MarketWatch reports that the Oracle derivative settlement has received court approval. Under the original terms of the settlement, the CEO of Oracle agreed to pay $100 million to charity on behalf of the company, while the company was to pay $22.5 million in legal fees to plaintiffs’ counsel. The proposed settlement came under criticism, with the court expressing concern over the fact that Oracle, the presumed beneficiary of the settlement, would be paying the legal fees. The approved settlement provides that the CEO of Oracle will make both payments.
Making Headlines
The notices put out by securities plaintiffs firms to announce the filing of a complaint tend to be fairly staid. At least one firm may be trying to liven them up (see here and here).
Filed under Curiouser and Curiouser
WorldCom Recap
American Lawyer has a feature article (via a law firm website) in its Litigation 2005 supplement that lays out the events surrounding the WorldCom settlements. The settlements totaled over $6 billion.
Filed under WorldCom
Dabit Update
Oral argument in Merrill Lynch v. Dabit, the SLUSA case before the Supreme Court, has been scheduled for Wednesday, January 18. The petitioner’s brief can be found here.
Filed under Appellate Monitor
Alito And Securities Class Actions
Fortune has an article on Supreme Court nominee Judge Samuel Alito’s record in business cases. The article briefly discusses a securities class action decision that was favorable for the defendant company.
Quote of note: “In a shareholder class action suit brought against Burlington Coat Factory after its stock price plummeted, Alito’s opinion came down on the side of the company, but in a nuanced way. ‘It suggests that he’s not particularly hostile to securities plaintiffs and many judges are,’ says David Hoffman, who teaches corporate law at Temple University.”
Filed under All The News That's Fit To Blog
No Perpetual Enemies
Under the PSLRA, the presumptive lead plaintiff in a securities class action is the party with the largest financial interest in the relief sought by the class. Courts have struggled, however, with how to apply this presumption when faced with proposed lead plaintiff groups. In In re Flight Safety Technologies, Inc. Sec. Litig., 2005 WL 2663033 (D. Conn. Oct. 19, 2005), two competing plaintiffs’ groups joined forces and sought to have eight investors named as co-lead plaintiffs. The court found that “appointing eight unrelated and unfamiliar plaintiffs as co-lead plaintiffs, when no preexisting relationship is evident, would be counter to both the terms and the spirit of the PSLRA.” Instead, the court appointed one individual investor (who had alleged the most potential damages) and one institutional investor (noting that Congress had expressed a preference for institutional investors).
Quote of note: “In the briefs submitted prior to the date on which the pending joint motion for appointment was filed, the Rogers Group and the Ozkam Group spent considerable time and effort criticizing the ability of the members of the other group to serve as lead plaintiffs in this action. As noted previously, those groups have since abandoned their concerns, however, and combined with those previously deemed inadequate in order to pursue their remedy. This gives new meaning to Lord Palmerston’s quotation: ‘We have no eternal allies and we have no perpetual enemies. Our interests are eternal and perpetual, and these interests it is our duty to follow.'”
Filed under Lead Plaintiff/Lead Counsel
SLUSA And ’33 Act Class Actions
As a general matter, claims under the ’33 Act may be brought in federal or state court and cannot be removed. There is a continuing split, however, over whether the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) created a removal exception for ’33 Act securities class actions (e.g., misstatements in a prospectus) brought in state court. The Second Circuit says that it did, but other courts have disagreed. In the latest decision on the issue, Lowinger v. Johnston, 2005 WL 2592229 (W.D.N.C. Oct. 13, 2005), the court found that removal pursuant to SLUSA was proper.
Filed under All The News That's Fit To Blog
Opting Out Of WorldCom
Compliance Week has an article on the battle between counsel for the WorldCom class action plaintiffs and counsel for the WorldCom opt-out plaintiffs over who obtained a better settlement for their clients. The competing press releases can be found here (class action plaintiffs) and here (opt-out plaintiffs). Thanks to Securities Litigation Watch for the link.
Addition: An interesting sidenote to the $651 million settlement with the opt-out plaintiffs – Citigroup and J.P. Morgan agreed to join the plaintiffs in petitioning the SEC to toughen its disclosure rules for securities offerings.
Filed under Settlement, WorldCom
KPMG Settlement Challenged
The controversy over the “reverse auction” in the KPMG tax shelter class action continues (see this post). The New Jersey Law Journal reports (via law.com – free regist. req’d) that a trio of plaintiffs’ firms plan to challenge the preliminary approval of a $225 million settlement.
Filed under Settlement
Staying Derivative Discovery
The October 21 edition of the New York Law Journal has a roundup (regist. req’d) of recent decisions on the applicability of the SLUSA discovery stay provisions to parallel state court derivative actions. The authors find that the trend in the case law is against imposing a discovery stay in this situation, but it is worth noting that there has been some recent contrary authority that is not discussed in the article.
Quote of note: “Thus, of the eight cases analyzed, [six] denied a stay of discovery in the derivative action, frequently with the proviso that the discovery would not be shared with the federal securities action. One stayed discovery based upon the derivative action counsel’s stated intent to share the fruits of that discovery with the federal securities action. Only one stayed discovery despite the absence of evidence of collusion and where the derivative complaint was filed a year before the federal securities complaint.”
Filed under All The News That's Fit To Blog
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