraudulently telling customers that it
"cannot" block calls to and from the stolen phones -- so customers
will have to buy new ones -- a class action claims in Superior
Court.
The class claims AT&T does this "in order to make millions of
dollars in improper profits, by forcing legitimate customers . . .
to buy new cell phones, and buy new cell phone plans, while the
criminals who stole the phone are able to simply walk into AT&T
stores and 're-activate' the devices, using different, cheap,
readily available 'SIM' cards (computer chips)."
Hilary White and two other named plaintiffs sued AT&T for
conspiracy, fraud, breach of contract, accessory to theft, unfair
trade and other charges.
They claim: "On a regular daily basis in California and elsewhere,
the cell phones, Apple Computer Corporation 'iPhones' in
particular, are stolen by criminals from lawful purchasers and
users."
Each cellphone and iPhone is registered to the purchaser when he
or she buys it, via an International Mobile Equipment
Identification, or IMEI number, about 15 digits long.
"Each such cellular device is identifiable, as a handheld cell
phone, by the IMEI imprinted on same, and said serial number is
readily visible to, and apparent to, any and all stores,
businesses, and defendant employees when the device is activated
or a new cell phone usage plan is turned on by defendants," the
complaint states.
"Nevertheless, for years, defendants have actively and without
reservation aided, abetted, and assisted thieves, i.e., possessors
of stolen cell phones, in earning illegal theft profits, by
turning back on, or 're-activating' said stolen phones.
"Plaintiffs have been told by AT&T representatives that they will
not, and 'cannot,' block and effectively kill usage of such stolen
cell phones by thieves and criminal organizations[;] however, such
representations are false and fraudulent.
"Defendants actively have, for years, participated in this
practice in order to make millions of dollars in improper profits,
by forcing legitimate customers, such as these plaintiffs, to buy
new cell phones, and buy new cell phone plans, while the criminals
who stole the phone are able to simply walk into AT&T stores and
're-activate' the devices, using different, cheap, readily
available 'SIM' cards (computer chips).
"Defendants have, for years, profited from this implicit
collaboration and conspiracy with thieves and criminal gangs of
thieves.
"Defendants continue to engage in this practice, and knowingly and
intentionally continue to refuse to block, disable, or 'kill'
permanently, or return to their lawful owners these stolen iPhones
and other cell phones, to the financial benefit and plan not only
of the criminal thieves themselves, but of the defendants, [i.e.],
AT&T.
"These unfair and illegal profits have amounted to many millions
of dollars each year, for the past several years, and continuing,
reaped by AT&T and other cell phone providers.
"Plaintiffs have repeatedly asked defendants to track, record, and
simply refuse to 'activate' these stolen iPhones, however, to date
defendants have refused to do so, even though it is readily,
easily able to accomplish, because if they take said proper
action, their sales of new iPhones and plans will be reduced and
diminished."
Plaintiffs seek disgorgement and punitive damages.
Named as defendants are AT&T, AT&T Communications of California,
AT&T Mobility Wireless Operations Holdings, and Doe corporations,
business entities and individuals.
A copy of the Complaint in White, et al. v. AT&T Inc., et al.,
Case No. 34-2012-00122192 (Calif. Super. Ct., Sacramento Cty.), is
available at:
http://www.courthousenews.com/2012/04/12/AT&TCA.pdf
The Plaintiffs are represented by:
R. Parker White, Esq.
POSWALL, WHITE & CUTLER
1001 G Street, Suite 301
Sacramento, CA 95814
Telephone: (916) 449-1300
- and -
Steven J. McHugh, Esq.
Debra A. McHugh, Esq.
MCHUGH & MCHUGH, LLP
Pine Cone Plaza
2494 Lake Tahoe Blvd., Suite B-7
South Lake Tahoe, CA 96150
Telephone: (530) 544-3006
E-mail: stevenmchugh@sbcglobal.net
BAJA MOTORSPORTS: Recalls 4,300 Dirt Bikes Due to Fire Incidents
----------------------------------------------------------------
The U.S. Consumer Product Safety Commission, in cooperation with
Baja Inc., doing business as Baja Motorsports, of Anderson, South
Carolina, announced a voluntary recall of about 4,300 Dirt Bikes,
which were previously recalled in March 2011
[http://www.cpsc.gov/cpscpub/prerel/prhtml11/11159.html].
Consumers should stop using recalled products immediately unless
otherwise instructed. It is illegal to resell or attempt to
resell a recalled consumer product.
Consumers who participated in the March 2011 recall should contact
the firm to see if a new repair is required.
The fuel tank can leak, posing a fire and burn hazard to
consumers.
The firm has received 16 reports of fires from leaking fuel,
including two reports of minor burns to consumer's legs and one
report of a minor burn to a consumer's finger. Ten of the
reported incidents, including two of the burn injuries, were
received after the March 2011 recall announcement.
This recall involves all model DR50 and DR70 Baja dirt bikes with
vehicle identification number (VIN) beginning with "L98," the
letter "B" as the 10th character of the VIN and having a yellow
dot or line marked on or near the VIN. The model number and VIN
are located on the product data plate, which is located on the
side of the "goose neck" -- where the handle bars meet the body of
the bike. Pictures of the recalled products are available at:
http://www.cpsc.gov/cpscpub/prerel/prhtml12/12150.html
The recalled products were manufactured in China and sold at Pep
Boys and other motor sports stores nationwide from December 2010
through January 2012 for between $450 and $650.
Consumers should immediately stop using the recalled dirt bikes
and contact Baja Motorsports to schedule a free repair. For
additional information, please contact Baja Motorsports toll-free
at (888) 863-2252 between 10:00 a.m. and 7:00 p.m. Eastern Time
Monday through Friday, or visit the firm's Web site at
http://www.bajamotorsports.com/
BANKWEST: Engages in Predator Lending, Customer Claims
------------------------------------------------------
Tony Raggatt, writing for Townsville Bulletin, reports that
Richmond grazier John Wharton has backed claims West Australian-
based BankWest has acted unfairly by funding customers in good
times and dumping them in bad times.
"It's predatory lending," he claimed on April 10.
Mr. Wharton, whose properties were placed into receivership last
year at the behest of Bankwest, was commenting on the ABC Four
Corners program last week, which investigated cases where downward
revaluations of the assets of the bank's customers caused loan
defaults.
Mr. Wharton has claimed BankWest sought to increase cattle numbers
on properties he purchased in 2008 to support loans and that the
bank provided loan documents with cashflow estimates from cattle
sales that were unachievable.
He said he had signed with a group called "Unhappy Banking"
planning a class action against the bank.
Meanwhile, law firm Slater & Gordon on April 10 confirmed it is
considering a class action on behalf of former BankWest customers
over the Commonwealth Bank's 2008 takeover of the West Australian
lender.
"We are looking at whether some of those people with BankWest
loans were hard done by when BankWest re-valued their securities
and called up their loans in the period after CBA took control of
BankWest," Slater & Gordon lawyer Van Moulis --
van.moulis@slatergordon.com.au -- said in a statement.
"So far we have had about 120 people register with us, and their
losses are quite significant.
"The types of cases we are looking at are primarily commercial
developments and involve property developers and small to medium-
sized business owners."
Mr. Moulis said there had been an allegation -- not yet backed by
evidence -- that the sales document related to CBA's acquisition
of Bankwest had contained a "claw back" provision under which the
purchase price was reduced by an amount related to the number of
bad debts on the books of Bankwest.
In a statement, Bankwest said it strongly rejected any accusations
of wrongdoing.
"Bankwest has acted fairly with all its customers since its
acquisition by the CBA and honored all of the existing contractual
and credit commitments with customers," it said.
The Commonwealth Bank has stated there was no basis to concerns
Bankwest customers were treated unfairly after the takeover.
CANADA ELECTROLYTIC ZINC: Court Authorizes C$900MM Class Action
---------------------------------------------------------------
Julius Melnitzer, writing for Financial Post, reports that a
Quebec court has authorized a $900 million class action that is
likely Canada's largest environmental class action to date.
Deraspe c. Zinc electrolytique du Canada ltee arises from a cloud
of toxic gas emitted from Canada Electrolytic Zinc's refinery in
Quebec in August 2004 causing certain individuals in the area to
experience noxious symptoms including eye, skin and throat
irritation; respiratory problems; coughing; and asthma attacks.
CAPITAL ONE: Bid to Remand in West Virginia Suit Remains Pending
----------------------------------------------------------------
A motion to remand a class action lawsuit filed by the Attorney
General for the state of West Virginia remains pending, according
to Capital One Financial Corporation's March 14, 2012, Form 8-K
filing with the U.S. Securities and Exchange Commission.
In August 2011, Capital One announced that it had entered into a
purchase agreement with HSBC Finance Corporation, HSBC USA Inc.
and HSBC Technology and Services (USA) Inc., to acquire
substantially all of the assets and assume liabilities of the
sellers' credit card and private-label credit card business in the
United States (other than the HSBC Bank USA, National Association
consumer credit card program and certain other retained assets and
liabilities) (the "HSBC U.S. credit card business") for a premium
estimated at $2.6 billion as of June 30, 2011 (the "HSBC
Acquisition").
HSBC Card and Retail Services is a component of a business of HSBC
Finance Corporation ("HBIO") which is an indirect wholly-owned
subsidiary of HSBC North America Holdings Inc. ("HSBC North
America" or "Parent") which is an indirect wholly-owned subsidiary
of HSBC Holdings plc ("HSBC"). HSBC Card issues MasterCard, Visa,
American Express and Discover credit card receivables ("Credit
Card") and private label receivables to consumers nationwide.
HSBC Card has historically operated as a part of its indirect
Parent, HSBC North America, which has sole ownership of the
assets.
In October 2011, the Attorney General for the State of West
Virginia filed a purported class action in the Circuit Court of
Mason County, West Virginia, captioned State of West Virginia ex
rel. Darrell V. McGraw, Jr. et al v. HSBC Bank Nevada, N.A. et al.
(No. 11-C-93-N), alleging similar claims related to debt
cancellation in connection with the marketing, selling and
administering of debt cancellation and suspension products to
consumers in West Virginia. In addition to damages, the Attorney
General is seeking civil money penalties and injunctive relief.
The action was removed to Federal Court and the Attorney General's
motion to remand is pending. HSBC Card has received a similar
inquiry from another state's Attorney General, although no action
has yet been filed.
Capital One Financial Corporation -- http://www.capitalone.com/
-- is a diversified financial services company, whose banking and
non-banking subsidiaries market a variety of financial products
and services. Capital One, National Association (CONA), which
offers a range of banking products and financial services to
consumers, small businesses and commercial clients. The company
operates in three segments: Credit Card, Commercial Banking and
Consumer Banking. The company's principal subsidiaries include
Capital One Bank, (USA), National Association (COBNA), which
offers credit and debit card products, other lending products and
deposit products.
CAPITAL ONE: Final Hearing on HSBC Settlement Set for Oct. 1
------------------------------------------------------------
A final approval hearing of a settlement resolving a consolidated
class action lawsuit against HSBC Card and Retail Services'
subsidiaries is scheduled for October 1, 2012, according to
Capital One Financial Corporation's March 14, 2012, Form 8-K
filing with the U.S. Securities and Exchange Commission.
In August 2011, Capital One announced that it had entered into a
purchase agreement with HSBC Finance Corporation, HSBC USA Inc.
and HSBC Technology and Services (USA) Inc., to acquire
substantially all of the assets and assume liabilities of the
sellers' credit card and private-label credit card business in the
United States (other than the HSBC Bank USA, National Association
consumer credit card program and certain other retained assets and
liabilities) (the "HSBC U.S. credit card business") for a premium
estimated at $2.6 billion as of June 30, 2011 (the "HSBC
Acquisition").
HSBC Card and Retail Services is a component of a business of HSBC
Finance Corporation ("HBIO") which is an indirect wholly-owned
subsidiary of HSBC North America Holdings Inc. ("HSBC North
America" or "Parent") which is an indirect wholly-owned subsidiary
of HSBC Holdings plc ("HSBC"). HSBC Card issues MasterCard, Visa,
American Express and Discover credit card receivables ("Credit
Card") and private label receivables to consumers nationwide.
HSBC Card has historically operated as a part of its indirect
Parent, HSBC North America, which has sole ownership of the
assets.
Between July 2010 and May 2011, eight substantially similar
putative class actions were filed against HSBC Card's
subsidiaries, HSBC Bank Nevada, N.A. ("HSBC Bank Nevada") and HSBC
Card Services Inc.: Rizera et al. v. HSBC Bank Nevada et al.
(D.N.J. No. 10-CV-03375); Esslinger et al v. HSBC Bank Nevada,
N.A. et al. (E.D. Pa. No. 10-CV-03213); McAlister et al. v. HSBC
Bank Nevada, N.A. et al. (W.D. Wash. No. 10-CV-05831); Mitchell v.
HSBC Bank Nevada, N.A. et al. (D. Md. No. 10-CV-03232); Samuels v.
HSBC Bank Nevada, N.A. et al. (N.D. III. No. 1 l-CV-00548);
McKinney v. HSBC Card Services et al. (S.D. III. No. 10-CV-00786);
Chastain v. HSBC Bank Nevada, N.A. (South Carolina Court of Common
Pleas, 13th Circuit) (filed as a counterclaim to a pending
collections action); Colton et al. v. HSBC Bank Nevada, N.A. et
al. (C.D. Ca. No. 11-CV-03742). These actions principally allege
that cardholders were enrolled in debt cancellation or suspension
products and challenge various marketing or administrative
practices relating to those products. The plaintiffs' claims
include breach of contract and the implied covenant of good faith
and fair dealing, unconscionability, unjust enrichment, and
violations of state consumer protection and deceptive acts and
practices statutes. The Mitchell action was withdrawn by the
plaintiff in March 2011.
In July 2011, the parties in Rizera, Esslinger, McAlister,
Samuels, McKinney and Colton executed a memorandum of settlement
and filed notices of settlement of all claims in each respective
court. The parties have memorialized the terms and conditions of
the settlement in a formal agreement, and submitted the settlement
on a consolidated basis for approval by the United States District
Court for the Eastern District of Pennsylvania. On February 23,
2012, the District Court granted preliminary approval of the
settlement and scheduled the final approval hearing for October 1,
2012.
HSBC Card says it is adequately reserved for the proposed
settlement. A motion for class certification and a motion to
defer consideration of class certification pending completion of
the settlement were recently heard in the Chastain action. The
motion to defer was granted and the case placed on stay pending
progression of the consolidated settlement.
Capital One Financial Corporation -- http://www.capitalone.com/
-- is a diversified financial services company, whose banking and
non-banking subsidiaries market a variety of financial products
and services. Capital One, National Association (CONA), which
offers a range of banking products and financial services to
consumers, small businesses and commercial clients. The company
operates in three segments: Credit Card, Commercial Banking and
Consumer Banking. The company's principal subsidiaries include
Capital One Bank, (USA), National Association (COBNA), which
offers credit and debit card products, other lending products and
deposit products.
CAPITAL ONE: HSBC Card in Mediation to Resolve New York MDL
-----------------------------------------------------------
HSBC Card and Retail Services is engaged in a mediation process to
resolve a consolidated class action lawsuit pending in New York,
according to Capital One Financial Corporation's March 14, 2012,
Form 8-K filing with the U.S. Securities and Exchange Commission.
In August 2011, Capital One announced that it had entered into a
purchase agreement with HSBC Finance Corporation, HSBC USA Inc.
and HSBC Technology and Services (USA) Inc., to acquire
substantially all of the assets and assume liabilities of the
sellers' credit card and private-label credit card business in the
United States (other than the HSBC Bank USA, National Association
consumer credit card program and certain other retained assets and
liabilities) (the "HSBC U.S. credit card business") for a premium
estimated at $2.6 billion as of June 30, 2011 (the "HSBC
Acquisition").
HSBC Card and Retail Services is a component of a business of HSBC
Finance Corporation ("HBIO") which is an indirect wholly-owned
subsidiary of HSBC North America Holdings Inc. ("HSBC North
America" or "Parent") which is an indirect wholly-owned subsidiary
of HSBC Holdings plc ("HSBC"). HSBC Card issues MasterCard, Visa,
American Express and Discover credit card receivables ("Credit
Card") and private label receivables to consumers nationwide.
HSBC Card has historically operated as a part of its indirect
Parent, HSBC North America, which has sole ownership of the
assets.
Since June 2005, HSBC Finance Corporation, HSBC North America, and
HSBC Holdings plc, as well as other banks and Visa Inc. and Master
Card Incorporated, have been named as defendants in four class
actions filed in Connecticut and the Eastern District of New York;
Photos Etc. Corp. et al. v. Visa U.S.A., Inc., et al. (D. Conn.
No. 05- CV-01007 (WWE)): National Association of Convenience
Stores, et al. v. Visa U.S.A., Inc., et al.( E.D.N.Y. No. 05-CV
4520 (JG)); Jethro Holdings, Inc., et al. v. Visa U.S.A., Inc. et
al. (E.D.N.Y. No. 05-CV-4521 (JG)); and American Booksellers Ass'n
v. Visa U.S.A., Inc. et al. (E.D.N.Y. No. 05-CV-5391 (JG)).
Numerous other complaints containing similar allegations (in which
no HSBC entity is named) were filed across the country against
Visa Inc., MasterCard Incorporated and other banks. These actions
principally allege that the imposition of a no-surcharge rule by
the associations and/or the establishment of the interchange fee
charged for credit card transactions causes the merchant discount
fee paid by retailers to be set at supracompetitive levels in
violation of the Federal antitrust laws. These lawsuits have been
consolidated and transferred to the Eastern District of New York.
The consolidated case is: In re Payment Card Interchange Fee and
Merchant Discount Antitrust Litigation, MDL 1720, E.D.N.Y. ("MDL
1720").
A consolidated, amended complaint was filed by the plaintiffs on
April 24, 2006, and a second consolidated amended complaint was
filed on January 29, 2009. On February 7, 2011, MasterCard
Incorporated, Visa Inc., the other defendants, including HSBC
Finance Corporation, and certain affiliates of the defendants
entered into settlement and judgment sharing agreements (the
"Agreements") that provide for the apportionment of certain
defined costs and liabilities that the defendants, including HSBC
Finance Corporation and HSBC Card's affiliates, may incur, jointly
and/or severally, in the event of an adverse judgment or global
settlement of one or all of these actions. The Agreements also
cover any other potential or future actions that are transferred
for coordinated pre-trial proceedings with MDL 1720.
While HSBC Card's continues to believe that it has substantial
meritorious defenses to the claims in this action, the parties are
engaged in a mediation process at the direction of the District
Court. Based on progress to date in mediation, HSBC Card's
increased its litigation reserves in the fourth quarter of 2011 to
an amount equal to its estimated portion of a potential settlement
of this matter.
Capital One Financial Corporation -- http://www.capitalone.com/
-- is a diversified financial services company, whose banking and
non-banking subsidiaries market a variety of financial products
and services. Capital One, National Association (CONA), which
offers a range of banking products and financial services to
consumers, small businesses and commercial clients. The company
operates in three segments: Credit Card, Commercial Banking and
Consumer Banking. The company's principal subsidiaries include
Capital One Bank, (USA), National Association (COBNA), which
offers credit and debit card products, other lending products and
deposit products.
CAPITAL ONE: ING Bank Expects Class Cert. Hearing in 2Q or 3Q
-------------------------------------------------------------
ING Bank, fsb, is expecting a Delaware court to hear arguments on
a motion for class certification in the lawsuit captioned Yarger
v. ING Bank, fsb, in late second or third quarter this year,
according to Capital One Financial Corporation's March 14, 2012,
Form 8-K filing with the U.S. Securities and Exchange Commission.
In June 2011, Capital One Financial Corporation entered into a
definitive agreement with ING Groep N.V., ING Bank N.V., ING
Direct N.V., and ING Direct Bancorp under which Capital One agreed
to acquire substantially all of such entities' ING Direct business
in the United States ("ING Direct"). On February 17, 2012,
Capital One completed the acquisition of ING Direct (the "ING
Direct Acquisition"). The equity interests, among others, of ING
Bank, fsb, were acquired in the ING Direct Acquisition.
In January 2011, mortgage customers filed a putative class action
complaint in the Superior Court of the State of Delaware, entitled
Yarger v. ING Bank, fsb. The Bank removed the case to the U.S.
District Court for the District of Delaware and filed an answer in
March 2011. The complaint is brought on behalf of plaintiffs and
all similarly-situated customers who purchased an Orange Mortgage
or Easy Orange Mortgage from the Bank for the period October 2005
through May 2009, and were allegedly marketed with a guaranteed
Rate Renewal fee of $500 or $750 for the remaining life of the
loan. The complaint alleges claims under: Delaware's Consumer
Fraud Act, common law fraud, promissory estoppel, breach of
implied covenant of good faith and fair dealing, violation of the
Truth-in-Lending Act, and unjust enrichment. No specific monetary
demand was made in the complaint; however, plaintiffs did request
compensatory, statutory treble damages and punitive damages,
interest, attorneys' fees and costs.
A class has not been certified by the court. The parties are
currently in the briefing stage of the motion for class
certification and expect the court to hear arguments on the motion
in late Q2 or Q3 2012.
The Bank is vigorously defending this matter and has proffered
considerable arguments as to why the motion should be denied and a
class should not be certified. At this time, it is the opinion of
management, that the Bank's liability, if any, arising out of this
litigation, will not have a material adverse impact on the
Company's Consolidated Financial Statements.
As lawsuits or legal proceedings develop, the Bank monitors the
matters for further developments that could affect previous
accruals or disclosures, if any, and updates such amounts accrued
or disclosures previously provided, as appropriate.
Capital One Financial Corporation -- http://www.capitalone.com/
-- is a diversified financial services company, whose banking and
non-banking subsidiaries market a variety of financial products
and services. Capital One, National Association (CONA), which
offers a range of banking products and financial services to
consumers, small businesses and commercial clients. The company
operates in three segments: Credit Card, Commercial Banking and
Consumer Banking. The company's principal subsidiaries include
Capital One Bank, (USA), National Association (COBNA), which
offers credit and debit card products, other lending products and
deposit products.
CARBO CERAMICS: Faruqi & Faruqi Files Class Action in New York
--------------------------------------------------------------
Faruqi & Faruqi, LLP has filed a class action lawsuit in the
United States District Court for the Southern District of New
York, case no. 12 CV 2807, on behalf of all persons who purchased
or sold CARBO Ceramics Inc. options contracts between October 27,
2011 and January 26, 2012 inclusive and suffered damages as a
result.
If you wish to obtain information concerning this action or view a
copy of the complaint, you can do so by clicking here:
http://www.faruqilaw.com/CRR
CARBO Ceramics, CARBO Ceramics' Chief Executive Officer Gary
Kolstad and CARBO Ceramics' Chief Financial Officer Ernesto
Bautista are charged with violations of Section 10(b) and/or 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. Specifically, the complaint alleges that defendants
knew or recklessly failed to inform investors that (1) the Company
was being negatively impacted by logistical issues such that it
was unable to shift resources to liquid plays; (2) the Company was
experiencing significant declines in proppant sales in the
Haynesville region; and (3) as a result of the foregoing,
Defendants' statements regarding the Company's operations and
earnings were false and misleading and lacked a reasonable basis
when made.
On January 26, 2012, CARBO Ceramics shocked the market by
announcing lower than expected earnings caused by logistical
issues and declining proppant sales. This news caused CARBO
Ceramics stock to drop approximately 35% by the close of the
business day, with the price of CARBO Ceramics options
correspondingly affected.
Plaintiff now seeks to recover damages on behalf of himself and
all other individual and institutional investors who bought or
sold CARBO Ceramics options contracts between October 27, 2011 and
January 26, 2012, excluding defendants and their affiliates, and
were damaged thereby. Plaintiff is represented by Faruqi &
Faruqi, LLP, a law firm with extensive experience in prosecuting
class actions and actions involving corporate fraud.
If you purchased or sold CARBO Ceramics options contracts during
the Class Period and were damaged thereby, you may, not later than
June 11, 2012, move the court to serve as lead plaintiff of the
class, if you so choose. In order to discuss this action, or if
you have any questions concerning this notice or your rights or
interests, please contact:
Faruqi & Faruqi, LLP
369 Lexington Avenue, 10th Floor
New York, NY 10017
ATTN: Richard Gonnello, Esq.
Francis P. McConville, Esq.
E-mail: rgonnello@faruqilaw.com
fmcconville@faruqilaw.com
Toll Free: (877) 247-4292
Telephone: (212) 983-9330
CASTLEROCK FARMING: Faces Class Action Over Unpaid Wages
--------------------------------------------------------
The Associated Press reports that a Hispanic advocacy group is
suing a Central Valley grape grower to recover wages for Latino
employees it claims were forced to work extra hours without pay.
The Mexican American Legal Defense Fund filed the class-action
lawsuit on April 10 in U.S. District Court in Fresno against
Castlerock Farming and Transport Inc.
The suit seeks a court order stopping the alleged illegal practice
and the payment of wages and other benefits denied to more than
5,000 workers over the past 11 years.
The suit also alleges Castlerock failed to properly pay minimum
wage to hourly workers, refused to provide paid rest breaks and
failed to provide meal breaks to employees who work at least five
hours.
A Castlerock spokeswoman says the company has not yet seen the
suit and could not comment.
CENTRAL VERMONT: Merger-Related Suits in State Court Dismissed
--------------------------------------------------------------
A Vermont state court dismissed merger-related class action
lawsuits in January 2012, according to Central Vermont Public
Service Corporation's March 14, 2012, Form 10-K filing with the
U.S. Securities and Exchange Commission for the year ended
December 31, 2011.
On May 27, 2011, CVPS, FortisUS Inc., Cedar Acquisition Sub Inc.,
a direct wholly owned subsidiary of Fortis ("Merger Sub") and
Fortis Inc., the ultimate parent of Fortis ("Ultimate Parent"),
entered into an Agreement and Plan of Merger (the "Fortis Merger
Agreement").
On July 11, 2011, CVPS, Gaz Metro Limited Partnership ("Gaz
Metro") and Danaus Vermont Corp., an indirect wholly owned
subsidiary of Gaz Metro ("Merger Sub"), entered into an Agreement
and Plan of Merger (the "Merger Agreement").
On July 11, 2011, prior to entering into the Merger Agreement with
Gaz Metro, CVPS terminated the Fortis Merger Agreement. In
accordance with the Fortis Merger Agreement, on July 12, 2011,
CVPS paid FortisUS Inc. $19.5 million (the "Fortis Termination
Payment"), consisting of a termination fee of $17.5 million and
expenses of FortisUS Inc. of $2 million. These amounts have been
recorded as a component of Other Income on the Consolidated
Statement of Income in 2011. The Merger Agreement with Gaz Metro
required Gaz Metro to reimburse CVPS for its payment of the Fortis
Termination Payment immediately following the approval of the
Merger Agreement by CVPS shareholders. It also provides that CVPS
will be required to pay Gaz Metro the full amount of the Fortis
Termination Payment reimbursement if the Merger Agreement is
terminated under certain circumstances.
On June 2, 2011, a lawsuit captioned David Raul v. Lawrence
Reilly, et al., Civil Division Docket No. 377-6-11-RDCV, was filed
in the Superior Court of Vermont, Rutland Unit, against CVPS and
members of the CVPS Board of Directors. The lawsuit also named as
defendants FortisUS Inc. and one of its affiliates. The Raul
complaint, which purported to be brought on behalf of a class
consisting of the public stockholders of CVPS, alleged that CVPS's
directors breached their fiduciary duties by entering into the
Fortis Merger Agreement for a price that is alleged to be unfair,
as the result of a process alleged to be unfair and inadequate,
with material conflicts of interest and so as to benefit
themselves, and including no-solicitation, matching rights and
termination fee provisions alleged to be designed to ensure that
no competing offers would emerge for CVPS. The Raul complaint
also included a claim of aiding and abetting against CVPS and the
Fortis entities. The Raul complaint sought, among other things,
injunctive relief against the proposed transaction with Fortis as
well as other equitable relief, damages and attorneys' fees and
costs. On June 23, 2011, following the announcement of an offer
received from Gaz Metro, David Raul filed an amended class action
complaint repeating his earlier allegations and claims but also
referring to this development and claiming that the CVPS Board
should terminate the Fortis Merger Agreement and negotiate a new
deal with Gaz Metro.
On or about June 17, 2011, and June 20, 2011, two additional
complaints (Civil Division Docket Nos. 417-6-11-RDCV and 425-6-11-
RDCV, respectively) were filed in the Superior Court of Vermont,
Rutland Unit, containing claims and allegations similar to those
in the original Raul complaint and seeking similar relief on
behalf of the same putative class. These complaints were filed,
respectively, by IBEW Local 98 Pension Fund and by Adrienne
Halberstam, Jacob Halberstam and Sarah Halberstam.
On July 13, 2011, a lawsuit captioned Howard Davis v. Central
Vermont Public Service, et al., Case No. 5:11-CV-181 was filed in
the United States District Court for the District of Vermont
against CVPS and members of the CVPS Board of Directors. The
lawsuit also named as defendants Gaz Metro Limited Partnership and
one of its affiliates. The Davis complaint, which purported to be
brought on behalf of a class consisting of the public stockholders
of CVPS, alleged that CVPS's directors breached their fiduciary
duties by, among other things, allegedly failing to undertake an
adequate sales process prior to the Fortis Merger Agreement,
entering into the Merger Agreement with Gaz Metro at an unfair
price and pursuant to an unfair process, engaging in self-dealing,
and by including various "deal protection devices" in the Merger
Agreement. The Davis complaint also included a claim for aiding
and abetting against CVPS and the Gaz Metro entities. The Davis
complaint sought injunctive relief and other equitable relief
against the proposed transaction with Gaz Metro, as well as
attorneys' fees and costs.
On July 22, 2011, the Halberstam plaintiffs in the state case
filed an amended complaint in the Vermont Superior Court, Rutland
Unit, which added Gaz Metro Limited Partnership and one of its
affiliates as defendants in addition to the defendants named in
the original complaint. The amended complaint contained claims
and allegations similar to those in the Davis complaint and sought
similar relief.
On August 2, 2011, an Amended Class Action Complaint was filed in
the Davis action reiterating the previous claims of breaches of
fiduciary duty and adding claims that the Company's proxy
materials regarding the Merger are materially misleading and/or
incomplete in various respects, in alleged violation of fiduciary
duties and the federal securities laws. The Amended Class Action
Complaint in the Davis action seeks injunctive and other equitable
relief against the proposed transaction with Gaz Metro, damages,
and attorneys' fees and costs.
On or about August 17, 2011, the three cases pending in the
Superior Court of Vermont were consolidated by court order, in
accordance with a stipulation that had been filed by the parties.
The court also entered orders stating that defendants need only
respond to a consolidated amended complaint to be filed, denying a
motion for expedited discovery that had been brought by the
plaintiffs, and staying all discovery until the legal sufficiency
of a consolidated amended complaint could be determined.
On August 23, 2011, IBEW moved for leave to file a consolidated
amended complaint in the state court proceedings. The proposed
consolidated amended complaint contained claims for breach of
fiduciary duty against the members of the CVPS Board of Directors
in connection with both the Fortis Merger Agreement and the
subsequent Gaz Metro Merger Agreement, including claims that the
proxy materials provided in connection with the proposed
shareholder vote on the Merger were misleading and/or incomplete,
and that the CVPS Board had violated its fiduciary duties. The
proposed consolidated amended complaint also contained claims for
aiding and abetting fiduciary breaches against CVPS and Gaz Metro.
The proposed consolidated amended complaint sought, among other
relief, an injunction against consummation of the Gaz Metro Merger
and damages, including but not limited to damages allegedly
resulting from CVPS's payment of a termination fee in connection
with the termination of the Fortis Merger Agreement.
On September 1, 2011, plaintiff in the Davis action filed a motion
seeking a preliminary injunction against the September 29, 2011
shareholder vote that was scheduled in connection with the Merger.
On September 16, 2011, defendants in the Davis action filed
motions to dismiss the Amended Class Action Complaint.
On September 19, 2011, CVPS and the other defendants in the Davis
action entered into a memorandum of understanding with the Davis
plaintiff regarding an agreed in principle class-wide settlement
of the Davis action, subject to court approval. In the memorandum
of understanding, the parties agreed that CVPS would make certain
disclosures to its shareholders relating to the Merger, in
addition to the information contained in the initial Proxy
Statement, in exchange for a settlement of all claims. Pursuant
to the memorandum of understanding, CVPS subsequently issued a
Supplemental Proxy statement that included the additional
disclosures. On November 28, 2011, the parties to the Davis
action entered into a finalized settlement agreement consistent
with the terms of the memorandum of understanding, which was then
submitted to the court by the Davis plaintiff together with a
request for preliminary approval. The IBEW plaintiff subsequently
moved to intervene in the Davis lawsuit for the purpose of
objecting to the proposed settlement agreement. On December 21,
2011, the court held a hearing on the request for preliminary
approval and on the IBEW's motion to intervene. The request for
preliminary approval was denied without prejudice to refile. The
IBEW motion to intervene was also denied without prejudice.
Meanwhile, a putative class action complaint captioned IBEW Local
98 Pension Fund, Adrienne Halberstam, Jacob Halberstam, Sarah
Halberstam, and David Raul v. Central Vermont Public Service, et
al., Case No. 5:11-CV-222 was filed in the United States District
Court for the District of Vermont against CVPS, Gaz Metro, and
members of the CVPS Board of Directors. This federal IBEW
complaint, dated September 15, 2011, contained claims of breach of
fiduciary duty and inadequate proxy statement disclosures that are
substantially similar to those contained in the proposed
consolidated amended complaint filed by the same plaintiffs in the
Superior Court of Vermont. The federal IBEW complaint also
included allegations of violations of the Securities Exchange Act
of 1934. Defendants filed motions to dismiss and, on December 7,
2011, the federal IBEW complaint was amended. The amended
complaint contains substantially similar claims and allegations.
Defendants have moved to dismiss the IBEW amended complaint and
briefing on that motion has been completed.
On January 12, 2012, the parties to the state court lawsuits filed
a stipulation for dismissal without prejudice of those
proceedings. On January 24, 2012, the state court entered an
order stating that the state court lawsuits would be dismissed
without prejudice unless it received a filed objection by
January 31, 2012. No such objection was filed.
COLDWELL BANKER: Judge Certifies Investors' Class Action
--------------------------------------------------------
On March 28, 2012, in the United States District Court Central
District of California, Case No. SACV 10-401 AG (MLGx), Judge
Andrew J. Guilford certified a class of investors in a class
action pending in Santa Ana. The five plaintiffs in the case, on
behalf of approximately 1,300 individuals and entities that paid
money to invest in any of seven investment funds, are represented
by J. Mark Moore -- mark@spiromoore.com -- H. Scott Leviant and
Ira Spiro, of Spiro Moore LLP, and Michael R. Newhouse, Ruth L.
Seroussi and Suzanne M. Henry, of Newhouse|Seroussi, Attorneys,
PC. Both of the firms representing the plaintiffs and the class
are located in Los Angeles, CA. The plaintiffs seek money damages
from the Defendants Coldwell Banker Real Estate Corporation and
Coldwell Banker Real Estate LLC (the "Coldwell Defendants") in
connection with a real estate-based investment scheme allegedly
perpetrated by Real Estate Partners, Inc. ("REP") and by a
Coldwell Banker Commercial franchise doing business as Coldwell
Banker Commercial REP ("CB/REP"). The Securities and Exchange
Commission previously sued and obtained a judgment against now-
bankrupt REP and some of its principals, Case No. SACV 07-1022 AG
(RNBx).
It is alleged that REP and CB/REP used the Coldwell Banker name
and marks to market and sell unregistered securities in seven real
estate investment funds (the Investment Funds, including: Income
Fund I, Income Fund II, Income Fund III, Unit Investment Business
Trust I, Unit Investment Business Trust II, Equity Fund, or Growth
Fund). Roughly 1,300 investors across the country ultimately
invested approximately $50 million in the Investment Funds, and
lost their money. More than 130 of these investors offered sworn
testimony supporting Plaintiffs' motion to the effect that they
would not have invested if not for the Coldwell Defendants'
represented role in the investments. Plaintiffs also presented
additional evidence including internal Coldwell Banker e-mails, as
well as other documents and testimony.
Mr. Moore, a partner at boutique class action law firm Spiro Moore
LLP, stated: "We and our clients obviously are quite pleased that
the Court agreed that this matter should proceed as a class action
and we believe the evidence that the Court considered in reaching
its ruling speaks for itself." The case is currently set for
trial in August 2012. The 28-page certification order is
available at http://www.spiromoore.com/larsen-v-coldwell-banker
More information about class counsel's firms can be found at
http://www.spiromoore.comand http://www.newhouseseroussi.com
Mr. Moore may be reached at (310) 235-2468 and Mr. Newhouse at
(310) 684-3162.
DEL MONTE: Class Certification Denial in Monopoly Suit Upheld
-------------------------------------------------------------
Plaintiffs Kathleen Conroy, James Linden, Nancy Linden, Michael
Greenspan, Joyce Greenspan, and Jonathan Weiss appealed from an
order denying their motion for class certification in their third
amended class action complaint against defendants Fresh Del Monte
Produce, Inc., Del Monte Fresh Produce Company, and Del Monte
Fresh Produce, N.A., Inc. They argued that the trial court
applied incorrect legal criteria and made erroneous legal
assumptions in denying their request for class certification.
In a March 7, 2012 order, Presiding Justice William R. McGuiness
of the Court of Appeals of California, First District, affirmed
the trial court's denial of the class certification.
The class action complaint is captioned In Re Del Monte Fresh
Pineapple Cases, Case No. A126638, which allege that Del Monte
improperly obtained and maintained a monopoly over the
propagation, marketing, and sale of pineapples.
A copy of the Appellate Court's Match 7, 2012 order is available
for free at http://is.gd/zAKJwsfrom Leagle.com.
DELTA AIR: Plan Did Not Violate ERISA by Pension Benefit Cut Backs
----------------------------------------------------------------
Meredith Z. Maresca, writing for Bloomberg BNA, reports that
a federal appeals court held on March 23 that Delta Air Lines Inc.
did not illegally cut back benefits when it amended its defined
benefit pension plan to change the formula for calculating a
Social Security benefit offset of plan participants who were under
age 52, affirming the dismissal of a proposed class suit on March
23 (Cinotto v. Delta Air Lines Inc., 11th Cir., No. 10-14704,
3/23/12).
The three-judge panel of the U.S. Court of Appeals for the
Eleventh Circuit found that Delta's "Amendment Eight" did not
come within the scope of the Employee Retirement Income Security
Act's anti-cutback rule, which protects accrued pension benefits
from being reduced by a plan amendment.
The court held that the anti-cutback rule does not protect a
mere expectation based on anticipated years of future employment,
even though the participants expected how the offset would work
if they continued to work until age 52.
Amendment Eight
Jean Marie Cinotto, a Delta flight attendant, filed the proposed
class action challenging Amendment Eight. The amendment changed
the formula for calculating the Social Security benefit offset of
participants who were under age 52 on March 31, 2007, and who
would retire from Delta after age 52. At all times, the plan
calculated a participant's monthly retirement benefit as being
equal to 60 percent of his or her "final average earnings" minus
50 percent of his or her Social Security benefit.
Prior to Amendment Eight, the plan calculated the Social Security
benefit offset for participants under age 52 by assuming 2003-
level pay from July 1, 2003, to Dec. 31, 2005, and no pay
thereafter. The amount of the offset hinged on whether a
participant continued to work for Delta, retired, and received a
retirement benefit, or terminated employment prior to retirement
and received a termination benefit.
The amended formula for determining Social Security offsets
would assume the participant had 2003-level pay until he or she
reached age 65. The amendment applied to employees, like Ms.
Cinotto, who had not attained age 52 by the amendment's effective
date and were not yet eligible for retirement, and who
subsequently continued to work for Delta until becoming eligible
for retirement benefits. The court said Amendment Eight
eliminated the possibility that a participant under age 52 could
decrease his or her Social Security offset -- thereby increasing
the future retirement benefit -- by continuing to work at Delta
past age 52 and becoming eligible under the earlier offset
formula.
The U.S. District Court for the Northern District of Georgia
found that Amendment Eight did not violate ERISA's anti-cutback
rule because the amended Social Security offset calculation was a
separate benefit that did not accrue until a participant turned
52 years old. The district court dismissed Ms. Cinotto's cutback
and other claims. Ms. Cinotto subsequently appealed only the
cutback claim to the Eleventh Circuit.
No Accrued Benefit
In affirming the district court, the appeals court said the
amendment altered how the plan would calculate the Social
Security offset for a potential retirement benefit, but only for
participants who were not yet eligible for it. A participant's
right to a certain offset formula upon reaching age 52 and
becoming entitled to a retirement benefit is dependent on future
service, the court said.
Judge Frank M. Hull, writing for the court, said the lower
Social Security offset had not become part of Ms. Cinotto's
accrued benefit because she was not yet 52 years old and depended
on future employment to become eligible for a retirement benefit.
As such, the court found that Ms. Cinotto had not yet accrued a
right to the more favorable offset; rather, at most she had an
expectation of a future accrual.
The court added that "a plan may freely amend how benefits
accrue in the future (or even end their accrual) so long as the
amendment 'goes to the terms of compensation for continued,
future employment.'"
The decision was joined by Judge Ed Carnes and Judge Barbara
Jacobs Rothstein of the U.S. District Court for the Western
District of Washington, sitting by designation.
Ms. Cinotto was represented by Lindsay Nako, Teresa Renaker, and
Julie Wilensky of Lewis Feinberg Lee Renaker & Jackson, Oakland,
Calif. Delta was represented by Patrick C. DiCarlo of Alston +
Bird, Atlanta.
DREW INDUSTRIES: Awaits Decision on "Gonzalez" Suit Appeal
----------------------------------------------------------
Drew Industries Incorporated is awaiting a court decision on an
appeal from the dismissal of a class action suit initiated in
California, according to the Company's March 14, 2012, Form 10-K
filing with the U.S. Securities and Exchange Commission for the
year ended December 31, 2011.
On January 3, 2007, an action was commenced in the United States
District Court, Central District of California, entitled, as
amended, Gonzalez and Royalty vs. Drew Industries Incorporated,
Kinro, Inc., Kinro Texas Limited Partnership d/b/a Better Bath
Components; Skyline Corporation, and Skyline Homes Inc. (Case No.
CV06-08233).
The case purported to be a class action. In the course of the
proceedings during 2010, the Court dismissed each of the seven
claims asserted by the named plaintiffs. They appealed to the
Ninth Circuit Court of Appeals, plaintiffs and Kinro filed appeal
briefs, and a decision from the Court of Appeals is pending.
Plaintiffs alleged that certain bathtubs manufactured by Kinro
Texas Limited Partnership, a subsidiary of Kinro, and sold under
the name "Better Bath" for use in manufactured homes, failed to
comply with certain safety standards relating to flame spread
established by the U.S. Department of Housing and Urban
Development ("HUD"). Plaintiffs alleged, among other things, that
sale of these products is in violation of various provisions of
the California Consumers Legal Remedies Act (Cal. Civ. Code Sec.
1770 et seq.), the Magnuson-Moss Warranty Act (15 U.S.C. Sec. 2301
et seq.), the California Song-Beverly Consumer Warranty Act (Cal.
Civ. Code Sec. 1790 et seq.), and the California Unfair
Competition Law (Cal. Bus. & Prof. Code Sec. 17200 et seq.).
Plaintiffs sought to require defendants to notify members of the
class of the allegations in the proceeding and the claims made, to
repair or replace the allegedly defective products, to reimburse
members of the class for repair, replacement and consequential
costs, to cease the sale and distribution of the allegedly
defective products, and to pay actual and punitive damages and
plaintiffs' attorneys fees. The Company's liability insurer
denied coverage on the ground that plaintiffs did not sustain any
personal injury or property damage.
Kinro conducted a comprehensive investigation of the allegations
made in connection with the claims, including with respect to the
HUD safety standards, test results, testing procedures, and the
use of labels. In addition, at Kinro's initiative, independent
laboratories conducted multiple tests on materials used by Kinro
in the manufacture of bathtubs, the results of which tests
indicate that Kinro's bathtubs are in compliance with HUD
regulations.
If the Court of Appeals reverses the District Court's rulings,
which dismissed all claims asserted by the named plaintiffs, and
if plaintiffs pursue their claims, protracted litigation could
result. Although the outcome of such litigation cannot be
predicted, if certain essential findings are ultimately
unfavorable to Kinro, the Company could sustain a material
liability. However, based upon all the developments in this case
to date, the Company believes that it will not incur a material
liability in connection with this case.
DUPONT: Judge Dismisses Personal Injury Suit
--------------------------------------------
Vicki Smith, writing for The Associated Press, reports that a
judge has dismissed a personal injury lawsuit that 14 West
Virginia families brought against DuPont over a former zinc
smelting operation, saying they failed to produce evidence that
toxins from the plant made them sick.
The plaintiffs were among thousands who won a class-action lawsuit
against DuPont in 2007. They then pursued a separate case,
claiming that long-term exposure to arsenic, cadmium and lead had
caused ailments ranging from rashes to cancer.
They sued without help from an attorney, and Harrison County
Circuit Judge Thomas Bedell gave them several chances to produce
evidence independent of the class-action case. He ruled that
they'd failed to produce expert testimony or any other scientific
evidence to support their claims.
"Plaintiffs have submitted no evidence whatsoever on these crucial
issues that would lead a rational trier of fact to rule in their
favor," the judge wrote. ". . . Although the court recognizes
that the plaintiffs made a good faith effort, they did not obtain
such evidence."
Lead plaintiff Rebecca Morlock didn't immediately return messages
Tuesday so it's unclear whether they will appeal. DuPont,
however, said it was pleased with the outcome.
"The ruling confirms that the plaintiffs lacked sufficient
evidence to proceed with their claims," spokesman Dan Turner said.
DuPont's smelter in north-central West Virginia produced more than
4 billion pounds of slab zinc and 400 million pounds of zinc dust
for use in rustproofing products, paint pigments and battery
anodes. By 1971, a toxic waste pile stood 100 feet tall and
covered nearly half of the 112-acre site.
The plant closed in 2001, and DuPont worked with state regulators
to demolish buildings and cap the site.
But nearly five years ago, a jury ruled DuPont was negligent in
creating the waste pile, and that it had deliberately lied to its
neighbors and downplayed possible health threats. It awarded $380
million in punitive damages -- an amount the state Supreme Court
later cut to $196 million.
The high court affirmed that thousands of residents were entitled
to a 40-year medical monitoring program and a cleanup fund for
private properties.
Those verdicts were later wiped out when DuPont dropped its appeal
and offered a $70 million settlement that included $4 million to
be set aside for cash payments to people who are eligible for
medical monitoring program that began in November.
Judge Bedell said he gave the plaintiffs in the personal injury
case nearly a year of extensions to gather new evidence. Instead,
they rehashed material used in the class-action case "alongside
speculative and, ultimately, conclusory statements."
DuPont called the litigation frivolous and asked for sanctions in
its motion for summary judgment.
But Judge Bedell rejected that, saying he doubts their conduct
"stemmed from any ill intent."
"Ultimately, the court recognizes that, in a very realistic and
pragmatic vein, the plaintiffs have understandable concerns
regarding their health," he wrote. "The court further understands
that the legal process is oftentimes daunting and complicated."
ENTERPRISE FIN'L: Glancy Binkow & Goldberg Files Class Action
-------------------------------------------------------------
Glancy Binkow & Goldberg LLP has filed a class action lawsuit in
the United States District Court for the Eastern District of
Missouri on behalf of a class consisting of all persons or
entities who purchased the securities of Enterprise Financial
Services Corp between April 20, 2010 and January 25, 2012,
inclusive.
A copy of the Complaint is available from the court or from Glancy
Binkow & Goldberg LLP. Please contact us by phone to discuss this
action or to obtain a copy of the Complaint at (310) 201-9150 or
Toll Free at (888) 773-9224, by e-mail at
shareholders@glancylaw.com or visit our Web site at
http://www.glancylaw.com
The Complaint charges Enterprise and certain of the Company's
executive officers with violations of federal securities laws.
Enterprise operates as the holding company for Enterprise Bank &
Trust, which purports to provide banking and wealth management
services to individuals and business customers in the St. Louis,
Kansas City and Phoenix metropolitan markets. The Complaint
alleges that throughout the Class Period defendants made false
and/or misleading statements and/or failed to disclose material
adverse facts about Enterprise's business, operations and
prospects. Specifically, the Complaint alleges that defendants
misrepresented and/or failed to disclose that: (1) the Company was
improperly recording income on loans covered under loss share
agreements with the Federal Deposit Insurance Corporation
("FDIC"); (2) as a result, the Company's income was overstated;
(3) as such, the Company's financial results were not prepared in
accordance with Generally Accepted Accounting Principles; (4) the
Company lacked adequate internal and financial controls; and (5),
as a result of the above, the Company's financial statements were
materially false and misleading at all relevant times.
On January 25, 2012, the Company announced that the financial
statements included in its Annual Report filed with the SEC on
Form 10-K for the 2010 fiscal year, and the interim financial
statements included in its Quarterly Reports filed with the SEC on
Form 10-Q for the first three fiscal quarters of 2010 and 2011,
respectively, should no longer be relied upon. According to the
Company, during these periods an error in the process Enterprise
used to record income on loans covered under loss share agreements
with the FDIC resulted in the overstatement of the Company's
reported income.
As a result of this news, shares of Enterprise declined $2.92 per
share, nearly 19%, to close on January 26, 2012, at $12.55 per
share, on unusually heavy volume.
If you are a member of the class described above, you may move the
Court, no later than 60 days from the date of this Notice, to
serve as lead plaintiff; however, you must meet certain legal
requirements. To be a member of the class you need not take
action at this time; you may retain counsel of your choice or take
no action and remain an absent class member. If you wish to
discuss this action or have any questions concerning this Notice
or your rights or interests with respect to these matters, please
contact:
Michael Goldberg, Esq.
Glancy Binkow & Goldberg LLP
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Telephone: (310) 201-9150
Toll Free: (888) 773-9224
E-mail: shareholders@glancylaw.com
Web site: http://www.glancylaw.com
GAMESTOP CORP: Class Action Settlement Gets Preliminary Court OK
----------------------------------------------------------------
On April 10, 2012, in the United States District Court for the
Northern District of California, Senior District Judge Thelton E.
Henderson entered an order preliminarily approving a class action
settlement Baron and Budd reached with GameStop Corporation, the
world's largest video game retailer. The settlement concerns used
video games sold by GameStop to consumers who are unable to access
certain downloadable content and online features (DLC) unless they
pay an additional $15, even though the packaging of the video
games claims that the DLC is available for free with the purchase
of the game.
Under the settlement, GameStop must, for the next two years, post
signs on the shelves where used games are sold in California
stores, and online, warning consumers that certain downloadable
content may require an additional purchase.
Additionally, as part of the settlement, consumers will have the
opportunity to recover the additional $15 they would have been
required to pay to access the downloadable content. Consumers who
purchased qualifying used games and who are enrolled in GameStop's
"PowerUp Rewards" customer loyalty program can receive a $10 check
and a $5 coupon. Consumers who purchased a qualifying game, but
are not members of GameStop's loyalty program, can receive a $5
check and a $10 coupon.
"We are pleased that as a result of this lawsuit, we were able to
obtain complete restitution for consumers, with actual money paid
out to people who were harmed by GameStop's conduct," said
Mark Pifko, Baron and Budd attorney and counsel in the lawsuit.
"The in-store and online warnings are an important benefit under
the settlement as well, because if GameStop discloses the truth to
consumers, it is unlikely that they will be able to continue
selling used copies of certain games for only $5 less than the
price of a new copy. In fact, we already know that not long after
the lawsuit was filed, GameStop lowered prices for used copies of
many of the game titles identified in the lawsuit."
According to the lawsuit, GameStop purchases used video games from
consumers for only a fraction of the original price, and then
sells them to other consumers at a marked-up price, usually around
$5 less than the price of a new game, to maximize their profits.
Utilizing this practice, GameStop makes more than $2 billion a
year on used video game sales, without paying any royalties to
video game publishers or developers, the lawsuit alleged.
If you believe you have been affected by GameStop's policies,
visit http://www.facebook.com/gamestop.settlementto learn more
about this settlement, find out how to recover lost funds from
GameStop, or to keep up with the latest about the settlement.
Although this settlement only applies to California consumers,
Baron and Budd is investigating similar GameStop practices in
other states. If you live outside of California and have
experienced the same issue at your local GameStop, contact Baron
and Budd at 1-866-844-4556 or via e-mail at info@baronbudd.com for
a free legal consultation.
About Baron & Budd, P.C.
The law firm of Baron & Budd, P.C., with offices in Dallas, Baton
Rouge, Austin, Los Angeles and Miami represents individuals,
governmental and business entities in areas as diverse as water
contamination, Gulf oil spill, Qui Tam, California Proposition 65
violations, dangerous medications and medical devices, Chinese
drywall, insurance claims, commercial litigation, consumer fraud,
securities fraud and asbestos-related illnesses such as
mesothelioma.
GATE CITY: Faces Class Action Over Improper Overdraft Fees
----------------------------------------------------------
Wendy Reuer, writing for INFORUM, reports that an Underwood woman
has filed a federal class-action lawsuit against Gate City Bank
for improper overdraft charges.
A complaint filed by attorneys for Amber Pieloor accuses Gate City
Bank of changing the sequence of customers' debit card
transactions in order to charge excessive overdraft penalties.
In other words, larger transactions would be processed first and
deplete customer's balances. Smaller transactions could then
cause multiple overdrafts.
The complaint alleges there are more than 100 possible plaintiffs
-- possibly tens of thousands -- nationwide and more than $5
million "in controversy."
Gate City President and CEO Steve Swiontek denies the allegations
and said the bank will vigorously defend itself, KFGO reported.
Court documents said banks and credit unions collected nearly $24
billion in overdraft fees in 2008, a 35 percent increase since
2006.
The amount of damages being sought was not specified.
Gate City Bank is a $1 billion company with 32 branch locations
throughout North Dakota, court documents say.
GNC HOLDINGS: Former Store Managers Seek Overtime Pay Class Action
------------------------------------------------------------------
Brian Bowling, writing for Pittsburgh Tribune-Review, reports that
lawyers for two former GNC store managers suing for unpaid
overtime argue that the limited records turned over by corporate
officials provide ample evidence to convert the 2010 lawsuit into
a class-action suit representing thousands of current and former
managers nationwide.
The Pittsburgh-based health and nutritional supplements company
argues that the lawyers haven't found even one more person willing
to join the case in the past 18 months, so a federal judge should
deny their motion for class certification.
U.S. District Judge Terrence McVerry heard oral arguments from
both sides on April 11 and took the matter under advisement.
Dominic Vargas of Regent Square and Anne Hickok of Greensboro,
N.C., sued General Nutrition Centers Inc. and General Nutrition
Corp. in June 2010. They claim their regional managers forced
them to work off the clock in order to avoid paying them overtime.
A spokeswoman for GNC Holdings Inc., which operates GNC stores
nationwide, declined to comment on the lawsuit. The company's
name changed to GNC Holdings Inc. when it sold stock and became a
publicly owned company a year ago. GNC has more than 5,600 stores
in the country including 2,003 stores-within-a-store in Rite Aid
pharmacies, and 7,200 worldwide.
Mr. Vargas worked for the company for about four years and managed
a GNC store in Edgewood for about one year and eight months before
he was fired in January 2010, the lawsuit says. Ms. Hickok
managed a Greensboro store for about one year and 10 months before
she was fired in February 2009, the lawsuit says.
GNC denies that it forces managers to work off the clock and
frequently paid Mr. Vargas and Ms. Hickok overtime without
disciplining them even though they failed to get prior approval
for the extra hours, court papers said. The company claims that
it fired the two for doctoring time sheets.
Adrian Roe, one of the attorneys representing the managers, said
the court allowed the company to redact employee names before
handing over records. So even though the records show other
managers being forced to work off the clock, he hasn't been able
to contact them to see if they want to join the lawsuit.
Christopher Michalik -- cmichalik@mcguirewoods.com -- one of the
attorneys representing GNC, couldn't be reached for comment.
HAPPINESS IS PETS: Files Motion to Dismiss Class Action
-------------------------------------------------------
Susan Frick Carlman, writing for NapervilleSun, reports that the
attorney representing Happiness Is Pets has filed a motion for
dismissal of the class action suit alleging the pet store chain
misled the purchasers of puppies that turned out to have serious
health issues.
The chain, which has a Naperville site among its five locations,
sold several puppies between November and January that later were
diagnosed with distemper. At least one of them died and several
others are grappling with the condition's aftereffects.
In his response to the class action suit filed in mid-February,
Naperville attorney David Fish claims the six plaintiffs hurried
the legal move and provides copies of the limited warranty signed
by each of the pet owners when they bought their dogs. His motion
to dismiss the complaint was mailed to the Cook County clerk's
office late last week.
"Instead of seeking a remedy under the warranty, plaintiffs were
recruited by an animal rights organization to become plaintiffs in
this lawsuit," reads the filing. "Rushing into court mandates
dismissal of Plaintiffs' Uniform Commercial Code claim (which
plaintiffs admit governs their canine purchases) because the
Illinois Supreme Court has held the failure to provide notice
prior to filing suit is 'fatal' to such a claim. It was also
unnecessary -- Happiness fully stands behind its warranty."
The filing cites case law in its assertion that the allegations of
fraud and misrepresentation by Happiness is Pets lack merit.
Among the contentions in the dismissal motion is a 1999 ruling
centered on puffing, the term used to describe the exaggerated
claims found in advertising materials.
"Puffing in the usual sense signifies meaningless superlatives
that no reasonable person would take seriously, and so it is not
actionable as fraud," it reads.
The six pet owners who filed the suit took issue with claims made
on the store chain's Web site, which include "we take pride in
dealing exclusively with the best private breeders throughout the
Mid-West."
The response suggests the evaluation of a breeder is in the eye of
the beholder. Activists have claimed -- virtually as a "mantra,"
the filing maintains -- that the pet store chain procures its dogs
from "puppy mills" that observe lax breeding practices and
frequently violate mandated health standards.
"Everyone can have a difference of opinion as to whether someone
is reputable, what constitutes a 'best breeder,' or even what it
means to be reputable," the motion states. "Such a determination
is inherently subjective."
It also suggests that the activist organization the Companion
Animal Protection Society exerted substantial influence over the
filing of the suit.
The CAPS Web site appears to confirm its involvement in the case,
with a post on the main page headed: "Customers take legal action
with the help of CAPS, which continues to protest HIP stores and
collect consumer complaints."
The Clinton Law Firm, which is working on behalf of the pet
owners, had anticipated the challenge to the complaint. However,
representatives declined to comment on the motion early last week,
because the attorneys had not yet reviewed the document.
"Plaintiffs' complaint is a meritorious story of animal abuse and
fraud by Happiness Is Pets," Edward X. Clinton said. "Plaintiff
will respond if an answer or response is filed by the Circuit
Court of Cook County."
J.C. PENNEY: Recalls 16,700 Drop-Side Cribs Due to Fall Hazard
--------------------------------------------------------------
The U.S. Consumer Product Safety Commission, in cooperation with
manufacturer, Nan Far Woodworking Co. Ltd., of Taiwan, and
importer, J.C. Penney Purchasing Corp., of Plano, Texas, announced
a voluntary recall of about 16,700 Rockland Furniture Drop-side
Cribs. Consumers should stop using recalled products immediately
unless otherwise instructed. It is illegal to resell or attempt
to resell a recalled consumer product.
The cribs' drop sides can malfunction, detach or otherwise fail,
causing part of the drop side to fall out of position, creating a
space into which an infant or toddler can roll and become wedged
or entrapped, which can lead to strangulation or suffocation. A
child can also fall out of the crib. Drop-side incidents can also
occur due to incorrect assembly and with age-related wear and
tear.
CPSC and the firms are aware of five incidents involving drop
sides that malfunctioned or detached, including one report of a
child who became entrapped and sustained minor scratches and
bruises.
This recall includes Rockland Furniture brand drop-side cribs
imported and sold by jcpenney from 2005 to 2008. The wooden cribs
used plastic hardware to attach the drop side. "Rockland
Furniture" and the model number can be found on a rectangular
label located on the lower portion of the headboard panel. The
following six drop-side crib models are included in this recall:
343-8124 Nightingale Spindle Drop-Side Crib
343-8280 Cottage Standard Drop-Side Crib Version 1
343-8271 Cottage Standard Drop-Side Crib Version 2
343-9105 Drop-Side Crib and Changer
343-8191 Renew Standard Drop-Side Crib
343-8192 Renew Convertible Drop-Side Crib
Pictures of the recalled products are available at:
http://www.cpsc.gov/cpscpub/prerel/prhtml12/12148.html
The recalled products were manufactured in Taiwan and sold at
jcpenney stores and online at jcpenney.com from January 2005
through December 2008 for between $150 and $400.
Consumers should immediately stop using the recalled cribs and
contact Nan Far Woodworking for a free repair kit that will
immobilize the drop side. In the meantime, find an alternate,
safe sleep environment for the child such as a bassinet, play yard
or toddler bed depending on the child's age. For additional
information, contact Nan Far Woodworking at (877) 967-5770 between
9:00 a.m. and 5:00 p.m. Pacific Time Monday through Friday or
visit the firm's Web site
http://www.rocklandimmobilizationkit.com/
KINROSS GOLD: Holzer Holzer & Fistel Files Class Action in N.Y.
---------------------------------------------------------------
Holzer Holzer & Fistel, LLC has filed a class action lawsuit in
the United States District Court for the Southern District of New
York on behalf of purchasers of Kinross Gold Corporation common
stock who purchased shares between February 16, 2011 and January
17, 2012, inclusive. The lawsuit alleges that, among other
things, Kinross Gold issued false and misleading statements during
the Class Period by failing to timely disclose to investors: (a)
that the drilling results at the Kinross Tasiast property had
exhibited high amounts of low-grade ores and that because of this
the Company would need to modify its mining processes to help
minimize operating costs and maximize profitability; (b) that, as
a result of the foregoing circumstances, applicable accounting
standards required the Company to record an impairment in the
value of goodwill that Kinross attributed to the Tasiast property;
and (c) that the Company's financial statements were not fairly
presented in conformity with International Financial Reporting
Standards and were materially false and misleading.
If you purchased KGC common stock during the Class Period, you
have the legal right to petition the Court to be appointed a "lead
plaintiff." A lead plaintiff is a representative party that acts
on behalf of other class members in directing the litigation. Any
such request must satisfy certain criteria and be made no later
than April 16, 2012. Any member of the purported class may move
the Court to serve as lead plaintiff through counsel of their
choice, or may choose to do nothing and remain an absent class
member. If you are a Kinross Gold investor and would like to
discuss a potential lead plaintiff appointment, or your rights and
interests with respect to the lawsuit, you may contact:
Michael I. Fistel, Jr., Esq.
Marshall P. Dees, Esq.
E-mail: mfistel@holzerlaw.com
mdees@holzerlaw.com
or via toll-free telephone at (888) 508-6832.
Holzer Holzer & Fistel, LLC -- http://www.holzerlaw.com-- is an
Atlanta, Georgia law firm that represents shareholders and
investors in litigation nationwide, including shareholder class
action and derivative litigation.
LEVY PREMIUM: 11th Circuit Affirms Class Action Dismissal
---------------------------------------------------------
Michael P. Tremoglie, writing for Legal Newsline, reports that a
federal three-judge panel has affirmed a district court's
dismissal of a complaint by employees of a food service company
about a service fee.
The specific issue was the collection from patrons, by the
defendants -- Levy Premium Foodservice d.b.a. Atlanta Sports
Catering and Compass Group North America d.b.a. Levy Restaurants
-- of a 20 percent service fee. The defendants have an exclusive
contract to provide concessions and food service in luxury suites
at the Georgia Dome, Philips Arena and Atlanta Motor Speedway.
The plaintiffs were employees who were suite attendants. They
provided the food and beverages to the patrons for which Levy
added a 20 percent fee to the bill, according to the case heard by
the U.S. District Court of Appeals for the Eleventh Circuit in
Atlanta.
The menus stated that this fee was "a convenience to our guests."
It was included because the company wanted to "clarify any
confusion regarding the service charge and tipping policy." The
defendants explained that the additional fee was "shared in the
form of higher wages . . . It helps our company attract a high
quality employee . . ." Then the menu says that patrons can "feel
free to extend a personal gratuity."
Levy retained the service fee and did not pay it to the
plaintiffs. The plaintiffs sued. The class alleged a breach of
contract, breach of contract as a third-party beneficiary, unjust
enrichment and conversion. The company moved to dismiss the
complaint in the federal district court. The district granted the
motion. The plaintiffs appealed.
Both the district court and the Appeals Court said that there
could not be a breach of contract because the contract was between
the patrons and Levy. It was not between Levy and the employees.
Both courts said there was not a third-party breach of contract
because the contract was never intended for the third party's
benefit -- which means the employees. Levy's policy, the district
court said and the Appeals Court concurred, was never stated to
benefit the employees. Levy clearly states if the patrons want to
tip the servers they could.
This was a policy that was intended to purportedly benefit the
patrons. It permits Levy to attract superior servers. These
servers will benefit the patrons.
Regarding the claim of being unjustly enriched, both courts said
that the plaintiffs did receive compensation for their services
which is all they were entitled. The retention of the service fee
did not prove that the employees were not justly compensated.
MERCK & CO: Va. Statute of Limitations Don't Toll Over Other Suits
------------------------------------------------------------------
In response to certified questions from the U.S. Court of Appeals
for the Second Circuit in relation to the lawsuit captioned John
Casey, et al. v. Merck & Co., Inc., Record No. 111-438, the
Supreme Court of Virginia holds that Virginia recognizes neither
equitable nor statutory tolling due to the pendency of a putative
class action in another jurisdiction.
The questions arise from actions commenced by four Virginia
residents against Merck & Co. Inc.
In September 2005, a putative class action, Wolfe v. Merck & Co.
was filed in the U.S. District Court for the Middle District of
Tennessee, alleging negligence against Merck in relation to the
prescription drug, Fosamax. The action was transferred to the
U.S. District Court for the Southern District of New York by the
Judicial Panel on Multidistrict Litigation. The New York Court
denied certification and dismissed the Wolfe action in January
2008.
Prior to dismissal of the Wolfe Action, four Virginia residents
filed individual state law based actions against Merck in the New
York court, asserting federal diversity jurisdiction. All
plaintiffs allegedly suffered from osteonecrosis of the jaw as a
result of Fosamax consumption. Merck insisted that the actions
were untimely under Virginia's two year statute of limitations for
personal injuries law. The New York court agreed with Merck and
found that the pendency of the Wolfe class action did not toll
Virginia's limitations period for the state law claims. The
plaintiffs appealed the ruling with the Second Circuit.
A copy of the Virginia Supreme Court's March 2, 2012 opinion is
available at http://is.gd/HZc2GRfrom Leagle.com.
MERRILL LYNCH: 7th Cir. Reverses Class Denial in "McReynolds" Suit
------------------------------------------------------------------
The U.S. Court of Appeals for the Seventh Circuit concluded that
the trial court erred in denying certification in the class action
suit styled as GEORGE McREYNOLDS, et al., on behalf of themselves
and all others similarly situated, Plaintiffs-Appellants, v.
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Defendant-Appellee,
Case No. 11-3639 (7th Cir.). The lawsuit charges Merrill Lynch of
racial discrimination in employment.
Circuit Judge Richard Posner, who penned the decision, said the
"practices challenged in this case present a pair of issues that
can most efficiently be determined on a class-wide basis . . .."
The denial of the class certification is therefore reversed, the
Ninth Circuit ruled.
The other members of the appellate panel are Circuit Judges Diane
Pamela Wood and David F. Hamilton.
A copy of the Seventh Circuit's February 24, 2012 order is
available at http://is.gd/VCRDlpfrom Leagle.com.
MORGAN STANLEY: 7th Cir. Upholds "Appert" HPI Fees Suit Dismissal
-----------------------------------------------------------------
The U.S. Court of Appeals for the Seventh Circuit affirmed the
district court's dismissal of Susan Appert's initial and amended
complaints in the lawsuit captioned SUSAN APPERT, individually and
on behalf of all others similarly situated v. MORGAN STANLEY DEAN
WITTER, INC., Case No. No. 11-1095.
Ms. Appert's complaint is a breach of contract action in state
court seeking class certification and recovery fees charged by
Morgan Stanley to customers from 1998 through the present.
Morgan Stanley entered into agreements with its customers that set
a fee for handling, postage, and insurance (HPI) for mailing trade
confirmation slips after each purchase or sale of securities.
A copy of the Seventh Circuit's March 8, 2012, order is available
for free at http://is.gd/GHOPdgfrom Leagle.com.
NBC UNIVERSAL: Class Action Over Channel Bundling Dismissed
-----------------------------------------------------------
Michael O. Loatman, writing for Bloomberg BNA, reports that a
proposed class action alleging an illegal tie between high-demand
and low-demand channels by cable and satellite companies is
dismissed without prejudice because the complaint failed to plead
an injury to competition, the U.S. Court of Appeals for the Ninth
Circuit ruled March 30 (Brantley v. NBC Universal Inc., 9th Cir.,
No. 09-56785, 03/30/12).
Writing for the court, Judge Sandra S. Ikuta said, "Businesses may
choose the manner in which they do business absent an injury to
competition." She explained that an injury to competition
includes tying arrangements, but only when the tie harms existing
competitors, creates barriers to entry for new competitors in the
tied market, or facilities horizontal collusion.
Judge Ikuta added that a contrary rule adopting the plaintiffs'
logic would have undermined the ability of musicians to sell a hit
single only through purchase of an entire album or a writer to
sell a short story only through a collection of short stories.
Indeed, she said, an alternate ruling could have called into
question cable channels because "such channels are themselves
packages of separate television programs."
The court left unmentioned that on June 3, 2011, it previously
released an opinion dismissing the case. That ruling drew a large
number of amicus briefs supporting a rehearing by the panel or en
banc. Judge Ikuta wrote that opinion as well and was joined by
Judges Pamela Ann Rymer and Consuelo M. Callahan.
The June 3 ruling was withdrawn Oct. 31, and the court appointed a
new judge -- Barry G. Silverman -- to replace Judge Rymer, who had
died in the interim.
Richard Brunell, the director of legal advocacy for the American
Antitrust Institute, Boston, and the author of an amicus brief
supporting rehearing, told BNA April 4 that he had been optimistic
that the withdrawn opinion meant the panel would reconsider its
prior ruling, but the new ruling was very similar.
Mr. Brunell said the ruling was correct to argue that the mere
fact that there was harm to consumers does not mean there was
injury to competition. Nonetheless, he explained, the complaint
dealt with a traditionally suspect tying agreement and the entire
industry was engaged in the practice.
He said that the U.S. Supreme Court's ruling in Leegin Creative
Leather Products Inc. v. PSKS Inc., 551 U.S. 877, 75 U.S.L.W. 4643
(2007) said there could be a violation of the antitrust laws if
there was an industry-wide adoption of resale price maintenance.
The Ninth Circuit should have similar concerns in this tying case,
which is also a vertical agreement raising antitrust concerns.
Mr. Brunell concluded that the opinion appeared to be "the
reversal of the mantra that antitrust law is to protect consumers,
not competitors."
Channel Bundling Draws Consumer Group Scrutiny
The practice of bundling channels has drawn attention from
Congress and the Federal Communications Commission, which both
have studied efforts to require companies to offer customers "a la
carte" channel offerings.
Parents Television Council President Tim Winter, Los Angeles, who
runs a Cable Choice campaign on the issue, told BNA April 4 that
he had hoped the antitrust lawsuit would be successful because the
cable industry had always been able to defeat legislative and
regulatory efforts to require unbundling of channels.
Mr. Winter said that AT&T had attempted to offer a la carte
channels to customers through its U-verse product, but it was
"slammed on that and forced to sell in bundles" because
programmers otherwise would not provide the company with channels.
He said that new entrants -- particularly the small, privately-
owned, family-friendly cable channel operators he worked with --
could not obtain a fair price from cable companies that would
allow them to enter the market because of the current system.
Mr. Winter added that a study found bundling costs consumers about
$100 million a year.
Lara Pritchard, vice president of communications for Time Warner
Cable, Northeast, told BNA that it would not comment on the
ruling. Glenn D. Pomerantz, Munger Tolles & Olson LLP, Los
Angeles, as well as the National Cable & Telecommunications
Association did not respond to BNA's request for comment on the
ruling.
Third Turn at Bat for Plaintiffs
The class action plaintiffs were on their third amended complaint
at the time of the ruling. The first amended complaint was
dismissed without prejudice for failure to show injury to
competition, which led to a second amended complaint that alleged
the bundling excluded independent programmers from the programming
market that includes companies such as NBC Universal and Fox
Entertainment Group.
The court explained that plaintiffs abandoned that approach after
preliminary discovery efforts, which programmers and distributors
-- such as Time Warner and Echostar -- said showed there was no
evidence of foreclosure of competition in the programming market.
The parties stipulated that a third amended complaint would be
allowed, but any dismissal would be with prejudice.
The district court and Ninth Circuit dismissed the claim.
Do Not Conflate Injury to Competition, Consumers
The court explained that the tying claim would be analyzed under
the rule of reason. The plaintiffs were required to show:
a contract, combination, or conspiracy among two or more parties,
the defendants' intent to harm competition within interstate or
foreign commerce, an actual injury to competition, and
the plaintiffs' standing to bring the claim.
The issue at the heart of the tying case was whether the
plaintiffs had shown injury to competition. The court also
explained that tying involves a supplier selling a "tying product"
only on the condition that a "tied product" is purchased, which in
this case would be high-demand and low-demand channels,
respectively.
Not all tying arrangements are illegal or harm competition, the
court held. Only those ties that harm existing competitors,
create barriers to entry for new competitors in the tied product
market, or facilitate horizontal collusion are illegal.
Instead, the court said, the plaintiffs cited harms to consumers
through reduced customer choice and increased prices, but "[b]oth
effects are fully consistent with a free, competitive market." As
Leegin showed, the use of resale price maintenance to eliminate
price reductions, and thereby raise prices, can be legal if no
anticompetitive effect is shown.
Plaintiffs' allegations of decreased consumer choice and higher
prices instead only provide support for the standing requirement
of the tying claim, the court held.
The class also said that the industrywide nature of the practice
raised injury to competition concerns. True, the court said,
Leegin does support the argument that an industrywide practice can
harm competition, but the plaintiffs failed to explain in the
complaint how the widespread practice of bundling low-demand and
high-demand channels injured competition.
Maxwell M. Blecher, Blecher & Collins PC, Los Angeles, argued for
the class. Pomerantz argued for the programming and distributor
defendants.
OBERON MEDIA: 9th Cir. Upholds Class Denial in Gamesaver Fees Suit
------------------------------------------------------------------
The U.S. Court of Appeals for the Ninth Circuit affirmed a trial
court's denial of certification of the consumer class action
captioned Blake R. Williams, Peggy J. McGregor, for themselves and
on behalf of all others similarly situated v. Oberon Media, Inc.,
Does 1 through 10, Case No. 10-56255 (9th Cir.).
The Plaintiffs complain of automatic fees of GameSaver
subscriptions without their consent. They further allege that
online game designer and retailer Oberon refused to cancel their
membership in GameSaver.
The Ninth Circuit also said it did not find any abuse of
discretion in the trial court's denial of the Plaintiffs' leave to
amend; refusal to grant the Plaintiffs an extension to file their
class certification motion; and denial of the Plaintiffs'
application to file documents under seal.
A copy of the Ninth Circuit's February 22, 2012 Memorandum is
available at http://is.gd/GrgvYmfrom Leagle.com.
PARK RIDGE, IL: Lacks Authority to Conduct Proceeding, Suit Says
----------------------------------------------------------------
J. Harrison, as Trustee, individually, and on behalf of all others
similarly situated v. City of Park Ridge, a municipal corporation,
Case No. 2012-CH-12613 (Ill. Cir. Ct., April 8, 2012) is brought
in connection with proceedings arising from notices of violation
issued by the City for the properties commonly known as 805 N.
Northwest Highway, Park Ridge, in Cook County, Illinois.
According to the lawsuit, the City has instituted administrative
proceedings known as CITY OF PARK RIDGE v. J. HARRISON, as
Trustee, et al., located in the City of Park Ridge, Illinois,
Administrative Hearing System, and identified as Case Nos. 1018,
10I9, 1020, 1021, 1022, 1068, 1069 and 1247 (collectively, the
"Proceeding").
Mr. Harrison contends that in violation of the Illinois Compiled
Statutes ("ILCS"), the City, instead of establishing the required
"code hearing unit within an existing agency or as a separate
agency in the municipal government," has done nothing more than
engage a Hearing Officer to hear the Proceeding. As a result of
this violation, the Defendant lacks the requisite jurisdiction to
conduct this Proceeding, and every proceeding ostensibly conducted
by the non-existent "Administrative Adjudication Division," he
points out.
Mr. Harrison, as trustee, is named as a respondent in a series of
Notices of Violation, issued by the Defendant for the Properties.
The Defendant is an Illinois municipal corporation organized,
existing and located in Cook County, Illinois.
The Plaintiff is represented by:
Robert A. Boron, Esq.
ROBERT A. BORON, LTD.
33 N. LaSalle Street, Ste. 3200
Chicago, IL 60602
Telephone: (312) 263-7825
PERSHING LLC: 1st Cir. Upholds Dismissal of "Katz" Consumer Suit
----------------------------------------------------------------
The U.S. Court of Appeals for the First Circuit affirmed dismissal
of the lawsuit captioned Brenda Katz v. Pershing, LLC, Case No.
11-1983 (1st Cir.)
Pershing sells brokerage execution, clearance, and investment
products and services to other financial organizations. Its
customers are typically registered broker-dealers and investment
advisers that trade securities on behalf of their clients.
Ms. Katz sued Pershing on behalf of herself and on behalf of
others similarly situated in the U.S. District Court for the
District of Massachusetts, insisting that the defendant failed to
protect sensitive non-public personal information as it was
obligated to do under both contract and consumer protection laws.
The First Circuit concluded that the plaintiff has not only failed
to state any contractual claim for relief but also lacks
constitutional standing to assert a violation of any arguably
applicable consumer protection law.
A copy of the First Circuit's February 28, 2012 order is available
at http://is.gd/nnTVULfrom Leagle.com.
PERFUMANIA HOLDINGS: Motion to Stay "Dias" Del. Action Denied
-------------------------------------------------------------
Vice Chancellor Sam Glasscock III of the Court of Chancery of
Delaware rejected a request to stay the lawsuit JOSE DIAS,
individually and on behalf of all others similarly situated v.
FREDERICK E. PURCHES, ANTHONY D'AGOSTINO, ESTHER EGOZI CHOUKROUN,
GLENN GOPMAN, ROBERT MITZMAN, PARLUX FRAGRANCES, INC., PERFUMANIA
HOLDINGS, INC., and PFI MERGER CORP., Civil Action No. 7199-VCG
(Del. Chancery Ct), in favor of a first-filed similar action in
Florida.
The lawsuits stem from Perfumania's December 2011 agreement to
acquire Parlux Fragrances, Inc.
By January 5, 2012, Shirley Anderson, purportedly a stockholder of
Parlux, filed an action challenging the acquisition in a Florida
state court in Broward County. On January 19, 2012, Arthur Weill
filed a Motion to Intervene in the Florida Action. After that
motion was denied, Mr. Weill filed on February 8, 2012, a
stockholder class action complaint similar to Ms. Anderson's and
moved to consolidate his case with the Florida Action. On
January 30, 2012, Jose Dias filed a class action against
Perfumania, Parlux and other defendants. All three actions seek
to enjoin the takeover of Parlux, on behalf of a stockholder
class, based on similar allegations of inadequate disclosure and
breach of fiduciary duty.
Vice Chancellor Glassrock said he hasn't found a valid reason to
stay the Delaware action in deference of the Florida Action. "To
the contrary, the interest of this state [Delaware] in the
behavior of fiduciaries for its corporate citizens convinces me
that the Motion to Stay must be denied."
A copy of the Chancery Court's March 5, 2012 Memorandum Opinion is
available for http://is.gd/Hd0jBAfrom Leagle.com.
The Plaintiff is represented by:
Blake A. Bennett, Esq.
Gregory F. Fischer, Esq.
COOCH AND TAYLOR, P.A.
1000 West Street, 10/F
Wilmington, DE 19801
Tel No: (302)984-3889 (for Mr. Bennett)
(302)984-3855 (for Mr. Fischer)
E-mail: bbennett@coochtaylor.com
gfisher@coochtaylor.com
- and -
Donald J. Enright, Esq.
LEVI & KORSINSKY LLP
1101 30th Street NW, Ste 115
Washington, DC 200007
Tel No: (202)524-4290
E-mail: denright@zlk.com
Attorneys for Defendants Parlux Fragrances, Inc., Frederick E.
Purches, Glenn Gopman, Robert Mitzman, Esther Egozi Choukroun, and
Anthony D'Agostino are:
Elizabeth Sloan, Esq.
BLANK ROME LLP
Chase Manhattan Centre,
1201 Market Street, Suite 800
Wilmington, Delaware 19801
Tel No: (302)425-6400
Fax No: (302)425-6464
E-mail: Sloan@BlankRome.com
- and -
Alvin B. Davis, Esq.
Digna B. French, Esq.
SQUIRE SANDERS (US) LLP
200 South Biscayne Boulevard, Suite 4100
Miami, FL 33131
Tel No: (305) 577-2835
E-mail: alvin.davis@squiresanders.com
Attorneys for Defendants Perfumania Holdings, Inc., and PFI Merger
Corp. are:
Raymond J. DiCamillo, Esq.
Kevin M. Gallagher, Esq.
RICHARDS, LAYTON & FINGER, P.A.
Wilmington, Delaware
Tel No: (302)651-7786 (for DiCamillo)
(302)651-7692 (for Gallagher)
E-mail: dicamillo@rlf.com
gallagher@rlf.com
- and -
John J. Tumilty, Esq.,
EDWARDS WILDMAN PALMER LLP
111 Huntington Avenue
Boston, MA 02199-7613
Tel No: (617)239-0100
Fax No: (617)227-4420
E-mail: jtumilty@edwardswildman.com
PIONEER ENERGY: Siskinds Launches Gas Price Fixing Class Action
---------------------------------------------------------------
The law firm Siskinds LLP has launched a class action regarding
alleged price fixing in the market for gas.
The Notice of Action issued on March 27, 2012, alleges that
Pioneer Energy LP, Canadian Tire Corporation, Limited and Mr. Gas
Limited, participated in unlawful conspiracy to fix prices of
gasoline sold in Kingston and Brockville, Ontario in 2007.
Siskinds LLP continues to investigate the alleged cartel and will
amend the proceeding to expand the scope of the allegations if it
can establish that the alleged conspiracy extended to other parts
of Ontario or for a period of time longer than currently alleged.
Charles Wright -- charles.wright@siskinds.com -- a lawyer with
Siskinds LLP, describes the purpose of the proceeding: "We believe
that through this lawsuit the defendants will be required to
disgorge an amount of money equal to the revenue obtained as a
result of any price fixing which can be established. In this
case, as with all of these types of cases, we are concerned about
recovering compensation for consumers that are unfairly
overcharged for the products they purchase."
SR SUNTOUR: Recalls 17,000 GT, Giant and Trek Bicycles
------------------------------------------------------
The U.S. Consumer Product Safety Commission, in cooperation with
SR Suntour, of Taiwan and Vancouver, Washington, announced a
voluntary recall of about 17,000 units of GT, Giant and Trek
Bicycles with SR Suntour Suspension Forks. Consumers should stop
using recalled products immediately unless otherwise instructed.
It is illegal to resell or attempt to resell a recalled consumer
product.
The suspension fork's internal support tubes can break and cause
the rider to lose control, fall and crash.
SR Suntour has received 12 reports of incidents with the
suspension forks, including two injuries involving a laceration
and a chipped tooth.
This recall involves the following GT, Giant and Trek bicycles
with SR Suntour suspension forks. "SR Suntour" and the date code
are printed on the back of the fork crown.
SR Suntour
Suspension Fork
Bicycles Model Years Model Name Date Codes
-------- ----------- ---------- ----------------------
Giant 2011-2012 Revel 1 CK110301 thru CK110731
Revel 1W
GT 2012 Avalanche 4.0 CK110301 thru CK110731
Avalanche 4.0 GTW
Trek 2012 3700D CK110301 thru CK110731
3900D
A picture of the recalled products is available at:
http://www.cpsc.gov/cpscpub/prerel/prhtml12/12149.html
The recalled products were manufactured in China and sold at
specialty bicycle stores nationwide from April 2011 through March
2012 for between $400 and $600.
Consumers should stop using bicycles with these forks immediately
and return the bicycles to any authorized GT, Giant or Trek dealer
for a free repair. For additional information, please contact SR
Suntour toll-free at (855) 205-2453 anytime, or visit the firm's
Web site at http://www.srsuntour-cycling.com/
STATE OF ARIZONA: Amnesty Int'l. Unveils Cruel Prison Conditions
----------------------------------------------------------------
Tim Hull at Courthouse News Service reports that Arizona keeps
thousands of prisoners in extreme isolation, with no access to
fresh air, natural light and regular exercise. Alone,
malnourished and often mentally unstable, the inmates sit in tiny,
dirty cells with blood and excrement caked to the walls, in
violation of international standards, according to a report from
Amnesty International.
The report documents the human rights group's concerns about the
conditions of the Arizona Department of Correction's Special
Management Units (SMU) and other maximum-security isolation
facilities.
On any given day, more than 3,000 prisoners out of a total prison
population of around 40,000, including women and children as young
as 14, experience such conditions in Arizona prisons, according to
Amnesty International.
"SMU prisoners are confined, most of them alone, for nearly 24
hours a day in sparsely furnished cells which are designed to
reduce visual and environmental stimulation," the report states.
"The only natural light source comes from a skylight in the area
beyond the cell tiers, with little natural light filtering into
the cells. The lighting in the cells is controlled by guards, and
remains on 24 hours a day, although reportedly dimmed at night.
It is reported that little fresh air enters the SMU cells or
housing pods, which become hot and stuffy in summer when
temperatures are regularly above 100 degrees Fahrenheit."
Staffing shortages and indifference have allowed conditions in
several SMUs to deteriorate far below international standards for
holding dangerous prisoners in solitary confinement, the group
says.
For those who are sentenced to life or death row, isolation is
commonplace, but dangerous inmates are not the only ones confined
to isolation. The report claims that prisoners sometimes spend
months and even years in isolation for relatively minor jailhouse
infractions.
"Amnesty International was told by an advocacy organization that
had worked on prison issues for many years that a violation for
three, even minor, rules within a 90-day period can result in a
major write-up which could lead to a prisoner being sent to the
SMU," according to the report. "The organization viewed the
record in one case that showed a prisoner had his custody level
raised from level 3 to level 5, resulting in SMU assignment, for
offences which included throwing liquid on another inmate (causing
no injury), feigning a seizure and refusing to come to the cell
door to be restrained."
The conditions have resulted in a sharp increase in prisoner
suicides in recent years, the group says.
"At least 43 suicides are listed as having taken place in
Arizona's adult prisons in the five and a half years from October
2005 to April 2011, with several more cases to June 2011 still
under investigation," the report states, adding that "36 of 37
cases where Amnesty International obtained information on the
units where the suicides took place, 22 (60 percent) took place in
maximum custody isolation facilities."
Prisoners have been pursuing similar claims, while attacking an
allegedly substandard prison health care system, in a class action
lawsuit since 2010. One day after a federal judge dismissed the
third amended complaint in March 2012 for lack of prosecution, the
same plaintiffs filed a new suit alleging the same claims.
The Amnesty International report repeats many of the allegations
brought up in the class action, including the claim that guards
regularly deny proper nutrition to prisoners in SMUs, figuring
that the inmates need less food since they do not exercise.
Amnesty International says it was denied access to the state's
largest SMU facility during a fact-finding trip last summer. The
report relies primarily on letters from prisoners and intelligence
gathered by prisoner-advocacy groups, as well as information
provided in the class action.
In an interview with Courthouse News, a spokesman for the Arizona
Department of Corrections attributed the barred access to a
scheduling conflict. There was an execution the week that the
investigators arrived, and the department's director was out of
town afterward, according to the ADOC. Citing the pending class
action, the spokesman refused to comment further.
Amnesty International says unsanitary cells also plague prison
isolation units, many of which hold inmates with undiagnosed or
undertreated mental health issues.
"In addition to the above concerns, conditions in some of the SMU
housing pods are reported to have become increasingly unsanitary
in recent years, with food, urine and faeces stuck onto walls,"
the report states, using a British spelling variant. "Prisoners
have alleged that they are not provided with adequate cleaning
materials for their cells. It is alleged that steam-cleaning is
no longer regularly done and that there are many isolated cases of
staph infection in the units. Amnesty International is concerned
at the health risks to inmates of these conditions, including
health concerns about inmates having to eat meals in their cells,
given the enclosed cellular environment, the close proximity of
the toilet and sink and reports that food ports are covered with
dirt, grease and blood."
Amnesty International says that ADOC has "no formal policy to
exclude the seriously mentally ill from SMU." The extreme
isolation, and lack of exercise and activity, have caused
previously healthy prisoners to develop mental-health issues,
according to the report. Meanwhile, those with pre-existing
conditions have allegedly worsened. The group says there is no
psychiatrist on duty at the state's largest SMU facility.
ADOC scores its inmates' mental health on a one-to-five scale,
giving fives to inmates with the most acute issues.
"The organization has been told by several sources, including a
source close to the prison's mental health service, that there is
serious under-reporting of mental illness in SMU, with particular
concern about under-diagnosis of prisoners within the Serious
Mental Illness (SMI) range of MH4," the report states. "It was
alleged that there are many prisoners in SMU who have a 'high
need' for mental health services (MH4) but have been given a lower
score of MH3 and are thus not receiving the specialized treatment
they require. Amnesty International was also told that MH5
prisoners treated at Phoenix may be placed in SMU once they have
been 'stabilized' and may move between the two units during their
incarceration; some are reportedly held in SMU because of a lack
of space in the mental health unit."
Arizona has the sixth-highest incarceration rate in the nation,
according to the U.S. Bureau of Justice Statistics.
Arizona Gov. Jan Brewer's office did not respond to a request for
comment.
TITLE LENDERS: Missouri Supreme Court Remands "Robinson" Suit
-------------------------------------------------------------
At issue in the case captioned Lavern Robinson v. Title Lenders,
Inc., dba Missouri PayDay Loans, Case No. SC91728 (Miss. Sup.
Ct.), is whether a consumer arbitration agreement containing a
class action waiver is unconscionable and, therefore,
unenforceable. Title Lenders, Inc., a payday loan company, argues
that its arbitration agreement containing a class waiver is
enforceable and should result in the dismissal of a lawsuit
brought by Lavern Robinson as borrower. Borrower seeks to have
the arbitration provision or its class waiver declared
unenforceable so that she can proceed with a class action suit or
class arbitration against Title Lenders.
In a March 6, 2012 opinion, the Supreme Court of Missouri, sitting
en banc, reversed the trial court's judgment that Title Lenders'
arbitration agreement is unenforceable. The case is remanded.
A copy of the Supreme Court's March 6 order is available at
http://is.gd/y1uSYufrom Leagle.com.
VITRAN EXPRESS: 9th Cir. Reverses Remand Order in "Campbell" Suit
-----------------------------------------------------------------
The U.S. Court of Appeals for the Ninth Circuit reversed and
remanded a district court's order remanding the case entitled
Brandon Campbell, et al. v. Vitran Express, Inc., Case No. 12-
550052, to California state court for lack of jurisdiction under
the Class Action Fairness Act. The issue in the case is whether
there is more than $5 million in controversy.
Vitran Express is in the business of transporting and delivering
merchandise in their trucks. The Plaintiffs, who are California
residents and former employees of Vitran who worked as city and
local truck drivers, alleged that the Company failed to provide
its drivers with meal and rest breaks, wages and benefits, and
accurate payroll records.
The Ninth Circuit held that Vitran has established, to a "legal
certainty", that the amount in controversy exceeds $5 million.
The evidence prepared by Vitran's experts, the Ninth Circuit
noted, shows that Plaintiffs' damages would, at a minimum, come to
$5,295,866.30, and at a maximum come to $7,226,375.50.
A copy of the Ninth Circuit's March 8, 2012 order is available at
http://is.gd/2mLz83from Leagle.com.
* Federal Securities Class Actions Up 10% in 2011, PwC US Says
--------------------------------------------------------------
Federal securities class action cases increased for the third
consecutive year in 2011 with nearly 200 cases representing a 10
percent increase over 2010 and 22 percent increase over 2009,
according to the 16th annual Securities Litigation Study released
on April 11 by PwC US. The study points to new trends in the
securities litigation arena including a focus on Mergers and
Acquisitions (M&A)-related cases, which increased by 17 percent
reaching an all-time high in 2011. Forty-eight M&A-related cases
were filed in 2011, representing the largest single category of
non-accounting cases. Financial crisis filings, in contrast, hit
their lowest point (nine cases filed) since the start of the
financial downturn in 2008.
M&A-related cases are cases that are filed very quickly following
the announcement of the transaction and the allegations are
relatively straightforward. Many of the cases are settled out of
court shortly after they are brought. According to PwC,
plaintiffs do not require a considerable investment of time or
resources, making it attractive for them to bring M&A cases to
court and the returns for plaintiff attorneys can also be
considerable.
"The dramatic rise in M&A cases signals that this 'new' focus of
litigation may be here for some time to come," said Patricia
Etzold, partner at PwC. "This is a real game changer for the
advisors involved in these deals. Given the increase in M&A
litigation at the federal and state court level, this may be a
good time for companies to evaluate their M&A process and criteria
for selecting advisors. In light of the uptick in cases,
companies may need to factor litigation risk into the timeline and
costs associated with any transaction."
PwC also found that cases against Foreign Issuers (FIs), which
increased by 126 percent in 2011, were dominated by companies
based in China. The 37 FI cases filed against China-based
companies in 2011 accounted for 61 percent of FI cases and 19
percent of total cases in 2011. The majority of cases filed were
against China-based companies that entered the market through a
reverse merger transaction, in which the China-based company
merged with a publicly-traded U.S. shell company, as opposed to
the traditional IPO process. China-based companies were also the
target of 39 percent of accounting-related cases in 2011.
The number of cases settled in 2011 declined by 30 percent to the
lowest level since 1999. A total of 69 settlements were reached
in 2011, compared to a total of 99 in 2010. Conversely, the total
value of settlements increased 17 percent from $2.9 billion in
2010 to $3.4 billion in 2011. Financial crisis-related
settlements -- totaling $2.6 billion -- made up the majority of
the total value of settlements.
PwC notes that 2011 saw a slight increase in the number of
accounting-related cases, including an increase in those that
allege inappropriate revenue recognition. Also prevalent in
accounting-related cases are allegations of a lack or failure of
internal controls, cited in 62 percent of filings.
"The increase in revenue recognition cases, combined with
statements by the Enforcement Division of the SEC that revenue
recognition is a priority area for 2012, is noteworthy. Many of
the accounting scandals following the turn of the century centered
on inappropriate revenue recognition practices and fuelled large
scale restatements, investigations and litigation," said
Neil Keenan, principal at PwC.
According to PwC, filings against financial services and health
industries sank in 2011. For the first time since 2007, companies
in the high-tech industry were named in more filings than those in
the financial services industry, returning to pre-financial crisis
levels. High-tech businesses were named in 23 percent of total
filings, a 9 percentage point increase over 2010.
The number of filings with SEC or DOJ involvement increased from
34 cases in 2010 to 36 cases in 2011, remaining well below the
heavy case volume that characterized 2007 and 2008 amid the
financial crisis. During 2011, the SEC pursued an array of Dodd
Frank whistleblower cases across sectors and borders, boosting
enforcement actions by 8 percent from 2010 levels. This may be a
precursor for further increases.
"Projecting the lessons of 2011 onto expectations for 2012 may be
challenging as developments in international markets may change
the litigation and enforcement landscape," added Ms. Etzold. "The
enactment of the UK Bribery Act and the recent ruling by the
Netherlands Court of Appeal might signal that other countries will
be following the United States' lead in bribery enforcement and
class action lawsuits. As these developments play out, it will be
interesting to assess their impact on U.S. securities litigation.
If history repeats, the rollercoaster ride that companies find
themselves on will continue and accelerate."
Other notable findings in the 2011 study include:
Circuits: The Second and Ninth Circuits continue to dominate, with
the Ninth Circuit keeping the lead - For the second consecutive
year, the single largest number of filings (54 filings or 28
percent of total filings) was recorded in the Ninth Circuit. This
narrowly edged the Second Circuit (52 filings or 27 percent of
total filings).
Directors and officers remain in the spotlight - The majority of
2011 federal filings continued to name as defendants members of
the C-suite and senior management. CEOs (named in 86 percent of
cases filed) and CFOs (named in 69 percent) are most frequently
named. This represents a slight increase compared to the last two
years.
A continued decrease in filings against Fortune 500 companies - In
2011, 12 percent of filings were directed at Fortune 500
companies, compared to 14 percent of filings in 2010. The
percentage of 2011 filings approximated pre-financial-crisis
levels.
Institutional investors lead the pack as lead plaintiffs - Thirty-
eight percent of cases (72 filings) had an institutional investor
assigned as the lead plaintiff, compared to 27 percent (52
filings) for private investors; 35 percent of cases have yet to
declare a lead plaintiff.
"The economic cycle will come full circle as the economy continues
to recover, stirring up the same motives, pressures, and
incentives to engage in misconduct that have rendered businesses
vulnerable since the earliest days of trade," stated Mr. Keenan.
"The world has changed, but some things will remain the same.
This time around, more eyes will be watching."
*********
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. Noemi Irene
A. Adala, Joy A. Agravante, Ivy B. Magdadaro, Psyche A. Castillon,
Julie Anne L. Toledo, Christopher Patalinghug, Frauline Abangan
and Peter A. Chapman, Editors.
Copyright 2012. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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The CAR subscription rate is $575 for six months delivered via
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are $25 each. For subscription information, contact Peter Chapman
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* * * End of Transmission * * *