NEW YORK - A federal judge in New York on Oct. 17 held that the forum selection clause of a shareholders' agreement does not pertain to shareholder derivative claims brought on behalf of a company (Bretton J. Bolt v. Francis P. Kirley, et al., No. 12-cv-00583, S.D. N.Y.). Subscribers may view the memorandum and order available within the full article.
ATLANTA - The 11th Circuit U.S. Court of Appeals on Oct. 17 affirmed the dismissal of a suit in which a borrower alleges that One West Bank FSB is incapable of foreclosing on his property, agreeing with the underlying ruling that the borrower had failed to allege facts sufficient to support his argument that OneWest holds no valid security deed and power of sale (Fred Milani v. One West Bank FSB, et al., No. 11-15378, 11th Cir.; 2012 U.S. App. LEXIS 21559).
NEW YORK - In an issue of first impression, a federal bankruptcy judge in New York on Oct. 12 ruled that the liquidation trustee for Bernard L. Madoff Investment Securities LLC (BLMIS) may recover more than $42 million from the Taiwanese Bureau of Labor Insurance (BLI) as a subsequent transferee because the initial transfers from BLMIS to the feeder fund in which BLI invested "are avoidable" (Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, No. 08-1789, [In re: Bernard L. Madoff Investment Securities LLC (Irving H. Picard v. Bureau of Labor Insurance, No. 11-02732], S.D. N.Y. Bkcy.). View related prior history, 2011 U.S. App. LEXIS 16884, 2012 U.S. Dist. LEXIS 92231.
WILMINGTON, Del. - A123 Systems Inc., manufacturer of lithium-ion batteries used in hybrid electric vehicles (HEVs), on Oct.16 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware despite listing assets of $459,795,000 and debts of only $376,045,000 (In Re: A123 Systems Inc., No. 12-12859, Chapter 11, D. Del. Bkcy.). Subscribers may view the petition available within the full article.
EUGENE, Ore. - A debt collector has failed to provide sufficient evidence showing that a statement made by one of its representatives to a consumer while attempting to collect on a debt falls under the bona fide error exemption of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C.S. §§1692 et seq., a federal judge in Oregon ruled Oct. 11 (Seif Elzaghal v. Ray Klein Inc., dba Professional Credit Service, No. 12-0116, D. Ore.; 2012 U.S. Dist. LEXIS 147323).
MEMPHIS, Tenn. - Morgan Keegan & Co. Inc. and certain of its related entities, as well as its former parent company, Regions Financial Corp. (RFC), have agreed to pay $68 million to settle claims that they breached their fiduciary duty by mismanaging a group of mutual funds that were backed by asset-backed securities, a federal judge in Tennessee ruled Oct. 12 (In re Regions Morgan Keegan Securities, Derivative and ERISA Litigation, No. 2:09-md-02009-SHM, [In re Helios Closed-End Funds Derivative Litigation, No. 2:11-cv-02935-SHM-TMP], W.D. Tenn.). Subscribers may view the motion available within the full article.
NEW YORK - A federal judge in New York on Oct. 15 allowed securities fraud claims that investors filed over alleged misrepresentations made by Lehman Brothers Holdings Inc. before its collapse to continue, finding that some allegations against Lehman's officers and directors can proceed but dismissing other claims (In re: Lehman Brothers Securities and ERISA Litigation, MDL No. 09-2017, S.D. N.Y.).
WASHINGTON, D.C. - The U.S. Supreme Court on Oct. 15 denied review of a divided Second Circuit U.S. Court of Appeals ruling adopting the presumption of prudence and finding that Citigroup Inc., Citibank N.A. and certain corporate officers and directors (collectively, Citigroup) did not breach their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. § 1001 et seq.,by continuing to offer company stock as an investment option in current and former employees' 401(k) plans, even though the company would suffer huge losses from its subprime-mortgage-related investments (Stephen Gray, et al. v. Citigroup, Inc., et al., No. 11-1531, U.S. Sup.).
WASHINGTON, D.C. - The U.S. Supreme Court on Oct. 15 declined to review a Second Circuit U.S. Court of Appeals ruling that McGraw-Hill Cos. Inc. and its officers and directors (collectively, McGraw-Hill) did not breach their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. § 1001 et seq., by continuing to offer company stock as an investment option in its 401(k) plans, despite problems in its financial services division (Patrick L. Gearren, et al. v. The McGraw-Hill Companies, Incorporated, et al., No. 11-1550, U.S. Sup.).
SOUTH BEND, Ind. - A law firm did not violate provisions of the Fair Credit Reporting Act, 15 U.S.C.S. § 1681, by obtaining a consumer's credit report on a number of occasions because the law firm was attempting to collect on a debt, a federal judge in Indiana ruled Oct. 12 in granting the law firm's motion for summary judgment (Chien Dang v. Weltman, Weinberg & Reis Co., L.P.A., No. 12-246, N.D. Ind.; 2012 U.S. Dist. LEXIS 147060).
SAN DIEGO - A California judge on Oct. 11 found future harm from a data breach sufficient injury for the purposes of the "injury-in-fact" requirement of Article III of the U.S. Constitution but dismissed California unfair competition law (UCL) claims (In re: Sony Gaming Networks and Customer Data Security Breach Litigation, Nos. MDL 11-2258, S.D. Calif.).
NEW YORK - A federal judge in New York on Oct. 11 set a 2013 trial date in an Securities and Exchange Commission lawsuit against a former Goldman Sachs & Co. officer accused of violating federal securities law in connection with misstatements made in the structuring and marketing of a subprime securities-backed synthetic collateralized debt obligation (CDO) (Securities and Exchange Commission v. Goldman Sachs & Co., et al., No. 10 Civ. 3229, S.D. N.Y.).
WASHINGTON, D.C. - A rule recently promulgated by the Securities and Exchange Commission requiring public companies to disclose payments of more than $100,000 to foreign governments in certain instances, as well as the federal government and the statutory provision authorizing the rule, are in violation of the First Amendment to the United States Constitution, U.S.C.S. Const. Amend. 1, Section 23(a)(2) of the Securities Exchange Act of 1934 15 U.S.C.S. § 78a et seq., and the Administrative Procedure Act, four business groups argue in a complaint filed against the SEC on Oct. 10 in a Washington federal court (American Petroleum Institute, et al. v. U.S. Securities and Exchange Commission, No. 12-1668, D. D.C.).
A complimentary copy of the complaint is attached.
WILMINGTON, Del. - A Delaware Chancery Court vice chancellor granted a motion to dismiss a shareholder complaint and found Oct. 9 that a corporation and its directors and officers owe no fiduciary duty to shareholders of a related master limited partnership (MLP) (Hite Hedge LP, et al. v. El Paso Corporation, et al., No. 7117-VCG, Del. Chanc.). View related prior history 2012 U.S. Dist. LEXIS 145408.
NEW YORK - Institutional investors have properly shown that they had a special relationship with Morgan Stanley & Co. Inc. and Morgan Stanley & Co. International Ltd. (collectively, Morgan Stanley) "such that Morgan Stanley had a duty to make no negligent misrepresentations to them," a federal judge in New York ruled Oct. 5 in determining that the investors have sufficiently pleaded their negligent misrepresentation claim (Abu Dhabi Commercial Bank, et al. v. Morgan Stanley & Co., Inc., et al., No. 08-7508, S.D. N.Y.).
BALTIMORE - A Maryland federal judge on Oct. 5 remanded a reimbursement dispute to state court, holding that the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. § 1001 et seq., did not preempt the plaintiff's claims (Feldman's Medical Center Pharmacy Inc., et al. v. CareFirst Inc., et al., No. 12-613, D. Md.; 2012 U.S. Dist. LEXIS 144784).
NEW YORK - A medical service provider's claim based on a health insurer's denial of coverage because an assistant surgeon was not "medically necessary," which was a term defined by the plan, is a right-to-payment claim that is preempted by the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. § 1001 et seq., a federal judge in New York ruled Oct. 4 (Neuroaxis Neurosurgical Associates, PC, v. CIGNA Healthcare of New York, Inc., No. 11 Civ. 8517, S.D. N.Y.; 2012 U.S. Dist. LEXIS 144921).
ST. LOUIS - An employee who was terminated six months after he engaged in alleged protected activity failed to make out a prima facie case of retaliation under the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. § 1001 et seq., or the Fair Labor Standards Act (FLSA), 29 U.S.C.S. § 203, the Eight Circuit U.S. Court of Appeals affirmed Oct. 3 (Donald Shrable v. Eaton Corporation, No. 12-1404, 8th Cir.; 2012 U.S. App. LEXIS 20591).
NEW ORLEANS - The Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. § 1001 et seq., does not preempt a third-party medical device provider's state law claims for negligent misrepresentation, promissory estoppel and violations of the Texas Insurance Code that alleged that the ERISA plan administrator misled it regarding plan beneficiaries' coverage, the en banc Fifth Circuit U.S. Court of Appeals ruled Oct. 5 (Access Mediquip v. UnitedHealthcare Insurance Co., No. 10-20868, 5th Cir.; 2012 U.S. App. LEXIS 20809).
NEW YORK - A federal judge in New York on Oct. 4 ruled that a complaint filed by Conoco Phillips against the Securities Investor Protection Act, 15 U.S.C.S. § 78aaa, trustee in the Chapter 11 bankruptcy of MF Global Inc. (MFGI) should be removed to district court, holding that it is the proper venue to resolve a dispute pertaining to regulations of the Commodity Futures Trading Commission (CFTC) (ConocoPhillips v. James W. Giddens [In Re: MF Global Inc.], No. 12-06014, Chapter 11, S.D. N.Y.).
ALBUQUERQUE, N.M. - Shareholders in a securities class action lawsuit against a provider of semiconductor-based components and subsystems and certain of its current and former executive officers and directors have failed to plead a material misrepresentation, scienter or loss causation in making their federal securities law claims against the defendants, a federal judge in New Mexico ruled in an opinion made available on Oct. 4 (Maurice Prissert, et al. v. EMCORE Corp., et al., No. 08-1190, D. N.M.; 2012 U.S. Dist. LEXIS 142710).
WASHINGTON, D.C. - The Judicial Panel on Multidistrict Litigation (JPMDL) on Oct. 4 granted a motion filed by Facebook Inc., 10 of its officers and directors and three underwriters of the company's initial public offering (IPO) to centralize 41 securities class action and shareholder derivative actions in the U.S. District Court for the Southern District of New York (In re Facebook Inc. IPO Securities and Derivative Litigation, MDL No. 2389, JPMDL). Subscribers may view the transfer order available within the full article.
WILMINGTON, Del. - A Delaware vice chancellor on Oct. 3 approved the settlement of a shareholder suit against a company's directors and officers regarding the sale of the company (In re Adams Golf, Inc. Shareholder Litigation, No. 7354-VCL, Del. Chanc.). Subscribers may view the order available within the full article.
SAN DIEGO - A health-care provider's claims against insurers alleging that the insurers misappropriated his name and made misrepresentations to his patients by holding him out as a contracted provider, which negatively impacted his ability to recover additional amounts owed under his contracts with his patients, are not completely preempted by the Employee Retirement Income Security Act, 29 U.S.C.S. § 1001 et seq., a federal judge in California ruled Oct. 2 in remanding the case to state court (Sanjay Ghosh, M.D., v. Aetna Health of California, Inc., et al., No. 3:12-CV-1557-JM (BGS), S.D. Calif.; 2012 U.S. Dist. LEXIS 142673).
NEW YORK - Ruling that shareholders in a securities class action lawsuit have failed to plead their federal securities law claim against a law firm because they have not shown that the law firm qualifies as an expert under controlling law, a federal judge in New York on Oct. 2 dismissed the claim against the law firm (In re Adelphia Communications Corp. Securities and Derivative Litigation, No. 03 MDL 1529; [The Accident Fund Co. (Blue Cross Blue Shield of Michigan), et al. v. Deloitte & Touche LLP, et al.], No. 03-5752; S.D. N.Y.). Subscribers may view the order available within the full article.