The company and its affiliates filed for Chapter 11 bankruptcy and sought to resolve asbestos-related liability through the creation of a personal-injury trust under 11 U.S.C. 524(g). As part of its reorganization plan, it sought to transfer rights under insurance liability policies to the trust. The Insurers had provided liability policies to the debtors prior to bankruptcy and objected that the transfer violated the policies' anti-assignment provisions. The bankruptcy and district courts held that 11 U.S.C. 1123(a)(5)(B) preempts those provisions. The Third Circuit affirmed. Section 524 trusts are the only national statutory scheme available to resolve asbestos litigation through a quasi-administrative process. The plain language of 11 U.S.C. 1123(a) evinces clear intent for a preemptive scope that includes transfer of property to a 524 trust; that preemption reaches private contracts enforced by state common law. View "In Re: Fed-Mogul Global, Inc." on Justia Law

The Thorogood lawsuit against Sears, characterized as "near frivolous," concerned marketing of a clothes dryer. It was certified and later decertified as a class action on the ground that no issues could be resolved in a single, class-wide evidentiary hearing, and was ultimately dismissed. Murray, a member of the proposed class, who did not become a party, filed a "copycat" class action, using the same attorney. Following a third visit to the Seventh Circuit, the district court enjoined the Murray suit as defiant of the decertification. The Supreme Court remanded. The Seventh Circuit consolidated the Thorogood and Murray cases for its fourth opinion. On the merits, the court stated that "One would have to have a neurotic obsession with rust stains (or be a highly imaginative class action lawyer) to worry about Sears' drum," and that it would "unsay nothing," in its previous opinions, but vacated the injunction. "We were wrong. The Supreme Court’s decision—rendered after we ordered the injunction … although it does not refer to the All Writs Act, inclines us to doubt that Murray, not having been a party to the Thorogood suit, can nevertheless be bound by a ruling in it, including the ruling decertifying the class."View "Thorogood v. Sears, Roebuck & Co." on Justia Law

Plaintiffs defaulted on a loan that they had secured by giving the lender a mortgage on their property. A law firm representing the lender sent plaintiffs a letter and documents demanding payment of the debt and threatening to foreclose on the property if they did not pay it. Plaintiffs then filed a putative class action lawsuit against the law firm alleging that the communication violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692e. The district court dismissed the complaint for failure to state a claim. The court held, however, that the complaint contained enough factual content to allow inference that the law firm was a "debt collector" because it regularly attempted to collect debts. The complaint also alleged that the law firm was "engaged in the business of collecting debts owed to others incurred for personal, family[,] or household purposes" and that in the year before the complaint was filed, the firm had sent more than 500 people "dunning notice[s]" containing "the same or substantially similar language" to that found in the letter and documents attached to the complaint in this case. Further, the complaint alleged enough to constitute regular debt collection within the meaning of 1692a(6). Accordingly, the court reversed the judgment and remanded for further proceedings. View "Reese, et al. v. Ellis, Painter, Ratterree, & Adams, LLP" on Justia Law

Three appellate proceedings were consolidated for a single Supreme Court opinion. All three cases appealed the dismissal of their respective cases from the Etowah Circuit Court. The Appellants all sued Donald Stewart individually and as the trustee of the Abernathy Trust and the Abernathy Trust Foundation, in a line of cases arising out of a toxic tort action against Monsanto Company, its parent corporation and a spin-off. The Monsanto Corporations manufactured and disposed of polychlorinated biphenyls (PCBs). A jury found the corporations liable on claims of wantonness, outrage, "suppression of the truth," negligence and public nuisance. After 500 trials on damages, the parties reached a settlement in 2003. $21 million was placed into a trust (the Abernathy Trust) established to pay health and education benefits for those Plaintiffs who qualified for assistance. Each plaintiff signed a retainer agreement and received and cashed his or her settlement check. Plaintiffs in this case challenged the settlement agreement and the award of attorneys fees. Further, they asked for a trust accounting regarding the use of the settlement funds. Upon review, the Supreme Court reversed the dismissal of the cases that asked for an accounting of the use of the trust's funds; one case was dismissed as moot; in the third case, the Court granted a writ of mandamus as to all portions of a circuit court order that sought review of the Abernathy trust document as compared to the terms of the settlement agreement. The circuit court was directed to lift any freeze of distributions from the trust. View "Bates v. Stewart" on Justia Law

This action arose out of the merger of Answers with A-Team, a wholly-owned subsidiary of AFCV, which in turn, was a portfolio company of the private equity firm Summit (collectively, with A-Team and AFCV, the Buyout Group). Plaintiffs, owners of Answers' stock, filed a purported class action on behalf of themselves and all other similarly situated public stockholders of Answers. The court concluded that the complaint adequately alleged that all of the members of the Board breached their fiduciary duties. Therefore, the motions to dismiss the First Cause of Action were denied, except as to the disclosure claim that plaintiffs have abandoned. The court also concluded that plaintiffs have adequately pled that the Buyout Group aided and abetted a breach of the Board's fiduciary duty. Therefore, the motions to dismiss the Second Cause of Action were denied. View "In re Answers Corp. Shareholders Litigation" on Justia Law

Plaintiffs are a dissident group, within a larger class of medical patient consumers in a case alleging fraud in overcharging for the medication Lupron. The patients, along with insurers and private health care providers, obtained a $150 million settlement agreement that was approved by the district court, of which $40 million was allocated to consumers. That agreement provided that if there were unclaimed monies from the $40 million consumer settlement pool after full recovery to consumer plaintiffs, all unclaimed funds would go into a cy pres fund to be distributed at the discretion of the trial judge. Dissident plaintiffs appealed distribution of the $11.4 million cy pres fund to the Dana Farber/Harvard Cancer Center and the Prostate Cancer Foundation for work on the treatment of the diseases for which Lupron is prescribed. They have already recovered more than 100% of their actual damages. The First Circuit affirmed. After expressing concern about distribution of such funds by judges and adding an audit requirement, the court noted the importance of avoiding windfalls for plaintiffs who have already been fully compensated. View "Rohn v. Dana Farber/Harvard Cancer Ctr." on Justia Law

This was a class action brought on behalf of the common unit holders of a publicly-traded Delaware limited partnership. In March 2011, the partnership agreed to be acquired by an unaffiliated third party at a premium to its common units' trading price. The merger agreement, which governed the transaction, also provided for a separate payment to the general partner to acquire certain partnership interests it held exclusively. The court concluded that defendants' approval of the merger agreement could not constitute a breach of any contractual or fiduciary duty, regardless of whether the conflict committee's approval was effective. The court also found that the disclosures authorized by defendants were not materially misleading. Therefore, plaintiffs could not succeed on their claims under any reasonable conceivable set of circumstances and defendants' motion to dismiss was granted. View "In re K-Sea Transportation Partners L.P. Unitholders Litigation" on Justia Law

This putative class action was before the court on an application for the approval of settlement of the class's claims for, among other things, breaches of fiduciary duty in connection with a merger of two publicly traded Delaware corporations. The target's largest stockholder, which acquired the vast majority of its shares after the challenged transaction was announced, objected to the proposed settlement. In addition, defendants' and plaintiffs' counsel disagreed about the appropriate level of attorneys' fees that should be awarded. The court certified the class under Rules 23(a), (b)(1), and (b)(2) with NOERS as class representative; denied BVF's request to certify the class on only an opt out basis; approved the settlement as fair and reasonable; and awarded attorneys' fees to plaintiffs' counsel in the amount of $1,350,000, inclusive of expenses. View "In re Celera Corp. Shareholder Litigation" on Justia Law

Named plaintiffs sought to represent potential classes of hospital employees, some covered by collective bargaining agreements and others not, claiming that they were deprived of compensation for work performed during meal breaks, before and after shifts, and during training sessions. One case asserted only state law tort and regulatory claims; the other raised claims under the Fair Labor Standards Act, 29 U.S.C. 206-207, and the Employee Retirement Income Security Act, 29 U.S.C.1059(a)(1), 1104(a)(1). The district court dismissed. The First Circuit affirmed in part. The state law claims were properly removed to federal court and were preempted because many were dependent on the terms of a collective bargaining agreement. The federal law claims, dismissed for failure to identify specific employers, were remanded to permit amendment. View "Cavallaro v. UMass Mem'l Health Care,Inc." on Justia Law

This case stemmed from a class action that began more than a quarter century ago where Idaho state prisoners at the Idaho State Correctional Institution (ISCI) prevailed on their claims that, inter alia, because of deliberate indifference, without any connection to a legitimate penological purpose, the inmates were subjected to needless pain and suffering on account of inadequate medical and psychiatric care. The district court issued an injunction to remedy the constitutional violations and the injunctions remained in effect in 2008 and 2009 when the facts giving rise to this case occurred. The Portland law firm of Stoel Rives, LLP was appointed to represent the prisoner class. At issue on appeal was whether Stoel Rives was entitled to an attorneys' fee award in the class action under the Prison Litigation Reform Act (PLRA), 42 U.S.C. 1997e. The court held that, in this case, the judge had discretion to consider whether Stoel Rives's work on a motion to compel conformity to the injunction was "directly and reasonably incurred in enforcing the relief." The district court acted within the bounds of its discretion in awarding fees in a reasonable amount for bringing about that conformity with the injunction. Here, Stoel Rives's work was what one would expect of a lawyer working for a client that could afford its efforts but that was not indifferent to the cost. The firm showed no evidence of milking the case, and the fees were "directly and reasonably incurred." Accordingly, the court affirmed the judgment. View "Balla v. State of Idaho, et al." on Justia Law