Mattel, River Rights, Philip Morris, Goldman in Court News

Mattel Inc. (MAT) has won dismissal of an antitrust lawsuit by MGA Entertainment Inc., the toymaker that sought $1 billion in damages alleging Mattel violated antitrust laws in a dispute over Bratz dolls.

U.S. District Court Judge David Carter in Santa Ana, California, on Tuesday dismissed MGA’s complaint. The judge had thrown out the case in October, saying MGA’s allegations should have been raised in previous litigation, and allowed the closely held company to file an amended complaint. This time, he didn’t grant leave to refile.

“MGA’s first amended complaint and opposition all but asks this court to reconsider its prior order dismissing the original complaint,” Carter said in his ruling.

A jury in April rejected Mattel’s claims that MGA had stolen the idea for its Bratz dolls and agreed with MGA that El Segundo, California-based Mattel stole MGA’s trade secrets when its employees got into the company’s showrooms at toy fairs by using phony business cards.

In August, Carter ordered Mattel to pay MGA $225 million in punitive damages, attorney fees and costs. That ruling brought the total award in the trial over the Bratz doll’s origins to $310 million. MGA filed its antitrust lawsuit in February of last year after the jury trial had already begun.

MGA Chief Executive Officer Isaac Larian said the Van Nuys, California-based company will appeal.

“The judge dismissed on technicality and wants guidance from the court of appeal,” Larian said in an e-mailed statement. “Mattel’s illegal and anticompetitive activities continue worldwide and we will pursue Mattel accordingly until they stop their monopolistic behavior.”

Alan Hilowitz, a Mattel spokesman, said the company was pleased with the decision.

The case is MGA Entertainment v. Mattel, 11-01063, U.S. District Court, Central District of California (Santa Ana.)

Trials/Appeals

Power Companies Win U.S. High Court Clash Over River Rights

The U.S. Supreme Court sided with power and mining companies against states and environmentalists in a clash over the rights to rivers explored two centuries ago by Lewis and Clark.

The justices, in an opinion written by Justice Anthony Kennedy, unanimously overturned a ruling that would have required a unit of PPL Corp. (PPK) to pay more than $50 million in rent to Montana for the use of riverbeds under ten of the energy company’s dams.

The ruling puts new limits on state claims to ownership of the rivers within their borders, modifying legal rules that date back to the American Revolution. The court said states don’t own major waterfalls and other river segments that weren’t navigable at the time of statehood.

For companies with facilities on rivers, the decision lifts a legal cloud. Companies had said a ruling favoring Montana might have let other western states make similar rent demands. Environmental groups had said a victory for PPL in the case would weaken the ability of states to protect fisheries, river ecosystems and recreation areas.

A Montana state trial court ordered the company to pay $40 million in past rent, plus an unspecified amount for rent starting in 2008. PPL Montana in 2010 recorded a pretax charge of $56 million to cover estimated payments through the first quarter of 2010. The company has said that its total accrued loss from the case as of Sept. 30, 2011, was $84 million.

The Montana Supreme Court had said the state owns the riverbeds and is entitled to rent payments. The company said the riverbeds are owned either by private parties or the federal government.

“The highest court in the land has affirmed PPL Montana’s long-held position that non-navigable stretches of riverbed lands are not owned by the state,” said Robert L. Grey, PPL’s general counsel, in a statement.

Montana Attorney General Steve Bullock said the state would try to press ahead with the case at the lower court level. The high court ruling left open that possibility.

PPL was represented in the case by Paul Clement, the lead lawyer for 26 states challenging President Barack Obama’s health-care law.

The case is PPL Montana v. Montana, 10-218, U.S. Supreme Court (Washington).

Philip Morris Wins Reversal of Florida ‘Engle’ Verdict

Altria Group Inc. (MO)’s Philip Morris USA won reversal of a $2 million Florida jury award in a wrongful-death case filed by the widower of a smoker who died of lung cancer.

The trial court erred in denying Philip Morris’s request to bar the claim because the lawsuit was filed too late, the Florida District Court of Appeal in West Palm Beach said in a ruling yesterday.

The lawsuit was filed in December 2007 by the estate of Shirley Barbanell, who died of lung cancer in April 1996 at the age of 73. Evidence demonstrated at a trial that Barbanell was aware before May 1990 that cigarette smoking had caused serious problems with her health, the appeals panel wrote.

“Although the decedent was not diagnosed with cancer until 1996, the critical event is not when an illness was actually diagnosed by a physician but when the disease or condition first manifested itself,” the appeals panel said.

The Florida Supreme Court in 2006 threw out a $145 billion punitive-damage verdict against the industry and ended a class action filed on behalf of the state’s smokers. The ruling, which permitted smokers in the class to sue individually, is known as the “Engle” decision, after Howard Engle, the lead plaintiff in the case.

The Barbanell case is the first “Engle” claim to be overturned by an appeals court, Philip Morris said in a statement. The jury had awarded damages of $5.34 million, holding Barbanell about 64 percent responsible, which reduced the damages to $2 million, according to the statement.

The ruling isn’t final and is subject to a request for a rehearing.

The case is Philip Morris USA Inc. v. Barbanell, 4D09-3987, Fourth District Court of Appeal of the State of Florida (West Palm Beach).

Stanford Fraud Trial Resumes Following Illness Interruption

R. Allen Stanford’s criminal fraud trial was again halted after a partial day of testimony when a judge decided the financier was too ill to continue.

After an early finish on Tuesday, the trial resumed yesterday in federal court in Houston. U.S. District Judge David Hittner adjourned proceedings this afternoon and sent the jury home about two and a half hours early. The trial is in its fifth week.

“The defendant is clearly not feeling well,” Hittner told lawyers. The jurors are to return today.

Stanford, 61, is fighting charges that he swindled investors out of more than $7 billion through what prosecutors claim was a Ponzi scheme built on allegedly bogus certificates of deposit at his Antigua-based Stanford International Bank Ltd. He has been incarcerated as a flight risk since being indicted in June 2009.

This week, jurors are hearing from expert witnesses testifying on Stanford’s behalf.

The criminal case is U.S. v. Stanford, 09-cr-342, U.S. District Court, Southern District of Texas (Houston). The SEC case is Securities and Exchange Commission v. Stanford International Bank, 09-cv-298, U.S. District Court, Northern District of Texas (Dallas).

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SAC’s Cohen Hid $5.5 Million From Ex-Wife, Lawyer Argues

Steven Cohen, the billionaire founder of SAC Capital Advisors LP, hid $5.5 million from his ex-wife during their 1990 divorce, her lawyer argued before a federal appeals panel in a bid to reinstate her lawsuit.

Howard Foster, a Chicago-based lawyer for Patricia Cohen, said Steven Cohen didn’t include the money, which Foster said Steven received as part of a settlement of a real-estate dispute, on his 1989 financial statement.

“The financial statement was wrong and deceptive,” Foster yesterday told the panel of the U.S. Court of Appeals in Manhattan. Martin Klotz, a lawyer for Steven Cohen at Willkie, Farr & Gallagher in New York, denied his client hid money in his argument before the three-judge panel.

In March, U.S. District Richard Holwell in New York dismissed Patricia Cohen’s suit, ruling she took too long to bring the case, which was filed in 2009. The judge said Cohen made similar claims in a 1991 lawsuit in which she accused her ex-husband of hiding assets and misrepresenting the value of his investments.

The case is Cohen v. Cohen, 11-1390, U.S. Court of Appeals for the Second Circuit (Manhattan), and 09-cv-10230, U.S. District Court, Southern District of New York (Manhattan).

State Can’t Force Pharmacies to Sell Contraceptives

Washington state can’t compel pharmacies to sell emergency contraceptives when such an action violates religious beliefs of the pharmacists, a federal judge ruled yesterday.

U.S. District Judge Ronald Leighton said that regulations by the Washington State Board of Pharmacy requiring pharmacies to sell prescribed medicines or face the possible loss of a license are unconstitutional, according to the opinion filed yesterday in Tacoma.

The case is Stormans Inc. v. Selecky, 07-05374, U.S. District Court, Western District of Washington (Tacoma).

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Occupy London Protesters Can’t Appeal Eviction, Judge Rules

Occupy London protesters camped near the steps of St. Paul’s cathedral were denied permission to appeal a court ruling that they can be evicted.

The U.K. Court of Appeal refused the petition by representatives of the movement in an opinion issued yesterday. The City of London Corporation, which manages the financial district, sued to evict protesters claiming they were blocking a public passageway, impeding tourists and forcing the continued closing of nearby Paternoster Square, where the London Stock Exchange is located.

“It is a travesty that today’s decision will limit voices of dissent within the City of London,” Tammy Samede, the Occupy London representative named in the appeal, said in an e-mailed statement.

A lower court judge ruled in January that the eviction could proceed following a week-long trial in which some ministers testified in support of the camp’s right to protest global economic inequality.

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Verdicts/Settlements

Goldman Sachs Wins Judge’s Approval of Overtime Suit Accord

Goldman Sachs Group Inc. (GS) won a judge’s approval of a lawsuit settlement that will require the bank to pay $993,841 to a group of computer technicians who said they weren’t paid overtime for their work as contractors.

U.S. District Judge William H. Pauley in Manhattan yesterday entered a judgment approving the settlement, citing reasons he stated at a Feb. 10 court conference.

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 a complaint filed in May 2010.

David Wells, a Goldman Sachs spokesman, declined to comment on the settlement.

Lawyers for the plaintiffs will be paid $262,787 plus expenses, which will come from the settlement fund, Pauley said.

The case is Bardouille v. Goldman Sachs & Co., 10-cv-4285, U.S. District Court, Southern District of New York (Manhattan).

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Lawsuits/Pretrial

SEC Seeks Testimony of Former IKB Employee in Tourre Suit

The U.S. Securities and Exchange Commission wants to question a former employee of IKB Deutsche Industriebank AG (IKB) in its lawsuit against Goldman Sachs Group Inc. trader Fabrice Tourre, court records show.

The SEC yesterday asked a federal judge in New York to issue a so-called letter of request that would allow the agency to take testimony from Jorg Zimmerman, a resident of Germany.

The agency sued Tourre in 2010, saying he defrauded investors by not disclosing that hedge fund Paulson & Co. helped pick the underlying securities for a collateralized debt obligation, known as Abacus, and planned to bet against them.

After reaching a $550 million settlement with New York- based Goldman Sachs, the SEC filed a new claim against Tourre, saying he gave the company “substantial assistance” as it misled investors. The SEC said IKB wouldn’t have invested if it had known of Paulson’s involvement in the portfolio selection.

“Tourre personally spoke with IKB employee Jorg Zimmerman to solicit interest in ABACUS 2007-ACI securities,” the SEC said in its filing.

The agency said its lawyers want to ask Zimmerman about IKB’s decision to invest, the representations that Tourre and Goldman Sachs made to the bank, “and the importance of the facts omitted by Tourre” and Goldman Sachs.

Zimmerman isn’t a defendant in the case. Tourre has denied wrongdoing in the lawsuit.

Pamela Rogers Chepiga, a lawyer for Tourre, said in an interview that yesterday’s request is a corrected version of an SEC filing from several weeks ago, and that she has also asked the German court to order testimony.

Tourre has said in court that the $150 million investment was actually made by two Jersey-based firms in the Channel Islands, and not by Dusseldorf, Germany-based IKB.

“We have to finish up discovery in Germany,” Chepiga said. Discovery is the gathering and sharing of evidence before a trial.

U.S. District Judge Barbara Jones in Manhattan last year refused to dismiss the case while narrowing some of the claims against Tourre. She said the SEC had met its burden for pursuing a claim that Tourre violated a law designed to prevent fraudulent sales of securities and should stand trial.

The case is SEC v. Tourre, 10-cv-03229, U.S. District Court, Southern District of New York (Manhattan).

Citigroup ‘Defrauded’ Fannie, Freddie, Whistle-Blower Says

Citigroup Inc. (C), which last week admitted breaking Federal Housing Administration rules and paid a fine, also violated regulations for home loans sold to Fannie Mae (FNM) and Freddie Mac (FRE), according to a whistle-blower’s complaint.

The bank “defrauded, falsified information or misled federal government entities” by selling or securing insurance for mortgages with defects such as improper appraisals and not reporting them as required, Sherry Hunt, a Citigroup quality- assurance vice president, said in her complaint, which was unsealed yesterday. It was filed under the False Claims Act in federal court in Manhattan in August.

Hunt’s charges formed the backbone of the U.S. Justice Department’s case against Citigroup, which paid $158.3 million in a Feb. 15 settlement and admitted that it certified loans for FHA insurance that didn’t qualify. Her complaint provides additional details into the bank’s broken mortgage-processing system. In last week’s agreement, the government reserved the right to pursue criminal and other charges related to mortgages originated or underwritten by Citigroup and not insured by the FHA.

“We take our quality-assurance processes seriously and have pro-actively undertaken process improvements to ensure that they are as strong as possible,” Sean Kevelighan, a Citigroup spokesman, said in an e-mailed statement.

Andrew Wilson, a spokesman for Washington-based Fannie Mae, and Chad Wandler, a spokesman for McLean, Virginia-based Freddie Mac, declined to comment.

The case is U.S. ex rel. Hunt v. Citigroup Inc., 11- cv-005473, U.S. District Court, Southern District of New York (Manhattan).

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BP, Anadarko Liable for Violating Pollution Law, Judge Says

BP Plc (BP\) and Anadarko Petroleum Corp. (APC) are liable for Clean Water Act violations, a judge ruled, allowing the U.S. to seek fines of as much as $1,100 per barrel of oil spilled in the Gulf of Mexico in 2010.

BP (BP/) and Anadarko, partners in the doomed Macondo Well project, are responsible by law for polluting the water because they owned the well, U.S. District Judge Carl Barbier in New Orleans said yesterday. The ruling allows the government to seek fines without having to prove the issue of liability at trial.

Transocean Ltd. (RIG), the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded, can’t be held liable for Clean Water Act violations yet, Barbier wrote in yesterday’s ruling. The issue has to be determined at trial.

BP and Anadarko are liable for civil penalties under the law “because they are both owners of the offshore facility from which oil discharged,” Barbier said.

“There are disputed facts as to whether Transocean meets” the definition of an operator of the offshore facility, Barbier said. “Accordingly the court cannot resolve this issue on summary judgment.”

The Justice Department asked 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. Strict liability is a legal term for automatic responsibility.

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. He will also determine whether any defendants were grossly negligent, which would leave the companies subject to enhanced fines under the Clean Water Act.

“This decision states clearly that BP is the responsible party and reaffirms the long-standing legal, regulatory and economic framework that has been employed by parties in the offshore oil and gas industry for decades,” Lou Colasuonno, a Transocean spokesman, said in an e-mail.

John Christiansen, Anadarko’s spokesman, said he hadn’t seen the judge’s ruling and couldn’t immediately comment.

“Long before this motion and its resolution today, BP had committed to paying all legitimate claims and helping economic and environmental restoration efforts in the Gulf Coast,” Daren Beaudo, a spokesman for London-based BP, said in an e-mail yesterday.

Wyn Hornbuckle, a Justice Department spokesman, said “We’re reviewing the ruling.”

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).

Mets Owners Seek to End $386 Million Madoff Suit Without Trial

The owners of the New York Mets are set to ask a judge today to end a $386 million lawsuit by the Bernard Madoff brokerage trustee without a trial, saying he hasn’t proved they ignored the fraud because it benefited their business.

U.S. District Judge Jed Rakoff threw out most of Madoff trustee Irving Picard’s $1 billion lawsuit against the baseball team’s owners last year, saying he could pursue only $386 million at a trial set to start March 19 in Manhattan federal court. To get most of the money, Rakoff said Picard must prove the defendants, including Fred Wilpon and Saul Katz, were willfully blind to Madoff’s crimes, which Picard has said cost investors about $20 billion in principal.

Wilpon and Katz contend they should be allowed to keep the $386 million. Picard isn’t entitled to a trial because he hasn’t proved what Rakoff said he was supposed to, the Mets owners said in a court filing this month.

Today, Picard will ask Rakoff to let him claim $83 million before the trial, leaving a jury to decide the rest of the suit. To get that amount, which the Mets owners received from Madoff’s Ponzi scheme in the two years before his 2008 arrest, Rakoff said Picard need only prove that Wilpon and Katz took the money without giving equal value in return.

The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).

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Wynn, Okada Hearing in Las Vegas Postponed to March 8

Lawyers for Wynn Resorts Ltd. (WYNN) and Kazuo Okada, the director whose 20 percent stake in the casino operator was redeemed by Wynn, won’t be in court today for a hearing on Okada’s request for documents.

The hearing was postponed until March 8 at the request of the lawyers, Mary Ann Price, a spokeswoman for the Nevada state court in Las Vegas, said yesterday in a telephone interview. Price couldn’t immediately say which side asked for the delay.

Clark County, Nevada, District Court Judge Elizabeth Gonzalez on Feb. 9 declined to rule on Okada’s request for a court order that, as a director, he was entitled to inspect the company’s books and records. The judge had ordered lawyers for Wynn and Okada to return to court so she could decide whether Okada’s request was “reasonable.”

Okada, a billionaire who through his Tokyo-based Universal Entertainment Corp. (6425) held the largest single stake in Wynn, sued last month, claiming the company hadn’t provided information he requested about a HK$1 billion ($135 million) pledge to the University of Macau, the use of $30 million he invested in 2002, and an amended stockholders agreement.

Las Vegas-based Wynn, which is run by Stephen Wynn, on Feb. 19 said it redeemed Okada’s 24 million shares for $1.9 billion and asked him to resign as director, saying he was “unsuitable.” An investigation found that Okada appeared to have paid $110,000 to gaming regulators in the Philippines in violation of U.S. anti-corruption laws, Wynn said.

In a separate lawsuit filed Feb. 19, Wynn alleges that Okada is developing two casinos and three hotels in Manila and that he seeks to lure “high-limit, VIP gamblers” from China in direct competition with Wynn’s casino in Macau. Construction on the Manila Bay casino resort started Jan. 26, Wynn said in its complaint.

Universal said in a Feb. 19 statement that Wynn’s redemption of the shares because of the Philippines project was “outrageous.” The company said it will take all legal steps necessary to protect its investment.

The case is Okada v. Wynn Resorts, A-12-654522, Clark County, Nevada, District Court (Las Vegas.)

For the latest lawsuits news, click here.

New Suits

SEC Sues China-based Executives Over Theft of Company Assets

The U.S. Securities and Exchange Commission sued two China- based executives, accusing them of defrauding investors by selling stakes in a coal business that they had turned into an empty shell company.

Puda Coal Inc. (PUDA) Chairman Ming Zhao and Liping Zhu, who was chief executive officer before stepping down last year, stole and sold the firm’s sole revenue-producing asset, a China-based coal mining company, the SEC said in a statement yesterday. Zhao secretly transferred Puda’s controlling interest to himself and then sold a portion to a fund controlled by Citic Group (CITIC), China’s largest state-owned investment firm, the SEC said.

The transactions weren’t approved by Puda Coal’s board or shareholders and weren’t disclosed in public filings, according to the SEC. During two Puda Coal offerings in 2010, the Citic fund was separately selling interests in the mining subsidiary to Chinese investors while Zhao and Zhu were telling U.S. investors Puda Coal owned a 90 percent stake, the agency said.

“The massive fraud perpetrated by Zhao and Zhu wiped out hundreds of millions of dollars in shareholder value and was compounded by their brazen obstruction,” George Canellos, head of the SEC’s regional office in New York, said in a statement. According to the SEC, Zhao’s counsel provided investigators a forged letter related to the mining assets after the agency began the probe.

Crocker Coulson, an outside investor relations representative for Puda, declined to comment.

Tony Blair’s Wife Sues News Corp., Convicted Phone Hacker

Former U.K. Prime Minister Tony Blair’s wife Cherie sued News Corp. (NWSA) and a former private investigator for its now-defunct News of the World tabloid for hacking into her phone.

The lawsuit, filed Feb. 21 against the company’s U.K. unit and Glenn Mulcaire, comes as News Corp. prepares for the first civil trial over the scandal, scheduled to start Feb. 27 in London. The company has already settled phone-hacking claims by Blair’s former press chief, Alastair Campbell, and former Deputy Prime Minister John Prescott.

News Corp. Chairman Rupert Murdoch shuttered the News of the World in July in a bid to contain public anger after it was revealed the tabloid hacked into the voice mails of a murdered schoolgirl. While most of the current lawsuits have settled, the company may face claims by more than 800 possible victims identified by police.

“If it is true that a former prime minister’s family have been targeted by Rupert Murdoch’s hackers, then it is clearly a significant moment in the scandal,” Tom Watson, a Labour Party lawmaker who is on a parliamentary committee investigating the scandal, said in an e-mail.

A message left with the press office of News Corp.’s U.K. unit, News International, wasn’t immediately returned. Mulcaire’s lawyer, Sarah Webb, didn’t immediately return a call seeking comment. Mulcaire was jailed in 2007 for hacking phones of members of Britain’s royal family.

“We have issued a claim on behalf of Cherie Blair in relation to the unlawful interception of her voice mails,” her lawyer, Graham Atkins of Atkins Thomson Solicitors in London, said in an e-mailed statement. “I will not be commenting any further at this time.” Full details of the suit aren’t yet available.

The case is Cherie Blair v. Newsgroup Newspapers, High Court of Justice Chancery Division, HC12C00657.

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Sloan-Kettering Chief Faces Suit by University of Pennsylvania

The head of Memorial Sloan-Kettering Cancer Center was accused by the University of Pennsylvania in a lawsuit of breaching his fiduciary duty to the school by using research he helped develop there to start his own company.

The complaint against Dr. Craig Thompson, filed yesterday in Manhattan federal court, follows a Dec. 13 complaint against him by the Leonard and Madlyn Abramson Family Cancer Research Institute at the Philadelphia-based school. The complaint also names the company Thompson formed, Agios Pharmaceuticals Inc.

Thompson studied cancer metabolism while he was scientific director of the institute, which was created by a $100 million donation from the Abramson family foundation to the university, according to the suits against him. Without telling the university, Thompson formed Agios to exploit the research, the complaints say.

Thompson’s lawyer, Allan J. Arffa, and John Evans, a spokesman for Cambridge, Massachusetts-based Agios, didn’t immediately return calls for comment on yesterday’s breach-of- contract and breach-of-duty lawsuit.

The suit doesn’t name Memorial Sloan-Kettering.

The cases are Trustees of the University of Pennsylvania v. Thompson, 12-cv-1330, U.S. District Court, Southern District of New York (Manhattan), and Leonard and Madlyn Abramson Family Cancer Research Institute v. Thompson, 11-09108, U.S. District Court, Southern District of New York (Manhattan).

For the latest new suits news, click here. For copies of recent civil complaints, click here.

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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