(Reuters) – The 2nd U.S. Circuit Court of Appeals seems to be eager to decide when, if ever, the federal government has the right to retain and search computer records seized in one investigation but later found to be relevant in another.
In a June 18 statement explaining his dissent in two recent enforcement actions against chief compliance officers at investment advisers, Commissioner Daniel Gallagher of the Securities and Exchange Commission pointed out that for the vast majority of the 11,700 investment advisers registered with the SEC, in-house compliance officers are “the only line of defense” against securities law violations. The SEC is undermanned and there’s no self-regulating organization for investment advisers, unlike broker-dealers, the commissioner said. So it’s critically important, he said, for the SEC to encourage chief compliance officers to perform their duties with vigor. According to Gallagher, that means the agency should stop using the blunt instrument of enforcement actions and start think about revising its rules in order to protect compliance officers when other people at their firms do something wrong.
In July 2014, the Chicago class action firm Anderson & Wanca moved for preliminary approval in Illinois state court of a $23 million settlement of allegations that Metropolitan Life Insurance violated the Telephone Consumer Privacy Act by sending out millions of unsolicited faxes. Five members of the class objected to the settlement. Two dropped protests on their own and the judge struck a third before granting final approval to the settlement in February 2015.
(Reuters) – On Friday, the 7th U.S. Circuit Court of Appeals ended a drama that has roiled the class action bar this month. A 7th Circuit motions panel agreed to dismiss appeals by objectors in a $75.5 million class action settlement with Capital One over debt collection robocalls. That sounds like a pro forma docket entry, since all of the objectors at the 7th Circuit moved to drop their cases. But there was a chance the appeals court might have taken bait dangled by Ted Frank at the nonprofit Center for Class Action Fairness and insisted on investigating settlements between the objectors and class counsel at Lieff Cabraser Heimann & Bernstein.
(Reuters) – Even after all the decision has cost him, Ted Frank of the non-profit Center for Class Action Fairness believes he was justified in accepting $250,000 in fees from a plaintiffs’ lawyer who engages in tactics Frank considers “repugnant” and “unethical.”
(Reuters) – More than 25 years ago, eight Coloradoans agreed to serve as the representatives for a class of about 13,000 property owners who believed the Rocky Flats nuclear weapons plant had contaminated their land with radioactive plutonium. In late 2005, after 15 years of pre-trial motions practice against the federal contractors Dow Chemical and Rockwell International, the case finally went to a four-month trial. Jurors deliberated for 17 days, answering a 30-page jury form, before returning a verdict of $177 million in compensatory damages and $200 million in punitive. With pre-trial interest, the compensatory damages alone topped $700 million.
I had a feeling the U.S. Chamber of Commerce might have something to say about the Securities and Exchange Commission’s split ruling last December against former State Street chief investment officer John Flannery. And so it does. The Chamber has filed an amicus brief at the 1st U.S. Circuit Court of Appeals, arguing that the SEC overstepped its authority when it used the State Street case to re-interpret anti-fraud provisions of the Securities Act of 1933.
Ted Frank of the nonprofit Center for Class Action Fairness (CCAF) requires his clients to pledge in their retainer agreements that they’re not looking for financial payoffs in bringing objections to proposed class settlements. As Frank explained earlier this month in an extraordinary declaration at the 7th U.S. Circuit Court of Appeals, the purpose of the provision is to distinguish Frank and his nonprofit from “professional objectors” – lawyers and clients who file objections to big class action settlements in the hope that class counsel will pay them to go away. Since founding the Center for Class Action Fairness in 2009, Frank has said his motive is to correct class action abuses for his clients and other class members, not to help clients win extortionate payoffs.
Can the Treasury Department and the Internal Revenue Service hire private lawyers to advise the government on big-dollar corporate tax audits that may result in litigation? On Wednesday, U.S. District Judge Ricardo Martinez of Seattle agreed to take up that question, granting Microsoft’s motion for an evidentiary hearing into the government’s $2.2 million contract with Quinn Emanuel Urquhart & Sullivan, which is serving as a litigation consultant in the IRS’s audit of Microsoft’s cost-sharing arrangements with affiliates in Puerto Rico and Asia.
(Reuters) – It seems as though there ought to be an easy way for the Securities and Exchange Commission to stomp out claims that its in-house judges are unconstitutionally appointed through a bureaucratic process, a defense theory that has spread as fast among SEC defendants as viral cute-animal memes on the Internet. But the SEC has so far avoided even addressing the potential consequences of that quick fix – perhaps because the solution isn’t so simple after all. If the SEC changed the way it appoints in-house judges, the fix could call into question the outcome of scores of past and present SEC enforcement actions as well as cases at other regulatory agencies.