Omnicare, Los Angeles Dodgers, Renault, Saudi Binladen Group in Court News
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Wynn Resorts Ltd. (WYNN) Vice Chairman Kazuo Okada sued the casino operator for access to financial records in a dispute with the company over the use of funds.
Okada, 69, filed the complaint in state court in Clark County, Nevada, seeking to force the company to produce spending records. He is also chairman of Universal Entertainment Corp. (6425), Wynn’s biggest shareholder.
Okada opposed Wynn Resorts’s HK$1 billion ($129 million) pledge in July 2011 to the University of Macau Development Foundation, according to the complaint. Universal, a Tokyo-based pachinko machine maker, owns a 20 percent stake in the Las Vegas-based operator of gambling resorts. Kazuma Ishioka, a spokesman at Tokyo-based Universal, declined to comment.
Okada said in a related regulatory filing he is seeking to protect his investments of $380 million in Wynn Resorts dating back to 2000.
According to the filings, on Nov. 2 Okada sought information regarding the pledge, the use of $30 million one of his companies invested in Wynn in April 2002 and an amendment to a stockholders agreement with Chairman and founder Stephen Wynn and ex-wife Elaine Wynn that followed the couple’s divorce.
“Not only was the request summarily denied but, shockingly, Wynn Resorts asked for evidence that the $30 million investment had even occurred,” according to the filing.
Calls made to Samanta Stewart, a spokeswoman at Wynn Resorts, went unanswered.
The case is Kazuo Okada v. Wynn Resorts, Ltd., District Court of Clark County, Nevada (Las Vegas).
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Nacchio Seeks $18 Million Refund for Taxes on Illegal Trades
Joseph Nacchio, the former Qwest Communications International Inc. (Q) chairman convicted of insider trading, sued the U.S. seeking a refund of almost $18 million in taxes he paid on gains from illegal stock sales.
In a lawsuit filed Jan. 10 in the U.S. Court of Federal Claims in Washington, Nacchio said he and his wife are owed a refund because court-ordered disgorgement of those gains wiped out their tax liability.
Nacchio, 62, received a 70-month prison sentence after his conviction in 2007 for selling stock in Denver-based Qwest in 2001 based on inside information. Nacchio of Rumson, New Jersey, made more than $44 million on the sale, according to court papers. CenturyLink Inc., a telecommunications company based in Monroe, Louisiana, bought Qwest last year for $24 billion.
The suit claims that “$44,632,464.38 was included in plaintiffs’ gross income for tax year 2007 because it appeared that the plaintiffs had an unrestricted right” to the money. “As such, plaintiffs paid $17,999,030.00 in federal income tax.”
In the criminal case, Nacchio was ordered to pay a $19 million fine and forfeit $44.6 million.
The Internal Revenue Service rejected an earlier request for a tax credit on Nacchio’s payment, claiming it would “violate public policy as it would force a portion of the penalty to be borne by the U.S. government,” according to a letter from the IRS cited in the suit.
William Lipkind, Nacchio’s lawyer in the tax lawsuit, didn’t return a telephone message seeking comment on the filing.
Grant Williams, an IRS spokesman, said federal law prohibits the agency from discussing or commenting on any particular taxpayer situation or case.
The case is Nacchio v. U.S., 12-00020, U.S. Court of Federal Claims (Washington).
Omnicare Cheated U.S., Illinois, Ex-Pharmacist Claims in Lawsuit
Omnicare Inc. (OCR) was accused in a lawsuit by a former company pharmacist of overbilling the U.S. and Illinois governments for drugs it supplied to nursing homes,
The pharmacist, Peter Ordeanu, alleged in a complaint filed Jan. 10 in federal court in Chicago that he and others at the company were required to enter false billing information that caused the state and federal governments to pay for medications that were more costly than those actually being dispensed.
“Omnicare regularly overcharged the government,” he alleged, by compelling pharmacists to enter incorrect National Drug Codes, the product identifiers assigned by the U.S. Food and Drug Administration to all commercially distributed pharmaceuticals.
The government may have suffered millions of dollars of damages from that conduct at a Des Plaines, Illinois, distribution facility operated by Covington, Kentucky-based Omnicare, Ordeanu said. Omnicare is the biggest U.S. provider of pharmaceuticals to nursing homes.
Patrick Lee, Omnicare’s vice president for investor relations, didn’t respond to phone and e-mail messages seeking comment on the lawsuit. Jamie Moser, a company spokeswoman with Joele Frank, Wilkinson Brimmer Katcher in New York, also didn’t immediately reply to e-mail and phone messages seeking comment.
Ordeanu also claims his employment was wrongfully terminated in January 2011 in violation of federal age discrimination laws. Ordeanu also alleges his firing was in retaliation for disclosing the company’s illegal activities to his Omnicare supervisors, managers and directors.
The case is United States of America ex rel. Ordeanu v. Omnicare Inc., 12-cv-184, U.S. District Court, Northern District of Illinois (Chicago).
U.K. Regulator Charges Man With 8 Counts of Insider Trading
Britain’s finance regulator charged Richard Anthony Joseph with insider trading and money laundering following his May, 2010, arrest for the crimes.
The Financial Services Authority said Joseph, 42, was released on conditional bail after a hearing in London yesterday. He is scheduled to appear at a higher criminal court in March to face the eight counts of insider trading and two counts of money laundering, the regulator said in a statement.
Joseph, who is not approved by the FSA to hold a regulated position in Britain’s finance industry, faces as long as seven years in jail for insider trading, plus a fine if he’s found guilty.
The FSA, which prosecutes market abuse in the U.K., has at least two insider trading trials scheduled to begin in the first half of the year and another case awaiting a trial date.
Karen Roberts, a spokeswoman for Joseph’s law firm, Irwin Mitchell, didn’t immediately respond to a phone call or e-mail seeking comment. FSA spokesman Christopher Hamilton declined to comment further.
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S&P, Moody’s Must Face Calpers Lawsuit Over Ratings, Judge Rules
Standard & Poor’s and Moody’s Investors Service Inc. must face California Public Employees’ Retirement System’s $1 billion lawsuit over their ratings of structured investment vehicles, a judge said.
The pension fund “produced sufficient evidence” that the ratings companies made misrepresentations “without reasonable grounds” to believe they were telling the truth, state court Judge Richard Kramer in San Francisco said in a ruling yesterday.
Calpers, the largest U.S. pension fund, sued the three major bond-rating companies in July 2009 for losses it said were caused by their “wildly inaccurate” risk assessments on so- called SIVs.
The ratings companies all gave top marks to Cheyne Finance LLC, Stanfield Victoria Funding LLC and Sigma Finance Inc., prompting Calpers to invest in them in 2006, the fund said in its complaint. The SIVs collapsed in 2007 and 2008, according to the Calpers complaint. The underlying assets of the three firms consisted primarily of risky subprime mortgages, Calpers said.
Kramer’s ruling rejected a request by the rating companies to dismiss the case under a California law designed to fend off lawsuits meant to chill public debate. He ruled in 2010 that the ratings are a form of speech that’s protected by the law. To fend off dismissal, Calpers then had to show a probability of prevailing in the lawsuit by presenting sufficient facts.
“It’s not a ruling on the merits of the case,” said Paul Clifford, an attorney at the California Anti-Slapp Project, a Berkeley, California-based law firm that specializes in similar lawsuits. SLAPP stands for “strategic lawsuits against public participation.”
Moody’s and S&P have 60 days to appeal the ruling, and the appeals court would take a fresh look at the evidence without considering whether Kramer erred in his decision, Clifford said in a phone interview. Neither side can present new evidence, he added.
Edward Sweeney, a spokesman for McGraw-Hill Cos. (MHP)’ Standard & Poor’s Rating Services reached via e-mail, had no immediate comment about the ruling. Michael Adler, a Moody’s spokesman, didn’t immediately respond to an e-mail message seeking comment on the decision. A phone call to Sacramento-based Calper’s media office wasn’t immediately returned.
The case is California Public Employees’ Retirement Systems v. Moody’s Corp. (MCO), 09-490241, Superior Court of California, County of San Francisco.
Bank of America Faults Lehman Statement on Archstone
Bank of America Corp. faulted Lehman Brothers Holdings Inc. for telling the press that there were no limits on the amount of damages the defunct firm could seek from the bank and Barclays Plc (BARC) over a disputed deal involving Archstone.
The bank termed Lehman’s statement, cited in a published story last week about Lehman’s fight to control its biggest real estate asset, “incorrect and prejudicial,” in a letter yesterday to a judge that was filed in court.
Bankrupt Lehman plans a $1.3 billion purchase of 26.5 percent of Archstone from the banks, as a first step in buying the banks’ 53 percent Archstone stake for as much as $2.7 billion, according to the parties’ comments in court last week. Lehman, after failing to stop the banks from giving Sam Zell’s Equity Residential (EQR) an option to buy the second half of their stake, told a reporter that the banks had waived any limits on monetary damages Lehman can seek from them as a result of their actions.
Bank of America and Barclays “respectfully request that the court once again instruct plaintiffs not to comment on this lawsuit in the media,” Bank of America said in the letter.
According to Bank of America, Lehman is entitled only to a refund if a judge deems that it overpaid for the second half of the banks’ stake. Lehman has said the Zell company will likely bid more than $1.3 billion for that piece of Archstone, forcing Lehman to match his bid if it wants to gain control of Archstone.
Kimberly Macleod, a Lehman spokeswoman, declined to comment.
Lehman is embarking on a $65 billion liquidation plan after three years in bankruptcy court that would pay the average creditor less than 18 cents on the dollar. It has said it aims to sell Archstone later for as much as $6 billion to help pay creditors. Archstone is Lehman’s biggest real estate asset. Lehman currently owns 47 percent.
The case is In re Lehman Brothers Holdings Inc. (LEHMQ), 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The complaint is Archstone LB Syndication Partner LLC v. Banc of America Strategic Venture Inc. (In re Lehman Brothers Holdings Inc.), 11-02928, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Facebook Claimant Fined $5,000 for Failure to Produce E-Mail
Paul Ceglia, the New York man claiming to own a stake in Facebook Inc., was fined $5,000 for failing to provide access to his e-mail accounts in his lawsuit against the company.
U.S. Magistrate Judge Leslie Foschio in Buffalo, New York, ruled Jan. 10 that Ceglia showed “a plain lack of respect” for a court order requiring him to turn over to Facebook the addresses and passwords for all e-mail accounts he has used since 2003.
Foschio ordered Ceglia to pay the fine and reimburse Facebook for its legal fees connected to the e-mail dispute. Foschio said Ceglia disregarded his lawyers’ advice to comply with the order.
“Plaintiff, fully advised by his attorneys not to do so, chose to knowingly ignore the unambiguous orders of the court,” Foschio wrote.
Ceglia’s attorney, Dean Boland of Lakewood, Ohio, said his client won’t seek to appeal the ruling. The failure to follow the e-mail order occurred before Boland took over as Ceglia’s lead counsel in October, he said. Three other legal teams have left the case since Ceglia sued in June 2010.
“When a judge orders you to do something, you’ve got to do it,” Boland said in a phone interview.
Orin Snyder, a lawyer who represents Palo Alto, California- based Facebook in the suit, didn’t immediately return a call seeking comment on the ruling.
Ceglia claims a 2003 contract entitles him to half the Facebook holdings of the social-networking company’s co-founder and chief executive officer, Mark Zuckerberg.
In an amended complaint filed in the case, Ceglia quoted e- mails between him and Zuckerberg that he says support his suit. Facebook has said that the e-mails were fabricated and that the two-page contract produced by Ceglia is a forgery.
The case is Ceglia v. Zuckerberg, 1:10-cv-00569, U.S. District Court, Western District of New York (Buffalo).
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Dodgers End TV Rights Fight With Fox, Removing Bar to Sale
The bankrupt Los Angeles Dodgers ended their court fight with News Corp. (NWSA)’s Fox Sports over future television rights, removing the last major barrier to a sale of the Major League Baseball team.
Fox Sports agreed to end its opposition to the Dodgers’ bankruptcy reorganization and the team agreed not to solicit bids for future television rights before an exclusive negotiating period with Fox ends later this year.
The deal was designed to “eliminate the cost and distraction of the disputes with Fox and to allow the sale process to move forward unhindered by any uncertainty regarding those disputes,” the Dodgers said in a court filing Jan. 10.
Dodgers owner Frank McCourt is selling the team, which filed for bankruptcy in June. To increase the value of the franchise, the Dodgers won permission from the judge overseeing the team’s bankruptcy to solicit separate offers for the rights to televise future games, which Fox currently holds.
That decision was put on hold by a higher court, which found that Fox was likely to win an appeal. A final hearing on whether to overturn the media rights ruling was scheduled for today.
U.S. Bankruptcy Judge Kevin Gross approved the settlement yesterday at a hearing in Wilmington, Delaware, that had originally been scheduled to decide whether the bankruptcy should be dismissed, as Fox had demanded.
“We are pleased that these matters between our two organizations have been resolved,” Fox said in a statement. “We were never in favor of litigation, but it was imperative that we protect our exclusive media rights.”
Under the settlement, whoever buys the team would have the right to negotiate an extension of Fox’s current television deal with the Dodgers or, failing that, sign a contract with a new company. Under the current contract, Fox has a limited right to match any subsequent bids under certain circumstances.
The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Saudi Binladen Group Wins Dismissal of Six 9/11 Lawsuits
Saudi Binladen Group, Saudi Arabia’s largest construction company, won dismissal of lawsuits in which it was accused of supporting Osama Bin Laden’s 2001 terrorist attacks.
U.S. District Judge George B. Daniels in New York yesterday threw out six cases brought by people including relatives of those killed in the Sept. 11 attacks. They claimed the construction and distribution company run by bin Laden’s relatives “provided material support” and financing to Bin Laden and maintained close ties with him before the attacks.
The company allegedly provided significant support to bin Laden before he was removed as a shareholder in 1993, “with knowledge that he was targeting the United States,” those suing said. They claimed the company provided a “financial lifeline” to the al-Qaeda leader, now deceased, after he was removed as a shareholder and his ties with it cut in 1994.
The claims “have no evidentiary support,” Daniels ruled.
The suits include cases filed by Deena Burnett, whose husband, Thomas, 28, was killed when his hijacked plane, United Airlines Flight 93, crashed in a southwestern Pennsylvania field, and the family of Thomas Ashton, who died at the World Trade Center.
The judge said the plaintiffs failed to establish so-called personal jurisdiction, or the court’s authority over the parties in the suit. The business activities of an employee of the company’s now-defunct U.S. unit were insufficient to confer jurisdiction, Daniels ruled.
U.S. District Judge Richard Casey, who presided over the case before his 2007 death, denied the Saudi Binladen group’s request to dismiss two suits in January 2005, Daniels said.
Casey allowed extensive evidence to be collected and ruled the Binladen Group could renew its motion later, Daniels said.
The case is In re Terrorist Attacks on Sept. 11, 2001, 03- MDL-1570, Southern District of New York (Manhattan).
Renault Heirs Lose Bid for Review of WWII Nationalization
The family of Renault SA (RNO)’s founder lost a bid to have a court review the 1945 nationalization of the carmaker in a case that dates back to allegations that Louis Renault collaborated with the Nazis during World War II.
The court said it didn’t have jurisdiction to take the case in a ruling yesterday. The court sided with the French government and Paris prosecutors, who argued that previous court rulings against the family were binding.
Seven of Louis Renault’s heirs asked the court to allow them to challenge the constitutionality of the state’s takeover. The family argued that since Renault, arrested for allegedly collaborating with the Nazis, died in prison awaiting trial, they were unfairly punished when French authorities refused to compensate his survivors.
“To call into question, 65 years later,” a war-time decision by the French authorities “to confiscate what had become an arm of war” was a “provocation,” said Jean-Paul Teissonniere, a lawyer for a metal workers union which opposed the heirs. “The court did not fall into the trap.”
The heirs will “very probably” file an appeal, according to their lawyer, Louis-Marie de Roux.
The court’s decision is “contrary to all the principles guaranteed by the constitution,” de Roux said. “There was a wrong committed by the state” when the authorities seized “the assets without any indemnification, any court ruling.”
The Boulogne Billancourt-based carmaker isn’t involved in the case. The French government is currently Renault’s biggest shareholder with a 15 percent stake.
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Goldman Sachs to Pay $1 Million to Settle Overtime Suit
Goldman Sachs Group Inc. (GS) will pay $993,841 to settle a suit brought by a group of computer technicians who said they weren’t paid overtime for their work as contractors.
The parties asked U.S. District Judge William H. Pauley in Manhattan in a filing yesterday to approve the settlement. Forty-one technicians returned claim forms, according to the filing.
“The parties reached the settlement agreement after an arm’s-length mediation held in March 2011,” according to the filing.
In the lawsuit, the technicians said they deserved overtime pay for working more than 40 hours a week. Work weeks topped 70 hours, and more than 100 employees in New York and New Jersey were underpaid as a result, they said in the complaint filed in May 2010.
David Wells, a Goldman Sachs spokesman, declined to comment on the settlement.
The case is Bardouille v. Goldman Sachs & Co., 10-cv-4285, U.S. District Court, Southern District of New York (Manhattan).
U.S. High Court Rejects Limits on Witness-ID Testimony
The U.S. Supreme Court (1000L) rejected calls for judges to assess the reliability of eyewitnesses before letting them go in front of a jury to identify the culprit in a criminal case.
The justices, voting 8-1, ruled against a New Hampshire (BEESNH) man who was identified by a witness and was subsequently convicted for breaking into a car. The accused man, Barion Perry, contended that the identification wasn’t reliable because he was being questioned by a police officer in a parking lot when the witness saw him from her apartment window.
The ruling reinforces the power of prosecutors while rebuffing defense contentions that eyewitness testimony is highly persuasive and frequently wrong. The decision continues a trend at the court, which under Chief Justice John Roberts has generally limited the rights of criminal defendants.
In the latest case, the justices said they wouldn’t extend previous rulings that protect suspects against witness identifications that are influenced by police suggestions. Writing for the court, Justice Ruth Bader Ginsburg said that rule applies only in cases involving law-enforcement misconduct.
“The jury, not the judge, traditionally determines the reliability of evidence,” Ginsburg wrote. “We also take account of other safeguards built into our adversary system that caution juries against placing undue weight on eyewitness testimony of questionable reliability.”
Justice Sonia Sotomayor, the lone dissenter, pointed to studies showing eyewitnesses’ misidentification of suspects to be the biggest cause of wrongful convictions. She said researchers found that misidentification was involved in a “staggering” 76 percent of the first 250 convictions to have been overturned due to DNA evidence.
“Eyewitness identifications’ unique confluence of features -- their unreliability, susceptibility to suggestion, powerful impact on the jury and resistance to the ordinary tests of the adversarial process -- can undermine the fairness of a trial,” wrote Sotomayor, a former prosecutor.
The case is Perry v. New Hampshire, 10-8974, U.S. Supreme Court (Washington).
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Job-Bias Suits Against Religious Groups Curbed by Top Court
The U.S. Supreme Court gave religious groups a new shield from job-bias suits, throwing out a case filed by a fourth-grade teacher who was fired from a Lutheran school in suburban Detroit.
The justices unanimously said for the first time that the Constitution protects churches from employment-discrimination claims by ministers. The court also said Cheryl Perich fell within that exception, in part because the church that ran the school conferred the title of “minister” on her.
“The interest of society in the enforcement of employment discrimination statutes is undoubtedly important,” Chief Justice John Roberts wrote for the court. “But so too is the interest of religious groups in choosing who will preach their beliefs, teach their faith and carry out their mission.”
Appeals courts to have considered the issue had uniformly recognized the “ministerial exception” to job discrimination laws, while disagreeing as to its breadth.
Perich and the U.S. Equal Employment Opportunity Commission were seeking to sue under the Americans with Disabilities Act, contending that the Hosanna-Tabor Evangelical Lutheran Church and School had discriminated against her because she had been diagnosed with narcolepsy. A federal appeals court had let her suit go forward.
The case is Hosanna-Tabor Church v. EEOC, 10-553, U.S. Supreme Court (Washington).
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Stanford’s Lawyers Seek to Quit Case Before Jan. 23 Fraud Trial
Lawyers for R. Allen Stanford, the Texas financial scheduled to go on trial this month on charges of leading a $7 billion fraud, asked a judge to let them quit the case.
Attorneys Ali Fazel and Robert Scardino, who are being paid from public funds because Stanford’s assets are frozen by court order in a related case, filed the withdrawal request with U.S. District Judge David Hittner in Houston yesterday, saying budget restrictions are hampering their effectiveness.
“The rulings of this court, the budget matters made public by this court, and matters still under seal have placed counsel in an untenable position,” they said. “Counsel cannot represent the accused competently.”
Jury selection is scheduled to begin on Jan. 23. Stanford is accused of defrauding investors who bought certificates of deposit issued by his Antigua-based Stanford International Bank. He has denied the charges.
Laura Sweeney, a spokeswoman for the U.S. Justice Department, declined to comment on the lawyers’ request.
Stanford has been in federal custody since he was indicted in June 2009.
The case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston).
Ex-Sullivan & Cromwell Lawyer Gets 28 Months for Tax Crime
John J. O’Brien, a former partner with the New York law firm Sullivan & Cromwell LLP who specialized in corporate mergers and acquisitions, was sentenced to 28 months in prison for failing to pay his taxes.
O’Brien, who earned about $10.8 million from 2001 to 2008, didn’t file federal tax returns for those years, according to the government. He used his unreported income to buy a rare-book business, which failed, according to prosecutors.
Calling it “a very odd case and a very troubling case,” U.S. Magistrate Judge Henry Pitman yesterday rejected O’Brien’s request to avoid prison, in a hearing in Manhattan federal court. As part of a plea agreement, O’Brien must pay $2.9 million in unpaid taxes, plus interest.
O’Brien, who is admitted to practice law in New York, is the subject of a legal disciplinary proceeding, Assistant U.S. Attorney Stanley Okula told Pitman. Because he pleaded guilty to four misdemeanor charges, he won’t be automatically disbarred.
The case is U.S. v. O’Brien, 11-cr-0652, U.S. District Court, Southern District of New York (Manhattan).
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