Presenting the "Preemptive Vigorous Defense" Press Release

Readers have no doubt discerned that securities class action related press releases, in all of their permutations, present a great deal of fodder for my musings.

It appears a new permutation has emerged.

This morning Antigenics Inc. issued a preemptive vigorous defense press release.

The release noted that a purported class action complaint had been filed last week in the United States District Court for the District of New Mexico against the company and its chief executive officer, Garo H. Armen.

Antigenics went on to state:

The Company believes that the complaint is without merit and plans to vigorously defend against the litigation. The Company's policy is to not discuss pending litigation.

Here's the rub - a quick search of Yahoo! Finance, MarketWatch, TheStreet.com, The Motley Fool, reveals that no press release has yet been issued by the firm(s) that filed the complaint.

Of course, they still have some time to get around to it.

The PSLRA states that securities class action plaintiffs, within 20 days of filing a complaint, "shall cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class." See 15 U.S.C. § §  77z-1(a)(3)(A)(i) (Securities Act of 1933), 78u-4(a)(3)(A)(i) (Securities Exchange Act of 1934).

One more thing - isn't issuing a preemptive press release arguably the very discussion of pending litigation that Antigenics indicates it does not do?

CIBC Settles Global Crossing Related Claims

According to news reports, the Canadian Imperial Bank of Commerce (CIBC), has agreed to settle claims asserted against it in the securities class action filed on behalf of Global Crossing Ltd. and Asia Global Crossing Ltd. shareholders, pending in the Southern District of New York.

While terms of the settlement have not yet been disclosed, sources indicated that the settlement is likely in the range of $20 million.

The lead plaintiffs in the Global Crossing litigation are the Public Employees' Retirement System of Ohio (OPERS) and the State Teachers' Retirement System of Ohio (STRS). Lead counsel is Grant & Eisenhofer P.A.

Remaining defendants include Goldman Sachs and Merrill Lynch, two of Global Crossing's underwriters.

More Securities Related Resources

The good folks at the Federal Judicial Center have a number of resources available that may be of use or interest to securities litigators. Two in particular are worth highlighting.

The first is a monograph, Federal Securities Law, authored by Prof. Thomas Lee Hazen. The text is meant as an introduction to the intricacies of the federal securities laws for federal judges.

Though it is a bit dated, having been published in 2003, it is nonetheless a good starting point for one looking for a broad overview of the federal securities laws - and the price (free!) is certainly right.

Prof. Hazen is the Cary C. Boshamer Distinguished Professor of Law at the University of North Carolina at Chapel Hill School of Law.

The second securities class action related resource from the FJC is the fourth edition of the Manual for Complex Litigation. The nearly 800 page tome is aimed at assisting federal trial judges in managing class and complex litigation. For those not wishing to download the entire manual, the table of contents here allows users to download smaller pieces. Though judicial officers are the intended audience, it is nonetheless a helpful resource used often by practitioners. Note that this is not the annotated version available from Thomson - West.

Refco Settlement Derby May Be Heating Up

According to this Dow Jones story (via CattleNetwork.com) a new potential defendant has emerged in the Refco securities class action - the law firm of Mayer, Brown, Rowe & Maw LLP.

That nugget was contained in papers filed last week by the Lead Plaintiffs in support of their motion to modify the PSLRA discovery stay. As noted in that brief, although Mayer Brown is not currently named as a defendant, the firm:

acknowledges that it is the "Law Firm" described in the Amended Complaint as being responsible for negotiating and documenting the fraudulent "loan" transactions that form the core of the fraud at Refco.

Indeed, lead plaintiffs note that as Refco's primary outside law firm for more than a decade, Mayer Brown:

was intimately familiar with Refco's operations and structure and - importantly - prepared some of the documents that lie at the heart of this case.

And:

Because documents from Mayer Brown will (as noted above) be pertinent regardless of Mayer Brown's status as a party or non-party to this action, Lead Plaintiffs simply state here that Mayer Brown's confidence that it is insulated from liability is, in a word, optimistic.

Sounds like Mayer Brown may be getting in line to join the Refco settlement derby.

As noted in this National Law Journal article from January, Mayer Brown is actually already involved in the litigation, having been named (along with partner Joseph P. Collins) as a defendant in at least one of the many cases consolidated with the class action, Teachers' Retirement System of Illinois v. Lee, No. 1:05-cv-10403. A copy of the Teachers' Retirement System complaint is available on the Lerach Coughlin website, here.

For those that were wondering, Cattle Network describes itself as "the premier website for any and all information needed in agri-business on a daily basis," with information "on everything from crop insurance to basis to employee benefits to foot rot to the daily boxed beef report." And no, I couldn't find the story on any other public website.

Is it the Bowtie?

Wilson Sonsini Goodrich & Rosati has long been considered one of the giants of the securities class action defense bar. Indeed according to the firm's website:

From 1999 to 2004, we have represented more issuers and have completely prevailed in more cases than any other law firm in the country.

Even with the departure of two prominent partners in the last four months, the firm still maintains a very active presence in the field, thanks in large measure to Boris Feldman.

Indeed, I believe Feldman is one of only two members of securities class action defense bar with their own eponymous website - www.borisfeldman.com, complete with a suitably stern picture of Boris with his trademark bowtie.


The other member of the defense bar with their own eponymous website - none other than Lyle Roberts, the author of The 10b-5 Daily and the owner of www.lyleroberts.com. Roberts and Feldman were, until recently, partners at Wilson Sonsini, and coincidentally, both are bowtie aficionados.

Roberts joined LeBoeuf, Lamb, Greene & MacRae LLP earlier this month. The firm's announcement can be found here.

Another recently-departed Wilson Sonsini securities litigation partner, Bruce Vanyo, does not have his own website. Vanyo left Wilson Sonsini in February of this year for Kirkland & Ellis, LLP. His stay there was cut short as a result of undiscovered client conflicts, according to this article from The Recorder. Vanyo joined Katten Muchin Rosenman LLP in March. According to uncorroborated sources, Vanyo does not wear bowties, except on formal occasions.

"Passive Voice Press Releases" and the "Vigorous Defense"

You've seen them discussed separately, but now we have them together. A complaint about a so-called "passive voice press release" and a vigorous defense proclamation by a defendant.

Passive voice press releases are those issued by law firms that have not yet filed a complaint. They typically announce that a securities class action "has been filed." This is distinguished from the active voice releases, which state things such as "[the firm] filed a complaint" or "[the firm] has filed a complaint."

The practice is most often pointed out by one of the firms that filed a complaint, not by the defendant corporation, as we have here.

Earlier this week, InfoSonics Corporation issued a press release, stating:

While at least seven law firms have publicly disseminated press releases over the past few days implying that they have filed lawsuits against InfoSonics Corporation, the Company's preliminary investigation has revealed that two lawsuits seeking class action status have been filed (by three of the firms that issued press releases this week). The remaining four law firms that implied in their press releases that they also filed lawsuits had not done so at the time of their releases and the Company has no knowledge that they have since filed actual lawsuits.

This is the classic passive voice press release issue, discussed by The 10b-5 Daily here and here and by Securities Litigation Watch here and here.

InfoSonics couldn't resist the lure of the vigorous defense language having read in these pages earlier in the week about a recent successful use of that phrase, and went on to state:

The Company believes its actions raised in the lawsuits were appropriate and intends to vigorously defend them.

Now if only we could find a passive voice press release that indicated the law firm intended to "vigorously pursue" the claims that they have not yet alleged.

More Resources from Weil Gotshal & Manges

Over at Securities Litigation Watch, Bruce Carton has pointed out a helpful resource, the 2005 Securities Litigation Survey, published by Weil, Gotshal & Manges.

Another useful resource is their bi-monthly Business & Securities Litigator. It is available online (with archives stretching back to 1999) or readers may subscribe by e-mailing the firm's webmaster.

The Supremes & SLUSA - Round II (Part II)

The Supreme Court has unanimously ruled to vacate and remand the Seventh Circuit's decision in Kircher v. Putnam Funds Trust, the second Securities Litigation Uniform Standards Act of 1998 (SLUSA) case to be heard by the Court this term.

In an opinion written by Justice David Souter, the Court, held that orders remanding cases that had been removed under SLUSA are non-appealable under 28 U. S. C. § 1447(d). Justice Scalia concurred in part and concurred in the judgment.

ADDITION: The 10b-5 Daily has an analysis of the Court's decision here.

"Vigorous Defense" Successful!

According to a press release issued today, Judge William C. Griesbach of the United States District Court of the Western District of Wisconsin has dismissed, in its entirety, the consolidated securities class action pending against Great Wolf Resorts, Inc., and certain of Great Wolf's officers as well as the underwriters of the company's 2004 initial public offering.

Back in November 2005, when the suit was first filed, a Great Wolf spokesperson stated:

We believe this suit has no merit, and we intend to vigorously defend it.

Readers may recall that both Bruce Carton and I have previously noted the uniform choice of the "vigorous defense" language in corporate press releases. This is the first instance that I can recall where the company's self-professed "vigorous defense" was successful. The wire services have been alerted and are now prepared for the avalanche of these releases that will surely follow.

Great Wolf is the largest owner, operator and developer in the United States of drive-to family resorts featuring indoor waterparks. You can find a resort near you here.

Lead counsel in the case was Schiffrin & Barroway, LLP.

Fighting Cousins?

Over at Securities Litigation Watch, Bruce Carton has a post about an article in The Recorder regarding litigation between counsel in the respective state and federal derivative actions involving Tenet Healthcare.

Counsel in the federal case are Cauley, Bowman, Carney & Williams, LLP. Counsel in the state case include Robbins Umeda & Fink, LLP.

Those two firms have some history. Let's try and untangle the relationship.

First a little background.

Back in the late 1990s, Paul J. Geller and Scott R. Shepherd were partners in what was then known as Shepherd & Geller, LLC. That firm now exists as Shepherd, Finkelman, Miller & Shah, LLC, a 13 attorney firm with offices in 5 states.

S. Gene Cauley and Paul Geller formed a partnership and that firm eventually became Cauley Geller Bowman & Coates, LLP.

The three name partners at Robbins Umeda & Fink were the San Diego office of Cauley Geller prior to 2002, when they left to form their own firm.

In 2003, Sam Rudman left what was then still Milberg Weiss Bershad Hynes & Lerach to join what became Cauley, Geller, Bowman, Coates & Rudman LLP.

We have to take a brief side trip at this point in our story. On May 1, 2004 Milberg Weiss Bershad Hynes & Lerach LLP officially split into Milberg Weiss Bershad & Schulman LLP and what was then known as Lerach Coughlin Stoia & Robbins LLP.

After that, on May 6, 2004, the Cauley Geller firm announced that it would split into two parts - Cauley Bowman Carney & Williams PLLC and Geller Rudman PLLC.

Then on July 1, 2004, Geller Rudman announced that it was merging with what was then Lerach Coughlin Stoia & Robbins LLP to form what is now Lerach Coughlin Stoia Geller Rudman & Robbins LLP.

Did you follow all of that?

Good, then you can play my new game - Six Degrees of Sam Rudman.

Williams Companies Settlement (Part III)

OK folks - This is really the last update.

As noted earlier, the related litigation on behalf of Williams Communications shareholders is still pending.

The class in that case was just certified on Monday by Judge Stephen P. Friot.

Co-lead counsel for the Williams Communications sub-class are Yourman Alexander & Parekh LLP and Milberg Weiss Bershad & Schulman LLP.

As noted previously, a copy of the amended complaint is available here and the opinions on the motions to dismiss are available here.

The lead plaintiff (and one of the class representatives) for the Williams Communications sub-class is Alex Meruelo. With the power of Google, I now know that Mr. Meruelo is the founder of La Pizza Loca, Inc., a fast food pizza restaurant with about 50 franchised and company owned restaurants throughout Southern California. According to Pizza Today Magazine, La Pizza Loca is the 61st largest pizza company in the United States.

Mr. Meruelo is also a member of the board of directors and chairman of the audit committee of Commercial Bank of California and a member of the board of William Lyon Homes one of the nation's largest homebuilders.

As though that was not enough, Mr. Meruelo is also the President and CEO of Meruelo Enterprises, a residential and commercial real estate concern and utility construction contractor, and the President and CEO of Cantamar Property Management.

Williams Companies Settlement (Part II)

Seems like everybody was right, sort of.

The litigation is being settled for $311 million. The company, officers and directors, and underwriters (or their insurers) are contributing $290 million and Williams' outside auditors, Ernst & Young, are contributing $21 million.

On August 28, 2004 the Court granted the motions of the Lead Plaintiffs and their counsel to withdraw. The Court then re-opened the lead plaintiff process and set a new deadline for filing lead plaintiff motions. Several parties filed new motions and on January 18, 2005, Chief Judge Sven Erik Holmes appointed the Ontario Teachers' Pension Plan Board and the Arkansas Teacher Retirement System as co-lead plaintiffs and Bernstein Litowitz Berger & Grossmann LLP as lead counsel.

My preliminary research indicates that the Williams settlements dwarf the size of other securities class action settlements in Oklahoma. The largest I have found to date was the $6.2 million settlement in 1997 relating to the demise of Skolnik's Inc., the franchisor of Skolnik's Bagel Bakery restaurants.

Further submissions from readers are, of course, welcome.

Williams Companies Agrees to Settle Class Actions

Houston - we have a disagreement.

According to press reports (Wash. Post), natural gas and pipeline company The Williams Companies, Inc. has agreed to settle the consolidated securities class action pending in the U.S. District Court for the Northern District of Oklahoma for $290 million. The company's press release is here.

According to the company's press release, related litigation on behalf of Williams Communications shareholders is still pending.

Co-lead counsel in that case appeared to be Yourman Alexander & Parekh LLP and Milberg Weiss Bershad & Schulman LLP. A copy of the amended complaint is available here and the opinions on the motions to dismiss are available here.

But according to this release, the litigation is being settled for $311 million. The second release indicates that the Ontario Teachers' Pension Plan Board and the Arkansas Teacher Retirement System are co-lead plaintiffs, and according to the firm's website, Bernstein Litowitz Berger & Grossmann LLP are lead counsel.

As if things were not murky enough, the complaint available on the Bernstein Litowitz website, here, lists HGK Asset Management, Teamsters Local 854 Pension Fund, Local 710 Pension Fund and Local 710 Health and Welfare Fund, and Gary Kosseff as lead plaintiffs and Schoengold Sporn Laitman and Lometti, Kirby McInerney & Squire, LLP, Futterman & Howard, and Murray, Frank & Sailer LLP as co-lead counsel and makes no mention of the Ontario Teachers' Pension Plan Board or the Arkansas Teacher Retirement System.

Looks like we have to dive into PACER to sort this one out. Stay tuned.

As an aside, The Ontario Teachers press release also notes:

This settlement represents the largest securities class action recovery in the history of Oklahoma.

Any guesses as to the second largest securities class action in Oklahoma state history?

Cockroaches?

Readers have no doubt noticed that this blog has not commented on the investigation and indictment of Milberg Weiss Bershad & Schulman LLP and name partners David J. Bershad and Steven G. Schulman. That was not merely a myopic oversight, but a reasoned decision.

But now, the gloves are off, and I am compelled to write about one of the more dismaying sideshows, the cheap shot comment.

In a recent article in Forbes magazine, John D. Lovi, the managing partner of Steptoe & Johnson's New York office, and a frequent opponent of Milberg Weiss, when asked if the indictment of the firm spelled the end of Milberg Weiss said:

They're like cockroaches; they're highly adaptable.

The second part of that statement I have no issue with. In fact, the entire comment may have been taken out of context, as Lovi goes on to state:

Unless this firm is destroyed by this investigation and this case, I think they will continue to be a dominant player in the field.

But it's the first part of his initial quote that I cannot stomach.

As noted by the New York State Bar Association's Guidelines on Civility in Litigation:

Lawyers should not use vulgar language or make demeaning characterizations of other persons.

And:

Lawyers should be mindful of the need to protect the image of the legal profession in the eyes of the public.

Similar language is contained in the New York State Bar Association's Code of Professional Responsibility, which state in Canon 7-37:

A lawyer should not make unfair or derogatory personal reference to opposing counsel.

I recognize that the guidelines are voluntary, but performing a Google search for lawyer jokes only reinforces the need to be mindful of civility in the profession.

Let's all agree that name-calling has no place in the profession, even if it is merely being used for illustrative purposes.

Time to get off of my soapbox and return you to your regularly scheduled blog.

Chambers USA Ranks Securities Litigation Firms

Chambers and Partners has released the 2006 Guide to America's Leading Lawyers for Business.

Of note, according to this press release, the law firm of Bernstein Litowitz Berger & Grossmann LLP, was given the top ranking in the field of plaintiff securities litigation. The firm's profile is available here. Partners Max W. Berger and John P. ("Sean") Coffey also received the top ranking in that field.

Does your country have an Enron yet?

First we had good old regular Enron.

Then we had Parmalat, which many began calling the "Enron of Italy."

Now we have Escala Group, Inc., which is now being called the "Enron of Spain." The Escala Group is the third-largest network of companies in the collectibles market, after Christie's and Sotheby's.

Isn't it time the rest of the world caught up and got their own Enron?

UPDATE: Alert readers have reminded us that competing for the title (presumably with Parmalat) for "Europe's Enron" are Royal Ahold (BusinessWeek article here) and Royal Dutch / Shell Transport n/k/a Royal Dutch Shell plc (Wharton article here).

Also, HIH Insurance Limited has been dubbed the "Enron of Australia" by the BBC, and Elan Corporation, plc, has been dubbed the "Enron of Ireland" notes Gibson Dunn & Crutcher's 2004 Annual Report.

Another reader pointed out that The South Sea Company has been called the "Enron of England." While the second article does indeed use that phrase, it is a bit of a stretch to include it on the list, as the company pre-deceased Enron by about 282 years.

How Many Former Prosecutors Do You Have?

Last week, Lerach Coughlin Stoia Geller Rudman & Robbins LLP announced that John J. Rice, a former Assistant U.S. Attorney had joined the firm. The announcement can be found here.

A review of the firm's biography reveals that Mr. Rice has a lot of company at Lerach Coughlin. The firm has a dozen former federal prosecutors as well as five former state or city prosecutors. For a firm with about 160 lawyers - that works out to a nice ration of 1 out of 10 attorneys being former prosecutors.

While it is not quite the 4 out of 5 dentists that would recommend Trident gum, it is certainly a large percentage for a firm of that size.

Several other attorneys with the firm, including name partners John J. Stoia, Jr. and Samuel H. Rudman, spent time with the United States Securities & Exchange Commission.

For those that just had to know, the dozen former federal prosecutors are:

1. X. Jay Alvarez
2. Patrick J. Coughlin
3. Michael J. Dowd
4. Daniel Drosman (also a former Manhattan ADA)
   
5. Jonah H. Goldstein
6. G. Paul Howes
7. Jeffrey W. Lawrence
8. John J. Rice
9. Scott Saham
10. Sanford Svetcov
    
11. Susan G. Taylor
    
12. David W. Mitchell

The five former state or city prosecutors are:

1. Randall J. Baron
2. Anne L. Box
3. Christopher M. Burke
4. Jonathan M. Stein
5. Shawn A. Williams
   

CalPERS appeals dismissal of NYSE suit

According to this article from BusinessWeek, co-lead plaintiffs, the California Public Employees' Retirement System (CalPERS) and Empire Programs, Inc. have appealed the dismissal of their claims against the NYSE last December by Judge Robert Sweet in the In re NYSE Specialists Securities Litigation. Judge Sweet's opinion is available here.

Judge Sweet had ruled that:

NYSE has absolute immunity with respect to Plaintiffs' Section 6(b), Section 20(a), Section 10(b) fraudulent scheme, and state law fiduciary duty claims, all of which are based on NYSE's failure to adequately monitor the conduct of the Specialist Defendants.

According to the article, Plaintiffs are arguing on appeal:

The NYSE steps outside its legitimate regulatory capacity and function when it orchestrates a fraud on investors, and those investors have standing to sue for false statements misrepresenting the very market on which they were induced to trade.

CalPERS is represented in the litigation by Lerach Coughlin Stoia Geller Rudman & Robbins LLP while Empire Programs is represented by Lovell Stewart Halebian LLP.

As a result of the specialist scandal, all seven NYSE specialist firms were fined by the SEC. The exchange itself was also censured by the SEC over its failure to police the specialists. A number of individual former traders have been indicted on fraud charges stemming from the case and two have pleaded guilty.

One interesting sidenote to the litigation. One of the lead plaintiffs, Empire Programs, is currently involved in litigation with Sea Carriers, a now-defunct Connecticut-based trading company over payments to be made as a result of the nearly $250 million in disgorgement and civil penalties paid by the specialist firms to settle litigation with the SEC.

The SEC's Order Approving a Distribution Plan, available here, describes the Empire / Sea Carriers litigation at length.

Refco Settlement Derby Begins

And the horses are off...

Today, co-lead counsel in the Refco securities litigation, Bernstein Litowitz Berger & Grossmann LLP and Grant & Eisenhofer, P.A., announced a settlement with BAWAG P.S.K. Group for at least $108 million. A copy of the press release announcing the settlement can be found here.

The settlement was part of BAWAG's attempted global resolution of its potential REFCO related liability. BAWAG also apparently into settlements with the United States Attorney for the Southern District of New York and the Official Committee of Unsecured Creditors in the Refco bankruptcy proceedings.

The settlement with BAWAG comes incredibly early in the litigation - less than four months after lead plaintiffs were appointed and just two months after a consolidated complaint was filed. According to the release, " defendants had until July 10 to submit their motions to dismiss the case."

As mentioned last week by this author, co-lead counsel maintains a website devoted to case developments in the Refco litigation here. The prior post is available here.

The End Of The Mega Securities Case Website?

In recent years, securities litigation groupies have been able to follow developments in some of the major cases via websites set up by lead counsel. With the WorldCom litigation all but finalized and the Enron litigation substantially settled, it's time to find some new websites to satisfy the securities litigation hunger.

Here is a roundup of the case-specific websites:

WorldCom

The website created by Bernstein Litowitz Berger & Grossmann LLP and Barrack, Rodos & Bacine, co lead counsel in the In re WorldCom Inc., Securities Litigation, is perhaps the most inclusive securities class action case specific website ever created. The site contains copies of virtually every pleading filed by the lead plaintiff, New York State Common Retirement Fund, as well as copies of the vast majority of Judge Cote's opinions.

Enron

There are two Enron case-specific websites worth mentioning. The first, available here is updated by lead counsel, Lerach Coughlin Stoia Geller Rudman & Robbins LLP. The second, available here, is updated by the lead plaintiff, The Regents of the University of California. With a trial date looming in the Fall, my guess is that the settlements will keep piling in, and these sites will stay relatively static.

IPO

The website in the Initial Public Offering Securities Litigation has copies of many of the major briefs filed in the case, as well as copies of the amended complaints filed in each of the several hundred consolidated and coordinated cases.

Mutual Funds

The massive morass of cases that grew out of the late-trading and market-timing mutual fund scandals in 2004 does not appear to have a combined website maintained by any of the attorneys involved in the litigation. The Court has a website with opinions and certain other information here.

Merrill Lynch Analyst (Blodget)

Again, there does not appear to be a combined website maintained by any of the attorneys involved in the litigation. The Court has a website here with opinions and certain other information, though it is rather out of date. Note that these cases have been preliminarily settled, see Merrill Lynch's 8-K here.

Refco

Co-lead counsel, Bernstein Litowitz Berger & Grossmann LLP and Grant & Eisenhofer, P.A., maintain a website here, relating to the precipitous corporate meltdown of Refco, which before its implosion, was one of the world's largest providers of brokerage and clearing services in the international derivatives, currency and futures markets.

Odds and Ends

The other remaining mega-cases that easily spring to mind, Fannie Mae and Parmalat, do not appear to have their own websites, yet.

While the unfolding options-backdating scandal does not have a website yet, it probably soon will. According to a press release issued earlier this week:

Kahn Gauthier Swick, LLC ("KGS") announces the creation of the nation's first privately funded independent Options Pricing Investigations Division, focused on the investigation into the illegal backdating of options grants by US corporations. A growing number of companies are now being investigated by KGS' Options Pricing Investigations Division for improperly manipulating the prices of executive option grants.

Thanks to D&O Diary for pointing us to the release.

There are of course two other excellent sources of securities litigation related filings, Stanford Law School's Securities Class Action Clearinghouse, and an alternative site maintained by Lerach Coughlin Stoia Geller Rudman & Robbins LLP here. These clearinghouses were created by local rules in the Northern District of California, available here, which require the posting to a "Designated Internet Site" of virtually all pleadings filed in securities class action cases in that district.

If any readers are aware of case-specific websites (as opposed to case-specific pages that are part of a law firm's general website) that I have missed, please send them along and I'll update the list.