Alison Frankel

Dow Jones chooses weak weapon in suit vs news aggregator Ransquawk

By Alison Frankel
January 10, 2014

Like most creators of news content – those of us who used to be known as “reporters” – I worry a lot about the value of information. Unless information consumers – those of you who used to be called “readers” – won’t pay for the content we provide, news organizations can’t make enough money to keep our owners happy. The journalism business is now in the slow and painful process of figuring out how to convince readers that news is worth paying for.

Too late for MBS investors to sue in N.Y. state? Try federal court!

By Alison Frankel
January 9, 2014

We are just beginning to witness the impact of the ruling last month by the New York State Appellate Division, First Department, that the six-year statute of limitations for breach-of-contract claims based on mortgage-backed securities begins to run on the securities’ closing date. As you surely recall, a unanimous state appeals court flatly rejected contrary reasoning by State Supreme Court Justice Shirley Kornreich, who had ruled that the breach in MBS contracts occurs not at the moment the deal closes but when the issuer refuses an MBS trustee’s demand for the repurchase of underlying mortgages that don’t live up to the issuer’s representations and warranties. Kornreich’s interpretation would have permitted MBS mortgage repurchase, or put-back, claims to be filed throughout the life of the securities. Instead, the appeals court essentially capped put-back exposure for MBS issuers. It’s only been a couple of weeks since the appellate ruling, but as the New York Commercial Litigation Insider reported Wednesday, state-court judges have already begun tossing mortgage repurchase cases filed more than six years after the MBS closing date.

FDA punts again on GMO labeling, in boon to class action plaintiffs

By Alison Frankel
January 8, 2014

A couple months back, I told you that labeling of food containing genetically modified ingredients could be one of the rare issues in which private litigation has more impact than federal regulation on industry practices. That prospect has become more likely than ever, thanks to a letter that the Food and Drug Administration sent Monday to three federal judges overseeing consumer class action claims involving food with bio-engineered ingredients.

New Delaware Supreme Court nominee Strine speaks! (Well, sort of)

By Alison Frankel
January 8, 2014

On Wednesday, Delaware Governor Jack Markell nominated Chancellor Leo Strine of Chancery Court to become chief justice of the state’s Supreme Court. Assuming Strine’s nomination is approved, Chancery Court is going to be a much less colorful place. Strine is a legal mastermind – with an unpredictable and outspoken judicial demeanor. Occasionally, his off-tangent courtroom riffs have landed him in trouble. In 2012, for instance, Strine said he regretted comments he made during a hearing involving fashion entrepreneur Tory Burch in which he asked her attorney if Burch is Jewish and compared her dispute with her former husband to a “drunken WASP-fest.” Strine was also gently chided last year by his future colleagues on the Delaware Supreme Court for using judicial opinions to express his “world views.”

Halliburton alert! New briefs argue Congress never endorsed Basic

By Alison Frankel
January 7, 2014

Last February, when Chief Justice John Roberts and Justice Samuel Alito of the U.S. Supreme Court sided with the court’s liberal wing in Amgen v. Connecticut Retirement Plans, they joined an opinion that left intact the standard for certification of a class of securities fraud plaintiffs. Amgen, as you probably recall, had asked the court to impose a requirement that shareholders prove the materiality of supposed corporate misrepresentations in order to win class certification. The majority refused, in a decision written by Justice Ruth Ginsburg. Among other things, Justice Ginsburg said that if Congress had wanted to tinker with the Supreme Court’s 1988 precedent on securities class certification, Basic v. Levinson, it could have done so in 1995, when lawmakers passed the Private Securities Litigation Reform Act, or again in 1998, when the Securities Litigation Uniform Standards Act became law. Instead, Justice Ginsburg wrote in Amgen, “Congress rejected calls to undo the fraud-on-the-market presumption of classwide reliance endorsed in Basic.”

Now that pot’s legal, what happens to employees who use?

By Alison Frankel
January 6, 2014

I don’t want to harsh the mellow of all you Coloradoans enjoying your newly instituted right to use marijuana for recreational purposes, but if you smoke dope on your time off and later test positive in a workplace drug test, your employer can fire you, according to partners at five major employment law firms. The same is true in all but a handful of other states that have legalized pot for medical purposes. Unless you work in Arizona, Delaware, Maine, Rhode Island, Illinois or Connecticut, you aren’t protected for the authorized use of marijuana (and your protection even in some of those states isn’t a sure thing). As long as federal law treats pot as an illegal drug, employers have strong arguments to counter state laws permitting its use.

For law firms, 2014 will be year of extreme change – and challenge

By Alison Frankel
December 26, 2013

Just before Christmas, a partner at one of the most perennially profitable law firms in the land told me a funny story about a former colleague’s explanation for jettisoning his career at the firm and entering academia. The Big Law refugee told his partners that being elected to their ranks was like winning a pie-eating contest, only to discover that the prize is more pie. It wasn’t worth it to put in years of crushing work to become a partner, he said, when partnership’s only reward (aside from heaps of money) is the right to continue to work yourself into numbness.

Paulson bets (for now) on JPMorgan in $2.7 bln FDIC fight

By Alison Frankel
December 23, 2013

The relatively new industry of litigation funding, in which an investor otherwise uninvolved in a dispute agrees to front the money for one side or the other (almost always the plaintiffs) to litigate the case, has occasioned much soul searching about who has the right to bring a claim and control its prosecution. But there’s really nothing new about investors betting on litigation, albeit by acquiring a direct interest in a case. I’m speaking, of course, about hedge funds engaged in litigation arbitrage, in which they purchase a security in the hope that successful litigation will drive up its value. The phenomenon is best known in the distressed debt arena, where hedge funds have made heaps of money by buying up notes of bankrupt or near-bankrupt companies and then clawing for creditors’ rights by any means necessary. You also see trading in claims against receiverships, as in the brisk secondary market for claims belonging to Bernard Madoff’s investors, as well as trading in stock whose value is particularly driven by litigation developments, as, for instance, MBIA’s used to be. More recently, we’ve seen investors buying mortgage-backed notes with the intention of acquiring a big enough stake to force the MBS trustee to pursue repurchase claims. (Although, as I told you last week, that’s become a very low-odds bet, thanks to the New York state appellate court’s new ruling on the statute of limitations for put-back suits.)

How Facebook IPO class action lawyers changed judge’s mind

By Alison Frankel
December 20, 2013

The first paragraph of Facebook’s motion to dismiss a securities class action that raised allegations about disclosures in its initial public offering was a no-brainer. Last February, U.S. District Judge Robert Sweet of Manhattan tossed four shareholder derivative suits based on the same underlying facts, concluding in a voluminous opinion that Facebook had “repeatedly made express and extensive warnings” about potential weaknesses in its revenue model as users shifted from desktop computers to mobile devices. So in May, when Facebook’s lawyers at Kirkland & Ellis and Willkie Farr & Gallagher moved to dismiss the parallel securities class action, which is also before Judge Sweet, they quoted the judge’s own words right back to him, not just in the first paragraph but seven more times in the dismissal brief.

Wachtell: ‘Bully’ Icahn tried to shake us down with ‘malicious’ lies

By Alison Frankel
December 19, 2013

In October, when I told you about a malpractice suit against Wachtell, Lipton, Rosen & Katz by Carl Icahn’s CVR Energy, I pointed out the undertone of devilish glee that ran through the Kansas federal court complaint. Icahn is the ultimate activist investor, a perennial foe of corporate board defender and long-term value guru Martin Lipton. Icahn beat Wachtell when he succeeded in acquiring CVR last year, despite CVR’s anti-takeover advice from the firm and Goldman Sachs and Deutsche Bank. His suit accusing Wachtell of malpractice – for supposedly failing to warn CVR’s board about the fees the company would have to pay Goldman and Deutsche Bank if Icahn prevailed – seemed to be icing on Icahn’s already tasty cake.