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6 CLASS ACTIONS CERTIFIED IN MASSIVE IPO SUIT NEW YORK — The mountain of litigation over the collapse of stock prices following initial public offerings in the technology boom has moved to a new phase with the certification of six class actions. Setting the stage for settlement talks or a possible trial in suits filed over the handling of 310 initial public offerings, Southern District of New York Judge Shira Scheindlin last week certified classes in suits against VA Linux Corp. and five other “focus cases” in In re Initial Public Offering Securities Litigation, 21 MC 92. The suits, filed between Jan. 11 and Dec. 6, 2001, under the 1993 Securities Act, charge that 310 companies and the investment banks that brought those companies’ shares to market defrauded investors on a grand scale. Underwriting banks allegedly made investors who were allocated IPO shares buy the shares in the aftermarket, sometimes at escalating prices, and pay additional, undisclosed compensation. As part of the alleged scheme, the underwriters issued misleading recommendations on stocks through analysts who labored under conflicts of interest. The cases were consolidated before Judge Scheindlin for pretrial supervision. She developed a plan with the attorneys to try six focus cases. While the ruling on class certification for the six cases governs those cases only, Scheindlin said most of the same issues raised here would be raised in connection with certification motions for the remaining 304 cases. In addition to VA Linux, the cases selected for consideration of class certification are Sycamore Networks Inc., iXL Enterprises Inc., Firepond Inc., Engage Technologies Inc. and Corvis Inc. — New York Law Journal TRADE TOWERS SUIT OVER INSURANCE BEGINS NEW YORK — Opening statements began Monday in the second trial pitting real estate developer Larry Silverstein against insurance companies over the amount owed for the destruction of the World Trade Center. The statements, at times combative and interrupted by a spate of objections, underscored what is at stake. If Silverstein and the World Trade Center owner, the Port Authority of New York and New Jersey, win, they stand to recover up to $2.2 billion from the nine carriers involved in the case. If they lose, they will recover, at most, half that amount. Silverstein entered into a 99-year lease with the Port Authority in July 2001 and purchased property insurance upon the commencement of his lease. The parties did not finalize the terms of the policies before the Sept. 11, 2001, terror attacks, making it unclear how much the insurance companies would have to pay for the losses suffered. In the first round of litigation, a jury before Southern District Judge Michael Mukasey held that under the inchoate terms the parties had agreed to, the attacks constituted one “occurrence.” The terms used in the form governing the insurance policies, known as the WilProp form, covered 13 of the 24 insurers. The verdict put a dent in Silverstein’s attempt to receive $7 billion, or twice the minimum amount he had insured, from all of the insurance carriers. Two other carriers settled their cases. This second trial, also presided over by Judge Mukasey, includes nine insurance carriers excluded from the previous case. The jury will have to determine whether under the insurance forms in place at the time of the attack the insurers will have to cover one or two occurrences. The trial is expected to last several weeks. — New York Law Journal ABA BLASTS FLORIDA BALLOT MEASURE ON FEES MIAMI — The American Bar Association provided fresh ammunition to opponents of the proposed Amendment Three of the Florida Constitution last week with the release of a task force report on lawyers’ contingency fees in medical malpractice litigation. The ABA study concludes that the amendment — which would impose strict new caps on plaintiffs’ attorneys fees in Florida — will “sacrifice justice at the altar of expedience” by “compromising access to justice by medical malpractice victims.” That is the chief argument made by plaintiff lawyers opposed to the amendment. The hotly debated measure on next month’s ballot, sponsored by Citizens for a Fair Share, a group created by the Florida Medical Association, would limit plaintiffs’ attorneys fees in Florida to 30 percent of the first $250,000 in damages and 10 percent of all damages in excess of that, exclusive of “reasonable and customary costs,” in any medical negligence lawsuit. Under current rules, plaintiff lawyer fees in Florida are limited to 40 percent of any recovery up to $1 million, plus 30 percent of any portion between $1 million and $2 million, plus 20 percent of any portion exceeding $2 million. Plaintiff lawyers argue that reduced fees will make it economically impossible for them to take most medical malpractice cases, since they must assume the risk of funding the costly litigation. — Miami Daily Business Review

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