A federal appeals court in New Orleans set an expedited hearing date for arguments over whether to lift a moratorium on deep-water drilling. The hearing is scheduled for July 8.
U.S. District Judge Martin Feldman ruled the six-month drilling ban, issued after the explosion and sinking of the Deepwater Horizon oil rig in April, was overly broad and he prohibited federal regulators from enforcing it.
On June 25, the government asked the U.S. Court of Appeals in New Orleans to put the order on hold during an appeal. The U.S. previously filed notice that it would appeal Feldman’s order.
The appeals court yesterday ordered lawyers for plaintiffs challenging the ban to file responses to the U.S. request by July 2. “If it can be filed earlier, the court would appreciate that,” according to a letter to attorneys posted on the court’s web site. “No extension will be granted.”
President Barack Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 to give a presidential commission time to study improvements in the safety of offshore operations.
Hornbeck Offshore Services Inc. and other offshore service and supply companies sued U.S. regulators, including Interior Secretary Kenneth Salazar, on June 7, seeking to lift the ban. They argued they would suffer irreparable economic harm from the suspension in drilling.
Feldman rejected the ban June 22, finding it too broad, and barred federal regulators from enforcing it. Two days later he denied a U.S. request to put his order on hold while regulators appeal.
The case is Hornbeck Offshore Services LLC v. Salazar, 2:10-cv-01663, U.S. District Court, Eastern District of Louisiana (New Orleans). The appeal case is 10-30585, 5th U.S. Circuit Court of Appeals (New Orleans).
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Motorola, Nokia Allowed to Refile LCD Antitrust Suit
Motorola Inc., Nokia Oyj and other buyers of liquid crystal display panels used in handsets may refile a price-fixing lawsuit they brought against makers of the screens, including Samsung Electronics Co. and LG Display Co.
U.S. District Judge Susan Illston in San Francisco rejected both federal and state antitrust claims brought by the mobile- phone makers and gave them until July 23 to file amended complaints.
Illston, agreeing with the LCD makers that Motorola failed to show she had jurisdiction in the case, said the mobile-phone maker didn’t demonstrate that products bought abroad were imported into the U.S. or that there was an anti-competitive effect in the U.S.
“Although Motorola argues that defendants intended for the foreign-purchased LCD panels and products to be brought to the United States, Motorola has not cited any authority adopting such an expansive definition of ‘import,’” Illston said in an order filed June 28.
The judge also ruled that Nokia, which sought only damages for domestic purchases and purchases directly imported into the U.S., failed to distinguish between purchases of its Finnish parent company and those of its U.S. subsidiary.
AT&T Inc.’s wireless unit failed to allege that its purchases of price-fixed products occurred in states whose antitrust laws it invoked, the judge said.
In March, Illston certified a class action on behalf of direct purchasers of LCDs or goods containing them from 1999 to 2006. She also certified a nationwide class of indirect buyers who bought TVs and computers beginning in 1996.
Since 2008, six LCD makers have pleaded guilty and were fined more than $860 million in a criminal investigation in the U.S. Suwon, South Korea-based Samsung, the world’s largest LCD maker, hasn’t pleaded guilty to price fixing.
Jennifer Erickson, a spokeswoman for Schaumburg, Illinois- based Motorola, didn’t return a call seeking comment.
The case is In Re TFT-LCD (Flat Panel) Antitrust Litigation, 07-1827, U.S. District Court, Northern District of California (San Francisco).
FedEx Wins Dismissal of Some Claims in Worker Lawsuit
A federal judge in South Bend, Indiana, threw out some claims in the suit, saying the workers failed to exhaust out-of- court, administrative procedures that might help them get the medical, dental and retirement benefits they’re seeking.
“Merely showing that FedEx is predisposed to deny the plaintiffs’ claims and has consistently taken that position in this lawsuit isn’t sufficient to show by certainty that the claims would be denied,” U.S. District Judge Robert L. Miller wrote in a June 28 opinion.
Miller’s decision allows the plaintiffs to re-file claims against Memphis, Tennessee-based FedEx, the world’s largest air- cargo carrier, should the named plaintiffs exhaust the administrative process. The company says its contract driver model is legal and was approved for tax purposes by the U.S. Internal Revenue Service in 1994.
“It’s a procedural setback as opposed to a substantive setback,” plaintiffs’ lawyer Lynn Faris said in a telephone interview. “We will do exactly as the judge says and have the named plaintiffs file the administrative claims.”
“The ruling is the latest victory for FedEx Ground in the ongoing legal challenges to the independent contractor model,” FedEx spokesman Maury Lane said in an e-mailed statement. “We believe that all lawsuits in the multidistrict litigation are without merit and part of a broad-based assault on independent contractors who have chosen to own and operate their own businesses.”
The case is In re FedEx Ground Package System Inc. Employment Practices Litigation, 3:05-md-00527, U.S. District Court, Northern District of Indiana (South Bend).
Starr Prosecutors Get Another Month to Indict Andrew Stein
Government attorneys prosecuting Kenneth Ira Starr, the New York investment adviser who faces federal fraud charges, obtained a month-long extension of a deadline to indict Andrew Stein, the former Manhattan borough president, in the case.
Court records show that U.S. Magistrate Judge Ronald Ellis yesterday signed an order to extend, to July 28, the date by which prosecutors must indict Stein.
Stein was arrested on May 27 along with Starr and charged with committing a tax crime and with lying to investigators. Both men were charged in a criminal complaint filed with the court the day before. Starr was indicted alone on June 11.
On June 17, Stein was seen leaving the offices of U.S. prosecutors in Manhattan. Stein’s attorney, Andrew Maloney, didn’t return calls seeking an explanation for why his client was meeting with prosecutors. Janice Oh, a spokeswoman for the U.S. attorney in Manhattan, declined to comment on the matter.
Starr, 66, is charged with stealing at least $59 million from 11 clients including film star Uma Thurman and former basketball star Julius Erving. Starr has pleaded not guilty.
The criminal case is U.S. v. Starr, 10-MJ-1135, U.S. District Court, Southern District of New York (Manhattan).
Ex-Bristol-Myers Executives’ Prosecution Deferred
U.S. prosecutors agreed to drop five-year-old fraud charges against former Bristol-Myers Squibb Co. executives Frederick S. Schiff and Richard Lane, who must pay money to a settlement fund under a court-approved deal.
Schiff, 62, a former finance chief, and Lane, 59, a former director of worldwide medicines, were first charged in 2005 with fraud and conspiracy. Prosecutors accused them of failing to tell investors in 2000 and 2001 that Bristol-Myers arranged tens of millions of dollars in incentives to spur wholesalers to buy more drugs than needed, a practice known as channel stuffing.
Under deferred-prosecution agreements approved yesterday in federal court in Newark, New Jersey, U.S. Attorney Paul Fishman will drop charges in one year as long as Schiff pays $225,000, Lane pays $175,000, and both abide by their terms of pre-trial release. Neither can serve as a chief executive officer or chief financial officer of a publicly traded company for two years.
“This misguided prosecution should have never happened in the first place,” said Schiff attorney David M. Zornow of Skadden, Arps, Slate, Meagher & Flom LLP in New York. “It has been a nightmare, and no one can give him back those years but he is extremely gratified today that he has been vindicated this way.”
Lane’s attorneys, Richard Strassberg and Robert Braceras of Goodwin Proctor LLP, called the agreement a “tremendous vindication” for their client.
“It vividly demonstrates what we have always maintained -- that at all times Mr. Lane acted properly and in the best interests of Bristol-Myers Squibb and its shareholders,” the attorneys said in a statement.
Bristol-Myers paid $300 million in 2005 to avoid prosecution for channel stuffing, part of the $839 million it spent to resolve investor lawsuits and probes by U.S. prosecutors and regulators. In 2003, Bristol-Myers erased $2.5 billion in revenue from 1999 to 2001 related to the practice.
The money that Schiff and Lane will pay will go to the “Department of Justice Bristol-Myers-Squibb Settlement Fund or such other settlement fund as the United States Attorney directs,” according to their deferred-prosecution agreements.
The case is U.S. v. Schiff, 06-cr-406, U.S. District Court, District of New Jersey (Newark).
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United, Continental Sued in Bid to Block Merger
The complaint was filed yesterday in federal court in San Francisco by Joseph Alioto, a lawyer who said he is representing U.S. consumers and small businesses. Alioto is seeking to block the merger.
“We believe in competition, not combination,” Alioto said in an interview. “The trend in this particular industry is heading straight for monopoly.”
The merger will increase fares, reduce the number of flights, diminish services such as meals and eliminate tens of thousands of jobs, according to the complaint. The proposed merger “substantially restrains” the competition between the carriers for passenger service throughout the U.S. at the expense of consumers, Alioto wrote.
United and Continental are seeking regulatory approval to combine under an all-stock merger they announced May 3. The new company would surpass Delta as the world’s biggest airline and mesh United’s Pacific routes with Continental’s service in Latin America and over the Atlantic.
“We believe this suit has no merit, and we will vigorously defend what we strongly believe to be a transaction that is in the best interests of Continental, its shareholders and the flying public,” Julie King, a spokeswoman for Continental, said in an e-mailed statement.
Jean Medina, a United spokeswoman, also said the complaint has no merit.
The case is Malaney v. UAL Corp., 10-2858, U.S. District Court, Northern District of California (San Francisco).
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Ex-Oil Broker Fined for Trading Abuses While Drinking
The U.K. financial regulator fined a former broker at PVM Oil Futures Ltd. 72,000 pounds ($108,000) for trading without client authorization and lying to his employer about it while going on drinking binges.
The Financial Services Authority also banned Steven Perkins from working in the financial services industry for five years. Perkins traded on the ICE Futures Europe exchange “in the early hours of the morning” in June 2009 without client authorization, the FSA said in a statement yesterday. He “drank excessively” over the weekend and the day of the trades, the regulator said.
“Perkins’ drunkenness does not excuse his market abuse,” said Alexander Justham, director of markets at the FSA. “Perkins has been banned because he is not a fit and proper person to be involved in regulated activities and his behavior posed a risk to the proper functioning of the market.”
Perkins’ job was to trade orders on an execution only basis in Brent Crude Futures contract on the ICE exchange for his firm’s clients. He traded “in extremely high volume” on the exchange in August, accumulating a long position in Brent crude in excess of 7,000 lots, or more than 7 million barrels of oil, the FSA said. The value of the position was over $520 million, according to the regulator.
Perkins’ lawyer, Stephen Pollard, didn’t respond to a request for comment. Perkins agreed to settle the case and qualified for a 20 percent discount on his fine under the FSA’s settlement procedures. The regulator also reduced his fine because of his financial circumstances.
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Three Ordered to Pay $173 Million Over FSA Deposit-Rule Breach
Three men who accepted deposits without proper authorization from the U.K. financial regulator were ordered by a London court to return 115 million pounds ($173 million) to investors.
John Anderson, Kenneth Peacock and Kautilya Nandan Pruthi were ordered to pay the U.K. Financial Services Authority for unlawfully accepting deposits while operating as Business Consulting International, John Anderson Consulting and Kenneth Peacock Consulting, the regulator said in a statement yesterday.
The regulator will return any money it receives to investors. It is unlikely that the money will be repaid, the FSA said.
“This case again emphasizes the importance of taking care to ensure that any firm or individual consumers deal with are authorized or approved by the FSA,” enforcement director Margaret Cole said in the statement.
The men were arrested in May last year by the City of London police on suspicion of conspiracy to defraud, money laundering and fraud by misrepresentation. The police investigation into Business Consulting is ongoing, and a fourth man was arrested in the probe in July.
Pruthi, Anderson and Peacock represented themselves at trial and numbers for them couldn’t be located.
GE Loses 10-Year-Old Challenge to EPA Superfund Law
General Electric Co. lost a federal appeals court challenge to the U.S. Environmental Protection Agency’s Superfund law that governs cleanup of hazardous waste sites.
The U.S. Court of Appeals for the Federal Circuit in Washington sided with a lower court, rejecting the company’s argument that the agency violated its due process rights under the U.S. Constitution.
GE was contesting a provision of the Superfund law that denies the company the ability to go to court to challenge the government’s claims. The lawsuit was filed in 2000, before GE agreed to and began to clean up 40-mile stretch of the Hudson River polluted with polychlorinated biphenyl.
“GE is evaluating the decision and reviewing its options,” said Mark Behan, a spokesman for Fairfield, Connecticut-based GE. The ruling will have no effect on the company’s dredging, where one phase of work was completed last year and the next is scheduled to start in 2011, he said.
The case is General Electric Co. v. Jackson, 09-5092, U.S. Court of Appeals for the District of Columbia (Washington).
FDA’s Avandia Ruling Won’t Affect Suits, Lanier Says
GlaxoSmithKline Plc’s legal liabilities won’t worsen even if U.S. regulators decide the company’s diabetes drug Avandia should be pulled off the market, plaintiffs’ lawyer Mark Lanier said.
An advisory panel will meet next month to consider whether Avandia’s ability to control blood-sugar levels in diabetics outweighs a possible increase in heart attacks, strokes and deaths from cardiovascular disease. While no studies have proven the drug is dangerous, the availability of a similar medicine that appears to lower heart attack risk has drug-safety advocates calling for Avandia to be withdrawn.
London-based Glaxo, the U.K.’s biggest pharmaceutical company, has settled or is close to settling as many as half the 13,000 lawsuits claiming Avandia caused heart attacks and other risks, said Lanier, of the Lanier Law Firm in Houston, in an e- mail. An FDA decision to withdraw Avandia wouldn’t open the door to new lawsuits by patients who claim they were injured by taking the drug, he said.
“Word has been out way too long about possible medical troubles,” he said. “Avandia cases are really hard to prove at trial. The costs associated with trying the cases are huge compared to the potential returns.”
Glaxo agreed to pay about $60 million, or about $86,000 per case, to resolve 700 Avandia suits filed by attorneys including Lanier last month. The settlement suggests about $1.1 billion of liability, wrote Gbola Amusa, a UBS AG analyst in London, in a May 11 note to investors.
A few more cases may be filed if Avandia is deemed dangerous and pulled from the market, “but probably not too many more,” Lanier said. A decision by the FDA or Glaxo to withdraw the drug “probably wouldn’t affect settlement values much, either,” he said.
Glaxo doesn’t comment on specific litigation, company spokeswoman Claire Brough said by phone.
Pfizer Rejected by U.S. High Court on Nigerian Suits
The U.S. Supreme Court rebuffed business calls for limits on human-rights lawsuits, refusing to stop claims that Pfizer Inc. tested unproven antibiotics on Nigerian children without telling their parents about the risks.
Pfizer, the world’s largest drugmaker, sought in its unsuccessful appeal to shield companies from U.S. lawsuits by foreigners under the Alien Tort Statute.
The suits stem from a 1996 outbreak of bacterial meningitis in northern Nigeria. New York-based Pfizer allegedly worked in concert with Nigerian officials to recruit 200 sick children for an experimental study of its new Trovan antibiotic.
The lawsuits say Pfizer didn’t disclose the experimental nature of the study or the risks involved. Eleven children died and others were left paralyzed, deaf or blind, according to the suits.
A federal appeals court ruled that the lawsuits could go forward. In rejecting the company’s appeal, the justices heeded the advice of the Obama administration, which argued that the appeal wasn’t suitable for high court review.
The Alien Tort Statute authorizes federal courts to consider some lawsuits by non-citizens for human-rights violations committed abroad. Courts have said the Alien Tort Statute applies to private companies when they act in concert with a foreign government.
Pfizer said in a statement that, while it is disappointed by the high court rebuff, it can still press other arguments at the trial court level.
“The company has reserved its right to again move to dismiss the cases on various grounds, including the fact that Nigeria is the appropriate forum for the cases to be heard,” the company said.
The case is Pfizer v. Abdullahi, 09-34, U.S. Supreme Court (Washington).
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Merck Doesn’t Have to Refund Louisiana, Judge Says
Merck & Co. doesn’t have to refund money the state of Louisiana paid for the withdrawn Vioxx painkiller, a federal judge ruled.
Managers of Louisiana’s state-sponsored health programs had no power under state law to halt reimbursements for Vioxx prescriptions, even had they known that Merck misled them about the drug’s heart-attack risk, U.S. District Judge Eldon Fallon in New Orleans ruled yesterday.
Louisiana “did not carry its burden that, had the state possessed different clinical information about Vioxx, it would have sought to restrict Vioxx Medicaid reimbursements entirely,” wrote Fallon, who heard the case without a jury. It was the first of more than a dozen refund cases filed by states over Vioxx to go to trial.
“We’re satisfied with the court’s decision and believe that the evidence showed that Merck acted appropriately by labeling Vioxx under the direction of the FDA and according to the evolving science available at the time it was on the market,” said Ron Rogers, a Merck spokesman, in an interview.
“We’re shocked and disappointed in the judge’s decision,” said James Dugan, one of the state’s lawyers. “We’re going to meet with the attorney general’s office to discuss our appellate rights.”
Louisiana sought to recover more than $20 million in the state’s case, including more than $11 million in damages, along with its litigation expenses and attorneys fees.
The Louisiana case is State of Louisiana v. Merck, Sharp & Dohme Corp., 05-3700, U.S. District Court, Eastern District of Louisiana (New Orleans).
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Kagan Says Military Had Access to Harvard Students
U.S. Supreme Court nominee Elena Kagan defended her treatment of military recruiters when she was dean at Harvard Law School, saying they had access to students “every single day” and any limitations were aimed at protecting the rights of gays and lesbians on campus.
Kagan said military officials recruited through an off- campus veterans’ group as she enforced a rule barring them from using the law school’s office of career services because the military kept gay people from serving openly.
“Military recruiters had access to Harvard students every single day I was dean,” Kagan said in response to questioning on the second day of her confirmation hearings before the Senate Judiciary Committee. She said military recruiting increased at one point during her tenure, and that she often told alumni and students in the military “how much I respected their service.”
The military recruitment question is one of the major issues facing Kagan, President Barack Obama’s choice to become the nation’s 112th justice. Republicans have used the issue to question her political leanings.
Senator Jeff Sessions of Alabama, the ranking Republican on the committee, told Kagan he believed she treated the military “in a second-class way.” He said, “I feel like you mishandled that.”
Kagan said she opposed the military’s “don’t ask, don’t tell” policy on gay people serving in the armed forces and still does. She called it “unwise and unjust.” The U.S. House of Representatives on May 27 voted to repeal the policy.
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