With Vigour and Zeal

The Enterprise Chambers of the Amsterdam Court of Appeals and of the Courts of Brussels both declined to enjoin the transactions that, among other things, saw Fortis SA/NV partially sold off to BNP Paribas. (previous post) The Brussels court issued its decision on 18 November, the Amsterdam court a week later on the 24th. (Amsterdam summary, decision, in Dutch; Brussels, decision in French and see Beduveld.nl, in Dutch) Plaintiffs’ counsel in the Dutch case is Spigthoff Advocaten & Belastingadviseurs NV.

Both courts though decided to instigate an inquiry (enquêteonderzoek), into the policy of Fortis, the course of events from 27 May 2007 and the transactions that occurred between 26 September 2008 until 7 October 2008, inclusive (Amsterdam) and into the valuation of the shares (Brussels), respectively. Modrikamen, counsel for the plaintiffs in the Belgian case, has stated it will appeal the decision.

In New York, so far at least one action (case detail, complaint dated 22 October 2008) has been filed against Fortis. The proposed class period is between 28 January 2008 and 6 October 2008, inclusive. Plaintiff’s counsel is Wolf Haldenstein Adler Freeman & Herz LLP. If you want to move for Lead Plaintiff status in that case, you must do so no later than 22 December 2008. Scott+Scott LLP has Fortis listed in its ‘Case investigations’ section for the present (here).

In a somewhat off-topic post, last night I went to see Malcolm Gladwell live on stage. He’s got a new book out, Outliers, and his untitled hour-long talk was basically an introduction into his book’s theme, subtitled The Story of Success, and mostly the oral presentation of one of the chapters in the book - Chapter Seven: The Ethnic Theory of Plane Crashes. From the inside cover:

The real secret of success turns out to be surprisingly simple, and it hinges on a few crucial twists in people’s life stories - on the culture they grow up in and the way they spend their time.

On the way home from the theatre I started reading my fresh hard back, signed copy, from Chapter Five: The Three Lessons From Joe Flom. ‘Flom‘ as in ‘Skadden Arps Slate Meagher & Flom LLP‘, the firm’s first associate back in 1948 and now its last living name partner. His story is being told from an expectedly unconventional angle. ‘What were Joe Flom’s opportunities?’

Gladwell is a fascinating storyteller with lots of fascinating stories to tell. (Also see his talk on the ‘ketchup conundrum‘ at TED, below.) Why too is it relevant, in understanding the firm, to know that all four Wachtell Lipton Rosen & Katz name partners were born in 1930 or 1931?

Just earlier this week (in this previous post) I referred to a research paper on res judicata and how the development of collective litigation procedures in various European jurisdictions is arguably one factor in the easing of recognition concerns of US courts. But what good are procedures if not put to use? That in turn is the concern of the two authors of the paper Will Aggregate Litigation Come to Europe?. From the abstract:

European thinking on the topic appears to have reached consensus on two points… the second [being that] whatever form European aggregate litigation takes, it will not replicate American class action litigation with its domination by entrepreneurial plaintiffs’ attorneys. […] Drawing on America’s long history of collective enforcement, we… ask whether Europe will adopt the incentives and institutional arrangements necessary to make aggregate litigation an effective remedy. Our concern is that Europe’s revulsion at accepting the reality of legal enforcement as an entrepreneurial activity may leave the incipient reforms without the necessary agents of implementation.

As Prof. Samuel Issacharoff and Prof. Geoffrey P. Miller (both of NYU) point out, “it is all well and good to lay down railroad track and invest in a stock of modern trains [b]ut someone has to drive the train.”

WV&Z can only speculate how long it will be until a European court, in a collective action brought exclusively in its own jurisdiction, “notes that class counsel were clearly not motivated entirely by notions of charity and a pursuit of justice for its own sake” before awarding the lawyers who brought the case an “adequate award” in the amount of, say, $31,500,000 in fees plus expenses.

With thanks to Mass Tort Litigation Blog for spotting the paper (posted on SSRN 10 November), picked up by Point of Law and discussed by the D&O Diary and thanks to The 10b-5 Daily for the link to the order concerning attorneys’ fees in the The Coca-Cola Company securities litigation.

There are only a few days left to participate in the $18,500,000 In re Bayer AG Securities Litigation (No. 03 cv 1546 SDNY) settlement by filing your proof of claim form (Bayer AG, Xetra: BAY). The deadline is 25 November 2008 (date of postmark).

The class is defined as “[a]ll persons or entities who or which from August 4, 2000 through and including February 21, 2003: (a) purchased or otherwise acquired ordinary shares of Bayer AG on the U.S. over-the-counter market or purchased American Depository Receipts (ADRs) of Bayer AG on the New York Stock Exchange, regardless of the purchaser’s country of residence at the time of purchase; or (b) purchased or otherwise acquired ordinary shares or ADRs of Bayer AG on any other stock exchange and the purchaser, or beneficial owner, was a resident or citizen of the United States at the time of purchase.” (WV&Z’s emphases) For a list of exchanges Bayer was listed on from time to time, see here.

It was alleged that Bayer’s share price was artificially inflated during the class period due to material misrepresentations and omissions in relation to its cholesterol-lowering drug, Baycol. The class period commences on the date of Bayer’s withdrawal of the drug from the US market. (FDA) The price of its securities then allegedly fell following publication of this article in The New York Times, marking the end of the class period. (Also see lead counsel Lowey Dannenberg Cohen & Hart PC’s latest announcement on the case.)

The dedicated settlement website contains all relevant documents - including the Notice of Pendency and Settlement of Class Action and Proof of Claim and Release - a FAQ and details on how to file your claim electronically.

The issue before the court in Morrison v National Australia Bank was whether to excercise subject matter jurisdiction over the foreign claimants who bought their NAB shares on a foreign exchange. (ASX, LSE, NYSE, NZX: NAB/NABHA) It held that in this case it could not (decision), based on the ‘conduct test’. The court however refrained from creating a ‘rigid bright-line rule’ for all ‘foreign-cubed’ cases, advocated by defendants and friends of the court. From the decision:

[D]eclining jurisdiction over all “foreign-cubed” securities fraud actions would conflict with the goal of preventing the export of fraud from America. As the argument goes, the United States should not be seen as a safe haven for securities cheaters; those who operate from American soil should not be given greater protection from American securities laws because they carry a foreign passport or victimize foreign shareholders. […]

Moreover, we are leery of rigid bright-line rules because we cannot anticipate all the circumstances in which the ingenuity of those inclined to violate the securities laws should result in their being subject to American jurisdiction. That being said, we are an American court, not the world’s court, and we cannot and should not expend our resources resolving cases that do not affect Americans or involve fraud emanating from America. In our view, the “conduct test” balances these competing concerns adequately and we decline to place any special limits beyond the “conduct test” on “foreign-cubed” securities fraud actions.

Thomas A. Dubbs, senior partner with plaintiffs’ counsel Labaton Sucharow LLP, who argued the appeal has stated that “[w]e are obviously disappointed in the outcome. However, the decision does contain good news for investors. For example, the Court clearly rejected the bright-line ban of ‘foreign-cubed’ securities cases… Instead, the Court held that jurisdiction in such cases must be reviewed on a case-by-case basis. [T]he Court also rejected defendants’ arguments that the American courts’ acceptance of such cases would result in a ‘parade of horribles’.”

This f-cubed case failed because the relevant conduct was in Australia. Hardly the ‘major victory’ the Washington Legal Foundation, one of the friends of the court in this case (case detail), has called the outcome. Without the rigid rule, the next such case may well see a different result.

What’s more, three learned fellow bloggers have already written (extensively) about this case - the D&O Diary, The 10b-5 Daily and ClassActionBlawg.com. D&O Diary provides three of the four amicus curiae briefs (and more background to the case, here), the fourth brief being from the Securities and Exchange Commission (here) in response to the court’s request.

Weil Gotshal & Manges LLP has published its annual 10b-5 Guide (2007) this summer, with thanks to Paul A. Ferrillo for this submission. It includes discussion of two cases that have featured here, one of which is Borochoff v. GlaxoSmithKline PLC (p.156). In that case the judge did not appoint as lead plaintiff the movant with the largest combined loss, a group of German investors, due to the concern whether “the foreign courts will not enforce a decision in favor of [defendant] against foreign plaintiffs in the class.” In the case of Vivendi Universal S.A. (p.175) the court included some foreign countries into the classification and specifically excluded others over the same concern. (Also see In re Rhodia S.A. Sec. Litig., p.195.)

In his 2007 paper Recognition and Res Judicata of U.S. Class Action Judgments in European Legal Systems, Dr. Andrea Pinna (LinkedIn) of French law firm Darrois Villey Maillot Brochier adresses exactly that concern, with thanks to Prof. Dr. Ianika M. Tzankova for her notifying me of the paper. Pinna actually concludes that his “analysis seems to suggest that the hostility of European legal systems towards granting Res Judicata effect to US class action judgments is progressively declining… [as a] consequence of a general acceptance of the necessity of renovating the old-continent civil procedures with tools allowing the consolidation of individual claims in collective claims.” (p.29 of 31)

Since the paper was published, more ‘old-continent’ jurisdictions have adopted collective claim procedures. DLA Piper’s article Global Realm of Securities Class Actions, with thanks to The 10b-5 Daily, highlights some of these procedures in its discussion of “the evolution of the class action device for securities claims in foreign jurisdictions.”

(Also of interest in a wider context is Prof. Samuel P. Baumgartner’s paper How Well Do U.S. Judgments Fare in Europe?, published just a few weeks after Pinna’s paper.)

Fulbright & Jaworski LLP today published its latest Annual Litigation Trends Survey Findings, its fifth such report, alongside the data used for the report. (Also see the UK and US press releases.) The survey covers mostly US (251) and UK (100) respondents.

One of the findings is that “more U.K. companies are facing a U.S. class action: 11% this year, compared with 5% in 2007.” (Report, p.47) But “[g]roup actions in the U.K. against companies are… down this year.” (p.47) Litigation partner Melanie E. Ryan in the UK press release: “The low absolute number of U.K. businesses facing class/group actions is reflected in the Civil Justice Council’s recent proposal to reform the class actions system in England and Wales. If the proposals of the Civil Justice Council are accepted in their entirety, there will be a fundamental change in the class action landscape.” (More specifically on the CJC and its recommendations in a forthcoming post.)

Concerning “legal areas where subprime matters are anticipated”, the report concludes that “[t]he main area of concern for all those who answered the question is securities litigation, securities class actions and other government actions.” (p.41) ‘Securities class actions’ ranks second with 40% of the response. The number of ‘all those who answered the question’ is just 15 though, out of the 358 respondents in all. (Data, table 65)
Of the 40% of those 15 participants in the question, 5 are in the US and 1 is in the UK. WV&Z would like to know who that is, so answers on a postcard please!

If the report, data and press releases aren’t enough for you, register here for Fulbright’s webcast (Tuesday 28 October, 5.30pm - 6.30pm GMT) on its findings or browse here for the first four reports.

What’s more: In the post above the links to the report and the data lead directly to these documents. When going to Fulbright’s website however, there is no direct route. One has to register first, before moving on to a page that links to these documents. Post-publication the firm has therefore requested to provide you with this registration page, www.fulbright.com/litigationtrends37.  With your registration data Fulbright “will be better able to target our audience for next year’s report. We also survey the individuals who have participated the previous year in next year’s campaign.” So there’s your chance to make it to the Sixth.

On the 9th of October last year it was announced that a consortium of three banks had won control over ABN Amro Holding NV of the Netherlands. (FT) Just shy of a year later, one of those three banks, Fortis SA/NV (Euronext: FORA/FORB), has been displaced by the Ministry of Finance of the Netherlands.
(press release) (The other two consortium banks are The Royal Bank of Scotland Group Plc (LSE: RBS) and Banco Santander SA (Bolsa de Madrid: SAN).)

After too many developments to mention here during that year, on the 3rd of october the Dutch State took control of all Fortis assets in the Netherlands, including the Dutch units of ABN Amro that Fortis had acquired. Total consideration: €16.8 billion. Price Fortis paid for its share of ABN Amro: €24 billion. On the 6th, BNP Paribas (Euronext: BNP) paid €14.5 billion in cash and shares for almost everything else outside of the Netherlands, a sale orchestrated by the government of Belgium. (press release) And on the 8th, two websites popped up: FortisAction.com and Beduveld.nl (in Dutch).

Both websites aim to unite ‘hoodwinked’ - or ‘beduveld’ in Dutch - Fortis shareholders and organise legal action. FortisAction.com is an initiative by Euroshareholders, a confederation of 32 European non-profit shareholders associations. Beduveld.nl is an initiative by Beursduivel.be and Belegger.nl, two shareholders websites ultimately owned by Sanoma Oyj (NASDAQ OMX: SAA1V). Any shareholder can sign up via these websites to be kept informed of their respective developments. Beduveld.nl has retained the firm Modrikamen on behalf of its group, which has made the first legal move. Modrikamen put out this statement (in Dutch) and filed a case to enjoin Belgium from proceeding with the asset sale to BNP Paribas.

Euroshareholders has indicated at a press conference today (Monday 13) it will launch its own action in a Dutch court within a fortnight seeking a judgment in particular on whether shareholder approval should have been sought for the BNP Paribas transaction. (Reuters, DJN, AFP/Yahoo!) To be continued…

One of the resources WV&Z has actually already used deserves more credit and a separate mention. In addition to its long-established Stanford Securities Class Action Clearinghouse, Stanford has created the Stanford Global Class Actions Exchange. Whereas the former only provides information on US federal class action securities litigation, the latter sets its sights on any form of collective litigation outside the US. GCAX includes several country reports, statutes, commentary and the contact details of mostly academics who specialise in research in the class action area of law.

Bruce Carton has also branched out. When at Garden City Group he maintained the GCG blog Best in Class. This blog unfortunately ceased to exist (and has been removed from the GCG website entirely) since he left the company. Over summer he maintained his own blog, Unusual Activity, which is now inactive and will be folded into his latest venture Securities Docket. Securities Docket, the Global Securities Litigation and Enforcement Report, aggregates securities litigation data from various sources and provides its own editorial content, updated throughout the day. (GCAX and Securities Docket are in the newly created Resources links section too, on the right.)

And finally a newcomer, ClassActionBlawg.com run by Baker & Hostetler LLP partner Paul G. Karlsgodt. This blog covers all types of class actions, including securities and derivative actions. WV&Z pays special attention to the posts tagged ‘International Class Action Law’.

Welcome (back) to all of you!

Today Parmalat SpA (Milan: PLT) announced it has settled the securities class action pending against it (SDNY). It will issue 10.5 million shares - ‘new’ according to AP, ‘existing’ according to WSJ - worth approximately €24 million to the class. (press release, Forbes and see the FT, WV&Z archives)

The Guardian quotes Lead Counsel Grant & Eisenhofer PA’s Stuart M. Grant:

“We are very pleased with the settlement reached with the company, bringing total investor recovery obtained so far in the Parmalat case to approximately $90 million. […] We will also continue to press claims against other defendants whom we allege defrauded investors over a period of years prior to Parmalat’s ultimate collapse in 2003.”

So it’s not over yet for the class, nor for Parmalat that still is involved in other legal procedures of its own.