LexisNexis® Legal Newsroom
Bankruptcy Judge Approves $2B Japanese Yen Reorganization Plan For Elpida Memory

WILMINGTON, Del. - The federal bankruptcy judge presiding over the Chapter 15 proceeding of Elpida Memory Inc. on June 25 approved Micron Technology Inc.'s 200 billion yen Japanese reorganization plan, which will give Micron control of all of Elpida's U.S. assets (In Re: Elpida Memory Inc., No. 12-10947, Chapter 15, D. Del. Bkcy.).

Split N.Y. Appeals Court Rules On Assistant Managers Participating In Tip Pool

ALBANY, N.Y. - An employee who is "granted meaningful authority or control over subordinates can no longer be considered similar to waiters and busboys" under New York Labor Law Section 196-d and may not participate in an employer-mandated tip pool, a split New York Court of Appeals ruled June 26 in a single opinion addressing two tip-pooling suits brought by Starbucks Corp. employees (Jeana Barenboim, et al. v. Starbucks Corporation, Eugene Winans, et al. v. Starbucks Corporation, No. 122, N.Y. App.; 2013 N.Y. LEXIS 1678).

7th Circuit Reverses; Debtor Company Entitled To Damages From Employee's Breach

CHICAGO - A divided panel of the Seventh Circuit U.S. Court of Appeals on June 26 reversed and remanded a district court ruling and a bankruptcy court ruling and held that a company aided and abetted an employee of a bankrupt company in breaching his fiduciary duty; therefore, the bankrupt company was entitled to damages (Pro-Pac Inc v. WOW Logistics Company, No. 12-2976, Chapter 11, 7th Cir.; 2013 U.S. App. LEXIS 13052).

Federal Circuit Upholds Patent Invalidity Ruling In Drug Dispute

WASHINGTON, D.C. - Finding that there is no genuine issue of material fact that the shared specification of two patents do not enable one of ordinary skill to practice certain claims without undue experimentation, the Federal Circuit U.S. Court of Appeals on June 26 affirmed a finding of patent invalidity for lack of enablement (Wyeth and Cordis Corporation v. Abbott Laboratories et al., Nos. 12-1223, 1224, Fed. Cir.).

Federal Judge Compels Arbitration Of Dispute Over Broker's Agreement

GREENSBORO, N.C. - A North Carolina federal judge on June 25 granted a motion to compel arbitration filed by a group of companies in relation to disputes over a broker's agreement, finding that the petitioner in the case was equitably estopped from denying enforcement of an arbitration provision in an underlying contract (Fastener Corporation of America v. Asheboro Elastics Corp., et al., No. 1:12-CV-1296, M.D. Fla.; 2013 U.S. Dist. LEXIS 88834).

Shareholders Ask For Approval Of $7 Million Settlement Of Derivative Suit

LAS VEGAS - Shareholders suing a company's directors and officers for breach of fiduciary duty asked a Nevada federal court on June 24 to approve a $7 million settlement of the shareholders' derivative lawsuit (In re Rino International Corporation Derivative Litigation, No. 10-cv-02209, D. Nev.).

Visa, MasterCard Seek Stay Of Retailers' Antitrust Suit Over Fees

NEW YORK - In response to retailers' complaint that they exercised their market power to preclude issuing banks from competing for merchant acceptance of credit and debit cards, thereby causing the merchants to pay excessive interchange fees, Visa and MasterCard on June 25 moved to stay all proceedings pending final decision on transfer by the Judicial Panel on Multidistrict Litigation (JPML) (Target Corporation, et al. v. Visa Inc., et al., No. 13-3477, S.D. N.Y.).

Agency Making Payments For MFGH Defense Costs Says Cap Increase Needed

NEW YORK - The MF Global Assurance Co. Ltd. (MFGA), the authorized agency for making insurance payments for the defense costs of officers of bankrupt MF Global Holdings Ltd. (MFGH), on June 25 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York arguing that the Bankruptcy Court should lift the automatic stay to allow a $10 million increase in the cap amount that governs how much MFGA is permitted to pay (In Re: MF Global Holdings Ltd., No. 11-15059, Chapter 11, S.D. N.Y. Bkcy. and In Re: MF Global Inc., No 11-2790, Chapter 11, S.D. N.Y. Bkcy.).

Kodak Says Rights Offering, With Additional $8M For Creditors, Is 'Reasonable'

NEW YORK - Bankrupt Eastman Kodak Co. on June 25 filed a brief arguing that a bankruptcy court should authorize it to conduct a rights offering in conjunction with its first amended Chapter 11 plan of reorganization because the company has made an additional $8 million available to creditors, which is "reasonable" (In Re: Eastman Kodak Company, No. 12-10202, Chapter 11, S.D. N.Y. Bkcy.).

9th Circuit: Contractor May Collect Interest; Bankruptcy Estate Not Affected

SAN FRANCISCO - A panel of the Ninth Circuit U.S. Court of Appeals on June 21 ruled that a subcontractor was entitled to post-petition interest on a judgment it was awarded against the U.S. Department of Energy (DOE) despite the fact that the DOE is a creditor in the bankruptcy of another contractor, finding that the award did not jeopardize the ability of creditors to collect on their claims against the bankruptcy estate (Ground Improvement Techniques Inc v. The Plan Committee $(In The Matter Of: Washington Group International Inc.$), No. 11-17447, Chapter 11, 9th Cir.; 2013 U.S. App. LEXIS 12772).

Creditors In 'Pink Slime' Case Say $1.65M Deal With WARN Class Lacks Legal Basis

WILMINGTON, Del. - A group of creditors in the Chapter 11 bankruptcy of AFA Investments Inc., the maker of the "pink slime" beef additive, on June 24 filed a brief objecting to a global settlement AFA is proposing on the grounds that the company lacks legal basis for paying $1.65 million to members of a class that has sued it in separate litigation under the Worker Adjustment and Retraining Notification (WARN) Act (In Re: AFA Investment Inc., No. 12-11127, Chapter 11, D. Del. Bkcy.).

Pfizer Faces Asbestos Actions After Supreme Court Declines To Hear Case

WASHINGTON, D.C. - The U.S. Supreme Court on June 24 denied a bid for certiorari by Pfizer Inc. of a ruling removing the protection for Pfizer of a bankruptcy injunction barring asbestos personal injury claims entered in the case of a defunct Pfizer subsidiary (Pfizer Inc. v. Law Offices of Peter G. Angelos, No. 12-300, U.S. Sup.).

Revstone Creditor Says Sale Of Assets 'Improper' And 'Not Ripe For Adjudication'

WILMINGTON, Del. - A creditor of bankrupt Revstone Industries LLC on June 21 filed a brief in bankruptcy court objecting to Revstone's motion seeking approval to sell the assets of its subsidiary Contech Castings LLC on grounds that the assets are not part of the bankruptcy estate and the issue is "not ripe for adjudication" (In Re: Revstone Industries LLC, No. 12-13262, Chapter 11, D. Del. Bkcy.).

7th Circuit Dismisses $17M Malpractice Claim Related To Company's Bankruptcy

CHICAGO - A panel of the Seventh Circuit U.S. Court of Appeals on June 21 affirmed the dismissal of a $17 million legal malpractice case against law firm Mayer Brown Rowe & Maw related to the advice it gave a company in bankruptcy (David E. Grochocinski v. Mayer Brown Rowe & Maw, No. 10-2057, Chapter 7, 7th Cir.; 2013 U.S. App. LEXIS 12728).

U.S. Supreme Court To Rule On Bankruptcy Judges' Power In 'Core' Proceedings

WASHINGTON, D.C. - The U.S. Supreme Court on June 24 granted certiorari in a case dealing with the questions of whether Article III of the U.S. Constitution permits the exercise of the judicial power of the United States by bankruptcy courts on the basis of litigant consent and whether a bankruptcy court may submit proposed findings of fact and conclusions of law for de novo review by a district court in a "core" proceeding under 28 U.S. Code Section 157(b) (Executive Benefits Insurance Agency v. Arkinson, No. 12-1200, U.S. Sup.).

1st Circuit: Error To Apply Heightened Pleading Standard In Antitrust Case

BOSTON - A recycling company sufficiently alleged that polystyrene food service packaging manufacturers and trade associations refused in concert to deal with the company in its recycling business method in violation of Section 1 of the Sherman Act, the First Circuit U.S. Court of Appeals ruled June 19, finding that the trial court misapplied the plausibility requirement at the pleading stage (Evergreen Partnering Group, Inc. v. Pactiv Corporation, et al., No. 12-1730, 1st Cir.; 2013 U.S. App. LEXIS 12505).

ICSID Issues Order On Discontinuance Of Arbitration With Ecuador

WASHINGTON, D.C. - The International Centre for Settlement of Investment Dispute (ICSID) on June 19 released an order taking note of the discontinuance of an arbitration action filed by a corporation against the Republic of Ecuador (Corporation Quiport SA V. Republic of Ecuador, No. ARB/09/23).

Rothstein Trustee: Creditors 'Misrepresent' Agreement, Wrongly Oppose Plan

FORT LAUDERDALE, Fla. - The trustee in the Chapter 11 bankruptcy proceeding of Rothstein, Rosenfeldt Adler (RRA), the former law firm of convicted Ponzi scheme operator Scott Rothstein, on June 21 filed a brief in bankruptcy court arguing that certain creditors known as the Levy parties "misrepresent" terms of a settlement they had with the trustee and wrongfully oppose the RRA plan of liquidation (In Re: Rothstein Rosenfeldt Adler, No. 09-34791, Chapter 11, S.D. Fla. Bkcy.).

N.J. Supreme Court: Asbestos Claims Are Not Covered Under Insolvent Insurer's Policies

TRENTON, N.J. - Asbestos claims against a bankrupt insured manufacturer are not covered under excess comprehensive general liability insurance policies issued by its insolvent insurer, the New Jersey Supreme Court held June 19, finding that the doctrine of collateral estoppel applies (In the matter of the liquidation of Integrity Insurance Co./The Celotex Asbestos Trust, No. 068970, N.J. Sup.; 2013 N.J. LEXIS 588).

Bankruptcy Judge OKs $3M Deal To Settle K-V Discovery Overpricing Claims

NEW YORK - The federal bankruptcy judge presiding over the Chapter 11 proceeding of pharmaceutical company K-V Discovery Solutions Inc. on June 20 granted a motion by bankrupt K-V and approved a $3 million settlement between the company and the State of Texas pertaining to alleged overpricing of medication (In Re: K-V Discovery Solutions Inc., No. 12-13346, Chapter 11, S.D. N.Y. Bkcy.).

Asbestos Coverage Disputes Between Flintkote, Insurers Go To Binding Arbitration

WILMINGTON, Del. - A Delaware federal bankruptcy judge on June 20 granted relief from the automatic stay in The Flintkote Co.'s Chapter 11 case so that Flintkote and certain London market insurance companies can participate in binding arbitration to resolve disputes over insurance coverage for asbestos bodily injury claims (In re: The Flintkote Co., et al., No. 04-11300, D. Del. Bkcy.).

Panel: No Coverage For Medical Negligence Suit Stemming From Autism Treatment

ATLANTA - The 11th Circuit U.S. Court of Appeals on June 20 affirmed a lower federal court's ruling that an insurer had no duty to defend a doctor and a medical practice in a medical negligence lawsuit because the policy's professional services exclusion barred coverage for the underlying claims (Nationwide Mutual Fire Insurance Co. v. Creation's Own Corporation, et al., No. 12-16223, 11th Cir.; 2013 U.S. App. LEXIS 12591).

Bankrupt Residential Capital: $200M In Claims Should Be Dismissed Or Expunged

NEW YORK - Bankrupt Residential Capital (ResCap) on June 20 filed a brief in the U.S. Bankruptcy Court for the Southern District of New York arguing that the $200 million in claims filed by the National Credit Union Administration (NCUA) should be dismissed or disallowed (In Re: Residential Capital LLC, No. 12-12020, Chapter 11, S.D. N.Y. Bkcy.).

Judge Finds Panamanian Company Was Not Properly Served With Petition

LOS ANGELES - A California federal judge on June 18 granted a Panamanian corporation's motion to quash service of a petition to confirm an arbitration award, finding that a theatrical group failed to properly serve the petition under federal law (Latinamerican Theatrical Group LLC v. Swen International Holding, No. 13-1270, C.D. Calif.; 2013 U.S. Dist. LEXIS 86383).

Couple's Mortgage Case Against Bankrupt GMAC Fails, Tennessee Federal Judge Says

MEMPHIS, Tenn. - A federal judge in Tennessee on June 19 found that bankrupt GMAC Home Mortgage Corp. did not wrongfully move for foreclosure against a couple who failed to make loan payments (Carl G. Nichols III v. GMAC Home Mortgage Corporation, No. 10-02072, W.D. Tenn.).