(Reuters) – Our civil justice system features two ways to assure that corporations treat the rest of us fairly. Consumers (or investors, in the case of securities violations) can bring a suit to recover damages. And government regulators can bring an enforcement action. These public and private cases are supposed to work together to hold deceptive corporations accountable for their misdeeds and to deter other businesses from engaging in similar misbehavior.
As the Obama administration pushes for Congressional approval of its nuclear deal with Iran, the Justice Department this week urged the U.S. Supreme Court not to grant review in a case that presents the question of whether lawmakers encroached on the executive and judicial branches to deliver nearly $2 billion in Iranian assets to terror victims.
I’ve been predicting this since June: Class actions face a fundamental threat in the upcoming U.S. Supreme Court term. We already had evidence from the 17 amicus briefs class action foes filed last month in Spokeo v. Robins, urging the justices to do away with class actions based on federal laws granting consumers a private right of action to enforce statutory violations. Now business groups are piling on in Tyson Foods v. Bouaphakeo.
(Reuters) – The British grocery giant Tesco moved Monday night to dismiss a securities class action in Manhattan federal district court that alleges the company’s coverup of an accounting scheme eventually resulted in a 15 percent plummet in the price of Tesco’s American Depository Receipts. Tesco’s lawyers at Wachtell Lipton Rosen & Katz argue that because Tesco ADRs do not trade on a U.S. stock exchange – they are only sold over the counter – investors cannot sue in federal court under the U.S. Supreme Court’s 2010 ruling in Morrison v. National Australia Bank.
(Reuters) – On Friday, Labaton Sucharow filed a class action on behalf of about 21.5 million (!) federal employees, contractors and job applicants whose personal information was exposed in an epic breach of security at the U.S. Office of Personnel Management, which screens applicants for federal government jobs and conducts security clearance on employees and contractors. Labaton’s complaint is at least the seventh class action against OPM and its private contractor, KeyPoint Government Solutions, including two suits by government employee unions and one with a federal administrative law judge as the lead plaintiff.
(Reuters) – The 2nd U.S. Circuit Court of Appeals really, really doesn’t like to hear cases en banc, so shareholders’ lawyers at Robbins Arroyo knew the odds were against them when they asked the entire court to take up the dismissal of a derivative suit accusing JPMorgan Chase directors of botching the company’s investigation of the London Whale trading debacle.
(Reuters) – The intrepid reporter Nate Raymond, who covers New York City federal courts for Reuters, recently decided that, as a pet project, he would use the Freedom of Information Act to try to obtain booking photos of criminal defendants in his bailiwick. It has been a Kafkaesque journey.
(Reuters) – The French media company Vivendi proved Tuesday that it is possible to rebut the infamous presumption in securities class actions that investors relied on market-distorting corporate misrepresentations. U.S. District Judge Shira Scheindlin of Manhattan granted Vivendi’s motion for summary judgment against claims by the institutional investor Southeastern Asset Management, or SAM, concluding that the evidence – including a five-hour deposition of the analyst who oversaw SAM’s Vivendi stake – showed SAM did not make investment decisions based on Vivendi’s supposedly fraudulent statements.
For the second time in 14 months, the District of Columbia U.S. Circuit Court of Appeals has rescued KBR from having to turn over documents from an internal investigation of kickback allegations to a whistleblower suing the company under the False Claims Act. And, more importantly for corporations other than KBR, the appeals court has once again rejected trial court rulings that would have bored holes in the shield of attorney-client privilege.
(Reuters) – The U.S. government made a fateful decision in January 2013 when it opted not to seek U.S. Supreme Court review of the 2nd U.S. Circuit Court of Appeals’ 2012 ruling in U.S. v. Caronia, which overturned the conviction of a pharmaceutical sales representative engaged in off-label marketing of a narcolepsy drug. The 2nd Circuit, in a split decision, held that as long as drug companies stick to truthful and accurate statements, off-label marketing is protected commercial speech under the First Amendment and Supreme Court precedent in Sorrell v. IMS Health. Commentary at the time called Caronia a landmark holding that might limit the Food and Drug Administration’s ability to police drug misbranding, but – perhaps fearing a loss at the Supreme Court – the Justice Department and the FDA portrayed the 2nd Circuit ruling as a narrow decision that wouldn’t affect enforcement.