Ebbers to forfeit assets in settlement

Bernard Ebbers, former chief of WorldCom, “will pay $5 million and transfer nearly all his assets into a liquidation trust to settle civil charges related to the company’s accounting fraud” if the settlement is approved by a federal judge. Here’s more from the AP article:

Federal prosecutors said the trust, which would sell off Ebbers’ assets, would be worth up to $40 million. As a result, prosecutors said they would not seek restitution when Ebbers is sentenced July 13.

The settlement springs from a class-action suit brought by investors against former WorldCom executives and board members, plus investment banks that underwrote WorldCom securities and auditing firm Arthur Andersen.

Ebbers has bigger problems, though: “Ebbers was convicted of fraud and conspiracy in the $11 billion accounting-fraud collapse of WorldCom in 2002. Prosecutors are seeking to put Ebbers behind bars for the rest of his life.”

In addition to the immediate cash payment, Ebbers must sell his multi-million-dollar home in Clinton, Miss., which he and his family must leave by Oct. 31, prosecutors said. He must also sell his interest in a number of businesses, including a trucking company, a golf course, a rice farm and a lumber company, the government said.

Ebbers will be required to forfeit all his remaining cash in the settlement, except for money for legal bills and what prosecutors described as a “modest living allowance” for his wife, Kristie.

Class Action Filed Over Hacking of Credit Card Data

On Tuesday, BusinessWire published an article regarding Rothken Law Firm Announcing Class Action Filed Over Hacking of Credit Card Data:

SAN RAFAEL, Calif.–(BUSINESS WIRE)–June 28, 2005–Rothken Law Firm announces a class action lawsuit was filed today by California credit card holders and merchants against Cardsystems Solutions, Inc. and others alleging a failure to maintain adequate data security which led to a security breach exposing over 40 million credit card holders to potential fraud.

The suit, filed in San Francisco Superior Court, alleges that Cardsystems Solutions was negligent for failing to adequately secure consumers’ credit card data, and for breaking Visa and MasterCard “Data Security Standards” which prohibit storing certain kinds of confidential consumer information.

The lawsuit alleges that Cardsystems Solutions, Merrick Bank, Visa and MasterCard have violated their duty to timely and properly inform consumers of the nature and degree of the alleged security breach. The suit claims that these violations constitute “unfair, unlawful and deceptive business practices” under California’s Unfair Competition Law.

The lawsuit seeks a declaration from the Court that Cardsystems violated the standard of care in its data security methods and that card holders are entitled to notice of the nature and extent their private credit card data was compromised and on-going credit monitoring to prevent fraud.

“There are strong privacy laws and public policies in California protecting consumers’ confidential financial information — consumers, in our view, have the right to be immediately informed if the privacy and security of their credit card information have been violated so they can make an informed decision on whether to change account numbers or take some other prompt remedial action,” said Ira Rothken, counsel for the consumer and merchant class plaintiffs.

A copy of the complaint can be found at www.techfirm.com/cardsystems.pdf.

Daimler-Chrysler settles in IL & NJ

An AP article from ABC7Chicago.com is saying that Daimler-Chrysler has settled lending bias cases in Illinois and New Jersey:

Daimler-Chrysler’s North American financing arm has tentatively settled class-action lawsuits brought by minority customers in Chicago and New Jersey. Those customers alleged that there was racial bias in the automaker’s lending policies.

Daimler-Chrysler Services North America agreed to spend one-point-seven (M) million dollars in the Chicago case and one-point-eight (M) million in New Jersey.

That money would be used to provide Daimler-Chrysler employees with anti-discrimination training and sponsor consumer financial literacy programs in minority communities.

The Chicago settlement comes more than two years after a group of black and Hispanic customers filed a lawsuit alleging Daimler-Chrysler discriminated against their credit applications. The lawsuit led to a boycott of the automaker’s vehicles.

Suit Filed Against Hawaii’s Largest Funeral Business

A class action suit has been filed against Hawaii’s largest funeral services business:

The suit was filed against RightStar, its officers and former trustees.

RightStar owns and operates Valley of the Temples on Oahu, Kona and Homelani Memorial on the Big Island and Maui Memorial.

Among its trustees is former Gov. John Waihee.

The suit alleges the company violated state law and their trust duties by withdrawing over $9 million from customer trust fund accounts since 2002.

Late last year, the state also filed suit against RightStar, saying millions of dollars in trust funds are not accounted for.

For even more information, check out the article in the Honolulu Advertiser.

Milberg Weiss under investigation

Newsday.com is reporting that “class action behemoth” Milberg Weiss is now being probed by the federal government:

After decades of going after big corporations for fraud and corruption, Milberg Weiss Bershad & Schulman now finds itself under investigation.

A pioneer in class-action litigation, Manhattan law firm Milberg Weiss is caught up in a federal probe of illegal kickback payments to a client.

While the case may give class-action lawyers a black eye, experts said, it is not likely to affect the number of suits filed. It may, however, dilute the power of Milberg Weiss, which those in the field call an 800-pound gorilla.

Though the indictment doesn’t name Milberg Weiss, it said a “New York law firm” paid retired attorney Seymour Lazar $2.4 million over more than two decades so he and his family members would serve as plaintiffs in the firm’s suits. During that time, the firm collected more than $44 million in fees from those cases.

Milberg Weiss acknowledged it is the firm referred to in the charges by the U.S. attorney’s office in Los Angeles.

“We are outraged that these allegations have been made against the firm and reject them as baseless,” Milberg Weiss said in a statement.

The U.S. Attorney’s Office did not return calls seeking comment.

Founded in 1965 by Lawrence Milberg and Melvyn Weiss, the firm has been at the forefront of the field, often bringing suits on behalf of individual shareholders or consumers. Among its most notable recent wins are a $600-million settlement with Lucent Technologies for misleading investors and a $1-billion settlement with various technology companies over their initial public offerings. All told, it has recovered more than $45 billion for its clients.

The firm also did pro bono work in suits against German companies and Swiss banks on behalf of Holocaust victims.

Even tangential involvement in a kickback scheme may dent the reputations of Milberg Weiss and plaintiffs’ lawyers, who are often seen as extremely aggressive, said Jacob Frenkel, a former federal prosecutor who heads the securities enforcement practice of Shulman Rogers in Rockville, Md.

But it remains to be seen whether Milberg Weiss or any of its partners are indicted and what any fallout might be, said Donald Langevoort, a professor at Georgetown University Law Center.

Regardless of the impact on Milberg Weiss, plaintiffs will have no shortage of law firms clamoring for their attention, experts said. Many firms, including one founded by former Milberg Weiss partner William Lerach, now vie for cases.

“I don’t see a lessening in securities class-action lawsuits as a whole,” said Michael Perino, a law professor at St. John’s University. “There are enough other firms who can pick up any slack.”

Entertainment Industry victorious, thanks to Supreme Court

Here’s part of an article from 7DAYS regarding a recent Supreme Court ruling:

Steve Jobs must be beside himself with joy. As if sales of his mighty iPod were not already spectacularly high, they are now set to go through the roof thanks to a landmark victory for the entertainment industry in its war against illegal file sharing.

Music industry executives will also be celebrating after Monday’s ruling by the US supreme court against the online practices which have contributed to a staggering 25 per cent decrease in CD sales in the last five years, while film studio executives will be equally relieved that a rise in the sharing of movie files could be slowed.

The class action lawsuit was filed in 2001 by a group of 28 entertainment industry companies including the likes of EMI, Time Warner and Disney against software producers Grokster and StreamCast Networks.

Of course it is not just Apple that stands to gain from this decision that is set to strike a deadly blow against online “peer-to-peer” networks such as Grokster and Morpheus, but also other sites that legally offer music downloads, like the once notorious Napster.

This is perhaps the most significant decision in this matter since Napster, one of the first generation of file-sharing networks, was sued by heavy metal group Metallica, and was eventually forced to shut down in 2002.

To read the rest, click here.

Possible class action against dairy industry

CNN is reporting that an advocacy group called PCRM, upset over ads claiming that milk aids weight loss, is waging war against the dairy industry:

WASHINGTON (Reuters) - An advocacy group that has repeatedly tangled with the dairy industry launched a new attack Tuesday, filing lawsuits alleging false advertising for claiming that milk helps in weight loss.

The Physicians Committee for Responsible Medicine (PCRM) said one lawsuit filed is intended as a class action against the industry to stop the ads, while a second suit seeks monetary damages.

Targets in the lawsuits include Kraft Foods Inc. (up $0.14 to $31.63, Research), General Mills (up $0.16 to $50.56, Research), Danoneunit Dannon and trade groups including the International Dairy Foods Association (IDFA), accusing them of falsely marketing dairy milk as good for weight loss, said Howard White, a spokesman for PCRM.

“The dairy industry is looking at falling sales and is attempting to boost its bottom line by aiming at America’s waistline,” White said.

To be balanced, here’s another perspective:

Critics, including the dairy industry, have pointed to the advocacy group’s connections with People for the Ethical Treatment of Animals (PETA), an animal rights group. They say the relationship calls into question whether it really seeks nutritional reform, or animal rights reform.

Thaxton Bankruptcy

In an Associated Press story posted to Myrtle Beach Online news that Thaxton, a Lancaster, SC-based car-title lender and insurance company specializing in high-risk loans, that filed for bankruptcy in October 2003, may also become defendants in a class-action securities fraud case. So ruled U. S. District Court Judge Robert Anderson of Greenville. The defendants, Finova Capital, accountants Cherry Bekaert & Holland, and the law firm of Moore and Van Allen are alleged to have committed securities fraud that led to the collapse of Thaxton, which owes $120 million to 3,800 investors.

Attorney Randy Eason said that the motion Judge Anderson ruled on allows lawyers Gil Bagnell and Chad McGowan to represent all investors whose money was frozen. It will also allow the case to move through the court system more quickly.

“Now, we are not only representing those who retained us, but all Thaxton Group note holders,” Eason said. “This puts more pressure on the defendants. They now have greater exposure because of all the note holders.” According to an article in The Lancaster News

Some of the note holders opted to sell their notes to claims traders.

In March 2004, some claims traders were offering to buy the notes for 30 cents on the dollar, but that amount is now up to 52.5 cents on the dollar.

“We continue to feel it’s in the note holders’ best interest to bide their time,” Eason said, and he believes everything is looking positive for the investors to get their money back, but he is still unsure how long it could take. The lawsuit is scheduled for September. Eason said that while the total cost of the lawsuit will be shared among all the note holders, it should also result in a greater recovery.

Teen workers suing over forced fashion purchases

Teresa F. Lindeman of the Pittsburgh Post-Gazette recently wrote about the many class-action suits now being brought against retail clothing chains:

Turns out there is a fine line between hiring people who love the clothes, buy the clothes and sell more by serving as unofficial clothing models, and creating an environment where workers earning barely more than minimum wage feel they have to spend their earnings just to keep their jobs.

Over the past three years, specialty-clothing stores such as Express and Abercrombie have spent millions of dollars settling class-action lawsuits over whether they made their employees buy their clothes.

The push began in 2002, when California labor officials announced a $2.2 million settlement with Abercrombie affecting 11,000 employees. It was a wake-up call for retailers, lawyers, employees – and not a few parents of teens working at the mall.

The article mentioned that suits have been brought against J. Jill in California, Express in Pennsylvania, Abercrombie & Fitch in many states, Bebe in California, and the operator of Lane Bryant stores in New Jersey.

It also stated that, “so far, retailers have shown a tendency to settle rather than let the litigation drag out long enough to get a ruling.”

High court agrees to review gas-fixing case

The Supreme Court has agreed to consider dismissing a suit accusing ChevronTexaco and Shell Oil of improperly inflating gasoline prices in the late 1990s.

Justices will review a lower court ruling that allowed the class-action lawsuit by 23,000 gas station owners to proceed. The lawsuit accuses Shell and Texaco of setting up two joint ventures in 1998 to illegally fix gas prices.

The 9th U.S. Circuit of Appeals in San Francisco ruled the suit should go to trial because of evidence suggesting the venture unfairly restrained trade.

The court noted that when crude oil was at historic lows of $10 to $12 a barrel, the ventures increased the prices of Shell and Texaco brands by 40 cents a gallon in Los Angeles and 30 cents in Seattle and Portland, Ore.

The ventures, Motiva Enterprises and Equilon Enterprises, operated from 1998 to 2001, when Texaco sold its stake to win approval of its purchase of Chevron. During that time, however, Texaco and Shell continued to maintain separate brand names and competed for customers “at the pump,” according to the ruling.

In a dissent, Judge Ferdinand Fernandez said the ventures were legitimate because they were approved by the Federal Trade Commission and several state attorneys general.

“What could be more integral to the running of a business than setting a price for its goods and services?” Fernandez wrote.

Backing ChevronTexaco and Shell Oil in the appeal were the U.S. Chamber of Commerce and major corporations such as Coca-Cola and Microsoft. They argue in filings that routine pricing decisions by joint ventures would be constantly challenged in court if the lower ruling is allowed to stand.

Lawyers for the gas station operators say distributors paid $1 billion or more in excessive charges, which they will seek to recoup. However, while the distributors passed the alleged excess costs to consumers, consumers wouldn’t necessarily be eligible for refunds.

The cases are Texaco v. Dagher, 04-805 and Shell Oil v. Dagher, 04-814. Arguments will be heard in the court’s next term beginning in October.

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