On Monday, just days before jurors in federal court in Cleveland concluded that Whirlpool was not negligent in the design of front-loading washing machines with a supposed propensity to develop a moldy smell, Whirlpool’s lawyers asked U.S. District Judge Christopher Boyko to overturn his decision to permit Ohio buyers of the machines to litigate as a class. Whirlpool argued that the three-week trial to determine whether 20 washing machine models were poorly designed hadn’t established a common question to bind the purchasers’ class together. Judge Boyko quickly denied the motion, ruling Tuesday that the design of the machines is a common issue for all purchasers in the class.
You certainly can’t accuse Sean McKessy, who heads the whistleblower office at the Securities and Exchange Commission, of ignoring employers’ attempts to silence would-be whistleblowers. McKessy has repeatedly warned corporations – most recently in an interview with Stephanie Russell-Kraft at Law360 – that if they try to stop employees from coming to the SEC with claims of wrongdoing or if they retaliate against those who have spoken out, the agency can bring an enforcement action against them for violating the Dodd-Frank Financial Reform Act.
New York’s highest court did a big favor for international banks last week in its decision in Motorola v. Standard Chartered. But they’re not the only beneficiaries of the ruling, at least as the banks tell the story. According to amicus briefs in the case from the Securities Industry and Financial Markets Association (SIFMA) and the city bar’s banking law committee (among others), New York’s position as a center of international finance would have been endangered had the Court of Appeals gone against Standard Chartered.
Earlier this week, I told you about new filings by the Canadian pharmaceutical company Valeant and the hedge fund Pershing Capital that suggested their target Allergan had disregarded advice from its financial adviser Goldman Sachs. The Pershing and Valeant briefs were heavily redacted and the underlying exhibits were sealed, but the implication from unredacted snippets was that Goldman had suggested Allergan request accounting information from Valeant and Allergan rejected the recommendation. Then, according to Pershing and Valeant, after Goldman refused to go along with attacks on Valeant’s business model, Allergan hired additional experts with no such reservations.
On Wednesday, the National Association of Criminal Defense Lawyers announced a major new grant to fund training for lawyers who represent indigent defendants. That’s no surprise. Providing good lawyers for defendants who can’t afford counsel is a core mission for NACDL. But the source of the funding caused a bit of a stir: Koch Industries, the Kansas-based, privately held manufacturing conglomerate that is the source of the boundless wealth of Charles and David Koch. The Koch brothers, as you surely know, contribute so lavishly to Republican candidates and conservative causes that the Senate’s Democratic majority leader, Harry Reid, has tagged them (via Talking Points Memo) “‘un-American’ plutocrats who ‘have no conscience and are willing to lie’ in order to ‘rig the system’ against the middle class.”
When the bond market went crazy last week, bankers had an explanation: too much regulation. Sure, why not? If you’re looking for a scapegoat, you can’t go wrong with overregulation. It’s like Starbucks, ubiquitous and convenient.
One of the most interesting supporting actors in the Allergan takeover drama is Goldman Sachs, which is a financial adviser (along with BofA Merrill Lynch) to the Botox maker. Goldman is known for defending takeover targets, so it made sense when Allergan brought in the bank to help it fend off a joint hostile advance from the Canadian pharmaceutical company Valeant and the hedge fund Pershing Square.
Professor Randall Thomas of Vanderbilt Law studies M&A class action litigation. To him, it’s obvious that some plaintiffs’ firms file these now ubiquitous suits simply to collect a so-called “deal tax” and others work the cases hard to win better terms for shareholders. Yet commentary on M&A class actions tends not to distinguish among shareholders’ firms, he said. “It always bothered me that all plaintiffs’ firms are painted with the same brush – they’re either shareholder champions or scum of the earth,” Thomas told me. “The reality is that there are big differences.”
If you are the most profitable corporate law firm in recorded history, with a habit of loudly defending the business judgment of corporate boards, you have to expect to take more than your share of shots. Wachtell Lipton Rosen & Katz is the Goldman Sachs of the law biz: When someone claims the firm has done something wrong, it’s news.
I’ll admit it: I was among the predictors of doom last year when a three-judge panel of the 3rd U.S. Circuit Court of Appeals issued its decision in Carrera v. Bayer. The Carrera decision, as you may recall, addressed the requirement that class membership be “ascertainable” in order for class actions to be certified. The facts of the case – a consumer class action claiming deceptive labeling of a Bayer diet supplement – were idiosyncratic, but the appellate holding that affidavits from purported purchasers aren’t sufficient to ascertain class membership seemed broad indeed. Consumer class action advocates asked for en banc review, asserting a credible argument that the decision was a death knell for claims based on low-cost items for which purchasers don’t save receipts. The 3rd Circuit declined to hear the case en banc, but in a dissent, four judges said they were worried that the Carrera decision went too far, giving rise to “fear that some wrongs will go unrighted because wrongdoers gamed the system.”