DEAL SHIELDS DEWEY LEADER FROM MISMANAGEMENT CLAIMS
NEW YORK — Former Dewey & LeBoeuf chairman Steven Davis has agreed to pay the bankrupt firm’s estate more than $500,000 as part of a broader settlement that is expected to insulate him from most future claims related to his alleged mismanagement of the firm.
Under a deal filed with the bankruptcy court on April 11, Dewey insurer XL Specialty Insurance Co. will contribute $19 million to the estate to help pay off the firm’s creditors.
Although the estate’s advisers have repeatedly blamed Davis, former Dewey chief financial officer Joel Sanders and former executive director Stephen DiCarmine for the firm’s collapse, the settlement ensures that the estate will not sue the three men or any other Dewey leaders for mismanagement.
ART DEALER FAULTED FOR ­’COMMERCIAL INDIFFERENCE’
NEW YORK — A federal judge has ruled that art dealer Joseph Carroll displayed "commercial indifference" when he bought eight works by modernist Stuart Davis from now-disgraced gallery owner Lawrence Salander at "bargain basement" prices when Salander did not actually own the works.
U.S. District Judge J. Paul Oetken granted summary judgment on March 29 to Davis’ son, Earl Davis, in a suit seeking return of the five works Carroll still has and compensation for the three that he has sold.
Earl Davis gave many of his father’s works to Salander O’Reilly Galleries on consignment, with the understanding that Salander would inform him when they were sold and pay him. By 2007, Salander was found to be dealing in fakes and mishandling finances. He was eventually sentenced in 2010 to six to 18 years in prison for fraud.
S&P FAILS IN EFFORT TO DELAY CASE ALLEGING FAULTY RATINGS
SAN FRANCISCO — Standard & Poor’s Financial Services LLC lost a bid on April 22 to delay a suit brought by California’s attorney general, setting the stage for discovery in the state’s claims that it lost $1 billion on triple-A rated investments.
Parent company The McGraw-Hill Cos. Inc. had asked San Francisco County Superior Court Judge Curtis Karnow to stay the action on the ground that an appeal in related litigation could alter the outcome.
Karnow rejected that argument, set a briefing schedule for any demurrer and told the parties to begin discovery. The suit claims that S&P’s ratings led to losses for the California Public Employees’ Retirement System and the California State Teachers’ Retirement System.
CASE PROCEEDS ACCUSING ­TESTING COUNCIL OF BIAS
SAN FRANCISCO — A federal judge gave the green light on April 22 to a lawsuit being pressed by California and federal education officials accusing the Law School Admission Council of discrimination against disabled test takers.
U.S. District Judge Edward Chen classified the suit as a government enforcement action exempt from class-certification requirements under the Federal Rules of Civil Procedure. Forcing the officials to seek formal class certification would interfere with their ability to pursue relief for victims of discrimination, Chen wrote.
"When a government agency pursues classwide relief though a civil enforcement action, it is not prosecuting a ‘class action’ subject to Rule 23," Chen wrote.
REBEL BATTLE FLAG WON’T FLY ON TEXAS LICENSE TAGS
DALLAS — A federal judge has rejected an effort to force the Texas Department of Motor Vehicles board of directors to approve issuance of specialty license plates bearing the Confederate battle flag.
U.S. District Judge Sam Sparks in Austin, Texas, on April 12 issued a take-nothing final judgment in a lawsuit brought by the Sons of Confederate Veterans Inc., which accused board members of violating its members’ First Amendment rights.
Sparks wrote that state car tags are a nonpublic forum and that officials rejected the Texas SCV’s proposed plates because of their content: a flag that "has been coopted by odious groups as a symbol of racism and white supremacy."
JUDGE SHIELDS DETAILS OF CONFIDENTIAL SETTLEMENT
PHILADELPHIA — A confidential settlement between a large-scale window manufacturer and a flat-glass producer is not discoverable by the remaining defendants in multidistrict litigation alleging price-fixing, a federal judge has ruled.
Last year, plaintiff Jeld-Wen Inc. and defendant PPG Industries Inc. settled out of the litigation before U.S. District Senior Judge Donetta Ambrose in Pittsburgh. The remaining defendants asked the court to compel discovery of the agreement’s terms, but Ambrose refused.
She cited public policy encouraging settlements and case law erecting a high standard of proof that material in settlement deals is relevant to a pending case. She said she wasn’t convinced that the defendants had met that standard.
FALSE-CLAIMS COUNSEL MAY COLLECT A CONTINGENT FEE
NEWARK, N.J. — A firm handling a false-claims suit that yielded a $12.6 million settlement may collect fees due via the client’s contingency agreement as well as those payable by statute by the other party, a federal judge has ruled.
"Whether the Federal False Claims Act allows an attorney to receive both statutory fees and a contingency fee is an issue of first impression in this Circuit" but "the Court is convinced that the statute does allow for an attorney to recover both fees," U.S. District Judge Joseph Irenas said on April 22.
The client, cardiologist Nicholas DePace, filed the qui tam suit in 2008, claiming The Cooper Health System prompted doctors to join an advisory board and paid them $18,500 annually to listen to marketing pitches about cardiac care at a hospital it runs. The doctors would refer patients for procedures.
MILITARY MUST REVEAL WHO ATTENDED TRAINING FACILITY
OAKLAND, Calif. (AP) — The federal government must disclose the names of Latin American military leaders who attended a Defense Department school, a federal judge has ruled.
U.S. District Judge Phyllis Hamilton said on April 22 that the Freedom of Information Act "mandates a strong policy in favor of disclosure."
The names were sought by SOA Watch, which has protested at the school in Fort Benning, Ga., formerly the School of the Americas, for more than two decades. The organization claims the United States has trained officials at the facility who later committed human rights abuses.
KAYE SCHOLER FORFEITS $1.5M FEE OVER LACK OF DISCLOSURE
NEW YORK — Kaye Scholer has finalized a settlement with the U.S. Trustee’s Office requiring the firm to forfeit $1.5 million it was paid or expected to be paid for its work on the Chapter 11 case of investment firm GSC Group.
The settlement, announced in U.S. Bankruptcy Court on April 22, resolved claims brought by the trustee’s office in January that accused Kaye Scholer of failing to disclose key details when it applied, and was chosen, to represent GSC as debtor’s counsel in 2010.
The trustee’s office argued that both Kaye Scholer and GSC financial adviser Capstone Advisory Group neglected to disclose that a key employee listed on Capstone’s application was actually a contractor who used a type of fee-sharing agreement barred by the Bankruptcy Code.
REPORTERS’ SHIELD PROTECTS BLOGGERS, TOO, JUDGE RULES
NEWARK, N.J. — A state trial judge has extended the protections of New Jersey’s reporters’ shield law to independent bloggers, even those who crusade against perceived government corruption and mismanagement.
Union County, N.J., Superior Court Judge Karen Cassidy on April 12 quashed a prosecutor’s subpoena of Tina Renna, president of the Union County Watchdog Association, who posts frequently on a website called The County Watchers.
"Under the governing case law, the fact that Ms. Renna’s organization has an official stated purpose of being a citizen watchdog and an advocate for transparency in government, does not preclude this Court from finding that the County Watchers blog does not also have the alternate purpose of disseminating news," Cassidy wrote.