Upcoming Securities Class Action Events
Starting today, we will begin to list upcoming securities litigation related events (conferences, webcasts, etc.) on this page.
While new events will also receive their own blog entries, this is the dedicated page for future events and all new events will be added here.
Readers are encouraged to send information on securities litigation related events to us via the "Contact Us" link on the upper left hand side of this blog.
Last Updated 7/15/08
35th Annual Advanced Postgraduate Course in Federal Securities Law
July 24-25, 2008, Omni Hotel, San Francisco, CA
Highlights:
• Developments in Securities Litigation
• Handling an Enforcement Investigation
• Accounting, Auditing, and Internal Control Developments
The conference brochure is available here or for more details, visit the conference webpage.
Securities Class Actions From a Former Practitioner’s Perspective and Experience
July 31, 2008
The Waldorf-Astoria Hotel, New York, New York
Highlights:
• Insider's view of the field of securities class action litigation
• Examination of the "predictable" defenses utilized by major law firms
• Suggestions of viable defenses that have not routinely been employed
The conference brochure is available here or for more details, visit the conference webpage.
MELTDOWN! The Impact of the Subprime Crisis on Professional & General Liability
August 13, 2008
The PLI California Conference Center, San Francisco, CA
Highlights:
• Overview of the subprime mortgage industry
• Professional and general liability claims that are likely to be brought
• How regulators are addressing these problems
The conference brochure is available here or for more details, visit the conference webpage.
D&O Liability Insurance
October 7-8, 2008
InterContinental, Cologne, Germany
Highlights:
• Impact of US Style Class Actions on the European D&O Liability Market
• Changes to the European D&O Market as a Result of the Sub-Prime Crisis & Credit Crunch
The conference brochure is available here or for more details, visit the conference webpage.
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February 26, 2008 |
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From Client to Colleague
Late last month Coughlin Stoia announced that they were adding an intellectual property litigation group with the addition of partners John C. Herman and Ryan K. Walsh from Duane Morris LLP. This of course garnered a decent amount of press coverage here and here, for example.
The names of the new Coughlin Stoia partners seemed familiar to us, a little too familiar for someone who doesn't dabble in the intellectual property field.
So we scratched our brains and came up with a nice little twist to the story.
Let's go back in time to November 2002. The Coughlin Stoia firm does not yet exist. But the predecessor firm, Milberg Weiss Bershad Hynes & Lerach started copyrighting the complaints they filed in securities class actions, and having outside counsel send cease and desist letters to other law firms that had allegedly plagiarized those complaint.
Milberg Weiss' outside intellectual property counsel - you guessed it John C. Herman from Duane Morris.
The Fulton County Daily Report has a story on the cease and desist letters here and the ABA Journal has a story (via an unrelated blog) here.
Herman had more recently worked with his new firm in the Home Depot derivative litigation. The WSJ Law Blog has a story, here.
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February 22, 2008 |
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Updates, Updates, and More Updates
We track a whole bunch of things here at SLW. Federal securities class action trials, options backdating cases, and opt-out cases in Tyco, Vivendi, and Merck to name a few. There are a bunch of updates to report, so let's dive in.
Securities Class Action Trials - "The List"
Some unrelated research revealed that we had missed a case that had gone to trial back in 2002. The case, Claghorn v. Edasco Ltd. was originally brought against Scorpion Technologies, certain Scorpion officers, and Grant Thornton, LLP, the company’s auditor. The litigation settled against those defendants, and the settlement with Grant Thornton included an assignment of claims
Plaintiffs filed a separate complaint that alleged that Edsaco had participated in a scheme to deceive Grant Thornton. After a two week trial, the jury returned a verdict against Edsaco, for $5.78 million in compensatory damages and $165 million in punitive damages. The litigation then settled for $10 million. The conduct at issue in Claghorn was all Pre-PSLRA, so it falls into our third bucket.
Our updated presentation (here) now details the 20 securities class action cases that have gone to trial since 1996.
The cases fall into three categories:
1.Securities Class Action Trials Based on Post-Reform Act Conduct Resulting in a Verdict at Trial (six)
2. Securities Class Action Trials Based on Post-PSLRA Conduct Resulting in a Settlement or Summary or Default Judgment During Trial (seven)
3. Securities Class Action Trials Based on Pre-PSLRA Conduct Resulting in a Verdict at Trial (seven)
Tyco Opt-outs
Second on our list of updates - the Michigan public pension funds, represented by Kaplan Fox, have filed a Tyco opt-out case. The Michigan funds join just one other public pension fund that has filed an opt-out case in Tyco. Details on all of the Tyco opt-outs can be found here.
Vivendi Opt-outs
Another international institutional investor, Wiener Städtische AG Vienna Insurance Group, has filed a Vivendi opt-out case. Wiener Städtische is represented by Motley Rice. Our complete list of Vivendi opt-outs can be found here.
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February 18, 2008 |
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Yet Another Breed of Opt-Out Case
Most securities litigators can spot a prototypical opt-out fact pattern from a mile away:
1. Good liability
2. Large damages
3. Solvent defendant(s)
4. Motion to dismiss denied
5. Settlement and/or class certification decision
We recently posted about a group of opt-out cases that spawned from just such a fact pattern, with the growing number opt-out cases filed in the Tyco litigation.
We also have spilled some ink about a non-standard opt-out fact pattern, in the Vivendi Universal litigation, where international institutional investors have filed individual or group actions after having been excluded from the class as a result of Judge Holwell's class certification decision.
Well, we have a new breed of opt-out cases to discuss - the Merck opt outs.
Readers may recall that in April 2007, Judge Chesler granted the motions to dismiss with prejudice and dismissed the securities class action pending against Merck related to Merck's Vioxx troubles.
According to Merck's most recent 10-Q, a total of seven opt-out cases have been filed against the company, but here's the first kicker, five of the seven were filed after the class action had already been dismissed by Judge Chesler. As an aside, according to my research, a total of eight opt-out cases have been filed and six were filed after Judge Chesler dismissed the securities class action.
Only two, an October 2005 complaint filed in the District of New Jersey by Stichting Pensioenfonds ABP (a Dutch pension fund) and an August 2005 complaint filed in Multnomah County Circuit Court on behalf of the Oregon Public Employee Retirement Fund, were filed before the motion to dismiss was granted.
As a side note, the Oregon state case has been set for trial in October 2008, though it would not make our list of securities class action trials as it is an individual complaint, and not a class action.
The six post-motion to dismiss complaints were filed on behalf of various international institutional investors, and contain a similar cast of characters to the opt-outs filed in the Vivendi litigation, though with a few twists on the attorneys or groups of plaintiffs involved in a given case. The post-motion to dismiss opt-out plaintiffs and their counsel are:
Norges Bank
Grant & Eisenhofer and Diaz, Reus, Rolff & Targ
Deka FundMaster Investmentgesellschaft mbH
Deka International (Ireland) Limited
Deka International S.A. Luxemburg
Deka Investment GmbH
Frankfurter Service Kapitalanlagegesellschaft mbH
International Fund Management S.A. Luxemburg
Internationale Fonds Service AG
Internationale Kapitalanlagegesellschaft mbH
Metzler Investment GmbH
Munich Ergo Asset Management GmbH
Grant & Eisenhofer, Motley Rice LLC and Sturman LLC
Deutsche Asset Management Investmentgesellschaft mbH
DWS (Austria) Investmentgesellschaft mbH
DWS Investment GmbH
Erste-Sparinvest Kapitalanlagegesellschaft mbH
Landesbank Berlin Investment GmbH
Liechtensteinische Landesbank Aktiengesellschaft
LRI Landesbank Rheinland-Pfalz International S.A.
Oppenheim Kapitalanlagegesellschaft mbH
Oppenheim Pramerica Asset Management S.à r.l.
Pioneer Investments Kapitalanlagegesellschaft mbH
Union Asset Management Holding AG
WIENER STÄDTISCHE Versicherung AG Vienna Insurance Group
Grant & Eisenhofer and Schiffrin Barroway Topaz & Kessler
AFA Livförsäkringsaktiebolag
AFA Sjukförsäkringsaktiebolag on its own behalf and on behalf of Kollektivavtalsstiftelsen
Trygghetsfonden TSL
AFA Trygghetsförsäkringsaktiebolag
Alecta pensionsförsäkring, ömsesidigt
AMF Pension Fondförvaltning AB
Arbetsmarknadsförsäkringar Pensionsförsäkringsaktiebolag
Danske Invest Administration A/S
Fjärde AP-Fonden
Gamla Livförsäkringsaktiebolaget SEB Trygg Liv
SEB Asset Management S.A.
Sjunde APFonden;
Skandinaviska Enskilda Banken AB on its own behalf and on behalf of SEB Investment Management AB
Swedbank Robur AB
Schiffrin Barroway Topaz & Kessler
Allianz Global Investors Ireland Limited
Allianz Global Investors Kapitalanlagegesellschaft mbH
Allianz Global Investors Luxembourg S.A.
As with the Tyco and Vivendi opt-out cases, check back here, as we will be updating the list and tracking these cases as well.
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February 15, 2008 |
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Look out Rocket Docket...
In an opinion that garnered little attention, the United States Court of Appeals for the Fourth Circuit has held that the Eastern District of Virginia is a proper venue for virtually all securities fraud prosecutions.
The Court, in U.S. v. Johnson, No. 06-5181, 2007 WL 4357393 (4th Cir. Dec. 14, 2007) held that the mere act of filing financial statements electronically with the US Securities and Exchange Commission (SEC) through the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system would be sufficient to make the Eastern District of Virginia a proper venue to hear any case alleging securities fraud violations based upon those filings.
As most public companies are required to (and do) use the EDGAR system to electronically submit their SEC filings, this ruling has potentially broad implications. The Eastern District is colloquially known as the "Rocket Docket" as the median time from the filing of a complaint to final disposition is less than 10 months according to Federal Judicial Center statistics.
While the Johnson case was a criminal prosecution (Johnson was the CEO of PurchasePro.com, Inc.), a memo from Latham & Watkins suggests that civil plaintiffs could file a case in the district as well:
Going forward, plaintiffs can safely bring an action alleging securities fraud based on the filing of allegedly fraudulent financial statements in the Eastern District of Virginia, knowing that their case will not be dismissed for lack of venue. Civil and criminal defendants, on the other hand, will be limited to seeking a discretionary transfer to a more convenient forum and can no longer successfully attempt to get such an action or count dismissed because they could not have reasonably foreseen that the electronic transmission of financial statements to the SEC would make them subject to suit in Virginia.
Of course, securities class action plaintiffs would be wise to think twice before employing that strategy.
Of the 25 cases filed in the Eastern District of Virginia between 1996 and 2007 that have reached a final disposition (an additional three cases are still active), 13 were dismissed. OK, technically 14 were dismissed as the Cable & Wireless plc case was dismissed, but settled on appeal.
That dismissal ratio (greater than 50%) is markedly higher than the national average and has earned the Eastern District of Virginia a reputation as a potentially unfriendly jurisdiction to securities class action plaintiffs.
So, don't expect a deluge of securities class actions to be filed in the Eastern District anytime soon, but look for a potential upsurge in criminal securities fraud cases or civil actions brought by the SEC in that venue.
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February 12, 2008 |
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Holder-Seller Conflicts and Exploding Class Periods
For some time now, a small, but vocal group of judges have written about the theoretical conflict inherent in many securities class actions - namely that when a case settles, current shareholders are paying damages to a class that includes former shareholders. See e.g. In re Seagate II Technology Sec. Litig., 843 F.Supp. 1341, 1362-64 (N.D.Cal.1994); In re Party City Sec. Litig., 189 F.R.D. 91, 108-10 (D.N.J.1999).
We will leave the legitimacy of the holder-seller conflict theory aside for now.
The $20.1 million tentative settlement in the Lumenis Ltd. securities class action announced yesterday has the ability to test whether investors care about this theoretical conflict, particularly when, as noted in the press release announcing the settlement, "the major portion would be paid on behalf of the defendants by the Company's insurers."
As noted in the press release, the company:
has scheduled a special general meeting of shareholders to seek approval and authorization, in accordance with the Israeli Companies Law, of a proposed settlement of the securities class action litigation that has been pending against the Company in the federal court in New York since 2002.
Though I am not licensed to practice law in Israel, and I did not stay at a Holiday Inn Express last night, it appears that the Israeli Companies Law requires shareholder approval of the settlement as it is considered an "extraordinary transaction."
A quick perusal of the 6-K filed by the company this week breaks the settlement down to a more granular level:
The Company has entered into separate confidential settlement agreements with its primary D&O Insurer, Genesis Insurance Company (“Genesis”), and the two excess D&O Insurers whose policies are immediately above the Genesis policy, Zurich American Insurance Company (“Zurich”) and Lumbermens Mutual Casualty Company (“Lumbermens”), as a result of which it is expected that Lumenis itself will directly contribute $2,736,000 toward the settlement of the Securities Class Action and the above-named D&O Insurers will collectively contribute the remaining $17,364,000, for a total of $20,100,000.
Thus the company will contribute about 13% of the total settlement.
Another interesting provision of the settlement, as detailed in the 6-K is the following:
After the filing of the Stipulation of Settlement, Lead Plaintiffs will file a Third Amended and Consolidated Class Action Complaint (“TAC”) naming the same defendants as are named in the SAC and which will incorporate additional allegations and claims based on those alleged in the SEC Civil Action. The TAC will amend and enlarge the class definition to include persons who purchased Lumenis securities at any time between October 2, 2000 and March 7, 2006 (the “Settlement Class Period”). Lumenis and the other defendants will not be required to respond to the TAC, by answer or by motion, unless and until the Court fails to give final approval to the settlement or it is otherwise terminated, and the Company and the individual defendants retain all of their defenses with respect to the TAC.
Thus, the class has grown quite a bit, having started at a mere seven weeks in the initial complaints, morphed to eight months or so in the amended complaints and now stretching nearly five and a half years, beyond even what the extended statute of limitations found in Sarbanes-Oxley would allow.
This poses an interesting philosophical question - is it reasonable to allow a settlement to extinguish claims that have yet to become time-barred - as the end of the enlarged class period is less than two years old. We'll save that one for another day as well.
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February 11, 2008 |
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The Name Game (2008 Edition)
As my Securities Class Action research team finishes up the heavy lifting for our annual SCAS 50 report on the top plaintiffs' law firms, it struck me that many of the firms have changed names in the last twelve months.
I'm not referring to the low-hanging fruit here (e.g. Lerach Coughlin Stoia Geller Rudman & Robbins, n/k/a Coughlin Stoia Geller Rudman & Robbins or Milberg Weiss & Bershad n/k/a Milberg Weiss) that were discussed in the Wall Street Journal.
A number of other firms changed names during the last year, generally representing the departure or addition of partners, or the elevation of a current partner to "name partner" status.
The former Lowey Dannenberg Bemporad Selinger & Cohen, P.C. (which is generally known as Lowey Dannenberg) has changed names twice during that spell, first dropping former name partner Neil Selinger (who remains of counsel to the firm) and Richard Bemporad (who has disappeared) and then, very recently adding Barbara Hart as a name partner from the Labaton Sucharow firm. The new name, for those keeping score at home - Lowey, Dannenberg, Cohen & Hart, P.C.
The former Kirby McInerney & Squire is now known as Kirby McInerney, with the move of Jeffrey H. Squire to an of counsel position at Bragar Wexler & Eagel, P.C.
Abbey Spanier Rodd Abrams & Paradis (itself a former name game contestant) has shortened by one name to Abbey Spanier Rodd & Abrams with the departure of Paul O. Paradis. Paul is now a name partner at Horwitz, Horwitz & Paradis.
Labaton Sucharow & Rudoff LLP has dropped Sheldon Rudoff from the name plate, but he remains a partner with the firm. The name change to Labaton Sucharow was presaged back in 2005 when the firm changed names from Goodkind Labaton Rudoff & Sucharow and noted that the firm was "more commonly to be known as Labaton Sucharow."
The former Schatz & Nobel is now Schatz Nobel Izard (no ampersand, thank you very much) with the addition of ERISA specialist Robert Izard to the letterhead.
The trend, if you will call it that, is not one of simply shortening firm names, but instead appears to represent one of increased mobility and a desire to keep the almighty typesetters union happy.
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The Tyco Opt Out Cases Continue To Trickle In
According to the order granting final approval to the class settlement in the In re Tyco International, Ltd. Multidistrict Litigation, 288 class members excluded themselves from the class action.
The expected and natural result of such exclusions has begun in earnest - the filing of individual or group "opt-out" cases. To date, it appears that only five opt out cases have been filed, but those five complaints cover 88 institutional and high-net worth individual investors. Details on those cases are available here.
What is unclear from the final approval order is whether these institutions, many of whom are related entities, are counted separately or collectively in the total number of exclusions. Depending on the answer to that question, the cases filed to date represent no more than 30.5% of the class members that opted out, but could represent substantially less than 10% of the class members that opted out.
The first opt-out case (that we are aware of) was filed back in September 2007, on behalf of a number of mutual funds from the Franklin Templeton family:
Franklin Mutual Advisers, LLC
Franklin Mutual Beacon Fund
Mutual Beacon Fund
Mutual Beacon Fund (Canada)
Mutual Discovery Fund
Mutual Discovery Securities Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
Mutual Shares Securities Fund
Of interest, the Franklin complaint was filed by Marc Kramer, a solo practioner in Short Hills, New Jersey. Marc is no stranger to securities litigation, having served as lead counsel in at least two securities class actions - MK Resources Company and Quovadx, Inc.
The next complaint was filed by Bernstein Litowitz Berger & Grossman, LLP in November 2007 on behalf of a fairly diverse group of entities and individuals:
Atticus Global Advisors, Ltd.
Atticus International Fund, Ltd.
Beta Equities, Inc.
Castlerock Asset Management Personal Accounts
Castlerock Fund, Ltd.
Castlerock Partners L.P.
Castlerock Partners II L.P.
Commonfund Asset Management Company, Inc.
Leon G. Cooperman
Toby Cooperman
Michael Scott Cooperman
Fred Alger Management, Inc.
Goldman Sachs Profit Sharing Master Trust
Half Moon Capital Partners, L.P.
Munder Large-Cap Value Fund
NR Securities Limited (f/k/a Dred, Ltd.)
National Bank of Canada
Omega Capital Investors, L.P.
Omega Capital Partners, L.P.
Omega Equity Investors, L.P.
Omega Institutional Partners, L.P.
Omega Institutional Partners II, L.P.
Omega Investors Overseas, L.P.
Omega Overseas Partners, Ltd.
Permal LGC Ltd.
The Ministers And Missionaries Benefit Board Of American Baptist Churches
Teacher Retirement System Of Texas
Watchung Road Associates, L.P.
The third complaint was filed in January 2008, by Lowey Dannenberg, on behalf of a dozen Federated mutual funds:
Federated American Leaders Fund, Inc.
Federated American Leaders Fund II
Federated Bond Fund
Federated Capital Appreciation Fund
Federated Capital Appreciation Fund II
Federated Intermediate Corporate Bond Fund
Federated Large Cap Growth Fund
Federated Mid Cap Growth Strategies Fund
Federated Mid Cap Growth Strategies Fund II
Federated Quality Bond Fund II
Federated Stock Trust
Federated Total Return Bond Fund
The fourth complaint was filed just five days later, by Bressler, Amery & Ross and Lieff Cabraser Heimann & Bernstein, LLP, on behalf of four Nuveen mutual funds:
Nuveen Balanced Stock and Bond Fund
Nuveen Balanced Municipal and Stock Fund
Nuveen Large-Cap Value Fund
Nuveen Rittenhouse Growth Fund
That same day, a fifth complaint was filed by Bressler, Amery & Ross and Lieff Cabraser Heimann & Bernstein, LLP, on behalf of a number of BlackRock funds:
BlackRock Asset Allocation Portfolio (Large Cap Growth) (as Successor in Interest to SSR Asset Allocation LCG)
BlackRock Capital Appreciation Portfolio (as Successor in Interest to SSR Legacy EQ)
BlackRock Global Allocation Fund, Inc.
BlackRock Global Allocation Fund, Inc. (as Successor in Interest to BlackRock Global Balanced Fund)
BlackRock Global Allocation Portfolio
BlackRock Global Allocation V.I. Fund
BlackRock Global Technology Fund, Inc. (as Successor in Interest to Merrill Lynch Internet Strategies Fund)
BlackRock Global Technology Fund, Inc. (as Successor in Interest to Merrill Lynch Internet Strategies Fund)
BlackRock Institutional Equity Funds North American Fund
BlackRock Large Cap Core Fund (as Successor in Interest to BlackRock Investment Trust Portfolio)
BlackRock Large Cap Core Portfolio Master (as Successor in Interest to Merrill Lynch Disciplined Equity Fund)
BlackRock Large Cap Value Fund (as Successor in Interest to BlackRock Large Cap
Value Equity)
BlackRock Large Cap Value-SSR Test (as Successor in Interest to SSR Large Cap Val Eq)
BlackRock Mid Cap Value Opportunities Fund
BlackRock S&P 500 Index Fund
BlackRock Series Fund
BlackRock Select Equity/(Investment Trust) SSR Inv Trust Test (as Successor in Interest to SSR Invest Trust JW)
Black Variable Series Funds, Inc.
BlackRock Variable Series Funds, Inc.
BlackRock World Index Series
DC American Growth Fund
Equity Index Trust Series Master
Master Enhanced S&P 500 Series
Master Large Cap Core Portfolio
Master S&P 500 Index Series
Merrill Lynch Balanced Portfolio Fund
Merrill Lynch Global Balanced Fund
Merrill Lynch Global Equity Fund
Merrill Lynch Institutional FCP Global Equity Ex-Japan Fund
Merrill Lynch International Investment Funds Global Fund Value
Merrill Lynch International Investment Funds U.S. Equity Fund
Merrill Lynch U.S. Dynamic Fund
MLIIF Global Equity Diversified Fund
MLIT Specialists International North America Fund
We will continue to track the Tyco opt out cases, just as we are tracking the Vivendi cases.
As always, readers are encouraged to send in any additional information.
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February 10, 2008 |
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Options Backdating - Keeping Score
With the recent settlement of the securities class action litigation involving alleged options backdating at HCC Insurance Holdings, we decided to take a quick look back at our list to see what was happening with these cases.
Of the 36 cases, 3 have been dismissed and 7 have settled.
The seven settlements total $244.55 million, for an average of just under $35 million. Removing the Mercury Interactive Corp. settlement, which represents nearly half of the total settlements, drops the average to a still respectable $21.18 million.
Of particular interest, these cases have settled much more quickly on average, than other cases. The seven cases have settled in an average of just 509 days. Again removing the outlier, Mercury Interactive, which was filed earlier and added the options backdating allegations in a later amended complaint, drops the average time from filing of initial complaint to tentative settlement for the remaining 6 cases to 463 days.
And the ratio of settlements to dismissals is somewhat out of line with historical averages as well. Most studies (and a quick check of our database) indicate that the percentage of new securities class actions that are dismissed is between 33-40 percent.
In these cases, we can look at the data two ways. Dismissals as a percentage of total cases or dismissals as a percentage of cases that have reached a final, or quasi-final resolution.
Under the former analysis, just over 8% of these cases have been dismissed. That number is artificially low, as not all of the cases have yet had a ruling on the motion to dismiss.
Under the latter method, 30% of these cases have been dismissed. This number is artificially high, as a number of these cases have already survived a motion to dismiss.
For a running update on the derivative options backdating cases, refer to Kevin LaCroix's master list here, and his list of dismissal and settlements, here.
UPDATE: The D&O Diary has an in depth post on the options backdating litigation, here.
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February 5, 2008 |
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The New Case Surge Continues
This just in - new federal securities class actions continued to be filed at a strong pace.
Indeed, strong may be a bit of an understatement as the activity in January 2008 is nearly 50% over historical levels when extrapolated out to a yearly basis.
The numbers are a little fuzzy (see our earlier post here on why that is) but at least 24 new federal securities class actions were filed in January 2008. That translates to 288 new cases per year.
Compare that to the 9 new federal securities class actions filed in January 2007, and the results are even starker. New case filings are up more than 250% from the same period last year.
And lest you say that this new crop of cases solely relates to the burgeoning subprime crisis, the newly filed cases involving Panera Bread, Comcast and American Dental Partners, among others, have little, if anything to do with mortgages, subprime or otherwise.
As far as the fuzziness of the numbers, it has to do with whether new cases will be consolidated with earlier (or later) cases involving similar claims, but filed in different jurisdictions (Freddie Mac), or against different defendants (Countrywide) for example.
And while four of those 24 cases may be reasonably predicted to later be consolidated into other actions, but that would still leave 20 new cases in one month. That would still translate to 240 new federal securities class action cases on an annualized basis, a nearly 25% jump over historical averages.
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