Bernstein Shur Business and Commercial Litigation Newsletter #44
September 2014 | Issue 44
We are pleased to present the 44th edition of the Bernstein Shur Business and Commercial Litigation Newsletter. This month, we highlight recent cases that address subpoena enforcement, a rejected class action settlement, and other news that will have an impact on business and litigation. We hope you enjoy the newsletter.
In the News:
Former Treasury Secretary Timothy Geithner has been ordered to comply with a subpoena issued by Standard & Poor’s in relation to its defense of a government enforcement action against the ratings agency. The Department of Justice has commenced an action against S&P alleging that it improperly inflated credit ratings for residential mortgage-backed securities in the run-up to the financial crash of 2008. S&P has countered that the enforcement action, which seeks penalties of $5 billion from S&P, was brought in retaliation for the agency’s downgrade of the long-term sovereign credit rating of the United States in 2011. In discovery in the enforcement action, S&P issued a subpoena to Geithner, who balked at producing his private notes used to write his book, Stress Test: Reflections on Financial Crises. Objecting to the subpoena, Geithner argued that his notes contained information that he deemed “private, confidential or sensitive.” U.S. District Judge David Carter for the Central District of California rejected Geithner’s arguments and ordered him to produce unredacted documents that were relevant to the dispute.
Read more about this development here.
The Seventh Circuit vacated a proposed class-action settlement between RadioShack Corp. and class members, stating that it would not apply a “judicial rubber stamp” in a case noted by exorbitant fees sought by class counsel. In the class action, plaintiffs alleged that RadioShack violated the Fair and Accurate Credit Transaction Act when it included credit card expiration dates on customer receipts, triggering concerns regarding misappropriation of personal data and identity theft. Under the proposed class settlement, class members were expected to receive $10 vouchers redeemable in RadioShack stores, while class counsel was slated to receive a $1 million fee. Rejecting the proposed settlement, Seventh Circuit Judge Richard Posner observed that RadioShack’s fragile financial condition made it possible that the vouchers might never be redeemed, while the proposed fee award was excessive.
Read more about this development here.
A $1.06 billion jury verdict awarded in an antitrust class action against Dow Chemical was affirmed on appeal. In the case, Dow was alleged to have fixed prices for polyurethane, which is commonly used to make car seats, insulation, and footwear. At the trial court level, Dow sought to defeat class certification, arguing that each class plaintiff failed to show individualized harm. The trial court rejected Dow’s arguments concluding, among other things, that common issues of law and fact applied to class members and that joinder of all members would be impracticable. Following the close of evidence, the jury awarded damages in excess of $1 billion, including trebled damages under antitrust statutes. On appeal, the Tenth Circuit Court of Appeals upheld the jury’s award, stating that the damages award was supported by competent evidence. Dow has stated that it will seek review of the decision by the United States Supreme Court.
Read more about this case here.
The Federal Judiciary Case Management/Electronic Case File (CM/ECF) system has promised to restore electronic case files deleted earlier this summer. In August 2014, a large amount of court files dating prior to 2010 were deleted from the Public Access to Court Electronic Records (PACER) system. PACER’s CM/ECF system was introduced in 2001 and gained wide-spread use by 2005. The move by PACER to delete case files was strongly criticized as limiting access to public records. This month, PACER announced that it was reversing the controversial decision and would restore electronic access to the deleted records on a rolling basis until complete with the project.
Read more about this news here.