Goldman, Bain Settle
The Goldman Sachs Group Inc. and Bain Capital Partners LLC agreed on June 11 to pay $121 million to settle a long-running antitrust lawsuit alleging that they and other private-equity players conspired to deflate the price of corporate takeovers in the years running up to the financial crisis.
Goldman Sachs agreed to pay $67 million to settle claims against the bank’s private-equity arm, while Bain Capital will pay $54 million. The proposed settlement is subject to approval by U.S. District Judge William Young.
The plaintiffs still have claims pending in Boston federal court against Blackstone Group L.P., Carlyle Group L.P., KKR & Co., Silver Lake Partners L.P. and TPG Capital Management L.P. A motion for class certification is pending before Young, and trial is tentatively set for November.
Heller Clawback Fails
SAN FRANCISCO — A federal judge has ruled the Heller Ehrman bankruptcy estate has no claim to profits earned from client business former partners brought with them to new law firms.
U.S. District Judge Charles Breyer on June 11 sided with firms including Orrick, Herrington & Sutcliffe and Jones Day that fought clawback actions after hiring Heller partners. Breyer expressed concern that the estate’s campaign to recover fees threatened clients’ rights.
“A law firm — and its attorneys — do not own matters on which they perform their legal services,” Breyer wrote. “Their clients do.” Breyer’s order overturns the ruling of U.S. Bankruptcy Judge Dennis Montali, who found that Orrick, Foley & Lardner, Davis Wright Tremaine and Jones Day must pay the Heller estate.
Pfizer Beats Liability
Pfizer Inc. has defeated an asbestos case involving a product made by a now-bankrupt subsidiary after a Maryland judge ruled that an exception to the shield that bankruptcy law provides to defendants doesn’t apply.
Baltimore city Circuit Court Judge John Glynn granted summary judgment against the plaintiff on the ground that Pfizer was not the apparent manufacturer of the asbestos-containing product manufactured and sold by its Quigley Co. Inc. subsidiary.
Glynn acknowledged that corporate documents mentioned both companies’ names on the letterhead, but said those documents were “provided to sophisticated people involved in the industry” and “I do not believe that a reasonable person under all the circumstances provided to me in this case could come to the conclusion from the documents that Pfizer was the manufacturer of the product.”
Therapists Held Liable
NEWARK — Plaintiffs suing gay-to-straight conversion therapy providers under New Jersey’s Consumer Fraud Act can recover not only the cost of the therapy but also the money they spend on additional therapy to undo the harm it allegedly caused, a state judge ruled on June 9.
The suit, filed in 2012, appears to be the first in the United States to assert claims for fraud, deception and unconscionable business practices against those who claim they can cure people of homosexuality. The defendants include JONAH (Jews Offering New Alternatives for Healing).
New Jersey is one of two states that have outlawed the therapy for minors, a ban upheld by a federal judge in November against a First Amendment challenge. The other is California, whose law was likewise upheld by the U.S. Court of Appeals for the Ninth Circuit. A petition for certiorari to the U.S. Supreme Court is pending.
Stigma Is Actionable
ALBANY — A teacher may proceed with his claim that state education staffers sabotaged his efforts to find a new job by alerting prospective employers that he had sexual relations with two former students more than 20 years ago, a federal judge has ruled.
Randy Mudge’s teaching license was suspended for a year and he resigned as a physical education teacher and coach in the Hunter-Tannersville Central School District in Greene County, N.Y., as the result of an investigation by the state Education Department during the 2008-09 school year.
U.S. District Judge David Hurd ruled that Mudge had made plausible claims of procedural due process and stigma-plus violations. A substitute teaching position is not a property interest entitled to due process protections, but a teaching license does merit such protection, he said.
LABOR & EMPLOYMENT
Settlement Is ‘Unfair’
A federal judge has rejected a proposed settlement that gives hundreds of current and former Aeropostale Inc. employees little to no money in return for waiving their rights to sue the clothing retailer for late overtime wages, accusing the attorneys behind the deal of “selling them down the river for nothing.”
U.S. District Judge William Alsup in San Francisco denied preliminary approval of the Fair Labor Standard Act collective-action settlement on May 29, calling it “one of the worst I’ve ever seen” and “so unfair, it cannot be fixed.”
Alsup ordered counsel for the parties to show why the class of about 600 Aeropostale workers shouldn’t be decertified and why the case should not go to trial on Aug. 18 on the named plaintiff Portia Daniel’s claim only. Alsup granted conditional certification for the class in April 2013.
Athletes Getting Paid
SAN FRANCISCO — The National Collegiate Athletic Association has agreed to pay $20 million to current and former student athletes who claim they were depicted in NCAA-licensed video games without their consent.
The association announced the settlement on June 9 as a related case began trial in Oakland federal court. Plaintiffs attorneys and the NCAA are at odds over how the settlement relates to that case, in which the compensation of student athletes also is at issue.
In the pending case, a class of student athletes, led by named plaintiff Edward O’Bannon Jr., seeks a court order blocking the NCAA policy that prevents the association from sharing its licensing revenue with players. U.S. District Chief Judge Claudia Wilken is presiding over the antitrust bench trial.
Caterpillar MDL Set
NEWARK — Lawsuits from around the country claiming Caterpillar Inc.’s engines for trucks, buses and recreation vehicles frequently break down have been centralized in federal court in New Jersey.
The Judicial Panel on Multidistrict Litigation, in consolidating five cases from California, Florida, Louisiana, Pennsylvania and New Jersey on Wednesday, said similar suits that are brewing in Georgia, Minnesota, North Carolina, Utah and Wisconsin might be transferred at a later date.
Caterpillar wanted the venue to be Miami. The plaintiffs supported that choice but also suggested New Jersey, which the panel said it chose because a case already here, BK Trucking Co. v. Caterpillar, is relatively advanced, with discovery underway. The case is assigned to Chief Judge Jerome Simandle, who will also take on the others.
Rothstein Partner Pleas
MIAMI — Stuart Rosenfeldt, Scott Rothstein’s former law partner, pleaded guilty on June 11 to a federal conspiracy charge growing out of Rothstein’s $1.2 billion Ponzi scheme.
U.S. District Judge Marcia Cooke in Miami allowed him to remain free on bond and set sentencing for Sept. 24. Rosenfeldt was the only other equity partner at Rothstein’s law firm, Rothstein Rosenfeldt Adler, a 70-attorney labor and employment firm based in Fort Lauderdale.
Rosenfeldt is the eighth attorney overall to face charges following Rothstein’s downfall. Partner Russell Adler is awaiting sentencing for making illegal campaign contributions.
Aside from Rothstein’s 50-year term, sentences for other attorneys have ranged from two to five years.
Congregation Backs Out
NEW YORK — A religious corporation can change its mind about moving forward with a contract to sell real property if the sale would not promote the corporation’s purpose or the interests of its members, a state trial judge has ruled.
New York County, N.Y., Supreme Court Justice Lawrence Marks on May 28 dismissed a complaint brought against a synagogue after it agreed in writing to sell its premises for nearly $4 million, then terminated the contract when its membership opposed the transaction.
“Ironically, the internal conflict regarding the possible sale of the Shul has energized the congregation,” Rabbi David Redisch of Congregation Ahavath Chesed submitted in an affidavit to the court. “The proposed sale of the Shul has led to an invigorated constituency, therefore, the membership is against the support of the sale.”