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Legal News Report 8-7-15
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BofA, Barclays Win Narrowing of 27 Libor-Rigging Lawsuits
Aug 4, 2015 | Bloomberg Business
By Bob Van Voris
A U.S. judge threw out a raft of claims against banks accused by investors of manipulating the London interbank offered rate, or Libor, which they said led to losses on transactions tied to the benchmark. -
What's At Stake In Uber Lawsuit's Class-Action Hearing
Aug 6, 2015 | Forbes
By Ellen Huet
Ride-hailing giant Uber heads to court again Thursday afternoon to see if its federal worker misclassification lawsuit will become a class-action — which means the company’s lawyers have to convince a judge that its drivers are so diverse that they shouldn’t be lumped together in a suit. -
The Never-Ending Lawsuit Against 2 Former A.I.G. Executives
Aug 6, 2015 | New York Times
By Randall Smith
Charles Dickens invented the interminable estate dispute Jarndyce v. Jarndyce for “Bleak House,” his 1853 novel. In real life, the Federal Trade Commission once took 16 years to force Carter’s Little Liver Pills to drop the word “Liver.” And antitrust regulators spent 13 years on a case against IBM before the Reagan administration dropped it abruptly. -
NYT hit with age, gender discrimination suit
Aug 7, 2015 | New York Post
By Keith Kelly
The New York Times Co. and its chief revenue officer are being sued by a former ad executive with nine years of service for “age, gender and race” discrimination after she got a new boss.
Legal News Report
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BofA, Barclays Win Narrowing of 27 Libor-Rigging Lawsuits
Aug 4, 2015 | Bloomberg Business
By Bob Van Voris
A U.S. judge threw out a raft of claims against banks accused by investors of manipulating the London interbank offered rate, or Libor, which they said led to losses on transactions tied to the benchmark.
U.S. District Judge Naomi Reice Buchwald in Manhattan ruled Tuesday that some claims were filed too late and that the court lacked jurisdiction over some defendants. She allowed local governments, hedge funds and other investors to pursue fraud claims. None of the cases was dismissed entirely.
Libor is a benchmark used to value more than $350 trillion of loans and securities globally. Bank of America Corp., Mitsubishi UFJ Financial Group Inc., Barclays Plc and Citigroup Inc. are among the banks accused in 27 lawsuits of rigging the rates for their benefit and at the expense of investors. Buchwald is overseeing all such cases in the U.S.
The investors alleged the banks reported rates below their true borrowing costs beginning in August 2007. As a result, investors and speculators in loans and securities with floating rates were harmed, they said.
In a series of earlier rulings, Buchwald ruled on claims by class-action plaintiffs and affiliates of Charles Schwab Corp., determining they were “wholly or substantially deficient.” The judge blocked the plaintiffs in those cases from suing under a civil racketeering statute and antitrust statutes that carry the possibility of triple damages.
Buchwald said traders in exchange-based securities and over-the-counter securities could pursue their claims.27 Cases
The claimants in the 27 cases affected by Tuesday’s ruling are individuals and firms that sued on their own, rather than seeking to combine their suits with others in class actions. They include the cities of Houston and Philadelphia, Salix Capital Ltd., the National Credit Union Administration Board and the Regents of the University of California.
Global authorities have investigated allegations that more than a dozen banks altered submissions used to set benchmarks such as Libor to profit from bets on interest-rate derivatives or make the lenders’ finances appear healthier.
Former UBS Group AG and Citigroup Inc. trader Tom Hayes was found guilty by a London jury on Monday of eight counts of conspiracy for scheming to rig the yen Libor rate. Hayes, the first person to be tried on charges of manipulating the benchmark, was sentenced to 14 years in prison.
The case is In re Libor-Based Financial Instruments Antitrust Litigation, 1:11-md-02262, U.S. District Court, Southern District of New York (Manhattan).
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What's At Stake In Uber Lawsuit's Class-Action Hearing
Aug 6, 2015 | Forbes
By Ellen Huet
Ride-hailing giant Uber heads to court again Thursday afternoon to see if its federal worker misclassification lawsuit will become a class-action — which means the company’s lawyers have to convince a judge that its drivers are so diverse that they shouldn’t be lumped together in a suit.
It’s the first and most advanced of several lawsuits filed against “Uber for X” startups that use an independent contractor-heavy business model, so many other companies are looking to this case for a hint of their own legal future. But Thursday’s hearing won’t actually be about whether Uber’s 160,000 California drivers are independent contractors or employees — it’ll be about the similarities of its drivers.
“What will be argued tomorrow is not actually the merits of the issue – it’s whether the issue can be adjudicated or tried on a class-wide basis,” said Gavin Rooney, an attorney at Lowenstein Sandler who is not involved in the case. “Can you decide at a stroke whether all the Uber drivers are or are not properly classified as independent contractors instead of employees?”
A class-action certification hearing isn’t about the case itself, but it can drastically change a case’s dynamics. If lawsuits become class-actions, that often ratchets up the stakes, giving plaintiffs some leverage to negotiate for a bigger settlement. None of the recent worker misclassification lawsuits — almost all filed by Boston attorney Shannon Liss-Riordan, against companies like Lyft, Instacart , Postmates, Caviar, Handy and Homejoy — have been certified as class-action suits yet.
The hearing for the Uber federal case is the first; a similar federal case against Lyft is scheduled for class-certification hearing in December. Juries will decideboth cases if they go to trial, judges ruled earlier this year.
“It changes the stakes dramatically if you go from one or two people complaining they are misclassified to a class of all drivers,” Rooney said. “While it’s not the merits, it’s obvious a very important decision, and I think if Uber were able to defeat class-certification it would be major victory.”
The Arguments
Uber’s overall goal is to convince Federal district court Judge Edward Chen that Uber’s California drivers — all 160,000 that ever drove in the state — are so varied in ways like how many hours they work or how many platforms they use that they cannot possibly be lumped together into one class. Liss-Riordan’s job will be to push back that the drivers may be different in some ways but not the essential ways that decide whether they’re employees or independent contractors.
Both sides will likely spend a lot of time referring to Wal-Mart v. Dukes, a 2011 Supreme Court case about whether 1.6 million female Wal-Mart employees faced gender discrimination in the workplace. (Ted Boutrous, Uber’s outside counsel, has an advantage here: he represented Wal-Mart and won.) The Supreme Court overturned an appeals court ruling about class-certification and decided the class members were too varied to be certified — part of a recent pattern in which the courts have indicated they want to be careful about giving out the power of a class-action suit.
The Wal-Mart decision raised the bar for getting class-certification — “UnderWal-Mart, that has become a more challenging test,” Rooney said — but Uber’s case also might be weaker than Wal-Mart’s, he added. In Wal-Mart, thousands of different supervisors working under different rules made allegedly discriminatory hiring and promotion decisions. For Uber, the situation drivers work under could be seen as much more consistent — signing up and using the same app to find passengers.
Liss-Riordan, who declined to comment for this story, will likely focus on making the relationship between Uber and its drivers look as simple as possible and highlighting the ways in which all drivers faced a common work situation.
One of the main ways Uber hopes to fight back is by showing how differently Uber’s drivers feel about their work, the company’s attorneys said. In earlier filings, the company provided about 400 testimonials from drivers talking about how much they love the job’s flexibility and want to stay independent contractors, not become employees.
Judge Chen is not expected to make an official decision on Thursday afternoon, though he may indicate which way he will rule, and will issue a written decision in the next few weeks.
The losing side can appeal and likely will. That would move the case to the Ninth Circuit Court of Appeals, which will decide whether to hear the appeal. In the past, class-certification decisions weren’t usually allowed to be appealed, but given how much those decisions can affect a case’s stakes — and therefore, the outcome or likelihood of a settlement — the rules were changed in 1998 to allow for appeals. If the class is certified, then Uber drivers will be given a chance to opt out of the class — but, as FORBES’ Dan Fisher pointed out, they cannot opt out of any changes to the structure of the business that Uber might make as a result of the lawsuit.
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The Never-Ending Lawsuit Against 2 Former A.I.G. Executives
Aug 6, 2015 | New York Times
By Randall Smith
Charles Dickens invented the interminable estate dispute Jarndyce v. Jarndyce for “Bleak House,” his 1853 novel. In real life, the Federal Trade Commission once took 16 years to force Carter’s Little Liver Pills to drop the word “Liver.” And antitrust regulators spent 13 years on a case against IBM before the Reagan administration dropped it abruptly.
Now a civil lawsuit is entering the pantheon of long-running court cases, passing 10 years in May with no end, or even a trial, in sight.
The suit was brought in 2005 by Eliot L. Spitzer, the New York attorney general at the time, and accused Maurice R. Greenberg, the former chief executive of the American International Group, and another former company executive of accounting fraud.
It has been delayed by what the presiding judge, Charles E. Ramos, exasperatedly described in 2014 as “a series of seemingly never-ending motions and appeals.”
Some legal experts say the case shows that a wealthy defendant with a high-powered legal team, in this case led by the litigator David Boies, can seemingly run circles around both state lawyers and the state court system itself.
The case has seen “World War I trench warfare, fighting over every yard,” said Peter J. Henning, a criminal-law professor at Wayne State University in Detroit, who writes an online column for The New York Times’s DealBook. He estimated that the defense could eventually cost more than $25 million.
One reason for the protracted proceedings is the New York court system’s unusual practice of allowing so-called interlocutory appeals of decisions made by the presiding judge before a trial even begins.
In this case, the team led by Mr. Boies has appealed five decisions by Justice Ramos and two by an intermediate-level appeals court. The most recent appeal postponed a trial that had been scheduled to start June 25.
“Does it slow things down? Yes,” said Oscar G. Chase, a law professor at New York University who has taught courses about New York practice. “It allows a deep-pocketed defendant to string out the case to their advantage. If a litigant’s goal is to delay the case, a series of appeals is an effective way to do it.”
In an interview, Mr. Boies defended the numerous appeals, saying that some were needed to gain access to witnesses or documents withheld by the state. “While I think it’s true that our appeals have inevitably delayed things, we have appealed because we thought we were right,” he said.Continue reading the main storyRELATED IN OPINIONTaking Note: The Biggest Losers From A.I.G.: TaxpayersJUNE 17, 2015
Beyond the appeals, the defense sought testimony from 48 witnesses, compared with eight by the state. And while the state asked for October arguments on the current appeal, the defense pushed for February 2016. David Nachman, one of the state prosecutors, said the defense’s actions over 10 years had made the case “as time-consuming and protracted as possible.”
Mr. Boies also denied that Mr. Greenberg, who is known as Hank, was stalling on a case in which the presiding judge has repeatedly ruled in favor of the state.
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“Hank wants a trial,” Mr. Boies said. Mr. Greenberg has always fought for what he believes, he said, and “has never been afraid of the courtroom.”
Mr. Spitzer filed the accounting fraud suit in a flurry of cases he brought against Wall Street, accusing analysts of fraudulent research, mutual fund operators of trading practices that shortchanged average investors and insurance brokers of bid-rigging and kickbacks.
In a nutshell, it accused Mr. Greenberg and A.I.G.’s former chief financial officer, Howard Smith, of engineering bogus transactions in 2000 and 2001 to bolster the company’s reserves and convert losses on insurance underwriting into losses on investments — all to make A.I.G.’s numbers look better to Wall Street.
Mr. Greenberg, who was ousted as chief executive in 2005 facing regulatory and internal investigations into the company’s accounting, has denied wrongdoing, saying he intended for the transactions to comply with accounting rules. Falsified documents that disguised some transactions were not his idea, he said, despite his reputation as a micromanager.
The transactions came to light when scrutiny of questionable accounting had intensified after sweeping frauds emerged at Enron and WorldCom. They were highlighted when A.I.G. itself settled accounting fraud charges brought by the Securities and Exchange Commission in 2006. Mr. Greenberg and Mr. Smith paid a total of $16.5 million to settle S.E.C. failure-to-supervise charges for the same transactions.
Along the way, the state dropped several accusations in its original complaint, and in 2013 it shifted the remedy it sought from restitution and damages to forfeiture of past pay and a ban on the defendants’ working in the securities industry or as officers of any public company.
The remedy shift took place soon after Mr. Greenberg and Mr. Smith participated in a $115 million settlement of a class-action suit over the accounting brought by former A.I.G. shareholders, which threatened to pre-empt the state’s demand for restitution. But it became a crucial element in the latest defense appeal, which argues in part that without a valid remedy the state has no case.
Mr. Boies, who also represented IBM in the antitrust case, said this has been the second longest out of some 85 significant court cases he has litigated.
“The IBM case went on for even longer, but there you were talking about the future of the entire computer industry,” he said. Describing other long-running cases, he said his wife, Mary, had been involved in a 15-year price-fixing case involving the sale of drugs to retail pharmacies.
In the Greenberg accounting case, the first two defense appeals concerned two rulings by Justice Ramos, in 2006 and 2008, that narrowed or blocked access to A.I.G. legal documents. The defense won the first appeal but lost the second. In a statement, a spokeswoman for Mr. Boies said these disputes delayed the case for two and a half years.
The third defense appeal successfully nullified a 2010 order by Justice Ramos that granted summary judgment for the state on one of the transactions but failed to gain the summary judgment it sought to dismiss all claims. The fourth, in 2012, unsuccessfully sought a summary judgment by a higher appeals court.
The fifth defense appeal, in 2013, unsuccessfully sought the removal of Justice Ramos for what it called bias against Mr. Greenberg. The sixth, filed in June 2014, unsuccessfully appealed a ruling by Justice Ramos that denied summary judgment for the defense after the state shifted remedies. The seventh, filed in April, sought a higher appeals court review of the same question.
This seventh appeal, by the Boies, Schiller & Flexner partner Nicholas Gravante, prompted the latest trial delay. Earlier, the trial had been scheduled to begin on Jan. 19 and then Feb. 25 of this year. A decision on the latest appeal isn’t expected until next year.
“I often find myself explaining to non-New York lawyers and clients, who don’t understand the delays that you find in the New York state court system, that it is so easy to gum things up with interlocutory appeals,” said Michael Gordon, a lawyer at Manatt, Phelps & Phillips.
One former state regulator noted that any strategy of delay might echo A.I.G.’s business strategy when Mr. Greenberg was at the helm: The company had a reputation for fighting claims and being slower to pay than some other insurers. (A.I.G. declined to comment on that perception.)
Still, some legal experts argue that Mr. Greenberg doesn’t deserve all the blame for the case’s slow pace, noting that Mr. Spitzer’s successors as New York’s attorney general, Andrew M. Cuomo and Eric T. Schneiderman, who currently holds the post, have not pulled out all the stops to speed things along.
“Different administrations may have differing commitments to any given case,” said James Park, a professor of corporate law at the University of California, Los Angeles, and a former assistant attorney general in the Spitzer era.
A spokesman for the state’s Office of Court Administration, David Bookstaver, acknowledged that the pretrial appeals procedures could favor wealthy litigants bent on delay, but he defended the rules as fair for both sides.
The two real-life inspirations for Jarndyce v. Jarndyce, cited by Dickens in a preface to “Bleak House,” lasted 17 years and more than a century. By the time the fictional estate case is concluded late in the book, legal fees have consumed all the assets in dispute.
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NYT hit with age, gender discrimination suit
Aug 7, 2015 | New York Post
By Keith Kelly
The New York Times Co. and its chief revenue officer are being sued by a former ad executive with nine years of service for “age, gender and race” discrimination after she got a new boss.
Tracy Quitasol, a 51-year-old Asian-American woman, was let go in January 2014 by Meredith Levien, who was a high-profile hire from Forbes two years ago and is now the chief revenue officer of the NYT Co.
Quitasol had been heading the Idea Lab, designed to come up with new digital ad programs, and was the executive director of product marketing and ad platform innovation.
The most explosive claim in the suit is the allegation that Levien, in a downsizing that took place in September 2013, let go predominantly older and minority employees.
A Times spokeswoman pointed out the Equal Employment Opportunity Commission has passed on taking action after on Quitasol’s complaints and said, “We plan to mount a vigorous defense against this suit.”
On the personal front, Quitasol claims in the Manhattan federal court suit that her problems began when Levien — then the executive vice president of advertising — along with the company’s human-resources department failed to curb a junior level staffer who refused to follow her instructions.
Quitasol claims it was a case of “gender discrimination” by the male employee — who, the suit claims, would only respond to instructions from male superiors. She brought the problem to the attention of Levien and HR who, the suit alleges, failed to take action.
On the discrimination charge, the suit claims during “two off-site meetings attended by all the advertising vice presidents, HR officials and Quitasol in September 2013, Levien said she would evaluate employees on whether they were ‘fresh to their career’ and ‘whether they have a family, what’s their situation.’ ”
At the meetings, “photographs of each staff member were shown on a screen and Levien repeatedly said, ‘We want people to look like the people we are selling to,’ ” according to the suit, and asked questions clearly intended to determine their “age, marital status and whether they had a family.”
The suit claims that in September 2013, 30 employees were targeted for dismissal, mostly older and minority employees.
They were replaced “in virtually every case by a white employee under the age of 40,” the suit claims.
Regarding her problem employee, Quitasol said she “became the target of repeated and serious incidents of hostile push-back and insolent treatment from Fergal Carr, a junior technical programmer” who was working with Quitasol on a project for Goldman Sachs.
The suit claims that the situation got so out of hand that Quitasol often had to have other male executives relay directions to the employee.
The Goldman Sachs project ultimately was delayed, and Quitasol said it was largely due to her problem employee.
Carr did not return a call but was quoted as telling The Daily Caller, which first reported on the suit, that the claims “were news to me,” and he was “not at all worried about them.”
“Ms. Quitasol was terminated for cause, and The New York Times denies the malicious and false allegations that are contained in the complaint she filed in June,” a Times spokeswoman said.
Quitasol said that the hiring of Levien has not reversed the ad slide since the digital gains are not enough to outpace the print declines (see story above).
A Times spokeswoman said, “It is worth noting that The Times advertising department has experienced important and sustained gains in digital ad revenue under her leadership.”
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