LexisNexis® Legal Newsroom
Vice Chancellor Denies Motion To Dismiss Shareholder Derivative Case

WILMINGTON, Del. - A Delaware vice chancellor denied a company's directors' and officers' motion to dismiss a shareholder derivative lawsuit on April 25, finding that the shareholder had pleaded particularized facts that raise a reasonable doubt that the directors and officers acted in good faith in failing to respond to the shareholder's demand that the board of directors investigate an alleged weaknesses in the corporation's internal controls (George Rich, Jr., Derivatively on Behalf of Fuqi International, Inc., v. Yu Kwai Chong, et al., No. 7616-VCG, Del. Chanc.; 2013 Del. Ch. LEXIS 106).

Judge Remands State's Lawsuit Against Standard & Poor's To State Court

HARTFORD, Conn. - A federal judge in Connecticut on April 24 granted the State of Connecticut's motion to remand a lawsuit alleging that a subsidiary of Standard & Poor's Financial Services LLC violated the state unfair trade practices law, ruling that the defendants' removal of the action to federal court was untimely (State of Connecticut v. The McGraw-Hill Companies Inc., et al., No. 13-311, D. Conn.; 2013 U.S. Dist. LEXIS 58528).

Lead Plaintiff Failed To Plead Recklessness In Securities Suit, Judge Rules

NEW YORK - A federal judge in New York on April 25 dismissed a lead plaintiff's second amended securities class action complaint against certain current and former executive officers of Eastman Kodak Co., ruling that the lead plaintiff failed to show recklessness on the part of the defendants in pleading scienter (Timothy A. Hutchinson v. Antonio M. Perez, et al., No. 12-1073, S.D. N.Y.).

DuPont Board Members Say Shareholder's Derivative Suit Should Be Dismissed

WILMINGTON, Del. - Directors and officers of E. I. du Pont de Nemours Co. told a Delaware federal court on April 23 that a shareholder has failed to adequately plead that presuit demand upon the company's board of directors would have been futile (Robert Zomolosky, derivatively on behalf of E.I. Du Pont De Nemours and Company v. Ellen Kullman, et al., No. 13-cv-00094, D. Del.).

News Corp. Directors And Officers Settle Shareholder Dispute For $139 Million

WILMINGTON, Del. - Parties to a shareholder derivative suit against directors and officers of News Corp. informed a Delaware vice chancellor on April 22 that they had reached a $139 million settlement of their dispute (In re News Corporation Shareholder Derivative Litigation, No. 6285-VCN, Del. Chanc.).

Judge: Lead Plaintiffs Failed To Plead Federal Securities Law Claims

MIAMI - Lead plaintiffs in a securities class action lawsuit against a cruise line and several of its executive officers have failed to plead any of their federal securities law claims relating to the defendants' alleged issuance of false and misleading statements regarding the company's business and financial condition, a federal judge in Florida ruled April 19 (In re Royal Caribbean Cruises Ltd. Securities Litigation, No. 11-22855, S.D. Fla.).

2nd Circuit: Court Erred In Denying Remand To State Court In Securities Suit

NEW YORK - A federal district court erred in denying American International Group Inc.'s motion to remand a complaint filed against Bank of America Corp., certain of its subsidiaries and others under provisions of the Edge Act, a Second Circuit U.S. Court of Appeals panel ruled April 19 (American International Group Inc., et al. v. Bank of America Corp., et al., No. 12-1640, 2nd Cir.).

Directors, Officers Rely On Business Judgment Rule Against Shareholder Complaint

CHICAGO - Directors and officers of a company claimed in an Illinois federal court on April 19 that they are protected from a shareholder's allegations under the business judgment rule (Frank Jeffers v. Retail Properties of America, Inc., et al., No. 12-cv-08522, N.D. Ill.).

Judge: Shareholders Failed To Plead Any Of Their Federal Securities Law Claims

SAN FRANCISCO - Shareholders in a securities class action have failed to plead any of their federal securities law claims in connection with a biotechnology company's alleged issuance of misrepresentations regarding the development of a DNA sequencing system, a federal judge in California ruled April 15 (Thomas J. Primo, et al. v. Pacific Bionsciences of California Inc., et al., No. 11-6599, N.D. Calif.; 2013 U.S. Dist. LEXIS 53643).

Fifth Third Agrees To Pay $16M To Settle Federal Securities Law Claims

CINCINNATI - Fifth Third Bancorp and a number of other defendants agreed to pay $16 million to settle claims that Fifth Third misrepresented its involvement in the subprime securities market in violation of federal securities laws, according to documents filed April 16 in Ohio federal court (The Eshe Fund v. Fifth Third Bancorp, No. 08-0421, S.D. Ohio).

Countrywide Reaches $500M Settlement In Mortgage-Backed Securities Class Actions

LOS ANGELES - Countrywide Financial Corp. will pay $500 million to shareholders in three related securities class action lawsuits to settle claims that it misrepresented the investment quality of mortgage-backed securities (MBS) in what is being called the largest-ever MBS class action recovery under the Securities Act of 1933, according to a press release issued by class counsel on April17 (David H. Luther v. Countrywide Financial Corp., No. 12-5125; Western Conference of Teamsters Pension Plan v. Countrywide Financial Corp., No. 12-5122; and Maine State Retirement System v. Countrywide Financial Corp., No. 10-0302, C.D. Calif.).

Shareholder: N.Y. Federal Court Holds Jurisdiction Over Director And Officer

NEW YORK - An investor told a New York federal court on April 10 that numerous reasons exist as to why the New York federal court has jurisdiction over a bank, one of its directors and one of its officers regarding a shareholder lawsuit (SBAV LP v. Porter Bancorp, Inc., et al., No. 13-cv-00372, S.D. N.Y.).

Judge Dismisses FDIC's Securities Claims Against Countrywide As Time-Barred

LOS ANGELES - Dismissal of federal securities law claims brought by the Federal Deposit Insurance Corp., as receiver for a failed bank, against Countrywide Securities Corp., certain of its subsidiaries and others is proper because the FDIC's claims are time-barred, a federal judge in California ruled April 8 (In re Countrywide Financial Corp. Mortgage-Backed Securities Litigation, No. 11-ML-2265, $(Federal Deposit Insurance Corp., as Receiver for Colonial Bank, v. Countrywide Securities Corp., et al., No. 12-6911$), C.D. Calif.).

Pension Plan Failed To Plead Scienter In Securities Class Action, Judge Rules

OKLAHOMA CITY - A pension plan failed to plead scienter in arguing that the nation's second largest natural gas producer and certain of its current and former officers and directors misrepresented the company's business and financial condition in violation of federal securities law, a federal judge in Oklahoma ruled April 10 in dismissing the pension plan's amended complaint (Dvora Weinstein, et al. v. Aubrey K. McClendon, et al., No. 12-465, W.D. Okla.).

Vice Chancellor OKs Settlement Of Shareholder Suit Against Directors, Officers

WILMINGTON, Del. - A vice chancellor in a Delaware court gave final approval to the settlement of a shareholder lawsuit on April 10, finding that it was fair and adequate (In re Gen-Probe Inc. Shareholders Litigation, No. 7495-VCL, Del. Chanc.).

Judge Trims Claims In Securities Suit Against Credit Suisse, Others

KANSAS CITY, Kan. - A federal judge in Kansas on April 8 ruled that dismissal of state and federal securities law claims regarding 12 residential mortgage-backed securities (RMBS) underwritten by Credit Suisse Securities (USA) LLC is proper because the plaintiff's claims regarding those securities were untimely filed (National Credit Union Administration Board v. Credit Suisse Securities $(USA$) LLC, et al., No. 12-2648, D. Kan.).

Cornerstone Releases Accounting Class Action Filings And Settlements Report

BOSTON - Although the number of securities class action lawsuit filings dealing with accounting issues dropped sharply in 2012, "accounting case settlement dollars represented over 90 percent of all settlement dollars for securities class actions in 2012," according to a report released by Cornerstone Research on April 10.

Judge: Gupta Not A 'Beneficial Owner' Of Goldman Stock Under Securities Law

NEW YORK - Ruling that former Goldman Sachs Group Inc. director Rajat Gupta was not a "beneficial owner" of Goldman Sachs shares under federal securities laws, a Second Circuit U.S. Court of Appeals panel in a per curiam opinion on April 5 affirmed a federal judge's dismissal of a shareholder derivative lawsuit (James Mercer v. Rajat K. Gupta, No. 12-3393, 2nd Cir.).

Panel: Agency Had Standing To Sue Over Fannie Mae, Freddie Mac Losses

NEW YORK - A federal district court did not err in partially denying a motion to dismiss filed by UBS Americas Inc. and various affiliated entities and individuals (collectively, UBS entities) because the Federal Housing Finance Agency's (FHFA) filing of its complaint against the UBS entities was timely and because it had standing to bring the claims, a Second Circuit U.S. Court of Appeals panel ruled April 5 (Federal Housing Finance Agency v. UBS Americas Inc., et al., No. 12-3207, 2nd Cir.).

Directors And Officers Ask Judge To Dismiss Shareholder Derivative Complaint

CHICAGO - Directors and officers of a company told an Illinois federal judge on April 5 that they have corrected the alleged error complained about by a shareholder in a derivative suit and that, therefore, the suit should be dismissed (Jan Donnawell v. Daniel Hamburger, et al., No. 12-cv-09074, N.D. Ill.).

Final Approval Of $2.4B Settlement Granted In Bank Of America Securities Suit

NEW YORK - A federal judge in New York on April 5 granted final approval of a $2.4 billion settlement between shareholders and Bank of America Corp. (BoA) to settle claims that it and certain of its executive officers and directors misrepresented the company"s business and financial condition, as well as the business and financial condition of Merrill, Lynch & Co. Inc. prior to BoA"s acquisition of Merrill (In re: Bank of America Corp. Securities, Derivative, and ERISA Litigation, No. 09-MDL-2058, S.D. N.Y.).

Shareholder Failed To State Claims In Say-On-Pay Suit, Federal Judge Rules

CHICAGO - A company's board of directors did not breach its fiduciary duty by failing to disclose certain information under the Dodd-Frank Wall Street Reform and Consumer Protection Act prior to conducting an executive "say on pay" vote because the defendants were not required to provide such information, a federal judge in Illinois ruled April 3 (Paul Noble v. AAR Corp., et al., No. 12-7973, N.D. Ill.; 2013 U.S. Dist. LEXIS 48075).

Federal Judge Keeps Wells Fargo In MedCap Ponzi Scheme Suit

SANTA ANA, Calif. - A federal judge in California on April 2 declined Wells Fargo NA's request to dismiss consolidation class action claims alleging that it breached its contract by giving noteholders' funds to Medical Capital Holdings Inc. (MedCap) in Med Cap's $1 billion Ponzi scheme (In Re: Medical Capital Securities Litigation $(Steven Masonek, et al. v. Wells Fargo Bank NA, No. 09-1048, Kenneth Bain, et al. v. Wells Fargo Bank, et al., No.10-0548, James L. Abbate, et al. v. Wells Fargo Bank, et al., No.10-6561, Securities and Exchange Commission v. Medical Capital Holdings Inc., et al., No. 09-0818$), No. 10-ml-2145, C.D. Calif.).

Shareholders Failed To Plead Federal Securities Law Claims, Federal Judge Rules

NEW YORK - Dismissal of a shareholder class action lawsuit is proper because lead plaintiffs have failed to plead any elements of the federal securities law claims, a federal judge in New York ruled March 29 (In re Travelzoo Inc. Securities Litigation, Nos. 11-5531 and 11-6845, S.D. N.Y.; 2013 U.S. Dist. LEXIS 46437).

Federal Judge Dismisses Insurer's Suit Disputing Coverage For FDIC's Claims

GAINESVILLE, Ga. - A management and professional liability insurer's declaratory judgment claim is barred by Section 1821(j) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), a Georgia federal judge ruled March 28, dismissing the insurer's lawsuit challenging coverage for claims against a failed bank's directors and officers (OneBeacon Midwest Insurance Co. v. FDIC, et. al, No. 2:12-CV-0106-RWS, N.D. Ga.; 2013 U.S. Dist. LEXIS 44237).