IN BRIEF
Milberg LLP Investor and Consumer Update
Landmark Ruling Protects
Investors’ Rights in Cases
Against Securities Professionals
The New York Court of Appeals issued a landmark decision in
Assured Guaranty (UK) Ltd. v. J.P. Morgan Investment Management Inc.
on December 20, 2011, holding that investors’ lawsuits against securities
professionals are not precluded by New York’s Martin Act.
VII
SPRING 2012
IN THIS ISSUE
consumer news
Reebok Settles False
Advertising Claims Chase Customers
to Receive $8 Million
securities news
Milberg LLP filed an amicus (friend-of-the-court) brief on behalf of the following labor
organizations: New York State AFL-CIO; the City Employees Union Local 237,
International Brotherhood of Teamsters; the Communications Workers of America Local
1180; the Uniformed Fire Officers Association; and the United Federation of Teachers.
attorney insight
Patricia Stryker, Recording Secretary and Director of Political Action and Legislation of City
Employees Union Local 237, stated: “Today’s decision will significantly help institutional and
individual investors who have been enormously harmed by wrongdoing in the financial
markets.” Arthur Cheliotes, President of the Communications Workers of America Local 1180,
stated: “The court’s decision is a great victory for investors, and will help to hold the securities
industry accountable for misconduct.”
national law journal recognizes
milberg in its 2011 plaintiffs’ hot list
The NLJ has selected Milberg, once again, for
inclusion in its annual “Hot List” showcasing the top
20 firms that “are winning multimillion-dollar verdicts
in court and at the settlement table.” The annual
list provides a “snapshot of the most successful
plaintiffs’ practices” of the past year. The publication picked 20 firms that “are at the cutting edge of
plaintiffs’ work—and that are giving defense players
a run for their money.”
Attorney advertising. Prior results do not guarantee a similar outcome.
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Marketing of GMO Products
as “All Natural” Challenged 2
The ruling resolved a significant and unsettled issue in New York securities law—
whether the Martin Act, which grants the State Attorney General broad power to
investigate and prosecute schemes involving fraudulent securities, preempts investor
suits arising under state common law.
Milberg partner Robert A. Wallner, who co-wrote the brief with partner Jennifer L. Young,
noted that prior to this ruling, numerous courts had dismissed investors’ lawsuits,
holding that they were precluded by the Martin Act. “New York courts historically had
dismissed many claims asserted by victimized investors. This decision is a gamechanger, and clarifies that investors can pursue their common law claims under New
York law,” he said. Wallner added that the ruling is a “landmark decision that will help
protect investors harmed by misconduct in the securities industry.”
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$41.5 Million Proposed
WaMu Settlement
2
HENRY KELSTON reviews
documentary film
“Hot Coffee”
3
In the News
3
firm news
Attorney Accolades
4
Speaking Engagements
4
Corporate Governance
4
noteworthy milberg cases
(Source: NLJ)
In re Vivendi Universal S.A. Sec. Litig.:
Record-breaking $1 billion verdict for
plaintiffs after a rare three-month jury trial
in a complex case involving global
securities class action fraud.
In re Nortel Network Sec. Litig.: $1 billion
settlement from Nortel Networks Corp.,
which included a cash settlement fund and
shares of company stock.
“We got literally as much as we could
given that we didn’t go to trial,” said
Sanford Dumain, lead Milberg partner
handling the case.
CONSUMER NEWS
SECURITIES NEWS
Reebok to Pay $25M to Settle False Advertising
Claims Over Toning Shoes
Proposed $41.5M Settlement
Significant Recovery for
WaMu Investors
Milberg partner Janine Pollack, serving as co-class counsel in In re Reebok EasyTone
Litigation, helped secure a $25 million settlement on behalf of consumers who
purchased EasyTone apparel and shoes. The case stemmed from allegations that
Reebok made false and misleading advertising and marketing claims about the health
benefits of its EasyTone products. Under the terms of the settlement, Reebok is also
required to change its advertising practices. The settlement was obtained in cooperation
with the Federal Trade Commission, which had been investigating Reebok for the bodyshaping promises the company claimed in its ads for EasyTone. The sneakers sell for
about $100 per pair. According to news reports, Reebok has sold more than five million
pairs in the U.S.
Class members submitting claims will receive refunds of significant portions of the
purchase price of the eligible shoes and/or eligible apparel, according to Ms. Pollack.
“This represents an excellent settlement for the Class,” she said. “Moreover, the
cooperation between the FTC and Class Counsel on this settlement was unprecedented.”
Consumers who bought the shoes can get cash back by filling out a claim form online at
www.reeboksetllement.com.
• In re Reebok EasyTone Litigation (D. Mass.)
Milberg Secures $8M Settlement for Chase Customers
The Central Distict of California recently granted final approval of a $7.8 million settlement in Milgram v. Chase Bank USA, N.A., et al., a consumer class action alleging that
Chase misled consumers and failed to adequately disclose the terms of its short-term
loans. The settlement, which calls for Chase to return some of the excessive finance
charges assessed against customers, is the result of Milberg’s extensive negotiations,
substantial investigation, and thorough analysis of the legal issues.
• Milgram v. Chase Bank USA, N.A., et al. (C.D. Cal.)
Marketing of GMO Products as “All Natural” Challenged
Milberg is at the center of a growing consumer movement against companies using the
phrase “all natural” to market foods containing genetically modified ingredients. The Firm
has filed class actions against the makers of Wesson Oils (Conagra), Tostitos (Frito-Lay
and Pepsico) and Kix cereals (General Mills) for describing as “all-natural” products made
with crops grown from seeds that have been genetically engineered using sophisticated
laboratory techniques. The suits accuse the companies of deceptive marketing practices
that violate several state laws and the federal Magnuson-Moss Act. Each of the class
actions seeks to include purchasers of the named products since the respective manufacturers began marketing the products as “all natural” or containing “all natural” crops.
• Gengo v. Frito Lay North America Inc. (E.D.N.Y)
• Bevans v. General Mills, Inc. (D.N.J.)
• In re ConAgra Foods, Inc. (C.D. Cal)
Proposed settlement would establish a
fund for Washington Mutual investors
who suffered financial losses during
the class period.
Milberg partner Lori
G. Feldman, serving
as co-lead counsel
and representing the
Walden Management
Co. Pension Plan Trust,
successfully negotiated
a proposed settlement
of a securities fraud
action pending in the
Lori Feldman
Western District of
Washington against Washington Mutual,
Inc. (WaMu) and some of its former
officers and directors. The settlement is
pending approval by the District Court, as
well as the U.S. Bankruptcy Court for the
District of Delaware due to WaMu’s filing of
a voluntary petition for Chapter 11 relief.
The lawsuit stems from WaMu’s
announcements, in September 2003
and June 2004, that it suffered losses
due to its failure to adequately protect its
mortgage loan portfolio from changes in
interest rates. Plaintiffs alleged that the
defendants made false and misleading
statements that WaMu had successfully
integrated the various technology
platforms and operational processes from
certain recent acquisitions and that WaMu
was well-positioned to withstand market
changes in interest rates because of its
hedging operations and the natural counterbalance of its risk.
If approved, the settlement will be a
significant recovery for investors.
• South Ferry LP #2 v. Killinger
(W.D. Wash.)
CASE HIGHLIGHTS
Milberg Takes Lead in Jiangbo Suit
Milberg has been appointed lead counsel in a class action suit filed against Jiangbo Pharmaceuticals, Inc. on behalf of all purchasers of Jiangbo
common stock from June 8, 2010 through May 31, 2011. The lawsuit alleges that the China-based health supplement manufacturer
violated U.S. federal securities laws by issuing false and misleading information to investors about the financial condition of the company.
• Lewis v. Jiangbo Pharmaceuticals, Inc. (S.D. Fla.)
Milberg Appointed Co-Lead Counsel in Takeda Wage-and-Hour Suit
Milberg was appointed co-lead counsel in Jones v. Takeda Pharmaceuticals North America, Inc., a wage-and-hour case alleging that Takeda
Pharmaceutical’s promotional representatives were improperly compensated under the Fair Labor Standards Act. The suit claims that promotional
representatives were required to work without compensation both before and after their work day officially began. These uncompensated tasks
included recordkeeping and running promotional seminars and informational gatherings to promote Takeda’s products. An “opt-in” class was
conditionally certified, and over 350 current and former Takeda employees submitted opt-in forms. The amended complaint now includes state law
wage and hour claims for proposed classes in New York, Illinois, and California. An Ohio proposed class action was also transferred and consolidated with the Milberg case.
• Jones v. Takeda Pharmaceuticals North America, Inc. (N.D. Ill.)
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ATTORNEY INSIGHT
Spilling the Beans on the “Tort Reform” Movement
Milberg Senior Counsel Henry Kelston reviews “Hot Coffee,” the documentary
that takes a critical look at America’s civil justice system.
Did you hear about the woman who sued McDonald’s
because she spilled hot coffee on herself? Of course
you did … everyone did. You may be interested to
learn that most of what you heard about that case is
wrong.
For example, it was widely reported that the injured
woman was driving while drinking her coffee. In fact,
Stella Liebeck, the 79-year-old woman who sued McDonald’s, was in the
passenger seat and the car was parked. Did you know
that Ms. Liebeck suffered second and third degree
burns and had to undergo multiple surgeries and skin
grafts? Or that, prior to Ms. Liebeck’s suit, McDonalds
had received more than 700 complaints or lawsuits
about its coffee being too hot?
But even more interesting is the story of how the case
became so famous and why so much of what we “know” about it is wrong.
This is the subject of “Hot Coffee,” a highly informative and entertaining documentary by
lawyer-turned-filmmaker Susan Saladoff. Saladoff uses the McDonald’s case as a starting
point to report on the sophisticated, multi-faceted campaign being waged by corporations,
their lobbyists, and public relations consultants to limit our access to the courts to sue
companies or people who injure us, either economically or physically. In a classic example
of the use of language to frame a debate, the campaign calls these changes “tort reform.”
After all, reform is a good thing, isn’t it?
what
“tort reform” really means
“Hot Coffee” spotlights four strategies employed by the tort reform advocates, using
portraits of four ordinary people who learned the hard way what “tort reform” really means.
First, there is the media campaign to persuade the American public that our court system is
overrun with plaintiffs getting rich on frivolous lawsuits. The PR machine spins the facts to
make lawsuits like the McDonald’s coffee case seem shocking and outrageous and, if they
succeed, the story penetrates the national media and becomes a punch line on late-night
talk shows. That’s why we all think we know about the McDonald’s case. The true story,
told in the documentary, is shocking and outrageous – but for entirely different reasons
than we were led to believe.
devastating effect of arbitrary caps
The film next explores the devastating effect arbitrary caps on damages can have on
people with severe injuries, and how the supposed benefits of the caps – lower
medical and insurance costs – have never materialized. In the most compelling segment
of the film, the parents of a Nebraska boy who was severely brain-damaged at birth due
to negligence of the doctors who delivered him explain that the jury in his malpractice
case awarded damages of $5.6 million, enough to pay for the lifelong care their son will
need. However, tort law had been “reformed” in Nebraska, and damages in the case were
capped at $1.25 million.
growing impact of the mandatory arbitration clauses
The third segment of the film explains how the corporate lobby targets and defeats state
legislators and judges considered too plaintiff-friendly, either by funding the campaigns
of opponents or, sometimes, by more surreptitious means. The final chapter describes
the growing impact of the mandatory arbitration clauses buried in many consumer and
employment contracts. These clauses bar individuals from suing in any court and, instead,
provide that all disputes will be heard by an arbitrator, in most cases an arbitrator picked by
the company that caused the alleged injury.
“Hot Coffee” is a penetrating look at the influence of corporate money in our government
and our justice system. According to the film, the “tort reform” movement was the
brainchild of Karl Rove, working in the early 1990s with then-candidate for Texas governor
George W. Bush and continuing through two terms in the White House. The impact of their
efforts to insulate corporations from the economic and moral consequences of their actions
continue to echo from the canyons of Wall Street to the Gulf of Mexico and beyond.
IN THE NEWS
Tougher Penalties for Fraudsters?
The Securities and Exchange Commission
(SEC) announced on January 6, 2012, that
it will no longer allow companies to say
they deny the commission’s civil charges
when, at the same time, they admit to or
have been convicted of criminal violations. The policy shift came amid criticism
that the agency has allowed companies to
repeatedly settle fraud cases without
admitting or denying misconduct.
In November 2011, a federal judge in New
York refused to approve the SEC’s $285
million settlement with Citigroup on charges
that the company failed to disclose to
investors its role in a $1 billion mortgage
derivatives deal.
SEC Chairwoman Mary Schapiro wrote to
lawmakers a few days after the ruling,
urging them to give the agency more power
to increase financial penalties for
individuals and Wall Street firms that
engage in fraudulent activities.
New Consumer Protection Chief
Calls for Whistleblowers to Come
Forward
Richard Cordray, the
new director of the
Consumer Financial
Protection Bureau, an
agency established to
police financial companies taking advantage
of consumers, has
called on informants
Richard Cordray
and whistleblowers to
identify and disclose illegal behavior.
Cordray, who was appointed by President
Obama on January 4, 2012, outlined the
agency’s vigorous oversight and
enforcement agenda during a speech at
the Brookings Institution. The agency’s
focus is on non-bank financial companies
such as money transfer agencies, credit
bureaus, and private mortgage lenders, all
of which fall outside the authority of most
bank regulators and consumer protection
agencies.
Class Action Waivers Are
Unfair Labor Practice
The National Labor Relations Board
rejected an arbitration agreement that
required employees to waive their class
action rights. The Board’s ruling in D.R.
Horton, Inc. and Michael Cuda held that
class action waivers don’t belong in the
workplace and that requiring them as a
condition of employment is an unfair labor
practice.
The NLRB’s decision was particularly
significant for workers as it came soon after
the U.S. Supreme Court struck down a
California rule that had blocked consumer
class action waivers as unconscionable.
The 2011 landmark ruling in AT&T Mobility
v. Concepcion was considered by many as
a major blow to consumer rights.
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CORPORATE GOVERNANCE
EVENTS | SAVE THE DATE
February 20
National Labor Management Conference
Westin Diplomat Resort and Spa
April 20
ABA Section of Litigation
Annual CLE Conference
Anita B. Kartalopoulos served on a panel
entitled, “Key Issues for Your Funds,” at the
35th annual National Labor Management
Conference.
Ariana J. Tadler served on a panel entitled,
“How Will the Federal Rules Change?
Subpoenas, E-Discovery and More: A
Dialogue With the Advisory Committeee.”
Hollywood, FL
March 01
Emerging Issues in Directors’
and Officers’ Liability 2012
Lamont Learning Centre
Milberg 3iX Conference
Keynoter Inspires Economists
to Adopt Code of Ethics
Washington, D.C.
April 26-27
Institute for Law and Economic Policy
18th Annual Symposium
The Future of Class Actions
Puerto Rico
Toronto, ON
Michael C. Spencer gave a presentation on
“Current Trends and Developments in
Securities Class Actions Against Directors and
Officers” for the Law Society of Upper Canada.
Professor Arthur R. Miller moderated a panel
entitled, “Class Actions from 1966 to the
Present.”
March 22-23
The Sedona Conference® Institute
The Four Seasons
March 22-23
14th Annual Sedona Conference®
on Complex Litigation
Jennifer L. Young was a panelist at the 6th
Annual Sedona Conference® Institute Program
on Staying Ahead of the eDiscovery Curve.
Ariana J. Tadler served on a panel entitled,
“Ethical Issues & Challenges Facing CourtAppointed Counsel.”
St. Louis, MO
Del Mar, CA
April 19
Bridgeport Continuing Education
Westin Bonaventure
June 07
5th Annual Women Legal 2012
AMA Executive Conference Center
David Azar was a panelist at the 12th Annual
Class Action Litigation & Management
Conference.
Janine L. Pollack will be on a panel entitled,
“Networking & Strategic Relationships —
Who Needs Golf.”
Under the new rules, economists must disclose in their academic papers any financial
incentives they have received and other
potential conflicts. The new rule also requires
economists to adhere to the same principles
in press interviews, government testimony,
and other non-academic work.
New York, NY
Los Angeles, CA
The American Economics Association (AES),
the country’s largest professional society
for economists, for the first time adopted
a conflict-of-interest
rule during its annual
conference in Chicago
in January. The move
was reportedly inspired
by the public attention
“InsideJob,” an Oscarwinning documentary
produced and directed
by Charles Ferguson,
Charles Ferguson
drew to the consulting
relationships of several influential economists. In his keynote speech at Milberg’s
Institutional Investor Information Exchange
(3iX) Conference held in New York City in
July 2011, Ferguson discussed how the financial industry’s practice of paying economists
lucrative consulting fees creates conflicts of
interest. In his film, Ferguson accused academic economists of “corruption” that directly
contributed to the 2007-2008 financial crisis.
FIRM NEWS
Los Angeles Mayor Antonio
Villaraigosa appointed
Milberg’s Senior Counsel
Nicole Duckett as City
Commissioner. Ms. Duckett
was also selected as an attorney representative for the
Central District of California
Nicole Duckett
to the Ninth Circuit Judicial Conference and was
included in the 2012 Super Lawyer “Rising Star”
list.
Partner Jeff S. Westerman in Milberg’s Los
Angeles office has been included in the 2012
Southern California Super Lawyers list.
Janine L. Pollack was appointed to the Women
in the Profession Committee of the City Bar of
New York.
Preservation Project Committee and the Case
Development/Special Projects
Committee.
Anita B. Kartalopoulos has been appointed to
the Executive Board of the Business and Labor
Coalition of New York (BALCONY).
On December 6, 2011, Henry J. Kelston
published “Regress to Neutral: A Response to
Robert Owen’s EDD Proposals” in the Legal
Technology News EDD Update Newsletter.
Barry A. Weprin is the new President-Elect of
the National Association of Shareholder and
Consumer Attorneys (NASCAT).
Public Justice has appointed Jennifer L. Young
to two of its Committees: the Class Action
Ariana J. Tadler and Henry J. Kelston
published an article entitled, “Court Programs
Working Toward Normalcy in E-Discovery,” in
the New York Law Journal’s October 3, 2011
issue.
Attorney advertising.
Prior results do not guarantee a similar outcome.
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