Fees Denied in Citi Case
NEW YORK — A federal judge on August 27 denied a $2 million fee request from the law firm that represented objectors to a $590 million shareholder class action settlement against Citigroup Inc. approved in August.
U.S. District Judge Sidney Stein rejected arguments made by Wolf Haldenstein Adler Freeman & Herz that work for its clients — along with its work as lead counsel in a parallel putative class action brought on behalf of Citi employee shareholders — led to modifications in the terms of the settlement approved by Stein in August.
The judge found that the settlement in the case, which alleged that the bank misstated its subprime-mortgage exposure, was "altered in certain respects that align with the objections submitted by Wolf Haldenstein." However, he determined that its work did not benefit the entire class.
BoA Suit Moves Ahead
NEW YORK — A federal judge has refused to dismiss a government lawsuit accusing Bank of America Corp. of ­fraudulently selling defective mortgages to Fannie Mae and Freddie Mac.
U.S. District Judge Jed Rakoff issued a one-page summary judgment order on August 27 refusing to dismiss the bank giant and its subsidiary Countrywide Financial Corp. from the civil case. The judge stated that he would fully explain his reasoning in a forthcoming opinion.
He left open the possibility of granting partial summary judgment to the banks, however, writing that he expected to tell the parties on the morning of September 23, the first day of trial, which, if any, of the government's theories survive the defendants' summary judgment motions.
Plan Approval Hinted
NEW YORK (AP) — A federal judge signaled on August 29 that he is leaning toward approving American Airlines Inc.'s emergence from bankruptcy protection. He also indicated that he wanted more time to reflect.
U.S. District Judge Sean Lane said that he was "finding the arguments in favor of confirmation fairly persuasive." He could sign off on American's restructuring plan during the next hearing on September 12 or in a written decision before that. The decision would leave one obstacle to American's proposed merger with US Airways Inc. — an antitrust lawsuit filed by the government earlier this month.
That suit filed by the U.S. Department of Justice, six states and the District of Columbia argues that combining American and US Airways would leave four airlines controlling more than 80 percent of U.S. air traffic and drive up prices.
Deal with eBay Rejected
SAN FRANCISCO — A federal judge on August 27 rejected a proposed $4.75 million settlement between eBay Inc. and a class of consumers, pointing to defects in the deal, including a plan to pay some claims by crediting class members' eBay accounts.
U.S. District Judge Jon Tigar focused particular attention on the settlement's default method of payment, which would be to issue eBay account credits to active users, rather than cash payments. The company would reduce credits by any amount users might owe to eBay — a scenario that Tigar questioned. Custom LED LLC, a manufacturer of motorcycle lights, sued eBay in January 2012 for breach of contract, fraud, unfair competition and false advertising with its "Featured Plus!" listing upgrade.
Lawyers for the class contended the upgrade did not place listings at the top of searches across all of the company's sites as promised and worked only for search results that were organized by "best match," not price, time or location.
Moody's Case Tossed
NEW YORK — A federal judge in New York has dismissed an investor lawsuit against Moody's Corp., which alleged that the ratings agency made false statements its independence and objectivity in rating securities.
U.S. District Judge George Daniels on August 23 granted summary judgment to Moody's in the six-year-old lawsuit that claimed it systematically sacrificed its independence and succumbed to conflicts of interest in assigning ratings to structured finance securities.
The judge focused on four loss causation events in 2007 and 2008 and found that the plaintiffs had failed to tie the events to actual drops in Moody's stock price. Plaintiffs filed a putative class action in July 2007 in the Northern District of Illinois that was later consolidated with a separate suit filed in New York.
Disposal Program OK'd
SAN FRANCISCO — Ruling over industry objections, a federal judge is allowing Alameda County, Calif., to move forward with a program that compels pharmaceutical companies to pay for the safe disposal of unused prescription drugs.
Drug companies would likely raise prices to fund the county initiative, forcing consumers nationwide to bankroll a program that only benefits Alameda County residents, lawyers at Jones Day had argued in a motion for summary judgment on behalf of a coalition of trade groups.
In an order that could embolden other municipalities, U.S. District Judge Richard Seeborg sided with the county, finding that the ordinance does not violate the commerce clause of the U.S. Constitution because it does not favor in-state companies over out-of-state companies.
A Hong Kong court on August 23 sentenced a former Hong Kong-based K&L Gates partner to 12 years in prison after he pleaded guilty to fraud and money laundering charges stemming from his use of client funds to pay off mounting gambling debts in Macau.
The court ruled that Navin Kumar Aggarwal, who left the firm in 2012, violated the public trust through his involvement in a massive fraud scheme carried out over the course of four years.
The South China Morning Post reported that the fraud affected 92 potential investors, two clients, and K&L Gates itself. Most of that sum has been repaid, the paper reported, and investors and clients involved suffered actual combined losses of roughly $73.7 million.
Casino Will Pay $47M
LOS ANGELES (AP) — Casino operator Las Vegas Sands Corp. has agreed to pay $47.4 million after failing to flag millions of dollars in money transfers made by a gambler linked to drug trafficking.
In return, the U.S. attorney's office in Los Angeles will not seek an indictment against the casino operator, prosecutors said on August 27. The deal also brings the criminal investigation to a close, but requires Las Vegas Sands to boost its efforts to monitor suspicious financial transactions for the next two years.
No Class Against Sears
A federal judge on August 26 denied certification to a plaintiffs group suing Sears, Roebuck and Co. for California wage-and-hour violations for time spent going through security. U.S. District Judge William Hayes in San Diego ruled that the Sears employees waived their right to sue collectively and had to arbitrate their wage-and-hour claims.
Plaintiffs' counsel had argued that the class action waiver was unconscionable under California case law. But the judge found that because of a 2011 U.S. Supreme Court ruling, AT&T Mobility v. Concepcion, the waiver requiring arbitration was not unconscionable.
Mesh Case Settles
The second federal bellwether trial over transvaginal mesh devices has settled for an undisclosed sum, while manufacturer C.R. Bard Inc. continues to press that the U.S. Food and Drug Administration's approval of its device should be admitted as evidence to jurors.
The settlement was revealed in a filing on August 23 by U.S. District Judge Joseph Goodwin, who is overseeing litigation over transvaginal mesh products in Charleston, W.Va.
A separate federal jury in the first bellwether trial awarded $2 million to a woman who alleged that Bard failed to warn of defects in its product that caused her bleeding and pain.
BP Payments Continue
NEW ORLEANS (AP) — A federal judge has rejected BP PLC's latest request to suspend settlement payments to Gulf Coast residents and businesses while a former FBI director leads an independent investigation of the program, which compensates victims of the company's 2010 oil spill.
U.S. District Judge Carl Barbier's August 28 order said that an internal probe by the claims administrator's office didn't find credible evidence of fraud involving employees of the settlement program's claims center in Mobile, Ala.
BP said it received a tip that someone who worked at the center helped people submit fraudulent claims in exchange for some of the settlement money. Barbier rejected BP's earlier request to suspend payments after appointing a former FBI director to investigate possible misconduct in the settlement program.