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Legal News Report 3-18-2016
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Plaintiffs Face Critical Legal Tests in GM Ignition-Switch Cases
Mar 14, 2016 | New York Times
By Jessica Dye
People suing General Motors Co over a faulty ignition switch will get two chances in a Manhattan court this week to argue that the U.S. automaker should be held accountable for injuries, deaths and lost vehicle value. -
U.S. Seeks to Block Tribune’s Deal for Orange County Register Publisher
Mar 17, 2016 | Wall Street Journal
By Anne Steele
Tribune Publishing Co. agreed to acquire all assets of Freedom Communications Inc., the owner of the Orange County Register, for $56 million in cash—but not if the U.S. Department of Justice has its way. Hours after the deal was announced, the Justice Department filed a civil antitrust lawsuit seeking to block the acquisition by the publisher of the Los Angeles Times, arguing that acquiring “its most significant competitor” would give Tribune Publishing a monopoly over newspaper sales in the area. -
DOJ and Ferguson Settle Lawsuit Over Racist Police Practices
Mar 17, 2016 | St. Louis Post-Dispatch
The city of Ferguson and the U.S. Department of Justice on Thursday filed a settlement agreement to resolve a lawsuit the federal government brought against Ferguson. Ferguson officials had provoked the lawsuit by rejecting some of the terms in a federal proposal to overhaul the city's police department and municipal court. -
Lawsuit against Harvard raises questions about split of biotech royalties
Mar 18, 2016 | Boston Globe
By Robert Weisman
Suggesting that Harvard University ran a “raggedy-ass” appeals process when a former graduate student claimed his research contribution was undervalued, a US judge has cleared the way for a rare trial on the school’s handling of royalties that could total millions of dollars. The trial, which has yet to be scheduled, may open a window on a process largely invisible to the public: how researchers in Harvard’s renowned laboratories divvy up money from scientific discoveries that fuel the Boston area’s burgeoning biopharma industry.
Legal News
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Plaintiffs Face Critical Legal Tests in GM Ignition-Switch Cases
Mar 14, 2016 | New York Times
By Jessica Dye
People suing General Motors Co over a faulty ignition switch will get two chances in a Manhattan court this week to argue that the U.S. automaker should be held accountable for injuries, deaths and lost vehicle value.
Jury selection starts on Monday in the second trial involving a car accident allegedly caused by the switch. The defect, which some GM employees knew about for years, prompted the recall of 2.6 million vehicles in 2014 and has been linked to nearly 400 serious injuries and deaths.
A first trial ended abruptly in January following allegations that the plaintiff gave misleading testimony.
On Tuesday, in the same courthouse, plaintiffs suing over lost vehicle value and accidents that occurred before GM's 2009 bankruptcy will ask the 2nd U.S. Circuit Court of Appeals to reverse unfavorable decisions from a bankruptcy court last year. They say the rulings could impact many of their claims under a sale agreement that largely freed "New GM" from burdensome liabilities that predate the bankruptcy.
The proceedings could affect claims worth potentially billions of dollars over the defective switch, which can slip out of place, causing engine stalls and cutting power to air bags, brakes and steering systems.
While GM has already paid $2 billion in settlements and penalties over the defect, it still faces hundreds of injury and death lawsuits. To help gauge those cases’ value, a series of test trials has been set to determine how juries view the evidence. That information is used in settlement talks.
As the first trial never reached a verdict, the one starting on Monday may be the first time a jury weighs in on whether GM is liable for its years-long failure to conduct a recall. A GM spokesman said the company will argue that the crash at issue was not caused by the switch.
At the 2nd Circuit, plaintiffs will argue that GM should face their claims because the company's deception deprived them of a chance to participate in the bankruptcy proceedings.
A lawyer for the plaintiffs, Steve Berman, said that had the U.S. government known about the defect during GM's bankruptcy, "The cars would have been recalled then, or the deal modified."
Plaintiffs’ lawyers have estimated the value of the economic-loss claims to be as high as $10 billion. But they acknowledge they could face steep hurdles to recovering anything if the 2nd Circuit does not overturn the earlier decisions.
http://www.nytimes.com/reuters/2016/03/14/us/14reuters-gm-recall-litigation.html
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U.S. Seeks to Block Tribune’s Deal for Orange County Register Publisher
Mar 17, 2016 | Wall Street Journal
By Anne Steele
Tribune Publishing Co. agreed to acquire all assets of Freedom Communications Inc., the owner of the Orange County Register, for $56 million in cash—but not if the U.S. Department of Justice has its way.
Hours after the deal was announced, the Justice Department filed a civil antitrust lawsuit seeking to block the acquisition by the publisher of the Los Angeles Times, arguing that acquiring “its most significant competitor” would give Tribune Publishing a monopoly over newspaper sales in the area.
Tribune successfully bid for the newspaper publisher through its subsidiary Orange County Media LLC at a public bankruptcy auction. The bid is subject to bankruptcy-court approval at a hearing March 21.
The Justice Department argued that, if combined, the merged operation would account for 98% of newspaper sales in Orange County and 81% of English-language newspaper sales in Riverside County. The deal would allow the Tribune to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers, the agency said.
A Tribune Publishing representative was unavailable for immediate comment. Before the suit, in the news release announcing the deal, Tribune said the deal allows Freedom’s Orange County Register and the Press-Enterprise to continue provide “premium news and information to consumers across Southern California.”
Freedom Communications filed for bankruptcy-court protection in November with a plan to sell the company to a local investment group led by the company’s publisher.
Tribune has been a mainstay in Freedom’s bankruptcy since a lawyer for Tribune announced the company’s interest in Freedom’s assets at the first bankruptcy hearing. At one point, Tribune even offered to finance Freedom’s bankruptcy.
Tribune also said it hoped to become the stalking-horse bidder, or lead bidder, but later announced to the court that it needed more time to evaluate certain of Freedom’s assets. That request was granted, but the new Feb. 12 stalking horse deadline came and went with no offer.
Although Tribune made its intentions known early, two other parties showed interest in Freedom’s assets during the case—Digital First and an investor group composed of Freedom Chief Executive Richard Mirman and developer Mike Harrah. Each entered bids for Freedom’s assets.
Digital First, whose largest shareholder is Alden Global Capital LLC, is also a newspaper publisher with properties including the Los Angeles Daily News, the Long Beach Press-Telegram and the San Jose Mercury News.
Just before the Wednesday auction, Tribune argued in court documents that Freedom shouldn’t be allowed to provide stalking-horse benefits to Digital First, which had bid $45.5 million. Tribune said Digital First wasn’t selected as stalking horse until March 13, missing the Feb. 12 deadline.
Protections for the stalking horse include $200,000 in expense reimbursement and a 2.5% breakup fee, which in this case amounts to $1.14 million, if another buyer purchases Freedom’s assets.
Freedom’s November filing for chapter 11 protection was its second trip through bankruptcy. The first, in 2009, ushered Freedom into the hands of several hedge funds, which in turn began selling some of its newspapers and its TV stations.
In 2012, Boston investor Aaron Kushner agreed to buy the Orange County Register and the paper’s other assets for about $50 million. He later purchased Riverside, Calif.’s Press-Enterprise for $27.3 million. Under Mr. Kushner’s ownership, the company refocused on local papers and hoped to compete with the Los Angeles Times by creating a Los Angeles Register.
But the company continued to bleed red ink, and Mr. Kushner stepped down as Freedom’s chief executive last year. Mr. Mirman, a Las Vegas investor, took control of the company’s day-to-day operations last March.
http://www.wsj.com/articles/tribune-agrees-to-acquire-orange-county-register-publisher-freedom-communications-1458214293
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DOJ and Ferguson Settle Lawsuit Over Racist Police Practices
Mar 17, 2016 | St. Louis Post-Dispatch
The city of Ferguson and the U.S. Department of Justice on Thursday filed a settlement agreement to resolve a lawsuit the federal government brought against Ferguson.
Ferguson officials had provoked the lawsuit by rejecting some of the terms in a federal proposal to overhaul the city's police department and municipal court.
But city officials approved the Justice Department proposal on Tuesday, saying they changed their minds after receiving a letter from Vanita Gupta, head of the Justice Department's Civil Rights Division. Gupta assured officials that the city's projected costs of the agreement had been overstated.
Thursday's filing, Attorney General Loretta E. Lynch said in a statement, “marks the beginning of a process that the citizens of Ferguson have long awaited – the process of ensuring that they receive the rights and protections guaranteed to every American under the law.”
The agreement will be in effect until Ferguson has achieved full compliance and maintained that status for two years.
http://www.stltoday.com/news/local/crime-and-courts/ferguson-and-doj-enter-consent-decree-to-resolve-lawsuit/article_cad8a3e0-0f9d-57e6-b980-aed35f40ed62.html
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Lawsuit against Harvard raises questions about split of biotech royalties
Mar 18, 2016 | Boston Globe
By Robert Weisman
Suggesting that Harvard University ran a “raggedy-ass” appeals process when a former graduate student claimed his research contribution was undervalued, a US judge has cleared the way for a rare trial on the school’s handling of royalties that could total millions of dollars.
The trial, which has yet to be scheduled, may open a window on a process largely invisible to the public: how researchers in Harvard’s renowned laboratories divvy up money from scientific discoveries that fuel the Boston area’s burgeoning biopharma industry.
“It’s very unusual that the case has gone this far,” said Steve Bauer, cochair of the national litigation practice at law firm Proskauer Rose LLP. “Usually colleagues [at research labs] sit down in a room and reach agreement. This is a blockbuster case where there’s potentially so much money involved that people are willing to fight over small percentages.”
The case focuses on Harvard professor Andrew G. Myers’s chemistry lab, which discovered a method for synthetically creating a new class of tetracycline antibiotics and licensed its technology to Watertown’s Tetraphase Pharmaceuticals Inc. Tetraphase raised $75 million in a 2013 initial public offering on the strength of that drug-making technology.
Former graduate student Mark Charest, who worked in the lab and was lead author of a paper describing the discovery in the journal Science, filed suit against Harvard and Myers in 2013. His lawsuit alleged, among other things, that he was cheated out of patent royalties worth about $10 million. Harvard denied the charges and filed a motion to dismiss.
“At its core, this is about Harvard operating with impunity with respect to student rights,” said Charest, who received a PhD in organic chemistry in 2004 and is now a health care investor. “We tried to operate in good faith with them and we were met with a stone wall.”
US District Court Judge Douglas P. Woodlock last month dismissed five claims, and removed Myers from the case as a defendant. But the judge let Charest move forward with two other claims: that Harvard denied him a proper appeals process and withheld royalty payments after he appealed.
While the judge dismissed claims contesting the initial royalty allocation, Charest’s attorney, Brian O’Reilly, said his client’s cut may increase if there are damage awards. Most patent lawsuits are settled before they go to court.
Both sides, however, said they won’t back down. O’Reilly said he hopes to bring the case to trial next year. A spokesman for Harvard said the university will continue to fight it.
“We are pleased that five of seven claims have been dismissed at this early stage of the case, including all the claims asserted against Professor Myers,” David Cameron, the university’s director of media relations, said in a statement. “We look forward to presenting evidence to defeat the two remaining claims in the next phase of litigation.”
Cameron declined to discuss the case beyond the university’s statement.
Myers, who ran the chemistry lab, was a scientific founder of
Tetraphase. The company was created in 2006 by Harvard’s Office of Technology Development to bring the antibiotics developed in the lab to market. Tetraphase made an upfront payment of $250,000 to Harvard and agreed to unspecified milestone payments and royalties on future sales. The antibiotics are in clinical trials, but Judge Woodlock’s decision last month described the Tetraphase license as Harvard’s “most successful to date” with a potential for “bringing in over $1 billion in revenue.”The royalties would be split under a Harvard formula that gives the technology development office 15 percent as an administrative fee. Of the remainder, inventors of a licensed discovery divide 35 percent among themselves and are given another 15 percent to support research in their lab. Twenty percent goes to the individual Harvard school involved and 15 percent to the department where the research occurred, and the final 15 percent goes to the university.
Charest’s lawsuit doesn’t involve Harvard’s overall windfall from Tetraphase royalties but only the distribution among the inventors in Myers’s lab. Like other research universities, Harvard calls for inventors to divide their share of the royalties evenly unless they agree otherwise. Charest alleged that he wanted an even distribution of royalties from the tetracycline patent in 2006 but was coerced by Harvard to accept 18.75 percent of the group’s share; Myers himself was given 50 percent, while three others researchers in the lab split the rest.
Three years later, Harvard and Tetraphase added a second patent to their licensing deal, giving the Watertown company rights to a production process technology developed in Myers’s lab after Charest had departed. The second patent was assigned 33 percent of the combined value of the license, effectively reducing royalties from the original patent by a third.
When Charest appealed that move, Harvard withheld his royalties from Tetraphase’s upfront and milestone payments and created an ad hoc committee to resolve the matter, according to the lawsuit. Charest’s suit said he wasn’t invited to the committee’s deliberations but told afterward that it had increased the value of the second patent to 45 percent, cutting his own share of royalties by nearly half.
Woodlock, in his Feb. 14 memorandum and order, was critical of Harvard’s appeals process, noting that the university bypassed its standing intellectual property committee by sending the case to the ad hoc panel. He cited a 1999 ruling against a one-sided arbitration process of the restaurant chain Hooters. “Harvard, like Hooters, is obligated to exercise its contractual discretion in good faith when setting the rules for an appeal,” Woodlock wrote.
In a 2014 hearing on Harvard’s motion to dismiss the case, the judge described Harvard’s “raggedy-ass approach” to resolving patent allocation appeals, though he stopped short of saying whether the process amounted to a breach of contract, as Charest claimed.
Myers, the Amory Houghton professor of chemistry and chemical biology at Harvard, wouldn’t discuss the allocation of royalties, referring questions to the university. But he said he was pleased that Woodlock had dismissed the charges against him.
“I look forward to dedicating all of my effort toward the continued development of life-saving therapeutics in human medicine,” Myers wrote in an e-mail.
https://www.bostonglobe.com/business/2016/03/17/lawsuit-against-harvard-raises-questions-about-split-biotech-royalties/29KG4BNGWd0eFmMohNk1EN/story.html
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