15 U.S.C. § 78dd-1—Prohibited Foreign Trade Practices By Issuers Under The Federal Private Securities Litigation Reform Act (PSLRA) Governing Individual And Class Action Securities Lawsuits

As a resources for class action defense lawyers who defend against securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress described prohibited foreign trade practices by issuers under the PSLRA in 15 U.S.C. § 78dd-1, which provides as follows:

§ 78dd–1. Prohibited foreign trade practices by issuers

(a) Prohibition

It shall be unlawful for any issuer which has a class of securities registered pursuant to section 78l of this title or which is required to file reports under section 78o (d) of this title, or for any officer, director, employee, or agent of such issuer or any stockholder thereof acting on behalf of such issuer, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to—

(1) any foreign official for purposes of—

(A)

(i) influencing any act or decision of such foreign official in his official capacity,

(ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or

(iii) securing any improper advantage; or

Statutes & Rules Uncategorized

New Labor Law Class Action Complaints Top Weekly Class Action Filings In California State And Federal Courts

As a resource to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. This report covers the time period from July 20 – July 26, 2007, during which time 41 new class action cases were initiated in these California state and federal courts.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re Trade Partners: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Western District Of Michigan

Judicial Panel Grants Defense Request, Opposed by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees with Defense Request to Transfer Class Actions to Western District of Michigan Five federal securities class action lawsuits (two in Oklahoma and one in California, Michigan and Texas) were filed against Macatawa Bank and others arising out of the role played by Macatawa bank’s predecessor-in-interest, Grand Bank, in an alleged fraud perpetrated by Trade Partners, Inc.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Amex Class Action Defense Cases-Aviation Data v. American Express: California Court Holds Defense Misrepresentations Warrant Rejection Of Class Action Settlement And Waiver Of Right To Arbitrate

Misrepresentations by Defendant and Defense Counsel in Connection with Discovery and Court Proceedings Surrounding Proposed Settlement of Class Action Supported Trial Court Ruling that Defense Waived Right to Compel Arbitration California Court Holds

Plaintiffs filed a class action California state court against American Express Travel Related Services (Amex) alleging violations of the state’s unfair competition law arising out of the manner in which it charged for flight and baggage insurance. Aviation Data v. American Express Travel Related Services Co., Inc., ___ Cal.App.4th __, 62 Cal.Rptr.3d 396, Slip Opn., at 2 (Cal.App. 2007). A proposed settlement fell apart due to misrepresentations made by defense counsel, and Amex moved to compel arbitration. The Court of Appeal defined the issue as, “May a party lose its contractual right to compel arbitration if, when negotiating and seeking approval of a class action settlement, it misrepresents the benefits of the proposed settlement to the court, opposing counsel and others?” _Id._, at 1. The court summarized the trial court order and its holding at page 1 as follows: “Here the trial court refused to approve a class action settlement when it concluded that counsel for [Amex] misled plaintiffs in the course of negotiations by offering to make significant modifications to its travel insurance program that, unbeknownst to the plaintiffs, it had already made for reasons unrelated to the lawsuit. We hold the court did not err in ruling that due to its misleading conduct, Amex lost its right to compel arbitration.”

The class action complaint alleged that Amex offered cardholders flight and baggage insurance programs at a cost of $4-$14 per flight automatically charged to their American Express card. The class action alleged that cardholders believed Amex would charge them for this insurance only if they actually flew, and would receive refunds if flights were canceled or the airline tickets were not used. Instead, “Amex engaged in a scheme to cheat and defraud its cardholders by assessing premiums for trips it knew were never taken; intentionally designed its billing practices, procedures and computer programs to bill customers for services they did not receive or use and to double-bill for the same service; and intentionally failed to issue refunds or credits on cancelled flights or unused tickets.” Aviation, at 2.

Arbitration Class Action Court Decisions Uncategorized

MARK YOUR CALENDARS – CLASS ACTION DEFENSE CONFERENCE COMING TO PHOENIX

The American Conference Institute is sponsoring a two-day seminar on positioning the class action case for early success. The conference will be held in Phoenix on September 26 and 27, 2007. The details of the conference, its location and its topics may be found here. More information about the American Conference Institute may be found at its website: www.americanconference.com.

Class Actions In The News Uncategorized

Allstate Class Action Defense Case-Allstate v. Superior Court: California Circuit Holds That “Made Whole” Rule Does Not Require Insured Recover Attorney Fees Before Insurer Can Demand Reimbursement Of Policy Benefits Previously Paid

As Matter of First Impression, Court Holds Class Action Failed to State a Claim Against Insurer because California Law Permits Insurers to Demand Reimbursement of Insurance Benefits Following Insured’s Recovery of Damages from Tortfeasor

Plaintiff filed a class action in California state court against Allstate Insurance alleging that its demand for reimbursement of benefits paid under the insurance policy violated various state and common laws. Allstate Ins. Co. v. Superior Court, 151 Cal.App.4th 1512, 1518 (Cal.App. 2007). Defense attorneys demurred, arguing that Allstate’s reimbursement demand, made pursuant to the terms of the insurance policy, was allowed by California law and so the class action complaint failed to state a claim, id., at 1519-20. The trial court overruled the demurrer, permitting the class action to proceed_, id._ The California Court of Appeal granted Allstate’s petition for writ of mandate and reversed.

Following an accident, plaintiff tendered a claim to Allstate under the first-party, no-fault medical payments insurance coverage section (“med-pay”) of his automobile policy, and Allstate paid him $4203.36. Allstate, at 1518. Plaintiff then sued the responsible party, recovering $11,000 but incurring $5926.84 in attorney fees and costs, id. Allstate did not participate in the litigation, but demanded reimbursement of the policy benefits paid pursuant to the “subrogation rights” provision which provides, “When we pay, your rights of recovery from anyone else become ours up to the amount we have paid. You must protect these rights and help us enforce them.” Id. Plaintiff reimbursed Allstate $1,696.13; “Allstate agreed to the reduction based on the common-fund rule that an insurer is required to deduct from its reimbursement a pro rata portion of the insured’s attorney fees and costs incurred to recover covered losses against a third party tortfeasor when the insurer had knowledge of, but did not participate in, the litigation.” Id., at 1519 (citing Lee v. State Farm Mut. Auto. Ins. Co., 57 Cal.App.3d 458, 465-66 (Cal.App. 1976)).

Class Action Court Decisions Uncategorized

PSLRA Class Action Defense Cases-Baker v. MBNA: Delaware Federal Court Grants Defense Motion To Dismiss One Count In Class Action Complaint Against Two Individuals Only But Otherwise Denies Motion

Class Action Complaint Adequately Alleged Section 10(a) Control Person Liability as to All Individual Defendants and Adequately Alleged Section 10(b) Violation Against Company and Three of its Officers, but Failed to Establish Necessary Inference of Scienter as to Two Other Officers Warranting Dismissal of Claim Against Them Only Delaware Federal Court Holds

Nine (9) securities class action lawsuits were filed against MBNA and consolidated in the United States District Court for the District of Delaware. The consolidated class action complaint sought to represent purchasers of MBNA securities and alleged that the company of five of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Baker v. MBNA Corp., ___ F.Supp.2d ___, 2007 WL 2009673, *1 (D. Del. July 6, 2007). Defense attorneys moved to dismiss the class action; the federal court dismissed one count as against two of the individual defendants, but otherwise denied the defense motion.

The class action complaint named MBNA and MBNA officers Bruce L. Hammonds, Kenneth A. Vecchione, Richard K. Struthers, Charles C. Krulak, and John R. Cochran, III, and alleged that defendants reported false information concerning its growth in order to artificially inflate the stock price for their personal financial gain. Baker, at *1. The details of the allegedly false statements are discussed in the court’s opinion, see id., at *1-*2. The class action contained two counts only: one for violations of Section 10(b) and Rule 10b-5 against all defendants, and one for violations of Section 20(a) against the individual defendants. Id., at *3. All defendants moved for dismissal of the class action complaint under Rule 12(b)(6) and Rule 9(b), id. In addition to noting its safe harbor provision, the district court summarized the impact of the Private Securities Litigation Reform Act of 1995 (PSLRA) on securities cases at page *4 as follows:

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

PSLRA Class Action Defense Cases-Tellabs v. Makor: Supreme Court Holds In Securities Class Action That “Strong Inference” Of Scienter Under PSLRA Requires “More Than Merely Plausible Or Reasonable” Inference

Required “Strong Inference” of Scienter Under Private Securities Litigation Reform Act (PSLRA) “Must be More than Merely Plausible or Reasonable – it Must be Cogent and at Least as Compelling as any Opposing Inference of Nonfraudulent Intent” Supreme Court Holds

Plaintiffs filed a class action against Tellabs and its CEO alleging violations of federal securities laws; defense attorneys moved to dismiss the class action complaint on the grounds that the Private Securities Litigation Reform Act (PSLRA) required plaintiffs to plead facts sufficient to support a “strong inference” of scienter, and that the putative class action failed to do so. The district court granted the defense motion, but the Seventh Circuit reversed and reinstated the class action. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. __, 127 S.Ct. 2499 (2007). The Supreme Court granted certiorari and reversed.

The Supreme Court recognized the positive aspects of private actions to enforce federal antifraud securities laws, but noted “if not adequately contained, [they] can be employed abusively to impose substantial costs on companies and individuals whose conduct conforms to the law.” Tellabs, at 2504. One control enacted by Congress consists of the exact pleading requirements in the Private Securities Litigation Reform Act (PSLRA), which “requires plaintiffs to state with particularity both the facts constituting the alleged violation, and the facts evidencing scienter, i.e., the defendant’s intention ‘to deceive, manipulate, or defraud.’” Id. (citations omitted). Specifically, the PSLRA requires that the complaint “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind,” 15 U.S.C. § 78u-4(b)(2). Congress, however, did not define the term “strong inference” and circuit courts have disagreed on its meaning. Tellabs, at 2504.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

15 U.S.C. § 78dd—Foreign Securities Exchanges And The Federal Private Securities Litigation Reform Act (PSLRA) Governing Individual And Class Action Lawsuits For Securities Fraud

In order to assist class action defense attorneys in defending against securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress addressed foreign securities exchanges under the PSLRA in 15 U.S.C. § 78dd, which states: § 78dd. Foreign securities exchanges (a) It shall be unlawful for any broker or dealer, directly or indirectly, to make use of the mails or of any means or instrumentality of interstate commerce for the purpose of effecting on an exchange not within or subject to the jurisdiction of the United States, any transaction in any security the issuer of which is a resident of, or is organized under the laws of, or has its principal place of business in, a place within or subject to the jurisdiction of the United States, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors or to prevent the evasion of this chapter.

Statutes & Rules Uncategorized

Despite Large Drop In New Class Action Filings Labor Law Class Action Complaints Again Lead Weekly Class Action Filings

To aid class action defense attorneys anticipate the claims against which they will have to defend in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the relevant timeframe.

Class Actions In The News Uncategorized