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C L A S S A C T I O N R E P O R T E R
Monday, July 28, 2008, Vol. 10, No. 148
Headlines
AGRICULTURE DEP'T: 6 Firms to Reopen "Pigford v. Glickman" Suit
AMERICAN INT'L: Michigan Wants to Lead Credit Default Swap Suit
BOIS D'ARC: Faces Nevada Lawsuit Over Stone Energy Merger
CALIFORNIA: Sushi Place Sues Labor Commissioner Over Wage Claims
CARRIER CORP: Settles Consumer Lawsuits Over Condensing Furnaces
CELESTICA INC: Continues to Face Securities Fraud Lawsuits
CENTENE CORP: No Ruling Yet in Missouri Suit Dismissal Appeal
DOMINO'S PIZZA: Settles California Lawsuit by Former Employees
HEALTH NET: N.J. Court Approves $255-Million Deal in ERISA Suit
HELEN OF TROY: Texas Court Approves $4.5MM Securities Suit Deal
ILLINOIS CENTRAL: Land Payments Suit Settlement Checks Are Out
INDIANA: Irate Taxpayers Sue Indianapolis Over Downtown Lots
KB HOME: No Discovery Yet in California ERISA Violations Lawsuit
LAURIN MARITIME: Mississippi River Oil Spill Sparks Lawsuit
LEHMAN BROTHERS: Faces N.Y. Suit Over SASCO Certificates, Notes
LEHMAN BROTHERS: Faces Colo. and Ill. Suits Over Archstone Buy
LEHMAN BROTHERS: Faces N.Y. MDL Concerning Municipal Derivatives
LEHMAN BROTHERS: Faces Ill. & N.Y. Subprime Disclosures Lawsuits
LEHMAN BROTHERS: Faces ERISA Violations Lawsuit in New York
MAZDA CANADA: Faces British Columbia Suit Over Door Locks
MORGAN STANLEY: Faces Several Subprime-Related Lawsuits
MORGAN STANLEY: Faces N.Y. Suits Over Auction Rate Securities
MORGAN STANLEY: Faces Suit Over "Frozen" Auction Rate Securities
NEW JERSEY DOC: Women Prisoners Dealt An Across-The-Board Win
ORLANDO-ORANGE: Tollway Commuters Issued Fake Tickets, Suit Says
PALESTINIAN AUTHORITY: Two Families Sue Over Terrorist Attacks
PR PHARMACEUTICALS: Jury Grants Verex $1MM in Duty Breach Suit
REUNION.COM INC: Violates Can-Spam Act, California Suit Alleges
SENTRY INSURANCE: Faces Ky. Suit Over Bogus 15% Municipal Tax
THUMBPLAY: Faces Illinois Suit Over Unauthorized Billing Charges
U.S. INTERIOR DEP'T: Tribes Want Trust Fund Class Suit Certified
USANA HEALTH: Utah Consolidated Securities Fraud Suit Dismissed
* Securities Lawsuit System in Need of Repair, U.S. Chamber Says
New Securities Fraud Cases
COMPUCREDIT CORP: Bronstein Gewirtz Files Ga. Securities Lawsuit
FCSTONE GROUP: Brower Piven Files Securities Lawsuit in Missouri
*********
AGRICULTURE DEP'T: 6 Firms to Reopen "Pigford v. Glickman" Suit
---------------------------------------------------------------
Six law firms announced that a team from their firms, featuring
Donald Gee, Esq., will be traveling to Alabama, Georgia,
Mississippi, and Tennessee to discuss the re-opening of the
closed 1999 class-action lawsuit "Pigford v. Glickman." This
suit became known as the "Black Farmer Settlement."
The six law firms are:
1. McEachin & Gee (Virginia),
2. Chestnut, Sanders, Sanders Pettaway & Campbell
(Alabama),
3. James Scott Farrin (North Carolina),
4. Pogust, Braslow & Millrood (Pennsylvania and New
Jersey),
5. Conlon, Frantz & Phelan (Washington, D.C.), and
6. Phillip L. Fraas (Washington, D.C.).
The Tuscaloosa News recounts that the 1999 class-action suit
provided settlements to many black farmers who had filed
complaints against the U.S. Department of Agriculture. However,
an estimated 73,000 people missed the October 1999 deadline for
seeking claims.
Legislation passed in the 2008 Farm Bill in May provides another
chance for anyone who filed late claims up until Sept. 15, 2000.
The provision was sponsored by U.S. Rep. Artur Davis.
The law firms are now evaluating denied and late claims that may
now have an opportunity to be considered under a new law, which
was proposed in part by Senator Barrack Obama.
Mr. Gee will be speaking from 10:00 a.m. through 6:00 p.m. at
the following locations:
Monday, July 28, 2008
Walthall County Library
Tylertown, MS
Phone: 601-876-4348
Tuesday, July 29, 2008
Columbia Country Club
Columbia, MS
Phone: 601-736-0383
Wednesday, July 30, 2008
Holiday Inn Hotel & Suites
Hattiesburg, MS
Phone: 601-296-0302
Mr. Gee will be speaking from 10:00 a.m. through 4:00 p.m. at
these locations:
Thursday, July 31, 2008
Prentiss Library
Prentiss, MS
Phone: 601-792-5845
Donald McEachin, Esq., Mr. Gee's law partner, will be speaking
from 10:00 a.m. through 6:00 p.m. at:
Friday, August 1, 2008
Days Inn
McComb, MS
Phone: 601-684-5566
The six law firms are the only firms endorsed by the National
Black Farmers' Association. These firms are also working with
the Federation of Southern Cooperatives, and the law firms
collectively represent over 50,000 black farmers.
The firms have set up an informational telephone line at
1-866-472-7826, available 24 hours a day, seven days a week.
Also available is an informational Web site --
http://www.blackfarmerclaims.com/-- where Mr. Gee discusses his
own childhood working on a black-owned farm.
Mr. Gee is an accomplished trial attorney. He obtained a B.A.
degree in Political Science from Virginia Commonwealth
University, and he received a law degree from Howard University
School of Law.
AMERICAN INT'L: Michigan Wants to Lead Credit Default Swap Suit
---------------------------------------------------------------
Michigan Attorney General Mike Cox said he is trying to protect
more than 600,000 state pensions by becoming the lead plaintiff
in a class action lawsuit against American International Group,
John O'Brien writes for Legal Newsline.
According to the report, Mr. Cox wants a federal judge to
appoint the State of Michigan Retirement Systems as lead
plaintiff in the suit, which alleges that AIG misled investors
regarding the value of its Credit Default Swaps tied to the
subprime mortgage market.
The complaint claims that AIG broke federal securities laws by
claiming their CDS would be safe during the nation's mortgage
crisis. The SMRS has combined assets of approximately
$60 billion.
The original complaint was filed in May 2008 by the Jacksonville
Police and Fire Pension Fund. The Ontario Teachers Pension Plan
Board and Oakland County, Mich., also moved to become lead
plaintiff.
Bernstein Liebhard & Lifshitz of New York submitted the State of
Michigan's request last week. Barrack, Rodos & Bacine of New
York and The Miller Law Firm of Rochester, Michigan, also
appeared on the document.
BOIS D'ARC: Faces Nevada Lawsuit Over Stone Energy Merger
---------------------------------------------------------
Bois d'Arc Energy, Inc., is facing a purported class action
lawsuit in Nevada over a merger agreement wherein the company
will be acquired by affiliates of Stone Energy Corp.
The putative class action lawsuit seeking certification in the
District Court of Clark County, Nevada, entitled, "Packard v.
Allison, et al., Case No. A567393," was filed against the
company, its directors and certain of its officers, as well as
Comstock Resources, Inc., Stone Energy Corp., and Stone Energy
Offshore, L.L.C., a Delaware limited liability company and
wholly owned subsidiary of Stone Energy Corp.
The lawsuit was brought by Gail Packard, a purported Bois d'Arc
stockholder, on behalf of a putative class of Bois d'Arc
stockholders and, among other things, seeks to enjoin the named
defendants from proceeding with the merger of Bois d'Arc with
and into Stone Energy Offshore with Stone Energy Offshore
surviving the merger as a wholly owned subsidiary of Stone
Energy, seeks to have the Agreement and Plan of Merger dated
April 30, 2008, by and among Bois d'Arc, Stone Energy, and Stone
Energy Offshore rescinded, and seeks an award of monetary
damages.
The plaintiff asserts that the decisions by Bois d'Arc's
directors and Comstock to approve the Merger constituted
breaches of their respective fiduciary duties because, Ms.
Packard alleges, they did not engage in a fair process to ensure
the highest possible purchase price for Bois d'Arc's
stockholders, did not properly value Bois d'Arc, failed to
disclose material facts regarding the proposed Merger, and did
not protect against conflicts of interest arising from the
participation agreement, the parachute gross-up payments, and
the change in control and severance arrangements.
Ms. Packard also contends that Stone Energy and Stone Energy
Offshore aided and abetted the alleged breaches of fiduciary
duty by Bois d'Arc's officers and directors, according to the
company's July 21, 2008 Form 8-K filing with the U.S. Securities
and Exchange Commission.
Bois d'Arc Energy, Inc. -- http://www.boisdarcenergy.com/-- is
an independent exploration company engaged in the discovery and
production of oil and natural gas in the Gulf of Mexico. The
Company's oil and natural gas properties are estimated to have
proved reserves of 398 billion cubic feet of natural gas
equivalent (Bcfe). Bois d'Arc's proved oil and natural gas
reserve base is 63% natural gas and 37% proved developed on a
Bcfe basis as of Dec. 31, 2007, and it serves as operator for
approximately 98% of its properties. During the year ended Dec.
31, 2007, its daily production averaged 88 million cubic feet
(MMcf) of natural gas and 4,578 barrels of oil or 116 million
cubic feet of natural gas equivalent (MMcfe). The Company's
properties are located in the outer continental shelf of the
Gulf of Mexico in water depths of up to 75 feet. Its Gulf of
Mexico operations include properties located offshore of
Louisiana and Texas, in state and federal waters of the Gulf of
Mexico.
CALIFORNIA: Sushi Place Sues Labor Commissioner Over Wage Claims
----------------------------------------------------------------
The owner of a downtown Los Angeles sushi restaurant that is
facing wage payment claims by two alleged undocumented workers
has launched a counterattack by filing a class-action lawsuit
against the California labor commissioner for defying federal
immigration law, Workforce Management reports.
Masayoshi Kaji of Sushi Sharin argued that the commissioner's
policy of providing undocumented workers with an administrative
forum in which to litigate wage claims and awarding them wages
violates the Immigration Reform and Control Act. His attorney
believes the case is one of first impression.
"The immigration policy of the United States is that people who
are here illegally can't work and should not be awarded wages,"
says Ernest J. Franceschi, Esq., of Los Angeles.
Workforce Management recounts that in April, the commissioner
awarded Mr. Kaji's two former employees -- brothers Tranquilino
Cruz Garcia and Rutilino Cruz Garcia -- more than $35,000 in
back wages plus penalties. The award covers unpaid overtime,
missed rest periods and missed meal periods between February
2005 and December 2007.
According to the report, Mr. Kaji's class action suit, filed in
May, seeks an injunction against the commissioner on behalf of
Mr. Kaji and "all California employers who are presently subject
to or in the future may be subject to an administrative action
before the California labor commissioner in which an award of
wages is sought by a person not illegally authorized to work in
the United States."
Mr. Franceschi cites the precedent of "Hoffman Plastics
Compounds v. National Labor Relations Board," in which the U.S.
Supreme Court overturned an award of back pay to an undocumented
alien who sued an employer for violations of the National Labor
Relations Act. "[A]warding back pay to illegal aliens runs
counter to policies underlying IRCA, policies the board has no
authority to enforce or administer," the ruling concluded.
"I don't really see any distinction" between Hoffman Plastics
and Mr. Kaji's case, Mr. Franceschi tells Workforce Management.
Mr. Kaji has also requested a court order requiring the Cruz
Garcias to reimburse him for all wages they received from him.
However, the report notes, California Labor Code Section 1171.5
provides that "All protections, rights, and remedies available
under state law . . . are available to all individuals
regardless of immigration status who have applied for
employment, or who are or who have been employed, in this
state."
Gladys Limon, Esq., an attorney with the Mexican American Legal
Defense and Educational Fund who is representing the Cruz
Garcias, contends that Hoffman Plastics was a narrow ruling that
has not been extended to state labor laws.
"One of the objectives of IRCA is to deter employers from hiring
illegal workers," she argues. "Enforcing wage and hour laws
against employers who are exploiting illegal workers [achieves]
the purposes of IRCA."
The report further notes that federal courts have distinguished
"Hoffman," which applied to back pay for work that had not been
performed, from cases involving awards for work actually
performed.
"Nothing in Hoffman suggests that IRCA mandates that
undocumented workers forfeit payments for work that they have
already performed or that, by hiring undocumented workers,
employers may evade their legal obligation to make wage payments
for work that has actually been performed," the report quotes
the New York state Attorney General's Office as stating in an
advisory opinion.
Mr. Franceschi opines that the distinction is "without
substance" when the worker's act of working is illegal. "The
Cruz Garcias were not allowed to be here, they were not allowed
to work here," he says. Therefore, the labor commissioner "has
no jurisdiction . . . to give them wages, no matter how they are
classified."
CARRIER CORP: Settles Consumer Lawsuits Over Condensing Furnaces
----------------------------------------------------------------
Carrier Corp., a subsidiary of United Technologies Corp.,
settled several class action consumer complaints over high-
efficiency condensing furnaces.
Initially, several lawsuits were filed against Carrier in
Washington, Minnesota, Michigan, Wisconsin, Ontario and British
Columbia. The complaints allege that Carrier engaged in
deceptive and unfair trade practices by knowingly selling high-
efficiency condensing furnaces containing secondary heat
exchangers that corrode and fail prematurely, causing
residential customers to incur labor costs for repair or
replacement that are not covered by Carrier's warranty.
While Carrier denies liability and disputes the claims, the
company and the counsel for the class action plaintiffs have
reached a comprehensive agreement to settle these actions.
Under the settlement, Carrier agrees to:
-- extend the labor warranty on the heat exchangers for
current owners of affected furnaces, or provide an
optional credit toward the purchase of new equipment,
-- reimburse owners who have already paid for repairs to
their heat exchanger, and
-- pay the fees and costs incurred by the plaintiffs.
The company received final approvals for the settlement deals
from the U.S. court in April 2008 and from the Canadian courts
in June 2008 and July 2008, according to United Technologies
Corp.'s July 22, 2008 Form 10-Q filing with the U.S. Securities
and Exchange Commission for the quarter ended June 30, 2008.
United Technologies Corp. -- http://www.utc.com/-- incorporated
in 1934, provides high-technology products and services to the
building systems and aerospace industries. The Company conducts
its business through six principal segments: Otis, Carrier, UTC
Fire & Security (UTC F&S), Pratt & Whitney, Hamilton Sundstrand
and Sikorsky. Otis includes elevators, escalators, moving
walkways and services. Carrier includes residential, commercial
and industrial heating, ventilating, air conditioning (HVAC) and
refrigeration systems and equipment, food service equipment,
building automation and controls, HVAC and refrigeration
components and installation, retrofit and aftermarket services.
UTC F&S offers fire and special hazard detection and suppression
systems and fire fighting equipment, electronic security,
monitoring and rapid response systems and service and security
personnel services. Pratt & Whitney includes commercial,
general aviation and military aircraft engines, parts and
services, industrial gas turbines and space propulsion.
Hamilton Sundstrand includes aerospace products and aftermarket
services. Sikorsky offers military and commercial helicopters,
aftermarket helicopter, and aircraft parts and services.
CELESTICA INC: Continues to Face Securities Fraud Lawsuits
----------------------------------------------------------
In 2007, securities class action lawsuits were commenced against
Celestica Inc. and their former chief executive and chief
financial officers, before the United States District Court of
the Southern District of New York by individuals who claim that
they were purchasers of company stock, on behalf of themselves
and other purchasers of company stock, during the period from
Jan. 27, 2005, through January 30, 2007.
The plaintiffs allege violations of United States federal
securities laws and seek unspecified damages. They allege that
during the purported class period, the company made statements
concerning their actual and anticipated future financial results
that failed to disclose certain purportedly adverse information
with respect to demand and inventory in their Mexican operations
and their information technology and communications divisions.
In an amended complaint, the plaintiffs have added one of the
company directors and Onex Corporation as defendants. A
parallel class proceeding has recently been issued against the
company and its former Chief Executive and Chief Financial
Officers, in the Ontario Superior Court of Justice, but neither
leave nor certification of the action has been granted by that
court.
The company believes that the allegations in these claims are
without merit and intends to defend against them vigorously.
However, there can be no assurance that the outcome of the
litigation will be favorable to the company or will not have a
material adverse impact on their financial position or
liquidity. In addition, the company may incur substantial
litigation expenses in defending these claims. The company has
liability insurance coverage that may cover some of the expense
of defending these cases, as well as potential judgments or
settlement costs.
Toronto-based Celestica Inc. provides a range of services and
solutions to original equipment manufacturers in the
communications, computing, consumer and industrial, aerospace
and defense sectors. The Company has operations throughout
Asia, the Americas and Europe.
CENTENE CORP: No Ruling Yet in Missouri Suit Dismissal Appeal
-------------------------------------------------------------
The U.S. District Court for the Eastern District of Missouri has
yet to rule on an appeal regarding the dismissal of a
consolidated class action suit against Centene Corp.
The consolidated class action dismissed by the Court was
originally two separate complaints filed in July 2006 and August
2006, respectively.
Both class action suits were filed against the company and
certain of its officers and directors on behalf of purchasers of
the company common stock from June 21, 2006, through July 17,
2006.
The suits allege that the company and certain of its officers
and directors violated federal securities laws by issuing a
series of materially false statements prior to the announcement
of the company's fiscal 2006-second quarter results.
According to the suits, these allegedly materially false
statements had the effect of artificially inflating the price of
the company's common stock, which subsequently dropped after the
issuance of a press release announcing the company's preliminary
fiscal 2006-second quarter earnings and revised guidance.
The suits were consolidated on Nov. 2, 2006, and an amended
consolidated complaint was filed in the U.S. District Court for
the Eastern District of Missouri in January 2007.
The consolidated class action asserts the same allegations, on
behalf of purchasers of the company's common stock from
April 25, 2006, through July 17, 2006.
At the company's request, the court dismissed the consolidated
lawsuit on June 29, 2007. However, the plaintiffs have appealed
the dismissal order, and briefing on the appeal has been
completed.
Oral argument on the appeal was held on April 18, 2008. A final
judgment has not been rendered, according to the company's
July 22, 2008 Form 10-Q filing with the U.S. Securities and
Exchange Commission for the quarter ended June 30, 2008.
The suit is "Larry Elam, et al. v. Centene Corp., et al., Case
No. 06-CV-1142," filed in the U.S. District Court for the
Eastern District of Missouri, Judge Catherine D. Perry,
presiding.
Representing the plaintiffs are:
Jill S. Abrams, Esq. (jabrams@abbeyspanier.com)
Abbey & Gardy
212 E. 39th Street
New York, NY 10016
Phone: 212-889-3700
- and -
Joe D. Jacobson, Esq. (jacobson@stlouislaw.com)
Green & Jacobson, P.C.
7733 Forsyth Boulevard, Suite 700
St. Louis, MO 63105
Phone: 314-862-6800
Fax: 314-862-1606
Representing the defendants are:
Jason M. Bohm, Esq. (jbohm@sidley.com)
Sidley & Austin
1 South Dearborn Street
Chicago, IL 60603
Phone: 312-853-0526
Fax: 312-853-7036
- and -
Edwin L. Noel, Esq. (enoel@armstrongteasdale.com)
Armstrong Teasdale, LLP
One Metropolitan Square, Suite 2600
St. Louis, MO 63102-2740
Phone: 314-621-5070
Fax: 314-621-5065
DOMINO'S PIZZA: Settles California Lawsuit by Former Employees
--------------------------------------------------------------
Domino's Pizza LLC reached a settlement for two purported class
action suits brought in California by former employees.
On June 10, 2003, "Vega v. Domino's Pizza LLC," was filed in
Orange County Superior Court over allegations that the company
failed to provide meal and rest breaks to its employees.
The second suit, "Rosello v. Domino's Pizza LLC," was filed on
Aug. 2, 2006, in Los Angeles County Superior Court, alleging
similar claims as set out in the Vega lawsuit.
On Feb. 14, 2007, the two actions were consolidated in Orange
County Superior Court. No determination with respect to class
certification was made.
On Sept. 11, 2007, the parties reached an out-of-court
settlement in which all claims in both "Vega v. Domino's Pizza
LLC," and "Rosello v. Domino's Pizza LLC" will be dismissed.
As part of the conditional settlement, the company agreed to pay
$5.0 million to the plaintiffs and their attorneys to resolve
the disputes. The company reserved $5.0 million in the second
quarter of 2007 for these matters.
On June 24, 2008, the settlement was approved by the court and
the agreed amont will be paid subsequent to the second quarter
of 2008, according to the company's July 22, 2008 Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarter ended June 15, 2008.
Domino's Pizza, Inc. -- http://www.dominos.com/-- is a pizza
delivery company in the U.S. The Company operates through a
network of 8,624 Company-owned and franchise stores, located in
all 50 states and in more than 55 countries. The Company's
franchisee comprises of over 2,000 owner-operators. The Company
operates its business in three segments: domestic stores,
domestic supply chain and international. The domestic stores
segment comprises 4,584 franchise stores and 571 Company-owned
store operations during the fiscal year ended Dec. 30, 2007.
The domestic supply chain segment operates 17 regional dough
manufacturing and food supply chain centers, one supply chain
center providing equipment and supplies to certain of stores in
the United States and internationally, and one vegetable
processing supply chain center. The international segment
oversees a network of 3,469 international franchise stores in
more than 55 countries.
HEALTH NET: N.J. Court Approves $255-Million Deal in ERISA Suit
---------------------------------------------------------------
Judge Faith S. Hochberg of the U.S. District Court for the
District of New Jersey approved a $255-million settlement in
three class-action suits against Health Net Inc. (HNT),
CNNMoney.com reports.
The company was named as a defendant in these three lawsuits
that are styled as nationwide class actions:
1. "McCoy v. Health Net, Inc. et al.,"
2. "Wachtel v. Health Net, Inc., et al.," and
3. "Scharfman, et al v. Health Net, Inc., et al."
McCoy & Wachtel Litigation
The McCoy and Wachtel cases are pending with the U.S. District
Court for the District of New Jersey on behalf of a class of
subscribers in a number of the company's large and small
employer group plans.
The Wachtel complaint initially was filed as a single plaintiff
case in New Jersey State court on July 23, 2001. Subsequently,
the company removed the Wachtel complaint to federal court, and
the plaintiffs amended their complaint to assert claims on
behalf of a class of subscribers in small employer group plans
in New Jersey on Dec. 4, 2001.
The McCoy complaint was filed on April 23, 2003, and asserts
claims on behalf of a nationwide class of Health Net
subscribers.
These two cases have been consolidated for purposes of trial.
In it, the plaintiffs allege that Health Net, Inc., Health Net
of the Northeast, Inc. and Health Net of New Jersey, Inc.,
violated the Employee Retirement Income Security Act of 1974 in
connection with various practices related to the reimbursement
of claims for services provided by out-of-network providers.
The plaintiffs seek relief in the form of payment of additional
benefits, injunctive and other equitable relief, and attorneys'
fees.
In September 2006, the District Court in McCoy/Wachtel certified
two nationwide classes of Health Net subscribers who received
medical services or supplies from an out-of-network provider and
to whom the defendants paid less than the providers billed
charges from 1995 through Aug. 31, 2004.
Class notices were mailed and published in various newspapers at
the beginning of July 2007.
Scharfman Litigation
On Jan. 13, 2005, counsel for the plaintiffs in the
McCoy/Wachtel actions filed a separate class action complaint
against Health Net; Health Net of the Northeast, Inc.; Health
Net of New York, Inc.; and Health Net Life Insurance Co.,
captioned, "Scharfman, et al. v. Health Net, Inc., et al., 05-
CV-00301 (FSH)(PS)." The suit was filed in the U.S. District
Court for the District of New Jersey.
On March 12, 2007, the Scharfman complaint was amended to add
plaintiffs in "McCoy," and "Wachtel," as named plaintiffs and to
add a non-ERISA claim.
The Scharfman complaint now alleges both ERISA and Racketeer
Influenced and Corrupt Organizations Act claims based on conduct
similar to that alleged in the McCoy/Wachtel actions.
The alleged claims in "Scharfman" run from Sept. 1, 2004, until
the present.
The plaintiffs in the Scharfman action seek relief in the form
of payment of additional benefits, civil penalties, restitution,
compensatory, and consequential damages, treble damages,
prejudgment interest and costs, attorney's fees and injunctive
and other equitable relief.
On April 10, 2007, the company filed a motion to dismiss all
counts of that complaint, which is pending. On July 25, 2007,
the Magistrate issued her recommendations to the Court on this
motion, recommending denying the motion to dismiss with respect
to the ERISA claims, granting the motion to dismiss with respect
to the State RICO claims, and dismissing the federal RICO claims
with leave to file an amended complaint and a direction to file
a RICO case statement.
McCoy/Wachtel Litigation Developments
In the McCoy/Wachtel actions, on August 9, 2005, the plaintiffs
filed a motion seeking sanctions against the defendants for a
variety of alleged misconduct, discovery abuses and fraud on the
District Court.
The District Court held 12 days of hearings on the plaintiffs'
sanctions motion between October 2005 and March 2006.
During the course of the hearings, and in their post-hearings
submissions, the plaintiffs also alleged that some of Health
Net's witnesses engaged in perjury and obstruction of justice.
Health Net denied all such allegations.
While the sanctions proceedings were progressing, the District
Court and the Magistrate Judge overseeing discovery entered a
number of orders relating, inter alia, to production of
documents.
In an order dated May 5, 2006, the District Court ordered the
restoration, search and review of backed-up e-mails of 59
current and former Health Net associates.
The restoration process was complex, time consuming and
expensive as it involved dealing with over 14 billion pages of
documents.
Health Net was unable to complete the project by the deadline
and the District Court denied additional time to complete the
project. The project was completed two months after the
deadline.
The May 5 Order also set forth certain findings regarding
plaintiffs' argument that the "crime-fraud" exception to the
attorney-client privilege should be applied to certain documents
for which Health Net claimed a privilege.
In this ruling, the District Court made preliminary findings
that a showing of a possible crime or fraud was made.
The review of privileged documents under the "crime-fraud"
exception was assigned by the District Court to the Magistrate
Judge, who was to review the documents and make a recommendation
to the District Court.
On Jan. 22, 2007, the Magistrate Judge made a recommendation
that the assertion of privilege for a number of the documents
was vitiated by the crime-fraud exception. Health Net has
appealed this ruling to the District Court.
In June 2007, the District Court asked the Magistrate Judge to
determine if plaintiffs had established a prima facie case that
Health Net had committed a crime or fraud that would vitiate the
attorney-client privilege claimed for an additional set of
Health Net documents.
The Magistrate Judge so found and referred the matter to a
Special Master for further review. No determination has yet
been made by the Special Master.
On Dec. 6, 2006, the District Court issued an opinion and order
finding that Health Net's conduct in connection with the
discovery process was sanctionable (December 6 Order).
The District Court ordered a number of sanctions against Health
Net, including, but not limited to:
-- striking a number of Health Net's trial exhibits and
witnesses;
-- deeming a number of facts to be established against
Health Net;
-- requiring Health Net to pay for a discovery monitor to
oversee the completion of discovery in these cases;
-- ordering that a monetary sanction be imposed upon
Health Net once the District Court reviews Health
Net's financial records; and
-- ordering Health Net to pay plaintiffs' counsel's fees
and expenses associated with the sanctions motion and
motions to enforce the District Court's discovery
orders and re-deposing Health Net witnesses.
In connection therewith, on June 19, 2007, the District Court
ordered Health Net to pay plaintiffs' counsel fees of
$6,723,883, which were paid on July 3, 2007; this amount was
accrued for as of June 30, 2007. The District Court has not yet
announced what, if any, additional penalties will be imposed.
In its December 6 Order, the District Court also ordered that
Health Net produce a large number of privileged documents that
were first discovered and revealed by Health Net as a result of
the e-mail backup tape restoration effort. The company appealed
that order to the Third Circuit where it is still pending.
Finally, pursuant to the December 6 Order, the District Court
appointed a Special Master to determine if the company has
complied with all discovery orders.
In her Report, the Special Master found, among other things,
that:
-- "There was no evidence of intentional or deliberate
destruction of emails;"
-- "There is no evidence of destruction of emails by any
individual;" and
-- "There was no evidence of intentional, malicious or
bad faith conduct."
As a result of these findings, plaintiffs requested that the
District Court accept the Special Master's Report, but reject
the portion containing the above quotes.
The company has opposed the request that portions of the Report
be expunged. The Court has yet to rule on plaintiffs' request.
Settlement Negotiations
In August 2007, the company engaged in mediation with the
plaintiffs that resulted in an agreement in principle to settle
McCoy, Wachtel and Scharfman actions.
A final settlement agreement was signed with the plaintiffs on
March 13, 2008.
The material terms of the company's agreement with the
plaintiffs are as follows:
-- Health Net will establish a $175 million cash
settlement fund which will be utilized to pay class
members, plaintiffs' attorneys' fees and expenses and
regulatory remediation of claims up to $15 million
paid by Health Net to members in New Jersey relating
to Health Net's failure to comply with specific New
Jersey state laws relating to ONET and certain other
claims payment practices;
-- Health Net will establish a $40 million prove-up fund
to compensate eligible class members who can prove
that they paid out of pocket for certain ONET claims
or who have received balance bills for such services
after May 5, 2005; and
-- Health Net will implement various business practice
changes relating to its handling of ONET claims,
including changes designed to enhance information
provided to its members on ONET reimbursements and
enhanced reimbursement for certain ONET services.
In addition, the parties have agreed to jointly request that the
District Court forego the imposition of any further sanctions,
penalties or fines against Health Net or its representatives.
Due to the length of time it took to negotiate a series of
complex settlement terms with plaintiffs, the company agreed
with plaintiffs to deposit $160 million into an escrow fund to
be used as the cash settlement fund referenced above when a
settlement is finally agreed to and approved by the District
Court.
On Jan. 28, 2008, the $160 million was placed into an escrow
account where it will accrue interest until the settlement is
approved by the District Court.
On April 24, 2008, the District Court conducted a preliminary
fairness hearing and subsequently signed an order on that date
preliminarily approving the settlement agreement. Notice of the
settlement agreement's terms was provided to class members
in May (Class Action Reporter, May 29, 2008).
At the July 24, 2008 final fairness hearing, Judge Hochberg
approved the $255-million settlement in the suits.
Health Net, Inc. -- https://www.healthnet.com/ -- is an
integrated managed care organization that delivers managed
healthcare services through health plans and government-
sponsored, managed-care plans. The Company operates and
conducts its businesses through its subsidiaries. Health Net's
health plans and government contracts subsidiaries provide
health benefits through its health maintenance organizations
(HMOs), insured preferred provider organizations (PPOs) and
point-of-service (POS) plans to approximately 6.6 million
individuals across the country through group, individual,
Medicare, (including the Medicare prescription drug benefit
commonly referred to as Part D), Medicaid, TRICARE and Veterans
Affairs programs. The Company operates within two segments:
Health Plan Services and Government Contracts.
HELEN OF TROY: Texas Court Approves $4.5MM Securities Suit Deal
---------------------------------------------------------------
The U.S. District Court for the Western District of Texas gave
final approval to the proposed $4.5-million settlement in a
securities fraud class action lawsuit filed against Helen of
Troy, Ltd., according to the company's July 9, 2008 Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarter ended May 31, 2008.
The class consists of all persons who purchased or otherwise
acquired Helen of Troy common stock between Oct. 12, 2004, and
Oct. 10, 2005 (Class Action Reporter, June 24, 2008).
The class action is a consolidation of several suits against the
company; Gerald J. Rubin, chairman of the company's board,
president, and chief executive officer; and Thomas J. Benson,
the company's chief financial officer, on behalf of purchasers
of publicly traded securities of the company.
The plaintiffs alleged violations of Sections 10 (b) and 20(a)
of the U.S. Securities Exchange Act of 1934, as amended, and
Rule 10b-5 thereunder, on the grounds that the company and the
two officers engaged in a scheme to defraud the company's
shareholders through the issuance of positive earnings guidance
intended to artificially inflate the company's share price so
that Mr. Rubin could sell almost 400,000 of the company's common
shares at an inflated price.
The plaintiffs sought unspecified damages, interest, fees,
costs, an accounting of the insider trading proceeds, and
injunctive relief, including an accounting of and the imposition
of a constructive trust and asset freeze on the defendants'
insider trading proceeds.
An agreement in principle has been reached to settle the
consolidated class action (Class Action Reporter, Jan. 24,
2008).
On June 19, 2008, the Court held a hearing in connection with
the settlement agreement and approved the terms of the
settlement, granted certification of the class for purposes of
the settlement, and awarded attorney's fees and costs related to
the lawsuit.
Under the settlement, the lawsuit has been dismissed with
prejudice in exchange for a cash payment of $4.5 million.
The suit is "In Re: Helen of Troy, Ltd., Securities Litigation,
Case No. 3:05-cv-00431-DB," filed in the U.S. District Court for
the Western District of Texas, Judge David Briones, presiding.
Representing the plaintiffs are:
Ariel Acevedo, Esq. (aacevedo@saxenawhite.com)
Saxena White P.A.
2424 North Federal Highway, Suite 257
Boca Raton, FL 33431
Phone: 561-394-3399
Fax: 561-394-3382
- and -
Daniel R. Malone, Esq. (dan@malone-pc.com)
The Malone Law Firm
300 East Main, #1100
El Paso, TX 79901
Phone: 915-533-5000
Fax: 915-533-5009
Representing the defendants are:
Nicholas Even, Esq. (nick.even@haynesboone.com)
Noel M. Hensley, Esq. (noel.hensley@haynesboone.com)
Haynes Boone, LLP
901 Main St., Ste. 3100
Dallas, TX 75202-3789
Phone: 214-651-5000
Fax: 214-651-5940
214-200-0470
- and -
H. Christopher Mott, Esq. (cmott@gordonmottpc.com)
Krafsur Gordon Mott, PC
4695 North Mesa Street
El Paso, TX 79912-6103
Phone: 915-545-1133
Fax: 915-545-4433
ILLINOIS CENTRAL: Land Payments Suit Settlement Checks Are Out
--------------------------------------------------------------
Settlement checks in connection with the resolution of the class
action suit against Illinois Central Railroad -- now part of
Canadian National Railway Co. -- over payments it received from
land it did not own, are finally making it to their
destinations, Kenneth Lowe writes for the Journal Gazette &
Times-Courier.
The suit was filed in 1992 by Darrell A. Woolums, Esq., of
Decatur, Illinois, who represented some 400 claimants including
individuals, agencies and municipalities along the ICC line from
Freeport to Centralia who paid the railroad for land it did not
own. The railroad had received the land free through a federal
land grant, according to The Clinton Daily Journal.
Specifically, the case stemmed from a discrepancy that
Mr. Woolums discovered while serving as attorney for the city of
Maroa.
More than a century later, Illinois Central Railroad had
abandoned the train tracks and decided to sell the land to
people who had property situated on part of the right of way
surrounding the railways.
Mr. Woolums said Illinois Central Railroad in essence told
people they needed to buy the land from the company, even
though, 150 years earlier, the land was granted to it by the
federal government at no charge.
Illinois Central Railroad not only sold the land it had no claim
to but also knew about it, Mr. Woolums said.
"We know they knew they couldn't (sell it) because through the
litigation, they had to disclose internal legal memoranda from
(their legal counsel) saying 'Don't sell it,' and they did it
anyway," Mr. Woolums said.
Earlier, Illinois Central Railroad settled the 16-year-old
class-action lawsuit (Class Action Reporter, July 15, 2008).
Mr. Woolums said that the claimants will share a total of
$5,805,000. He added that each claimant will receive all the
money originally paid the railroad, plus interest.
The Clinton Daily Journal relates that one beneficiary of the
settlement is the DeWitt County Friendship Center, which will
receive more than $4,000. Another is The City of Wapella, which
will receive a check for nearly $13,000.
Mr. Woolums pointed out that there are other individuals in
DeWitt County who will benefit from the settlement.
To contact Mr. Woolums:
Darrell A. Woolums, Esq.
Samuels, Miller, Schroeder, Jackson & Sly, LLP
225 North Water Street, Suite 301
P.O. Box 1400
Decatur, IL 62525-1400
Phone: 217-429-4325
Fax: 217-425-6313
e-mail: law@smsjslaw.com
Web site: http://www.smsjslaw.com/
INDIANA: Irate Taxpayers Sue Indianapolis Over Downtown Lots
------------------------------------------------------------
Irate taxpayers filed a class-action complaint in Marion County
Court against the City of Indianapolis and the Indiana Sports
Corp., CourtHouse News Service reports.
The complaint asserts that the city issued millions of dollars
of bonds in the 1980s to buy downtown lots for redevelopment.
In 2007, the plaintiffs claim, the Indiana Sports Corp. sold a
lot for $6 million without repaying the city.
KB HOME: No Discovery Yet in California ERISA Violations Lawsuit
----------------------------------------------------------------
Discovery has yet to commence in the purported class action
lawsuit "Bagley et al., v. KB Home, et al.," which was filed in
the U.S. District Court for the Central District of California.
On March 16, 2007, plaintiffs Reba Bagley and Scott Silver filed
an action against against the company, its directors, and
certain of its current and former officers under Section 502 of
the Employee Retirement Income Security Act, 29 U.S.C. Section
1132.
On April 3, 2008, the plaintiffs filed an amended complaint
adding Tolan Beck and Rod Hughes as additional plaintiffs and
dismissing certain individuals as defendants.
All four plaintiffs claim to be former employees of KB Home who
participated in the KB Home 401(k) Savings Plan. They allege on
behalf of themselves and on behalf of all others similarly
situated that all defendants breached fiduciary duties owed to
plaintiffs and purported class members under ERISA by failing to
disclose information to and providing misleading information to
participants in the Plan about alleged prior stock option
backdating practices of the Company and by failing to remove the
Company's stock as an investment option under the Plan.
The plaintiffs allege that this breach of fiduciary duties
caused them to earn less on their Plan accounts than they would
have earned but for defendants' alleged breach.
They seek unspecified money damages and injunctive and other
equitable relief.
On May 16, 2008, the company filed a motion to dismiss the suit
on the basis that the plaintiffs' allegations failed to state a
claim against the company.
The plaintiffs filed an opposition to the dismissal motion on
June 20, 2008. The company filed its reply in support of the
motion in July and a hearing on the matter is scheduled for
Aug. 4, 2008.
Because of the pendency of the company's motion to dismiss (and
a separate motion to dismiss filed by the individual
defendants), no discovery has been taken in the lawsuit,
according to the company's Form July 10, 2008 10-Q filing with
the U.S. Securities and Exchange Commission for the quarter
ended May 31, 2008.
The suit is "Bagley et al., v. KB Home, et al., Case No. 2:07-
cv-01754-GPS-SS," filed in the U.S. District Court for the
Central District of California, Judge George P. Schiavelli,
presiding.
Representing the plaintiffs are:
Stephen J Fearon, Jr., Esq. (stephen@sfclasslaw.com)
Squitieri & Fearon LLP
32 East 57th Street, 12th Floor
New York, NY 10022
Phone: 212-421-6492
- and -
Stephen M. Fishback, Esq. (sfishback@kfjlegal.com)
Keller Fishback and Jackson LLP
18425 Burbank Boulevard Suite 610
Tarzana, CA 91356-6918
Phone: 818-342-7442
Fax: 818-342-7616
Representing the defendants are:
Marc T.G. Dworsky, Esq. (marc.dworsky@mto.com)
Munger Tolles & Olson
355 S. Grand Ave., 35th Fl.
Los Angeles, CA 90071-1560
Phone: 213-683-9100
- and -
Michael M. Farhang, Esq. (mfarhang@gibsondunn.com)
Gibson Dunn and Crutcher
333 South Grand Avenue, Suite 4600
Los Angeles, CA 90071-3197
Phone: 213-229-7005
LAURIN MARITIME: Mississippi River Oil Spill Sparks Lawsuit
-----------------------------------------------------------
A class action lawsuit was filed on July 24, 2008, before the
U.S. District Court for the Eastern District of Louisiana in
response to an oil spill in the Mississippi River, when a barge
full of heavy fuel oil was hit by a tanker and split in half,
Susan Finch writes for The Times-Picayune.
The defendants in the case are:
-- Laurin Maritime, the Houston firm that operates the
Liberian-flagged tanker MV Tintomara;
-- that ship's owner, Gibraltar-based Whitefin Shipping Co.
Limited;
-- American Commercial Lines Inc., the Indiana company that
owns the barge;
-- DRD Towing, the Harvey company that owns the tug M/V Mel
Oliver, and
-- the New Orleans-Baton Rouge Steamship Pilots
Association, one of whose members was in command of the
Tintomara at the time of the collision.
The case was filed by New Orleans residents Stephen Marshall
Gabarick and Bernard Attridge on behalf of themselves and "all
residents and inhabitants of New Orleans who have suffered any
damages and/or losses" from the July 23 accident near the
Crescent City Connection. The accident remains under
investigation by the U.S. Coast Guard and other agencies.
The lawsuit complains that because of prevailing winds, the
plaintiffs and individuals they represent have been exposed to
toxic gases that have spread from the collision site to the
French Quarter and Uptown.
The plaintiffs claim that the heavy oil has caused serious
environmental damage to the river and threatened sensitive
wetlands. They also note it forced closure of several
communities' water intakes to prevent contamination of their
drinking water supplies.
Closure of an 80-mile long stretch of the river because of the
spill, their lawsuit says, has caused and will continue to cause
loss of income to individuals and businesses that are being
prevented from using the waterway.
The lawsuit touches on two major issues: holding the vessel
operator responsible and getting people money for damages
suffered as a result.
The suit is "Gabarick et al. v. Laurin Maritime (America) Inc.
et al., Case Number: 2:2008cv04007," filed in the U.S. District
Court for the Eastern District of Louisiana, Magistrate Judge
Karen Wells Roby, presiding.
LEHMAN BROTHERS: Faces N.Y. Suit Over SASCO Certificates, Notes
---------------------------------------------------------------
Lehman Brothers Holdings Inc., and Lehman Brothers, Inc., are
facing a purported class action lawsuit in New York over the
mortgage pass-through certificates and asset-backed notes of
Structured Asset Securities Corp. (SASCO), according to the
company's July 10, 2008 Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended May 31,
2008.
The purported class action complaint was received on June 19,
2008, by the Supreme Court of the State of New York, County of
Nassau, captioned, "Alaska Electrical Pension Fund v. Lehman
Brothers Holdings Inc., et al."
The complaint is brought as a purported class action on behalf
of all persons or entities who acquired mortgage pass-through
certificates and asset-backed notes of SASCO issued during 2006
and 2007 pursuant or traceable to an allegedly false and
misleading registration statement and through which
approximately 60 mortgage trusts issued notes.
The complaint names certain employees of LBI who signed the
registration statement and the mortgage trusts along with Lehman
Brothers Holdings, LBI, and SASCO. It purports to allege a
claim under Sections 11 and 15 of the U.S. Securities Act of
1933, as amended, and seeks compensatory damages to the class
members.
Lehman Brothers Holdings Inc. -- http://www.lehman.com/--
serves the financial needs of corporations, governments and
municipalities, institutional clients and high-net-worth
individuals worldwide. The Company provides an array of
services in equity and fixed income sales, trading and research,
investment banking, asset management, private investment
management and private equity. It operates three business
segments: Capital Markets, Investment Banking and Investment
Management. Lehman Brothers generates client-flow revenues from
institutional, corporate, government and high-net-worth clients
by advising on and structuring transactions; serving as a market
maker and intermediary in the global marketplace, including
having securities and other financial instrument products;
originating loans for distribution to clients in the
securitization or principals market; providing investment
management and advisory services, and acting as an underwriter
to clients.
LEHMAN BROTHERS: Faces Colo. and Ill. Suits Over Archstone Buy
--------------------------------------------------------------
Lehman Brothers Holdings Inc. is facing two purported class
action lawsuits in Colorado and Illinois over the acquisition of
Archstone-Smith Trust and Archstone-Smith Operating Trust by
certain affiliates of the company, according to the company's
July 10, 2008 Form 10-Q filing with the U.S. Securities and
Exchange Commission for the quarter ended May 31, 2008.
Stender Litigation
On Nov. 30, 2007, a purported class action lawsuit related to
the acquisition of Archstone-Smith Trust (AST) and Archstone-
Smith Operating Trust (ASOT) by affiliates of Tishman Speyer
Real Estate Venture VII, L.P., and Lehman Brothers, was filed
before the U.S. District Court for the District of Colorado.
The suit is captioned "Steven A. Stender, et al. v. James A.
Cardwell, et al., Case No. 2007cv2503."
The lawsuit names, among others, AST, ASOT, AST's former
trustees, Lehman Brothers and Tishman Speyer Development Corp.
as defendants.
The suit was brought by certain former unitholders of ASOT,
individually and purportedly on behalf of all holders of ASOT's
Class A-1 common units as of the date of the Acquisition, and
alleges, among other things:
-- that ASOT and AST entered into enforceable property
contribution agreements and partnership agreements
with such unitholders;
-- that AST and ASOT agreed not to enter into any
transactions or dispose of any interest in the
property contributed by such unitholders that would
result in such unitholders realizing a taxable gain,
and agreed to provide such unitholders with the
ability to receive dividends and to liquidate their
units by receiving cash or converting them to common
shares in the publicly-traded AST;
-- that AST and ASOT failed to perform their duties under
the contribution and partnership agreements and
statutory and common law partnership principles in
connection with the Acquisition; and
-- that AST and its former trustees and officers, aided
and abetted by Lehman Brothers and Tishman Speyer
violated their fiduciary duties owed to such
unitholders in connection with the Acquisition. The
class action seeks an unspecified amount of damages.
On Feb. 27, 2008, at the defendants' behest, the magistrate
judge presiding over the Stender Action granted stay of
discovery and further pretrial proceedings pending the court's
decision on the defendants' motion to stay or dismiss the
complaint in favor of arbitration, or in the alternative, to
dismiss the case for failure to state a claim.
Katz Litigation
On May 9, 2008, a second purported class action lawsuit relating
to the Acquisition, captioned, "Jack P. Katz v. Ernest A.
Gerardi, Jr., et al.," was filed in the Circuit Court of Cook
County, Illinois, by the same law firm that represents
plaintiffs in the Stender Action.
The lawsuit names, among others, AST, ASOT, AST's former
trustees, Lehman Brothers, and Tishman Speyer Development as
defendants.
The complaint alleges, among other things, that the prospectus
or information statement and registration statement on Form S-4
filed with the Securities and Exchange Commission by ASOT with
respect to the Series O Preferred Units to be issued to
unitholders who did not elect to receive the cash consideration
in connection with the Acquisition violated Sections 11, 12 and
15 of the 1933 Act in that the prospectus and registration
statement allegedly contained materially false and misleading
statements.
The complaint seeks:
-- with respect to unitholders who elected to receive the
Series O Preferred Units, rescission of their exchange
and damages in the amount of the full value of the
Class A-1 Common Units at the time of the Acquisition
plus the value of the tax protection and other
purported benefits applicable to the Class A-1 Common
Units; and
-- with respect to unitholders who elected to receive the
cash consideration, rescissory damages and damages
in the amount of the tax liability they were required
to pay as a result of the receipt of the cash
consideration.
Lehman Brothers reported no further development in the matters
in its regulatory filing.
Lehman Brothers Holdings Inc. -- http://www.lehman.com– serves
the financial needs of corporations, governments and
municipalities, institutional clients and high-net-worth
individuals worldwide. The Company provides an array of
services in equity and fixed income sales, trading and research,
investment banking, asset management, private investment
management and private equity. It operates three business
segments: Capital Markets, Investment Banking and Investment
Management. Lehman Brothers generates client-flow revenues from
institutional, corporate, government and high-net-worth clients
by advising on and structuring transactions; serving as a market
maker and/or intermediary in the global marketplace, including
having securities and other financial instrument products;
originating loans for distribution to clients in the
securitization or principals market; providing investment
management and advisory services, and acting as an underwriter
to clients.
LEHMAN BROTHERS: Faces N.Y. MDL Concerning Municipal Derivatives
----------------------------------------------------------------
Lehman Brothers, Inc., is facing a Multidistrict Litigation in
New York District Court concerning the sale of municipal
derivatives, according to the company's July 10, 2008 Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarter ended May 31, 2008.
Initially, LBI has been named as a defendant in six putative
class actions:
1. "Fairfax County, Virginia, et al. v. Wachovia Bank
N.A., et al., Case No. 08-cv-432," filed in the U.S.
District Court for the District of Columbia on
March 12, 2008;
2. "Hinds County, Mississippi v. Wachovia Bank, et al.,
Case No. 08-cv-2516," filed in the U.S. District
Court for the Southern District of New York on
March 13, 2008;
3. "The City of Oakland, California v. AIG Financial
Products Corp., et al., Case No. 08-cv-2116," filed
in the U.S. District Court for the Northern District
of California on April 23, 2008;
4. "Central Bucks School District v. Wachovia Bank N.A.,
et al., Case No. 08-cv-956," filed in the D.C.
District Court on June 4, 2008;
5. "Mayor and City Counsel of Baltimore v. Wachovia Bank,
N.A., et. al.," filed in the New York District Court
on July 3, 2008; and
6. "County of Alameda, California v. AIG Financial
Products Corp., et al.," filed in the California
District Court on July 8, 2008.
In each case, the plaintiffs allege a conspiracy among issuers
and brokers of municipal derivatives to fix prices, rig bids,
and allocate customers in violation of Section 1 of the Sherman
Act, 15 U.S.C. Section 1.
The City of Oakland also alleges that this conduct violated
California's Cartwright Act, Cal. Bus. & Prof. Code Sections
16720, et seq., and Unfair Competition Law, Cal. Bus. & Prof.
Code Sections 17200, et seq.
On June 16, 2008, the U.S. Judicial Panel on Multidistrict
Litigation issued an order transferring the cases brought by
Fairfax County and Hinds County (as well as another case in
which LBI is not named) to the New York District Court for
coordinated or consolidated pretrial proceedings.
In that order, the MDL Panel identified the cases brought by the
City of Oakland and Central Bucks School District, as well as
two cases in which LBI is not named, as additional actions that
may be consolidated in the MDL proceeding.
On June 23, 2008, the New York District Court issued an order
consolidating four cases, including those brought by Fairfax
County and Hinds County, for all pretrial purposes. The
Baltimore and the second California case had not yet been filed
at that time.
Lehman Brothers Holdings Inc. -- http://www.lehman.com/--
serves the financial needs of corporations, governments and
municipalities, institutional clients and high-net-worth
individuals worldwide. The Company provides an array of
services in equity and fixed income sales, trading and research,
investment banking, asset management, private investment
management and private equity. It operates three business
segments: Capital Markets, Investment Banking and Investment
Management. Lehman Brothers generates client-flow revenues from
institutional, corporate, government and high-net-worth clients
by advising on and structuring transactions; serving as a market
maker and intermediary in the global marketplace, including
having securities and other financial instrument products;
originating loans for distribution to clients in the
securitization or principals market; providing investment
management and advisory services, and acting as an underwriter
to clients.
LEHMAN BROTHERS: Faces Ill. & N.Y. Subprime Disclosures Lawsuits
----------------------------------------------------------------
Lehman Brothers Holdings Inc. is facing two purported class
action lawsuits in Illinois and New York over subprime
disclosures, according to the company's July 10, 2008 Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarter ended May 31, 2008.
The two purported securities class action suits were filed on
April 29, 2008, and June 18, 2008, against Lehman Brothers and
certain of its officers relating to its allegedly false or
misleading statements in connection with its subprime mortgage
backed securities trading.
The April 29 class action complaint, captioned, "Southeastern
Pennsylvania Transportation Authority, et al. v. Lehman Brothers
Holdings, Inc., et al. (SEPTA)" was filed in the U.S. District
Court for the Northern District of Illinois.
The June 18 class action complaint, captioned, "Operative
Plasterers and Cement Masons International Association Local 262
Annuity Fund et al. v. Lehman Brothers Holdings, Inc., et al.
(Operative Plasterers)" was filed in the U.S. District Court for
the Southern District of New York.
The purported class period for the SEPTA complaint is Sept. 13,
2006, through July 30, 2007, while the purported class period
for the Operative Plasterers complaint is Sept. 13, 2006,
through June 6, 2008.
Both complaints allege that Lehman Brothers made materially
false or misleading statements by purportedly failing to fully
disclose the nature and extent of its exposure to losses
incurred from trading in subprime mortgage backed derivatives
and collateralized debt obligations.
The plaintiffs further allege that the company materially
overvalued its position, maintained inadequate reserves, and did
not prepare its financial statements in accordance with U.S.
generally accepted accounting principles. Both complaints
allege violations of Section 10(b) of the U.S. Exchange Act and
Rule 10b-5 promulgated thereunder against Holdings and the
individual defendants.
The complaints also allege that the individual defendants
violated Section 20(a) of the U.S. Exchange Act. They seek
class certification and compensatory damages in an amount to be
determined.
Lehman Brothers Holdings Inc. -- http://www.lehman.com/--
serves the financial needs of corporations, governments and
municipalities, institutional clients and high-net-worth
individuals worldwide. The Company provides an array of
services in equity and fixed income sales, trading and research,
investment banking, asset management, private investment
management and private equity. It operates three business
segments: Capital Markets, Investment Banking and Investment
Management. Lehman Brothers generates client-flow revenues from
institutional, corporate, government and high-net-worth clients
by advising on and structuring transactions; serving as a market
maker and intermediary in the global marketplace, including
having securities and other financial instrument products;
originating loans for distribution to clients in the
securitization or principals market; providing investment
management and advisory services, and acting as an underwriter
to clients.
LEHMAN BROTHERS: Faces ERISA Violations Lawsuit in New York
-----------------------------------------------------------
Lehman Brothers Holdings, Inc., certain of its current officers
and directors, and members of the Employee Benefit Plans
Committee are facing a purported class action lawsuit in New
York over allegations that the defendants violated the Employee
Retirement Income Security Act, according to the company's
July 10, 2008 Form 10-Q filing with the U.S. Securities and
Exchange Commission for the quarter ended May 31, 2008.
The class action complaint, captioned, "Alex E. Rinehart et al.
v. Lehman Brothers Holdings, Inc. et al.," was filed On June 18,
2008, before the U.S. District Court for the Southern District
of New York.
The Rinehart complaint is brought pursuant to ERISA on behalf of
a purported class of all participants in or beneficiaries of the
Lehman Brothers' employee pension benefit plan -- Lehman
Brothers Savings Plan -- between Sept. 13, 2006, and the present
whose accounts included investments in the company's common
stock.
The Rinehart complaint alleges that the company and its officers
and directors, as fiduciaries of the Plan, failed to exercise
the required skill, care, prudence, and diligence required to
administer the Plan allegedly because Lehman Brothers was
"heavily invested in collateralized debt obligations (CDOs) and
subprime mortgage backed derivatives and was a participant in
the mortgage backed security origination sector."
The plaintiffs allege that defendants failed to fully disclose
the nature and extent of losses incurred from trading in
subprime mortgage backed derivatives and CDOs, and that the
company failed to timely write down its positions in these
securities. They further allege that the company materially
overvalued its position, maintained inadequate reserves, and did
not prepare its financial statements in accordance with U.S.
generally accepted accounting principles.
The plaintiffs allege that, as fiduciaries of the Plan, the
defendants had an obligation to conduct an independent and
thorough investigation into the merits of all investment
alternatives, and by allegedly disseminating false or misleading
information, they failed to prudently manage the Plan's assets
with respect to the Plan's investments.
The complaint seeks relief in the form of unspecified monetary
payment to the Plan and Plan participants, along with injunctive
and other equitable relief.
The suit is "Rinehart v. Lehman Brothers Holdings, Inc. et al.,
Case No. 1:08-cv-05598-LAK," filed in the U.S. District Court
for the Southern District of New York, Judge Lewis A. Kaplan,
presiding.
Representing the plaintiff is:
Thomas James McKenna, Esq. (tjmlaw2001@yahoo.com)
Gainey & McKenna, LLP
295 Madison Avenue
New York, NY 10017
Phone: 212-983-1300
Fax: 212-983-0383
Representing the defendants is:
Eric Milo Albert, Esq. (ealbert@stblaw.com)
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Phone: 212-455-2000 x2878
Fax: 212-455-2502
MAZDA CANADA: Faces British Columbia Suit Over Door Locks
---------------------------------------------------------
Mazda Canada Inc. is facing a class-action complaint before the
British Columbia Supreme Court over allegations that Mazda 3
cars are prone to break-ins because of defective locks, and
Mazda failed to warn customers despite widespread reports of it,
CourtHouse News Service reports.
The suit is brought on behalf of all persons who bought or
leased Mazda 3 motor vehicles, with a defective door lock
mechanism.
The plaintiffs claim the problem is so widespread that Mazda
offers a free fix to customers who demand it, but did not issue
a recall or warn other customers.
The plaintiffs demand judgment and relief as follows:
-- an order certifying the proceeding as a class
proceeding;
-- general, special, punitive and aggravated damages;
-- a declaration that the conduct of the defendants
constitutes a deceptive practice within the meaning of
the Business Practices and Consumer Protection Act;
-- damages pursuant to s.56 of the Sale of Goods Act;
-- damages pursuant to s.172 of the Business Practices and
Consumer Protection Act;
-- costs pursuant to s.37(2) of the Class Proceedings Act,
RSBC 1996, c.50;
-- interest pursuant to the Court Order Interest Act, RSBC
1996, c.79; and
-- such further and other relief as to the court may seem
just.
The suit is "Alisha Hollen Koubi et al. v. Mazda Canada, Inc. et
al.," filed in British Columbia Supreme Court.
Representing the plaintiffs is:
James A. Hanson
Hanson Wirsig Matheos
#210-15225 104th Avenue
Surrey, BC V3R 6Y8
Phone: 604-583-2200
Fax: 604-583-3469
MORGAN STANLEY: Faces Several Subprime-Related Lawsuits
-------------------------------------------------------
Morgan Stanley has been named defendant in several putative
class action suits brought under Sections 11 and 12 of the U.S.
Securities Act related to the company's role as a member of the
syndicates that underwrote offerings of securities and mortgage
pass-through certificates for certain entities that have been
exposed to subprime and other mortgage-related losses, according
to the company's Form July 9, 2008 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended May 31,
2008.
These putative class action suits include those related to:
-- New Century Financial Corp., pending with the U.S.
District Court for the Central District of California;
-- Countrywide Financial Corp. and its affiliates, one
consolidated lawsuit is pending with the U.S. District
Court for the Central District of California and two
other lawsuits are pending with the Superior Court of
the State of California in Los Angeles;
-- Merrill Lynch & Co., Inc., pending with the U.S.
District Court for the Southern District of New York;
-- Wachovia Corp., pending with the U.S. District Court
for the Eastern District of New York;
-- Washington Mutual, Inc., pending with the U.S. States
District Court for the Western District of Washington;
and
-- Fifth Third Bancorp, pending with the U.S. District
Court for the Southern District of Ohio.
Morgan Stanley -- http://www.morganstanley.com/-- is a global
financial services firm that, through its subsidiaries and
affiliates, provides its products and services to a group of
clients and customers, including corporations, governments,
financial institutions and individuals. Morgan Stanley's
business segments include Institutional Securities, Global
Wealth Management Group and Asset Management. The company
conducts its business from its headquarters in and around New
York City, its regional offices and branches throughout the U.S.
and its principal offices in London, Tokyo, Hong Kong and other
world financial centers.
MORGAN STANLEY: Faces N.Y. Suits Over Auction Rate Securities
-------------------------------------------------------------
Morgan Stanley, along with certain of its subsidiaries, is
facing a couple of purported class action lawsuits in New York
over auction rate securities that were acquired from the
company, according to the company's Form July 9, 2008 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarter ended May 31, 2008.
On March 25, 2008, a putative class action complaint, entitled,
"Miller v. Morgan Stanley & Co. Incorporated," was filed before
the U.S. District Court for the Southern District of New York
purportedly on behalf of persons who acquired auction rate
securities from the Company from March 25, 2003, through
Feb. 13, 2008, and who were allegedly damaged thereby.
The complaint alleges, among other things, that the company
failed to disclose material facts with respect to auction rate
securities and thereby violated Section 10(b) of the Exchange
Act and SEC Rule 10b-5.
The complaint seeks damages, attorneys' fees, and rescission.
On March 31, 2008, a similar action, entitled, "Jamail v. Morgan
Stanley, et al.," was filed in the same court seeking damages,
attorneys' fees and equitable and injunctive relief.
Morgan Stanley -- http://www.morganstanley.com/-- is a global
financial services firm that, through its subsidiaries and
affiliates, provides its products and services to a group of
clients and customers, including corporations, governments,
financial institutions and individuals. Morgan Stanley's
business segments include Institutional Securities, Global
Wealth Management Group and Asset Management. The company
conducts its business from its headquarters in and around New
York City, its regional offices and branches throughout the U.S.
and its principal offices in London, Tokyo, Hong Kong and other
world financial centers.
MORGAN STANLEY: Faces Suit Over "Frozen" Auction Rate Securities
----------------------------------------------------------------
Morgan Stanley is facing a purported class action lawsuit in New
York over auction rate securities that were allegedly "frozen"
by the company, according to the company's Form July 9, 2008
10-Q filing with the U.S. Securities and Exchange Commission for
the quarter ended May 31, 2008.
On May 28, 2008, a putative class action suit, entitled,
"Bartholomew v. Morgan Stanley et al.," was filed in the U.S.
District Court for the Southern District of New York,
purportedly on behalf of individuals who allegedly had their
auction rate securities "frozen" by the company and who have
been damaged thereby.
The complaint alleges, among other things, that the company made
misrepresentations and omissions with respect to auction rate
securities and breached a fiduciary duty to the putative class
by failing to participate in auctions and asserts claims under
the Investment Advisers Act of 1940 and state law.
The complaint seeks damages, disgorgement, attorneys' fees, and
a declaration that the Company's auction rate securities
transactions with the putative class members are void.
The suit is "Bartholomew v. Morgan Stanley et al., Case No.
1:08-cv-04910-AKH," filed in the U.S. District Court for the
Southern District of New York, Judge Alvin K. Hellerstein,
presiding.
Representing the plaintiffs are:
Joel Paul Laitman, Esq. (jplaitman@aol.com)
Schoengold Sporn Laitman & Lometti, P.C.
19 Fulton Street, Suite 406
New York, NY 10038
Phone: 212-964-0046
Fax: 212-267-8137
- and -
Elizabeth Tripodi, Esq.
(etripodi@finkelsteinthompson.com)
Finkelstein Thompson LLP
1050 30th Street NW
Washington, DC 20007
Phone: 202-337-8000
Fax: 202-337-8090
Representing the defendants are:
Gregory Arthur Markel, Esq. (greg.markel@cwt.com)
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
Phone: 212-504-6112
Fax: 212-504-6666
NEW JERSEY DOC: Women Prisoners Dealt An Across-The-Board Win
-------------------------------------------------------------
In three separate opinions totaling 77 pages, the New Jersey
Superior Court stopped the Department of Corrections from
transferring any more women prisoners to the New Jersey State
Prison, a men's Supermax prison, for the duration of an ongoing
legal battle over previous unlawful transfers.
The court also granted the women's request to pursue their
claims as a class action. In addition, the court denied a
motion by the DOC, brought on five separate legal grounds, to
dismiss the women prisoners' complaint, and also rejected the
DOC's motion to terminate the case.
"These rulings amount to a sweeping victory for women prisoners
who have suffered grossly unfair and inhumane treatment at the
hands of the Department of Corrections," said Mie Lewis, Esq.,
lead American Civil Liberties Union counsel for the case. "We
are delighted that after thoroughly analyzing the arguments on
both sides, the court has vindicated the rights of women
prisoners."
The class action lawsuit, "Jones v. Hayman," filed by the ACLU
and the ACLU of New Jersey in December 2007, challenges the
DOC's transfer of a group of women prisoners to NJSP where women
are denied basic movement in the prison, deprived of access to
the prison law library and the prison school, barred from the
prison's main yard and denied access to basic hygiene. The
lawsuit charges the women's transfer and their oppressive
conditions of confinement are unconstitutional and
discriminatory based on their sex.
"We're gratified that this is the first step to these women
leaving conditions that no one should be forced to live in,"
said Ed Barocas, Legal Director of the ACLU of New Jersey.
"When the court issues its final ruling we expect to see a
permanent stop to the arbitrary transfer of women to the men’s
prison, an end to their inhumane conditions and the DOC
penalized for its wrongdoing."
In March, evidence emerged that James Drumm, Assistant
Administrator of the New Jersey State Prison, offered women
prisoners reductions in their disciplinary sentences in exchange
for making false statements describing conditions as better than
they were. After one prisoner told the ACLU about the offer,
she was beaten by a prison guard, according to her sworn
statement and those of three other women prisoners. In later
statements to the court, women prisoners described a campaign of
intimidation intended to punish and silence women who spoke out.
Other sworn statements of women prisoners described bullying and
intimidation carried out by the internal affairs unit of the
DOC, the Special Investigations Division (SID).
On July 22, the DOC agreed to withdraw the statements obtained
by James Drumm from the record and to provide the ACLU with
further evidence concerning the alleged official misconduct.
Previously, at a court hearing on April 11, 2008, corrections
officials agreed to withdraw medical and psychiatric evidence
that the ACLU charged had been collected in violation of court
rules and ethical standards.
ORLANDO-ORANGE: Tollway Commuters Issued Fake Tickets, Suit Says
----------------------------------------------------------------
A class-action complaint filed in the Circuit Court for the 9th
Judicial Circuit in and for Orange County, Florida, claims that
a defect in transponders used for Florida's E-Pass and SunPass
automatic tollway payment systems has caused thousands of
innocent commuters to be fined for failing to pay tolls,
CourtHouse News Service reports.
The defendants are the Orlando-Orange County Expressway
Authority, which runs the E-Pass system, and the Florida
Turnpike Authority, which runs the SunPass system. Both systems
are supposed to automatically debit pass-holders' accounts.
The plaintiffs bring this action on behalf of all persons who
received traffic infractions for toll violations, where the E-
PASS transponder was accepted, and, despite utilizing the E-PASS
transponder and having sufficient funds at the time of the
infraction with which to pay the toll, were issued toll
violations.
The plaintiffs claim the defendants knew or should have known of
a defect in the transponders, which caused commuters to be
"issued violations for failure to pay the toll fees when in fact
their accounts had sufficient balances to pay the tolls. As a
result, the plaintiff and other class members were forced to pay
fines in excess of what the individual toll would have cost."
One innocent driver, a firefighter, was fined $3,000 and had his
driver's license suspended and almost lost his job because of
it, the Orlando Sentinel reported earlier.
Apparently, the batteries die on the transponders, and the
tickets ensue.
The Orlando Sentinel estimated that the system makes 24,000
errors every month.
The plaintiff demands judgment against the defendants, together
with attorney's fees and such other and further relief as the
court may deem just and proper.
The suit is "Ashley Burns et al. v. Orlando-Orange County
Expressway Authority et al.," filed in the Circuit Court for the
9th Judicial Circuit in and for Orange County, Florida.
Representing the plaintiffs is:
Justin Howard Presser, Esq.
Weiss Legal Group, PA
698 N. Maitland Avenue
Maitland, FL 32751
Phone: 407-599-9036
Fax: 407-599-3978
PALESTINIAN AUTHORITY: Two Families Sue Over Terrorist Attacks
--------------------------------------------------------------
Two families who lost loved ones in terror attacks in Jerusalem
filed a $128-million suit against the Palestinian Authority,
former Fatah Secretary-General in the West Bank Marwan
Barghouti, and seven other terrorists held in Israel, Ynetnews
reports.
According to the suit, Mr. Barghouti "should be held accountable
for plaintiffs' emotional anguish."
Ynetnews recounts that Mr. Barghouti, who was arrested by the
Israeli Defense Forces in 2002, was convicted of the murder of
five Israelis and was sentenced to five consecutive life terms
and 40 years -- a total of 165 years. The other seven
terrorists, who were all convicted of various terror offenses,
are also serving long-term prison sentences.
The report relates that the plaintiffs are family members of
Ronen Landau and Yoella Chen who were killed seven years ago in
two separate terror attacks. Mr. Chen was killed in a shooting
attack at a bus station in Jerusalem, which was carried out on
Mr. Barghouti's direct orders.
Overall, 14 members of the two bereaved families are named as
the plaintiffs in the ILS450 million suit (approx. $128 million)
-- one of the largest class-action suits ever filed in Israel,
the report says.
Attorneys Nitzana Darshan-Leitner and Roee Cohavi of the Israel
Law Center, who are representing the families, said that Mr.
Barghouti led, facilitated and personally ordered terror attacks
on Israeli targets with the aid of various Tanzim operatives.
Furthermore, in his capacity as Fatah Secretary-General, Mr.
Barghouti devised a policy of terror uncensored by the
Palestinian Authority, and the plaintiffs contend that he should
be held accountable for the plaintiffs' emotional anguish.
"Barghouti is a felon and a convicted murderer and should be
treated as such, especially in this day and age, when we hear so
many calls to free this arch-murderer. Giving the plaintiffs the
justice they deserve, would be serving justice for all
Israelis," the plaintiffs' lawyers said.
PR PHARMACEUTICALS: Jury Grants Verex $1MM in Duty Breach Suit
--------------------------------------------------------------
An Arapahoe County District Court (Colo.) jury awarded an
Englewood-based public company what will likely amount to more
than $1 million in damages in the class action dispute between
the minority shareholders of Inverness-based Verex, Inc., a
public company, and Fort Collins-based private company PR
Pharmaceuticals, Inc.
The jury found that PR Pharmaceuticals and its president, Steven
Howe, and CEO, Dr. Patrick Bols, breached their fiduciary duties
to Verex, Inc., and its shareholders.
The verdict for the class of minority shareholders is in favor
of approximately 1185 shareholders holding 1,195,470 shares.
The court has previously indicated that it may value those
shares at $ .50/share for a total value of $597,735. The jury
awarded punitive dames against all of the defendants and in
favor of Verex, Inc. With this value, the verdict is
approximately $1.3 million. Prejudgment interest is substantial
with this case having been filed in 2003. Total damages
including interest are expected to bring the value of the
verdict to over $2 million.
"We are, of course, delighted that after all of these years, our
clients have finally gotten this matter resolved," said
plaintiffs' trial lead counsel David P. Hersh of Burg Simpson
Eldredge Hersh & Jardine, P.C. Hersh added, "The Defendants
never acknowledged their wrongdoing, and so it is particularly
gratifying to receive the jury's determination that the
Defendants not only breached their fiduciary duties, but did so
willfully and wantonly, justifying an award of punitive
damages."
The jury found that the former majority shareholders violated
their respective fiduciary duties for the benefit of themselves
and to the detriment of the present company shareholders.
"It's good to win vindication for the little guys -- this is
what we practice law for -- to fight injustice, even against big
companies at great odds," said plaintiffs' trial counsel David
K. TeSelle, Esq.
For more information, contact:
David P. Hersh, Esq.
Burg Simpson Eldredge Hersh & Jardine, P.C.
40 Inverness Drive East
Englewood, CO 80112
Phone: +1-303-792-5595
REUNION.COM INC: Violates Can-Spam Act, California Suit Alleges
---------------------------------------------------------------
Reunion.com Inc. is facing a class-action complaint before the
U.S. District Court for the Northern District of California over
allegations that it violates the Can-Spam Act and falsely
advertises by sending e-mails with misleading subject lines that
falsely claim that some third party "wants to connect with you,"
CourtHouse News Service reports.
Pursuant to Federal Rule of Civil Procedure 23, the plaintiffs
bring this action on behalf of all individuals who, at a time
they were not registered members of Reunion.com, received one or
more e-mails from the date three years prior to the filing of
this action up to and including the date of final judgment.
The plaintiffs want the court to rule on:
(a) whether Reunion.com advertised in the emails within the
meaning of Cal. Bus. & Prof. C. Section 117529.1 and
17529.5;
(b) whether the e-mails were sent from California and
sent to California electronic mail addresses, within
the meaning of Cal. Bus. & Prof. C. Section 17529.5(a);
(c) whether the e-mails constitute unsolicited commercial
email advertisements within the meaning of Cal. Bus. &
Prof. C. Section 117529.1(c) & (o);
(d) whether the e-mails contain falsified, misrepresented
and forged header information in violation of
California Business and Professions Code Section
17529.5(a)(2);
(e) whether the e-mails contain a subject line that
Reunion.com knows would be likely to mislead a
recipient, acting reasonably under the circumstances,
about a material fact regarding the contents or subject
matter of the message in violation of California
Business and Professions Code Section 17529.5(a)(3);
and
(f) whether the e-mails that are sent from third party
e-mail accounts deceptively contain or are accompanied
by a third-party's domain name without the permission
of the third party in violation of California Business
and Professions Code Section 17529.5(a)(1).
The plaintiffs ask:
-- that the court enter a judgment against Reuninon.com
that it has:
(1) violated California Business and Professions Code
Section 17529.5(a)(1);
(2) violated California Business and Professions Code
Section 17529.5(a)(2) and (a)(3);
-- that the court enter a preliminary and permanent
injunction enjoining Reunion.com and its agents,
employees, representatives, and successors and
predecessors in interest from engaging in violations of
California Business and Professions Code Section
17529.5, or otherwise sending false, deceptive,
misleading emails;
-- that the court order Reunion.com to pay plaintiffs and
the class:
(1) statutory damages in the amount of $1000 per each
email advertisement received by members of the class
pursuant to California Business and Professions Code
Section 17529.5;
(2) plaintiffs' costs and attorneys' fees incurred by
plaintiffs in prosecuting this action, pursuant to
California Business and Professions Code Section
17529.5;
(3) interest, including prejudgment interest, on the
foregoing sums; and
-- that the court grant the plaintiffs such additional
relief as is just and proper.
The suit is "Violeta Hoang et al. v. Reunion.com, Inc., Case No.
08 3518," filed in the U.S. District Court for the Northern
District of California.
Representing the plaintiffs are:
Henry M. Burgoyne, III, Esq.
(hank@kronenbergerlaw.com)
Karl S. Kronenberger, Esq. (karl@kronenbergerlaw.com)
Jeffrey M. Rosenfeld, Esq. (jeff@kronenbergerlaw.com)
Kronenberger Burgoyne, LLP
150 Post Street, Suite 520
San Francisco, CA 94108
Phone: 415-955-1155
Fax: 415-955-1158
SENTRY INSURANCE: Faces Ky. Suit Over Bogus 15% Municipal Tax
-------------------------------------------------------------
Sentry Insurance is facing a class-action complaint before the
Commonwealth of Kentucky, Kenton Circuit Court, over allegations
it defrauds customers by charging them a bogus 15% "municipal
tax," CourtHouse News Service reports.
The complaint alleges that for years, Sentry has reaped undue
profits at the expense of customers by engaging in a routine
practice of overcharging premiums, which Sentry disguises as
taxes or tax-related collection fees. The report says that
misrepresenting to these customers that the amounts being
charged are correct, Sentry uses this coercive guise of taxes
and collection fees to, as a practical matter, increase premium
avenue.
Sentry charges these customers for a tax that is not owed and
converts upwards of an additional 15% of the total tax or 2% of
the premium as self-payment for collecting the tax it claims it
owes to local government.
The scheme is not complicated -- the more the taxes Sentry
claims it owes, the more self-payment fees it collects, the
report explains. The practice allows insurance companies to
increase profits by as much as 2% without raising premium rates.
The plaintiffs bring this action on behalf of all customers,
owning or insuring risks in the Commonwealth of Kentucky, who
purchased an insurance policy from or underwritten by Sentry
from June 14, 2001, to the date the court enters an order
certifying a class of plaintiffs, and who were charged local
government taxes or collection fees on their premium statements
when none were owed, or were charged such taxes or fees at rates
higher than permitted, as may determined by information
available in Sentry records.
The plaintiffs want the court to rule on:
(a) whether Sentry has engaged in unlawful billing
practices by overcharging customers taxes or fees that
were not owed;
(b) whether Sentry has engaged in illegal dealing in
premiums;
(c) whether Sentry has misrepresented to consumers amounts
owed for insurance coverage;
(d) whether Sentry has violated Kentucky's consumer
protection laws;
(e) whether Sentry is authorized to charge a collection fee
in addition to an otherwise lawful premium tax;
(f) whether Sentry has engaged in fraudulent conduct by
charging plaintiff class members taxes that were either
no owed or at rates higher than permitted;
money when they charge for taxes that are not owed and
(g) whether Sentry has converted plaintiff class members'
charge upwards of an additional 2% of the total premium
for 15% of the tax charged as self-payment for
collecting what they claim was a tax due to local
governments; and
(h) whether Sentry has been negligent in determining the
location of insurable risks and misrepresenting
premiums for insurance charges.
The plaintiffs ask the court for:
-- an order certifying this action as a class action
pursuant to the Kentucky Rules of Civil Procedure and
that the named plaintiff be appointed as representative
of the class;
-- judgment in favor of plaintiff and the class, which
amount is to be ascertained at trial and includes monies
paid to Sentry by plaintiff and the class for wrongfully
collected government taxes and self-pay collection fees,
and any additional amounts collected by Sentry in
furtherance and as a result of the wrongful acts set
forth;
-- judgment in favor of plaintiff and the class awarding
interest to compensate for the wrongful use of
plaintiff's and the class' money;
-- judgment in favor of plaintiff and the class punitive
damages in an amount determined by the jury at trial;
-- judgment in favor of plaintiff and the class, awarding
them attorney fees, incentive fees, litigation expenses
(including fees and costs of expert witnesses) and other
costs of this action;
-- judgment in favor of plaintiff and the class, awarding
them pre-judgment interest to compensate them for
defendant's wrongful use of their money;
-- that plaintiff's counsel be appointed class counsel; and
-- judgment in favor of plaintiff and the class, awarding
them declaratory and injunctive or other equitable
relief as may be just and warranted under the
circumstances.
The suit is "Patricia Jarboe et al. v. Sentry Insurance, Case
No. 08-CI-2173," filed in the Commonwealth of Kentucky, Kenton
Circuit Court.
Representing the plaintiffs are:
Alexander F. Edmondson, Esq.
Jason Reed, Esq.
Edmondson & Associates
28 West 5th Street
Covington, KY 41011
Phone: 859-491-5551
Fax: 859-491-0187
THUMBPLAY: Faces Illinois Suit Over Unauthorized Billing Charges
----------------------------------------------------------------
Thumbplay Inc. -- a mobile content provider -- is facing a
class-action complaint before the Cook County Circuit Court
(Illi.) alleging the firm failed to institute "checks or
safeguards" to protect consumers against unauthorized charges on
their wireless bills, Wireless and Mobile News reports.
The suit, filed by Chicago attorney Myles McGuire, Esq., on
behalf of Nikolay Antonov, implicates players on all levels of
the industry -- aggregators, copyright licensors, and affiliate
marketers, Internet advertising networks -- who fail to clearly
display the "service's price, subscription period and
cancellation procedures."
"Cell phones are morphing into credit cards, but the same
security procedures don't apply to phone numbers, which are
public information," said Myles McGuire whose firm successfully
reached a third-party agreement with AT&T.
Mr. McGuire added that the suit does not explicitly accuse
Thumbplay of intentionally defrauding customers: "We've alleged
in the complaint that it's either passive indifference or active
cooperation in a scheme to defraud."
A statement issued by Thumbplay reads in part "The lawsuit is
utterly meritless. We have retained experienced, nationally-
recognized counsel and intend to vigorously oppose these claims.
As a leading member of the Mobile Marketing Association,
Thumbplay strictly adheres to the Mobile Marketing Association's
Consumer Best Practices Guidelines, and we have been active in
developing and leading best practices for mobile advertising."
"Thumbplay has been recognized as a model of best practices in
the mobile commerce marketplace (m-commerce). In fact, on
May 6, 2008, Florida's Assistant Attorney General, William
Haselden, praised Thumbplay at the Federal Trade Commission's
two-day Town Hall meeting titled Beyond Voice: Mapping the
Mobile Marketplace, which explored the m-commerce marketplace
and its implications for consumer protection policy. He
specifically cited Thumbplay's ads for being compliant 'in every
way,'" the statement continues.
To contact Mr. McGuire:
Myles McGuire, Esq.
Blim & Edelson, LLC
The Monadnock Building, Suite 1642
53 West Jackson Boulevard
Chicago, IL 60604
Phone: 312-913-9400
Fax: 312-913-9401
Web site: http://www.blimlaw.com/
U.S. INTERIOR DEP'T: Tribes Want Trust Fund Class Suit Certified
----------------------------------------------------------------
Lawyers from the Native American Rights Fund are asking a
federal judge in Washington, D.C., to grant class-action
certification on behalf of 250 tribes whose tribal trust fund
accounts are managed by the United States Interior Department,
The Casper Star Tribune reports.
The report relates that 12 tribes named as lead plaintiffs in
the suit, captioned "Nez Perce vs. Interior Secretary Dirk
Kempthorne," are seeking a complete and historical accounting of
their tribal trust fund accounts managed by the Interior
Department for the past 188 years.
"The situation is so bad on how the government continues to
manage the trust accounts that it's not an easy task to bring
these claims," NARF attorney Melody McCoy, Esq., said. "The
government just resists at every step of the way, resists
turning over the information so tribes can make their claim.
The government knows how bad it is. And they are terrified of
liability."
Casper Star Tribune points out that the Interior Department
manages more than 1,800 trust fund accounts for more than 250
tribes. As of 2007, account balances for tribal trust funds
totaled $2.9 billion.
A restitution award on behalf of tribes could exceed
$500 billion, said Ms. McCoy, who will present oral arguments
before U.S. District Judge James Robertson. Ms. McCoy is one of
five lawyers who will argue the tribal trust case on behalf of
NARF, a Native legal advocacy organization based in Boulder,
Colorado.
The report says that Interior Department lawyers filed a motion
in June to dismiss the "Nez Perce vs. Kempthorne" tribal trust
fund case. They argue that tribes have "no legal footing" for
claims of breach of trust and the demand for an accounting
because tribes received account statements, a requirement of the
Trust Fund Management Reform Act of 1994.
NARF lawyers counter that the account statements done by the
Arthur Anderson accounting firm in 1996 were incomplete.
Congress required all tribes to meet a December 2006 deadline if
they wanted to challenge the 1996 Arthur Anderson tribal trust
fund reports prepared for the Bureau of Indian Affairs, Casper
Star Tribune recounts. Tribes who did not file suit risked
their right to challenge the reports.
At least 47 tribes have filed separate suits in district court
or land claims court for full and complete accountings, the
report notes.
The "Nez Perce vs. Kempthore" suit names 12 tribes as lead
plaintiffs, including the Mescalero Apache, Tule River,
Hualapai, Tlingit and Haida, Yakama, Klamath Tribes, Yurok,
Santee Sioux, Cheyenne-Arapaho, Pawnee, Sac and Fox. If
certified, the class-action suit will include all the tribes
that have not filed their own case.
The report explains that the Interior Department has been
assigned the role of managing money earned from Indian lands, a
job that has been historically wrought with systemic accounting
blunders, according to dozens of Congressional and government
reports over the last century. Federal bureaucrats have been
managing tribal trust lands since 1820. The Interior Department
began managing lands for Native individuals in 1887.
Casper Star Tribune relates that Judge Robertson is currently
overseeing a similar class action case. "Cobell vs. Kempthorne"
was filed 12 years ago by Elouise Cobell, a community economic
developer from the Blackfeet Nation in Montana. The Cobell case
sought an historical accounting on behalf of more than 500,000
Native landowners. Judge Robertson has said he will likely
announce a landmark multibillion-dollar cash settlement in that
suit in August 2008.
USANA HEALTH: Utah Consolidated Securities Fraud Suit Dismissed
---------------------------------------------------------------
Judge Dale Kimball of the U.S. District Court for the District
of Utah dismissed with prejudice the shareholder class action
suit filed in March of 2007 against USANA Health Sciences, Inc.,
and certain of its officers and directors.
During and subsequent to the first quarter in 2007, three class
action suits were filed against the company, USANA Chief
Executive Officer Myron W. Wentz, USANA President David A.
Wentz, and USANA Chief Financial Officer Gilbert A. Fuller
(Class Action Reporter, Nov. 28, 2007).
These suits are:
1. "Ashok Kapur, et al., v. USANA Health Sciences, Inc. et.
al.,"
2. "Guerin Senter, et al., v. USANA Health Sciences, Inc.,
et. al.,"
3. "Edward Shaw, et al., v. USANA Health Sciences, Inc.,
et. al."
The suits were brought on behalf of those who purchased the
company's common stock on the open market during the period of
July 18, 2006, through March 14, 2007.
The plaintiffs allege in each case that they were persons who
purchased shares of our common stock on the open market during
the period of July 18, 2006, through March 14, 2007, and each
complaint seeks certification as a class action on behalf of
other purchasers of our stock during that time period.
The plaintiffs claim, among other things, that the company
violated Sections 10(b) and 20 (a) and SEC Rule 10b-5 under the
U.S. Securities Exchange Act of 1934 by knowingly or recklessly
failing to make certain statements that the plaintiffs allege
should have been made, including statements regarding the multi-
level marketing industry and anti-pyramid laws, sustainability
of the company's marketing plan, Associate sales to end-user
customers, and Associate turnover, income, and profitability.
The plaintiffs assert that because of such alleged omissions,
the company's statements about its future business prospects
were lacking in a reasonable basis and that the company's
reported results and financial statements were misstated.
The complaints seek damages, pre-judgment interest, costs,
attorney's fees and other further relief deemed appropriate by
the court.
On Oct. 17, 2007, the three cases were consolidated into one
action (Class Action Reporter, May 16, 2008).
Earlier, Judge Kimball ruled that the plaintiffs failed to
assert any actionable securities laws claims against USANA.
"We are pleased that the court ruled in our favor on this motion
to dismiss," said Dave Wentz, chief executive officer, USANA
Health Sciences, Inc. "This was a case we believed from the
beginning had no foundation and we will now be able to move
forward without further distraction or expense."
The suit is "Ashok Kapur, et al. v. USANA Health Sciences, Inc.,
et al., Case No. 07-CV-00177," filed in the U.S. District
Court for the District of Utah, Judge Dale A. Kimball,
presiding.
Representing the plaintiffs is:
Dreier LLP
499 Park Avenue
New York, NY, 10022
Phone: 212-328-6100
Fax: 212-328-6101
e-mail: classlaw@dreierllp.com
* Securities Lawsuit System in Need of Repair, U.S. Chamber Says
----------------------------------------------------------------
Private securities class action lawsuits present a serious
threat to the health of U.S. businesses, the prosperity of
American families and the strength of the nation's global
competitiveness, according to a new analysis released last week
by the U.S. Chamber Institute for Legal Reform (ILR).
"America's securities class action system is broken, both in its
design and application," ILR president Lisa A. Rickard told
attendees at a forum hosted by the Manhattan Institute, noting
that the current system of lawsuits essentially entails one
group of innocent investors suing another group of innocent
investors. She pointed out that aggrieved investors often
receive only pennies on the dollar, while huge sums of money are
chewed up in legal costs.
"Driven by the multibillion dollar plaintiffs' lawyer industry,
the system exacts enormous costs on our economy while betraying
the individual investors it is designed to assist," said Ms.
Rickard.
She noted that securities class action litigation caused the
destruction of nearly $25 billion of shareholder wealth between
1995 and 2005, according to a study released earlier by ILR.
Using the downfall of securities giant Milberg Weiss LLP as an
example, the report indicated that the systemic failures have
been exacerbated by trial lawyers who abuse the class action
mechanism for profit. According to ILR's report, the integrity
of the system has been further undermined by a "pay to play"
culture, in which plaintiffs' law firms ensure their status as
lead counsel by contributing to the political campaigns of
officials who control the large public pension funds that bring
these lawsuits.
Ms. Rickard called on Congress to investigate the culture of
greed and corruption prevalent in the securities trial bar
saying, "While the U.S. House and Senate leadership has been
eager to conduct oversight hearings into the perceived abuses of
other industries, Congress has been silent on this issue.
Common sense reform measures should, and must, be enacted by
Congress to repair the broken securities class action system if
we are to keep our nation on a prosperous and competitive
course."
ILR's new, comprehensive analysis of securities litigation in
America shows that the costs of the system, already in the
billions of dollars each year, are rapidly climbing.
Representing about one-half of all federal class actions in the
U.S., new securities class action filings increased by 58% from
2006 to 2007. The average estimated monetary losses in suits
also doubled over the same period.
The analysis also notes that the current securities class action
lawsuit system forces businesses to mitigate potential damages
by settling lawsuits rather than risk going to trial, generating
approximately $51.8 billion in settlements over the past decade.
Among a number of potential legislative changes suggested in the
report, ILR proposes:
-- Enacting the "Securities Litigation Attorney
Accountability and Transparency Act," (S.3033, H.R.
5463) introduced by Senator John Cornyn (R-TX) and
Congressman Jeb Hensarling (R-TX). The Act would cast
sunlight onto the relationships between attorneys and
plaintiffs, eliminate pay-to-play conflicts and other
suspicious connections between attorneys and elected
officials, introduce a competitive bidding process for
the selection of lead counsel, and call for further
investigation into the hourly fees paid to plaintiffs'
attorneys in securities class action litigation.
-- Ensuring coordination between public and private
enforcement in order to promote efficient compensation
and prevent wasteful, duplicative recovery by
shareholders.
-- Providing defendants equal access to appeal denials of
motions to dismiss a suit in order to reduce the intense
pressure to settle meritless suits following the denial
of such dispositive motions.
-- Curbing abuse of civil discovery, the costs of which
fall disproportionately on defendant companies and
create enormous pressure to settle, by shifting the cost
of discovery from defendants to plaintiffs when
discovery requests are unjustified.
ILR's report, "Securities Class Action Litigation: The Problem,
Its Impact, and The Path to Reform," is available at
http://www.InstituteforLegalReform.com/
ILR seeks to promote civil justice reform through legislative,
political, judicial, and educational activities at the national,
state, and local levels. The U.S. Chamber of Commerce is the
world's largest business federation, representing more than 3
million businesses and organizations of every size, sector, and
region.
New Securities Fraud Cases
COMPUCREDIT CORP: Bronstein Gewirtz Files Ga. Securities Lawsuit
----------------------------------------------------------------
Bronstein, Gewirtz & Grossman, LLC, commenced a class action
lawsuit in the United States District Court for the Northern
District of Georgia against CompuCredit Corporation and various
individuals on behalf of purchasers of CompuCredit securities
who purchased between November 6, 2006, and June 9, 2008.
The complaint alleges CompuCredit issued materially false and
misleading statements regarding the Company's business and
financial results. As a result of CompuCredit's false
statements, its stock traded at artificially inflated prices
during the Class Period, reaching its Class Period high of
$40.61 per share on December 12, 2006.
According to the complaint, the true facts, which were known by
the defendants but concealed from the investing public during
the Class Period, were as follows:
(a) the Company's assets contained millions of dollars
worth of impaired and risky securities, many of which
were backed by loans to subprime borrowers;
(b) the Company was not adequately accounting for its
provision for loan losses in violation of Generally
Accepted Accounting Principles, causing its financial
results to be materially misstated;
(c) the Company's improper marketing and collection
practices would lead to large fines and would harm the
Company's future results;
(d) the Company had far greater exposure to anticipated
losses and defaults related to its subprime customers
than it had previously disclosed;
(e) given the deterioration in the market for asset-backed
securities related to subprime consumers, the Company
would be forced to reduce its lending operations due to
liquidity concerns as it relied upon the sale of its
asset-backed securities to fund its ongoing operations;
and
(f) given the increased volatility in the subprime market
and increased level of delinquencies and defaults that
CompuCredit was experiencing, the Company had no
reasonable basis to make projections about its
financial results.
For more information, contact:
Peretz Bronstein, Esq.
Eitan Kimelman
Bronstein, Gewirtz & Grossman, LLC
60 East 42nd St., Suite 4600
New York, NY 10165-0006
Phone: 212-697-6484
FCSTONE GROUP: Brower Piven Files Securities Lawsuit in Missouri
----------------------------------------------------------------
Brower Piven, A Professional Corporation, disclosed that a class
action lawsuit has been commenced in the United States District
Court for the Western District of Missouri on behalf of
purchasers of the common stock of FCStone Group, Inc., between
November 15, 2007, and July 9, 2008, inclusive.
FCStone is an integrated commodity risk management company
providing risk management consulting and transaction execution
services to commercial commodity intermediaries, end users and
producers.
The complaint charges FCStone and certain of its officers and
directors with violations under the Securities Exchange Act of
1934.
The complaint alleges that during the Class Period, defendants
issued materially false and misleading statements regarding
FCStone's business and financial results.
As a result of defendants' false statements, FCStone stock
traded at artificially inflated prices during the Class Period,
reaching its Class Period high of $52.40 per share in January
2008.
Interested parties may move the court no later than Sept. 16,
2008, for lead plaintiff appointment.
For more information, contact:
Charles J. Piven, Esq.
Brower Piven, A Professional Corporation
The World Trade Center-Baltimore
401 East Pratt Street, Suite 2525
Baltimore, MD 21202
Phone: 410-332-0030
e-mail: hoffman@browerpiven.com
Web site: http://www.browerpiven.com/
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent research,
collectively face billions of dollars in asbestos-related
liabilities.
*********
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. Glenn Ruel S. Senorin, Janice M. Mendoza, Freya Natasha F.
Dy, and Peter A. Chapman, Editors.
Copyright 2008. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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