INSIDE THIS ISSUE
Following a final approval hearing on February 11, 2015, the United States District Court for the District of Massachusetts ordered final approval of a $590.5 million settlement on March 3, 2015 and March 17, 2015. The Court also concluded that the process by which the net settlement funds will be distributed to claimants was fair and reasonable. This final approval brings resolution to Dahl v. Bain Capital Partners, LLC, No. 1:07-cv-12388-WGY (D. Mass.), a longstanding antitrust case against many of the most prominent private equity firms in the United States. The settlements, negotiated by Scott+Scott and its co-lead counsel, were between the plaintiff shareholders and defendant private equity firms Bain Capital, Goldman Sachs, Silver Lake, Blackstone, KKR, TPG, and Carlyle.
Filed in 2007, the case was brought on behalf of former shareholders of U.S. public companies who sold their shares to Defendants in certain leveraged buyouts (“LBO”) between 2003 and 2007. In an LBO, a private equity firm acquires substantially all of the outstanding shares of a company using a combination of equity and debt to fund the purchase. The private equity firm then withdraws any publically-traded share from stock exchanges, thereby taking the company private. After operating the company for a period of time, the private equity firm then typically sells the company to other private buyers or conducts a public offering.
After multiple rounds of summary judgment, the court sustained two antitrust claims. The first alleged that Defendants agreed not to compete on eight deals during the time between the announcement of the deals and their closings, generally known as the “go-shop” period. This claim was brought on behalf of shareholders in Freescale, HCA, SunGard, Harrah’s, AMC, TXU, Aramark, and Kinder Morgan. The second claim alleged an agreement not to compete on the HCA LBO on behalf of a class of HCA shareholders.
After seven years of hard-fought litigation, which included the review of millions of pages of documents, taking over fifty depositions, and the submission of nearly 20 expert reports, the parties settled the case before trial was scheduled to begin on November 3, 2014. At the time of the settlement, summary judgment and class certification motions were pending, which created substantial litigation risks to both sides.
On March 26, 2015, the Honorable Katherine B. Forrest of the United States District Court for the Southern District of New York denied Defendants’ motion to dismiss plaintiffs’ claim that defendants violated federal and state antitrust laws by conspiring to manipulate the spot price of physically delivered aluminum in In re Aluminum Warehousing Antitrust Litigation, Case No. 13-md-2481 (KBF) (S.D.N.Y.). Scott+Scott represents corporate opt-out plaintiffs in the matter.
Defendants in the case include Goldman, Sachs & Co., Goldman Sachs International, Metro International Trade Services LLC, J. Aron & Company, Mitsi holdings LLC, JPMorgan Securities plc, Henry Bath LLC, Glencore AG, Glencore Ltd., and Pacorini Metals USA LLC. Plaintiffs allege that Defendants conspired to manipulate a component of the spot price of physically delivered aluminum, called the “Midwest Premium,” by restricting the supply of aluminum immediately available to the spot market in warehouse locations controlled by them. The Midwest Premium reflects the delivery, storage, finance, and insurance costs incurred by producers, traders, and holders of warehoused aluminum. Plaintiffs allege that Defendants agreed to delay the load-out rate of aluminum out of warehouses to increase the price of storage, thereby increasing the Midwest Premium reflected in the spot price for aluminum. Plaintiffs were injured because they paid more for physically delivered aluminum as a result of Defendants’ conduct to drive up the Midwest Premium.
Plaintiffs allege that Defendants used specific aspects of both their commodities trading and warehouse operations to effectuate the conspiracy. First, each of the financial institution defendants acquired LME-approved warehouses in or around 2010. Next, the financial institutions worked with their affiliated warehouses to insure that stocks of aluminum were obtained and maintained at unusually high levels by slowing the load-out rate of aluminum from warehouses, increasing incentives for producers to store aluminum and agreeing with other Defendants and third parties to shuffle aluminum from warehouse-to-warehouse to meet the minimum load-out rate. The financial trading arms assisted in the conspiracy by obtaining large numbers of aluminum warrants and strategically canceling warrants for the purpose of putting the aluminum into the load-out queues, thereby delaying load-outs of aluminum legitimately seeking to exit the warehouse.
Plaintiffs allege that Defendants benefited from this scheme because the defendant financial institutions were able to sell aluminum in the spot market at an inflated price, their affiliated warehouses received increased rent revenues, and their affiliated trading arms benefited from the increase in the value of their holdings and their trading activity.
The Court found that Plaintiffs, as purchasers of physical aluminum that included the artificially increased Midwest Premium, suffered antitrust injury because “their purchases were inextricably intertwined with the competitive landscape in which defendants’ alleged scheme ultimately played out.” “[P]laintiffs are central—they are the fulcrum—to the creation of the market opportunity underlying both metal storage and warrant trading for aluminum. As the real world buyers who—they allege—must pay prices for aluminum that incorporate the Midwest Premium, they are necessarily directly impacted by the alleged conduct.”
In denying Defendants’ motion to dismiss, the Court adopted the allegations in the Joint Amended Complaint filed by the opt-out clients, as it “does a far better job of articulating and supporting clear theories of anticompetitive conduct” than the complaint filed by class plaintiffs.The case is proceeding to discovery.
On April 23, 2015, the Honorable Jack B. Weinstein of the Eastern District of New York granted final approval to a class action settlement in Friedman v. Maspeth Federal Loan & Savings Association, No. 13-cv-6295 (E.D.N.Y.). The case involved allegations that a bank, Maspeth Federal Loan & Savings Association (“Maspeth”) wrongfully imposed late fees on timely-received mortgage payments.
The settlement returns a 100% of all damages sustained by members of the Class. Specifically, any Class member who believes that the bank wrongfully imposed late fees is entitled to receive all of the money that he or she was charged. In addition, the settlement includes prospective relief for the Class: Maspeth was required to implement changes to its policies and procedures to prevent any future mislabeling or misreporting of timely-received mortgage payments. Accordingly, this additional requirement protects Class members from the wrongful imposition of any future late fees associated with their mortgages at the bank. In approving the settlement, Judge Weinstein noted that there was not a single objection to, or request for exclusion from, the settlement by any members of the Class.
The lawsuit was originally filed in November 2013 and was later amended to assert claims under the federal Real Estate Settlement Procedures Act (“RESPA”), the New York General Business law, and other common law claims. RESPA regulates mortgage servicing to ensure that consumers are provided with accurate and timely information so that they can correct errors when they occur.
The bank provided the plaintiff and other members of the Class with a mortgage loan payment book. This book provided that the bank would not impose late charges as long as payments were “received by 8:00 p.m. on the 16th of each month.” Despite this clear language and the fact that the plaintiff had postal receipts demonstrating that Maspeth had received his payments before that date and time, the bank repeatedly charged the plaintiff late fees. The plaintiff sent written requests to the bank demanding that it both explain and correct the wrongfully-imposed late fees, yet the bank refused to fix its errors.
In July 2014, Judge Weinstein denied the bank’s motion to dismiss. The Court noted that the case involved “issues of first impression” with respect to RESPA. After several months of arms’ length negotiations, the parties reached a settlement. At the final approval hearing Judge Weinstein complimented Plaintiff’s counsel, Scott+Scott attorneys Joseph Cohen and Stephen Teti, for their work on an extremely complicated case and granted final approval of the settlement.
On March 27, 2015, the Honorable BarryTed Moskowitz, Chief Judge of the Southern District of California, entered ajudgment in favor of Victor Willis, giving the former lead singer and lyricist of the Village People a 50% copyright interest in 13 songs, including the classic Village People hit “Y.M.C.A.” The judgment followed a four week-long trial in which a jury found for Mr. Willis over the record companies Scorpio Music S.A. and Can’t Stop Productions, Inc., as well as French record producer Henri Belolo. The judgment also gave Mr. Willis a 33% interest in 20 other songs, including the classic songs “In the Navy” and “Macho Man.” Mr. Willis has been represented by Scott+Scott since the inception of the action in 2011 and was represented by Scott+Scott attorney John Jasnoch during the trial.
The case and trial were the first of their kind concerning Section 203 of the Copyright Act of 1976. In 1976, Congress amended the federal copyright laws to allow authors the ability to terminate a transfer of their copyrights and recapture their copyright interests after 35 years. See 17 U.S.C. §203. In January 2011, pursuant to Section 203, Mr. Willis served a notice of termination of his grants of copyright to 33 songs he authored between 1977 and 1980. Thereafter, Scorpio Music and Can’t Stop Productions commenced a lawsuit against Mr. Willis challenging the validity of the termination and seeking a declaration that Mr. Willis was limited to a 12-20% copyright interest at the most. In May 2012, Mr. Willis won a landmark court ruling which affirmed the validity of copyright termination and allowed him to reclaim a 33% share of the 33 songs that were released by the Village People, the Richie Family, Patrick Duvey, and Felicia Allen. See Scorpio Music S.A. v. Willis, No. 11cv1557, 2012 WL 1598043 (S.D. Cal. May 7, 2012).
After this early victory, Mr. Willis filed a counterclaim against the record companies and Mr. Belolo, seeking to have his 33% interest in certain songs increased to 50% because Mr. Belolo, who was listed as an author on certain songs, did not actually contribute to the writing of the songs. During the trial, Mr. Belolo contended that he had created preexisting French lyrics to the songs, which were then adapted from French by Mr. Willis. Mr. Belolo’s claims were rejected by the jury when their verdict found that Mr. Willis was the sole lyricist and one of only two authors (along with producer Jacques Morali) of the 13 compositions.
Witnesses that testified on Mr. Willis’s behalf included Phil Hurtt, a producer and songwriter who authored the classic song “I’ll be Around” by The Spinners, as well as Russell Dabney, the original drummer of the Village People’s studio band Gypsy Lane. The Case is Scorpio Music S.A. v. Victor Willis, Case No. 11-cv-1557.
Events in the
+May 31- June 3, 2015
Massachusetts Association of Contributory Retirement Systems (MACRS)
Conference Center at Hyannis
The four day conference will focus on a variety of issues of particular importance to the Massachusetts retirement community including a special presentation and national pension update by Hank Kim, executive director and general counsel for the National Conference on Public Employees Retirement Systems (NCPERS). This year’s conference will be “renamed” in honor of Fire Captain, Kevin J. Regan who lost his life last December in a tragic accident. Kevin, a Westfield, Mass. trustee served on the MACRS board for more than a decade and co-ordinated the MACRS conferences.
+May 31- June 3, 2015
Government Finance Officers’ Association 109th National Conference (GFOA)
Pennsylvania Convention Center
The GFOA provides professional development training opportunities to state and local government finance professionals as well as an ideal venue for meeting and networking with colleagues and experts from across the nation. Sessions available for CEUs include accounting, auditing, and financial reporting; budgeting; capital planning and economic development; debt management; financial management; pension and benefit administration; and treasury and investment management. Attendees create their own curriculum on a first come basis. Preconference sessions begin May 29 and are designed for new government finance officers.
+June 3-5, 2015
Mid-Atlantic Plan Sponsors Annual Trustee Educational Conference (MAPS)
Hotel Monaco Baltimore
The Mid Atlantic Plan Sponsors is an organization formed by trustees from eleven states in an effort to share knowledge in the public pension arena. Pension fund trustees, administrators and professional service providers meet annually to exchange ideas and information. The group is dedicated to the sound management of government finance resources and works as a cooperative partnership with the National Conference on Public Employee Retirement Systems (NCPERS).
+June 3-6, 2015
Oklahoma State Firefighters Association’s 121th Annual Convention (OSFA)
Oklahoma City, Oklahoma
The Oklahoma State Firefighters’ Association provides its members with financial, legislative and educational advisory programs and pension seminars as well as many firefighter specific training tools and resources.
+June 14-17, 2015
International Foundation ofEducation, Benefits for Public Pensions (IFEBP) Trustees & Administrators Institute
Hilton San Francisco, Union Square
San Francisco, California
The Trustees and Administrators Institutes are the premier educational programs for those who serve multiemployer trust funds. IFEBP conferences offer concurrent seminars for new trustees, advanced trustees and administrators. This seminar focuses on the Essentials of Multiemployer Trust Fund Administration. Each features a module for handling fiduciary responsibilities, government reporting, disclosures and how the economic political and regulatory environment impacts plans.
+June 15-17, 2015
26th Annual National Association of Securities Professionals Annual and Financial Services Conference (NASP)
NASP is the national advocate for minorities in the financial services industry. Founded in 1986 to provide educational opportunities and create equal representation for people of color and women in all aspects of the securities industry, it is a non-profit organization and has become one of the most respected Pension and Financial Services Conferences. NASP, headquartered in Washington, DC currently has local chapters in several metropolitan cities, including Atlanta, Baltimore/Washington DC, Boston, Chicago, Detroit, New York, North Carolina, Philadelphia, San Francisco, Southern California, and Texas. NASP brings together the nation’s minorities who have achieved recognition as financial professionals including investment bankers, asset managers, public finance consultants, plan sponsors, and many other finance professionals.
+June 16-18, 2015
National Association of Attorneys General Summer Conference (NAAG)
Hilton La Jolla Torrey Pines
San Diego, California
The National Association of Attorneys General (NAAG) was established more than 100 years ago to provide Attorneys General an opportunity to communicate between the states’ chief legal officers on legal and law enforcement matters. NAAG’s focus is: "To facilitate interaction among Attorneys General as peers and to facilitate the enhanced performance of Attorneys General and their staffs." NAAG offers "cooperative leadership," not only between the states, but also with their federal counterparts. NAAG has 3 major meetings: the Association’s winter meeting in Washington, DC, the NAAP Presidential Initiative Summit and the Summer Meeting. Portions of these meetings may be open to the public and require advance registration.
+June 17 & 18, 2015
American Antitrust Institute’s 16th Annual Conference (AAI) and Invitational Symposium: Antitrust and Entrepreneurship
National Press Club
This year’s conference title is “Antitrust and the 2016 Presidential Transition.” The event is part of AAI’s larger effort to formulate a comprehensive set of policy recommendations to the 45th President of the United States. The AAI Invitational Symposium will address the question of how competition policy and entrepreneurial activity should relate to one another.
+June 23-26, 2015
National Association of Public Pension Attorneys (NAPPA) Legal Conference
Austin Hilton Hotel
The National Association of Public Pension Attorneys is a legal professional and educational association founded more than 25 years ago for and by attorneys. Continuing education credit is available at this annual educational conference. The first session of the conference is designed for new members.
+June 28 - July 1, 2015
Florida Public Pension Trustee Association’s 31st Annual Conference (FPPTA)
Boca Raton Resort
Boca Raton, Florida
FPPTA’s primary purpose in conducting an annual educational forum is to provide the basis for improved financial and operational performance of the public employee retirement systems in the state. FPPTA acts as a central resource for educational purposes forth public pension industry including topics such as the political reality of public pension plans and private sector public sector plans.
Government Finance Officers’ Association Conferences (GFOA)
+ June 4, 2015
Connecticut Government Finance Officers’ Association
+June 10-12, 2015
Idaho City Clerks, Treasurers & Finance Officers Association
+ June 10-13, 2015
Wyoming Association of Municipalities
South High School
+June 13-17, 2015
Florida Government Finance Officers’ Association
Westin Diplomat Hollywood
+ June 17-19, 2015
Maryland Government Finance Officers’ Association
Clarion Conference Center
Ocean City, Maryland
+June 18-26, 2015
Maine Government Finance Officers’ Training
Scott + Scott LLP is a nationally recognized law firm headquartered inConnecticut with offices in New York City, Ohio and California. The firm represents individual as well as institutional investors who have suffered from corporate stock fraud. Scott+Scott has participated in recovering billions of dollars and achieved precedent-setting reforms in corporate governance on behalf of its clients. In addition to being involved in complex shareholder securities and corporate governance actions, Scott+Scott also has a significant national practice in antitrust, ERISA, consumer, civil rights and human rights litigation. Through its efforts, Scott+Scott promotes corporate social responsibility.
Scott+Scott’s PT+SM System is the firm’s proprietary investment portfolio tracking service. Carefully combining the firm’s proprietary computer-based portfolio monitoring software with Scott+Scott’s hands-on approach to client relations is a proven method for institutional investors and their trustees to successfully
- Monitor their investment portfolios
- Identify losses arising from corporate fraud
- Consider what level of participation any given situation requires
- Recover funds obtained on their behalf through investor litigation action
To obtain more information about Scott+Scott’s PT+SM services or to schedulea presentation to fund trustees, fund advisors or asset managers, please contact: David R. Scott + Toll Free: 800.404.7770 email: firstname.lastname@example.org + UK Tel: 0808.234.1396