Tullett, Merrill, RBS, Total, Pfizer, Vivendi, Qatari Diar in Court News

Tullett Prebon Plc, the inter-dealer broker, lost a lawsuit accusing competitor BGC Partners Inc. of a hiring raid on 77 of its partners that cost the U.K. firm $387 million in market value.

U.S. District Judge Stanley Chesler in Newark, New Jersey ruled June 18 that Tullett had failed to include its allegedly victimized U.S. units in the lawsuit and said the firm lacked a stake in the matter that would allow it to pursue the case.

“Tullett U.K. is, at bottom, a shareholder of the affected subsidiaries,” Chesler said, adding that the firm failed to show it “meets the basic standing requirement that a plaintiff may seek to vindicate only its own rights, not those of a third party.”

Tullett, a London-based firm that matches securities trades between banks, sued New York’s BGC Partners in October, complaining that BGC’s hiring of brokers from two units of Tullett in the U.S. had diminished its market value.

Tullett said in its complaint it had sustained a $387 million loss in its market value from August when hiring raid began through the end of the year. The company’s shares fell 28 percent during the period.

“BGC has shown no sign that it is willing to stop its unlawful activity,” according to the complaint. Only a court order directing BGC to end its “systematic destruction of Tullett Prebon’s subsidiaries” would put an end to its attempts to put Tullett Prebon “out of business.”

Tullett disagreed with the court’s decision and is considering its options, firm spokesman Nigel Szembel in London said in an e-mail.

“Judge Chesler’s opinion, which does not reach the merits of Tullett’s claims, was in part based on the pendency of a Finra arbitration brought by Tullett’s subsidiaries against BGC subsidiaries,” Szembel said. The case before the Financial Industry Regulatory Authority is unaffected by the decision, and will go to trial soon, he said.

BGC spokesman Robert Hubbell declined to comment.

The case is Tullett Prebon Plc v. BGC Partners Inc., 09cv5365, U.S. District Court, District of New Jersey (Newark).

Florida Family Awarded $2.5 Million Over Defective Drywall

A Florida couple suffered $2.5 million in damages as a result of defective drywall from China, a Florida jury found June 18, helping to set a standard for trials throughout the U.S.

In the first jury trial in the U.S. over defective drywall, a state court panel in Miami deliberated more than a day before finding closely held Banner Supply Co. 55 percent responsible for damage done to the home of Armin and Lisa Seifart. The jury found a company not included in the lawsuit, Germany’s Knauf Group, 35 percent liable.

Plaintiffs had sought $4.3 million for loss of enjoyment of their home and other damages.

“It sets a precedent to the extent that we were able to see what a jury thinks about this case,” said Ervin Gonzalez, attorney for the Seifarts.

USG Corp. and Knauf are among about 1,000 defendants that may face claims they distributed defective drywall manufactured in China. As many as 40,000 plaintiffs may bring claims, U.S. District Judge Eldon Fallon of New Orleans, who is overseeing federal drywall lawsuits nationwide, said last month.

The cases, part of coordinated litigation over allegedly defective drywall, are intended as a bellwether to help determine property damage issues in other cases against manufacturers. More than 2,100 people in the U.S. have sued in federal court claiming damages from drywall made in China.

The Seifarts bought their home in February 2008. After less than a year they learned their problems with appliances and a sulfur smell originated with the drywall.

Banner countered that the Seifarts should be reimbursed for the cost of repairs only, urging the jury not to make an award for loss of enjoyment or the reduction of the value to the home.

“We are a bit disappointed and we will weigh all of our rights, including our appellate rights,” Banner’s attorney, Todd Ehrenreich said after the verdict.

AstraZeneca to Pay $103 Million to Settle Drug-Pricing Suit

AstraZeneca Plc, the U.K.’s second-largest drugmaker, will pay $103 million to settle claims it overcharged for some medicines in the U.S., court records show.

AstraZeneca’s accord will end claims by third-party payers who paid some of their insured’s Medicare for the Zoladex or Pulmicort Respules products and other consumers and third-party payers who paid cash or a co-payment for the drugs outside of Medicare. Massachusetts plaintiffs will receive $13 million, while those outside the state will get $90 million, according to papers filed June 18 in federal court in Boston.

Consumers will receive 11 percent of the settlement while the rest will go to insurers, according to a statement by Hagens Berman Sobol Shapiro LLP, the law firm that brought suit. The proposed settlement of the class-action suit requires court approval to become final. AstraZeneca, which denied wrongdoing, said the settlement was in the company’s best interest.

“AstraZeneca has competed responsibly with respect to pricing and marketing of our medicines, and we firmly believe that we have acted at all times in accordance with the law,” Tony Jewell, a company spokesman, said in an e-mail.

Lawyers for the plaintiffs will be paid one-third of the settlement funds, according to court records.

The plaintiffs accused the company of illegally seeking to boost market share by selling medicines to physicians at steep discounts to the published average wholesale price that consumers, pension funds and others paid, while secretly encouraging doctors to claim full reimbursement from insurers.

The case is In Re Pharmaceutical Industry Average Wholesale Price Litigation, MDL No. 1456 or 01-cv-12257, U.S. District Court, District of Massachusetts (Boston).

A.R. Capital Founder Sentenced to 37 Months in Prison

A.R. Capital Group Inc.’s Alan Fishman, a car-service driver before he launched the hedge fund, was sentenced to 37 months in prison for his role in stealing from investors, federal prosecutors in New York said.

Fishman, 50, and Daniel Ledven, 38, a principal at the firm, pleaded guilty in March to one count each of conspiring to commit securities fraud, U.S. Attorney Preet Bharara in New York said June 18 in a statement. Ledven was sentenced to 57 months in prison, according to the statement.

A.R. Capital raised about $20 million from individual investors in its purported hedge fund between 2003 and September 2006, claiming the money would be invested in international real estate companies and used for leveraged trading, prosecutors said. About $18 million of the money was wired to bank accounts in the Ukraine, prosecutors said.

Domenico Savatta, a lawyer for Fishman, and Henry Putzel, a lawyer representing Ledven, didn’t return calls to their offices after regular business hours.

The case is U.S. v. Ledven, 09-1088, U.S. District Court, Southern District of New York (Manhattan.)

Merrill Wins Dismissal of Chunilal’s U.K. Lawsuit Over Bonus

Merrill Lynch & Co. won dismissal of a lawsuit over a reduced bonus filed by its former head of Asia-Pacific investment banking, Damian Chunilal.

The dispute shouldn’t be heard in the U.K. because “there is no good arguable case that the breach relied on in fact occurred within the jurisdiction,” Judge Michael Burton said.

Chunilal, who was fired from Merrill in November 2008, less than two months after the bank agreed to be taken over by Bank of America Corp., said his bonus was reduced to 20 percent of the year-earlier level. He sued the firm in London in October for breach of contract.

Merrill sought the dismissal, saying English courts didn’t have jurisdiction over the matter. Chunilal, who worked for the bank for 19 years, relocated to Hong Kong from London in 2004. He was paid a bonus of $2.3 million in his last year, compared with $11.7 million in 2007 and $13.9 million in 2006, according court papers.

Chunilal’s lawyer, Robin Knowles, didn’t respond to a request for comment on the ruling. Chunilal didn’t respond to an e-mail.

Knowles argued the decision to pay the reduced bonus was made in London by the head of human resources for investment banking, and that Chunilal’s first contract with Merrill was governed under English law, while the second contract, negotiated in New York, didn’t specify.

The case is Damian Chunilal v. Merrill Lynch International Inc., case no. 2009-1354, High Court of Justice (London).

Ex-RBG Chairman Rastogi Ordered to Pay $44 Million

Former RBG Resources Plc Chairman Virendra Rastogi, who is serving a 9 1/2-year jail sentence for a trans-Atlantic fraud, was ordered to pay 30 million pounds ($44 million) to compensate victims.

Rastogi, 42, defrauded JPMorgan Chase & Co. and other banks that provided the now-defunct metals trading company, also known as Allied Deals Plc, with cash backed by worthless assets. The company obtained loans used to gamble on the metal exchange, for personal gain or to pay back other loans, the U.K. Serious Fraud Office said June 18 in a statement.

RBG Resources owed more than $420 million when it went into liquidation in 2002, the SFO said. The ex-chairman gained more than 1 billion pounds from the fraud and used some of the money to buy a flat in London’s Mayfair neighborhood, now worth 5 million pounds. The order strips Rastogi of the last of his assets, the office said.

“The defendant is a very intelligent and able man” who, for much of his adult life, “has had absolutely no regard for truth or honesty,” Judge James Wadsworth said in his order, according to the SFO. “The defendant accepts that the whole of his business success was based on deceit.”

Antony Brown, Rastogi’s lawyer, said his client “absolutely does not have 30 million pounds” and is considering whether to appeal the order.

Rastogi was sentenced to prison in 2008 for the fraud, which expanded from New York to London in 1996. It eventually grew to involve more than 200 RBG-related companies across six jurisdictions, many of which didn’t conduct any metals trading.

Total, Chevron Found Guilty in U.K. Buncefield Fuel Depot Fire

A U.K. court found Total SA and Chevron Corp. guilty of failing to prevent the Buncefield fire in a fuel depot in north London in 2005, according to the Health and Safety Executive.

“When the largest fire in peacetime Europe tore through the Buncefield site on that Sunday morning in December 2005, these companies had failed to protect workers, members of the public and the environment,” the HSE said June 18 in an e- mailed statement.

Hertfordshire Oil Storage Ltd., operator of the depot, is a venture between Paris-based Total, which holds 60 percent in the company, and San Ramon, California-based Chevron.

“We understand the decision made by the jury,” Claire Elliot, a U.K.-based Total spokeswoman, said by phone. “We deeply regret the events at Buncefield and would like to apologize to all those affected by the incident.”

British Pipeline Agency Ltd. and TAV Engineering Ltd. were among companies that also were found guilty or pleaded guilty to various charges related to the fire.

The Buncefield oil depot is about 25 miles north of London and supplies jet fuel by pipeline to Heathrow, Europe’s busiest airport.

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Lawsuits/Pretrial

Pfizer Faces Trials in 200 Suits Over Hormone-Drugs

Pfizer Inc. faces a Texas trial over its hormone- replacement drugs after a judge overseeing lawsuits related to the medicines sent 200 cases back to their home courts.

A judge in Galveston, Texas, set a May 2011 trial date for Karen Zahn’s claims against Pfizer’s Wyeth unit. Zahn says in her suit that the Prempro menopause drug helped cause her breast cancer. It’s one of the first of more than 8,000 lawsuits over the medicine consolidated in federal court in Arkansas to be returned for trial, plaintiffs’ lawyers said.

U.S. District Judge William Wilson in Little Rock, Arkansas, is supervising pretrial proceedings in the cases against Wyeth and Pharmacia & Upjohn, another Pfizer unit. He returned the 200 cases to their courts in March and told lawyers to get another 400 ready to go back later this year.

“Pfizer is now going to have to gear up and hire lawyers all over the country to try these cases,” said Carl Tobias, a professor at the University of Richmond law school who teaches classes on mass-tort law. “That makes things more expensive and may provide some incentive to settle.”

Officials of New York-based Pfizer said that while Wilson has sent back some cases, he refused plaintiffs’ requests to send back all the suits at one time.

“No decision has been made about how many additional cases will be remanded or when,” Pfizer spokesman Chris Loder said in an e-mailed statement. It also isn’t clear how many of the remanded cases will go to trial, he said.

Loder refused to comment on whether Pfizer will seek to settle the remaining Prempro cases before Wilson. The company faces at least 8,000 Prempro claims, Wyeth officials said in a 2009 regulatory filing.

“Pfizer will continue to vigorously defend its hormone therapy medicines,” he said in a statement. “We do not comment on the number of cases pending, nor do we comment on our legal strategy.”

The case is In Re Prempro Products, 03-cv-15070, U.S. District Court, Eastern District of Arkansas (Little Rock).

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Browner Says BP Claims Probably Will Surpass $20 Billion

The $20 billion that BP Plc will set aside for claims from the worst oil spill in U.S. history probably won’t be all the company ultimately must pay, President Barack Obama’s senior energy and environment adviser said.

“It is likely that the number will be higher,” Carol Browner said in an interview on Bloomberg Television’s “Conversations with Judy Woodruff,” that aired this weekend.

BP agreed with Obama on June 16 to set up a $20 billion compensation fund for victims of the environmental and economic disaster caused by the explosion of its well in the Gulf of Mexico. BP and the administration are struggling to stop the flow of as much as 60,000 barrels of oil daily from the well.

BP should be able to contain as much as 90 percent of the gushing crude in coming days or weeks, Obama said in a June 15 address televised from the Oval Office.

“We have pushed them very hard to improve that plan that will get us to up to 90 percent of it captured while the relief wells are being dug,” Browner said June 18. BP is working to complete relief wells by August that the company says provide the only prospect of completely plugging the leak.

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Trials/Appeals

Vivendi Investors Ask Court to Order Company, Messier to Repay

Vivendi SA investors asked a Paris court to order former Chief Executive Officer Jean-Marie Messier and six other former executives, as well as the company, to repay them money lost during a $77 billion acquisition spree.

Vivendi isn’t a defendant and has participated in the trial claiming it was also a victim of the acquisition campaign that preceded Messier’s 2002 ouster. The company’s lawyer said June 18 that its goal was to “aid in a manifestation of the truth” of the Messier era and said it should pay no damages.

Vivendi joined the case “so that we might at last turn the page, so that we can focus on what Vivendi does now,” company lawyer Herve Pisani said.

Shareholder lawyer Frederik-Karel Canoy asked the court to “set a precedent,” estimating the loss at 160 euros ($198) per share and seeking 10 euros a share in prejudice. He told the court Vivendi should join in paying. An award would tell shareholders “if we can stay in France or do we have to go to the U.S.”

French investors joined a class action in New York, where the jury in January cleared Messier and former Chief Financial Officer Guillaume Hannezo of wrongdoing while finding the company liable for misleading investors. Vivendi has appealed and set aside 550 million euros for any potential award.

Prince Charles’s Design Protest Not ‘Fatal,’ Qatari Diar Said

The real-estate investment arm of Qatar’s sovereign-wealth fund considered ignoring opposition from Prince Charles over its plan for a London luxury apartment complex, saying the heir to England’s throne had failed to stop other developments he didn’t like.

Qatari Diar Real Estate Investment Co. executive John Ward said in an April 2009 internal e-mail that London had approved other developers’ designs for the Shard skyscraper -- which will be the city’s tallest -- and the One New Change office complex near St. Paul’s Cathedral, over the prince’s objections to their modern appearances, according to documents revealed at a court hearing this week in London.

The Prince of Wales’s “track record on public pronouncements on building design is not always one-way traffic,” Ward said in the e-mail. “His public views are not always fatal.”

Qatari Diar withdrew its site plan application for the landmark Chelsea Barracks in June 2009, claiming it would likely be rejected. Its U.K. developer, CPC Group Ltd., sued claiming that Qatari Diar was obliged to submit the plan or pay costs. The developer argues the plan could have been approved and was wrongfully abandoned to appease Prince Charles.

The breach-of-contract case went to trial last month, with CPC, controlled by real-estate entrepreneur Christian Candy, seeking 81 million pounds ($120 million) it says it would have received if the complex had been built.

Qatari Diar spokeswoman Georgiana Gibbs declined to comment when reached by phone June 18.

The case is CPC Group Ltd. v. Qatari Diar Real Estate Investment Company, 4260/09, High Court of Justice, Chancery Division (London).

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

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