Soccer, Class Actions Increase, Google-Motorola: Compliance

The New York Red Bulls, the soccer team owned by Austrian billionaire Dietrich Mateschitz, must pay property taxes to Harrison, New Jersey, a tax-court judge ruled.

The town where the Major League Soccer franchise plays home games sought $3.6 million in taxes for 2010 and 2011 from the team, named for Mateschitz’s energy-drink company. The Red Bulls refused to pay, saying the land where its stadium is located is owned by the tax-exempt Harrison Redevelopment Agency.

The ruling from Judge Christine Nugent in Newark rejected that argument as well as the claim that the team-owned stadium serves a “public purpose” and so should be exempt from taxes. The next step will determine how much the Red Bulls will pay, said Al Cifelli, the town’s tax assessor.

“Harrison has had a difficult time as a municipal entity,” he said by telephone. “This is a shot in the arm.”

Negotiations may take place privately, Cifelli said. The 1.2 square-mile (3.1 square-kilometer) town across the Passaic River from Newark has said the tax bill should be paid in full.

Harrison, with 13,620 residents, had bet the soccer stadium would jump-start redevelopment in a community where per-capita income is 63 percent of the state average, according to U.S. Census Bureau data. The town borrowed $39 million in 2006 to buy and clean up the site, while Hudson County chipped in $45 million for a parking garage and the team paid $200 million to build the Red Bull Arena.

Transformation of the surrounding industrial area into a neighborhood of shops and condominiums hasn’t come to fruition, with developers’ payments to the town totaling $1.34 million in the past year, compared with an estimated $11.5 million for 2011 when the project was conceived.

In December, the town had to borrow almost $3 million to cover debt service on the 2006 borrowing, according to Gabriela Simoes, Harrison’s finance officer. The municipality’s lack of a long-term solution to handle its debt triggered a five-level rating cut by Moody’s Investors Service in May. The new Ba3 score is three steps below investment grade.

Nugent pronounced her ruling at a Jan. 6 hearing, where a lawyer for the team, Thomas Denitzio, said the Red Bulls would appeal, according to a transcript. She hasn’t issued a written decision.

Jurgen Mainka, a team spokesman, said officials of the franchise weren’t available for comment on the matter.

The case is Red Bull Arena Inc. v. Town of Harrison, 10999-2010, Tax Court of New Jersey, Essex County (Newark).

Compliance Policy

EPA Won’t Enforce Boiler Rule After Court Ruling, Jackson Says

The Environmental Protection Agency pledged not to enforce its pollution standards on boilers until a reconsidered rule is issued this year, even after a court said the regulations should be put in place.

EPA will issue a “no action” letter soon for the measure introduced last year, and will give companies three years to comply after the new regulations are issued, EPA Administrator Lisa Jackson said Jan. 18 in a letter to Senator Ron Wyden, an Oregon Democrat.

“EPA recognizes that industry needs sufficient time to comply with these standards,” Jackson wrote in the letter, which was provided yesterday to Bloomberg News.

The U.S. District Court in Washington said this month the EPA violated an order by issuing standards for boilers, used by paper plants, refiners, schools and hospitals, then delaying them to reconsider the regulations. New rules are set to be completed in May, Jackson’s deputy, Gina McCarthy, said in Washington yesterday.

Representatives for companies such as Boise Inc. (BZ) say the court decision shows that legislation is necessary.

The EPA proposal and the court’s ruling cause “enormous confusion and uncertainty,” Donna Harman, president of the American Forest & Paper Association in Washington, said in a statement. “These are multibillion-dollar investment decisions that cannot be made overnight.”

The House of Representatives passed a measure last year to block U.S. limits on air pollution from industrial boilers and to delay the replacement standards. A companion measure in the Senate has 41 co-sponsors, although prospects for a vote are uncertain, with Democrats in the majority and President Barack Obama’s administration opposed to the House bill.

In its December proposal, the EPA estimated pollution controls at paper mills, chemical manufacturers and refineries will cost $1.49 billion a year for cleaning mercury and soot. Obama said the rule is among the most expensive regulations his administration is considering.

Compliance Action

EU Restarts Antitrust Review of Google-Motorola Mobility Bid

European Union regulators restarted their antitrust review of plans by Google Inc. (GOOG), the biggest maker of smartphone software, to buy Motorola Mobility Holdings Inc (MMI).

The European Commission set a new deadline of Feb. 13 to rule on the deal. It stopped the review on Dec. 6 to seek more information from the companies.

Regulatory reviews mean the purchase by Google is likely to be completed in 2012, Libertyville, Illinois-based Motorola Mobility said in November. Google plans to use Motorola Mobility’s more than 17,000 patents to protect supporters of its Android software in licensing and legal disputes with rivals such as Apple Inc. (AAPL) -- and also move into the hardware business.

Al Verney, a spokesman for Google in Brussels, declined to comment on the EU review. Jennifer Erickson, a spokeswoman for Motorola Mobility, didn’t immediately respond to a call and an e-mail seeking comment.

Google, based in Mountain View, California, and Motorola Mobility in September received a request for additional information from the U.S. Justice Department’s antitrust division. China is also reviewing the deal, Shang Ming, the head of the country’s Ministry of Commerce’s antimonopoly bureau, said last month.

Courts

Chinese Issuer, M&A Claims Boost Securities Lawsuits

Securities class-action lawsuits in the U.S. increased 6.8 percent last year, led by claims against companies involved in mergers and acquisitions and Chinese companies listed on U.S. exchanges through reverse mergers, a study found.

The lawsuits include M&A claims involving Verizon Communications Inc. (VZ) and Terremark Worldwide Inc. (TMRK), Smurfit-Stone Container Corp. (SSCC) and Rock-Tenn Co. (RKT), and Exelon Corp. (EXC) and Constellation Energy Group Inc. (CEG), according to Stanford Law School’s Securities Class Action Clearinghouse, which conducted the study with Cornerstone Research.

M&A-related cases constituted almost 23 percent of the 188 total federal securities class actions filed in 2011, Cornerstone Research said. That’s unchanged from 2010, when 176 total class actions were filed, according to the study. Overall, the number of class actions filed last year was 3 percent below the annual average of 194 filings from 1997 to 2010, the report’s authors said.

“It’s only the growth of merger-related litigation, which has historically been brought in state courts, that inflates the aggregate statistics so that they even approach historic norms,” Joseph Grundfest, director of the Stanford clearinghouse, said in an e-mailed statement.

Lawsuits alleging violations of accounting rules and financial restatements by Chinese issuers account for more than 17 percent of all federal securities class actions, according to the report. Twenty-four of the 33 lawsuits against Chinese firms were filed in the first half of 2011, which Grundfest said may mean that this type of litigation is subsiding.

Only three class actions related to the financial crisis were filed last year, and overall filings against financial companies represent 13 percent of 2011’s total, compared with 24 percent in 2010.

BP (BP/), Anadarko Should Be Held Liable Before Trial, U.S. Says

BP Plc (BP\), Transocean Ltd. and Anadarko Petroleum Corp. (APC) should be found liable before trial for violations of federal pollution laws stemming from the April 2010 Gulf of Mexico oil spill, lawyers for the U.S. argued yesterday at a hearing in federal court in New Orleans.

The Justice Department is asking U.S. District Judge Carl Barbier to find the companies violated the Clean Water Act on the basis of so-called strict liability because they were operators of the doomed project. Barbier, who’s overseeing much of the spill litigation, has scheduled a nonjury trial for Feb. 27 to determine liability and apportion fault for the disaster.

A ruling by Barbier against the companies would mean they couldn’t fight allegations of Clean Water Act violations at the trial and would allow the U.S. to seek fines of as much as $1,100 from each company per barrel of oil spilled. The government has also asked Barbier to find Anadarko and Transocean (RIG) liable under the Oil Pollution Act, a separate environmental law, for cleanup costs and damages. BP already accepted responsibility for those costs.

Even if Barbier does rule for the U.S. on its bid for a pretrial decision, the question of gross negligence, which will determine whether the companies are subject to enhanced fines under the Clean Water Act, will be considered at trial.

If Barbier denies the U.S. motion, he’ll determine at trial which companies can be held liable and thus subject to fines.

The April 2010 Macondo well blowout and explosion killed 11 workers and caused the worst offshore oil spill in U.S. history. The accident spurred hundreds of lawsuits against BP and its partners, including Transocean, the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded, and Anadarko, which owned 25 percent of the well.

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

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Entergy Wins as Court Rules Vermont Can’t Shut Nuclear Plant

Entergy Corp. (ETR) won a court challenge to the state of Vermont’s right to overrule federal regulators and shut down its only nuclear power station.

U.S. District Judge Garvan Murtha in Brattleboro, Vermont, ruled yesterday that state legislators lacked the authority to deny Entergy a license to operate the reactor after March 2012. He conducted a three-day trial without a jury in September.

Entergy, based in New Orleans, sued Vermont’s governor, Peter Shumlin, its attorney general, William Sorrell, and members of its Public Service Board in April 2011, charging that the state didn’t have the authority to overrule the U.S. Nuclear Regulatory Commission, which renewed Entergy’s license this year to operate the power station until 2032.

“Vermont’s attempt to shut down operations at the Vermont Yankee Station through regulatory or legislative denial of a Certificate of Public Good is preempted by the federal Atomic Entergy Act,” Entergy argued in court papers.

Entergy said that Vermont Yankee, the state’s only nuclear power plant, supplies about 33 percent of Vermont’s electricity. It employs 650 people and pays about $13 million a year in state fees and taxes. The plant is in Vernon, on the Connecticut River in the southeastern corner of the state.

In a statement, the governor said he was “very disappointed” in the ruling.

“Entergy has not been a trustworthy partner with the state of Vermont,” Shumlin said in the statement, adding that he believes that “it is in Vermont’s best interest to retire the plant.”

Shumlin said he will wait for Sorrell, the attorney general, to review the ruling before deciding whether to appeal.

Sorrell ordered more oversight of the nuclear plant after the discovery of the radioactive hydrogen isotope tritium in monitoring wells, the company said in court papers.

The case is Entergy Nuclear Vermont Yankee LLC v. Shumlin, 1:11-00099, U.S. District Court, District of Vermont (Brattleboro).

U.S. Defends Use of Wiretap Evidence in Gupta Prosecution

U.S. prosecutors opposed a bid by former Goldman Sachs Group Inc. (GS) director Rajat Gupta to block use in his criminal case of wiretap evidence obtained from the mobile phone of convicted inside trader Raj Rajaratnam.

Six different judges authorized the wiretaps because they are particularly appropriate in investigating insider trading, which requires communication and is often difficult to detect and prove beyond a reasonable doubt, the government said yesterday in a filing opposing Gupta’s request to suppress the evidence.

Gupta, who also sat on the board of Procter & Gamble Co. and led McKinsey & Co., was indicted by a federal grand jury in October on five counts of securities fraud and one count of conspiracy to commit securities fraud for passing inside information to Rajaratnam. Gupta also faces a lawsuit filed by the U.S. Securities and Exchange Commission.

Rajaratnam, the former Galleon Group LLC hedge fund manager, was convicted last year of directing the biggest insider-trading ring in a generation. It was one of the first insider-trading cases in which the government made extensive use of wiretaps.

Gupta’s lawyers said Jan. 3 that the court’s rejection of a similar bid by Rajaratnam to bar the intercepts as evidence during his trial was incorrect. Federal laws restricting use of wiretaps don’t permit them in investigations of suspected insider trading, according to Gupta’s filing.

Gary Naftalis, a lawyer for Gupta, didn’t immediately return a call to his office after regular business hours yesterday seeking comment on the government’s filing.

The case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York (Manhattan).

U.S. Judge Denies ‘Occupy’ Request to Allow Courthouse Rally

A group calling itself “Occupy the Courts” lost a bid to force the U.S. to issue a permit for a rally planned for outside a New York federal courthouse today.

U.S. District Judge Lewis Kaplan yesterday denied a last- minute request by the group and by Jarret Wolfman, an organizer of the rally, for a court order compelling the U.S. General Services Administration to allow it to take place today outside the courthouse, on Pearl Street in lower Manhattan.

The event, intended to coincide with similar protests outside 120 U.S. courthouses in 46 states, was planned to begin in the plaza outside the Daniel Patrick Moynihan U.S. Courthouse between 4 and 6 p.m. today, then move to a march and rally at nearby Foley Square. Organizers said they want to call attention to a 2010 Supreme Court decision that made it easier for corporations to spend money in election campaigns.

“The purpose of the day of action is to mark the second anniversary of the U.S. Supreme Court (1000L)’s infamous Citizens United v. Federal Election Commission decision that opened the floodgates to unlimited corporate money in elections,” Occupy the Courts said in a complaint filed with the court Jan. 18.

Kaplan ruled that the area outside the courthouse, which he said is a potential terrorist target, isn’t a public forum. As a result, the government may impose restrictions on free speech if they are reasonable and content-neutral, he said. Kaplan said that no permit has ever been issued for a demonstration outside the courthouse. He cited the government’s security concerns in refusing to order a permit.

Kaplan said that Occupy the Courts has adequate alternative locations for the rally, including the sidewalk in front of a nearby federal courthouse, which is currently closed for renovations.

Wolfman, asked after the hearing what he planned to do in response to Kaplan’s ruling, said “I don’t know yet.”

Ellen Davis, a spokeswoman for the Manhattan U.S. Attorney’s office, which represented the government in the case, declined to comment on the ruling.

The case is Wolfman v. French, No. 12-CV-443, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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