In re Black Farmers Discrimination Litigation

The U.S. government has agreed to pay black farmers $1.15 billion to settle decades-old claims that the U.S. Department of Agriculture systematically shut them out of a loan program.

The settlement, announced February 18, is on top of an earlier $1 billion settlement, and addresses claims by farmers who were left out of the previous settlement. It represents a triumph not just for the 30,000–50,000 farmers who may participate in the award, but for Crowell & Moring partners Laurel Malson and Andrew Marks, who have represented the farmers since 2008. (Rachel Hines, senior counsel at the U.S. Department of Justice, steered the negotiations for the USDA.)

In 1997 three black farmers lodged a class action, Pigford et al. v. Glickman, alleging that the USDA denied them loans and subsidies because of their race. Two years later, the case settled, with the government awarding a fixed payment of $62,500 to each of more than 16,000 claimants.

In 2008, Congress authorized a $100 million award to address claims made by thousands of black farmers who said they had been shut out of the 1999 settlement because of late or incomplete paperwork. Lawyers for the farmers deemed the award insufficient, and the farmers reasserted their claims in a new suit against the USDA.

The $100 million is included in the current settlement; Congress was expected to vote on the settlement in mid-April.

For plaintiffs black farmers

Crowell & Moring: Laurel Malson, Andrew Marks, counsel David Bell, and associate Michael Lieberman. (They are in Washington, D.C.) The firm, tapped in 2008, was petitioning to be co–lead counsel when the settlement was announced.

Chestnut, Sanders, Sanders, Pettaway & Campbell: Henry Sanders and Rose Sanders. (They are in Selma, Alabama.) The firm, co–lead counsel on the 1997 case, also petitioned to be co-lead counsel.

Morgan & Morgan: Gregorio Francis, J. Andrew Meyer, and Scott Weinstein. (Francis is in Orlando; Meyer is in Tampa; and Weinstein is in Fort Myers, Florida.) The firm also petitioned to be co–lead counsel.

Stinson Morrison Hecker: Phillip Fraas. (He is in Washington, D.C.)The firm, co–lead counsel on the 1997 case, was petitioning to be class counsel when the settlement was announced.

Conlon, Frantz & Phelan: David Frantz. (He is in Washington, D.C.) The firm, co–lead counsel on the 1997 case, also petitioned to be class counsel.

Law Offices of James Scott Farrin: James Farrin and Eric Haase. (They are in Durham, North Carolina.) The firm also petitioned to be class counsel.

Pogust, Braslow & Millrood: Harris Pogust. (He is in Conshohocken, Pennsylvania.) The firm also petitioned to be class counsel.

Strom Law Firm: J. Preston Strom, Jr. (He is in Columbia, South Carolina.) The firm also petitioned to be class counsel.

For defendant The U.S. Department of Agriculture

In-House: At the U.S. Department of Justice’s Civil Division, Federal Programs Branch: Associate attorney general Thomas Perrelli, assistant attorney general for the civil division D. Anthony West, and senior counsel Rachel Hines.

–Claire Zillman

WaMu v. JPMorgan Chase

Looks like all that litigation posturing by the bankrupt parent of Washington Mutual Bank was not for naught. On March 12, after ten months of litigation that included some fiery accusations against JPMorgan Chase & Co. by WaMu’s litigation counsel at Quinn Emanuel Urquhart & Sullivan, the parties told Delaware federal bankruptcy court judge Mary Walrath that they’d reached a draft settlement.

There was no filing with the court, but the terms of the proposed deal were read into the record. The WaMu estate will recover $4 billion in deposits it claimed JPMorgan Chase improperly withheld after acquiring the WaMu savings bank for $1.9 billion in 2008. The estate will also receive about $2 billion from two tax refunds to JPMorgan Chase, as well as $179 million in intercompany notes and about $100 million from other claims.

The total take for WaMu’s parent is about $6.3 billion, not including liability JPMorgan Chase agreed to assume from the estate. Brian Rosen of Weil, Gotshal & Manges represented the estate in settlement talks; Peter Calamari and David Elsberg of Quinn Emanuel led the litigation for the estate. JPMorgan Chase tapped Robert Sachs of Sullivan & Cromwell.

WaMu’s suit against JPMorgan Chase took an aggressive initial tack, claiming damages of $10 billion over the other bank’s alleged scheme to undermine WaMu in order to acquire it on the cheap. In June the judge refused to permit the bank to transfer the case to another jurisdiction and granted sweeping discovery to the WaMu estate. The case settled as the judge was poised to issue a summary judgment ruling on the $4 billion in deposits WaMu claimed from JPMorgan Chase.

WaMu unsecured creditors support the proposed deal. The estate takes the position that the bondholders of WaMu Bank don’t have standing in the bankruptcy to oppose the settlement.

The settlement proposes to resolve the WaMu estate’s litigation with the Federal Deposit Insurance Corporation, which was a codefendant with JPMorgan Chase but also staked a claim to the $4 billion in savings bank deposits. The FDIC would receive a bit more than $1 billion from a share of JPMorgan Chase’s tax refund, according to WaMu’s lawyers.

At press time the settlement still awaited approval from the court.

For Plaintiff Washington Mutual, Inc. (Seattle)

In-House: General counsel Chad Smith.

Quinn Emanuel Urquhart & Sullivan: Adam Abensohn, Peter Calamari, Michael Carlinsky, David Elsberg, Susheel Kirpalani, and associate Benjamin Finestone. (All are in New York.) The firm, which is known for its work on suits against banks, won the work in a beauty contest.

Weil, Gotshal & Manges: Simeon Gold, Stuart Goldring, William Horton, Jr., Brian Rosen, and asso­ciates Kelly DiBlasi, Vaughan Petherbridge, Tal Sapeika, and counsel Steven Margolis. (All are in New York.)

For the Bank Bondholders

Wilmer Cutler Pickering Hale and Dorr: Philip Anker. (He is in New York.)

For the Official Committee of Unsecured Creditors

Akin Gump Strauss Hauer & Feld: Peter Gurfein, Fred Ho­dara, Howard Jacobson, Robert Johnson, and David Simonds. (Gurfein and Simonds are in Los Angeles; Jacobson is in Washington, D.C.; and the rest are in New York.) The firm was cocounsel.

Pepper Hamilton: Laurence Shiekman and David Stratton. (Shiekman is in Philadelphia. Stratton is in Wilmington.) The firm was cocounsel.

For Defendant JPMorgan Chase & Co. (New York)

Sullivan & Cromwell: Stacey Friedman and Robert Sacks. (Friedman is in New York; Sacks is in Los Angeles.) The firm did not comment on its role.

For Defendant and Receiver The Federal Deposit Insurance Corporation

DLA Piper: Thomas Califano and John Clarke, Jr. (They are in New York.)

–Alison Frankel and Irene Plagianos

Ashland v. Oppenheimer

A federal district court judge dismissed with prejudice a claim against Oppenheimer & Co. Inc., by a corporate customer who alleged that the broker-dealer misrepresented the safety and liquidity of auction-rate securities.

Federal district court judge Jennifer Coffman ruled that allegations by the customer, the chemical company Ashland Inc., were not specific enough to allow the case to proceed.

The same week as the February 22 dismissal of the suit, Oppenheimer reached auction-rate securities settlements with New York and Massachusetts. Those settlements resolved investigations into its marketing and sale of the securities, long-term debt whose interest rates are set through periodic auctions.

For all three matters, Oppenheimer tapped Rodney Acker at Fulbright & Jaworski. Christopher Johnson at Kasowitz, Benson, Torres & Friedman acted for Ashland in its suit; Ashland is appealing the dismissal.

The litigation and investigations stem from the February 2008 collapse of the $330 billion market for the securities. Underwriters and broker-dealers subsequently reached a spate of settlements with federal and state regulators later that year in which they agreed to buy back billions of dollars worth of the securities from small investors.

In its complaint filed in April 2009 in federal district court in Lexington, Kentucky, Ashland alleged that even when Oppenheimer executives became aware of major problems in the market and began dumping personal holdings of the instruments, the broker-dealer failed to warn Ashland and continued to market the securities aggressively to the company. When the market collapsed, Ashland was left holding $194 million of illiquid securities.

In the New York settlement announced February 24, Oppenheimer agreed to restore $31 million to individuals, charities, and small businesses holding Oppenheimer accounts worth less than $1 million. Simultaneously, it agreed to pay $4.3 million to settle an administrative action in Massachusetts. Under the settlements, Oppenheimer neither admitted nor denied the states’ findings.

For plaintiff Ashland Inc. (Covington, Kentucky)

Kasowitz, Benson, Torres & Friedman: Christopher Johnson, Charles Miller, and associate Joshua Greenblatt. (They are in New York.) The firm is also representing Ashland in a similar suit against Morgan Stanley.

Dinsmore & Shohl: Barbara Edelman and Grahmn Morgan. (They are in Lexington, Kentucky.) The firm was local counsel.

For plaintiff the State of New York

In-House: At the Office of the Attorney General: special deputy attorney general for investor protection David Markowitz and assistant attorneys general Thomas Teige Carroll, Harriet Rosen, and Daniel Sangeap.

For plaintiff the Commonwealth of Massachusetts

In-House: At the Enforcement Section, Massachusetts Securities Division, Office of the Secretary of the Commonwealth: chief of enforcement Patrick Ahearn and enforcement attorneys William Donahue, Joshua Grinspoon, and Kevin Morris.

For defendant Oppenheimer & Co. Inc. (New York)

In-House: Deputy general counsel–director of litigation John McGuire.

Fulbright & Jaworski: Rodney Acker, Lionel Hest, Peter Stokes, and associates Stefania Tani and Jami Vibbert. (Acker is in Dallas, Stokes is in Austin, and the rest are in New York.) The firm represented Oppenheimer in the Ashland case. The firm, which has handled similar cases involving six broker-dealers, got the matter through a referral.

Stites & Harbison: Douglass Farnsley and Clark Johnson. (They are in Louisville.) The firm was local counsel in the Ashland case.

Bingham McCutchen: Thomas Hennessey and Neal Sullivan. (Hennessey is in Boston; Sullivan is in Washington, D.C.) Bingham represented Oppenheimer and executives Robert Lowenthal and Gregory White in the Massachusetts matter.

MIntz Levin Cohn Ferris Glovsky and Popeo: R. Robert Popeo, Laurence Schoen, Adam Sisitsky, and associate Marbree Sullivan. (They are in Boston.) The firm represented Oppenheimer CEO Albert Lowenthal in the Massachusetts matter.

–Tosin Sulaiman

In re Time Warner Cable Antitrust Litigation

In at least a temporary victory for Time Warner Cable Inc., on March 5 a Manhattan federal district court judge dismissed an antitrust class action accusing the cable giant of compelling premium subscribers to pay cable box rental fees.

Margaret Zwisler of Latham & Watkins is acting for Time Warner; several firms are spearheading the case on behalf of a putative class of subscribers.

The action is one of several similar suits against the company filed in 2008. In an amended consolidated complaint filed in April 2009, subscribers alleged that Time Warner abused its market dominance in markets it controlled by illegally tying its premium services to the rental of a cable box. The complaint alleged that Time Warner further required plaintiffs to rent cable boxes only through the company. The putative class sought hundreds of millions of dollars in damages, plaintiffs counsel said.

In 2007 the cable industry was required to introduce smart cards designed to separate the security element of cable boxes from the devices themselves, thus providing customers with an alternative to leasing cable boxes. But subscribers alleged that Time Warner continued to promote the use of its cable boxes, rather than the new technology.

In its motion to dismiss, Time Warner argued that its promotion of its proprietary set-top boxes was not enough to establish coercion. Judge P. Kevin Castel agreed, finding that subscribers had failed to provide evidence that they had actually been coerced into leasing the cable boxes.

The judge set April 9 as a deadline for an amended complaint to be filed.

For plaintiff Matthew Meeds et al.

Edgar Law Firm: John F. Edgar, John M. Edgar, and Daniel Young. (They are in Kansas City, Missouri.) The firm was lead plaintiffs counsel.

Harwood Feffer: Robert Harwood and counsel Peter Overs, Jr. (They are in New York.) The firm was liaison counsel.

For defendant Time Warner Cable Inc. (New York)

In-House: Assistant chief counsel–litigation and chief privacy officer Craig Goldberg.

Latham & Watkins: Matthew Brill, Margaret Zwisler, and associates Jennifer Giordano and Allyson Maltas. (They are in Washington, D.C.) The firm has represented Time Warner Cable since 2005.

Stinson Morrison Hecker: David Everson and associate Anne Emert. (They are in Kansas City, Missouri.) The firm was local counsel before the case moved to New York.

–Tosin Sulaiman