WHAT TO KNOW:
- Board also agrees to retool controversial forum bylaw
- Settlement will be paid by insurers into company’s coffers
Boeing Co.’s board will pay $6.25 million and amend a controversial company bylaw to end litigation in two courts challenging the aerospace manufacturer’s requirement that certain shareholder lawsuits be heard in Delaware, according to federal court filings in Chicago.
Judge Harry D. Leinenweber signed off tentatively on the deal Thursday, about seven months after an appeals court revived federal derivative claims filed against Boeing’s board in Chicago by a pension fund. The appellate ruling overturned Leinenweber’s novel 2020 decision sending the dispute to Delaware.
The judge scheduled a final settlement hearing for Dec. 14. The agreement will go to a judge in Delaware’s Chancery Court after the conclusion of approval proceedings in the US District Court for the Northern District of Illinois, according to the pension fund’s court filings.
The lawsuit, filed in 2019, emerged from shareholder derivative litigation over two high-profile crashes of Boeing’s 737 Max 8 jetliner that killed a combined 346 people. The investor suits accused Boeing’s board of ignoring safety issues before the crashes, which together cost the company more than $20 billion.
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The new settlement would amend Boeing’s forum bylaw to clarify that shareholder derivative suits can be heard by federal district courts in Delaware or the Eastern District of Virginia if Delaware’s state courts lack jurisdiction because they assert only federal claims.
“The Boeing bylaw change extends beyond claims arising under the Securities and Exchange Act of 1934 and allows federal derivative claims under any federal statutory scheme with exclusive jurisdiction to be brought in federal court,” Carol Gilden, lead counsel for the investors and partner at Cohen Milstein Sellers & Toll PLLC, said in a Friday statement. “Plus, those claims are not restricted to Delaware federal court and can be brought where Boeing is headquartered, which is an analogy other courts may rely on.”
The $6.25 million settlement amount would also be paid by the board’s insurers, according to the court filings.
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Cohen Milstein Sellers & Toll PLLC are counsel for the pension fund. Boeing and its board are represented by Sullivan & Cromwell LLP and Kirkland & Ellis LLP.
Washington state and the federal government will receive $33 million from health care giant Centene Corp. to resolve a lawsuit alleging it overcharged the state’s Medicaid program — a deal that amounts to the second-largest fraud recovery in the state’s history.
Washington’s Office of the Attorney General announced the deal Wednesday, saying Centene will pay about $19 million to the state and about $13 million to the federal government to toss allegations that the company overcharged for pharmacy benefit management services.
“Medicaid dollars are a precious resource meant to fund care for the most vulnerable among us,” Washington state Attorney General Bob Ferguson said in a news release. “My office works to ensure that these dollars go where they are intended — not toward fraud.”
Washington sued Centene in July 2022, alleging the company and one of its subsidiaries, Coordinated Care of Washington, violated the Washington Medicaid False Claims Act. Coordinated Care of Washington contracts with Washington’s Health Care Authority to manage its Medicaid program, which is called Apple Health, according to the release.
- Investors allege salesforce size inflated
- Utah district court dismissed litigation in 2021
Pluralsight failed to convince the Tenth Circuit to affirm the complete dismissal of an investor lawsuit claiming executives made false claims about the size and productivity of the online education site’s salesforce.
The allegations brought by a couple of public employee retirement funds “strongly support the inference” that Pluralsight’s then-CFO knew he overstated the salesforce’s size at a 2019 conference and there was a risk of misleading investors, the US Court of Appeals for the Tenth Circuit said in a unanimous decision Tuesday.
The allegations also support the inference the former CFO had a “financial motive for making the misleading representation,” the appeals court said
The investor funds—Indiana Public Retirement System and Public School Teachers’ Pension and Retirement Fund of Chicago—sued Pluralsight in 2019 , alleging false or misleading statements about the company’s salesforce artificially inflated Pluralsight’s stock price, including during a 2019 secondary public offering.
They appealed to the Tenth Circuit after the U.S. District Court for the District of Utah dismissed the suit in March 2021.
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Indiana Public Retirement System and Public School Teachers’ Pension and Retirement Fund of Chicago are represented by Cohen Milstein Sellers & Toll and Clyde Snow & Sessions. Pluralsight is represented by Wilson Sonsini Goodrich & Rosati and Fabian VanCott.
Read the article on Bloomberg Law (subscription required.).
WHAT YOU SHOULD KNOW:
- Deal said to be among largest derivative recoveries
- Judge not confident higher recovery “realistic”
Shareholders of FirstEnergy Corp. won court approval of a $180 million settlement in their derivative litigation against the utility company’s directors.
The shareholders have said the settlement is “among the largest derivative recoveries ever achieved” in the US, noted Judge Algenon Marbley of the U.S. District Court for the Southern District of Ohio, who granted final approval Tuesday.
The Akron, Ohio-based company had been embroiled in a bribery scandal tied to nuclear subsidies, admitting in mid-2021, as part of a deal with federal prosecutors, that it conspired with public officials and others to pay millions of dollars in bribes.
According to settlement terms, the defendants’ insurers will pay $180 million to FirstEnergy, less legal fees. FirstEnergy will also commit to a series of internal governance reforms, including the departure of six directors.
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Cohen Milstein Sellers & Toll PLLC represents additional plaintiff Massachusetts Laborers Pension Fund.
Workers for an animal feed manufacturer asked a California federal judge for class status in their suit alleging they were charged an inflated $244 million for their employer’s stock just before its value plummeted because of a feed contamination scandal.
Three workers filed their request for class certification Thursday in the suit lodged against Kevin Kruse, owner of feed manufacturer Western Milling, and GreatBanc Trust Co., trustee of the employee stock ownership plan. The workers requested that their memorandum expressing the grounds for class certification be filed under seal.
In their motion, they said the class should include all workers and their beneficiaries who participated in the Western Milling employee stock ownership plan from Nov. 4, 2015. According to the initial complaint, nearly 400 workers are eligible for the suit.
The request stems from the February 2019 lawsuit Armando Zavala filed against Kruse, who operates the parent company of Western Milling, Kruse-Western Inc. Most of the claims survived a dismissal bid in December 2021.
Zavala, a former employee, said that the company violated the Employee Retirement Income Security Act when it sold the Kruse-Western stock to the newly established Western Milling employee stock ownership plan in 2015 for an inflated price of $244 million, which resulted in the loss of “tens of millions” for the stock ownership plan.
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The workers are represented by Daniel Feinberg, Nina Wasow and Andrea Obando of Feinberg Jackson Worthman & Wasow LLP and by Michelle C. Yau and Kai Richter of Cohen Milstein Sellers & Toll PLLC.
Read the article on Law360.
US judge dismisses oil and gas giant’s arguments for avoiding trial over alleged human rights abuses in Indonesia.
A United States judge cleared the way for 11 Indonesian villagers to sue ExxonMobil for alleged human rights abuses after finding the majority of the gas and oil giant’s arguments to be “entirely meritless”.
In a searing 85-page opinion, US District Court Judge Royce Lamberth concluded that both witness testimony and ExxonMobil’s internal documents would potentially allow a reasonable jury to find that security personnel hired by the firm had abused villagers in Aceh province during the late 1990s and early 2000s.
Lamberth said the US multinational’s arguments about Indonesian law and other evidence in the case were repeatedly found to be “wrong” or “simply wrong”.
The reasoning, which was previously under seal, was publicly released on Tuesday after Lamberth last month ruled that the villagers’ lawsuit could go to trial after languishing in the US courts system since 2001.
The villagers allege that they or their loved ones were assaulted, tortured, abused and, in some cases, killed, by Indonesian soldiers who were contracted to ExxonMobil to provide security at the Arun gas field during fighting between separatist fighters and the military.
“We are gratified that the court was moved by the evidence we presented from more than a dozen eyewitnesses and agreed that this important human rights case against ExxonMobil should move forward to trial,” Agnieszka Fryszman, lawyer for the plaintiffs and chair of Cohen Milstein’s Human Rights Practice, said in a statement.
“This case has been up and down to the Supreme Court and tied up in pretrial litigation for over 20 years. This is a big turning point for our clients who have stuck it out for so long in the hopes of obtaining justice. We look forward to presenting our evidence to a jury.”
For the first time after 20 years of legal proceedings, the Washington DC District Court, United States, issued a document to the public revealing the testimonies of victims of alleged human rights violations allegedly committed by the ExxonMobil company in Aceh by hiring a number of Indonesian military personnel.
Judge Royce C. Lambert, Tuesday (02/08), issued an 85-page memorandum of opinion containing the testimonies of the victims.
Most of them rejected the ExxonMobil company’s defense of the alleged human rights violations against 11 Acehnese.
The law firm Cohen Milstein Sellers & Toll PLLC, representing the plaintiffs, said the decision could pave the way for prosecuting alleged human rights violations by ExxonMobil.
This US company allegedly hired a number of Indonesian military personnel in the early 2000s to provide security guarantees at their natural gas facilities in Aceh.
The trial judge said the plaintiff’s eyewitness statements and internal ExxonMobil documents would help the jury find evidence whether the soldiers paid for assault, torture, or committed extrajudicial killings.
Will proceed to court
“We are grateful that the Court was moved by the evidence we presented, including dozens of eyewitnesses, and agreed that this ExxonMobil human rights case should go to court,” said Agnieszka Fryszman, lawyer for the plaintiffs and leader of the team of human rights advocates at law firm Cohen Milstein.
“This case has been going up and down the Supreme Court and tied up in pretrial litigation for more than 20 years. This was a major turning point for our client, who had been stuck for so long in hopes of getting justice. We hope to present our evidence to the jury,” Agnieszka said.
ExxonMobil as a defendant in this case has denied all the testimonies presented by the plaintiffs.
After starting a career in advertising working with the voice of Darth Vader, Christina Saler made a pivot into law school and has since dedicated her professional life to rooting out corporate wrongdoing.
Saler, a partner at Cohen Milstein, focuses primarily on shareholder litigation, representing public pension funds and other institutional investors as plaintiffs in class actions against publicly traded corporations and their officers and directors for securities fraud or breaches of fiduciary duty.
One of her current cases is centered around the pricing of prescription medicine. Working with the Ohio Attorney General, Saler and her team have been able to uncover the machinations of pharmaceutical middlemen that have allegedly kept prices of pharmacy drugs artificially high.
While this is something of a departure from her securities work, the prescription pricing cases fit into her ethos and reasoning behind practicing law, which is all about bringing transparency, accountability and lasting change for the public good.
A graduate of Rutgers University Law School, Saler is a Lawdragon 500 Leading Plaintiff Financial Lawyer.
Lawdragon: What do you like most about your practice?
Christina Saler: Over the years, I have forged many long-lasting relationships with the professionals and trustees entrusted with administering and overseeing pension funds for public employees and unionized workers. The public pension fund community is a collegial group with a tremendous responsibility – safeguarding the retirement money for teachers, firefighters, police officers, other public servants and members of trade unions. So I feel honored to have become a trusted client counselor.
LD: What types of matters are keeping you busy these days?
CS: Since 2017, there has been a growing concern about how Pharmacy Benefit Managers (PBMs) have used their position to affect the pricing and availability of prescription drugs. As you can imagine, this is a big concern for state-funded health plans, such as Medicaid and public employee plans, since healthcare costs tend to be one of the largest line items in a state budget.
PBMs provide prescription drug benefits and services to private health insurance plans, self-insured employers and state-run programs. You can think of them as “middlemen” because they negotiate with drug manufacturers on the cost of drugs that will be covered by the PBMs’ health plan clients, and they negotiate with pharmacies the costs to fill the prescriptions. PBMs also develop their own pharmacy networks. Currently, three PBMs – CVS Caremark, Express Scripts and OptumRx – control nearly 80 percent of the prescription drug market and operate with little transparency or accountability to states and consumers.
Independent pharmacists were the first to raise a public outcry about PBMs’ unfair and potentially fraudulent business practices. The pharmacists were feeling financially squeezed. But PBMs’ business practices weren’t only harming independent pharmacies. Our investigations on behalf of state attorneys general across the country have revealed that some PBMs’ abusive drug pricing and fee layering schemes cost many states hundreds of millions of dollars in fraudulent charges.
The complexity of the PBM industry cannot be understated; many of the major players are vertically integrated companies, meaning that a single holding company has wholly owned subsidiaries that are health plan insurers, MCOs, PBMs and/or retail pharmacy chains.
Although working in this space was a shift from my securities practice, it’s because of the strong relationships that I’ve forged over the years that I was in position to help lead this highly specialized work, starting in 2018 as special outside counsel to the Office of the Ohio Attorney General. Since then, our work has expanded considerably. So, right now, we represent many state attorneys general in their investigations of the PBMs servicing their states, have active litigation against OptumRx and Express Scripts in one state, and have settled several matters on behalf of some of these states against Centene Corporation, which is the largest provider of managed care services to state Medicaid programs. We have joined forces with a highly talented small firm in this massive effort. Together, we really are the only ones doing this type of work on behalf of the states.
Our investigations on behalf of state attorneys general across the country have revealed that some PBMs’ abusive drug pricing and fee layering schemes cost many states hundreds of millions of dollars in fraudulent charges.
LD: This sounds like it could have massive implications. How did you first start working with the Ohio AG on this?
CS: In 2018, we were retained by Ohio Attorney General Dave Yost’s Office to assist in his investigation of the State of Ohio’s PBM relationships. Among the Ohio agencies and entities requiring PBM services are the Ohio Medicaid program, which is overseen by the Ohio Department of Medicaid (ODM), the Ohio Bureau of Workers Compensation (BWC), the Ohio Department of Administrative Services (DAS) and the Ohio Highway Patrol Retirement System.
LD: What’s the current status of the cases?
CS: We have two matters in active litigation. Trial against OptumRx is currently set for October 2022. It was, however, the ODM litigation against Centene Corp. filed in March 2021 that was a watershed case.
LD: Tell us about that one.
CS: Ohio’s Medicaid program provides coverage to about 2.9 million Ohioans through Managed Care Organizations (MCOs). One such MCO, Centene’s Buckeye Health Plan, administered its pharmacy benefits and services via its captive PBM, Envolve Pharmacy Solutions. Working closely with the AG’s office, we conducted an extensive investigation and alleged that Centene’s MCO and PBM entities had breached Centene’s provider agreements with ODM, violating Ohio’s statutory law which governs the practices of MCOs.
Three months after we filed the case, on June 14, 2021, AG Yost announced that the litigation was resolved by a $88.3M settlement with Centene Corporation. The settlement, one of the largest in Ohio history, sent a message to PBMs nationwide that they cannot take advantage of the state or patients.
This victory in Ohio was just the start. Since June 2021, we have negotiated nine individual state settlements with Centene worth more than $360M to resolve investigations we had been conducting for those states, and we are working on finalizing several others.
LD: Congratulations. Can you talk about some of the challenges of managing a collection of cases of this magnitude?
CS: These are large, highly complex data- and contract-driven cases which require specific expertise in Medicaid regulations, drug pricing and claims data analysis. So we needed to not only become experts ourselves in this area of the law and fluent in the business practices PBMs deploy, but also assemble a team of industry and data experts to help identify any irregularities in the PBMs’ pricing of drug claims, processing and reporting to the states. Our investigations require a lot of coordination with our clients, too. In addition to working with the state AG’s offices, we also interact with the state agencies that procured the PBMs and utilize their services.
LD: What impact are these efforts having on the industry?
CS: Our work with state attorneys general has put pressure on PBMs. They are fully aware that states are scrutinizing these extraordinarily expensive contracts – and state legislatures are also focusing on the business practices that have put independent pharmacies out of business while PBM profits increased year-after-year. Also, at the federal level, the Federal Trade Commission launched an inquiry into PBMs on June 7, 2022. The FTC’s probe will scrutinize the impact of vertically integrated PBMs on the access and affordability of prescription drugs.
Litigation is an effective way to return money to the states that PBMs improperly charged. But I think legislation is the ultimate long-term solution. These two tools combined are bringing transparency to the industry that should, over time, bring down the cost of drugs to states and individual consumers.
LD: Was there an early experience or mentor who really helped shape the course of your professional life?
CS: I had a wonderful mentor named George Croner at Kohn Swift & Graft, which I joined fresh out of law school. George had attended the U.S. Naval Academy and, when he was in the Navy, he was the guy waving the jets onto the carrier runway. That guy! We worked on a lot of fiduciary duty shareholder rights cases in the context of limited partnerships, as well as a few interesting defamation lawsuits we took to trial against media defendants. George is retired now but was a very practical litigator and a brilliant writer. He took me under his wing and gave me a tremendous amount of responsibility and opportunities as a young associate.
I’m focused on relationships and helping investors and other clients address their losses through litigation in a pragmatic way. I think the “scorched earth” approach to litigation can be very destructive.
When I joined Cohen Milstein in 2017, I had already been practicing for 14 years. I had my own portfolio of work, clients, etc. So, my interests and goals were different. Cohen Milstein is very well known in the institutional investor and public pension community, so the firm offered a significantly bigger platform than I had before, which allowed me to broaden my representation of the clients I brought to the firm. Steve Toll, the managing partner of Cohen Milstein and Lawdragon Legend who brought me to the firm, has been incredibly supportive of my work, especially in developing the PBM matters. I respect his opinion and trust his assessment of delicate matters that have arisen as we’ve worked with the various states. I feel fortunate that I had George to guide me in my early career, and Steve to consult with in the latter part of my career.
LD: How would you describe your style as a lawyer? Or, how do you think others see you?
CS: I think my adversaries see me as very prepared and direct. I’m focused on relationships and helping investors and other clients address their losses through litigation in a pragmatic way. I think the “scorched earth” approach to litigation can be very destructive. Likewise, grandstanding or trying to come across as the smartest person in the room is incredibly unproductive and asserts the lawyers’ personal interests over the clients. Instead, what I strive to do is communicate clearly, build trust and methodically plan a strategy while remaining flexible. I think all of that is critical to the endgame in part because it advances the case and earns respect from opposing counsel and the bench.
LD: If you weren’t a lawyer, what would you be doing now?
CS: I’d be an entertainment agent. Seriously, I was heading in that direction. My first career was in advertising. Before going to law school in 2000, I worked at Tierney, an advertising and public relations agency based in Philadelphia. Our largest client was Bell Atlantic, which merged with GTE Corp. to become Verizon. I managed several creative campaigns, but my primary focus was managing the company’s expansive spokesperson contract with James Earl Jones. Yes, the voice of Darth Vader! In the 1990s, James Earl Jones was the voice and the face of Bell Atlantic, a role he continued to play for Verizon when the companies merged in 1999.
I worked very closely with James Earl for several years, reviewing all the creative and scripts for commercials, contracts, scheduling, personal appearances – everything had to go through me. We spent a lot of time together at the voiceover studio and on shoots, and we developed a great professional relationship and friendship. Of course, best laid plans. I met my husband when I was applying to law schools. He is a lobbyist, and I quickly became immersed in his political network. So, in law school my focus changed to working with public sector clients to get them relief when corporations play too fast and loose with the law.
Consumers accusing Reckitt Benckiser Group Plc of falsely claiming that its Woolite laundry detergent can “renew” or “revive” colors can bring their claims as a class action, a federal judge has ruled.
U.S. District Judge Beth Labson Freeman in San Jose, California ruled Friday that the thousands of consumers’ claims involved the same legal issues, rejecting the British consumer goods giant’s argument that how each consumer interpreted the product’s labeling varied too much among individuals.
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For plaintiffs: Theodore Leopold of Cohen Milstein Sellers & Toll
School board members from five Virginia localities and Richmond’s schools superintendent have signed onto an amicus brief to the Supreme Court of Virginia opposing a former teacher’s claim that he was unlawfully fired for violating his district’s anti-discrimination and anti-harassment policies.
The brief, which was submitted by LGBTQ+ advocacy group Equality Virginia and more than 35 signatories, asks the Supreme Court of Virginia to uphold the King William Circuit Court’s dismissal of former teacher Peter Vlaming’s lawsuit against the West Point School Board.
School board members who joined the brief include those from Arlington, Fairfax and Stafford counties, and the cities of Charlottesville and Falls Church.
“Without clear protections, such as the commonwealth’s model policies for the treatment of transgender students in Virginia’s public schools and West Point’s anti-discrimination and anti-harassment policies, transgender children risk mental, emotional, physical, and sexual harm when they attend school,” the brief states. “Without these protections, transgender students suffer isolation and stigma when they are differentiated from their peers.”
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Last July, Equality Virginia and law firm Cohen Milstein Sellers & Toll filed a separate brief in support of Virginia’s model policies to make schools safer and more inclusive for transgender students.
The two said in a joint statement on Wednesday that the West Point School Board must treat its transgender students equally, including by ensuring that staff address transgender students with the names and pronouns that reflect their gender identity.
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“The harm of differentiating transgender students from their peers and failing to affirm their identities is well-established in the courts,” said S. Douglas Bunch, an attorney with Cohen Milstein Sellers & Toll, in a statement.
“Sadly, this effect is magnified when the hostile actor is a teacher,” he said. “School policies, such as one of using pronouns that reflect a transgender student’s identity, are there to mitigate these harms and allow all students to thrive in school.”