LexisNexis® Legal Newsroom
Judge Approves Settlement Of Shareholder Derivative Lawsuit

AUSTIN, Texas - A federal judge in Texas on Jan. 2 approved the settlement of a shareholder derivative lawsuit and ordered the parties to file appropriate papers to achieve dismissal of the action (David H. Goodman v. Philippe Crevoisier, et al., No. 12-cv-01169, W.D. Texas).

Summary Judgment Of No Lost Profits Granted In Patent Case

HARTFORD, Conn. - Because a plaintiff lacks expert testimony establishing a basis for recovery of lost profits under the test set forth in Panduit Corp. v. Stahlin Bros. Fibre Works Inc. (575 F.2d 1152, 1156 $(6th Cir. 1978$)), a Connecticut federal judge on Dec. 31 granted a defendant's motion for summary judgment (Protegrity Corporation v. Voltage Security Inc., No. 10-755, D. Conn.).

Fisker Committee's Asset Sale Plan Fails To Protect Rights, Lender Argues

WILMINGTON, Del. - Hybrid Tech Holdings LLC, a secured creditor in the Chapter 11 bankruptcy of Fisker Automotive Holdings Inc., on Jan. 1 filed a brief in the U.S. Bankruptcy Court for the District of Delaware objecting to a motion filed by the Official Committee of Unsecured Creditors on grounds that its plan to conduct an asset sale fails to adequately protect Hybrid's interests as a lender of post-petition financing (In Re: Fisker Automotive Holdings Inc., No. 13-13087, Chapter 11, D. Del. Bkcy.).

2nd Circuit: District Court Erred In Deferring To ERISA Plan Administrator

NEW YORK - A federal district court erred in deferring to a pension plan administrator's interpretation of an offset provision under the Employee Retirement Income Security Act because the interpretation violated the plan's provisions and was not disclosed in summary plan descriptions (SPDs) given to the plan participants, the Second Circuit U.S. Court of Appeals ruled Dec. 23 (Paul J. Frommert, et al. v. Sally L. Conkright, et al., No. 12-67-cv, 2nd Cir.; 2013 U.S. App. LEXIS 25500).

Judge Finds NSA Data Collection Lawful Per Patriot Act, Dismisses ACLU's Suit

NEW YORK - In a Dec. 27 order, a New York federal judge dismissed a lawsuit brought by the American Civil Liberties Union (ACLU) over the bulk telephony metadata collection activities of the National Security Administration (NSA), finding that it was precluded under the statutory scheme of the USA Patriot Act, while finding that the agency's activities did not violate the Fourth or First Amendments to the U.S. Constitution (American Civil Liberties Union, et al. v. James R. Clapper, et al., No. 13-3994, S.D. N.Y.; 2013 U.S. Dist. LEXIS 180863).

Attorneys Awarded 16 Percent Of Settlement Fund In Securities Class Action

NEW YORK - A federal judge in New York on Dec. 19 ruled that although a law firm's request for attorney fees in a securities class action lawsuit against Citigroup Inc. and others was too high, the firm is still entitled to 16 percent of the overall settlement amount (In re Citigroup Inc. Bond Litigation, No. 08-9522, S.D. N.Y.).

Shareholders Say Presuit Demand On Company's Board Would Have Been Futile

CHICAGO - Shareholders that brought a shareholder derivative lawsuit against certain of a company's directors and officers told a federal court in Illinois on Dec. 16 that the circumstances of the directors' and officers' conduct show that presuit demand upon the company's board of directors would have been futile (Robert J. Casey, et al. v. Christopher B. Begley, et al., No. 11-cv-09074, N.D. Ill.).

6th Circuit: Stay Extended Properly; Creditor's Interest In Real Property Lacking

CINCINNATI - A panel of the Sixth Circuit U.S. Court of Appeals on Dec. 17 affirmed a bankruptcy court's decision to grant an extension of the automatic stay in a bankruptcy due to the fact that the creditor who sought relief from the stay failed to show that it had a valid security interest in real property that was contested in the bankruptcy proceeding (Grant, Konvalinka & Harrison v. C. Kenneth Still $(In Re: Steve A. McKenzie$), No. 12-6374, Chapter 7, 6th Cir.; 2013 U.S. App. LEXIS 24934).

California Federal Judge Remands Reimbursement Suit, Finds No Preemption Exists

SAN JOSE, Calif. - A California federal judge on Dec. 16 remanded a reimbursement dispute to state court, holding that the Employee Retirement Income Security Act did not preempt the state law claims (Bay Area Surgical Management v. United Healthcare Insurance Co., et al., No. 13-2512, N.D. Calif.; 2013 U.S. Dist. LEXIS 176682).

Judge Upholds Judgment In Favor of BB&T In Loan Dispute

LAS VEGAS - A federal judge in Nevada on Dec. 17 denied reconsideration of a summary judgment ruling in favor of Branch Banking and Trust Co. (BB&T) in a suit arising from a $20 million loan, dismissing the defendants' argument about fair market value of a property secured by the loan, "newly discovered evidence" and a loss-sharing agreement (Branch Banking and Trust Company v. David M. Frank, et al., No. 11-1366, D. Nev.; 2013 U.S. Dist. LEXIS 176727).

High Court Denies Review Of 7th Circuit's 401(k) Class Certification Ruling

WASHINGTON, D.C. - The U.S. Supreme Court on Dec. 16 denied review of a Seventh Circuit U.S. Court of Appeals ruling vacating denial of class certification to retirement plans' participants on their claims that the plans' fiduciaries breached their duties under the Employee Retirement Income Security Act by investing in a stable-value fund (SVF) that did not result in a rate of return that was sufficient for a retirement asset (Lockheed Martin Corp., et al. v. Anthony Abbott, et al., No. 13-447, U.S. Sup.).

Supreme Court Rules On Limitations Period In ERISA Denial Case

WASHINGTON, D.C. - The U.S. Supreme Court ruled Dec. 16 that the contractual limitations provision of a disability benefits plan that requires participants to bring suit within three years after "proof of loss" is due is enforceable under the Employee Retirement Income Security Act, even if the limitations period commences before the plan resolved the claim for benefits (Julie Heimeshoff v. Hartford Life & Accident Insurance Co., et al., No. 12-729, U.S. Sup.).

Law Firm: Bankrupt Rotech Healthcare Not Allowed To Depose Its Attorneys

WILMINGTON, Del. - The law firm that represented the Official Committee of Equity Security Interest Holders in the Chapter 11 bankruptcy of Rotech Healthcare Inc. on Dec. 13 moved for a protective order, contending that Rotech should not be permitted to depose members of the firm (In Re: Rotech Healthcare Inc., No. 13-10741, Chapter 11, D. Del. Bkcy.).

High Court Will Consider Presumption Of Prudence In ERISA Stock-Drop Case

WASHINGTON, D.C. - The U.S. Supreme Court on Dec. 13 agreed to review a Sixth Circuit U.S. Court of Appeals ruling that Fifth Third Bancorp and its employee stock ownership plan (ESOP) trustees breached their fiduciary duties under the Employee Retirement Income Security Act by continuing to offer company stock as a retirement plan investment option at a time when the bank was engaged in subprime lending (Fifth Third Bancorp, et al. v. John Dudenhoeffer, et al., No. 12-751, U.S. Sup.).

SEC Announces $131.8 Million Settlement With Merrill Lynch

WASHINGTON, D.C. - The Securities and Exchange Commission on Dec. 12 announced that Merrill Lynch, Pierce, Fenner & Smith Inc. has agreed to pay $131.8 million to settle claims that it made "faulty disclosures about collateral selection for two collateralized debt obligations (CDOs) that it structured and marketed to investors, and [maintained] inaccurate books and records for a third CDO" in violation of federal securities laws (In the Matter of Merrill Lynch, Pierce, Fenner & Smith Inc., No. 3-15642, SEC).

Judge Dismisses Fraud Claims Against Bank Of America, Former CEO

NEW YORK - A federal judge in New York on Dec. 11 ruled that dismissal of a securities class action lawsuit against Bank of America Corp. (BofA) and its former CEO is proper because shareholders' state-law claims regarding BofA's acquisition of Merrill Lynch & Co. Inc. are precluded by the Securities Litigation Uniform Standards Act (SLUSA) (In re Bank of America Corp. Securities, Derivative and ERISA Litigation, No. 09-2058; [Melgen, et al. v. Bank of America Corp., et al., No. 12-5210], S.D. N.Y.).

Judge: Failure To Exhaust Administrative Remedies Dooms Breach, Bad Faith Claims

BOSTON - Because a short-term disability (STD) benefits recipient did not pursue the review process available after her insurer terminated benefits payments, a Massachusetts federal judge on Dec. 9 found that her claims against her insurer and employer must be dismissed per the Employee Retirement Income Security Act (Linda Pingiaro v. Standard Insurance Co., et al., No. 1:13-cv-10094, D. Mass.; 2013 U.S. Dist. LEXIS 172690).

Panel Affirms Ruling In Favor Of Security Provider In Suit Prompted By Explosion

CHICAGO - An Illinois appeals panel on Dec. 10 affirmed a lower court's ruling in favor of a security provider, finding that there was no question of fact regarding whether the provider had a contractual duty to stop or report the delivery of propane tanks that caused a building to explode (St. Paul Mercury Insurance v. Aargus Security Systems Inc., et al., No. 1-12-0784, Ill. App., 1st Dist., 2nd Div.; 2013 Ill. App. LEXIS 847).

U.S. Bancorp To Pay $53M To Settle Repurchase Obligations With Freddie Mac

MINNEAPOLIS - U.S. Bancorp will pay $53 million in cash to Freddie Mac as part of an agreement between the parties to resolve "substantially all repurchase obligations related to representations and warranties made on loans sold to Freddie Mac between 2000 and 2008," the bank announced Dec. 10 in a press release.

Judge Dismisses Shareholder Derivative Suit Without Leave To Amend

SAN FRANCISCO - A federal judge in California dismissed a shareholder derivative suit against Wells Fargo & Co. on Dec. 6 because the shareholder failed to show that presuit demand upon the company's board of directors would have been futile (Richard Gulbrandsen, Derivatively on Behalf of Wells Fargo & Company v. John G. Stumpf, et al., No. 12-cv-05968, N.D. Calif.; 2013 U.S. Dist. LEXIS 172471).

Shareholder Accuses Directors And Officers Of Insider Trading

BOSTON - A company's shareholder told a Massachusetts federal court on Dec. 6 that certain of the company's directors and officers had breached their fiduciary duty to the company by selling stock in the company using inside information (Arkady Livitz v. Harvey J. Berger, et al., No. 13-cv-13097, D. Mass.).

Shareholder Sues Directors And Officers Of Chinese Coal Company

SEATTLE - A shareholder in a Chinese coal energy company told a federal court in Washington state on Dec. 9 that the company's directors and officers have made false and misleading statements about the company's holdings and its alleged revenues (Jay Finkelstein v. Dickson V. Lee, et al., No. 13-cv-2197, W.D. Wash.).

'Penthouse' Reorganization Wrongly Releases Parties In IPO Action, Investors Say

WILMINGTON, Del. - A principal in an investment company that is the lead plaintiff in a class action against one of the affiliates of bankrupt PMGI Holdings Inc., the parent company of adult entertainment empire carrying the name "Penthouse," on Dec. 9 filed an objection to PMGI's plan of reorganization, contending that it improperly releases individuals responsible for violating securities laws during an initial public offering (IPO) of common stock (In Re: PMGI Holdings Inc., No. 13-12404, Chapter 11, D. Del. Bkcy.).

Judge Signs Off On $153M Securities Settlement With Fannie Mae, KPMG

WASHINGTON, D.C. - A federal judge in the District of Columbia on Friday granted final approval of a $153 million securities class action settlement between investors and Fannie Mae and KPMG LLP, ruling that the terms of the settlement and the plan of allocation meet all statutory requirements (In re: Fannie Mae Securities Litigation, No. 04-01639, D. D.C.).

Final Approval Of $500M Countrywide Securities Settlement Granted

LOS ANGELES - A federal judge in California on Dec. 6 granted final approval of a record-setting $500 million securities class action settlement in three related actions against Countrywide Financial Corp. for misrepresenting the investment quality of mortgage-backed securities (MBS) it offered to investors (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.).