/raid1/www/Hosts/bankrupt/CAR_Public/140611.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, June 11, 2014, Vol. 16, No. 115
Headlines
AMERICAN REALTY: Reaches MoU in "Quaal" Suit Over ARCT III Merger
AMERICAN REALTY: CapLease Merger Suits Junked; "Tarver" Remains
AMERICAN REALTY: Dismissal Motion in "Poling" Lawsuit Opposed
AMERICAN REALTY: MoU Entered in Md. Lawsuit Over Cole Merger
APPLE REIT: 2nd Cir. Affirms Dismissal of Securities Suit
AURORA LOAN: Resolves Mortgage Modification Class Action
BANKRATE INC: Seeks Approval for Epicor Acquisition Suit Accord
BLACKSTONE GROUP: Trial in "Dahl" Case to Begin November 2014
BODY CENTRAL: Amended Complaint Filed in "Mogensen" Stock Suit
CARLYLE GROUP: Certification Hearing Date in Mass. Securities
CARLYLE GROUP: Shareholders Blocked from Amending D.C. Lawsuit
CREDIT CONTROL: Accused of Violating Fair Debt Collection Act
CRESTWOOD EQUITY: Awaits Approval of Settlement in Merger Lawsuit
CRESTWOOD EQUITY: Hearing in Suit v. Arrow Midstream Set for June
CROSS COUNTRY: CC Staffing Seeks to Settle Cal. Labor Lawsuit
DUNHAM'S SPORTS: Ex-Store Managers File Overtime Class Action
DYNEGY INC: N.Y. Court Junks "Silsby" Suit Over DMG Transfer
ENDO HEALTH: Faces Class Suit Alleging Antitrust Law Violations
ENERGY TRANSFER: Approval Sought for Accord in Merger Suit
ENERGY TRANSFER: Regency Still Faces Suits Over Eagle Rock Deal
ENSIGN GROUP: Settles Staffing Suits Over Health, Safety Code
ENSIGN GROUP: Considers Medicare Coverage Settlement Favorable
EQUAL ENERGY: Motion to Consolidate Okla. Securities Suits Filed
FIDELITY & GUARANTY: Amended Settlement Filed in Insurance Suit
FIRST MARBLEHEAD: Seeks to Dismiss "Smith" Securities Lawsuit
FITFLOP USA: Settles Deceptive Ad Class Action for $5.3 Million
FORGE GROUP: Bentham IMF Plans to Fund Shareholder Class Action
FUSION-IO INC: Still Faces Securities Lawsuits in California
GENERAL MOTORS: Plaintiffs' Lawyers Criticize Internal Report
GENERAL MOTORS: Two AM 100 Law Firms Issue Recall Probe Report
GENERAL MOTORS: No Conspiracy in Ignition-Switch Recall
GENERAL MOTORS: To Launch Compensation Program for Crash Victims
GENERAL MOTORS: Plaintiffs' Attorneys Argue Over Case Venue
GENERAL MOTORS: Meltons File New Suit Over 2005 Cobalt Crash
GENERAL MOTORS: 2006 Crash Victim Not on Confirmed Deaths List
GLAXOSMITHKLINE PLC: Georgia to Get $2.6MM in Drug Settlement
GNC HOLDINGS: Court Approval Sought for Hydroxycut Suit Accord
GNC HOLDINGS: Still Faces Suits Over DMAA-Containing Products
GNC HOLDINGS: Still Faces Certified Labor Suit in California
GNC HOLDINGS: Pa. Suit Related to Overtime Pay in Discovery
GREAT-WEST LIFE: Sued in California for Charging Excessive Fees
GROWLIFE INC: Served with "Romero" Securities Lawsuit in Calif.
HERE TO THERE: Accused of Not Paying Overtime Premiums in Indiana
HIGHER ONE: Executives Among Defendants in Class Action
IMPERIAL HOLDINGS: Warrants Issued as Part of Fuller Settlement
INFOBLOX INC: Fails to Disclose Heavy Discounting, Suit Claims
INTERCONTINENTALEXCHANGE GROUP: Still Faces Securities Lawsuits
JAZZ PHARMACEUTICALS: Still Faces Suit Over Gentium Acquisition
KERYX BIOPHARMACEUTICALS: Securities Suit in New York Now Closed
LENDER PROCESSING: 6th Cir. Affirms Dismissal of Foreclosure Suit
LIBERTY MEDIA: Cases Now Moot After Bid to Buy Sirius Dropped
LONG BEACH, CA: Faces "Ochoa" Suit Alleging Violations of ADA
MALLINCKRODT PUBLIC: Faces Suits Over Plan to Acquire Cadence
MALLINCKRODT PUBLIC: Faces Suits Over Plan to Purchase Questcor
MERCK & CO: Sued in California Over Coppertone Sunscreen Products
MICHAEL FOODS: "Tag-along" Cases Over Food Products in Discovery
MUNI: Judge Certifies Drivers' Minimum Wage Class Action
NELNET INC: Settlement Process Ongoing in Suit v. Peterson's
NELNET INC: Settling "Than Zaw" Suit Over Unlawful Phone Calls
NELNET INC: No Class Yet in "Keating" Suit Over Spam Text
NTS REALTY: Suits by Ky. & Delaware Unitholders Settled, Junked
OCLARO INC: No Trial Set for "Westley" Securities Suit in Calif.
PADBURY MINING: Investors Mull Class Suit Over Oakajee Agreement
PEOPLES HOME: Did Not Properly Pay Overtime to LPNs, Nurse Claims
PEOPLES TRUST: Faces Class Action Over Illegal Credit Card Fees
PETROLOGISTICS LP: Faces "Basaraba" Merger-Related Suit in Texas
PORTFOLIO RECOVERY: Files Motion to Stay Consolidated TCPA Suit
PROSPECT CAPITAL: Block & Leviton Files Securities Class Action
PRUDENTIAL FINANCIAL: Court Mulls Damage Award in Veterans Suit
PRUDENTIAL FINANCE: "Huffman" Suit by Beneficiaries Stayed
PRUDENTIAL FINANCIAL: Loses Bid to Dismiss Retirees' Suit in N.J.
PRUDENTIAL FINANCIAL: Agents File New Certification Motion
QC HOLDINGS: Review on Dismissal of N.C. Payday Loans Suit Mulled
QC HOLDINGS: Direct Credit Enters Accord in Suit Over Interest
QC HOLDINGS: Briefing in TCPA Violation Suit Expected in Q2
RITE AID: Faces Class Action in Calif. Over Spam Text Messages
RYCO CONSTRUCTION: Class Suit Seeks to Recover Unpaid Back Wages
SAGAL MEAT: Class Is Entitled to Unpaid Overtime Wages, Suit Says
SILVER SPRING: No Class Status in Cal. Suit Over Smart Meters
STATE FARM: Seeks Protective Order in $7-Bil. RICO Class Action
UNI-PIXEL INC: Still Faces Shareholder Suits in New York, Texas
UNIVERSAL MUSIC: Files Summary Judgment Suits in Royalties Action
URBAN OUTFITTERS: Court Says Insurance Don't Cover ZIP Code Suit
VERTEX PHARMACEUTICALS: Scott+Scott Files Securities Class Action
WASHINGTON KENNEL CLUB: Sued for Improperly Claiming Tip-Credit
WR GRACE: Bares Updates on Management of Property Damage Claims
ZAGG INC: Dismissal of Utah Securities Litigation Under Appeal
* Plaintiff's Bar Focuses on Injunctive Relief Class Actions
*********
AMERICAN REALTY: Reaches MoU in "Quaal" Suit Over ARCT III Merger
-----------------------------------------------------------------
The parties in a suit filed by Randell Quaal over the ARCT III
Merger agreed to a memorandum of understanding regarding
settlement of all claims asserted on behalf of the alleged class
of ARCT III stockholders, according to American Realty Capital
Properties, Inc.'s May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 31,
2014.
After the announcement of the ARCT III Merger Agreement on
December 17, 2012, Randell Quaal filed a putative class action
lawsuit filed on January 30, 2013 against the Company, ARC
Properties Operating Partnership, L.P. (the OP), ARCT III, ARCT
III OP, the members of the board of directors of ARCT III and
certain subsidiaries of the Company in the Supreme Court of the
State of New York. The plaintiff alleges, among other things, that
the board of ARCT III breached its fiduciary duties in connection
with the transactions contemplated under the ARCT III Merger
Agreement. In February 2013, the parties agreed to a memorandum of
understanding regarding settlement of all claims asserted on
behalf of the alleged class of ARCT III stockholders. In
connection with the settlement contemplated by that memorandum of
understanding, the class action and all claims asserted therein
will be dismissed, subject to court approval. The proposed
settlement terms required ARCT III to make certain additional
disclosures related to the ARCT III Merger, which were included in
a Current Report on Form 8-K filed by ARCT III with the SEC on
February 21, 2013. The memorandum of understanding also added that
the parties will enter into a stipulation of settlement, which
will be subject to customary conditions, including confirmatory
discovery and court approval following notice to ARCT III's
stockholders. If the parties enter into a stipulation of
settlement, a hearing will be scheduled at which the court will
consider the fairness, reasonableness and adequacy of the
settlement.
AMERICAN REALTY: CapLease Merger Suits Junked; "Tarver" Remains
---------------------------------------------------------------
Among the cases filed against American Realty Capital Properties,
Inc. after an announcement of the CapLease Merger Agreement, the
only remaining suit to date is that filed by Dewey Tarver, after a
Consolidated Action was dismissed, according to American Realty's
May 8, 2014, Form 10-Q filing with the U.S. Securities and
Exchange Commission for the quarter ended March 31, 2014.
Since the announcement of the CapLease Merger Agreement on May 28,
2013, the following lawsuits have been filed:
On May 28, 2013, Jacquelyn Mizani filed a putative class action
lawsuit in the Supreme Court for the State of New York against the
Company, ARC Properties Operating Partnership, L.P. (the OP),
Safari Acquisition LLC, CapLease, CapLease LP, CLF OP General
Partner, LLC and the members of the CapLease board of directors
(the "Mizani Action"). The complaint alleges, among other things,
that the merger agreement at issue was the product of breaches of
fiduciary duty by the CapLease directors because the proposed
merger transaction (the "CapLease Transaction") purportedly does
not provide for full and fair value for the CapLease shareholders,
the CapLease Transaction allegedly was not the result of a
competitive bidding process, the merger agreement allegedly
contains coercive deal protection measures and the merger
agreement and the CapLease Transaction purportedly were approved
as a result of improper self-dealing by certain defendants who
would receive certain alleged employment compensation benefits and
continued employment pursuant to the merger agreement. The
complaint also alleges that CapLease, the Company, the OP and
Safari Acquisition LLC aided and abetted the CapLease directors'
alleged breaches of fiduciary duty.
On July 3, 2013, Fred Carach filed a putative class action and
derivative lawsuit in the Supreme Court for the State of New York
against the Company, the OP, Safari Acquisition LLC, CapLease,
CapLease LP, CLF OP General Partner, LLC and the members of the
CapLease board of directors (the "Carach Action"). The complaint
alleges, among other things, that the merger agreement was the
product of breaches of fiduciary duty by the CapLease directors
because the merger purportedly does not provide for full and fair
value for the CapLease shareholders, the CapLease Transaction
allegedly was not the result of a competitive bidding process, the
merger agreement allegedly contains coercive deal protection
measures and the merger agreement and the CapLease Transaction
purportedly were approved as a result of improper self-dealing by
certain defendants who would receive certain alleged employment
compensation benefits and continued employment pursuant to the
merger agreement. The complaint also alleges that with respect to
the Registration Statement and draft joint proxy statement issued
in connection with the proposed CapLease Transaction on July 2,
2013, that disclosures made therein were insufficient or otherwise
improper. The complaint also alleges that CapLease, the Company,
the OP and Safari Acquisition LLC aided and abetted the CapLease
directors' alleged breaches of fiduciary duty.
On June 25, 2013, Dewey Tarver filed a putative class action and
derivative lawsuit in the Circuit Court for Baltimore City against
the Company, the OP, Safari Acquisition LLC, CapLease, CapLease
LP, CLF OP General Partner, LLC and the members of the CapLease
board of directors (the "Tarver Action"). The complaint alleges,
among other things, that the merger agreement was the product of
breaches of fiduciary duty by the CapLease directors because the
CapLease Transaction purportedly does not provide for full and
fair value for the CapLease shareholders, the CapLease Transaction
allegedly was not the result of a competitive bidding process, the
merger agreement allegedly contains coercive deal protection
measures and the merger agreement and the CapLease Transaction
purportedly were approved as a result of improper self-dealing by
certain defendants who would receive certain alleged employment
compensation benefits and continued employment pursuant to the
merger agreement. The complaint also alleges that CapLease,
CapLease LP, CLF OP General Partner, LLC, the Company, the OP and
Safari Acquisition, LLC aided and abetted the CapLease directors'
alleged breaches of fiduciary duty.
Counsel who filed each of these three cases reached an agreement
with each other as to who will serve as lead plaintiff and lead
plaintiffs' counsel in the cases and where they will be
prosecuted. Thus, on August 9, 2013, counsel in the Tarver Action
filed a motion for stay in the Baltimore Court, informing the
court that they had agreed to join and participate in the
prosecution of the Mizani and Carach Actions in the New York
Court. The Defendants consented to the stay of the Tarver Action
in the Baltimore Court, and on September 5, 2013, Judge Pamela J.
White issued an order granting that stay. Consequently, there has
been no subsequent activity in the Baltimore Court in the Tarver
Action. Also on August 9, 2013, all counsel involved in the Mizani
and Carach Actions filed a joint stipulation in the New York
Court, reflecting agreement among all parties that the Mizani and
Carach Actions should be consolidated (jointly, "the Consolidated
Actions") and setting out a schedule for early motion practice in
response to the complaints filed (the "Consolidation
Stipulation"). Pursuant to the Consolidation Stipulation, an
amended complaint was also filed in the New York court on August
9, 2013 and was designated as the operative complaint in the
Consolidated Actions ("Operative Complaint"). Pursuant to the
Consolidation Stipulation, all Defendants filed a motion to
dismiss all claims asserted in the Operative Complaint on
September 23, 2013. Plaintiffs' response was due on or before
November 7, 2013. On November 7, 2013, Plaintiffs filed a motion
seeking leave to file a second amended complaint, which the
Defendants have opposed. On March 24, 2014, Plaintiffs' counsel in
the Consolidated Actions dismissed those claims without prejudice.
Consequently, only the Tarver Action currently remains pending
among these cases, although it remains stayed.
AMERICAN REALTY: Dismissal Motion in "Poling" Lawsuit Opposed
-------------------------------------------------------------
Plaintiffs' counsel in a suit filed by John Poling in the Circuit
Court for Baltimore City against American Realty Capital
Properties, Inc. over the CapLease Merger Agreement has opposed a
motion to dismiss, according to American Realty's May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 31, 2014.
On October 8, 2013, John Poling filed a putative class action
lawsuit in the Circuit Court for Baltimore City against the
Company, the OP, Safari Acquisition LLC, CapLease, CapLease LP,
CLF OP General Partner, LLC and the members of the CapLease board
of directors (the "Poling Action"). The complaint alleges that the
merger agreement breaches the terms of the CapLease' 8.375% Series
B Cumulative Redeemable Preferred Stock ("Series B") and the terms
of the 7.25% Series C Cumulative Redeemable Preferred Stock
("Series C") and is in violation of the Series B Articles
Supplementary and the Series C Articles Supplementary. The
Complaint alleges claims for breach of contract and breach of
fiduciary duty against the CapLease entities and the CapLease
board of directors. The complaint also alleges that the Company,
the OP and Safari Acquisition, LLC aided and abetted CapLease and
the CapLease directors' alleged breach of contract and breach of
fiduciary duty.
On November 13, 2013, all counsel involved in the Poling Action
filed a joint stipulation, reflecting agreement among all parties
concerning a schedule for early motion practice in response to the
complaint filed (the "Scheduling Stipulation"). Pursuant to the
Scheduling Stipulation, all Defendants filed a motion to dismiss
all claims asserted in the Operative Complaint on December 20,
2013. Plaintiffs' counsel has opposed that the motion to dismiss,
and a hearing on the motion is currently scheduled for May 15,
2014.
AMERICAN REALTY: MoU Entered in Md. Lawsuit Over Cole Merger
------------------------------------------------------------
The parties to a Consolidated Action filed in the Circuit Court
for Baltimore City, Maryland over the merger of a wholly owned
subsidiary of Cole Real Estate Investments, Inc. (Cole) and Cole
Holdings Corporation, entered into a memorandum of understanding
regarding settlement of all claims asserted on behalf of the
alleged class of Cole stockholders, according to American Realty
Capital Properties, Inc.'s May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
Three putative class action and/or derivative lawsuits, which were
filed earlier this year, assert claims for breach of fiduciary
duty, abuse of control, corporate waste, unjust enrichment, aiding
and abetting breach of fiduciary duty and other claims relating to
the merger between a wholly owned subsidiary of Cole Real Estate
Investments, Inc. (Cole) and Cole Holdings Corporation, pursuant
to which Cole became a self-managed REIT. On October 22, 2013, the
Circuit Court for Baltimore City granted all defendants' motion to
dismiss with prejudice the action pending before the court, but
the plaintiffs have appealed that dismissal. The other two
lawsuits, which also purport to assert shareholder class action
claims under the Securities Act of 1933, as amended (the
"Securities Act"), are pending in the United States District Court
for the District of Arizona. Defendants filed a motion to dismiss
both complaints on January 10, 2014. Subsequently, both of those
lawsuits have been stayed by the Court pursuant to a joint request
made by all parties pending final approval of the consolidated
Baltimore Cole Merger Actions.
To date, eleven lawsuits have been filed in connection with the
Cole Merger. Two of these suits -- Wunsch v. Cole, et al
("Wunsch"), No. 13-CV-2186, and Sobon v. Cole, et al ("Sobon") --
were filed as putative class actions on October 25, 2013 and
November 18, 2013, respectively, in the U.S. District Court for
the District of Arizona. Between October 30, 2013 and November 14,
2013, eight other putative stockholder class action or derivative
lawsuits were filed in the Circuit Court for Baltimore City,
Maryland, captioned as: (i) Operman v. Cole, et al ("Operman");
(ii) Branham v. Cole, et al ("Branham"); (iii) Wilfong v. Cole, et
al. ("Wilfong"); (iv) Polage v. Cole, et al. ("Polage"); (v)
Corwin v. Cole, et al ("Corwin"); (vi) Green v. Cole, et al
("Green"); (vii) Flynn v. Cole, et al ("Flynn") and (viii) Morgan
v. Cole, et al. ("Morgan"). All of these lawsuits name the
Company, Cole and Cole's board of directors as defendants; Wunsch,
Sobon, Branham, Wilfong, Flynn, Green, Morgan and Polage also name
CREInvestments, LLC, a Maryland limited liability company and a
wholly-owned subsidiary of the Cole, as a defendant. All of the
named plaintiffs claim to be Cole stockholders and purport to
represent all holders of Cole's stock. Each complaint generally
alleges that the individual defendants breached fiduciary duties
owed to plaintiff and the other public stockholders of Cole in
connection with the Cole Merger, and that certain entity
defendants aided and abetted those breaches. The breach of
fiduciary duty claims asserted include claims that the Cole Merger
does not provide for full and fair value for the Cole
shareholders, that the Cole Merger was the product of an
"inadequate sale process," that the Cole Merger Agreement contains
coercive deal protection measures and the Cole Merger Agreement
and that the Cole Merger were approved as a result of or in a
manner which facilitates improper self-dealing by certain
defendants. In addition, the Flynn, Corwin, Green, Wilfong, Polage
and Branham lawsuits claim that the individual defendants breached
their duty of candor to shareholders and the Branham and Polage
lawsuits assert claims derivatively against the individual
defendants for their alleged breach of fiduciary duties owed to
Cole. The Polage lawsuit also asserts derivative claims for waste
of corporate assets and unjust enrichment. The Wunsch and Sobon
lawsuits also assert claims against Cole and the individual
defendants under Section 14(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), based on allegations that
the proxy materials omitted to disclose allegedly material
information, and a claim against the individual defendants under
Section 20(a) of the Exchange Act based on the same allegations.
Among other remedies, the complaints seek unspecified money
damages, costs and attorneys' fees.
In January 2014, the parties to the eight lawsuits filed in the
Circuit Court for Baltimore City, Maryland ("the consolidated
Baltimore Cole Merger Actions") entered into a memorandum of
understanding regarding settlement of all claims asserted on
behalf of the alleged class of Cole stockholders. In connection
with the settlement contemplated by that memorandum of
understanding, the class action and all claims asserted therein
will be dismissed, subject to court approval. The proposed
settlement terms required Cole to make certain additional
disclosures related to the Cole Merger, which were included in a
Current Report on Form 8-K filed by Cole with the SEC on January
14, 2014. The memorandum of understanding also contemplated that
the parties will enter into a stipulation of settlement, which
will be subject to customary conditions, including confirmatory
discovery and court approval following notice to Cole's
stockholders. If the parties enter into a stipulation of
settlement, a hearing will be scheduled at which the court will
consider the fairness, reasonableness and adequacy of the
settlement. There can be no assurance that the parties will
ultimately enter into a stipulation of settlement, that the court
will approve any proposed settlement, or that any eventual
settlement will be under the same terms as those contemplated by
the memorandum of understanding, therefore any losses that may be
incurred to settle this matter are not determinable.
The Sobon lawsuit was voluntarily dismissed on February 3, 2014.
The Company believes that the Wunsch lawsuit in connection with
the Cole Merger is without merit and that it has substantial
meritorious defenses to the claims set forth in the complaint.
On December 27, 2013, Realistic Partners filed a putative class
action lawsuit against the Company and the members of its board of
directors in the Supreme Court for the State of New York. Cole was
later added as a defendant also. The plaintiff alleges, among
other things, that the board of the Company breached its fiduciary
duties in connection with the transactions contemplated under the
Cole Merger Agreement and that Cole aided and abetted those
breaches. In January 2014, the parties entered into a memorandum
of understanding regarding settlement of all claims asserted on
behalf of the alleged class of the Company's stockholders. In
connection with the settlement contemplated by that memorandum of
understanding, the class action and all claims asserted therein
will be dismissed, subject to court approval. The proposed
settlement terms required the Company to make certain additional
disclosures related to the Cole Merger, which were included in a
Current Report on Form 8-K filed by the Company with the SEC on
January 17, 2014. The memorandum of understanding also
contemplated that the parties will enter into a stipulation of
settlement, which will be subject to customary conditions,
including confirmatory discovery and court approval following
notice to the Company's stockholders. If the parties enter into a
stipulation of settlement, a hearing will be scheduled at which
the court will consider the fairness, reasonableness and adequacy
of the settlement. There can be no assurance that the parties will
ultimately enter into a stipulation of settlement, that the court
will approve any proposed settlement, or that any eventual
settlement will be under the same terms as those contemplated by
the memorandum of understanding, therefore any losses that may be
incurred to settle this matter are not determinable.
APPLE REIT: 2nd Cir. Affirms Dismissal of Securities Suit
---------------------------------------------------------
The United States Court of Appeals for the Second Circuit (the
"Second Circuit") entered a summary order in the consolidated
class action referred to in the Company's prior filings as the In
re Apple REITs Litigation matter, on April 23, 2014, according to
Apple REIT Ten, Inc.'s May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 31,
2014.
In the summary order, the Second Circuit affirmed the dismissal by
the United States District Court for the Eastern District of New
York (the "District Court") of the plaintiffs' state and federal
securities law claims and the unjust enrichment claim. The Second
Circuit also noted that the District Court dismissed the
plaintiffs' remaining state common law claims based on its finding
that the complaint did not allege any losses suffered by the
plaintiff class, and held that, to the extent that the District
Court relied on this rationale, its dismissal of the plaintiffs'
state law breach of fiduciary duty, aiding and abetting a breach
of fiduciary duty, and negligence claims is vacated and remanded
for further proceedings consistent with the summary order. The
Company will defend against the claims remanded to the District
Court vigorously.
AURORA LOAN: Resolves Mortgage Modification Class Action
--------------------------------------------------------
Philip R. Stein, Esq. -- pstein@bilzin.com -- and Anthony Narula,
Esq. -- anarula@bilzin.com -- at Bilzin Sumberg Baena Price &
Axelrod LLP, in an article for The National Law Review, report
that a former goliath of the non-prime lending market, Aurora Loan
Services, LLC, recently resolved a class-action lawsuit alleging
that it fraudulently induced distressed California borrowers to
enter into purported "workout" agreements to extract unearned
payments. ALS was one of many servicing affiliates of big banks
that created, and profited off of, various reduced documentation
programs, which correspondent lenders originating and funding
residential home loans sold to Aurora Bank FSB were required to
follow. A subsidiary of Aurora Bank FSB, and affiliate of Lehman
Brothers Holdings, Inc., ALS left the mortgage servicing business
in the aftermath of the financial crisis of 2007-2008, selling the
majority of its remaining servicing rights to Nationstar Mortgage
LLC in 2012.
The class-action lawsuit against ALS was pending before Judge
Saundra Brown Armstrong of the United States District Court for
the Northern District of California. The Amended Complaint
contains accusations that ALS took advantage of homeowners who
fell behind on their mortgage payments, drawing them into
deceptive contracts that required borrowers to make monthly
payments in exchange for delaying impending foreclosures. The
agreements promised an opportunity for borrowers to obtain
mortgage modifications, but ALS allegedly failed to follow
through. The lawsuit was consolidated with two other cases and
survived various dispositive motions brought by ALS.
The settlement fund containing $5.3 million is expected to be
split among 15,000 mortgagors in California who were allegedly
duped into entering illusory agreements with ALS that induced them
to continue making payments with the false hope of curing their
deficiencies. Borrowers claimed they were under the impression
that their foreclosures were on hold while they were considered
for a loan modification. In actuality, any such modification
allegedly would have violated ALS' policies and procedures. The
plaintiffs contend that the workout agreement program was an
improper attempt to generate additional funds from non-performing
loans, allowing ALS to continue to reap servicing fees.
Defeating Demands for Repurchase
Following the collapse of the housing market, it has become all
too common for correspondent lenders to be inundated with
repurchase demands and indemnification requests made by big banks
and their servicing affiliates, such as Aurora and ALS.
When litigating or settling repurchase demands, loan originators
should consider whether residential servicers improperly serviced
any defaulted loans. To the extent that residential servicers
used deceptive or fraudulent practices, the affirmative defense of
unclean hands (among others) may prove to be successful.
Likewise, if residential servicers entered into modification
agreements with distressed borrowers, loan originators may be able
to take the position that a loan modified without the originator's
involvement is not the same loan that was sold, and therefore is
no longer subject to repurchase claims.
BANKRATE INC: Seeks Approval for Epicor Acquisition Suit Accord
---------------------------------------------------------------
Court approval is being sought for a settlement reached in a
lawsuit over the proposed acquisition of Epicor Software
Corporation by funds advised by Apax Partners, according to
Bankrate, Inc.'s May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 31,
2014.
In connection with the announcement of the proposed acquisition of
Epicor Software Corporation ("Legacy Epicor") by funds advised by
Apax in April 2011, four putative stockholder class action suits
were filed in the Superior Court of California, Orange County, and
two such suits were filed in Delaware Chancery Court. The actions
filed in California were entitled Kline v. Epicor Software Corp.
et al., (filed Apr. 6, 2011); Tola v. Epicor Software Corp. et
al., (filed Apr. 8, 2011); Watt v. Epicor Software Corp. et al.,
(filed Apr. 11, 2011), and Frazer v. Epicor Software et al.,
(filed Apr. 15, 2011). The actions filed in Delaware were entitled
Field Family Trust Co. v. Epicor Software Corp. et al., (filed
Apr. 12, 2011) and Hull v. Klaus et al., (filed Apr. 22, 2011).
Amended complaints were filed in the Tola and Field Family Trust
actions on April 13, 2011 and April 14, 2011, respectively.
Plaintiff Kline dismissed his lawsuit on April 18, 2011 and
shortly thereafter filed an action in federal district court.
Kline then dismissed his federal lawsuit on July 22, 2011.
The state court suits alleged that the Legacy Epicor directors
breached their fiduciary duties of loyalty and due care, among
others, by seeking to complete the sale of Legacy Epicor to funds
advised by Apax through an allegedly unfair process and for an
unfair price and by omitting material information from the
Solicitation/Recommendation Statement on Schedule 14D-9 that
Legacy Epicor filed on April 11, 2011 with the SEC. The complaints
also alleged that Legacy Epicor, Apax Partners, L.P. and Element
Merger Sub, Inc. aided and abetted the directors in the alleged
breach of fiduciary duties. The plaintiffs sought certification as
a class and relief that included, among other things, an order
enjoining the tender offer and merger, rescission of the merger,
and payment of plaintiff's attorneys' fees and costs. On April 25,
2011, plaintiff Hull filed a motion in Delaware Chancery Court for
a preliminary injunction seeking to enjoin the parties from taking
any action to consummate the transaction. On April 28, 2011,
plaintiff Hull withdrew this motion. On December 30, 2011, Hull
dismissed his Delaware suit.
On May 2, 2011, after engaging in discovery, plaintiffs advised
that they did not intend to seek injunctive relief in connection
with the merger, but would instead file an amended complaint
seeking damages in California Superior Court following the
consummation of the tender offer. On May 11, 2011, the Superior
Court for the County of Orange entered an Order consolidating the
Tola, Watt, and Frazer cases pursuant to a joint stipulation of
the parties. Plaintiffs filed a Second Amended Complaint on
September 1, 2011, which made essentially the same claims as the
original complaints. Plaintiffs Kline and Field Family Trust have
both joined in the amended complaint. The company filed a
demurrer (motion to dismiss) to this amended complaint on
September 29, 2011. The demurrers were heard on December 12, 2011,
and the Court overruled them. The Defendants answered the
Complaint on December 22, 2011. On June 22, 2012, the court
granted plaintiff's motion for class certification and dismissed
Mr. Hackworth as a defendant.
After the parties had completed fact discovery and begun expert
discovery, plaintiffs sought leave to amend their complaint to add
two new defendants, the Company's former chief financial officer
and the Company's former financial advisor, Moelis & Company. On
February 22, 2013, the Court granted plaintiffs leave, and
plaintiffs' Third Amended Complaint was filed. On April 5, 2013,
pursuant to a stipulation between the parties, the Court dismissed
Legacy Epicor from this action with prejudice. On April 29, 2013,
the Court overruled demurrers by the new defendants to the Third
Amended Complaint.
Although the company believes this lawsuit is without merit and
are prepared to vigorously defend against the claims, the parties
engaged in a mediation on October 21, 2013. Following the
mediation, the parties reached an agreement in principle to settle
the action, subject to the approval of the Court. If approved by
the Court, a settlement fund of $18 million will be created by the
various defendants. The Court set a preliminary approval hearing
for May 23, 2014.
As of March 31, 2014, the company has recorded a $7.8 million
liability which is included in the company's unaudited
consolidated balance sheet within accrued expenses and other
current liabilities, which represents the company's portion of the
settlement.
BLACKSTONE GROUP: Trial in "Dahl" Case to Begin November 2014
-------------------------------------------------------------
A hearing on plaintiffs' class certification motion in Kirk Dahl,
et al. v. Bain Capital Partners, LLC, et al. will take place after
May 19, 2014; the Court has directed that new summary judgment
motions be filed by August 1, 2014; and any trial of the action is
scheduled to begin in early November 2014, according to The
Blackstone Group L.P.'s May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
In December 2007, a purported class of shareholders in public
companies acquired by one or more private equity firms filed a
lawsuit against a number of private equity firms and investment
banks, including The Blackstone Group L.P., in the United States
District Court in Massachusetts (Kirk Dahl, et al. v. Bain Capital
Partners, LLC, et al.). The suit alleges that, from mid-2003
through 2007, eleven defendants violated the antitrust laws by
allegedly conspiring to rig bids, restrict the supply of private
equity financing, fix the prices for target companies at
artificially low levels, and divide up an alleged market for
private equity services for leveraged buyouts. After the
conclusion of discovery, the plaintiffs filed an amended complaint
in June 2012, in which the plaintiffs sought damages on behalf of
public shareholders that tendered their shares in connection with
17 leveraged buyouts. In March 2013, the court denied defendants'
joint motion for summary judgment and all but one individual
motion for summary judgment on plaintiffs' overarching conspiracy
claim but narrowed the scope of plaintiffs' allegations.
Consequently, the number of transactions for which plaintiffs are
seeking damages has been reduced from 17 to eight transactions.
The court has previously dismissed claims against Blackstone with
respect to three of these eight transactions because Blackstone
was released from any and all claims by the same shareholders in
prior litigation. In July 2013, the court denied all but two
defendants' renewed individual motions for summary judgment, and
in August 2013, the court granted another defendant's motion for
reconsideration and ordered summary judgment in favor of that
defendant. In July 2013, the court also denied the motion by
Blackstone and three other defendants for summary judgment on
plaintiffs' claim of a conspiracy with respect to the Hospital
Corporation of America (HCA). On October 21, 2013, plaintiffs
filed a motion for class certification and defendants filed an
opposition to that motion on January 24, 2014. On March 28, 2014,
plaintiffs filed a reply in support of their motion for class
certification. A hearing on plaintiffs' class certification motion
will take place after May 19, 2014. The Court has directed that
new summary judgment motions be filed by August 1, 2014. Any trial
of the action is scheduled to begin in early November 2014.
BODY CENTRAL: Amended Complaint Filed in "Mogensen" Stock Suit
--------------------------------------------------------------
A second amended complaint was filed in a securities suit Mogensen
v. Body Central Corp. et al., 3:12-cv-00954, pending in the United
States District Court for the Middle District of Florida,
according to the company's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 29, 2014.
On August 27, 2012, a securities class action, Mogensen v. Body
Central Corp. et al., 3:12-cv-00954, was filed in the United
States District Court for the Middle District of Florida against
the Company and certain of the Company's current and former
officers and directors. An amended complaint, filed on February
22, 2013, on behalf of persons who acquired the Company's stock
between November 10, 2011 and June 18, 2012, alleges that
defendants violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and SEC Rule 10b-5 by making false or
misleading statements about the business and operations, thereby
causing the stock price to be artificially inflated during that
period. The amended complaint seeks monetary damages in an
unspecified amount, equitable relief, costs and attorney's fees.
On March 19, 2014, the United States District Court for the Middle
District of Florida granted the defendants' motion to dismiss the
amended complaint. The court gave plaintiffs leave to file an
amended complaint. A second amended complaint was subsequently
filed on April 23, 2014, which, in addition to the allegations
previously filed, further alleges that one of the defendants, a
former officer and director, violated Section 20A of the
Securities and Exchange Act of 1934.
CARLYLE GROUP: Certification Hearing Date in Mass. Securities
-------------------------------------------------------------
The case management order in the suit Police and Fire Retirement
System of the City of Detroit v. Apollo Global Management, LLC
calls for a hearing on class certification sometime after May 19,
2014, and a jury trial commencing in November 2014, which could be
delayed in the event an appeal to the U.S. Court of Appeals for
the First Circuit on the class certification issue should become
necessary, according to The Carlyle Group L.P.'s May 8, 2014, Form
10-Q filing with the U.S. Securities and Exchange Commission for
the quarter ended March 31, 2014.
On February 14, 2008, a private class-action lawsuit challenging
"club" bids and other alleged anti-competitive business practices
was filed in the U.S. District Court for the District of
Massachusetts (Police and Fire Retirement System of the City of
Detroit v. Apollo Global Management, LLC). The complaint alleges,
among other things, that certain global alternative asset firms,
including the Partnership, violated Section 1 of the Sherman Act
by forming multi-sponsor consortiums for the purpose of bidding
collectively in company buyout transactions in certain going
private transactions, which the plaintiffs allege constitutes a
"conspiracy in restraint of trade." Count One of the complaint
alleges an overarching conspiracy relating to certain large buyout
transactions. Count Two of the complaint alleges a conspiracy with
regard to the buyout of Healthcare Corporation of America. The
plaintiffs seek damages as provided for in Section 4 of the
Clayton Act and an injunction against such conduct in restraint of
trade in the future. The defendants moved for summary judgment on
both counts. On March 13, 2013, the U.S. District Court for the
District of Massachusetts ruled that plaintiffs could proceed on
Count One solely on the basis of an alleged conspiracy to refrain
from "jumping" announced proprietary (i.e., non-auction) deals.
The Court stated that it would entertain further summary judgment
motions by individual defendants as to their participation in the
more narrowly defined alleged conspiracy. The Court also denied
summary judgment as to Count Two. On April 16, 2013, Carlyle filed
a consolidated motion, renewing its motion for summary judgment on
Count One, and moving for reconsideration on Count Two. On April
22, 2013, Carlyle joined a motion seeking reconsideration on Count
Two filed on behalf of all Count Two defendants. On June 20, 2013,
the Court denied the motion for reconsideration on Count Two filed
by the Count Two defendants. On July 18, 2013, the Court denied
Carlyle's individual summary judgment motion regarding its
participation in the conspiracy alleged in Count One. The
plaintiffs moved to certify the class on October 21, 2013. The
case management order calls for a hearing on class certification
sometime after May 19, 2014 and a jury trial commencing in
November 2014, which could be delayed in the event an appeal to
the U.S. Court of Appeals for the First Circuit on the class
certification issue should become necessary. Carlyle believes that
reasonable litigation and settlement costs that are not covered by
applicable insurance are indemnifiable by one or more of the
company's investment funds.
CARLYLE GROUP: Shareholders Blocked from Amending D.C. Lawsuit
--------------------------------------------------------------
The plaintiffs' previously filed notice of appeal in a securities
suit against The Carlyle Group L.P. in the United States District
Court for the District of Columbia was automatically reinstated
after the court refused a motion to amend the suit, according to
the company's May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 31,
2014.
On June 21, 2011, August 24, 2011 and September 1, 2011,
respectively, three putative shareholder class actions were filed
against Carlyle, certain of its affiliates and former directors of
Carlyle Capital Corporation Limited alleging that the fund
offering materials and various public disclosures were materially
misleading or omitted material information. Two of the shareholder
class actions (Phelps v. Stomber, et al. and Glaubach v. Carlyle
Capital Corporation Limited, et al.) were filed in the United
States District Court for the District of Columbia. Phelps v.
Stomber, et al. was also filed in the Supreme Court of New York,
New York County and was subsequently removed to the United States
District Court for the Southern District of New York. The two
original D.C. cases were consolidated into one case under the
caption of Phelps v. Stomber and the Phelps named plaintiffs were
designated "lead plaintiffs" by the Court. The New York case was
transferred to the D.C. federal court and the plaintiffs requested
that it be consolidated with the other two D.C. actions. The
plaintiffs were seeking compensatory damages sustained as a result
of the alleged misrepresentations, costs and expenses, as well as
reasonable attorney's fees. On August 13, 2012, the United States
District Court for the District of Columbia dismissed both the
D.C. and New York shareholder class actions. The plaintiffs moved
for leave to amend their complaint and/or for amendment of the
Court's decision, but the trial court denied that motion on June
4, 2013. The plaintiffs' previously filed notice of appeal to the
Court of Appeals for the District of Columbia Circuit was then
automatically reinstated and oral arguments on this appeal were
held on February 19, 2014.
CREDIT CONTROL: Accused of Violating Fair Debt Collection Act
-------------------------------------------------------------
Rick Mansour, Individually and on Behalf of All Others Similarly
Situated v. Credit Control, LLC, Case No. 8:14-cv-00862 (C.D.
Cal., June 4, 2014) alleges violations of the Fair Debt Collection
Practices Act.
The Plaintiff is represented by:
Seyed Abbas Kazerounian, Esq.
Matthew M. Loker, Esq.
KAZEROUNI LAW GROUP APC
245 Fischer Avenue, Suite D1
Costa Mesa, CA 92626
Telephone: (800) 400-6808
Facsimile: (800) 520-5523
E-mail: ak@kazlg.com
ml@kazlg.com
CRESTWOOD EQUITY: Awaits Approval of Settlement in Merger Lawsuit
-----------------------------------------------------------------
The United States District Court for the Southern District of
Texas is yet to approve a settlement reached in In re Crestwood
Midstream Partners Unitholder Litigation, Lead Case No. 4:13-cv-
01528, according to Crestwood Equity Partners LP's May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 31, 2014.
Five putative class action lawsuits challenging the Crestwood
Merger have been filed, four in federal court in the United States
District Court for the Southern District of Texas: (i) Abraham
Knoll v. Robert G. Phillips, et al. (Case No. 4:13-cv-01528); (ii)
Greg Podell v. Crestwood Midstream Partners, LP, et al. (Case No.
4:13-cv-01599); (iii) Johnny Cooper v. Crestwood Midstream
Partners LP, et al. (Case No. 4:13-cv-01660); and (iv) Steven
Elliot LLC v. Robert G. Phillips, et al. (Case No. 4:13-cv-01763),
and one in Delaware Chancery Court, Hawley v. Crestwood Midstream
Partners LP, et al. (Case No. 8689-VCL). All of the cases name
Legacy Crestwood (since merged into the Company), Crestwood Gas
Services GP LLC, Crestwood Holdings LLC, the current and former
directors of Crestwood Gas Services GP LLC, the Company, Inergy
Midstream, Crestwood Midstream GP LLC (formerly NRGM GP, LLC), and
Intrepid Merger Sub, LLC as defendants. All of the suits are
brought by a purported holder of common units of Inergy Midstream,
both individually and on behalf of a putative class consisting of
holders of common units of Inergy Midstream. The lawsuits
generally allege, among other things, that the directors of
Crestwood Gas Services GP LLC breached their fiduciary duties to
holders of common units of Inergy Midstream by agreeing to a
transaction with inadequate consideration and unfair terms and
pursuant to an inadequate process. The lawsuits further allege
that the Company, Inergy Midstream, Crestwood Midstream GP LLC,
and Intrepid Merger Sub, LLC aided and abetted the Legacy
Crestwood directors in the alleged breach of their fiduciary
duties. The lawsuits seek, in general, (i) injunctive relief
enjoining the merger, (ii) in the event the merger is consummated,
rescission or an award of rescissory damages, (iii) an award of
plaintiffs' costs, including reasonable attorneys' and experts'
fees, (iv) the accounting by the defendants to plaintiffs for all
damages caused by the defendants, and (v) such further equitable
relief as the court deems just and proper. Certain of the actions
also assert claims of inadequate disclosure under Sections 14(a)
and 20(a) of the Securities Exchange Act of 1934, and the Elliot
case also names Citigroup Global Markets Inc. as an alleged aider
and abettor. The plaintiff in the Hawley action in Delaware filed
a motion for expedited proceedings but subsequently withdrew that
motion and then filed a stipulation voluntarily dismissing the
action without prejudice (which has not yet been approved by the
Court). The plaintiffs in the Knoll, Podell, Cooper, and Elliot
actions filed an unopposed motion to consolidate these four cases,
which the Court granted and captioned the consolidated matter as
In re Crestwood Midstream Partners Unitholder Litigation, Lead
Case No. 4:13-cv-01528 (the "Consolidated Action"). The plaintiffs
entered into a Memorandum of Understanding (MOU) on September 24,
2013 to settle the Consolidated Action whereby the defendants
denied liability. The settlement contemplated by the MOU is
subject to a number of conditions, including notice to the class
and final court approval following completion of a settlement
hearing, which is scheduled for May 16, 2014. The defendants
expect the Court to approve the final settlement.
CRESTWOOD EQUITY: Hearing in Suit v. Arrow Midstream Set for June
-----------------------------------------------------------------
The motion to authorize a class action linked to the derailment of
a train transporting crude oil in Lac Megantic, Quebec, Canada,
including Arrow Midstream Holdings, LLC, will be heard in June
2014, according to Crestwood Equity Partners LP's May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 31, 2014.
Prior to the completion of the Arrow Acquisition on November 8,
2013, a train transporting over 50,000 barrels of crude oil
produced in North Dakota derailed in Lac Megantic, on July 6,
2013. The derailment resulted in the death of 47 people, injured
numerous others, and caused severe damage to property and the
environment. In October 2013, certain individuals suffering harm
in the derailment filed a motion to certify a class action lawsuit
in the Superior Court for the District of Megantic, Province of
Quebec, Canada, on behalf of all persons suffering loss in the
derailment.
In March 2014, the plaintiffs filed their fourth amended motion to
name Arrow and numerous other energy companies as additional
defendants in the class action lawsuit. The plaintiffs have named
at least 53 defendants purportedly involved in the events leading
up to the derailment, including the producers and sellers of the
crude being transported, the midstream companies that transported
the crude from the well head to the rail system, the manufacturers
of the rail cars used to transport the crude, the railroad
companies involved, the insurers of these companies, and the
Canadian Attorney General. The plaintiffs allege, among other
things, that Arrow (i) was a producer of the crude oil being
transported on the derailed train, (ii) was negligent in failing
to properly classify the crude delivered to the trucks that hauled
the crude to rail loading terminal, and (iii) owed a duty to the
petitioners to ensure the safe transportation of the crude being
transported. The motion to authorize the class action will be
heard in June 2014.
CROSS COUNTRY: CC Staffing Seeks to Settle Cal. Labor Lawsuit
-------------------------------------------------------------
CC Staffing, Inc., a subsidiary of Cross Country Healthcare, Inc.,
is seeking approval for the settlement of a labor suit pending in
the United States District Court, Northern District of California,
according to Cross Country's May 8, 2014, Form 10-Q filing with
the U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
On December 4, 2012, the Company's subsidiary, CC Staffing, Inc.
(now known as Travel Staff, LLC) became the subject of a purported
class action lawsuit (Alice Ogues, on behalf of herself and all
others similarly situated, Plaintiffs, vs. CC Staffing, Inc., a
Delaware corporation; and DOES 1-50, inclusive, Defendants) filed
in the United States District Court, Northern District of
California. Plaintiff alleges that traveling employees were denied
meal periods and rest breaks, that they should have been paid
overtime on reimbursement amounts, various other wage and hour
claims, and that they are entitled to associated penalties. In
2013, the parties have agreed to settle this lawsuit for $0.8
million with the understanding that such settlement is not an
admission by the Company of any liability, negligence or wrong
doing. The settlement amount has been accrued for and is included
in other current liabilities on its consolidated balance sheets.
The United States District Court, Northern District of California
granted preliminary approval of the settlement on January 17,
2014, subject to the inclusion of language requiring a five-day
cure period for deficient requests for exclusion from class
members. On February 6, 2014, the parties amended the settlement
agreement to include such language. A hearing for final approval
of the settlement agreement was scheduled for May 16, 2014.
DUNHAM'S SPORTS: Ex-Store Managers File Overtime Class Action
-------------------------------------------------------------
Brian Bowling, writing for TribLive, reports that a Troy, Mich.,
sports retailer with at least 14 stores in Western Pennsylvania
refuses to pay its assistant store managers overtime even though
most of their work is not managerial, a former Mercer County man
claims in a proposed class-action lawsuit filed on June 4 in
federal court.
Jason D. Vasil of Surprise, Ariz., claims that he regularly worked
at least 50 hours a week while living in Sharon and working at the
Dunham's Sports store in Hermitage between July 2012 and April
2014. Most of his work consisted of helping customers and
performing manual labor such as restocking shelves and cleaning
bathrooms, the lawsuit says.
When Dunham's Sports opened a store, it would send a team of
assistant store managers who would work 12 to 15 hours a day
setting up displays and equipment and stocking shelves. Using
them allowed the company to avoid the overtime it would have had
to pay regular employees to do the work, the lawsuit says.
DYNEGY INC: N.Y. Court Junks "Silsby" Suit Over DMG Transfer
------------------------------------------------------------
The U.S. District Court for the Southern District of New York
dismissed the remaining claims in Charles Silsby v. Carl C. Icahn,
et al., Case No. 12CIV2307, according to Dynegy Inc.'s May 8,
2014, Form 10-Q filing with the U.S. Securities and Exchange
Commission for the quarter ended March 31, 2014.
In connection with the prepetition restructuring and corporate
reorganization of the DH Debtor Entities and their non-debtor
affiliates in 2011 (the "2011 Prepetition Restructuring"), and
specifically the DMG Transfer, a putative class action stockholder
lawsuit captioned Charles Silsby v. Carl C. Icahn, et al., Case
No. 12CIV2307 (the "Securities Litigation"), was filed in the U.S.
District Court for the Southern District of New York. The lawsuit
challenged certain disclosures made in connection with the DMG
Transfer. As a result of the filing of the voluntary petition for
bankruptcy by Dynegy Inc., this lawsuit was stayed as against
Dynegy Inc. and as a result of the confirmation of the Joint
Chapter 11 Plan (the "Plan"), the claims against Dynegy Inc. in
the Securities Litigation are permanently enjoined.
On August 24, 2012, the lead plaintiff in the Securities
Litigation filed an objection to the confirmation of the Plan
asserting, among other things, that lead plaintiff should be
permitted to opt-out of the non-debtor releases and injunctions
(the "Non-Debtor Releases") in the Plan on behalf of all putative
class members. The company opposed that relief. On October 1,
2012, the Bankruptcy Court ruled that lead plaintiff did not have
standing to object to the Plan and did not have authority to opt-
out of the Non-Debtor Releases on behalf of any other party-in-
interest.
Accordingly, the Securities Litigation may only proceed against
the non-debtor defendants with respect to members of the putative
class who individually opted out of the Non-Debtor Releases. The
lead plaintiff filed a notice of appeal on October 10, 2012. On
June 4, 2013, the District Court dismissed the appeal. On July 3,
2013, the lead plaintiff filed a notice of appeal with the U.S.
Court of Appeals for the Second Circuit and filed a brief on
November 4, 2013. On July 19, 2013, the defendants filed a
substantive motion to dismiss the plaintiff's remaining claims. On
April 30, 2014, the District Court granted the defendants' motion
and dismissed the action.
ENDO HEALTH: Faces Class Suit Alleging Antitrust Law Violations
---------------------------------------------------------------
Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund,
individually and on behalf of all others similarly situated v.
Endo Health Solutions Inc., Endo Pharmaceuticals Inc., Penwest
Pharmaceuticals Co. and Impax Laboratories Inc., Case No. 2:14-cv-
03190 (E.D. Pa., June 4, 2014) alleges violations of The Clayton
Antitrust Act of 1914.
The Plaintiff is represented by:
Natalie Finkelman Bennett, Esq.
SHEPHERD FINKELMAN MILLER & SHAH LLC
35 E. State St.
Media, PA 19063
Telephone: (610) 891-9880
Facsimile: (610) 891-9883
E-mail: NFINKELMAN@sfmslaw.com
ENERGY TRANSFER: Approval Sought for Accord in Merger Suit
----------------------------------------------------------
Certain plaintiffs in lawsuits over the acquisition of PVR
Partners LP by Regency Energy Partners LP, a subsidiary of Energy
Transfer Equity, L.P., entered a settlement with defendants and
the parties are awaiting approval of the agreement, according to
Energy Transfer's May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 31,
2014.
Five putative class action lawsuits challenging the merger have
been filed and are currently pending. All of the cases name PVR,
PVR GP and the current directors of PVR GP, as well as Regency and
the General Partner of Regency (collectively, the "Regency
Defendants"), as defendants. Each of the lawsuits has been brought
by a purported unitholder of PVR, both individually and on behalf
of a putative class consisting of public unitholders of PVR. The
lawsuits generally allege, among other things, that the directors
of PVR GP breached their fiduciary duties to unitholders of PVR,
that PVR GP, PVR and the Regency Defendants aided and abetted the
directors of PVR GP in the alleged breach of their fiduciary
duties, and, as to the actions in federal court, that some or all
of PVR, PVR GP, and the directors of PVR GP violated Section 14(a)
of the Exchange Act and Rule 14a-9 promulgated thereunder and
Section 20(a) of the Exchange Act. The lawsuits purport to seek,
in general, (i) injunctive relief, (ii) disclosure of certain
additional information concerning the transaction, (iii) in the
event the merger is consummated, rescission or an award of
rescissory damages, (iv) an award of plaintiffs' costs and (v) the
accounting for damages allegedly caused by the defendants to these
actions, and, (vi) such further relief as the court deems just and
proper.
The styles of the pending cases are as follows: David Naiditch v.
PVR Partners, L.P., et al. (Case No. 9015-VCL) in the Court of
Chancery of the State of Delaware); Charles Monatt v. PVR
Partners, LP, et al. (Case No. 2013-10606) and Saul Srour v. PVR
Partners, L.P., et al. (Case No. 2013-011015), each pending in the
Court of Common Pleas for Delaware County, Pennsylvania; Stephen
Bushansky v. PVR Partners, L.P., et al. (C.A. No. 2:13-cv-06829-
HB); and Mark Hinnau v. PVR Partners, L.P., et al. (C.A. No. 2:13-
cv-07496-HB), pending in the United States District Court for the
Eastern District of Pennsylvania.
On January 28, 2014, the defendants entered into a Memorandum of
Understanding ("MOU") with Monatt, Srour, Bushansky, Naiditch and
Hinnau pursuant to which defendants and the referenced plaintiffs
agreed in principle to a settlement of their lawsuits ("Settled
Lawsuits"), which will be memorialized in a separate settlement
agreement, subject to customary conditions, including consummation
of the PVR Acquisition, which occurred on March 21, 2014,
completion of certain confirmatory discovery, class certification
and final approval by the Court of Common Pleas for Delaware
County, Pennsylvania. If the Court approves the settlement, the
Settled Lawsuits will be dismissed with prejudice and all
defendants will be released from any and all claims relating to
the Settled Lawsuits.
ENERGY TRANSFER: Regency Still Faces Suits Over Eagle Rock Deal
---------------------------------------------------------------
Regency Energy Partners LP, a subsidiary of Energy Transfer
Equity, L.P., continues to face lawsuits challenging its
acquisition of Eagle Rock Energy Partners, L.P. midstream assets,
according to Energy Transfer's May 8, 2014, Form 10-Q filing with
the U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
Two putative class action lawsuits challenging Regency's
acquisition of the Eagle Rock Energy Partners, L.P. midstream
assets are currently pending in federal district court in Houston,
Texas. Both cases name Eagle Rock and its current directors, as
well as Regency and a subsidiary (collectively, the "Regency
Defendants"), as defendants. Each of the lawsuits has been brought
by a purported unitholder of Eagle Rock (collectively, the
"Plaintiffs"), both individually and on behalf of a putative class
consisting of public unitholders of Eagle Rock. The Plaintiffs in
each case seek to enjoin the transaction, claiming, among other
things, that it yields inadequate consideration, was tainted by
conflict and constitutes breaches of common law fiduciary duties
or contractually imposed duties to the shareholders. The Regency
Defendants are named as "aiders and abettors" of the allegedly
wrongful actions of Eagle Rock and its board.
ENSIGN GROUP: Settles Staffing Suits Over Health, Safety Code
-------------------------------------------------------------
The Ensign Group, Inc. is settling staffing suits in California,
according to the company's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
A class action staffing suit was previously filed against the
Company in the State of California, alleging, among other things,
violations of certain Health and Safety Code provisions and a
violation of the Consumer Legal Remedies Act at certain of the
Company's California facilities. In 2007, the Company settled this
class action suit, and the settlement was approved by the affected
class and the Court. The Company has been defending a second such
staffing class-action claim filed in Los Angeles Superior Court;
however, a settlement was reached with class counsel and has
received Court approval. The total costs associated with the
settlement, including attorney's fees, estimated class payout, and
related costs and expenses, are projected to be approximately
$6,500, of which, approximately $1,500 of this amount was recorded
during the year ended December 31, 2013, with the balance having
been expensed in prior periods.
ENSIGN GROUP: Considers Medicare Coverage Settlement Favorable
--------------------------------------------------------------
Implementation of the provisions of the Medicare Coverage
Settlement Agreement could favorably impact Medicare coverage
reimbursement for the services of The Ensign Group, Inc.,
according to the company's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
A proposed federal class action settlement was filed in federal
district court on October 16, 2012 that would end the Medicare
coverage standard for skilled nursing, home health and outpatient
therapy services that a beneficiary's condition must be expected
to improve. The settlement was approved on January 24, 2013, which
tasked Centers for Medicare and Medicaid Services (CMS) with
revising its Medicare Benefit Manual and numerous other policies,
guidelines and instructions to ensure that Medicare coverage is
available for skilled maintenance services in the home health,
skilled nursing and outpatient settings. CMS must also develop and
implement a nationwide education campaign for all who make
Medicare determinations to ensure that beneficiaries with chronic
conditions are not denied coverage for critical services because
their underlying conditions will not improve. At the conclusion of
the CMS education campaign, the members of the class will have the
opportunity for re-review of their claims, and a two- or three-
year monitoring period will commence. Implementation of the
provisions of this settlement agreement could favorably impact
Medicare coverage reimbursement for the company's services.
EQUAL ENERGY: Motion to Consolidate Okla. Securities Suits Filed
----------------------------------------------------------------
Plaintiffs in securities lawsuits against Equal Energy Ltd. in the
U.S. District Court for Western District of Oklahoma have moved to
consolidate the cases, according to the company's May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 31, 2014.
On January 14, 2014, Equal Energy shareholder Johan Van Weelden
brought a separate lawsuit in the U.S. District Court for Western
District of Oklahoma against Equal Energy, its directors and
Petroflow: Van Weelden v. Equal Energy Ltd., et al., No. 14-cv-
0047-C. Subsequently three putative class actions were also filed
by shareholders in the same federal court: Montemarano et al. v.
Equal Energy Ltd., et al., No. 14-cv-0058-C; Cooke v. Equal
Energy, Ltd., et al., No. 14-CV-0087-C; Scripture v. Equal Energy
Ltd., et al., No. 14-cv-0114-C. These cases allege that
disclosures relevant to the proposed Arrangement Agreement with
Petroflow violate Section 14(a) and 20(a) of the Securities
Exchange Act. Defendants have only recently been served in these
matters, and litigation is still in its initial stages. Plaintiffs
have moved to consolidate the cases, and the various plaintiffs'
counsel are engaging in motion practice regarding who should be
appointed as lead counsel. Plaintiff Montemarano has also moved
to obtain early discovery from Equal Energy. Briefing of these
matters is ongoing.
FIDELITY & GUARANTY: Amended Settlement Filed in Insurance Suit
---------------------------------------------------------------
An amended Settlement Agreement was filed in a suit for a
California class consisting of all persons who own or owned an OM
Financial/Fidelity & Guaranty Life Insurance indexed universal
life insurance policy, according to Fidelity & Guaranty's May 8,
2014, Form 10-Q filing with the U.S. Securities and Exchange
Commission for the quarter ended March 31, 2014.
On July 18, 2011, a putative class action Complaint was filed in
the United States District Court for the Central District of
California, captioned Eddie L. Cressy v. OM Financial Life
Insurance Company, et. al., Case No. 2:2011-cv-05871. The
Plaintiff asked the Court to certify the action as a class action
on behalf of both a nationwide and a California class defined as
certain persons who were sold OM Financial Life Insurance equity-
indexed universal life insurance policies.
The Plaintiff alleged, inter alia, that the Plaintiff and members
of the putative class relied on defendants' advice to purchase
unsuitable insurance policies. After extensive motion practice,
the federal court dismissed the federal causes of action, with
prejudice, and, on May 9, 2013, declined to exercise supplemental
jurisdiction over the state law claims, dismissed the state law
claims, without prejudice, and granted the Plaintiff leave to re-
file the state law claims in California state court.
On July 5, 2013, the Plaintiff filed a putative class action
captioned Eddie L. Cressy v. Fidelity Guaranty [sic] Life
Insurance Company, et. al. in the Superior Court of California,
County of Los Angeles, at No. BC-514340. The state court Complaint
asserts, inter alia, that the Plaintiff and members of the
putative class relied on Defendants' advice in purchasing
unsuitable equity-indexed insurance policies. The Plaintiff seeks
to certify a class defined as "all persons who reside or are
located in the state of California who were sold OM Financial/FGL
Insurance equity-indexed universal life insurance policies as an
investment."
On April 4, 2014, the Plaintiff, FGL Insurance and the other two
defendants signed a Settlement Agreement, pursuant to which FGL
Insurance has agreed to pay a total of $5.3 to settle the claims
of a nationwide class consisting, with certain exclusions, of all
persons who own or owned an OM Financial/FGL Insurance indexed
universal life insurance policy issued from January 1, 2007
through March 31, 2014, inclusive. As part of the settlement, FGL
Insurance agreed to certification of the nationwide class for
settlement purposes only. An amended Settlement Agreement was
filed with the Court on April 23, 2014 as part of the Plaintiff's
Unopposed Motion for Preliminary Approval of Settlement and
Conditional Class Certification, which is scheduled to be heard by
the Court on May 21, 2014. FGL Insurance has the right to
unilaterally terminate the settlement if either: (i) 100
policyholders or (ii) policyholders representing more than one
percent (1%) of the total premiums paid opt out of or object to
the settlement. The settlement is subject to other conditions and
the Court's final approval.
At March 31, 2014, the Company estimated the total cost for the
settlement, legal fees and other costs related to this class
action would be $9.2 and established a liability for the unpaid
portion of the estimate of $7.1. Based on the information
currently available the Company does not expect the actual cost
for settlement, legal fees and other related cost to differ
materially from the amount accrued. The Company is seeking
indemnification from OM Group (UK) Limited ("OMGUK") under the
First Amended and Restated Stock Purchase Agreement, dated
February 17, 2011 (the "F&G Stock Purchase Agreement") between HFG
and OMGUK related to the settlement and the costs and fees in
defending the Cressy litigation in both the federal and state
courts. The Company has established an amount recoverable from
OMGUK for the amount of $4.5, the collection of which the Company
believes is probable. The actual amount recovered from OMGUK could
be greater or less than the Company's estimate, but the Company
anticipates that the amount recovered will not be materially
different than its current estimate. The settlement, legal fees
and other costs related to this class action and the amount
recoverable from OMGUK is presented net in the income statement in
the caption "Benefits and other changes in policy reserves."
FIRST MARBLEHEAD: Seeks to Dismiss "Smith" Securities Lawsuit
-------------------------------------------------------------
Plaintiff's opposition to a motion to dismiss the securities suit
Smith v. The First Marblehead Corp. et al., Civ. A. No. 13-cv-
12121-PBS is due to be filed in May 2014, according to the
company's May 8, 2014, Form 10-Q filing with the U.S. Securities
and Exchange Commission for the quarter ended March 31, 2014.
On August 28, 2013, a purported class action was filed in the
United States District Court for the District of Massachusetts
against FMD, Daniel Meyers, FMD's Chief Executive Officer and
Chairman of the FMD Board of Directors, and Kenneth Klipper, FMD's
Chief Financial Officer and one of FMD's Managing Directors. The
action is entitled Smith v. The First Marblehead Corp. et al.,
Civ. A. No. 13-cv-12121-PBS (D. Mass.). The plaintiff alleges,
among other things, that the defendants made false and misleading
statements and failed to disclose material information in various
SEC filings, press releases and other public statements concerning
the company's corporate income tax filings. The complaint alleges
various claims under the Securities Exchange Act of 1934, as
amended, and Rule 10b-5 promulgated thereunder. The complaint
seeks, among other relief, class certification, unspecified
damages, fees and such other relief as the court may deem just and
proper. In December 2013, the court appointed a lead plaintiff and
lead counsel. On February 20, 2014, an amended complaint was filed
by the lead plaintiff and contained similar allegations as the
earlier complaint. On April 7, 2014, the company filed a motion to
dismiss the amended complaint. Plaintiff's opposition to the
company's motion to dismiss is due to be filed in May 2014. A
class has not been certified in the action as of May 8, 2014.
FITFLOP USA: Settles Deceptive Ad Class Action for $5.3 Million
---------------------------------------------------------------
Kyla Asbury, writing for Legal Newsline, reports that FitFlop USA
has agreed to settle a class action lawsuit claiming its footwear
was deceptively advertised for $5.3 million.
The settlement resolves claims that FitFlop was deceptively
advertising its footwear as providing health benefits that they
did not allegedly deliver. Class members who purchased FitFlop
footwear in the United States between Jan. 1, 2007 and Jan. 8 are
eligible to receive between $25 and $100 from the settlement.
FitFlop has denied the allegations, but agreed to a settlement
that was approved on April 28, according to court documents.
The proposed settlement creates a $5.3 million settlement fund to
provide monetary relief to class members for their purchases of
FitFlop footwear and to pay for attorneys' fees, expenses and
notice and administration costs, according to the order granting
final approval for the class action settlement that was filed
April 28 in the U.S. District Court for the Southern District of
California.
If the settlement fund is not exhausted, the remainder will go to
Consumers Union of the United States, a non-profit group that says
it is dedicated to fighting false advertising, and Consumer
Watchdog, a non-profit civic entity that says it fights to expose,
confront and change deceptive corporate practices through policy
research, investigation, public education and advocacy.
The settlement fund was reached after the parties engaged in
settlement discussions at the early neutral evaluation conference
held before Magistrate Judge Karen S. Crawford and after attending
two private mediations with Martin Quinn of JAMS San Francisco on
Oct. 9, 2012, and June 19, according to settlement documents.
Following the parties' last mediation session, they continued to
engage in numerous telephonic conferences until a tentative
settlement was reached in July.
Charlice Arnold, a named plaintiff in the suit, will receive a
$5,000 service award and Barbara Glaberson and Angie Ojeda will
receive awards of $1,500, according to the settlement document.
The court founds that class counsel's request for $1.325 million
in attorneys' fees and $180,000 in expenses is fair and
reasonable.
"Through an extensive and comprehensive nationwide marketing
campaign, defendant claims that its expensive FitFlop Footwear
. . . with its patent-pending 'Microwobbleboard Technology' will
provide to anyone who wears it a variety of health benefits
ordinary footwear cannot provide," according to the complaint,
which was filed May 4, 2011, in the U.S. District Court for the
Southern District of California.
The defendant promised that its shoes improve posture, increase
muscle activation and toning and reduce joint strain, the
complaint stated.
FitFlops range from approximately $50 to $240, according to the
complaint.
The plaintiffs were represented by Timothy Gordon Blood --
tblood@bholaw.com -- Leslie E. Hurst -- lhurst@bholaw.com -- and
Thomas J. O'Reardon II of Blood Hurst & O'Reardon LLP;
Janine L. Pollack -- pollack@whafh.com -- Michael Liskow --
liskow@whafh.com -- Francis M. , Gregorek -- gregorek@whafh.com
-- Betsy C. Manifold -- manifold@whafh.com -- Rachele R. Rickert
-- rickert@whafh.com -- and Maris C. Livesay -- livesay@whafh.com
-- of Wolf Haldenstein Adler Freeman & Herz LLP; Elaine A. Ryan
and Patricia N. Syverson -- psyverson@bffb.com -- of Bonnett,
Fairbourn, Friedman & Balint, PC; James C. Shah of Shepherd
Finkelman Miller & Shah LLP; John F. Edgar of Edgar Law Firm LLC;
and Jayne A. Goldstein of Pomerantz Grossman Hufford Dahlstrom &
Gross LLP.
FitFlop was being represented by Brooke A. Alexander --
balexander@bsfllp.com -- Laura J. McKay and William S. Ohlemeyer -
- wohlemeyer@bsfllp.com -- of Boies, Schiller & Flexner LLP.
The case was assigned to District Judge Thomas J. Whelan.
U.S. District Court for the Southern District of California case
number: 3:11-cv-00973
FORGE GROUP: Bentham IMF Plans to Fund Shareholder Class Action
---------------------------------------------------------------
Oliver Probert, writing for Australian Journal of Mining, reports
that Bentham IMF, which in February said it would consider funding
a shareholder class action lawsuit against the collapsed mining
supply firm Forge, confirmed it would go ahead with that action to
AJM on May 27.
More than 1700 workers were made redundant when Forge Group was
forced into liquidation earlier this year, after costs blew out on
the Diamantina and West Angelas power station projects it was
contracted to build.
The company's stock price dropped more than 80% in a single day
when it announced the cost issues and an AU$127 million profit
writedown last November.
That announcement was followed on February 11 this year with the
decision by Forge's board of directors to place the company into
voluntary administration, appointing KordaMentha Restructuring as
receivers and managers of the business. A day later KordaMentha
announced the redundancy of much of Forge's workforce, and the
loss of many of the company's projects to other contractors. Soon
after, Ferrier Hodgson, the firm appointed to liquidate Forge,
announced that remaining shareholders in the ASX-listed business
would receive nothing more out of their investment.
The stunning collapse, which saw the Perth-based engineer's stock
fall from around AU$4.10 to around AU$0.60 in a single day in
November, enraged shareholders. Some alleged that the company's
directors had not been as honest and up-front with their
shareholders as they could or should have been, and left it too
late to break the bad news of cost overruns.
That's where Bentham IMF, an Australian funder of litigation
suits, has stepped in.
"It is simply not believable that Forge directors waited until
late November 2013 to tell investors of problems with the power
station contracts, when it [allegedly] knew or ought to have known
about them much earlier in the year," IMF investment manager Tania
Sulan said in February, before the company confirmed it would go
ahead in funding the lawsuit.
"This is a classic case of a company and its directors breaching
fundamental obligations to shareholders and the market," she
alleged.
IMF appealed to all shareholders to join the class action, and as
first reported in AJM's sister publication, the Australian Bulk
Handling Review, Ms. Sulan confirmed on May 27 that IMF will go
ahead with funding the lawsuit.
"We have decided that the claim size is sufficient to confirm
funding," Ms. Sulan said.
Ben Phi, practice group leader for Slater & Gordon, the legal firm
which was appointed to run the proposed action back in February,
said at that time: "Based on our investigations to date, we
believe that the proposed allegations against Forge have strong
grounds."
Current and former shareholders who acquired Forge shares on or
after January 1, 2013 and held some or all of these shares at any
time between November 4, 2013 and February 11, 2014 are eligible
to participate in the action, IMF said.
FUSION-IO INC: Still Faces Securities Lawsuits in California
------------------------------------------------------------
Fusion-Io, Inc. continues to face securities lawsuits filed in the
United States District Court for the Northern District of
California, according to the company's May 8, 2014, Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarter ended March 31, 2014.
Beginning on November 19, 2013, the Company and certain of its
current and former officers were named in three putative class
action lawsuits filed in the United States District Court for the
Northern District of California (Denenberg v. Fusion-io, Inc. et
al.; Miami Police Relief & Pension Fund v. Fusion-io, Inc. et al.;
Marriott v. Fusion-io, Inc. et al.). Two of the complaints are
allegedly brought on behalf of a class of purchasers of the
Company's common stock between August 10, 2012 and October 23,
2013, and one is brought on behalf of a purported class of
purchasers between January 25, 2012 and October 23, 2013. The
complaints generally allege violations of the federal securities
laws arising out of alleged misstatements or omissions by the
defendants during the alleged class periods. The complaints seek,
among other things, compensatory damages and attorneys' fees and
costs on behalf of the putative class.
GENERAL MOTORS: Plaintiffs' Lawyers Criticize Internal Report
-------------------------------------------------------------
Amanda Bronstad, writing for The National Law Journal, reports
that plaintiffs lawyers who have sued General Motors Co. over its
ignition switch recalls on June 5 criticized the automaker's
internal investigative report as biased and incomplete.
The 315-page report, released on June 5, concluded that GM failed
to identify ignition switch defects -- which have been linked to
13 deaths -- due to incompetence among its employees, not a cover-
up by senior executives. GM fired 15 employees and disciplined
five others.
"The ignition switch issue was touched by numerous parties at
GM -- engineers, investigators, lawyers -- but nobody raised the
problem to the highest levels of the company," said CEO Mary
Barra, who described the report as "extremely thorough, brutally
tough and deeply troubling."
The report, conducted by former U.S. Attorney Anton Valukas --
avalukas@jenner.com -- chairman of Jenner & Block, is GM's
explanation as to why it recalled 2.6 million vehicles for
ignition switch problems this year. Documents that GM submitted
to Congress indicate the company knew about the defects for the
past decade.
Mark Robinson, senior partner of Robinson, Calcagnie, Robinson
Shapiro Davis Inc. in Newport Beach, Calif., said the Valukas
report, some of which is redacted, is just a start.
"The report [Thurs]day makes us think there's a lot more questions
that we want answered," he said. "There are a lot of apologies in
here, a lot of admissions of wrongdoing, and I commend GM for
that, making this public. On the other hand, these admissions are
shocking. It makes me wonder what more we're going to get out of
these documents."
For instance, Mr. Robinson said, the report concluded that
Ms. Barra and GM general counsel Mike Milliken didn't know about
the ignition switch problems until after GM made the decision to
institute this year's recalls. But senior attorney Bill Kemp, who
the report said is "widely regarded as GM's most knowledgeable,
experienced, and trusted safety lawyer," could not explain to GM's
investigators why he failed to tell Mr. Milliken about known
ignition switch problems until earlier this year.
Mr. Kemp was among those employees GM fired, according to a
Bloomberg report on June 5. (The report recommends a series of
changes to GM's legal department.)
"The highest, most knowledgeable product liability lawyer at GM
knew. As far as I'm concerned, GM knew," Mr. Robinson said.
"Whether he told Milliken or not . . . doesn't really matter. It
might be a deficiency in the way they're running the office, but
clearly the most knowledgeable product liability lawyer at GM
knew."
Mr. Robinson and other plaintiffs lawyers also questioned the
independence of the report itself.
Mr. Valukas of Jenner spearheaded the investigation with the
assistance of King & Spalding -- firms that have long served as
outside counsel to GM. Jenner & Block's previous work for GM
includes its $15.8 billion initial public offering in 2010.
"Let's not lose sight of the fact that GM commissioned and paid
for the report, and its primary author is an attorney who
represents GM," Steve Berman, managing partner of Seattle's Hagens
Berman Sobol Shapiro, said in a written statement on June 5.
With more than 60 lawsuits filed against GM, plaintiffs lawyers
said they have more faith that their own cases will tell the
entire story, even though discovery has been stayed pending
resolution of issues related to GM's 2009 bankruptcy.
Lance Cooper, founding partner of The Cooper Firm in Marietta,
Ga., whose case on behalf of the parents of Brooke Melton has been
credited for uncovering the ignition switch defects, said in a
statement on Thursday that documents and the testimonies of
employees showed that GM chose not to fix the ignition switch
defects for cost reasons.
"That is why it is critical that the civil cases move forward so
that the American public may learn the whole truth, not just the
truth GM chooses to disclose," Mr. Cooper said.
GENERAL MOTORS: Two AM 100 Law Firms Issue Recall Probe Report
--------------------------------------------------------------
Brian Baxter, writing for The Am Law Daily, reports that for
General Motors, the mounting legal problems that began with a suit
brought by a four-lawyer firm in Marietta, Ga., took a new turn on
June 5, when two Am Law 100 firms with close ties to the company
issued their verdict on what caused GM's current recall crisis.
In a 315-page investigative report filed with the National Highway
Traffic Safety Administration, GM's lawyers from Jenner & Block
and King & Spalding detail a "pattern of incompetence and neglect"
at the automaker, but found no widespread conspiracy among top
executives to cover up an ignition switch defect that has been
linked to 13 deaths and sparked the recall of 2.6 million
vehicles.
The report -- the product of an internal inquiry led by Jenner
chairman Anton "Tony" Valukas -- specifically cleared CEO
Mary Barra of any wrongdoing related to GM's efforts to uncover
and address the mechanical flaw, according to sibling publication
The National Law Journal.
Ms. Barra, recently named one of Time's 100 Most Influential
People and set to earn $14.4 million in compensation this year
after becoming the first woman to move into GM's top leadership
role in January, said publicly that the report's findings
implicated a "disproportionate number" of senior executives. She
also announced that 15 employees have left the company as a result
of what the Valukas-led team uncovered.
While Ms. Barra didn't name the individuals in question, various
news reports soon identified several of those affected. Among
them is William Kemp Jr., a longtime GM in-house lawyer who had
led the company's safety and recall unit. Kemp's name has surfaced
in connection with internal GM emails pointing to ignition switch
problems with the company's Pontiac G5 and Chevrolet Cobalt
models. (The Cobalt has been Google's preferred vehicle for its
Streetview cameras. The Internet search giant is now developing
its own self-driving cars.)
Mr. Kemp, who works out of a GM's engineering and technical center
in the Detroit suburb of Warren, Mich., did not respond to a
request for comment. In the early 1990s, he helped lead a robust
GM response to a flawed Dateline NBC News report about the
allegedly explosive nature of the automaker's "sidesaddle" fuel
tanks. The network later settled a suit filed by company over
that report. (Bloomberg noted Mr. Kemp's role in the Dateline
drama in a story last month about GM's efforts to overhaul its in-
house legal department to avoid further recall delays.)
As noted in a series of stories over the past two months by
sibling publication Corporate Counsel, GM's general counsel
Michael Millikin has been at the heart of the recent recall
crisis, which has increased scrutiny on the company's in-house
legal operations.
Corporate Counsel reported on June 5 that Mr. Millikin's name is
conspicuously absent as an author of the massive report filed with
NHTSA. Only Mr. Valukas, who served as the top federal prosecutor
in Chicago from 1985 to 1989, is listed on the document's title
page. While the absence of Mr. Millikin's name is notable given
that GM said previously he would lead the inquiry alongside
Mr. Valukas, a GM spokesman told Corporate Counsel that the report
was prepared independently by the Valukas-led team.
Mr. Millikin, a 65-year-old Michigan native and former federal
narcotics prosecutor who spent more than 30 years at GM before
becoming its in-house legal chief in 2009, has appeared with
Ms. Barra as she endured congressional grillings over the past few
months. He did not respond to a request for comment about how
much GM is paying Jenner and King & Spalding for their work on the
matter or why they were picked to handle the investigation.
Such internal investigations -- for embattled companies,
nonprofits, politicians or labor unions -- have become a lucrative
source of revenue for large firms in recent years. In 2010 Mr.
Valukas, hired the year before as a court-appointed examiner in
the massive Lehman Brothers bankruptcy case, released a 2,200-page
report detailing what caused the financial services giant to
implode. (Mr. Jenner reaped $58 million in fees and expenses for
its work in the Lehman matter.)
In the GM report released on June 5, the company's lawyers state
that their investigation "covered a time period of more than [15]
years, involved hundreds of witness interviews and the review of
millions of documents. Throughout the entire investigation, GM
provided unfettered access and cooperation."
The report describes Jenner's role as being focused on "the
knowledge of specific senior executives, as well as GM's board."
The firm, which notes that its investigation focused solely on the
ignition switch and not other recalls, also did not seek to
"reconstruct accidents or determine which injuries or fatalities
were or were not caused by the safety defect in the Cobalt and
other cars."
Mr. Jenner identified more than 300 document custodians and then
subjected their files to a "document production process and an
investigative process" that resulted in two different levels of
review to "identify documents potentially responsive to government
requests." (GM is currently coping with at least four different
federal investigations.)
The report states that than 230 witnesses were interviewed over a
period of 70 days by at least two Jenner attorneys. The only
exceptions were former GM in-house legal chiefs Robert Osborne,
who is currently of counsel with Jenner in Washington, D.C., and
his predecessor Thomas Gottschalk, now of counsel with Kirkland &
Ellis in the same city. The two former GCs were interviewed by an
unidentified outside firm.
It is unclear whether that firm was King & Spalding, which,
according to the GM report, was retained to "assist in responding
to requests from government agencies." King & Spalding lawyers
also assisted in searches for documents and conducted "first-
level" document review, as well as participated in a "limited
number" of witness interviews in the "initial phase of the
investigation."
A King & Spalding spokesman and Jenner spokeswoman both referred
requests for comment to GM, whose spokesman Greg Martin told The
Am Law Daily in an email that the company had "nothing additional
to provide" beyond the report itself.
Besides its ties to Mr. Osborne, a former cochair of the corporate
department at Jenner, the Chicago-based Am Law 100 firm has
enjoyed a longtime relationship with GM. The firm received
roughly $23 million for its role advising the company five years
ago during its 40-day stint in Chapter 11 and subsequent initial
public offering that raised $23.1 billion in late 2010. (Joseph
Gromacki, who joined Jenner from Kirkland in 2003 and now chairs
the firm's corporate practice, was named an American Lawyer
Dealmaker of the Year in 2011 for his GM work.)
Asked about the firm's current work for GM, newly elected Jenner
managing partner Terry Truax told The Am Law Daily earlier this
year that "we're very proud to represent GM, and the GM in-house
community is looking to Valukas to give an unvarnished report."
The NLJ reported on June 5 that several plaintiffs lawyers suing
GM -- some of whom have banded together to take on the automaker
-- have assailed the Valukas report as a whitewash by conflicted
counsel. "Let's not lose sight of the fact that GM commissioned
and paid for the report, and its primary author is an attorney who
represents GM," said a statement by Steve Berman, a founding
partner of Seattle-based plaintiffs firm Hagens Berman Sobol
Shapiro. "I see this as nothing more than a cynical attempt at
masking the truth, at the expense of GM owners."
King & Spalding also did some bankruptcy work for GM and has long
handled product liability litigation for the company, including
incidents over faulty fuel tanks and ignition switches.
GM hired former Kaye Scholer partner Kenneth Feinberg --
kfeinberg@feinbergrozen.com -- in April to advise on a
compensation fund for recall victims. Mr. Feinberg, now a founder
and name partner of Washington, D.C.'s Feinberg Rozen, will be now
tasked with administering a compensation fund to dole out payments
to potential victims of GM's ignition switch failure. The company
has said it is preparing for more recalls, and as such the
automaker has added to its recall-related payroll.
Earlier last week, The NLJ reported the company hired Holland &
Knight to lobby on "oversight and legislation pertaining to [the]
automobile recall."
Holland & Knight partners Richard Gold -- rich.gold@hklaw.com --
the head of the firm's public policy and regulation practice, and
Paul Bock, who heads its government section group, are leading a
team working on the matter for the auto giant, according to
records on file with the U.S. Senate. GM has paid outside and
in-house lobbyists nearly $3 million through the first quarter of
this year.
Besides seeking to make inroads on Capitol Hill, GM, which has had
its defenders as it seeks to weather the recall storm, now must
also rebuild its relationships with customers and some business
partners.
A lawyer with a large firm in Michigan with close ties to the auto
industry, who sought anonymity in order to speak freely, says the
company sought last year to issue new terms and conditions for
auto parts suppliers that would increase the suppliers' potential
exposure to future recall costs.
After a supplier "revolt," GM withdrew its proposed modifications
to contracts with companies that provide the company with the
necessary parts to make its myriad vehicles in February, says the
lawyer, who notes that suppliers still share some liability for
future recalls, though not under the stiffer terms GM sought to
push through last year.
Perhaps not surprisingly, Reuters reported in May on a survey of
"tier 1" auto parts suppliers finding that GM was the worst OEM --
or original equipment manufacturer, an acronym used to identify
Detroit's big automakers -- to have as a customer. GM earned the
dubious distinction by beating out Chrysler, which Reuters reports
had held the title since 2008.
Chrysler -- which like GM emerged from government-backed
bankruptcy proceedings five years ago -- is currently the subject
of its own NHTSA investigation related to a 2012 recall prompted
by faulty air bags in its Jeep sport utility vehicles.
GENERAL MOTORS: No Conspiracy in Ignition-Switch Recall
-------------------------------------------------------
Todd Ruger, writing for The National Law Journal, reports that an
exhaustive internal investigation of General Motors Co.'s
ignition-switch recall shortcomings revealed a "pattern of
incompetence and neglect," but no overarching conspiracy to
conceal information from the public, the company said on June 5.
The investigation, led by former U.S. Attorney Anton Valukas,
chairman of Jenner & Block, found GM's handling of the recall was
"riddled with failures which led to tragic results for many," the
company's chief executive office said in a statement.
The Valukas report concluded that no one at GM took responsibility
to fix the issue on the Chevy Cobalt, GM CEO Mary Barra said in
the statement. The report, Ms. Barra said, "revealed no
conspiracy by the company to cover up the facts and no evidence
that any employee made a trade-off between safety and cost."
The report was sent to Congress on June 5, according to The New
York Times.
"The ignition-switch issue was touched by numerous parties at GM
-- engineers, investigators, lawyers -- but nobody raised the
problem to the highest levels of the company," Ms. Barra said.
Ms. Barra described the Valukas findings as "extremely thorough,
brutally tough, and deeply troubling," the press release stated.
Kenneth Feinberg of Feinberg Rozen will administer a compensation
program for victims of crashes related to faulty ignition
switches.
Ms. Barra said 15 individuals who were determined to have acted
inappropriately are no longer with the company. Disciplinary
actions have been taken against five other employees.
GM Chairman Tim Solso said in a statement the company will
implement recommendations made in the Valukas report.
"In addition, the board also retained independent counsel to
advise us with respect to this situation and governance and risk
management issues," Mr. Solso said. "We will establish a stand-
alone risk committee to assist in overseeing these efforts."
GM has recalled 2.6 million cars and acknowledged that 13 people
have died due to the ignition defects, which could shut off
engines and prevent air bags from deploying in accidents. The
U.S. National Highway Traffic Safety Administration on May 16
announced that GM had agreed to pay the maximum $35 million for
its failure to promptly report the defects to the public.
GM faces more than 60 lawsuits over the ignition-switch recalls.
GM has pushed to coordinate those cases in New York, where the
automaker has moved in bankruptcy court to bar most of the cases
under its 2009 Chapter 11 reorganization. A U.S. Judicial Panel
on Multidistrict Litigation ruling, expected within a few weeks,
will decide the identity of the judge who will issue critical
rulings in the GM litigation.
The plaintiffs lawyers, at a recent session, outlined key facts in
the litigation and focused attention on GM's lawyers, including
general counsel Michael Millikin, who signed off on settlements in
earlier cases involving accidents that could have been caused by
the ignition-switch defects.
Mr. Solso said on June 5 the Valukas report "confirmed" that
Ms. Barra and Mr. Millikin "did not learn about the ignition-
switch safety issues and the delay in addressing them until after
the decision to issue a recall was made on Jan. 31, 2014."
The plaintiffs lawyers also said the problems go beyond the
ignition switch, involving GM's long culture of cost cutting, and
they believe the number of deaths is much greater than the company
has acknowledged. NHTSA officials in May declared that the
defects could be responsible for more than 13 deaths.
Mr. Jenner collected more than 41 million documents for the
investigation, and conducted more than 350 interviews. The report
details roundtable discussions about litigation and cases that GM
lawyers worked on.
The report includes nine recommendations for the GM legal staff,
such as holding regular discussions between each product
litigation attorney and the higher-level attorneys about potential
safety issues. It also recommends a member of the legal staff be
designated a liaison to the "Global Vehicle Safety" group at the
company.
GM lawyers should also meet monthly with engineers, and should
create guidance concerning the types of issues that should be
elevated to the general counsel, the report found.
GENERAL MOTORS: To Launch Compensation Program for Crash Victims
----------------------------------------------------------------
The Associated Press reports that General Motors plans to launch a
program to compensate crash victims or families affected by an
ignition switch problem that is linked to at least 13 deaths in
crashes of older GM cars. The company said it expects the program
will start accepting claims Aug. 1, but didn't specify how much
money will be involved. Guidelines and other details will be
developed in the coming weeks by compensation expert Kenneth
Feinberg, GM said.
GM has recalled 2.6 million older small cars to repair the
ignition switches. A report issued on June 5 said it took GM more
than a decade to issue the recall partly because employees
improperly viewed the switch defect as a "customer satisfaction"
issue instead of a safety problem.
GM announced the hiring of Mr. Feinberg in April. He previously
handled the Sept. 11 Victim Compensation Fund as well as funds for
victims of the Boston Marathon bombing and the BP oil spill.
Mr. Feinberg told The Associated Press that the timeline means "I
have my work cut out for me." During the next few weeks, he said
he'll speak with plaintiff's lawyers, lawmakers, public interest
groups and GM officials.
"I'll propose some ideas based on my experience that will form the
basis for a . . . compensation program," he said.
CEO Mary Barra said on June 5 that the report by former U.S.
Attorney Anton Valukas found a pattern of incompetency and
neglect, but not a cover-up, at the heart of the Detroit
automaker's long delay in dealing with the faulty switches.
Ms. Barra said the company would "do the right things for those
who were harmed" and "everything in our power to make sure this
never happens again."
The internal investigation and Ms. Barra's remarks don't deter
Lance Cooper, a Georgia-based personal injury attorney who
represents victims suing GM.
Mr. Cooper said in a statement that documents produced in one
lawsuit show that GM opted not to fix the safety defects in cars
"for cost reasons."
"This is why it is critical that the civil cases move forward so
that the American public may learn the whole truth, not just the
truth GM chooses to disclose," he said.
Mr. Feinberg said he's been focused on his task, not the
investigation, so he can't comment on the latter's findings or how
they might affect those suing GM.
"That's up to them -- it's a voluntary program I'm establishing,"
he said. "The alternative is protracted litigation."
GENERAL MOTORS: Plaintiffs' Attorneys Argue Over Case Venue
-----------------------------------------------------------
Jeff Bennett at The Wall Street Journal reports that 15 attorneys
with product-liability cases pending against General Motors Co.
each got two minutes on June 5 in federal court to make the case
for consolidating the cases before a federal judge in their home
states.
As lawyers argued for their venues -- Florida offers speed;
California is home to a judge with recent experience handling
large-scale automotive product liability litigation -- a traffic
signal-style device shifted from green to yellow to red, counting
down each lawyer's remaining time. In addition to California and
Florida, lawyers argued for New York, Texas, Louisiana,
Pennsylvania and Michigan, where GM is based.
Newport Beach, Calif., Attorney Mark Robinson of Robinson
Calcagnie Robinson Shapiro Davis Inc. argued that the GM cases
should be assigned to California. He was the lead attorney for
plaintiffs in cases brought against Toyota Motor Corp. over
defects related to sudden acceleration. Those cases were
consolidated in Orange County, Calif., and Toyota agreed to a $1.6
billion settlement in 2013.
Mr. Robinson said there is no need to assign the case to New York,
where the GM bankruptcy case is being handles. The bankruptcy and
the civil litigation deal with different issues, he argued.
The panel is expected to make decisions within the next two weeks.
Consumers have filed 59 cases, claiming that they've suffered
economic loss because the Chevrolet Cobalt and other older models
have been deemed by GM to be defective. The auto maker has
recalled 2.6 million cars to fix faulty ignition switches, linked
by the company to 13 deaths.
A GM attorney ran into a wall of questions from the seven member
panel when he argued that none of these claims can move forward
until a bankruptcy court rules on whether most of the claims that
occurred before the auto maker's 2009 bankruptcy are nullified.
GM argues that the company's bankruptcy settlement diverts such
claims to an "Old GM" entity set up to dispose of liabilities and
assets that aren't part of the restructured "New GM."
One panel member asked whether it is, in fact, GM's view that even
product liability cases filed after 2009 cannot proceed. The
lawyer agreed that was GM's position.
Other attorneys asked the panel to not wait on the bankruptcy
court and move ahead so lawyers can begin discovery. They argued
that any post June 2009 claim should be heard.
GENERAL MOTORS: Meltons File New Suit Over 2005 Cobalt Crash
------------------------------------------------------------
Gregory Wallace, Poppy Harlow and Amanda Hobor, writing for
CNNMoney, report that the first time Brooke Melton's car stalled
while driving, her father insisted they take it to the dealership
to be fixed. But it happened again three days later, on March
10, 2010 -- her 29th birthday. This time, she lost control of the
car. It spun out, hydroplaned, hit an oncoming vehicle and rolled
off the road, dropping 15 feet into a creek. Before her parents
could get to the hospital, Brooke Melton was dead.
Police concluded her 2005 Chevrolet Cobalt was "traveling too fast
for the roadway conditions;" she was doing 58 miles per hour in a
55 zone. But her parents doubted she was to blame.
"She was just so responsible about driving. I mean, we even
called her scaredy cat because she was so responsible about
driving," Ken Melton said. "I knew in my heart and in my gut
there was something wrong with the car, that it wasn't her fault."
Their skepticism, and the findings of an engineering expert they
hired, first alerted the public to an ignition switch flaw.
General Motors (GM) went on to recall 2.6 million vehicles for the
problem.
The Meltons had already settled their lawsuit against GM by the
time the recall was issued. Now that the automaker has admitted
it knew of ignition switch issues 10 years before the recall, the
family has filed a new lawsuit asking a judge to reopen the case,
and accused a GM engineer of lying about his knowledge of the
flaw.
General Motors told CNNMoney it "denies the assertion that GM
fraudulently concealed relevant and critical facts in connection
with the Melton matter." It said the results of an internal
investigation into the circumstances will be released Thursday.
The GM engineer did not return CNNMoney's calls.
'Not about the money'
Ken and Beth Melton are convinced their daughter's death was due
to the flawed ignition switch. They say her car's data recorder
shows that the ignition was switched out of "run," to the
"accessory" position, seconds before the crash, citing an expert
they hired. That can disable power steering, anti-lock braking
and the airbags. The airbag in Melton's Cobalt did not deploy.
The GM dealership that worked on the car days earlier received a
bulletin that GM distributed to dealerships in 2006 about the
problem and should have fixed it, the Meltons claim. Their
lawsuit also names the dealership, which declined through its
attorney to speak with CNNMoney.
Brooke Melton isn't on General Motors' list of 13 ignition switch-
related deaths, GM CEO Mary Barra said, because the company is
only counting head-on crashes where air bags did not deploy.
Federal regulators say the death toll is likely higher.
Beth Melton accuses the automaker of "playing with numbers."
"Enough of this posturing. Enough of trying to say 'we didn't do
anything wrong,'" Ken Melton said.
The Meltons say they thought the case was behind them when they
settled with GM in September 2013. Revelations emerging from the
2014 recall changed their mind.
"Not only did General Motors' defect cause their daughter's death,
but then (GM) withheld evidence," their attorney, Lance Cooper,
said. The Meltons "did not have all the information that was
necessary before they settled their case." They acknowledge that
persuading a judge to reopen the case is difficult. But Cooper
said the "evidence is overwhelming" and shows that GM
"fraudulently entered into" a settlement.
The terms of the Melton's settlement were not disclosed. And the
Meltons say the effort to reopen the lawsuit isn't about the
money.
"We want to know who at General Motors knew, and what General
Motors is going to do in the future, and what happened to Brooke
and who allowed it," Beth Melton said. This time, the Meltons say
they won't settle, and intend to fight all the way up to the
Georgia Supreme Court if necessary.
Brooke's legacy
Not far from their home, Brooke Melton's battered 2005 Cobalt
still sits in storage, its steering wheel removed by
investigators. The Meltons took CNNMoney to see it -- the couples'
first time seeing their daughter's car since they cleared it of
her belongings four years ago.
"I want people to see how violent the impact was and that her
death is not being counted -- it means like it doesn't matter," he
said.
The Meltons insist GM should have notified owners earlier, and the
dealership should have fixed Brooke's car.
And they believe that her crash led to the recall. Mr. Cooper's
law firm hired engineering expert Mark Hood, who collected GM
ignition switches from cars and junkyards and discovered the
problem.
In February, General Motors began the ignition switch recalls.
"Every time I see a recall from General Motors, I give a nod to
Brooke," Beth said. "These people need to know that there are
problems with their cars and people are finding out -- and I think
it has a lot to do with the case that started with our daughter."
GENERAL MOTORS: 2006 Crash Victim Not on Confirmed Deaths List
--------------------------------------------------------------
CNN Wire reports that Natasha Weigel, 18, and her friend
Amy Rademaker, 15, died from car crash injuries in October 2006,
after their Chevy Cobalt hit a tree in St. Croix County,
Wisconsin. Amy was sitting in the passenger seat in the front.
Natasha was in the back.
However, General Motors counts only Amy's death among the 13
caused by ignition switch failures, which are at the center of a
massive recall and have led to Congressional hearings and multiple
investigations into the auto company.
Natasha's family learned last month from government safety
regulators that she is not on GM's list of confirmed deaths.
And the parents of both Amy and Natasha are at a loss to
understand the distinction.
"I don't understand how Amy can be on that list and not Natasha,"
said Ken Rimer, Natasha's step father. "Had the ignition switch
not failed, they'd both be alive."
General Motors has yet to reach out to either girls' parents
directly. They both say they learned about the tie between the
accident and the ignition switch problem earlier this year. They
are represented by the same lawyer, Robert Hilliard of Texas, and
joined a lawsuit with other victims suing GM in March.
Last month, both families asked the National Highway Traffic
Safety Administration whether GM had included their daughters on
the list of 13 confirmed deaths. Amy's name was on it. Natasha's
wasn't.
The Rimers say they can only guess why Natasha was excluded.
Amy's front-seat airbag didn't activate, a problem with the
ignition switch failures. Since Natasha was in the backseat,
which didn't have airbags, her death was not tied to an
unactivated airbag. She died 11 days after the accident from head
injuries. The driver was also injured but survived.
GM confirmed to CNNMoney that its list includes only those in the
front seat of cars whose airbags didn't inflate.
But the pain and loss for Natasha's family isn't any different.
"I just don't understand," Mr. Rimer said.
Amy's mother, Margie Beskau, received an email from the government
around April 11 that her daughter was one of the victims. She was
surprised that Natasha's name wasn't on that list.
"GM is trying to pass this off as an airbag problem, and it's
not," Ms. Beskau said.
GM declined to comment on the lawsuit. But spokesman Greg Martin
said that "GM has taken responsibility for its actions and will
keep doing so."
GLAXOSMITHKLINE PLC: Georgia to Get $2.6MM in Drug Settlement
-------------------------------------------------------------
Lawrence Viele Davidson, writing for Daily Report, reports that
GlaxoSmithKline reached a $105 million settlement with Georgia and
44 other states last week for misrepresenting uses and qualities
of its drugs Advair, Paxil and Wellbutrin.
Georgia will get $2.62 million from the settlement, said
John Sours, the administrator of the Governor's Office of Consumer
Protection. The money goes in the state's general fund. The
Office of Consumer Protection is charged with prosecuting
violations of the Fair Business Practices Act.
The company is accused of giving financial incentives to its sales
force to market drugs for off-label use. Sales representatives
also provided samples of the drugs to doctors who were likely to
only prescribe the drugs for off-label use, according to the
settlement.
GSK reached a related settlement with the federal government in
2012. It agreed to pay $3 billion to resolve criminal and civil
liabilities for rewarding doctors who promoted the drugs for
off-label use with lavish trips, according to the U.S. Department
of Justice.
"GSK is the first pharmaceutical company to commit to fundamental
reforms to our business model in the U.S. and around the world by
stopping payments to doctors to speak about our products, stopping
payments to doctors to attend medical conferences and cutting the
tie linking the pay of our sales representatives who call on
prescribers to the number of prescriptions issued," the company
said in a press release.
The company did not admit liability in the state settlement
agreement.
Illinois and Oregon state prosecutors led the executive committee
in the multi-state litigation, according to a Georgia press
release. Mr. Sours' office works with the state Attorney
General's office, which gets information about any push for
consumer protection lawsuits from the National Attorneys General
Association.
"We will continue to collaborate in order to protect Georgia
consumers from unfair business conduct," Attorney General
Sam Olens said in the press release.
GNC HOLDINGS: Court Approval Sought for Hydroxycut Suit Accord
--------------------------------------------------------------
The parties in In re: Hydroxycut Marketing and Sales Practices
Litigation, MDL No. 2087 have since reached a revised settlement,
which remains subject to Court approval, according to GNC
Holdings, Inc.'s May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 31,
2014.
On May 1, 2009, the FDA issued a warning on several Hydroxycut-
branded products manufactured by Iovate Health Sciences U.S.A.,
Inc. ("Iovate") based on 23 reports of liver injuries from
consumers who claimed to have used the products between 2002 and
2009. As a result, Iovate voluntarily recalled 14 Hydroxycut-
branded products.
Following the recall, the Company was named, among other
defendants, in multiple lawsuits related to Hydroxycut-branded
products in several states. Iovate previously accepted the
Company's tender request for defense and indemnification under its
purchasing agreement with the Company in these matters. The
Company's ability to obtain full recovery in respect of any claims
against the Company in connection with products manufactured by
Iovate under the indemnity is dependent on Iovate's insurance
coverage, the creditworthiness of its insurer, and the absence of
significant defenses by such insurer. To the extent the Company is
not fully compensated by Iovate's insurer, it can seek recovery
directly from Iovate. The Company's ability to fully recover such
amounts may be limited by the creditworthiness of Iovate.
As of March 31, 2014, there were 76 pending lawsuits related to
Hydroxycut in which the Company had been named: 70 individual,
largely personal injury claims and six putative class action
cases, generally inclusive of claims of consumer fraud,
misrepresentation, strict liability and breach of warranty.
The United States Judicial Panel on Multidistrict Litigation
consolidated pretrial proceedings of many of the pending actions
in the Southern District of California (In re: Hydroxycut
Marketing and Sales Practices Litigation, MDL No. 2087).
In May 2013, the parties to the individual personal injury cases
signed a Master Settlement Agreement, under which the Company is
not required to make any payments. Settlement payments will be
made exclusively by Iovate and dismissals are expected to be
entered in these actions on or before June 1, 2014.
The parties in the consolidated class actions reached a
settlement, but the Court denied final approval of that settlement
in December 2013. The parties have since reached a revised
settlement, which remains subject to Court approval. The Company
is not required to make any payments under the current settlement
agreement. Following the resolution of the individual personal
injury cases and the settlement of the consolidated class action
suits, all of the Hydroxycut claims currently pending against the
Company will be resolved without any payment by the Company.
GNC HOLDINGS: Still Faces Suits Over DMAA-Containing Products
-------------------------------------------------------------
GNC Holdings, Inc. was named in 18 lawsuits involving products
containing derivatives from geranium, including 15 personal injury
cases and three putative class action cases as of March 31, 2014,
according to the company's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
Prior to December 2013, the Company sold products manufactured by
third parties that contained derivatives from geranium known as
1.3-dimethylpentylamine/ dimethylamylamine/13-dimethylamylamine,
or "DMAA," which were recalled from its stores in November 2013.
As of March 31, 2014, the Company was named in 18 lawsuits
involving products containing DMAA, including 15 personal injury
cases and three putative class action cases. The proceedings
associated with these cases, which generally seek indeterminate
money damages, are in the early stages, and any liabilities that
may arise from these matters are not probable or reasonably
estimable at this time. The Company is contractually entitled to
indemnification by its third-party vendor with regard to these
matters, although the Company's ability to obtain full recovery in
respect of any such claims against it is dependent upon the
creditworthiness of the vendor and/or its insurance coverage and
the absence of any significant defenses available to its insurer.
GNC HOLDINGS: Still Faces Certified Labor Suit in California
------------------------------------------------------------
GNC Holdings, Inc. continues to face a certified class action in
the U.S. District Court, Northern District of California, alleging
violation of the Fair Labor Standards Act, according to the
company's May 8, 2014, Form 10-Q filing with the U.S. Securities
and Exchange Commission for the quarter ended March 31, 2014.
On July 21, 2011, Charles Brewer, on behalf of himself and all
others similarly situated, sued General Nutrition Corporation in
federal court, alleging state and federal wage and hour claims
(U.S. District Court, Northern District of California, Case No.
11CV3587). On October 7, 2011, plaintiff filed an eight-count
amended complaint alleging, inter alia, meal, rest break and
overtime violations. On October 21, 2011, the Company filed a
motion to dismiss the complaint and on December 14, 2011 the court
dismissed count six (the federal overtime claim) giving plaintiffs
an opportunity to amend the complaint within thirty days. On
January 13, 2012, plaintiff filed a Second Amended complaint. On
September 18, 2012, Plaintiff filed a Motion for Conditional
Certification and on January 7, 2013, the Court conditionally
certified a Fair Labor Standards Act class with respect to one of
Plaintiff's claims.
GNC HOLDINGS: Pa. Suit Related to Overtime Pay in Discovery
-----------------------------------------------------------
Discovery regarding opt-in plaintiffs is ongoing in a labor suit
filed against GNC Holdings, Inc. in the U.S. District Court,
Western District of Pennsylvania, according to the company's May
8, 2014, Form 10-Q filing with the U.S. Securities and Exchange
Commission for the quarter ended March 31, 2014.
On June 29, 2010, Dominic Vargas and Anne Hickok, on behalf of
themselves and all others similarly situated, sued General
Nutrition Corporation and the Company in federal court (U.S.
District Court, Western District of Pennsylvania, Case No. 2:05-
mc-02025). The two-count complaint alleges, generally, that
plaintiffs were required to perform work on an uncompensated basis
and that the Company failed to pay overtime for such work. The
second count of the complaint alleges the Company retaliated
against plaintiffs when they complained about the overtime policy.
The Company filed a motion to dismiss count II of the Complaint
and on January 6, 2011 the court granted the motion. In fall,
2011, plaintiffs filed their Motion for Class Certification. On
August 16, 2012, the Court ruled on the motion, granting in part
and denying in part, the motion. Class notice was mailed to
putative class members in November 2012 and discovery regarding
opt-in plaintiffs is ongoing. As of March 31, 2014, an immaterial
liability has been accrued in the accompanying financial
statements.
GREAT-WEST LIFE: Sued in California for Charging Excessive Fees
---------------------------------------------------------------
John Teets v. Great-West Life & Annuity Insurance Company, Case
No. 2:14-at-00725 (E.D. Cal., June 4, 2014) alleges that Great-
West breached its fiduciary duties, and engaged in transactions
prohibited under the Employee Retirement Income Security Act of
1974 by unilaterally setting its own compensation and by charging
excessive fees incident to administering the Contracts.
Guaranteed Investment Contracts are a financial product offered by
insurance companies. Investors -- in this case retirement plans
-- pay money in exchange for a contract promising a return on the
investment. A GIC is a type of group annuity contract.
Great-West Life & Annuity Insurance Company operates the Great-
West Key Guaranteed Portfolio Fund. Retirement plans in which the
Plaintiff and the proposed class are participants and
beneficiaries invest in the Fund pursuant to a GIC that governs
the relationship between the plans and Great-West, referred to as
"the Contract." The Contract enables Great-West to set its own
compensation as a service provider to the plans.
Great-West is an indirect wholly-owned subsidiary of Great-West
Lifeco, Inc. Great-West is headquartered in Greenwood Village,
Colorado.
The Plaintiff is represented by:
Todd F. Jackson, Esq.
Nina Wasow, Esq.
Julie Wilensky, Esq.
LEWIS, FEINBERG, LEE, RENAKER & JACKSON P.C.
476 9th Street
Oakland, CA 94607
Telephone: (510) 839-6824
Facsimile: (510) 839-7839
E-mail: tjackson@lewisfeinberg.com
nwasow@lewisfeinberg.com
jwilensky@lewisfeinberg.com
- and -
Garrett W. Wotkyns, Esq.
Michael McKay, Esq.
SCHNEIDER WALLACE COTTRELL KONECKY LLP
8501 N. Scottsdale Rd., Suite 270
Scottsdale, AZ 85253
Telephone: (480) 428-0145
Facsimile: (866) 505-8036
E-mail: gwotkyns@schneiderwallace.com
mmckay@schneiderwallace.com
- and -
Scot Bernstein, Esq.
LAW OFFICES OF SCOT D. BERNSTEIN,
A PROFESSIONAL CORPORATION
101 Parkshore Drive, Suite 100
Folsom, CA 95630
Telephone: (916) 447-0100
Facsimile: (916) 933-5533
E-mail: swampadero@sbernsteinlaw.com
- and -
Todd Schneider, Esq.
Mark Johnson, Esq.
SCHNEIDER WALLACE COTTRELL KONECKY LLP
180 Montgomery Street, Suite 2000
San Francisco, CA 94104
Telephone: (415) 421-7100
Facsimile: (415) 421-7105
E-mail: tschneider@schneiderwallace.com
mjohnson@schneiderwallace.com
GROWLIFE INC: Served with "Romero" Securities Lawsuit in Calif.
---------------------------------------------------------------
Growlife, Inc. was served with the securities complaint Randy
Romero v. Growlife, Inc. et al; Case No.: CV14-03015, according to
the company's May 8, 2014, Form 8-K filing with the U.S.
Securities and Exchange Commission.
On April 18, 2014, a class action lawsuit (the "Complaint") was
filed against GrowLife, Inc., a Delaware corporation (the
"Company") in the United States District Court, Central District
of California (Randy Romero v. Growlife, Inc. et al; Case No.:
CV14-03015). The Complaint alleges two claims: (1) Violation of
Section 10(b) and Rule 10b-5 of the Securities Exchange Act of
1934 (the "Act") against the Company and the individual executive
officers and board of directors (collectively, the "Board"); and
(2) Violation of Section 20(a) of the Act against the members of
the Board.
On May 2, 2014, the Company was served with the Complaint. The
Complaint alleges (among other things) that the Company and the
Board published certain documents and filings that were inaccurate
and/or inadequate, causing Company securities to be traded at an
inflated price. The Complaint further alleges that the Company's
and Board's actions caused the members in the class action to
suffer damages in an amount to be proven at trial. The Complaint
also claims that members of the Board are in violation of Section
20(a) of the Act due to their position and relationship with the
Company and their alleged involvement with the Company's violation
of Section 10(b) and Rule 10b-5 of the Act.
HERE TO THERE: Accused of Not Paying Overtime Premiums in Indiana
-----------------------------------------------------------------
W. Edward Kriete on Behalf of Himself and All Others Similarly
Situated v. Here to There, Inc. and Joshua Baxter, Case No. 1:14-
cv-00917-JMS-DKL (S.D. Ind., June 4, 2014) is a proposed class and
collective actions brought on behalf of all former and current
employees of the Defendants, who were not paid overtime premiums
and had funds deducted for alleged illegal reasons.
Here to There, Inc., is an incorporated business. Joshua Baxter
is the president of Here to There, Inc.
The Plaintiff is represented by:
Ronald E. Weldy, Esq.
WELDY & ASSOCIATES
8383 Craig Street, Suite 330
Indianapolis, IN 46250
Telephone: (317) 842-6600
Facsimile: (317) 842-6933
E-mail: weldy@weldylaw.com
HIGHER ONE: Executives Among Defendants in Class Action
-------------------------------------------------------
Christopher Hoffman, writing for New Haven Register, reports that
a class-action lawsuit alleges that Higher One and some of its top
executives knowingly misled shareholders about its finances and
the legality of its business practices.
As a result, shareholders suffered significant financial losses
when the company announced May 12 that it faces Federal Reserve
penalties so large it could default on a loan, the suit alleges.
The revelations caused the company's stock to tumble 14 percent to
$5.51 a share, says the action filed by Goldman, Gruber & Woods of
Trumbull and Pomerantz LLC of New York.
"As a result of the dissemination of the aforementioned false and
misleading reports, releases and public statements, the market
price of Higher One securities was artificially inflated," the
action claims. "In ignorance of the adverse facts concerning
Higher One's business and financial condition which were concealed
by defendants, plaintiff and the other members of the class
purchased or otherwise acquired Higher One securities at
artificially inflated prices."
In addition to Higher One, the action names as defendants company
co-founder and former CEO Mark Volchek, Chief Financial Officer
Christopher Wolf and Vice President of Finance Jeffrey Wallace.
The suit seeks unspecified damages for hundreds of thousands of
Higher One shareholders.
Founded in 2000 by three Yale undergraduates, Higher One
specializes in distributing financial aid refunds, money left over
after a student's fees are paid. Critics say Higher One uses
deceptive practices to lure students into signing up for its bank
accounts and then charges them abusive fees. The company denies
the charges.
The lawsuit notes that Higher One twice has settled claims over
allegedly illegal practices. In August 2012, it paid $11 million
in restitution to 60,000 students and a $110,000 fine to the
Federal Deposit Insurance Corp. About 14 months later, it settled
six class-action lawsuits for $15 million.
In both instances, the company pledged as part of the settlements
to cease any improper practices and touted that fact repeatedly in
public financial filings, the suit says.
But on May 12, Higher One revealed in a financial filing that the
Federal Reserve had found the firm's marketing and disclosure
practices violate the Federal Trade Commission Act, the lawsuit
says. The central bank is proposing fines so severe that they
could cause a loan default, the filing said.
"Thus, while the company actively touted that it had
'substantially revised (the) compliance management system,' since
the 2012 settlement, and had 'agreed to make and/or maintain
certain practice changes,' in fact, the company continued its
improper marketing and disclosure practices," the lawsuit says.
"These practices ultimately placed the company at risk of further
sanctions."
The company's and the defendants' "wrongful acts and omissions"
precipitated a decline in stock value that caused shareholders to
suffer "significant losses and damages," the lawsuit reads.
Higher One's stock price declined further since the May 12
announcement, closing at $3.68 a share on May 28.
IMPERIAL HOLDINGS: Warrants Issued as Part of Fuller Settlement
---------------------------------------------------------------
Warrants to purchase two million shares of Imperial Holdings, Inc.
stock as part of a settlement in the suit Fuller v. Imperial
Holdings et al., were issued into an escrow account in April 2014,
according to the company's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
On December 16, 2013, final approval of the settlement to the
class action designated Fuller v. Imperial Holdings et al. was
granted by the United States District Court for the Southern
District of Florida. The terms of the class action settlement
included a cash payment of $12.0 million, with $11.0 million
contributed by the Company's primary and excess director and
officer liability insurance carriers, with such amounts paid
during the quarter ended March 31, 2014. The terms of the
settlement also include the issuance of warrants to purchase two
million shares of the Company's stock. The estimated fair value at
March 31, 2014 of such warrants was $5.4 million. The warrants,
which were issued into an escrow account in April 2014 will have a
five-year term from the date they are distributed to class
participants and have an exercise price of $10.75.
INFOBLOX INC: Fails to Disclose Heavy Discounting, Suit Claims
--------------------------------------------------------------
Safedin Beqaj, Individually and on Behalf of All Others Similarly
Situated v. Infoblox Inc., Robert D. Thomas, and Remo E. Canessa,
Case No. 3:14-cv-02564 (N.D. Cal., June 4, 2014) alleges that the
Defendants made false or misleading statements and failed to
disclose that:
(1) the Company was discounting heavily to maintain market
share;
(2) the Company's Federal business prospects were weak and
would continue to be weak for the foreseeable future; and
(3) the Company was having difficulty closing big-ticket deals
that had previously driven revenue growth.
Infoblox is a Delaware corporation headquartered in Santa Clara,
California. Infoblox provides a broad family of enterprise and
service provider-class solutions to automate management of the
critical network infrastructure services needed for secure,
scalable and fault-tolerant connections between applications,
devices and users. The Individual Defendants are directors and
officers of the Company.
The Plaintiff is represented by:
Lionel Z. Glancy, Esq.
Michael M. Goldberg, Esq.
Robert Vincent Prongay, Esq.
GLANCY BINKOW & GOLDBERG LLP
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
E-mail: lglancy@glancylaw.com
mmgoldberg@glancylaw.com
rprongay@glancylaw.com
- and -
Howard G. Smith, Esq.
LAW OFFICES OF HOWARD G. SMITH
3070 Bristol Pike, Suite 112
Bensalem, PA 19020
Telephone: (215) 638-4847
Facsimile: (215) 638-4867
E-mail: howardsmith@howardsmithlaw.com
INTERCONTINENTALEXCHANGE GROUP: Still Faces Securities Lawsuits
---------------------------------------------------------------
Intercontinentalexchange Group, Inc. continues to face the
securities lawsuits City of Providence v. BATS Global Markets,
Inc. et al., Case No. 14-cv-2811 (S.D.N.Y.), and American European
Insurance Company v. BATS Global Markets, Inc. et al., Case No.
14-cv-3133 (S.D.N.Y.), according to the company's May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 31, 2014.
2
On April 18, 2014, a purported class action lawsuit was filed in
the U.S. District Court for the Southern District of New York (the
"Southern District") by the City of Providence, Rhode Island,
against more than 40 defendants, including "Exchange Defendants",
"Brokerage Defendants" and "HFT [High Frequency Trading]
Defendants". New York Stock Exchange LLC and NYSE Arca, Inc., two
of the company's subsidiaries, are among the named Exchange
Defendants. Plaintiff is suing on behalf of a class of "all public
investors" who bought or sold stock on a U.S.-based exchange or
alternative trading venue from April 18, 2009 to the present. The
complaint asserts violations by all Exchange Defendants of
Sections 10(b) and 6(b) of the Securities Exchange Act of 1934.
The complaint seeks unspecified compensatory damages against all
defendants, jointly and severally, as well as various forms of
equitable relief. On May 2, 2014, a purported class action lawsuit
with similar allegations and legal claims was filed in the
Southern District by American European Insurance Company against
most of the same entities (including New York Stock Exchange LLC
and NYSE Arca, Inc.) named as defendants in the City of Providence
lawsuit. Additional information may be obtained from the
complaints, which are styled, respectively, as City of Providence
v. BATS Global Markets, Inc. et al., Case No. 14-cv-2811
(S.D.N.Y.), and American European Insurance Company v. BATS Global
Markets, Inc. et al., Case No. 14-cv-3133 (S.D.N.Y.).
JAZZ PHARMACEUTICALS: Still Faces Suit Over Gentium Acquisition
---------------------------------------------------------------
Jazz Pharmaceuticals Public Limited Company continues to face a
securities suit in the U.S. District Court for the Southern
District of New York in connection with the Gentium S.P.A.
Acquisition, according to Jazz Pharmaceuticals' May 8, 2014, Form
10-Q filing with the U.S. Securities and Exchange Commission for
the quarter ended March 31, 2014.
In January 2014, the company became aware of a purported class
action lawsuit filed in the U.S. District Court for the Southern
District of New York in connection with the Gentium Acquisition.
The lawsuit, captioned Xavion Jyles, Individually and on Behalf of
All Others Similarly Situated v. Gentium S.P.A. et al., names
Gentium, each of the Gentium's directors, the company and the
company's Italian subsidiary as defendants. The lawsuit alleges,
among other things, that Gentium's directors breached their
fiduciary duties to Gentium's shareholders in connection with the
Gentium tender offer agreement that Gentium entered into with the
company and the company's Italian subsidiary valuing Gentium
ordinary shares and ADSs at $57.00 per share, and that the company
and the company's Italian subsidiary violated Sections 14(e) and
20(a) of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, by allegedly overseeing Gentium's preparation of an
allegedly false and misleading Section 14D-9
Solicitation/Recommendation Statement. The lawsuit seeks, among
other relief, class action status, rescission, and unspecified
costs, attorneys' fees and other expenses.
KERYX BIOPHARMACEUTICALS: Securities Suit in New York Now Closed
----------------------------------------------------------------
The case styled In re Keryx Biopharmaceuticals, Inc. Securities
Litigation, Case No. 1:13-CV-0755-KBF in the U.S. District Court
for the Southern District of New York is now concluded after
plaintiffs did not file an objection to the dismissal of the case,
according to the company's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
On February 1, 2013, a lawsuit was filed against the company and
the company's chief executive officer on behalf of a putative
class of all of the company's shareholders (other than the
defendants) who acquired the company's shares between June 1, 2009
and April 1, 2012. Smith v. Keryx Biopharmaceuticals, Inc., et
al., Case No. 1:13-CV-0755-TPG (S.D.N.Y.). On February 26, 2013, a
substantially similar lawsuit was filed against the company and
the company's chief executive officer as well as the company's
chief financial officer. Park v. Keryx Biopharmaceuticals, Inc.,
et al., Case No. 1:13-CV-1307-TPG (S.D.N.Y.). On June 10, 2013,
the Court entered an Order consolidating the two lawsuits and
appointing a lead plaintiff. The case was styled In re Keryx
Biopharmaceuticals, Inc. Securities Litigation, Case No. 1:13-CV-
0755-KBF (S.D.N.Y.). On July 10, 2013, the lead plaintiff filed a
Consolidated Amended Complaint that, in substance, repeated the
claims alleged in the consolidated lawsuits. The Consolidated
Amended Complaint asserted claims against (i) the company for
alleged violations of Section 10(b) of the Securities Exchange Act
of 1934 ("Exchange Act") and Rule 10b-5 promulgated thereunder and
(ii) the company's chief executive officer for alleged violations
of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5.
The claims in the Consolidated Amended Complaint were premised on
general allegations that the company and the individual defendant
participated directly or indirectly in the preparation and/or
issuance of purportedly false and misleading earnings reports, SEC
filings, press releases, and other public statements, which
allegedly caused the company's stock to trade at artificially
inflated prices. On August 26, 2013, the company filed a motion to
dismiss the Consolidated Amended Complaint. On February 14, 2014,
the Court entered an Opinion and Order granting the motion to
dismiss. The Court entered Judgment for the Defendants on February
24, 2014. The lead plaintiff did not appeal the Judgment and this
matter is now concluded.
LENDER PROCESSING: 6th Cir. Affirms Dismissal of Foreclosure Suit
-----------------------------------------------------------------
Hale Yazicioglu, Esq. -- hyazicioglu@hinshawlaw.com -- at Hinshaw
& Culbertson, in an article for Lexology.com, reports that Ohio
homeowners who were defendants in judicial foreclosure suits
brought a class action against the loan processing companies and
law firms who commenced foreclosure actions. Plaintiffs asserted
claims under the FDCPA and the Ohio Consumer Sales Practices Act
(OCSPA) based on the defendants filing of state court foreclosure
actions on behalf of the trustees of securitized trusts.
The district court previously dismissed a number of the
plaintiffs' claims at the motion to dismiss stage, including
several claims under FDCPA. With respect to the one remaining
FDCPA claim, the Sixth Circuit concluded that because under Ohio
law, possession of either a note or mortgage gives a party
standing to foreclose, and because there was no dispute that the
foreclosing entity validly held the note, there was no false or
misleading statement made when the lender commenced foreclosure
proceedings that would give rise to liability under the FDCPA.
The Sixth Circuit also affirmed dismissal of the OCSPA claims
finding that the defendants were not "suppliers engaged in a
consumer transaction" for purposes of establishing liability under
the statute.
Clark v. Lender Processing Services, --- Fed. Appx. ---, 2014 WL
1408891 (6th Cir. Apr. 14, 2014)
LIBERTY MEDIA: Cases Now Moot After Bid to Buy Sirius Dropped
-------------------------------------------------------------
Cases over a former proposal of Liberty Media Corporation to
acquire the remaining shares of Sirius XM became moot after the
withdrawal of the proposal, according to Liberty's May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 31, 2014.
In early to mid-January 2014, a series of stockholder class
actions were filed in Delaware and New York state courts against
Sirius XM, Liberty, Liberty Radio LLC, and certain present and
former Sirius XM board members (Joan L. Amble, Anthony J. Bates,
George W. Bodenheimer, David J.A. Flowers, Eddy W. Hartenstein,
James P. Holden, Gregory B. Maffei, Evan D. Malone, John C.
Malone, James E. Meyer, James F. Mooney, Carl E. Vogel, Vanessa A.
Wittman. David Zaslav). In Delaware, the cases are captioned: Roy
v. Meyer, et al., Case No. 9248-VCN (Del. Ch.); Ebenau v. Meyer,
et al., Case No. 9249-VCN (Del. Ch.); Ricciardi v. Sirius XM
Holdings Inc., et al., Case No. 9253-VCN (Del. Ch.); Western
Washington Laborers-Employers Pension Trust v. Sirius XM Holdings
Inc., et al., Case No. 9269-VCN (Del. Ch.); and Varvolis v.
Malone, et al., Case No. 9283-VCN (Del. Ch.). In New York, the
cases are captioned: Freedman v. Sirius XM Holdings Inc., et al.,
Index No. 650038/2014 (N.Y. Sup. Ct.); Adoni v. Amble, et al.,
Index No. 650085/2014 (N.Y. Sup. Ct.); Goodman v. Amble, et al.,
Index No. 650141/2014 (N.Y. Sup. Ct.); Hartleib v. Sirius XM
Holdings Inc., et al., Index No. 650158/2014 (N.Y. Sup. Ct.);
Shenk v. Sirius XM Holdings Inc., et al., Index No. 650188/2014
(N.Y. Sup. Ct.); The Booth Family Trust v. Meyer, et al., Index
No. 650235/2014 (N.Y. Sup. Ct.); Corso v. Sirius XM Holdings Inc.,
et al., Index No. 650253/2014 (N.Y. Sup. Ct.); and Sciortino v.
Sirius XM Holdings Inc., et al., Index No. 650268/2014 (N.Y. Sup.
Ct.).
The cases involved Liberty's former proposal (the "Proposal") to
acquire the remaining shares of Sirius XM that it does not already
own (which was subsequently withdrawn). The plaintiffs alleged
that in pursuing this Proposal, Liberty and the individual
director defendants breached their fiduciary duties to the Sirius
XM shareholders.
On January 13, 2014, a notice of voluntary discontinuance was
filed in the Adoni case. On January 27, 2014, a motion for
consolidation (of all of the New York cases) and appointment of
lead counsel was filed in the Shenk case. On January 31, 2014,
defendants filed a cross-motion to dismiss the New York actions,
or in the alternative to stay the New York actions, in favor of
the substantially similar actions pending in Delaware.
On March 13, 2014, before the New York Supreme Court heard oral
argument on the pending motion and cross-motion, Liberty issued a
press release stating that it had withdrawn the Proposal. In
light of this withdrawal, plaintiffs' cases became moot. On April
1, 2014, notices of voluntary discontinuances were filed in the
Freedman, Goodman, Hartleib, The Booth Family Trust, Corso, and
Sciortino cases. In the Shenk case, a stipulation of voluntary
discontinuance was faxed to the court on April 2, 2014, and on
April 10, 2014, Judge Lawrence Marks "So Ordered" the stipulation.
LONG BEACH, CA: Faces "Ochoa" Suit Alleging Violations of ADA
-------------------------------------------------------------
Hector Ochoa, Cynde Soto, Cathy Shimozono, Ben Rockwell, Sharon
Parker, on behalf of themselves and all others similarly situated
v. City of Long Beach, a public entity; Bob Foster, in his
official capacity as Mayor; Robert Garcia, in their official
capacities as members of the Long Beach City Council; Suja
Lowenthal, in their official capacities as members of the Long
Beach City Council; Gary DeLong, in their official capacities as
members of the Long Beach City Council; Patrick O'Donnel, in their
official capacities as members of the Long Beach City Council;
Gerrie Schipske, in their official capacities as members of the
Long Beach City Council; Dee Andrews, in their official capacities
as members of the Long Beach City Council; James Johnson, in their
official capacities as members of the Long Beach City Council; Al
Austin, in their official capacities as members of the Long Beach
City Council; and Steven Neal, in their official capacities as
members of the Long Beach City Council, Case No. 2:14-cv-04307
(C.D. Cal., June 4, 2014) accuses the Defendants of violating the
Americans with Disabilities Act.
The Plaintiffs are represented by:
Richard Brian Diaz, Esq.
DISABILITY RIGHTS LEGAL CENTER
800 South Figueroa Street, Suite 1120
Los Angeles, CA 90017
Telephone: (213) 252-7406
Facsimile: (213) 736-1428
E-mail: richard.diaz@lls.edu
MALLINCKRODT PUBLIC: Faces Suits Over Plan to Acquire Cadence
-------------------------------------------------------------
Mallinckrodt public limited company faces lawsuits in connection
with its proposed acquisition of Cadence Pharmaceuticals, Inc.,
according to Mallinckrodt's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
Nine purported class action lawsuits have been filed in February
2014 and March 2014 by purported holders of Cadence common stock
in connection with the Company's acquisition of Cadence, six in
the Delaware Court of Chancery (consolidated under the caption In
re Cadence Pharmaceuticals, Inc. Stockholders Litigation), and
three in California State Court, San Diego County (Denny v.
Cadence Pharmaceuticals, Inc., et al., Militello v. Cadence
Pharmaceuticals, Inc., et al., and Schuon v. Cadence
Pharmaceuticals, Inc., et al.). The actions bring claims against,
and generally allege that, the board of directors of Cadence
breached their fiduciary duties in connection with the acquisition
by, among other things, failing to maximize shareholder value, and
the Delaware and Schuon actions further allege that Cadence
omitted to disclose allegedly material information in its Schedule
14D-9. The lawsuits also allege, among other things, that the
Company aided and abetted the purported breaches of fiduciary
duty. The lawsuits seek various forms of relief, including but not
limited to, rescission of the transaction, damages and attorneys'
fees and costs. On March 7, 2014, following expedited discovery,
the parties in the consolidated Delaware action entered into a
Memorandum of Understanding ("the MOU"), which sets forth the
parties' agreement in principle for a settlement of those actions.
The settlement contemplated by the MOU will include, among other
things, a release of all claims relating to the Company's
acquisition of Cadence as set forth in the MOU.
MALLINCKRODT PUBLIC: Faces Suits Over Plan to Purchase Questcor
---------------------------------------------------------------
Mallinckrodt public limited company faces lawsuits in connection
with its proposed acquisition of Questcor Pharmaceuticals, Inc.,
according to Mallinckrodt's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
Eight purported class action lawsuit were filed in April 2014 in
the California State Court, Orange County by purported holders of
Questcor Pharmaceuticals, Inc. ("Questcor") common stock in
connection with the Company's proposed acquisition of Questcor
(Hansen v. Thompson, et al., Heng v. Questcor Pharmaceuticals,
Inc., et al., Buck v. Questcor Pharmaceuticals, Inc., et al.,
Yokem v. Questcor Pharmaceuticals, Inc., et al., Ellerbeck v.
Questcor Pharmaceuticals, Inc., et al., Richter v. Questcor
Pharmaceuticals, Inc., et al., Tramantano v. Questcor
Pharmaceuticals, Inc., et al., and Crippen v. Questcor
Pharmaceuticals, Inc., et al.). The actions bring claims against,
and generally allege that, the board of directors of Questcor
breached their fiduciary duties in connection with the acquisition
by, among other things, agreeing to sell Questcor for inadequate
consideration and pursuant to an inadequate process. Some of the
lawsuits also allege, among other things, that the Company aided
and abetted the purported breaches of fiduciary duty. The lawsuits
seek various forms of relief, including but not limited to, an
order enjoining the shareholder vote relating to the acquisition,
rescission of the transaction if consummated, damages and
attorneys' fees and costs. In addition, plantiffs in a prior-
pending derivative litigation, In re Questcor Pharmaceuticals,
Inc. Shareholder Derivative Litigation, pending in the U.S.
District Court for the Central District of California, have filed
an application to lift the stay of that action in order to file an
amended complaint alleging that the board of directors of Questcor
breached their fiduciary duties in connect with the acquisition.
MERCK & CO: Sued in California Over Coppertone Sunscreen Products
-----------------------------------------------------------------
Danika Gisvold, On Behalf of Herself and All Others Similarly
Situated v. Merck & Co., Inc., a Delaware corporation, MSD
Consumer Care Inc., a Delaware corporation and Merck Sharp & Dohme
Corp., a New Jersey corporation, Case No. 3:14-cv-01371-DMS-JLB
(S.D. Cal., June 4, 2014), is brought relating to the Defendants'
Coppertone sunscreen products.
Law360 reports that the lawsuit claims Merck overcharges for its
Coppertone sunscreen products with Sun Protection Factors of 55
and above because they have "virtually identical" active
ingredients as the Coppertone SPF 50 products.
The Plaintiff is represented by:
James Richard Patterson, Esq.
PATTERSON LAW GROUP, APC
402 West Broadway, 29th Floor
San Diego, CA 92101
Telephone: (619) 398-4760
Facsimile: (619) 756-6991
E-mail: jim@pattersonlawgroup.com
MICHAEL FOODS: "Tag-along" Cases Over Food Products in Discovery
----------------------------------------------------------------
Discovery is underway in "tag-along" cases against Michael Foods,
Inc. over alleged violations of federal and state antitrust laws
in connection with the production and sale of shell eggs and egg
products, according to Michael Foods Group, Inc.'s May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 29, 2014.
In late 2008 and early 2009, some 22 class-action lawsuits were
filed in various federal courts against Michael Foods, Inc. and
approximately 20 other defendants (producers of shell eggs,
manufacturers of processed egg products, and egg industry
organizations), alleging violations of federal and state antitrust
laws in connection with the production and sale of shell eggs and
egg products, and seeking unspecified damages. Plaintiffs seek to
represent nationwide classes of direct and indirect purchasers,
and allege that defendants conspired to reduce the supply of eggs
by participating in animal husbandry, egg-export and other
programs of various egg-industry associations. In December 2008,
the Judicial Panel on Multidistrict Litigation ordered the
transfer of all cases to the Eastern District of Pennsylvania for
coordinated and/or consolidated pretrial proceedings. Between late
2010 and early 2012, a number of companies, each of which would be
part of the purported class in the antitrust action, brought
separate actions against defendants. These "tag-along" cases,
brought primarily by various grocery chains and food companies,
assert essentially the same allegations as in the main action. All
but one of the tag-along cases were either filed in or transferred
to the Eastern District of Pennsylvania where they are being
treated as related to the main action; discovery is underway in
these matters. The one tag-along case where pretrial proceedings
are not under the jurisdiction of the Eastern District of
Pennsylvania was brought by a retail grocery chain in Kansas state
court under Kansas law. Claims against Michael Foods in that
particular matter were resolved through a confidential settlement
agreement on April 11, 20
The company received a Civil Investigative Demand ("CID") issued
by the Florida Attorney General on November 17, 2008, regarding an
investigation of possible anticompetitive activities "relating to
the production and sale of eggs or egg products." The CID
requested information and documents related to the pricing and
supply of shell eggs and egg products, as well as the company's
participation in various programs of United Egg Producers. The
company fully cooperated with the Florida Attorney General's
Office to date. Further compliance is suspended pending discovery
in the civil antitrust litigation.
MUNI: Judge Certifies Drivers' Minimum Wage Class Action
--------------------------------------------------------
Joe Eskenazi, writing for SFWeekly, reports that a U.S. District
Court judge certified some 2,500 drivers -- every man and woman
who has slipped behind the wheel of a bus, train, trolley, or
cable car since July 2009 -- as a class in a federal suit against
Muni. And, like Muni, that suit is moving forward with extreme
slowness -- and may cost the city an arm and a leg.
Judge Yvonne Gonzalez Rogers affirmed the drivers have "provided
substantial evidence" they've been stiffed in the myriad ways they
claim Muni is stiffing them. These include interludes spent
performing post-driving inspections; travels from one bus or train
to another when switching runs; and time expended wandering from
the final bus or train run of the day to their personal vehicles.
Muni, the drivers claim, pays them based upon "a predetermined
amount of driving time," yet "has a practice of designing its
routes in a manner that makes it impossible for Operators to stay
on schedule."
Management demurred, stating operators' experiences are varied --
and, in nonlegal jargon, their own damn fault; a driver who failed
to submit overtime cards due to "laziness" was prominently cited.
"The Court finds Defendant's arguments unavailing," wrote the
judge.
The plaintiffs accuse Muni -- and the city -- of failing to adhere
to the Minimum Wage Ordinance en masse, since July 16, 2009, for
the class of 2,500 workers. While yes, Muni drivers are paid
significantly more than minimum wage, this claim is based upon the
notion that Muni failed to compensate its drivers for the
aforementioned time periods. The city, incidentally, claims that,
per the city's Minimum Wage Ordinance, "the City
. . . is not an 'employer' as that term is defined."
There's a lot of money riding on this determination. Multiply the
$50 daily penalty for violating the Minimum Wage Ordinance by five
years worth of days and 2,500 workers. The total: $228 million.
That's a lot of cash. And a lot of leverage, if a settlement is in
the offing.
Muni spokesman Paul Rose declined to comment, deferring to the
City Attorney's Office -- which declined to comment. So did
plaintiffs' attorney Steve Tidrick. The warring parties are next
scheduled to meet on Aug. 8. If Mr. Tidrick is right, by that
time, the city will owe his clients roughly $10 million more.
NELNET INC: Settlement Process Ongoing in Suit v. Peterson's
------------------------------------------------------------
Peterson's Nelnet, LLC, a subsidiary of Nelnet, Inc., is in the
process of settling a lawsuit filed by Bais Yaakov of Spring
Valley in the U.S. Federal District Court for the District of New
Jersey, alleging that Peterson sent unsolicited advertising faxes,
according to Nelnet, Inc.'s May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
On January 4, 2011, a complaint against Peterson's Nelnet, LLC
("Peterson's"), a subsidiary of Nelnet, Inc. ("Nelnet"), was filed
in the U.S. Federal District Court for the District of New Jersey
(the "New Jersey District Court"). The complaint alleges that
Peterson's sent six advertising faxes to the named plaintiff in
2008-2009 that were not the result of express invitation or
permission granted by the plaintiff and did not include certain
opt out language. The complaint also alleges that such faxes
violated the Federal Telephone Consumer Protection Act (the
"TCPA"), purportedly entitling the plaintiff to $500 per
violation, trebled for willful violations for each of the six
faxes. The complaint further alleges that Peterson's had sent
putative class members more than 10,000 faxes that violated the
TCPA, amounting to more than $5 million in statutory penalty
damages and more than $15 million if trebled for willful
violations. The complaint seeks to establish a class action. On
September 13, 2013, the named plaintiff filed a motion for class
certification, and on October 7, 2013, Peterson's filed a motion
to dismiss the named plaintiff's motion for class certification.
As of the filing date of this report, the New Jersey District
Court has not established, recognized, or certified a class. On
January 23, 2014, Peterson's and the named plaintiff reached an
agreement in principle whereby Peterson's would, without admitting
any wrongdoing or liability, settle all claims in the lawsuit,
including potential class action claims, for payment of an
immaterial amount. The settlement agreement in principle is
subject to finalization and court approval.
NELNET INC: Settling "Than Zaw" Suit Over Unlawful Phone Calls
--------------------------------------------------------------
Nelnet, Inc. is in the process of settling a complaint claiming
that it violated Section 632 of the California Penal Code by
allegedly recording one or more telephone calls to the plaintiff
without the plaintiff's consent, according to the company's May 8,
2014, Form 10-Q filing with the U.S. Securities and Exchange
Commission for the quarter ended March 31, 2014.
On January 18, 2013, a Third Amended Complaint was served on
Nelnet in connection with a lawsuit by Than Zaw against Nelnet
(erroneously referred to in the lawsuit as Nelnet Business
Solutions, Inc.) in the Superior Court of the State of California,
Contra Costa County (the "California State Court"). The lawsuit
was originally instituted on December 30, 2010, and alleges that
Nelnet violated the California Fair Debt Collection Practices Act
in its interactions with the plaintiff, a California resident. The
plaintiff's Third Amended Complaint added additional allegations
claiming that Nelnet violated Section 632 of the California Penal
Code by allegedly recording one or more telephone calls to the
plaintiff without the plaintiff's consent, and sought $5,000 in
statutory damages per alleged violation. The Third Amended
Complaint further alleged that Nelnet improperly recorded
telephone calls to other California residents without such
persons' consent, and sought to establish a class action with
respect to the California Section 632 claim. As of the filing date
of this report, the California State Court has not established,
recognized, or certified a class. On October 16, 2013, Nelnet and
the named plaintiff reached an agreement in principle whereby
Nelnet would, without admitting any wrongdoing or liability,
settle all claims in the lawsuit, including potential class action
claims, for payment of an immaterial amount. The settlement
agreement in principle is subject to finalization and court
approval.
NELNET INC: No Class Yet in "Keating" Suit Over Spam Text
---------------------------------------------------------
The U.S. Federal District Court for the Northern District of Ohio
has not established, recognized, or certified a class in a suit
filed by Grant Keating against Nelnet, Inc., alleging it sent
unsolicited advertising text message to plaintiffs, according to
the company's May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 31,
2014.
On August 6, 2012, an Amended Complaint was served on Peterson's,
CUnet, LLC ("CUnet"), a subsidiary of Nelnet, and on Nelnet
(collectively, the "Keating Defendants"), in connection with a
lawsuit by Grant Keating in the U.S. Federal District Court for
the Northern District of Ohio (the "Ohio District Court"). The
lawsuit was originally instituted on August 24, 2011, and alleges
that the Keating Defendants sent an advertising text message to
the named plaintiff in June 2011 using an automatic telephone
dialing system, and without the plaintiff's express consent. The
complaint also alleges that this text message violated the TCPA,
purportedly entitling the plaintiff to $500, trebled for a willful
violation. The complaint further alleges that the Keating
Defendants sent putative class members similar text messages using
an automatic telephone dialing system, without such purported
class members' consent. The complaint seeks to establish a class
action. On August 29, 2013, the Keating Defendants filed motions
for summary judgment, and the named plaintiff filed a motion for
class certification. As of the filing date of this report, the
Ohio District Court has not established, recognized, or certified
a class.
NTS REALTY: Suits by Ky. & Delaware Unitholders Settled, Junked
---------------------------------------------------------------
The lawsuits In re NTS Realty Holdings Limited Partnership
Unitholders Litigation, Consol. C.A. No. 8302-VCP in the Delaware
Court of Chancery and Stephen J. Dannis, et al. v. J.D. Nichols,
et al., Case No. 13-CI-00452 in Jefferson County Circuit Court of
the Commonwealth of Kentucky are now settled and dismissed,
according to NTS Realty's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
On February 4, 2014, NTS Realty Holdings Limited Partnership,
together with the other defendants in a class action lawsuit,
entered into a Stipulation and Agreement of Compromise, Settlement
and Release (the "Settlement Agreement") with the plaintiffs in
the class action (the "Kentucky Action") captioned, Stephen J.
Dannis, et al. v. J.D. Nichols, et al., Case No. 13-CI-00452,
which was pending in Jefferson County Circuit Court of the
Commonwealth of Kentucky against the Company, NTS Realty Capital,
Inc., the company's managing general partner, each of the members
of the board of directors of Realty Capital, NTS Realty Partners,
LLC and NTS Merger Parent, LLC. The Settlement Agreement provides
for the full and complete compromise, settlement, release and
dismissal of the Kentucky Action as well as the class action
lawsuit pending in the Delaware Court of Chancery under the
consolidated case caption of In re NTS Realty Holdings Limited
Partnership Unitholders Litigation, Consol. C.A. No. 8302-VCP (the
"Delaware Action" and with the Kentucky Action, the "Actions").
Also, as previously disclosed, in accordance with the terms of the
Settlement Agreement, on April 24, 2014, the court in the Kentucky
Action entered an Order and Final Judgment, pursuant to which,
among other things, all actions asserted against the defendants in
the Kentucky Action were dismissed with prejudice. The Settlement
Agreement provides that, after entry of the Order and Final
Judgment in the Kentucky Action, the parties to the Settlement
Agreement will file a stipulation and order dismissing the
Delaware Action with prejudice.
On May 5, 2014 the stipulation and order dismissing the Delaware
Action was filed with the court, and on May 6, 2014, the court in
the Delaware Action entered an order dismissing, with prejudice,
all actions asserted against the defendants in the Delaware
Action. Generally, if there are no appeals filed to the orders
dismissing the respective Actions, then each respective order will
become final and no longer be subject to appeal after expiration
of 30 days following the date of entry of such order.
On May 8, 2014, the company issued a press release announcing the
Delaware court's dismissal of the Delaware Action.
OCLARO INC: No Trial Set for "Westley" Securities Suit in Calif.
----------------------------------------------------------------
Discovery has commenced, and no trial has been scheduled in the
securities action Westley v. Oclaro, Inc., No. 11 Civ. 2448 EMC in
the United States District Court for the Northern District of
California, according to the company's May 8, 2014, Form 10-Q
filing with the U.S. Securities and Exchange Commission for the
quarter ended March 29, 2014.
On May 19, 2011, Curtis and Charlotte Westley filed a purported
class action complaint in the United States District Court for the
Northern District of California, against the company and certain
of the company's officers and directors. The Court subsequently
appointed the Connecticut Laborers' Pension Fund ("Pension Fund")
as lead plaintiff for the putative class. On April 26, 2012, the
Pension Fund filed a second amended complaint, captioned as
Westley v. Oclaro, Inc., No. 11 Civ. 2448 EMC, allegedly on behalf
of persons who purchased the company's common stock between May 6
and October 28, 2010, alleging that the company and certain of the
company's officers and directors issued materially false and
misleading statements during this time period regarding the
company's current business and financial condition, including
projections for demand for the company's products, as well as the
company's revenues, earnings, and gross margins, for the first
quarter of fiscal year 2011 as well as the full fiscal year. The
complaint alleges violations of section 10(b) of the Securities
Exchange Act and Securities and Exchange Commission Rule 10b-5, as
well as section 20(a) of the Securities Exchange Act. The
complaint seeks damages and costs of an unspecified amount. On
September 21, 2012, the Court dismissed the second amended
complaint with leave to amend. After the Pension Fund moved for
reconsideration, on January 10, 2013, the Court allowed plaintiffs
to take discovery regarding statements made in May and June 2010.
On March 1, 2013 the Pension Fund filed a third amended complaint,
attempting to cure pleading deficiencies with regard to statements
allegedly made in July and August 2010. On April 1, 2013,
defendants moved to dismiss the third amended complaint with
respect to the statements made in July and August 2010. On May 30,
2013, the Court granted Defendants' motion to dismiss the
complaint's claims based on statements made in July and August
2010. Discovery has commenced, and no trial has been scheduled in
this action.
PADBURY MINING: Investors Mull Class Suit Over Oakajee Agreement
----------------------------------------------------------------
Andrew Burrell, writing for The Australian, reports that investors
who bought shares in Padbury Mining after it announced a AU$6.5
billion funding agreement in April to build the Oakajee port and
rail project are close to launching a class action against the
company and its directors for allegedly misleading the market.
The disgruntled Padbury shareholders -- who watched in horror as
the share price plummeted when the deal later collapsed -- are
expecting to sign a costs agreement on May 29 with Melbourne law
firm Lander & Rogers. The likely litigation follows a string of
major class actions brought against other listed companies --
including Leighton Holdings, Treasury Wine Estates and
WorleyParsons -- over their disclosure practices.
The Padbury shareholder who has helped organize the potential
legal action told The Australian last night so far he had signed
up about 50 angry investors, whose losses ranged from AU$5000 to
AU$80,000. He said the case might be run by a specialist
litigation funder. "It's not just about the money, it's about the
reputation of the market which is being manipulated day in and day
out," said the shareholder, who asked not to be named. "Someone's
head needs go on the chopping block over this."
When asked why he invested heavily in Padbury on the back of its
announcement, the shareholder said he believed that the company
had raised AU$6.5 billion to build Oakajee as it had claimed.
Lander & Rogers commercial disputes partner Greg McKenzie
confirmed he was in talks with the Padbury shareholders.
"Lander & Rogers has been requested to advise a group of investors
on the prospects of bringing a claim -- possibly a class action --
against Padbury and its directors," he said.
Padbury was forced to abandon its plan to revive the Oakajee
project in Western Australia after it was unable to substantiate
its claim that it had "secured" 100% of the equity needed to build
the infrastructure.
The junior told the Australian Securities Exchange on April 11 it
had raised the money through an agreement with an unnamed entity,
later revealed to be companies linked to Sydney entrepreneur
Roland Frank Bleyer.
Padbury's share price soared as much as 170% on April 11, with
about 200 million shares changing hands before trading was halted.
The announcement sparked scrutiny of Mr. Bleyer's past business
dealings amid revelations of a string of failed business deals as
well as civil and criminal cases brought against him in the US.
When trading resumed late in April, the share price fell 85% on
the day.
In response to a string of queries from the ASX, Padbury admitted
it should have told investors on April 11 that it was required to
procure a bank to issue a demand guarantee in relation to 20 per
cent of the AUD6.5 billion funding package to build Oakajee. The
company also admitted that its April 11 announcement was not
reviewed by external legal counsel.
Padbury is also facing an investigation by the Australian
Securities & Investments Commission into whether it misled the
market over its botched funding deal.
PEOPLES HOME: Did Not Properly Pay Overtime to LPNs, Nurse Claims
-----------------------------------------------------------------
Joyce Evans v. Peoples Home Health, LLC, Edward P. Stone and
Timothy Buttell, Case No. 3:14-cv-00254-RS-CJK (N.D. Fla.,
June 4, 2014) alleges that as a licensed practical nurse, the
Plaintiff worked in excess of 40 hours per week for the
Defendants, but was not properly paid for all hours worked in
excess of 40 hours per week.
Peoples Home Health, LLC, is a Florida for Profit Corporation and
transacts business in the state of Florida, including Escambia
County, Florida. The Individual Defendants are owners, officers
or managers of the Company. The Defendants operate Peoples Home
Health facilities in various locations in the state of Florida.
The Plaintiff is represented by:
Jeremiah J. Talbott, Esq.
LAW OFFICES OF J.J. TALBOTT, P.A.
900 East Moreno Street
Pensacola, FL 32503
Telephone: (850) 437-9600
Facsimile: (850) 437-0906
E-mail: jjtalbott@talbottlawfirm.com
PEOPLES TRUST: Faces Class Action Over Illegal Credit Card Fees
---------------------------------------------------------------
Goldblatt Mitchell disclosed that a proposed class action was
delivered May 26 2014, against Peoples Trust Company and Peoples
Card Services LLP on behalf of a class of consumers in Ontario.
The Statement of Claim (which has not been proven in Court)
alleges that the defendants breached the Ontario Consumer
Protection Act by extracting unauthorized and illegal fees from
prepaid credit cards they sold. The claim seeks damages of
$100,000,000.00. A copy of the Statement of Claim can be found at
www.prepaidcreditclassaction.com
The lead plaintiff is Joyce Bernstein, who in September, 2010
obtained a prepaid visa card branded with the name "Vanilla
Prepaid Visa". The Vanilla Prepaid Visa card, which the
defendants issued, stated on it that it was "valid thru to 04/14".
In September, 2013, and despite never having used her card, Ms.
Bernstein learned that all the amounts on her card had been seized
by Peoples.
Ms. Bernstein alleges, on behalf of the class, that Peoples'
seizure of funds from prepaid credit cards was illegal, and
impermissible under the Ontario Consumer Protection Act.
The claim alleges that the defendants' prepaid credit cards were
governed by the Ontario Consumer Protection Act, which set out
when certain fees could be charged against the cards, and the
permissible amounts. The claim alleges that the charges levied
against the Peoples prepaid credit cards were not permissible
under the Consumer Protection Act.
Ms. Bernstein is represented by Jordan Goldblatt and Christine
Davies -- cdavies@sgmlaw.com -- of Sack Goldblatt Mitchell LLP and
Louis Sokolov -- lsokolov@sotosllp.com -- of Sotos LLP. Sack
Goldblatt Mitchell LLP and Sotos LLP are currently co-counsel in a
$100,000,000.00 class action against Bell Mobility Inc. alleging
that expiry dates on its pre-paid wireless services are illegal.
"We believe that people in Ontario are entitled to be treated
fairly and transparently in all their consumer transactions," said
Mr. Goldblatt.
"The Consumer Protection Act exists to prevent companies from
engaging in 'unfair business practices' that harm their
customers," said Mr. Sokolov. "We are asking the Court to decide
whether the systemic practice of seizing money from prepaid credit
cards is unlawful. If it is, then the practice must stop and the
money must be returned."
Information on this action, and for prospective class members is
available at www.prepaidcreditclassaction.com
PETROLOGISTICS LP: Faces "Basaraba" Merger-Related Suit in Texas
----------------------------------------------------------------
Gloria Basaraba, On Behalf of Herself and All Others Similarly
Situated v. Petrologistics LP, Petrologistics GP LLC, Propylene
Holdings LLC, Jaime Buehl-Reichard, Alan E. Goldberg, Lance L.
Hirt, Zalmie Jacobs, Phillip D. Kramer, Robert D. Lindsay, David
Lumpkins, Nathan L. Ticatch, John B. Walker, Andrew S. Weinberg,
Hallie A. Vanderhider, Flint Hills Resources, LLC, and FHR
Propylene LLC, Case No. 4:14-cv-01558 (S.D. Tex., June 4, 2014)
arises from Flint Hill's proposed acquisition of all the
outstanding common units of PetroLogistics.
Headquartered in Houston, Texas, PetroLogistics is a major
producer of propylene and is the only independent dedicated
propylene producer in the United States. PetroLogistics owns and
operates the world's largest propane dehydrogenation facility,
based on production capacity, located in the vicinity of the
Houston Ship Channel. The Individual Defendants are directors and
officers of the Company.
Flint Hills is a Delaware limited liability company headquartered
in Wichita, Kansas, and is a subsidiary of Koch Industries, Inc.
Flint Hills is an independent refining, chemicals and biofuels
company. Flint Hills' petrochemicals are used to manufacture
goods from plastics to building products to packaging materials.
FHR Propylene LLC is a Delaware limited liability company, wholly
owned by Flint Hills, and was created for the purposes of
effectuating the Proposed Transaction.
The Plaintiff is represented by:
Thomas E. Bilek, Esq.
THE BILEK LAW FIRM, L.L.P.
700 Louisiana, Suite 3950
Houston, TX 77002
Telephone: (713) 227-7720
Facsimile: (713) 227-9404
E-mail: tbilek@bileklaw.com
- and -
Juan E. Monteverde, Esq.
FARUQI & FARUQI, LLP
369 Lexington Avenue, 10th Floor
New York, NY 10017
Telephone: (212) 983-9330
Facsimile: (212) 983-9331
E-mail: jmonteverde@faruqilaw.com
PORTFOLIO RECOVERY: Files Motion to Stay Consolidated TCPA Suit
---------------------------------------------------------------
Portfolio Recovery Associates, Inc. filed a motion to stay the
suit In re Portfolio Recovery Associates, LLC Telephone Consumer
Protection Act Litigation, case No. 11-md-02295, according to the
company's May 8, 2014, Form 10-Q filing with the U.S. Securities
and Exchange Commission for the quarter ended March 29, 2014.
The Company has been named as defendant in a number of putative
class action cases, each alleging that the Company violated the
Telephone Consumer Protection Act ("TCPA") by calling consumers'
cellular telephones without their prior express consent. On
December 21, 2011, the United States Judicial Panel on Multi-
District Litigation entered an order transferring these matters
into one consolidated proceeding in the United States District
Court for the Southern District of California. On November 14,
2012, the putative class plaintiffs filed their amended
consolidated complaint in the matter, now styled as In re
Portfolio Recovery Associates, LLC Telephone Consumer Protection
Act Litigation, case No. 11-md-02295 (the "MDL action"). The
Company has filed a motion to stay this litigation until such time
as the Federal Communications Commission has ruled on various
petitions concerning the TCPA.
PROSPECT CAPITAL: Block & Leviton Files Securities Class Action
---------------------------------------------------------------
Block & Leviton LLP on May 28 disclosed that it has filed a class
action lawsuit against Prospect Capital Corporation and certain of
its officers. The lawsuit, captioned Willey v. Prospect Capital
Corporation et al., No. 14 CV 3796,is pending in the United States
District Court for the Southern District of New York.
The lawsuit alleges violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, on behalf of investors who purchased or otherwise
acquired Prospect's securities during the period September 14,
2009, through May 6, 2014, inclusive.
The complaint asserts that Prospect, through its officers and
directors, made false and misleading statements and omissions
regarding the Company's internal financial controls and its
accounting for certain of its subsidiaries and the consolidation
of those subsidiaries. These statements are alleged to have been
false and misleading when made because: (i) the Company was
suffering from grossly deficient internal controls and therefore
was susceptible to accounting fraud; (ii) Defendants failed to
disclose the true nature of the accounting irregularities
regarding the accounting for its subsidiaries; and (iii) the
Company's financial statements during the Class Period were
inaccurate in numerous material respects. The improper accounting
has been the subject of an SEC inquiry, and was done in violation
of SEC policies.
If you are a member of the Class, you may, no later than July 28,
2014, request that the court appoint you as Lead Plaintiff for the
Class. You may contact the attorneys at Block & Leviton to
discuss your rights in the case. You may also retain counsel of
your choice and you need not take any action at this time to be a
class member. If you have any questions regarding your rights
related to this action or have information relevant to the claims
asserted in the complaint, please contact attorney Steven P. Harte
of Block & Leviton, LLP at (617) 398-5600 or email him at
steven@blockesq.com
PRUDENTIAL FINANCIAL: Court Mulls Damage Award in Veterans Suit
---------------------------------------------------------------
The United States District Court for the District of Massachusetts
is dealing with the issue of whether nominal damages should be
awarded and whether any equitable relief should be granted in In
re Prudential Insurance Company of America SGLI/VGLI Contract
Litigation, according to Prudential Financial, Inc.'s May 8, 2014,
Form 10-Q filing with the U.S. Securities and Exchange Commission
for the quarter ended March 29, 2014.
From July 2010 to December 2010, four purported nationwide class
actions were filed challenging the use of retained asset accounts
to settle death benefit claims of beneficiaries of a group life
insurance contract owned by the United States Department of
Veterans Affairs that covers the lives of members and veterans of
the U.S. armed forces. In 2011, the cases were consolidated in the
United States District Court for the District of Massachusetts by
the Judicial Panel for Multi-District Litigation as In re
Prudential Insurance Company of America SGLI/VGLI Contract
Litigation. The consolidated complaint alleges that the use of the
retained assets accounts that earn interest and are available to
be withdrawn by the beneficiary, in whole or in part, at any time,
to settle death benefit claims is in violation of federal law, and
asserts claims of breach of contract, breaches of fiduciary duty
and the duty of good faith and fair dealing, fraud and unjust
enrichment and seeks compensatory and punitive damages,
disgorgement of profits, equitable relief and pre and post-
judgment interest. In March 2011, the motion to dismiss was
denied. In January 2012, plaintiffs filed a motion to certify the
class. In August 2012, the court denied plaintiffs' class
certification motion without prejudice pending the filing of
summary judgment motions on the issue of whether plaintiffs
sustained an actual injury. In October 2012, the parties filed
motions for summary judgment. In November 2013, the Court issued a
Memorandum and Order stating that the named plaintiffs: (1) did
not suffer a cognizable legal injury; (2) are not entitled to any
damages based on allegations of delay in payment of benefits; and
(3) are not entitled to disgorgement of profits as a remedy. The
Court ordered further briefing on whether nominal damages should
be awarded and whether any equitable relief should be granted. In
February 2014, the parties filed briefs on the issues addressed in
the Court's order.
PRUDENTIAL FINANCE: "Huffman" Suit by Beneficiaries Stayed
----------------------------------------------------------
The United States District Court for the Eastern District of
Pennsylvania stayed the case Huffman v. The Prudential Insurance
Company pending the outcome of a case involving another insurer
that is before the Third Circuit Court of Appeals, according to
Prudential Financial, Inc.'s May 8, 2014, Form 10-Q filing with
the U.S. Securities and Exchange Commission for the quarter ended
March 29, 2014.
In September 2010, Huffman v. The Prudential Insurance Company, a
purported nationwide class action brought on behalf of
beneficiaries of group life insurance contracts owned by ERISA-
governed employee welfare benefit plans was filed in the United
States District Court for the Eastern District of Pennsylvania,
challenging the use of retained asset accounts in employee welfare
benefit plans to settle death benefit claims as a violation of
ERISA and seeking injunctive relief and disgorgement of profits.
In July 2011, the Company's motion for judgment on the pleadings
was denied. In February 2012, plaintiffs filed a motion to certify
the class. In April 2012, the Court stayed the case pending the
outcome of a case involving another insurer that is before the
Third Circuit Court of Appeals.
PRUDENTIAL FINANCIAL: Loses Bid to Dismiss Retirees' Suit in N.J.
-----------------------------------------------------------------
The United States District Court for the District of New Jersey
denied Prudential Financial, Inc.'s motion to dismiss the suit
City of Sterling Heights General Employees' Retirement System v.
Prudential Financial, Inc., et al., according to Prudential
Financial, Inc.'s May 8, 2014, Form 10-Q filing with the U.S.
Securities and Exchange Commission for the quarter ended March 29,
2014.
In August 2012, a purported class action lawsuit, City of Sterling
Heights General Employees' Retirement System v. Prudential
Financial, Inc., et al., was filed in the United States District
Court for the District of New Jersey, alleging violations of
federal securities law. The complaint names as defendants the
Company's Chief Executive Officer, the Chief Financial Officer,
the Principal Accounting Officer and certain members of the
Company's Board of Directors. The complaint alleges that knowingly
false and misleading statements were made regarding the Company's
current and future financial condition based on, among other
things, the alleged failure to disclose: (i) potential liability
for benefits that should either have been paid to policyholders or
their beneficiaries, or escheated to applicable states; and (ii)
the extent of the Company's exposure for alleged state and federal
law violations concerning the settlement of claims and the
escheatment of unclaimed property. The complaint seeks an
undetermined amount of damages, interest, attorneys' fees and
costs. In May 2013, the complaint was amended to add three
additional putative institutional investors as lead plaintiffs:
National Shopmen Pension Fund, The Heavy & General Laborers'
Locals 472 & 172 Pension & Annuity Funds, and Roofers Local No.
149 Pension Fund. In June 2013, the Company moved to dismiss the
amended complaint. In February 2014, the Court denied the
Company's motion to dismiss.
PRUDENTIAL FINANCIAL: Agents File New Certification Motion
----------------------------------------------------------
A renewed motion for class certification is filed in a
consolidated lawsuit claiming that Prudential Financial, Inc.
failed to pay overtime to insurance agents, according to the
company's May 8, 2014, Form 10-Q filing with the U.S. Securities
and Exchange Commission for the quarter ended March 29, 2014.
In October 2006, a purported class action lawsuit, Bouder v.
Prudential Financial, Inc. and Prudential Insurance Company of
America, was filed in the United States District Court for the
District of New Jersey, claiming that Prudential failed to pay
overtime to insurance agents in violation of federal and
Pennsylvania law, and that improper deductions were made from
these agents' wages in violation of state law. The complaint
sought back overtime pay and statutory damages, recovery of
improper deductions, interest, and attorneys' fees. In March 2008,
the court conditionally certified a nationwide class on the
federal overtime claim. Separately, in March 2008, a purported
nationwide class action lawsuit was filed in the United States
District Court for the Southern District of California, Wang v.
Prudential Financial, Inc. and Prudential Insurance, claiming that
the Company failed to pay its agents overtime and provide other
benefits in violation of California and federal law and seeking
compensatory and punitive damages in unspecified amounts. In
September 2008, Wang was transferred to the United States District
Court for the District of New Jersey and consolidated with the
Bouder matter. Subsequent amendments to the complaint resulted in
additional allegations involving purported violations of an
additional nine states' overtime and wage payment laws. In
February 2010, Prudential moved to decertify the federal overtime
class that had been conditionally certified in March 2008 and
moved for summary judgment on the federal overtime claims of the
named plaintiffs. In July 2010, plaintiffs filed a motion for
class certification of the state law claims. In August 2010, the
district court granted Prudential's motion for summary judgment,
dismissing the federal overtime claims. In January 2013, the Court
denied plaintiffs' motion for class certification in its entirety.
In July 2013, the Court granted plaintiffs' motion for
reconsideration, permitting plaintiffs to file a motion to certify
a class of employee insurance agents seeking recovery under state
wage and hour laws. In September 2013, plaintiffs filed a renewed
motion for class certification.
QC HOLDINGS: Review on Dismissal of N.C. Payday Loans Suit Mulled
-----------------------------------------------------------------
QC Holdings, Inc. will know by mid-2014 if the Supreme Court will
review the dismissal of a case connected to its origination of
payday loans in North Carolina, according to the company's May 8,
2014, Form 10-Q filing with the U.S. Securities and Exchange
Commission for the quarter ended March 29, 2014.
On February 8, 2005, the Company, two of its subsidiaries,
including its subsidiary doing business in North Carolina, and Mr.
Don Early, the Company's Chairman of the Board, were sued in
Superior Court of New Hanover County, North Carolina in a putative
class action lawsuit filed by James B. Torrence, Sr. and Ben
Hubert Cline, who were customers of a Delaware state-chartered
bank for whom the Company provided certain services in connection
with the bank's origination of payday loans in North Carolina,
prior to the closing of the Company's North Carolina branches in
fourth quarter 2005. The lawsuit alleges that the Company violated
various North Carolina laws, including the North Carolina Consumer
Finance Act, the North Carolina Check Cashers Act, the North
Carolina Loan Brokers Act, the state unfair trade practices
statute and the state usury statute, in connection with payday
loans made by the bank to the two plaintiffs through the Company's
retail locations in North Carolina. The lawsuit alleges that the
Company made the payday loans to the plaintiffs in violation of
various state statutes, and that if the Company is not viewed as
the "actual lenders or makers" of the payday loans, its services
to the bank that made the loans violated various North Carolina
statutes. Plaintiffs are seeking certification as a class,
unspecified monetary damages, and treble damages and attorney fees
under specified North Carolina statutes. Plaintiffs have not sued
the bank in this matter and have specifically stated in the
complaint that plaintiffs do not challenge the right of out-of-
state banks to enter into loans with North Carolina residents at
such rates as the bank's home state may permit, all as authorized
by North Carolina and federal law.
In July 2011, the parties completed a weeklong hearing on the
Company's motion to enforce its class action waiver provision and
its arbitration provision. In January 2012, the trial court denied
the Company's motion to enforce its class action and arbitration
provisions. The Company has appealed that ruling to the North
Carolina Court of Appeals. On February 4, 2014, the Court of
Appeals ruled that the trial court erred, and ordered the trial
court to dismiss the lawsuit and that the parties proceed to
arbitration. It is now expected that plaintiffs will seek review
of this decision by the North Carolina Supreme Court. That review
is discretionary, however, so there is a possibility that the
Supreme Court will refuse review. It is expected that the Company
will know if the Supreme Court will review the case by mid-2014.
If the Supreme Court accepts review, the parties will file briefs
and argue the matter before the Supreme Court. That would likely
result in an issued decision from the Supreme Court no earlier
than mid-2015.
There were three similar purported class action lawsuits filed in
North Carolina against three other companies unrelated to the
Company. The plaintiffs in those three cases were represented by
the same law firms as the plaintiffs in the case filed against the
Company. Settlements in each of the three companion cases were
reached by the end of 2010; however, the settlements do not
provide reasonable guidance on settlements in the Company's case,
especially in light of the favorable decision by North Carolina
Court of Appeals on the Company arbitration clause.
QC HOLDINGS: Direct Credit Enters Accord in Suit Over Interest
--------------------------------------------------------------
An oral settlement was reached in a suit filed by a Canadian
resident against Direct Credit over interest charges on loans,
according to QC Holdings, Inc.'s May 8, 2014, Form 10-Q filing
with the U.S. Securities and Exchange Commission for the quarter
ended March 29, 2014.
On September 30, 2011, the Company acquired all the outstanding
shares of Direct Credit, a British Columbia company engaged in
short-term, consumer Internet lending in certain Canadian
provinces. On October 18, 2011, Matthew Lee, an alleged Alberta,
Canada resident sued Direct Credit, all of its subsidiaries and
three former directors of those subsidiaries in the Supreme Court
of British Columbia in a purported class action. The plaintiff
alleges that Direct Credit and its subsidiaries violated Canada's
criminal usury laws by charging interest on its loans at rates
higher than 60%. The plaintiff purports to represent all Canadian
borrowers of the subsidiary who resided outside of British
Columbia.
Plaintiff sought (i) class certification for the class described,
(ii) a declaration that loan fees collected in excess of the 60%
limit in the cited usury statute are held by the defendants in
constructive trust for the benefit of the class members, (iii) an
accounting and restitution to plaintiff and class members of all
loan fees received by the defendants, (iv) a declaration that the
collection of the loan fees in excess of 60% per annum constitutes
an unconscionable trade act or practice under the Canadian
Business Practices Consumer Protection Act, (v) an order to
restore to the class members the loan fees collected by defendants
in excess of 60% per annum, and (vi) interest thereon.
On March 19, 2014, the Supreme Court of British Columbia entered a
judgment regarding certain procedural matters relating to the
class action, including (i) a formal rule certifying the class
(which Direct Credit had not opposed), (ii) setting a 10-year
statute of limitation period for the covered claims from the date
the complaint was filed on October 18, 2011, (iii) setting end
dates for the class period, which varies from province and
territory, (iv) providing that all class members that entered into
loan agreements on or after June 20, 2009 will be class members
unless they opt out of the class, (v) proving that all other class
members must opt into the class within three months after the
notice of class certification is issued, and (vi) certain related
matters.
The parties have reached an oral settlement of this matter,
subject to negotiation and execution of a written settlement
agreement and receipt of required court approval of the settlement
terms. The Company's share of the proposed settlement amount and
ancillary expenses, net of indemnification from the prior owners
of Direct Credit, is expected to be approximately $500,000. The
Company has reserved in the accompanying financial statements the
estimated gross liability for settling this litigation or the
agreed upon terms and recorded an indemnification asset due from
the prior owners.
QC HOLDINGS: Briefing in TCPA Violation Suit Expected in Q2
-----------------------------------------------------------
Class briefing was expected to be conducted in the second quarter
of 2014 in a suit alleging that QC Holdings, Inc. violated the
Telephone Consumer Protection Act by using an "artificial or
prerecorded voice," according to the company's May 8, 2014, Form
10-Q filing with the U.S. Securities and Exchange Commission for
the quarter ended March 29, 2014.
On August 13, 2012, the Company was sued in the United States
District Court for the South District of California in a putative
class action lawsuit filed by Paul Stemple. Mr. Stemple alleges
that the Company used an automatic telephone dialing system with
an "artificial or prerecorded voice" in violation of the Telephone
Consumer Protection Act, 47 U.S.C. 227, et seq. The complaint does
not identify any other members of the proposed class, nor how many
members may be in the proposed class. This matter is in the early
stages of litigation. The Company has filed an answer denying all
claims. It is expected that class briefing will occur in the
second quarter of 2014.
RITE AID: Faces Class Action in Calif. Over Spam Text Messages
--------------------------------------------------------------
Legal Newsline reports that a class action lawsuit has been filed
against Rite Aid alleging the company sent repeated spam text
messages about a prescription alert service to cell phones in
violation of the Telephone Consumer Protection Act.
The complaint alleges in February 2013, Rite Aid began sending
texts to the cell phone of Clinton Rooney, a resident of San
Diego, inviting him to subscribe to the company's prescription
alerts.
Mr. Rooney claims Rite Aid continued sending messages despite
repeated requests to stop, according to a complaint filed May 20
in the U.S. District Court for the Southern District of
California.
"To begin with, many people do not realize that spam text
messages, which are regulated by the federal TCPA, are a cheap,
easy-to-use method for companies to market to consumers," said
Robert L. Hyde, an attorney for the plaintiff. "Because of this,
businesses are very tempted to abuse this medium."
Mr. Hyde said spam text messaging is in its infancy.
"If these text messages are not addressed, they will become the
same problem tomorrow that spam e-mail messaging has become
today," Mr. Hyde said. "The TCPA requires prior express consent
to receive these messages. However, many businesses, like Rite
Aid, view text messaging as an opportunity to spam users on their
cellular telephones.
"Currently, at the urging of these corporations, the FCC is
considering relaxing that the TCPA in an effort to provide these
businesses the ability to spam users, an effort that, in my view,
must be resisted by all consumers.
"Lawsuits like Rooney v. Rite Aid . . . are for this very purpose
-- to protect consumers across the country."
Mr. Rooney claims the TCPA was designed to prevent calls like the
ones he received, and to protect the privacy of citizens like
himself. In enacting the TCPA, Congress intended to give
consumers a choice as to how creditors and telemarketers may call
them, the complaint states. Mr. Rooney claims the defendant's
acts and omissions constitute numerous and multiple negligent
violations of the TCPA and that he and the class are entitled to
an award of $500 in statutory damages for each and every
violation. The defendant's acts and omissions also constitute
numerous and multiple knowing and/or willful violations of the
TCPA, which entitles Rooney and the class to an award of $1,500 in
statutory damages for each and every violation.
Mr. Rooney is seeking damages, injunctive relief and any other
available legal or equitable remedies. He is being represented by
Hyde and Joshua B. Swigart of Hyde & Swigart and Stephen G.
Recordon of Recordon & Recordon.
The case has been assigned to District Judge John A. Houston.
U.S. District Court for the Southern District of California case
number: 3:14-cv-01249
RYCO CONSTRUCTION: Class Suit Seeks to Recover Unpaid Back Wages
----------------------------------------------------------------
Gabriel Quintero, on behalf of himself, and all other plaintiffs
similarly situated, known and unknown v. Ryco Construction Company
d/b/a Ryco Landscaping, Ryan Taheny, Individually, and Colin
Taheny, Individually, Case No. 1:14-cv-04135 (N.D. Ill., June 4,
2014) is brought under the Fair Labor Standards Act, the Portal-
to-Portal Act, the Illinois Minimum Wage Law and the Illinois Wage
Payment and Collection Act seeking to recover unpaid back wages.
Ryco Construction Company, doing business as Ryco Landscaping,
provides landscaping and maintenance services. The Individual
Defendants are the owners of the Company.
The Plaintiff is represented by:
John William Billhorn, Esq.
Meghan A. VanLeuwen, Esq.
BILLHORN LAW FIRM
120 S. State Street, Suite 400
Chicago, IL 60603
Telephone: (312) 853-1450
E-mail: jbillhorn@billhornlaw.com
mvanleuwen@billhornlaw.com
SAGAL MEAT: Class Is Entitled to Unpaid Overtime Wages, Suit Says
-----------------------------------------------------------------
Julio Anibal Mejia Sanchez, on behalf of himself and others
similarly situated v. Sagal Meat Market, Inc., 134th Meat Market,
Inc., Sagal Meat Market II, Inc., Sagal Meat Market III, Inc.,
Sagal Meat Market VI, Inc., Sagal Meat Market VII, Inc., Lenin
Sanchez, Jose Sanchez, and Zuli Sanchez, Case No. 1:14-cv-03522
(E.D.N.Y., June 4, 2014) alleges that pursuant to the Fair Labor
Standards Act and the New York Labor Law, the Plaintiff is
entitled to recover from the Defendants: (1) unpaid overtime
compensation; (2) liquidated damages; (3) prejudgment and post-
judgment interest; and (4) attorneys' fees and costs.
Sagal Meat Market, Inc., is a New York domestic business
corporation headquartered in Brooklyn, New York. 134th Meat
Market, Inc., Sagal Meat Market II, Inc., and Sagal Meat Market
III, Inc., are New York domestic business corporations
headquartered in Bronx, New York. Sagal Meat Market VI, Inc., and
Sagal Meat Market VII, Inc., are New York domestic business
corporations headquartered in Brooklyn, New York.
The Individual Defendants are owners, officers, directors or
managing agents of the Corporate Defendants.
The Plaintiff is represented by:
Peter Hans Cooper, Esq.
CILENTI & COOPER, PLLC
708 Third Avenue, 6th Floor
New York, NY 10017
Telephone: (212) 209-3933
Facsimile: (212) 209-7102
E-mail: pcooper@jcpclaw.com
SILVER SPRING: No Class Status in Cal. Suit Over Smart Meters
-------------------------------------------------------------
The Superior Court of the State of California, San Mateo County
denied a revised class certification motion in a suit claiming
that the smart meters used by Silver Spring Networks, Inc. are
defective and generate incorrect bills, according to the company's
May 8, 2014, Form 10-Q filing with the U.S. Securities and
Exchange Commission for the quarter ended March 29, 2014.
The company was named in a lawsuit filed in September 2010 in the
Superior Court of the State of California, San Mateo County
(Edwards v. Silver Spring Networks). The lawsuit claims to be a
"class action" on behalf of California consumers, and alleges that
smart meters are defective and generate incorrect bills. The
company filed a motion to dismiss this case and, in September
2011, the San Mateo Superior Court granted the company's motion
without leave to amend as to two of the plaintiffs' causes of
action and with leave to amend as to a third claim. In February
2012, the plaintiffs filed an amended complaint, to which the
company filed an answer denying the plaintiffs' allegations in May
2012. In August 2012, the plaintiffs filed a second amended
complaint, and in September 2012, the company filed a demurrer to
one of the two claims asserted in the second amended complaint,
which was overruled by the court. In November 2012, the plaintiffs
filed a motion for class certification. In April 2013, the court
denied the class certification motion without prejudice, but
allowed the plaintiffs to file a revised class certification
motion, which the plaintiffs filed in June 2013. The court denied
the revised class certification motion in December 2013.
STATE FARM: Seeks Protective Order in $7-Bil. RICO Class Action
---------------------------------------------------------------
The Madison-St. Clair Record reports that State Farm will raise
First Amendment objections document by document if it doesn't
obtain an order protecting the privacy of records in a $7 billion
class action, according to its lawyers.
In a May 23 reply to plaintiffs who prefer publicity to privacy,
they called on U.S. Magistrate Stephen Williams to adopt a
protective order they proposed on May 2.
"Most of plaintiffs' discovery requests seek information that is
potentially protected by the First Amendment associational
privilege," Patrick Cloud of HeplerBroom in Edwardsville wrote.
"When a court enters a protective order like that defendants
propose, it is not rendering a decision that any particular
document is in fact confidential," he wrote.
"Instead, the order serves as an efficiency measure, by expediting
production and avoiding the burden on the court of document by
document adjudication," he wrote.
He filed the brief jointly with two other defendants, Ed Murnane
of Illinois Civil Justice League and State Farm employee William
Shepherd.
Plaintiffs who claim State Farm, Messrs. Murnane and Shepherd
corruptly secured the election of Illinois Supreme Court Justice
Lloyd Karmeier opposed the order on May 16.
Lead lawyer Robert Clifford of Chicago wrote, "The public has a
significant interest in access to filed information pertaining to
the impartiality of a state supreme court justice and to an
alleged scheme to funnel corporate money through the courthouse's
back door."
Clifford wrote that defendants failed to show any likelihood that
identifying donors to groups which supported Karmeier would result
in threats, harassment or reprisals.
Cloud argued in reply that defendants don't plan to assert
privilege as to contributions to candidates, committees, and
parties, which are matters of public record. He wrote that they
planned to assert privilege as to contributions to trade
associations and advocacy organizations and communications with
those groups.
"Plaintiffs offer no authority holding that such associational
activities lose their privileged character merely because one
party asserts they are 'political,' and no such authority exists,"
Cloud wrote.
He wrote that defendants do not seek an abstract ruling on
privilege issues now.
"Instead, defendants have proposed provisions that would allow
plaintiffs relevant discovery without defendants risking privilege
waiver," he wrote.
He wrote that plaintiffs offered no explanation of why that
proposal was inadequate.
"If the court rejects defendants' proposal, the First Amendment's
application necessarily will have to be addressed on a document by
document basis, which will delay discovery, create additional
burden and waste judicial resources on unnecessary disputes," he
wrote.
He wrote that plaintiffs have yet to produce a shred of proof of
their allegations.
"State Farm served subpoenas on plaintiffs' investigators months
ago seeking documents related to their supposed investigations,
and have yet to receive anything," Cloud wrote.
Russell Scott of Belleville signed the brief for Mr. Shepherd, and
Scott Berliant of Chicago signed for Mr. Murnane.
Magistrate Williams has set a hearing June 17.
Chief District Judge David Herndon presides over the action.
UNI-PIXEL INC: Still Faces Shareholder Suits in New York, Texas
---------------------------------------------------------------
Uni-Pixel, Inc. continues to face securities lawsuits in the
United States District Court, Southern District of New York and
the United States District Court, Southern District of Texas,
according to the company's May 8, 2014, Form 10-Q filing with the
U.S. Securities and Exchange Commission for the quarter ended
March 31, 2014.
In June 2013, two purported class action complaints were filed in
the United States District Court, Southern District of New York
and the United States District Court, Southern District of Texas
against the Company and the company's CEO, CFO, and Chairman. The
Southern District of New York complaint was voluntarily dismissed
by plaintiff on July 2, 2013. The surviving complaint alleges
that the company and the company's officers and directors violated
the federal securities laws, specifically Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, by making purportedly
false and misleading statements concerning the company's licensing
agreements and product development. The complaint seeks
unspecified damages on behalf of a purported class of purchasers
of the company's common stock during the period from December 7,
2012 to May 31, 2013.
UNIVERSAL MUSIC: Files Summary Judgment Suits in Royalties Action
-----------------------------------------------------------------
Eriq Gardner, writing for The Hollywood Reporter, reports that
over the past few years, major record labels have been attempting
to put out a legal firestorm from recording artists who claim to
have been cheated on digital music. Some labels like Sony and
Warner have agreed to pay millions of dollars to settle class
actions.
Not Universal Music Group. The major has been fighting tooth and
nail, and on May 23, Universal Music lodged a pair of summary
judgment motions in an attempt to defeat its own suing artists.
The litigation inferno stems from a 2010 appellate ruling in
F.B.T. Productions v. Aftermath that suggested that record labels
should be treating digital download income off of venues like
Apple's iTunes as "licenses" rather than "sales." The difference
could mean a lot of money because under typical licensing or
leasing provisions of artist-label contracts, about 50 percent of
collected revenue gets handed over to artists. Under sales
provisions, it's usually not more than 15 percent.
After F.B.T. Productions -- which did a lot of work on Eminem's
seminal recordings -- experienced some success, many other artists
filed class actions against Universal Music. Many of the cases
were then consolidated, and along the way, some artists like Rob
Zombie and Otis Williams of The Temptations have withdrawn their
claims while others like Chuck D. of Public Enemy, Rick James (by
way of trust), Dave Mason of Traffic, Whitesnake, Andres Titus of
Black Sheep, Ron Tyson of The Temptations and Bo Donaldson have
remained in the case to challenge Universal Music's accounting.
In one of its summary judgment motions, Universal Music writes its
own view of the history of these digital royalty claims. "In
2002, with online piracy still ravaging the music industry, UMGR
sought to enlist support from recording artists for legal online
music sales by announcing to the music community a new 'royalties
model' for calculating artists' royalties for Downloads," says a
memorandum authored by the label's attorneys at the law firm of
Jeffer Mangels Butler & Mitchell.
Universal Music says it saw iTunes downloads as the "equivalent of
a physical sale through a new distribution channel," an
interpretation it says would have entitled the label to make
packaging deductions when calculating royalties. But supposedly,
the label had a generous heart. "UMGR determined it would not to
take such contractual royalty deductions for Downloads, even when
an artist's contract allowed it," continues the memorandum.
The defendant nods to some of the press that this new "royalties
model" received at the time. Some recording artists reps "hailed"
it. Others expressed ambivalence. And yet, a few didn't think it
had gone far enough. A few artist attorneys are said to have
brought forward the argument that these downloads were "licenses,"
an interpretation which Universal Music rejected. Then came the
F.B.T. decision, and subsequently the firestorm of litigation.
After a couple years of discovery in this massive case, which
produced some 665,000 pages of documents, Universal Music says the
claims now must be rejected by the judge. The label brings a few
arguments to support their cause.
In reference to the plaintiffs' claim for violation of
California's unfair competition law, Universal Music says such
claim is defective because there is no sufficient connection to
the public being harmed. "The record remains devoid of evidence
that the industry discussion about Download royalties in the early
2000s had anything to do with the general public, let alone even
reached consumers or would have been comprehensible to them,"
states the memorandum. "Plaintiffs assert UMGR made various
allegedly inaccurate public statements. As a threshold matter,
there is no evidence that a single consumer heard any such
statements, let alone understood them, was harmed by them, or
needs 'protection' from them."
Universal Music challenges the lawsuit on other grounds. Some of
the artists like Chuck D and Titus are said to have agreed that
their business relationship would be governed by New York law,
making their assertion of a California law out of bounds. The
label also believes that the statute of limitations precludes the
plaintiffs' breach of contract claims and points to a 2004 letter
from artists' lawyers to Universal Music over the issue of digital
music that "amply demonstrates that Plaintiffs could have asserted
the theory they advance in this case . . . at least seven years
before filing these suits."
In Universal Music's other summary judgment memorandum, the
defendant objects to the claims of Donaldson and Tyson -- each for
interesting reasons.
As far as Donaldson, who was the lead singer of Bo Donaldson and
The Heywoods, the defendant says the musical group is a
"partnership that agreed to take action only by majority vote, and
Donaldson has never obtained the required majority consent to
pursue this action."
But even if that's not correct, Universal Music introduces another
wrinkle to the whole licenses vs. sales dispute. "Few, if any,
recording contracts have the starkly dichotomous structure of the
contract in F.B.T.," writes Universal Music's lawyers. "None of
Plaintiffs' contracts do. Certainly the contract on which
plaintiff Bo Donaldson is suing does not. To the contrary, when
Plaintiffs' theory that UMGR 'licenses' Downloads to Download
Providers is applied to Donaldson's contract, this actually
dictates a lower royalty for Downloads than UMGR is paying under
that contract. Of course, if, under Plaintiffs' theory, Donaldson
has been overpaid royalties, he cannot maintain claims for
underpayment of royalties."
Finally, there's Tyson, a tenor in The Temptations, whose digital
royalties claim has gotten a good deal of press. According to the
summary judgment, he joined the singing group in 1983 and
therefore wasn't a member of the contracts that entailed the hit
recordings from the '60s and '70s. And as for contracts in the
'80s and '90s, Tyson might have been "mentioned" in them, says
Universal Music, but he's allegedly just an employee of founding
member Otis Williams.
"It is eminently unfair for the owner of A Song For You and Tall
Temptations, Williams, to dismiss his claims (without prejudice)
while one of his employees, Tyson, continues to prosecute the
claims ostensibly on Williams' corporations' behalf," says the
defendant. "Presumably, if Tyson wins, Williams' corporations
will claim the benefit of that victory; if Tyson loses, they will
claim the right to disavow the loss as unauthorized by and
inapplicable to them, and to sue UMGR again on the same claim
Tyson just lost."
And thus, the claim over digital music from The Temptations
remains in some sort of odd standing limbo.
The plaintiffs -- being represented by nearly a half dozen
prominent entertainment law firms -- will likely respond soon to
the summary judgment arguments.
URBAN OUTFITTERS: Court Says Insurance Don't Cover ZIP Code Suit
----------------------------------------------------------------
Rose Bouboushian, writing for Courthouse News Service, reports
that OneBeacon and Hanover Insurance Cos. need not defend Urban
Outfitters in three class actions alleging they illegally gathered
credit card customers' ZIP codes, a federal judge ruled.
Whitney Hancock sued Urban Outfitters and Anthropologie in D.C.
federal court, alleging they illegally collected customer ZIP
codes on three occasions since June 21, 2010.
The defendants allegedly have a corporate policy to "train and
require" employees to ask credit card customers for their ZIP
codes, despite knowing that it is illegal to do so.
Urban Outfitters can use the info "for their own pecuniary
benefit, including by engaging in direct marketing campaigns
without customers' permission," the D.C. plaintiffs claim.
Andrew Dremak filed a similar suit in San Diego County Court,
which was later consolidated with five other suits filed in
California from Feb. 15 to March 21, 2011.
The California plaintiffs allege that Urban Outfitters
"systematically and intentionally" had cashiers gather customer
names, credit card numbers, and ZIP codes -- info not required to
complete transactions -- on at least eight occasions since Feb.
15, 2010. Urban Outfitters then used the data for targeted
marketing and sold it to other businesses, the California
plaintiffs claimed.
Lauren Miller filed similar claims in Massachusetts, asserting
that the store has used ZIP codes to send customers junk mail
since Aug. 15, 2009.
Plaintiffs of all three suits allege violations of various state
consumer protection and privacy laws, and seek damages and other
monetary awards.
Though the D.C. complaint was dismissed on March 14, 2014, those
plaintiffs appealed.
After Urban Outfitters requested defense coverage from OneBeacon
America Insurance Co., the latter sought a declaration that it
need not defend the defendants in the three suits.
The defendants joined The Hanover Insurance Co. as a third-party
defendant on Oct. 25, 2013, which, in turn, sought a declaration
that it has no obligation to indemnify the stores.
Urban Outfitters then moved for partial summary judgment for the
opposite declaration.
But Senior U.S. District Judge Stewart Dalzell of the Eastern
District of Pennsylvania ruled in the insurers' favor May 15.
The judge tossed aside Urban Outfitters' claim that the three
suits allege oral or written publication of private customer
information, which is covered under the insurance policies.
"The Hancock plaintiffs make no such allegation," Dalzell wrote.
"Rather, they allege only that the retailers used their ZIP code
information 'to determine their home or business addresses,' where
'[d]efendants sent unsolicited mailings or other material.'
Although the complaint stated that the retailers could identify
customers' home or business addresses 'by matching the customers'
names with their ZIP codes . . . via commercially available
databases,' that claim notably does not allege that the
information gathered from Urban Outfitters customers was publicly
disseminated."
The insurance policies exclude coverage of the Dremak allegations,
the ruling states.
"The language of the exclusion, which bars collecting and
recording information, is consonant with the Song-Beverly [Credit
Card Act of 1971] prohibition against 'request[ing], require[ing]'
or 'record[ing]' ZIP code data as a condition of purchase,"
Dalzell wrote. "Accordingly, we find that because the Dremak
allegations arise out of the alleged violation of the statutory
right to privacy that prohibits collecting or recording
information, the exclusions bar coverage under the policies."
The policies neither cover the Massachusetts plaintiffs' claims
that Urban Outfitters breached their privacy by sending them junk
mail, according to the ruling.
VERTEX PHARMACEUTICALS: Scott+Scott Files Securities Class Action
-----------------------------------------------------------------
Scott+Scott, Attorneys at Law, LLP on May 28 disclosed that it
filed a securities class action complaint against Vertex
Pharmaceuticals, Incorporated, the Company's Chief Executive
Officer, and certain of its officers and directors in the United
States District Court for the District of Massachusetts. The
lawsuit alleges violations of the Securities Exchange Act of 1934
and was filed on behalf of all purchasers of Vertex common stock
between May 7, 2012 and May 29, 2012, inclusive.
The complaint alleges that Vertex issued false and misleading
public statements concerning a pharmaceutical study of its
products, VX-809 and Kalydeco. Specifically, the complaint
alleges that at the start of the Class Period on May 7, 2012,
Vertex announced positive "interim data" from its Phase 2 study of
VX-809 and Kalydeco. This caused a significant increase in the
Company's stock price -- from $37.41 to $58.12 per share. As
Defendants continued heralding the positive and "unexpected"
interim Phase 2 study results, the Company's stock traded as high
as $64.94 on May 25, 2012. Certain of the individual Defendants
took advantage of this stock price increase to sell approximately
$30 million of Vertex stock.
On May 29, 2012, the Company announced that the exceptional
results of the Phase 2 study of the two medications were grossly
overstated. On this news, the Company's stock price fell from a
close of $64.85 on May 25, 2012 to a close of $57.80 on May 29,
2012.
You can view a copy of the complaint filed by Scott+Scott at:
http://is.gd/qLUsmd
If you purchased Vertex common stock during the Class Period, you
may move the Court no later than July 28, 2014 to serve as lead
plaintiff. 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 Michael Burnett, Esq. at
Scott+Scott -- mburnett@scott-scott.com -- (800) 404-7770, (860)
537-5537), or visit the Scott+Scott website,
http://www.scott-scott.comfor more information. There is no cost
or fee to you.
Scott+Scott is a class action law firms in the United States, with
offices in New York, Connecticut, Ohio, and California. The firm
has been directly responsible for the recovery of hundreds of
millions of dollars on behalf of its clients through the
prosecution of major securities, antitrust and employee retirement
plan class action lawsuits. The firm represents pension funds,
foundations, individuals, businesses, and other entities
worldwide.
WASHINGTON KENNEL CLUB: Sued for Improperly Claiming Tip-Credit
---------------------------------------------------------------
Charles Smith and Jordan Biddle, on behalf of themselves and all
others similarly situated v. Washington County Kennel Club,
Incorporated, a Florida Profit Corporation d/b/a Ebro Greyhound
Park & Poker Room, and Stockton Hess, an individual, Case No.
5:14-cv-00139-RS-GRJ (N.D. Fla., June 4, 2014) alleges that during
the Plaintiffs' employment, the Defendants improperly claimed a
'tip-credit' for the Plaintiffs and others similarly situated, and
illegally paid these employees below the statutorily required
minimum wage under the Fair Labor Standards Act.
The Plaintiffs and others similarly situated, were poker dealers
at the Defendants' casino, and were 'tipped' employees under the
FLSA through a tip pool.
The Plaintiffs are represented by:
Christopher J. Whitelock, Esq.
WHITELOCK & ASSOCIATES, P.A.
300 Southeast Thirteenth Street
Fort Lauderdale, Florida 33316
Telephone: (954) 463-2001
Facsimile: (954) 463-0410
E-mail: cjw@whjitelocklegal.com
- and -
Chad E. Levy, Esq.
LEVY & LEVY, P.A.
300 Southeast Thirteenth Street
Fort Lauderdale, Florida 33316
Telephone: (954) 763-5722
Facsimile: (954) 763-5723
E-mail: chad@levylevylaw.com
WR GRACE: Bares Updates on Management of Property Damage Claims
---------------------------------------------------------------
In its May 8, 2014, Form 10-Q filing with the U.S. Securities and
Exchange Commission for the quarter ended March 31, 2014, W.R.
Grace & Co. provides updates on the management of the Zonolite
Attic Insulation (ZAI) PD Account.
On April 2, 2001, Grace and 61 of its United States subsidiaries
and affiliates filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code. The cases were consolidated
under case number 01-01139 (the "Chapter 11 Cases"). Grace's non-
U.S. subsidiaries and certain of its U.S. subsidiaries were not
included in the filing.
In September 2008, Grace and other parties filed the Joint Plan
with the Bankruptcy Court to address all pending and future
asbestos-related claims and all other pre-petition claims as
outlined therein. On January 31, 2011, the Bankruptcy Court issued
an order (the "Confirmation Order") confirming the Joint Plan. On
January 31, 2012, the United States District Court for the
District of Delaware (the "District Court") issued an order
affirming the Confirmation Order and confirming the Joint Plan in
its entirety. On February 3, 2014 (the "Effective Date"), the U.S.
Court of Appeals for the Third Circuit (the "Third Circuit")
dismissed the sole remaining appeal challenging the Confirmation
Order and the Joint Plan became effective.
Under the Joint Plan, two asbestos trusts were established and
funded under Section 524(g) of the Bankruptcy Code. The
Confirmation Order contains a channeling injunction which provides
that all pending and future asbestos-related personal injury
claims and demands ("PI Claims") have been channeled for
resolution to an asbestos personal injury trust (the "PI Trust")
and all pending and future asbestos-related property damage claims
and demands ("PD Claims"), including PD Claims related to Grace's
former attic insulation product ("ZAI PD Claims"), have been
channeled to a separate asbestos property damage trust (the "PD
Trust"). Canadian ZAI PD Claims have been channeled to a separate
Canadian claims fund. The trusts are the sole recourse for holders
of asbestos-related claims; the channeling injunctions prohibit
holders of asbestos-related claims from asserting such claims
directly against Grace.
Under the terms of the Joint Plan, Asbestos-Related Property
Damage Claims under the Chapter 11 Cases were satisfied as:
The plaintiffs in asbestos property damage lawsuits generally seek
to have the defendants pay for the cost of removing, containing or
repairing the asbestos-containing materials in commercial and
public buildings. Various factors can affect the merit and value
of PD Claims, including legal defenses, product identification,
the amount and type of product involved, the age, type, size and
use of the building, the legal status of the claimant, the
jurisdictional history of prior cases, the court in which the case
is pending, and the difficulty of asbestos abatement, if
necessary.
Several class action lawsuits also were filed on behalf of
homeowners alleging damage from ZAI. Based on Grace's
investigation of the claims described in these lawsuits, and
testing and analysis of this product by Grace and others, Grace
believes that ZAI was and continues to be safe for its intended
purpose and poses little or no threat to human health. The
plaintiffs in the ZAI lawsuits dispute Grace's position on the
safety of ZAI. In December 2006 the Bankruptcy Court issued an
opinion and order holding that, although ZAI is contaminated with
asbestos and can release asbestos fibers when disturbed, there is
no unreasonable risk of harm from ZAI.
At Grace's request, in July 2008, the Bankruptcy Court established
a claims bar date for U.S. ZAI PD Claims and approved a related
notice program that required any person with a U.S. ZAI PD Claim
to submit an individual proof of claim no later than October 31,
2008. Approximately 17,960 U.S. ZAI PD Claims were filed prior to
the October 31, 2008, claims bar date and, as of the Effective
Date, an additional 1,310 U.S. ZAI PD Claims were filed.
Under the Joint Plan, all PD Claims have been channeled to the PD
Trust for resolution. The PD Trust contains two accounts, the PD
Account and the ZAI PD Account. U.S. ZAI PD Claims are to be paid
from the ZAI PD Account and non-ZAI PD Claims are to be paid from
the PD Account. Canadian ZAI PD Claims are to be paid by a
separate fund established in Canada. Each account has a separate
trustee and the assets of the accounts may not be commingled.
PD Account
On the Effective Date, the PD Account of the PD Trust was funded
with $39.9 million in cash from Grace and $111.4 million in cash
from Cryovac and Fresenius to pay allowed non-ZAI PD Claims
settled as of the Effective Date, and CDN$8.6 million in cash from
Grace to fund the Canadian ZAI PD Claims fund.
Following the Effective Date, unresolved non-ZAI PD Claims are to
be litigated in the Bankruptcy Court and any future non-ZAI PD
Claims are to be litigated in a federal district court, in each
case pursuant to procedures to be approved by the Bankruptcy
Court. To the extent any such PD Claims are determined to be
allowed claims, they are to be paid in cash by the PD Trust.
Grace is obligated to make a payment to the PD Trust every six
months in the amount of any non-ZAI PD Claims allowed during the
preceding six months plus interest (if applicable) and, except for
the first six months, the amount of PD Trust expenses for the
preceding six months (the "PD Obligation"). The aggregate amount
to be paid under the PD Obligation is not capped and Grace may be
obligated to make additional payments to the PD Account in respect
of the PD Obligation. Grace has accrued for those unresolved non-
ZAI PD Claims that it believes are probable and estimable. Grace
has not accrued for other unresolved or unasserted non-ZAI PD
Claims, as it does not believe that payment on any such claims is
probable. As of March 31, 2014, Grace had made no other payments
to the PD Trust since the Effective Date.
On the Effective Date, the PD Trust contributed CDN$8.6 million to
a separate Canadian ZAI PD Claims fund through which Canadian ZAI
PD Claims are to be resolved. Grace has no continuing or
contingent obligations to make additional payments into this fund.
ZAI PD Account
On the Effective Date, the ZAI PD Account was funded with
approximately $34.4 million in cash from Cryovac and Fresenius.
Grace is obligated to make a payment of $30 million in cash to the
ZAI PD Account on the third anniversary of the Effective Date, and
Grace is obligated to make up to 10 contingent deferred payments
of $8 million per year to the ZAI PD Account during the 20-year
period beginning on the fifth anniversary of the Effective Date,
with each such payment due only if the assets of the ZAI PD
Account fall below $10 million during the preceding year. The
amounts that Grace will be obligated to pay to the ZAI PD Account
under the Joint Plan are capped amounts.
Grace is not obligated to make additional payments to the PD Trust
in respect of the ZAI PD Account beyond the payments described.
Grace has accrued for the $30 million payment due on the third
anniversary of the Effective Date, but has not accrued for the 10
additional payments since Grace does not currently believe they
are probable.
The PD Trust is to resolve U.S. ZAI PD Claims that qualify for
payment under specified trust distribution procedures by paying
55% of the claimed amount, but in no event is the PD Trust to pay
more per claim than $4,125 (as adjusted for inflation each year
after the fifth anniversary of the Effective Date).
All payments to the PD Trust required after the Effective Date are
secured by the Company's obligation to issue 77,372,257 shares of
Company common stock to the asbestos trusts in the event of
default, subject to customary anti-dilution provisions. Grace has
the right to conduct annual audits of the books, records and claim
processing procedures of the PD Trust.
ZAGG INC: Dismissal of Utah Securities Litigation Under Appeal
--------------------------------------------------------------
Plaintiffs in In re: Zagg, Inc. Securities Litigation are
appealing the dismissal of the case, according to the company's
May 8, 2014, Form 10-Q filing with the U.S. Securities and
Exchange Commission for the quarter ended March 31, 2014.
James H. Apple, et al. v. ZAGG Inc, et al., U.S. District Court,
District of Utah, 2:12-cv-00852; Ryan Draayer, et al. v. Zagg Inc,
et al., U.S. District Court, District of Utah, 2:12-cv-00859. On
September 6 and 10, 2012, two putative class action lawsuits were
filed by purported Company shareholders against the Company,
Randall Hales, Brandon O'Brien, and Cheryl Larabee, as well as
Robert G. Pedersen II, the Company's former Chairman and CEO, and
Edward Ekstrom and Shuichiro Ueyama, former members of the
Company's Board of Directors. These lawsuits were subsequently
amended by a complaint filed on May 6, 2013. The plaintiffs seek
certification of a class of purchasers of the Company's stock
between October 15, 2010 and August 17, 2012. The plaintiffs
claim that as a result of Mr. Pedersen's alleged December 2011
margin account sales, the defendants initiated a succession plan
to replace Mr. Pedersen as the Company's CEO with Mr. Hales, but
failed to disclose either the succession plan or Mr. Pedersen's
margin account sales, in violation of Sections 10(b), 14(a), and
20(a), and SEC Rules 10b-5 and 14a-9, under the Securities
Exchange Act of 1934 (the "Exchange Act"). On March 7, 2013, the
U.S. District Court for the District of Utah (the "Court")
consolidated the Apple and Draayer actions and assigned the
caption In re: Zagg, Inc. Securities Litigation, and on May 6,
2013, plaintiffs filed a consolidated complaint. On July 5, 2013,
the defendants moved to dismiss the consolidated complaint. On
February 7, 2014, the Court entered an order granting the
Company's motion to dismiss the consolidated complaint. On
February 25, 2014, plaintiffs filed a notice of appeal.
* Plaintiff's Bar Focuses on Injunctive Relief Class Actions
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Robert J. Herrington, Esq., at Greenberg Traurig, LLP, in an
article for The National Law Review, wrote that as the Supreme
Court has tightened the requirements for certifying a damages
class action, some in the plaintiff's bar have responded by
focusing on class actions seeking injunctive relief, particularly
in cases against consumer products companies. To certify a class
under Rule 23(b)(2), a plaintiff does not have to demonstrate
predominance or superiority, and thus an injunctive class should,
at least in theory, be easier to certify. But a class action
seeking injunctive relief has its own challenges, one of which is
establishing that the named plaintiff has standing.
Standing to seek an injunction
In the context of a consumer fraud class action, standing can be a
particular challenge. A plaintiff seeking injunctive relief "must
demonstrate that he has suffered or is threatened with a 'concrete
and particularized' legal harm, coupled with 'a sufficient
likelihood that he will again be wronged in a similar way.'" Bates
v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007).
The plaintiff must "establish a 'real and immediate threat of
repeated injury' " that "must be likely to be redressed by the
prospective injunctive relief." Id. "Unless the named plaintiffs
are themselves entitled to seek injunctive relief, they may not
represent a class seeking that relief." Hodgers-Durgin v. de la
Vina, 199 F.3d 1037, 1045 (9th Cir. 1999). Thus, without a threat
of future harm, injunctive relief is not available.
Under this standard, a plaintiff suing for consumer fraud or false
advertising should have a difficult time seeking injunctive
relief. After filing suit, the plaintiff is obviously aware of
the allegedly false statement, and it is difficult to see how,
given that knowledge, she could establish a "real and immediate
threat of repeated injury." The plaintiff either is not going to
buy the consumer product in the future, or, if she did, would be
aware of the misstatement.
What must a plaintiff allege to have standing for injunctive
relief?
Courts have reached different conclusions about whether plaintiffs
suing for consumer fraud have standing to seek an injunction.
Some hold that a plaintiff does not have standing if she is not
likely to buy the product again. See, e.g., Rahman v. Mott's LLP,
No. 13-cv-3482-SI, 2014 WL 325241, at *10 & n.9 (N.D. Cal. Jan.
29, 2014) ("to establish standing, plaintiff must allege that he
intends to purchase the products at issue in the future."); Morgan
v. Wallaby Yogurt Co., Inc., 13-CV-00296-WHO, 2014 WL 1017879, at
*6 (N.D. Cal. Mar. 13, 2014) (relief limited to damages where
plaintiffs "stated that they would not have purchased the product
had they known it contained added sugar");Delarosa v. Boiron,
Inc., No. 10-1569, 2012 WL 8716658, at *5 (C.D. Cal. Dec. 28,
2012) (no threat of future injury because plaintiff would not
purchase ineffective homeopathic product again); Bohn v. Boiron,
Inc., No. 11-8704, 2013 WL 3975126, at *4 (N.D. Ill. Aug. 1, 2013)
(same); Wang v. OCZ Tech. Grp., Inc., 276 F.R.D. 618 (N.D.
Cal.2011) (no threat of future injury because plaintiff already
purchased electronics and did not allege he would purchase again);
Robinson v. Hornell Brewing Co., No. 11-2183, 2012 WL 1232188, at
*4 (D.N.J. Apr. 11, 2012) (no threat of future injury because
plaintiff stated intent never to purchase product again).
Other courts have concluded that a plaintiff does have standing
even if he is not going to buy the product again. See, e.g.,
Koehler v. Litehouse, Inc., No. 12-cv-4055-SI, 2012 WL 6217635, at
*6 (N.D. Cal. Dec. 13, 2012) ("To do otherwise would eviscerate
the intent of the California legislature in creating consumer
protection statutes because it would effectively bar any consumer
who avoids the offending product from seeking injunctive
relief."); Larsen v. Trader Joe's Co., No. 11-5188, 2012 WL
5458396, at *4 (N.D. Cal. June 14, 2012) (plaintiffs had standing
even though they would not purchase the products again); Lanovaz
v. Twinings N. Am., Inc., No. 12-cv-2646-RMW, 2014 WL 46822, at
*10 (N.D. Cal. Jan. 6, 2014) (same); Ries v. Ariz. Beverages USA
LLC, 287 F.R.D. 523, 533 (N.D. Cal. 2012) (same); Henderson v.
Gruma Corp., No. 10-4173, 2011 WL 1362188, at *7-8 (C.D. Cal. Apr.
11, 2011) (plaintiffs had standing even though they likely would
not purchase the products again).
Establishing standing may preclude materiality
If a plaintiff does allege that she is, or plans on, continuing to
buy the product, she faces another problem -- materiality. To be
actionable, a misstatement generally must be "material," meaning
"a reasonable man would attach importance to its existence or
nonexistence in determining his choice of action in the
transaction in question." Fairbanks v. Farmers New World Life Ins.
Co., 197 Cal. App. 4th 544, 565 (2011). Where a plaintiff
continues to buy a consumer product notwithstanding the
mislabeling or false advertising, she may not be able to establish
that the misstatement was material. See, e.g., Leong v. Square
Enix of Am. Holdings, Inc., No. CV09-4484, 2010 WL 1641364, at *4,
8 (C.D. Cal. Apr. 20, 2010) aff'd, 462 F. App'x 688 (9th Cir.
2011) (dismissing UCL, FAL, and CLRA claims because plaintiff
continued to pay subscription fees after learning of the allegedly
fraudulent practice, which precluded showing of materiality).
Takeaways
Consumer products companies that are defending class actions
seeking injunctive relief will want to keep these standards in
mind. They can be used to force a plaintiff into a Hobson's
choice. If the plaintiff does not allege that she plans to
purchase the product again, the company may want to ask the court
to dismiss any request for injunctive relief. If the plaintiff
does allege that she plans to purchase the product, that may be a
basis to challenge whether the alleged misstatement is material.
*********
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