/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/130528.mbx C L A S S A C T I O N R E P O R T E R Tuesday, May 28, 2013, Vol. 15, No. 104 Headlines 3M COMPANY: Suit by Ex-Employee Over Perfluorochemicals Remains 3M COMPANY: Court Abates Suit by Franklin County, Ala. Resident 3M COMPANY: July 2013 Hearing Set Over Settlement ACTAVIS: Directors Reject Mylan's $15BB Cash & Stock Deal Offer ALLIANT ENERGY: Oral Arguments Held in Settlement of ERISA Suit AMERICAN INT'L: Court Narrows 2008 Securities Suit AMERICAN INT'L: N.Y. ERISA Lawsuit Now in Discovery AMERICAN INT'L: Canadian Securities Suit Remains Stayed AMERICAN INT'L: Two Classes Certified in SICO Treasury Action AMERICAN INT'L: $725MM Accord Reached in 2004 Securities Suit AMERICAN INT'L: NJ Court Allows Distribution of Settlement Fund AMERICAN INT'L: No Discovery Yet in Suit Over Caremark Deal AMERICAN INT'L: 7th Circuit Upholds RICO Suit Settlement AMYRIS INC: Lied Over Biofene Commercial Production, Suit Says APPLE INC: Faces Class Action Over Defective iPhone4 Power Button APPLE INC: Nov. 7 Hearing in Privacy Class Suit APPLEBEE'S: Faces Overtime Class Action ASIAINFOLINKAGE: Being Sold for Too Little to CITIC, Suit Claims AT&T: Judge Approves Labor Case Settlement ATLAS AIR: Polar Air Cargo Named as Defendant in Antitrust Suit ATP OIL: Scott+Scott Law Firm Files Class Action in Louisiana BARCLAYS PLC: Judge Tosses Securities Fraud Class Suit Over LIBOR BAYER AG: Ontario Court Certifies Yaz & Yasmin Class Action BEAZER HOMES: Settles Lawsuit Over "Defective" Drywall BMC SOFTWARE: Being Sold for Too Little, Suit Claims BMW AG: Faces Class Action Over Premature Cracking in Z4 Cars CAPITAL ONE: Faces Class Action Over Defrauding Customers CASH STORE: Corrects Accrual for BC Class Action Settlement Costs CATHOLIC HEALTH: Faces Suit Over Underfunding Retirement Plans CHICAGO: Face Class Action for Shutting Down 53 Elem. Schools CHURCH & DWIGHT: Motions to Junk Nevada Suit Over Deodorant Ad CIGNA CORPORATION: Still Faces Amara ERISA Violation Suit CIGNA CORPORATION: Plaintiffs Can't Appeal Denial of Class Cert. DRIL-QUIP INC: Continues to Face Suit Over Deepwater Horizon ECOLAB INC: Continues to Face, Settle Wage Hour Claims ECOLAB INC: Nalco Still Faces Claims Over COREXIT Dispersant ECOLAB INC: "B3" Complaint v. Nalco Dismissed With Prejudice ECOLAB INC: Medical Benefits Settlement in MDL 2179 Approved ECOLAB INC: "Franks" Suit Stayed After MDL 2179 Settlement ENTERPRISE FINANCIAL: May Hearing on Motion to Junk Stock Suit EURONET WORLDWIDE: Vigorously Defending Wage & Hour Suit FACEBOOK INC: Sponsored Stories Settlement Ruling Set This Month GENESIS HEALTHCARE: Godfrey & Kahn Discusses Supreme Court Ruling GENWORTH HOLDINGS: Riddle RESPA Lawsuit in Limited Discovery GYMBOREE CORPORATION: Pays Out Fees, Expenses in Merger Suit HARBOR EXPRESS: Faces Class Action for Misclassifying Drivers HARMAN INTERNATIONAL: "Kim" Securities Suit in D.C. Still Open HARMAN INTERNATIONAL: Still Faces "Russell" ERISA Lawsuit HARVEST NATURAL: Faces Consolidated Stock Suit in Texas ICAHN ENTERPRISES: Suit by Dynegy Shareholders in Abeyance ITT CORP: Sues Insurer for Asbestos Coverage INCYTE CORPORATION: Sued in Delaware Over Launch of JAKAFI INTERMEC INC: Plaintiffs Failed to Stop Honeywell Deal in March MONSANTO CO: Countryside Organics Awaits Ruling in Patent Case MOODY'S CORP: Oral Arguments Proceed in N.Y. Stock Suit MOODY'S CORP: Fraud Claims Trial in Cheyne SIV Suit This Month MOODY'S CORP: Has Confidential Deal With Rhinebridge Plaintiffs MYLAN SPECIALTY: Indemnified for Claims in Drug Pricing Suit PROVIDENCE HEALTH: Sued Over Refusal to Cover Autism ABA Therapy QUESTOR PHARMACEUTICALS: To Seek Dismissal of "Norton" Suit QUESTOR PHARMACEUTICALS: State Derivative Lawsuit Stayed REDFLEX TRAFFIC: Issued Illegal Tickets to Drivers, Suit Says SANDISK CORP: Wants Ritz Trustee as Substitute Plaintiff SANDISK CORP: Plaintiffs Appeal Dismissal of Antitrust Suit SEMPRA ENERGY: Cleared by Regulatory Report in 2011 Power Outage SOUTHWEST AIRLINES: AirTran Continues to Face Antitrust Suit STILLWATER MINING: Faces "Jurgelewicz" Shareholder Lawsuit STILLWATER MINING: Faces "Casey" Shareholder Lawsuit STRAYER EDUCATION: Plaintiffs' Deadline to Appeal Ruling Lapses TOYS "R" US: Settlement in Consumer Suit Vacated; Case Remanded TREX COMPANY: Continues to Face Suit Over "Defective" Products UNITED PARCEL: Ontario Suit Over Brokerage Service Continues UNITED PARCEL: Still Faces Price-Fixing Suit in N.Y. Court UNITED PARCEL: Settles Suit Over Rebranding of Store Franchises UNITED STATES: Pickens Doodle Line Landowners Seek Compensation UNUM LIFE: Trial Set for ERISA Suit by Insurance Beneficiaries VOLTAGE PICTURES: Judge Dismisses Reverse Copyright Class Action * Farella Discusses CIPA Prohibition on Customer Service Calls * Supreme Court Set to Weigh on Split in Suits v. LCD Makers ********* 3M COMPANY: Suit by Ex-Employee Over Perfluorochemicals Remains --------------------------------------------------------------- A case against 3M Company over alleged property damage from exposure to certain perfluorochemicals in Alabama remains stayed, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. A former employee filed a purported class action lawsuit in 2002 in the Circuit Court of Morgan County, Alabama seeking unstated damages and alleging that the plaintiffs suffered fear, increased risk, subclinical injuries, and property damage from exposure to certain perfluorochemicals at or near the Company's Decatur, Alabama, manufacturing facility. The Circuit Court in 2005 granted the Company's motion to dismiss the named plaintiff's personal injury-related claims on the basis that such claims are barred by the exclusivity provisions of the state's Workers Compensation Act. The plaintiffs' counsel filed an amended complaint in November 2006, limiting the case to property damage claims on behalf of a purported class of residents and property owners in the vicinity of the Decatur plant. Also, in 2005, the judge in a second purported class action lawsuit (filed by three residents of Morgan County, Alabama, seeking unstated compensatory and punitive damages involving alleged damage to their property from emissions of certain perfluorochemical compounds from the Company's Decatur, Alabama, manufacturing facility that formerly manufactured those compounds) granted the Company's motion to abate the case, effectively putting the case on hold pending the resolution of class certification issues in the first action described above filed in the same court in 2002. Despite the stay, plaintiffs filed an amended complaint seeking damages for alleged personal injuries and property damage on behalf of the named plaintiffs and the members of a purported class. No further action in the case is expected unless and until the stay is lifted. 3M COMPANY: Court Abates Suit by Franklin County, Ala. Resident --------------------------------------------------------------- The Morgan County Circuit Court abated a case against 3M Company over its use of perfluorochemicals, putting it on hold pending the resolution of the class certification issues in the first case filed there, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. A former 3M employee filed a purported class action lawsuit in 2002 in the Circuit Court of Morgan County, Alabama seeking unstated damages and alleging that the plaintiffs suffered fear, increased risk, subclinical injuries, and property damage from exposure to certain perfluorochemicals at or near the Company's Decatur, Alabama, manufacturing facility. In February 2009, a resident of Franklin County, Alabama, filed a purported class action lawsuit in the Circuit Court of Franklin County seeking compensatory damages and injunctive relief based on the application by the Decatur utility's wastewater treatment plant of wastewater treatment sludge to farmland and grasslands in the state that allegedly contain PFOA, PFOS and other perfluorochemicals. The named defendants in the case include 3M, its subsidiary Dyneon LLC, Daikin America, Inc., Synagro-WWT, Inc., Synagro South, LLC and Biological Processors of America. The named plaintiff seeks to represent a class of all persons within the State of Alabama who have had PFOA, PFOS and other perfluorochemicals released or deposited on their property. In March 2010, the Alabama Supreme Court ordered the case transferred from Franklin County to Morgan County. In May 2010, consistent with its handling of the other matters, the Morgan County Circuit Court abated this case, putting it on hold pending the resolution of the class certification issues in the first case filed there. 3M COMPANY: July 2013 Hearing Set Over Settlement ------------------------------------------------- A final approval hearing is scheduled for July 2013 in the settlement of a suit against 3M Company over its acquisition of Ceradyne, Inc., according to 3M's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In October 2012, four plaintiffs filed purported class actions against Ceradyne, Inc., its directors, 3M and Cyborg Acquisition Corporation (a direct wholly owned subsidiary of 3M) in connection with 3M's proposed acquisition of Ceradyne. Two suits were filed in California Superior Court for Orange County and two were filed in the Delaware Chancery Court. The suits alleged that the defendants breached and/or aided and abetted the breach of their fiduciary duties to Ceradyne by seeking to sell Ceradyne through an allegedly unfair process and for an unfair price and on unfair terms, and/or by allegedly failing to make adequate disclosures to Ceradyne stockholders regarding the acquisition of Ceradyne. 3M completed its acquisition of Ceradyne in November 2012. In November 2012, the parties reached a settlement with the California plaintiffs for an amount that is not material to the Company, while the Delaware plaintiffs dismissed their complaints without prejudice. The settlement will bind all former Ceradyne shareholders and has received preliminary approval from the California court. A final approval hearing is scheduled for July 2013. ACTAVIS: Directors Reject Mylan's $15BB Cash & Stock Deal Offer --------------------------------------------------------------- Courthouse News Service reports that overpaid directors at Actavis rejected Mylan's $15 billion offer to buy Actavis for $120 a share in a cash and stock deal, shareholders claim in Clark County Court. ALLIANT ENERGY: Oral Arguments Held in Settlement of ERISA Suit --------------------------------------------------------------- The Seventh Circuit Court of Appeals heard oral arguments and has not yet issued its final decision in the settlement of a suit over Alliant Energy Cash Balance Pension Plan, according to Alliant Energy Corporation's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In February 2008, a class-action lawsuit was filed against the Plan in the Court. The complaint alleged that certain Plan participants who received distributions prior to their normal retirement age did not receive the full benefit to which they were entitled in violation of ERISA because the Plan applied an improper interest crediting rate to project the cash balance account to their normal retirement age. These Plan participants were limited to individuals who, prior to normal retirement age, received a lump-sum distribution or an annuity payment. The Court originally certified two subclasses of plaintiffs that in aggregate include all persons vested or partially vested in the Plan who received these distributions from January 1, 1998 to August 17, 2006 including: (1) persons who received distributions from January 1, 1998 through February 28, 2002; and (2) persons who received distributions from March 1, 2002 to August 17, 2006. In June 2010, the Court issued an opinion and order that granted the plaintiffs' motion for summary judgment on liability. In December 2010, the Court issued an opinion and order that decided the interest crediting rate that the Plan used to project the cash balance accounts of the plaintiffs during the class period should have been 8.2% and that a pre-retirement mortality discount would not be applied to the damages calculation. In May 2011, the Plan was amended and the Plan subsequently made approximately $10 million in additional payments in 2011 to certain former participants in the Plan. This amendment was required based on an agreement Alliant Energy reached with the Internal Revenue Service, which resulted in a favorable determination letter for the Plan in 2011. In November 2011, plaintiffs filed a motion for leave to file a supplemental complaint to assert that the 2011 amendment to the Plan was itself an ERISA violation. In March 2012, the Plan and the plaintiffs each filed motions for summary judgment related to the supplemental complaint, and the plaintiffs filed a motion for class certification, seeking to amend the class definition and for appointment of class representatives and class counsel. In July 2012, the Court issued an opinion and order granting plaintiffs' motion for class certification, but only as to the interest crediting rate and the pre-retirement mortality discount claims of lump-sum recipients. As a result of the opinion and order, two new subclasses were certified in lieu of the prior subclass certification. Subclass A involves persons who received a lump-sum distribution between January 1, 1998 and August 17, 2006 and who received an interest crediting rate of less than 8.2% under the Plan as amended in May 2011. Subclass B involves persons who received a lump-sum distribution between January 1, 1998 and August 17, 2006 and who would have received a larger benefit under the Plan as amended in May 2011 if a pre-retirement mortality discount had not been applied. In the opinion and order the Court then granted plaintiffs' motion for summary judgment as to the two subclasses, and denied as moot the parties' motions for summary judgment with respect to issues beyond the two subclasses. In August 2012, as amended in September 2012, the Court entered a final judgment for the two subclasses in the total amount of $18.7 million. The judgment amount includes pre-judgment interest through July 2012 and takes into account the approximate $10 million of additional benefits paid by the Plan following the Plan amendment in 2011. In September 2012, the Plan appealed the judgment, and the interlocutory orders that led to the judgment, to the Seventh Circuit Court of Appeals. In November 2012, the Plan filed its opening brief with the Seventh Circuit Court of Appeals in which it seeks to reverse all or part of the judgment. In April 2013, the Seventh Circuit Court of Appeals heard oral arguments and has not yet issued its final decision. The judgment discussed above did not address any award for plaintiffs' attorney's fees or costs. In September 2012, the plaintiffs filed a motion with the Court for payment of plaintiffs' attorney's fees and costs in the amount of $9.6 million, of which $4.3 million was requested to be paid out of the common fund awarded to the two subclasses in the September 2012 judgment. In February 2013, the Court awarded plaintiffs' attorney's fees and costs in the amount of $6.4 million. The Court ordered that all of the fees and costs be paid from the $18.7 million judgment previously awarded and not be in addition to that judgment. Alliant Energy, IPL and WPL have not recognized any material loss contingency amounts for the final judgment of damages as of March 31, 2013. A material loss contingency for the judgment will not be recognized unless a final unappealable ruling is received, or a settlement is reached, which results in an amendment to the Plan and payment of additional benefits to Plan participants. Alliant Energy, IPL and WPL are currently unable to predict the final outcome of the class-action lawsuit or the ultimate impact on their financial condition or results of operations but believe an adverse outcome could have a material effect on their retirement plan funding and expense. AMERICAN INT'L: Court Narrows 2008 Securities Suit -------------------------------------------------- The United States District Court for the Southern District of New York Court granted a motion for judgment on the pleadings brought by the defendants in the Consolidated 2008 Securities Litigation filed against American International Group, Inc. (AIG), according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. The Court's order dismissed all claims against the outside auditors in their entirety, and reduces the scope of the Securities Act claims against AIG and defendants other than the outside auditors. Between May 21, 2008 and January 15, 2009, eight purported securities class action complaints were filed against AIG and certain directors and officers of AIG and AIG Financial Products Corp. and AIG Trading Group Inc. and their respective subsidiaries (AIGFP), AIG's outside auditors, and the underwriters of various securities offerings in the United States District Court for the Southern District of New York (the Southern District of New York), alleging claims under the Securities Exchange Act of 1934, as amended (the Exchange Act), or claims under the Securities Act of 1933, as amended (the Securities Act). On March 20, 2009, the Court consolidated all eight of the purported securities class actions as In re American International Group, Inc. 2008 Securities Litigation (the Consolidated 2008 Securities Litigation). On May 19, 2009, lead plaintiff in the Consolidated 2008 Securities Litigation filed a consolidated complaint on behalf of purchasers of AIG Common Stock during the alleged class period of March 16, 2006 through September 16, 2008, and on behalf of purchasers of various AIG securities offered pursuant to AIG's shelf registration statements. The consolidated complaint alleges that the defendants made statements during the class period in press releases, AIG's quarterly and year-end filings, during conference calls, and in various registration statements and prospectuses in connection with the various offerings that were materially false and misleading and that artificially inflated the price of AIG Common Stock. The alleged false and misleading statements relate to, among other things, the Subprime Exposure Issues. The consolidated complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Sections 11, 12(a)(2), and 15 of the Securities Act. On August 5, 2009, the defendants filed motions to dismiss the consolidated complaint, and on September 27, 2010, the Court denied the motions to dismiss. On April 1, 2011, the lead plaintiff in the Consolidated 2008 Securities Litigation filed a motion to certify a class of plaintiffs. On November 2, 2011, the Court terminated the motion without prejudice to an application for restoration. On March 30, 2012, the lead plaintiff filed a renewed motion to certify a class of plaintiffs. On April 26, 2013, the Court granted a motion for judgment on the pleadings brought by the defendants. The Court's order dismissed all claims against the outside auditors in their entirety, and also reduces the scope of the Securities Act claims against AIG and the defendants other than the outside auditors. The company accrued estimate of probable loss with respect to this litigation. On November 18, 2011, January 20, 2012, June 11, 2012, and August 8, 2012, four separate, though similar, securities actions were brought against AIG and certain directors and officers of AIG and AIGFP by the Kuwait Investment Authority, various Oppenheimer Funds, eight foreign funds and investment entities led by the British Coal Staff Superannuation Scheme, and Pacific Life Funds and Pacific Select Fund. Discovery in these actions is stayed until the earlier of (i) the Court deciding the motion for class certification pending in the Consolidated 2008 Securities Litigation following 30 days' notice from any party, (ii) the preliminary approval of any settlement in the Consolidated 2008 Securities Litigation, or (iii) June 28, 2013, unless the Court orders an extension. As of May 2, 2013, no discussions concerning potential damages have occurred and the plaintiffs have not formally specified an amount of alleged damages in their respective actions. AMERICAN INT'L: N.Y. ERISA Lawsuit Now in Discovery --------------------------------------------------- Discovery is ongoing in a purported class action brought under the Employee Retirement Income Security Act of 1974 against American International Group, Inc. in the U.S. District Court for the Southern District of New York. Between June 25, 2008, and November 25, 2008, AIG, certain directors and officers of AIG, and members of AIG's Retirement Board and Investment Committee were named as defendants in eight purported class action complaints asserting claims on behalf of participants in certain pension plans sponsored by AIG or its subsidiaries. The Court subsequently consolidated these eight actions as In re American International Group, Inc. ERISA Litigation II. On September 4, 2012, lead plaintiffs' counsel filed a second consolidated amended complaint. The action purports to be brought as a class action under the Employee Retirement Income Security Act of 1974, as amended (ERISA), on behalf of all participants in or beneficiaries of certain benefit plans of AIG and its subsidiaries that offered shares of AIG Common Stock. In the consolidated amended complaint, plaintiffs allege, among other things, that the defendants breached their fiduciary responsibilities to plan participants and their beneficiaries under ERISA, by continuing to offer the AIG Stock Fund as an investment option in the plans after it allegedly became imprudent to do so. The alleged ERISA violations relate to, among other things, the defendants' purported failure to monitor and/or disclose certain matters, including the Subprime Exposure Issues. On November 20, 2012, defendants filed motions to dismiss the consolidated amended complaint. As of May 2, 2013, plaintiffs have not formally specified an amount of alleged damages, discovery is ongoing, and the Court has not determined if a class action is appropriate or the size or scope of any class. AMERICAN INT'L: Canadian Securities Suit Remains Stayed ------------------------------------------------------- A purported securities class action filed in the Ontario Superior Court of Justice against American International Group, Inc. has been stayed pending further developments in the Consolidated 2008 Securities Litigation, AIG said on its May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On November 12, 2008, an application was filed in the Ontario Superior Court of Justice for leave to bring a purported class action against AIG, AIG Financial Products Corp. and AIG Trading Group Inc. and their respective subsidiaries (AIGFP), certain directors and officers of AIG and Joseph Cassano, the former Chief Executive Officer of AIGFP, pursuant to the Ontario Securities Act. If the Court grants the application, a class plaintiff will be permitted to file a statement of claim against defendants. The proposed statement of claim would assert a class period of March 16, 2006 through September 16, 2008 and would allege that during this period defendants made false and misleading statements and omissions in quarterly and annual reports and during oral presentations in violation of the Ontario Securities Act. On April 17, 2009, defendants filed a motion record in support of their motion to stay or dismiss for lack of jurisdiction and forum non conveniens. On July 12, 2010, the Court adjourned a hearing on the motion pending a decision by the Supreme Court of Canada in a pair of actions captioned Club Resorts Ltd. v. Van Breda 2012 SCC 17 (Van Breda). On April 18, 2012, the Supreme Court of Canada clarified the standard for determining jurisdiction over foreign and out-of- province defendants, such as AIG, by holding that a defendant must have some form of "actual," as opposed to a merely "virtual," presence in order to be deemed to be "doing business" in the jurisdiction. The Supreme Court of Canada also suggested that in future cases, defendants may contest jurisdiction even when they are found to be doing business in a Canadian jurisdiction if their business activities in the jurisdiction are unrelated to the subject matter of the litigation. The matter has been stayed pending further developments in the Consolidated 2008 Securities Litigation. In plaintiff's proposed statement of claim, plaintiff alleged general and special damages of $500 million and punitive damages of $50 million plus prejudgment interest or such other sums as the Court finds appropriate. As of May 2, 2013 the Court has not determined whether it has jurisdiction or granted plaintiff's application to file a statement of claim, no merits discovery has occurred and the action has been stayed. AMERICAN INT'L: Two Classes Certified in SICO Treasury Action ------------------------------------------------------------- On November 21, 2011, Starr International Company, Inc. (SICO) filed a complaint against the United States in the United States Court of Federal Claims (the Court of Federal Claims), bringing claims, both individually and on behalf of all others similarly situated and derivatively on behalf of AIG (the SICO Treasury Action). The Court of Federal Claims has granted SICO's motion for class certification of two classes: (1) persons and entities who held shares of American International Group, Inc. Common Stock on or before September 16, 2008 and who owned those shares on September 22, 2008; and (2) persons and entities who owned shares of AIG Common Stock on June 30, 2009 and were eligible to vote those shares at AIG's June 30, 2009 annual meeting of shareholders, according to AIG's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. The complaint challenges the government's assistance of AIG, pursuant to which AIG entered into a credit facility with the Federal Reserve Bank of New York (the FRBNY and such credit facility, the FRBNY Credit Facility) and the United States received an approximately 80 percent ownership in AIG. The complaint alleges that the interest rate imposed on AIG and the appropriation of approximately 80 percent of AIG's equity was discriminatory, unprecedented, and inconsistent with liquidity assistance offered by the government to other comparable firms at the time and violated the Equal Protection, Due Process, and Takings Clauses of the U.S. Constitution. On November 21, 2011, SICO also filed a second complaint in the Southern District of New York against the FRBNY bringing claims, both individually and on behalf of all others similarly situated and derivatively on behalf of AIG (the SICO New York Action). This complaint also challenges the government's assistance of AIG, pursuant to which AIG entered into the FRBNY Credit Facility and the United States received an approximately 80 percent ownership in AIG. The complaint alleges that the FRBNY owed fiduciary duties to AIG as our controlling shareholder, and that the FRBNY breached these fiduciary duties by "divert[ing] the rights and assets of AIG and its shareholders to itself and favored third parties" through transactions involving Maiden Lane III LLC (ML III), an entity controlled by the FRBNY, and by "participating in, and causing AIG's officers and directors to participate in, the evasion of AIG's existing Common Stock shareholders' right to approve the massive issuance of the new Common Shares required to complete the government's taking of a nearly 80 percent interest in the Common Stock of AIG." SICO also alleges that the "FRBNY has asserted that in exercising its control over, and acting on behalf of, AIG it did not act in an official, governmental capacity or at the direction of the United States," but that "[t]o the extent the proof at or prior to trial shows that the FRBNY did in fact act in a governmental capacity, or at the direction of the United States, the improper conduct . . . constitutes the discriminatory takings of the property and property rights of AIG without due process or just compensation." On January 31, 2012 and February 1, 2012, amended complaints were filed in the Court of Federal Claims and the Southern District of New York, respectively. In rulings dated July 2, 2012, and September 17, 2012, the Court of Federal Claims largely denied the United States' motion to dismiss in the SICO Treasury Action. Discovery is proceeding. On November 19, 2012, the Southern District of New York granted the FRBNY's motion to dismiss the SICO New York Action. On December 21, 2012, SICO filed a notice of appeal in the United States Court of Appeals for the Second Circuit. In both of the actions commenced by SICO, the only claims naming AIG as a party (nominal defendant) are derivative claims on behalf of AIG. On September 21, 2012, SICO made a pre-litigation demand on our Board demanding that we pursue the derivative claims in both actions or allow SICO to pursue the claims on our behalf. On January 9, 2013, the Board unanimously refused SICO's demand in its entirety and on January 23, 2013, counsel for the Board sent a letter to counsel for SICO describing the process by which our Board considered and refused SICO's demand and stating the reasons for our Board's determination. On March 11, 2013, SICO filed a second amended complaint in the SICO Treasury Action alleging that demand was excused and wrongfully refused. On April 5, 2013, AIG and the United States filed motions to dismiss such claims in SICO's second amended complaint. On March 11, 2013, the Court of Federal Claims in the SICO Treasury Action granted SICO's motion for class certification of two classes: (1) persons and entities who held shares of AIG Common Stock on or before September 16, 2008 and who owned those shares on September 22, 2008; and (2) persons and entities who owned shares of AIG Common Stock on June 30, 2009 and were eligible to vote those shares at AIG's June 30, 2009 annual meeting of shareholders. The United States has alleged, as an affirmative defense in its answer, that AIG is obligated to indemnify the FRBNY and its representatives, including the Federal Reserve Board of Governors and the United States (as the FRBNY's principal), for any recovery in the SICO Treasury Action, and seeks a contingent offset or recoupment for the value of net operating loss benefits the United States alleges that we received as a result of the government's assistance. The FRBNY has also requested indemnification under the FRBNY Credit Facility from AIG in connection with the SICO New York Action and from ML III under the Master Investment and Credit Agreement and the Amended and Restated Limited Liability Company Agreement of ML III. AMERICAN INT'L: $725MM Accord Reached in 2004 Securities Suit ------------------------------------------------------------- A $725 million settlement has been reached in the Consolidated 2004 Securities Litigation, according to American International Group Inc.'s May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. Beginning in October 2004, a number of putative securities fraud class action suits were filed in the Southern District of New York against AIG and consolidated as In re American International Group, Inc. Securities Litigation (the Consolidated 2004 Securities Litigation). Subsequently, a separate, though similar, securities fraud action was also brought against AIG by certain Florida pension funds. The lead plaintiff in the Consolidated 2004 Securities Litigation is a group of public retirement systems and pension funds benefiting Ohio state employees, suing on behalf of themselves and all purchasers of AIG's publicly traded securities between October 28, 1999 and April 1, 2005. The named defendants are AIG and a number of present and former AIG officers and directors, as well as C.V. Starr & Co., Inc. (Starr), SICO, General Reinsurance Corporation, and PricewaterhouseCoopers, LLP, among others. The lead plaintiff alleges, among other things, that AIG: (i) concealed that it engaged in anti-competitive conduct through alleged payment of contingent commissions to brokers and participation in illegal bid-rigging; (ii) concealed that it used "income smoothing" products and other techniques to inflate its earnings; (iii) concealed that it marketed and sold "income smoothing" insurance products to other companies; and (iv) misled investors about the scope of government investigations. In addition, the lead plaintiff alleges that Maurice R. Greenberg, AIG's former Chief Executive Officer, manipulated our stock price. The lead plaintiff asserts claims for violations of Sections 11 and 15 of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Sections 20(a) and 20A of the Exchange Act. On July 14, 2010, AIG approved the terms of a settlement (the Settlement) with lead plaintiffs. The Settlement is conditioned on, among other things, court approval and a minimum level of shareholder participation. Under the terms of the Settlement, if consummated, AIG would pay an aggregate of $725 million. Only two shareholders objected to the Settlement, and 25 shareholders claiming to hold less than 1.5 percent of AIG's outstanding shares at the end of the class period submitted timely and valid requests to opt out of the class. Of those 25 shareholders, seven are investment funds controlled by the same investment group, and that investment group is the only opt-out who held more than 1,000 shares at the end of the class period. By order dated February 2, 2012, the District Court granted lead plaintiffs' motion for final approval of the Settlement. AIG has fully funded the amount of the Settlement into an escrow account. On January 23, 2012, AIG and the Florida pension funds, who had brought a separate securities fraud action, executed a settlement agreement under which AIG paid $4 million. On February 17, 2012 and March 6, 2012, two objectors appealed the final approval of the Settlement. On September 27, 2012, the two objectors withdrew their appeals with prejudice. AMERICAN INT'L: NJ Court Allows Distribution of Settlement Fund --------------------------------------------------------------- The United States District Court for the District of New Jersey issued an order authorizing distribution of the settlement fund to the class members in the suit In re Insurance Brokerage Antitrust Litigation (the Commercial Complaint), according to American International Group, Inc.'s May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. Commencing in 2004, policyholders brought multiple federal antitrust and Racketeer Influenced and Corrupt Organizations Act (RICO) class actions in jurisdictions across the nation against insurers and brokers, including AIG and a number of its subsidiaries, alleging that the insurers and brokers engaged in one or more broad conspiracies to allocate customers, steer business, and rig bids. These actions, including 24 complaints filed in different federal courts naming AIG or an AIG subsidiary as a defendant, were consolidated by the judicial panel on multi-district litigation and transferred to the United States District Court for the District of New Jersey (District of New Jersey) for coordinated pretrial proceedings. The consolidated actions have proceeded in that Court in two parallel actions, In re Insurance Brokerage Antitrust Litigation (the Commercial Complaint) and In re Employee Benefits Insurance Brokerage Antitrust Litigation (the Employee Benefits Complaint, and, together with the Commercial Complaint, the Multi-District Litigation). The plaintiffs in the Commercial Complaint are a group of corporations, individuals and public entities that contracted with the broker defendants for the provision of insurance brokerage services for a variety of insurance needs. The broker defendants are alleged to have placed insurance coverage on the plaintiffs' behalf with a number of insurance companies named as defendants, including AIG subsidiaries. The Commercial Complaint also named various brokers and other insurers as defendants (three of which have since settled). The Commercial Complaint alleges that defendants engaged in a number of overlapping "broker-centered" conspiracies to allocate customers through the payment of contingent commissions to brokers and through purported "bid-rigging" practices. It also alleges that the insurer and broker defendants participated in a "global" conspiracy not to disclose to policyholders the payment of contingent commissions. Plaintiffs assert that the defendants violated the Sherman Antitrust Act, RICO, and the antitrust laws of 48 states and the District of Columbia, and are liable under common law breach of fiduciary duty and unjust enrichment theories. Plaintiffs seek treble damages plus interest and attorneys' fees as a result of the alleged RICO and Sherman Antitrust Act violations. The plaintiffs in the Employee Benefits Complaint are a group of individual employees and corporate and municipal employers alleging claims on behalf of two separate nationwide purported classes: an employee class and an employer class that acquired insurance products from the defendants from January 1, 1998 to December 31, 2004. The Employee Benefits Complaint names AIG as well as various other brokers and insurers, as defendants. The activities alleged in the Employee Benefits Complaint, with certain exceptions, track the allegations of customer allocation through steering and bid-rigging made in the Commercial Complaint. On August 16, 2010, the United States Court of Appeals for the Third Circuit (the Third Circuit) affirmed the dismissal of the Employee Benefits Complaint in its entirety, affirmed in part and vacated in part the District Court's dismissal of the Commercial Complaint, and remanded the case for further proceedings consistent with the opinion. On March 30, 2012, the District Court granted final approval of a settlement between AIG and certain other defendants on the one hand, and class plaintiffs on the other, which settled the claims asserted against those defendants in the Commercial Complaint. Pursuant to the settlement, AIG will pay approximately $7 million of a total aggregate settlement amount of approximately $37 million. On April 27, 2012, notices of appeal of the District Court order granting final approval were filed in the Third Circuit. As of December 5, 2012, the Third Circuit had dismissed all appeals from the District Court order granting final approval of the settlement. On February 15, 2013, the District Court issued an order authorizing distribution of the settlement fund to the class members. A number of complaints making allegations similar to those in the Multi-District Litigation have been filed against AIG and other defendants in state and federal courts around the country. The defendants have thus far been successful in having the federal actions transferred to the District of New Jersey and consolidated into the Multi-District Litigation. Two consolidated actions naming AIG defendants are still pending in the District of New Jersey. In the consolidated action The Heritage Corp. of South Florida v. National Union Fire Ins. Co. (Heritage), an individual plaintiff alleges damages "in excess of $75,000." Because the plaintiff has not actively pursued its claim since the settlement of the class action described in the preceding paragraph, AIG is unable to reasonably estimate the possible loss or range of losses, if any, arising from the Heritage litigation. The parties in Avery Dennison Corp. v. Marsh & McLennan Companies, Inc. (Avery), the other remaining consolidated action, entered into a settlement agreement on April 4, 2013. Finally, the AIG defendants have settled the four state court actions filed in Florida, New Jersey, Texas, and Kansas state courts, where plaintiffs had made similar allegations as those asserted in the Multi-District Litigation. AMERICAN INT'L: No Discovery Yet in Suit Over Caremark Deal ----------------------------------------------------------- General discovery is yet to occur in a suit over a settlement of class and derivative litigation involving Caremark Rx, Inc. (Caremark), according to American International Group's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. AIG and certain of its subsidiaries have been named defendants in two putative class actions in state court in Alabama that arise out of the 1999 settlement. The plaintiffs in the second-filed action intervened in the first- filed action, and the second-filed action was dismissed. An excess policy issued by a subsidiary of AIG with respect to the 1999 litigation was expressly stated to be without limit of liability. In the current actions, plaintiffs allege that the judge approving the 1999 settlement was misled as to the extent of available insurance coverage and would not have approved the settlement had he known of the existence and/or unlimited nature of the excess policy. They further allege that AIG, its subsidiaries, and Caremark are liable for fraud and suppression for misrepresenting and/or concealing the nature and extent of coverage. The complaints filed by the plaintiffs and the intervenors request compensatory damages for the 1999 class in the amount of $3.2 billion, plus punitive damages. AIG and its subsidiaries deny the allegations of fraud and suppression, assert that information concerning the excess policy was publicly disclosed months prior to the approval of the settlement, that the claims are barred by the statute of limitations, and that the statute cannot be tolled in light of the public disclosure of the excess coverage. The plaintiffs and intervenors, in turn, have asserted that the disclosure was insufficient to inform them of the nature of the coverage and did not start the running of the statute of limitations. On August 15, 2012, the trial court entered an order granting plaintiffs' motion for class certification. AIG and the other defendants have appealed that order to the Alabama Supreme Court, and the case in the trial court will be stayed until that appeal is resolved. General discovery has not commenced and AIG is unable to reasonably estimate the possible loss or range of losses, if any, arising from the litigation. AMERICAN INT'L: 7th Circuit Upholds RICO Suit Settlement -------------------------------------------------------- The United States Court of Appeals for the Seventh Circuit dismissed an appeal filed by Liberty Mutual against the approval of a proposed settlement and the certification of a settlement class in a suit filed against American International Group, Inc. over workers' compensation premium reporting, according to AIG's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On May 24, 2007, the National Council on Compensation Insurance (NCCI), on behalf of the participating members of the National Workers' Compensation Reinsurance Pool (the NWCRP), filed a lawsuit in the United States District Court for the Northern District of Illinois (the Northern District of Illinois) against the company with respect to the underpayment by AIG of its residual market assessments for workers' compensation insurance. The complaint alleged claims for violations of RICO, breach of contract, fraud and related state law claims arising out of our alleged underpayment of these assessments between 1970 and the present and sought damages purportedly in excess of $1 billion. On April 1, 2009, Safeco Insurance Company of America (Safeco) and Ohio Casualty Insurance Company (Ohio Casualty) filed a complaint in the Northern District of Illinois, on behalf of a purported class of all NWCRP participant members, against AIG and certain of its subsidiaries with respect to the underpayment by AIG of its residual market assessments for workers' compensation insurance. The complaint was styled as an "alternative complaint," should the Northern District of Illinois grant our motion to dismiss the NCCI lawsuit for lack of subject-matter jurisdiction, which motion to dismiss was ultimately granted on August 23, 2009. The allegations in the class action complaint are substantially similar to those filed by the NWCRP. On February 28, 2012, the Northern District of Illinois entered a final order and judgment approving a class action settlement between us and a group of intervening plaintiffs, made up of seven participating members of the NWCRP, which would require AIG to pay $450 million to satisfy all liabilities to the class members arising out of the workers' compensation premium reporting issues, a portion of which would be funded out of the remaining amount held in the Workers' Compensation Fund. Liberty Mutual filed papers in opposition to approval of the proposed settlement and in opposition to certification of a settlement class, in which it alleged our actual exposure, should the class action continue through judgment, to be in excess of $3 billion. AIG disputes this allegation. Liberty Mutual and its subsidiaries Safeco and Ohio Casualty subsequently appealed the Northern District of Illinois' final order and judgment to the United States Court of Appeals for the Seventh Circuit (the Seventh Circuit). On January 10, 2013, AIG and Liberty Mutual entered into a settlement under which Liberty Mutual, Safeco and Ohio Casualty agreed voluntarily to withdraw their appeals, and AIG, the Liberty Mutual parties and the settlement class plaintiffs submitted an agreed stipulation of dismissal to the Seventh Circuit. On March 25, 2013, the Seventh Circuit dismissed the appeal. The $450 million settlement amount, which is currently held in escrow pending administration of the class-action settlement, was funded in part from the approximately $191 million remaining in the Workers' Compensation Fund. As of March 31, 2013, the company had an accrued liability equal to the amounts payable under the settlement. AMYRIS INC: Lied Over Biofene Commercial Production, Suit Says -------------------------------------------------------------- Courthouse News Service reports that Amyris and its CEO inflated stock prices by lying about their ability to produce a renewable chemical called Biofene on a commercial scale, a class claims. APPLE INC: Faces Class Action Over Defective iPhone4 Power Button ----------------------------------------------------------------- Courthouse News Service reports that that the power button on Apple's iPhone4 fails just after the 1-year warranty expires, a class action claims in Federal Court. APPLE INC: Nov. 7 Hearing in Privacy Class Suit ----------------------------------------------- Philip A. Janquart at Courthouse News Service reports that Apple Inc. this month filed a motion for summary judgment in a privacy class action lawsuit. The suit claims the company accesses and tracks personal information through third-party iPhone applications without user permission. The federal court in San Jose dismissed the plaintiffs' first consolidated complaint on Sept. 20, 2011, holding they had "not identified a concrete harm from the alleged collection and tracking of their personal information sufficient to create injury in fact," and had failed to "allege injury in fact to themselves," Apple's motion says. On June 12, 2012, the court dismissed all but two of the claims in the plaintiffs' first amended complaint. However, with respect to the question of Article III standing, held the "Plaintiffs [had] addressed the concerns indentified in the Court's September 20 order and [had] articulated a particularized harm as to themselves" by alleging 'which apps they downloaded that accessed or tracked their personal information' and 'what harm resulted from the access or tracking of their personal information,'" Apple's continues. "With respect to the UCL (Unfair Competition Law) and CLRA (Consumer Legal Remedies Act) claims against Apple, the court noted that plaintiffs' allegation 'may prove false,' but 'at this stage . . . [were] sufficient to state a claim," the motion states. Apple, however, argues, in part, that the plaintiffs admit suffering "no harm whatsoever," that they have not lost money or property and that they "still have no idea whether their personal information or location data was actually tracked. In addition, the company says a forensic analysis of plaintiffs' iPhones -- and the testimony of each of plaintiffs experts -- confirmed that there is no evidence whatsoever that any of plaintiffs personal information or location data was in fact transmitted to the third-party companies or Apple." Apple added that in order to download an application, Apple device users must create an Apple ID and agree to the App Store Terms and Conditions, which includes its privacy policy. "Apple's Privacy Policy clearly states that it applies solely to data that Apple itself collects, uses, discloses, transfers and stores -- and not to data collected by third parties, such as apps. The policy further discloses that apps may collect data from users' devices." Apple says the plaintiffs lack standing under Article III of the U.S. Constitution and under the UCL, and have no evidence of any material misrepresentations or nondisclosures. In closing, Apple states in its motion that, "This lawsuit never should have been brought. There was never a factual basis for it, never a law broken, and never a person harmed. Discovery of the plaintiffs and their phones has definitively established that the facts plaintiffs invented to circumvent the court's Sept. 20, 2011 order have no bases." A hearing is set for Nov. 7, 2013 before U.S. District Judge Lucy H. Koh. S. Ashlie Beringer, Joshua Jessen and Jessica Ou, of Gibson Dunn & Crutcher in Palo Alto, represent the plaintiffs. APPLEBEE'S: Faces Overtime Class Action --------------------------------------- Courthouse News Service reports that Applebee's stiffs waitresses and waiters for overtime, a class action claims in Federal Court. ASIAINFOLINKAGE: Being Sold for Too Little to CITIC, Suit Claims ---------------------------------------------------------------- Courthouse News Service reports that insiders at AsiaInfoLinkage are selling the company too cheaply through an unfair process to a consortium led by CITIC Capital Holdings, for $12 a share or $890 million, shareholders claim in Chancery Court. AT&T: Judge Approves Labor Case Settlement ------------------------------------------ Elizabeth Warmerdam at Courthouse News Service reports that a federal judge approved a settlement in a labor case against AT&T for alleged failure to pay overtime or provide meal and rest breaks. Cathy Birdsong originally brought the complaint as a class action in Alameda County Superior Court, and AT&T removed the case to federal court in December 2012. The complaint said AT&T misclassified Birdsong and other California business manager employees as "exempt" under California labor law, thus denying them overtime compensation and other benefits. Birdsong said most of her job duties consisted of work that did not trigger exempt status. U.S. District Judge Thelton Henderson dismissed the case with leave to amend in March after noting that Birdsong had signed a general release and waiver of claims when she was fired in exchange for a severance allowance. The release provided that Birdsong would not participate in any class action against AT&T or file a claim against AT&T based on her employment or the termination of her employment. Because of the release, Birdsong was prohibited from bringing all of her claims under state law against AT&T. The only claim Henderson would allow Birdsong to bring in an amended complaint was her individual cause of action for misclassification under the Fair Labor Standards Act (FLSA). Instead of filing a new complaint, Birdsong began negotiating this claim with AT&T. Henderson approved the parties' settlement on May 13, 2013, and dismissed the case with prejudice, finding that the "compromise of plaintiff Cathy Birdsong's individual overtime, liquidated damages and attorneys' fees claims under the Fair Labor Standards Act (FLSA) is a fair and reasonable compromise of FLSA claims as to which there are bona fide disputes regarding liability." The terms of the settlement were not released. ATLAS AIR: Polar Air Cargo Named as Defendant in Antitrust Suit --------------------------------------------------------------- The U.S. District Court for the Eastern District of New York allowed plaintiffs in an antitrust suit to add Polar Air Cargo Worldwide, Inc. additional defendant, which the court granted on April 13, according to Atlas Air Worldwide Holdings, Inc.'s May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2013. In 2010, Old Polar entered into a plea agreement with the United States Department of Justice relating to the previously disclosed DOJ investigation concerning alleged manipulation by cargo carriers of fuel surcharges and other rate components for air cargo services. As a result of the DOJ Investigation, the Company and Polar Air Cargo LLC (Old Polar) have been named defendants, along with a number of other cargo carriers, in several class actions in the United States arising from allegations about the pricing practices of a number of air cargo carriers that have now been consolidated for pre-trial purposes in the United States District Court for the Eastern District of New York. The consolidated complaint alleges, among other things, that the defendants, including the Company and Old Polar, manipulated the market price for air cargo services sold domestically and abroad through the use of surcharges, in violation of United States, state, and European Union antitrust laws. The suit seeks treble damages and injunctive relief. In 2007, the Company and Old Polar commenced an adversary proceeding in bankruptcy court against each of the plaintiffs in this class action litigation seeking to enjoin the plaintiffs from prosecuting claims against the Company and Old Polar that arose prior to 2004, the date on which the Company and Old Polar emerged from bankruptcy. In 2007, the plaintiffs consented to the injunctive relief requested and the bankruptcy court entered an order enjoining plaintiffs from prosecuting Company claims arising prior to 2004. The court in the antitrust class actions has heard and decided a number of procedural motions. Among those was the plaintiffs' motion to join Polar Air Cargo Worldwide, Inc. as an additional defendant, which the court granted on April 13, 2011. There was substantial pre-trial written discovery and document production, and a number of depositions were taken. The case is currently in the class certification phase, with motions and responses being submitted and additional depositions occurring. We are unable to reasonably predict the court's ruling on the motion or the ultimate outcome of the litigation. ATP OIL: Scott+Scott Law Firm Files Class Action in Louisiana ------------------------------------------------------------- Scott+Scott, Attorneys at Law, LLP on May 24 filed a class action complaint on behalf of those who purchased or otherwise acquired ATP Oil & Gas Corp. 11.875% Senior Second Lien Exchange Notes pursuant to the Company's December 16, 2010 Exchange of the Notes. The action, which seeks remedies under the Securities Act of 1933, is pending in the United States District Court for the Eastern District of Louisiana. Investors who purchased or otherwise acquired ATP 11.875% Senior Second Lien Exchange Notes pursuant and/or traceable to the Exchange and wish to serve as a lead plaintiff in the action must move the Court no later than July 23, 2013. Any member of the investor class may move the Court to serve as lead plaintiff through counsel of its choice or may choose to do nothing and remain an absent class member. If you wish to discuss this action or have questions concerning this notice or your rights, please contact Scott+Scott at scottlaw@scott-scott.com or 800) 404-7770, (860) 537-5537) or visit the Scott+Scott website for more information: http://www.scott-scott.com There is no cost or fee to you. ATP is engaged in the acquisition, development, and production of oil and natural gas properties. The Company seeks to acquire and develop properties with proven undeveloped reserves in the Gulf of Mexico and North Sea that are economically attractive, but not strategic to, major or large independent exploration-oriented oil and gas companies. ATP also has licenses for exploration in the Mediterranean Sea. On August 17, 2012, the Company announced that it was filing for Chapter 11 bankruptcy. The complaint alleges that the defendants misrepresented or failed to disclose material adverse facts in their publicly filed Exchange materials. Specifically, ATP made false and/or misleading statements and/or failed to disclose material adverse facts concerning: (1) the impact that two successive United States Department of the Interior moratoria for deepwater drilling operations in the Gulf of Mexico had on the Company's operations and revenues; and (2) the Company's breach of certain credit agreements by engaging in "disguised financing" arrangements that were designed to evade the requirements of such credit agreements. As of the date the securities class action was filed, ATP 11.875% Senior Second Lien Exchange Notes were trading at approximately four cents ($0.04) on the dollar. Scott+Scott has significant experience in prosecuting major securities, antitrust, and employee retirement plan actions throughout the United States. The firm represents pension funds, foundations, individuals, and other entities worldwide. About ATP Oil Houston, Tex.-based ATP Oil & Gas Corporation is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Motley Rice LLC and Fayard & Honeycutt, APC serve as special counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. ATP disclosed assets of $3.6 billion and $3.5 billion of liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan where Credit Suisse AG serves as agent. There is $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent. ATP's other debt includes $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. Trade suppliers have claims for $147 million, ATP said in a court filing. An official committee of unsecured creditors has been appointed in the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley & McCloy, in New York, represents the Creditors Committee as counsel. A 7-member panel of equity security holders has also been appointed in the case. Kyung S. Lee, Esq., and Charles M. Rubio, Esq., of Diamond McCarthy LLP, in Houston, Texas, serve as counsel to the Equity Committee. BARCLAYS PLC: Judge Tosses Securities Fraud Class Suit Over LIBOR ----------------------------------------------------------------- David Bario, writing for The Litigation Daily, reports that less than two months after a judge gutted sprawling antitrust litigation over alleged manipulation of global benchmark interest rates, shareholders have struck out in a related securities class action against Barclays plc. On May 13 U.S. District Judge Shira Scheindlin in Manhattan dismissed a securities fraud class action that plaintiffs lawyers at Robins Geller Rudman & Dowd and Wolf Haldenstein Adler Freeman & Herz brought against Barclays last July, after the bank agreed to pay U.S. and European authorities $453 million for manipulating the London Interbank Offered Rate, or LIBOR. The plaintiffs alleged that Barclays and its executives duped investors in Barclays American Depositary Shares by concealing the bank's part in the LIBOR scandal. Judge Scheindlin, however, concluded that the shareholders couldn't show that Barclays intended to deceive them or that the bank's alleged misrepresentations caused their losses. The decision is a victory for a trio of defense firms: Boies, Schiller & Flexner and Sullivan & Cromwell represent Barclays, former CEO John Varley, and two other bank execs. Dechert represents former CEO Robert Diamond. Lead partners on the case include Boies Schiller's Jonathan Schiller, S&C's David Braff, and Andrew Levander of Dechert. BAYER AG: Ontario Court Certifies Yaz & Yasmin Class Action ----------------------------------------------------------- The birth control safety advocates at DrugRisks.com are announcing new information on the site for women using the oral contraceptives Yaz and Yasmin. A court in Canada has certified a class action for patients alleging blood clot injuries, as settlements continue in the United States. DrugRisks was created to increase the safety of patients taking popular prescription drugs like Yaz and Yasmin by providing the latest warnings, recalls, studies and legal news. Visitors can discover of others are experiencing similar side effects and decide if they need legal advice. The resource center has added warnings from British Medical Journal and FDA that birth control pills containing drospirenone, like Yaz and Yasmin, can increase the risk of blood clots, DVT and pulmonary embolism by as much as 74%. DrugRisks also noted that, with a growing number of patients in the U.S. filing a Yaz lawsuit alleging blood clot injuries, cases were consolidated to a special federal Multi-District Litigation court in Illinois (Yasmin and Yaz (Drospirenone) Marketing, Sales Practices and Products Liability Litigation (MDL No. 2100, Southern District Illinois). Bayer's latest annual financial report shows the company has spent nearly $1 billion to settle around 4,800 claims alleging Yaz blood clots, and will continue to evaluate new claims for settlement on a case-by-case basis. Now, DrugRisks has learned that the Honourable Justice Crane of the Ontario Superior Court of Justice certified a Yaz and Yasmin class action on April 15, 2013. Lawyers are still helping those affected in the U.S. file a claim. Anyone who suffered a blood clot, DVT, stroke or pulmonary embolism after taking Yaz or Yasmin is urged to contact the DrugRisks Center or speak with a lawyer about their legal options. Due to the specialized nature of federal MDL drug injury cases, DrugRisks cautions that patients should seek a lawyer with experience in this litigation, and only recommends lawyers and law firms who have already settled Yaz lawsuits. Visit http://www.DrugRisks.comfor more information on the research, side effects and Yaz litigation news related to the birth control, or to speak with a lawyer. BEAZER HOMES: Settles Lawsuit Over "Defective" Drywall ------------------------------------------------------ Beazer Homes Corp. is participating in a global class settlement of a suit filed by homeowners over alleged defective drywall, according to the May 2, 2013, Form 10-Q filing of Beazer Homes USA, Inc. (Company) with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On June 3, 2009, Beazer Homes Corp., a wholly owned subsidiary of the Company, was named as a defendant in a purported class action lawsuit in the Circuit Court for Lee County, State of Florida, filed by Bryson and Kimberly Royal, the owners of one of our homes in our Magnolia Lakes community in Ft. Myers, Florida. The complaint names the Company and certain distributors and suppliers of drywall and was on behalf of the named plaintiffs and other similarly situated owners of homes in Magnolia Lakes or alternatively in the State of Florida. The plaintiffs allege that the Company built their homes with defective drywall, manufactured in China, that contains sulfur compounds that allegedly corrode certain metals and that are allegedly capable of harming the health of individuals. Plaintiffs allege physical and economic damages and seek legal and equitable relief, medical monitoring and attorney's fees. This case has been transferred to the Eastern District of Louisiana pursuant to an order from the United States Judicial Panel on Multidistrict Litigation. In addition, the Company has been named in other multi-plaintiff complaints filed in the multidistrict litigation and individual state court actions. The company believes that the claims asserted in these actions are governed by home warranties or are without merit. The Company has offered to repair all of these homes pursuant to a repair protocol that has been adopted by the multidistrict litigation court, including those homes involved in litigation. To date, the owners of all but two of the affected homes have accepted the Company's offer to repair. Furthermore, the Company has agreed to participate in a global class settlement with the plaintiff class counsel and numerous other defendants in the multidistrict litigation, which was approved by the Court on February 13, 2013. The class action settlement requires Beazer to make a settlement payment that it said is not material to its consolidated financial position or results of operations, and resolves all claims, including future claims, against Beazer related to Chinese drywall. The only exception would have been any claims by persons or entities that opted out of the settlement, but there were no opt outs by the Court's deadline. The Company also continues to pursue recovery against responsible subcontractors, drywall suppliers and drywall manufacturers for its repair costs. As of March 31, 2013, the company said it has recorded an immaterial amount related to our expected liability under the settlement. BMC SOFTWARE: Being Sold for Too Little, Suit Claims ---------------------------------------------------- Courthouse News Service reports that BMC Software is selling itself to Bain Capital Partners too cheaply through an unfair process, for $46.25 a share or $6 billion, shareholders claim in a class action in Chancery Court. BMW AG: Faces Class Action Over Premature Cracking in Z4 Cars ------------------------------------------------------------- Courthouse News Service reports that Alloy rims on BMW's Z4 cars crack prematurely in the 2007-2012 models, a class action claims in Federal Court. CAPITAL ONE: Faces Class Action Over Defrauding Customers --------------------------------------------------------- Courthouse News Service reports that Capital One Bank defrauds customers by claiming its credit cards co-branded with (nonparty) Best Buy have no annual fee, a class action claims in Federal Court. CASH STORE: Corrects Accrual for BC Class Action Settlement Costs ----------------------------------------------------------------- The Cash Store Financial Services Inc. on May 13 disclosed that it will restate the previously issued consolidated financial statements for the years ended September 30, 2012; September 30, 2011 and the 15-month period ended September 30, 2010. The Company will also restate the December 31, 2011; March 31, 2012; June 30, 2012 and December 31, 2012 unaudited interim consolidated financial statements. As disclosed by the Company on May 8, 2013, the release of the financial statements for the three and six month periods ended March 31, 2013 was delayed due to a recently identified increase to the British Columbia class action lawsuit settlement accrual which resulted in an increase in expense of $8.2 million. The Company has since determined that the adjustment was caused by a misunderstanding of the settlement terms and conditions which resulted in the application of the incorrect accounting principle to report the liability as at September 30, 2010. The correction of this error is not related to the Special Investigation initiated by the Special Committee of the Board. The correction of the error effective from September 30, 2010 will result in the maximum exposure of $18.8 million being expensed. The maximum amount of the potential liability was first disclosed in the notes to the financial statements in March 2010, and disclosed thereafter in the annual and quarterly financial statements. The maximum potential exposure consists of approximately $6.2 million in cash, which was paid to the Settlement Administrator in 2011, approximately $6.2 million in credit vouchers, and $6.4 million in legal fees, which was paid to the plaintiff's counsel in 2010. After cash and credit vouchers have been disbursed by the Settlement Administrator, the remaining accrual for unclaimed credit vouchers as of March 31, 2013 is approximately $5.3 million. The Company will revise its accrual for unclaimed cash and vouchers to the extent that the applicable de-recognition criteria have been met which is expected to occur in late fiscal 2014. The correction had no impact on total revenues, operating margin, or cash position and had no impact on compliance with debt covenants in any periods presented. To address these matters, the Company expects to file amendments to its previously issued financial statements and MD&A for the years ended September 30, 2012; September 30, 2011; the fifteen- month period ended September 30, 2010 as well as the December 31, 2011; March 31, 2012; June 30, 2012 and December 31, 2012 interim periods. These financial statements and MD&A should not be relied upon until such time as the Company files its restated financial statements. The decision to restate prior financial statements and MD&A based on these matters was made by the Company's Board of Directors, upon the recommendation of management and the Audit Committee. In connection with this matter, the Company has re-evaluated its conclusions regarding the effectiveness of its internal control over financial reporting for the affected periods and determined that a material weakness existed. As a result of the material weakness, the Company has now concluded that such controls were ineffective. Accordingly, the Company will restate its disclosures to include the identification of a material weakness related to the restatements. CATHOLIC HEALTH: Faces Suit Over Underfunding Retirement Plans -------------------------------------------------------------- Courthouse News Service reports that Catholic Health Initiatives underfunded its employee retirement plans by $892 by falsely claiming "church plan" exemptions from ERISA, workers say in a federal class action. CHICAGO: Face Class Action for Shutting Down 53 Elem. Schools ------------------------------------------------------------- Jack Bouboushian at Courthouse News Service reports that Chicago's plan to shut down 53 elementary schools will "needlessly uproot, transfer, and destabilize" black and special ed children, parents say in two federal class actions. Lead plaintiff Mandi Swan sued Chicago and its Board of Education in one complaint. Lead plaintiff Sherise McDaniel sued the same defendants in the other lawsuit. Also sued in both complaints is Chicago Schools CEO Barbara Byrd Bennett, in her official capacity. In March this year, Byrd-Bennett proposed closing 53 elementary schools to save money. The plan will go to the School Board for final approval on May 22. McDaniel claims the school closings are racially biased and will increase the racial segregation of Chicago's schools. "The impact on African American children is in stark contrast to the impact on white children - who have been almost universally insulated from the negative educational consequences of school closings. The 53 elementary schools selected by the CEO for closing have a combined enrollment of 125 white students out of a total enrollment of 16,059 students - less than 1 percent," McDaniel and other mothers say in their complaint. "Despite repeated false claims that the closings have some education-related purpose, defendants have for more than a decade transferred African American children to schools that are equally failing or worse, and are equally or more segregated. Since 2001, defendants have carried out school closings so as to contribute to a form of racial and economic segregation, as destructive as older forms of intentional racial segregation." In the second class action, Swan and other mothers and children claim that the two months between the proposal and its implementation "does not permit a timely and orderly process either for the proper review and revision of the individualized education programs (IEPs) for the plaintiff children and over 5,000 other children in special education programs or for the extra services and counseling such children require to make the difficult transition to unfamiliar schools and unfamiliar teachers and students." The complaint continues: "By putting off their decision on the closings to the eleventh hour, or the very end of the school year -- for the largest closing of public schools in American history -- the defendants place the plaintiff children and other children in special education at far greater risk than their non-disabled peers. The late date makes it impossible to conduct the closings without significant disruption to the programs in which these children participate and without adequate provision for the special safety risks faced by children with disabilities. In violation of federal law, this late, ill-timed, and ill-prepared program for the closing of 53 elementary schools will have a discriminatory impact upon the plaintiff children and other children with disabilities, compared to their non-disabled peers." The mothers add: "Defendants still have not made known whether the special education teachers who know the plaintiff children and other children with IEPs and who know and are familiar to them will be reassigned to the receiving schools. "There is no other information at this time as to who will teach these children. "There is no information as to whether these children will be placed in larger classes. "There is no information or specific plans about the supportive services the children will receive to make the transition to the receiving schools. "There is no information about the specific safety plans for these children who are at special risk because of their disabilities. "As a result, parents like the plaintiffs cannot make informed decisions as to where to place their children, and have inadequate time to enroll the children in different schools." McDaniel seeks a permanent injunction against racial discrimination. Swan seeks a temporary injunction for at least a year, until "defendants can assure an orderly process of transition." Both proposed classes are represented by Thomas Geoghegan, with Despres, Schwartz & Geoghegan. CHURCH & DWIGHT: Motions to Junk Nevada Suit Over Deodorant Ad -------------------------------------------------------------- Church & Dwight Co., Inc. filed a motion to dismiss an amended complaint over its alleged deceptive and unlawful business practices with respect to the advertising, marketing and sales of ARM & HAMMER ESSENTIALS Natural Deodorant, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. The Company has been named as a defendant in a purported class action lawsuit alleging unfair, deceptive and unlawful business practices with respect to the advertising, marketing and sales of ARM & HAMMER ESSENTIALS Natural Deodorant. Specifically, on March 9, 2012, Plaintiffs Stephen Trewin and Joseph Farhatt, on behalf of themselves and all others similarly situated, filed a complaint against the Company in the U.S. District Court for the District of New Jersey alleging violations of the New Jersey Consumer Fraud Act, violations of the Missouri Merchandising Practices Act and breach of implied warranty. The original complaint alleges, among other things, that the Company uses a marketing and advertising campaign that is centered around the claim that the ARM & HAMMER ESSENTIALS Natural Deodorant is a "natural" product that contains "natural" ingredients and provides "natural" protection. The complaint alleges the advertising and marketing campaign is false and misleading because the product contains artificial and synthetic ingredients. Among other things, the complaint seeks an order certifying the case as a class action, appointing Plaintiffs as class representatives and appointing Plaintiffs' counsel to represent the class. The complaint also seeks restitution and disgorgement of all amounts obtained by the Company as a result of the alleged misconduct, compensatory, actual, statutory and other unspecified damages allegedly suffered by Plaintiffs and the purported class, up to treble damages for alleged violation of the New Jersey Consumer Fraud Act; punitive damages for alleged violations of the Missouri Merchandising Practices Act, an order requiring the Company to immediately cease its alleged wrongful conduct, an order enjoining the Company from continuing the conduct and acts identified in the complaint, an order requiring the Company to engage in a corrective notice campaign, an order requiring the Company to pay to Plaintiffs and all members of the purported class the amounts paid for ARM & HAMMER ESSENTIALS Natural Deodorant, statutory prejudgment and post-judgment interest, and reasonable attorneys' fees and costs. On May 14, 2012, the Company filed a motion to dismiss the original complaint. On December 10, 2012, the Court issued an order granting the Company's motion and dismissed the original complaint without prejudice. On January 7, 2013, Plaintiffs filed an amended complaint seeking relief similar to that sought in the original complaint, excluding the breach of implied warranty claim. The Company has filed a motion to dismiss the amended complaint, which is currently pending before the Court. CIGNA CORPORATION: Still Faces Amara ERISA Violation Suit --------------------------------------------------------- Cigna Corporation continues to face a lawsuit known as "Amara cash balance pension plan litigation" before the United States District Court for the District of Connecticut, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On December 18, 2001, Janice Amara filed a class action lawsuit, captioned Janice C. Amara, Gisela R. Broderick, Annette S. Glanz, individually and on behalf of all others similarly situated v. Cigna Corporation and Cigna Pension Plan, in the United States District Court for the District of Connecticut against Cigna Corporation and the Cigna Pension Plan on behalf of herself and other similarly situated participants in the Cigna Pension Plan affected by the 1998 conversion to a cash balance formula. The plaintiffs allege various ERISA violations including, among other things, that the Plan's cash balance formula discriminates against older employees; the conversion resulted in a wear away period (when the pre-conversion accrued benefit exceeded the post- conversion benefit); and these conditions are not adequately disclosed in the Plan. In 2008, the court issued a decision finding in favor of Cigna Corporation and the Cigna Pension Plan on the age discrimination and wear away claims. However, the court found in favor of the plaintiffs on many aspects of the disclosure claims and ordered an enhanced level of benefits from the existing cash balance formula for the majority of the class, requiring class members to receive their frozen benefits under the pre-conversion Cigna Pension Plan and their post-1997 accrued benefits under the post-conversion Cigna Pension Plan. The court also ordered, among other things, pre-judgment and post-judgment interest. Both parties appealed the court's decisions to the United States Court of Appeals for the Second Circuit that issued a decision on October 6, 2009 affirming the District Court's judgment and order on all issues. On January 4, 2010, both parties filed separate petitions for a writ of certiorari to the United States Supreme Court. Cigna's petition was granted, and on May 16, 2011, the Supreme Court issued its Opinion in which it reversed the lower courts' decisions and remanded the case to the trial judge for reconsideration of the remedy. The Court unanimously agreed with the Company's position that the lower courts erred in granting a remedy for an inaccurate plan description under an ERISA provision that allows only recovery of plan benefits. However, the decision identified possible avenues of "appropriate equitable relief" that plaintiffs may pursue as an alternative remedy. The case was returned to the trial court and hearings took place on December 9, 2011 and March 29-30, 2012. Over the summer, the trial judge passed away after a long illness and the case was re-assigned. On December 20, 2012, the new trial judge issued a decision awarding equitable relief to the class. The court's order requires the Company to reform the pension plan to provide a substantially identical remedy to that ordered by the first trial judge in 2008. Both parties appealed the order and the judge stayed implementation of the order pending resolution of the appeals. In light of the re-affirmed remedy ordered by the District Court, the Company was required to re-evaluate its reserve for this case. Due to the current economic environment of low interest rates that have a significant impact on the valuation of potential future pension benefits, the Company was required to increase its reserve for this matter in the fourth quarter of 2012. The Company will continue to vigorously defend its position in this case. CIGNA CORPORATION: Plaintiffs Can't Appeal Denial of Class Cert. ---------------------------------------------------------------- The United States District Court for the District of New Jersey denied a petition by plaintiffs in a suit against Cigna Corporation over its use of data provided by Ingenix, Inc., to appeal the denial of a class certification in the case, according to Cigna's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On February 13, 2008, State of New York Attorney General Andrew M. Cuomo announced an industry-wide investigation into the use of data provided by Ingenix, Inc., a subsidiary of UnitedHealthcare, used to calculate payments for services provided by out-of-network providers. The Company received four subpoenas from the New York Attorney General's office in connection with this investigation and responded appropriately. On February 17, 2009, the Company entered into an Assurance of Discontinuance resolving the investigation. In connection with the industry-wide resolution, the Company contributed $10 million to the establishment of a new non-profit company that now compiles and provides the data formerly provided by Ingenix. The Company was named as a defendant in a number of putative nationwide class actions asserting that due to the use of data from Ingenix, Inc., the Company improperly underpaid claims, an industry-wide issue. All of the class actions were consolidated into Franco v. Connecticut General Life Insurance Company et al., which is pending in the United States District Court for the District of New Jersey. The consolidated amended complaint, filed on August 7, 2009, asserts claims under ERISA, the RICO statute, the Sherman Antitrust Act and New Jersey state law on behalf of subscribers, health care providers and various medical associations. On September 23, 2011, the court granted in part and denied in part the Company's motion to dismiss the consolidated amended complaint. The court dismissed all claims by the health care provider and medical association plaintiffs for lack of standing to sue, and as a result the case proceeded only on behalf of subscribers. In addition, the court dismissed all of the antitrust claims, the ERISA claims based on disclosure and the New Jersey state law claims. The court did not dismiss the ERISA claims for benefits and claims under the RICO statute. Plaintiffs filed a motion to certify a nationwide class of subscriber plaintiffs on December 19, 2011, that was denied on January 16, 2013. Plaintiffs petitioned for an immediate appeal of the order denying class certification, but their petition was denied by the United States Court of Appeals for the Third Circuit on March 14, 2013, meaning that plaintiffs cannot appeal the denial of class certification until there is a final judgment in the case. As a result, the case is proceeding in the District Court on behalf of the named plaintiffs only. DRIL-QUIP INC: Continues to Face Suit Over Deepwater Horizon ------------------------------------------------------------ Dril-Quip, Inc. continues to face legal actions in relation to the Deepwater Horizon Incident, according to its May 3, 2013, Form 10- Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On April 22, 2010, a deepwater U.S. Gulf of Mexico drilling rig known as the Deepwater Horizon, operated by BP Exploration & Production, Inc. ("BP"), sank after an explosion and fire that began on April 20, 2010. The Company's wellhead and certain of its other equipment were in use on the Deepwater Horizon at the time of the incident. The Company was named in both class action and other lawsuits arising from the Deepwater Horizon incident that were consolidated in the multi-district proceeding In Re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010 ("MDL Proceeding"). On January 20, 2012, the judge presiding over the MDL Proceeding issued an order that granted the Company's Motion for Summary Judgment and dismissed all claims asserted against the Company in those proceedings with prejudice. On April 9, 2012, the judge issued an order granting a final judgment in favor of the Company with respect to the court's prior order that granted the Company's Motion for Summary Judgment. One of the lawsuits against the Company consolidated in the MDL Proceeding was a personal injury lawsuit initially filed in a Texas state court for which the plaintiff has filed a motion to remand the lawsuit back to the Texas state court. If that lawsuit is remanded to the Texas state court, the Company intends to vigorously defend that lawsuit and does not believe it will have a material impact. Accordingly, no liability has been accrued in conjunction with this matter. ECOLAB INC: Continues to Face, Settle Wage Hour Claims ------------------------------------------------------ Ecolab Inc. continues to face suits over wage hour claims, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. The company is a defendant in six pending wage hour lawsuits claiming violations of the Fair Labor Standards Act (FLSA) or a similar state law. Of the six suits, two have been certified for class action status, three seek class certification, and one has reached a tentative settlement. Doug Ladore v. Ecolab Inc., et al., United States District Court for the Central District of California, case no. CV 11-9386 GAF (FMOx), is a wage hour class action brought on behalf of California Pest Elimination employees. The case has been certified for class treatment, and on January 22, 2013, the plaintiffs' motion for summary judgment was granted and the court found that the class of employees was entitled to overtime pay. On February 22, 2013, pursuant to court-ordered mediation, the company reached a preliminary settlement with the plaintiffs, which remains subject to court approval. The company has established an accrual for the settlement amount, which is not material to its operations or financial position. A second suit, a California state action, has been certified for class treatment of California Institutional employees. Three of the other wage hour suits seek certification of a state class of certain Institutional or Pest Elimination division associates. The matter involving the Institutional employees also seeks nationwide certification of alleged FLSA violations. In the matter involving Pest Elimination employees, the Court has dismissed the alleged FLSA violation. One suit also seeks certification of a purported class of terminated California employees of any business for alleged violation of statutory obligations regarding payment of accrued vacation upon termination. Tentative settlement, subject to Court approval, has been reached in a matter involving a California class of technicians in the company's Equipment Care subsidiary (formerly GCS). Final settlement has been reached in an additional wage hour matter involving a national class of certain independent contractors in the company's Other segment (formerly U.S. Other Services) and the proceeds distributed. The class in each of these settlements was certified for settlement purposes only. The settlement amounts are not material to the company's operations or financial position. ECOLAB INC: Nalco Still Faces Claims Over COREXIT Dispersant ------------------------------------------------------------ Nalco Holding Company, with which Ecolab Inc. merged in 2012, faces remaining claims over alleged negligence relating to the use of our COREXIT dispersant, Ecolab disclosed in its May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In June, July and August 2010, in April 2011 and in April 2012, Nalco Company was named, along with other unaffiliated defendants, in nine putative class action complaints filed in either the United States District Court for the Eastern District of Louisiana (Parker, et al. v. Nalco Company, et al., Civil Action No. 2:10- cv-01749-CJB-SS; Harris, et al. v. BP, plc, et al., Civil Action No. 2:10-cv-02078-CJBSS; Irelan v. BP Products, Inc., et al., Civil Action No. 11-cv-00881; Adams v. Louisiana, et al., Civil Action No. 11-cv-01051; Elrod, et al. v. BP Exploration & Production Inc., et al., 12-cv-00981), the United States District Court for the Southern District of Alabama, Southern Division (Lavigne, et al. v. BP PLC, et al., Civil Action No. 1:10-cv- 00222-KD-C; Wright, et al. v. BP, plc, et al., Civil Action No. 1:10-cv-00397-B) or the United States District Court for the Northern District of Florida, Pensacola Division (Walsh, et al. v. BP, PLC, et al., Civil Action No. 3:10-cv-00143- RV-MD; Petitjean, et al. v. BP, plc, et al., Case No. 3:10-cv-00316-RS-EMT) on behalf of various potential classes of persons who live and work in or derive income from the Coastal Zone. The Parker, Lavigne and Walsh cases have since been voluntarily dismissed. Each of the remaining actions contains substantially similar allegations, generally alleging, among other things, negligence relating to the use of our COREXIT dispersant in connection with the Deepwater Horizon oil spill. The plaintiffs in each of these putative class action lawsuits are generally seeking awards of unspecified compensatory and punitive damages, and attorneys' fees and costs. ECOLAB INC: "B3" Complaint v. Nalco Dismissed With Prejudice ------------------------------------------------------------ Claims in the "B3" Master Complaint against Nalco Holding Company were dismissed with prejudice; plaintiffs will have 30 days after entry of final judgment to appeal the Court's decision, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In July, August, September, October and December 2010, Nalco Company was also named, along with other unaffiliated defendants, in eight complaints filed by individuals in either the United States District Court for the Eastern District of Louisiana (Ezell v. BP, plc, et al., Case No. 2:10-cv-01920-KDE-JCW), the United States District Court for the Southern District of Alabama, Southern Division (Monroe v. BP, plc, et al., Case No. 1:10-cv- 00472-M; Hill v. BP, plc, et al., Civil Action No. 1:10-cv-00471- CG-N; Hudley v. BP, plc, et al., Civil Action No. 10-cv-00532-N), the United States District Court for the Northern District of Florida, Tallahassee Division (Capt Ander, Inc. v. BP, plc, et al., Case No. 4:10-cv-00364-RH-WCS), the United States District Court for the Southern District of Mississippi, Southern Division (Trehern v. BP, plc, et al., Case No. 1:10-cv-00432-HSO-JMR) or the United States District Court for the Southern District of Texas (Chatman v. BP Exploration & Production, Civil Action No. 10-cv-04329; Brooks v. Tidewater Marine LLC, et al., Civil Action No. 11-cv-00049). In April 2011, Nalco Company was also named in Best v. British Petroleum plc, et al., Civil Action No. 11-cv-00772 (E.D. La.); Black v. BP Exploration & Production, Inc., et al. Civil Action No. 2:11-cv-867, (E.D. La.); Pearson v. BP Exploration & Production, Inc., Civil Action No. 2:11-cv-863, (E.D. La.); Alexander, et al. v. BP Exploration & Production, et al., Civil Action No. 11-cv-00951 (E.D. La.); and Coco v. BP Products North America, Inc., et al. (E.D. La.). In October 2011, Nalco Company was also named in Toups, et al. v Nalco Company, et al., No. 59-121 (25th Judicial District Court, Parish of Plaquemines, Louisiana). In November 2011, Toups was removed to the United States District Court for the Eastern District of Louisiana. In April 2012, Nalco Company was named in Esponge v. BP, P.L.C., et al., Case No. 0166367 (32nd Judicial District Court, Parish of Terrebonne, Louisiana); and Hogan v. British Petroleum Exploration & Production, Inc., et al., Case No. 2012-22995 (District Court, Harris County, Texas). In April 2012, Esponge was removed to the United States District Court for the Eastern District of Louisiana. In May 2012, Hogan was removed to the United States District Court for the Southern District of Texas. In June 2012, the Judicial Panel for Multidistrict Litigation transferred Hogan to the United States District Court for the Eastern District of Louisiana. The complaint in Esponge generally alleges, among other things, that oil and dispersants have caused and will continue to cause plaintiffs to lose revenue and/or earning capacity. The remaining complaints generally allege, among other things, negligence and injury resulting from the use of COREXIT dispersant in connection with the Deepwater Horizon oil spill. The complaints seek unspecified compensatory and punitive damages, and attorneys' fees and costs. The Chatman case was voluntarily dismissed. In January 2012, Nalco Company was named, along with other unaffiliated defendants, in Top Water Charters, LLC v. BP, P.L.C., et al., No. 0165708 (32nd Judicial District Court, Parish of Terrebonne, Louisiana). The complaint generally alleges, among other things, negligence and gross negligence relating to the Deepwater Horizon oil spill and use of chemical dispersants. The plaintiffs allege that the oil and dispersants have harmed their fishing charter businesses and seek unspecified compensatory damages, punitive damages and attorneys' fees and costs. In February 2012, Top Water Charters was removed to the United States District Court for the Eastern District of Louisiana. In August and September 2012, Nalco Company was named, along with other unaffiliated defendants, in Doom v. BP Exploration & Production, et al., Case No. 12-cv-2048 (E.D. La.) and Kolian v. BP Exploration & Production, et al., Case No. 12-cv-2338 (E.D. La.). The complaints generally allege, among other things, negligence and strict liability relating to the Deepwater Horizon oil spill and use of chemical dispersants. The complaints seek unspecified compensatory and punitive damages. All of the above-referenced cases pending against Nalco Company have been administratively transferred for pre-trial purposes to a judge in the United States District Court for the Eastern District of Louisiana with other related cases under In Re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, Civil Action No. 10-md-02179 (E.D. La.) ("MDL 2179"). Pursuant to orders issued by Judge Barbier in MDL 2179, the claims have been consolidated in several master complaints, including one naming Nalco Company and others who responded to the Gulf Oil Spill (known as the "B3 Bundle"). Plaintiffs are required by Judge Barbier to prepare a list designating previously-filed lawsuits that assert claims within the B3 Bundle regardless of whether the lawsuit named each defendant named in the B3 Bundle master complaint. Nalco Company has received a draft list from the plaintiffs' steering committee. The draft list identifies fifteen cases in the B3 Bundle, some of which are putative class actions. Six cases previously filed against Nalco Company are not included in the B3 Bundle. Pursuant to orders issued by Judge Barbier in MDL 2179, claimants wishing to assert causes of action subject to one or more of the master complaints were permitted to do so by filing a short-form joinder. A short-form joinder is deemed to be an intervention into one or more of the master complaints in MDL 2179. The deadline for filing short form joinders was April 20, 2011. Of the individuals who have filed short form joinders that intervene in the B3 Bundle, Nalco Company has no reason to believe that these individuals are different from those covered by the putative class actions described above. These plaintiffs who have intervened in the B3 Bundle seek to recover damages for alleged personal injuries, medical monitoring and/or property damage related to the oil spill clean-up efforts. On May 18, 2012, Nalco filed a motion for summary judgment against the claims in the "B3" Master Complaint, on the grounds that: (i) Plaintiffs' claims are preempted by the comprehensive oil spill response scheme set forth in the Clean Water Act and National Contingency Plan; and (ii) Nalco is entitled to derivative immunity from suit. On November 28, 2012, the Court granted Nalco's motion and dismissed with prejudice the claims in the "B3" Master Complaint asserted against Nalco. The Court held that such claims were preempted by the Clean Water Act and National Contingency Plan. Because claims in the "B3" Master Complaint remain pending against other defendants, the Court's decision is not a "final judgment" for purposes of appeal. Under Federal Rule of Appellate Procedure 4(a), plaintiffs will have 30 days after entry of final judgment to appeal the Court's decision. On April 3, 2013, Nalco was named, along with other, unaffiliated defendants, in Duong , et al., v. BP America Production Company, et al., Case No. 13-cv-00605 (E.D. La.). The complaint generally alleges, among other things, negligence relating to the Deepwater Horizon oil spill and use of chemical dispersants. The complaint seeks unspecified compensatory and punitive damages. On April 8, 2013, Nalco was named, along with other, unaffiliated defendants, in Fitzgerald v. BP Exploration, et al., Case No. 13-cv-00650 (E.D. La.). The complaint generally alleges, among other things, negligence and strict liability relating to the Deepwater Horizon oil spill and use of chemical dispersants. The complaint seeks unspecified compensatory and punitive damages. Both cases are consolidated in MDL 2179 and subject to the MDL Court's November 28, 2012 order. ECOLAB INC: Medical Benefits Settlement in MDL 2179 Approved ------------------------------------------------------------ The United States District Court for the Eastern District of Louisiana granted final approval of the Medical Benefits Class Action Settlement in a suit that stemmed from the explosion and fire of the deepwater drilling platform, the Deepwater Horizon, operated by a subsidiary of BP plc. Nalco Company, now an indirect subsidiary of Ecolab, supplied large quantities of COREXIT 9500, a Nalco oil dispersant product for the oil spill. Ecolab disclosed in its May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013: "On April 18, 2012, BP plc and the Plaintiffs' Steering Committee ("PSC") for In Re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, Civil Action No. 10-md-02179 (E.D. La.) ("MDL 2179") filed motions for preliminary approval of two proposed class action settlements: (1) a proposed Medical Benefits Class Action Settlement; and (2) a proposed Economic and Property Damages Class Action Settlement." Pursuant to the proposed settlements, class members agree to release claims against BP and other released parties, including Nalco Energy Services, LP, Nalco Holding Company, Nalco Finance Holdings LLC, Nalco Finance Holdings Inc., Nalco Holdings LLC and Nalco Company. Potential class members were permitted to opt-out of the settlements. The opt-out period closed November 1, 2012. The court permitted potential class members to revoke their opt- outs until the date final settlement approval was entered. On May 2, 2012, the Court preliminarily approved the Medical Benefits Class Action Settlement and Economic and Property Damages Class Action Settlement. A hearing to consider the fairness, reasonableness and adequacy of the proposed settlements took place on November 8, 2012. On December 24, 2012, the Court granted final approval of the Economic and Property Damages Class Action Settlement. On January 11, 2013, the Court granted final approval of the Medical Benefits Class Action Settlement. ECOLAB INC: "Franks" Suit Stayed After MDL 2179 Settlement ---------------------------------------------------------- The Circuit Court of Harrison County, Mississippi, Second Judicial District stayed proceedings in Franks v. Sea Tow of South Miss, Inc., et al. as a result of the MDL 2179 Medical Benefits Class Settlement, according to Ecolab's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In March 2011, Nalco Company, an indirect subsidiary of Ecolab Inc., was named, along with other unaffiliated defendants, in an amended complaint filed by an individual in the Circuit Court of Harrison County, Mississippi, Second Judicial District (Franks v. Sea Tow of South Miss, Inc., et al., Cause No. A2402-10-228 (Circuit Court of Harrison County, Mississippi)). The amended complaint generally asserts, among other things, negligence and strict product liability claims relating to the plaintiff's alleged exposure to chemical dispersants manufactured by Nalco Company. The plaintiff seeks unspecified compensatory damages, medical expenses, and attorneys' fees and costs. Plaintiff's allegations place him within the scope of the MDL 2179 Medical Benefits Class. In approving the Medical Benefits Settlement, the MDL 2179 Court barred Medical Benefits Settlement class members from prosecuting claims of injury from exposure to oil and dispersants related to the Response. As a result of the MDL court's order, on April 11, 2013, the Mississippi court stayed proceedings in the Franks case. ENTERPRISE FINANCIAL: May Hearing on Motion to Junk Stock Suit -------------------------------------------------------------- A hearing on Enterprise Financial Services Corp.'s motion to dismiss a securities lawsuit William Mark Scott v. Enterprise Financial Services Corp, et al. was set for early May 2013, according to the company's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On April 10, 2012, a putative class action was filed in the United States District Court for the Eastern District of Missouri captioned William Mark Scott v. Enterprise Financial Services Corp, Peter F. Benoist, and Frank H. Sanfilippo. The complaint asserts claims for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of purchasers of the Company's stock between April 20, 2010 and January 25, 2012, inclusive. The complaint alleges, among other things, that defendants made false and misleading statements and allegedly "failed to disclose that the Company was improperly recording income on loans covered under loss share agreements with the FDIC" and that, as a result, "the Company's financial statements were materially false and misleading at all relevant times." The action seeks unspecified damages and costs and expenses. On October 10, 2012, Plaintiff filed an amended complaint. The Company moved to dismiss the complaint on December 11, 2012. A hearing on the Company's motion to dismiss is currently set for early May 2013. The Company is unable to estimate a reasonably possible loss for the case because the proceeding is in an early stage and there are significant legal and factual issues to be determined and resolved. The Company denies plaintiffs' allegations and intends to vigorously defend the lawsuit. EURONET WORLDWIDE: Vigorously Defending Wage & Hour Suit -------------------------------------------------------- Euronet Worldwide, Inc. is facing a purported class action filed in 2012 by a former employee alleging wage and hour violations relating to meal and rest period requirements. The Company is vigorously defending this suit, according to its May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. Although it is not possible to determine the outcome of this proceeding, in the opinion of management and external legal counsel, such proceeding is not currently expected to have a material adverse effect on the consolidated results of operations or financial condition of the Company. FACEBOOK INC: Sponsored Stories Settlement Ruling Set This Month ---------------------------------------------------------------- WYSO and NPR's Elise Hu report that a San Francisco judge will decide this month whether to approve a settlement in a class- action lawsuit that could affect more than 70 million Facebook users. The $20 million deal would mark the end of a years-long battle over the social network's "Sponsored Stories" advertising. But Facebook users' images could still appear in ads if they don't change their settings. And many users say the deal before the judge doesn't go far enough to protect their privacy. The Back Story The lawsuit alleges that the company "unlawfully used the names, profile pictures, photographs, likenesses, and identities of Facebook users in the United States to advertise or sell products and services through Sponsored Stories without obtaining those users' consent." It happened to the teen daughter of Kim Parsons of Hermitage, Tenn. Neighbors called Ms. Parsons when they saw her daughter's picture posted with an ad for a local ice cream store. At first Ms. Parsons thought her 13-year-old had managed to visit the ice cream shop without her, but she hadn't. Her daughter had just clicked a "like" button online. Her daughter's photo and the endorsement of the business were being used by Facebook to make money online. That's generally how the Sponsored Stories service works. Facebook started the program in 2011, and typical posts show a photo of a user with the tag line saying, for example, "Steve Henn likes Patriotic Pants." (Friends would see that ad because sometime in the past I clicked "like" next to one of their ads.) Ms. Parson's daughter had clicked "like" on Facebook more than 200 times. So her daughter's image was being used in ads constantly. And Ms. Parsons felt like she had no way to stop it. "I should not have to come in on the back end trying to protect my child; that should be understood," she said. "There is a very strong legal case here," said Heidi Li Feldman, a law professor at Georgetown University who specializes in class- action torts and ethics. "I have no question in my mind that as a matter of business ethics Facebook acted entirely unscrupulously. This is bad behavior. They intentionally and knowingly appropriated people's images without getting their permission for commercial use." Facebook denies any wrongdoing, but in the settlement deal before a judge, the company has agreed to pay $20 million. If approved, it could result in $10 payouts for individual users. Opt-Out Options As part of the settlement proposal, Facebook will let adults opt out of this ad program, but only for two years. The settlement would also create an elaborate system to give parents the ability to prevent their kids' images from appearing in these ads. But before that could happen, both the parents and children would have to tell Facebook they are related, and then the parent would need to dig into his or her settings and ask Facebook to stop using the child in ads. Ms. Feldman says it's laughable. "Do you know what is hilarious about that?" asked Ms. Feldman. "That becomes just another data collection mechanism for Facebook. I mean, just think how valuable it would be for them to find out who is related to whom on Facebook. For marketing purposes -- I mean, my God -- parents are already targeted." The settlement does provide one option for parents who are not on Facebook. If they would like to prevent their children's images from being used in Facebook's ads they can submit an online form and attach a "notarized statement declaring your rights as a parent or guardian." Facebook sent a mock-up of what this form could look like to the court. In the mock-up, the company added, "If you don't submit this statement or we find it to be insufficient we won't be able to process your request." The price of getting a letter notarized at the local UPS in Facebook's home town of Menlo Park, Calif., is $10, which coincidentally is the same amount Facebook is offering to pay users whose images were used in Sponsored Stories without permission. Facebook calls this settlement proposal both fair and adequate. If the judge doesn't sign off next month, the attorneys will try to negotiate a new deal or head toward trial. Ms. Parsons, the mother of three from Tennessee, has another idea. She'd like the court to require Facebook to simply stop using images of minors in ads. And, she says, if the company wants to use her picture it should have to ask first -- for each and every ad. GENESIS HEALTHCARE: Godfrey & Kahn Discusses Supreme Court Ruling ----------------------------------------------------------------- Rufino Gaytan III, Esq., at Godfrey & Kahn S.C. reports that if you have ever received a complaint alleging minimum wage or overtime violations from one of your employees, the United States Department of Labor's Wage and Hour Division, or a similar state agency (in Wisconsin, the Labor Standards Bureau of the Equal Rights Division), you have probably considered the possibility that other employees might raise similar claims. Depending on the size of your workforce, this single-employee headache could quickly evolve into a class action or collective action migraine. Under the Fair Labor Standards Act (FLSA), a single employee may file a wage and hour lawsuit on behalf of himself and other "similarly situated" employees. The FLSA's collective action mechanism requires potential plaintiffs to opt into the lawsuit, meaning that individuals must choose to participate in the case. This mechanism differs from a class action lawsuit because individuals covered by a class certified by the court must opt out of the case. In other words, in a class action, an individual covered by a certified class must choose to not participate in the case. Defense counsel have typically attempted to protect employers from prolonged and costly collective action litigation by "picking off" the named plaintiff(s) in lawsuits filed under the FLSA. This "picking off" strategy refers to Rule 68 of the Federal Rules of Civil Procedure, which allows a defendant to make an offer of judgment to the plaintiff. An offer of judgment amounts to giving the plaintiff the full relief requested in the complaint and costs accrued by the plaintiff. A plaintiff's acceptance of a Rule 68 offer of judgment moots (i.e., a dispute no longer exists) the case as to the plaintiff, thereby depriving the court of jurisdiction. In the collective action context, however, employers have had mixed results on the issue of whether acceptance of a Rule 68 offer by the named plaintiff(s) also moots the claims of the potential collective group of affected employees. The question also remained: what happens when the named plaintiff(s) rejects the Rule 68 offer of judgment? On Tuesday, April 16, 2013, the United States Supreme Court issued a decision, Genesis Healthcare Corp. v. Symczyk, that attempted to answer this question. In this case, the employer, Genesis, made a Rule 68 offer of judgment to the plaintiff, Symczyk, while simultaneously answering the complaint and prior to Symczyk moving for conditional certification. By its terms, the offer automatically expired after ten days. Symczyk did not accept the offer, and Genesis moved for judgment in its favor, arguing that its offer of judgment mooted Symczyk's claim and the potential collective action. Symczyk did not contest Genesis' argument that the offer fully satisfied her claim. The district court agreed with Genesis and dismissed the case for lack of subject-matter jurisdiction. The Court of Appeals for the Third Circuit agreed with the district court that Genesis' Rule 68 offer mooted Symczyk's claim, but it disagreed about the effect the offer had on the potential collective action. The court of appeals held that allowing a defendant to "pick off" named plaintiffs for the purpose of avoiding the certification of a collective action would run contrary to the purpose of the collective action mechanism permitted by the FLSA. On appeal, the Supreme Court held that a plaintiff "has no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness." According to the Supreme Court, a Rule 68 offer of judgment that renders the claims of the named plaintiff(s) moot also eliminates the plaintiff's interest in the collective action. More importantly, the Supreme Court held that a collective action under the FLSA, even if "conditionally certified" by a court, does not give the "class" of potential plaintiffs "an independent legal status." A "conditional certification" simply results in "the sending of court-approved written notice to employees[.]" Thus, the Supreme Court has given some legitimacy to the strategy of "picking off" named plaintiffs by offering them full relief through a Rule 68 offer of judgment. Note, however, that the Supreme Court did not hold that an unaccepted Rule 68 offer renders a claim (the named plaintiff's or the collective action claim) moot. Because Symczyk waived these arguments in the lower courts, the Supreme Court simply assumed, without deciding, that the unaccepted Rule 68 offer rendered her claim moot. While, at first blush, the decision seems like a great win for employers, it has potential limitations, many of which Justice Elena Kagan points out in her dissent, including the following: -- Symczyk waived several important arguments throughout the litigation, including the argument that the unaccepted Rule 68 offer in fact did not moot her individual claim. -- The Genesis case addresses a scenario in which no other plaintiffs had yet joined the collective action (due in part to the timing of Genesis' offer to Symczyk and her failure to move for certificaiton). -- The Court simply ignored the limitations of a Rule 68 offer of judgment, including that Rule 68 only gives courts authority to enter judgment when the plaintiff accepts the offer and that "[e]vidence of an unaccepted offer is not admissible except in a proceeding to determine costs." Despite the limitations of the Genesis decision, employers can take comfort in the Court's indication of its leanings regarding collective actions. In addition to the Court's holding regarding the mootness issue, employers can also point to the Court's statements calling into question the legitimacy of applying class action rules and precedent to collective actions under the FLSA. GENWORTH HOLDINGS: Riddle RESPA Lawsuit in Limited Discovery ------------------------------------------------------------ Beginning in December 2011 and continuing through January 2013, one of Genworth Holdings, Inc.'s U.S. mortgage insurance subsidiaries was named along with several other mortgage insurance participants and mortgage lenders as a defendant in twelve putative class action lawsuits alleging that certain "captive reinsurance arrangements" were in violation of RESPA. The Barlee case was dismissed by the Court with prejudice as to the company's subsidiary and certain other defendants on February 27, 2013. In the Riddle case, the defendants' motion to dismiss was denied, but the Court limited discovery at this stage to issues surrounding the statute of limitations, according to the Company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 31, 2013. GYMBOREE CORPORATION: Pays Out Fees, Expenses in Merger Suit ------------------------------------------------------------ The Gymboree Corporation paid out $0.8 million in attorneys' fees and reimbursement of expenses in relation to the settlement of a suit over a tender offer of Bain Capital sponsored investment funds, according to Gymboree's May 2, 2013, Form 10-K filing with the U.S. Securities and Exchange Commission for the fiscal year ended February 2, 2013. Between October 12 and October 18, 2010, three purported class action complaints were filed in the Superior Court of the State of California, County of San Francisco, captioned Halliday v. The Gymboree Corporation, et al., Case No. CGC-10-504544, Himmel v. Gymboree Corp., et al., Case No. CGC-10-504550, and Harris v. The Gymboree Corporation, et al., Case No. CGC-10-504693. The complaints challenged the transaction pursuant to which investment funds sponsored by Bain Capital commenced a tender offer for the outstanding shares of the Company, which was followed by a merger of a subsidiary of investment funds sponsored by Bain Capital with and into the Company. The various complaints named as defendants the Company, the Company's Board of Directors, the Company's former Chief Financial Officer (collectively, the "Individual Defendants"), Bain Capital and the two subsidiaries of the investment funds sponsored by Bain Capital that were created to consummate the Merger (collectively, the "Bain Defendants"). The suits alleged generally that the Individual Defendants breached their fiduciary duties in connection with the Transaction and that the Company and the Bain Defendants aided and abetted those alleged breaches. The complaints sought, among other things, to (i) enjoin the Transaction unless and until the Company adopted and implemented a procedure to obtain the highest possible value for stockholders, and (ii) rescinded the Merger Agreement between entities controlled by investment funds sponsored by Bain Capital and the Company. While the Individual Defendants and the Bain Defendants (collectively, "Defendants") believed that the complaints were without merit and that the Defendants had valid defenses to all claims, in an effort to minimize the burden and expense of further litigation relating to such complaints, on November 12, 2010, the Defendants reached an agreement in principle with the plaintiffs in these actions (collectively, the "Plaintiffs") to settle the litigation in its entirety and resolve all allegations by the Plaintiffs against the Defendants in connection with the Transaction. The settlement provided for a settlement and release by the purported class of the Company's stockholders of all claims against the Defendants in connection with the Transaction. In exchange for such settlement and release, and after arm's length discussions between and among the Defendants and the Plaintiffs, the Company provided certain additional supplemental disclosures to its Schedule 14D-9, although the Company did not make any admission that such additional supplemental disclosures were material or otherwise required. After reaching agreement on the substantive terms of the settlement, the Plaintiffs applied to the court for an award of attorneys' fees and reimbursement of expenses up to $0.8 million, which Defendants agreed not to oppose. The settlement, including the award of attorneys' fees and expenses, was approved by the court and an Order for Final Judgment was entered on January 10, 2012. As of January 29, 2011, the Company had accrued $0.8 million that was paid out in January 2012. HARBOR EXPRESS: Faces Class Action for Misclassifying Drivers ------------------------------------------------------------- Brian Sumers, writing for The Daily Breeze, reports that a trucking firm operating at the ports of Los Angeles and Long Beach illegally underpays its drivers, according to a proposed class- action lawsuit filed on May 13 in Los Angeles Superior Court. The suit alleges Wilmington-based Harbor Express Inc. willfully misclassifies its drivers as independent contractors, when, under California law, they should be considered employees. The law offers considerable protections to employees -- like minimum wage, overtime and meal-and-rest breaks -- that are not afforded to independent contractors. A court likely will need to decide whether drivers at Harbor Express Inc. have enough control over their day-to-day schedules to qualify as independent contractors. The lawsuit alleges the drivers should be classified as employees because they have no control over when they work, for whom they work, and how they work. "I think it's fairly outrageous in 2013 to be classifying people as independent contractors when they clearly are controlled and working exclusively for and under the direction of Harbor Express," said Brian Kabateck, attorney for the proposed class, which he said could include about 400 drivers. Andy Kim, president of Harbor Express, said he had not seen the lawsuit, but insisted he does not misclassify his workers. "No," he said. "So far, we have had no problems." If the drivers win, the company could be on the hook for considerable back pay, including for periods when the drivers -- had they been employees -- should have received meal and rest breaks. California law is relatively stringent on the issue of independent contractors because the state misses out on considerable revenue when workers are not classified as employees. Independent contractors do not pay payroll taxes or contribute to workers compensation insurance. Another issue with independent contractors: The law does not allow them to join a labor union. That's been a problem for the International Brotherhood of Teamsters, which, for the past six years has sought to organize drivers at both ports. But they've mostly been stymied in their efforts, because as many as 90 percent of trucking firms use the independent contractor model. The Teamsters have threatened legal action against noncompliant firms that use the contractor model, though a union spokeswoman said organized labor is not behind this suit. Mr. Kabateck said he filed it because he felt the Harbor Express is skirting the law. "We see this more often in smaller trucking companies," he said. "But a company this size doing this? It's brazen in the way they are acting. " HARMAN INTERNATIONAL: "Kim" Securities Suit in D.C. Still Open -------------------------------------------------------------- Harman International Industries Incorporated continues to face a consolidated securities action filed in the United States District Court for the District of Columbia, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. The Company said, "On October 1, 2007, a purported class action lawsuit was filed by Cheolan Kim against Harman and certain of our officers in the United States District Court for the District of Columbia seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007 (the "Class Period"). The original complaint alleged claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and Rule 10b-5 promulgated thereunder." The complaint alleged that the defendants omitted to disclose material adverse facts about Harman's financial condition and business prospects. The complaint contended that had these facts not been concealed at the time the merger agreement with KKR and GSCP was entered into, there would not have been a merger agreement, or it would have been at a much lower price, and the price of the company's common stock therefore would not have been artificially inflated during the Class Period. The Kim Plaintiff alleged that, following the reports that the proposed merger was not going to be completed, the price of the company's common stock declined, causing the plaintiff class significant losses. On November 30, 2007, the Boca Raton General Employees' Pension Plan filed a purported class action lawsuit against Harman and certain of the company's officers in the Court seeking compensatory damages and costs on behalf of all persons who purchased our common stock between April 26, 2007 and September 24, 2007. The allegations in the Boca Raton complaint are essentially identical to the allegations in the original Kim complaint, and like the original Kim complaint, the Boca Raton complaint alleges claims for violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. On January 16, 2008, the Kim Plaintiff filed an amended complaint. The amended complaint, which extended the Class Period through January 11, 2008, contended that, in addition to the violations alleged in the original complaint, Harman also violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by "knowingly failing to disclose "significant problems" relating to its PND sales forecasts, production, pricing, and inventory" prior to January 14, 2008. The amended complaint claimed that when "Defendants revealed for the first time on January 14, 2008 that shifts in PND sales would adversely impact earnings per share by more than $1.00 per share in fiscal 2008," that led to a further decline in the Company's share value and additional losses to the plaintiff class. On February 15, 2008, the Court ordered the consolidation of the Kim action with the Boca Raton action, the administrative closing of the Boca Raton action, and designated the short caption of the consolidated action as In re Harman International Industries, Inc. Securities Litigation, civil action no. 1:07-cv-01757 (RWR). That same day, the Court appointed the Arkansas Public Retirement System as lead plaintiff ("Lead Plaintiff") and approved the law firm Cohen, Milstein, Hausfeld and Toll, P.L.L.C. to serve as lead counsel. On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of Patrick Russell v. Harman International Industries, Incorporated, et al. with In re Harman International Industries, Inc. Securities Litigation. On May 2, 2008, Lead Plaintiff filed a consolidated class action complaint (the "Consolidated Complaint"). The Consolidated Complaint, which extends the Class Period through February 5, 2008, contends that Harman and certain of our officers and directors violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, by issuing false and misleading disclosures regarding our financial condition in fiscal year 2007 and fiscal year 2008. In particular, the Consolidated Complaint alleges that defendants knowingly or recklessly failed to disclose material adverse facts about MyGIG radios, personal navigation devices and our capital expenditures. The Consolidated Complaint alleges that when Harman's true financial condition became known to the market, the price of our common stock declined significantly, causing losses to the plaintiff class. On July 3, 2008, defendants moved to dismiss the Consolidated Complaint in its entirety. Lead Plaintiff opposed the defendants' motion to dismiss on September 2, 2008, and defendants filed a reply in further support of their motion to dismiss on October 2, 2008. The motion is now fully briefed. As of March 31, 2013, the case remained open with no new developments. HARMAN INTERNATIONAL: Still Faces "Russell" ERISA Lawsuit --------------------------------------------------------- Harman International Industries, Incorporated continues to face a lawsuit filed in the United States District Court for the District of Columbia alleging violations of the Employee Retirement Income Security Act of 1974, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. Patrick Russell (the "Russell Plaintiff") filed a complaint on December 7, 2007 in the United States District Court for the District of Columbia and an amended purported putative class action complaint on June 2, 2008 against Harman and certain of our officers and directors alleging violations of the Employee Retirement Income Security Act of 1974 ("ERISA") and seeking, on behalf of all participants in and beneficiaries of the Savings Plan, compensatory damages for losses to the Savings Plan as well as injunctive relief, imposition of a constructive trust, restitution, and other monetary relief. The amended complaint alleges that from April 26, 2007 to the present defendants failed to prudently and loyally manage the Savings Plan's assets, thereby breaching their fiduciary duties in violation of ERISA by causing the Savings Plan to invest in our common stock notwithstanding that the stock allegedly was "no longer a prudent investment for the Participants' retirement savings." The amended complaint further claims that, during the Class Period, defendants failed to monitor the Savings Plan fiduciaries, failed to provide the Savings Plan fiduciaries with, and to disclose to Savings Plan participants, adverse facts regarding Harman and our businesses and prospects. The Russell Plaintiff also contends that defendants breached their duties to avoid conflicts of interest and to serve the interests of participants in and beneficiaries of the Savings Plan with undivided loyalty. As a result of these alleged fiduciary breaches, the amended complaint asserts that the Savings Plan has "suffered substantial losses, resulting in the depletion of millions of dollars of the retirement savings and anticipated retirement income of the Savings Plan's Participants." On March 24, 2008, the Court ordered, for pretrial management purposes only, the consolidation of Patrick Russell v. Harman International Industries, Incorporated, et al. with In re Harman International Industries, Inc. Securities Litigation. Defendants moved to dismiss the complaint in its entirety on August 5, 2008. The Russell Plaintiff opposed the defendants' motion to dismiss on September 19, 2008, and defendants filed a reply in further support of their motion to dismiss on October 20, 2008. The motion is now fully briefed. As of March 31, 2013, the case remained open with no new developments. HARVEST NATURAL: Faces Consolidated Stock Suit in Texas ------------------------------------------------------- Lawsuits alleging that Harvest Natural Resources, Inc. made certain false or misleading public statements that resulted to stock price declines have been consolidated, according to the company's May 2, 2013, Form 10-K filing with the U.S. Securities and Exchange Commission for the year ended December 31, 2013. The following related class action lawsuits were filed on the dates specified in the United States District Court, Southern District of Texas: John Phillips v. Harvest Natural Resources, Inc., James A. Edmiston and Stephen C. Haynes (March 22, 2013); Sang Kim v. Harvest Natural Resources, Inc., James A. Edmiston, Stephen C. Haynes, Stephen D. Chesebro', Igor Effimoff, H. H. Hardee, Robert E. Irelan, Patrick M. Murray and J. Michael Stinson (April 3, 2013); Chris Kean v. Harvest Natural Resources, Inc., James A. Edmiston and Stephen C. Haynes (April 11, 2013); Prastitis v. Harvest Natural Resources, Inc., James A. Edmiston and Stephen C. Haynes (April 17, 2013); Alan Myers v. Harvest Natural Resources, Inc., James A. Edmiston and Stephen C. Haynes (April 22, 2013); and Edward W. Walbridge and the Edward W. Walbridge Trust v. Harvest Natural Resources, Inc., James A. Edmiston and Stephen C. Haynes (April 26, 2013). The complaints allege that the Company made certain false or misleading public statements and demand that the defendants pay unspecified damages to the class action plaintiffs based on stock price declines. On April 18, 2013, the second, third and fourth listed actions were consolidated into the Phillips case. The Company and the other named defendants intend to vigorously defend the consolidated and other listed lawsuits. ICAHN ENTERPRISES: Suit by Dynegy Shareholders in Abeyance ---------------------------------------------------------- The case Silsby v. Icahn et al. is being held in temporary abeyance pending a decision by the federal court as to the scope of plaintiff's right to proceed with this action, according to Icahn Enterprises Holdings L.P.'s May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On March 28, 2012 an action was filed in the U.S. District Court, Southern District of New York, entitled Silsby v. Icahn et al. Defendants include Carl C. Icahn and two officers of Dynegy Inc ("Dynegy") and certain of its directors. As initially filed, the action purports to be brought as a class action on behalf of Dynegy shareholders who acquired their shares between September 2011 and March 2012. The Complaint alleges violations of the federal securities laws by defendants' allegedly making false and misleading statements in securities filings that artificially inflated the price of Dynegy stock. The individual defendants are alleged to have been controlling persons of Dynegy. Plaintiff is seeking damages in an unspecified amount. Subsequent to the filing of this action, Dynegy filed for bankruptcy, and a U.S. bankruptcy court has approved a Plan of Reorganization. Plaintiff is proceeding with the action and has filed an amended complaint which purports to be a class action on behalf of Dynegy shareholders who acquired their securities between July 10, 2011 and March 9, 2012. "However, we believe that we have meritorious defenses to the claims and intend to file a motion to dismiss. At present, the case is being held in temporary abeyance pending a decision by the federal court as to the scope of plaintiff's right to proceed with this action," Icahn Enterprises said. ITT CORP: Sues Insurer for Asbestos Coverage -------------------------------------------- ITT Corporation, on its May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013, disclosed the cases it is involved in: "On February 13, 2003, we commenced an action, Cannon Electric, Inc. v. Affiliated FM Ins. Co., Sup. Ct., Los Angeles County, seeking recovery of costs related to asbestos product liability losses. During this coverage litigation, we entered into coverage- in-place settlement agreements with ACE, Wausau and Utica Mutual dated April 2004, September 2004, and February 2007, respectively. These agreements provide specific coverage for the Company's legacy asbestos liabilities. "In the first quarter of 2012, Goulds Pumps resolved its claims against Fireman's Fund and Continental Casualty. In January 2012, ITT and Goulds Pumps filed a putative class action against Travelers Casualty and Surety Company (ITT Corporation and Goulds "Pumps, Inc., v. Travelers Casualty and Surety Company (f/k/a Aetna Casualty and Surety Company)), alleging that Travelers is unilaterally reinterpreting language contained in older Aetna policies so as to avoid paying on asbestos claims. We continue to negotiate settlement agreements with other insurers, where appropriate." INCYTE CORPORATION: Sued in Delaware Over Launch of JAKAFI ---------------------------------------------------------- In March and April 2013, two lawsuits were filed in the United States District Court for the District of Delaware against the Incyte Corporation, and its chief drug development and medical officer, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. The complaints each allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a purported class of purchasers of the Company's stock between April 26, 2012 and August 1, 2012. In general, the complaints allege that the defendants issued materially false or misleading statements concerning the Company's business and prospects relating to the commercial launch of JAKAFI. The complaints seek damages in an unspecified amount, equitable relief of an unspecified nature, and costs and expenses of litigation. The Company believes it has meritorious defenses and intends to vigorously defend itself against these lawsuits. The Company is unable to estimate the possible loss or range of loss, if any, at this time. INTERMEC INC: Plaintiffs Failed to Stop Honeywell Deal in March --------------------------------------------------------------- A Washington state court denied the plaintiffs' motion for a preliminary injunction seeking to stop the proposed acquisition of Intermec Inc. by Honeywell International Inc., according to Intermec's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In December 2012, multiple purported class action lawsuits were filed on behalf of the Company's stockholders in connection with the proposed acquisition of Intermec by Honeywell International Inc. These cases were filed in Delaware Chancery Court and in Superior Court in Washington State. On January 10, 2013, the three Delaware cases were consolidated as In re Intermec, Inc. Shareholders Litigation, C.A. No. 8137-CS, and lead counsel was appointed. On January 24, 2013, lead counsel for the plaintiffs in the consolidated action filed an amended complaint. On January 11, 2013 the Superior Court in Washington consolidated these cases under the name, In re Intermec, Inc. Shareholder Litigation, Lead Case No. 12-2-01841-1, lead counsel was appointed and the consolidated case is pending in Snohomish County, Washington. On February 28, 2013, plaintiffs in the Washington State action filed a Consolidated Amended Complaint. On March 1, 2013, plaintiffs in the Washington State action filed a motion for a preliminary injunction and a hearing on this motion was held on March 15, 2013 in the Superior Court of Washington for Snohomish County. Plaintiffs' motion was denied. The Company conducted a Special Meeting of Stockholders on March 19, 2013 at which adoption of the Agreement and Plan of Merger between Intermec and Honeywell was approved. The lawsuits allege, among other things, that the Company's Board of Directors breached its fiduciary duties to stockholders by failing to take steps to maximize stockholder value or to engage in a fair sale process before approving the proposed acquisition of Intermec by Honeywell. The plaintiffs in these various actions seek relief that includes, among other things, an injunction prohibiting the consummation of the proposed merger, rescission to the extent the Merger terms have already been implemented, damages for the breaches of fiduciary duty, and the payment of plaintiffs' attorneys' fees and costs. MONSANTO CO: Countryside Organics Awaits Ruling in Patent Case -------------------------------------------------------------- Laura Peters, writing for The News Leader, reports that a local organic grower continues a legal battle against seed giant Monsanto Co. but over very different issues from those of farmers who lost a federal case on May 13 against the firm. The U.S. Supreme Court ruled that growers who plant Monsanto's genetically altered seeds can't harvest seeds from those plants without a licensing agreement from the company. In contrast, the case involving Waynesboro's Countryside Organics seeks court protection for family agricultural operations who don't want their naturally grown crops cross-pollinated with Monsanto's engineered seed. Organic farmers would consider it pollution and want legal protection from the company if it happens. The local grower was one of 83 plaintiffs who filed a class-action lawsuit against Monsanto in March 2010 challenging Monsanto's ability to sue organic farmers for patent infringement. Still, Bill Ahrens, Countryside's marketing executive, disagrees with the May 13 court ruling. Monsanto in a sense has been given the right to patent life, Mr. Ahrens said. "What rights do they have to say that you can't reuse (seed) for it's natural intention? A seed is genetic material. You plant it. You get seeds from it. Typically, what you do with those seeds if you don't eat them is you replant them," Mr. Ahrens said. "But they're saying no, you can't do that, you don't have the right." In his case, a federal judge ruled in the seed company's favor two years ago, but Mr. Ahrens' side appealed. They should hear word on their case soon, he said. According to Mr. Ahrens, they want it put in writing that farmers will not be sued in the event of "genetic trespass" if Monsanto's plants pollinated with organic crops. "If their plant pollinates my plant, then my plant carries the Monsanto gene," he said. MOODY'S CORP: Oral Arguments Proceed in N.Y. Stock Suit ------------------------------------------------------- Oral arguments on the motion for summary judgment in a securities lawsuit against Moody's Corporation took place on April 9, 2013, according to the company's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. Two purported class action complaints have been filed by purported purchasers of the Company's securities against the Company and certain of its senior officers, asserting claims under the federal securities laws. The first was filed by Raphael Nach in the U.S. District Court for the Northern District of Illinois on July 19, 2007. The second was filed by Teamsters Local 282 Pension Trust Fund in the United States District Court for the Southern District of New York on September 26, 2007. Both actions have been consolidated into a single proceeding entitled In re Moody's Corporation Securities Litigation in the U.S. District Court for the Southern District of New York. On June 27, 2008, a consolidated amended complaint was filed, purportedly on behalf of all purchasers of the Company's securities during the period February 3, 2006 through October 24, 2007. Plaintiffs allege that the defendants issued false and/or misleading statements concerning the Company's business conduct, business prospects, business conditions and financial results relating primarily to MIS's ratings of structured finance products including RMBS, CDO and constant-proportion debt obligations. The plaintiffs seek an unspecified amount of compensatory damages and their reasonable costs and expenses incurred in connection with the case. The Company moved for dismissal of the consolidated amended complaint in September 2008. On February 23, 2009, the court issued an opinion dismissing certain claims and sustaining others. On January 22, 2010, plaintiffs moved to certify a class of individuals who purchased Moody's Corporation common stock between February 3, 2006 and October 24, 2007, which the Company opposed. On March 31, 2011, the court issued an opinion denying plaintiffs' motion to certify the proposed class. On April 14, 2011, plaintiffs filed a petition in the United States Court of Appeals for the Second Circuit seeking discretionary permission to appeal the decision. The Company filed its response to the petition on April 25, 2011. On July 20, 2011, the Second Circuit issued an order denying plaintiffs' petition for leave to appeal. On September 14, 2012, the Company filed a motion for summary judgment, which was fully briefed on December 21, 2012. Oral arguments on the motion for summary judgment took place on April 9, 2013. MOODY'S CORP: Fraud Claims Trial in Cheyne SIV Suit This Month -------------------------------------------------------------- Trial on the remaining fraud claims against Moody's Corporation in a suit over the credit ratings assigned to the securities issued by the Cheyne SIV is set for May 2013, according to the company's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013 On August 25, 2008, Abu Dhabi Commercial Bank filed a purported class action in the United States District Court for the Southern District of New York asserting numerous common-law causes of action against two subsidiaries of the Company, another rating agency, and Morgan Stanley & Co. The action related to securities issued by a structured investment vehicle called Cheyne Finance (the "Cheyne SIV") and sought, among other things, compensatory and punitive damages. The central allegation against the rating agency defendants was that the credit ratings assigned to the securities issued by the Cheyne SIV were false and misleading. In early proceedings, the court dismissed all claims against the rating agency defendants except those for fraud and aiding and abetting fraud. In June 2010, the court denied plaintiff's motion for class certification, and additional plaintiffs were subsequently added to the complaint. In January 2012, the rating agency defendants moved for summary judgment with respect to the fraud and aiding and abetting fraud claims. Also in January 2012, in light of new New York state case law, the court permitted the plaintiffs to file an amended complaint that reasserted previously dismissed claims against all defendants for breach of fiduciary duty, negligence, negligent misrepresentation, and related aiding and abetting claims. In May 2012, the court, ruling on the rating agency defendants' motion to dismiss, dismissed all of the reasserted claims except for the negligent misrepresentation claim, and on September 19, 2012, after further proceedings, the court also dismissed the negligent misrepresentation claim. On August 17, 2012, the court ruled on the rating agencies' motion for summary judgment on the plaintiffs' remaining claims for fraud and aiding and abetting fraud. The court dismissed, in whole or in part, the fraud claims of four plaintiffs as against Moody's but allowed the fraud claims to proceed with respect to certain claims of one of those plaintiffs and the claims of the remaining 11 plaintiffs. The court also dismissed all claims against Moody's for aiding and abetting fraud. Three of the plaintiffs whose claims were dismissed filed motions for reconsideration, and on November 7, 2012, the court granted two of these motions, reinstating the claims of two plaintiffs that were previously dismissed. On February 1, 2013, the court dismissed the claims of one additional plaintiff on jurisdictional grounds. Trial on the remaining fraud claims against the rating agencies, and on claims against Morgan Stanley for aiding and abetting fraud and for negligent misrepresentation, was scheduled for May 2013. On April 24, 2013, pursuant to confidential settlement agreements, the 14 plaintiffs with claims that had been ordered to trial stipulated to the voluntary dismissal, with prejudice, of these claims as against all defendants, and the Court so ordered that stipulation on April 26, 2013. The settlement did not cover certain claims of two plaintiffs that were previously dismissed by the Court. MOODY'S CORP: Has Confidential Deal With Rhinebridge Plaintiffs --------------------------------------------------------------- Pursuant to a confidential settlement agreement, the plaintiffs in a suit over the credit ratings assigned to the securities issued by a structured investment vehicle called Rhinebridge Plc stipulated to the voluntary dismissal, with prejudice, of all remaining claims against Moody's Corporation, according to Moody's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In October 2009, plaintiffs King County, Washington and Iowa Student Loan Liquidity Corporation each filed substantially identical putative class actions in the Southern District of New York against two subsidiaries of the Company and several other defendants, including two other rating agencies and IKB Deutsche Industriebank AG. These actions arose out of investments in securities issued by a structured investment vehicle called Rhinebridge Plc (the "Rhinebridge SIV") and sought, among other things, compensatory and punitive damages. Each complaint asserted a claim for common law fraud against the rating agency defendants, alleging, among other things, that the credit ratings assigned to the securities issued by the Rhinebridge SIV were false and misleading. The case was assigned to the same judge presiding over the litigation concerning the Cheyne SIV. In April 2010, the court denied the rating agency defendants' motion to dismiss. In June 2010, the court consolidated the two cases and the plaintiffs filed an amended complaint that, among other things, added Morgan Stanley & Co. as a defendant. In January 2012, in light of new New York state case law, the court permitted the plaintiffs to file an amended complaint that asserted claims against the rating agency defendants for breach of fiduciary duty, negligence, negligent misrepresentation, and aiding and abetting claims. In May 2012, the court, ruling on the rating agency defendants' motion to dismiss, dismissed all of the new claims except for the negligent misrepresentation claim and a claim for aiding and abetting fraud; on September 28, 2012, after further proceedings, the court also dismissed the negligent misrepresentation claim. Plaintiffs did not seek class certification. On September 7, 2012 the rating agencies filed a motion for summary judgment dismissing the remaining claims against them. On January 3, 2013, the Court issued an order dismissing the claim for aiding and abetting fraud against the rating agencies but allowing the claim for fraud to proceed to trial. In June 2012 and March 2013, respectively, defendants IKB Deutsche Industriebank AG (and a related entity) and Fitch, Inc. informed the court that they had executed confidential settlement agreements with the plaintiffs. On April 24, 2013, pursuant to a confidential settlement agreement, the plaintiffs stipulated to the voluntary dismissal, with prejudice, of all remaining claims as against the remaining defendants, including Moody's, and the Court so ordered that stipulation on April 26, 2013. MYLAN SPECIALTY: Indemnified for Claims in Drug Pricing Suit ------------------------------------------------------------ Dey, now known as Mylan Specialty L.P., a wholly owned subsidiary of Mylan Inc., was named as a defendant in several class actions brought by consumers and third-party payors. Mylan Specialty has reached a settlement of these class actions, which has been approved by the court and all claims have been dismissed, according to Mylan Inc.'s May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. Additionally, a complaint was filed under seal by a plaintiff on behalf of the United States of America against Dey in August 1997. In August 2006, the Government filed its complaint-in-intervention and the case was unsealed in September 2006. The Government asserted that Mylan Specialty was jointly liable with a codefendant and sought recovery of alleged overpayments, together with treble damages, civil penalties and equitable relief. Mylan Specialty completed a settlement of this action in December 2010. These cases all have generally alleged that Mylan Specialty falsely reported certain price information concerning certain drugs marketed by Mylan Specialty, that Mylan Specialty caused false claims to be made to Medicaid and to Medicare, and that Mylan Specialty caused Medicaid and Medicare to make overpayments on those claims. Under the terms of the purchase agreement with Merck KGaA, Mylan is fully indemnified for the claims and Merck KGaA is entitled to any income tax benefit the Company realizes for any deductions of amounts paid for such pricing litigation. Under the indemnity, Merck KGaA is responsible for all settlement and legal costs, and, as such, these settlements had no impact on the Company's Consolidated Statements of Operations. At March 31, 2013, the Company has accrued approximately $66.4 million in other current liabilities, which represents its estimate of the remaining amount of anticipated income tax benefits due to Merck KGaA. Substantially all of Mylan Specialty's known claims with respect to this pricing litigation have been settled. PROVIDENCE HEALTH: Sued Over Refusal to Cover Autism ABA Therapy ---------------------------------------------------------------- OPB reports that two Multnomah County families whose children have autism have filed a class action lawsuit against Providence Health Plan. The families say Providence is refusing to pay for "Applied Behavior Analysis." ABA involves a therapist working one-on-one with a child -- to teach a range of skills -- from reading to tooth brushing. It's expensive because of the time involved. Lawyer Keith Dubanevich, says Providence denied the families' claims, first saying ABA was experimental, then saying it was excluded from their policies. "I'm pretty confident that a lot of parents just give up because they either don't have the expertise or the money to hire a lawyer or the time to deal with it." Mr. Dubanevich says Oregon's "Mental Health Parity Act" requires Providence to cover mental and physical problems to the same degree. Providence spokesman Gary Walker says most health insurance carriers in Oregon don't cover ABA. And while Providence doesn't discuss pending litigation he says, it is working with legislators, advocates and other health plans, to find common standards to cover ABA in the future. QUESTOR PHARMACEUTICALS: To Seek Dismissal of "Norton" Suit ----------------------------------------------------------- Questcor Pharmaceuticals, Inc. plans to file a motion to dismiss a consolidated amended complaint in a suit filed against it over its use of Acthar for certain indications, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. According to the Company, "On September 26, 2012, a putative class action lawsuit was filed against us and certain of our officers and directors in the United States District Court for the Central District of California, captioned John K. Norton v. Questcor Pharmaceuticals, et al., No. SACv12-1623 DMG (FMOx). The complaint purports to be brought on behalf of shareholders who purchased our common stock between April 26, 2011 and September 21, 2012." "The complaint generally asserts that we and certain of our officers and directors violated sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, by making allegedly false and/or misleading statements concerning the clinical evidence to support the use of Acthar for indications other than infantile spasms, the promotion of the sale and use of Acthar in the treatment of MS and nephrotic syndrome, reimbursement for Acthar from third-party insurers, and our outlook and potential market growth for Acthar. "The complaint seeks damages in an unspecified amount and equitable relief against the defendants. This lawsuit has been consolidated with four subsequently-filed actions asserting similar claims under the caption: In re Questcor Securities Litigation, No. CV 12-01623 DMG (FMOx). On January 4, 2013, the district court issued an order appointing the West Virginia Investment Management Board and Plumbers & Pipefitters National Pension Fund as Lead Plaintiffs in the consolidated securities action. In March 2013, the Lead Plaintiffs filed a consolidated amended complaint for the consolidated securities action. We will be filing a motion to dismiss the consolidated amended complaint in May 2013." QUESTOR PHARMACEUTICALS: State Derivative Lawsuit Stayed -------------------------------------------------------- A court issued a final ruling granting a motion by Questor Pharmaceutials Inc. to stay state derivative actions until the putative federal securities and federal derivative actions are resolved, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On October 2, 2012, an alleged shareholder filed a derivative lawsuit purportedly on behalf of the Company against certain of our officers and directors in the Superior Court of the State of California, Orange County, captioned Monika do Valle v. Virgil D. Thompson, et al., No. 30-2012-00602258-CU-SL-CXC. The complaint asserts claims for breach of fiduciary duty, abuse of control, mismanagement and waste of corporate assets arising from substantially similar allegations as those contained in the Norton case, as well as from allegations relating to sales of our common stock by the defendants and repurchases of our common stock. The company disclosed that: "The complaint seeks an unspecified sum of damages and equitable relief. On October 24, 2012, an alleged shareholder filed a derivative lawsuit purportedly on behalf of the Company against certain of our officers and directors in the Superior Court of the State of California, Orange County, captioned Jones v. Bailey, et al., Case No. 30-2012- 00608001-CU-MC-CXC. The suit asserts claims substantially identical to those asserted in the do Valle derivative action." "In January 2013, a Judge of the Superior Court held a hearing with regard to our motion to stay these state shareholder derivative actions in favor of the putative federal securities class action and federal shareholder derivative action. On February 19, 2013, the court issued a final ruling granting our motion to stay the state derivative actions until the putative federal securities and federal derivative actions are resolved." REDFLEX TRAFFIC: Issued Illegal Tickets to Drivers, Suit Says ------------------------------------------------------------- Courthouse News Service reports that a class action claims the City of Center Point and Redflex Traffic Systems illegally ticket drivers by threatening them with a court appearance if they refuse to pay fines, though "no such court exists." Redflex owns and operates the traffic cameras for Center Point, which photographs cars believed to run red lights or stop signs or speed. Such traffic-enforcement systems have been challenged, usually unsuccessfully, in courts all over the country. This one is a bit odd, though. It claims that the law that made the traffic cameras legal also gave ticketed drivers the right to appeal -- but there are no courts authorized to hear the appeals, the two named plaintiffs say. Rhonda Lashon Stubbs and Celeita Snow sued the city and Redflex in Jefferson County Court. Stubbs's Lexus, license plate IMNGOD, was ticketed twice, allegedly for running the same stop sign on different days. Snow's Mercedes Benz was issued 14 citations. Snow says she repeatedly requested hearings on her tickets, and the city granted them, then "postponed" them, but never set a new date. It can't, she says, because there is no court that can hear it. "Ms. Stubbs paid the Notice of Violation because the Defendants left her with the false impression that the administrative hearing would be binding and would be conducted by the 'Municipal Court,'" the complaint states. "Currently, however, the Defendants strenuously argue that no such court exists. By leaving the Plaintiff with the false impression that she would appear in front of a 'court,' the Notice of Violation carried the full imprimatur of the State of Alabama and misled and intimidated Ms. Stubbs and the Class members into paying the 'fine.' "Similarly, the Notice of Violation sent to Stubbs and other members of the Class did not explain that the $100 'fine' could not be collected unless the City filed a later, separate civil suit. Neither Ms. Stubbs nor any other Class member was informed that the Notice of Violation was not judicial in nature but was actually a non-binding collection notice." In fact, the plaintiffs say, a state judge has told the city that its system is illegal. The complaint states: "On August 17, 2012, an order was entered by Jefferson County Circuit Court Judge David N. Lichtenstein in City of Center Point v. Kenneth Crowder, CV-2012-0929 whereby this Court found that the Alabama District Courts do not have jurisdiction to hear appeals of any matters concerning fines, adjudications, or other action pursuant to Ordinance 2011-02. Therefore, the 'appeal' rights granted in the statute are defective as contrary to the Alabama Constitution. "As a result of deficiencies in the Statute and Ordinance -- as pointed out by Judge Lichtenstein -- no meaningful appeal lies from any decision of the hearing officer appointed by the Mayor. Act 2011-580 grants rights of appeal and the Due Process Clause requires the opportunity for meaningful review; absent that, the Statute and the Ordinance are unconstitutional as applied and are due to be stricken." Every member of the class, in other words, becomes a hero, or victim, of his or her own Kafka novel. The plaintiffs seek declaratory judgment, costs, and damages for civil rights violations, suppression of material facts, and unlawful debt collection practices. Their lead counsel is Samuel M. Hill. Franz Kafka (1883-1924) wrote novels and stories in which the hero, often named Josef K., is summoned to appear at a court he cannot reach, for a crime uncertain. Center Point, pop. 23,000, is a suburb of Birmingham. SANDISK CORP: Wants Ritz Trustee as Substitute Plaintiff -------------------------------------------------------- The U.S. District Court for the Northern District of California is yet to rule on the motion of Sandisk Corporation requesting that Albert Giuliano, the Chapter 7 Trustee of the Ritz bankruptcy estate, be substituted as the plaintiff in the Ritz Camera Federal Antitrust Class Action, according to Sandisk's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On June 25, 2010, Ritz Camera & Image, LLC ("Ritz") filed a complaint in the U.S. District Court for the Northern District of California (the "District Court"), alleging that the Company violated federal antitrust law by conspiring to monopolize and monopolizing the market for flash memory products. The lawsuit captioned Ritz Camera & Image, LLC v. SanDisk Corporation, Inc. and Eliyahou Harari, purports to be on behalf of direct purchasers of flash memory products sold by the Company and joint ventures controlled by the Company from June 25, 2006 through the present. The complaint alleges that the Company created and maintained a monopoly by fraudulently obtaining patents and using them to restrain competition and by allegedly converting other patents for its competitive use. On February 24, 2011, the District Court issued an Order granting in part and denying in part the Company's motion to dismiss which resulted in Dr. Harari being dismissed as a defendant. On September 19, 2011, the Company filed a petition for permission to file an interlocutory appeal in the U.S. Court of Appeals for the Federal Circuit (the "Federal Circuit") for the portion of the District Court's Order denying the Company's motion to dismiss based on Ritz's lack of standing to pursue Walker Process antitrust claims. On October 27, 2011, the District Court administratively closed the case pending the Federal Circuit's ruling on the Company's petition. On November 20, 2012, the Federal Circuit affirmed the District Court's order denying SanDisk's motion to dismiss. On December 2, 2012, the Federal Circuit issued its mandate returning the case to the District Court. Discovery is now open in the District Court. On February 20, 2013, Ritz filed a motion requesting that Albert Giuliano, the Chapter 7 Trustee of the Ritz bankruptcy estate, be substituted as the plaintiff in this case. The Court has not ruled on Ritz's motion. SANDISK CORP: Plaintiffs Appeal Dismissal of Antitrust Suit ----------------------------------------------------------- Appellate briefing on a motion by certain indirect purchasers of SD cards against a ruling to dismiss a case against Sandisk Corporation is ongoing, according to the company's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On March 15, 2011, a putative class action captioned Oliver v. SD- 3C LLC, et al was filed in the U.S. District Court for the Northern District of California (the "District Court") on behalf of a nationwide class of indirect purchasers of SD cards alleging various claims against the Company, SD-3C, Panasonic, Toshiba, and Toshiba America Electronic Components, Inc. under federal antitrust law pursuant to Section 1 of the Sherman Act, California antirust and unfair competition laws, and common law. The complaint seeks an injunction of the challenged conduct, dissolution of "the cooperation agreements, joint ventures and/or cross-licenses alleged herein," treble damages, restitution, disgorgement, pre- and post-judgment interest, costs, and attorneys' fees. Plaintiffs allege that the Company (along with the other members of SD-3C) conspired to artificially inflate the royalty costs associated with manufacturing SD cards in violation of federal and California antitrust and unfair competition laws, which in turn allegedly caused plaintiffs to pay higher prices for SD cards. The allegations are similar to, and incorporate by reference the complaint in the Samsung Electronics Co., Ltd. v. Panasonic Corporation; Panasonic Corporation of North America; and SD-3C LLC. On May 21, 2012, the District Court granted Defendants' motion to dismiss the complaint with prejudice. Plaintiffs have appealed. Appellate briefing should be completed on June 21, 2013. No date for oral argument has been set. SEMPRA ENERGY: Cleared by Regulatory Report in 2011 Power Outage ---------------------------------------------------------------- Sempra Energy said in its May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013, that a regulatory report found no failure on its part for a September 2011 power failure that resulted to a lawsuit against the Company. In September 2011, a power outage lasting approximately 12 hours affected millions of people from Mexico to southern Orange County, California. Within several days of the outage, several customers of California Utilities, which are San Diego Gas & Electric Company (SDG&E) filed a class action lawsuit in Federal District Court in San Diego against Arizona Public Service Company, Pinnacle West, and SDG&E alleging that the companies failed to prevent the outage. The lawsuit seeks recovery of unspecified amounts of damages, including punitive damages. In July 2012, the court granted SDG&E's motion to dismiss the punitive damages request and dismissed Arizona Public Service Company and Pinnacle West from the lawsuit. In addition, more than 7,000 customers' claims, primarily related to food spoilage, have been submitted directly to SDG&E. The Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) conducted a joint inquiry to determine the cause of the power failure and issued a report in May 2012 regarding their findings. The report does not make any findings of failure on SDG&E's part that led to the power failure. SOUTHWEST AIRLINES: AirTran Continues to Face Antitrust Suit ------------------------------------------------------------ A May 20, 2013 deadline was due for a report on Delta Air Lines' production of electronic data in relation to a federal antitrust suit against Delta Air Lines, Inc. and AirTran, according to Southwest Airlines Co.'s May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. A complaint alleging violations of federal antitrust laws and seeking certification as a class action was filed against Delta Air Lines, Inc. ("Delta") and AirTran in the United States District Court for the Northern District of Georgia in Atlanta on May 22, 2009. On May 2, 2011, Southwest acquired all of the outstanding equity of AirTran Holdings, Inc. (AirTran Holdings), the former parent company of AirTran Airways, Inc. (AirTran Airways), in exchange for Southwest Airlines Co. common stock and cash. The complaint alleged, among other things, that AirTran attempted to monopolize air travel in violation of Section 2 of the Sherman Act, and conspired with Delta in imposing $15-per-bag fees for the first item of checked luggage in violation of Section 1 of the Sherman Act. The initial complaint sought treble damages on behalf of a putative class of persons or entities in the United States who directly paid Delta and/or AirTran such fees on domestic flights beginning December 5, 2008. After the filing of the May 2009 complaint, various other nearly identical complaints also seeking certification as class actions were filed in federal district courts in Atlanta, Georgia; Orlando, Florida; and Las Vegas, Nevada. All of the cases were consolidated before a single federal district court judge in Atlanta. A Consolidated Amended Complaint was filed in the consolidated action on February 1, 2010, which broadened the allegations to add claims that Delta and AirTran conspired to reduce capacity on competitive routes and to raise prices in violation of Section 1 of the Sherman Act. In addition to treble damages for the amount of first baggage fees paid to AirTran and to Delta, the Consolidated Amended Complaint seeks injunctive relief against a broad range of alleged anticompetitive activities, as well as attorneys' fees. On August 2, 2010, the Court dismissed plaintiffs' claims that AirTran and Delta had violated Section 2 of the Sherman Act; the Court let stand the claims of a conspiracy with respect to the imposition of a first bag fee and the airlines' capacity and pricing decisions. On June 30, 2010, the plaintiffs filed a motion to certify a class, which AirTran and Delta have opposed. The Court has not yet ruled on the class certification motion. The original period for fact and expert discovery was scheduled to end on February 25, 2011, but on February 3, 2012, the Court granted plaintiffs' motion for supplemental discovery because Delta discovered that it had not produced certain electronic documents. The period for supplemental discovery against AirTran ended on May 3, 2012, but discovery disputes between plaintiffs and Delta have continued. On June 18, 2012, the parties filed a Stipulation and Order that plaintiffs have abandoned their claim that AirTran and Delta conspired to reduce capacity. On August 31, 2012, AirTran and Delta moved for summary judgment on all of plaintiffs' remaining claims, and the plaintiffs filed a supplemental brief on class certification. From September to November 2012, the plaintiffs filed a series of motions to compel Delta to produce additional documents and for sanctions based on alleged failures to produce electronic data. On November 19, 2012, the Court ordered plaintiffs to appoint an expert to examine Delta's production of electronic data and suspended the briefing schedule for the summary judgment motion until the expert has completed his work. It is AirTran's understanding that the expert's work has been ongoing. Under the current schedule, the expert's report was due May 20, 2013. After the expert submits his report and Delta produces any responsive documents identified by the expert as not previously produced, the parties will resume briefing defendants' motions for summary judgment and supplemental briefing on plaintiffs' motion for class certification. AirTran denies all allegations of wrongdoing, including those in the Consolidated Amended Complaint, and intends to defend vigorously any and all such allegations. STILLWATER MINING: Faces "Jurgelewicz" Shareholder Lawsuit ---------------------------------------------------------- Stillwater Mining Company has been named as nominal defendant in a putative derivative and class action complaint filed by a purported shareholder in the United States District Court for the District of Montana, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On April 4, 2013, a putative derivative and class action complaint was filed by a purported shareholder in the United States District Court for the District of Montana, Billings Division, captioned Jurgelewicz v. McAllister, et al., Case 1:13-cv-00047-RFC. The complaint names the board of directors as defendants and the Company as nominal defendant. The complaint asserts derivative claims for breach of fiduciary duty, waste and unjust enrichment against certain members of the Board, alleging that those defendants violated the Company's 2004 Equity Incentive Plan, which limits awards to 250,000 shares per year to any individual, by awarding Mr. McAllister a grant of 337,447 restricted stock units in 2010 and a grant of 267,512 restricted stock units in 2012. Plaintiff also asserts against the Board class action claims for violation of the fiduciary duty of candor and violations of Sec. 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, alleging that the Proxy Statement is false and misleading because it fails to disclose that the Board violated the 2004 Equity Incentive Plan in 2010 and 2012. Among other remedies, plaintiff seeks a declaration that the awards granted to Mr. McAllister in 2010 and 2012 allegedly in excess of the applicable annual limit were ultra vires and void; rescission of the alleged excess grants; damages; an injunction against the 2013 Annual Meeting until corrective action is taken; and an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws and policies. The Company strongly disagrees with the legal position taken by and allegations made by the plaintiffs and believes this lawsuit is without merit as the limitation in the 2004 Equity Incentive Plan derives from Section 162(m) of the Internal Revenue Code, which was not relevant in respect of these awards. However in light of the litigation and the legal uncertainty relating to the 2010 and 2012 restricted stock unit award grants to Mr. McAllister in excess of the 250,000 share annual limit set forth in the Company's 2004 Equity Incentive Plan, on April 6, 2013 the Company's Compensation Committee and Mr. McAllister in order to avoid unnecessary legal expenses and the potential distraction of litigation (which in each case the members of the Compensation Committee and Mr. McAllister believe would not be in the best interests of the Company's shareholders) agreed to rescind each of such awards to the extent of the excess of the award over the 250,000 share limit set forth in the plan. To that end (i) Mr. McAllister paid back to the Company 87,447 shares received in respect of his 2010 restricted stock unit award and (ii) Mr. McAllister's 2012 restricted stock unit award (with respect to service in 2011) was reduced by 17,512 restricted stock units. In addition, although not subject to the foregoing litigation, consistent with the Compensation Committee's decision on April 6, 2013, on April 9, 2013, the Compensation Committee and Mr. McAllister rescinded 82,000 shares in respect of his 2009 restricted stock unit award of 332,000. STILLWATER MINING: Faces "Casey" Shareholder Lawsuit ---------------------------------------------------- On April 16, 2013, a putative class action complaint was filed by a purported shareholder of Stillwater Mining Company in the Thirteenth Judicial District Court, Yellowstone County, captioned Casey v. Stillwater Mining Co., et al., according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. The complaint names the Company and the board of directors as defendants, and asserts class action claims for breach of fiduciary duty against the board, and aiding and abetting claims against the Company. The complaint alleges that the board of directors, aided and abetted by the Company, is breaching its fiduciary duties by failing to maximize shareholder value and consider strategic alternatives in light of the Clinton Group's ongoing proxy contest. Among other remedies, Plaintiff seeks a declaration that the directors' conduct is a breach of fiduciary duty; an order directing the board to exercise its fiduciary duties to obtain a transaction which is in the best interests of Stillwater's shareholders; an order directing the board to establish a committee of independent directors, or, if there are no independent directors, to engage an independent third party to evaluate strategic alternatives and take decisive steps to maximize shareholder value; and an order prohibiting the board from entering into any contractual provisions which harm Stillwater or its shareholders or prohibit defendants from maximizing shareholder value, including any confidentiality agreement or contract designed to impede the maximization of shareholder value. STRAYER EDUCATION: Plaintiffs' Deadline to Appeal Ruling Lapses --------------------------------------------------------------- A putative securities class action against Strayer Education, Inc. is finally disposed of as the deadline expired for plaintiffs to request further appeal, according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. On October 15, 2010, a putative securities class action was filed in the United States District Court for the Middle District of Florida. On March 20, 2012, the District Court granted the Company's motion to dismiss the complaint for failure to state a claim, and the Eleventh Circuit Court of Appeals upheld that dismissal on December 13, 2012. That dismissal became the final disposition of the case on March 13, 2013, when the deadline expired for plaintiffs to request further appeal. A shareholder derivative action alleging similar facts was filed in the Circuit Court of Fairfax County, Virginia, which action was voluntarily dismissed by nonsuit on June 12, 2012. TOYS "R" US: Settlement in Consumer Suit Vacated; Case Remanded --------------------------------------------------------------- The Third Circuit Court of Appeals vacated a District Court's order approving a settlement agreement in a consumer class action filed against Toys "R" Us, Inc. The Court remanded the case to the District Court, according to the company's May 3, 2013 filing of its financial report for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 with the U.S. Securities and Exchange Commission. On July 15, 2009, the United States District Court for the Eastern District of Pennsylvania (the "District Court") granted the class plaintiffs' motion for class certification in a consumer class action commenced in January 2006, which was consolidated with an action brought by two Internet retailers that was commenced in December 2005. Both actions allege that Babies "R" Us agreed with certain baby product manufacturers (collectively, with the Company and our Parent, the "Defendants") to impose, maintain and/or enforce minimum price agreements in violation of antitrust laws. In addition, in December 2009, a third Internet retailer filed a similar action and another consumer class action was commenced making similar allegations involving most of the same Defendants. In January 2011, the parties in the consumer class actions entered into a settlement agreement, which was approved by the District Court in a final approval order in December 2011. In January 2012, certain parties who objected to the District Court's final approval of the settlement filed Notices of Appeal with the Third Circuit Court of Appeals. According to the Company, "As part of the settlement, in March 2011, we made a payment of approximately $17 million towards the overall settlement. In February 2013, the Third Circuit Court of Appeals vacated the District Court's final approval order and remanded the case to the District Court." The company said it does not reasonably believe that it will need to make any further payments in connection with any future settlement. In addition, in January 2011, the plaintiffs, the Company and its Parent and certain other Defendants in the Internet retailer actions entered into a settlement agreement pursuant to which the company made a payment of approximately $5 million towards the overall settlement. In addition, on or about November 23, 2010, the company's Parent entered into a Stipulation with the Federal Trade Commission ("FTC") ending the FTC's investigation related to its Parent and its subsidiaries' compliance with a 1998 FTC Final Order and settling all claims in full. Pursuant to the settlement, in May 2011, the company paid approximately $1 million as a civil penalty. TREX COMPANY: Continues to Face Suit Over "Defective" Products -------------------------------------------------------------- Trex Company, Inc. continues to face lawsuits over alleged defects in certain of its products, according to the company's May 3, 2013, Form 10-Q filing with the U.S.Securities and Exchange Commission for the quarter ended March 1, 2013. On January 19, 2009, a purported class action case was commenced against the Company in the Superior Court of California, Santa Cruz County, by the lead law firm of Lieff, Cabraser, Heimann & Bernstein, LLP and certain other law firms (the "Lieff Cabraser Group") on behalf of Eric Ross and Bradley S. Hureth and similarly situated plaintiffs. These plaintiffs generally allege certain defects in the Company's products, and that the Company has failed to provide adequate remedies for defective products. On February 13, 2009, the Company removed this case to the United States District Court, Northern District of California. On January 21, 2009, a purported class action case was commenced against the Company in the United States District Court, Western District of Washington by the law firm of Hagens Berman Sobol Shapiro LLP (the "Hagens Berman Firm") on behalf of Mark Okano and similarly situated plaintiffs, generally alleging certain product defects in the Company's products, and that the Company has failed to provide adequate remedies for defective products. This case was transferred by the Washington Court to the California Court as a related case to the Lieff Cabraser Group's case. On July 30, 2009, the U.S. District Court for the Northern District of California preliminarily approved a settlement of the claims of the lawsuit commenced by the Lieff Cabraser Group involving surface flaking of the Company's product, and on March 15, 2010, it granted final approval of the settlement. On April 14, 2010, the Hagens Berman Firm filed a notice to appeal the District Court's ruling to the United States Court of Appeals for the Ninth Circuit. On July 9, 2010, the Hagens Berman Firm dismissed their appeal, effectively making the settlement final. On March 25, 2010, the Lieff Cabraser Group amended its complaint to add claims relating to alleged defects in the Company's products and alleged misrepresentations relating to mold growth. The Hagens Berman firm has alleged similar claims in its original complaint. In its Final Order approving the surface flaking settlement, the District Court consolidated these pending actions relating to the mold claims, and appointed the Hagens Berman Firm as lead counsel in this case. On December 3, 2010, the Hagens Berman Firm filed an amended consolidated complaint relating to the mold growth claims (now on behalf of Dean Mahan and other named plaintiffs). On December 15, 2010, a purported class action case was commenced against the Company in the United States District Court, Western District of Kentucky, by the lead law firm of Cohen & Malad, LLP ("Cohen & Malad") on behalf of Richard Levin and similarly situated plaintiffs, and on June 13, 2011, a purported class action was commenced against the Company in the Marion Circuit/Superior Court of Indiana by Cohen & Malad on behalf of Ellen Kopetsky and similarly situated plaintiffs. On June 28, 2011, the Company removed the Kopetsky case to the United States District Court, Southern District of Indiana. On August 11, 2011, a purported class action was commenced against the Company in the 50th Circuit Court for the County of Chippewa, Michigan on behalf of Joel and Lori Peffers and similarly situated plaintiffs. On August 26, 2011, the Company removed the Peffers case to the United States District Court, Western District of Michigan. On April 4, 2012, a purported class action was commenced against the Company in Superior Court of New Jersey, Essex County on behalf of Caryn Borger, M.D. and similarly situated plaintiffs. On May 1, 2012, the Company removed the Borger case to the United States District Court, District of New Jersey. The plaintiffs in these purported class actions generally allege certain defects in the Company's products and alleged misrepresentations relating to mold growth. The Company believes that the claims relating to mold growth are without merit and denies all liability with respect to the facts and claims alleged. However, the Company is aware of the substantial burden, expense, inconvenience and distraction of continued litigation. As of March 31, 2013, the Company has accrued a $1.7 million liability related to these claims. It is reasonably possible that the Company may incur costs in excess of the recorded amounts; however, the Company expects that the total net cost to resolve the lawsuit will not exceed $10 million. UNITED PARCEL: Ontario Suit Over Brokerage Service Continues ------------------------------------------------------------ United Parcel Service, Inc. is facing in Ontario the last remaining claim against it over allege inadequate disclosure concerning the existence and cost of brokerage services, according to the company's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. According to the Company, "In Canada, four purported class-action cases were filed against us in British Columbia (2006); Ontario (2007) and Quebec (2006 and 2013). The cases each allege inadequate disclosure concerning the existence and cost of brokerage services provided by us under applicable provincial consumer protection legislation and infringement of interest restriction provisions under the Criminal Code of Canada." "The British Columbia class action was declared inappropriate for certification and dismissed by the trial judge. That decision was upheld by the British Columbia Court of Appeal in March 2010, which ended the case in our favor. "The Ontario class action was certified in September 2011. Partial summary judgment was granted to us and the plaintiffs by the Ontario motions court. The complaint under the Criminal Code was dismissed. No appeal is being taken from that decision. The allegations of inadequate disclosure were granted and we are appealing that decision. "The motion to authorize the 2006 Quebec litigation as a class action was dismissed by the motions judge in October 2012; there was no appeal, which ended that case in our favor. The 2013 Quebec litigation also has been dismissed. "We deny all liability and are vigorously defending the one outstanding case in Ontario. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from this matter, including: (1) we are vigorously defending ourselves and believe that we have a number of meritorious legal defenses; and (2) there are unresolved questions of law and fact that could be important to the ultimate resolution of this matter. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operation or liquidity." UNITED PARCEL: Still Faces Price-Fixing Suit in N.Y. Court ---------------------------------------------------------- United Parcel Service, Inc. continues to face a suit alleging price-fixing activities relating to the provision of freight forwarding services, according to the company's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In January 2008, a class action complaint was filed in the United States District Court for the Eastern District of New York alleging price-fixing activities relating to the provision of freight forwarding services. United Parcel Service, Inc. was not named in this case. In July 2009, the plaintiffs filed a first amended complaint naming numerous global freight forwarders as defendants. UPS and UPS Supply Chain Solutions are among the 60 defendants named in the amended complaint. The plaintiffs filed a Second Amended Complaint in October 2010, which the company moved to dismiss. In August 2012, the Court granted the company's motion to dismiss all claims relevant to UPS in the Second Amended Complaint, with leave to amend. The plaintiffs filed a Third Amended Complaint in November 2012. According to the company, "We have filed another motion to dismiss, and will otherwise vigorously defend ourselves in this case. There are multiple factors that prevent us from being able to estimate the amount of loss, if any, that may result from these matters including: (1) the court has dismissed the complaint once but has not considered the adequacy of the amended complaint; (2) the scope and size of the proposed class is ill-defined; (3) there are significant legal questions about the adequacy and standing of the putative class representatives; and (4) we believe that we have a number of meritorious legal defenses." "Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial condition, results of operations or liquidity." UNITED PARCEL: Settles Suit Over Rebranding of Store Franchises --------------------------------------------------------------- United Parcel Service, Inc. reached a settlement in principle to settle a case over the rebranding of The UPS Store franchises, according to the company's May 3, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. UPS and subsidiary Mail Boxes Etc., Inc. are defendants in a lawsuit in California Superior Court about the rebranding of The UPS Store franchises. In the Morgate case, the plaintiffs are 125 individual franchisees who did not rebrand to The UPS Store and a certified class of all franchisees who did rebrand. The trial court entered judgment against a bellwether individual plaintiff, which was affirmed in January 2012. The trial court granted the company's motion for summary judgment against the certified class, which was reversed in January 2012. According to the company, "In March 2013, we reached a settlement in principle with the remaining individual plaintiffs. We believe the ultimate settlement of this matter will not have a material adverse effect on our financial condition, results of operations or liquidity." UNITED STATES: Pickens Doodle Line Landowners Seek Compensation --------------------------------------------------------------- Ron DeKett, writing for Pickens County News, reports that the class action lawsuit filed in U.S. Court of Claims on behalf of landowners along the abandoned rail line linking Easley with Pickens is the only option the owners have for compensation from the loss of use of their land, the plaintiffs' attorney said. "This case is the only way they can do it," said plaintiff attorney Thor Hearne, who is with Arent Fox LLP. The lawsuit, Juanita Campbell, et al. v. The United States of America, lists the names of more than 50 plaintiffs who own property along the old Pickens Doodle line. It was filed May 8 in U.S. Court of Claims in Washington, D.C. The defendant is the U.S. government defended by the U.S. Justice Department. The judge is the Honorable Victor J. Wolski. Easley and Pickens are looking at transforming the line into a recreational trail through the federal rails-to-trails program similar to the Swamp Rabbit Trail in Greenville. Supporters of the project believe such a trail would encourage healthy living and promote economic growth. But changing the easement from railroad use to recreational use will affect at least 150 property owners along the abandoned line, Hearne said. "Creating a public-access recreation trail across Plaintiffs' property and appropriating a new easement for possible future railroad use has taken from Plaintiffs the value of the land physically appropriated for this trail corridor and greatly diminished the value of Plaintiffs' property adjoining this trail corridor," according to the lawsuit. Although the property is owned by the individuals, control of the property is held by the federal government with the Surface Transportation Board governing what can be done with it, Mr. Hearne said. The easement restricts access by property owners which could devalue their properties, he said. "It's not like a normal condemnation where the government comes in and sends you a notice saying 'we're taking 20 acres of your property for a highway,' " Mr. Hearne said. "In this case they never tell the owners anything. They just do it. They leave it up to the property owners who have to individually bring their case in the U.S. Court of Claims which is in Washington, D.C. And it's the only court that has the jurisdiction to award them any compensation." The intent of the lawsuit is only to gain just compensation for lost value of property along the abandoned line, Mr. Hearne said. "It does not in any way stop the creation of the trail or the conversion of the abandoned rail line to a public recreational trail," Mr. Hearne said. Mr. Hearne said when the federal Surface Transportation Board approved Pickens Railway Co.'s request to abandon the line, the board also designated the easement to be used as a recreational trail. The designation prevented landowners from assuming control over their properties over which the easement runs, he said. "Under the terms of the original railroad easement and under South Carolina law, South Carolina does not own or possess any right to grant the cities of Easley and Pickens an easement across plaintiffs' land," according to the lawsuit. The lawsuit, citing the Fifth Amendment, states the homeowners are due "just compensation." Hearne said the case is a two-step process. The first is for the judge to determine whether compensation is due to property owners. The plaintiffs must prove they owned the land in October 2012 when the Surface Transportation Board gave Pickens Railway Co. permission to abandon the rail line and designated the easement to be used for recreational use or future rail use, he said. The second is for the plaintiffs and the government to select an appraiser who would determine what the compensation would be for each property owner. Mr. Hearne said the process would take at least two years but that he hoped it could be completed within three years. Other landowners along the abandoned line are expected to join in the class action suit, he said. UNUM LIFE: Trial Set for ERISA Suit by Insurance Beneficiaries -------------------------------------------------------------- A case filed by a certain group of life insurance policy beneficiaries against Unum Life Insurance Company of America is on a trial list for June 2013, according to Unum Group's according to the company's May 2, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended March 1, 2013. In October 2010, Denise Merrimon, Bobby S. Mowery, and all others similarly situated vs. Unum Life Insurance Company of America, was filed in the United States District Court for the District of Maine. According to the Company, "This class action alleges that we breached fiduciary duties owed to certain beneficiaries under certain group life insurance policies when we paid life insurance proceeds by establishing interest-bearing retained asset accounts rather than by mailing checks." "Plaintiffs seek to represent a class of beneficiaries under group life insurance contracts that were part of the Employee Retirement Income Security Act (ERISA) employee welfare benefit plans and under which we paid death benefits via retained asset accounts. "The plaintiffs' principal theories in the case are: (1) funds held in retained asset accounts were plan assets, and the proceeds earned by us from investing those funds belonged to the beneficiaries, and (2) payment of claims using retained asset accounts did not constitute payment under Maine's late payment statute, requiring us to pay interest on the undrawn retained asset account funds at an annual rate of 18 percent. "In February 2012, the District Court issued an opinion rejecting both of plaintiffs' principal theories and ordering judgment for us. At the same time, however, the District Court held that we breached a fiduciary duty to the beneficiaries by failing to pay rates comparable to the best rates available in the market for demand deposits. The District Court also certified a class of people who, during a certain period of time, were beneficiaries under certain group life insurance contracts that were part of ERISA employee welfare benefit plans and were paid death benefits using retained asset accounts. "The District Court authorized the parties to make an immediate appeal of its decision to the First Circuit Court of Appeals, and each of the parties sought leave for an early appeal on the issues raised by the District Court's rulings, but the First Circuit decided not to hear the appeal at this time. Therefore, the parties are required to wait until the proceedings in the District Court have concluded for further resolution of those issues. "The First Circuit did not rule on or discuss the merits of the case. The case is proceeding in the District Court where notice to class members and discovery on the issue of damages have been completed. In February 2013, the company filed a motion requesting the court reconsider its prior summary judgment ruling as well as a motion challenging the admissibility of the testimony of plaintiffs' expert witness. "On April 10, 2013, the court denied a motion for reconsideration and reserved its ruling regarding the admissibility of testimony from plaintiffs' expert witness. The case has been placed on a trial list for June 2013. VOLTAGE PICTURES: Judge Dismisses Reverse Copyright Class Action ---------------------------------------------------------------- Sanne Specht, writing for Mail Tribune, reports that a federal judge took aim at "reverse class action lawsuits" while dismissing a Los Angeles-based movie company's lawsuit that claimed dozens of Jackson County "John Doe" defendants had pirated one of its movies off the Internet. Salem attorney Carl Crowell in February filed a lawsuit on behalf of Voltage Pictures LLC in U.S. District Court in Medford, seeking up to $180,000 in damages from each of 34 defendants accused of pirating the 2012 movie "Maximum Conviction" off the Internet. Statewide, Voltage alleged, nearly 600 people had participated in copyright infringement. The company sought $30,000 for the alleged infringement, and an additional $150,000 from each defendant in statutory damages should there be a finding of willful conduct. U.S. District Court Judge Ann Aiken dismissed the case, ruling the movie company had unfairly lumped the plaintiffs together in a "reverse class action suit" to save more than $200,000 in court costs, and possibly intimidate the plaintiffs into paying $7,500 for allegedly illegally viewing a $10 video. Voltage sought a jury trial, alleging the unnamed defendants used their computers to illegally copy and distribute the 2012 movie "Maximum Conviction," which was directed by Keoni Waxman and stars Steven Seagal and Steve Austin. Voltage said the unnamed local defendants resided in Medford, Talent, Central Point, Shady Cove, Klamath Falls and Brookings. The defendants were not identified by name at the time of the initial filing because Voltage had only their Internet protocol addresses. Voltage later subpoenaed the defendants' Internet service providers, which include Charter Communications, Clearwire Corp., CenturyLink, Embarq Corp. and Frontier Corp., to obtain the defendants' names. ". . . the manner in which plaintiff is pursuing the Doe defendants has resulted in $123,850 savings in filing fees alone," Judge Aiken wrote, adding that defendants were being subjected to a "lack of fundamental fairness." Voltage's suit stated the video industry has tried to capitalize on Internet technology and reduce costs to consumers through legitimate and legal venues such as Netflix, Hulu and Amazon Prime. But, it maintained, people continue to "steal motion pictures and undermine the efforts of creators through their illegal copying and distribution of motion pictures" through peer- to-peer networks such as BitTorrent, which connects computers through its system. Whenever people download the BitTorrent application, they become both a user and a distributor, the suit alleges. Judge Aiken agreed technologies such as BitTorrent are "anonymous and stealthy tools" that allow for large-scale copyright infringement. But she said not every defendant named in Voltage's suit had equal culpability. Some had unsecured IP addresses, others allowed only downloading and prohibited uploading, while others were associated with institutional accounts such as businesses or schools with numerous users, she said. Voltage's suit states it is a "common misunderstanding that people involved in motion pictures are already wealthy" and that the perception is that "the end product, such as a DVD, only costs very little to make." In fact, the suit says, there are "countless expenses and labors," including writers, staff, construction workers and others involved in making the final product. Judge Aiken said cases such as the one filed by Voltage allow plaintiffs to "use the courts' subpoena powers to troll for quick and easy settlements." A sample demand letter sent to defendants associated with IP addresses threatens severe punitive damages and a not-so-subtle implication that liability is a foregone conclusion, Judge Aiken said. The letter asks $7,500 as a settlement offer, and said that amount would increase up to $150,000 if the recipient did not agree to prompt payment. It also makes threats against attempts to delete files, asserting costs associated with such actions will be added to the assessment. Judge Aiken characterized the letter as an exorbitant extortion tactic. "Accordingly, plaintiff's tactic in these BitTorrent cases appears to not seek to litigate against all the Doe defendants, but to utilize the court's subpoena powers to drastically reduce litigation costs and obtain, in effect, $7,500 for its product, which in the case of Maximum Conviction, can be obtained for $9.00 on Amazon for the Blue-Ray/DVD combo or $3.99 for a digital rental," Judge Aiken wrote. Mr. Crowell refused comment to the Mail Tribune in February and did not return calls on May 10. * Farella Discusses CIPA Prohibition on Customer Service Calls -------------------------------------------------------------- Farella Braun & Martel's C. Brandon Wisoff, Esq., and Racheal Turner, Esq., writing for Corporate Counsel, report that while recording customer service calls is commonly viewed as a risk management tool, a recent wave of class action cases brought under California's Invasion of Privacy Act, Cal. Penal Code Sec. 630 et seq. (CIPA) has challenged this common practice, claiming that the plaintiffs are entitled to $5,000 per call. Does your company monitor or record its incoming and outgoing customer service calls (or use an outsourced vendor that does so)? You might assume that CIPA covers only California-based companies and/or calls that are placed and recorded at a California call center, so your company is not in danger of being sued in a CIPA class action if it is located outside California or if your calls are placed and recorded in another state. But in a 2006 decision, the California Supreme Court held that CIPA applied to calls made by Californians to Georgia, even though the recordings were made in Georgia and were legal under Georgia law. Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95 (2006). The Kearney Court expressly warned out-of-state companies that they would be subject to California law for "recording of telephone conversations made to or received from California." Id. at 130-31. This article will explain what CIPA prohibits, discuss a recent Ninth Circuit Court of Appeals decision that offers some protection against CIPA class actions, and provide tips to help your company reduce the risk of liability from a recording class action. CIPA's Prohibition on Recording or Monitoring without Consent Although most states and the federal government generally permit recording of phone calls with just one party's consent, California and a small minority of other states require all parties to the conversation to consent. CIPA's legislative history establishes that the act was meant to prohibit industrial espionage and eavesdropping for the purpose of obtaining trade secrets, not routine recording of customer service calls for quality assurance. Unfortunately, however, the statutory language does not make that intended limitation clear, and the California Supreme Court's Kearney decision assumed (without considering the act's legislative history) that CIPA applied to routine customer service recordings. Section 632 of CIPA prohibits eavesdropping upon or recording of "confidential communications" made in person or by telephone without the other party's consent. The California Supreme Court has explained that a communication is "confidential" under Section 632 if a party to a conversation has an objectively reasonable expectation that the conversation is not being overheard or recorded. Flanagan v. Flanagan, 27 Cal. 4th 766, 776-77 (2002). However, state and federal courts have disagreed regarding whether the content of the conversation has any bearing on that determination. Even more troubling, mobile phone and cordless phone communications do not have to be "confidential" for liability to be imposed. Section 632.7 of CIPA prohibits intentionally recording all calls to or from mobile phones and cordless phones, regardless of their confidentiality. Section 637.2 of CIPA provides that any person injured by a CIPA violation may bring an action for the greater of $5,000 or three times the person's actual damages, but it expressly provides that actual damages are not a prerequisite to filing suit. The availability of this $5,000 statutory penalty and the possibility of multiple violations are responsible for the recent flood of CIPA class actions, which are primarily being brought under sections 632 and 632.7. While CIPA's prohibition on secret or surreptitious eavesdropping upon or recording of calls is broad and long-reaching, companies should be able to avoid violating CIPA simply by providing a warning that the call will be monitored or recorded to every person who will be monitored or recorded ("monitoring" typically occurs when an undisclosed supervisor or other third party is listening in on a representative's conversation with a customer to ensure proper customer service protocols are followed). As stated by the California Supreme Court, "A business that adequately advises all parties to a telephone call, at the outset of the conversation, of its intent to record the call would not violate [Section 632]." Kearney, 39 Cal. 4th at 118. However, the court has not faced a case in which a plaintiff argued that he or she had not consented to the recording, despite receiving a warning. Recent Ninth Circuit Opinion Offers Some Protection for Routine Recording The Ninth Circuit's decision in Faulkner v. ADT Security Services, Inc., 2013 WL 174368 (9th Cir. Jan. 17, 2013), is a welcome ruling for businesses that routinely record customer service calls, because Faulkner makes it harder for class action plaintiffs in federal court to allege an actionable claim under Section 632 of CIPA and to obtain class certification. In Faulkner, the plaintiff called ADT Security Services, his home security provider, to dispute a charge on his bill. He heard beeping, asked the ADT representative about it, and learned his call was being recorded. The plaintiff filed a CIPA class action in California state court, but ADT removed it to federal court and then successfully moved to dismiss it. The Ninth Circuit upheld the District Court's dismissal of the plaintiff's CIPA claim for failure to state a claim, holding that the plaintiff's allegation that he called ADT to "dispute a charge" was insufficient to allege an objectively reasonable expectation of confidentiality under Section 632 of CIPA. According to the court, "too little is asserted in the complaint about the particular relationship between the parties, and the particular circumstances of the call, to lead to the plausible conclusion that an objectively reasonable expectation of confidentiality would have attended such a communication." However, the court suggested in a footnote that the plaintiff "might" have a CIPA claim if he provided sensitive information like his social security number or an unlisted phone number during the call. Faulkner is an important decision because it has now resolved the disagreement among the district courts in the Ninth Circuit over whether the content of the communication is relevant to determining if the communication was "confidential" under Section 632. Under Faulkner, content matters, and merely alleging that a routine customer service call was recorded or monitored is not enough to state a Section 632 CIPA claim in federal court. Further, because individual circumstances are now required to establish confidentiality, it will be more difficult for plaintiffs to allege a cognizable class and obtain class certification. Best Practices for Reducing Risk While Faulkner is an important and positive development for companies that routinely record or monitor calls in, to, or from California (or that use an outsourced third-party vendor that does so), that business practice still carries substantial risk. For example, companies that routinely request personal information such as social security numbers before disclosing that the call may be recorded or monitored are still at risk of being sued in a call recording class action under Section 632 of CIPA. Further, as stated above, Section 632.7 of CIPA, which Faulkner did not address, prohibits intentionally recording all calls to or from cell phones and cordless phones, regardless of their confidentiality. Moreover, some defendants will not be able to remove their cases from the California state courts, where the pleading standards are not as exacting, and the case law is divided on the relevance of the content of the call under Section 632. Accordingly, to reduce the risk of liability from a call recording class action, companies that routinely record or monitor calls in, to, or from California (or other states with dual-consent recording statutes) should consider employing the following practices: -- For inbound calls, providing an automated warning that calls may be monitored or recorded before the caller is connected to a live agent. -- For outbound calls, giving a warning before the person being called is monitored or recorded. -- Providing live agents with scripts requiring them to give a warning at the outset of speaking to every new person (i.e., every time a new person gets on the line). -- If you have contracts with the customers calling/being called, including provisions in your contracts with those customers (1) providing notice that calls may be monitored or recorded, (2) stating that the parties consent to having calls between them monitored or recorded, (3) requiring individual arbitration of claims, and/or (4) providing that the laws of a single-consent state govern the party's relationship. -- If any third-party vendors make customer service calls on your behalf, including provisions in your contracts with those vendors requiring the vendors to comply with all laws related to call recording and to indemnify you for any claims arising out of calls that they make on your behalf. -- Obtaining insurance coverage for defense of third-party claims for unlawful call recording and invasion of privacy. Ultimately, however, the litigation risk cannot, under the present case law, be entirely eliminated. * Supreme Court Set to Weigh on Split in Suits v. LCD Makers ------------------------------------------------------------ Andrew Longstreth, writing for Reuters, reports that the U.S. Supreme Court was set to consider whether to weigh in on a question that has split the judiciary: Do federal courts have jurisdiction over lawsuits filed in state court by state attorneys general on behalf of their citizens? Two petitions filed in separate cases over price-fixing by liquid crystal display makers have asked the Supreme Court to clarify the law and resolve a division among federal appeals courts. One petition comes from LCD makers who are appealing a decision by the 4th U.S. Circuit Court of Appeals, which held that two lawsuits filed by South Carolina's attorney general can remain in South Carolina state court. The other petition was filed by Mississippi's attorney general, who has appealed a decision by the 5th U.S. Circuit Court of Appeals. That court granted a request by LCD makers to remove a case filed by the Mississippi attorney general to federal court from Mississippi state court. A federal statute passed in 2005, known as the Class Action Fairness Act (CAFA), aimed to give federal courts jurisdiction over lawsuits involving large numbers of plaintiffs. But it is not clear whether the statute was meant to apply to suits filed by state attorneys general seeking to recover damages for their citizens. The Supreme Court was scheduled to meet in private on May 23 to decide whether to take either case. An announcement on whether the court will hear the cases could come as early as today, May 28. Any oral argument would be scheduled for next term, which starts in October. The outcome of a Supreme Court decision would be important for corporate defendants who often seek to avoid state courts, which they consider to be more plaintiff-friendly. In federal court, corporate defendants can also take advantage of a legal procedure that consolidates all related litigation. If the Supreme Court rules in favor of the states, "defendants could (end up) defending themselves in multiple districts," said Patricia Conners, an attorney with the Florida attorney general's office, at a conference. Companies v. States CAFA was a major victory for companies that complained of plaintiffs gaming the system to avoid federal court. The law gave federal jurisdiction to class actions and "mass actions" involving "minimal diversity" among the parties. The statute defined mass actions as claims involving 100 or more persons to be tried simultaneously, while minimal diversity is considered satisfied when "any member of a class of plaintiffs" is a citizen of a state different from any defendant. Corporate defendants, like the LCD makers, argue that allowing state attorneys general to avoid federal jurisdiction would undermine the purpose of CAFA. The states, on the other hand, counter that CAFA makes no reference to lawsuits filed by state attorneys general and that imposing federal jurisdiction on their lawsuits would infringe on their sovereignty. They also argue that as states, they should not be considered "citizens" for diversity purposes under CAFA. So far, only the 5th Circuit has agreed with corporate defendants. In the price-fixing case brought by the Mississippi attorney general against LCD makers, the court adopted a so-called "claim- by-claim" approach that analyzes who would benefit from a lawsuit, not simply who brought it, when deciding jurisdiction. In his petition to the Supreme Court, Mississippi Attorney General Jim Hood argues that the 5th Circuit's decision conflicts with Supreme Court precedent. "This Court has consistently held that a state's overall interest in the case it has brought in its name is the determinative inquiry, not who may ultimately benefit from the relief sought," wrote lawyers for Hood's office. The LCD makers responded that CAFA mandates federal jurisdiction in the case. They also noted that when the U.S. Senate contemplated passage of CAFA, it rejected an amendment that would have precluded the act's application to actions filed by state attorneys general. The 5th Circuit's decision is in conflict with decisions from three other appellate courts, including the 4th Circuit. Those courts have adopted a so-called "whole case" approach that determines who the real party in interest is that brought the case as a whole. In their appeal of the 4th Circuit's decision, the LCD makers argued that such an approach would allow the states to "bring what is essentially a class action in state court without fear of removal under CAFA." Lawyers for South Carolina Attorney General Alan Wilson responded that "no clear rule under CAFA" demands that the federal courts take jurisdiction of a "lawsuit brought by the state's attorney from the state court in which the state elected to file the lawsuit." ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Noemi Irene A. Adala, Joy A. Agravante, Valerie Udtuhan, Julie Anne L. Toledo, Christopher Patalinghug, Frauline Abangan and Peter A. Chapman, Editors. Copyright 2013. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $775 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-241-8200. * * * End of Transmission * * *