Merix Corp. Complaint Found To Be Lacking In Merit

Merix Corporation (NASDAQ: MERX) announced today that the securities class action lawsuit pending against the company, its directors and four of its officers has been dismissed with prejudice.

The litigation was pending in the United States District Court for the District of Oregon before Judge Michael W. Mosman and was originally filed in June 2004 following the company's May 13, 2004, announcement slashing the company's earnings outlook for the fourth quarter of 2004.

The Central Laborers Pension Fund was appointed as the lead plaintiff and Schiffrin & Barroway, LLP and Stoll Stoll Berne Lokting & Shlachter P.C. were appointed lead and liaison counsel, respectively, in August 2004.

Judge Mosman granted the motion to dismiss the first amended complaint on September 15, 2005, without prejudice, and gave plaintiffs leave to amend their complaint. On November 18, 2005, the lead plaintiff filed a second amended complaint, and Merix again moved to dismiss. The second motion to dismiss was granted, with prejudice, today.

A pair of derivative lawsuits was also filed against certain Merix directors and officers in the Circuit Court for the State of Oregon, Multnomah County. On August 31, 2005, Judge Mosman granted a motion to stay discovery in the derivative action. Thereafter, on September 13, 2005, the state court stayed all proceedings in the derivative lawsuit, including proceedings on a motion to dismiss the consolidated shareholder derivative complaint.

Bruce Carton over at Securities Litigation Watch previously blogged about the Merix litigation, noting that:

the case is just the ninth securities class action filed in that court since the passage of the PSLRA and, following the tentative settlement recently announced in the Electro Scientific case, is the only active securities class action on that court's docket.

Daily Trivia: The District of Oregon's main courthouse, located in Portland, is named for Senator Mark O. Hatfield, and has been nicknamed the "Schick Razor Building" due to the design of the overhanging roof. Senator Hatfield was also the youngest secretary of state in Oregon history and a two-term governor. He retired in 1996, having never lost an election.

Seven Months of Scrivening

HealthSouth Corporation (OTC: HLSH) announced today that it had entered into definitive settlement agreements with the lead plaintiffs in the federal securities class action and the state and federal derivative actions.

The agreements memorialize the preliminary settlement previously announced by the company on February 23, 2006.

The federal securities litigation is pending before Judge Karon O. Bowdre in the United States District Court for the Northern District of Alabama. The federal derivative litigation is pending in the Northern District of Alabama while the state action is pending in the Jefferson County (Alabama) Circuit Court.

Oracle Partners, LP is the lead stockholder plaintiff and Lerach Coughlin Stoia Geller Rudman & Robbins LLP and Labaton Sucharow & Rudoff LLP are co-lead counsel for the stockholder class. Whatley Drake & Kallas LLC is liaison counsel for the stockholder plaintiffs.

The Retirement Systems of Alabama are the lead bondholder plaintiffs and Bernstein Litowitz Berger & Grossman LLP and Cunningham, Bounds, Crowder, Brown & Breedlove, LLC are co-lead counsel for the bondholders. Donaldson & Guin, L.L.C. is liaison counsel for the bondholder plaintiffs.

Bernstein Litowitz maintains a case page with copies of the amended complaints here.

Given that the bondholder plaintiffs filed a 274 page Joint Second Amended Consolidated Class Action Complaint (containing joint factual allegations for bond and stockholder claims) and a 145 page Consolidated Amended Class Action Complaint (containing legal theories and claims for the bondholder claims) together with twelve appendices, all of which was later supplemented by a 62 page Corrected Amendment to Joint Second Amended Consolidated Class Action Complaint, it isn't hard to imagine why it may have taken seven months to finalize the language of the settlement documents.

The settlements call for HealthSouth to issue $215 million in common stock and warrants and HealthSouth's insurance carriers to make a cash contribution of $230 million.

Additionally, the class in the federal securities litigation will receive 25% of any net recoveries from future judgments obtained by or on behalf of HealthSouth with respect to certain claims against Richard Scrushy, the company's former chief executive officer, Ernst & Young, LLP, the company's former auditors, and UBS, the company's former primary investment bank. Scrushy, Ernst and UBS remain defendants in the derivative and federal securities class actions.

Daily Trivia: Judge Bowdre served as a law clerk for J. Foy Guin, Jr. Judge Guin is now a Senior Judge on the United States District Court for the Northern District of Alabama and the father of David Guin, a name partner at Donaldson & Guin, liaison counsel for the bondholder plaintiffs in the HealthSouth litigation.

For a more personal view of Judge Guin, see this 80th birthday tribute put together by David's sister, Jan Smith.

"Dating Games"

M. P. Narayanan, Cindy A. Schipani, and H. Nejat Seyhun, a trio of professors at the Stephen M. Ross School of Business at the University of Michigan, have authored an interesting article on the "true" costs to shareholders of the burgeoning options backdating scandal.

The article, The Economic Impact of Backdating of Executive Stock Options:

provides an estimate of the value loss incurred by shareholders of firms implicated in backdating and compares it to the potential gain that executives might have obtained through backdating.

The study found that:

revelation of backdating results in an average loss to shareholders of about 8%.

For firms ensnared in the options-backdating scandal that amounts to an average loss of market capitalization of half a billion dollars.

The average potential upside for the executives at the firms involved in options-backdating - less than $600,000 per company per year.

The disproportionality of those figures led the authors to draw a comparison to Martha Stewart's conviction for obstruction of justice. Her alleged gain (really an avoided loss) was less than $50,000 but resulted in a market capitalization drop of approximately 40% for shareholders of Martha Stewart Living Omnimedia (NYSE: MSO) in 2002 when news surfaced of Martha's sale of ImClone Systems (NASDAQ: IMCL) stock.

The authors go on to suggest a number of remedies for both backdating and other options-related malfeasance, such as springloading.

Among the possible solutions:

• Require companies to report both the date the board or compensation committee finalized the option award details, and the actual grant date.
• Remove the short-swing profits exemption (Section 16(b) of the Securities and Exchange Act of 1934) for shares obtained from option exercises.
• Prohibit annual option awards from being effective on a single date, and instead divide the grants into twelve equal installments awarded on a monthly basis, at the same time executives receive their basic pay.
• Explicitly include the granting of compensation options (and the acquisition of shares through exercises of those options) as falling within the general insider trading provisions of Section 10(b) of the Securities and Exchange Act of 1934.
  

The article will be published in the June, 2007 issue of the Michigan Law Review.

Two of the authors have an entire site devoted to their stock options dating research - Dating Games: Backdating & Forward-dating of executive stock options. Of particular interest on the site - a timeline tracing the early history of the option backdating scandal.

Daily Trivia: Michigan's business school is named for Stephen M. Ross, the founder, chairman and chief executive officer of The Related Companies, L.P. Related is the developer of the $1.7 billion Time Warner Center on Columbus Circle in New York City. Ross is also the nephew of the late industrialist and philanthropist Max M. Fisher. In recognition of Fisher's gift to The Ohio State University, the business school was renamed the Fisher College of Business.

Strike Two in the Fourth Circuit = Out

Last week, the United States Court of Appeals for the Fourth Circuit affirmed the dismissal of the remaining claims in Glaser v. Enzo Biochem, Inc.

The Glaser case arose from allegedly false statements made by the company regarding a new treatment that Enzo had developed to combat HIV.

This was not the first time that this case has been to the Fourth Circuit. In an opinion last March, the Court affirmed the dismissal of the plaintiffs' federal securities fraud and conspiracy claims but reversed dismissal of the plaintiffs' Virginia common law fraud claims. A copy of the Fourth Circuit's prior opinion is available here.

After remand, certain defendants moved to dismiss the common law fraud claims against them on the grounds that those defendants had not made any of the remaining actionable statements. The other defendants also moved to dismiss the common law fraud claims for failure to plead loss causation.

The Fourth Circuit held that Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005), did apply to plaintiffs' common law fraud claims, and that the complaint failed to establish a causal link between the allegedly fraudulent statements and the losses that plaintiffs suffered.

The Glaser case was pending in the United States District Court for the Eastern District of Virginia before Judge Gerald Bruce Lee.

Sharp eyed readers may recognize the Glaser case as the second case to discuss whether the longer statute of limitations for federal securities fraud claims in the Sarbanes-Oxley Act of 2002 acted to revive claims that had already expired under the earlier one year/three years statute of limitations. See Glaser v. Enzo Biochem, Inc., 303 F. Supp. 2d 724 (E.D. Va. 2003)

Enzo Biochem (NYSE: ENZ) is a life sciences and biotechnology company:

focused on harnessing genetic processes to develop research tools, diagnostics and therapeutics and provides reference laboratory services to the medical community.

One of the plaintiffs, Lawrence F. Glaser is an inventor. One of his more interesting patents is for a computer mouse that, through the use of a unique identifier, causes a particular desktop theme to be displayed by the graphical user interface of the computer.

The Glaser's attorney is Michael J. Rovell. Mr. Rovell is perhaps best known for representing Allen Dorfman, an alleged mobster accused of skimming millions from the Central States Southeast and Southwest Areas Pension Fund of the International Brotherhood of Teamsters.

Daily Trivia: The Fourth Circuit maintains its offices in the Lewis F. Powell, Jr., Federal Courthouse in Richmond. The courthouse is one of only two buildings in the historic core of Richmond to survive the 1865 fire that marked the evacuation of the Confederate Army during the last days of the Civil War.

Brain Aerobics

Procedural contortions are just mental exercise, right?

Untangling the backstory of the In re First Horizon Pharmaceutical Corp. Sec. Litig. provided exactly that.

But first, the newsworthy angle.

The United States Court of Appeals for the Eleventh Circuit issued an opinion earlier this week vacating the District Court's order dismissing the litigation, and ordered the District Court to allow the plaintiffs to replead their complaint.

The 11th Circuit further determined that:

securities claims without a fraud element [e.g. Section 11] must be pled with particularity pursuant to Federal Rule of Civil Procedure 9(b) when that nonfraud securities claim is alleged to be part of a defendant's fraudulent conduct.

The Court thus joined the majority of circuits to address the matter. See e.g. Cal. Pub. Employees' Ret. Sys. v. Chubb Corp., 394 F.3d 126, 161 (3d Cir. 2004); Rombach v. Chang, 355 F.3d 164, 171 (2d Cir. 2004); Lone Star Ladies Inv. Club v. Schlotzsky's, Inc., 238 F.3d 363, 368 (5th Cir. 2001); In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1404-05 (9th Cir. 1996).

Now for the backstory.

On September 29, 2004, Judge J. Owen Forrester of the United States District Court for the Northern District of Georgia dismissed, without prejudice, the securities fraud class action complaint pending against First Horizon Pharmaceutical Corporation (n/k/a Sciele Pharma, Inc.) (Nasdaq: SCRX).

Judge Forrester granted the plaintiffs an opportunity to amend their class action lawsuit provided that the plaintiffs paid all of the defendants' fees and costs associated with filing the motions to dismiss the class action lawsuit.

Plaintiffs did not file a second amended complaint as permitted, but instead filed a motion asking Judge Forrester to reconsider his September 29, 2004 order and lift the condition that they pay defendants' fees and costs before further amendment.

On June 22, 2005, the District Court denied plaintiffs' motion and gave them another opportunity to amend if they pay defendants' fees and costs. Once again, plaintiffs chose not to file a second amended complaint, and instead filed an appeal to the Eleventh Circuit.

On an interesting side note, at the outset of the litigation, First Horizon issued a press release, announcing, you guessed it:

that it intends to vigorously defend itself against a securities class action lawsuit recently filed against the Company

The Court had previously appointed Thomas Sheahan, Richard G. Bartels and Roy Latourette Jr., as lead plaintiffs and three firms that no longer exist - Chitwood & Harley, Milberg Weiss Bershad Hynes & Lerach LLP, and Cauley Geller Bowman & Coates LLP - as lead counsel.

Daily Trivia: Sciele employs about 700 people, but 525, or 75% of those employees are in sales. No wonder the company describes itself as "a pharmaceutical company specializing in sales, marketing, and the development of branded prescription products focused on Cardiovascular/Metabolic and Women's Health."

UPDATE: The 10b-5 Daily has a post on the 11th Circuit's decision here.

"The Milberg Effect"

The securities litigation blogosphere is lighting up (SLW; D&O Diary; 10b-5 Daily) with responses and interpretations of the Wall Street Journal's recent piece, "The Milberg Effect."

That editorial suggests that the projected slow down in securities class action filings in 2006 is related to the current legal woes surrounding famed class action powerhouse Milberg Weiss Bershad & Schulman LLP.

The author of this humble blog has his own opinions on the decline in federal securities class actions.

First, the number of federal securities class actions has potentially slowed because a substantial portion of the plaintiffs bar is busy filing other types of securities cases, including state and federal derivative actions.

A review of law firm websites, such as Gardy & Notis, LLP and Schiffrin & Barroway LLP bears out the numbers suggested by The D&O Diary's options backdating litigation tally - but the overwhelming majority of those cases have been filed as derivative actions.

Other firms, such as Lerach Coughlin Stoia Geller Rudman & Robbins LLP have been described as filing dozens of options backdating suits, but a review of the Lerach Coughlin website does not shed much light on the cases that the firm has filed.

Second, as regular readers of this blog have discerned (see prior posts here, here, and here for example) there have been a substantial number of state breach of fiduciary duty claims filed in recent months, many relating to proposed mergers or other corporate transactions.

Both of these "reasons" for the drop-off in federal securities class action filings might safely be lumped together under the "printing press" theory.

As suggested by MoFo's Jordan Eth in this National Law Journal article from last year, the "speed of Bill Lerach's printing press" may be a limiting factor in the number of securities lawsuits filed each year.

If the collective "printing press" of the plaintiff's bar is largely filled with derivative options backdating cases and state law breach of fiduciary duty cases, then the total number of federal cases will likely decline.

Of course, as noted by The D&O Diary here, the plaintiff's securities bar is expanding with firms that had historical backgrounds in asbestos and tobacco litigation, such as Motley Rice LLC and Kahn Gauthier Swick, LLC, joining the fray, so the output capacity of the presses may still be increasing.

How Many Montgomery Counties Are There?

The author grew up in Montgomery County, Pennsylvania. He now lives in Montgomery County, Maryland, and our story today takes us to Montgomery County, Ohio.

According to press reports, a class action complaint has been filed in Montgomery County (Ohio) Common Pleas Court against The Reynolds and Reynolds Company (NYSE: REY), its nine directors and Universal Computer Systems Holding, Inc. over the proposed merger between Reynolds and UCS.

In the proposed merger, which is valued at $2.8 billion, UCS, a privately held auto dealership technology company, is paying $40 cash per share for Reynolds shares. The resulting subsidiary will retain the Reynolds and Reynolds name, but will be a private company and its shares no longer will be listed on the New York Stock Exchange.

A copy of the complaint is available here.

Counsel for the plaintiff is The Brualdi Law Firm.

Daily Trivia: The answer to the title question - 18 American counties share the name Montgomery County. Most were named in honor of General Richard Montgomery, a Revolutionary War general who died in 1775 attempting to capture Quebec, after successfully capturing Montreal.

The "Scary Defense Counsel" Press Release

We're back and ready to dive right in.

According to a press release issued last week by Isolagen, Inc. (AMEX: ILE), a pair of derivative lawsuits against the company and certain of its current and former officers and directors were recently dismissed.

The dismissal of those two complaints does not end the litigation looming over Isolagen, nor does it even end the derivative litigation facing the company, as a federal derivative action is still pending as part of a consolidated MDL proceeding.

But that's getting ahead of ourselves a bit, as these cases have some history.

The various complaints stem from the August 1, 2005 revelation by the company that the preliminary results from a clinical trial involving the "Isolagen Process" had not met all of the primary end points and that one of the two separate dermal studies had failed to demonstrate statistical significance. Accordingly, FDA approval would not be achieved as promised.

The Isolagen Process utilizes a patient's own cells to reduce the normal effects of aging on skin, such as wrinkles and creases.

The first derivative complaint was filed in the 55th Judicial District Court of Harris County, Texas on September 28, 2005. On December 2, 2005, the company filed an answer and special exceptions pursuant to Rule 91 of the Texas Rules of Civil Procedure. On February 6, 2006, the Court granted the special exceptions, and an amended complaint was then filed on February 15, 2006. Defendants then renewed their special exceptions, which were upheld by the Court and the complaint was dismissed on September 6, 2006.

The second derivative complaint was filed in the Court of Common Pleas of Chester County, Pennsylvania on October 31, 2005. On January 20, 2006, Isolagen filed its preliminary objections to the complaint. The complaint was dismissed with prejudice on August 31, 2006.

There is a third derivative complaint (the federal one), but we'll get to that in a minute.

In August and September, 2005 a number of class action lawsuits were filed against Isolagen and certain of its current and former officers and directors in the United States District Court for the Southern District of Texas and in the United States District Court for the Eastern District of Pennsylvania.

Shortly thereafter, Isolagen filed a motion with the Judicial Panel on Multidistrict Litigation to transfer the federal securities class actions and the pending federal derivative action to the Eastern District of Pennsylvania. On February 23, 2006, the JPML granted Isolagen's motion and the actions were transferred.

On April 4, 2006, Senior Judge Ronald L. Buckwalter appointed Silverback Asset Management, LLC, Silverback Master, Ltd., Silverback Life Sciences Master Fund, Ltd., Context Capital Management, LLC and Michael F. McNulty as lead plaintiffs, and Bernstein Litowitz Berger & Grossman LLP and Kirby McInerney & Squire LLP as co-lead counsel.

A copy of the consolidated class action complaint, filed on July 14, 2006, is available here.

In addition to claims against Isolagen and certain of its current and former officers and directors, the consolidated complaint also asserts claims against CIBC World Markets Corp., Legg Mason Wood Walker, Inc., Canaccord Adams, Inc. and UBS Securities LLC as underwriters in connection with an April 2004 public offering of Isolagen common stock and a 2005 sale of convertible notes.

Which finally leads us to the title of this post. After the initial complaints were filed, Isolagen announced that the company had retained Skadden, Arps, Slate, Meagher & Flom, LLP to defend it.

The announcement of the specific counsel engaged to represent a corporation in securities litigation appears to be a very rare announcement, and thus merits addition to our burgeoning list of press release permutations.

Now to wrap up that loose end - the federal derivative complaint alluded to above.

On October 8, 2005 a derivative complaint was filed in the United States District Court for the Southern District of Texas. Isolagen sought to transfer that action to the Eastern District of Pennsylvania along with the federal class actions.

On February 23, 2006, the action was transferred. Thereafter, the plaintiff filed an amended complaint, and the defendants moved to dismiss the amended complaint. Briefing on that motion is complete, but no decision has yet been rendered.

Daily Trivia: For the sixth straight year, Skadden was named "The Best Corporate Law Firm" in the United States by Corporate Board Member Magazine. The survey asks directors and general counsel of publicly traded companies to identify the law firms they most admire.

We're outta here...

There will be a brief break in the action here.

Regular posting will resume around Monday, September 18.

A "New" Model for Damages in Securities Fraud Class Actions

Professor Elizabeth Chamblee Burch, from Samford University's Cumberland School of Law, has penned a new article, Reassessing Damages in Securities Fraud Class Actions, available from SSRN, here.

The basic premise of the article is simple:

That courts should limit plaintiffs to recovery for their out-of-pocket losses.

Prof. Burch suggests that there is substantial difficulty with determining damages in current securities fraud class actions, due to an attempt by courts "to fashion common-law deceit and misrepresentation remedies to fit open-market fraud."

She offers a fairly detailed historical analysis of fraud (from common law up the modern securities laws) and the various remedies that courts have fashioned to compensate plaintiffs injured by fraud.

After an examination of the theories supporting private rights of action under Rule 10b-5 (compensation and deterrence), Prof. Burch turns to the "out-of-pocket" measure of damages a a possible solution to such problems as potential double recovery by plaintiffs:

The out-of-pocket measure is the only common-law remedy that recognizes the distinctions between face-to-face transactions and open-market fraud, that complies with the loss causation requirement, and that limits plaintiffs to their actual damages.

Prof. Burch also suggests:

Restricting investors to out-of-pocket losses also advances optimal deterrence by increasing predictability through a clear doctrinal damage calculation.

I'm not convinced that having prior knowledge of the measure of private securities fraud damages would deter most corporate wrongdoers from committing securities fraud, but the article is worth a look anyway.

Daily Trivia: Samford's law school has alumni practicing in every state except Maine, Nebraska, North Dakota and Rhode Island.

Announcing the Vitriolic Defense

Earlier this week Cohen & Malad, LLP issued a press release announcing the filing of a securities fraud class action complaint against RelationServe Media, Inc. n/k/a SendTec, Inc., in the in the United States District Court for the Southern District of Florida.

Today, in response, Sendtec, Inc., a direct marketing services company based in St. Petersburg, Florida, decided to introduce a new type of press release, the vitriolic defense.

In their release, Sendtec starts with a familiar tune:

This action is frivolous and without merit.

Most companies then assert their intention to vigorously defend themselves, but Sendtec went much further:

Accordingly, we intend to seek dismissal of this case and sanctions for a false filing in which federal jurisdiction as a class action has been improperly sought.

There is some history between these litigants, so the tone of the company's release is not coming from left field.

As reported in a Sendtec 10-Q earlier this year, the named plaintiff in the federal litigation, Richard F. Thompson, (and related individuals and entities) commenced an action in the Hamilton County Circuit Court, against Anthony D. Altavilla, Summit Financial Partners, LLC, Barron Partners, LP, US MedSys Corp. and RelationServe Media, Inc.

The plaintiffs in the earlier state complaint against Sendtec (f/k/a RelationServe Media, Inc.) sought rescission of the 110,000 shares of common stock they purchased in July 2005, alleging that the shares were not properly registered as required under Indiana Law.

Of course, Sendtec had something to say about the earlier litigation:

The Company believes this action is without merit, and intends to vigorously defend itself with respect to this matter.

Daily Trivia: Sendtec has won a host of awards for the advertising work the firm has done over the years. I was surprised to learn that the Telly Award the firm won for a Roy Rogers Restaurants campaign had nothing to do with Kojak. In fact the Telly's "honor outstanding local, regional, and cable television commercials and programs, as well as the finest video and film productions."

An Avalanche of Settlement Notices?

I'm loathe to suggest that this humble blog has the power to move mountains, but earlier this week, I suggested that class counsel should strongly consider issuing press releases to publicize the settlement of securities class actions.

Today, not one, but two different such notices popped up.

The first was issued in the In Re DVI, Inc. Securities Litigation, and announced a group of partial settlements valued at $2,885,000 in cash.

The DVI litigation is pending in the United States District Court for the Eastern District of Pennsylvania before Judge Legrome D. Davis.

Judge Davis had previously appointed the Cedar Street Fund and the Cedar Street Offshore Fund, and an individual investor, Kenneth Grossman as lead plaintiff, and Krislov & Associates, Ltd. and Chimicles & Tikellis LLP as lead and liaison counsel, respectively.

Judge Davis' opinion appointing lead plaintiff and lead counsel can be found here.

The second was issued in the Allou Health Care, Inc. litigation, and announced a settlement with the outside director defendants for $300,000 and "certain other consideration."

The Allou litigation is pending in the United States District Court for the Eastern District of New York before Judge Joanna Seybert.

William D. Witter Partners, LLP, David P. Herpst and David Hust were previously appointed lead plaintiff and Abbey Spanier Rodd Abrams & Paradis LLP was appointed lead counsel.

At Least the Stay in the Derivative Cases Will Be Lifted

According to an article in today's Detroit News , the securities class action pending against Visteon Corp. (NYSE: VC), certain current and former officers of the company, and the company's auditor PricewaterhouseCoopers LLP, has been dismissed.

The Visteon litigation was pending in the United States District Court for the Eastern District of Michigan before Judge Robert H. Cleland.

A copy of Judge Cleland's opinion is available here.

The Visteon litigation was filed in February 2005 after Visteon restated earnings, claiming company officials hadn't disclosed the risks of being spun off by Ford Motor Co. According to the article, plaintiffs alleged that Visteon "had no chance to be profitable and failed to disclose it was hampered by money-losing businesses inherited from Ford, price reductions promised to its former parent company and high labor costs."

The Public Employees' Retirement System of Mississippi is lead plaintiff in the Visteon litigation while Baron & Budd, P.C. is lead counsel and VanOverbeke, Michaud, & Timmony, PC. is liaison counsel.

On a side note - listed as "Additional Plaintiff's Counsel" on the Visteon complaint is the Baton Rouge firm of LeBlanc & Waddell, LLP. Baron & Budd and the LeBlanc firm maintain a joint website devoted to securities litigation, here.

As previously discussed by The D&O Diary, Baron & Budd and LeBlanc & Waddell are part of the growing number of firms known for their work in asbestos or tobacco litigation that have branched out into securities litigation.

Also, as previously disclosed by Visteon in this 10-K, two derivative lawsuits were filed in the Third Judicial Circuit Court of Michigan following the company's 2005 restatement. Those matters had been stayed pending resolution of the motion to dismiss in the securities litigation.

Daily Trivia 1: The building that houses VanOverbeke, Michaud, & Timmony, PC. was originally built in 1872 for Grace Whitney-Evans, a daughter of Detroit lumber baron, David Whitney. The house was later rented to Joseph L. Hudson founder of the Detroit department store chain, The J.L. Hudson Company.

Daily Trivia 2: Joseph L. Hudson is credited with creating new department store policies including the maintenance of full inventories to permit immediate delivery and liberal return privileges for customers. He was also one of the first in the retail industry to attach visible prices to merchandise.

A Welcome Addition to the Press Release Universe

The vast majority of press releases that we have discussed relate to events at the inception of securities litigation.

This press release, issued by Plaintiff's counsel in the KPNQwest securities litigation comes at the end of the case. It is a copy of the summary notice of several proposed partial settlements valued at a total of $15,175,000. The same notice was published today in The Wall Street Journal.

Time to climb onto the soapbox...

The WSJ notice was in the so-called "tombstone format" that is typically used to announce securities litigation settlements. While this type of notice has routinely been found to be an acceptable part of an overall notice campaign, I applaud plaintiff's counsel in this case for taking the extra step to broadcast the notice over one of the national business wires.

As many commentators (and this author, here) have noted, investors routinely fail to file claims forms in securities class actions. Any action that increases the percentage of investors that are able to recover losses in a given securities class action is a positive development. And as researchers have noted for years, investors use the Internet to track their investments, and are thus potentially far more likely to see a notice on their financial website of choice than in a print only format.

Now, back to your regularly scheduled post...

KPNQwest N.V. was jointly owned by Dutch telecom operator Koninklijke KPN N.V. (Royal KPN N.V.) and the Denver based "Baby Bell", Qwest Communications International Inc. KPNQwest filed for bankruptcy protection in 2002, one of the many telecoms that failed after the dot-com and telecom bubbles burst.

Lead counsel in the KPNQwest litigation are Schiffrin & Barroway, LLP and Glancy Binkow & Goldberg LLP, while Kirby McInerney & Squire, LLP is liaison counsel. The case is pending in the United States District Court for the Southern District of New York before Judge Peter K. Leisure.

A copy of the second amended complaint is available from Stanford here.

Thanks to Kevin LaCroix author of The D&O Diary for sending in the press release.

Daily Trivia: At the time of its bankruptcy filing, KPNQwest carried more than 25% of Europe's internet traffic.