/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/130211.mbx C L A S S A C T I O N R E P O R T E R Monday, February 11, 2013, Vol. 15, No. 29 Headlines AGILYSYS INC: Still Defends Wage and Hour Suit in California ARBITRON INC: Faces Nielsen Merger-Related Suit in Delaware AT&T: Settles Wash. State Prisoners' Class Action for $45 Million BANKSIA: Solicitor to Inform Debenture Holders of Class Action BRINKER INTERNATIONAL: Remaining Issues in Workers' Suit Pending CERTAINTEED CORP: Faces Antitrust Class Action Over Drywall Prices CHASE HOME: Sealed Bid for Class Cert. in "Gordon" Suit Denied CIRRUS LOGIC: Robbins Geller Files Class Action in New York DIRECTSAT: Economic Efficiency Does Not Justify Collective Action ENERGY CORP: Judge Tosses Most of Royalty Class Action Claims GREENBERG TRAURIG: Gender Bias Suit Stalls Over Arbitration Issues INTUITIVE SURGICAL: Appeal in "Perlmutter" Suit Remains Pending ITALIAN COLORS: Oral Argument on Arbitration Issue on Feb. 27 NIELSEN HOLDINGS: Faces Class Suit Over Arbitron Acquisition PREWETT FAMILY: Faced Suit For Failing to Pay Employees' OT Wages PROGRESSIVE INT'L: Recalls 26,500 Canning Jar Lifters SANDERSON FARMS: RICO Class Action Suit Dismissed With Prejudice SEALY CORP: Defends "Hernandez" Suit vs. Unit in California SEALY CORP: Signs MOU to Settle Merger-Related Suits in Delaware SOIL SOLUTIONS: Judge Approves Recycling Plant Class Action THORLEY INDUSTRIES: Recalls 1,440 4moms breeze Playard Sheets TOYOTA MOTOR: Loses Bid to Arbitrate Prius Brake Defect Claims VISA: N.J. Retailers Unlikely to Implement Credit-Card Surcharge * Securities Class Action Settlements Outside U.S. May Rise * Comcast and Amgen Rulings Could Modify Class Action Landscape ********* AGILYSYS INC: Still Defends Wage and Hour Suit in California ------------------------------------------------------------ On July 9, 2012, a putative class action lawsuit was filed against Agilysys, Inc. in the United States District Court for the Northern District of California alleging violations of federal and state wage and hour laws, rules and regulations pertaining primarily to pay for missed meals and rest periods and failure to reimburse business expenses. The lawsuit purports to be a class action and seeks substantial damages. At this time, the Company is not able to predict the outcome of this lawsuit, or any possible monetary exposure associated with the lawsuit. The Company's management believes that the plaintiffs' allegations are without merit and that their claims are not appropriate for class action treatment. The Company is vigorously defending these claims. No further updates were reported in the Company's February 4, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended December 31, 2012. ARBITRON INC: Faces Nielsen Merger-Related Suit in Delaware ----------------------------------------------------------- Arbitron Inc. is facing a merger-related class action lawsuit in Delaware, according to the Company's February 4, 2013, Form 8-K filing with the U.S. Securities and Exchange Commission. On January 24, 2013, a putative class action lawsuit was filed in the Court of Chancery of the State of Delaware regarding the proposed merger ("Merger") of TNC Sub I Corporation ("Merger Sub"), a wholly owned subsidiary of Nielsen Holdings, N.V. ("Nielsen") with and into the Company. The complaint ("Complaint") was purportedly filed on behalf of the public shareholders of the Company, and names as defendants, the Company, each of the Company's directors, Merger Sub, and Nielsen. The Complaint alleges, among other things, that the Company's directors breached their fiduciary duties by failing to maximize shareholder value in a proposed sale of the Company. The Complaint further alleges that the Company's preliminary proxy statement fails to provide material information and provides materially misleading information relating to the Merger and that the Company and Nielsen aided and abetted the alleged breaches by the Company's directors. The plaintiff seeks, among other things, class action status, an injunction preventing the completion of the Merger (or, if the Merger is completed, rescinding the Merger or awarding rescissory damages), and the payment of attorneys' fees and expenses. The Company says it intends to defend the lawsuit vigorously. On February 4, 2013, the Company issued a press release announcing that the Company and Nielsen have agreed that Nielsen will voluntarily withdraw and refile the Hart-Scott-Rodino ("HSR") notification and report form for the Merger in order to give the Federal Trade Commission additional time to review the proposed transaction. Nielsen originally filed its notification and report form on January 4, 2013. The HSR notification and report form is being withdrawn effective as of February 4, 2013, and Nielsen was set to refile by February 6, 2013. Upon renewing the filing, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act will expire on Friday, March 8, 2013, at 11:59 p.m. New York City time, unless earlier terminated or extended by a request for additional information. AT&T: Settles Wash. State Prisoners' Class Action for $45 Million ----------------------------------------------------------------- The Associated Press reports that AT&T has agreed to pay families of Washington state prisoners $45 million to settle a class action lawsuit involving collect calls made from state prisons. Lawyers estimate at least 70,000 families are eligible for some of the money from the settlement filed on Feb. 1 in King County Superior Court, The Seattle Times reported on Feb. 3. The lawsuit filed in 2000 accused AT&T and other phone companies of failing to disclose exorbitant rates for collect calls from prison. The case has moved back and forth between the Washington Supreme Court, the state Utilities and Trade Commission, and King County Superior Court. It was settled just before it was scheduled to go to trial in King County to determine damages. The class action lawsuit covers collect calls made between 1996 and 2000 from Department of Corrections facilities. It was filed by family members and friends of Paul Wright, editor of Prison Legal News and a former inmate in Washington state. Mr. Wright estimated that between 70,000 and 172,000 people could be eligible for refunds that include full reimbursement of call charges, plus $200 per person. At the time, those charges were $3.95 for the first minute and 90 cents each additional minute, according to Seattle attorney Chris Youtz, who represented the prison families. After 20 minutes, the calls ended, requiring a new call, and a new surcharge. "The rates were ridiculous," Mr. Youtz said. AT&T spokesman Marty Richter said in a statement that the company believes it had followed all the rules at issue in the lawsuit. "We are pleased to see the litigation resolved in a way that, among other things, supports legal assistance for low-income residents of Washington state and educational assistance for families of prison inmates in the state," he said. BANKSIA: Solicitor to Inform Debenture Holders of Class Action -------------------------------------------------------------- Blair Thomson, writing for Bendigo Advertiser, reports that letters regarding a class action will be sent to all people owed money in the Banksia collapse this week. Solicitor Mark Elliott is pursuing nine defendants over the lender's collapse and said there had been strong interest in the action. "I drafted a letter over the weekend that will go out to the 16,000 debenture holders by mid [this] week," he said. "It will answer the debenture holders' questions. "The class action Web site is well advanced and will be up and running with meaningful information by the end of the month. We're making good progress everywhere." Mr. Elliott said Banksia directors, Cherry Fund, The Trust Company and Bendigo-based auditors Richmond Sinnott and Delahunty Chartered Accountants had filed notices of appearance as defendants. "There's no point suing Banksia for money if you're accessing the money watermarked for debenture holders," he said. "This is trying to access other forms of money, principally insurance. It's not bad luck they've lost AUD300 million . . . it's got to be more than that." Mr. Elliott said he expected the class action to begin in about 12 to 18 months. Banksia is being liquidated by McGrathNichol, with the company's loan book recently listed for sale. A McGrathNicol spokesman said a range of institutions had expressed interest in the loans. Strathfieldsaye resident Jim Stein, who lost $130,000 in the collapse, said it had been hard to find out what was happening with the liquidation and class action. "There has been a lack of information . . . it would be good to find out what is going on," he said. "I support the class action and I've been speaking to some people in the banking industry who say we've got a very good case." BRINKER INTERNATIONAL: Remaining Issues in Workers' Suit Pending ---------------------------------------------------------------- In August 2004, certain current and former hourly restaurant team members filed a putative class action lawsuit against Brinker International, Inc. in California Superior Court alleging violations of California labor laws with respect to meal periods and rest breaks. The lawsuit sought penalties and attorney's fees and was certified as a class action by the trial court in July 2006. In July 2008, the California Court of Appeal decertified the class action on all claims with prejudice. In October 2008, the California Supreme Court granted a writ to review the decision of the Court of Appeal and oral arguments were heard by the California Supreme Court on November 8, 2011. On April 12, 2012, the California Supreme Court issued an opinion affirming in part, reversing in part, and remanding in part for further proceedings. The California Supreme Court's opinion resolved many of the legal standards for meal periods and rest breaks in the Company's California restaurants and the Company intends to vigorously defend its position on the remaining issues upon remand to the trial court. It is not possible at this time to reasonably estimate the possible loss or range of loss, if any. No further updates were reported in the Company's February 4, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended December 26, 2012. CERTAINTEED CORP: Faces Antitrust Class Action Over Drywall Prices ------------------------------------------------------------------ Jon Campisi, writing for The Pennsylvania Record, reports that a week after two men filed a federal antitrust class action suit against the makers of gypsum board alleging the companies conspired to fix the prices of the commodity, another consumer filed his own complaint against the manufacturers in federal court. Massachusetts resident Howard Glaser filed his suit Jan. 30 on behalf of himself and others similarly situated, alleging that as a result of the defendants' misconduct, he and others sustained injury in that they were made to pay more for drywall than they would have in the absence of the companies' collective wrongdoing. The lawsuit was jointly filed by Kenneth Trujillo and Ira N. Richards, of the Philadelphia firm Trujillo, Rodriguez & Richards, and attorneys Robert S. Green, James Robert Noblin and Lesley E. Weaver, of the California firm Green & Noblin. The defendants named in the case are CertainTeed Corp., USG Corp., United States Gypsum Co., New NGC Inc., LaFarge North America Inc., Georgia-Pacific, American Gypsum Co., Temple-Inland Inc., and PABCO Building Products. The lawsuit accuses the defendants of violating the Sherman Act, which has to do with anti-competitiveness. The defendants are accused of engaging in an unlawful conspiracy, dating back to at least the fall of 2011, to fix, raise, maintain and stabilize the price of gypsum board, which is also known as drywall or sheetrock, and is used in residential and commercial construction projects. "Because of its sound-dampening, fire-retarding, and moisture- control qualities, gypsum board has no competitively significant substitutes, thus enabling the manufacturer of gypsum board to control the market without fear that purchasers might turn to an alternate product," the complaint states. The suit claims that from at least September 2011 through the present, the defendant companies combined and conspired to fix and raise the prices at which they sold the product in the U.S. beginning with large and coordinated price increases that became effective in early 2012. "In advance of these coordinated increases, during late September through mid-October 2011, five of the eight defendant manufacturers announced to their customers that they were raising gypsum board prices in January 2012, each by an unprecedented 35% and indicated those price increases would remain in place throughout 2012," the lawsuit reads. The complaint further states that the defendants conspired to abolish a process known as "job quotes," which had protected customers from price increases occurring during their respective construction projects, and allowed them to lock in gypsum board prices during the duration of their projects. "In addition, job quotes were an avenue for price competition between manufacturers, as customers could get bids from a variety of manufacturers and play one off of the other," the lawsuit states. "But the collusive change in the industry pricing model limited such competition and shifted the risk of future price increases squarely to customers and was expressly designed to allow Defendants to profit from both this and any future price increases." The lawsuit accuses the defendants of violating state and federal antitrust laws as well as state and federal consumer protection and unfair competition laws. A similar class action suit was filed by the same plaintiffs' attorneys at the U.S. District Court in Philadelphia on Jan. 23. The federal case number is 2:13-cv-0059-MMB. CHASE HOME: Sealed Bid for Class Cert. in "Gordon" Suit Denied -------------------------------------------------------------- District Judge Virginia M. Hernandez Covington denied approval of a sealed motion for class certification in GORDON v. CHASE HOME FINANCE, LLC. Ruth Gordon and Anthony Arango, residents of Florida, refinanced their home with a mortgage from Washington Mutual Bank in 2003, and the loan was later assigned to JPMorgan Chase Bank, N.A., with servicing delegated to Chase Home Finance, LLC. Ms. Gordon ad Mr. Arango initiated their complaint against Chase Home and JP Morgan in September 2011 asserting: (I) breach of contract; (II) breach of the implied covenant of good faith and fair dealing; (III) breach of fiduciary duty; (IV) declaratory judgment; (V) violation of the anti-tying provisions of the Bank Holding Company Act, 12 U.S.C. Section 1972, et seq.; (VI) unconscionability; and (VII) violation of the Truth in Lending Act, 15 U.S.C. Section 1601, et seq. They filed a sealed motion for class certification on March 16, 2012, seeking to certify two classes: one concerning force- placed insurance and one concerning excess flood insurance requirements. On December 21, 2012, they filed their motion to preserve the Court's jurisdiction over Florida Class Members pursuant to the First-Filed Rule and All Writs Act. Judge Covington ruled that the suit is not amenable to resolution on a classwide basis. "Plaintiffs fall short of satisfying the required element of commonality as Plaintiffs have not demonstrated the existence of a common contract signed by all members of the proposed classes," she said. Aside from holding that the Plaintiffs' contract-based claims are not suitable for classwide disposition, the Court similarly finds that the Plaintiffs cannot satisfy the commonality analysis as to the remaining claims for breach of fiduciary duty, unconscionability, and violation of the Bank Holding Company Act. "Each of these claims present highly individualized inquiries, the answers to which are not apt to drive the resolution of the litigation," according to Judge Covington. "In addition, even if the requirements of Rule 23(a)[of the Federal Rules of Civil Procedure] had been satisfied, including the requirements of typicality and adequacy of representation, evaluation of the more stringent requirements of Rule 23(b) underscores that class certification is inappropriate in this case." The Plaintiffs' motion to preserve the Court's jurisdiction over Florida Class Members pursuant to the First-Filed Rule and All Writs Act is denied as moot. The case before Judge Covington is styled RUTH GORDON and ANTHONY ARANGO, individually and on behalf of all others similarly situated, Plaintiffs, v. CHASE HOME FINANCE, LLC, and JPMORGAN CHASE BANK, NA., Defendants, Case No. 8:11-cv-2001-T-33EAJ, (M.D. Fla.). A copy of the District Court's February 5, 2013 Order is available at http://is.gd/9Z5BEqfrom Leagle.com. CIRRUS LOGIC: Robbins Geller Files Class Action in New York ----------------------------------------------------------- Robbins Geller Rudman & Dowd LLP on Feb. 4 disclosed that a class action has been commenced in the United States District Court for the Southern District of New York on behalf of all persons or entities who purchased the common stock of Cirrus Logic, Inc. between July 31, 2012 and October 31, 2012. If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from Feb. 4. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Samuel H. Rudman, Esq. or David A. Rosenfeld, Esq. of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at djr@rgrdlaw.com If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/cirrus/ Any member of the putative 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. The complaint charges Cirrus and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Cirrus develops high-precision, analog and mixed-signal integrated circuits ("ICs") for a broad range of audio and energy markets, including consumer and commercial audio, automotive entertainment, and targeted industrial and energy-related applications. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's financial performance and future prospects. According to the complaint, the true facts, which were known or recklessly disregarded by each of the defendants but concealed from the investing public during the Class Period, were as follows: (i) Cirrus's dependence on Apple, Inc. (its biggest customer) for revenues was increasing rather than diminishing; (ii) Cirrus's sales growth was falling rather than increasing; (iii) difficulties in Cirrus's supply chain and at its vendors were increasing costs and diminishing the Company's profit margins going forward; (iv) the launch of several models of Cirrus's new LED lighting had been delayed; and (v) as a result, defendants knew Cirrus's increased fiscal 2013 guidance was not attainable. According to the complaint, on October 31, 2012, after the close of trading, Cirrus shocked the market by issuing significantly lower guidance for fiscal 2013 than the market had been led to expect, modeling revenues to be down 15% sequentially for its 2013 fourth quarter. In response to the Company's announcement, the complaint alleges that the price of Cirrus stock fell precipitously. Plaintiff seeks to recover damages on behalf of all purchasers of Cirrus common stock during the Class Period. The plaintiff is represented by Robbins Geller, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. Robbins Geller -- http://www.rgrdlaw.com-- represents U.S. and international institutional investors in contingency-based securities and corporate litigation. With nearly 200 lawyers in nine offices, the firm represents hundreds of public and multi- employer pension funds with combined assets under management in excess of $2 trillion. The firm has obtained many of the largest recoveries and has been ranked number one in the number of shareholder class action recoveries in MSCI's Top SCAS 50 every year since 2003. DIRECTSAT: Economic Efficiency Does Not Justify Collective Action ----------------------------------------------------------------- According to Thomson Reuters' Alison Frankel, Judge Richard Posner of the 7th Circuit Court of Appeals is not categorically opposed to class actions, even when the defendant claims that individual facts predominate over classwide issues. In a case called Butler v. Sears, which involved class allegations about mold-prone Whirlpool washing machines, Sears had claimed Whirlpool modified the design on various washing machine models, so owners' experiences varied too widely to permit the suit to proceed as a class action. But Judge Posner's succinct, tightly reasoned opinion last November concluded that the key question is efficiency. "Is it more efficient, in terms both of economy of judicial resources and of the expense of litigation to the parties, to decide some issues on a class basis or all issues in separate trials?" he wrote. In the moldy washer case, he said, it made sense to resolve whether the machines were defective in a single proceeding (or perhaps subclass proceedings) rather than to force hundreds of owners to litigate individually. Judge Posner does not believe economic efficiency justifies every collective action. In particular, Judge Posner on Feb. 4 said that a trial involving unpaid overtime claims by a small group of DirectSat employees wouldn't prove anything tangible about the damages claims of 2,341 home satellite dish repair and installation technicians. Even though DirectSat technicians are covered by wage-and-hour laws, they work on a per-job basis rather than at an hourly rate, "more like independent contractors than employees," Judge Posner wrote. If the opt-in class proposed by three technicians and their lawyers at Axley Brynelson had sought declaratory or injunctive relief based on DirectSat's supposed practice of shortchanging workers by discouraging them from recording time spent on activities such as calling customers, Judge Posner said, it might not have mattered that individual technicians work at varying efficiencies and put varying effort into the job. But because the class (technically, the collective group) wanted to collect money damages, Judge Posner wrote in a 14-page opinion, plaintiffs' lawyers would have to show some way to calculate those damages short of holding 2,341 minitrials. Their suggestion of trying the claims of 42 supposedly representative plaintiffs is no solution, the judge said on behalf of a three-judge panel that also included Judges William Bauer and Ann Williams, since they offered no evidence that the selected technicians were representative of larger subclasses. "They continue on appeal to labor under the misapprehension that testimony by 42 unrepresentative 'representative' witnesses, supplemented by other kinds of evidence that they have been unable to specify, would enable a rational determination of each class member's damages," Judge Posner wrote. "They must think that like most class action suits this one would not be tried -- that if we ordered a class or classes certified, DirectSat would settle. That may be a realistic conjecture, but class counsel cannot be permitted to force settlement by refusing to agree to a reasonable method of trial should settlement negotiations fail." Judge Posner did suggest an alternative for workers like the DirectSat technicians, who are supposedly out several thousand dollars each. Thousand-dollar claims might not justify individual private litigation against their employer, but the Department of Labor can get them the same money damages, according to the judge. Judge Posner stopped well short of concluding that all wage-and- hour collective actions are unjustified. The DirectSat techs work unusually individualized schedules, and Judge Posner found that their lawyers responded to a reasonable request from the trial court for a case management plan "rather truculently." The judge cites all kinds of complications in establishing a collective damages theory but doesn't say it would be impossible. Nevertheless, if you're prosecuting an overtime class action in the 7th Circuit, it would be a good idea to be able to show that the workers in the case suffered similar damages. Michael Modl -- mmodl@axley.com -- of Axley argued the appeal for the plaintiffs, and Miguel Estrada -- mestrada@gibsondunn.com -- of Gibson, Dunn & Crutcher, who represented DirectSat at the 7th Circuit. ENERGY CORP: Judge Tosses Most of Royalty Class Action Claims ------------------------------------------------------------- A Pennsylvania class action alleging that gas producer Energy Corporation of America (ECA) had improperly calculated royalty payments experienced a major setback when a Pennsylvania federal judge eliminated most of the claims brought by the class. ECA's motion for summary judgment was partially granted by U.S. District Judge Joy Flowers Conti, adopting Magistrate Judge Robert Mitchell's October 2012 Report and Recommendation. Interpreting the landmark Kilmer decision, the court rejected the class plaintiffs' claim that marketing costs were not acceptable post-production deductions. The court concluded that the list of post-production costs detailed in Kilmer "should not be interpreted as comprehensive and that deduction of marketing costs, generally, is not contrary to law." The court also found that under the leases between ECA and the class plaintiffs, ECA was permitted to use an allocation methodology to assign each well its pro rata share of aggregate volumes from a total field volume, as well as a pro rata share of post-production costs. In so doing, the court found that Kilmer did not mandate that ECA could deduct only costs that it could demonstrate were actually sustained by a particular well. The court also eliminated the claim that the class plaintiffs should have been paid royalties on the upside of hedges that benefited a publicly traded trust that owned the right to receive a portion of ECA's proceeds from the sale of gas from the class plaintiffs' wells, concluding that ECA's relationship with the trust was unconnected to ECA's lease obligations with the class plaintiffs. Finally, the court rejected ECA's challenge to the Report and Recommendation's finding that ECA improperly deducted charges for interstate transportation costs. The court did, however, allow ECA the opportunity to revisit the issue at trial depending on the evidence presented. The court's ruling evidences Pennsylvania courts' willingness to give Kilmer a practical construction in allowing deductions for post-production costs as well as computing those costs. Further, the court refused to connect unrelated hedging transactions (utilized to mitigate market risk) with the specific lease obligations between lessor and lessee. As such, this decision is a helpful development for Pennsylvania oil and gas producers, in that it reasonably enables lease obligations to coexist with commercial realities. Paul K. Stockman, Esq. -- pstockman@mcguirewoods.com -- Gregg M. Rosen, Esq. -- grosen@mcguirewoods.com -- Jonathan T. Blank, Esq. -- jblank@mcguirewoods.com -- and Lisa M. Lorish, Esq. -- llorish@mcguirewoods.com -- at McGuireWoods LLP authored the news article. GREENBERG TRAURIG: Gender Bias Suit Stalls Over Arbitration Issues ------------------------------------------------------------------ The Am Law Daily reports that a proposed gender discrimination class action against Greenberg Traurig is off to a slow start, with lawyers arguing over not just whether the case belongs in arbitration, but also which judge should decide that question. Francine Friedman Griesing's attorney argues that she be allowed her choice of venue as a Title VII plaintiff, a reference to the law prohibiting employers from discriminating against those in protected classes. INTUITIVE SURGICAL: Appeal in "Perlmutter" Suit Remains Pending --------------------------------------------------------------- An appeal from the dismissal of a securities litigation against Intuitive Surgical, Inc. remains pending, according to the Company's February 4, 2013, Form 10-K filing with the U.S. Securities and Exchange Commission for the year ended December 31, 2012. On August 6, 2010, a purported class action lawsuit entitled Perlmutter v. Intuitive Surgical et al., No. CV10-3451, was filed against the Company and seven of its current and former officers and directors in the U.S. District Court for the Northern District of California. The lawsuit seeks unspecified damages on behalf of a putative class of persons who purchased or otherwise acquired the Company's common stock between February 1, 2008, and January 7, 2009. The complaint alleges that the defendants violated federal securities laws by making allegedly false and misleading statements and omitting certain material facts in the Company's filings with the Securities and Exchange Commission. On February 15, 2011, the Police Retirement System of St. Louis was appointed Lead Plaintiff in the case pursuant to the Private Securities Litigation Reform Act of 1995. An amended complaint was filed on April 15, 2011, making allegations substantially similar to the original allegations. On May 23, 2011, the Company filed a motion to dismiss the amended complaint. On August 10, 2011, that motion was granted and the action was dismissed; the plaintiffs were given 30 days to file an amended complaint. The Company filed a motion to dismiss the amended complaint. A hearing occurred on February 16, 2012, and on May 22, 2012, the Company's motion was granted. The complaint was dismissed with prejudice, and a final judgment was entered in the Company's favor on June 1, 2012. On June 20, 2012, Plaintiffs filed a notice of appeal with the United States Court of Appeals for the Ninth Circuit. The appeal is styled Police Retirement System of St. Louis v. Intuitive Surgical, Inc. et al., No. 12-16430. Plaintiffs filed their opening brief on September 28, 2012. The Company filed an answering brief on November 13, 2012, and Plaintiffs filed a reply brief on December 17, 2012. No oral argument date has been set, and the appeal remains pending. The Company is aware of increasing efforts by plaintiff's attorneys to solicit da Vinci patients for product liability lawsuits against the Company. The Company cannot yet estimate the impact of these solicitations. ITALIAN COLORS: Oral Argument on Arbitration Issue on Feb. 27 ------------------------------------------------------------- Oral argument for the case American Express Co. v. Italian Colors Restaurant will be on February 27, 2013, before the United States Supreme Court. Bancroft lawyers Paul Clement, Esq. -- pclement@bancroftpllc.com -- and Michael McGinley, Esq. -- mmcginley@bancroftpllc.com -- filed a brief on January 22, 2013, in the Supreme Court on behalf of Italian Colors Restaurant and other small businesses, as Respondents in American Express Co. v. Italian Colors Restaurant, No. 12-133. Respondents are merchants who sued American Express for violations of the federal antitrust laws. American Express seeks to compel one-on-one arbitration according to the terms of its standard arbitration clause. Those terms do not allow Respondents to share the costs of proving their claims, as they could in litigation, or to shift the costs to American Express in the event Respondents prevail, as they could under many other companies' arbitration agreements. Respondents presented undisputed evidence that those prohibitive costs, which include an extensive expert study, would exceed each individual Respondent's expected recovery by several hundred thousand dollars and therefore would prevent Respondents from effectively vindicating their federal antitrust rights. The question presented to the Supreme Court is whether an arbitration clause should be enforced when there is no dispute that litigants would be unable effectively to vindicate their federal statutory rights in the arbitral forum. Daniel Fisher, writing for Forbes, reports that the U.S. Supreme Court will soon hear arguments in this case that tests a philosophical question at the heart of modern tort law: If the cost of pursuing a lawsuit exceeds its value to an individual plaintiff, is that a bad thing? The case asks a second fundamental question: How far can businesses go in asking their customers to sign agreements prohibiting them from joining in class actions, which would solve the problem above? These two questions are wrapped tightly together in Amex vs. Italian Colors, where lawyers want to bring a class action accusing Amex of violating antitrust laws by requiring merchants to accept Amex debit and credit cards at the same fee level. The problem is, each of the merchants signed an agreement to settle their claims in arbitration, and waived their right to join in class actions. "The only way these lawsuits can be brought is on a class basis," said Matt Cantor -- mcantor@constantinecannon.com -- a partner with Constantine Cannon, a law firm that has won billions in antitrust settlements from the big credit-card companies over similar claims. Since the average merchant has potential damages of several thousand dollars and an expert witness report could cost $1 million, he said, "a class action waiver effectively precludes any resolution at all." The U.S. Solicitor General agrees, saying in a brief submitted in the case that private lawsuits are a key part of the antitrust enforcement scheme and consumers would lose out if those cases could be squelched with arbitration agreements. "The United States . . . has a substantial interest in ensuring that arbitration agreements are not used to prevent private parties from obtaining redress for violations of their federal statutory rights," the SG wrote. While the central issue involves an arbitration contract, this case is really about the economics of class actions, which allow lawyers to bundle together hundreds or millions of small claims into a very powerful weapon to induce companies to settle on their terms. "Aggregation," Amex says in its brief, "can distort the underlying substantive law by creating hydraulic pressure to settle even meritless claims." To reduce the pressure, corporate lawyers figured out how to write arbitration clauses that prohibit class actions. That has inspired plaintiff lawyers to try and probe the weaknesses of those agreements because it's simply not as profitable, or effective, for them to represent clients one at a time in many consumer and antitrust cases where individual damages are small. In addition to the Solicitor General, the plaintiffs in this case are supported by Public Citizen, the American Antitrust Institute and the National Retail Federation. On the other side are the U.S. Chamber, the American Bankers Association and other business interests who say arbitration is a cheaper and more effective way to resolve business disputes. And they may have the upper hand in this fight. Twice in the past three sessions, the Supreme Court has rejected the argument that arbitration agreements shouldn't be allowed to prevent class litigation. The most recent decision, AT&T vs. Concepcion, affirmed bans on class actions even in consumer contracts. The conservative majority on the court, led by Chief Justice John Roberts has shown a strong preference for upholding the Federal Arbitration Act, which encourages businesses to use arbitration instead of courtroom litigation to settle their differences. The FAA was passed in 1926 to address widespread hostility by judges toward contracts that required arbitration. Many judges felt no one, even sophisticated businesses, should be able to sign away their right to their day in court. So Congress passed a federal law requiring courts to honor agreements requiring arbitration. In this case, Italian Colors represents merchants who say Amex broke antitrust laws by forcing them to accept credit and debit American Express cards at the same fee level. (Merchants hate credit-card fees, calling them "swipe fees" even though consumers don't pay them directly in the way they'd pay, say, an ATM fee.) But as Italian Colors notes, even the largest retailer in the case would have a maximum claim of $12,850, or $38,549 when trebled, while hiring the experts to prove Amex broke the law could cost $1 million or more. "No rational actor would attempt to bring a claim when a negative recovery is a certainty," said the U.S. Solicitor General, in the amicus brief. The plaintiffs say the arbitration agreement prevents them from cooperating in any way and makes the proceedings of any one case confidential and sealed to the others. That precludes any sort of collective action to spread around the costs of hiring lawyers and preparing expert testimony, they say. Amex argues the plaintiffs had plenty of opportunity to pursue their claims on a cost-effective basis, but chose not to. Given the informal rules in arbitration, "claimants could hire the same attorneys, or hire the same expert witness, even outside the context of class proceedings," the company says, despite the ban on court-overseen class actions. "There were ways the plaintiffs could have made it cost- effective," said Alan Kaplinsky -- kaplinsky@ballardspahr.com -- a partner with Ballard Spahr in Philadelphia who pioneered the use of arbitration clauses banning class actions, and filed a brief on behalf of the American Bankers Association in this case. "They elected not to go down that road." NIELSEN HOLDINGS: Faces Class Suit Over Arbitron Acquisition ------------------------------------------------------------ Nielsen Holdings N.V. is facing a class action lawsuit arising from its proposed acquisition of Arbitron Inc., according to the Company's February 4, 2013, Form 8-K filing with the U.S. Securities and Exchange Commission. On December 17, 2012, Nielsen Holdings N.V., a Dutch public company with limited liability (naamloze vennootschap) ("Nielsen"), TNC Sub I Corporation, a Delaware corporation and an indirect wholly-owned subsidiary of The Nielsen Company B.V. and Nielsen ("Merger Sub"), and Arbitron Inc., a Delaware corporation ("Arbitron"), entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the terms of the Merger Agreement, subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Merger Sub will be merged with and into Arbitron (the "Merger"), and Arbitron will become an indirect wholly-owned subsidiary of The Nielsen Company B.V. and Nielsen at the effective time of the Merger. On January 24, 2013, a putative class action lawsuit was filed in the Court of Chancery of the State of Delaware regarding the proposed Merger. The complaint ("Complaint") was purportedly filed on behalf of the public shareholders of Arbitron, and names as defendants, Arbitron, each of Arbitron's directors, Merger Sub, and Nielsen. The Complaint alleges, among other things, that Arbitron's directors breached their fiduciary duties by failing to maximize shareholder value in a proposed sale of Arbitron. The Complaint further alleges that Arbitron's preliminary proxy statement fails to provide material information and provides materially misleading information relating to the Merger and that Arbitron and Nielsen aided and abetted the alleged breaches by Arbitron's directors. The plaintiff seeks, among other things, class action status, an injunction preventing the completion of the Merger (or, if the Merger is completed, rescinding the Merger or awarding rescissory damages), and the payment of attorneys' fees and expenses. Nielsen and Merger Sub intend to defend the lawsuit vigorously. On February 4, 2013, Arbitron announced that Arbitron and Nielsen have agreed that Nielsen will voluntarily withdraw and refile the Hart-Scott-Rodino ("HSR") notification and report form for the Merger in order to give the Federal Trade Commission additional time to review the proposed transaction. Nielsen originally filed its notification and report form on January 4, 2013. The HSR notification and report form is being withdrawn effective as of February 4, 2013, and Nielsen was set to refile by February 6, 2013. Upon renewing the filing, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act will expire on Friday, March 8, 2013, at 11:59 p.m. New York City time, unless earlier terminated or extended by a request for additional information. PREWETT FAMILY: Faced Suit For Failing to Pay Employees' OT Wages ----------------------------------------------------------------- Christian Broughton, Mikele Antunez, Colton Wristen, individually and on behalf of all others similarly situated v. Prewett Family Water Park, The City of Antioch and Does 1-50, Case No. 3:13-cv- 00531 (N.D. Calif., February 6, 2013) is brought on behalf of all persons, who have been employed by Prewett Family Water Park operated by the City of Antioch as hourly paid non-exempt employees engaged in the operations, safety, maintenance, repairs, and security during the period commencing three years prior to the filing of the complaint. The Defendants failed to pay the Plaintiffs and the proposed class overtime compensation, according to the complaint. As a result of this failure, the Plaintiffs contend, they and the members of the collective class have been unlawfully deprived of compensation in amounts to be determined at trial. The Plaintiffs are residents of the state of California and were employees of Prewett Family Water Park. Prewett Family Water Park is a water park owned and operated by the City of Antioch. The Plaintiffs are unaware of the true names of the Doe Defendants. The Plaintiffs are represented by: Kenneth C. Absalom, Esq. James J. Achermann, Esq. LAW OFFICE OF KENNETH C. ABSALOM 275 Battery Street, Suite 200 San Francisco, CA 94111 Telephone: (415) 392-5040 Facsimile: (415) 392-3729 E-mail: kenabsalom@333law.com james.achermann@333law.com PROGRESSIVE INT'L: Recalls 26,500 Canning Jar Lifters ----------------------------------------------------- The U.S. Consumer Product Safety Commission and Health Canada, in cooperation with Progressive International Corporation, of Kent, Washington, announced a voluntary recall of about 22,700 Canning Jar Lifters in the United States of America and 3,800 in Canada. Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product. The jar lifter handle can detach over time due to a missing stainless steel core in the hinge. This can cause the tongs to fail to grip and allow a jar being lifted to fall, posing a laceration hazard to the user. Progressive International has received no reports of injury or property damage. The recall involves the One Handed Jar Lifter. The jar lifter is a pair of tongs designed for lifting canning jars out of boiling water. The lifter is red with white handles. It is made of plastic and metal with a nylon coating. Pictures of the recalled products are available at http://is.gd/5vWDIH The recalled products were manufactured in China and sold at AC Sales Co., Ace Hardware, Amazon, Americas Gardening Resources, Bi- Mart, Blain Supply Inc., Chef Central , Cole Hardware, DeNault's True Value Hardware, Heart of America, Home Shopping Club, InterBond Corp. of America, Kitchen Kaboodle, Kitchen Krafts Inc., Lehman Hardware & Appliance Inc., Metropolitan Markets, Marmaxx, Reading China & Glass/Calvert, Supermarket Associates, Sur La Table, Williams-Sonoma, Winners Merchants International, World Kitchen Ltd., Zulily Inc. and other retailers nationwide from February 2012 to October 2012 for about $10. Consumers should immediately stop using the jar lifter and contact Progressive International Corporation for a free replacement. Progressive International Corporation Customer Service may be reached at (800) 426-7101, from 9:00 a.m. to 5:00 p.m. Pacific Time Monday through Friday; or by e-mail at jarlifter@progressiveintl.com; or online at http://www.progressiveintl.com/and click on "Recall Information" for additional information. SANDERSON FARMS: RICO Class Action Suit Dismissed With Prejudice ---------------------------------------------------------------- The United States District Court for the Middle District of Georgia dismissed the amended class action complaint captioned MELISSA SIMPSON and SABRINA ROBERTS on behalf of themselves and all those similarly situated, Plaintiffs, v. SANDERSON FARMS, INC., PERRY HAUSER, JEFF BLACK, DEMISHIA CROFT, ARISTIDES CARRAL- GOMEZ, JANIE PERALES, KARINA FONDON, and JENNIFER HARRISON BUSTER, Defendants, Civil Action No. 7:12-CV-28 (HL). The class action suit was filed pursuant to the Racketeer Influenced and Corrupt Organizations Act, and the Georgia RICO Act, alleging that the Defendants conspired to depress the wages paid to hourly workers employed at the Sanderson Farms processing facility in Moultrie, Georgia, since 2008 by knowingly employing large numbers of illegal aliens and by falsely attesting that the illegal aliens presented genuine work authorization documentation or identification documents. Senior District Judge Hugh Lawson pointed out that actual data is required to support the wage depression claim. "The Plaintiffs' amended complaint cannot survive the Defendants' motions to dismiss because it fails to allege sufficient facts to show that [18 U.S.C. Section 1546] violations proximately caused depressed wages." Moreover, he said, the Plaintiffs, who are represented by counsel well versed in wage depression RICO claims, were given an opportunity to cure the deficiencies in the complaint and failed to do so. Under the circumstances, the Court finds dismissal of the complaint with prejudice appropriate. A copy of the District Court's February 5, 2013 Order is available at http://is.gd/jj7HKlfrom Leagle.com. SEALY CORP: Defends "Hernandez" Suit vs. Unit in California ----------------------------------------------------------- Sealy Corporation is defending a lawsuit captioned Hernandez et al. v. Sealy Mattress Manufacturing Co., according to the Company's February 4, 2013, Form 10-K filing with the U.S. Securities and Exchange Commission for the year ended December 2, 2012. In March 2012, Hernandez et al. v. Sealy Mattress Manufacturing Co. was filed in Superior Court in California with respect to some allegations of improper wage and hour calculations in accordance with California state law. The Company is vigorously defending this lawsuit and it is too early to determine a potential liability related to this action as there has been little discovery and the matter has not yet been presented for class certification. SEALY CORP: Signs MOU to Settle Merger-Related Suits in Delaware ---------------------------------------------------------------- Sealy Corporation entered into a memorandum of understanding to settle merger-related lawsuits in Delaware, according to the Company's February 4, 2013, Form 10-K filing with the U.S. Securities and Exchange Commission for the year ended December 2, 2012. On September 26, 2012, the Company entered into a Merger Agreement (the "Merger Agreement") with Tempur-Pedic International Inc. ("Tempur-Pedic") pursuant to which a wholly-owned subsidiary of Tempur-Pedic will merge with and into the Company, resulting in the Company becoming a subsidiary of Tempur-Pedic (the "Merger"). In connection with the Merger, each share of the Company's common stock issued and outstanding immediately prior to the Merger will be converted into the right to receive $2.20 per share in cash (the "Merger Consideration"). As part of the transaction, it is anticipated that the Company's outstanding senior and subordinated notes will also be redeemed in accordance with the provisions of the related note indentures. The proposed merger has been approved by the Board of Directors of both companies and remains subject to certain additional conditions and approvals of various regulatory authorities. Six purported class action lawsuits have been filed relating to the Merger. One lawsuit was filed in North Carolina state court and five were filed in the Delaware Court of Chancery by purported stockholders of the Company against the Company, the Company's directors, the Silver Lightning Merger Company ("Sub"), and Tempur-Pedic. Justewicz v. Sealy Corp., et al. ("North Carolina Action") was filed on October 3, 2012, in the General Court of Justice, Superior Court Division in North Carolina ("North Carolina Court"). On November 13, 2012, the Delaware Court of Chancery consolidated all five Delaware actions into a single action, now styled as In re Sealy Corporation Shareholder Litigation ("Delaware Action"). Plaintiff in the North Carolina Action and plaintiffs in the Delaware Action allege, among other things, that the defendants have breached their fiduciary duties to the Company's stockholders and that the Company, Sub and Tempur-Pedic aided and abetted the Company's directors' alleged breach of fiduciary duties. The complaints also claim that the Merger Consideration is inadequate, that the Merger Agreement contains unfair deal protection provisions, that the Company's directors are subject to conflicts of interests, and that the Preliminary Information Statement it filed on October 30, 2012, omits material information concerning the negotiation process leading to the proposed transaction and the valuation of the Company. On October 12, 2012, plaintiff in the North Carolina Action brought a Motion for Expedited Discovery and for a Hearing and Briefing Schedule on Plaintiff's Motion for a Preliminary Injunction. On October 24, 2012, defendants in the North Carolina Action brought a Motion to Stay the North Carolina Action in favor of the Delaware Action. On November 7, 2012, the North Carolina Action plaintiff amended his complaint to add allegations claiming that the Preliminary Information Statement filed by the Company on October 30, 2012, did not provide sufficient information. Following briefing and a hearing on November 8, 2012, the North Carolina Court stayed the North Carolina Action. On November 19, 2012, plaintiffs in the Delaware Action filed a consolidated amended complaint, a motion for expedited proceedings, and a motion for a preliminary injunction. The Company believes that the allegations in these lawsuits are entirely without merit. On January 22, 2013, solely to avoid the burden, expense and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, the parties to the Delaware Action entered into a memorandum of understanding setting forth an agreement-in-principle providing for a settlement of the Delaware Action (the "Proposed Settlement"). In connection with the Proposed Settlement, the Company agreed to include certain supplemental disclosures in an amended information statement. The Proposed Settlement provides for the release of all claims by Company stockholders concerning the Merger Agreement, the Merger, and the disclosures made in connection with the Merger, including all claims that were asserted or could have been asserted in the Delaware Action and the North Carolina Action. The Proposed Settlement does not provide for the payment of additional monetary consideration to Company stockholders and the Proposed Settlement does not affect the rights of any Company stockholder to seek appraisal pursuant to Section 262 of the Delaware General Corporation Law. The Proposed Settlement is subject to definitive documentation and approval by the Delaware Court of Chancery. SOIL SOLUTIONS: Judge Approves Recycling Plant Class Action ----------------------------------------------------------- The Associated Press reports that a federal judge has approved class-action status for a lawsuit alleging that dust and other emissions from a northern Indiana wood recycling plant pose a health threat and nuisance to nearby residents. About 150 people who live near the Elkhart plant sued VIM Recycling in 2009, two years before the plant was sold to Soil Solutions. Environmental attorney Kim Ferraro told The Elkhart Truth that a federal judge's decision in South Bend to approve the plaintiffs' September 2011 request for class-action status means more than 1,700 people could become part of the lawsuit. "This decision ensures that all of the residents of this impacted community who might not otherwise be able to afford to legally protect their rights to clean air and a safe home, can take action to protect their homes and families," she said. Ms. Ferraro, who is the water policy director of the Hoosier Environmental Council, said notices will now be sent to residents near the plant advising them of their status as class-action members and, if desired, how they can opt out of the court proceedings. Neighbors near the wood-recycling plant, which grinds scrap wood into animal bedding and mulch, have complained for years that its dust and other emissions has impacted their health and is a nuisance. Indiana regulators have taken several actions against the recycling plant, including fines, over the years. The Indiana Department of Environmental Management filed its own lawsuit against the plant, alleging that it has improperly accepted waste wood containing glues, resins and other substances. The class-action lawsuit against Soil Solutions Company, VIM Recycling, Inc., K.C. Industries, LLC, and Kenneth R. Will alleges that waste materials were dumped and processed at the plant in unsafe and negligent ways. The case received media attention in the summer of 2007 when the site's massive waste piles caught fire, prompting fire departments from Elkhart and surrounding communities to the scene. One worker died in the incident. Ms. Ferraro said the goal of the lawsuit is to put an end to the "harmful dust, pollutant runoff, smoke and extreme noxious odors" nearby residents endure from wood waste scraps processed at the site or from smoldering emissions from the waste piles. Carmine Green, one of six plaintiffs who will represent the 1,700 residents in the class action suit, said in a statement from Ferraro that when winds blow particles and fumes away from the plant toward her home she had to go inside and close her doors and windows. She said the smell would make her sick to her stomach. "Surely we can run businesses in Elkhart and preserve our way of life at the same time," Ms. Green said. Jim Brotherson, an attorney for Soil Solutions, said the class- action status "will make it easier for us" because the merits of litigants arguments can be decided in a single case. He said Soil Solutions, the current owner of the site, disavows the actions of the VIM Recycling, the previous owner. THORLEY INDUSTRIES: Recalls 1,440 4moms breeze Playard Sheets ------------------------------------------------------------- The U.S. Consumer Product Safety Commission, in cooperation with Thorley Industries LLC, doing business as 4moms, of Pittsburgh, Pennsylvania, announced a voluntary recall of about 1,440 4moms(R) breeze(TM) Cotton Jersey Playard Sheets. Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product. The sheets are too small for the play yards. A sheet that does not properly fit the play yard poses an entrapment hazard that could lead to suffocation. No incidents or injuries have been reported. The recalled play yard sheets are cream-colored, cotton jersey fabric. They were sold as an accessory to the 4moms breeze play yard. "4moms" is printed on a black tag sewn onto the sheet. Item number 4M-009-10-000101 is printed on the packaging. UPC 817980011137 is printed on the sheet's packaging and on a white warning tag sewn onto the sheet. A picture of the recalled products is available at http://is.gd/txom41 The recalled products were manufactured in China and sold at buybuy Baby and other juvenile product stores nationwide and online at www.buybuybaby.com from December 2012 through January 2013 for about $15. Consumers should stop using the recalled play yard sheets immediately and return them to 4moms for a full refund. 4moms may be reached toll-free at (888) 977-3944 from 9:00 a.m. to 5:00 p.m. Eastern Time Monday through Friday or online at http://www.4moms.com/and click on Recall for more information. TOYOTA MOTOR: Loses Bid to Arbitrate Prius Brake Defect Claims -------------------------------------------------------------- Amanda Bronstad, writing for The National Law Journal, reports that a federal appeals court has struck down Toyota Motor Corp.'s attempt to arbitrate claims that it failed to inform consumers about defects in the anti-lock braking systems of certain Prius and Lexus vehicles. VISA: N.J. Retailers Unlikely to Implement Credit-Card Surcharge ---------------------------------------------------------------- Michael L. Diamond, writing for The Asbury Park Press NJ, reports that a provision in a class-action settlement with Visa, MasterCard and major banks allows retailers to charge consumers up to 4 percent on purchases made with credit cards. New Jersey is one of 40 states in which retailers can implement a credit-card surcharge, but few are expected to do so. Especially For You Florist & Gift Shop in Freehold has its hands full with plenty of competitors and a customer base trying to recover both from a shaky economy and superstorm Sandy. So the option to make up for its credit-card transaction fees by putting a surcharge on credit-card wielding customers doesn't get very far. "Oooh, no," owner Marlene Rogala said. "Times are tough enough as it is, and, I don't know, it's probably something we would really have to think about before we institute that program." New Jersey retailers said on Feb. 4 they are unlikely to take advantage of a provision in a class-action settlement with Visa, MasterCard and major banks and charge consumers up to 4 percent on purchases made with credit cards. So unlikely, in fact, that they say a bill in the New Jersey Legislature that would prohibit retailers from implementing credit-card surcharges is a waste of time. "We really think it is a solution in search of a problem," said John Holub, president of the New Jersey Retail Merchants Association, a trade group. "You would be hard-pressed to find any retailer in the state of New Jersey who has considered or is even willing to place a surcharge on their customers." New Jersey is one of 40 states in which retailers can use a credit-card surcharge, a right they won as part of a settlement last July of a long-running federal antitrust lawsuit brought by nine retailers against Visa, MasterCard and major banks. Retailers have said they pay transaction fees to credit-card companies that can be so expensive that the bank sometimes gets a bigger share of the profit than they do. Before the agreement, the credit-card companies prohibited retailers and other businesses that accept credit cards from charging customers for the right to use plastic. The settlement gave merchants the right to pass along the fees as of Jan. 27. The idea isn't foreign to consumers in New Jersey, where gasoline stations charge different prices depending on the payment method. But Mr. Holub said gasoline stations are seen as offering not a surcharge, but a discount to customers who pay with cash. New Jersey lawmakers introduced legislation that would prohibit retailers from charging customers extra for using credit cards, although Mr. Holub said gasoline stations would be exempt. "This is an issue that strikes the nerve of any retailer out there," Mr. Holub said. Retailers can pass along transaction fees with the credit-card surcharge. But the lawsuit settlement requires retailers to notify customers of the surcharge before and after a purchase with signs that are visible at a store entrance and its cash registers. The sales receipt has to list the surcharge separately. Web sites must notify customers that they're about to pay more for something they buy online. Some retail groups, including the National Retail Federation, are scratching their heads over the settlement. The lawsuit's intent, retail groups say, was to lower the transaction fees that merchants pay banks, but that hasn't happened. Instead, the fee is just has high. They can recoup the charge -- but they risk losing customers in the process. "That's exactly opposite where we want to be," said Mallory Duncan, a senior vice president at the National Retail Federation said. Shore-area retailers sounded reluctant to penalize customers who use a credit card. Small retailers, in particular, said they worried about losing customers to larger competitors. "We have to do what we can to get people to shop local," said Sheena MacClaren, owner of Plethora Boutique in Point Pleasant. "I just think it comes down to customer service and making things easier for them." * Securities Class Action Settlements Outside U.S. May Rise ----------------------------------------------------------- Pension Funds Insider reports that a leading class action specialist predicts that, with an increase in the amount of pension funds claiming back lost investments, settlements in securities class actions outside the US could rise to $8.3 billion per year by 2020. Class action specialist GOAL Group predicts that settlements in securities class actions outside the US will rise substantially. Up to very recently pension funds only focused on claiming back lost investments in the US, as this was the market with the most developed legislature. However, pension fund trustees, and their custodian banks, have a fiduciary duty to recover beneficiary returns from class actions, and more and more funds will have this added as a clause in their contract, forcing them to seek legal solutions in many other nations across the world. The root of this international diversification seems to have been a combination of restrictions on jurisdiction definitions in the US Federal courts (for example the Morrison v. National Australia Bank ruling), along with a growing desire to develop domestic class action procedures in many countries around the globe. A worrying fact, however, in the new study by the legal consultants identified that if non-participation rates seen in US class actions are experienced and continued in non-US activity, by the end of the decade $2.02 billion of investors' rightful returns will be left unclaimed each year. In the UK, pension funds currently account for 38% of total assets under management -- an estimated 1.6tn (according to the 2011- 2012, IMA Annual Survey). On average 40% of these funds portfolio is invested in foreign stocks, of which only 11% is invested in US stocks. GOAL says the awareness of what is lost out on, on an annual basis, should be a wake-up call to fiduciaries. Especially now that funds are seen to be including the responsibility for class action identification and participation in contractual agreements with their custodians, these need to be seen trying to recoup the investment losses in order not to be sued. Some custodians though are restricting the geography of their class action service level, which could indicate that non-participation rates are likely to be even higher than at current US case levels. Stephen Everard, CEO of the GOAL Group, said the excuses of not participating in class action lawsuits was slowly disappearing: "Until recently, the main focus of securities class actions was on the US. However, class action growth outside the US is now increasing rapidly, and is predicted to mirror the growth of the US class action scene in the early part of the 21st century. "Certain legislatures -- currently The Netherlands and Canada -- have defined and admitted the idea of a global 'class' where non- US investors in shares listed on a non-US exchange can pursue their securities class actions in those countries' courts. There is no viable excuse for non-participation as a number of specialist service providers can now perform this function at relatively low cost." The UK is also one of the jurisdictions where US-style securities litigation is developing, along with Germany, The Netherlands and Canada, where a framework is already in place. GOAL says it is "quite possible" that the UK could become a regional center for the prosecution of these cases. * Comcast and Amgen Rulings Could Modify Class Action Landscape --------------------------------------------------------------- John D. Hanify, Esq. -- jhanify@jonesday.com -- and Jason C. Weida, Esq. -- jweida@jonesday.com -- at Jones Day reports that last November 5, the Supreme Court Justices listened to two important class action cases that may offer the opportunity for the Court to impose stricter standards for the certification of class actions. Comcast Corp. v. Behrend is a Sherman antitrust claim brought by cable subscribers in the Philadelphia market asserting that they paid too much for cable. The plaintiffs alleged a conspiracy to "cluster" licenses in geographical areas where the company could then more effectively control cable prices. At the outset of the case, the plaintiffs advanced four theories to support their damages claim. The lone theory found creditable by the district court was that Comcast's clustering deterred "overbuilders" -- companies that can offer a competitive alternative where a cable company already operates -- from entering the Philadelphia market. On the basis of that theory of damages, the district court certified the class under Fed. R. Civ. P. 23(b)(3). On appeal to the Third Circuit, Comcast argued that the plaintiffs had not satisfied Rule 23(b)(3)'s predominance requirement. According to Comcast, the plaintiffs' expert relied on a damages model tied to all four theories but could not measure damages under the sole remaining theory credited by the district court. A divided panel affirmed class certification. It did so on the heels of Wal-Mart Stores, Inc. v. Dukes, where the Supreme Court suggested that Daubert's standards for the admission of expert testimony applied in class certification proceedings. The Third Circuit, however, refused to fault the district court for not scrutinizing the expert's damages model under Daubert standards. The panel stated, "We understand the Court's observation to require a district court to evaluate whether an expert is presenting a model which could evolve to become admissible evidence, and not requiring a district court to determine if a model is perfect at the certification stage." Rather, according to the Third Circuit, expert opinions need only be "plausible" at the class certification stage. The majority's rationale elicited a strong dissent from Judge Jordan. He found the evidentiary standard which had been applied to be deficient, noting that "simple logic indicates that a court may consider the admissibility of expert testimony at least when considering pre-dominance [under Rule 23(b)(3)]." In the dissent's view, a "court should be hard pressed to conclude that the elements of a claim are capable of proof through evidence common to a class if the only evidence proffered would not be admissible as proof of anything." Thus, Comcast raises the critical question of whether the "plausible" prospect that admissible evidence will be admitted at trial can satisfy the standards for class certification, or whether admissible evidence, including competent expert opinion, must be advanced at the time certification is considered by the district court. In the second case, Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, the plaintiffs claimed to be representatives of a class of securities holders suing under Section 10(b) of the Exchange Act and Rule 10b-5. They alleged that false and misleading public statements made by an officer of the company fraudulently inflated its stock price. The plaintiffs sought class certification under Rule 23(b)(3) partly on the basis of the fraud-on-the-market theory of reliance. This theory, accepted by the Supreme Court in Basic Inc. v. Levinson, 485 U.S. 224 (1988), relieves plaintiffs of the need to show actual reliance where there is a public market for the stock, a so-called "efficient market," and where the offending statements or misrepresentations were made into that market. The assumption implicit in the theory is that the market takes account of such statements and that their impact is reflected in the price of the stock. Amgen argued that, in addition to proving that an efficient market existed and the alleged misstatements were public, plaintiffs must also prove -- at the certification stage -- that those misrepresentations were material. According to Amgen, immaterial statements do not affect stock price. Thus, there is no basis for presuming that investors relied in common on immaterial misstatements when they bought or sold the stock. The district court rejected that argument, refused Amgen's attempt to offer admissible evidence of immateriality, and certified the class. A unanimous panel of the Ninth Circuit affirmed the certification, reasoning that materiality is an "element of the merits of [a] securities fraud claim," whereas the efficient-market and public- statement predicates to the fraud-on-the-market theory are not. Because materiality is an element of a claim, the panel reasoned, its merits can be addressed only "at trial or by summary judgment motion."[4] Each of these cases raises the question as to the quantum of proof required at the class certification stage. Each challenges the pre-existing practice of certifying a class with something less than admissible evidence. The Court's decisions in Comcast and Amgen could dramatically modify the class action landscape. What is troubling to certain of the Justices is the fact that class certification becomes the defining moment in class action cases because the act of certification can increase risk monumentally and exert unwarranted pressure on defendants to settle claims that may have little chance of success on the merits. In many high- stakes class actions, including both antitrust and securities class actions, certification hinges on expert testimony. Permitting class certification on the basis of plausible but inadmissible expert opinions and/or alleged misrepresentations that may be immaterial to market price serves as an obvious opportunity for what Judge Henry Friendly described as "blackmail settlements." The class certification issues raised by Comcast and Amgen have split the circuits. In Comcast, the Third Circuit's decision itself created the split. The emerging trend, both pre- and especially post-Dukes, has been to apply Daubert in class certification proceedings, although the circuits differed as to the level of scrutiny required. For example, in American Honda Motor Co. v. Allen, the Seventh Circuit held that when expert testimony is critical to class certification, "the district court must perform a full Daubert analysis before certifying the class." The Eleventh Circuit subsequently adopted that approach. And the Ninth Circuit, after tinkering with a contrary view, ultimately agreed with the Seventh and Eleventh Circuits. Other circuits have been less exacting but still apply Daubert in some form or another. The Eighth Circuit, for instance, has endorsed a "focused Daubert inquiry." According to the panel, "an exhaustive and conclusive Daubert inquiry before the completion of merits discovery cannot be reconciled with the inherently preliminary nature of pretrial evidentiary and class certification rulings." And, although the First Circuit has not addressed this precise question, it has held that when predominance turns on "a novel or complex theory as to injury . . . the district court must engage in a searching inquiry into the viability of that theory and the existence of the facts necessary for the theory to succeed." In Amgen, the Ninth Circuit compounded the pre-existing circuit split. Its decision aligned the Ninth Circuit with the Seventh and Third Circuits, both of which view materiality as a merits element of a securities fraud claim that has no place in the certification inquiry. In doing so, the Ninth Circuit disapproved of contrary holdings in the Second and Fifth Circuits (and contrary dictum in a First Circuit decision). Those circuits require a plaintiff to prove materiality at the certification stage on the basis of a footnote in the Supreme Court's decision in Basic, which they have read as suggesting a materiality criterion for the fraud-on-the-market theory. The Ninth, Seventh, and Third Circuits, however, say that reading Basic in that way is unwarranted. If oral argument is any gauge of how the Court will rule, the defendants in both Comcast and Amgen have reason for cautious optimism. In Comcast, the defense counsel argued that the plaintiffs' model for determining damages could not pass muster under Daubert, adding that the certified class covered subscribers in hundreds of franchise areas facing different competitive conditions. "If you drop a stone in the water, you're going to have ripples all the way out," Comcast argued. "That doesn't mean all the ripples are the same." Justice Kennedy, who often casts the deciding vote in close cases, appeared sympathetic to this line of reasoning, stating, "The judge has to make a determination that in his view the class can be certified. And that includes some factual inquiries as to the damages alleged." The plaintiffs' counsel responded with a procedural argument, namely, that Comcast had waived the Daubert issue by failing to raise it below. Chief Justice Roberts, however, suggested that the Court could simply answer the admissibility question and then remand for a finding on the waiver issue. Later that same morning, in Amgen, the defense counsel argued that the fraud-on-the-market theory does not make sense without materiality: "Absent materiality, the market price cannot be presumed to reflect the statement in question." That argument drew pointed questions from Justices Ginsburg and Kagan, who appeared reluctant to require plaintiffs to prove materiality before trial. Justice Ginsburg in particular said that she was "nonplussed" by Amgen's argument because a finding of immateriality at the class certification stage would be dispositive of the merits: "Of course, [the finding is] going to bind the class representative. So if it's immaterial, the case ends." But the plaintiffs' counsel was subject to harsher treatment when he took the podium. Indeed, Justice Scalia told the plaintiffs' counsel that there is "good reason" to decide the question of materiality before a class is certified: "The reason is the enormous pressure to settle once the class is certified. In most cases, that's the end of the lawsuit" -- an observation that applies equally to the question of materiality in Amgen and the question of admissibility in Comcast. ********* 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., Washington, D.C., USA. Noemi Irene A. Adala, Joy A. Agravante, Valerie Udtuhan, Julie Anne L. Toledo, Christopher Patalinghug, Frauline Abangan and Peter A. Chapman, Editors. Copyright 2013. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $775 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. * * * End of Transmission * * *