It’s not often that Judge Richard Posner of the 7th U.S. Circuit Court of Appeals concedes that he might have been wrong. (Just ask U.S. Supreme Court Justice Antonin Scalia and his “Reading Law” co-author Bryan Garner, who have been engaged in a back-and-forth war of words with Posner since he first harshly criticized their research back in August 2012.)
Don’t get too excited about the news Monday that the U.S. Supreme Court has agreed to hear the appeal of bond investors whose antitrust claims against the global banks involved in the Libor-setting process were tossed last year.
Should New York courts have the right to hear cases against international businesses with any operations in the state? That’s what the state’s top administrative judge asked for — and very nearly got — from the state legislature. The proposed changes to state laws died on June 20, the last day the state senate was in session. But according to the chair of the New York courts’ advisory committee on civil procedure, the law to reclaim jurisdiction over foreign corporations will probably be revived when the legislature returns to session, possibly as soon as this fall.
U.S. District Judge James Gwin of Washington, D.C., created a huge stir last March when he ruled that documents from KBR’s internal investigation of government contract fraud were not protected by attorney-client privilege and must be disclosed to a whistleblower who sued KBR under the False Claims Act. Even though KBR’s in-house lawyers oversaw the investigation — which examined allegations that the company and a subcontractor inflated costs and accepted kickbacks related to military contracts in Iraq — Gwin said that the privilege didn’t apply because (among other things) KBR’s primary purpose in the investigation was to comply with regulatory requirements, not to obtain legal advice.
If it is possible for an appellate ruling on the jurisdiction of bankruptcy trustees’ claims against an auditor to be snicker-inducing, Judge Richard Posner‘s opinion Wednesday for the 7th U.S. Circuit Court of Appeals in Parmalat v. Grant Thornton is that decision.
Sometimes, the best way to understand the broad implications of a court’s decision isn’t to read the ruling itself but rather the dissent. That was certainly true a year ago, when Justice Antonin Scalia attacked the U.S. Supreme Court’s decision in Windsor v. U.S., which struck down federal prohibitions on same-sex marriage as an unconstitutional intrusion on the equal rights of gays and lesbians. The majority’s ruling was carefully constrained, but a furious Scalia predicted that the stirring language of Justice Anthony Kennedy’s opinion would reverberate more loudly in the lower courts than the actual holding. As we now know from decisions all over the country striking down restrictions on same-sex marriage, Scalia was right.
It was entirely predictable that last spring, after Safeway announced that it had agreed to accept a $9.2 billion offer from the private equity firm Cerberus Capital, shareholders would rush to file suits challenging the deal. As you know, shareholder M&A suits have become an inevitable consequence of merger announcements, and, to the frustration of defendants, are often brought in more than one jurisdiction — which has meant, in years past, that if defendants couldn’t persuade judges to defer to other courts, they sometimes had to defend against the same claims by multiple plaintiffs firms in multiple courts.
Let’s state the obvious: Big Business did not get what it wanted Monday from the U.S. Supreme Court, which refused in Halliburton v. Erica P. John Fund to overturn Basic v. Levinson, the 25-year-old precedent that permits shareholders to bring classwide claims of securities fraud.
At a hearing Wednesday afternoon in Manhattan, Argentina’s lawyer, Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, informed U.S. District Judge Thomas Griesa that Argentine officials “will be in New York next week” in order to begin negotiations with the hedge funds whose bond litigation has forced the country to the brink of a sovereign debt crisis.
If Argentina truly wants to resolve its debt crisis without defaulting on tens of billions of dollars in restructured bonds, its politicians had better stop giving speeches.