Class Action Defense Cases—In re SemGroup Energy: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In Northern District of Oklahoma

MJH@jmbm.com (Michael J. Hassen) — Fri, 21 Nov 2008 13:16:00 GMT

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Common Class Action Defendants or by Plaintiffs in New York Class Action, and Transfers Class Actions to Northern District...

Two class actions – one in Oklahoma and one in New York – were filed against SemGroup Energy Partners alleging violations of federal securities laws; specifically, the class action complaints alleged that defendants “made materially false and misleading statements which artificially inflated the price of SGLP common stock in violation of the federal securities laws” In re SemGroup Energy Partners, L.P., Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. October 10, 2008) [Slip Opn., at 1]. Plaintiffs in the Oklahoma class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Northern District of Oklahoma; plaintiffs in the New York class action supported the motion but argued alternatively for transfer of the class actions to the Southern District of New York. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed that the Northern District of Oklahoma was the appropriate transferee court, particularly as it was supported by all parties and because “SGLP, its general partner and affiliated individual defendants are located in Tulsa, Oklahoma, and parties, witnesses and documents may be found there.” Id., at 1-2. Accordingly, the Panel centralized the class actions in Oklahoma, id., at 2.

Download PDF file of In re SemGroup Energy Partners, L.P., Securities Litigation Transfer Order

New Louisiana Regulation Creates Safe Harbor For Certain Equity-Based Compensatory Plans of Privately-Held Companies

alan.berteau@keanmiller.com (Alan J. Berteau) — Fri, 21 Nov 2008 13:02:51 GMT

by Dean P. Cazenave

Offers and sales of “securities” must be registered unless there is an applicable exemption from the federal and state securities laws. The most commonly known exemption is the private placement exemption set forth in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933 (and corresponding private placement exemptions under applicable state “blue sky” laws).

Regulation D was primarily designed to facilitate capital raising transactions, as opposed to employee stock option or stock purchase plans. Many people are unaware that when an employer (or controlling Shareholder) sells stock to an employee (even at a discount, or even if to an executive), such a sale is subject to the securities laws and applicable federal and state exemptions from registration must be found.

Federal Rule 701

In 1988, the SEC adopted Rule 701 which exempts from registration securities issued pursuant to a written compensatory employee benefit plan or written contract by a nonreporting (i.e., privately held) company. An employee benefit plan includes any purchase, savings, option, bonus, stock appreciation, profit sharing, thrift, incentive, pension, or similar plan. The participants in the plan (or party to the contract) must be employees, directors, general partners, trustees (if a business trust), officers, consultants, or advisers.

The plan or the contract setting forth the arrangement must be in writing and a copy must be given to the employees. The exemption is available only to the securities offered or sold by the issuer, which means the employee must find another exemption for their resale.

Rule 701 contains a limitation on aggregate sales price or amount sold in any consecutive 12-month period based upon the greatest of $1 million, 15 percent of the company’s assets, and 15 percent of the outstanding securities of the class.

Rule 701 also contains a disclosure requirement. The disclosure requirements apply only if the aggregate sales price or amount of securities sold during any consecutive 12-month period exceed $5 million. Subject to that qualification, an issuer relying upon Rule 701 is required to provide to investors, a reasonable period of time prior to sale, (1) a copy of the plan or contract; (3) a copy of the summary plan description required by ERISA or, if the plan is not subject to ERISA, a summary of the material terms of the plans; (3) information concerning risks associated with the securities sold; and (4) financial statements required by Part F/S of Form 1-A as of a date no more than 180 days prior to sale. Providing financial statements would be difficult for some issuers since, even though the statements do not have to be audited unless the issuer otherwise has audited statements available, they must be prepared in accordance with GAAP. It should err on the side of caution and make the required disclosures if there is a possibility that sales will exceed the $5 million limitation.

State Law

Until recently, Louisiana did not exempt sales of stock by employers to employees unless the sale was effected pursuant to a special type of stock option plan or pursuant to a stock purchase plan qualified under the Internal Revenue Code of 1986 (as amended), as Louisiana did not automatically exempt all types of transactions exempt under Federal Rule 701. Thus, unless one of the narrow Louisiana exemptions applied, privately held companies which desired to sell stock to Louisiana employees were forced to try to find another exemption, absent which they were forced to either (a) register the transactions with the Louisiana Commissioner of Securities, or (b) as was more likely the case, simply not proceed with the proposed sale to employees. However, the Louisiana Office of Financial Institutions recently promulgated a rule which provides that any transaction exempt under Federal Rule 701 is now exempt under Louisiana law. Louisiana Administrative Code, Title 10, Part XIII, § 801. A copy of the Rule can be found at www.ofi.louisiana.gov. The promulgation of this new rule has the effect of broadening the exemptions available to privately held companies which desire to sell stock to Louisiana employees.

For example, the sale of stock pursuant to a stock purchase plan (regardless of whether qualified under the Internal Revenue Code) or other written compensatory agreement which meets the requirement of Federal Rule 701 will now be exempt under Louisiana law. In addition, although Louisiana law has long exempted the issuance of stock options (and the exercise of such options) if issued pursuant to a plan which limited participation to employees only, Louisiana law did not exempt stock plans if the plan allowed for the issuance of options to non-employees (e.g., non-employee directors). Federal Rule 701 contains no such limitation with respect to option plans which authorize the issuance of options to non-employees and thus the new Rule seems to provide more flexibility for stock option plans as well.

Privately held companies which desire to sell stock or other equity ownership to one or more Louisiana employees should consider the securities laws implications of doing so before effecting any offers or sales.

Summary Judgment In Benzene Case: Failure To Prove Dose

sean.wajert@dechert.com (Sean Wajert) — Fri, 21 Nov 2008 10:04:29 GMT

A federal court has granted summary judgment in a toxic tort suit in which plaintiff alleged he contracted a bone disease because of his long-term exposure to trace amounts of benzene in oil-based paint. Smolowitz v. The Sherwin-Williams Co., 2008 WL 4862981 (E.D.N.Y. Nov. 10, 2008). Plaintiff failed to offer sufficient evidence under New York law of exposure level.

In order to prevail in a toxic tort case, plaintiffs must present sufficient evidence to support a finding that defendants' products caused plaintiffs' injuries. Proof of causation requires establishing both “general” causation and “specific” causation. General causation bears on whether the type of injury at issue can be caused or exacerbated by the defendant's product. Specific causation bears on whether, in the particular instance, the injury actually was caused or exacerbated by the defendant's product. The fundamental principle of toxicology is that the dose makes the poison: substances that are benign or even beneficial at a certain level can be toxic at another. Even when general causation is clear, a plaintiff must show that he or she was exposed to a sufficient dose of the substance to have caused the disease. Under New York law, plaintiffs must establish both general and specific causation through expert testimony

Plaintiff Richard Smolowitz worked as a drywall taper and spackler over a thirty year period beginning in the 1950s and ending in the early 1980s. Plaintiff alleges that his exposure to benzene in paints caused him to contract myelodysplastic syndrome (“MDS”). A central factual issue in this case, said the court, was the level of exposure to which plaintiff was subject, and whether that level of exposure can cause MDS. First, plaintiff was not a painter, but alleged he worked in areas where paint products were regularly used. Second, the solvents used in defendants' oil based paints contained only a trace contamination of benzene due to the fact that the products are based on petroleum, and it is not always possible to remove all of the benzene during the manufacturing process.

In early motion practice, plaintiff's counsel represented that he would provide the testimony of expert witnesses who could prove that plaintiff was exposed to oil based paints with sufficient levels of benzene to cause his illness. Eventually, he relied on the opinions of plaintiff's treating physician, Dr. Silverman, to provide expert testimony on issues of general and specific causation. The doctor reported he was currently treating plaintiff for MDS; that Smolowitz reported a history of exposure to oil based paints, thinners and benzene during a 35-year period; and that in his opinion it was “likely to a reasonable medical probability, that Mr. Smolowitz's exposure to benzene during the years that he worked as a dry-wall mechanic is causative for his current hematologic condition.”

The court concluded that Dr. Silverman's testimony was inadequate to prove either general or specific causation. The conclusory statement that based upon plaintiff's reported history it was likely to a reasonable medical probability that Mr. Smolowitz's exposure to benzene during the years that he worked as a dry-wall mechanic is causative for his current hematologic condition, had substantial deficiencies. First, there was nothing in this statement that suggests that Dr. Silverman was aware of or had quantified the precise amount of benzene to which plaintiff was exposed. No proof of dose. Second, Dr. Silverman did not offer any opinion as to whether that limited level of benzene exposure, whatever it was, can cause the disease. In the absence of sufficient evidence from an expert or a treating physician of the plaintiff's exposure level, plaintiff could not prove the essential causation element of the claim.

No Longer Good Law

the10bdaily@hotmail.com (Lyle Roberts) — Fri, 21 Nov 2008 03:28:54 GMT

As discussed in The 10b-5 Daily before, whether the Tellabs decision on pleading scienter (i.e., fraudulent intent) can best be described as a victory for plaintiffs or defendants has to be evaluated on a circuit-by-circuit basis. In the U.S. Court...

Massachusetts Top Securities Regulator Charges Oppenheimer & Co with Unethical Conduct and Fraud

info@stockbroker-fraud.com (Shepherd Smith & Edwards LLP) — Fri, 21 Nov 2008 01:03:29 GMT

Massachusetts Secretary of State William Galvin is charging Oppenheimer & Co. with unethical conduct and fraud. The state’s top securities regulator is accusing the investment bank of continuing to market and sell auction rate securities to clients even as Oppenheimer...

Galvin says that Oppenheimer Chairman and Chief Executive Albert Lowenthal and other firm executives kept clients and other firm employees “in the dark” about the collapsing ARS market. His office is seeking to revoke Lowenthal’s broker-dealer registration in Massachusetts because he says that the CEO and other Oppenheimer executives “betrayed” their clients’ trust. This is the first time that a state regulator has charged one of the smaller brokers for its alleged involvement in the sale of auction-rate securities while the market was failing.

Galvin says that Oppenheimer clients in Massachusetts are unable to access some $56 million because their ARS investments have been frozen since February. Also named in Galvin’s complaint are ARS Managing Director Greg White and Senior Managing Director Robert Lowenthal.

Oppenheimer and its firm executives are denying Galvin’s allegations. On Tuesday, the investment bank issued a statement claiming that its employees had no knowledge of the kinds of actions that their larger firm counterparts engaged in which contributed to the ARS market collapse. The investment bank also maintains that its executives personally bought and sold ARS during the period noted in Galvin's complaint, and they continue to hold a number of these securities.

Oppenheimer says it is working with financing sources and regulators to help investors cash out of their ARS.

Related Web Resources:

Massachusetts sues Oppenheimer & Co over ARS sales, Reuters, November 18, 2008

Galvin blasts Oppenheimer & Co. over auction-rate securities, Boston Herald, November 18, 2008

Related Web Resources:

Read the Complaint (PDF)

View the Exhibits (PDF)

Oppenheimer & Co.

Our stockbroker fraud lawyers are working with many investors with frozen auction-rate securities to recover their investments. Contact Shepherd Smith Edwards and Kantas LLP today.

Petition PE1197

iain@absolvitor.com (Iain Nisbet) — Thu, 20 Nov 2008 23:50:05 GMT

Petition by Bill Alexander calling on the Scottish Parliament to urge the Scottish Government to reform the legal system to adopt the Scandinavian system of allowing unrestricted access to legal representation before the court for example by allowing non-lawyers to appear in court on behalf of other parties.

Auto Help on the Way?

Ron@OhioLemonLaw.com (Ron Burdge) — Thu, 20 Nov 2008 20:44:53 GMT

Corporate "suits" from the Detroit Big 3 showed up in Washington DC to testify before the US Congress on November 19 on why they needed to be part of the government's latest handout --- er, bailout --- program. It didn't help that they each flew there in their own private jet, folks.

In spite of the hostile treatment, apparently there's been a back-room deal cut for billions in US aid to head to Detroit's coffers soon. None of the details have been released but they should be leaking out soon.

Surprisingly, during the hearing the Big 3 repeatedly called the bailout a "bridge loan" but no one called it a bridge to nowhere, which many have argued it will be. We don't think so. Detroit needs the money, sure, but just paying last month's bills without changing the way the bills are generated isn't going to help the industry.

Meantime, there's no automatic relief here. Congress still has to pass a bill thru both houses and that won't be easy. Then the President has to sign off on it and that, too, won't be easy. It could easily take another month or two before it's done, and that is if it gets done at all.

So, don't count your dollar bills just yet, Detroit. There's still a lot of bricks to make before that bridge gets built, no matter where it's going.

Meanwhile, if you've got a lemon car or truck, you may want to try to settle up and get your money sooner rather than later --- just in case the bailout bails out and your lemon's manufacturer goes bust.

Burdge Law Office

www.BurdgeLaw.com

Helping Consumers Get Even Since 1978.

Deutsche Bank Cutting Investment Banking Jobs

Thu, 20 Nov 2008 20:09:08 GMT

The loss of jobs in investment banking and brokerage is truly a worldwide phenomenon. Duetsche Bank announced that it is cutting 900 jobs in its investment banking operations in New York and London. According to James Wilson reporting on FT.com today, these cuts are the deepest yet by Germany’s largest bank. The move amounts to a reduction of about 12% of Deutsche Bank’s 7000-person investment banking team.

Deutsche Bank is also cutting jobs in credit origination, bond underwriting, and proprietary trading. The bank is not accepting any capital or liquidity guarantees from Germany’s government-backed financial sector stabilization fund.

This latest news on the job front demonstrates that employees of overseas financial firms are certainly not immune to the ongoing heavy job cuts that American-based firms such as Citigroup are experiencing.

Recalls of the Week

Thu, 20 Nov 2008 18:47:47 GMT

Over the past week there have been several significant recalls. Let's jump right on into it. 1. Topical Acne Cream: A voluntary recall has been issued for all 1 ounce tubes of 10% Benzoyl Peroxide Acne Cream sold under the...

Over the past week there have been several significant recalls. Let's jump right on into it.

1. Topical Acne Cream: A voluntary recall has been issued for all 1 ounce tubes of 10% Benzoyl Peroxide Acne Cream sold under the following names: DG Maximum Strength Acne Medicated Gel (sold at Dollar General), Kroger Acne Gel 10% Benzoyl Peroxide Acne Medication (sold at Kroger) and Equate: Medicated Acne Gel (sold at Wal-Mart). It is being recalled because some samples of the product have been found to have a bacteria growing in them. Although the manufacturer CSI USA, Inc. has concluded the risk of illness is low, there is an increased risk of infections for individuals with cuts, scrapes or other compromised skin conditions or those with weakened immune systems. Obviously, those using this cream for acne would have a "compromised skin condition." You should stop using the product immediately and you can get a full refund by mailing the tube or proof of purchase to CSI USA, Inc, 170 Commerce Way, Gallatin, TN 37066, Attn: ACNE CREAM RECALL. For more information, see here.

2. GE Profile Monogram and Kenmore Wall Ovens: GE is recalling about 244,000 GE Profile Monogram and Kenmore Wall Ovens because extreme heat can escape during the self-clean cycle if the wall oven door is removed and incorrectly re-attached by the consumer or installer. This can create a fire and burn hazard to consumers. The wall ovens were sold in white, black, bisque and stainless steel. The affected ovens were sold to homebuilders between October 2002 and December 2004 for between $900 and $3600. For information regarding the models involved in this recall and photos of the ovens, see here. There is a test you can do to see if the oven door is attached properly which is shown at this site. If the door is incorrectly attached, do not use the self-clean feature and GE for a free repair. You can continue to use the normal baking and broiling function (i.e. no problem for cooking that Thanksgiving turkey...whew.) Consumer Reports addressed this recall here.

3. Mylicon Gas Relief Dye Free Drops: Although it has been awhile since I had a small child, I can still remember being told that my younger son suffered from "colic" i.e. he was always miserable and we really don't know why. In fact, my wife swears that when she discussed the issue with our then pediatrician after my son was one month old, the pediatrician told her "to put him in a closet till he's 4 months old and then take him out and he will be fine." Great solution. One thing we did use on a regular basis to try and help the situation was Mylicon drops. Well just last week a voluntary recall of about 12,000 units of Mylicon Gas Relief Dye Free drops sold in 1 oz. plastic bottles distributed after October 5th of this year was issued. Some bottles could have metal fragments in them generated during the producing of the drops. If you have given this drops to your infant and are concerned, you are instructed to take your child to your health care provider immediately. To see a description of the specific lots involved in this recall, see the FDA's website and Consumer Reports discussion of this recall. If you have one of the recalled bottles, you should immediately stop using them and call the company at 1-800-222-9435 or see their website at www.mylicon.com regarding how to dispose of the product and get replacement or refund. As an aside, if your child has been given Mylicon out of one of these bottles, I would take him to see your doctor and DO NOT dispose of the bottle until you confirm nothing is wrong with the child as a result. Should a problem have occurred as a result of having one of these bottles, you will need to keep the bottle and the medicine in it as potential evidence. In fact, it is your best evidence and should not be discarded and even given to the manufacturer. If you need some advice on this issue, feel free to contact me using the contact form or calling me. Please note the recall DOES NOT include Original Mylicon Gas Relief or the Mylicon Gas Relief Dye Free 1/2 oz. size.

4. Roman Blinds sold at IKEA: Just today a recall has been announced for IRIS and ALVINE Roman Blinds sold at IKEA Home Furnishings. Approximately 670,000 of these blinds have been sold. Back in April of this year, a 1 year old girl became entangled in the inner cord and strangled. (Question: Why did it take over 6 months to announce the recall???) The recall includes all sizes of these blinds and they are white. At the top edge of the blind, there is a sewn in label with the IKEA logo, and a 5 digit number, either 19799 or 21369. These blinds were sold from July 2005 though June 2008. You should immediately stop using these blinds and return them to IKEA for a full refund. For more information see the CPSC's website or IKEA's website.

That's it for this week of recalls. Be careful out there. And if you need any help or advice regarding an injury due to a product, please contact me.

Today's Incredibly Weak Car Bumpers

Thu, 20 Nov 2008 18:20:05 GMT

Car bumpers in most new cars are incredibly weak. The Insurance Institute of America testers bumpers of 17 cars by crashing them into a barrier at a mere 6 mph resulting in an average cost to repair of $4,500! Luxury cars were the worst offenders; an Infiniti G35 had more than $5,200 in front end damage. According to SmartMoney magazine, some car manufacturers cram electronics right behind he bumpers increasing the risk of damage.

Today's bumpers are plastic lined with energy-absorbing foam and metal. The bumpers are aligned to the car's body for the sake of appearance and to be more aerodynamic to save fuel.

In the 1980s, the federal bumper standards were lowered with test speeds dropping to 2.5 mph from 5 mph and bumpers were allowed to sustain damage so long as headlights and other safety related components were protected.

Insurance companies say 3/4 of all collision repairs involve the bumpers. The tab in 2006 for minor collision repair approached $1 billion.

Paul Karlsgodt

pkarlsgodt@bakerlaw.com (Paul Karlsgodt) — Thu, 20 Nov 2008 18:11:23 GMT

The October 2008 issue of the Federalist Society’s Class Action Watch is now available for free download at the organization’s website (see link to the March 2008 issue here). This installment includes articles on punitive damage limits, medical monitoring, the selection of lead counsel in securities class actions, product-based public nuisance cases, the impact of conflicts of state law on [...]

Thanks to Ted Frank at Overlawyered for the tip.

The Overstock.com train wreck continues

info@sequence-inc.com (Tracy Coenen) — Thu, 20 Nov 2008 18:03:45 GMT

For almost two years, Sam Antar (convicted felon and former CFO of Crazy Eddie) has been writing about Overstock.com (NASDAQ:OSTK) and his questions about their financial reporting and disclosures. I became interested in the company’s financial statements and SEC filings a few months later and began blogging about Overstock and nutty CEO Patrick Byrne as [...]

Recalls of the Week

Thu, 20 Nov 2008 16:20:15 GMT

Over the past week there have been several significant recalls. Let's jump right on into it.

That's it for this week of recalls. Be careful out there. And if you need any help or advice regarding an injury due to a product, please contact me.

Sprint Class Action Defense Cases–Harlow v. Sprint: Kansas Federal Court Denies Motion To Dismiss Class Action Holding Kansas Wage Payment Act Class Action Claim May Be Brought By Employees Who Neither Live Nor Work In Kansas

MJH@jmbm.com (Michael J. Hassen) — Thu, 20 Nov 2008 12:30:53 GMT

Class Action Alleging Violations of Kansas Wage Payment Act may be Brought by Plaintiffs who do not Live or Work in Kansas because State Law Contains no Express Geographical Limitation and Employment Agreement Expressly Contained Kansas Choice of Law...

Plaintiffs filed a class action against their employer, Sprint Nextel and Sprint/United Management (collectively “Sprint”) alleging violations of federal securities law; specifically, the class action claimed that “Sprint failed to pay [plaintiffs] proper commissions.” Harlow v. Sprint Nextel Corp., 574 F.Supp.2d 1224, 1225 (D. Kan. 2008). According to the class action, plaintiffs were to be paid according to a “Business Incentive Compensation Plan that governed commissions they would receive based on sales of various products and services”; however, due to computer problems plaintiffs were not paid the proper amount of commissions. Id. None of the plaintiffs lived or worked in Kansas, id., at 1226, but the class action was filed in Kansas because the Plan provides that Kansas law governs the employment agreement and that any disputes under the Plan must be brought in Kansas, id., at 1225. The class action complaint alleged violations of Kansas’s Wage Payment Act, and sought relief also under theories of breach of contract, quantum meruit, promissory estoppels, and unjust enrichment. Id., at 1225. Defense attorneys filed a motion to dismiss the class action, which the district court treated as a motion for judgment on the pleadings because Sprint had already filed an answer to the class action complaint. Id. At the time the district court ruled on the motion, the only issue that remained open for resolution was the viability of the Wage Payment Act claim, id. The district court denied the motion as to that claim, holding that it could not determine as a matter of law that the Kansas Wage Payment Act could not be brought by employees who neither lived nor worked in the state.

After discussing the applicable standard of review, see Harlow, at 1225-26, the district court turned to Sprint’s argument that “the named Plaintiffs cannot seek protection under the Kansas Wage Payment Act (KWPA) because none of them live or work in Kansas,” id., at 1226. The district concluded that the Seventh Circuit opinion relied upon by the defense – Glass v. Kemper Corp., 133 F.3d 999 (7th Cir. 1998), which held that “the Illinois Wage Payment and Collection Act does not apply to employees outside of Illinois” – was distinguishable from the class action before it because (1) the Illinois Wage Payment Act expressly limits its reach to “employers and employees in this state,” and (2) the employment agreement in Glass did not include a choice of law provision, whereas the Sprint employment agreement expressly provided that “Kansas law governs the Plan.” Id. Defense attorneys argued that the choice of law provision in the Plan could not give “extraterritorial effect” to Kansas’s Wage Payment Act, id. In the absence of Tenth Circuit authority on the subject, the district court adopted the reasoning of the Ninth Circuit, which held that “where a state law includes no express geographical limitation, courts may apply it to a contract that, because of a choice of law provision, falls under that state's law,” but that “[if] the state law contains limits on its geographical scope, ‘courts will not apply it to parties falling outside those limitations, even if the parties stipulate that the law should apply.’” Id. (quoting Gravquick A/S v. Trimble Navigation Int'l Ltd., 323 F.3d 1219, 1223 (9th Cir. 2003)). Following Ninth Circuit authority, then, the federal court concluded that the Kansas Wage Payment Act could be applied “with no geographical restriction” because of the Plan’s choice of la provision. Id., at 1226-27. The district court held, further, that the Kansas Wage Payment Act “is not limited to employees who live and work in Kansas, and the choice of law provision contained in the Plan allows Plaintiffs to seek relief under Kansas law, including the KWPA.” Id., at 1227. Accordingly, it denied the motion to dismiss.

Download PDF file of Harlow v. Sprint

Pushy Car Salesman: A Myth?

Thu, 20 Nov 2008 12:14:49 GMT

Pushy Car Salesman: A Myth? Wards online is a site that I follow on a regular basis. It is an auto industry site and it concentrates on the problems and issues of the auto industry. There are great articles and...

Pushy Car Salesman: A Myth?

Wards online is a site that I follow on a regular basis. It is an auto industry site and it concentrates on the problems and issues of the auto industry. There are great articles and gives an terrific insight as to what is going on in the industry, such as the possible merger of GM and Chrysler.

But there was a "study" that was done and it reported that respondents to the survey report that they were not oversold. Is this your experience? Do you think this survey is credible?

If this was really true why would they do a study to prove it?

Carton and Rudnick family law
Carton and Rudnick consumer law
Carton and Rudnick

Modified Rice MDL Court Proposes Settlement Master

sean.wajert@dechert.com (Sean Wajert) — Thu, 20 Nov 2008 10:47:04 GMT

The federal judge overseeing the MDL involving claims over allegedly mishandled genetically modified rice has appointed a special master to assist with settlement talks. In re Genetically Modified Rice Litigation, MDL No.1811.

The order comes as the parties prepare for the process of selecting the bellwether trials currently slated to begin in November, 2009. The parties are to select plaintiff claims from each of 5 affected states for the initial trial pool. The bellwether trial plan approach follows the court's denial of class certification.

The bulk of plaintiffs are long grain rice producers who allege that defendants developed and tested a genetically modified strain of rice that contaminated the U.S. commercial rice supply. When rice importers banned the importation of U.S. rice, prices dropped and plaintiffs sued. Defendants have argued that such damages are too legally remote and speculative to be recovered.

The court noted that it “is important that the parties continue to explore settlement while preparing the cases for trial or remand to the transferor districts.” Because the MDL court did not have time to address settlement in as an effective and timely manner as is needed, the court proposed appointment of Hon. Steven N. Limbaugh, Sr., who has recently retired from the bench, and is available and willing to serve as a settlement special master for this case.

The court is giving the parties notice and an opportunity to be heard, and the opportunity to suggest alternative candidates for appointment. If no party files objections by Nov. 20, any objections will be waived, and the court will enter an order appointing him as Special Master.

Paul Karlsgodt

pkarlsgodt@bakerlaw.com (Paul Karlsgodt) — Thu, 20 Nov 2008 06:59:37 GMT

Class Action Blawgosphere Review “Lay Down the Gauntlet” Challenge of the Week In Monday’s ClassActionBlawg entry, I commented about the possibility of “nested” class actions, or class actions seeking damages for breach of fiduciary duty for failing to make a claim in another securities class action. Bruce Carton of Securities Docket was quick to point out in response that not only was I [...]

Class Action Blawgosphere Review “Lay Down the Gauntlet” Challenge of the Week

In Monday’s ClassActionBlawg entry, I commented about the possibility of “nested” class actions, or class actions seeking damages for breach of fiduciary duty for failing to make a claim in another securities class action. Bruce Carton of Securities Docket was quick to point out in response that not only was I not the first comment about the possibility of the phenomenon, but that it had actually already happened, and that he came up with a name for it three years ago: “litigation about litigation.”

I might argue that “nested class actions” are really just a more specific subcategory of “litigation about litigation” but that wouldn’t be any fun. Instead, the challenge this week is for you, the reader, to decide which term is going to be the VHS of class action scholarship and which is going to be Betamax (for those of you under 30, think HD-DVD versus Blu-Ray). Of course, this probably means that you’ll pick something different altogether. Maybe just: Malkovich, Malkovich, Malkovich, Malkovich… Please feel free to post other suggestions in the comments below.

With that out of the way, here are some blog posts from the week that was that might be of interest to class action practitioners:

Class Action Decisions

CAFA Law Blog summarizes the latest in federal removal decisions discussing the $5 million amount-in-controversy standard under the Class Action Fairness Act (CAFA):

http://www.cafalawblog.com/-case-summaries-plaintiff-sues-whirlpool-over-washing-machines-whirlpool-gives-cafa-removal-a-spin-court-says-plaintiffs-motion-to-remand-is-all-washed-up.html

Class Action Defense Blog offers a summary of a decision addressing whether an offer of judgment to the named plaintiff under Rule 68, Federal Rules of Civil Procedure, can moot claims brought on behalf of a putative class:

http://classactiondefense.jmbm.com/2008/11/class_action_defense_casesstew.html

The VLW Blog reports on a Virginia court’s decision not to certify a would-be class of purchasers of Virginia lottery scratch tickets who allegedly had no chance of winning the grand prize:

http://www.valawyersweekly.com/vlwblog/2008/11/18/class-denied-for-lottery-lawsuit/

Class Action News

The UCL Practitioner offers a scoop on a forthcoming California Supreme Court decision in case involving the efforts that a plaintiff must take to settle a case short of litigation before being entitled to attorneys’ fees under a state fee-shifting provision.

http://www.uclpractitioner.com/2008/11/breaking-news-supreme-court-to-hand-down-vasquez-attorneys-fees-decision-tomorrow.html

According to these reports from the AmLaw Daily and Corporate Legal Times, class action defense firm Sonnenschein Nath & Rosenthal scored a pro bono victory on the plaintiffs’ side, representing a class of developmentally disabled residents of state-owned assisted living facilities against the state of Illinois.

http://amlawdaily.typepad.com/amlawdaily/2008/11/sonnenschein-se.html

http://www.cltmag.com/sonnenschein-secures-pro-bono-class-action-victory-for-disabled-clients.html

NewsBusters follows up on a story covered by countless blogs last week (see last week’s CABWR) about a class action filed against a well-known lingerer retailer alleging that its bras contained formaldehyde, causing skin rashes:

http://newsbusters.org/blogs/jeff-poor/2008/11/17/good-morning-america-attacks-victorias-secret-faulty-bra-lawsuit

PartTimePoker discusses a class action filed by a group of poker players challenging the constitutionality of a law prohibiting online gambling:

http://news.parttimepoker.com/2008/11/14/uigea-update-legal-challeneges-class-action-suits-and-interesting-interreptations/

North Carolina Business Litigation Report provides an update on a class action seeking to enjoin a high-profile bank merger:

http://www.ncbusinesslitigationreport.com/2008/11/articles/class-actions/wachovia-shoots-back-says-its-board-of-directors-fulfilled-its-fiduciary-duties-in-negotiating-merger-with-wells-fargo/

Class Action Trends

The D&O Diary discusses trends in securities class actions involving claims of “credential inflation” by corporate executives:

http://www.dandodiary.com/2008/11/articles/securities-litigation/credential-inflation-portrayals-proceedings-and-prose/

Tech Law Prof Blog and The Consumerist discuss a case reflecting a possible trend in class actions involving marketing practices of social networking Internet sites:

http://lawprofessors.typepad.com/tech_law_prof/2008/11/classmatecom-ma.html

http://consumerist.com/5085516/classmatescom-sued-because-classmates-werent-really-looking-for-him

Law and More examines the possibility of a class action suit on behalf of overparented children for causing shrunken nervous systems:

http://lawandmore.typepad.com/law_and_more/2008/11/you-shrunk-our-nervous-systems—class-action-suit-by-overparented-children.html

Gabe’s Guide to the e-Discovery Universe summarizes imminent trends in e-Discovery in class actions and other complex litigation to be spawned from the financial crisis.

http://gabesguide.com/?p=1437

Spam Notes covers class action trends in spam, social media, text messaging, and other technology, including this entry:

http://spamnotes.com/2008/11/12/text-message-price-fixing-class-action-filed-against-tmobile-sprint-verizon-att-and-vodafone.aspx

International Class Action Law

With Vigour and Zeal comments on trends relating to the res judicata effect of U.S. class action judgments in European countries (see related ClassActionBlawg entry here):

http://kranenburgesq.com/blog/2008/11/res-judicata-of-us-class-action-judgments/

Point of Law comments on an article discussing how entrepreneurial mass litigation might fare in Europe:

http://www.pointoflaw.com/archives/2008/11/will-aggregate.php

Tan Kin Lian’s Blog comments on a Financial Times article discussing a report on the lack of participation in U.S. securities class action settlements by Asian institutional investors (see ClassActionBlawg commentary here):

http://tankinlian.blogspot.com/2008/11/asians-fail-to-join-class-action-claims.html

Deadly Prose reports on a collective action being pursued on behalf of alleged victims sickened by tainted milk against a Chinese government-owned manufacturer (see ClassActionBlawg entry here):

http://www.deadlyprose.com/jurist-news-stories/2008/11/14/chinese-officials-fail-to-halt-class-action-law-suit.html

Mass Tort Litigation Blogdiscusses a decision by a Brazilian appellate court vacating an award in favor of a consumer “association” (reportedly formed by a doctor and three attorneys two weeks before the lawsuit was filed) against cigarette manufacturers for “indemnification,” finding that the defendants’ due process rights had been violated when they were not allowed to present certain evidence in their defense:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/11/brazil-vacates.html

Top Notch Class Action Lawyers

Finally, I noticed that H. Scott Leviant of The Complex Litigator is looking for new employment opportunities. You’d do well to consider Scott if you have an opening for a top-notch class action lawyer.

http://www.thecomplexlitigator.com/2008/11/the-complex-litigator-will-consider-all-offers-of-gainful-employment-or-similar-associations.html

Auto Care Myths Cost Consumers & Harm the Environment

Thu, 20 Nov 2008 05:37:44 GMT

Dealers and oil changer companies typically recommend changing oil every 3 months or 3,000 miles. On November 6, 2008, GM issued a statement that this recommendation is the biggest myth in the car business. GM has a Oil Life System (OLS) in almost all its models that monitors combustion events, engine temperature and other parameters to gauge oil's life. Using the data, OLS tells drivers exactly when their engine oil should be replaced. Changing oil when OLS indicates it is time to do so, a motorist who drives 15,000 miles a year would make two or three fewer oil changes a year as compared to changing oil every 3 months or 3,000 miles.

If all drivers of GM vehicles equipped with OLS use the system as intended, they would save more than 100 million gallons of motor oil annually compared to the 3,000 mile interval.

There are environmental consequences to too frequent oil changes. The American Petroleum Institute states that 1 billion gallons of motor oil are sold each year of which 185 million gallons are improperly disposed in the trash or down a drain.

The California EPA encourages drivers to follow the manufacturer's recommendations on oil changes. Manufacturers that do not have an OLS system in their cars typically recommend changing oil every 7,500 miles,

Other myths--today's electronically controlled engines do not need "tune-ups" and there is no need for chassis lubrication, annual radiator flushes, or routine wheel alignment.

Honda Trying to Halt Sales of Discounted Service Contracts

Thu, 20 Nov 2008 05:00:29 GMT

Savvy car buyers know that they may save money by buying an extended warranty (service contract) backed by a manufacturer from any authorized dealer. A NY Times article published August 2, 2008, on the subject of extended warranties features a Rhode Island Honda dealer, Saccucci Auto Group, that has made a business of selling discounted Honda Care service contracts over the Internet (www.myhondawarranty.com). According to Saccucci Auto Group, Honda formerly encouraged its dealers to sell the contracts over the Internet. However, in February 2008, Honda announced a new policy banning Internet sales to protect its dealers' profit margins.

Saccucci Auto Group sued Honda in a state court and a judge temporarily enjoined Honda from enforcing the new policy. Honda then removed the case to the federal district court. In October 2008, the case was tried in a federal court, but no decision has been announced.

NASAA Says Investors with Frozen Auction-Rate Securities Should Ask Investment Firms About Buyback Opportunities

info@stockbroker-fraud.com (Shepherd Smith & Edwards LLP) — Thu, 20 Nov 2008 03:16:12 GMT

The North American Securities Administrators Association is reminding investors to ask the investment firms that sold them any now-frozen auction-rate securities about repurchase opportunities. Following the ARS market collapse, securities regulators in 12 US states joined together to form a multi-state Task Force dedicated to finding out whether Wall Street investment firms had misled investors when persuading them to invest in the ARS market.

As part of their settlement agreements reached with the firms in question, 11 major Wall Street investment banks have said they will buy back over $51 billion in ARS from charities, retail investors, and small companies. However, these repurchase offers may not be available indefinitely.

NASAA President Fred Joseph says the best way to avail of any redemption offers is to contact the investment firms as soon as possible. So far, 11 firms have agreed in principle to buy back over $50 billion in ARS. NASAA says additional repurchase opportunities are expected to become available in the coming months.

Investment Firms with ARS Hotlines:

Bank of America 1-866-638-4183
Deutsche Bank 1-866-926-1437
Citi 1-866-720-4802
JP Morgan 1-866-450-8470
Goldman Sachs 1-888-350-2857
Merrill Lynch 1-888-706-1381
UBS 1-800-253-1974
Morgan Stanley 1-800-566-2273
Wachovia 1-866-283-794

Meantime, more investigations are under way into the sales practices of US firms that marketed and sold auction-rate securities to investors. Unfortunately, many investors who were told ARS were liquid investments are now dealing with frozen securities and cannot access their funds.

If you invested in the auction-rate securities industry and your ARS became frozen during the market’s collapse, you may be the victim of securities fraud.

Related Web Resources:
State Securities Regulators Remind Auction Rate Securities Investors to Contact Firms About Buyback Offers, NASAA, November 17, 2008

Small firms caught in ARS buyback vise, November 16, 2008

Shepherd Smith Edwards and Kantas, LLP is committed to helping investors who are the victim of broker fraud or investment advisor misconduct recoup their losses. Contact our stockbroker fraud lawyers today.

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