Toyota, Plato, Apple, Kaupthing, Arkema, ANZ Bank, Moore in Court News

The federal judge overseeing sudden- acceleration lawsuits against Toyota Motor Corp. appointed 21 plaintiffs’ lawyers to manage litigation involving U.S. claims.

Toyota, the world’s largest automaker, faces at least 228 federal and 99 state lawsuits including proposed class actions over economic loss and claims of personal injuries or deaths caused by sudden-acceleration incidents. The federal lawsuits were combined April 9 in a multidistrict litigation, or MDL, before U.S. District Judge James V. Selna in Santa Ana, California.

More than 70 plaintiffs’ lawyers sought appointments to leadership positions in the federal lawsuits, including about 60 who spoke at a May 13 hearing before Selna. Before the hearing, Selna proposed limiting the number of plaintiffs’ attorneys on leadership committees to 12.

“The court became convinced at the initial hearing that a larger group of counsel is needed to meet the needs of the case,” the judge said in the May 14 order. Selna set the next hearing in the lawsuits for May 28.

The company, based in Toyota City, Japan, has recalled more than 8 million vehicles for fixes related to sudden, unintended acceleration. The automaker announced in September that it was recalling 3.8 million Toyota and Lexus vehicles because of a defect that may cause floor mats to jam accelerator pedals. The company later recalled vehicles over defects involving the pedals themselves.

Selna appointed as co-lead counsels for the economic loss plaintiffs Steve Berman at Hagens Berman Sobol Shapiro LLP in Seattle, Marc M. Seltzer at Susman Godfrey LLP in Los Angeles and Frank Pitre at Cotchett Pitre & McCarthy in Burlingame, California.

He appointed Elizabeth Cabraser at Lieff Cabraser Heimann & Bernstein LLP in San Francisco and Mark P. Robinson Jr. at Robinson Calcagnie & Robinson in Newport Beach, California, as co-leads for personal injury and death cases. Cabraser’s firm has filed at least 20 lawsuits against Toyota claiming deaths or injuries caused by unintended acceleration incidents, and Robinson has won multiple million-dollar verdicts against automakers.

The economic loss and personal injury committees will each have nine members, including the lead counsel. Selna also appointed three lawyers as plaintiffs’ liaison counsel for state and related federal cases while naming Monica R. Kelly, of Ribbeck Law in Chicago as a consultant to the committees on foreign law issues.

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News Corp. Doesn’t Have to Give Rival Meeting Videos

News Corp., which has been fighting lawsuits alleging unfair competition in its business of supermarket promotions, doesn’t have to turn over videos of sales meetings to a former rival, a judge ruled.

U.S. District Judge Anne Thompson in Trenton, New Jersey, denied a request by Floorgraphics Inc. to see the videos, which the company alleged might show anticompetitive behavior, according to court filings. The judge also ruled that News Corp. was entitled to enforce an earlier settlement reached with Floorgraphics in 2009, when it bought the company’s contracts for $29.5 million, according to the filings.

“We’re happy with the result,” Lee Abrams, a lawyer for News Corp.’s News America Marketing unit, said May 14 in a phone interview.

News Corp., led by Chief Executive Officer Rupert Murdoch, agreed in February to pay $500 million to Valassis Communications Inc. to settle claims that its tactics caused $1.5 billion in damages to the supermarket coupon company. Floorgraphics Executive Vice President George Rebh said in a March 29 affidavit that he wanted to renew his fight with News Corp. after reading how much it had paid Valassis.

Rebh said May 14 in a phone interview that he hasn’t decided whether to appeal Thompson’s May 12 ruling.

New York-based News Corp.’s News America Marketing unit, which showed a $414 million operating loss including the Valassis payment for the quarter ended Dec. 31, faces separate claims by Insignia Systems Inc. at a trial scheduled for December. The Minneapolis-based marketer of in-store promotions seeks unspecified damages.

Lawyers for Insignia have 20 hours of videotaped sales meetings at News America Marketing “that are quite powerful in terms of their mentality with respect to competition,” Insignia Chief Executive Officer Scott Drill said in an interview last month.

The cases are Insignia Systems Inc. v. News America Marketing In-Store Inc., 04-cv-04213, U.S. District Court, District of Minnesota (Minneapolis) and Floorgraphics Inc. v. News America Marketing In-Store Services Inc., 04-cv-03500, U.S. District Court, District of New Jersey (Trenton).

Plato Learning Holders Win Bid to Stall Sale Vote

Plato Learning Inc. investors won a judge’s ruling that temporarily blocks a vote on the proposed sale of the maker of computer-based tutoring programs to Thoma Bravo LLC.

Plato, based in Bloomington, Minnesota, said in March that Thoma Bravo, a Chicago-based private-equity firm, would pay $143 million, or $5.60 a share in cash. Maric Capital Master Fund Ltd., with 91,000 shares, sued in Delaware Chancery Court seeking more money.

“Unless the proxy statement is supplemented by a corrective disclosure” on the company’s valuation analysis, the sale cannot go through, Judge Leo Strine Jr. wrote in an opinion following a hearing May 13.

The transaction is subject to a stockholder vote on May 19, and must be completed by June 1, Strine wrote. He said he would lift the injunction “once timely and satisfactory disclosures are made.”

In a complaint filed April 12, lawyers for Maric said Plato directors agreed to the takeover at too low a price partly because the buyer promised to retain the current senior management.

“Reasonable efforts have not been taken” by directors to get the best price, William S. Norton, a lawyer for Maric, told Strine at the May 13 hearing in Wilmington, Delaware.

Wendy J. Wildung, representing Plato, countered that, “We think plaintiffs are living in a hypothetical world,” and the company got the “highest available” price.

Robert Rueckl, Plato’s chief financial officer, didn’t return voice and e-mail messages seeking comment on Strine’s ruling.

The case is Maric Capital Master Fund Ltd. v. Plato Learning Inc., CA5402, Delaware Chancery Court (Wilmington).

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IPhone Investigation Documents Ordered Unsealed

Search warrant documents in an investigation of the possible theft of an Apple Inc. iPhone prototype will be made public, a California judge ruled.

Judge Clifford V. Cretan in Redwood City ruled May 14 against the San Mateo County District Attorney’s office, which argued that unsealing the documents will reveal identities of potential witnesses and compromise the investigation. Media organizations argued they should have access to the documents based on constitutionally protected free-speech rights.

The county’s argument relies only on its right to “maintain the security of an ongoing investigation,” Katherine Keating, a lawyer for the media organizations said May 13 in an e-mail. “What the District Attorney hasn’t done beyond making these vague assertions is explain what exactly is in the records” that justifies keeping them secret in light of “the public’s right of access to judicial records,” she said.

Based on Apple’s claim that an iPhone prototype was stolen, the county’s computer crimes task force last month broke down the front home door of Jason Chen, an editor at technology blog Gizmodo.com, and seized computers and electronics, court filings show. Gizmodo said it purchased the phone for $5,000 after it was found at a bar in a San Francisco suburb. It was returned to Cupertino, California-based Apple a few days before Chen’s home was searched.

“The goal of the investigation is to find out every single person who came in contact with that phone from the moment it left the restaurant and ended up back in the hands of Apple, and to find out every person who handled it, what they knew and in the course of that if there was any crime committed,” Deputy District Attorney Steve Wagstaffe said in a phone interview may 13.

Media organizations sought to have the documents unsealed to determine whether the county had a legal basis for the warrant used to break into Chen’s home.

The case is In Re Sealed Search Warrant Records, 2010-0034, San Mateo County Superior Court (Redwood City, California).

Ex-Kaupthing Chairman Wants Police ‘Assurances,’ Lawyer Says

Kaupthing Bank hf’s former Chairman Sigurdur Einarsson, who is wanted by Icelandic police on suspicion of fraud and counterfeiting, won’t return to Iceland until police provide “some assurances.”

“Einarsson was invited to come to Iceland for an interview,” which was due to take place May 13, Einarsson’s lawyer Ian Burton said in a telephone interview May 13. “When it came time for Einarsson to go over, we said, what we’d like you to do is to provide us with some assurances.”

Iceland issued an international arrest warrant for Einarsson on May 12, according to the website of Interpol, the world’s largest international police organization. The country’s special prosecutor is investigating a number of former Kaupthing executives for alleged market manipulation and forgery. Before its collapse, Kaupthing lent $12 billion in deals that were “if not illegal, completely unethical,” Prime Minister Johanna Sigurdardottir said in August.

Four people have been detained in the Kaupthing probe, which had been Iceland’s largest bank before its 2008 collapse. They include the bank’s former Chief Executive Officer Hreidar Mar Sigurdsson, former Iceland Chief Executive Officer Ingolfur Helgason and the former head of the bank’s Luxembourg branch, Magnus Gudmundsson. Kaupthing’s former Chief Risk Officer Steingrimur Karason has been banned from leaving the island.

Einarsson, who lives in the U.K., can’t be arrested by international police under the current warrant, according to Burton.

“I think there’s a misconception,” said Burton. The warrant “is only to arrest him for an interview. And as such, that warrant, which they’ve notified Interpol of, isn’t a warrant that entitles any foreign jurisdiction to arrest him for the purposes of extradition. You can only extradite somebody if they’re actually in the position to be charged.”

Olafur Thor Hauksson, Iceland’s special prosecutor leading the investigation, said “we don’t claim to have any jurisdiction in the U.K.,” in a phone interview. “The Reykjavik district court issued an arrest warrant, which has since been published by Interpol. Whether or not Einarsson will be arrested on the merit of that warrant depends on a U.K. court.”

Kaupthing, Glitnir Bank hf and Landsbanki Islands hf collapsed in October 2008 after they amassed debts equivalent to 12 times the island’s gross domestic product. After taking control of the three banks, the government was forced to seek a $4.6 billion International Monetary Fund-led loan to stay afloat.

ANZ Bank ‘Shocked’ at Alleged Drug Ring in Melbourne

Australia & New Zealand Banking Group Ltd. said it was “shocked” to learn that a drug trafficking ring was allegedly operating from a bank office in Melbourne, and is helping police with the investigation.

“We have zero tolerance for this type of behavior and none of the staff linked to this investigation are with ANZ any longer,” said Stephen Ries, a Melbourne-based spokesman for the bank. “We are treating the matter very seriously and have been doing everything we can to assist the police.”

Seven ANZ Bank employees have been allegedly linked to dealing drugs and another seven to buying from them, the Herald Sun newspaper reported May 14, citing an unidentified person. Search warrants on ANZ Bank offices and the homes of staff linked to the allegations were issued, and computer records and documents have been seized, the report said.

An internal work e-mail system was being used by those involved in the alleged dealing, the newspaper said, without disclosing where it obtained the information.

The department at the center of the three-monthlong federal police probe collects debts from people who owe the bank, according to the report.

The Australian Federal Police said a 30-year-old man from the Melbourne suburb of Forest Hill was charged on Feb. 11 with importing the drug mephedrone, or 4MMC. A spokeswoman, who declined to be identified in line with force policy, wouldn’t comment further on the report when contacted by Bloomberg News.

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Legal Reviews

Massey’s Upper Big Branch Mine Under Criminal Probe, U.S. Says

A Massey Energy Co. unit that operated the West Virginia coal mine where 29 miners died on April 5 is being investigated for possible “willful criminal activity,” the Justice Department said May 14.

The U.S. attorney’s office for the Southern District of West Virginia, in Charleston, said in a letter that investigators are examining actions by the Massey unit, Performance Coal Co., and its directors and officers. The letter didn’t outline specific allegations.

The U.S. attorney, in the letter, requested that a pending civil case against Performance by the Mine Safety and Health Administration, part of the Department of Labor, be suspended until the criminal probe is completed. The Labor agency is pursuing civil cases over safety violations. Performance ran the Upper Big Branch mine, site of the explosion, for Massey.

A call to Roger Hendriksen, a spokesman for the Richmond, Virginia-based company, wasn’t returned.

The Federal Bureau of Investigation is probing Massey for possible bribery of state and federal inspectors, a person familiar with the examination has said. The explosion at Upper Big Branch sparked the investigation, a second person familiar with the matter said April 30, asking not to be identified because the matter is confidential.

At least two dozen Massey employees, federal and state officials and mine union members have been interviewed by FBI agents, the first person familiar with the investigation said.

Massey in a statement on April 30 said it had “no knowledge of criminal wrongdoing” and was cooperating with investigators.

New Suits

Arkema Sues Dow Chemical Over Supply Contract

A unit of France’s Arkema SA accused Dow Chemical Co., the largest U.S. chemical maker, of violating a contract for supplying methyl methacrylate, used to make Plexiglas and automobile taillights.

Arkema Inc. contends Dow, of Midland, Michigan, promised to supply specific quantities of the chemical but reneged on the deal and refuses to step-up deliveries because of production problems.

“The parties entered into the capacity reservation contract for valuable consideration” and “it is a valid and enforceable contract,” Arkema lawyers said in a heavily redacted complaint made public May 14 in Delaware Chancery Court in Wilmington.

Dow’s methyl methacrylate plant in Deer Park, Texas, is having production problems and running at low levels, Rebecca Bentley, a spokeswoman for the Midland, Michigan-based company said May 14 in an e-mail. She declined to say when the problems began or how much of the plant’s capacity is in use.

Arkema argued in court papers that “there is a threat of imminent, irreparable injury” in Dow’s actions.

The case is Arkema Inc. v. The Dow Chemical Co., CA5479, Delaware Chancery Court (Wilmington).

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Trials/Appeals

Ex-Broker Avoids Prison While Judge Reviews Order

Former Credit Suisse Group AG broker Eric Butler will remain free while a judge reviews a decision that ordered him to prison during the appeal of his conviction for fraudulently selling securities that cost investors more than $1.1 billion in losses.

U.S. District Judge Jack B. Weinstein in Brooklyn, New York, said May 14 that Butler can stay out of prison while the judge reviews the April 27 decision revoking the ex-broker’s bail. Butler is scheduled to go before Weinstein again on June 25 to see if he can stay free on bail while he challenges his verdict at the U.S. Court of Appeals in Manhattan.

“You may be right that there is no issue on appeal, but from time to time I’m surprised,” Weinstein told prosecutors. Butler also is the main caregiver for a child while his wife works, the judge said, citing Butler’s lawyer. “I see no reason to incarcerate him,” Weinstein said.

In a May 4 letter, Butler’s lawyer Steven Molo asked Weinstein to stay the order forcing his client to prison by May 27. Molo said it would be unfair for Butler to be held in custody if Weinstein later rules that he can remain free while he appeals the conviction.

Weinstein sentenced Butler to five years in prison in January. Butler was found guilty in August of securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud.

“Butler has failed to raise a substantial question of law or fact” showing that his conviction might be reversed or overturned for a new trial, or that his sentence may reduced to exclude imprisonment, U.S. Magistrate Judge Ramon Reyes said in his order sending Butler to prison while he appeals the verdict.

The request to revoke Butler’s bail was made by lawyers in the office of then-U.S. Attorney Benton Campbell. Loretta Lynch was sworn into that office on May 3.

“The defendant’s request is no more than a transparent attempt to delay the inevitable imposition of his sentence,” prosecutors wrote to Weinstein on May 5 in response to Molo’s letter.

Butler was indicted with Julian Tzolov in 2008. Prosecutors claimed the men falsely told clients their securities were backed by federally guaranteed student loans and were a safe alternative to bank deposits or money-market funds. The products were actually linked to auction-rate securities and generated high commissions for the pair, witnesses testified during Butler’s three-week trial.

The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).

TiVo Plunges as Victory Against EchoStar Reconsidered by Court

TiVo Inc. fell 40 percent in Nasdaq trading after an appeals court said it would reconsider the company’s legal victory against Dish Network Corp. and EchoStar Corp. for infringing a digital-video recording services patent.

The court said May 14 that all active judges will take a second look at a panel’s March 4 finding that Dish and EchoStar were still in violation of TiVo’s patent, even after claiming they had altered their technology to avoid infringement. TiVo, based in Alviso, California, argued the changes weren’t sufficient.

TiVo, a pioneer of digital-video recording, said it’s disappointed in the decision to draw out the case, which began with a lawsuit in 2004 against Dish and EchoStar when those two were a single satellite-television and equipment company.

“Many investors had been hoping for a resolution to this case that has been going on for many years now,” said Mark Harding an analyst with New York-based Maxim Group, who rates TiVo a “buy” and doesn’t own shares. It’s “more of a waiting game than anything now.”

The U.S. Court of Appeals for the Federal Circuit, which specializes in patent law, will consider whether the judge in the case erred in not giving Dish a trial to determine if changes made to the Dish software effectively worked around the TiVo patent. The full appeals court also plans to hear arguments on the standard of proof in such cases.

“We are disappointed that we do not yet have finality in this case despite years of litigation,” Krista Wierzbicki, a TiVo spokeswoman, said in an e-mail. “We remain confident that the Federal Circuit’s ruling in our favor will be reaffirmed.”

TiVo is seeking a court order that would halt Dish’s DVR service and force the Englewood, Colorado-based satellite company into paying licensing fees.

Kathie Gonzalez, a spokeswoman for Dish, didn’t immediately return a message seeking comment. Marc Lumpkin, a spokesman for EchoStar, said the company would respond soon.

The appeal is TiVo v. EchoStar, 2009-1374, U.S. Court of Appeals for the Federal Circuit (Washington). The lower-court case is TiVo Inc. v. EchoStar Communications Corp., 04-cv-01, U.S. District Court, Eastern District of Texas (Marshall).

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Verdicts/Settlement

Ex-Lazard Banker Gets Two Years for Insider Trading

Adnan Zaman, a former investment banker at merger adviser Lazard Ltd., was sentenced to two years and two months in prison for participating in an insider-trading scheme in which he leaked information on acquisitions to friends and shared in their trading profits.

U.S. District Judge Susan Illston in San Francisco also ordered Zaman to complete 800 hours of community service. Zaman, 31, provided merger and acquisition advisory services to Lazard clients in San Francisco and was charged in December with one count of securities fraud. He pleaded guilty in January.

“I am ashamed to be standing before you,” Zaman told Illston on May 14. “This is not how my parents raised me. I wake up every morning ashamed that I can’t change the decision I made.”

The government had recommended a 40-month sentence and no criminal fine, saying Zaman already had agreed to forfeit his profits in a settlement with securities regulators. Zaman’s lawyers had asked for a maximum sentence of one year with 1,000 hours of community service.

Illston initially indicated she intended to impose a 30- month term as a deterrent. “My primary concern is a crime like this is so easy to commit and undermines the market in such a pernicious way,” she said.

The judge settled on a 26-month term after defense attorney William Keane said a shorter sentence, coupled with extended community service, would allow Zaman to go out into the investment banking community to warn young bankers against making his mistakes.

In 2006 and 2007, Zaman leaked information about acquisitions involving Gilead Sciences Inc. and WebMethods Inc., prosecutors said in charging documents. He also leaked inside information on transactions involving Sabre Holdings Corp. and TXU Corp. that he learned from a friend whose company was involved in those deals, according to the documents.

Zaman settled a Securities and Exchange Commission insider- trading lawsuit, agreeing to forfeit $78,456 in profit and interest without admitting wrongdoing. Zaman worked in Lazard Freres & Co.’s investment banking group in San Francisco before transferring in July 2007 to the company’s restructuring group in New York, according to the SEC’s complaint.

The case is U.S. v. Zaman, 09-01178, U.S. District Court, Northern District of California (San Francisco).

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Court Filings

Moore Capital Suit Over Platinum Trading Most Popular Docket

A Securities lawsuit against Moore Capital Management LP, alleging the company manipulated platinum and palladium futures in trading on the New York Mercantile Exchange, was the most- read litigation docket on the Bloomberg Law system last week.

An Ohio man, Greg Galen, filed the suit in New York federal court on April 30 seeking class action status.

On April 29 Moore Capital agreed to pay $25 million to settle the U.S. Commodity Futures Trading Commission’s allegation that a former portfolio manager attempted to manipulate platinum and palladium futures during a surge in prices two years ago.

The CFTC said Moore portfolio manager, who wasn’t identified, used buy orders in the closing moments of trading on Nymex to boost settlement prices from November 2007 through May 2008, The orders “frequently accounted for a significant portion of the volume” in the two thinly traded markets, the agency said.

New York-based Moore said in a statement after the CFTC settlement that the portfolio manager left the company in the fall of 2008. None of Moore’s principals nor its current management were involved in any improper trading, and none were accused of any wrongdoing.

“Moore Capital believes this complaint has no merit and intends to defend the action vigorously,” said Justin Dini, a spokesman at Brunswick Group for Moore Capital.

The case is Galen v. Moore Capital Management, 1-10-03617 (SDNY May 03, 2010), New York.

To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

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