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).

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).

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.

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.

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.

Yet Another Settlement from N.D. California

Cerus Corporation (NASDAQ: CERS) today announced an agreement to settle the securities class action litigation pending against the company and certain current and former directors and officers. The litigation is pending before Judge Jeremy D. Fogel in the United States District Court for the Northern District of California.

Judge Fogel previously appointed Gaeton and Lionel Carnot as lead plaintiffs and Lerach Coughlin Stoia Geller Rudman & Robbins LLP as lead counsel in the Cerus litigation. A copy of that order can be found here.

The company's press release also indicates that derivative litigation pending in the Superior Court for the County of Contra Costa was also settled. A review of the docket reveals that Robbins Umeda & Fink, LLP is counsel for the plaintiff in both of the derivative actions pending there.

While the press release does not indicate the value of the settlements, an 8-K filed by Cerus gives some insight:

Under these settlement agreements, the Company's directors' and officers' liability insurance policy will fund a cash settlement amount and the Company has agreed to take or continue certain corporate governance measures.

The corporate governance measures to be taken, include:

• Making a good faith effort to add one or two independent directors to the company's board by September 1, 2007;
• If the company is unable to add these independent directors by that time, retaining a professional search firm to assist in the identification candidates, with the company using best efforts to add one or two independent directors to the board by December 31, 2008;
• Unless otherwise required by law, two thirds of the company's board of directors will consist, through January 1, 2009, of independent directors.

On an interesting side-note, a number of complaints were filed in the litigation, including two different amendments to complaints that had been filed just one or two months prior.

For example, on May 24, 2004, the plaintiffs filed a consolidated complaint, followed shortly thereafter on June 17, 2004, by an amended consolidated complaint (link unavailable) which added certain allegations attributed to a confidential witness.

On January 20, 2005, the Court dismissed the complaint with leave to amend within 60 days. On March 21, 2005, the plaintiffs filed a second amended consolidated complaint, and on May 24, 2005, the plaintiffs filed a third amended consolidated complaint.

Cerus is a Concord, California based bio-technology firm focused on developing blood safety systems and, more recently, immunotherapies for cancer and infectious disease.

Morrison & Foerster LLP is counsel for defendants in the litigation.

Daily Trivia: Morrison & Foerster has undergone 14 name changes in the firm's history and can trace it roots back to 1883. Brobeck, Phleger & Harrison LLP, the formerly omnipresent securities litigation powerhouse (and now defunct) law firm, was formed in 1925 by lawyers that left Morrison & Foerster.

Umm...yeah, I'm going to need to you to come in on Saturday alright?

The close relationship between plaintiffs' lawyers and labor unions (specifically their pension funds) is well documented, and often criticized.

A press release issued today by the law firm of Wolf Haldenstein Adler Freeman & Herz LLP piqued my interest, with a unique example of that relationship.

The firm announced that it was one of the prime sponsors of the Fifth Annual "DC Labor Film Festival," produced by the Metropolitan Washington Council of the AFL-CIO. The festival "was established as a part of a project to use the arts to highlight the plight of workers and their efforts to secure better conditions of employment."

While the festival features a number of independent films with serious themes, it also features one of my favorite comedies - Office Space, the 1999 cubicle comedy directed by Mike Judge.

For fellow devotees, this fan site has a number of memorable sound clips from the film.

Wolf Haldenstein opened its Washington, DC office on July 1st of this year, with the addition of Reuben Guttman, formerly of Milberg Weiss Bershad & Schulman, LLP. The Washington Business Journal has a story on the office opening here and the WSJ Blog has a post here.

Less is More?

A recent ruling in the CV Therapeutics, Inc. (NASDAQ: CVTX) securities litigation highlights some of the interesting issues that are filtering through the courts with respect to electronic discovery (e-discovery).

The case is pending in the United States District Court for the Northern District of California before Judge Susan Illston.

The parties had previously agreed on the entry of a stipulated order governing the discovery of material restored from defendant's backup tapes. The backup tapes contained approximately 425,000 documents.

Defendants applied a "de-duplication process" to the tapes, which reduced the number of documents to approximately 129,000. Defendants then produced about 4,000 documents. Plaintiffs objected to the de-duplication as well as the withholding of documents.

The defendants argued that it would be unduly burdensome and expensive to produce the remaining 125,000 documents, and asked the magistrate to require plaintiffs to select slightly less than half of the documents.

A virtual treasure trove of court filings from the litigation can be found on the Stanford website, here. Interestingly, Lerach Coughlin's "Designated Internet Site," is nearly bereft of filings from the CV Therapeutics litigation.

Magistrate Edward M. Chen found that de-duplication was an acceptable method of reducing the size of the production and ordered the defendants to apply search terms to narrow the remainder of the production.

A copy of Magistrate Chen's opinion is available here. The case can be cited as In re CV Therapeutics, Inc. Sec. Litig., 2006 WL 2458720 (N.D. Cal. Aug. 22, 2006).

In November 2003, Judge Ilston appointed David Crossen as lead plaintiff and Lerach Coughlin Stoia Geller Rudman & Robbins LLP (at the time, Milberg, Weiss, Bershad, Hynes & Lerach, LLP) as lead counsel in the CV Therapeutics litigation. A copy of the order appointing lead plaintiff and lead counsel is available here.

A copy of the consolidated amended complaint is available here.

Defense counsel in the case is Latham & Watkins, LLP.

Daily Trivia: Magistrate Chen is the first Asian-American to serve on the bench of the United States District Court for the Northern District of California.

No Pay, No Pal

According to news reports (InvestmentNews.com - registration required), a Cyprus based investment company is suing Clarium Capital Management, a hedge fund headed by PayPal founder Peter Thiel, alleging that it was defrauded out of millions of dollars over a period of eight years.

The suit was filed earlier this week by Amisil Holdings Ltd. of Cyprus in the United States District Court for the Northern District of California.

According to news reports, Amisil first invested in Clarium in 1998. At that time, Clarium was known as Thiel Capital Management. Amisil's investment is thought to be equivalent to a 1% interest in the hedge fund.

The article contains a colorful quote from a representative of the plaintiff:

Amisil has not received a single distribution from Clarium, while he [Mr. Thiel] has skimmed tens of millions of dollars out of Clarium into his own pockets. There's been no pay for us, and he's been no pal.

Amisil is represented by Harvey L. Leiderman of Reed Smith LLP's San Francisco office. Leiderman is a recent addition to the firm, according to this announcement.

Daily Trivia: Mr. Thiel started as a derivatives trader at Credit Suisse Group and in 2003 nearly bought Martha Stewart's Manhattan duplex condo. Ms. Stewart later sold the condo the day before she was sentenced for crimes related to her well-timed sale of Imclone Systems Inc. stock in late 2001.

Jackpot!

According to an 8-K filed last week, The Sands Regent (NASDAQ: SNDS), has agreed in principle to settle a shareholder class action, which challenged the proposed merger of Sands Regent with Herbst Gaming, Inc., the operator of the Terrible's casino chain.

The litigation was pending in the Second Judicial District Court for Washoe County, Nevada. Counsel for the plaintiff included Lerach Coughlin Stoia Geller Rudman & Robbins LLP and Ademi & O'Reilly, LLP.

A review of the docket reveals that the settlement was reached just one day after an amended complaint was filed.

The settlement requires the defendants to: 1) make certain modifications to the merger documents; 2) amend the disclosures contained in the proxy statement; 3) pay $345,000 in attorneys fees to plaintiffs' counsel.

The proposed merger, which was announced on May 17, 2006 is valued at approximately $148 million.

According to an earlier 8-K, you guessed:

The Company believes the lawsuit is without merit and intends to vigorously defend the action.

Daily Trivia: Herbst Gaming began in 1987 as an offshoot of the family business, Terrible Herbst Oil Company, which now operates 80 gasoline stations and convenience stores throughout Nevada. Herbst Gaming serviced the slot machines located in the Terrible Herbst locations and is now one of the largest slot route operators in the State of Nevada.

A Quick Trip Through The Blogosphere

A few interesting items from other blogs that you might find interesting.

• Kevin LaCroix, over at The D&O Diary, has an interesting post here about the recently filed options backdating litigation against Zoran Corporation (NASDAQ: ZRAN) and ten of its past or present directors and officers. The Zoran litigation appears to be somewhat unique because it focuses on allegedly improper or misleading solicitation of shareholder proxies and consent.
  

• The D&O Diary also has an interesting post here on the growing trend of activist hedge funds and their willingness to litigate to effectuate change. Not surprisingly, the post also has some thoughts on what this trend means for D&O liability.

• Lyle Roberts, author extraordinaire of The 10b-5 Daily, has a post here on a brewing circuit split on the application of the "collective scienter" theory, which allows a plaintiff to establish the scienter of a defendant corporation based on the collective knowledge of the corporation's employees.

• Michael Thomas, author of The Daily Caveat, has an update on the litigation swirling around Kirk Wright, and the failure of his hedge fund management company, International Management Associates here.

• Broc Romanek, editor of TheCorporateCounsel.net, has a post here discussing a recent New York State court decision analyzing whether a fiduciary relationship exists between an underwriter and an issuer and whether such a fiduciary relationship should be imputed to underwriter's counsel.
  

Appeal is the "Genesis" of a Settlement

Today Wolf Popper LLP announced the proposed settlement of the securities class action pending against Genesis Microchip Inc. (NASDAQ: GNSS) in the United States District Court for the Northern District of California.

The $1.75 million settlement came after the case was dismissed by Judge Jeffrey S. White, but before plaintiffs appeal was heard by the United States Court of Appeals for the Ninth Circuit. A copy of the stipulation of settlement is available here.

Wolf Popper LLP and Alexander, Hawes & Audet, LLP are lead and liaison counsel, respectively. The lead plaintiff in the litigation appears to be former model (and current wife of Carl Bernstein) Christine Kuehbeck.

The PSLRA Nugget has a post about some interesting, though unrelated litigation involving Ms. Kuehbeck.

Readers may recall this recent post which discussed the local rules of the District, which require the posting of virtually securities fraud class action litigation complaints and pleadings to a "Designated Internet Site" such as Stanford Law School's Securities Class Action Clearinghouse or Lerach Coughlin Stoia Geller Rudman & Robbins LLP's Securities Class Action Designated Internet Site. A search of both of those websites reveals nary a mention of the Genesis Microchip litigation.

Daily Trivia: Genesis is the leading supplier of the video processors used in liquid crystal display (LCD) monitors, which today are the most widely used display technology for PC monitors.

Intermagnetics Abandons "Vigorous Contest"

As this blog is relatively young, it should not surprise readers that the majority of cases discussed herein are either just beginning or nearly ending as they are substantially older than this fair publication.

Thus it is with great pleasure that I note the settlement announced earlier this week by Intermagnetics General Corp. (NASDAQ: IMGC) of two class action complaints filed in the Supreme Court of the State of New York for Albany County, challenging the proposed $1.3 billion sale of Intermagnetics to Philips Holding USA Inc., a subsidiary of Koninklijke Philips Electronics N.V. (NYSE: PHG).

It was exactly one week ago that the Intermagnetics litigation was first discussed, here. In that post, we noted that:

Intermagnetics believes that these allegations are without merit and intends to contest them vigorously.

No further information about the settlement is available from the Intermagnetics website or the company's SEC filings.

Complaints Missed the "Marc"

According to this press release the consolidated securities class action lawsuit pending against Digimarc Corporation (NASDAQ: DMRC) and certain of its current and former executive officers was dismissed by Judge Anna J. Brown of the United States District Court for the District of Oregon.

The litigation arose from accounting errors disclosed by the company in 2004 and a restatement of prior financial statements that soon followed.

A copy of Judge Brown's opinion is available on the Digimarc website, here.

Rex Boggs, Kennard McAdam, and Glenn Thomas are lead plaintiffs in the Digimarc litigation. Milberg Weiss Bershad & Schulman, LLP and the Portland firm of Stoll Stoll Berne Lokting & Shlachter PC are is lead counsel and liaison counsel, respectively in the Digimarc litigation.

Stoel Rives, LLP is defense counsel in the securities litigation.

Additionally, the company announced that companion state and federal derivative litigations were also dismissed.

The first derivative lawsuit was pending in the Circuit Court of the State Oregon for Washington County, and was dismissed by this stipulation. Lead counsel for plaintiffs in the state litigation were Schiffrin & Barroway, LLP and Danziger Shapiro & Leavitt, P.C. The Portland firm of Layne & Lewis, LLP was liaison counsel for the plaintiffs.

The second derivative lawsuit was pending in the United States District Court for the District of Oregon, and was dismissed by Judge Ancer L. Haggerty. A copy of Judge Haggert's opinion is available here.

Interestingly, among the reasons for granting the motion to dismiss the federal derivative litigation was the prior dismissal by Judge Brown of the securities class action.

Lead counsel for plaintiffs in the federal derivative litigation were Robbins Umeda & Fink, LLP and Faruqi & Faruqi LLP. The Portland firm of Grenley, Rotenberg, Evans, Bragg & Bodie, P.C. was liaison counsel for the plaintiffs.

Perkins Coie, LLP was defense counsel in both of the derivative lawsuits.

Daily Trivia: Digimarc provides products and services that enable the annual production of more than two-thirds of U.S. driver licenses.

Star Gas Partners Securities Litigation Dismissed

Today, Star Gas Partners, L.P. (NYSE: SGU) announced the dismissal of a securities class action against Star, Star's general partner, several of Star's former officers and directors and three investment banks that underwrote the public offerings of Star's common units in September 2002 and August 2003. A copy of the company's press release is available here.

The Star Gas litigation was pending in the United States District Court for the District of Connecticut before Judge Janet Bond Arterton.

Judge Arterton's opinion on the motions to dismiss is available here, and her prior opinion appointing lead plaintiffs and lead counsel is available here.

John E. Wertin, RS Holdings LLC, and James Rosner are lead plaintiffs in the Star Gas litigation and Labaton Sucharow & Rudoff LLP and Schiffrin & Barroway, LLP are lead counsel. Shepherd Finkelman Miller & Shah, LLC is liaison counsel in the litigation.

Readers may recall that RS Holdings is also a lead plaintiff in the recently settled DHB securities litigation, discussed previously here.

Though Star Gas never put out a "vigorous defense" press release, they did indicate in the first 10-Q filed after the litigation was commenced that they "will defend against the Class Actions vigorously."

Daily Trivia: Star Gas (or its subsidiary, Petro, Inc. depending on the information source) is the nation's largest retail distributor of home heating oil.

Holding "Penalty", Ten Yards

An article from today's Washington Business Journal announced the resignation of Hugh Panero from the board of directors of Vonage Holdings Corp (NYSE: VG).

Readers will no doubt recall that Vonage and several of the company's officers and directors are currently defendants in a securities class action lawsuit stemming from the company's May 2006 initial public offering. The D&O Diary has a post on the Vonage litigation, here.

Panero is named as a defendant in the Vonage litigation.

Mr. Panero is far more well known for his regular job - as chief executive officer and a member of the board of directors at XM Satellite Radio Holdings Inc (NASDAQ: XMSR).

Readers may recall that XM is currently a defendant in several securities class actions and a shareholder derivative action.

You guessed it - Panero is also a defendant in the XM litigation.

Mr. Panero has some high caliber legal talent representing him in both the Vonage and XM litigations - Wilmer, Cutler Pickering Hale and Dorr LLP a/k/a WilmerHale - but I have some free life advice for him - don't join the board of any more companies with the word "holding" in their name.

A Forbes story on Panero's resignation from the Vonage board notes another interesting coincidence - the stock was up nearly 4% following the announcement of Panero's departure.

Daily Trivia: According to their most recent 10-Q, the so-called "access charges" that Vonage pays to other telephone companies to transfer or "terminate" calls back onto the public switched telephone network accounted for just under 60% of the company's direct cost of providing telephone services to subscribers.

Parlux Redux

Well, it appears that The PSLRA Nugget's new law firm, Saxena White P.A. has finally decided to provide some fodder for this blog.

As noted here by Chris Jones, the author of The Nugget, the new firm is off to a fast start, having already been appointed leadership positions in a number of cases.

Last week, apparently hoping to add to the firm's success, Saxena White announced the filing of a class action complaint against Parlux Fragrances Inc. (NASDAQ: PARL).

Of interest to readers may be this little blurb at the end of the press release:

Saxena White P.A. has offices in Boca Raton, San Francisco, and Boston.

Unfortunately the firm's website is not yet fully functional, and as of press time, we had not heard back from Mr. Jones, so the new "office openings" will remain a Scooby Doo mystery for now.

Reuters has a story on the Parlux litigation, here.

Regular readers will note that this is the third trip to this fair blog for Parlux, with prior posts here and here.

Baked Alaska Pipeline

Last week, shareholders of BP p.l.c. (NYSE: BP) filed a derivative lawsuit in the United States District Court for the Southern District of New York. The case has been assigned to Judge Harold Baer.

The complaint alleges that BP had known for years about the severe pipeline corrosion that led to the shutdown of the Prudhoe Bay oil field earlier this month, but failed to adequately monitor and repair the oil transit lines that feed into the 800-mile Trans Alaska Pipeline System.

A copy of the complaint is available here.

In what can only be described as an unusual occurrence, the complaint lists but a single attorney as counsel for the plaintiff, Jules Brody of Stull, Stull & Brody.

Daily Trivia: The population of Prudhoe Bay is approximately 47 people, and a billion caribou.