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/raid1/www/Hosts/bankrupt/CAR_Public/110927.mbx C L A S S A C T I O N R E P O R T E R Tuesday, September 27, 2011, Vol. 13, No. 191 Headlines AMERICAN FAMILY: LankinChapman Seeks to Amend Class Action APPLE INC: Judge Dismisses Consolidated Privacy Class Actions BOEHRINGER INGELHEIM: Trial Court Denies Ill. Suit Certification BRAIN RESEARCH: Bid to Disqualify Class Action Lawyer Rejected BRIDGEWAY INT'L: Recalls 91,000 Bicycles Due to Fall Hazard C.R. BARD: Women Suffering Avaulta Complications May File Suit CHRISTIAN BROTHERS: Thirty-Five Men Join Sex Abuse Class Action CLARK & WASHINGTON: Sued in Ga. for Disgorgement of Legal Fees COVINGTON DIOCESE: Dist. Ct. Has No Jurisdiction on Law Firm Claim FEN-PHEN: Lawyer Permanently Disbarred Over Settlement JPMORGAN CHASE: No Breach in Loyalty in Sigma Investment, Ct. Says LUFKIN INDUSTRIES: 5th Cir. Urges Recalculation of Goldstein Fees MERCK & CO: 2nd Cir. Seeks Guidance on Cross Tolling in Virginia NEIMAN MARCUS: "Monjazeb" Class Suit Remains Pending in Calif. OASIS LEGAL: App. Ct. Remands Parson Suit on Improper Venue Issue PANDORA MEDIA: Accused of Violating Video Rental Privacy Act RICHMOND, VA: Police Officers File Overtime Class Action SEATTLE HOUSING: Jan. 2012 Settlement Fairness Hearing Set SINOTECH ENERGY: October 18 Lead Plaintiff Deadline Set SMITH BARNEY: Union Pension Fund's Class Action Can't Proceed SOUTHWEST AIRLINES: Sued in Alabama Over Rapid Rewards Program SPECIALIZED BICYCLE: Recalls 14,200 Bicycles Due to Fall Hazard STATE STREET: Dist. Ct. Rejects Bid to Dismiss Consolidated Suit SYCAMORE NETWORKS: IPO Case Appellant May Appeal Until Sept. 24 UNITED STATES: Faces Class Action Over Discharged Military Gays ********* AMERICAN FAMILY: LankinChapman Seeks to Amend Class Action ---------------------------------------------------------- Steve Korris, writing for The Madison St. Clair Record, reports that LakinChapman lawyers who carried on a Madison County class action against American Family Insurance with a dead client for three years find a substitute suffers a more serious deficiency. Jonathan Piper of LakinChapman moved for leave to amend the complaint on Sept. 9, after American Family alleged that class representative Mark Kruse leads a conflicting class action in Iowa. In the Madison County action, Mr. Kruse and other substitutes for the late Manuel Hernandez claim American Family improperly reduced payments on medical bills from car crashes. According to American Family, the interests of the class in the Iowa action conflict with the interests of the class in Madison County. American Family reported Mr. Kruse's role in Iowa to Madison County Circuit Judge Bill Mudge on Aug. 16, in a supplement to a motion to decertify the class. Rather than oppose the motion, Mr. Piper proposed a new complaint. He didn't mention Mr. Kruse, but the notes he hit sounded like retreat. "Plaintiffs seek leave to amend their complaint to narrow the class claims to reductions taken pursuant to Mitchell Medical software reductions based on charges exceeding the usual and customary amount for the geographical region," he wrote. "The amended complaint also contains an alternative request for certification of particular issues," he wrote. "The amended complaint will help to focus the issues with respect to certification and before notice to the class is issued," he wrote. "There is no prejudice or surprise to defendant by making changes for clarification and proper procedure," he wrote. Brad Lakin and Robert Schmieder worked on the brief. Mr. Hernandez sued American Family in 2000. Retired circuit judge Daniel Stack certified a class action as associate judge in 2002, on claims from 11 states back to 1990. Mr. Hernandez died in 2004, but no one told Judge Stack. He kept holding hearings and signing orders. In 2006, American Family notified him that Mr. Hernandez died. The insurer pleaded that the case died with him, but Judge Stack allowed substitutions in 2007. This June, American Family filed a decertification motion under seal. In its Aug. 16 supplement, Anthony Martin of St. Louis wrote that class counsel should have disclosed the Iowa action at least three years ago. He wrote that the Iowa action was replete with accusations against doctors Mr. Kruse represents in the Madison County action. He wrote that Mr. Kruse has a conflict with at least 95% of medical doctors and doctors of osteopathy in Iowa. He wrote that the case awaited oral argument at the Iowa Supreme Court. Judge Mudge set an Oct. 14 hearing on Mr. Piper's motion. APPLE INC: Judge Dismisses Consolidated Privacy Class Actions ------------------------------------------------------------- Amy Miller, writing for The Recorder, reports that a federal judge in San Jose has dismissed a group of consolidated privacy class actions that claimed that Apple Inc. and eight other defendants let advertisers track mobile device users' activity without permission. U.S. District Judge Lucy Koh granted the motions to dismiss on Sept. 20, with leave to amend, finding that plaintiffs didn't show that they'd been harmed, or how defendants' actions had allegedly harmed them. "In fact," Judge Koh wrote, "plaintiffs fail to differentiate among the eight mobile industry defendants making it impossible to decipher, based on the current allegations, any causal chain." The suits claim generally that the iPhone's operating system enables privacy violations by letting app makers access, track and store user information without the user's knowledge or consent. "Downloading an app is not a case or controversy," said S. Ashlie Beringer, a Palo Alto Gibson, Dunn & Crutcher partner who argued the motion on behalf of defendants Admob Inc., Flurry Inc., Mobclix Inc., Pinch Media Inc., Trafficmarketplace.com Inc., Millennial Media, AdMarvel Inc. and Quattro Wireless Inc. "Mobile applications need to access information on the device to work, and so do the companies that provide ads and other support to these apps, James McCabe of Morrison & Foerster in San Francisco argued on behalf of Apple. Officials at Apple did not respond to requests for comment. Judge Koh's ruling in In Re iPhone Application Litigation, 11-MD- 02250, comes a month after complaints filed across the country by KamberLaw, Milberg, Audet & Partners, Parisi & Havens and others were consolidated before her. Judge Koh gave the plaintiffs 60 days to file an amended complaint, which KamberLaw's Scott Kamber said they will do. "We look forward to refiling, and appreciate the courts' constructive input," he said. U.S. District Judge Richard Seeborg dismissed a similar class action against Facebook over its "Friend Finder" feature in June, also saying plaintiffs had not shown they'd suffered any injury. BOEHRINGER INGELHEIM: Trial Court Denies Ill. Suit Certification ---------------------------------------------------------------- Judge Gary Feinerman of the U.S. District Court for the Northern District of Illinois ruled in favor of Boehringer Ingelheim Pharmaceuticals Inc. in the class action lawsuit commenced by Catherine Copello and Annette Allen, on behalf of themselves and others similarly situated, against the Company, Case No. 10-C 7396 (N.D. Ill.). The plaintiffs are former employees of the company that allege deprivation of overtime pay under the Fair Labor Standards Act and the Illinois Minimum Wage Law. "Allen's FLSA claims are dismissed, and Copello may not participate in an FLSA collective action or an IMWL class action against Boehringer," Judge Feinerman ordered. Ms. Allen identified nothing "by way of wise judicial administration or judicial efficiency" that would be gained by allowing her to pursue her FLSA claims in Illinois, the District Court opined. Ms. Allen previously opted into the action captioned, Ruggeri v. Boehringer Ingelheim Pharmaceuticals Inc., No. 3:06-CV-1985 (D. Conn.), a pending FLSA collective action brought by Boehringer PSRs in the District of Connecticut. As to Ms. Copello, the District Court acknowledged that she entered into a separation agreement and general release when she left Boehringer's employ in late October 2009, where the employee waived the right to become a member of any class in a case against the company related in any way to the employee's employment with the company. The ruling held that because Ms. Allen's FLSA claim is dismissed and Ms. Copello cannot pursue a FLSA collective action, there is no plaintiff who could fill that role. "Accordingly, Plaintiffs' motion to conditionally certify an FLSA collective action is denied," the District Court said. The following claims remain for disposition: (1) Msses. Copello's and Allen's IMWL claims, for which only Ms. Allen can be put forth as a class representative if and when Rule 23 certification is sought; and (2) Ms. Copello's FLSA claims, which can proceed only on an individual basis. A copy of the District Court's Aug. 2, 2011 Memorandum Opinion and Order is available at http://is.gd/ZxGtVgfrom Leagle.com. BRAIN RESEARCH: Bid to Disqualify Class Action Lawyer Rejected -------------------------------------------------------------- Kenneth Ofgang, writing for Metropolitan News, reports that an attorney who sued the maker of a medical product for false advertising, and who was in turn sued by the manufacturer for defamation, may continue to represent the plaintiff in the original lawsuit, the Fourth District Court of Appeal ruled on Sept. 21. Orange Superior Court Judge Gail Andler did not abuse her discretion in ruling that Thomas H. Clarke Jr. of Ropers, Majeski, Kohn & Bentley did not have a disqualifying conflict of interest, the court held. Justice Eileen Moore authored the unpublished opinion for Div. Three. Mr. Clarke filed suit on behalf of Joseph Rotenberg against Brain Research Labs, LLC and related defendants in Marin Superior Court two yeas ago. The complaint alleged that the defendants falsely promoted Procera AVH as protecting the brain and promoting healing. Mr. Rotenberg asked the Marin court to certify a class and to grant injunctive relief and restitution under the false advertising, unfair competition, and consumer legal remedies acts. Defamation Suit In August 2009, the defendants in that action sued Messrs. Clarke, Rotenberg, and a television station and its network, claiming Mr. Clarke made defamatory statements in a local news report and in an Internet video posted to solicit potential plaintiffs. Among the allegedly defamatory statements cited by the manufacturer were that its product "contains dangerous drugs" that were potentially lethal, that its makers were "scam artists" who did not care if users "live or die," that claims made for the product were "bogus," and that it was "absolutely ineffective." The judge in the defamation case granted an anti-SLAPP motion in part, concluding that Brain Research Labs might prevail on its claims against Clarke and his firm, but not against Mr. Rotenberg. Mr. Clarke and Roper Majeski have an appeal pending; the broadcast defendants have been dismissed. Action Removed In the meantime, the underlying case was removed to federal court, remanded to the Marin court, and ultimately transferred to the Orange Superior Court. In September of last year, three months after the transfer of venue and 15 months after the action was filed, the defendants moved to disqualify Mr. Clarke and Ropers Majeski. They argued that counsel had a strong motive to leverage the class claims in order to extricate itself from the defamation suit, noting that Mr. Clarke had said in settlement talks that any settlement of the underlying suit should involve the defamation action as well, although he admittedly had later "reversed his position." Mr. Clarke denied that he had ever sought to condition a settlement of the underlying case on a resolution of the defamation claims. In denying the disqualification motion, Judge Andler said that to disqualify counsel under the circumstances would encourage future defendants to believe that they could leverage selection of class counsel by suing the plaintiffs' chosen lawyers for defamation. Any prejudice to the class, she added, could be mitigated through the court's ongoing supervision of the litigation, including its authority to rule on class certification and on approval of any settlement. Abuse of Discretion Alleged Justice Moore, writing for the Court of Appeal, said the case was reviewable under an abuse-of-discretion standard. The defendants' argument that the case involved pure questions of law, as to which the panel would not be required to defer to the trial court, was "simply incorrect," the justice said, because the disputed comments by Mr. Clarke about tying settlement of the two cases together were important to the resolution. Besides, she wrote, the court would not order disqualification on de novo review because the defendants failed to establish that a current conflict exists, and the trial judge can take appropriate action if new facts arise "somewhere down the road." Justice Moore distinguished cases in which the court found that counsel's interests were so antagonistic to those of the class as to compel disqualification, such as Cal Pak Delivery, Inc. v. United Parcel Services, Inc. (1997) 52 Cal.App.4th l and Apple Computer, Inc. v. Superior Court (2005) 126 Cal.App.4th 1253. Cal Pak involved an attorney who "admitted he had offered to sell out his client and the class . . . for a payment to himself personally," the court in that case explained, while Apple concerned a named plaintiff who was employed by a law firm representing the class. No Evidence In contrast, Justice Moore said, there was no evidence that Mr. Clarke or his firm were looking to sacrifice class interests for their own benefit, nor that the plaintiff and the law firm had "an overly close relationship that would compromise the interests of potential class members." The justice wrote: "While defendants' concerns for the interests of the class members is laudable, all they offer is speculation. The evidence does not establish a current conflict between Clarke's duty of loyalty to the class and his own interests. The bottom line is that currently, Clarke's interest is the same as that of the class -- to prove that defendants are liable for selling a defective product." Robert H. Platt, Benjamin G. Shatz, Bruce B. Kelson and Adrianne E. Marshack of Manatt, Phelps & Phillips represented Brain Research Labs, while Clarke, along with Susan H. Handelman and Terry Anastassiou, also of Ropers Majeski, represented Rotenberg. The case is Rotenberg v. Brain Research Labs, LLC, G044675. BRIDGEWAY INT'L: Recalls 91,000 Bicycles Due to Fall Hazard ----------------------------------------------------------- The U.S. Consumer Product Safety Commission, in cooperation with Bridgeway International of Naples, Florida, announced a voluntary recall of about 91,000 bicycles. Consumers should stop using recalled products immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product. The bicycle chain can break, causing a rider to lose control and fall. The firm is aware of 11 reports of incidents, including nine reports of injuries, including lacerations and contusions. This recall involves "NEXT"-branded men's 26-inch hybrid bicycles. The bicycles are red or orange. "Power X" and "Suspension" are printed on the frame. Model numbers LBH2611M and LBH2611M2 are included in this recall. The model number is located on the frame between the pedals. Picture of the recalled products is available at http://www.cpsc.gov/cpscpub/prerel/prhtml11/11331.html The recalled products were manufactured in China and sold at Walmart from February 2011 through July 2011 for about $100. Consumers should immediately stop using the recalled bicycle and contact the company for a free repair. For additional information, contact Bridgeway International at (877) 934-3228 anytime or visit the firm's Web site at http://www.powerxbike.com/ C.R. BARD: Women Suffering Avaulta Complications May File Suit -------------------------------------------------------------- An Avaulta mesh lawsuit may be an option for women who were implanted with the Avaulta Plus, Avaulta Solo or Avaulta Biosynthetic and suffered from erosion or other complications. Potentially, these patients may be able to participate in an Avaulta mesh lawsuit to seek compensation for medical bills, pain and suffering and other damages resulting from their mesh complications. Several Avaulta mesh lawsuits have already been filed, and women looking to take legal action should keep in mind that they only have a certain amount of time to file a claim before being barred from ever seeking compensation. To find out if you are eligible for an Avaulta mesh lawsuit, visit http://www.classaction.org/avaulta-transvaginal-mesh.htmlfor a no cost, no obligation review of your claim. In July 2011, the FDA announced that the transvaginal placement of mesh products, such as the Avaulta mesh, can put pelvic organ prolapse patients at a greater risk than other surgical options. Furthermore, according to the agency, with this greater risk of mesh complications comes no greater benefit. Once described as rare, mesh problems which were reported among pelvic organ prolapse repair patients implanted with vaginal mesh products include mesh erosion; infection; discomfort; pain during sex; urinary problems; vaginal scarring; and recurrence of prolapse or incontinence. Because C.R. Bard was allegedly negligent in the design and sale of its Avaulta mesh product, women suffering Avaulta mesh problems following pelvic organ prolapse surgery may have legal recourse. To find out if you can participate in an Avaulta mesh lawsuit to seek compensation for damages, visit Class Action.org today. The Avaulta mesh attorneys working with the site are providing this consultation at no cost and with no obligation. About Class Action.org Class Action.org is dedicated to protecting consumers and investors in class actions and complex litigation throughout the United States. Class Action.org keeps consumers informed about product alerts, recalls, and emerging litigation and helps them take action against the manufacturers of defective products, drugs, and medical devices. Information about consumer fraud issues and environmental hazards is also available on the site. Visit http://www.classaction.orgtoday for a no cost, no obligation case evaluation and information about your consumer rights. CHRISTIAN BROTHERS: Thirty-Five Men Join Sex Abuse Class Action --------------------------------------------------------------- ABC News reports that thirty-five Victorian men have joined a child sex abuse class action against the Christian Brothers order. Lawyer Vivian Waller is representing the men who say they were abused while they were students at schools run by the order. Christian Brother Robert Best is appealing against a 14-year jail sentence for offences between the 1960s and 1980s in schools around Victoria, including Ballarat. Ms. Waller says more men are coming forward. "I act for the men in relation to Brother Best [who] has recently been convicted or entered a guilty plea and that was approximately 14 people," she said. "Since that time, the numbers have expanded to 35. So more people are coming forward all the time." She says other men have come forward who allege abuse that has not yet been heard in court. "My office has been inundated with former students of St. Alipius in Ballarat and St. Patrick's in Ballarat and other schools in Melbourne taught by the Christian Brothers," she said. CLARK & WASHINGTON: Sued in Ga. for Disgorgement of Legal Fees -------------------------------------------------------------- Iulia Filip at Courthouse News Service reports that in a federal class action, clients of a law firm specializing in bankruptcy say Clark & Washington made them pay legal fees with postdated checks, without telling them the checks were dischargeable through their bankruptcy cases, and cashed the checks after the cases were filed or discharged. And, the class claims, Clark & Washington did this after a federal bankruptcy judge told it not to. Lead plaintiff Richard Edwin Lundquist III says he "was not informed that the debt represented by the post-dated checks was subject to discharge through his case, and subsequently allowed defendants to cash said checks." As named plaintiff, Mr. Lundquist sued Clark & Washington and its managing partner Emory Lee Clark. Mr. Lundquist says he represents hundreds of clients from Georgia, Florida and Tennessee who hired Clark & Washington to file Chapter 7 bankruptcy cases on their behalf, and agreed to pay the legal fees with postdated checks. Established in 1983, Clark & Washington is one of the largest bankruptcy filers in the Southeast, with 12 offices in the metro Atlanta area and more offices in Florida and Tennessee. Mr. Lundquist says the firm advertises on its Web site, promising bankruptcy representation for a down payment of $299 and additional installment payments. "This installment plan includes, and has included on many occasions, the practice of having clients tender personal checks post-dated to be cashed during various intervals following the planned filing of their bankruptcy cases -- and sometimes after the bankruptcy cases have been completed," the complaint states. "Defendants, despite boasting on their Web site that they are 'up front about costs and fees from the very beginning,' do not disclose to their potential clients that the post-dated checks defendants accept and intend to cash during and/or after the planned bankruptcy cases represent a debt subject to discharge through those same cases. Thus, defendants have established a practice of publicly claiming to absolve clients of all debt incurred prior to the filing of a bankruptcy case (hereafter 'pre- petition debt'), while privately working instead to create pre- petition debt covering defendants' fees and concealing said debt from their clients to prevent the clients from exercising the right not to pay the discharged debt. "Plaintiff, a former client of defendants who was induced to tender post-dated checks to defendants for legal representation, was not informed that the debt represented by the post-dated checks was subject to discharge through his case, and subsequently allowed defendants to cash said checks." Mr. Lundquist says the firm sent him a letter in late 2010, offering to handle his bankruptcy case and save his home from foreclosure. He says that in addition to the $364 down payment, which covered the filing fee, credit counseling and credit report costs, he was asked to pay $800 for representation, via five postdated personal checks. Clark & Washington filed Mr. Lundquist's Chapter 7 case in January, according to the complaint. "While plaintiff's case was still active, defendants cashed one or more of the post-dated checks issued by plaintiff prior to the filing of the underlying case," the complaint states. "Defendants neither requested nor received relief from the automatic stay imposed by the case in order to collect the pre-petition debt." Mr. Lundquist says the law firm violated bankruptcy rules by soliciting clients via direct mail, offering to represent them for a minimum down payment, with the rest of the fees to be paid by postdated checks, and sending clients collection letters to collect a debt incurred before the filing of their cases. He says, "The practice of collecting pre-petition attorney's fees in post-dated, post-petition checks was addressed and condemned in several recent decisions," including rulings by federal bankruptcy courts in Tennessee and Florida. In a July 12 order, U.S. Bankruptcy Judge Michael Williamson enjoined Clark & Washington from accepting postdated checks after the petition date as payment of its attorney's fees for bankruptcy cases filed in Tampa. Judge Williamson ruled that the firm's practice of depositing postdated checks after the bankruptcy cases have been filed or after a discharge has been entered violated the Bankruptcy Code and created a conflict of interest between the firm and its clients. Mr. Lundquist's complaint states: "Following these decisions, and without regard for the precedent set therein, defendants willfully continued to solicit and accept post-dated personal checks pre- petition for payment of flat-fee arrangements with the intention of cashing said checks following the filing and discharge of many Chapter 7 cases." Mr. Lundquist adds: "Unaware that the unpaid portion of their fees (represented by the post-dated personal checks) were dischargeable debts under Chapter 7, plaintiff and the class allowed defendants to unlawfully cash and collect these dischargeable fees following the filing, completion and discharge of their respective cases." Mr. Lundquist seeks class certification, disgorgement of legal fees, and compensatory and punitive damages for federal and state RICO violations, Bankruptcy Code violations, fraud, unjust enrichment and concealment. A copy of the Complaint in Lundquist v. Clark & Washington, P.C., et al., Case No. 11-cv-03179 (N.D. Ga.) (Carnes, J.), is available at: http://www.courthousenews.com/2011/09/22/GaLawyers.pdf The Plaintiff is represented by: Terry Haygood, Esq. THE LAW OFFICE OF TERRY HAYGOOD 401 Broad Street Rome, GA 30161 Telephone: (706)-232-2222 COVINGTON DIOCESE: Dist. Ct. Has No Jurisdiction on Law Firm Claim ------------------------------------------------------------------ Judge Danny C. Reeves of the U.S. District Court for the Eastern District of Kentucky held that he lacks subject matter jurisdiction to consider the professional negligence claims asserted by Julane Simpson, Heather Moser, and Tom Cardosi against a law firm involved in a state court complaint against the Catholic Diocese of Covington, Kentucky. Simpson, et al., accused Stanley Chesley, Robert Steinberg, and Waite, Schneider, Bayless & Chesley Co., LPA, for breach of fiduciary duty, professional negligence and fraud. The Simpson plaintiffs complained that the actions of Messrs. Chesley and Steinberg caused them to receive less money in the settlement of the Covington Diocese class action complaint. The Boone Circuit Court approved the settlement in May 2009. Judge Reeves pointed to the Rooker-Feldman doctrine in making his decision. The doctrine precludes "lower federal courts . . . from exercising appellate jurisdiction over final state-court judgments." Accordingly, the case is remanded to the Kenton Circuit Court, Judge Reeves ruled. A copy of the District Court's Aug. 2, 2011 Memorandum Opinion and Order is available at http://is.gd/jhst1Nfrom Leagle.com. FEN-PHEN: Lawyer Permanently Disbarred Over Settlement ------------------------------------------------------ Brett Barrouquere, writing for The Associated Press, reports that a Kentucky attorney who worked on the class-action lawsuit over the diet-drug fen-phen was permanently disbarred on Sept. 22 for his role in a scheme that cost clients more than $65 million from the settlement and landed two other lawyers in federal prison. The Kentucky Supreme Court revoked the law license of David Helmers of Lexington, citing "serious ethical violations." Mr. Helmers is the fourth attorney involved with the case to be disbarred. The fen-phen settlement has also jeopardized the Kentucky law license of Cincinnati attorney Stanley Chesley, known as the "Master of Disaster" for his work on large class-action cases around the country. The Kentucky Supreme Court is weighing a request from the Kentucky Bar Association to disbar Mr. Chesley for his role in the proceedings. That case is pending. The high court, in an order signed by Chief Justice John Minton, also ordered Mr. Helmers to pay nearly $40,000 to cover the cost of the disciplinary proceedings against him. The court found that Mr. Helmers wasn't the mastermind of the scheme, but rather acted at the direction of several more experienced attorneys. But, Justice Minton wrote, "it takes no technical expertise" to know that deceiving clients, some of whom were "egregiously injured" by the drug, was wrong. "That he did so at the direction of his employer does not permit us to overlook the serious deficiency in character revealed by the facts before us," Justice Minton wrote for the court. Mr. Helmers worked as an associate in William Gallion's law firm during the 2001 settlement negotiations, which netted $200 million. The fen-phen case involved 440 clients who said they suffered heart and lung damage as a result of taking the drug. Mr. Gallion, 60, and Shirley Cunningham Jr., one-time owners of champion racehorse Curlin, are serving federal sentences after being convicted of bilking their clients out of millions from the settlement. Both have been disbarred. A third attorney, Melbourne Mills of Lexington, was acquitted at a federal criminal trial, but he was disbarred for his role in the scheme. Mr. Gallion is not scheduled to be released from federal prison until 2029; Mr. Cunningham, 57, won't get out until 2025. The two men are appealing their convictions. The U.S. 6th Circuit Court of Appeals has not scheduled oral arguments in the case. Mr. Helmers went to work for Gallion, then a respected attorney, while still in law school in Lexington. After being admitted to the bar, Mr. Helmers handled client meetings about the fen-phen settlement for Gallion. The court found that Mr. Helmers failed to disclose to clients details of the settlement or that the attorneys had decided beforehand how much each client would receive from the settlement. "Additionally, (Helmers) told many of the clients that if they spoke to others about their settlement award, they could face a penalty assessment of $100,000," Justice Minton wrote. Justice Minton said Mr. Helmers was "inexperienced, impressionable" and may have been influenced by Gallion, Cunningham and Mills. A state court awarded former clients of Gallion and Cunningham $42 million in a civil case, but the Kentucky Court of Appeals overturned that award. That case is being appealed to the Kentucky Supreme Court. Also on Sept. 22, Mr. Chesley's wife, U.S. District Judge Susan J. Dlott, withdrew from the Kentucky bar. Judge Dlott, a federal judge in southern Ohio since 1995, is not accused of any wrongdoing in the case. The reason for her withdrawal wasn't immediately known on Sept. 22. JPMORGAN CHASE: No Breach in Loyalty in Sigma Investment, Ct. Says ------------------------------------------------------------------ Judge Shira A. Scheindlin for the U.S. District Court for the Southern District of New York ruled that JPMorgan Chase Bank did not breach its duties of loyalty by investing its fiduciary clients' cash collateral in the June 2009 Medium-Term Notes of Sigma Finance, Inc., while simultaneously extending billions of dollars of "repo" financing to Sigma. Sigma is a structured investment vehicle that collapsed on Sept. 30, 2008. The Court held that JPMorgan's extension of repo financing to Sigma in a non-fiduciary capacity did not constitute a conflict of interest, nor did it cause Plaintiffs' losses. Judge Scheindlin entered his ruling in the class actions brought by the Board of Trustees of The Aftra Retirement Fund, Board of Trustees of the Imperial County Employees' Retirement System, and The Investment Committee of The Manhattan and Bronx Surface Transit Operating Authority Pension Plan against JPMorgan, Case Nos. 09 Civ. 686, 09 Civ. 3020, and 09 Civ. 4408, (S.D.N.Y.) A copy of the District Court's Aug. 5, 2011 Opinion and Order is available at http://is.gd/WLQpq5from Leagle.com. Counsel for Plaintiffs are: Joseph H. Meltzer, Esq. Peter H. LeVan, Jr., Esq. BARROWAY TOPAZ KESSLER MELTZER & CHECK, LLP 280 King of Prussia Road Radnor, Pennsylvania 19087 Tel: (610) 667-7706 Fax: (610) 667-7056 E-mail: jmeltzer@ktmc.com plevan@ktmc.com - and - Milo Silberstein, Esq. DEALY & SILBERSTEIN, LLP 225 Broadway, Suite 1405 New York, NY 10007 Tel: (212) 385-0066 - and - Gregory M. Nespole, Esq. WOLF HALDENSTEIN ADLER FREEMAN HERZ LLP 270 Madison Avenue New York, NY 10016 Tel: (212) 545-4761 Fax: (212) 545-4758 E-mail: nespole@whafh.com Counsel for JPMorgan are: Lewis Richard Clayton, Esq. Jonathan H. Hurwitz, Esq. Samuel E. Bonderoff, Esq. PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP 1285 Avenue of the Americas New York, NY 10019 Tel: (212) 373-3215 E-mail: lclayton@paulweiss.com jhurwitz@paulweiss.com sbonderoff@paulweiss.com - and - Bradley E. Beckworth, Esq. Brad Seidel, Esq. NIX PATTERSON & ROACH, LLP 205 Linda Drive, Daingerfield, Texas 75638 Tel: (903) 645-7333 Fax: (903) 645-5389 - and - David L. Wales, Esq. BERNSTEIN, LITOWITZ, BERGER & GROSSMAN, LLP 1285 Avenue of the Americas New York, NY 10019 Tel: (212) 554-1400 Fax: (212) 554-1444 E-mail: DWales@blbglaw.com LUFKIN INDUSTRIES: 5th Cir. Urges Recalculation of Goldstein Fees ----------------------------------------------------------------- The U.S. Court of Appeals for the Fifth Circuit affirmed the district court's back pay calculation in the class action complaint Sylvester McClain, et al. v. Lukfin Industries, Inc., Case No. 10-40036 (5th Cir.) The Plaintiffs' complaint is a Title VII class action for employment discrimination against Lufkin, which culminated in a multi-million dollar judgment in 2005. However, parties still challenged the district court's attorneys' fee award and Lukfin complained that back pay damages were erroneously authorized in an earlier appeal. Upon an earlier recommendation of the Fifth Circuit, the district court awarded $3.3. million in back pay to the class for discriminatorily lost promotions dating back to 1994. The district court also ordered a $400 hourly rate to the Plaintiffs' lead counsel, Timothy Garrigan; but refused to order payment to partners at Goldstein, Demchak, Baller, Borgen & Dardarian, as associate counsel, at a $650 hourly rate. The district court only awarded $400 per hour to Goldstein Demchak. The Fifth Circuit stated it found no reversible error in the district court's calculation of back pay. The district court, however, erred in failing to calculate the initial lodestar using the rates Goldstein Demchak attorneys typically charge in their own home district, the Fifth Circuit opined. A recalculation is warranted, the Fifth Circuit noted, since the present case is atypical in that an avalanche of unrebutted evidence established that (1) plaintiffs' lead counsel required assistance in prosecuting the case, and (2) no lawyer within the Texas district or state were available to assist the lead counsel. Goldstein Demcheck is based in California. Accordingly, the Fifth Circuit vacated and remanded the fee award to Goldstein Demchak for reconsideration. The appeals panel is composed of Circuit Judges Edith H. Jones, James L. Dennis, and Edith Brown Clement. Judge Jones, who penned the appellate court decision, clarified that the appeal on the fee award is designed simply to enrich, not to enhance or encourage. "On remand, the district court should exercise its discretion within the parameters we have set out to prevent a windfall recovery," she stated. Judge Jones' clarification comes after Judge Dennis noted that the majority opinion does not "categorically prohibit" district courts from comparing the fees of defense counsel and prevailing plaintiffs' counsel when statutory fee shifting occurs. A copy of the Fifth Circuit's Aug. 8, 2011 Order is available at http://is.gd/W9cq4nfrom Leagle.com. MERCK & CO: 2nd Cir. Seeks Guidance on Cross Tolling in Virginia ---------------------------------------------------------------- The U.S. Court of Appeals for the Second Circuit referred to the Supreme Court of Virginia questions of Virginia law relating to equitable and statutory cross-jurisdictional tolling with respect to the Fosamax-related actions brought by Virginia residents against Merck & Co., Inc. Plaintiffs Rebecca Quarles, Dorothy Deloriea, Ora Casey and Roberta Brodin filed separate actions in the Southern District of New York, alleging negligence in Merck's development and distribution of the drug, Fosamax. Earlier, the U.S. District Court for the Southern District of New York earlier dismissed the Plaintiffs' product liability claims for injuries allegedly caused by Fosamax. Plaintiffs appealed the District Court judgment. The Plaintiffs argued that the tolling doctrine established in American Pipe & Construction Company v. Utah, 414 U.S. 538 (1974), should apply and thus, their status of limitations should have been tolled for 28 months. The Second Circuit stated that it is uncertain whether cross- jurisdictional tolling is available under Virginia law and thus, it is seeking the guidance of the Supreme Court of Virginia on whether Virginia law permits equitable tolling of statute of limitations due to the pendency of a putative class action in another jurisdiction. The appellate panel is composed of Circuit Judges Robert D. Sack, Debra Ann Livingston, and Raymond Lohier, Jr. A copy of the Second Circuit's Aug. 5, 2011 Order is available at http://is.gd/uTdb9xfrom Leagle.com. Counsel for Plaintiffs is: Timothy M. O'Brien, Esq. LEVIN PAPANTONIO THOMAS MITCHELL RAFFERTY & PROCTOR, P.A. 316 South Baylen Street Pensacola, FL Tel: (850) 435-7084 (888) 435-7001 Fax: (850) 436-6084 Counsel for Defendant are: Norman C. Kleinberg, Esq. Theodore V.H. Mayer, Esq. William J. Beausoleil, Esq. HUGHES HUBBARD & REED LLP One Battery Park Plaza New York, NY 10004-1482 Tel: (212) 837-6000 Fax: (212) 422-4726 E-mail: kleinber@hugheshubbard.com mayer@hugheshubbard.com beausole@hugheshubbard.com - and - Paul F. Strain, Esq. David J. Heubeck, Esq. VENABLE LLP 750 E. Pratt Street Suite 900 Baltimore, MD 21202 Tel: (410)244.7400 Fax: (410)244.7742 E-mail: pfstrain@Venable.com djheubeck@Venable.com NEIMAN MARCUS: "Monjazeb" Class Suit Remains Pending in Calif. -------------------------------------------------------------- On April 30, 2010, a Class Action Complaint for Injunction and Equitable Relief was filed in the United States District Court for the Central District of California by Sheila Monjazeb, individually and on behalf of other members of the general public similarly situated, against Neiman Marcus, Inc., Newton Holding, LLC, TPG Capital, L.P. and Warburg Pincus, LLC. On July 12, 2010, all defendants except for the Company were dismissed without prejudice, and on August 20, 2010, this case was refiled in the Superior Court of California for San Francisco County. This complaint, along with a similar class action lawsuit originally filed by Bernadette Tanguilig in 2007, alleges that the Company has engaged in various violations of the California Labor Code and Business and Professions Code, including without limitation 1) asking employees to work "off the clock," 2) failing to provide meal and rest breaks to its employees, 3) improperly calculating deductions on paychecks delivered to its employees, and 4) failing to provide a chair or allow employees to sit during shifts. The plaintiffs in these matters seek certification of their cases as class actions, reimbursement for past wages and temporary, preliminary and permanent injunctive relief preventing defendant from allegedly continuing to violate the laws cited in their complaints. The Company says it intends to vigorously defend its interests in these matters. Currently, the Company cannot reasonably estimate the amount of loss, if any, arising from these matters. However, the Company does not currently believe the resolution of these matters will have a material adverse impact on its financial position. The Company will continue to evaluate these matters based on subsequent events, new information and future circumstances. No further updates were reported in the Company's September 21, 2011, Form 10-K filing with the U.S. Securities and Exchange Commission for the year ended July 30, 2011. OASIS LEGAL: App. Ct. Remands Parson Suit on Improper Venue Issue ----------------------------------------------------------------- The Court of Appeals of North Carolina held that the trial court in the class action complaint, Jermaine Parson v. Oasis Legal Finance, LLC, et al., Case No. COA10-1414, erred in its conclusion that the agreement between the parties was entered in North Carolina. The Appellate Court reversed the judgment of the trial court and remanded to that court for the purpose of granting a motion filed by the defendant to dismiss the suit for improper venue. The plaintiff and Oasis are parties to an agreement for an advance of funds to pay for plaintiff's legal representation in a vehicular accident lawsuit. In return, the plaintiff agreed that if he made a recovery for his personal injuries, he would repay the amount advanced by Oasis plus an additional sum. The plaintiff filed the class action complaint against Oasis in February 2010 in the Guilford County Superior Court, alleging among other things usury, violation of the consumer finance act and unfair and deceptive trade practices because Oasis recovered more than what it is entitled to. In April 2010, the trial court denied the defendants' motion to dismiss the plaintiff claims alleging improper venue. The defendants appealed. The Appellate Court noted that the validity of the contract at issue is to be determined by the forum. As the signature of the Oasis representative was made in Illinois, the contract was formed in Illinois, the Appellate Court held. The Appellate Court added, "the forum selection clause mandates Cook County, Illinois, as the exclusive venue for all disputes arising from the [parties'] purchase agreement, while North Carolina law will be applied to govern the dispute, including the validity of the contract." A copy of the Appellate Court's Aug. 2, 2011 decision is available at http://is.gd/BboiHZat Leagle.com. Counsel for Plaintiff are: John F. Bloss, Esq. ROBERTSON MEDLIN & BLOSS, P.L.L.C. Greensboro, North Carolina Tel: (336) 378-9881 Fax: (336) 378-9886 - and - Frederick L. Berry, Esq. BARRON & BERRY, L.L.P. 301 S. Greene Street Greensboro, NC 27401 Tel: (336) 274-4782 Fax: (336) 379-8592 E-mail: fred.berry@barronberry.com Counsel for Defendants are: Robert J. King, III, Esq. Clint S. Morse, Esq. BROOKS PIERCE MCLENDON HUMPHREY & LEONARD, L.L.P. 2000 Renaissance Plaza 230 North Elm Street Greensboro, NC 27401 Tel: (336) 373-8850 Fax: (336) 378-1001 E-mail: rking@brookspierce.com cmorse@brookspierce.com PANDORA MEDIA: Accused of Violating Video Rental Privacy Act ------------------------------------------------------------ Courthouse News Service reports that a federal class action claims Pandora Media violates Michigan law by its "intentional disclosure of its users' private music listening histories." A copy of the Complaint in Deacon v. Pandora Media, Inc., Case No. 11-cv-04674 (N.D. Calif.), is available at: http://www.courthousenews.com/2011/09/22/Sssshhhh.pdf The Plaintiff is represented by: Sean Reis, Esq. 30021 Tomas Street, Suite 300 Rancho Santa Margarita, CA 92688 Telephone: (949) 459-2124 E-mail: sreis@edelson.com - and - Jay Edelson, Esq. Ari J. Scharg, Esq. EDELSON MCGUIRE LLC 350 North LaSalle Street, Suite 300 Chicago, IL 60654 Telephone: (312) 589-6370 RICHMOND, VA: Police Officers File Overtime Class Action -------------------------------------------------------- Vin Gurrieri, writing for Law360, reports that a putative class of police officers on Sept. 19 accused Richmond, Va., of violating federal and state labor laws by failing to properly pay them overtime. The suit, filed by 73 police officers on behalf of a proposed class of more than 800 law enforcement employees, alleges the city denied overtime compensation in violation of state law and the federal Fair Labor Standards Act. SEATTLE HOUSING: Jan. 2012 Settlement Fairness Hearing Set ---------------------------------------------------------- Nick McCann at Courthouse News Service reports that the Seattle Housing Authority agreed to change certain Section 8 housing policies after voucher holders settled their class action alleging that the agency discriminates against residents who are disabled and have children. Lead plaintiffs Markeletta Wilson and Marie Townes said the Seattle Housing Authority illegally required Section 8 voucher holders to show custody documents before allowing children to live with them, and that it barred relatives from living together. Their 2009 class action also claimed that the housing authority did not provide disabled voucher holders with reasonable accommodations. Ms. Wilson sought to represent a subclass of disabled voucher holders who were terminated from the Section 8 program, and Townes sought to represent holders who were required to prove custody of their children. The Seattle Housing Authority denied any illegal activity, but the parties were able to reach a settlement agreement, which U.S. District Judge Marsha Pechman preliminarily approved on Sept. 20. The judge found the settlement "was the result of serious, informed, non-collusive, and arms-length negotiations" and that the agreement "falls within the range of reasonableness and possible approval." As a result of the settlement, the Seattle Housing Authority will make certain policy changes and grant new termination hearings to class members on request. Among the changes, the authority may "consider extenuating circumstances to extend the time period that a guest, including a related adult, is allowed to stay in the subsidized residence." It must also now notify voucher holders that a judge can review their terminations. The court will hold a fairness hearing on the settlement agreement on Jan. 9, 2012. SINOTECH ENERGY: October 18 Lead Plaintiff Deadline Set ------------------------------------------------------- Glancy Binkow & Goldberg LLP disclosed that all persons or entities who purchased the American Depositary Shares of SinoTech Energy Limited pursuant and/or traceable to the Company's Registration Statement and Prospectus issued in connection with the Company's initial public offering on November 3, 2010, including open-market purchasers of SinoTech ADSs between November 3, 2010 and August 16, 2011, inclusive, have until October 18, 2011, to move the Court to serve as Lead Plaintiff in the securities fraud class action lawsuit. The shareholder lawsuit, Athale v. SinoTech Energy Limited, et al., No. 11-cv- 05831-GBD, has been assigned to the Honorable George B. Daniels, United States District Judge for the Southern District of New York. For more information or a copy of the Complaint, please contact Glancy Binkow & Goldberg by phone to discuss this action at 310- 201-9150, toll-free at 888-773-9224, or by e-mail to shareholders@glancylaw.com SinoTech provides enhanced oil recovery services to oil companies in the People's Republic of China. The Complaint charges SinoTech, certain of the Company's current and former executive officers and directors, and the underwriters of its IPO with violations of the Securities Act of 1933. The Complaint alleges that certain representations made in the Registration Statement and Prospectus issued in connection with the IPO were materially inaccurate. Specifically, the Complaint alleges that the Company's reported sales and revenues were materially inaccurate, because the nature, size and scope of the Company's business was materially exaggerated. The Private Securities Litigation Reform Act of 1995 ("PSLRA") requires the Court to appoint a "Lead Plaintiff" in this case. Any person or group who suffered a loss as a result of purchasing SinoTech ADSs pursuant and/or traceable to the Company's November 3, 2010 IPO including open-market purchasers between November 3, 2010 and August 16, 2011, may ask the Court to be appointed as Lead Plaintiff, but must file a motion no later than the October 18, 2011 deadline. To be a member of the class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent class member. If you wish to discuss this action or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact: Michael Goldberg, Esq. Glancy Binkow & Goldberg LLP 1801 Avenue of the Stars, Suite 311 Los Angeles, CA 90067 Telephone: 310-201-9150 Toll Free: 888-773-9224 E-mail: shareholders@glancylaw.com Web site: http://www.glancylaw.com SMITH BARNEY: Union Pension Fund's Class Action Can't Proceed ------------------------------------------------------------- Bob Van Voris, writing for Bloomberg News, reports that Citigroup Inc.' s Smith Barney unit can't be sued by the union pension fund that's the lead plaintiff in a six-year-old shareholder fraud class action because it never owned any of the shares that are the basis of the lawsuit, a judge said. U.S. District Judge William H. Pauley III in Manhattan, citing "epic failures" by the lawyers on both sides of the case, on Sept. 22 dismissed Operating Local 649 Annuity Trust Fund from the suit. The pension fund's attorneys told the judge that their client bought more than 75,000 shares of a similarly named security and not those involved in the case. Judge Pauley called the effect of the error "seismic," and said it has caused the litigation to take on "Sisyphean dimensions." "After six years of litigation, including extensive motion practice, an appeal to the Second Circuit, remand, more motion practice, and discovery, lead counsel learned that the lead plaintiff never purchased any of the securities at issue in this action," Judge Pauley wrote in the Sept. 22 decision. The suit was filed against Smith Barney Fund Management LLC and Citigroup Global Markets Inc. in 2005, after Citigroup agreed to pay $208 million to settle claims by the U.S. Securities and Exchange Commission that its subsidiaries kept fees that should have been turned over to Smith Barney's mutual funds. In a letter to Judge Pauley Aug. 31, Bernstein Liebhard LLP, which represents Local 649, said the union had purchased shares in Smith Barney Capital Preservation Collective Trust, not Smith Barney Capital Preservation Fund, the mutual fund that is the subject of the litigation. "Lead counsel's failure to confirm the most basic fact -- that its client purchased the securities at issue in this action -- has resulted in a considerable waste of time and resources," Judge Pauley said. Bernstein Liebhard partner Stanley Bernstein said the lawyers relied on the union's certification that it had bought the mutual fund shares and brokerage statements that mistakenly reflected the mutual fund shares along with their ticker symbol. "We did not just rely on somebody's word," Mr. Bernstein said in a phone interview on Sept. 22. "We had the underlying core documentation from the broker. And it was wrong." In addition to the union's attorneys, Judge Pauley also criticized Citigroup's lawyers in his opinion. "Astonishingly, defense counsel failed to ask their clients whether Local 649 had invested in any of the Smith Barney funds and, if so, specifically which one," Berman said. "Had Smith Barney simply checked its records, it would have avoided six years of sparring with a phantom opponent." Charles Platt, a partner in the New York office of Wilmer Cutler Pickering Hale and Dorr LLP, which represents Citigroup, declined to comment on Judge Pauley's opinion on Sept. 22. The mistake will require several motions to be rebriefed, the filing of another amended complaint and the exchange of additional evidence in the case, according to Judge Pauley. "In retrospect, it was something so obvious that every lawyer in the case should have recognized the problem and reacted immediately," Judge Pauley wrote. "But no one did." The case is In re Smith Barney Transfer Agent Litigation, 05-cv- 07583, U.S. District Court, Southern District of New York (Manhattan). SOUTHWEST AIRLINES: Sued in Alabama Over Rapid Rewards Program -------------------------------------------------------------- Courthouse News Service reports that a federal class action claims Southwest Airlines stopped honoring its Rapid Rewards Program coupons supposedly good for "one beer, wine, mixed or specialty nonalcoholic drink." A copy of the Complaint in Baxley v. Southwest Airlines Co., Incorporated, Case No. 11-cv-_____ (N.D. Ala.), is available at: http://www.courthousenews.com/2011/09/22/BoozeSky.pdf The Plaintiff is represented by: Joel E. Dillard, Esq. Donald R. James, Jr., Esq. BAXLEY, DILLARD, DAUPHIN, MCKNIGHT & JAMES 2008 Third Avenue South Birmingham, AL 35233 Telephone: (205) 271-1100 E-mail: bddmclaw@baxleydillard.com SPECIALIZED BICYCLE: Recalls 14,200 Bicycles Due to Fall Hazard --------------------------------------------------------------- The U.S. Consumer Product Safety Commission, in cooperation with distributor, Specialized Bicycle Components Inc., of Morgan Hill, California, and manufacturer, Advanced Group, of Taiwan, announced a voluntary recall of about 14,200 bicycles with Advanced Group carbon forks. Consumers should stop using recalled products immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product. The brake component housed within the bicycle's carbon fork can disengage from the fork and allow the brake assembly to contact the wheel spokes while rotating, posing a fall hazard. The company has received two reports of the brake component disengaging from the carbon fork. No injuries have been reported. This recall involves the following nine, 2011 model year bicycles with Advanced Group carbon forks: Sirrus Expert, Sirrus Comp, Sirrus Elite, Vita Expert, Vita Comp, Vita Elite, Vita Elite Step Thru, Tricross Sport, Tricross, and Tricross Comp. All bicycles have the brand name "Specialized" on the lower front frame tube. The model name is on the top tube. Pictures of the recalled products are available at: http://www.cpsc.gov/cpscpub/prerel/prhtml11/11330.html The recalled products were manufactured in Taiwan and sold at authorized Specialized Retailers nationwide from June 2010 through August 2011 for between $700 and $2,000. Consumers should immediately stop riding these bicycles and return them to an authorized Specialized retailer for a free repair or replacement carbon fork. For additional information, contact Specialized toll-free at (877) 808-8154 from 8:00 a.m. to 5:00 p.m. Pacific Time Monday through Friday, or visit the company's Web site at http://www.specialized.com/ STATE STREET: Dist. Ct. Rejects Bid to Dismiss Consolidated Suit ---------------------------------------------------------------- Judge Nancy Gertner of the U.S. District Court for the District of Massachusetts denied motions to dismiss a consolidated class action complaint against State Street Corporation. The consolidated action stems from two related class action: a federal securities action and an Employee Retirement Income Security Act action. Lead Plaintiffs in the Securities Action are institutional investors, Public Employees' Retirement System of Mississippi and Union Asset Management Holding AG. Lead Plaintiff under the ERISA Action is Casey J. Richard, a participant in State Street's Salary Savings Plan. Plaintiffs allege that State Street made material misrepresentations and omissions concerning its foreign exchange trading practices and revenue. Judge Gertner found that the Plaintiffs' allegations are both stated with particularity and plausible. "Plaintiffs' evidentiary sources," the Court stated, "strengthen one another and collectively paint a plausible picture of a company defrauding its clients. Multiple types of evidence from multiple sources reinforce the same narrative." Judge Gertner held that the Plaintiffs' allegation of fraud meets the materiality requirement. A copy of the District Court's Aug. 3, 2011, Memorandum and Order is available at http://is.gd/SiOV8Ufrom Leagle.com. SYCAMORE NETWORKS: IPO Case Appellant May Appeal Until Sept. 24 --------------------------------------------------------------- An appellant has until September 24, 2011, to take an appeal from a district court decision holding that it lacked standing to object to the settlement in the consolidated securities lawsuit involving Sycamore Networks, Inc., according to the Company's September 21, 2011, Form 10-K filing with the U.S. Securities and Exchange Commission for the year ended July 31, 2011. Beginning on July 2, 2001, several purported class action complaints were filed in the United States District Court for the Southern District of New York against the Company and several of its officers and directors (the "Individual Defendants") and the underwriters for the Company's initial public offering on October 21, 1999. Some of the complaints also include the underwriters for the Company's follow-on offering on March 14, 2000. An amended complaint, which is the operative complaint, was filed on April 19, 2002, on behalf of persons who purchased the Company's common stock between October 21, 1999, and December 6, 2000. The amended complaint alleges claims against the Company, several of the Individual Defendants and the underwriters for violations under Sections 11 and 15 of the Securities Act of 1933, as amended (the "Securities Act"), primarily based on the assertion that the Company's lead underwriters, the Company and several of the Individual Defendants made material false and misleading statements in the Company's Registration Statements and Prospectuses filed with the Securities and Exchange Commission, or the SEC, in October 1999 and March 2000 because of the failure to disclose (a) the alleged solicitation and receipt of excessive and undisclosed commissions by the underwriters in connection with the allocation of shares of common stock to certain investors in the Company's public offerings and (b) that certain of the underwriters allegedly had entered into agreements with investors whereby underwriters agreed to allocate the public offering shares in exchange for which the investors agreed to make additional purchases of stock in the aftermarket at pre-determined prices. It also alleges claims against the Company, the Individual Defendants and the underwriters under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), primarily based on the assertion that the Company's lead underwriters, the Company and the Individual Defendants defrauded investors by participating in a fraudulent scheme and by making materially false and misleading statements and omissions of material fact during the period in question. The amended complaint seeks damages in an unspecified amount. The action against the Company is being coordinated with approximately three hundred other nearly identical actions filed against other companies. Due to the large number of nearly identical actions, the court has ordered the parties to select up to twenty "test" cases. The Company's case has been selected as one such test case. As a result, among other things, the Company will be subject to broader discovery obligations and expenses in the litigation than non-test case issuer defendants. On October 9, 2002, the court dismissed the Individual Defendants from the case without prejudice. This dismissal disposed of the Section 15 and Section 20(a) claims without prejudice, because these claims were asserted only against the Individual Defendants. On October 13, 2004, the court denied the certification of a class in the action against the Company with respect to the Section 11 claims alleging that the defendants made material false and misleading statements in the Company's Registration Statement and Prospectuses. The certification was denied because no class representative purchased shares between the date of the IPO and January 19, 2000 (the date unregistered shares entered the market), and thereafter suffered a loss on the sale of those shares. The court certified a class in the action against the Company with respect to the Section 10(b) claims alleging that the Company and the Individual Defendants defrauded investors by participating in a fraudulent scheme and by making materially false and misleading statements and omissions of material fact during the period in question. On December 5, 2006, the Second Circuit vacated the district court's class certification decision. On April 6, 2007, the Second Circuit panel denied a petition for rehearing filed by the plaintiffs, but noted that the plaintiffs could ask the district court to certify a more narrow class than the one that was rejected. On August 14, 2007, the plaintiffs filed a Second Amended Class Action complaint against the Company. The Company and the underwriters filed separate motions to dismiss the amended complaint on November 14, 2007. On March 26, 2008, the Court denied the motion to dismiss the Section 10(b) claims but dismissed certain Section 11 claims against the Company. On June 5, 2008, the Court dismissed the remaining Section 11 claims against the Company in response to a motion for partial reconsideration. The parties in the approximately 300 coordinated cases, including the Company's case, reached a settlement. The insurers for the issuer defendants in the coordinated cases will make the settlement payment on behalf of the issuers, including the Company. On October 5, 2009, the Court granted final approval of the settlement. The settlement approval was appealed to the United States Court of Appeals for the Second Circuit. One appeal was dismissed and the second appeal was remanded to the district court to determine if the appellant was a class member with standing to appeal. On August 25, 2011, the district court determined that the remaining appellant lacked standing to object to the settlement. The appellant has until September 24, 2011, to appeal the district court's decision. Due to the inherent uncertainties of litigation, the Company says it cannot accurately predict the ultimate outcome of the matter. If the settlement does not survive appeal, the litigation continues, and the Company is found liable, the Company is unable to estimate or predict the potential damages that might be awarded, whether such damages would be greater than the Company's insurance coverage, and whether such damages would have a material impact on the Company's results of operations or financial condition in any future period. UNITED STATES: Faces Class Action Over Discharged Military Gays --------------------------------------------------------------- Nedra Pickler, writing for The Associated Press, reports that two days after repeal of the "don't ask, don't tell" policy against gays serving openly in the military, the Obama administration was in court on Sept. 22 opposing a lawsuit seeking full severance pay for those dismissed under the law. The American Civil Liberties Union is seeking class action status for 142 people who only got half pay after their discharge because of being gay. But the Justice Department asked the U.S. Court of Federal Claims to dismiss the case. Judge Christine Odell Cook Miller said she probably will let the case continue and questioned why the government wouldn't pay now that the law has changed. "Your timing is exquisite -- two days after the policy goes into effect eliminating 'don't ask, don't tell,' here we are," she said as she took the bench. "I would consider this to be an unenviable argument to have at this time," she told the government's attorney later. The case was filed by the ACLU on behalf of former Air Force Staff Sgt. Richard Collins of Clovis, N.M. He was honorably discharged in 2006 after nine years of service when two civilians who worked with him at Cannon Air Force Base reported they saw him kiss his boyfriend in a car about 10 miles from the base. The decorated sergeant was off-duty and not in uniform at the time, according to the lawsuit. In an interview on Sept. 22, Sgt. Collins said he and his partner, who are still together, always have been discreet about showing affection in public. "That one time I just happened to lean over and kiss him on the cheek," he recalled. "He said something sweet." The Air Force paid Sgt. Collins $12,351 instead of the $25,702 he expected after his discharge. Separation pay is granted to military personnel who served at least six years but were involuntarily discharged, part of an effort to ease their transition into civilian life. But the Defense Department has a list of conditions that trigger an automatic reduction in that pay, including homosexuality, unsuccessful drug or alcohol treatment or discharge in the interests of national security. That policy went into effect in 1991, two years before "don't ask, don't tell" became law. The suit argues it is unconstitutional for the Defense Department to unilaterally cut the amount for people discharged for homosexuality. The administration is not defending the merits of the policy. Instead, Justice Department lawyer L. Misha Preheim argued the defense secretary has sole discretion to decide who gets what separation pay and the court cannot rewrite military regulations. Judge Miller said she would issue a ruling on the government's motion to dismiss by Oct. 15 after full review of the Justice Department's arguments, but her preliminary decision was to deny the motion. She warned Mr. Preheim and a uniformed Air Force attorney also at the defense table that they should be prepared for the case to move forward. She said it's probably appropriate to certify it for class action status, if the government really thinks it's worth it to continue fighting the case. "I can't believe this is something the military wants to revisit now," she said. Joshua Block, attorney with the ACLU lesbian gay bisexual and transgender project, said class action would cover 142 people who got half pay for being discharged for homosexuality in the past six years -- the time period covered by the statute of limitations -- for a total payment of $2.1 million. Mr. Miller, first appointed by President Ronald Reagan and reappointed by President Bill Clinton, questioned why for that amount of money the government would want to wade back into the "don't ask, don't tell" debate. Mr. Collins, who is 35 and works for his partner's business, said he has talked to recruiters about going back into the military now that the policy has been abolished. But he's leaning against it since he'd have to go back in at his old rank after missing out on promotions in the past few years. And if he did re-enter, he said he'd be wary of openly discussing his relationship. "Even though 'don't ask, don't tell' has been rescinded, I wouldn't go out there and flaunt it," he said. "Even though that policy is gone, you are still going to have discrimination from people." ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Leah Felisilda, Noemi Irene A. Adala, Joy A. Agravante, Julie Anne Lopez, Christopher Patalinghug, Frauline Abangan and Peter A. Chapman, Editors. Copyright 2011. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. 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