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Nonprofit KidsPeace Corp. Files For Chapter 11, Citing $100M In Pension Plan Debt

Tara Arick — Fri, 24 May 2013 20:49:03 +0000

- From LexisNexis® Mealey’s™ Daily Legal News.

KidsPeace Corp., a nonprofit that operates a 96-bed psychiatric hospital and provides what it calls “acute behavioral healthcare” to children and young adults, among other services, on May 22 filed for Chapter 11 bankruptcy, citing debt of $ 100 million related to its pension plan alone (In Re: KidsPeace, No. 13-14509, E.D. Pa. Bkcy.).

KidsPeace filed for Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania.

Assets, Liabilities

According to the bankruptcy petition, for the three-month period ending March 31, 2013, KidsPeace’s revenues on a consolidated basis were $ 30,699,949 and its expenses for the same period were $ 30,931,804.

The corporation’s total assets in 2012 were $ 86,666,989, while its total liabilities that same year were $ 158,587,999. KidsPeace owes $ 56,206,821 in bond debt and carries a pension liability of $ 100 million.

The corporation’s primary secured debts are:

* A loan from Gemino Healthcare Finance for a $ 7.5 million line of credit.

* Revenue bonds issued by the Lehigh County General Purpose Authority valued at $ 74,985,000.

* Bonds issued by the U.S. Department of Agriculture (USDA) valued at $ 3.6 million.

* A mortgage with National Penn Bank, secured against the corporation’s national headquarters building in Schnecksville, Pa., at a fixed rate of interest of 6.7 percent due in monthly installments of principal and interest of $ 16,308 through May 2014, with a final payment of $ 1,088,428 in June 2014.

* Letters of credit with M&T Bank totaling $ 1,853,722.

Pension Plan

The pension plan debt pertains to the KidsPeace Defined Benefit Pension Plan (KDBPP), which KidsPeace says it formerly sponsored. The KDBPP is a pension benefit plan guaranteed by the Pension Benefit Guarantee Corp. (PBGC).

KidsPeace has not made any contributions to the pension plan since September 2011, and benefits under the pension plan were frozen as of Jan. 1, 2009, the corporation says. The PBGC alleges that the pension plan is underfunded by $ 100 million, according to the petition. Moreover, KidsPeace did not make its annual pension plan contribution of $ 3 million in the fiscal year ending on Dec. 31, 2011.

In addition running to its hospital, the corporation bills itself as a provider of “a comprehensive range of residential treatment programs, regular and special education services, and a variety of foster care and community-based treatment programs to help children, adolescents and young adults overcome challenges and transform their lives.”

KidsPeace operates through six subsidiary nonprofit Pennsylvania member corporations and one subsidiary nonprofit New York corporation and employs 1,951 full- and part-time employees, including approximately 143 licensed nurses, eight physicians and 50 specialized teachers. The corporation operates in Pennsylvania, Georgia, Maine and New York.

KidsPeace is represented by Morris Bauer of Norris McLaughlin & Marcus in Allentown, Pa.

No related posts were found, so here's a consolation prize: Only 3-days Left to our $10K for Charity Event.

Bankruptcy Judge Approves $9.5M In DIP Funding For Oreck Corp.

Tara Arick — Fri, 24 May 2013 01:12:49 +0000

- From LexisNexis® Mealey’s™ Daily Legal News.

The federal bankruptcy judge in the Chapter 11 case of Oreck Corp. on May 21 approved $ 9.5 million in post-petition financing, also called debtor-in-possession (DIP) financing (In Re: Oreck Corporation, No. 13-04006, Chapter 11, M.D. Tenn. Bkcy.).

Oreck filed for Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Tennessee on May 6 at which time it immediately moved for approval of $ 11 million in DIP funding.

DIP Funding

Bankruptcy Judge Keith M. Lundin approved the DIP order authorizing Oreck to borrow money up to an aggregate principal amount of $ 9.5 million.

As of the petition date, Oreck was indebted to its first lien lender for $ 4,230,719.33 and a second lien lender for $ 5,467,897. The company insisted that it could not continue to operate with $ 11 million in DIP funding.

However, the bankruptcy judge authorized $ 9.5 million, to be provided by Black Diamond Commercial Finance LLC, without explaining the reason for granting less financing than Oreck requested.

11 U.S. Code Section 364

Pursuant to 11 U.S. Code Section 364(c)(1) all of the DIP obligations will constitute allowed claims against Oreck with priority over any and all administrative expenses, diminution claims and all other claims existing currently, or arising after afterward, the bankruptcy judge said.

Oreck is represented by William L. Norton III and Alexandra E. Dugan of Bradley Arant Boult & Cummings in Nashville.

AMF Bowling Seeks Approval Of $310M Loan With Credit Suisse, Merger With Bowlmor

Tara Arick — Wed, 22 May 2013 13:21:10 +0000

- From LexisNexis® Mealey’s™ Daily Legal News.

Bankrupt AMF Bowling Worldwide Inc. on May 18 moved in the U.S. Bankruptcy Court for the Eastern District of Virginia for authorization to enter a credit agreement with Credit Suisse Securities LLC with a total value of $ 310 million that would also merge the company with Bowlmor, an independent operator of bowling centers (In Re: AMF Bowling Worldwide Inc., No. 12-36495, Chapter 11, E.D .Va. Bkcy.).

On Nov. 12, AMF filed for Chapter 11 bankruptcy in the Bankruptcy Court, citing debt of $ 296 million.

Loans

The debtor proposes a modified restructuring plan, sponsored by the Ad Hoc Group of Second Lien Lenders, that contains two parts. The first part is a $ 260 million senior exit loan that includes a $ 50 million line of credit from Credit Suisse. The second part is a $ 50 million second lien exit loan that will be raised via a rights offering made to each of AMF’s second lien lenders. That offering would also be financed by Credit Suisse, according to AMF’s motion.

The plan with Credit Suisse would pave the way for AMF’s plan to be combined with Strike Holdings LLC, commonly known as Bowlmor.

AMF maintains that its proposal is within its sound business judgment and proper under 11 U.S. Code Section 363(b)(1).

Economic Downturn

When AMF filed for Chapter 11 bankruptcy, Chief Financial Officer Stephen S. Satterwhite filed a first-day declaration in which he said that as a result of the economic downturn in 2008, AMF hired Moelis & Co. LLC to assist AMF in marketing and selling substantially all of AMF’s assets. In December 2011, Moelis contacted 168 parties to gauge their interest in a potential purchase, but only two potential buyers emerged.

In the end, neither of the two potential purchasers followed through based on concerns raised when they conducted due diligence into AMF’s business operations.

Sale Process Failed

Satterwhite said that following the failed sale process, and in the face of upcoming debt and liquidity concerns, AMF embarked on a path to organize its major creditor constituencies to negotiate, and ultimately implement, global restructuring.

Before filing for Chapter 11 bankruptcy, AMF and a majority of its first-lien secured lenders negotiated a restructuring term sheet that laid the foundation for a restructuring support agreement (RSA) designed to maximize recoveries for all parties in interest and shorten the debtors’ stay in Chapter 11.

AMF is represented by Dion W. Hayes of McGuire Woods in Richmond.

Mobility Matters More Than Ever for Online Marketing in Law Firms

Lydia — Tue, 21 May 2013 12:34:38 +0000

According to a recent study by comScore, in 2012 the U.S. smartphone market surpassed 50 percent market penetration and all signs point to continued growth.

So what does this major milestone mean for the success of your law firm?

ComScore reported more than 125 million smartphone users in 2012, and more than 50 million tablet owners, which means it’s more important than ever for your law firm’s website to be smartphone and tablet friendly. Therefore, taking the time to optimize your site so that it maybe viewable on the smaller screens is more than a good idea; it’s necessary. Without doing so, potential clients who may come upon your site through a mobile device and bounce away due to a poor user experience.

Still not ready for a little change? Think about this: According to the study, one in three minutes spent online is now spent on mobile devices. Search queries on mobile devices are forecasted to overtake desktop search queries by 2014. Is your firm’s site optimized to cater to these mobile shoppers?

Now is the time to create a mobile version of your firm’s site. Not sure where to start or concerned about best practices for optimizing your mobile site? Read on for more information about Google’s suggestions for smartphone-optimized sites:

Sites that use responsive web design (sites that serve all devices on the same set of URLs, with each URL serving the same HTML to all devices and using just CSS to change how the page is rendered on the device.) This is the recommended configuration by Google.
Sites that dynamically serve all devices on the same set of URLs, but each URL serves different HTML (and CSS) depending on whether the user agent is a desktop or a mobile device.
Sites that have separate mobile and desktop URLs.

You can read more about how to implement each of these configurations here.

According to a survey performed by the Law Firm Mobile blog, of the firms on the 2012 Am Law 200 list, 54 firms (27%) now have mobile sites. However, another study notes that 57 percent of consumers will not recommend a business with a poorly constructed mobile site, and 40 percent will visit a competitor’s site after a bad mobile experience. So be aware, and don’t throw together a hasty site just to be more relevant.

If you are ready to improve your law firm’s mobile website, contact the experts at LexisNexis Law Firm Marketing Solutions.

Laws Regarding Parental Rights Fail to Keep Up With Reproductive Technology

DonaldScarinci@yahoo.com — Mon, 20 May 2013 16:26:00 +0000

Through modern reproductive technology, a woman can carry a baby for nine months, but not be the child’s mother. Similarly, a man can provide the genetic material to create a child with no intention of becoming a father. However, while science has dramatically changed how people become parents, laws regarding parental rights have failed to keep up with these advances.

In Kansas, a sperm donor is being asked to pay child support, even though he signed an agreement disclaiming any financial responsibility for the child. William Marotta provided sperm to a lesbian couple seeking to have a child, and the insemination procedure was performed without using a medical facility. Given the high costs of artificial insemination, these private agreements are increasingly common.

However, the state of Kansas does not consider him a donor, but a father. The state only only recognizes agreements between sperm donors and parents when a medical professional performs the procedure. As a result, Marotta is now involved in a complicated case that has received national attention.

In another high profile assisted reproduction case, a Florida judge recently approved a birth certificate listing three people. They include a married lesbian couple and the gay man that donated sperm.

The non-traditional birth certificate was part of a settlement between the parties. The biological father and the couple had an oral agreement under which he was to provide his sperm for artificial insemination. However, after the child was born, he sought a larger role in the child’s life. Although Florida law traditionally does not award custody rights to sperm donors, the child’s mothers will have sole custody, and the sperm donor will have visitation, under the terms of the settlement.

These cases reveal a complex area of law that must continue to evolve to keep pace reproductive science as well as social trends. Many states, including Kansas, based their initial laws on the Uniform Parentage Act, which was first adopted in 1973. Although the model law was updated in 1994, only nine states have implemented the changes, which include removing the doctor involvement requirement for a sperm donor seeking to disclaim parental responsibility. As a result, courts must use old laws to determine the parental rights to children born using new technology.

$45 Million Skechers Toning Shoe Settlement Granted Final Approval

Tara Arick — Fri, 17 May 2013 09:51:11 +0000

- From LexisNexis® Mealey’s™ Daily Legal News.

A Kentucky federal judge on May 13 granted final approval of a $ 45 million settlement to be paid by Skechers U.S.A. Inc. to end multidistrict litigation alleging that the company’s “toning” footwear was falsely advertised to improve posture, promote weight loss, strengthen the back, improve blood circulation, promote sleep, reduce stress and burn calories (In Re: Skechers Toning Shoe Products Liability Litigation, No. 11-2308, W.D. Ky.; 2013 U.S. Dist. LEXIS 67441).

In granting final approval, Senior Judge Thomas B. Russell of the Western District of Kentucky found objections to the settlement to be without merit. “For the first category, reimbursement of the full price of the shoes would preclude payment to some class members because the settlement fund would be consumed more quickly. Furthermore, reimbursement of the full price would overcompensate the class members. As represented by Grabowski and Skechers, the monetary relief available under the settlement is calculated to compensate the class members for the difference between the shoe they bought and the shoe actually received. Reimbursement of the full purchase price would overcompensate class members. The second category cannot truly be considered objections because the objectors express satisfaction with the product received and do not seeks compensation or other relief. The final category is also without merit because the proposed settlement in no way waives, infringes on, or otherwise affects a class member’s right to maintain personal injury claims against Skechers.

The proposed settlement only reaches the consumer fraud and economic injury claims,” the judge held.

Under the terms of the settlement, Skechers has established a $ 40 million fund for the payment of class claims. Payments to class members, per pair of shoes purchased, will range between $ 20 and $ 84. Skechers also agreed to establish a separate $ 5 million fund for attorney fees and costs.

Deceptive Advertising

Tamara Grabowski filed a class action complaint against Skechers in June 2010 in the U.S. District Court for the Southern District of California. Grabowski alleged that Skechers falsely and deceptively advertised its toning shoes. She brought causes of action for violation of California’s Consumers Legal Remedies Act (CLRA), California’s unfair competition law and breach of express warranty. Two months later, Venus Morga filed a class complaint in the same court, bringing nearly identical allegations against Skechers. She sought to represent the identical nationwide class as was alleged by Grabowski.

Concurrent with her complaint, Morga filed a notice of related case information. On Sept. 3, 2010, the Morga case was deemed related to Grabowski’s case and was transferred. On Feb. 18, 2011, amended class action complaints were filed in both cases. The amended complaints, which were substantively identical to each other, realleged Skechers’ violations of California’s consumer protection laws and asserted claims for breach of warranty. The amended complaints also sought damages as permitted by the CLRA.

Grabowski’s and Morga’s complaints were consolidated with others by the Judicial Panel on Multidistrict Litigation and transferred to the U.S. District Court for the Western District of Kentucky. Skechers denied all claims contained in both actions but decided to settle the suits.

Counsel

Paul J. Schachter, Penny U. Hendy and Ronald E. Johnson Jr. of Schachter, Hendy & Johnson in Fort Wright, Ky.; Robert K. Jenner and Jessica H. Meeder of Janet, Jenner & Suggs in Baltimore; Anthony B. Brewer and Morgan E. Welch of Welch, Brewer & Hudson in North Little Rock, Ark.; Jay R. Vaughn of Busald, Funk & Zeverly in Florence, Ky.; Richard W. Schulte of Wright & Schulte in Dayton, Ohio; Adam M. Priest of Pryor, Flynn, Priest & Harber in Knoxville, Tenn.; Jarrett L. Ellzey Jr. and William C. Hughes of Hughes Ellzey in Houston; Matthew H. Raty of the Law Office of Matthew H. Raty in Sandy, Utah; Charles T. Thronson and Richard E. Mrazik of Parsons, Behle & Latimer in Salt Lake City; Erik R. Blaine of Behnke, Martin & Schulte in Vandalia, Ohio; Damon B. Willis of Ewing, McMillin & Willis in Louisville; Joel M. Rubenstein of German Rubenstein in New York; Edward B. Mulligan V, Gregory L. Laker, Irvin B. Levin, Jeff S. Gibson and Melissa L. Stuart of Cohen & Malad in Indianapolis; Jason E. Holland and Kenneth R. Haggard of Hopkinsville, Ky.; David M. Kopstein of Kopstein & Associates in Seabrook, Md.; John L. Lowery of the Law Office of John L. Lowery in Nashville, Tenn.; Elaine A. Ryan, Patricia N. Syverson and Todd D. Carpenter of Bonnett, Fairbourn, Friedman & Balint in Phoenix; James C. Shah of Shepherd, Finkelman, Miller & Shah in Media, Pa.; Leslie E. Hurst, Thomas J. O’Reardon II and Timothy G. Blood of Blood, Hurst & O’Reardon in San Diego; and Pamela Gilbert of Cuneo, Gilbert & Laduca in Washington, D.C., represent the plaintiffs.

The plaintiffs are also represented by: Janine L. Pollack of Wolf, Haldenstein, Alder, Freeman & Herz in New York; Jeff S. Westerman of Milberg in Los Angeles; Joshua Keller and Roland W. Riggs IV of Milberg in New York; Mark Salvato of Houston; John L. Lowery of the Law Office of John L. Lowery in Nashville; Barbara M. McDonald, Norberto J. Cisneros, Robert C. Maddox and Troy L. Isaacson of Maddox, Isaacson & Cisneros in Las Vegas; Christopher J. Morosoff of the Law Offices of Christopher J. Morosoff in Palm Desert, Calif.; Greg K. Hafif, Herbert Hafif and Michael G. Dawson of the Law Offices of Herbert Hafif in Claremont, Calif.; Ray A. Mandlekar of Ray A. Mandlekar Law Offices in Temecula, Calif.; Marc L. Godino of Glancy, Binkow & Goldberg in Los Angeles; Brett H. Cebulash and Kevin S. Landau of Taus, Cebulash & Landau in New York; Eric Cramer and Shanon J. Carson of Berger & Montague in Philadelphia; Melanie S. Bailey of Burg, Simpson, Eldredge, Hersh & Jardine in Cincinnati; Robert K. Jenner of Janet, Jenner & Suggs in Baltimore; Martin D. Crump and Trevor B. Rockstad of Davis & Crump in Gulfport, Miss.; Bradley Winston of Winston & Wigand in Davie, Fla.; David G. Bryant and Jasper D. Ward of Jones Ward in Louisville; Susan E. Burgess and Thomas G. Buchanan III of the Law Office of Thomas G. Buchanan in Little Rock; Daniel C. Brown of Kalamazoo, Mich.; and B. David Jarashow of the Law Offices of B. David Jarashow in Freehold, N.J.

Dennis M. O’Hara and Patrick K. Dahl of Wicker, Smith, Tutan, O’Hara, McCoy, Graham & Ford in Fort Lauderdale, Fla.; Carlos M. Lazatin, Daniel M. Petrocelli, Gloria M. Borges and Jeffrey A. Barker of O’Melveny & Myers in Los Angeles; Darrell S. Cockcroft of Thompson Coe in Austin, Texas; David D. Hudgins of Hubbard & Biederman in Dallas, J. Tanner Watkins, Jill F. Endicott and Patrick S. O’Bryan of Dinsmore & Shohl in Louisville; Jeffrey R. Schmieler and Lisa N. Walters of the Law Offices of Saunders & Schmieler in Silver Spring, Md.; Joanna K. Chan of O’Melveny & Myers in New York; Katrina R. Atkins of Dinsmore & Shohl in Cincinnati; Kristine A. Crosswhite of Crosswhite, Limbrick & Sinclair in Baltimore; Michael D. Barnes of Wright, Lindsey & Jennings in Little Rock; Richard L. Walter of Boehl, Stopher & Graves in Paducah, Ky.; Shea B. Oliver and Ted C. Raynor of Burch, Porter & Johnson in Memphis, Tenn., represent Skechers.

Facebook, History Site Operator Settle ‘Timelines’ Trademark Dispute

Tara Arick — Thu, 16 May 2013 17:50:46 +0000

- From LexisNexis® Mealey’s™ Daily Legal News.

A federal judge on May 13 filed an order granting an agreed motion by Facebook Inc. and the operators of a history-themed website, ending an almost 18-month dispute over alleged infringement of the “timelines” trademark by the social networking giant (Timelines Inc. v. Facebook Inc., No. 1:11-cv-06867, N.D. Ill.).

Infringement Complaint

In September 2011, Chicago-based Timelines Inc. filed a lawsuit against Facebook, asserting trademark infringement and false designation under the Lanham Act, as well as violation of the Illinois Consumer Fraud and Deceptive Practices Act and the Illinois Uniform Deceptive Trade Practices Act.

The tagline on Timelines’ website at timelines.com states that its users can “[d]iscover, record, and share history.” The site’s users can contribute to and comment on existing pages on historical events, such as the U.S. Civil War, great sports moments or assassinations. Users can also post content about their own events, to which other users can add additional content and comments. Timelines Inc. has federal trademark registrations for “Timelines,” “Timelines.com” and a design logo, as well as another trademark registration that was pending before the U.S. Patent and Trademark Office (PTO).

TRO Denied

Shortly before filing its complaint, Timelines learned that Facebook was then planning to launch the “timeline” feature on its popular social network. This feature allows Facebook users “to graphically display the events of their personal lives in chronological order along a vertical bar.”

On Sept. 30, 2011, Judge Edmond E. Chang, who presided over an emergency hearing, denied Timelines’ motion for a temporary restraining order (TRO), ruling that the plaintiff failed to show that it would suffer irreparable harm without one. About a week later, Timelines filed an amended complaint, breaking the federal trademark infringement claim into separate claims for reverse and direct infringement. Timelines also added a claim for unfair competition under both the Lanham Act and common law.

Facebook defended its use of the term “timelines” as being generic and fair use. Facebook sought a declaration of noninfringement and asked the court to cancel Timelines’ trademarks in the PTO.

Dismissed With Prejudice

After more than a year of motions, countermotions and negotiations, Facebook filed a motion for summary judgment in January 2013. Facebook said that Timelines was “seek[ing] to appropriate for its exclusive use the common English word ‘timeline(s)’ under the guise of trademark protection.” Facebook contended that not only it, but “a host of other companies use the term . . . to identify or describe aspects of products and services that consist of or relate to timelines,” which merely “refers to an arrangement of events or other information in chronological order.”

In an April 1 minute entry, Judge John W. Darrah mostly denied Facebook’s summary motion. The judge noted that the PTO had deemed Timelines’ pending trademark application as abandoned and, as such, granted in part summary judgment on the cancellation claim.

A jury trial was set for April 23.

On May 7, Timelines filed an agreed motion to dismiss the matter with prejudice, joined by Facebook. The parties did not disclose the terms of their agreement. In his order, Judge Darrah dismissed the matter with prejudice.

Timelines is represented by James T. Hultquist, Douglas A. Albritton, Michael L. DeMarino and Bruce R. Van Baren of Reed Smith in Chicago. Facebook is represented by Peter J. Willsey and Brendan J. Hughes of Cooley in Washington, D.C., Michael G. Rhodes of Cooley in San Francisco and Steven D. McCormick of Kirkland & Ellis in Chicago.

LIBOR Suit Plaintiffs May Move To Amend Antitrust Complaints, Federal Judge Rules

Tara Arick — Mon, 13 May 2013 14:25:39 +0000

- From LexisNexis® Mealey’s™ Daily Legal News.

The federal judge in New York overseeing the London InterBank Offered Rate (LIBOR) antitrust litigation on May 3 granted over-the-counter, bondholder and exchange-based plaintiffs two weeks to move for leave to amend their amended complaints to add allegations of antitrust injury related to their claims that 16 banks manipulated the LIBOR interest rate benchmark (In re: LIBOR-Based Financial Instruments Antitrust Litigation, No. 11 MD 2262, S.D. N.Y.).

On March 28, U.S. Judge Naomi Reice Buchwald of the Southern District of New York dismissed the antitrust claims, concluding that “[r]egardless of whether defendants’ conduct constituted a violation of the antitrust laws,” their antitrust claims failed because they did not allege that their injury resulted from any harm to competition.

In the instant memorandum, Judge Buchwald commented that “we are inclined to think that none of these allegations would change the outcome reached” in the March 28 order. Moreover, “given the obvious magnitude of this litigation,” “the comprehensive manner in which we have already addressed the issues in this case, and the tremendous amount of resources already expended by defendants, we will not require defendants to respond to any motion for leave to amend until we have had an opportunity to review such motion ourselves and have determined that a response is necessary.”

Benchmark

Each business day, the defendant banks submit to the British Banking Association (BBA) a rate that is supposed to reflect their expected costs of borrowing U.S. dollars from other banks, and the association computes and publishes the average of these submitted rates.

The published average is used as a benchmark for short-term interest rates in financial instruments worldwide.

The plaintiffs allege that the defendants conspired to report rates that did not reflect their good-faith estimates of their borrowing costs and that the defendants submitted artificial rates from August 2007 to May 2010.

The over-the-counter (OTC) plaintiffs, exchange-based plaintiffs and bondholder plaintiffs each brought a purported class action against the defendants. A fourth group of plaintiffs, known as Schwab plaintiffs, filed three lawsuits: one was filed by Charles Schwab Corp., Charles Schwab Bank N.A. and Charles Schwab & Co. Inc.; a second was filed by three Schwab bond market funds; and a third was filed by seven Schwab money funds. The Judicial Panel on Multidistrict Litigation ordered that the pretrial proceedings of the cases be consolidated before Judge Buchwald.

All four categories of plaintiffs alleged a violation of Section 1 of the Sherman Act, and the Schwab plaintiffs also alleged a violation of California’s antitrust statute and Racketeer Influenced and Corrupt Organizations (RICO) Act. The exchange-based plaintiffs also alleged violations of the Commodity Exchange Act (CEA) and vicarious liability for and aiding and abetting such manipulation. State law causes of action were asserted by the OTC, exchange-based and Schwab plaintiffs.

The defendant banks are Bank of America Corp., Bank of America N.A., Bank of Tokyo-Mitsubishi UFJ Ltd., Citibank N.A., Citigroup Inc., Cooperatieve Bentrale Raiffeisen-Boerenleenbank B.A., Credit Suisse Group AG, Deutsch Bank AG, HSBC Holdings plc, HSBC Bank plc, JPMorgan Chase & Co., JPMorgan Chase & Co., JPMorgan Chase Bank N.A., Lloyds Banking Group plc, HBOS plc, Norinchukin Bank, Royal Bank of Canada, Royal Bank of Scotland Group plc and WestLB AG.

No Antitrust Injury

In the March 28 order dismissing the antitrust claims, Judge Buchwald concluded that the LIBOR-setting process was not itself competitive and that the plaintiffs did not allege that the banks’ conduct had an anti-competitive effect in any market in which the defendants competed.

“Because the LIBOR-setting process was not intended to be competitive, even if we were to credit plaintiffs’ allegations that defendants subverted this cooperative process by conspiring to submit artificial estimates instead of estimates made in good faith, it would not follow that plaintiffs have suffered antitrust injury. Plaintiffs’ injury would have resulted from defendants’ misrepresentation, not from harm to competition,” the judge said.

“Plaintiffs’ allegation that the prices of LIBOR-based financial instruments ‘were affected by Defendants’ unlawful behavior,’ such that ‘Plaintiffs paid more or received less than they would have in a market free from Defendants’ collusion,’ . . . might support an allegation of price fixing but does not indicate that plaintiffs’ injury resulted from an anticompetitive aspect of defendants’ conduct,” the judge reasoned.

Similarly, there was no harm to competition in the interbank loan market, the judge found.

‘Normal Competitive Conduct’

Moreover, “the harm alleged here could have resulted from normal competitive conduct. Specifically, the injury plaintiffs suffered from defendants’ alleged conspiracy to suppress LIBOR is the same as the injury they would have suffered had each defendant decided independently to misrepresent its borrowing costs to the BBA. Even if such independent misreporting would have been fraudulent, it would not have been anticompetitive, and indeed would have been consistent with normal commercial incentives facing defendants,” the judge said.

Judge Buchwald rejected the plaintiffs’ arguments that because LIBOR is a proxy for competition in the underlying market for interbank loans, the defendants harmed competition by manipulating LIBOR.

“[T]he fact remains that competition in the interbank lending market and in the market for LIBOR-based financial instruments proceeded unimpaired. If LIBOR no longer painted an accurate picture of the interbank lending market, the injury plaintiffs suffered derived from misrepresentation, not from harm to competition,” the judge said.

Because the plaintiffs did not suffer an antitrust injury, they lacked standing to bring antitrust claims, the judge ruled.

Exchange-Based Claims

Addressing the exchange-based plaintiffs’ CEA claims, Judge Buchwald rejected the defendants’ argument that the claims involved an impermissible extraterritorial application of the CEA because they rely exclusively on foreign commodities manipulation.

Instead, the judge found that “[b]y manipulating LIBOR, defendants allegedly manipulated the price of Eurodollar futures contracts, which is directly based on LIBOR. Eurodollar futures contracts, of course, are traded on the Chicago Mercantile Exchange. . . . Because plaintiffs’ claims involve manipulation of the price of domestically traded futures contracts, they are not impermissibly extraterritorial.”

In addition, Judge Buchwald concluded that the plaintiffs adequately pleaded commodities manipulation. However, Judge Buchwald concluded that the exchange-based plaintiffs’ claims are time-barred to the extent that they rely on contracts purchased from August 2007 through May 29, 2008, the date that, based on publicly available information, the plaintiffs were on inquiry notice of their injury.

Also in the March 28 order, the judge dismissed the RICO claim as barred by the Private Securities Litigation Reform Act and declined to exercise supplemental jurisdiction over the state law claims, except the Schwab plaintiffs’ California antitrust claim and the exchange-based plaintiffs’ New York common law unjust enrichment claims, which the judge dismissed with prejudice.

Counsel

The OTC plaintiffs are represented by Allan Steyer, Henry A. Cirillo and Lisa Marie Black of Steyer Lowenthal Boodrookas Alvarez & Smith in San Francisco, Michael D. Hausfeld, Steig D. Olson, Michael P. Lehmann and Jon T. King of Hausfeld in New York and Arun S. Subramanian of Susman Godfrey in New York. The exchange-based plaintiffs are represented by Daniel Hume, David E. Kovel, Roger W. Kirby and Surya Palaniappan of Kirby McInerney in New York and Samuel Howard Rudman of Robbins Geller Rudman & Dowd in Melville, N.Y.

The bond plaintiffs are represented by David Haym Weinstein, Robert S. Kitchenoff, Jeremy S. Spiegel and Steven A. Asher of Weinstein Kitchenoff & Asher in Philadelphia and Karen L. Morris and Patrick F. Morris of Morris & Morris in Wilmington, Del. The Schwab plaintiffs are represented by Richard Martin Heimann, Eric B. Fastiff, Brendan Patrick Glackin and Andrew Scirica Kingsdale of Lieff Cabraser Heimann & Bernstein in San Francisco, Steven Eliott Fineman and Michael J. Miarmi of Lieff Cabraser in New York and Lowell Harry Haky of Charles Charles & Co. Inc.

Bank of America Corp. and Bank of America N.A. are represented by Robert F. Wise Jr., Arthur J. Burke and Paul S. Mishkin of Davis Polk & Wardwell in New York. Bank of Tokyo-Mitsubishi UFJ Ltd. is represented by Daryl A. Libow and Christopher M. Viapiano of Sullivan & Cromwell in Washington, D.C. Citibank N.A. and Citigroup Inc. are represented by Andrew A. Ruffino of Covington & Burling in New York, Alan M. Wiseman and Thomas A. Isaacson of Covington & Burling in Washington and Michael R. Lazerwitz and Joon H. Kim of Cleary Gottlieb Steen & Hamilton in New York. Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. is represented by David R. Gelfand and Sean M. Murphy of Milbank Tweed Hadley & McCloy in New York.

Credit Suisse Group is represented by Herbert S. Washer, Elai Katz and Joel Kurtzberg of Cahill Gordon & Reindel in New York and Richard Schwed of Shearman & Sterling in New York. Deutsche Bank AG is represented by Moses Silverman and Andrew C. Finch of Paul, Weiss, Rifkind, Wharton & Garrison in New York. HSBC Holdings plc and HSBC Bank plc are represented by Ed DeYoung and Roger B. Cowie of Locke Lord in Dallas and Gregory T. Casamento of Locke Lord in New York. JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A., are represented by Thomas C. Rice, Juan A. Arteaga and Joan E. Flaherty of Simpson Thacher & Bartlett in New York.

Lloyds Banking Group plc and HBOS plc is represented by Marc J. Gottridge and Eric J. Stock of Hogan Lovells in New York and Richard Williamson and Megan P. Davis of Flemming Zulack Williamson Zauderer in New York. Norinchukin Bank is represented by Andrew W. Stern, Alan M. Unger and Nicholas P. Crowell of Sidley Austin in New York. Royal Bank of Canada is represented by Arthur W. Hahn and Christian T. Kemnitz of Katten Muchin Rosenman in Chicago. Royal Bank of Scotland Group plc is represented by Robert G. Houck, Alejandra de Urioste and James D. Miller of Clifford Chance in New York. WestLB AG is represented by Ethan E. Litwin and Morgan J. Stecher of Hughes Hubbard & Reed in New York.

Are Bar Exams About to Get Harder for Budding Lawyers?

DonaldScarinci@yahoo.com — Mon, 13 May 2013 13:55:33 +0000

Practical things like the rules of court and civil procedure are often the most difficult things for law students to master because this is one area where experience is more important than memorization. While there are some rubrics all lawyers come to know, such as the deadline for responding to a complaint, many find it easier to just look up the applicable rule when the need arises.

Unfortunately, law students sitting for the bar exam soon will not have that luxury. Starting in 2015, civil procedure will be tested on the Multistate Bar Examination (MBE), the multiple-choice section of the exam that is used in most states.

The MBE currently tests knowledge of constitutional law, contracts, criminal law and procedure, evidence, real property, and torts. These sections will be shortened to accommodate civil procedure questions. It will be the first major update in 35 years.

The National Conference of Bar Examiners made the decision to add the new legal subject after surveying educators and other members of the legal community. While most concluded that civ pro knowledge is essential for lawyers, law students may not agree.

“We know, from what students tell us, that civil procedure tends to be one of their most challenging areas of study,” Christopher Fromm, director of bar review programs, Kaplan Bar Review, stated. “Adding a section to the MBE in an area of study that students have traditionally found difficult will make the exam more challenging overall.”

For students sitting for the bar in California, Arkansas, Washington, Louisiana, and Nevada, the news may be extra difficult to swallow. The five states topped a recent ranking of the most difficult bar exams in the country. For those reading this post from New York or New Jersey, nether state made the top ten.

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Plaintiffs Seek Approval Of $153M Securities Settlement With Fannie Mae, KPMG

Tara Arick — Fri, 10 May 2013 16:20:29 +0000

- From LexisNexis® Mealey’s™ Daily Legal News.

Lead plaintiffs in a securities class action lawsuit against Fannie Mae and accounting firm KPMG LLP on May 7 asked a federal judge to approve a $ 153 million settlement that would end the lawsuit, which was brought in 2004 (In re: Fannie Mae Securities Litigation, No. 04-01639, D. D.C.).
Lead plaintiffs Ohio Republic Retirees System and State Teachers Retirement System of Ohio filed their motion for preliminary approval of the settlement in the U.S. District Court for the District of Columbia.

The lead plaintiffs originally filed the suit in 2004, naming Fannie Mae and three of its executive officers as defendants.

Claims Made

The lead plaintiffs alleged, on behalf of all purchasers of Fannie Mae’s common stock and call options and sellers of Fannie Mae’s put options from April 17, 2001, to December 22, 2004, that the defendants issued a series of false and misleading statements concealing the fact that Fannie Mae violated Financial Accounting Standard (FAS) 133 and intentionally manipulated its hedge transaction accounting to reflect misleading profits in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5.

The lead plaintiffs then amended their complaint to add KPMG as a defendant, and soon after, the District Court, in three separate rulings, dismissed each of the executives for failure to plead scienter.

The lead plaintiffs are represented by W.B. Markovits, Joseph T. Deters, James R. Cummins, Melanie S. Corwin, Christopher Stock and Francis P. Karam of Waite, Schneider, Bayless & Chesley in Cincinnati, Jeffrey Lerner of Bernstein Liebhard in New York and Daniel S. Sommers of Cohen Milstein Sellers & Toll in Washington.

Defendants

Fannie Mae is represented by Jeffrey Kilduff, Robert Stern and Michael Walsh Jr. of O’Melveny & Myers in Washington.

KPMG is represented by Joseph Warin, Scott Fink, John Sturc, George Brown, Andrew Tulumello and David Debold of Gibson, Dunn & Crutcher in Washington.

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