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California keeps catalyst fees, spurns federal lead Rejecting federal precedent, the California Supreme Court last week clarified, but refused to abolish, so-called catalyst fees in the state. The sharply divided 4-3 votes in two companion cases affirmed that such fees -awarded to parties whose suits result in changes beneficial to the public-are permissible in private attorney general actions, but only as long as they are based on meritorious complaints and there has been a “reasonable attempt” to settle. “What is objectionable about elimination of the catalyst theory is . . . that attorneys will be deterred from accepting public interest litigation,” wrote Justice Carlos Moreno. Tipton-Whittingham v. Los Angeles, No. 04 C.D.O.S. 10570. 11th Circuit dismisses suit against car insurers A suit seeking to represent 70 million car owners against the nation’s insurance industry quietly disappeared in the hands of the 11th U.S. Circuit Court of Appeals. The suit alleged that the companies conspired to provide policyholders with inferior repair parts that would not restore cars to their precrash condition. A 17-page decision by Senior Judge James C. Hill that dismissed the action sidestepped a debate over class certification and held that the case fell within a 1945 federal law that banned antitrust cases concerning the “business of insurance.” Gilchrist v. State Farm, No. 03-10799. Businesses win end to multiple apartheid suits A federal judge has dismissed a series of cases in which plaintiffs sought to recover billions of dollars from a host of companies that did business with the regime in South Africa during the days of apartheid. Judge John E. Sprizzo of New York found that there was no jurisdiction to entertain the cases because there had been no showing that the companies violated international law. The cases were brought under the Alien Tort Claims Act against companies including IBM and CitiGroup Inc. Sprizzo said the plaintiffs, victims of apartheid who sought more than $400 billion in damages through eight cases, had shown “little that would lead this Court to conclude that aiding and abetting international law violations is itself an international law violation that is universally accepted as a legal obligation.” Law school funding ban tossed by 3d Circuit In a major victory for gay rights advocates, the 3d U.S. Circuit Court of Appeals has ruled that Congress cannot force law schools to allow U.S. armed forces recruiters on campus-by threatening to cut off all federal funding-since the military’s policy of excluding gays and lesbians conflicts with the anti-discrimination policies enforced by most law schools. The ruling in Forum for Academic and Inst. Rights v. Rumsfeld is the first federal appellate decision to address the constitutionality of the Solomon Amendment, a 1994 law that requires universities to provide access to military recruiters on campus or forfeit federal funding. By a 2-1 vote, the 3d Circuit found that the forum-a coalition of law schools and law professors-is likely to succeed in its claim that the Solomon Amendment violates the law schools’ First Amendment rights by compelling them to engage in speech they disagree with. Judge rejects challenge to Sarbanes-Oxley A federal judge in Birmingham, Ala., has rejected a challenge by fired HealthSouth Corp. Chief Executive Officer Richard Scrushy to the Sarbanes-Oxley Act. In the first court test of Sarbanes-Oxley-which requires top executives of public corporations to vouch for the financial reports of their companies-U.S. District Judge Karon O. Bowdre disagreed with Scrushy’s argument that the act is unconstitutionally vague and should not be part of the indictment accusing him of a massive fraud at HealthSouth. Alice Martin, the U.S. attorney for the Northern District of Alabama, said prosecutors were pleased with the decision but declined further comment. Scrushy’s spokesman, Charlie Russell, said the defense wasn’t surprised by Bowdre’s decision, which, he said, will not be appealed. Scrushy last year became the first CEO charged under Sarbanes-Oxley. Free on $10 million bond, Scrushy is accused of heading a scheme to overstate HealthSouth earnings by some $2.7 billion.

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