c96abf0c37ca4f0089a9c68004057ee9772009-11-20T15:02:00-06:00The highest court in West Virginia has overturned a $4.2 million jury verdict against Erie Indemnity Co., ruling that the decision by Erie and its subsidiaries to terminate a contract with Princeton Insurance Agency did not constitute restraint of trade under the Sherman Act.
In a per curium opinion issued Wednesday, the Supreme Court of Appeals of West Virginia said Erie could not have conspired with another party to restrain competition -– a requisite of any restraint of trade claim –- because the only parties it conspired with, its own subsidiaries, are considered by common law to be part of the same entity.
Princeton’s initial suit held that Erie Insurance Property and Casualty and Erie Family Life, both members of the Erie Insurance Group, conspired to injure Princeton when they terminated an underwriting contract in 2004.
Erie Insurance Group, in turn, is owned by parent company Erie Indemnity Co.
The contract, which originated in the early 1990s, allowed Princeton to sell Erie’s insurance products in West Virginia.
Erie held that it terminated the agreement on the heels of a steep decline in profitability and quantity of its products sold by Princeton.
Because Princeton had recently begun a new agency operating from the same location, Erie said, it suspected that Princeton was driving business to that agency.
When Princeton head Kevin Webb denied Erie’s request for figures on its sales -– save for a few notes jotted on a restaurant napkin -– Erie terminated policy, the defendant said.
The jury cleared Erie of subsequent allegations from Princeton of consumer protection and unfair trade law violations, but determined that, because Erie’s subsidiaries were not wholly owned, they constituted separate entities capable of conspiracy, awarding Princeton treble damages amounting to more than $4.2 million for restraint of trade.
But common law holds that courts can still deem non-wholly-owned subsidiaries part of the same entity, the state high court said.
“When presented with cases in which there is less than 100 percent control over a subsidiary, federal courts have looked to the amount of control the parent company has over its subsidiary, examining … whether there is a unity of purpose which essentially forecloses the risk of anticompetitive conspiracy,” the opinion said.
Erie cited the fact that all of its corporate employees are employed by Erie Indemnity, and pointed to the issuance of a single termination letter as indication that a “unitary corporate decision was made.”
It also stressed to the court that none of its companies compete with each other concerning sales.
The trial court erred, the high court said, by conducting “no examination regarding the facts of Erie’s corporate structure.”
The Supreme Court of Appeals also rejected Princeton’s alternative argument that, by pressuring Webb to turn over sales records and obtaining from him a few handwritten notes on a napkin related to such records, Erie made Webb a co-conspirator in the alleged scheme.
Webb’s actions were not illegal, the high court said, so they could not constitute conspiracy.
Even if Princeton had established a concerted effort on the part of co-conspirators, it would not have been able to prove sufficient injury, the opinion said.
Antitrust laws exist “to protect competition rather than competitors,” so “injuries resulting from competition alone are not sufficient to constitute antitrust injuries,” it said.
Princeton may have been able to show that it, alone, suffered injury, but it would not have been able to show that competition, as a whole, suffered, the Supreme Court of Appeals said.
Representatives for the parties did not immediately respond to requests for comment.
Erie is represented by Dinsmore & Shohl LLP and Lamp O’Dell Bartram Levy & Trautwein PLLC.
The Veneri Law Offices represents Princeton.
The case is Princeton Insurance Agency Inc. et al. v. Erie Insurance Co. et al., case number 34498, in the Supreme Court of Appeals of West Virginia. 135383002009/12/20 00:00W.Va. High Court Nixes $4.2M Jury Award Against ErieFriday, Nov 20, 20092009/11/202009/11/20742009/11/201The highest court in West Virginia has overturned a $4.2 million jury verdict against Erie Indemnity Co., ruling that the decision by Erie and its subsidiaries to terminate a contract with Princeton Insurance Agency did not constitute restraint of trade under the Sherman Act. 65586dc0e65b4a7d85d47ba7f062ca93132009-11-20T14:15:00-06:00MvuInvestors LLC has appealed its recent loss to General Electric Co. unit GE Healthcare in their dispute over GE’s aborted deal to acquire Mvu’s MRI technology.
Mvu has asked the U.S. Court of Appeals for the Ninth Circuit to hear its case, it said in a notice of appeal filed Thursday in the U.S. District Court for the Central District of California.
The two companies have been litigating since November 2008, after GE declined to pursue a purported oral bargain.
A GE representative allegedly promised that the corporate giant would swallow up Mvu for between $3 million and $13 million and secure its portfolio of patents, though GE maintains the oral offer was never firm.
Judge Manuel Real of the Central District granted GE’s request for summary judgment Nov. 16, saying, “there is no cause of action for breach of encouraging words.”
Dismissing Mvu’s complaint with prejudice, Judge Real also noted that “the promise of a future agreement cannot give rise to a legal obligation until the parties reach the future agreement.”
GE has a rigorous approval process for acquisitions valued at more than $3 million, requiring the assent of several high-level executives, according to the uncontroverted facts in the case as summarized by Judge Real.
“Mvu believes the summary judgment is based on an erroneous view of the applicable law and the court having drawn inferences from conflicting evidence in favor of defendant instead of plaintiff, as required,” said Maxwell Blecher of Blecher & Collins PC, an attorney for Mvu.
“For these reasons, we believe the judgment will be reversed by the Ninth Circuit,” Blecher said.
"We believe the court's decision on summary judgment was proper and will be affirmed on appeal by the Ninth Circuit," said Dennis Ellis of Paul Hastings Janofsky & Walker LLP, an attorney for GE.
In addition to the brewing battle over the grant of summary judgment, Mvu also faces a fight against a GE motion for sanctions.
GE has accused Mvu of fabricating allegations in its amended complaint and said it should bear some of the costs of the suit.
When its first complaint was dismissed as insufficient, Mvu bolstered it with “patently false” accusations, GE alleged in a motion for sanctions filed Sept. 28 alongside a summary judgment motion in the U.S. District Court for the Central District of California.
Mvu’s initial complaint had alleged that GE reneged on an offer that featured multiple prices and several contingencies, an element of uncertainty that led to its being dismissed, according to GE’s account of events.
After the dismissal, Mvu came back with a first amended complaint, which “with a stroke of the pen” leveled new allegations that are much more certain, though roundly contradicted by discovery evidence, according to the complaint.
“GE Healthcare advances a simple, straightforward position: the FAC filed by plaintiff in this action was and is a sham,” GE said.
Mvu’s filing of a complaint with facts it allegedly knew are false warrants sanctions, GE said.
Mvu attorneys have said the sanctions motion is almost frivolous.
Blecher & Collins PC represents Mvu in this matter.
Paul Hastings Janofsky & Walker LLP represents GE in this matter.
The case is MvuInvestors LLC v. General Electric Co., case number 08-cv-8016, in the U.S. District Court for the Central District of California.135427002009/12/20 00:00MvuInvestors Appeal Loss To GE In Patent Deal SuitFriday, Nov 20, 20092009/11/202009/11/20892009/11/201MvuInvestors LLC has appealed its recent loss to General Electric Co. unit GE Healthcare in their dispute over GE’s aborted deal to acquire Mvu’s MRI technology. 5d95eb3e89844d73b8ca36377ee3c225142009-11-20T12:35:00-06:00Fast food giant McDonald's has won the latest skirmish in a Florida state appeals court in a dispute with a franchise group over contracts, rent subsidies and alleged illegal taping.
The Fourth District Court of Appeal granted McDonald's a writ of certiorari on Wednesday to review a partial denial of the company's motion to stay proceedings in favor of a federal lawsuit.
McDonald's filed a case last year in the U.S. District Court for the Middle District of Florida against franchise operator Melton Management for breach of a release agreement, declaratory judgment and damages for violation of Florida's anti-wiretapping law.
According to the complaint, when Melton complained about the financial performance of one of its franchises, McDonald's agreed to provide financial assistance in the form of temporary rent reduction and a lump sum distribution.
As part of the deal, Melton had to sign a release agreement, but prior to the execution of the release, it expressed concern about the profitability of another franchise that had not yet opened, McDonald's said.
Melton nonetheless agreed to the franchise terms and to the release agreement, according the McDonald's. When the two franchises lost money and Melton threatened to sue, McDonald’s sought damages for breach of the release agreement.
Melton allegedly taped conversations in which McDonald's representative Charles Robeson offered rent relief, leading to the anti-wiretapping charges, as McDonald's and Robeson claim they never authorized the recording.
After McDonald's filed the federal suit, Melton filed suit in state court against McDonald's and Robeson for the failure of a new franchise to meet projections. The suit argued that Robeson had promised to make Melton whole if franchises lost money.
Melton accused McDonald's and Robeson of breach of fiduciary duty, fraud, misrepresentation and tortious interference with prospective business.
Both sides moved to stay the opposing side's action. A trial court stayed the state court action against McDonald's but not against Robeson, who was not named in the federal suit.
McDonald's then asked the state appeals court to stay the action against Robeson as well.
The company argued that courts should not consider a controversy over which another court has already obtained jurisdiction and that it would be better to have the action stayed in its entirety.
In granting cert, the appeals court said the trial court abused its discretion in not also staying the action against Robeson.
The appeals court noted that the issue of whether the federal action should be stayed or dismissed is pending.
"Given the kinds of claims asserted in each complaint, the federal court may ultimately grant the Melton group's motion to stay or dismiss," the court said.
"However, until the federal district court rules, the trial court should stay the entire subsequently filed and subsequently related state action," it said.
DLA Piper LLP represents McDonald's in the case, but counsel was not immediately available to comment.
Goldstein Tanen & Trench PA represents Melton. Counsel declined to comment on the matter.
The case is Robeson v. Melton, case number 4D09-2552, in the District Court of Appeal of Florida for the Fourth District.135377002009/12/20 00:00McDonald's Wins Cert In Fla. Franchise CaseFriday, Nov 20, 20092009/11/202009/11/20892009/11/201Fast food giant McDonald's has won the latest skirmish in a Florida state appeals court in a dispute with a franchise group over contracts, rent subsidies and alleged illegal taping.f10e1a4c1224426faa8c3a0f10361ca4902009-11-19T18:27:00-06:00A unit of St. Jude Medical Inc. has won a preliminary injunction against a former employee who allegedly stole trade secrets in order to set up a rival medical device company in China, according to attorneys representing St. Jude.
The Los Angeles Superior Court ruled Tuesday that it had jurisdiction over the former employee, Yongning Zou, and that a preliminary injunction should issue against him and his new company, Nervicon Co. Ltd., pending service of process through the Hague Convention, the attorneys said.
The court also purportedly found a substantial likelihood that St. Jude Medical Cardiac Rhythm Management Division — also known as Pacesetter Inc. — would prevail on the merits of its claims, and that there was a substantial risk of irreparable harm.
“[The injunction] prohibits them from utilizing any information that they took from St. Jude, disclosing it, incorporating it into any of their own designs, disseminating it to any third parties, destroying it or hiding it,” said James Gale, an attorney with Feldman Gale PA who is representing St. Jude in the matter. “The judge was real broad with what he ordered.”
His colleague, Todd Malynn, added that Nervicon and Zou would have to return anything they stole.
“If they come out with a product now, and we look at the product and see our stuff in it, then theoretically they could be held in contempt,” Malynn said.
The case will now move to the discovery phase, the two attorneys said.
According to St. Jude's complaint, filed Oct. 23, Zou was hired at the company in May 2003 as a hardware design engineer. In March 2008, he was then promoted to principal hardware design engineer, which allegedly gave him access to any and all documents relating to any and all parts manufactured by St. Jude.
“Zou was provided access to a significant amount of information to execute his job duties, including but not limited to the schematics, specifications, source code and/or drawings related to the various projects in which Zou was intimately involved,” the complaint said.
Zou resigned on June 25, 2009, saying at the time that he did not have another job lined up.
But on June 10, Nervicon was officially formed in China. Zou is one of Nervicon's three shareholders and possesses a 47.5 percent interest in the company, according to the complaint.
Soon after, Nervicon allegedly requested certain pieces of “surface mount crystals” from Statek Corp., which manufacturers a 24 MHz surface mount crystal oscillator for use in St. Jude's cardiac rhythm management devices and its neuromodulation devices.
Upon request, Nervicon provided Statek with a specification setting forth the parameters it required for a crystal oscillator. But Statek recognized the document as a copy of certain pages from St. Jude's specification for its crystal oscillator, the complaint alleged.
“They forgot to change the name from St. Jude to Nervicon on all places in the document,” Gale said.
In addition to trade secret misappropriation, the complaint accused Nervicon and Zou of unfair competition, breach of contract, conversion of property and breach of fiduciary duty. It is seeking damages in an amount to be determined at trial.
St. Jude is represented by Feldman Gale PA. Nervicon and Zou are represented by Squire Sanders & Dempsey LLP.
The case is Pacesetter Inc. v. Nervicon Co. Ltd. et al., case number BC424443, in the Superior Court of the State of California for the County of Los Angeles.135349002009/12/19 00:00St. Jude Wins Motion To Recover Stolen Trade SecretsThursday, Nov 19, 20092009/11/192009/11/19732009/11/191A unit of St. Jude Medical Inc. has won a preliminary injunction against a former employee who allegedly stole trade secrets in order to set up a rival medical device company in China, according to attorneys representing St. Jude.b1cc0f4f3f314fa0a65bdba8a5bef40a592009-11-19T16:22:00-06:00Real estate investment company FIG Global LLC has accused the executives of international investment banking company Royal Holdings LLC of cheating it out of more than $94.8 million by defaulting on a joint agreement to purchase prestigious resort properties in Portugal.
FIG alleges that Royal Holdings CEO Sultan Alshaie, who claims to be part of the Saudi royal family, and his associates Nasir Alshaie, Ahmed Alshaie and Bernard Otremba-Blanc, who claims to be an honorary German consul, have engaged in deceptive practices to draw investors into apparent legitimate investment opportunities before intentionally withdrawing from their obligations, according to the complaint lodged Wednesday in the U.S. District Court for the District of Arizona.
“Since it is believed that the defendants employ false or misleading information to induce would-be investors and then divert assets to the detriment of investors, the present action is not only necessary to correct a most egregious injustice done to the plaintiffs, but also to punish the defendants for their willful and wanton fraudulent acts, and also to prevent them from further fraudulent acts against others,” the complaint said.
After being introduced to Sultan Alshaie at the German Consulate in Phoenix, Ariz., in December 2007, FIG decided to begin a venture with Alshaie to invest in prestigious properties around the world, according to the complaint.
Under the terms of the joint venture to purchase properties in Portugal, Alshaie was to invest €34.3 million ($50.9 million) for an 80 percent share, while FIG committed to invest about $7 million for a 20 percent share, the complaint said.
By March 2008, FIG had put a down payment of €3 million ($4.4 million) on the Madeira, Portugal, property, with Alshaie's promise that he would complete the agreement to purchase the property after Otremba-Blanc inspected it in May, according to the complaint.
Alshaie provided a letter of commitment to the sellers of the Portugal property along with proof of funds from Bank of America NA showing an account holding of almost $220 million in July 2008, the complaint said.
In the fall, Alshaie pledged his funds from a fuel trading transaction with Kazakhstan to complete the agreement with FIG on the Portugal property, and in February 2009 about $80 million of these funds were wired from Alshaie to a Swiss bank account held for his family, according to the complaint.
However, FIG later discovered that this transfer was “in fact a decoy which allowed for multiple ghost transfers of exactly the same amount to be wired to other recipients in other parts of the world,” and that the U.S. government immediately froze these assets under suspicion that they were being used “for activities hostile to the U.S. and others,” the complaint said.
But when the government completed its review and released these funds, Alshaie continued to claim that he had no access to the money and refused to pay his portion of the agreement.
On Aug. 6, following suspicions that Alshaie was now “unilaterally and intentionally breaching the agreement,” FIG made a written demand for performance. That request was ignored, and FIG ceased all communications with the defendants.
“In hindsight, the defendants' actions appeared to be an elaborate ruse intentionally designed to induce the FIG into an international investment scheme,” FIG said in its complaint.
FIG has asked for damages related to its breach of contract, fraud and misrepresentation claims as well as injunctive relief, according to the complaint.
“The defendants have falsely and maliciously misrepresented their intentions with the intent to induce FIG into justifiably relying on the defendants’ representations, which has caused FIG to suffer great damages,” the complaint said.
Representatives for both parties could not immediately be reached for comment Thursday.
FIG is represented by The Poster Law Firm PLLC.
Counsel information for the defendants was not immediately available.
The case is Foundations Investment Group Global LLC v. Sultan Alshaie et al., case number 09-cv-02416, in the U.S. District Court for the District of Arizona.135177002009/12/19 00:00FIG Sues Saudi Royalty Over $95M Contract BreachThursday, Nov 19, 20092009/11/192009/11/19892009/11/191Real estate investment company FIG Global LLC has accused the executives of international investment banking company Royal Holdings LLC of cheating it out of more than $94.8 million by defaulting on a joint agreement to purchase prestigious resort properties in Portugal.184576e417dc4ab193e5677405cca97f592009-11-19T15:53:00-06:00Alltel Communications LLC is facing a class action in Ohio over claims that the company reneged on a promotion that promised to provide potentially lifetime free long distance calls.
According to the complaint, filed Wednesday in the U.S. District Court for the Northern District of Ohio, Alltel offered customers free long distance for as long as they remained on their wireless calling plan if they stayed on Local Promo Plan D WK.
Alltel allegedly breached the contract in or around October 2007, and potential class members have been paying for long distance service they assumed was free since then, the complaint said.
Verizon Communications Inc., a named defendant in the suit, acquired Little Rock, Ark.-based Alltel on Jan. 9.
The named plaintiff in the case, Ohio resident Kenneth A. Steele, called a toll-free number to accept the offer in the fall of 2004, promptly after Alltel presented the offer, according to the complaint. Steele continues to use the same wireless plan.
The solicitation sent to Alltel customers, dated Sept. 30, 2004, promises that the offer is free and that there is nothing to buy. “This offer is valid as long as you stay on your Local Promo Plan D WK,” the solicitation, included as an exhibit to the complaint, said.
Alltel was offering the promotion as part of a move to bolster revenues that were hit hard by a decrease in roaming fees charged to customers of other wireless companies and its own users migrating to different plans, according to a 2004 10-Q filing with the U.S. Securities and Exchange Commission that was included as an exhibit to the complaint.
“Had plaintiff not accepted Alltel's offer and instead migrated to another Alltel calling plan, Alltel would have incurred significant costs,” the complaint said.
Steele began wireless service with GTE Corp. in 1997 and continued his service after GTE and Alltel engaged in a 2000 asset swap that brought the northern Ohio market under Alltel's purview.
The complaint is seeking confirmation of one of two distinct classes. One would be made up of a nationwide class of customers who accepted Alltel's offer and would be governed under Arkansas law.
The other class would be made up of current and former Alltel customers living in Ohio and governed by Ohio law, the complaint said.
Steele is seeking damages and a declaratory judgment that Alltel breached its contract for free lifetime long distance. The potential damages could exceed $5 million, according to the complaint.
Neither Verizon, Alltel's parent, nor counsel for the purported class could be reached for comment Thursday.
Steele is represented by Goldman Scarlato & Karon PC.
No counsel information was available for Alltel.
The case is Steele v. Alltel Communications LLC et al., case number 09-cv-02694, in the U.S. District Court for the Northern District of Ohio. 135151002009/12/19 00:00Ohio Class Says Alltel Bailed On Free Long Distance Thursday, Nov 19, 20092009/11/192009/11/19892009/11/191Alltel Communications LLC is facing a class action in Ohio over claims that the company reneged on a promotion that promised to provide potentially lifetime free long distance calls.acbdf7bbea414bd7bef904a27970deff342009-11-19T15:14:00-06:00Norwegian oil and gas company Statoil ASA has agreed to pay $21 million to the U.S. government to settle charges stemming from a 2002 contract with Horton Investments Ltd. that was allegedly a cover to send bribes to Iran.
Statoil agreed to a $10.5 million fine for violating the U.S. Foreign Corrupt Practices Act, as well as an additional $10.5 million in disgorgement to the U.S. Securities and Exchange Commission, the company said Thursday.
The company allegedly made payments to an Iranian official to induce him to use his influence to obtain a contract for the company in the Iranian South Pars gas field.
Those payments took the form of a consulting contract with London-based Horton that called for the payment of more than $15 million over 11 years, prosecutors said.
After transferring two bribes totaling more than $5 million, Statoil was awarded a contract for the development of the South Pars field, one of the largest natural gas fields in the world, according to the U.S.
Government officials also accused Statoil of accounting for those payments improperly and having insufficient internal controls in place to prevent wrongdoing.
In 2004, Statoil settled similar charges with Norwegian authorities, agreeing to pay the equivalent of about $3 million. That amount will be deducted from what Statoil has to pay to U.S. authorities, so its payment to the U.S. government will only be $18 million.
Under the terms of its settlement with the U.S., Statoil will also retain a compliance consultant for a three-year period to ensure the company complies with the Foreign Corrupt Practices Act.
“The last years we have strengthened our systems, procedures and training within ethics and anti-corruption,” Statoil CEO Helge Lund said. “We are content with closing the Horton case.”
Statoil chairman Jannik Lindbaek added that the Horton matter occurred several years ago under the company's previous management, and that Statoil was continuing to strengthen its ethical and compliance policies.
The U.S. Department of Justice confirmed that all charges against Statoil for violating the anti-bribery and accounting provisions of the Foreign Corrupt Practices Act had been dismissed with prejudice.
Bribing foreign government officials and then attempting to disguise the payments as consulting fees cannot be standard operating procedure for corporations, Assistant Attorney General Lanny Breuer said in a statement.
The settlement came as part of a deferred prosecution agreement, which the Justice Department said could be an important middle ground between declining prosecution and obtaining a conviction.
Deferred prosecution in this case helped restore the integrity of the company's operations and preserve its financial viability, while at the same time ensuring that Statoil improved a failed compliance and anti-corruption program, the department said.
Sullivan & Cromwell LLP represents Statoil.
The case is United States of America v. Statoil ASA, case number 06-00960, in U.S. District Court for the Southern District of New York.135279002009/12/19 00:00Statoil Settles With US For $21M In Iran Bribery CaseThursday, Nov 19, 20092009/11/192009/11/19742009/11/191Norwegian oil and gas company Statoil ASA has agreed to pay $21 million to the U.S. government to settle charges stemming from a 2002 contract with Horton Investments Ltd. that was allegedly a cover to send bribes to Iran.6ae555f314df49068fa50059e0475dce942009-11-19T14:36:00-06:00A federal judge has directed United Coal Co. LLC to turn over documents, including those concerning quality management standards, to Italiana Coke SRL in the companies' dispute over the existence and validity of a $9.3 million coking coal contract, which was agreed upon but never formally executed.
Judge Henry Pitman of the U.S. District Court for the Southern District of New York on Wednesday handed down an order granting Italiana Coke's application to compel the production of certain documents from United Coal, its former supplier.
In the order, Judge Pitman told United Coal to turn over by Dec. 4 all documents in its possession that referenced ISO 9001 and the role of, or preference for, written contracts, or the subject of contract formation.
He also ordered United Coal to produce the database of documents considered by its expert witness, including information from Consol Coal Co., reports prepared for the expert's other clients and any other contracts, to the extent that the expert considered them in drafting his report.
Finally, Judge Pitman directed United Coal's counsel by Dec. 1 to confirm that “all reasonable repositories have been searched for documents regarding United Coal's metallurgical coal transactions with U.S. Steel and that there are no additional responsive documents.”
Electronic repositories should be included in the search, the judge wrote, adding that Italiana Coke may also subpoena U.S. Steel for similar documents.
Italiana Coke sued United Coal in May 2008 for allegedly backing out of a deal to ship 80,000 metric tons of coking coal — to be distilled into coke, a product used in the manufacture of steel — to the Savona, Italy-based refiner after the price of coal skyrocketed that spring.
In its complaint, the company sought monetary damages exceeding $12 million, or the production of the coal at the agreed-upon price, which by May 2008 was approximately half of market value.
“Instead of complying with existing contractual terms, defendant is attempting to hold Italiana Coke hostage by offering to supply Italiana Coke with coking coal at more than double the agreed upon price,” the complaint says.
In December 2007, the parties agreed to a handshake deal, as they had done in years past, that traditionally was considered by both parties to be a “binding, valid and enforceable contract,” the complaint says.
After exchanging several e-mails throughout the early part of 2008 ironing out the minutia of the pact, United Coal sent a final draft of the contract to Italiana Coke in March and scheduled a meeting for April 4, at which time the deal ostensibly would be finalized, the complaint says.
At the April 4 meeting, United Coal instead “surprised” Italiana Coke by denying that the terms agreed upon during the handshake deal constituted a valid contract and offered the product at twice the earlier rate, Italiana Coke says.
This reversal “created a significant financial uncertainty for Italiana Coke, [impaired its] ability to operate its facilities and by extension, to fulfill Italiana Coke's contractual obligations to its customers,” the complaint says.
Both entities moved for summary judgment during the first week of November.
In its motion, United Coal argued that the breach of contract claims should be tossed because neither party intended to be contractually bound in the absence of a formal, written agreement, which “indisputably never occurred.”
United Coal also posited that Italiana Coke's promissory estoppel claim should be dismissed because Italiana cannot establish that it reasonably relied on any promise by United Coal to supply the company with coal for the entire 2008-2009 season.
Italiana Coke fired back a day later, requesting summary judgment on the breach of contract claims and asking the court to grant it $9,367,500, plus interest fees and costs.
Italiana Coke is represented in this matter by Mayer Brown LLP.
United Coal is represented by Venable LLP.
The case is Italiana Coke SRL v. United Coal Co. LLC, case number 08-cv-04725, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Nick Malinowski135204002009/12/19 00:00Court Compels Docs In Suit Over $9M Coal ContractThursday, Nov 19, 20092009/11/192009/11/191002009/11/191A federal judge has directed United Coal Co. LLC to turn over documents, including those concerning quality management standards, to Italiana Coke SRL in the companies' dispute over the existence and validity of a $9.3 million coking coal contract, which was agreed upon but never formally executed.604614dbd6ef427fa851d10f8b71694d152009-11-18T19:24:00-06:00A federal appeals court has found that Cell Therapeutics Inc.’s settlement of a qui tam suit should not preclude it from bringing suit seeking contractual indemnification from its reimbursement consultant for damages as part of the government’s investigation over its leukemia treatment Trisonex.
The U.S. Court of Appeals for the Ninth Circuit on Wednesday reversed a lower court’s summary judgment ruling that CTI’s claims against Lash Group Inc. were barred, finding that the settlement agreement among CTI, the government and a CTI employee did not constitute a finding of liability under the federal False Claims Act.
After CTI received federal approval of Trisonex in September 2000, the biotechnology company retained Lash’s predecessor to handle Medicare reimbursement, but the consultant mistakenly advised CTI, as well as Medicare carriers and medical providers, that the drug’s off-label uses were reimbursable by Medicare, according to the opinion.
In 2006 a CTI employee filed a qui tam action against CTI and Lash, and the government intervened in the suit as to CTI but not as to Lash. The government alleged that CTI knowingly promoted the sale and use of Trisonex for off-label uses and made false statements that led to false claims to Medicare.
CTI settled the suit for $10.6 million, and the district court dismissed the claims without making a finding of liability. Lash settled separately for an undisclosed amount.
While the qui tam suit was pending, CTI brought a breach of contract suit against Lash seeking a ruling that Lash was contractually obligated to indemnify it for damages related to the government’s investigation and any resulting settlement. The suit claimed that Lash’s bad advice resulted in $12.3 million in damages in addition to the settlement payment.
The U.S. District Court for the Western District of Washington held that CTI’s claims were barred in light of the Ninth Circuit’s decision in Mortgages Inc. v. U.S. District Court for the District of Nevada, which directed dismissal of a qui tam defendant’s counterclaims for indemnification against the relator.
The district court determined that qui tam defendants may not seek indemnification from co-participants in a scheme to defraud the government and that CTI’s claims could not proceed because its damages were dependent upon its payments to settle the FCA claims in the qui tam case.
On appeal the Ninth Circuit said that based on its decision in United States ex rel. Madden v. General Dynamics Corp., CTI may advance independent claims without regard to an eventual finding of liability under the FCA, and the district court should have separated claims that “only have the effect of offsetting liability” from those that are not dependent on liability under the FCA.
The Ninth Circuit found that the district court improperly concluded that CTI’s $12.3 million claim for lost profits was not an independent claim but rather depended on the claim for FCA indemnification barred by Mortgages.
The appeals court held the Mortgages decision did not extend to damages for claims other than fraud claims under the FCA.
“The facts articulated in CTI’s complaint are sufficient to state a claim for damages independent of the question of CTI’s liability under the FCA,” Circuit Judge M. Margaret McKeown said.
The Ninth Circuit also found that the district court erred by characterizing the settlement as establishing FCA liability and thus barring the indemnification claim against Lash.
It noted that settlements generally do not bar claims against nonparties and further explained that the district court’s presumption that a settlement with the government is equivalent to a finding of liability would risk chilling the settlement process.
While the government obtained several concessions from CTI regarding preclusive effects of the agreement, there were no concessions made regarding CTI’s liability for fraud, the Ninth Circuit said.
Also, Lash was not a party to the settlement, and none of CTI’s claims against Lash were raised during the qui tam case or the settlement, the appeals court said.
“To the extent that some courts have interpreted Mortgages to foreclose qui tam defendants from bringing claims against third parties, we respectfully disagree with that gloss on the case,” Judge McKeown said.
This decision will be important to any qui tam of FCA defendant who has been sued for following the advice of a consultant or other professional, according to Daniel Dunne, an attorney representing CTI.
“These defendants may now have recourse against the firms and persons they relied on, to their detriment. It will be important for corporations facing qui tam claims to consider third-party indemnification claims in their strategy,” he said.
An attorney representing Lash was unavailable for comment.
Circuit Judges Michael Daly Hawkins and Jay S. Bybee also heard the case.
Cell Therapeutics Inc. is represented in this matter by Orrick Herrington & Sutcliffe LLP.
Lash Group Inc. is represented by Reed Smith LLP and Corr Cronin Michelson Baumgardner & Preece LLP.
The case is Cell Therapeutics Inc. v. Lash Group Inc. et al, case number 08-35619, in the U.S. Court of Appeals for the Ninth Circuit.135075002009/12/18 00:009th Circ. Allows CTI Contract Dispute To Go ForwardWednesday, Nov 18, 20092009/11/182009/11/18182009/11/181A federal appeals court has found that Cell Therapeutics Inc.’s settlement of a qui tam suit should not preclude it from bringing suit seeking contractual indemnification from its reimbursement consultant for damages as part of the government’s investigation over its leukemia treatment Trisonex.5906ce47660c42278b80089c4a406eb4172009-11-18T16:59:00-06:00A group of consumers is hoping to get a breach of contract and antitrust class action certified against American Home Mortgage Securities LLC, Deutsche Bank National Trust Co. and Wells Fargo Bank over securitized adjustable rate mortgages.
The plaintiffs, led by Elvin and Phyllis Valenzuela, moved for class certification Tuesday in U.S. District Court for the Eastern District of California.
Individuals who took out option adjustable rate mortgage loans in California that were originated by American Home Mortgage would be eligible for the class if the yearly numerical interest rate on the loan was 2 percent or less, if the loan used the term “may” instead of “will” or “shall” when describing rate changes, and if the loan met other criteria.
Banks allegedly violated the Truth in Lending Act, California's unfair-competition law and other laws in offering option ARM loans without disclosing the rates borrowers eventually would have to pay.
American Home Mortgage and the other banks knew their conduct would cause many consumers to lose their homes through foreclosure, and the banks are guilty of fraud, negligence and breach of contract, according to the plaintiffs' complaint.
Thousands of consumers were sold option ARM home loans, according to the complaint. The products were allegedly sold based on the promise of a low fixed payment resulting from a prominently featured low interest rate.
In fact, consumers were charged a different, much higher interest rate that was disguised from them, the complaint said.
“Once lured into these loans, consumers could not easily extricate themselves from the loans because defendants included in the loans a stiff and onerous prepayment penalty, making it extremely difficult, if not impossible, for borrowers to pay off the loans,” according to the complaint.
Though the banks represented the initial rate as extending for three to five years, they immediately increased rates as soon as the loans were signed, the consumers said. The banks allegedly told consumers that by accepting the loans they could lower their payments and save money.
The banks knew they were selling financial products in a false and deceptive manner and knowingly concealed and omitted information, the consumers said.
Consumers are asking the court to award actual damages, compensatory damages, consequential damages, statutory damages, punitive damages, rescission, equitable relief, restitutionary disgorgement of all profits, interest and declaratory relief.
They are also asking for a mandatory injunction for the banks to permanently include clear and conspicuous disclosure statements with option ARM loans, reasonable attorneys' fees and other relief the court deems proper.
Browne Woods George LLP and Arbogast & Berns LLP represent the plaintiffs. Counsel was not immediately available for comment.
Severson & Werson PC represents the banks in the matter. Counsel declined to comment on the case.
The case is Valenzuela et al. v. American Home Mortgage et al., case number 08-cv-01179, in the U.S. District Court for the Eastern District of California.134897002009/12/18 00:00Consumers Seek Class Cert. In Mortgages SuitWednesday, Nov 18, 20092009/11/182009/11/18502009/11/181A group of consumers is hoping to get a breach of contract and antitrust class action certified against American Home Mortgage Securities LLC, Deutsche Bank National Trust Co. and Wells Fargo Bank over securitized adjustable rate mortgages.96e31e7f6d384b6b9c7add1d33325928582009-11-18T15:32:00-06:00A Virginia man has pled guilty to conspiring to bribe Panamanian government officials to secure a no-bid contract to maintain buoys and lighthouses along the Central American nation's waterways.
Charles Paul Edward Jumet, 53, faces maximum penalties of 10 years imprisonment and fines of at least $500,000, for violation of the Foreign Corrupt Practices Act and making false statements, according to a plea deal Judge Dennis Dohnal of the U.S. District Court for the Eastern District of Virgina approved Friday.
As part of his plea, Jumet admitted that from 1997 through 2003, he and others paid administrators in Panama's defunct National Maritime Ports Authority and another government official more than $200,000.
Although unnamed in the complaint, the recipients of the bribes have been identified by several Caribbean news outlets as Hugo Torrijos; Ruben Reyna; and Ernesto Perez Balladares, Panama's president from 1994 to 1999.
According to court documents, Jumet and his co-conspirators established several Panamanian shell companies affiliated with his Virginia-based company Overman Associates to perpetrate the scheme.
One of those companies, Ports Engineering Consultants Corp., was awarded a 20-year concession to manage infrastructure along Panama's waterways in December 1997, court documents said.
This arrangement was suspended in 2000 during an investigation by Panama's Comptroller's Office, but resumed three years later, according to the U.S. Department of Justice.
In July 2004, the U.S. Department of Homeland Security began its own criminal investigation into the matter, assisted by the FBI, and found that Jumet had disguised at least one payment as a “re-election campaign contribution” for one of the officials, while other bribes were passed through the Panamanian shell companies as dividends, according to the DOJ.
As part of the plea, Jumet will also continue to cooperate with the U.S. government in the investigation, the DOJ said.
Public defender Robert Wagner, who represents Jumet, said he would not comment on the case before sentencing.
Former Panamanian Comptroller Alvin Weeden told the newspaper La Prensa that the contracts were worth approximately $3 million and that his investigation was sparked by PECC's overt appropriation of port authority furniture.
Weeden's case against Balladares, Torrijos and Reyna fizzled out in 2005, because Balladares was immune from investigation as a member of the Central American Parliament and a Panamanian court determined his protection extended to his accomplices, the Panama News said.
Jumet is represented by the Office of the Federal Public Defender.
The case is United States of America v. Jumet, case number 09-cr-00397, in the U.S. District Court for the Eastern District of Virginia. 135003002009/12/18 00:00Man Cops To Bribing Panamanians Over Buoy ContractsWednesday, Nov 18, 20092009/11/182009/11/18742009/11/181A Virginia man has pled guilty to conspiring to bribe Panamanian government officials to secure a no-bid contract to maintain buoys and lighthouses along the Central American nation's waterways. 4573af5c1df14a2db9141d2add6f4da0772009-11-18T15:04:00-06:00A federal court's 2005 ruling that Ford Motor Co. breached a contract by ceasing to supply trucks to its dealers after selling its business will now apply to an entire class of plaintiffs, after a federal judge issued a fiery rebuke denying a request by Ford to reconsider the ruling.
District Judge Jose L. Linares of the U.S. District Court for the District of New Jersey ripped Ford on Monday for asking for reconsideration nearly four years after the ruling, and said the automaker's request would have fallen flat even if it had been timely. The judge simultaneously granted a motion for summary judgment by a class of truck dealer plaintiffs, led by Bayshore Ford Truck Sales Inc., looking to apply the ruling to the entire class, which was certified in September 2006.
The judge did, however, grant Ford's request for summary judgment against 36 individual class members whose claims against Ford were barred for various reasons. An attorney for the plaintiffs said about 100 class members remain in suit.
The dealers, under contract with Ford to sell the company's heavy trucks, sued in 1999, accusing the company of breaching its contract. The dealers said Ford stopped supplying them with vehicles after it sold its heavy truck business to Freightliner/Sterling for $300 million in 1997.
The court initially granted summary judgment to the plaintiffs in December 2005 on the grounds that letting Ford cut off supply without terminating the contract would “completely change the nature and purpose of the contract.”
It was not until September 2006 that the court certified a class of plaintiffs.
The class moved for summary judgment in June, asking the court to apply its 2005 ruling to the entire class.
Ford also bid for summary judgment, asking the court to reconsider its 2005 ruling and seeking to exclude 36 class members whose claims were allegedly barred.
Judge Linares granted the plaintiffs' motion, making no secret of his feelings toward Ford's reconsideration bid.
The company's request came “almost four years after the decision and after a class has been certified,” the judge said. “It goes without saying that such a request is untimely.”
But even if timely, the judge said, “Ford’s opposition and its own motion do not set forth any facts or controlling law that were presented to but overlooked by this Court. Instead, it presents several arguments for why, in its view, the Court was wrong.”
In its briefs, Ford said the court's 2005 ruling “makes no sense,” and conflicts with prior case law from New Jersey district court. Leaving the ruling unchanged would create an “absurd disparity” between the court's ruling and prior decisions by the court, Ford said.
But Ford's frank approach did not sway Judge Linares.
“One would think such wild mis-characterizations of our judicial system mere hyperbole, but given that Ford makes similar statements repeatedly throughout its voluminous briefing... the Court assumes Ford is serious,” the judge said.
Judge Linares went on to note that any prior case law pertaining to related cases is non-binding.
The judge also tossed Ford's bid to deny damages to the class, saying damages may have to be determined individually rather than on a class-wide basis, but should not be dismissed entirely.
Judge Linares did grant summary judgment against 36 class members, including six plaintiffs who agreed its class membership should be terminated. Of the remaining 30, the vast majority had already released Ford from any claims by resigning their Ford heavy truck franchise at the time of the sale and demanding termination benefits.
Eric Chase, an attorney for the plaintiffs, called the ruling a "wonderful victory" for remaining class members.
"Ford wanted to revisit old issues ... and the court, absolutely correctly in our view, said you can't go back over that ground, that it's just a motion for reconsideration in another form," Chase said.
Attorneys for Ford declined to comment Wednesday.
Ford is represented by Day Pitney LLP and Hogan & Hartson LLP.
Attorneys from Bressler Amery & Ross PC represent the plaintiffs.
The case is Bayshore Ford Truck et al. v. Ford Motor Co., case number 99-cv-00741, in the U.S. District Court for the District of New Jersey.134914002009/12/18 00:00Judge Applies Ford Contract Ruling To Entire ClassWednesday, Nov 18, 20092009/11/182009/11/18922009/11/181A federal court's 2005 ruling that Ford Motor Co. breached a contract by ceasing to supply trucks to its dealers after selling its business will now apply to an entire class of plaintiffs, after a federal judge issued a fiery rebuke denying a request by Ford to reconsider the ruling.
b73a4d583e3a4638a8e795d76e4f20791012009-11-18T14:59:00-06:00Hydrogen generation and fuel cell developer Hydrogenics Corp. has sued American Power Conversion Corp. over $2.1 million it says it's owed for a breached manufacturing and supply contract for fuel cells.
The lawsuit, filed Friday in the U.S. District Court for the District of Massachusetts, accuses APC of violating the terms of the agreement, which Hydrogenics then said it had to terminate in July.
After inking the deal in August 2006, Hydrogenics ramped up its fuel cell manufacturing program to fill the order, the lawsuit says.
The agreement called for APC to order and pay for up to 500 HyPM XR 12 kW Fuel Cell Power Modules, according to the complaint.
In the first year of the deal alone, Hydrogenics was to manufacture up to 50 of the cells. The contract stipulated that if APC didn't order at least that many in that time frame, Hydrogenics could cancel the deal and collect a termination payment based on “a formula determined by the number of fuel cells for which APC had ordered and paid,” the suit said.
“Hydrogenics invested heavily in its fuel cell manufacturing program over the next few years with the good faith expectation that APC would fulfill its contractual obligation,” the company said in the suit.
Instead, APC ordered and paid for just two fuel cells. Hydrogenics notified APC in July that it had elected to terminate the agreement, but APC refused to pay about $2.14 million Hydrogenics says it is owed, the complaint said.
That amount, which was due from 15 days after Hydrogenics notified APC it was canceling the deal, was based on a formula that charged APC one-third of the $13,000 value of each the undelivered units.
The company is seeking damages and an award of the $2,136,420 termination payment it says it's owed. It tried unsuccessfully to resolve the matter out of court before suing, it said in a statement.
A spokesman for APC was not immediately able to discuss the case. An attorney for Hydrogenics did not immediately return a call for comment.
APC supplies backup power products and services, including surge suppressors, uninterruptible power supplies, power management software and other products targeted at critical network infrastructures, according to the company's Web site.
Ontario-based Hydrogenics listed $39.4 million in revenues and about $47.6 million in total assets in 2008. Its wholly owned subsidiaries include Hydrogenics Test Systems Inc., Stuart Energy Systems Corp. and European companies. It purchased Algonquin Power Income Fund in October.
Hydrogenics is represented by Goodwin Procter LLP.
Counsel information for APC was not available.
The case is Hydrogenics Corp. v. American Power Conversion Corp., case number 1:09-cv-11947, in the U.S. District Court for the District of Massachusetts.134892002009/12/18 00:00Hydrogenics Sues American Power Over $2M ContractWednesday, Nov 18, 20092009/11/182009/11/18502009/11/181Hydrogen generation and fuel cell developer Hydrogenics Corp. has sued American Power Conversion Corp. over $2.1 million it says it's owed for a breached manufacturing and supply contract for fuel cells.
f3a6b64ea306424c8308d2adb7ccce9a772009-11-18T13:34:00-06:00A judge has tossed accusations of tortious interference with a business relationship from Assembly Technology Inc., saying the company failed to show that defendant Samsung Techwin Co. Ltd. did not have the right to commit the allegedly interfering acts.
U.S. District Judge Thomas N. O'Neill Jr. of the Eastern District of Pennsylvania said in a dismissal order Monday that companies have the right to interfere with competitors' contracts in certain circumstances under Pennsylvania's Second Restatement of Torts, and ATI did not show that Samsung, a Korean technology manufacturer, broke the rules.
Huntington Valley, Pa.-based ATI lodged its initial complaint in February, claiming Samsung began negotiating for services with a third-party consultant when it was still under contract for those services with ATI.
The companies forged a contract in 1999 making ATI the sole supplier of certain equipment for Samsung's high-speed chip mounting machinery, and the parties renewed terms of the deal in January each year, according to an amended complaint filed in June.
ATI also contracted with third-party consultants, directing them to work closely with Samsung, according to the complaint. The consultants informed ATI they planned to terminate their relationship with ATI after the 2006 version of the contract expired on Jan. 2, 2007.
But unbeknownst to ATI, Samsung planned to continue its relationship with the consultants by contracting with them to replace ATI as its suppliers, according to the complaint.
Rather than wait until the 2006 contract expired, however, Samsung began negotiating with the consultants during the contract period, the suit alleged.
Samsung asked the court to throw out the case on the grounds that ATI's statute of limitations had run out and that ATI failed to state a claim.
The judge didn't bite on the statute of limitations argument, saying it remained unclear as to when, exactly, ATI learned of the alleged injury, but dismissed the case without prejudice for failure to state a claim.
A tortious interference claim requires a plaintiff to show that the defendant did not have privilege to commit the alleged interfering act, the judge said.
Pennsylvania allows companies qualified privilege to interfere with a contract that is terminable at will if the contract involves competitors of the acting company, the acting company does not employ wrongful means or cause unlawful restraint of trade, and the acting company is interfering for the purpose of advancing his interests in the competition, the judge explained.
“Pennsylvania courts … apply this qualified privilege in recognition of the fact that healthy marketplace competition may require a party to seek to divert business from its competitors in ways that otherwise might be improper,” Judge O'Neill said.
The burden fell to ATI to show either that Samsung violated qualified privilege provisions, or that the restatement does not apply, either because the parties are not competitors or because the contract in question was not terminable at will.
The judge rejected ATI's arguments on both fronts, saying the contract was terminable at will, the parties were competitors, and no wrongful means has occurred.
ATI said Samsung “knowingly induced” the consultants to breach their good faith duty by negotiating prior to the termination of their contract with ATI, but that doesn't constitute a wrongful act, the judge said.
“Wrongful means include 'physical violence, fraud, civil suits and criminal prosecutions' as well as 'independently actionable conduct,'” Judge O'Neill said.
The judge granted ATI leave to amend its complaint.
An attorney for Samsung declined to comment Wednesday. An attorney for ATI did not return calls seeking comment.
Duane Morris LLP represents Samsung.
ATI is represented by Eckert Seamans Cherin & Mellott LLC.
The case is Assembly Technology Inc. v. Samsung Techwin Co. Ltd., case number 09-cv-00798, in the U.S. District Court for the Eastern District of Pennsylvania. 134935002009/12/18 00:00Interference By Samsung Was Not A Violation: JudgeWednesday, Nov 18, 20092009/11/182009/11/18502009/11/181A judge has tossed accusations of tortious interference with a business relationship from Assembly Technology Inc., saying the company failed to show that defendant Samsung Techwin Co. Ltd. did not have the right to commit the allegedly interfering acts. 613f6b0d28af48a283abedc002f4af8b592009-11-18T13:13:00-06:00Plaintiffs in class actions in Pennsylvania and New Jersey can continue to pursue state consumer protection claims against TD Bank NA over dormancy fees on gift cards after judges in both cases denied the bank's motion to dismiss on federal preemption grounds.
Judge Robert B. Kugler of the U.S. District Court for the District of New Jersey denied TD Bank's motion to dismiss on Nov. 12. That was followed by Judge Timothy J. Savage's decision in the U.S. District Court for the Eastern District of Pennsylvania on Tuesday.
Plaintiffs in both cases claim that TD Bank failed to alert consumers about monthly $2.50 dormancy fees on gift cards ranging in value from $25 to $500, while advertising the cards as “free” or “no fee.” Banks assess dormancy fees on gift cards after a period of inactivity, reducing their value.
E-Commerce Times, an online publication, estimates that consumers lose out on about 10 percent of the $300 billion gift card industry each year, partly due to dormancy fees, Judge Savage noted.
According to Judge Savage's ruling, there is no mention of the material terms of the gift cards anywhere on the cards or in their elaborate packaging.
The fees are calculated by the issue date of the card, but the cards only list a “good thru” date, meaning consumers have no way of knowing when the dormancy fees kick in, Judge Savage's ruling said.
In both cases, TD Bank said the National Bank Act and rules put out by the Office of the Comptroller of the Currency on gift cards preempted the enforcement of consumer protection laws in New Jersey and Pennsylvania.
Relying on the June 26, 2009, U.S. Supreme Court ruling in Cuomo v. the Clearing House Association LLC, a decision that said state consumer protection laws for financial products are not preempted by federal regulations, both judges said TD Bank's preemption arguments could not be used to block the two class actions.
“The duty to refrain from deceptive and misleading conduct is imposed on all businesses,” Judge Savage wrote in his opinion. “State laws of general application, which merely require all businesses, including banks, to abide by contracts and refrain from making misrepresentations to customers, do not impair a bank’s ability to exercise its gift card issuing powers.”
The plaintiffs did not get everything that they wanted.
In the New Jersey case, Judge Kugler ruled that plaintiffs' claims that TD Bank should be barred from issuing gift cards with fees were preempted by federal laws on gift cards. Plaintiffs in the Pennsylvania case dropped those charges at oral arguments, according to Judge Savage's ruling.
Still, Leonard V. Fodera of the firm Silverman & Fodera PC, which represents both sets of plaintiffs, said he was pleased with the rulings.
“I think that over the last eight years or so, preemption has been used as a sword more often than not to cut away the rights of individuals,” he said in a telephone interview, adding that the rulings were part of a restoration of the balance between federal and state laws.
Stephen G. Harvey of Pepper Hamilton LLP, which is representing TD Bank, stressed that some of the claims have been tossed and that the judges were forced to accept all claims as true for the purpose of the dismissal motion.
“TD Bank is confident that it will be able to prove that its practices with respect to marketing of gift cards were in no way deceptive or misleading,” Harvey said.
The Pennsylvania case was transferred to the federal court in January. The New Jersey case was transferred from the Camden County Superior Court in March.
The plaintiffs in both cases are represented by Silverman & Fodera PC.
Pepper Hamilton LLP is counsel for TD Bank in both cases.
The cases are Mann et al. v. TD Bank NA et al., case number 09-cv-01062, in the U.S. District Court for the District of New Jersey, and Mwantembe et al. v. TD Bank NA et al., case number 09-cv-00135, in the U.S. District Court for the Eastern District of Pennsylvania. 134958002009/12/18 00:00NJ, Pa. Gift Card Claims Against TD Bank Move AheadWednesday, Nov 18, 20092009/11/182009/11/18892009/11/181Plaintiffs in class actions in Pennsylvania and New Jersey can continue to pursue state consumer protection claims against TD Bank NA over dormancy fees on gift cards after judges in both cases denied the bank's motion to dismiss on federal preemption grounds.d1e4314d9aef4e16ab94210f4bd92b41292009-11-18T12:08:00-06:00A federal judge has dismissed claims by two former Lasco Foods Inc. employees that the restaurant supplier abused the legal process by filing a trade secrets suit against them in order to harass them and get them to agree to a noncompete covenant.
Judge Jean C. Hamilton of the U.S. District Court for the Eastern District of Missouri ruled Monday that the employees, Ronald Hall and Charles Shaw, hadn't alleged that Lasco was trying to get anything out of its trade secrets suit that it couldn't obtain legally.
In counterclaims filed in Lasco's suit, Hall and Shaw argued that their former employer filed the suit primarily to harass them, force them to spend money defending the suit and pressure them to agree not to go after Lasco customers even though they never signed a noncompete agreement while they worked for the company.
But simply having ulterior motives for filing a lawsuit doesn't amount to abuse of process, Judge Hamilton said.
“Indeed, perceived harassment, annoyance and the need to spend large amounts of money are unfortunate byproducts of litigation,” the opinion said. “The simple act of a filing a lawsuit, however, is not unlawful, even if the lawsuit is filed for such reasons.”
Hall and Shaw also didn't offer any evidence that Lasco wanted them to agree not to go after its customers, and the company hadn't demanded such an order in its suit or offered to settle the case in exchange for one, according the judge.
“Absent any factual support for defendants’ claim that plaintiff is seeking a restrictive covenant, the court cannot find that plaintiff filed this lawsuit for the ulterior motive of imposing a restrictive covenant,” she said.
Attorneys for Hall & Shaw and for Lasco could not immediately be reached for comment Wednesday.
Lasco filed suit in October 2008, alleging that Hall and Shaw misappropriated trade secrets from company computers to start their own company, Hall & Shaw Sales, Marketing & Consulting LLC, after leaving the restaurant supplier.
Hall & Shaw is also named as a defendant in Lasco's suit.
In addition to a claim under Missouri's trade secrets law, the suit includes claims under two federal computer security laws — the Computer Fraud and Abuse Act and the Stored Wire and Electronic Communications Act.
It also includes counts of violating two Missouri computer security laws, unfair competition, conversion, tortious interference, civil conspiracy and breach of the duty of loyalty.
In October, Judge Hamilton denied the defendants' motion to dismiss most of Lasco's complaint, though she did dismiss two state common law claims on preemption grounds.
Even though the employees were authorized to access Lasco's computer records while they worked at the company, that access became “unauthorized” under the federal computer security laws once they used the information for their own interests, the judge found.
Lasco is represented by Ogletree Deakins Nash Smoak & Stewart PC.
The defendants are represented by McCarthy Leonard Kaemmerer LC.
The case is Lasco Foods Inc. v. Hall & Shaw Sales, Marketing & Consulting LLC et al., case number 4:08-cv-01683, in the U.S. District Court for the Eastern District of Missouri.134968002009/12/18 00:00Lasco Trade Secrets Suit Not Abusive, Judge SaysWednesday, Nov 18, 20092009/11/182009/11/18742009/11/181A federal judge has dismissed claims by two former Lasco Foods Inc. employees that the restaurant supplier abused the legal process by filing a trade secrets suit against them in order to harass them and get them to agree to a noncompete covenant.d9fdb1ad1fbb44dea4ddedc25a72a3ba142009-11-17T18:18:00-06:00A major iPCS Inc. shareholder has come out against the sale of the wireless communications company to Sprint Nextel Corp., arguing that the $24 per share offer — valued at $831 million — reflects neither the fundamental business value of iPCS nor the value of iPCS' breach of contract claims against Sprint.
Investment firm Greywolf Capital Management LP, which owns 8.2 percent of iPCS, said in a letter to iPCS' board of directors that this was a great deal for Sprint, but that the price for iPCS shareholders was far too low.
Instead of $24, the transaction price should be between $34 and $47 per share, according to Greywolf.
“Sprint has the motivation and the ability to acquire iPCS for a fair price,” the letter said. “Should the proposed transaction be rejected, we stand ready to review a revised deal from Sprint.”
Greywolf has been one of iPCS' largest shareholders since 2004, and it always expected Sprint would one day try to acquire the company, which is a Sprint affiliate, according to the investment firm.
After losing a breach of contract suit against iPCS over an exclusive marketing area, Sprint said in June that it would divest part of its integrated digital enhanced network assets in some iPCS territories in the Midwest.
But when Sprint announced the $831 million deal with iPCS on Oct. 19, it said it would no longer have to sell off those assets.
In Monday's letter, Greywolf said Sprint was never serious about selling those assets and that it was simply using the threat of divestiture as a negotiating tactic.
The divestiture was never viable for Sprint due to the complexity of splitting apart switch infrastructure, building a new network monitoring system, building out a voice mail platform, and rerouting cell sites both inside and outside the affected territories, among a number of other things, according to the investment firm.
The divestiture would be extremely costly and legally questionable, it added.
“We believe shareholders and the board should disregard Sprint's various empty threats to economically harm iPCS if the transaction is not completed,” the letter said. “Any improper actions by Sprint will be subject to arbitration or litigation, and will ultimately fail.”
If the deal is approved, Sprint will acquire all outstanding shares of iPCS' common stock for $24 a share. Shareholders representing about 9.5 percent of the affiliates' outstanding shares already have agreed to vote for the merger and tender their shares, the companies said at the time.
Sprint would take on $405 million of net debt as part of the deal, which is expected to close in late 2009 or early 2010.
Meanwhile, the transaction would bring all litigation between the two companies to an end.
IPCS sued Sprint after the carrier tried to compete with the affiliate in iPCS' exclusive market by acquiring Nextel, which had been an iPCS competitor.
Eventually, the Illinois Circuit Court ruled that the contract between the two companies did not allow Sprint to compete with iPCS in the exclusive area and issued a permanent injunction against the carrier.
The parties were engaged in other lawsuits, as well.
A representative for Sprint declined to comment Tuesday.
--Additional reporting by Melissa Lipman 134782002009/12/17 00:00IPCS Shareholder Blasts Planned $831M Sale To SprintTuesday, Nov 17, 20092009/11/172009/11/17292009/11/171A major iPCS Inc. shareholder has come out against the sale of the wireless communications company to Sprint Nextel Corp., arguing that the $24 per share offer — valued at $831 million — reflects neither the fundamental business value of iPCS nor the value of iPCS' breach of contract claims against Sprint.6e0d23595ae546bfa37a84dec47bcdce292009-11-17T16:01:00-06:00Long John Silver's Inc. has reeled in a summary judgment victory in its suit accusing a former franchisee of defaulting on his obligations under separate agreements to operate two of the seafood chain's locations in Texas.
Judge Jennifer B. Coffman of the U.S. District Court for the Eastern District of Kentucky on Friday awarded the fast food chain more than $281,000 for its expenses related to Syed Naveed Zaidi's contract breaches and closed the case, ruling that “no genuine issues of material fact remain.”
“The plaintiff’s evidence — including the agreements among the parties, the affidavit of the plaintiff’s senior financial analyst, billing documents and the defendant's admissions — establish the existence of enforceable contracts, breach of those contracts by the defendant and damages caused by reason of the breach,” Judge Coffman ruled.
Zaidi acquired his first Long John Silver's in 2001 when franchisee Nasir Chaudhri assigned his rights and interests under a 1994 sublease for a Galveston, Texas, location to Zaidi, according to the ruling.
Two years later, Zaidi executed a sublease assignment with ABZ Management Inc. for the Galveston property, an arrangement that Long John Silver's consented to “subject to Zaidi's acknowledgment that he was not released from his liability under the sublease.”
When ABZ failed to perform its assigned obligations to the restaurant's satisfaction and abandoned the property a few years later, Zaidi ignored three notifications from Long John Silver's of his obligation to the restaurant for expenses including unpaid rent, taxes and a lease termination fee, the ruling said.
Zaidi entered into his second franchise agreement with the restaurant through his company Alif International USA Inc., which signed a franchise agreement in 2002 to run a location in Deer Park, Texas, according to the ruling.
As president, 100 percent shareholder and service-of-process agent for Alif, Zaidi signed and delivered to the restaurant a personal guarantee of Alif's obligations under the Deer Park contract, the ruling said.
Zaidi's company defaulted on that agreement in January 2008 as a result of its failure to pay amounts due, but when Long John Silver's notified Zaidi later the same month that the service agreement had been terminated, Zaidi and his company continued to operate the restaurant, according to the ruling.
Long John Silver's sued Zaidi and his company in March 2008, claiming breach of various contracts and requesting injunctive relief, an award of damages and its attorneys' fees and costs.
The court ordered Zaidi and Alif to cease operation and remove the Long John Silver's proprietary marks at the Deer Park restaurant no later than April 1, but the defendants did not comply with complete de-imaging until May 20 and failed to pay royalties and advertising fees from the contract's Jan. 31 termination to the restaurant's April 1 shuttering, the ruling said.
Judge Coffman dismissed the case March 10 after the parties informed the court that they had reached a tentative settlement, but Long John Silver's requested that the case be re-docketed in April, according to the ruling.
Representatives for both parties did not immediately respond to requests for comment Tuesday.
Long John Silver's is represented by Stites & Harbison PLLC.
Zaidi and his company are represented by Kochman Donati & Charbonnet LLP.
The case is Long John Silver's Inc. v. Zaidi et al., case number 08-cv-00120, in the U.S. District Court for the Eastern District of Kentucky.134686002009/12/17 00:00Long John Silver's Wins Franchisee Contract SpatTuesday, Nov 17, 20092009/11/172009/11/17892009/11/171Long John Silver's Inc. has reeled in a summary judgment victory in its suit accusing a former franchisee of defaulting on his obligations under separate agreements to operate two of the seafood chain's locations in Texas.a36f648a748f489a839b228c93a992e01012009-11-17T15:46:00-06:00The bankruptcy estate of Lehman Brothers Holdings Inc. has sued Barclays Capital Inc., claiming the investment division of Barclays Bank PLC improperly reaped a $5 billion windfall in breach of their asset purchase contract when it hurriedly scooped up Lehman assets last fall.
The adversary proceeding, filed Monday in the U.S. Bankruptcy Court for the Southern District of New York, charges certain Lehman employees with aiding and abetting a breach of fiduciary duty and claims Barclays breached a contract by paying billions less for Lehman assets than was specified in an asset purchase agreement.
"Certain Lehman executives knew, but did not reveal to others ... that Lehman negotiators had agreed to give Barclays an undisclosed $5 billion discount off the book value of the assets transferred to Barclays and later agreed to undisclosed transfers of billions more in so-called 'additional value' that Barclays demanded," the lawsuit says.
Lehman and its affiliates entered into bankruptcy on Sept. 15, 2008, and in the days immediately afterward Barclays moved in to buy valuable portions of Lehman business for some $45 billion, the suit says, adding that those assets should have been priced at between $50 billion and $52 billion.
The suit says Barclays is obligated to return billions to the debtors' estates and also seeks punitive damages and interest.
Monday's lawsuit was not an unexpected development. Lehman filed a motion in September seeking to modify the Barclays asset sale and noting the "undisclosed $5 billion discount."
In a motion filed earlier in November, the debtors also noted that questions about the quick sale to Barclays were obscuring details needed for the debtors to assemble a Chapter 11 plan.
Also Monday, the committee of unsecured creditors joined Lehman, filing their own suit that seeks a judgment that the Barclays asset sale was not properly authorized by the bankruptcy court.
The committee's lawsuit cites what it characterizes as an ironically named "clarification letter" executed Sept. 22, 2008, that "was used as the vehicle for Barclays' attempt to transfer billions of dollars in assets in connection with the sale transaction."
The court was never asked to approve the final, executed version of the clarification letter, the lawsuit charges.
"The misleadingly titled clarification letter is anything but a 'clarification,'" the creditors charge, adding that the document "crystallized Barclays’ receipt of a secret, undisclosed, $5 billion block discount in the value of the purchased assets."
James W. Giddens, liquidating trustee of Lehman Brothers Inc., who is represented by Hughes Hubbard & Reed LLP, has filed a similar case against Barclays.
A source said Tuesday that any trial date in the matters would not be set until April.
The Lehman debtors are represented by Weil Gotshal & Manges LLP and Jones Day.
The official committee of unsecured creditors is represented by Quinn Emanuel Urquhart Oliver & Hedges LLP.
London-based Barclays, represented before the bankruptcy court by Boies Schiller & Flexner LLP, could not immediately be reached for comment on Tuesday.
The bankruptcy case is Lehman Brothers Holdings Inc., case number 08-13555, in the U.S. Bankruptcy Court for the Southern District of New York. The Lehman complaint against Barclays is adversary proceeding number 09-01731. The unsecured creditors' lawsuit is adversary proceeding number 09-01733.134578002009/12/17 00:00Lehman Suit Seeks Return Of $5B To $7B From BarclaysTuesday, Nov 17, 20092009/11/172009/11/17892009/11/171The bankruptcy estate of Lehman Brothers Holdings Inc. has sued Barclays Capital Inc., claiming the investment division of Barclays Bank PLC improperly reaped a $5 billion windfall in breach of their asset purchase contract when it hurriedly scooped up Lehman assets last fall.0c18b4394550479d86f62d3644277d91592009-11-17T14:20:00-06:00Local units of telecommunications company CenturyLink Inc. are seeking over $20 million from Sprint Communications Co. LP, alleging that Sprint unilaterally lowered rates for connecting Voice Over Internet Protocol calls to local networks in violation of existing contracts.
In a complaint filed Monday in the U.S. District Court for the Eastern District of Virginia, CenturyLink units from at least 13 states — including Virginia, Texas, Pennsylvania, Missouri and Oregon — alleged that beginning in June, Sprint lowered the rate it would pay for connecting VoIP calls to CenturyLink's local telephone networks to .07 cents per minute, even for intrastate calls.
The contracts at issue set rates for time division multiplex technology — a standard data transmission method for telephone calls and other signals — and VoIP technology based on where the calls originated, according to the complaint.
Sprint's charges varied depending on whether callers were in the same or different states, and whether the calls were local or long distance, the complaint says.
The charges for long-distance interstate calls were based on tariffs approved by the Federal Communications Commission, while charges for long-distance calls made within a single state were based on tariffs set up by individual states, the suit states.
The first of the contracts were negotiated between the local units of CenturyLink and the Sprint units named in the complaint when they were both subsidiaries of Sprint Nextel Corp., according to the plaintiffs.
The agreements remained in force after the CenturyLink plaintiffs were spun off into a separate company called Embarq Corp. in 2006, the complaint says.
On July 1, CenturyTel Inc., based in Monroe, La., acquired Embarq and renamed the company CenturyLink, the suit states.
In June, around the same time that the merger with CenturyLink was near completion, Sprint filed a series of disputes and refused to pay the agreed charges for the first time, the suit alleges.
Sprint claimed that a 2004 FCC ruling that VoIP telephony was strictly under the agency's purview and was thus considered interstate commerce, the plaintiffs contend.
Because of that, Sprint argued it should only be charged the lower, interstate rate for access to local telephone networks rather than higher state-based rates, even if the VoIP calls were made within states, according to the CenturyLink units.
Although the FCC did not set interstate VoIP connection rates, Sprint proposed paying .07 cents per minute, the complaint says.
Sprint maintains that it is still entitled to use CenturyLink's local telephone networks but should no longer have to pay the agreed charges, according to the suit.
“In effect, the Sprint defendants have purported to rewrite the Sprint [interconnection agreements] unilaterally,” the CenturyLink units said.
According to the complaint, Sprint's move could lower their payments for VoIP traffic by 96 percent, retroactive to May 2007.
In addition to holding back disputed fees, Sprint began withholding payment, retroactive to May 2007, for non-VoIP charges in June, the suit claims.
Sprint argues that this is a “self-help” means of recovering the difference between .07 cents per minute and the charges previously paid to CenturyLink, again retroactive to May 2007, the complaint says.
As a result, CenturyLink has received no payments from Sprint on many invoices, the suit claims. According to the plaintiffs, Sprint owed over $20 million by the the end of October.
Matt Sullivan, a Sprint spokesman, said the company had just received the complaint and was not in a position to comment.
Representatives CenturyLink could not be reached for comment.
The plaintiffs are represented by Foley & Lardner LLP and Thomson Long Niesen & Kennard.
Counsel information for Sprint was not immediately available.
The case is Central Telephone Co. of Virginia et al. v. Sprint Communications Co. of Virginia, Inc. et al., case number 09-cv-00720, in the U.S. District Court for the Eastern District of Virginia. 134645002009/12/17 00:00CenturyLink Sues Sprint Over VoIP Fee ContractsTuesday, Nov 17, 20092009/11/172009/11/17592009/11/171Local units of telecommunications company CenturyLink Inc. are seeking over $20 million from Sprint Communications Co. LP, alleging that Sprint unilaterally lowered rates for connecting Voice Over Internet Protocol calls to local networks in violation of existing contracts.