The 10b-5 Daily

It is international week at The 10b-5 Daily, with two more articles discussing the exporting of American-style class action litigation (including securities fraud cases). The New York Law Journal (via law.com – free regist. req’d) has a piece on pending legislation in the Netherlands that will allow for settlements that bind all members of a class who do not opt out. The author notes that the expansion of class actions in Europe is taking place at the same time that U.S. corporations are attempting to limit their use here. While over at Forbes, there is a profile of U.S. lawyers who are pursuing mass tort actions abroad.

Quote of note (New York Law Journal): Marc Gottridge of Lovells “does not foresee a sea change in the balance of class actions, despite the pending legislation in the Netherlands and elsewhere. ‘Even if foreign countries adopted the same procedures’ used in American courts, ‘the U.S. would still be an attractive forum in many cases’ for institutional investors based in Europe, he said. That is because of the U.S. system’s wide-reaching discovery, jury trials and the potential for immense punitive damage awards.”

Long-time readers of The 10b-5 Daily know that this blog has been interested in South Korea’s efforts to establish a private securities class action system. As the deadline approaches for the new legislation to go into effect, financial regulators continue to weigh the costs and benefits. In this article from the Korea Times, the governor of the Financial Supervisory Service (FSS) notes that securities class actions can be misused and discusses the prevalence of these suits in the U.S. Another article from the same paper, however, quotes a FSS official as stating: “It’s fair to say the imminent class action lawsuit has also kept companies from cooking their books.”

The New York Law Journal has an article (via law.com – free regist. req’d) on whether the group pleading doctrine, which creates a presumption that a company’s senior officers are collectively responsible for misrepresentations or omissions contained in public statements made by the company, is compatible with the heightened pleading standards of the PSLRA. The article discusses the Fifth Circuit’s decision in the INSpire case from earlier this year.

The New York Law Journal has an article (via law.com – free regist. req’d) on the wave of securities class actions that have hit the biotech industry. (The 10b-5 Daily has previously posted about the relevant 2003 filing statistics.) The article discusses a recent law firm survey and profiles several prominent cases, including the litigation brought against ImClone Systems and Regeneron Pharmaceuticals.

Quote of note: “The biggest concern for a life science company involves its handling of news related to its prominent drug. In an industry that relies on investors to fork over millions to high-risk investments, life science companies position themselves to attract investment dollars. In such an industry, companies must navigate carefully.”

Although Oracle has had its hands full fighting off securities litigation, including a recent setback when the U.S. Court of Appeals for the Ninth Circuit reversed the lower court’s dismissal of the federal securities class action brought against the company, things may be looking up. Reuters reports that Oracle has obtained a dismissal of the shareholder derivative suit brought against the company’s officers in Delaware Chancery Court. The facts and accusations in the Delaware case reportedly “mirror” those in the federal securities class action.

In the wake of recent corporate scandals, European courts have become flooded with individual shareholder suits. A Bloomberg article discusses the Deutsche Telekom litigation in Germany, where 2,100 claims have been filed by 754 law firms. Last February, the company delivered 8 tons of paperwork in response to the complaints. All of this has European courts and legislators contemplating whether they should permit shareholders to file securities class actions.

Quote of note: “Countries from the Netherlands to Finland have changed their laws or are considering changes to permit investors and consumers to file multi-party complaints. The goal is to help cope with shareholder suits and product liability cases that can attract thousands of plaintiffs.”

Quote of note II: “‘Europe wasn’t litigious until about five years ago, but then we started to get Americanized,’ says Paul Bowden, a 49-year-old partner at the law firm of Freshfields Bruckhaus Deringer in London. ‘Consumer associations have become more powerful and willing to push lawsuits, and there is a growing number of small law firms with young, ambitious lawyers who have learned a lot from the U.S.'”