Tuesday, October 31, 2006

Desperately Seeking Standing

Last week, Labaton Sucharow & Rudoff LLP, lead counsel in the In re National Australia Bank Securities Litigation, issued this press release, noting that the Court had:
dismissed the Complaint, holding that the Court lacked subject matter jurisdiction over the claims of foreign purchasers of NAB securities purchased on non-U.S. exchanges.

The Court also ruled that the plaintiff who purchased NAB ADRs did not sustain damages and dismissed the claims of ADR purchasers.
According to the release:
This means that someone who purchased NAB ADRs between April 1, 1999 and September 3, 2001, inclusive, and lost money on the investment, may seek to be substituted as a plaintiff so that the action can continue.

(emphasis in original)
The National Australia Bank Ltd. (NYSE: NAB) press release came just one day after this one in the Wells Fargo mutual funds litigation, discussed here last week.

Two similar press releases in one week are enough to create a trend, so without further ado, let's roll out our newest addition to the "Securities Litigation Universe of [Press] Release Permutations", or SLURP.

We'll call the newcomer to SLURP the "Personal Ad Press Release."

It describes a press release discussing securities litigation where some or all of a case has been dismissed on standing grounds, and plaintiff's counsel is attempting to find a substitute plaintiff that will cure the standing issue.

Daily Trivia: Labaton Sucharow partner Mark S. Arisohn was one of the attorneys that represented Vincent Chiarella before the Supreme Court in Chiarella v. United States, 445 U.S. 222 (1980), the seminal insider trading case.

Monday, October 30, 2006

Savient Wins On Scienter

Savient Pharmaceuticals, Inc. (NASDAQ: SVNT) today announced that securities class action pending against the company and three of its former officers was dismissed with prejudice.

The case is pending in the United States District Court for the District of New Jersey before Senior Judge Harold A. Ackerman.

During the class period Savient was known as Bio-Technology General Corporation, but changed its name on June 23, 2003. The litigation is thus captioned as In re Bio-Technology General Corp. Sec. Litig.

Poalim Mutual Funds and Joseph Rago are the lead plaintiffs and Glancy Binkow & Goldberg LLP and the Law Offices of Jacob Sabo are lead counsel in the Bio-Technology General litigation. A copy of Judge Ackerman's opinion appointing lead plaintiffs and lead counsel can be found here.

The lead plaintiffs filed a first amended consolidated class action complaint on September 25, 2003, and by this opinion, Judge Ackerman dismissed the complaint without prejudice.

On October 11, 2005 the plaintiffs filed this second amended complaint (complete with attachments from a "confidential witness") and the defendants again moved to dismiss.

According to the press release, Judge Ackerman's dismissal of the second complaint was based on the failure:
to set forth particularized facts, through direct or circumstantial evidence, which give rise to a strong inference that the defendants acted with intent to defraud, recklessness or a conscious disregard of the truth.
In other words - insufficient scienter allegations.

Daily Trivia: Poalim Mutual Funds was one of the two mutual fund managers of Bank Hapoalim Ltd., Israel's largest bank. In late 2005, Hapoalim and the second largest mutual fund manager in Israel, Bank Leumi Le-Israel Ltd., began selling their mutual and provident fund-management units to comply with a new law that required Israeli banks to divest their asset-management businesses.

Thursday, October 26, 2006

The Wells Fargo Wagon

Judge William H. Alsup has partially denied the latest motion to dismiss in the Wells Fargo & Co. (NYSE: WFC) mutual funds litigation according to a press release issued today by lead counsel, Gutride Safier LLP.

A copy of Judge Alsup's October 24, 2006 opinion is available here, but as alluded to earlier, this is merely the latest motion to dismiss in the litigation, and a copy Judge Alsup's August 14, 2006 opinion also denying in part and granting in part the prior motion to dismiss is available here.

In the August 14 opinion, Judge Alsup held that the plaintiff had failed to allege that he had standing to bring his claim for violation of Section 36(b) of the Investment Company Act of 1940, and that there was no private right of action for violations of Section 48(a) of the ICA, and dismissed those claims.

Judge Alsup found however, that plaintiff had properly plead violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 and denied the motions to dismiss those counts in the prior amended complaint.

In the latest opinion, Judge Alsup granted the motion to dismiss with respect to the claims alleged against H.D. Vest Investment Services, LLC, an affiliated, broker/dealer, non-bank subsidiary of Wells Fargo, due to standing issues.

Judge Alsup also dismissed the Section 10(b) claims alleged against the investment advisor and distributor defendants, holding that the plaintiff had not adequately plead that those defendants had made any statements or participated substantially enough in the alleged scheme to defraud.

A copy of the "Second Amended Consolidated Class Action Complaint For Violation Of The Federal Securities Laws And For Violation Of The Investment Company Act" (say that five times fast) is available here.

The plaintiff "may seek leave to amend by filing a motion proposing yet another complaint, to be filed and served by November 17, 2006," so yet another round of motions to dismiss will be "a-comin' down the street."

Daily Trivia: Judge Alsup is also a passionate outdoorsman, having spent considerable time exploring and helping to conserve the Sierra Nevada Mountains. Judge Alsup has even written a pair of books for the Yosemite Association, including Missing in the Minarets: The Search for Walter A. Starr, Jr., which details the mysterious 1933 disappearance of a prominent San Francisco attorney among the rugged peaks of the Sierra Nevada.

Wednesday, October 25, 2006

Wait, I Though the Cart Went After the Horse

We've talked about a fair number of press release permutations over the life of this blog.

Today, Xethanol Corporation (AMEX: XNL) decided to add a new one to the list - the "we don't understand securities litigation, but that won't stop us from commenting on it" press release.

The press release starts off in familiar territory, with the routine headline:
Xethanol Says Class Action Lawsuit Without Merit
But instead of staying on course and setting forth the company's intent to put on a "vigorous defense," the press release takes an unexpected left turn:
"All that we have received thus far is the law firm's press release that ran at 5:19 p.m. yesterday afternoon. Not only are the allegations and insinuations baseless, but also the case apparently has no lead plaintiff," said Louis Bernstein, Xethanol's President and interim CEO.
Well, Mr. Bernstein, that is actually the point. The PSLRA requires that:
Not later than 20 days after the date on which the complaint is filed, the plaintiff or plaintiffs 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--

1. of the pendency of the action, the claims asserted therein, and the purported class period; and

2. that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class.
If the good folks at Xethanol have any further questions about the securities litigation process, Kaplan Fox & Kilsheimer LLP have prepared this handy flowchart to assist them.

The press release that started the furor was issued by Kahn Gauthier Swick, LLC. That release also contained some interesting language:
SPECIAL NOTICE: While federal law does not prohibit other lawyers from "announcing" this lawsuit, Kahn Gauthier Swick is the law firm that researched, investigated, drafted and filed the securities fraud case against Xethanol. If you are a Xethanol shareholder who decides to contact one of these lawyers, Kahn Gauthier Swick reminds you to fully interview any lawyer to assure that they fully understand the facts surrounding the Xethanol claims our firm has filed in Court.
This is indeed a recurring them, last discussed in June 2005 byThe 10b-5 Daily and Securities Litigation Watch, regarding the PEMSTAR litigation.

It also harkens back to the practice discussed in this November 2002 Fulton County Daily Report article on Bill Lerach's efforts to stop other firms from simply copying and re-filing his firm's securities complaints by copyrighting those complaints.

Not to encourage anyone, but a copy of the Kahn firm's complaint in the Xethanol litigation is available here.

Daily Trivia: One of Xethanol's Advisory Board members is Jed Schutz, a real estate developer and chairman of the board of Campusfood.com, Inc., a subsidiary of Dotmenu, Inc., "The #1 source for online food ordering at college campuses."

Tuesday, October 24, 2006

The Suit That Wasn't

Back in August, Interserve Plc (FTSE: IRV), a U.K. construction services company, announced that it was restating financial results for at least five years and would write down the value of its assets by 25 million pounds ($47 million).

As part of the restatement, KPMG, LLP and Linklaters were to conduct an "independent forensic review."

Predictably, shares of Interserve plunged (Bloomberg) following this news - the restatement - not the appointment of accountants and lawyers to perform a financial review.

Then things took some interesting turns.

A group of shareholders that had received their shares as a result of Interserve's acquisition of MacLellan Group plc hired law firm Mishcon de Reya to "consider whether to sue the support services company, its individual directors and its auditor Deloitte."

The independent review was completed (The Times of London) in late September and shares of Interserve soared (Reuters via Scotsman.com).

Of note - the acounting review resulted in 5 million pounds (about $9.3 million) in professional fees for KPMG and Linklaters. The total writedown was only 25.9 million pounds.

By comparison, Alston & Bird, LLP, the law firm of R. Neal Batson, the examiner appointed by the court overseeing Enron Corp.'s Chapter 11 bankruptcy was paid about $100 million. And Kirkpatrick & Lockhart Nicholson Graham LLP, the law firm of Richard Thornburgh, the examiner appointed in the WorldCom bankruptcy was paid in the neighborhood of $10 million.

Thanks again to reader Werner Kranenburg, a former Schiffrin & Barroway, LLP summer associate, and current law student in the United Kingdom for sending this one in.

Daily Trivia: Governor Thornburgh married not one, but two women named "Ginny." His first wife, Ginny Hooton was killed in an automobile accident. Several years later, he married his second wife, Ginny Judson.

Sunday, October 22, 2006

Canadian Securities Class Action Expansion

According to this newsletter from Canadian law firm Stikeman Elliott LLP, the first statements of claim (the Canadian equivalent of a complaint) to invoke the secondary-market liability provisions that were recently added to the Ontario Securities Act have been filed in a proposed class action against Imax Corporation and certain directors and officers of the company.

The statements of claim were filed in Ontario's Superior Court of Justice in early September 2006 and contain allegations similar to the class action complaints filed in the United States District Court for the Southern District of New York, namely that Imax's 2005 earnings were misrepresented during the class period by recognizing revenue from theatres that had not yet opened.

A copy of the relevant Ontario statute (Bill 198) can be found here.

Daily Trivia: IMAX technology premiered at the 1970 World's Fair and Exposition in Osaka, Japan.

Thursday, October 19, 2006

Institutional Activism through Litigation

Prof. Michael A. Perino (St. John's University School of Law) has penned a new paper, Institutional Activism through Litigation: An Empirical Analysis of Public Pension Fund Participation in Securities Class Actions, available from SSRN here .

Prof. Perino attempts to analyze:
whether there is any correlation between cases with public pension fund lead plaintiffs and settlement outcomes, attorney effort, or fee requests or awards.
His conclusions:
  • cases with public pension participation are positively correlated with settlement amounts (measured both in absolute terms and as a proportion of investors' overall market losses), even when controlling for institutional self-selection of larger, more high profile cases.
  • cases with public pension fund acting as lead plaintiffs are positively correlated with two "proxies for attorney effort," the number of docket entries in the case and the ratio of settlement to docket entries.
  • Attorneys' fee requests and fee awards are lower in cases with public pension lead plaintiffs, either because public pensions are sophisticated repeat players or as a result of attorney competition to represent these institutions.
The paper's conclusion:
that public pension funds do act as effective monitors of class counsel.
I don't have much to quibble with in the paper, but one thing stuck out to me as worthy of discussion.

First, Prof. Perino suggests that:
Under the PSLRA, plaintiffs' lawyers increasingly have incentives to develop longstanding relationships with institutions willing to become active in class litigation because doing so should increase the number of lucrative lead counsel opportunities
I agree, but that is one-half of the "problem" that led to the enactment of the PSLRA in the first place. As discussed later in the paper:
long-term relationships frequently existed between attorneys and individuals (dubbed, "professional plaintiffs"), who agreed to buy stock in likely litigation targets and to serve as representative plaintiffs in any ensuing action in exchange for payments from the lawyer. . . such agreements made sense for plaintiffs' attorneys - who were able to reduce the search costs associated with initiating a case by having a ready stable of plaintiffs.
As an aside, I am unable to buy into the theory that pre-PSLRA investors were both: (a) able to predict likely litigation targets in advance with great precision; and (b) that they agreed to buy and hold these stocks and suffer guaranteed losses.

If the investor (or the attorneys) for that matter, were able to predict securities fraud (much like the SEC's "Pre-Crime Unit" joked about by Bruce Carton over at Securities Litigation Watch) wouldn't they do better financially by shorting the stock before the disclosure caused the resulting decline in price and the supposedly inevitable "race to the courthouse?"

Update: The D&O Diary has a thoughtful post on the article, here and the WSJ Law Blog has a post here.

Daily Trivia: Professor Perino was "one of the principal developers of Stanford Law School's Securities Class Action Clearinghouse." The Clearinghouse was nominated by the Smithsonian Institution for the 1997 Computerworld Smithsonian Award (since renamed The Computerworld Honors Program) as one of the five most important applications of information technology created by an educational institution.

The eventual winner in 1997 was The Virtual Alphabet Book, which is a:
multimedia presentation of the traditional ABCs. It contains alternative ways to learn the alphabet. You can also interact with the objects in the Virtual Alphabet Book with switches, infra-red head pointers, or a touch screen. This makes the alphabet accessible to children with severe physical limitations.

Wednesday, October 18, 2006

It's Getting Hot in Here...

It's that time of year again.

The National Law Journal has come out with their annual "Plaintiffs' Hot List" - an admittedly highly subjective survey of the plaintiffs' bar.

Eleven firms were highlighted on "The Year's Hottest Firms" list.

Of those, ten have a substantial securities litigation practice.

In alphabetical order the ultra hot securities litigators of 2006 are:

Baron & Budd, P.C. - An 80 attorney firm founded in Dallas nearly twenty years ago. Among noteworthy securities cases mentioned in the article is In re 7-Eleven Inc. Shareholders Litig., where Randall K. Pulliam represented shareholders attempting to force the company to pay more to take the corporation private. The company ultimately agreed to boost its tender offer by $5 per share, worth $145 million to the shareholders.

Bernstein Liebhard & Lifshitz, LLP - A 42 attorney firm that is just slightly older than the PSLRA, the New York based firm is on the plaintiffs' executive committee in the In re Initial Public Offering Securities Litig, and secured an important decision in the In re Royal Dutch/Shell Transport Securities Litigation, that will allow shareholders to proceed with their claims even if they held their stock.

Bernstein, Litowitz, Berger & Grossmann LLP - The 50 lawyer firm "had a hand in six of the 10 largest securities fraud class actions to date," including the $1.3 billion settlement in In re Nortel Networks Corp. Securities Litig. that "represents the largest recovery on record for a non-U.S. lead plaintiff."

Cohen, Milstein, Hausfeld & Toll, P.L.L.C. - With 60 attorneys and offices in four states (well three states and the District of Columbia), the firm has often been cited as having a cutting edge litigation practice, including the recent news that the firm would soon open a London office, an apparent first for a plaintiff side firm. Last year, the firm also had the rare opportunity to try a securities fraud class action - with In re Globalstar Securities Litig.

Hagens Berman Sobol Shapiro LLP - Though more noted these days for the firm's work in antitrust, healthcare, and consumer litigation, Hagens Berman has strong securities litigation roots. Plus, they have to be the only firm on the list that sponsors a cycling team.

Grant & Eisenhofer, P.A. - Formed just as the PSLRA was taking effect, this relative newcomer to the securities litigation arena has made waves as noted in a companion article, Investors Press Their Demands. The firm "has been pursing litigation intended to shake up the way corporate boards do business."

Labaton Sucharow & Rudoff LLP - One of the older firms in the plaintiff's class action bar, the Labaton firm is a frequent guest on these pages, including recent settlements of the In re DHB Industries Inc. Class Action Litig., and In re HealthSouth Corp. Securities Litig. securities class actions.

Lerach Coughlin Stoia Geller Rudman & Robbins LLP - The largest class action firm in the country, with 180 attorneys, the firm has achieved an eye-popping $45 billion in recoveries, including $7.3 billion in the Enron litigation alone. As noted previously, here, about 10% of the firm's attorneys are former prosecutors.

Lieff Cabraser Heimann & Bernstein, LLP - The 60 attorney firm has offices in three states and an impressive roster of securities litigation clients. The securities case mentioned in the article, Merrill Lynch Fundamental Growth Fund v. McKesson HBOC Inc., is an opt-out case where the firm reached a settlement on the verge of trial and recovered nearly all of the $150 million in losses claimed by the firm's two mutual fund clients.

Motley Rice LLC - The 74 attorney firm is perhaps best known for their work in toxic torts, products liability and catastrophic injury, but as noted several months ago by The D & O Diary, the securities litigation group at Motley Rice was substantially enlarged in February 2006 with the addition of four seasoned Atlanta-based lawyers from Chitwood Harley Harnes LLP.

Daily Trivia: The one firm on the National Law Journal list that is not highlighted above, Girardi & Keese, now employs Erin Brockovich, perhaps the most famous paralegal in the world.

Tuesday, October 17, 2006

Second Circuit Affirms SEC's Ability to Direct Fair Funds Distribution

In an opinion earlier this month that failed to garner even a mention in the collective securities litigation blogging universe, the United States Court of Appeals for the Second Circuit affirmed the District Court's approval of a plan by the Securities and Exchange Commission to distribute money to the victims of WorldCom, Inc.'s massive fraud.

The SEC had prepared a distribution plan pursuant to the "Fair Funds for Investors" provision of the Sarbanes-Oxley Act of 2002 (15 U.S.C. § 7246(a)). Judge Jed S. Rakoff approved the plan, which "excluded investors whose aggregated sales and purchases of WorldCom securities over the relevant time period resulted in a net profit," or recovered than thirty-six cents on the dollar either in the bankruptcy proceeding or through the sale of their WorldCom securities."

The Official Committee of Unsecured Creditors of WorldCom, Inc. appealed, arguing that:
the district court extended inappropriate deference to the SEC when it approved the Fair Fund distribution and erred in rejecting the Committee's objections.
The Second Circuit held, in a case of first impression, both inside and outside the Circuit, that the "fair and reasonable" standard of review applied by the district court is the appropriate one for Fair Fund distribution plans. Further, the Court held:
We have long understood that the SEC's charge to enforce the securities laws carries with it the discretion to determine how to distribute recovered profits among injured investors.
The distribution is to be made from the WorldCom Victim Trust. Further information can also be found at the SEC's Spotlight on SEC v. WorldCom page, here, or the website maintained by lead counsel in the securities class action, here.

Thanks to reader Werner Kranenburg, a former Schiffrin & Barroway, LLP summer associate, and current law student in the United Kingdom for nudging us in the direction of the opinion.

Daily Trivia: Judge Rakoff, who gave the 2003 commencement speech at Swarthmore College, took the opportunity to recount the story of A. Mitchell Palmer, a fellow Swarthmore graduate. Judge Rakoff described Palmer as "the worst of all Swarthmore graduates."

Palmer, who was appointed Attorney General in 1919, was twice the intended victim of anarchist bomb attacks. These personal attacks are believed to have been a significant influence for Palmer's campaign against radicalism, which culminated in the "Palmer Raids," a series of police roundups, warrantless wiretaps, and mass arrests of suspected leftists and radicals from 1918-1921.

Monday, October 16, 2006

International Institutional Investor "Arms Race" Ratchets Up a Notch

As previously discussed here and here, American class action law firms are taking a number of steps to solidify their relationships with foreign institutional investors and outside counsel for those investors.

Many of those steps have involved forming official and unofficial affiliations with foreign based firms.

In what appears to be a first for a plaintiffs firm though, Cohen, Milstein, Hausfeld & Toll, P.L.L.C. is set to open their own London office on January 1, 2007 according to this article from The Lawyer.

According to the article, the new office will be staffed by "one or two partners and up to nine associates," and "will initially focus on antitrust and competition matters," though "securities actions, employee discrimination and environmental law" actions will also be on the new office's agenda.

As previously noted, Cohen Milstein already has an international practice area portion of their website and boasted that they had "affiliated offices in the United Kingdom, Italy, South Africa, Panama, Australia and China."

This appears to be a major step forward, going beyond the "joint alliance" formed earlier this year between Labaton Sucharow & Rudoff LLP and the TILP Group and the "formal cooperation agreement" formed between Schiffrin & Barroway, LLP and Winheller.

Update: The Times (of London) also has an article on the office opening.

BISYS Group Settles Securities Class Actions

The BISYS Group, Inc. (NYSE: BSG) today announced that it had reached an agreement in principle to settle a pair of securities class action lawsuits pending against the company and certain of its former officers and directors for $66.5 million in cash.

The litigation is pending before Judge Lewis A. Kaplan in the United States District Court for the Southern District of New York.

The settlement resolves both a class action on behalf a class of purchasers of publicly traded shares of BISYS' securities (the "Open-Market Litigation") and a class action in behalf of a class of those that acquired non-publicly traded BISYS securities as part of private equity transactions (the "Private Transaction Litigation").

The Public Employees Retirement Association of New Mexico, the New Mexico Educational Retirement Board, and the New Mexico State Investment Council are co-lead plaintiffs for the Open-Market Litigation. Cauley Bowman Carney & Williams, PLLC, and Kirby McInerney & Squire, LLP are co-lead counsel for the Open-Market Litigation.

A copy of the consolidated amended complaint in the Open-Market Litigation is available here.

An individual, Robert Grant, is lead plaintiff and Wolf Haldenstein Adler Freeman & Herz LLP is
lead counsel for the Private Transaction Litigation.

A copy of the amended complaint in the Private Transaction Litigation is available here.

Daily Trivia: Among other alternative investments, The New Mexico State Investment Council is allowed to make investments in New Mexico film projects in the form of a guaranteed, no-interest loan up to 100% of the production budget.

Among the projects that the Council has invested in - the Lions Gate Entertainment comedy Employee of the Month.

Investments require participation in the project's post break-even revenues and the project must be wholly or substantially produced in New Mexico with a production crew the majority of which must be New Mexico residents. For budding auteurs seeking backing for their next project, the Council's Film Investments Program Policies and Procedures can be found here.

Update: The 10b-5 Daily also has a post on the settlement, here.

Sunday, October 15, 2006

Jackpot, Part Deux!

According to press reports shareholders of Harrah's Entertainment Inc. (NYSE: HET) have filed a class action lawsuit alleging that the proposed $15.1 billion takeover by two private equity firms is an "apparent camouflaged management buyout."

The suit, which is pending in The Delaware Court of Chancery, names the company, its board of directors, and its proposed buyers, Apollo Management and Texas Pacific Group, as defendants.

Under the terms of the offer, which was announced on October 2, the private equity firms would pay $81 in cash per share.

Harrah's indicated that it had established a special committee of independent directors to review the offer and retained UBS Securities LLC as an adviser.

The class action seeks to stop the proposed buyout and conduct "a fair process" for selling shares of Harrah's, the world's largest casino operator.

Harrah's operates approximately 40 casinos throughout the country under a number of different nameplates, such as Caesars, Ballys, Horseshoe and Showboat.

Press reports have also indicated that in the week leading up to the buyout offer, there were unusual increases in the trading of Harrah's call options and five-year credit-default swaps.

According to data provided by Options Clearing Corp., call option contracts in Harrah's shares were exchanged four to six times the average daily volume of August on the Tuesday, Wednesday and Thursday before the bid was announced.

Daily Trivia: Among the investments held by Texas Pacific Group is Cranium, Inc., the fourth largest board game company in the world, and manufacturer of the popular line of Cranium games. Cranium is headquartered in Seattle, which has been described as "the Boardwalk of popular board games." The "Emerald City" is also home to Screenlife, LLC, manufacturer of the "world's most popular DVD games," including the award-winning line of Scene It? games.

Thursday, October 12, 2006

Corporate Governance Therapy for PainCare

PainCare Holdings, Inc. (Amex: PRZ) announced yesterday that it had reached an agreement in principle to settle a shareholder derivative lawsuit brought against certain of the company's officers and directors in connection with PainCare's restatement of financial results announced earlier this year.

The litigation is pending before Judge John Antoon, II in the United States District Court for the Middle District of Florida.

Federman & Sherwood are counsel for plaintiffs in the derivative litigation.

The settlement provides for the following relief:
  • PainCare will expand its board with the appointment of a new board member to bring additional corporate governance expertise and public company experience.
  • The company will adopt amended corporate by-laws mandating that directors will not serve on more than three corporate boards, including that of PainCare.
  • External or internal legal counsel will be appointed and responsible for conducting an annual investigation of PainCare's corporate governance and board stewardship to ensure compliance with prevailing best industry practices, with the results of the investigation reported to the board.
The companion federal securities class action remains pending. In the federal securities class action, Barrack, Rodos & Bacine and Williams Schifino Mangione & Steady P.A. are lead and liaison counsel, respectively, for lead plaintiff, the Employees Retirement System of the Government of the Virgin Islands.

Of course, the company announced shortly after the first class actions were filed back in March:
the Company believes that these reported lawsuits lack merit and has engaged the international law firm of McDermott Will & Emery LLP to vigorously defend against such allegations and claims.
There you have it - a combination of the "vigorous defense" and the "scary defense counsel" press releases, and it happened just three days after this blog was launched.

PainCare describes itself as "one of the nation's leading providers of pain-focused medical and surgical solutions and services."

Daily Trivia: Barrack Rodos also represents the Retirement Systems Administration of the Commonwealth of Puerto Rico. While a number of plaintiff's firms have pension fund client lists on their websites, no word on which class action firms represent such other exotically located pension funds as the Northern Mariana Islands Retirement Fund, the Government of Guam Retirement Fund, the American Samoa Government Employees' Retirement Fund, the Puerto Rico University Retirement System, or any plans for the Federated States of Micronesia.

4 Down, 47 To Go...

That little break in posting back in July, was not in fact for a carefree summer getaway.

I decided that membership in three state bars (Pennsylvania, New Jersey and the District of Columbia) was not enough, and I sat for the Virginia Bar Exam.

The July exam is held in Roanoke at the Roanoke Civic Center, recent home of the now defunct Roanoke Valley Vipers of the United Hockey League and the equally defunct Roanoke Dazzle of the NBA Development League.

Well, the results are in, and I passed.

This event confirms my oft repeated suspicion - namely that the LSAT does not test your ability to succeed in law school; that law school does not test your ability to practice law nor does it prepare you to take the bar exam; and that passing the bar exam is generally no measure of your ability to practice law. The recently incorporated addendum - apparently practicing law prepares you for taking the bar exam!

Congratulations to the thousands of others across the country that have already received similar good news and best of luck to those still awaiting results. To that group that failed - I suggest you read this post at The Uncivil Litigator blog, or find some Deep Thoughts from Jack Handey.

Wednesday, October 11, 2006

Extra, Extra, Read All About It!

According to news reports (AP via Yahoo! Finance) the recently filed shareholder derivative action against eight Tribune Company (NYSE: TRB) directors was volunatrily dismissed after the judge overseeing the litigation questioned whether he had subject matter jurisdiction to hear the case.

The litigation alleged that the board had refused to consider offers to buy the company's biggest paper, The Los Angeles Times, and that Tribune's $2.4 billion stock buyback in June depleted cash and made the company unattractive to potential buyers.

The result according to the complaint:
Defendants have held and are holding the company and its shareholders hostage.
The class action sought a ruling that the directors had breached their fiduciary duty to the company, along with an order compelling the board to name an independent committee to consider purchase offers and other strategies.

The suit was filed on September 19 in the United States District Court for the Northern District of Illinois and had been assigned to Senior Judge Milton Shadur.

Articles about the filing of the complaint can be found here (AP via Yahoo! Finance) and here (Bloomberg via The Boston Globe).

In two orders issued Sept. 21 and Sept 25, Judge Shadur questioned whether he had jurisdiction over the matter and suggested that the case should instead be filed in state court.

No word on whether the complaint has been refiled, but the likely destination would be the Circuit Court of Cook County.

Lasky & Rifkind, Ltd. and Lerach Coughlin Stoia Geller Rudman & Robbins LLP were counsel in the Tribune litigation.

Daily Trivia: Among other media properties, the Tribune Company owns WPHL-TV, a television station in Philadelphia currently affiliated with the MyNetworkTV television network. WPCA-TV, the predecessor to WPHL on Channel 17, was Philadelphia's first commercial UHF channel.

Tuesday, October 10, 2006

But Will Court TV Carry the Trial Live?

According to a press release issued today, Wechsler Harwood LLP has filed a class action challenging the proposed buyout of the publicly held shares of Cablevision Systems Corp. (NYSE: CVC) by the Dolan family, the controlling shareholders of Cablevision.

The offer, which was announced yesterday morning, would give public shareholders $27 in cash for each Cablevision share.

This is not the first time the Dolan family has attempted to take Cablevision private. Back in 2005, the Dolans had offered to take the cable assets private while at the same time creating a separate public company that would include other Cablevision assets such as Madison Square Garden, Radio City Music Hall, the New York Knicks and the New York Rangers.

The Dolan family currently owns approximately 22.5% of Cablevision's common stock, but controls approximately 74.0% of the voting power. Charles Dolan currently serves as chairman of Cablevision's board and James Dolan currently serves as Cablevision's president and CEO.

The buyout would be financed by an investment of the Dolan family's Cablevision shares and debt financing from Merrill Lynch & Co. and Bear, Stearns & Co. Inc.

According to this press release issued by Cablevision yesterday evening, the board of directors has appointed a special transaction committee, to evaluate and act on the Dolan family's proposal. The special committee is comprised of board members Thomas V. Reifenheiser and Vice Admiral John R. Ryan USN (Ret.) and has retained Willkie Farr & Gallagher LLP as its legal counsel.

The Dolan family is being advised by Debevoise & Plimpton LLP and Skadden, Arps, Slate, Meagher & Flom LLP and investment banks Merrill Lynch and Bear, Stearns.

Daily Trivia: The original Madison Square Garden was named for (and located near) Madison Square park. The site of the original garden (26th and Madison Avenue) was previously a passenger depot for the New York and Harlem Railroad (n/k/a Metro-North Railroad Harlem Line). After the depot moved to Grand Central Terminal, P.T. Barnum purchased the old depot and converted into a hippodrome. William Henry Vanderbilt was the first to name the arena Madison Square Garden.

Monday, October 09, 2006

Once, Twice, Three Times A Defendant

Last week, Symbol Technologies, Inc. (NYSE: SBL) announced that class action lawsuits have been filed against the company in state court, seeking to enjoin the proposed acquisition of Symbol by Motorola, Inc. (NYSE: MOT).

The Motorola acquisition, which was previously announced on September 19 is valued at approximately $3.9 billion. Under the terms of the merger agreement, Motorola agreed to pay $15 per share in cash for the outstanding Symbol shares. News stories in the wake of the announcement (Unstrung.com here) and (Forbes here) suggested that the price was too low and that other bidders might emerge.

Though the Symbol press release does not indicate where the litigation was filed, the company is based in Long Island, and the complaints were likely filed in Suffolk County Supreme Court.

Oh, one more thing about the Symbol press release announcing the class actions. You guessed it, the announcement of a "vigorous defense":
Symbol believes the lawsuits are entirely without merit and intends to vigorously defend against the claims.
Perhaps the good folks at Symbol are simply tiring of being a frequent target of securities litigation, having been named (according to Stanford's Securities Class Action Clearinghouse) three times as a defendant in a securities class action (See case pages here, here, and here).

Interestingly, a quick search of Stanford revealed that Motorola has also been named three times as a defendant in a securities class action.

The first is a recently certified class action on behalf of purchasers of publicly traded Motorola common stock.

The second is a certified class action on behalf of purchasers of Iridium World Communications, Ltd. securities (Motorola was the principal investor in Iridium and had selected six current and former employees and officers to serve as members of Iridium's Board of Directors).

The third is a class action on behalf of purchasers of Charter Communications, Inc. securities (Motorola was one of Charter's vendors). A copy of the Eighth Circuit's opinion affirming the District Court's dismissal of Motorola from the Charter class action is available here.

Daily Trivia: Three Times A Lady was The Commodores first number one single. The Commodores met as freshmen at Tuskegee University.

Live, from Shanghai....It's Another Episode of Case Dismissed!

Continuing our international coverage from last week, we skip over to Shanghai, where SINA Corporation (NASDAQ: SINA) announced the dismissal, without leave to amend, of the consolidated securities class action pending against the company and certain of its officers and directors.

SINA is an online media company and information services provider in China.

The case was pending in the United States District Court for the Southern District of New York before Judge Naomi Reice Buchwald.

Three Michigan municipal pension funds, the City of Sterling Heights General Employee's Retirement System, City of St. Clair Shores Police and Fire Retirement System, and Charter Township of Clinton Police and Fire Retirement System are the lead plaintiffs in the SINA litigation and Lerach Coughlin Stoia Geller Rudman & Robbins LLP is lead counsel.

No word on whether the mascot for Sina's iAsk search engine could take Ask.com's butler, Jeeves, in a streetfight:

Friday, October 06, 2006

He doesn't have a MySpace page, but...

According to an article in the Philadelphia Daily News, Andrew L. Barroway, managing partner of Schiffrin & Barroway, LLP, is also a partner in a very different venture - a group that is in talks with Comcast Corp., the parent company of Comcast Spectacor, L.P., which owns the Philadelphia Flyers, Philadelphia 76ers, Philadelphia Phantoms, Wachovia Center, the Wachovia Spectrum, cable sports television group Comcast SportsNet and various other entities.

Barroway is partnering with Wayne D. Kimmel, one of the founders of ETF Venture Funds - a suburban Philadelphia based venture capital fund.

Barroway appears to be something of a 76ers fan - according to a December 2003 American Lawyer article, he lives in the former house of NBA Hall of Famer and former Sixers great Julius Erving, a/k/a "Dr. J."

Though, according to a USA Today article from earlier this year, the Dr. J house is now for sale, together with a neighboring house owned by Barroway and his wife, for a cool $10.9 million.

Regular readers may recall back in August when The D&O Diary highlighted another securities litigator that was "living large" though in a decidedly different way, S. Gene Cauley of Cauley Bowman Carney & Williams, PLLC and his colorful MySpace page (which has since been deactivated).

Thursday, October 05, 2006

Bank Hapoalim Settles Israeli Derivative Lawsuit

According to news reports here (Jerusalem Post) and here (Globes Online), Israel's largest bank, Bank Hapoalim Ltd., has reached an agreement in principle to settle a derivative class action lawsuit filed against the bank for the bonuses paid to executives in 2005.

The litigation was filed after Zvi Ziv, the bank's president and CEO and Shlomo Nehama, the bank's chairman were paid NIS (New Israeli Sheqel) 33 million and NIS 23 million, respectively, in total compensation in 2005. According to the Post article, the payment to Ziv was "the highest executive compensation package ever for an executive in Israel."

Each of the officers has agreed to return NIS 13 million to the bank, or just over $3 million at today's exchange rates, but according to the Globes article:
They will not make an actual repayment; the amounts will be deducted from the amounts to which they will be eligible in 2006-08.
The settlement agreement is subject to approval both by the Court and the Israel Securities Authority.

Bank Hapoalim is dual listed on the Tel Aviv and London Stock Exchanges.

Readers may recall that Bruce Carton over at Securities Litigation Watch has been on a quest to track down international securities litigation.

Daily Trivia: The plural of sheqel (also spelled shekel) is sheqalim (or shekalim). The New Israeli Sheqel was introduced in on September 4, 1985 and is divided into 100 agorot (plural of agora).

Wednesday, October 04, 2006

Ibis Settles Securities Class Action

Earlier this week, Ibis Technology Corporation (NASDAQ: IBIS) issued a press release announcing that it had reached an agreement to settle the consolidated securities class action litigation pending against the company and Martin Reid, its president and CEO, for $1.9 million, to be funded entirely by the company's insurance carrier.

The Ibis litigation is pending in the United States District Court of Massachusetts before Judge Reginald C. Lindsay. A copy of Judge Lindsay's opinion partially granting and partially denying the motion to dismiss is available here.

Three individuals, Martin Smolowitz, George Harrison (not the late Beatle), and Mark G. Forgue, are the lead plaintiffs in the Ibis litigation. The Law Offices of Bernard M. Gross, P.C. and Shapiro Haber & Urmy LLP are lead and liaison counsel, respectively.

A copy of the consolidated amended complaint is available here.

Daily Trivia: George Harrison (the late Beatle) was also a film producer. He founded Handmade Films in 1979 to finance the Monty Python film Life of Brian after the original financiers pulled out.

International Institutional Investor "Arms Race" - Update

Regular readers may recall that several months ago this humble blog pointed to the increasing efforts being undertaken by American class action firms to solidify "their relationships with foreign institutional investors and outside counsel for those investors."

Yesterday, Schiffrin & Barroway, LLP and the German law firm, Winheller Attorneys at Law, announced "a formal cooperation" agreement to provide "Class Action Services for Institutional Investors."

Of note in the press release, Stefan Winheller, founding partner of the firm, suggests:
that possible clients include banks, mutual fund managers, corporate investors, insurance companies, and pension and other support funds.
It is an interesting turn of phrase, perhaps best likened to the "passive voice" press releases I write about so frequently.

Winheller goes on to say:
We aim to help institutional investors successfully seek compensation for the fraudulent misuse of their investments. The strategic partnership with S&B will give investors from Germany, Austria and Switzerland the great chance to carry out their fiduciary duties to their clients on a convenient contingency fee basis.
American securities class action law firms have also signed on in droves to sponsor international pension fund summits - six have signed on as sponsors of the UK & Irish Pension Summit and four (out of only six sponsors!) have signed on as sponsors of the European Pension Investment Forum.

Tuesday, October 03, 2006

Bellsouth Settles With the Quakers (and the rest of the Class)

According to press reports (Atlanta Journal-Constitution) BellSouth Corp. (NYSE: BLS) has settled the securities class action lawsuit pending against the company and certain current and former officers and directors for $35 million.

The case is pending before Judge William S. Duffey, Jr in the United States District Court for the Northern District of Georgia.

Quaker Capital Management, a Pittsburgh based money management firm and registered investment advisor is the lead plaintiff in the BellSouth litigation. Bernstein Liebhard & Lifshitz, LLP and Chitwood Harley Harnes LLP are co-lead counsel.

A copy of the order appointing lead plaintiff and lead counsel is available here.

As noted in the Journal-Constitution article, the litigation includes both open market purchasers and shareholders that acquired BellSouth shares through the BellSouth Direct
Investment Plan

Daily Trivia: With the proposed merger between BellSouth and AT&T Inc. (itself the result of a merger between SBC Communications Inc. and AT&T), the "Ma Bell" network is now down to just three of the seven original Regional Bell Operating Companies (known as "Baby Bells") formed in the wake of the 1982 settlement of the Justice Department's antitrust suit against the American Telephone & Telegraph Company. For readers with more than a passing interest in telecommunications history, see the Bell System Memorial website.