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Legal News Report 7-29-2016
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U.S. Judge Revives Intentional Fraud Claim in Lyondell Bankruptcy
Jul 27, 2016 | Reuters
By Jonathan Stempel
NEW YORK — A federal judge on Wednesday revived a $6.3 billion claim alleging that Lyondell Chemical Co engaged in an intentional fraudulent transfer in connection with its 2007 leveraged buyout, which took place less than two years before the company went bankrupt. -
Appeals court strikes down North Carolina’s voter ID law
Jul 29, 2016 | The Washington Post
By Ann E. Marimow
A federal appeals court on Friday struck down North Carolina’s requirement that voters show identification before casting ballots and reinstated an additional week of early voting. -
Washington State Fines Volkswagen $176 Million Over Emissions
Jul 28, 2016 | The Wall Street Journal
By Associated Press
SEATTLE—Washington state regulators have fined Volkswagen $176 million, saying the auto maker put people’s health at risk by releasing harmful air pollutants by cheating on emissions tests. -
Judge Dismisses $24 Billion Lawsuit Against Credit Suisse
Jul 28, 2016 | The Wall Street Journals
By Patrick Fitzgerald
A federal judge has dismissed a $24 billion lawsuit accusing Credit Suisse of running a predatory loan-to-own scheme that plaintiffs claimed loaded four luxury ski and golf resorts with debt so it could foreclose on their assets.
Legal News
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U.S. Judge Revives Intentional Fraud Claim in Lyondell Bankruptcy
Jul 27, 2016 | Reuters
By Jonathan Stempel
NEW YORK — A federal judge on Wednesday revived a $6.3 billion claim alleging that Lyondell Chemical Co engaged in an intentional fraudulent transfer in connection with its 2007 leveraged buyout, which took place less than two years before the company went bankrupt.
U.S. District Judge Denise Cote in Manhattan granted a request by a trustee representing Lyondell's unsecured creditors to reinstate the claim. The decision reversed a November 2015 ruling by a federal bankruptcy judge.
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Appeals court strikes down North Carolina’s voter ID law
Jul 29, 2016 | The Washington Post
By Ann E. Marimow
A federal appeals court on Friday struck down North Carolina’s requirement that voters show identification before casting ballots and reinstated an additional week of early voting.
The decision by a three-judge panel of the U.S. Court of Appeals for the 4th Circuit was an overwhelming victory for civil rights groups and the Justice Department that argued the voting law was designed to dampen the growing political clout of African American voters, who participated in record numbers in elections in 2008 and 2012.
“We can only conclude that the North Carolina General Assembly enacted the challenged provisions of the law with discriminatory intent,” Judge Diana Gribbon Motz wrote for the panel.
The challenge to North Carolina’s law is one of several cases throughout the country seeking to eliminate strict voting rules in place for the first time in the November presidential contest.
Opponents of the law, lead by the state NAACP, asked the three-judge panel to reverse a lower court ruling that upheld the voting rules.
In 2013, North Carolina lawmakers overhauled the election law soon after the Supreme Court got rid of a requirement that certain states with a history of discrimination receive pre-approval before changing voting rules. Legislators eliminated same-day voter registration, rolled back of a week of early voting and put an end to out-of-precinct voting.
During oral arguments, Judges James A. Wynn, Jr. and Henry F. Floyd remarked on the timing of the changes, and on comments from a state senator who said lawmakers were no longer restrained by the “legal headache” of the Voting Rights Act.
The timing “looks pretty bad to me,” Floyd said, prompting murmurs of agreement from the courtroom packed with opponents of the law, some of whom traveled from North Carolina to the Richmond-based appeals court.
The same three-judge panel — Judges Wynn, Floyd and Diana Gribbon Motz — had earlier ordered the state to keep same-day voter registration and out-of-precinct voting in effect as the case made its way through the courts.
As a result of North Carolina’s new election rules, Justice Department attorney Anna Baldwin told the court that thousands of voters were “shut out of the political process” in 2014. About 1,600 ballots cast in the wrong precincts were not counted. Another 12,000 people were unable to register to vote on the same day as the election.
In April, a lower court judge rejected the argument of opponents that the legislature had intentionally discriminated against minority voters and that large numbers would be disenfranchised by the changes to the voting system.
Lawyers representing the state pointed out that overall African American participation increased in 2014. Lawmakers also amended the measure a week before it was scheduled to be tested at trial to allow voters to cast ballots without an ID if they submit affidavits attesting to “a reasonable impediment,” including a lack of a birth certificate or transportation.
Gov. Pat McCrory (R), who supports the law, has said it would help prevent voter fraud.
North Carolina was one of 17 states set to have more restrictive voting laws in place for this presidential election than they had for the prior one. Laws in several states, including Texas, Wisconsin and Virginia, also are being challenged in court.
A federal appeals court in Texas this summer said the state’s strict voter-ID law discriminates against minority voters, and ordered a lower court to come up with a fix for the law in time for the November elections.
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Washington State Fines Volkswagen $176 Million Over Emissions
Jul 28, 2016 | The Wall Street Journal
By Associated Press
SEATTLE—Washington state regulators have fined Volkswagen $176 million, saying the auto maker put people’s health at risk by releasing harmful air pollutants by cheating on emissions tests.
The Department of Ecology said Thursday that the company violated state clean-air laws when it installed illegal software on many of its diesel vehicles to trick emissions tests.
Volkswagen vehicles emitted as much as 40 times the allowable amount of harmful nitrogen oxides while being driven, the department said. The fine was based on violations per vehicle, and the penalty holds Volkswagen accountable for environmental damage from more than 21,000 vehicles registered in Washington, the department said.
Volkswagen said in a statement Thursday that it is working with federal and state agencies on a national resolution of remaining environmental issues on the issue. “It is regrettable that some states have decided to pursue environmental claims now” after supporting that process, the company said.
Volkswagen said on June 28 that it reached a $603 million agreement with 44 U.S. states, the District of Columbia and Puerto Rico to resolve consumer-protection claims.
Separately, the German auto maker reached a deal in June with the U.S. government to pay as much as $14.7 billion to settle emissions-cheating claims with American consumers and regulators.
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Judge Dismisses $24 Billion Lawsuit Against Credit Suisse
Jul 28, 2016 | The Wall Street Journals
By Patrick Fitzgerald
A federal judge has dismissed a $24 billion lawsuit accusing Credit Suisse of running a predatory loan-to-own scheme that plaintiffs claimed loaded four luxury ski and golf resorts with debt so it could foreclose on their assets.
Judge Justin L. Quackenbush of the U.S. District Court in Idaho granted a request from Credit Suisse and real estate adviser Cushman & Wakefield for summary judgment, dismissing the suit and handing a big victory to the two companies in a six-year-long legal battle involving ultra-luxe vacation resorts in the Caribbean and western U.S.
The lawsuit, filed in 2010 on behalf of more than 3,000 homeowners, property owners and other investors, accused Credit Suisse of piling the resorts up with debt during the real estate boom so it could foreclose on their assets.
The property owners accused Cushman of aiding Credit Suisse’s purported scheme by creating a property-appraisal methodology that artificially inflated the resorts’ values.
Representatives for the property owners, Credit Suisse and Cushman weren’t immediately available for comment.
In a 45-page opinion, Judge Quackenbush said the homeowners failed to show “Credit Suisse wanted to own the resorts.” In addition, the judge ruled Cushman’s appraisals didn’t cause the property owners’ losses.
The judge said property owners failed to show that a loan-to-own program devised by Credit Suisse—and not the nationwide housing market collapse—caused the resorts’ developers to default.
The property owners claimed to have lost more than $8 billion, for which they sought three times that amount in the damages, on their investments at Ginn Sur Mer Resort in the Bahamas, the Lake Las Vegas resort in Nevada, the Tamarack Resort in Idaho and the Yellowstone Club in Montana.
Credit Suisse was a big player in arranging the financing of a number of upscale Western resorts that have since tumbled into bankruptcy. The bank marketed the loans to the developers of the high-end resorts.
The bank and its appraisers, however, used an uncommon appraisal method to value the properties. Known as “total net value,” the method relied on future expected revenue for the developers, rather than more traditional methods based on how the market valued the properties at the time.
The plaintiffs argued that the property valuations and loans were too high, burdening the developers when the property market crashed a decade ago.
Eventually, a dozen properties valued by the new method collapsed into bankruptcy or were forced to restructure, resulting in hundreds of millions of dollars in losses for investors and property owners.
Credit Suisse ended up buying some of the properties at discounted rates after they collapsed in value.
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