Altria, Anadarko, Motorola, AstraZeneca, Presidential Life in Court News

Langeford Capital Ltd., owned by Bangladeshi businessman Anis Ahmed, sued ABN Amro Bank NV in Singapore, claiming the bank negligently misrepresented a Lehman Brothers Holdings Inc. investment as safe.

Ahmed, through Langeford, lost $1 million after being “induced” by ABN Amro in January 2008 to invest in a product which had ‘hardly any downside,’” according to court papers filed with the Singapore High Court. Amsterdam-based ABN Amro made “false and untrue and inaccurate and misleading” representations and failed to disclose the product was issued by Lehman, Langeford said in court papers.

Wealthy Asian clients have sued financial institutions including Citigroup Inc., UBS AG and Morgan Stanley after Lehman Brothers collapsed in September 2008, precipitating a global credit crisis that erased $1.8 trillion in fortunes.

ABN Amro was “well aware” of Ahmed’s low-risk appetite and that he was “particularly wary” of investments involving U.S. companies, having lost money when technology stocks collapsed beginning in 2000, according to court papers. Ahmed hadn’t seen the term sheet and believed the investment was issued by ABN Amro, according to the court papers.

ABN Amro’s private banking operations in Singapore declined to comment in an e-mailed statement as did Ahmed’s lawyer Suresh Divyanathan.

ABN Amro has disputed Ahmed’s claims and said Langeford and the businessman were “high net worth, experienced and sophisticated investors with a reasonable appetite for risk.”

The case is Langeford Capital Ltd. vs ABN Amro Bank NV S173/2010 in the Singapore High Court.

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Trials/Appeals

Mattel Loses Appeal Ruling Over Ownership of MGA’s Bratz Dolls

Mattel Inc. must retry its claims to MGA Entertainment Inc.’s Bratz dolls after an appeals court overturned a judge’s finding that Mattel owned the ideas and work of a former employee who first thought of the dolls.

The ruling may make it more difficult for corporations to claim ownership of their employees’ ideas, particularly if they are conceived in a private context, said Carole Handler, an intellectual property lawyer with Lathrop and Gage LLP in Los Angeles who isn’t involved in the case.

“This has enormous importance for a host of legal cases that come up quite frequently,” Handler said in a phone interview. “It raises many issues.”

The U.S. Court of Appeals in San Francisco yesterday overturned a December 2008 order that gave Mattel the rights to most of MGA’s Bratz products. A jury in the case found that the designer who created the dolls was working at Mattel when he conceived of the idea and the name and made the initial drawings for the pouty and multiethnic girls.

“Even assuming that MGA took some ideas wrongfully, it added tremendous value by turning the ideas into products and, eventually, a popular and highly profitable brand,” the appellate panel said in an opinion written by Chief Judge Alex Kozinski. “It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA’s legitimate efforts, because it may have started with two misappropriated names.”

The appeals court said a significant part of the jury verdict and damages award likely needs to be vacated and that the entire case probably will need to be retried.

“We look forward to a full trial on all Mattel’s claims against MGA,” El Segundo, California-based Mattel said yesterday in a statement. “We believe that such a trial will present a comprehensive and even more compelling case for Mattel than was possible with a divided trial.”

Isaac Larian, founder and chief executive officer of Van Nuys, California-based MGA, said in a statement that the company is deeply grateful to the court for confirming “that the American dream lives.” The company will launch a “stunning new line of Bratz products,” Larian said.

The case is MGA Entertainment Inc. v. Mattel Inc., 09- 55673, U.S. Court of Appeals for the Ninth Circuit (San Francisco. The district court case is Bryant v. Mattel, 04- 09049, U.S. District Court, Central District of California (Riverside).

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Altria Loses Bid to Set Aside Evidence in Florida Smoker Suits

Altria Group Inc.’s Philip Morris USA unit and other U.S. cigarette makers lost an appeal affecting about 4,000 Florida smoker lawsuits in federal court.

A federal appeals court in Atlanta yesterday denied the companies’ request to block lower courts from applying a 2006 Florida Supreme Court decision they claimed deprived them of fair trials in death and injury suits filed in the state.

The companies said that a series of factual conclusions endorsed by Florida’s highest court in the 2006 “Engle” decision can’t fairly be used against them in individual smokers’ trials. The findings included those that cigarette makers conspired to hide information on smoking’s health effects and that they made false statements about their products.

The federal court said the findings “must be given the same preclusive effect in this federal court case that they would be given if the case were in state court.”

Besides the 4,000 cases in federal courts, another 4,000 are being tried in state courts. Plaintiffs have won most of those that have been tried.

The case is Brown v. R.J. Reynolds Tobacco Co., 08-16158, 11th U.S. Circuit Court of Appeals (Atlanta).

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Former Morgan Crucible Chief’s Trial Goes to Jury

A lawyer for Ian Norris told Philadelphia jurors that the former Morgan Crucible Co. chief executive officer didn’t obstruct justice in an alleged price-fixing scheme as deliberations began in his criminal trial.

Norris, 67, was indicted by a U.S. grand jury in 2003 and extradited from the U.K. in March after extensive trans-Atlantic negotiations for a trial that began July 12.

When a defendant like Norris cooperatively writes up his best account of what happened at business meetings, “that’s not obstruction of justice, that’s following instructions,” Norris attorney Christopher Curran told jurors yesterday in his closing arguments.

Norris was the first foreign defendant to be sent back to the U.S. to face charges arising from a criminal antitrust investigation, U.S. Justice Department officials said in March. His subordinates were alleged to have ordered destruction of files detailing secret talks among European makers of carbon and graphite products about fixing prices in a cartel lasting more than a decade.

Norris engaged in a “sophisticated long-term scheme” to obstruct an investigation and “persuaded his subordinates to come along with him,” prosecuting attorney Lucy McClain said in her summation yesterday.

The case is U.S. v. Ian Norris, 03-CR-632, U.S. District Court, Eastern District of Pennsylvania (Philadelphia.)

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Lawsuits/Pretrial

Anadarko Plans to Meet With BP to Avoid Spill-Cost Litigation

Anadarko Petroleum Corp., the Texas oil company that owns a stake in BP Plc’s damaged well, said it plans to meet with its partners on the project to try to settle a dispute over spill- related costs without going to court.

Chief Executive Officer Jim Hackett said he expects “productive meetings” with BP to occur at the appropriate time, according to testimony prepared for a Senate subcommittee hearing yesterday. MOEX Offshore 2007 LLC, a third partner, also would be part of the discussions, Hackett said.

An explosion struck the Macondo well in the Gulf of Mexico on April 20, triggering the worst oil spill in U.S. history. BP operated the project with a 65 percent interest, while Anadarko has 25 percent and MOEX Offshore, a unit of Japan’s Mitsui Oil Exploration Co., the remaining 10 percent. Anadarko on June 18 said BP’s actions caused the spill, and both Anadarko and MOEX Offshore have said they are withholding payments of spill costs.

“Under the joint operating agreement, no party is required to pay any costs or damages to the operator to the extent that they are incurred as a result of the operator’s gross negligence or willful misconduct,” Hackett said in his testimony.

BP has said responsible parties should live up to their obligations and that it’s evaluating its options. An agreement among the partners calls for arbitration to resolve the disagreement.

Anadarko, based in The Woodlands, Texas, is committed to meeting its obligations under the Oil Pollution Act, Hackett said. He said the company agreed, in a letter sent to the Justice Department, to provide advance notice of substantial cash or asset transfers from Anadarko that aren’t part of the ordinary course of business.

Hackett said he agrees with the government approach of dealing with BP as the primary responsible party and expects that company to continue to honor its commitment to pay all legitimate claims.

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New Suits

Presidential Life Sued by Former Chief Over Elections

Presidential Life Corp., an insurer that reported $242.2 million in revenue last year, was sued by its former Chairman and Chief Executive Officer Herbert Kurz, who wants to replace the board and consider sale of the firm.

Presidential Life officials are trying to block his nomination of directors by citing an unfair “advance notice bylaw provision,” Kurz contends in a Delaware Chancery Court complaint made public yesterday in Wilmington.

If elected at the Aug. 18 meeting, Kurz’s slate of eight directors would be “committed to enhancing stockholder value by restoring the company’s culture of stringent cost controls, while also exploring the sale of the company or other alternative strategies,” Kurz said in a statement July 21.

Kurz founded the firm and with the Kurz Family Foundation controls more than 26 percent of the stock, according to data compiled by Bloomberg News. He resigned after the New York Insurance Department suggested in a letter June 3 that he “engaged in untrustworthy conduct” in connection with company health insurance and a charitable foundation, the company said in a July 19 statement.

Kurz asks a judge to discount the company’s bylaw interpretation in favor of his nominees or to block the annual meeting.

“Clearly, Mr. Kurz did not comply with the company’s advance notice bylaw provision and is attempting to turn back the clock and return the company to his control,” Presidential spokesman Greg Faje said in an e-mailed statement.

“Furthermore, his actions follow a recent insurance department ruling that barred Mr. Kurz from serving as an officer, director or controlling person of Presidential Life,” Faje said.

The case is Herbert Kurz v. Presidential Life, CA5659, Delaware Chancery Court (Wilmington).

Motorola Accuses Huawei of Conspiring to Steal Trade Secrets

Motorola Inc. sued Chinese rival Huawei Technologies Co. for allegedly conspiring with former employees of the U.S. maker of mobile phones and two-way radios to steal trade secrets.

Huawei began receiving the information as early as 2001, Schaumburg, Illinois-based Motorola claimed in an amended lawsuit filed July 16 in federal court in Chicago. Huawei said the complaint has no merit. Motorola originally sued five former workers in 2008 for allegedly taking trade secrets with them when they left to join Lemko Corp., which has a reseller agreement with Huawei.

The suit comes as security concerns undermine Huawei and ZTE Corp., China’s two biggest network-gear makers, in their ability to expand in some markets. India blocked domestic phone companies from buying equipment made by Chinese vendors, people familiar with the matter said, and U.S. government concerns over national security led Huawei to abandon a joint bid to buy 3Com Corp. in 2008.

“The complaint is groundless and utterly without merit,” Charlie Chen, Huawei’s senior vice president of North American marketing, said in an e-mailed statement. “Huawei has no relationship with Lemko, other than a reseller agreement. Huawei will vigorously defend itself against baseless allegations.”

The case is Motorola Inc. v. Lemko Corp., 08-cv-05427, U.S. District Court, Northern District of Illinois (Chicago).

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Verdicts/Settlements

AstraZeneca Said to Pay $2 Million in Seroquel Cases

AstraZeneca Plc agreed to pay $2 million to settle more than 200 cases over its antipsychotic drug Seroquel in the first resolution of lawsuits alleging the medicine causes diabetes, people familiar with the accords said.

The settlement, which provides an average payout of more than $10,000 per case, came as the result of a U.S. court- ordered mediation involving 26,000 cases filed against London- based AstraZeneca over Seroquel, the people said.

AstraZeneca officials declined to comment on the settlement of the 200 Seroquel cases or the mediation ordered by a federal judge in Florida who was overseeing all federal-court litigation over the antipsychotic drug.

“AstraZeneca continues to participate in good faith in the court-ordered mediation process,” Tony Jewell, a company spokesman, said in an interview. “The mediator has asked the parties to maintain the confidentiality of those discussions. AstraZeneca will honor the mediator’s request.”

Lawrence J. Gornick, a San Francisco lawyer who represented the more than 200 former Seroquel users whose cases are being settled, didn’t return calls for comment on the accords.

The consolidated Seroquel case is In Re Seroquel Products Litigation, 06-MD- 01769, U.S. District Court, Middle District of Florida (Orlando).

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WBL’s Ex-CFO Lew Fined S$67,500 for Insider Trading

Kevin Lew Chee Fai, found liable in Singapore’s first civil lawsuit for insider trading, was fined S$67,500 ($49,100) for selling shares of WBL Corp., a Volvo and Jaguar car distributor.

“The right signal has been sent to the market,” Judge Lai Siu Chiu said at a hearing yesterday. Lew, 50, was Singapore- based WBL’s chief financial officer until July 2007, when he was asked to resign.

The Monetary Authority of Singapore sued Lew, who avoided a loss of S$27,000 by selling WBL shares two days after learning it was forecast to report losses on July 2, 2007. The financial regulator said after winning the case in May that insider trading “undermines investor confidence in the integrity” of the city’s capital markets.

Lew sold 90,000 WBL shares at S$4.98 each on July 4, 2007, even after the company’s in-house lawyer said the information shared at the meeting was price-sensitive, according to court papers. Lew in his defense said he didn’t believe the matters discussed on July 2, 2007, were price sensitive and sold the shares to raise cash to exercise his WBL options.

Lew’s lawyer Thio Shen Yi asked Judge Lai to impose the minimum fine of S$50,000 as Lew has been in financial hardship since July 2007 and this was a “one-off incident.” Lew plans to file an appeal by July 29, Thio said after the fine was announced.

The case is Monetary Authority of Singapore vs Kevin Lew Chee Fai S71/2009 in the Singapore High Court.

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Litigation Departments

Lehman Pays Bankruptcy Advisers $873.1 Million in 21 Months

Lehman Brothers Holdings Inc., the investment bank in bankruptcy since September 2008, paid its lawyers and managers $873.1 million for 21 1/2 months of work, or almost $1.4 million a day.

The restructuring firm Alvarez & Marsal LLC, which provided Lehman with its current chief executive officer, Bryan Marsal, led the payments with $311.6 million in fees for “interim management” through June, according to yesterday’s filing with the U.S. Securities and Exchange Commission.

Weil Gotshal & Manges LLP of New York collected $200.6 million for acting as Lehman’s lead bankruptcy law firm. Milbank Tweed Hadley & McCloy LLP got $56.5 million for advising Lehman’s creditors’ committee.

Lehman filed the biggest U.S. bankruptcy in September 2008 with assets of $639 billion. Creditors include Goldman Sachs Group Inc., UBS AG, the New York Giants and Abu Dhabi Investment Authority as well as individuals who hold Lehman bonds.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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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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