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Archive for December, 2009

Andrew J. Trask (twitterfeed: @classstrategist) of the international law firm, McGuire Woods, has a great new legal blog called Class Action Countermeasures.   The blog’s tagline is “Discussions of the Strategic Considerations Involved in Class Action Defense,” and it definitely lives up to that promise.  Here’s just a sample of the titles of insightful articles published on the blog over the past month:

  • Making the 30(b)(6) Deposition Work for You
  • Fighting Fishing Expeditions, The Oppenheimer Relevance Objection
  • Beating Plaintiffs to the Punch, The Motion to Deny Class Certification
  • Battling Third Party Litigation Funding: Aim Interrogatories at Funding Sources?

I’m adding Class Action Countermeasures to my blogroll and will be checking it for updates regularly, so opposing counsel, beware!

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I’m in Montana this week visiting family for the Holidays. Merry Christmas, and check back next week for new content.

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Cy pres awards continue to be a hot topic both in the news and in academia.  The latest contribution comes from Columbia law student Sam Yospe, whose article entitled Cy Pres Distributions in Class Action Settlements (Columbia Business Law Review, forthcoming) examines judicial discretion in choosing cy pres awards and makes practical suggestions for reform.  Yospe’s article is an excellent secondary research source for anyone looking at issues relating to cy pres awards in class action settlements.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1492105

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Vanderbilt law professor Brian T. Fitzpatrick has published a great new research paper titled The End of Objector Blackmail?  The paper discusses the problems of objectors blackmailing the parties to a class action settlement into paying them a portion of the fees at the threat of holding up final approval and resolution of the settlement.   Professor Fitzpatrick discusses the history of the problem, provides a statistical analysis of “quick-pay provisions,” which have been one approach to combatting the problem, and finally argues for an approach that prohibits settlements of objector appeals unless the settlement includes a modification to the underlying agreement. 

My own take on this issue, based purely on my own anecdotal observations, is that the objector blackmail problem has improved significantly over the past few years.  From a defendant’s perspective, it was never much of a problem to have class counsel forfeit a portion of their fee to an objector to hasten approval of a settlement, but many plaintiffs’ lawyers have started refusing to negotiate with objectors.   Two additional effective practical tools for fighting frivolous objectors include 1) asking the Court to require the posting of a substantial bond pending appeal of any objection to the settlement; and 2) asking the trial court for sanctions against frivolous objectors or their counsel.

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Two of my greatest passions are class action law and NFL football, although not necessarily in that order.  So, my interest is always piqued when the two are combined.  Much to my delight, I came across this article from Rebecca Mowbray of The Times-Picayune that Saints Coach Sean Payton is the lead plaintiff in a putative class action filed in federal district court in New Orleans against a Chinese drywall manufacturer.  Let’s hope class certification comes after February 7, because it looks like Coach Payton may be too busy with other obligations to focus on his obligations as class representative until then and could run into trouble meeting the adequacy of representation standard under Rule 23(a)(4).

Curiously, in another would-be class action involving the NFL, Parrish v. NFL Players Association, class certification was denied in part because the named plaintiff was found to be an inadequate representative.   However, the would-be representative in that case was rejected for reasons much more serious than simply being busy.  The court found that he was inadequate because his “vindictive remarks aimed at defendants, the racial slurs in several of his statements, his stated unwillingness to ever settle this case, and his blemished track record of representing retired NFL players — all demonstrate that he cannot be trusted to fulfill his fiduciary duty to the proposed class.”

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The Fall 2009 edition of the ABA Class Action and Derivative Suits Committee’s newsletter CADS Report has some great articles on cutting-edge class action issues relating to class action litigation in state courts.  The topics include:

1) Use of state law equitable tolling to principles to resurrect a class action previously filed in state court;

2) Resolution of fact issues at the class certification stage in state court class actions;

3) Drafting effective class arbitration waivers;

4) Avoiding CAFA removal.

CADS members can get access to the on-line version of the report here.  If you aren’t a member, you should join.

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The United States Supreme Court has granted certiorari to review the Second Circuit’s decision in the “foreign-cubed” securities class action Morrison v. National Australia Bank, Ltd., No. 07-0583-cv (2d Cir. 2008).  The Second Circuit’s decision is discussed at some length in this October 28, 2008 CAB Entry.  The Supreme Court docket number is 08-1191

The questions presented for review are as follows: 

I. Whether the antifraud provisions of the United States securities laws extend to transnational frauds where: (a) the foreign-based parent company conducted substantial business in the United States, its American Depository Receipts were traded on the New York Stock Exchange and its financial statements were filed with the Securities Exchange Commission (“SEC”); and (b) the claims arose from a massive accounting fraud perpetrated by American citizens at the parent company’s Florida-based subsidiary and were merely reported from overseas in the parent company’s financial statements. 

II. Whether this Court, which has never addressed the issue of whether subject matter jurisdiction may extend to claims involving transnational securities fraud, should set forth a policy to resolve the three-way conflict among the circuits (i.e., District of Columbia Circuit versus the Second, Fifth and Seventh Circuits versus the Third, Eighth and Ninth Circuits). 

III. Whether the Second Circuit should have adopted the SEC’s proposed standard for determining the proper exercise of subject matter jurisdiction in transnational securities fraud cases, as set forth in the SEC’s amicus brief submitted at the request of the Second Circuit, and whether the Second Circuit should have adopted the SEC’s finding that subject matter jurisdiction exists here due to the “material and substantial conduct in furtherance of” the securities fraud that occurred in the United States. 

 

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