(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.
(Reuters) – The mortgage lender PHH Corporation was understandably jolted in June, when the Consumer Financial Protection Board issued its final decision in an enforcement action accusing PHH of jacking up consumers’ closing costs by demanding that mortgage insurers buy reinsurance from PHH’s in-house reinsurance company. CFPB director Richard Cordray ruled that those re-insurance deals are effectively kickbacks to PHH and ordered the company to pay $109 million in disgorgement – $103 million more than the $6 million disgorgement recommended by Administrative Law Judge Cameron Elliot.
Gary Friedman of the Friedman Law Group can now put a price tag on the cost of his horribly misguided decision to share privileged and confidential documents from his antitrust class action against American Express with his old friend Keila Ravelo, a lawyer for MasterCard in a parallel case: $75 million.
(Reuters) – Here’s a rather terrifying vision of the future, inspired by the dire warnings contained in amicus briefs in a case called U.S. v. Ganias at the 2nd U.S. Circuit Court of Appeals. In the course of investigating someone you are connected to, perhaps a client or business associate, the government obtains a search warrant for the records of your involvement with its target. Rather than comb through your computer hard drive to find relevant documents, government investigators copy your entire drive: your business records, personal information, emails, whatever you’ve got on the computer. The feds pull out what they need for the case against their target. But instead of disposing of the rest of your electronic records, the government warehouses its copy of your hard drive. And if you happen to fall under scrutiny – or if the investigation of your colleague was just a pretext for getting a hold of your electronic files – your computer hard drive is sitting right there in government hands, waiting to be plumbed for evidence against you.